Recently I had a conversation with an agent who wanted a higher commission split. Their reasoning was not based on production, but on possibility. They wanted to get paid for the business they planned, not necessarily the business they had already done.
I didn’t feel like they were being unreasonable and I actually understood where it was coming from. But we realized we were looking at the same opportunity through completely different lenses. My agent was focused on what I could get and I was focused on what I needed to keep it.
What was missing from this conversation was recognition of what the company had already invested in to help build its business. Support, resources, technology, training, and infrastructure that often go unnoticed until they’re gone. Then I realized something. Many people in our industry don’t fully understand what they will be offered when they join a brokerage firm. Instead, they simply see a breakup.
view from the top
Brokerage leaders look at the business as a whole. They review fee structures, technology costs, office leases, insurance premiums, compliance requirements, marketing investments, training programs, support staff, and operational infrastructure.
Agents see one number, but leaders see the calculations behind that number. That disconnect creates one of the most important and least discussed challenges facing the industry today. While much of the real estate industry conversation focuses on hiring, market share, and growth, brokerage leaders are quietly having a very different conversation behind closed doors.
They’re talking about profitability. More specifically, that’s what’s missing. For many years, growth has been the industry’s favorite metric. More agencies, offices, market share, expansion all lead to growth and that became the goal.
The problem is that growth and profitability are not the same thing. A brokerage firm may be growing but struggling financially, or operating on razor-thin margins despite successful recruitment, or facing incredible pressure behind the scenes even though it looks incredibly healthy from the outside.
That’s exactly what many companies are facing today. Trading volumes in many markets are still below historical norms, trades are taking longer, competition is increasing, and everyone expects more.
At the same time, operating costs for intermediaries continue to rise, including technology costs, marketing costs, insurance premiums, and support staff expenses. Compliance requirements are also becoming more complex. Many of these costs and investments are unavoidable because they are necessary to operate a brokerage firm.
Where the silent financial crisis begins
The challenge is that revenue doesn’t necessarily keep up with business costs. Then a quiet financial crisis begins, not because securities firms are failing, but because the margin for error is shrinking. Every decision is more important, as are conversations about hiring, investments, and compensation.
So, back to the agent who wanted a higher split.
One of the most difficult things in leadership is having conversations that people don’t want to hear.
In reality, not all requests for higher divisions will be supported by the production levels generated. Of course, potential is important, but companies cannot proceed with their business based on potential alone. They are driven by performance: results, revenue, and profitability.
However, at some point over the years, many in our industry began to view the value of intermediation through a single lens: compensation. For example, if another company offers a higher split, you may think it must be a better deal, or if another company negotiates a different deal, you may think you should take the same deal. Or, if the broker says no, you won’t be invested with that broker.
However, a healthy business does not work like that.
What many agents don’t realize is that every dollar a brokerage spends impacts staffing, technology, marketing, training, and agent support. These are the very resources agents rely on every day to serve their clients and grow their businesses. At some point, leaders must make decisions based on business fundamentals rather than emotion. It’s not necessarily popular, but it’s necessary.
What keeps the lights on
What concerns me most is how little we as an industry are talking about these realities. We celebrate hiring announcements, office openings, expansion plans, and growth. But little is said about profitability, sustainability, and the pressures leaders feel to continue investing in their people while managing rising costs in all areas of the business.
The truth is, brokerage leaders aren’t trying to figure out how to make more money. Most companies are looking for ways to continue delivering value without compromising the future of their business. That’s a whole different conversation.
The brokerages that will grow over the next few years won’t necessarily be the loudest. They will not be abandoning the traditional model of value agents. These are people who understand their numbers, make disciplined decisions, and are willing to have complex conversations before the hard realities arise.
The conversation I had with the agent wasn’t really about the breakup. It was about perspective.
While the agent was evaluating one opportunity, I was evaluating the overall health of the business. That is the silent financial crisis occurring within securities companies today. It’s not that leaders don’t want to invest, it’s that they are being forced to make increasingly difficult decisions about where that investment is most important.
Because every brokerage leader learns the same lesson at some point: growth becomes the headline. If it’s profitable, it stays lit.
Kevelyn Guzman is a regional vice president at Coldwell Banker Warburg. Connect with her on Instagram and LinkedIn.
