How’s Your RAL Doing?

Got RAL?

Tax season is upon you and you’re hoping to make a gazillion dollars making those refund anticipation loans, right?

So, did your RAL bank go out of business last week? A couple of the “big boys” just got a scare when theirs did. Jackson-Hewitt and Liberty both got caught in the cross-hairs when federal banking regulators ordered Pacific Capital Bancorp to halt its RAL origination services. Whoa!

Jackson-Hewitt was getting 75% of their RAL’s from Pacific Capital, while Liberty was getting 90%. And, they couldn’t even get an exemption for being a dependent, LOL!

Lucky for H&R Block that they went out and bought their own bank a few years back, but while Liberty was shopping for one, it couldn’t get its deal approved by the feds either.

According to John Hewitt, President of Liberty Tax Service, Liberty will continue to look for a bank to acquire. In the meantime, Liberty has signed a three-year deal with Republic Bank, located in Kentucky, to fund their RAL business.

Jackson-Hewitt has jumped on the bandwagon and signed with Republic also. No word from Jackson-Hewitt about whether they’ll be trying to get their own bank or not.

If you haven’t got a RAL supplier already, you’re probably going to be scrambling, and use this as a big, big, lesson about practice building. What, you want to know how this ties in with building your practice?

Well, for starters, let’s look at the model these guys are using.

For one thing, they’ve committed almost all of their business growth to a niche where they are dependent on others who are operating in a regulated environment where the principals here have no real control. They need the banks to provide their product. If something happens to the bank, they’re SOL. (And, I don’t mean “sorta” outta luck.)

How many times have you let that happen to you? The moral here is that you need to be the “Master Of Your Own Destiny.”

Of course, once you’ve committed to a course of action it becomes rather hard to turn the ship around, so your best course of action is to plan ahead. That’s what John Hewitt was doing when he started shopping for his own bank. While he didn’t get the first one or two he bid on, he has bought time and is still shopping. Maybe he’ll get one before his contract with Republic is up.

Ah, life in the fast lane.

Best to you,
Kirk

PS - Wanting to take control of your own destiny and develop other sources of income, and learn how to create your own practice building tools? Take a look at the rest of the website and see all the free or low cost tools you can use to kick start your practice.

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