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A new solution to help brokers administer financial benefits to agents is now available from Tongo, a company that “builds financial products that cater to the needs of the commission economy,” Inman has learned. The company wants to make it as easy for agents to contribute to their 401(k)s and pay taxes as easily salaried professionals do.
The web and mobile application rests on the concept of providing agents clear and flexible control of commission revenue, especially as it relates to dividing funds among their personal and business needs, a longstanding industry issue contributing to why entering the industry from a dependable, salaried role can be so challenging.
“This toolkit delivers automated budgeting to savings, checking, retirement, and investment accounts, as well as fast access to current and future commissions,” a Sept. 17 press release stated.
Upon onboarding, agents can easily assign distributions to retirement funds, personal checking and savings accounts or any other linked financial vehicles, and take advantage of an in-app tax planning feature for properly stashing estimated payments. It also partners with services to assist in long-term retirement planning and investment advisory.
Tongo’s Financial Benefits Platform, as it’s called, also serves the broker or a brokerage’s back-office team in commission split management and funds delivery.
Brandon Wright, CEO and co-founder of Tongo, said in a statement that so much of the traditional financial establishment and “traditional banking” rests on the standardization of salaried pay structures, and thus present an inherent disadvantage to agents who have to adapt to volatile pay structures and often worse, having their income be so dependent on the performance of all the other stakeholders in a typical transaction.
“The salary-based system of regular payroll is why bills are due monthly, and, in turn, why credit scores reward monthly payments. Additionally, 401K contributions and tax withholdings are automated through payroll, which makes it easier to save and pay taxes on time,” Wright said.
“Millions of professionals in the real estate industry work on commission and have irregular income streams. This hinders them from building their credit scores and delays retirement because contributions to savings and retirement accounts aren’t routine or automated.”
The company also allows for advance access to funds should an agent require a loan against future earnings for sudden expenses or investment in additional business resources, such as marketing subscriptions or software. Wright spoke to Inman on the phone about this aspect of the solution, saying that it is intended to be a flexible, dependable source of business credit that is critical to building any business.
“Self-employed people don’t get paid monthly, they get paid in irregular ways, so we built a commission-backed line of credit that you don’t have to repay until you get paid,” Wright said. “It’s priced like a prime product. They can draw up to 75 percent on any commission that will close within the next 60 days, and if they don’t use it, they don’t pay anything; it’s there for a safety net.”
There’s no junk fees or compounding, Wright said, and the rate is as low as 3 percent for 30 days.
“There’s nothing punitive, no extension fees, nothing like that. If a deal is delayed, repay when it’s closed with no penalty. If the deal falls apart, no penalty, pay when the next one closes.”
Tongo’s cash distribution features and accounting-like benefits do compete with a number of existing industry back-office systems, primarily Quickbooks, which is often used for accounting and money management. MoxiBalance, Lone Wolf Back Office, Inside Real Estate’s BackOffice and Constellation 1 are just a few examples, albeit designed primarily with an enterprise focus. In some ways, Tongo could be an add-on to such systems.
“Tongo can be a substitute for the credit cards agents use to fund their business,” Wright said. “But the major piece is that we’re trying to build the essential financial toolkit for the self-employed, and access to capital is one piece of that.”
