Mortgage Professional Australia issue 19.04

MPAMAGAZINE.COM.AU ISSUE 19.04

THE TIME IS NOW Five non-majors meet to discuss the broker landscape after the royal commission

A WOMAN’S WORLD Overcoming the stigmas for gender equality

00_OFC_SUBBED purple version.indd 2

EDUCATING BROKERS How industry players are boosting knowledge

A POSITIVE OUTLOOK Specialist Finance Group’s CEO talks brokers

8/04/2019 1:41:49 PM

01-IFC_Contents_SUBBED.indd 1

8/04/2019 1:04:59 PM

APRIL 2019

CONNECT WITH US

CONTENTS

Got a story or suggestion, or just want to find out some more information? twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU

UPFRONT 02 Editorial

The impact of brokers is not just financial

04 Statistics

16

26 FEATURES

WOMEN IN BROKING

A look at gender diversity in the broker space and how women are overcoming stigmas

NON-MAJOR BANKS ROUNDTABLE

THE BIG INTERVIEW

WILLIAM LOCKETT

The CEO of Specialist Finance Group discusses what it means to be a boutique aggregator

12

06 Head to head

Brokers share how they are building resilience

08 News analysis

A new report shines a light on the profile of home upgraders

10 Opinion

What is the next wave in asset finance?

FEATURES

SPECIAL REPORT

MPA speaks to five non-major banks in a live-streamed panel discussion about the current broker landscape and the opportunities in their space

How small business lending contributes to the Australian economy

38 Reverse mortgages

Heartland Seniors Finance answers questions about the market

30 FEATURES

BROKER EDUCATION

A lender and aggregator talk about the importance of educating brokers

40 Cyber insurance

Why brokers should be protected against cyber crime

42 SMSF lending

Liberty talks about the space others are pulling out of

PEOPLE 52 Brokerage insight

How one brokerage aims to help its customers succeed in the current market

54 Career path

A desire to improve the borrower experience moved this director up the ladder

56 Other life

34

FEATURES

SMALL BUSINESS LENDING

How a broker helped a WA disability support service thanks to Prospa

How a property investment adviser takes to the waves to reflect and keep fit

MPAMAGAZINE.COM.AU NOW ONLINE: Our daily newsletter. Keep on top of property market trends, business strategy, and what industry leaders have to say.

www.mpamagazine.com.au

01-IFC_Contents_SUBBED.indd 1

1

8/04/2019 1:06:59 PM

UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au APRIL 2019

The selfless side of broking

S

ome of the standout moments for me over the last month have been conversations with brokers who are really giving the industry a good name and going the extra mile to help others. The stigma and misconceptions about brokers pushing for higher loans to line their own back pockets, or not doing the right thing for their customers’ best interests, might have been lessened if these brokers had been given a chance to tell their stories.

For instance, I interviewed a broker who has set up an initiative to use his commissions for a positive cause. Other brokers are now on board, and 20% of the upfront and trail commissions received by each of them goes towards helping the homeless. You can find out more about this on the MPA website, but it’s a great example of how much deeper the layers go than what came out in the royal commission.

Not only that, but MPA spoke to another broker who, after experiencing domestic violence as a child and seeing the all-too-frequent stories in the media today, is raising

It was a great example of how much deeper the layers go than what came out in the royal commission money through dance events for a women’s refuge that helps women and children escaping such situations. You can read her story on our website too.

While it’s not for every broker to set up charities and organise events, it is important to remember that even in your day-to-day jobs you are helping people achieve their dreams and get into their own homes.

To continue to help you do that, we’ve spoken to a lender and aggregator who understand the importance of an ongoing education for brokers, particularly as the lending landscape continues to change. Whether it be education on diversifying into other areas, learning more about different lender criteria, or getting advice on growing your marketing campaigns, MPA has found out more about the tools available to you, which you can read about in this month’s broker education feature.

Also in this edition we report on our first live-streamed panel of the year, with representatives from the non-major banks. We had some great questions from brokers on topics ranging from the royal commission and remuneration structures to lending practices more generally.

Read on for the full report, but if you would like to watch the whole roundtable session you can find it on MPA’s website.

Rebecca Pike, editor, MPA

2

EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Journalists Tom Goodwin, Abel Riototar Contributor Damian Mantini

Marketing Manager Danica Mendoza

CORPORATE

Production Editor Roslyn Meredith

Chief Executive Officer Mike Shipley

ART & PRODUCTION

Chief Operating Officer George Walmsley

Designer Cess Rodriguez Traffic Coordinator Freya Demegilio

Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

tel: +612 8437 4784 rebecca.pike@keymedia.com

SUBSCRIPTION ENQUIRIES

tel: +61 2 8311 5831 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES claire.tan@keymedia.com

Key Media Regional head office Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Bengaluru, Seoul

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL neil.sharma@kmimedia.ca T +1 416 644 8740

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

www.mpamagazine.com.au

02-03_Editorial_SUBBED.indd 2

8/04/2019 2:47:09 PM

02-03_Editorial_SUBBED.indd 3

8/04/2019 1:10:45 PM

UPFRONT

STATISTICS

Keeping SMEs up and running Small businesses are keeping their doors open and hiring more staff thanks to the impact of SME lending FINTECH LENDER Prospa recently commissioned RFi Group and the Centre for International Economics (CIE) to estimate the full economic impact of its lending activities on small businesses in Australia.

The analysis, which surveyed over 7,100 Prospa customers, considered the value of funds Prospa lent from 2013 to 2018. It used data points to determine how Prospa funds had benefited businesses and the wider economy via revenue and employment growth.

Prospa founders and CEOs Greg Moshal and Beau Bertoli said the report “shines a light

$3.6bn

Prospa’s lending contribution to nominal Australian GDP

1 in 4

N0. of businesses that were unsure if they’d still exist without Prospa

on how providing access to capital allows small businesses to grow and create jobs”.

“The results are greater than we had ever imagined and give us an immense sense of pride in the role of Prospa in the Australian economy,” they added.

Founded in 2012, Prospa has lent almost $920m to over 18,000 Australian small businesses. Its loans of between $5,000 and $250,000 help businesses manage their cash flow and fund growth efforts.

Turn to page 34 for more about Prospa’s impact on SMEs.

$1.7bn

BOOSTING REVENUE AND EMPLOYMENT According to the RFi Group/CIE report, without Prospa’s lending, overall retail customer revenue in 2018 would have been $517m lower. In construction, total revenue would have been $500m lower, while in hospitality it would have been down $355m. When it came to their workforces, Prospa’s construction customers said these would have been reduced by over 4,600 full-time equivalent (FTE) positions had they failed to get a Prospa loan. The company’s hospitality customers would have seen their workforces reduced by nearly 3,950 FTEs, and in retail these would have fallen by over 2,600 FTEs.

57

Amount added to Australia’s GDP No, of FTE positions maintained in 2018 due to Prospa’s lending for every $1m Prospa lends Source: The Economic Impact of Prospa Lending to Small Business, January 2019

CREDIT CHALLENGES INCREASE

FUNDING CONTINUED BUSINESS

Sensis Business Index, access to finance, 2012–18

Ability of Prospa customers to continue operations without loan

The September 2018 Sensis Business Index revealed that over 30% of small businesses were unsuccessful in accessing finance in the previous quarter.

In the same period, businesses that found it difficult to access finance increased by nine points to 31%, while those that found it easy dropped by five points to 14%.

Of customers surveyed, 26% were either unsure whether their business would still be operating or believed they would have been forced to shut down without their most recent Prospa loan, while 13% in the hospitality sector believed they would have ceased operation if not for their most recent loan.

50 40 30 20 10 0

Sep 12

Sep 13

Sep 14

Sep 15

Sep 16

Sep 17

Sep 18

74%

5%

21%

Yes

No

I am not sure

-10 -20 -30

Relatively difficult

Relatively easy

Net balance Source: Sensis Business Index September 2018

4

Source: The Economic Impact of Prospa Lending to Small Business, January 2019

www.mpamagazine.com.au

04-05_Stats_SUBBED_FIXED.indd 4

8/04/2019 1:37:02 PM

Direct impact of Prospa lending on customer revenue by sector, 2018 $600m

$517m

$500m

$500m $400m

$355m

$300m $200m

$102m

$100m

$88m

$60m

$41m 0

Agriculture

Manufacturing

Construction

Wholesale trade

$145m

$118m

Retail trade

Hospitality

Transport

$44m Real estate

Professional services

$34m

$15m Administration

Healthcare

Other services

Direct impact of Prospa lending on customer employment by sector, FTE positions maintained, 2018 5,000

4,632 3,941

4,000 3,000

3,782

2,613

2,000

1,002

1,000

869

588

408 0

Agriculture

Manufacturing

Construction

Wholesale trade

Retail trade

Hospitality

Transport

918 354 Real Estate

Professional services

473 Administration

335 Healthcare

Other services

Source: The Economic Impact of Prospa Lending to Small Business, January 2019

SAVED FROM LOSSES

In total, 82% of Prospa customers said they believed their revenue would have been lower if not for their most recent Prospa loan, while 31% believed they would have had fewer staff. Over 90% of customers in manufacturing and hospitality believed their revenue would have been lower without their loan.

Direct impact of Prospa lending on customers

BILLIONS PUMPED INTO GDP RFi Group and CIE estimate that for every $1m Prospa lends there is a corresponding $4m increase in GDP. It is estimated that Prospa has added over $3.6bn to nominal Australian GDP since 2013.

Impact of Prospa lending on nominal Australian GDP, 2013–18 $2,000m

$1,697m

82%

Lower revenue

$1,500m

$1,136m $1,000m

31%

$529m

$500m

Fewer staff/ employees

$0m

Source: The Economic Impact of Prospa Lending to Small Business, January 2019

$240m $0.3m

$51m

2013

2014

2015

2016

2017

2018

Source: The Economic Impact of Prospa Lending to Small Business, January 2019

www.mpamagazine.com.au

04-05_Stats_SUBBED_FIXED.indd 5

5

8/04/2019 1:37:22 PM

UPFRONT

HEAD TO HEAD

How are you building resilience in your business?

Diversification is part of these brokers’ plans, whether to improve their business processes or propositions – or both

Mardee Blackwood

Oliver Li

Mortgage broker 1st Street Financial

Head of sales and training Option Finance Australia

“The mortgage industry has had a major shake-up with the royal commission, and here are some tips to build your resilience: remember challenges aren’t disasters; be smart, accept change and look for other solutions, such as outsourcing support services or operating from a cloud-based platform; be positive and look at these changes as temporary and manageable; and come together and unite.

“During times of change, we need to focus on what we can control and work on building personal and professional resilience to help safeguard and grow our business. If we embrace change and the challenges we are faced with, we will most likely see improved performance.

The industry is doing a great job in showing a strong, united stance.”

“Everyone in our industry has been facing many uncertainties and unexpected challenges that make them feel unsure about their future. We have worked harder than ever to think about coping strategies.

Many broking firms start to realise the importance of diversification, so do we. In today’s tough times and difficult situations, our team think positively and consider the moment a good opportunity to improve our professionalism and to serve our clients with a broader range of financial products.

“Option Finance Australia has not only focused on traditional mortgage lending; it has diversified into business, private and development finance, general and health insurance, personal loans, mortgage protection insurance, and vehicle and equipment finance, among others.”

Kyle Weltman Mortgage consultant Cane Financial

“In our industry, now more than ever, resilience is the name of the game. My clients are where my focus and emphasis must be. My ongoing business success comes from my clients’ understanding of how I value our relationship and how I’m genuinely trying to improve their situation. I’m constantly trying to find ways to equip my clients with additional knowledge.

“I also keep up to date and educate myself about lenders’ policies and the industry, as these are invaluable requirements for business resilience these days. Policies are differentiating faster than ever, and we need to find the right fit in a swift manner. Finally, be adaptive, goal-orientated, and take on challenges with a positive attitude.”

IT’S NOT AS DIFFICULT AS YOU THINK When asked how brokers could build resilience and diversify their business in 2019, Liberty group sales manager John Mohnacheff said “brokers should stop thinking that diversifying is complex and complicated”. It’s not about adopting a complex strategy but “rather a commitment to knowledge, research and big-picture thinking”.

Diversification is easier than many may think, he added. For Mohnacheff, it’s only a matter of taking the time to understand a customer’s needs and financial position, then working with various lenders to find a solution.

6

www.mpamagazine.com.au

06_Head_to_Head_SUBBED_Replace Kyle pic if poss.indd 6

8/04/2019 11:40:14 AM

UPFRONT

NEWS ANALYSIS

Shining a light on upgraders A report released by ING focuses on the upgraders market and paints a picture of how brokers can play a key part in helping buyers switch to their new homes – hopefully without having to give up date night

A LOT of emphasis is placed on the nearly 60% of borrowers who turn to mortgage brokers for their home loans – and for good reason – but there is another figure that should be celebrated.

Of borrowers who have used a broker in the past, 81% have used or plan to use a broker again for their upgrade, said ING’s Upgraders Homeownership Survey Report.

According to one ‘upgrader’ at the launch of the bank’s report last month, “I will be using the broker that helped me buy my first house.

It’s just a trust issue. I engaged with a few brokers for my first house, and he just simplified concepts for me that were very complicated. So I’m not even going to shop around so much this time, which is probably really bad advice, but I just trust him. And I also want the process to be quick.”

The survey, which was conducted by GalKal in March 2019, shone a light on the kinds of people mortgage brokers might be helping to upgrade – and how you might struggle to stop them from going on date nights even if they want to save money. The bank surveyed borrowers who were already upgrading, as well as those looking to upgrade.

Unlike a first home buyer, upgraders have the burden of selling their home in time to move and juggling the finances involved in that.

8

Using a stopgap To combat that challenge more than half (59%) of all survey respondents said they had used or planned to use a stopgap between selling their old home and buying a new one.

This was made up of almost a third (30%) who had rented or planned to rent, while nearly a quarter (24%) had moved in with friends and family or planned to do so, and 5%

temporary living arrangements between selling and purchasing suggests their actions are very considered and done to help ease the financial stress of upgrading.”

With tighter credit and a heightened focus on living expenses after the scrutiny of the

“Taking on a larger mortgage and having to consider the needs of others ... are additional things that upgraders may have to contend with” Melanie Evans, ING had used or intended to use a hotel or motel.

ING’s head of retail banking, Melanie Evans, said there were many reasons why managing finances at this time weighed on the minds of upgraders.

“Taking on a larger mortgage and having to consider the needs of others, such as a spouse or children, that may not have been in the equation during the last purchase are additional things that upgraders may have to contend with,” she explained.

“The fact that Aussie upgraders are making

banking royal commission, brokers are more conscious than ever of their customers’ finances. But if upgraders are easing their financial stress by using this stopgap between homes, perhaps the broker can rest easy?

Unfortunately not. The report shows there is still a way to go in educating property buyers on how to manage their expenses when applying for finance.

According to the report, 46% of respondents found organising finances and getting a loan to be the most stressful part of upgrading,

www.mpamagazine.com.au

08-09_News_Analysis_SUBBED_FIXED.indd 8

8/04/2019 8:25:41 AM

WHO ARE ING’S UPGRADERS?

Current upgraders Future upgraders

40% 60%

9% 12%

35% 39%

4% 12%

22%

27% 36% suggesting they needed a little help. Forty-one per cent said the financial strain and saving money was one of the biggest stressors.

Don’t take away date night We’ve also heard in recent times that banks,

that many customers were unwilling to give up their lifestyle. People aren’t budgeting as much as they should, and when they eventually put pen to paper to work out their expenses, they’re shocked, said Mardee Blackwood from 1st Street Home Loans. Still, she often finds they

“We’re trying to be more proactive in seeing clients early on so when they go for the application they’re not going to get stung” Mardee Blackwood, 1st Street Home Loans for example, are refusing credit based on food delivery services appearing on an applicant’s bank statements, yet the ING report showed that most upgraders were unwilling to give up these lifestyle pleasures.

A huge 77% of respondents said they had not given up taxis or Ubers or would not do so to afford an upgraded home. Seventy-six per cent said they had not given up date nights or would not do so; 75% said the same for going out with friends, and 68% for beauty luxuries.

One broker told MPA she found it funny

will cut down in other areas as long as they can keep eating out and going on date nights.

But with the banks focusing more on those living expenses, it means she has to approach clients more proactively.

“We used to have the clients disclose what they were spending, and we would always go through the bank statements and make sure they were on target with what they were telling us,” Blackwood said. “The banks in the past just didn’t need to see the evidence they do now.

“How we approach it is we get everything up

Household type Single Income No Kids/Dual Income No Kids Young family Older family Empty nesters

Age 18–29 years 30–39 years 40–54 years 55–64 years 65+

front so we can give the proper advice about what is going to possibly affect what they can borrow going forward. It might be that we met them in May but because of what we’ve seen we say we need this to be curbed or we need to look at this in a couple of months when we can show you’re not eating out every week.

“We’re trying to be more proactive in seeing clients early on so that when they go for the application they’re not going to get stung. It’s a case of educating the client and making sure they’re aware of what banks are looking for.”

Despite borrowers not wanting to give up certain spending habits, making higher repayments on an upgraded home was the biggest concern for respondents, ahead of feeling isolated and regret over leaving a home. This was followed by a concern about having their finance application declined.

On a more positive note, the ING survey showed that 82% of mortgage holders are paying down more than what’s required most years, and 45% expect to pay off their mortgage at least five years early.

www.mpamagazine.com.au

08-09_News_Analysis_SUBBED_FIXED.indd 9

9

9/04/2019 9:11:42 AM

UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com

A new wave of asset finance Offering asset finance to clients is helping mortgage brokers cope with the changing market conditions, writes Damian Mantini of Platform Finance THE ROYAL COMMISSION has certainly made brokers more aware of the need for diversification, especially considering the impact the tighter lending criteria and softer housing market conditions have had on their core business.

Asset finance is one way they can diversify, with benefits such as a solid investment return and positive consumer outcomes. It also makes sense as one of the biggest assets brokers have is the trust they’ve established with their customers. Once a customer knows their mortgage broker can also organise asset finance – whether for a car or other depreciable item – it’s more than likely they will use their broker because of the value they place on that relationship.

Existing infrastructure The key advantage brokers have in adding asset finance into their mix is that they already have the infrastructure in place to offer it. Adding this extra string to their bow is not going to be prohibitively expensive – and in most cases it’s part of the natural conversation that occurs during the home loan interview.

Going back five or six years, asset finance used to be uncharted territory for mortgage brokers, but an increasing number are now investigating how to make it a regular part of their business. Offering asset finance is much easier thanks to advancements in technology.

Five years ago brokers didn’t have a platform through which to provide such a service, but now a number of different services can be transacted via one portal.

There will always be brokers who resist change, but most have recognised the need to

10

adapt to what the market wants. If they didn’t before, the royal commission has certainly woken them up to it. The brokers who have come on board with asset finance are taking the time to educate themselves on the key differences between this and home loans, as both are specialist areas requiring different knowledge and processes.

panel with multiple options, underpinned by broker-centric processes and operations.

We’ve found that brokers who have successfully diversified into asset finance are the ones who have taken a persistent – and consistent – approach. It’s important to have clear and constant messaging so that when people are considering large purchases, like their next car, their broker is top of mind.

Energy the next wave Brokers may also want to open their eyes to the growing range of assets that can be financed.

Cars tend to be the ‘bread and butter’ category, but equipment finance is also proving popular.

However, the next wave is definitely energy finance as more businesses look to buy products like solar panels and battery storage solutions to meet their needs.

While diversifying into asset finance makes sense for many brokers, there will always be some who want to stick with home loans.

Over the past year, we’ve had a 45% increase in brokers wanting to partner with us to offer asset finance to their clients Education alleviates fear Fear of the unknown will always be the biggest barrier to offering this service, but that is changing as more resources become available to help educate brokers about its benefits. Over the past year, Platform Finance has had a 45% increase in brokers wanting to partner with us to offer asset finance to their clients. A greater understanding of the value proposition asset finance offers to their business is a key driver of this.

Once they start offering this service, brokers may find that one challenge is letting their customers know they offer it. When people think of mortgage brokers they instinctively think of home loans. This is changing, but it takes time. We assist brokers by helping them to understand how offering asset finance can help their business. From there, they can go on to educate their clients.

Our business was built on replicating that of the home loan space. The value proposition is identical – offering a large and diverse lender

However, this group can still take advantage of the trend as, for example, we have a direct sales team that helps facilitate deals between brokers and their customers who are interested in asset finance. We find that once these brokers start writing asset finance business, they’re happy to continue providing it.

It’s an exciting time for brokers interested in learning more about how asset finance can help their business. The early adopters are doing well, and we expect a big increase in brokers seeking to diversify into this space over the next two to three years – especially as they continue to focus on good customer outcomes and more competitive pricing structures.

Damian Mantini is director of aggregation and strategic partnerships at Platform Finance. He joined as a shareholder in 2012 and has more than 20 years’ experience in the finance industry, specifically in the broker channel.

www.mpamagazine.com.au

10-11_Opinion_SUBBED.indd 10

8/04/2019 9:38:00 AM

10-11_Opinion_SUBBED.indd 11

8/04/2019 9:38:06 AM

PEOPLE

BIG INTERVIEW

THE SILVER LINING FOR BROKERS With tighter lending and policy backflips on remuneration, brokers are putting their forward planning on hold. But Specialist Finance Group managing director William Lockett finds encouragement and opportunity in the face of the current uncertainty

SPECIALIST FINANCE GROUP has no shareholders and no complicated manage­ ment structures. It prides itself on being independently owned, with one sole owner and shareholder who has a direct relationship with all of its brokers.

That sole owner is managing director William Lockett. A broker since 1986, he took over what became Specialist Finance Group in 1991.

In the last few months, as the uncertainty has grown following the banking royal commission’s final report, the group’s direct relationship with brokers has enabled it to ramp up its communication with those who are worried about the industry.

Despite the recommendations from Commissioner Kenneth Hayne and the potential changes to follow, Lockett expects the broking industry to continue to be “strong and vibrant”, just like it is now, even though he feels the recommendations sought to disrupt the third party channel.

Even now, while we wait for certainty on what will happen to broker remunera­ tion, brokers are not able to move forward, Lockett says.

12

Brokers as small businesses are always looking ahead to plan their growth, whether its through hiring new staff or expanding their office space. However, while it seems that changes to broker remuneration are not an imminent threat any more, brokers are still pausing to find out what will happen next.

He adds, “How can something be broken when a broker provides a service the consumer wants, and the consumers knows how the broker gets paid and they continue to use the broker?

“Brokers provide a service banks don’t provide. If you use a broker you have the

“If the core focus is on the best outcome for the client whilst protecting the sustainability of the third party channel, that’s the biggest thing” “Most broking businesses have had to put a lot of their forward planning on hold until they are absolutely certain about what’s going to happen and how much it affects them.

“Wherever the uncertainty lands, when something does land, it is only then that they can have certainty about how to adapt and move forward.”

Staunchly against the recommendations laid out in the final report, Lockett says the current remuneration structure has been supported in all previous reports and by the low number of complaints against brokers.

luxury of calling them on your mobile; quite often they’ll come to your house after hours.

Banks don’t do that. Brokers do that.”

Not only worried about his own brokers, Lockett is also part of an aggregator’s forum that meets to discuss how to support and work with brokers across the country.

“Whilst we may be competitors within our industry, we’re certainly not enemies,” Lockett says. “When industry-related matters come up, we all band together. We have 14 aggregators working together for the benefit of all brokers.”

www.mpamagazine.com.au

12-15_Big_Interview_SUBBED_V2.indd 12

9/04/2019 8:10:19 AM

PROFILE Name: William Lockett Company: Specialist Finance Group Title: Managing director Years in the industry: 33 Career highlight: “Specialist Finance Group maintaining its complete independency of any form of third party ownership.”

Career lowlight: “The royal commission findings and recommendations gave no value to the service model provided by mortgage brokers to their clients and the community.”

www.mpamagazine.com.au

12-15_Big_Interview_SUBBED_V2.indd 13

13

9/04/2019 8:11:25 AM

PEOPLE

BIG INTERVIEW

Lockett believes there will be some benefits out of the recommendations as the industry works together. “Like any industry or business, you strive to be better today than what you were yesterday,” he says.

“There’s a wise old saying, ‘What I know would fill a book; what I don’t know would fill a library’. If you have that approach, then we never stop looking for ways to improve and get better at what we do.

I’m going to do the same thing in my business in six months or 12 months and not think about change.”

Despite the claims against mortgage brokers and the recommendations in the final report, Lockett says this experience should encourage brokers.

The industry has pulled together over the last few months to educate policymakers and the Australian public. One of the biggest

“The buying public out there are saying, we love you, we use you, we want you … that’s the number one thing [brokers] should be encouraged by” “The issue is we don’t know exactly how [future changes are] going to shape and define the industry. But one thing we do know is that it will shape and define it.

“If the core focus is always on the best outcome for the client whilst recognising the value of the third party channel, that’s the best outcome for all parties.”

Another positive of being a boutique aggregator is the ease of adapting its business models to work around brokers. Specialist Finance Group offers four different models, but these can be tailored to suit the broker’s needs and changed as a broker’s circumstances might change. This adaptability is something Lockett believes in strongly, and he encourages brokers to grow and adapt their business models.

“In terms of what brokers have to do, they simply have to improve the scope of services they provide,” he says. “Are they solely residential lending? Should they look to expand to commercial or personal lending?

“If they’re doing an analysis of their business and they find it has slowed down, they should say this is an opportunity to evaluate my business model and improve it.

“If you’re in business today, you can’t say

14

examples is the MFAA’s advertising campaign, backed by lenders and aggregators and showing the impact of mortgage brokers. Brokers and borrowers alike also signed a petition to save the broking industry, with broker customers sharing their stories on social media.

“Brokers should be optimistic and encouraged about the support they’re getting from our industry partners, particularly the MFAA and FBAA, who are standing united with all brokers Australia-wide, in protecting the value proposition they provide,” Lockett says.

“They should be encouraged also by the feedback they are receiving from their clients who want to maintain the third party channel and their relationship with their broker.

Equally, or more importantly, they should be optimistic and encouraged purely by the fact there’s almost 60% who choose to obtain a housing loan through a mortgage broker. They choose to use a mortgage broker rather than deal directly with a bank.

“The buying public already clearly value the service proposition that mortgage brokers provide. Mortgage brokers should take great pride in this fact alone, regardless of what others might state.”

SPECIALIST FINANCE GROUP TECH TOOLS • Fact-find • Lender turnaround times • Product search and comparison Broker tools • Compliance section • Consumer grade fact-find • Upload documents • View status and shared notes Client portal • Comment on files • Integrated video conferencing • Share screen with client • Scan client’s ID and documents Video using PC’s camera conferencing • Record meetings

Workflows

• Customise workflows • Automation as deal changes stage • Send email and SMS notifications • Create tasks and assign to users

Marketing

• Send email and SMS campaigns • View campaign statistics • Send automated messages for birthdays, renewals or expiries

www.mpamagazine.com.au

12-15_Big_Interview_SUBBED_V2.indd 14

9/04/2019 8:11:34 AM

12-15_Big_Interview_SUBBED_Client revisions to come.indd 15

8/04/2019 1:45:27 PM

SPECIAL REPORT

NON-MAJOR BANKS ROUNDTABLE 2019

2019

NON-MAJOR BANKS ROUNDTABLE

Following a year of scrutiny of the banking sector, consumer sentiment towards the big four banks has been waning and the non-major banks are ready to move into their space. In a live panel discussion, five non-major bank heads discussed the opportunities this presents – as well as the much-talked-about topic of broker remuneration

16

www.mpamagazine.com.au

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 16

8/04/2019 11:58:58 AM

MPA’S NON-MAJOR BANKS Roundtable went off without a hitch last month, despite a couple of changes to the line-up the day before.

Due to some unforeseen circumstances in Western Australia, Bankwest’s Ian Rakhit unfortunately had to step down from the discussion. Another last-minute change saw Citi swap out its head of mortgage distribution, Matt Wood, for its head of banking, David Zammit.

The roundtable was also joined by Mark Vilo, head of bank intermediaries at Suncorp; Mathew Patterson, head of broker sales at ME; Glenn Gibson, head of thirty party distribution at ING; and Darren Kasehagen, head of third party banking at Adelaide Bank.

While the non-major banks will have felt some of the pressure over the past year with the royal commission in full swing, they were not as heavily scrutinised as the four major banks. Thus, with the release of the final report, the non-majors could breathe a sigh of relief.

You could see that relief as they chatted and took selfies ahead of the cameras being turned on, somewhat of a change from just several months before. Of course, they know there is still a lot of work to be done, but now at least

they know more about what that work will involve in order to step in where the majors have failed. Good customer outcomes and customers’ best interests were a key focus of the day.

The other big talking point was of course the recommendation that broker remuneration should be changed to a borrower-pays model. Both sides of government are taking a more cautious approach to this, and the nonmajors had a lot to say about what they thought.

Some of the non-majors that took part were involved in the Combined Industry Forum, which had already recommended a change to commissions. It was good to get their insight from the perspective of a group that has already tried to remove potential conflict and strive for better customer outcomes.

The next few pages provide a snapshot of the discussion between these five non-major banks, but you can also watch it in full on our website at www.mpamagazine.com.au.

MPA’s next live-streamed roundtable is scheduled for 17 May and will feature some of the industry’s biggest aggregators. Join us then as we discuss the broking industry, with possibly more insight to follow the federal election.

www.mpamagazine.com.au

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 17

17

8/04/2019 11:59:33 AM

SPECIAL REPORT

NON-MAJOR BANKS ROUNDTABLE 2019 THE PANELLISTS

Darren Kasehagen Head of third party banking, Adelaide Bank

David Zammit Head of banking and wealth distribution, Citi

What do you think the landscape looks like for brokers going forward?

After the scrutiny of the mortgage broking industry and the subsequent recommendations from Commissioner Kenneth Hayne in the royal commission’s final report, it is no wonder brokers have been nervous about their futures.

Not only did Hayne hold a microscope up to the potential conflict of broker commissions but he also questioned how much work brokers do, the occurrences of fraudulent documents, and the poor assessment of borrowers’ living expenses.

When the recommendations came out, Hayne focused on commissions and recommended the removal of both upfront and trail.

Glenn Gibson Head of third party distribution and direct mortgages, ING

Mark Vilo Head of banking intermediaries, Suncorp

Immediately after the report was released the mortgage broking industry was understandably concerned about where its future would lie, particularly if commissions were to be removed. As it stands now, neither of the political parties are recommending outright banning of upfront commissions, but there is still a question mark hanging over trail.

The panel of five representatives of nonmajor banks at MPA’s roundtable gave a pretty positive picture of the industry. Mark Vilo, Suncorp’s head of bank intermediaries, started off the panel discussion by saying, “I think there’s every reason for brokers to feel pretty optimistic about the future”.

Vilo, who has been heavily involved in the Combined Industry Forum, agreed that

Mathew Patterson Head of broker sales, ME

it was a great time to be in the mortgage broking industry.

“If I was a broker I’d be feeling optimistic, and I think that when you are in an environment of change, those that face into that change and do something positive about it are going to end up in far better position,” Vilo said.

Darren Kasehagen, Adelaide Bank’s head of third party banking, supported this view of the new environment for brokers. “There’s hardly been a better time to be a broker,” he said. “I’m really positive about the broker industry going forward. I think, to be fair, that if you’d asked me that in early February, I would have answered it in a very different way because I think a consumer-pays model would not have been good.

AUDIENCE QUESTION Will you be introducing any new policies or products to continue growth in non-major market share?

Q

Patterson: I think to encourage refinances and gain a competitive advantage in the market you’ve got to innovate through product, because you can’t do it through policy and serviceability because of responsible lending.

18

Zammit: It’s more around how you use the products and the strategies with those products – that’s really going to be where the differentiation lies. I think that’s going to be a space where, in particular for the non-majors, we can stand out: around the niche areas and the differentiation of what people are looking for depending on the needs they have and ultimately what the customer outcome is.

Vilo: We’re all going to have to innovate in some way. We’ve got the big four that are able to invest heavily in technology, and we’ve got the neobanks at the other end, so I think for us to be saying ‘talk to us in 12 months’ time and nothing will change’, that’ll be disappointing. We need to be working through innovation, whether it is product or how we get the pendulum right in terms of how we’re dealing with policy.

Kasehagen: For us as smaller players who can’t as easily compete on price and don’t have the resources potentially to innovate as fast, it’s about service for me … If I was going to pick one thing out that might change or continue to evolve over the next 12 months, I’d say service, turnaround times, and making sure we give that good service to the broker and customer.

www.mpamagazine.com.au

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 18

8/04/2019 12:07:43 PM

“I’m really pleased that some sanity has prevailed and both major parties have actually come to the landing where they’re at at the moment.”

Commissioner Hayne’s recommendations did not just touch on broker commissions, however. Another recommendation in the final report included the introduction of a best interest duty for the customer.

Speaking to that, ME head of broker sales Mathew Patterson said the royal commission was a very thorough process that had reoriented the focus back onto the consumer.

“I think the real opportunity for brokers is going to come through the introduction of the best interest duty,” he said.

“That’s going to give brokers a real competitive advantage in the market. In the current environment a broker can say their value proposition is, ‘I’m going to research the market, I’m going to look at all these different lenders for you, I’m going to find the best deal that’s available for you’. To be able to overlay that with a statement to say, ‘And I’m also legally obligated to act in your best interests instead of mine’, I think it’s a very powerful statement that the branches can’t offer.”

One of the biggest concerns is the effect of remuneration changes and what competition will look like between the majors and nonmajors. Do you think there is a threat?

With the recommendation to change broker remuneration came the concern that the channel would simply not be viable any more. The argument was that, particularly if there was a switch to a borrower-pays model, the number of brokers would likely diminish as people avoided the heavy cost of using a mortgage broker at a time when they were already under the financial stress of buying property.

Those banks that use brokers as their shopfront or main distribution source questioned how they would be able to compete with the major banks.

There was definitely more of a threat of reduced competition when the report was released, but not so much today, said

NON-MAJOR VS MAJOR BANKS’ MARKET SHARE

80 70 60

65.83%

62.48%

63.84% 59.03%

50 40

34.17%

37.52%

30 Aug 17

Nov 17

Major banks

40.97% 36.16% Feb 18

May 18

Non-major banks Source: AFG Competition Index June 2018

David Zammit, head of banking and wealth distribution at Citi.

“I think the discussion is actually broader than the compensation piece, because the reality is that what a broker does is very different compared to a client going directly to a bank, and so you’re not comparing

“From our point of view, we like to partner with the best, so we’ve partnered with brokers and we will almost get to 100% through that channel because of that reason.”

Asked how the non-majors might overcome any reduced competition, ING’s head of broker distribution and direct mortgages,

“From our point of view, we like to partner with the best, so we’ve partnered with brokers and we will almost get to 100% through that channel” David Zammit, Citi apples with apples,” he said.

He listed three key reasons why Citi sourced 95% of its business through brokers: the access they provided to an array of options; the strategies that come with those options; and the level of service brokers provide.

Glenn Gibson, said that as a non-major competition was in ING’s blood.

“It’s what we’re all about, but it comes down to best customer outcomes,” Gibson said.

“So the best customer outcome is to have choice and to have a broad choice.”

www.mpamagazine.com.au

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 19

19

8/04/2019 12:07:54 PM

SPECIAL REPORT

NON-MAJOR BANKS ROUNDTABLE 2019 Rather than focusing on their own banks individually, Gibson said the non-majors had banded together so they could work better to help the mortgage broker industry.

“We’re not talking about how do we as ING sell more loans, or how do we individually do more. It’s a case of, how do we support the broker network going forward?

How can we make sure competition is there?

How can we make sure there is always a choice? And we’ve come up with a range of ideas around that.”

Naturally, the banks and the industry are hopeful that, with policies as they currently stand, the threat to competition will no longer be there.

Suncorp’s Vilo said, “I think both sides of government have realised that following the path from some of the recommendations might not be the most prudent way to go, so I have a degree of confidence around where we are going; I think we’ve passed that point.”

He added, “I think the work that’s been done is actually evidence of the fact you can get people listening if you create a form of movement. All these guys here are part of a working group; we want to actually do things better for brokers.

“So, let’s watch this space. We’re all

working together in a very constructive and meaningful way so that it’s not about us; it’s about the brokers that we’re facing into every day.”

“We’re all working together in a very constructive and meaningful way so that it’s not about us, it’s about the brokers that we’re facing into every day” Mark Vilo, Suncorp As credit has tightened, turnaround times have increased. What are you doing to help brokers and their borrowers?

In MPA’s recent Brokers on Banks survey, brokers voted turnaround times as the factor that was most important to them.

After the increased scrutiny of banks’ lending practices, not only are brokers working harder to supply evidence but the waiting times have increased and the number of loans approved have declined.

Kasehagen was the first panellist to respond to the question, saying there were a few approaches to this from Adelaide Bank’s perspective.

HAVE TURNAROUND TIMES IMPROVED OR WORSENED OVER THE LAST YEAR?

32%

21%

20%

19%

8%

Improved significantly

Improved

No difference

Worsened

Worsened significantly Source: MPA Brokers on Banks Survey 2019

20

The non-major has been carrying out extra training with brokers and pilot groups.

“Similarly, we’re doing a bit of a test bed with a group of brokers around allowing

deals to go through at an accelerated pace rather than staying in the queue if they’ve got everything in order, which is something we haven’t done before,” Kasehagen said.

“We’ve changed a little bit in the way our documentation is categorised and sent through, and we’ve automated our serviceability calculators. So we’re continually trying to tweak things to actually improve there.

We then dial it back to say, what can the broker do to actually almost help themselves? For me it just comes back to, ‘if it ain’t documented, it ain’t done’.”

Kasehagen added, “Credit is a little bit tighter than it was some periods before. As a general comment, we’ve seen turnaround times for us anyway be a little bit longer than we’d like. But the more accurate the information that comes through to us the better it is for everyone involved.”

Vilo agreed that Suncorp had seen similar challenges, but the bank was working to improve and simplify its processes. “Even to the extent of removing the BDM from the conversation and getting our lenders to pick up the phone and talk to a broker if they’ve got a question so they can resolve it without multiple layers of intervention,” he said.

“We’ve got a number of tools to help brokers understand what it is we’re looking for when it comes to living expenses, such as interactive modules and so on. So we’re sort of working through that at the moment.

“I think going forward we’re going to be in a position where we need to streamline some of the other processes that we’ve got.

www.mpamagazine.com.au

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 20

8/04/2019 12:08:14 PM

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 21

8/04/2019 12:08:46 PM

SPECIAL REPORT

NON-MAJOR BANKS ROUNDTABLE 2019

Credit policy and our lending guidelines are something that we need to be clearer on.

We’re in the process of delivering something on that shortly.”

Vilo said Suncorp was not just improving its own systems internally but also seeking feedback directly from brokers to find out how they could help.

Nodding at this, Gibson said ING was currently in the process of receiving responses from a survey it had been running to find out what was most important to brokers, whether turnaround times or service or something else.

He said so far the responses had clearly said, “A fast no is more important than a fast yes”.

AUDIENCE QUESTION

Q

What do you think about the user-pays model, and do you support the current stances of the government and opposition?

Patterson: Whatever model is implemented needs to be channel neutral, it needs to ensure sustainability of the channel, and it absolutely needs to encourage consumer choice. So as long as those three principles are met we’ll continue to work with both sides of politics and the industry to implement that.

Gibson: We don’t support a user-pays model if it depletes competition at all. I think where we’re sitting now, the user-pays model is pretty much off the table, which is a good thing.

There are differences in regard to the two sides of politics as to what they’re saying they will implement. Realistically, we don’t know what is actually going to happen until number one, there’s an election; number two, we’ve got a decision on who is going to put what in; and three, what is going to be legislated, what is going to get through the Senate, and what is the way forward.

Vilo: We’ve advocated all the way through that commission is not a bad thing. In terms of whether it’s upfront, whether it’s trail, whether it’s a combination of the two, we’re ambivalent either way. The most important thing from our perspective is that whatever does come out of it is universal. So, if we’re talking an upfront commission, then the expectation should be that we all pay an upfront commission that is similar; if we pay trail commission, we should all pay a trail commission that is similar.

Kasehagen: Our bank is pro-choice, pro putting the customer first. So, to the original question, I don’t think a consumer-pays model would have ticked any box in that realm. In terms of both parties, as Mat said we’ll work with whatever comes into play, when we find that out. Regarding the all-upfront scenario Labor has proposed, my personal view is that I’m not completely sure that’s competition-neutral.

22

“I’m really pleased that some sanity has prevailed and both major parties have actually come to the landing where they’re at at the moment” Darren Kasehagen, Adelaide Bank “The pressure on turnaround times I actually think from a broker perspective is the decision on ‘Is it going to proceed, or do I need any more? Because if it’s a fast no, I know whether to place it somewhere else’.

“So we’ve gone out and said, ‘OK, what is it you actually want? Where are your pressure points?’ What we’re going to be doing as ING is actually changing our workstream to match what that outcome is.”

At ME, Patterson said there had been a focus on technology, as there was across most lenders. “We all know living expenses is a big issue across the industry at the moment, and there are a lot of lenders moving to electronic verification of living expenses.

www.mpamagazine.com.au

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 22

8/04/2019 12:09:12 PM

WHERE BROKERS’ LOANS ARE GOING Credit unions, building societies and mutuals Non-bank lenders Any other type of lender

Brokers’ white label loans International Banks (eg ING Direct, Citi, etc.)

APR MAY JUN 2014

APR MAY JUN 2015

“Credit scoring is a necessary evil almost.

It helps in terms of getting the deal through the system. If the data’s right, if the documents are there, we can turn deals around and have them approved the same day if that deal fits that profile and we have everything that we need.

“As we go further down, electronic verification of living expenses is only going to help enhance the service proposition for all lenders. But it’s contingent on the broker getting it right the first time.”

Vilo finished the conversation on turnaround times by saying, “We’ve got to remember at all times that there’s a customer at the end of all of this. And so when there is a broker getting frustrated with us, we’ve got to accept that it’s their brand, it’s their reputation, that we’re dealing with, so – and that’s the reminder that we keep pushing through our business – guys, there’s a customer at the end here. Let’s make sure we can get the best outcome for them.”

APR MAY JUN 2016

APR MAY JUN 2017

Do you see your market share continuing to grow?

Last year the non-majors’ share of mortgages grew to its highest-ever level, according to data from aggregator AFG. Asked whether they thought that would continue, the five panellists had varying viewpoints.

With a more positive outlook, Vilo said, “I think the expectation is, and what would

APR MAY JUN 2018

Regional banks owned by or aligned to major banks Major banks

Responding to that, Zammit said, “To be honest, I’d probably disagree.” He said he did not think the pie would grow.

“I think the challenge is that the pie is going to shrink given what’s happening in the regulatory environment, given what’s happening globally, given what’s happening with funding costs, given what’s happening with the lending that’s currently sitting in Australia.

“We’re so reliant on the broker channel as a distribution source, so if the broker share goes to 70%, yes, the non-majors are going to go up as well” Glenn Gibson, ING be fantastic would be, that the whole market would continue to grow. So, if we think about the growth of customers choosing a mortgage broker, we’re growing rapidly and we’ll continue to grow.”

“So, I think the challenge is, the pie is going to shrink, and so the question really for brokers and banks and lenders is going to be: how do I either maintain my part of the pie, or gradually increase that?”

www.mpamagazine.com.au

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 23

23

8/04/2019 12:22:04 PM

SPECIAL REPORT

NON-MAJOR BANKS ROUNDTABLE 2019 AUDIENCE QUESTION

Q

What are you doing to educate brokers?

Zammit: The platform that we’re building at the moment, around the broader conversation other than just the mortgage – that’s something we’ve been rolling out now for six to 18 months, enabling the brokers to partner with us and hold functions and have materials so we can help educate those clients around not just how to get access to the lending but what to do with the lending afterwards.

Patterson’s perspective was back at the more positive end of the scale.

“The environment we’re in at the moment is unprecedented goodwill towards the nonmajors, and I think we’ve got to take advantage of that,” he says.

“We’re trying to capture that and see how

Taking a more neutral approach, Gibson said he was “in between the two”.

“The market is contracting, but the broker channel is increasing. When you’re talking about the market share of the non-majors, there’s no surprise that the non-major market share has gone up when the broker

“Whatever model is implemented needs to be channel neutral, needs to ensure sustainability of the channel, and it absolutely needs to encourage consumer choice” Mathew Patterson, ME we can support brokers further, and see how we can take advantage of that positive sentiment that’s coming through.

“In terms of market share, I absolutely see it growing. Going back to best interest as well, I just think it’s another layer of that value proposition that’s going into the broker proposition, which branch lenders can’t offer.”

24

Patterson: From a compliance perspective, that’s the other thing that’s particularly relevant at the moment, so we have a very comprehensive data set that goes behind all of our brokers, all of their applications, and we share that with the aggregators. So it’s about bringing that compliance view to brokers to help them protect themselves in their businesses.

Vilo: We’ve had a range of initiatives with both aggregators and brokers around how we can introduce SME lending as part of the diversification piece… We’ve initiated our masterclass which we ran last year, and we’ve followed that through to where we’re just about to release a series of SME workshops around the country.

market share has gone up,” he said.

“We’re so reliant on the broker channel as a distribution source, so if the broker share goes to 70%, yes, the non-majors are going to go up as well, because we are so reliant, and we have such a good partnership with the broker channel. I think the broker’s percentage of the market will go up; the market will come back a little bit.”

www.mpamagazine.com.au

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 24

8/04/2019 12:22:21 PM

16-24_Non Majors Roundtable_SUBBED_FIXED.indd 25

8/04/2019 12:22:45 PM

FEATURES

WOMEN IN BROKING

A WOMAN’S WORLD The industry is making great strides in the conversation around gender equality, but with the proportion of women brokers continuing to hover below 30%, many in the industry say there is still a lot of work to be done to improve

BEING DISMISSED as a PA, expected to leave and start a family, or being told they couldn’t compete with men are just some of the challenges female brokers say they were faced with when they first joined the industry.

While many say the issue of gender balance has improved over the past year, one finance broker suggests it’s an issue that was overlooked by the royal commission.

Pure Finance managing director Brendan Dixon believes that diversity and equality in the financial services sector is crucial to industry reform.

26

According to a report released by the MFAA last year, the number of female brokers peaked in the period April to September 2017. It reduced slightly in the period following that, but the numbers were still higher than previously.

However, while the proportion of female brokers has declined, the number of brokers overall keeps rising.

Across industries women continue to earn less than men, are less likely to advance as far as men do in their careers, and accumulate less retirement and superannuation savings.

In the finance industry, women are hugely under-represented at an executive level. Only 15% of high-level positions are held by women, compared to 85% held by men, says Dixon.

Yet the issue was not touched upon during the royal commission. “In our view, gender equality is an extremely important conversation, and we believe it has a significant role to play in creating the cultural change we seek in financial services,” says Dixon.

“Businesses that are diverse, both in gender and culture, have a greater ability to connect with their customer base and deliver

www.mpamagazine.com.au

26-29 Women in Broking_SUBBED_FIXED.indd 26

8/04/2019 9:25:49 AM

better outcomes across the board, including productivity.”

But female brokers are not only dealing with fewer promotions and lower salaries. There are stigmas that women face in such a maledominated environment as the broker industry.

Director of Calculated Lending Bianca Patterson started out in broking in 2011 when she was 26 years old, with no experience of lending or banking. She says she remembers “feeling disheartened” in those early days.

“One of my greatest challenges back then was trying to forge relationships and build rapport within the industry,” she says. “There

and attitudes have shown that there are still boundaries and stigmas to work through.

It is important to note that not every male in the industry has those attitudes, as Dixon’s comments illustrate.

Astute Ability Group principal Mhairi MacLeod started her own business in 1998 after about five years in the motor trade, in which she worked as a finance and insurance business manager. She remembers receiving a negative response from male peers and being told she would never be as successful as a man in that environment, but she also found many that men were very supportive.

“Gender equality is an extremely important conversation, and we believe it has a significant role to play in creating the cultural change we seek in financial services” Brendan Dixon, Pure Finance were times I was dismissed as being someone’s PA, or was told I would make some waves but would then disappear either to start a family or leave the industry like almost 50% of the new-to-industry brokers did.”

While Patterson believes the industry has made great strides in the last 12 months, she still hears experienced industry members speak the same way, and she wants it to end.

“Our industry and roles are tough enough right now; the last thing we need to do is discourage each other,” she says.

The industry is not standing still on the matter. An industry-wide initiative is being led by the MFAA, and individual groups are doing their own bit.

Patterson has taken part in the MFAA’s Opportunities for Women program, which she says has started a great conversation. While the number of groups involved in the initiative has been a “positive sign”, some negative comments

Fast-forward to today and MacLeod says she’s proud of how far the industry has come.

“There are many more women in broking now than when I started in the industry 20 years ago,” she says. “When I started in broking, there was no mention of equality or even events for women in finance. It was definitely a maledominated sector. I’m proud that more women have become brokers and are highly involved in the industry at senior levels.”

While it may still be male-dominated, MacLeod says she doesn’t consider broking to be a ‘man’s world’.

“It’s an industry in which women can enjoy tremendous success, and there are many fantastic female role models in our sector,” she says. “The industry is also very inclusive, and work is being done to remove barriers to diversity.”

Despite the improvements, she knows there is more work to be done. She says

DIVERSITY IN FINANCIAL SERVICES Reflecting achievements in diversity in the broader financial services industry, Suncorp was recently named Employer of Choice for Gender Equality for the sixth consecutive year by the Workplace Gender Equality Agency.

Speaking to MPA about the bank’s drive to be a place of equality, the lender’s chief people experience officer, Amanda Revis, says it’s not just about gender but about age and cultural diversity as well.

“Suncorp can only be its best when the workforce is as diverse, talented and passionate as the communities in which we live and we operate,” says Revis. “Our people will be their best when they feel included, valued and connected – and we have a program of work to accelerate our journey towards a diverse workforce and inclusive culture.”

The financial services industry is commonly seen as male-dominated, but Revis says Suncorp has achieved gender balance across all leadership roles and will be continuing to “set the tone from the top”.

The non-major bank has a number of groups to support inclusion in the workplace, such as one for LGBTIQ+ employees, another to connect women and men on gender equality, one supporting mature-age workers, and another supporting millennials and digital natives.

“We promote diversity and inclusion at all levels of the business. We want everyone to feel comfortable bringing their whole selves to work,” Revis says.

www.mpamagazine.com.au

26-29 Women in Broking_SUBBED_FIXED.indd 27

27

8/04/2019 9:25:57 AM

FEATURES

WOMEN IN BROKING

FEMALE BROKER REPRESENTATION Female broker representation showing signs of decline.

Number/proportion (%) of female brokers in the industry 4,500 4,000

28.3%

27.8%

27.1%

27.4%

3,700

3,500

30%

27.3%

3,708

3,871

3,779

25%

3,312 20%

3,000 2,500

15% 2,000 10%

1,500 1,000

5% 500 0

Oct 15–Mar 16

Apr 16–Sep 16

Oct 16–Mar 17

Number of female brokers

Apr 17–Sep 17

Oct 17–Mar 18

0%

Proportion of female brokers

Note: Conversion rates were calculated based on data from 10 aggregators who were able to provide data.

the falling proportion of female brokers is significant given the important role of women as customers. Studies across the globe have suggested that in the average household women either directly make or influence 80% of all purchasing decisions.

“This is why we have to look at ways to attract women to the industry, particularly given the negativity about the financial services sector arising from the Hayne royal commission,” MacLeod says.

“We also need greater resources and programs that would enable women to seek more support and involvement.”

An example of how females are moving into more executive roles is seen at Mortgage

28

Choice, which not only has a female CEO but a female chair and a leadership team including female executives.

The broker group has a strong contingent of female franchise owners and is continuing to actively encourage and support the recruitment of women to the industry, says CEO Susan Mitchell. She says broking allows women to work to a schedule that suits their needs, as well as to use strong interpersonal and relationship management skills.

“Over the years, we have seen a number of our strongest female broking business owners come through the ranks as loan writers or become successors within the same business,” Mitchell says.

New recruits to Mortgage Choice can benefit from a support network helping brokers through the challenges they may face early on in their careers.

“As with all new recruits to our network, we partner them with a mentor who can support and guide them to their success and help navigate the challenges faced in the current environment,” Mitchell adds.

“Mortgage Choice’s female brokers can benefit from participating in our state-based franchisee groups, which provide marketing and business support. Joining a business network is also an inexpensive way to source new opportunities, build your customer base and source quality staff, while sharing

www.mpamagazine.com.au

26-29 Women in Broking_SUBBED_FIXED.indd 28

8/04/2019 9:26:12 AM

PROPORTION OF MEN VS WOMEN RECRUITED Apr 15–Sep 15

Oct 15–Mar 16

Apr 16–Sep 16

Oct 16–Mar 17

Apr 17–Sep 17

Oct17–Mar18

% of men recruited during period

66%

68%

68%

72%

69%

69%

% of women recruited during period

34%

32%

32%

28%

31%

31%

many of the brokers she works with is that so much can change in the time they take out. Even in the past year there have been changes to remuneration structures, policies and regulations.

“Education, good communication and support is a strong place to start in addressing

“It’s hugely rewarding and there’s a lot of support and it’s ever-increasing,” she says.

“From my perspective we’ve got 38 female brokers and we’d welcome any new females entering the industry; we’d definitely love to increase them. All I can say is there’s an awareness that the change is happening.”

“It was definitely a male-dominated sector. I’m proud that more women have become brokers and are highly involved in the industry at senior levels” Mhairi MacLeod, Astute Ability Group and learning from experiences.

“I encourage women to get into the habit of regularly attending breakfasts, seminars, lectures and lunches that are held by relevant groups, to build their personal network and reap the rewards a diverse contact book can bring.”

One of the other big challenges for women in broking is the prospect of taking time out to have a family. While this is not for every woman – some may not choose to start a family and others find solutions that let them continue working – there are many who want to take the time out with their children.

Julianne Walsh, a BDM at Liberty Network Services, says a big challenge for

it,” Walsh says. “If a female is returning to the workforce after having a family or starting a family, that’s a lot to take in within such a short period of time. I think that’s obviously when we have noticed a decline, with either women leaving the industry or not getting the pick-up of women coming into the industry.”

Liberty has also been involved in the MFAA Opportunities for Women initiative.

The non-bank has impressive figures, with 44% of staff being female and 55% of females promoted compared to males.

Walsh, who started in financial services in 1998, knows there are challenges but wants to remind women that there are also rewards in broking.

While she recognises the change, Walsh believes there’s more to be done.

“I think it has to be owned by all the different bodies,” she says.

“We have the MFAA and they’re listening to the challenges, but it has to go further than that. Aggregators have to take ownership and start recognising and holding more local support groups for women or those starting in the industry.

“We see specifically with women that they do stop to have a family or they do stop for a variety of reasons, and coming back into that workforce can be scary. There’s a lack of confidence potentially and we have to have that support structure there.”

www.mpamagazine.com.au

26-29 Women in Broking_SUBBED_FIXED.indd 29

29

8/04/2019 9:26:18 AM

FEATURES

BROKER EDUCATION

BOOSTING BROKING KNOWLEDGE Mortgage broking is a field of continual development, growth and education, but is your brokerage keeping up to date?

BROKERS ARE uniquely placed to be aware of the changing lending landscape, giving them a natural edge in the marketplace. But to be the best in the business is an ongoing pursuit; regular education is required in order to keep up with changes in the market.

Businesses that commit time and resources to creating and executing a business strategy have the potential to consistently improve their performance over time.

“It’s vital that brokers take every chance to upskill so that they can capitalise on every opportunity that exists in the market,” says Aaron Milburn, director of sales and distribution at Pepper.

Pepper is genuinely passionate about ensuring that every Australian family understands their financial options. Borrowers, Milburn notes, are simply looking to brokers to help them find a personalised solution to their lending goals.

“Showing that you truly understand what your customer wants, and being able to provide that solution when no one else could, will pay dividends,” he says.

In 2019, access to training resources is also far easier. With the choices available from a broad variety of companies, brokers looking to enhance their skills have arguably never had it better. It’s simply a matter of identifying the needs that are specific to your brokerage and reaching out to a provider that can fill the gap.

30

www.mpamagazine.com.au

30-33 Broker Education_SUBBED.indd 30

8/04/2019 12:53:35 PM

Improving broker awareness One increasingly common area in which broker education is needed is specialist lending. Over the last couple of years, Pepper has seen its goal as to help raise awareness and understanding of the specialist lending category and assist those customers whose needs sit outside the offering of traditional lenders. Brokers have often been wary of alternative lending solutions, particularly in the wake of the 2008 GFC, but they’re becoming more common as banks tighten their lending criteria. The changing nature of work and Australia’s ageing population

“They’ve really embraced the extra information they are receiving up front to help their customers make a decision,” Milburn says. “It has attracted many new-tospecialist-lending brokers, and it’s helping dispel the misconception that writing a non-conforming loan is too hard.”

Tailoring for best fit PLAN Australia also sees supporting the growth and development of its brokers as a top priority, with business strategy and development being its particular focuses at the moment.

“More brokers are now realising that prime is just a moment in time and alternative lending solutions are becoming the new normal” Aaron Milburn, director of sales and distribution, Pepper also mean that more and more borrowers no longer fit the standard profile.

“Today, with the changing landscape, more brokers are now realising that prime is just a moment in time and alternative lending solutions are becoming the new normal,” says Milburn. “We’re excited for our fifth annual national Insights Roadshow in June, where brokers will be able to get the insights, tools and panel expertise that will give their businesses that winning edge.”

The focus now is on arming brokers with the right insights and the tools they need to successfully service this important and growing market. Milburn says Pepper has an array of “cutting-edge” tools available to brokers, pointing to its Customer Conversion Toolkit, Market Smarts industry insights and Alternative Lending Market Toolkit.

He is also impressed by the strong appetite from brokers for information around alternative lending.

Each broking business has its own training needs, says CEO Anja Pannek. Accordingly, the company aims to provide a broad range of professional development options – from face-to-face events through to digital content that brokers can access easily from their offices or mobile devices.

“This is a pivotal time for the industry, and it’s important for broking businesses to have a strong foundation to ensure their future viability,” says Pannek. “With the heightened focus on compliance and regulation, brokers are telling us that they require tailored, educational content that helps them to adapt to regulatory change and improve outcomes for customers.”

In practical terms, this means that PLAN invests significant time in researching content, listening to what members have to say about what they want to learn, and ensuring that its mission resonates with a broad range of members.

EMBRACING DIGITAL CHANGE In recent years, PLAN Australia has invested heavily in digital education tools and was one of the first aggregators to offer high-definition digital PD days. In addition, PLAN Australia actively participates on LinkedIn, providing its followers with regular updates on awards, news coverage, industry topics of interest and upcoming events.

“The popularity of these events continues to grow every year,” says PLAN Australia CEO Anja Pannek. “We also offer short, sharp webinar content focused on industry changes, along with YouTube videos that help brokers to get the most out of our broker software platform, Podium.”

www.mpamagazine.com.au

30-33 Broker Education_SUBBED.indd 31

31

8/04/2019 12:53:48 PM

FEATURES

BROKER EDUCATION

EQUIPPING BROKERS For a provider of alternative lending solutions, education is critical to increasing awareness of specialist lending and educating the end borrower, says Aaron Milburn, director of sales and distribution at Pepper.

“Broker education programs have always been a priority to Pepper because we believe brokers play and will continue to play a significant role in the market,” Milburn says. “We are dedicated to arming brokers with the skills they need to take their business to the next level and ensure that their businesses are sustainable and resilient to change.”

“In 2018 we ran a range of initiatives to help grow and improve brokers’ services, including our largest-ever business planning session at our PD days nationally,” says Pannek. “We also launched a new initiative, the 100/100 program, a national boardroom-style program involving 100 PLAN Australia businesses in 100 days.”

During the 100/100 program, brokers were encouraged to analyse their existing business, then identify their ideal client,

“This is a pivotal time for the industry, and it is important for broking businesses to have a strong foundation to ensure their future viability” Anja Pannek, CEO, Plan Australia their customer value proposition, and ways to improve their business processes and leadership style.

“To round off the program, PLAN Australia partnership managers followed up with all participants, to work with them on bringing their ideas to life,” says Pannek. “In 2019 we will continue to build on the success of these initiatives with a range of business planning and strategy events.”

Reaching bigger audiences For content delivery, PLAN’s conference agenda throughout the year includes a National Conference, Commercial and Asset Finance conferences, a Strategic Partners Leadership Gathering and PD days.

The aggregator aims to have the right mix of face-to-face and digital events so there is something in the calendar for everyone, Pannek says. “In the current climate, we know brokers are looking for tailored support, so we will continue to listen to our members to ensure we are delivering high-quality, impactful and

32

relevant education and training at all times.”

Concessions have also been made to incorporate a broader variety of participants.

Digital PD days are useful for regional brokers and also for allowing the entire staff of a broking business to participate (including admin staff ), which would not usually be possible at a face-to-face event.

“Brokers are often time-poor and on the road, so we know that the digital format resonates with them,” says Pannek. “Sessions

are recorded and can be viewed in their own time.”

Breaking into a new phase of broking As the broking industry evolves, lenders continue to look for new ways to provide actionable insights and tools for brokers who want to expand their toolkits of lending solutions. But the human element can’t be forgotten. Tools and platforms won’t mean much without having the right team embedded into the business, Milburn says.

“Our existing team has ensured we are providing brokers with the right support they need, when they need it,” he says.

It’s a common sentiment across the wider business. As broker members move to the next phase of growth in their businesses, they’re going to need to upskill. Diversifying customer bases and improving efficiency won’t be possible without the right combination of all these factors in place. Yet given the resources that are already available – and those that will be developed into the future – it seems the future of broking is in good hands.

www.mpamagazine.com.au

30-33 Broker Education_SUBBED.indd 32

8/04/2019 12:54:02 PM

30-33 Broker Education_SUBBED.indd 33

8/04/2019 12:54:12 PM

FEATURES

SMALL BUSINESS AND BROKING

Securing the future of small business As banks pull back and small businesses find it harder to access finance, MPA speaks to one broker who says it’s his responsibility to fill the gap and help his customers grow with lenders like Prospa

34

DESPITE COMPRISING more than 90% of companies in Australia today, small businesses have frequently struggled to get the recognition they deserve in the wider marketplace. And rarely has this been truer than when it comes to finance, says Matt Bauld, general manager of sales and business development at Prospa.

“It’s always been tough, and it’s becoming even tougher for small businesses to get the funding they need, with many lenders more cautious in 2019,” says Bauld.

Despite their vast number, he explains, small businesses have been overlooked by the big banks and second-tier providers for some time now. Many of the available products on the market are simply unsuitable.

“Small business owners are often told they need to provide security to access finance by putting their family home on the line, increasing the risk and stress attached to running their business,” says Bauld. “Ever heard the phrase ‘all your eggs in one basket’?”

This issue extends to brokers, Bauld says. Many are small business owners themselves and understand the different challenges and pressures of running their own ventures. They understand that small business owners work long hours, often six or seven days a week. That extra red tape or lengthy application process not only takes up precious time but can mean missing out on a great opportunity, or even closing up shop. But the advantage they have is that they know the ins and outs of the financial system. Accordingly, they can really help other SMEs, says Bauld.

www.mpamagazine.com.au

34-37 Exclusive Feature_Prospa_V2_SUBBED_FIXED.indd 34

8/04/2019 9:29:35 AM

Sponsored by

“Small business owners need brokers, and so do we. We need this kind of support and understanding in the sector, and when we combine it with solutions like ours, the impact is enormous,” he says.

Focused Supports Bauld points to a recent example of where a broker partner was able to provide a much-needed funding solution to Focused Supports, a Perth-based business that provides care and support for those with disabilities in the surrounding community.

Founder and owner Cinci Dymock says, “We started Focused Supports because there was a gap in services, and we really felt we could make a difference.”

In 2018, Dymock had an opportunity to grow her business, which would have

PROSPA LENDING BOOSTS ECONOMY Prospa sees small business lending as a key economic enabler, and has the figures to back it up. Independent research by RFi Group and the Centre for International Economics found that small business lending by Prospa and its broker partners had contributed $3.65bn to Australian GDP and supported 52,500 jobs since 2013, as reported in January 2019’s The Economic Impact of Prospa Lending to Small Business. Other figures from the report include:

82%

1 in 4

$1.697bn

of Prospa customers believe their revenue was increased as a result of their most recent loan

Prospa customers surveyed said they were unsure if they’d still be operating without their most recent loan

was contributed to Australian GDP by Prospa loans in 2018, along with 24,400 FTE jobs

“We couldn’t have done this without the broker community who help us reach many more small business owners than we could on a direct basis. Some 70% of our business is referred to us by partners,” says Prospa general manager Matt Bauld.

“We couldn’t have done this without the broker community who help us reach many more small business owners than we could on a direct basis” Matt Bauld, Prospa allowed her to provide her clients and their families with better care. However, she found it difficult to access funding from traditional lenders, largely because she was deemed to have not been in business for long enough.

“As a new disability service provider, we hadn’t been operating for a full year, and a lot of the banks weren’t interested in lending to us,” said Dymock. “When we were looking at establishing offices and expanding, there were limited options to get the financial support.”

Dymock sought the assistance of Michael Deegan at DO Financial, a Prospa broker partner who is passionate about providing finance for small businesses that require it.

“My wife and I have been working on our business together,” says Deegan. “We love

being in small business, and we have a strong belief that the SME space is the backbone of the Australian economy.”

But in 2016 economic times were tough in Western Australia. With only two years as a residential broker, Deegan hadn’t had much of an opportunity to build up a significant home loan portfolio.

“Getting into the SME space – hand on heart, not overexaggerating – saved me from closing doors and getting a job back at a bank,” says Deegan. “If I hadn’t had the revenue, I wouldn’t be speaking to you now as a broker.”

Deegan recommended Prospa to Dymock, and she described the subsequent process as “painless and quick”.

“We’re not a generic type of business, so it’s really good that Prospa actually looked into what we do, what our needs were, and supported us with that funding, rather than saying, ‘Oh, that doesn’t fit in the box – sorry, bad luck!’” says Dymock.

Fortunately, Prospa was able to help.

After reviewing the performance of Dymock’s business over the previous six months, the lender found it could provide the necessary funds until government grants came through. This finance ultimately made it possible for Dymock to purchase a property that was perfect for providing short-term accommodation and respite services for her clients.

Deegan believes that was a vindication of the hard work that goes into broking.

“It’s incredible,” he says. “When we can provide assistance to a business and it helps them grow, or get over a hurdle and keep going, it reminds you of why we do what we do.”

Particularly with a business like Focused Supports, he says it was crucial Dymock had the funds to continue.

www.mpamagazine.com.au

34-37 Exclusive Feature_Prospa_V2_SUBBED_FIXED.indd 35

35

8/04/2019 9:30:09 AM

FEATURES

SMALL BUSINESS AND BROKING

“She had an opportunity to take on new clients. Had she not had funding come through she almost would have had to have said no. We’re talking about clients that have disabilities. It’s heartbreaking for something to be lined up and then a provider says no, we can’t take you on. The impact on that person and their family would have been huge.”

Educating brokers Not only does Deegan love being part of the space, in which he can help businesses grow and succeed, but he says brokers have “a responsibility” to fill the gap as a number of lenders pull back from the SME market.

“As brokers first and foremost, you’re doing your client an injustice if you’re not putting yourself in that space and making yourself a subject-matter expert in that lending,” says Deegan.

But for many brokers the leap into SME lending is one they are not yet willing to take. Deegan says he has been surprised by the number of brokers he speaks to who want to stay in the residential space.

WHAT DO SMES USE FINANCE FOR? Small businesses need access to finance for different reasons, but they all want a fast and hassle-free experience, says Prospa general manager Matt Bauld.

“Often, they want to seize an opportunity to grow their business and use funds to upgrade equipment, renovate, hire more staff or introduce new goods and services,” he says.

Maintaining short-term liquidity is also a common factor: small business owners face unique challenges in this area, depending on their sector. Late payments have a big impact on them, and for many, cash flow is also affected by seasonality.

“For example, winter may bring a slower trading period for a beachside cafe, but the owner still needs to pay bills, wages, and rent,” says Bauld.

“Getting into the SME space – hand on heart, not overexaggerating – saved me from closing doors and getting a job back at a bank” Michael Deegan, DO Financial “The amount of brokers and colleagues that I have spoken to – I’m talking long-term brokers, guys that have been in the industry 15 years – and they are not doing SME lending. I’m saying it’s not that difficult,” Deegan adds.

“I don’t know, I’m really surprised there aren’t more brokers in this space, and I think more brokers need to be getting their head around it and offering it to their clients.”

“Being a broker it’s about using our skill

36

set to help a business owner keep that cash flow going, taking the stress away so they can go on with running their own business and concentrating on what’s important. It feels pretty good,” he says.

“Yes, it’s great for your own business, but now is a time where more than ever brokers need to stand up and position themselves as true advice providers in the credit space, and we need to position ourselves as solutions providers for that broader market in the

SME space, not just for home loans.”

Prospa makes it a priority to educate brokers on moving into SME lending, including providing them with marketing tools and support. Deegan says the lender’s process was “seamless” when it came to putting through the application for Focused Supports.

“The guys were awesome. I ran it quickly past the BDM here in WA, and he was like ‘yep, that’s something we can help with’. The response time that I had was phenomenal. It was two days and Cinci had the cash in her account – she couldn’t believe it. Those guys have done a great job of turning it around,” he says.

“In terms of the way Prospa operates, the relationship with the broker is firstclass. I can’t fault the process. It’s been great.”

Financing Australia’s future This need for finance hasn’t gone unnoticed.

The government has recently established a $2bn securitisation fund to make the finance that’s available to small business owners more affordable by lowering the wholesale cost of funds for alternative lenders like Prospa.

“The fund will create a more diverse and competitive finance market and bring forward capital market acceptance of the ‘small business unsecured loan’ asset class by two to three years,” says Bauld.

Additionally, Bauld says, Prospa believes the government initiative will improve awareness among small business owners that they can switch from traditional lenders, which will help improve competition in small business lending.

“While awareness of alternative lenders is growing, the number of small businesses who would consider using an alternative finance provider like Prospa has remained steady at around 15%,” says Bauld.

“This inertia around switching remains, despite there being limited innovation in small business banking.”

www.mpamagazine.com.au

34-37 Exclusive Feature_Prospa_V2_SUBBED_FIXED.indd 36

8/04/2019 9:30:44 AM

34-37 Exclusive Feature_Prospa_V2_SUBBED_FIXED.indd 37

8/04/2019 9:31:41 AM

FEATURES

REVERSE MORTGAGES

Demystifying reverse mortgages Australia has a growing population over the age of 65, and alongside this the demand for reverse mortgages has expanded. Heartland Seniors Finance CEO Andrew Ford explains why this presents a real opportunity for mortgage brokers OVER THE past two years the industry has seen the number of bricks-and-mortar lenders offering reverse mortgages drop, while the number of over-65s has continued to grow. Add to this the review by ASIC last year which showed that the product allowed older Australians to achieve their financial goals, and the opportunity for brokers has never been stronger.

With around 20,000 Australians turning 65 every month and life expectancy rising, the number of people over that age is expected to grow from 15% of the population in 2018 to 23% by 2050, according to the ABS. “What we’re seeing is retirees are living longer; they want to do more into their late 70s and into their 80s, so they want to do things, and that requires money,” says Heartland Seniors Finance CEO Andrew Ford.

A reverse mortgage provides retirees 60 years and over access to the money they need while allowing them to stay in their homes.

It is similar to a standard mortgage, except there are no regular repayments. While voluntary repayments can be made, the loan

38

ABOUT HEARTLAND Established in 2004 as Australian Seniors Finance Purchased by Heartland, a New Zealand-based financial services group, in 2014 Has assisted over 17,000 seniors Nearly $1bn in home equity released 24.9% annualised growth in first half of FY19 Supports Dementia Australia

is typically repaid when the last resident vacates the property, either through sale, death or moving into aged care.

There is no single reason why someone might want a reverse mortgage; common uses include debt consolidation, home improvements, supplementing income, car maintenance or replacement, and covering medical or aged care expenses.

Ford says, “It can make a transformational difference to the quality of a retirement, which is really what we’re all about.”

He says there are real opportunities for brokers in the reverse mortgage space, and Heartland hopes to overcome the lack of awareness surrounding these products.

“What we’re aiming to do with our activity online and through our broker network, and as we move to some more mainstream marketing, is to normalise reverse mortgages and demystify them,” Ford adds.

“We’re constantly engaging with people to try to overcome some of the misconceptions that exist out there.”

In a poll of brokers, 21% of respondents said they were not sure of any clients in their current database that would benefit from a reverse mortgage, and 20% said there were none. Looking more closely, Ford said brokers would “be surprised” what they would find.

“It’s sometimes about assisting the parents of someone you’re helping with a regular home loan,” he says. “Or, for some of those

www.mpamagazine.com.au

38-39 Exclusive Feature_Heartland_SUBBED.indd 38

8/04/2019 3:04:03 PM

Sponsored by

brokers that have been in the industry for a while, it might be a customer who you helped 10 or 15 years ago and they are now entering retirement and still have some residual debt – so it’s worth reaching out to see if you can be of any assistance.”

According to Ford, brokers already make up 70% of new business. Heartland has developed a broker portal that provides the broker with agreements, resources and application forms.

MPA: Can a reverse mortgage be used to help a family member put down a 20% deposit on a property purchase?

Andrew Ford: We’re seeing more of this.

It absolutely can. Supporting the next generation is a really important thing for

WHAT A REVERSE MORTGAGE IS USED FOR

71%

Debt consolidation

30% Travel

68%

Home improvements and purchases

28%

“[A reverse mortgage] can make a transformational difference to the quality of a retirement, which is really what we’re all about” Andrew Ford our customers. What we would say, though, is it’s an area that needs additional controls; there is an increased risk of the customer using their own equity and then not being able to meet their own long-term needs, and there’s also a heightened risk of elder abuse.

Heartland generally requires that all the family members are aware of the gift, and we have extra controls around gifting just to make sure they’re making an informed decision, particularly regarding any pension impact.

MPA: What is the accreditation process for brokers who want to offer reverse mortgages?

AF: There’s no cost involved in getting accredited. We’ve also just revisited our accreditation manual and moved to an online process. All a broker needs to do is contact

MPA: What is the average turnaround time for a reverse mortgage application?

AF: This is a product people don’t tend to have an urgent need for. Unashamedly, our process is very thorough and helps the customer to make an informed decision, and it’s driven by the customer’s desire to progress it. On average we’re looking at about six to eight weeks from application to settlement.

About 20% of our loans in the last month were settled in less than a month. If the customer is organised and is happy to have the valuer over in a day or two from application, if they make an appointment with a solicitor – because independent legal advice is required – and they give us all the supporting documents straight away, it can be settled very quickly, but it’s at the customer’s pace.

Income and cash flow

13%

Car Purchase/repair

broker@seniorsfinance.com.au and we will send them the material and the test link to become accredited. By and large we are probably accrediting 10 to 12 brokers a week, and it’s a fairly quick process.

36% Medical

BROKER PERSPECTIVE Do you think the reverse mortgage market will grow in the next five years?

1% No

9% Not sure

90% Yes Do you have any clients in your customer base that you believe could benefit from a reverse mortgage?

21% Not sure

20% No

60% Yes

www.mpamagazine.com.au

38-39 Exclusive Feature_Heartland_SUBBED.indd 39

39

8/04/2019 3:04:19 PM

FEATURES

CYBER INSURANCE

It’s time to prepare for cyber attacks The internet might seem like a secure and efficient place for brokers to store confidential documents, but what happens when they fall victim to a cyber attack? MPA talks to Michael Gottlieb, CEO of BizCover, about why brokers need to be protected

THE FIGURES are alarming. Cyber crime costs Australian businesses $4.5bn each year, around 60% of Australian businesses have experienced at least one ransomware incident in the past year, and the average cost of a cyber-crime attack is over $270,000.

And yet it remains one of the least insured areas for small businesses.

Brokers, who store confidential client information and rely on online processes and platforms, are at risk of losing not only that

40

information but thousands of dollars while their businesses recover from an attack.

It can take on average 23 days to get back to normal business after a cyber attack, and often longer, says Michael Gottlieb, founder and CEO of BizCover. And while most aggregators expect brokers to be covered by professional indemnity insurance, cover for cyber liability is not something they require or provide.

“It’s alarming to see how big the risk is and how exposed small businesses are,” Gottlieb

says. “Imagine if these stats were the same for theft and break-ins to physical businesses. You could be sure that people would be insuring and protecting their businesses in a hurry.”

A cyber attack or data breach could occur after being hacked, or it could even be the result of something as simple as leaving your company laptop in the back of a taxi.

Gottlieb warns that the theft of data is not the only thing to look out for. BizCover dealt with a broker who had a malicious

www.mpamagazine.com.au

40-41 Exclusive Feature_Bizcover_SUBBED.indd 40

8/04/2019 1:07:59 PM

Sponsored by

code installed on their website. It caused their domain to be blacklisted as their site contained malware and they were no longer able to receive emails from their clients.

Reputational damage, loss of earnings and IT forensic expenses meant he was able to claim $17,000 on his cyber liability policy.

“This is a great example of how expensive a simple piece of bad code on your website

interruption to the business while its systems are down, and crisis management costs, which could be required to salvage the business’s reputation after a breach.

Gottlieb says many insurers will not only cover extortion amounts that ransomware often demands but also help the businesses deal with these threats.

“These threats can be quite scary and

“Imagine if these stats were the same for theft and break-ins to physical businesses. You could be sure that people would be insuring and protecting their businesses in a hurry” Michael Gottlieb, BizCover can be,” he says. “If you use digital platforms, store information on your computer or even use emails, you are a potential target.

Cyber criminals and hackers can target your commercially sensitive information, your client information, intellectual property or banking information.

“Businesses need to think about how valuable their data is, how secure their data is and how robust their IT infrastructure is.

Do they have a response plan or are their staff trained to spot a threat? The risk is huge and the cost of being adequately covered is comparatively very low.”

Cyber liability insurance is not the only type of cover for cyber crime. Brokers who think they are covered by professional indemnity or public liability insurance may get a rude and costly awakening, Gottlieb says.

Brokers and other small businesses may also think they are protected by firewalls and anti-virus software, but attacks can still happen, and cyber liability insurance will help with the expenses and legal costs associated with these data breaches.

Expenses could include the cost of

serious when they occur, so this help can be vital,” he says.

A cyber liability policy will also typically cover notification costs – as certain data breaches must be reported under the Mandatory Data Breach Notification Laws – as well as other legal costs.

A threat that BizCover has seen “alarmingly on the rise” is small businesses falling victim to someone posing as a vendor and sending fake invoices. The cyber liability policies available through BizCover allow brokers to choose the option to cover for social engineering, phishing or cyber fraud, meaning that if this were to happen to a broker or an employee they could be protected under the additional cover option.

BizCover currently insures more than 1,000 finance and mortgage brokers, mostly for professional indemnity.

“We are finding that many small businesses are unaware they can cover for cyber attacks, and it’s about educating more people to know it’s an option they can choose to add to their insurance package. For a mortgage broker it can be as little as $50 a month,” he says.

WHAT CYBER CRIME IS BEING REPORTED?

13,687

Total number of reports made Top three cyber crimes reported:

52%

related to scams or fraud

20%

related to purchases or sales

7%

related to cyber bullying Top three states reporting cyber attacks:

30% Qld

26% Vic

22%

NSW

Source: Most recent ACORN quarterly snapshot, 1 April–30 June 2018

Disclaimer: Please note that cover for cyber liability is subject to the specific terms and conditions of the particular policy purchased. This article is for information purposes only and should not be relied upon as advice Any prices referred to in this article are indicative only. The extent to which cover may be available and its costs will be subject to underwriting processes on a case-by-case basis.

www.mpamagazine.com.au

40-41 Exclusive Feature_Bizcover_SUBBED.indd 41

41

8/04/2019 1:09:45 PM

FEATURES

SELF-MANAGED SUPERANNUATION FUNDS

A super approach to investment More and more Australians are looking to borrow against their super to fund property investments. John Mohnacheff, national sales manager at Liberty, explains to MPA what that means for brokers

MACQUARIE’S ANNOUNCEMENT that it would cease SMSF lending from 30 April made it the last of the bigger banks to drop this product. But as the appetite for this investment type continues, the gap between supply and demand is growing. Brokers may have fewer options, but it is also an opportunity for growth and diversification.

Added to this, the royal commission highlighted a number of shortcomings of the superannuation industry. With numerous high-profile funds apparently no longer deliv-

42

ering the requisite returns, there is considerable discussion about the best path forward.

It’s no real surprise, then, that self-managed super funds are becoming an increasingly popular option. Rather than delegating management of their superannuation funds, SMSF investors directly control the way their superannuation is managed. It’s a program designed to encourage Australians to actively invest in their future, and by doing so increase the funds they have available during retirement.

Recent ATO data indicates that 53% of existing SMSFs have been established for more than 10 years. However, their numbers have steadily grown; from 2012 to 2017, growth in the number of SMSFs averaged almost 5% annually. Total contributions to SMSFs also increased by 21% in the five years to 2016.

But where are the funds being invested?

According to John Mohnacheff, national sales manager at Liberty, an increasing number of Australians are looking at using their SMSFs to invest in property.

“People wanted to be able to engage with savings beyond the traditional, passive way,” says Mohnacheff.

It’s a phenomenon born out of an increased desire for control over the future, as well as to look for reliable investment options.

“Most Australians have a rough idea where their super is invested,” says Mohnacheff. “But very few could give you a detailed breakdown of dollar amounts, how diverse it is or how well those markets are faring. For an increasing number of Australians, leaving it up to chance just isn’t good enough any more.”

Perhaps the most significant advantage, says Mohnacheff, is that utilising an SMSF allows for a wider distribution – and more rapid redistribution – of assets.

www.mpamagazine.com.au

42-43 Exclusive Feature_Liberty_SUBBED_V2.indd 42

9/04/2019 8:12:09 AM

Sponsored by

“Probably the biggest advantage is the ability to diversify the superannuation portfolio,” he says. “Property is a natural fit for that process, provided the investor has done their homework properly and demonstrated that they will be able to repay the loan of course.”

SMSF BY THE NUMBERS

1.1 million

>$1.1m

SMSF members in Australia

was average value of SMSF assets in the 2015/16 income year

53%

$37bn

of males/47% of females have SMSFs

worth of benefit payments made in 2016, an increase from $22.6bn in 2012

30%

57%

of all super assets are made up of SMSFs

of all SMSFs have a corporate trustee rather than individual trustees

A changing market Mohnacheff suggests that brokers should welcome the opportunities borrowing through an SMSF presents. “Brokers shouldn’t be scared of the prospect of lending to people who want to borrow via an SMSF,” he says. “If the client has spoken to their advisers and done their due diligence, the process is exactly like any other home or commercial loan. It’s just in a different vehicle.”

However, Mohnacheff is quick to point out that brokers should not involve themselves in the advisory process.

“The home loan broker should never, ever offer any advice or become involved in

Source: ATO; figures as of 30 June 2017

Securing approval So what can brokers do to help their clients’ loans get approval? Mohnacheff says it’s down to a variety of factors.

“If the client has spoken to their advisers and done their due diligence, the [SMSF] process is exactly like any other home or commercial loan” John Mohnacheff, national sales manager, at Liberty that process,” he says. “All the broker should be doing is facilitating the loan process as normal.”

Mohnacheff notes that Liberty does not provide advice around investments either. Rather, they will approve or refuse a loan on the basis of the application and supplementary information that a broker provides. But while neither the lender or broker provides direct advice around investment decisions, that doesn’t mean they don’t have a responsibility to the borrower.

“Brokers should seek to understand their customers’ financial objectives and circumstances and provide that information to their lender.”

Brokers and clients need to be cautious when submitting a loan for consideration, says Mohnacheff. All the relevant materials need to be provided, to give a holistic overview of both the client’s financial circumstances and the property they’re looking at purchasing.

“We remain committed to responsible SMSF lending. That means we are very

discerning about which properties we’ll lend against,” says Mohnacheff. “However, property is cyclic, and if the client’s chosen property has a history of providing sound rental income, then it has promise in the long term.”

A question of commitment Mohnacheff doesn’t think investing through an SMSF is ideal for everyone – it’s heavily dependent on the individual’s abilities and commitment to a long-term project.

“It’s not a hobby. If you’re a passive investor or you’re not sure what you’re doing, it’s best to leave it to the professionals,” he says. “And if you want to invest for fun, do it outside of your superannuation.”

Nonetheless, he remains confident that the number of investors looking to invest in property via their SMSFs will continue to grow. Brokers will need to be ready for the clients who come through their doors.

“There are plenty of sophisticated investors out there,” Mohnacheff says.

“And they’re looking to plan their lives in retirement. We need to be able to help them do that.”

www.mpamagazine.com.au

42-43 Exclusive Feature_Liberty_SUBBED_V2.indd 43

43

9/04/2019 8:12:22 AM

FEATURES

DIGITAL

Avoiding digital distractions in business While digital technology is being developed to improve efficiency, even the most productive people struggle to avoid being distracted by it.

Amantha Imber looks at how some of the world’s busiest business people overcome the temptation

SIX MINUTES. This is the amount of time people can stay focused on a task before succumbing to the lure of email or messaging apps, according to research by RescueTime.

After analysing 185 million working hours’

2.8 hours per day doing “productive” work.

In the US, given that the average employee works 47 hours per week, most are spending less than a third of their working hours doing focused, impactful work.

For the world’s most productive people, deliberately taking themselves offline is the key to making progress on their most important projects worth of data, the research revealed that people check email or their instant messenger apps every six minutes, on average.

The research also found that we only spend

44

Through the podcast that I host, “How I Work”, I have spoken to dozens of successful entrepreneurs, business people and innovators about how they buck the

trend seen in these statistics. My guests on the show are all world-class performers in their individual domains and have all developed strategies for fighting the temptation to do a ‘just check’ of their email every few minutes.

• They use checking digital distractions as a mini break Wharton professor and bestselling author Adam Grant isn’t a fan of going cold turkey when it comes to social media, email and other digital distractions. Instead, he uses them as small rewards or breaks after spending time on a large chunk of deep, focused work.

“I actually find some of those distractions to be useful mini breaks,” Grant explains.

“So, when I’m stuck on an idea or a sentence when I’m writing, I’ll actually go over to Twitter and check it for a minute or two, but I limit myself on a clock. I also have goals for how much work I have to finish before I’m allowed to go over and check.

www.mpamagazine.com.au

44-46_Bizstrat 1_SUBBED_FIXED.indd 44

8/04/2019 12:35:22 PM

44-46_Bizstrat 1_SUBBED_FIXED.indd 45

8/04/2019 12:35:40 PM

FEATURES

DIGITAL

“I’ll use it as a small reward for making progress on the things that I think are important.”

• They reflect on their motivation for wanting to check social media For Grant, being conscious of his motivation for checking social media is critical. He warns people that if the urge to scroll through Facebook or other social media sites is constantly taking you away from your work, then your work probably isn’t motivating enough.

“I actually feel the opposite impulse. If I’m scrolling through Facebook, I’m like, ‘Ah! I’m going to have this really exciting work to do! I want to get back to that’,” Grant says.

So, while checking social media at work isn’t something he frowns upon, being cognisant of your motivation is key.

• They create subtle changes to nudge themselves towards healthier habits Avoiding digital distractions doesn’t have to mean making big changes in your life.

Sometimes it’s the smaller changes that can have the biggest impact. Matt Mullenweg, a founding developer of WordPress, the open source software used by over 31% of the Web, is a big fan of making subtle changes to nudge himself towards healthier digital habits.

“If what is closest to me in the bed when I wake up is the Kindle and not the phone, I’m more likely to read,” says Mullenweg. “But if the phone is on top of the Kindle, I’m more likely to look at the phone.”

Making sure he leaves his Kindle on top of his phone is therefore a small but effective strategy for doing more reading and less phone checking.

• They work offline for hours at a time In today’s world, being disconnected from the internet is rare. We are never far away from Wi-Fi, and if we are not in range

46

our phone probably is. But for the world’s most productive people, deliberately taking themselves offline is key to making progress on their most important projects.

“Going offline is really great,” says Mullenweg. “I do this on aeroplanes, but

If the urge to scroll through Facebook or other social media sites is constantly taking you away from your work, then your work probably isn’t motivating enough then occasionally at home I’ll just turn off the network, literally unplugging it, and then just force myself to look at all the things that are there in front of me.”

Sarah Green Carmichael, former executive editor at Harvard Business Review, adopts a similar strategy.

“I get a ton of editing done on trains and planes because you’re strapped into the seat and you don’t have Wi-Fi. So, if I’m travelling for work, I try to take day flights so I can have that time on the aeroplane to work.

“That time becomes disproportionately precious to me.”

• They sometimes go to extreme measures Prior to becoming CEO of Moment, a company that helps people rein in their mobile phone usage, Tim Kendall was president of Pinterest and struggled a lot with his own phone usage.

He started to research what he describes as “brute force approaches” and discovered a product called the kSafe.

The kSafe, a lockable kitchen safe with a built-in timer, was originally designed as a dieting product that dieters could use to lock away unhealthy food. But in recent years the product has found a dual purpose for those struggling with mobile phone addiction, as they can lock their phones in the safe.

Kendall himself tried experimenting with locking away his phone on weeknights and then for a few hours on weekends. While he doesn’t use the kSafe regularly any more, he found it effective at the time.

“The thing that works for me today is in my house I have an office, and when I leave that office before I go have dinner with my family, I just leave my phone,” Kendall explains.

“On my best nights, I don’t go and get my phone until the next morning, which is effectively the same thing as putting it in a kitchen safe from 6pm to 8am.”

But at the end of the day, the world’s most productive and high-achieving people are human. They have days when they struggle with digital distractions like the rest of us.

When thinking about staying off his phone for significant periods of time, Kendall says, “I find it hard and I go through withdrawal, but I also think it has a meaningful impact on my relationship with my kids and my wife. I just feel less anxious and less psychologically toxic if I can take a break from my phone.”

Dr Amantha Imber is the founder of Inventium, Australia’s leading innovation consultancy and the host of “How I Work”, a podcast about the habits and rituals of the world’s most successful innovators.

www.mpamagazine.com.au

44-46_Bizstrat 1_SUBBED_FIXED.indd 46

8/04/2019 12:37:17 PM

44-46_Bizstrat 1_SUBBED_FIXED.indd 47

8/04/2019 12:37:27 PM

FEATURES

SOCIAL MEDIA

Building a presence Not everyone is a social media mastermind, but as anyone running a small business knows, you can’t ignore the impact and reach of these platforms.

Nicola Moras explains how you can build a social media presence to get the best return from your customers

SOCIAL MEDIA is a content machine that is never ever satisfied when you’re running a small business. Your audience is demanding new content if you want to keep their attention, and that alone can create a bit of stage fright or ‘flashing cursor syndrome’ when it comes to trying to work out what to

consumers say companies’ social media posts impact their purchases.

That’s a huge number and one we simply cannot afford to ignore. How much are you missing out by not using the power of social media? Following are four steps you can take to create impact and return.

One of the most powerful things you can do online that will drive impact is to share your opinions and thinking in your area of expertise, products and services post, when to post and how to share online.

This tends to make you feel overwhelmed, which is less than ideal.

Businesses today cannot afford to ignore the importance of using social media, especially if they want to be relevant and still in business in the next two to five years.

According to Forbes magazine, 78% of

48

1

What makes your company different?

We’re not just talking about your products and services. We need to be clear on what makes you, as people, different to your competitors.

What are your strengths and knowledge, your R&D processes, and who are your people?

This is very different to the standard USP,

because it requires you to delve deeper into what makes your business, your company and you as a person different. Being able to articulate this very clearly will give you the confidence to be able to share it online with authority and certainty in a way that builds impact.

2

Know your audience: demographics as well as psychographics Business 101 will have you doing work on your ideal audience, and it’s an incredibly valuable process, but most companies only do about 50% of what could be done.

If you delve deeper than their gender, age

www.mpamagazine.com.au

48-49_Bizstrat 2_SUBBED.indd 48

8/04/2019 9:43:29 AM

presence on Facebook (with a global, growing userbase of more than 2.2 billion people you cannot ignore it) as well as on your website where you’ll be blogging regularly, and then choose either Instagram, LinkedIn or Twitter, depending on where your audience tend to spend the majority of their time. Post various pieces of content consistently, multiple times per day.

(Productivity tip: You can share the same thing you posted on Facebook to a different platform at a different time.)

4

How to get a return

With all of this social media and digital activity, many business owners neglect the most important step, which is to let people know how they can use their services.

My rule of thumb is that you will post five pieces of valuable content – solving problems your audience has or helping them achieve their goals, dreams or desires – and then you will make an offer of a product or service or even let them download something for free that you might be offering them as a way of getting them into your email database.

range and marital status, you’ll find all sorts of gold that you can use to create digital marketing that speaks directly to them as humans – from their fears and problems to their stress points, dreams, goals and desires. Understanding these will help to create an emotional connection with your audience online.

For example, if you know that your audience is someone who wants to write a book but they’re deathly afraid of putting themselves out there for fear of judgment, you’ll have a very different conversation with them online versus the standard ‘3 Steps to Writing a Bestseller’ conversation.

Get inside their heads and understand what really makes them tick. Connect with them on a very emotional level. This will make you stand out as being different.

3

Building a presence and platform

One of the most powerful things you can do online that will drive impact is to share your opinions and thinking in your area of expertise, products and services.

There are many platforms to choose from where you can share this, so that can often mean you put it in the too-hard basket when trying to decide where to focus your attention.

Focus on my ‘3 Pillar Rule’. Build a

When you follow these four steps you will be creating impact and return, because you are speaking directly to the audience who you want to become your customers. They are scrolling through the endless supply of content, realising that you are the one who can solve their biggest problems; you understand them and they feel heard and validated.

Nicola Moras is a social media specialist, sought-after speaker and author of Visible, a guide for business owners on how to generate financial results from social media and digital marketing. Nicola helps clients around the world achieve visibility, impact and profits, enabling them to become ‘professionally famous’ online. Find out more at www.nicolamoras.com.au.

www.mpamagazine.com.au

48-49_Bizstrat 2_SUBBED.indd 49

49

8/04/2019 9:43:46 AM

FEATURES

RECRUITMENT

Finding the right fit for your business Hiring someone to work in the business you’ve built can take a lot of faith in a person you’ve only spent a short time with. But there are things you can do ensure they’re a good fit, writes Karen Gately

HOW OFTEN have you or other members of your leadership team hired people who have then failed to perform in their roles to an acceptable standard?

Reflect for a moment on the detrimental impacts on your time, energy, resources and team of a new employee failing to deliver on the promises they made during the hiring process that they could do the job well.

Adopting a planned, considered and disciplined approach is fundamental to your ability to accurately predict the likelihood of someone being successful in their role and your organisation. Leveraging a variety of assessment techniques to validate your observations and build a full picture of the candidate’s potential throughout the process is key to predicting success.

As widely referenced research by US

50

Professors Frank Schmidt and John Hunter reveals, unstructured interviews have a predictive validity of just 38%. They report that the strongest predictors of performance

ranked highly, the validity ratings of each were 54% and 51%, respectively. This suggests a blend of strategies is necessary in order to achieve the level of predictive validity needed to enable effective decision-making.

It’s essential that you leverage each step in your hiring process to assess both what people are capable of and how they are likely to go about achieving what they need to. Assess also the depth of each candidate’s desire to do the job, and the alignment of the opportunity you’re offering with their career aspirations.

Assess capability Look for evidence that candidates have the ability to apply their knowledge, skills and experience within the context of the role you are hiring for. Avoid the common error of presuming that because someone has attained a certain qualification or level of seniority they are capable of effectively leveraging their experience to perform well in your organisation.

Explore the extent to which candidates understand the core objectives, responsibilities and complexities of the role. Test also their willingness to confront the challenges of the role and have the resilience to drive change if required. Contemplate the extent to which the candidate will be able to respond

Time and again I see leaders making the fatal mistake of prioritising the skills and qualifications of a candidate while ignoring the clear signals of culture misfit are structured interviews and testing.

The study analysed 85 years of research to identify the most effective methods for hiring people who will excel in their roles, as well as the least effective. It’s important to note that while structured interviews and testing

to irregularities, breakdowns and other unanticipated events.

Assess culture fit Cultural fit is the extent to which a person’s approach to doing their job and being a

www.mpamagazine.com.au

50-51_Bizstrat 3_SUBBED_FIXED.indd 50

8/04/2019 9:54:22 AM

member of your team is aligned with the values of your business. While it can be tempting to hire the person with the most experience or most impressive technical qualifications, your choice should never be at the expense of recruiting people who are likely to behave in the ways you need them to.

Time and again I see leaders making the fatal mistake of prioritising the skills and qualifications of a candidate while ignoring the clear signals of culture misfit. I am yet to see these decisions turn out well. Without exception they have struggled to leverage the person’s full potential and, more often than not, have found themselves managing the undesirable consequences of unsuccessful behaviours.

The simple reality is that the extent to which someone is aligned with the culture of your organisation profoundly impacts on whether or not they will ultimately be a successful member of the team. It needs to be an important priority in any recruitment process.

Not an exact science While recruitment is not an exact science and can better be described as an art, there are steps you can take to ensure you hire the right people. It is crucial that you consider the candidate’s fit with your business and team throughout the process. Here are some examples of how you can do this: 1. Read between the lines and listen for attitude, whether reading a CV, conducting an interview or doing a reference check.

2. Assess priorities, philosophies, beliefs, attitudes, prejudices and motivations. Consider how these reflect the likely approach they will take to their work and dealing with others. How will this fit with the way you want things to be done in your business?

3. Observe interactions before, during and after interviews and other face-to-face interactions. Notice shifts in behaviour or expressions of attitude towards individuals and groups. For example, how does the

candidate respond to and interact with people they perceive to be senior, their peer or junior to them?

4. Use assessment tools effectively. There are many insightful tests now available that can assist you in accurately assessing candidates. It is important to remember that these tools are indicative, not predictive, and should be used for guidance rather than as standalone decision-making tools. For example, use information gleaned in reports to design interview questions and guide conversations with referees.

Karen Gately, founder of Corporate Dojo, is a leadership and people-management specialist. She is the author of The People Manager’s Toolkit: A Practical Guide to Getting the Best from People and The Corporate Dojo: Driving Extraordinary Results Through Spirited People.

www.mpamagazine.com.au

50-51_Bizstrat 3_SUBBED_FIXED.indd 51

51

8/04/2019 9:54:37 AM

PEOPLE

BROKERAGE INSIGHT

Click your heels together for success In a crowded broker market, sometimes it’s the small details that can make you stand out – like Two Red Shoes, for instance. MPA speaks to principal Rebecca Jarrett-Dalton to find out more 2012 WAS a milestone year for Rebecca

Breaking into broking

Jarrett-Dalton. After wrapping up at a previous company, she decided it was time to strike out on her own and establish herself as a solo broker under the banner of Two Red Shoes.

Now spanning the eastern seaboard and parts of South Australia, Two Red Shoes has marked itself out as an impressive mortgage broking success story over the intervening years. The titular shoes – worn to every client meeting – have proven to be a powerful piece of branding, though Jarrett-Dalton notes there are numerous other functions as well.

“It’s a marketing tool, but it’s definitely an icebreaker with clients too,” she says.

Additionally, the specific aim of Two Red Shoes was to aid prospective buyers who hadn’t necessarily received the attention they needed from the broking industry. There is a perception among the community, says Jarrett-Dalton, that financial providers don’t want to deal with women. Today, she works to break that perception by providing a friendly face for her clientele.

“I sit in front of a lot of women who make a lot of decisions about the family finances, and I wanted to make sure it was a femalefriendly environment,” says Jarrett-Dalton.

“A lot of my clients are also women in situations involving family separations or divorce, which has traditionally been an underserved market by the industry.”

Before entering the world of broking, JarrettDalton had trained and worked in a wide variety of industries. Sales, accounting, journalism, pre-press, production management, payroll… the list goes on. But it was only later

52

property, and I found I was just fascinated by the process – how brokers fit in to facilitate everything,” says Jarrett-Dalton.

“So, in 2001, I decided to branch out and give broking a try for myself.”

Initially, the idea of having flexible hours so

“As specialists we’re also able to better work through the data that the banks collect, and distil that down for clients” that she realised the whole process had been an unorthodox apprenticeship for her present career, equipping her with the tools she needed to start her own small business.

“During one of these jobs, a co-worker had convinced me to buy my own investment

she could work around her family was a major draw (“Of course, I forgot that banks don’t actually work nights!” she says) but over time it became apparent that the profession had far more to offer. At her first company, trainees were given an in-depth look at both mortgage

TWO RED SHOES AND THE ROYAL COMMISSION The royal commission continues to dominate conversation in the broking space as agencies assess what the best path forward is prior to legislation even being drafted. Two Red Shoes principal Rebecca Jarrett-Dalton is sceptical about the potential long-term effects of the legislation. Brokers provide a valuable service, she says, but they should also be industry specialists, dedicated to achieving positive outcomes for clients rather than financial institutions.

“There’s no question that there are issues to be addressed within the industry,” says Jarrett-Dalton. “But I’m concerned that legislation could unfairly favour the banks and prevent proper customer choice and competition. We can’t guarantee that the banks will provide consumers with the same level of care.”

www.mpamagazine.com.au

52-53_Brokerage_Insight_SUBBED.indd 52

8/04/2019 10:48:09 AM

FAST FACTS Company: Two Red Shoes Founder: Rebecca Jarrett-Dalton Location: Cranebrook, NSW Year founded: 2012 Services offered: Home loans, investment property loans Number of employees: 2 Awards: • 2019 Connective Empowerment Award • 2018 Lindsay Business Woman of the Year

broking and numerous related fields, including property law and accounting.

“It’s definitely expanded my range of services,” says Jarrett-Dalton. “I like the responsibility that comes with the role, too. For instance, when I’m working with an SMB, I’m not only running my own business – I’m helping someone else run theirs too.”

Future tech and future-proofing With close to two decades in the business, Jarrett-Dalton has also witnessed first-hand a huge number of changes within the broking industry.

“Just like everything else, things are almost

entirely digital these days,” she says. “Back in 2001, you just needed a fax machine and printer to get into business.”

But while a more elaborate technological set-up may be necessary for brokers now, Jarrett-Dalton is also adamant that things are better as a result.

“We’re able to provide information to clients virtually instantaneously,” she says.

“And I think as specialists we’re also able to better work through the data that the banks collect, and distil that down for clients.”

Looking to the future, Jarrett-Dalton sees an increasing emphasis on blockchain and P2P lending.

“I don’t know exactly what it’s going to look like, but I do know that it will mean an increased emphasis on scrutinising personal finances before approving loans,” she says. “Banks are jumping at shadows at the moment.”

Additionally, the increased emphasis on new technology means that more people who don’t necessarily have a banking, credit or finance background will be entering the industry.

“Roles like credit assessors are very technical, so I do wonder what sort of impact that could have further down the line,” she says.

On a more personal note, Jarrett-Dalton is looking to grow Two Red Shoes and bring more brokers on to “lighten the load a bit”.

“There’s been a downturn in the market, but people are still buying and that’s keeping me extremely busy,” she says.

“We’re small and nimble at the moment, able to run lean, but we do need to look at expansion to keep providing our clients with the best possible service.”

www.mpamagazine.com.au

52-53_Brokerage_Insight_SUBBED.indd 53

53

8/04/2019 10:48:25 AM

PEOPLE

CAREER PATH

CONNECTED TO SOLUTIONS Credit Connect director Peter Benson’s desire to provide borrowers with a better experience blossomed into a multimillion-dollar private lending company

Peter Benson formed an alliance with a Brisbane law firm sourcing mortgage lending clients and originating finance applications STARTS LENDING from prospective borrowers.

AT LAW FIRM Although the firm had roughly $20m in funds under management 2006 at that time, Benson felt he needed to offer something different as REALISES borrowers frequently encountered obstacles when they approached NON-BANK DREAM mainstream banks. “We established a business providing complementary Backed up by over 14 years of investment and lending offerings and services to the legal clients of the firm.” experience, Benson launched his private lending company, Credit Connect. His loan enquiry levels increased on a monthly basis because banks were not lending in the commercial, development and non-residential markets, and they only offered residential interest-only loans. “As director, my initial job when Credit Connect first started was to source clients who were interested in investing in secured first mortgage lending, and to establish proper distribution channels.”

1992

2008

SAILS THROUGH GFC

The GFC struck two years after Credit Connect began operating. But amid heightened uncertainty and market volatility, Benson’s young firm continued to prosper. “During the GFC, Credit Connect wrote a lot of business as banks had stopped lending. But even with property values declining, no investor client incurred a capital loss with Credit Connect loans.”

2019 and beyond

LAUNCHES IN SYDNEY

Benson and his team opened a second office in Sydney in the hope of growing their staff and connecting to more borrowers and investors. Since its launch, Credit Connect Group has underwritten more than $380m in secured loans, ranging from $50,000 to more than $25m.

54

2017

LENDS SUPPORT ACROSS CONTINENTS

Benson currently serves as director of Credit Connect Finance (CCF), an entity of the Credit Connect Group that operates as a private lender and licensed credit provider. CCF was established in 2006 to facilitate consumers whose loans fell under the credit score. “CCF now predominantly lends to non-residents of Australia who are based in China and seeking financial assistance so they can purchase or invest in Australian properties.”

“If we can write $100m in new loans via the Sydney office, that will be a great accomplishment”

www.mpamagazine.com.au

54-55_Career Path_SUBBED.indd 54

8/04/2019 2:45:27 PM

54-55_Career Path_SUBBED.indd 55

8/04/2019 12:48:53 PM

PEOPLE

OTHER LIFE

TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com

“I really do believe that su rfing has allowed me to be a better person a nd has given me a fa r greater appreciation of the simplicity in my life”

10

Approx. age Glossop’s passion for surfing began

2–3

Number of times a week Glossop hits the waves

2

Number of kids who keep Glossop’s life fun and busy

CONQUERING WAVES Pure Property Investment director Paul Glossop says the serenity and challenge of surfing make him a better person THE ADDICTION began when his mum drove him to the beach years ago. At a young age, Paul Glossop, now founder and director of Pure Property Investment, would use every spare moment to catch trains or buses, or request rides from his parents’ friends, so he could go surfing.

“That was 25 years ago, and it’s the best addiction anyone could ask for, in my opinion,” Glossop says.

“Surfing has always been a release that I can rely on. It’s my place to reflect, to

56

keep fit, to socialise and to centre myself.”

Surfing’s ability to test Glossop – whether he’s riding two-foot waves, mellow beach breaks or double overhead, scary, shallow reef breaks – is also what keeps him enthusiastic about the sport.

A couple of days per week, Glossop, a husband as well as a dad to a two-year old daughter and five-year old-son, will try to get up before his family does to catch some waves. Sometimes he also surfs on weekends with his boy.

“I walk to work, and most of the time I check the surf on the way. I duck out of my office during the day if the waves are on,” Glossop says.

If anything, he adds, his life gets his clients to reflect on their own passions and find a balance between health and wealth so they can ultimately attain happiness that aligns with their goals.

“When I reflect on the sprightly teenage version of myself, I can truly say I’m living the dream I envisioned.”

www.mpamagazine.com.au

56-IBC_Other Life_SUBBED.indd 56

8/04/2019 11:15:53 AM

56-IBC_Other Life_SUBBED.indd 57

8/04/2019 11:16:08 AM

Get your business clients moving.

4

.44

Business Essentials Variable Loan.

Plus a 100% loan offset transaction account to help spark your clients’ business plans.

(Residential security, commercial margin applies.)

Talk to your Suncorp SME Business Development Manager today.

Banking products are issued by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No: 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Please read the Product Information Documents before making any decisions regarding any product. Visit your nearest branch or call 13 11 55 for more information. Terms and conditions, fees and charges may apply and are available on request. ~Variable Rate Special Offer valid from 1/4/19 to 30/6/19 and is subject to change without notice. Rate offered on date of settlement of the loan will apply. New to bank loans $10,000 up to $999,999 only. Minimum application requirements apply including satisfactory residential or commercial security and provision of 2 years’ financial statements and tax returns for all applicants and guarantors. 0.30% commercial security margin applies. Offer may be withdrawn at any time before a contract is entered into. Pre-approvals excluded. Customers will be required to open a Suncorp Business Transaction Account as part of the small business application where they do not already hold a Suncorp Business Transaction Account. Loan discount may be varied where the borrower does not have a Suncorp Business Transaction Account. ^Loan establishment fee of $800 is valid from 1/4/19 to 30/6/19 and subject to change without notice. Normally $800 for loans <$500,000 and 0.30% for loans >$500,000. Offer may be withdrawn at any time before a contract is entered into. Pre-approvals excluded.

30687 02/04/19 A

56-IBC_Other Life_SUBBED.indd 58 E66441_30687_020419_A_SunBank_SME_Broker_Offer_Ad_MPA_Mag_268dx210w_FA.indd 1

8/04/2019 2/04/2019 1:51:13 8:06:36PM AM