Australian Broker magazine Issue 10.03

FEBRUARY 2013 ISSUE 10.03

$4.95 POST APPROVED PP255003/06906

+INSIDE + NEWS A look at what’s been making headlines P4

+ ANALYSIS ASIC TAKES A HARD LINE

The regulator has vowed to ramp up its enforcement actions P10

SEARCH SWINDLE

Google’s ad model could hit your business P12

+ OPINION DIFFERENTIATE OR DIE

Brokers leaving lowdoc money on the table Resimac’s Allan Savins says brokers are missing big opportunities in the specialist space

Brokers must have a point of difference in products P14

+ MARKET TALK Adelaide is going nowhere fast P20

B

rokers are constantly being told to diversify.

Aggregators are touting vehicle and equipment finance, insurance, SMSFs and even term deposits as new revenue streams for brokers struggling to stay afloat in a tough credit environment. But Resimac COO Allan Savins has said brokers have yet to exhaust their opportunities in residential mortgages.

FULL STORY PAGE 16

+ CAUGHT ON CAMERA Bernie Lewis rides for a cure P29

NEWS

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2

WHAT THEY SAID...

NUMBER CRUNCHING EASING ARREARS

GERALD FOLEY

Mortgage delinquencies are declining across Australia

0.55%

0.54%

0.52%

“We’re still NMB, we’re not becoming a subset of Aussie” P8

0.47%

0.41% PETER KELL

Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Source: Genworth

“I wouldn’t characterise ASIC’s approach as ‘light touch’ ”

DID YOU KNOW?

1.51

Investor loans are 1.51 times more likely to default than owneroccupier loans

P10

Source: Fitch

$2,388.20 The average weekly pay of a financial services worker is $1,421.10. The average weekly pay of someone in the mining sector is $2,388.20

SCOTT PARRY

“It’s the product that will ultimately have an enormous impact on your client’s financial future” P14

FIONA MACKENZIE

12*

*The number of people ASIC has banned from the industry since the advent of NCCP Source: ASIC

“It’s really referrals from existing clients and accountants that are the key sources of new business” P27

NEWS 4

brokernews.com.au brokernews.com.au

Westpac happy to grow below system ■ NAB has lifted its share of the mortgage market

by more than 2% since the lowest point in its market share in 2010, according to the Australian Prudential Regulation Authority (APRA), but rival big bank Westpac says it’s “happy to grow under the system”.

Data compiled up to the end of December 2012 shows banks that lost market share in home loans over the calendar year 2012 – based on APRA data – include CBA, down 0.8 percentage points to 27.2%, and Westpac, down half a percentage point to 25.6%.

Westpac senior media relations manager, corporate affairs and sustainability, Danny John, said the bank is comfortable with its current standing in the mortgage market.

“Westpac Group has, across both of its major brands – Westpac retail banking and St.George – grown its market share by about 2% [in the past four years]. We’re really happy with the growth that we’ve achieved over that period.”

EDITOR Adam Smith

CBA NABS 40% FHB SHARE

PUBLISHER SIMON KERSLAKE

■ CBA and its subsidiary Bankwest accounted for nearly 40% of all first home loans processed in December, according to AFG’s quarterly Competition Index.

The bank’s strong performance drove the overall market share of major lenders to a 2012 high of 77.5% among first homebuyers, the market sector in which non-major lenders are traditionally strongest.

CBA was also the largest provider of fixed loans in the October-December quarter, with 18.8% of the market.

COPY & FEATURES JOURNALIST Mackenzie McCarty PRODUCTION EDITORS Carolin Wun, Moira Daniels ART & PRODUCTION SENIOR DESIGNER Rebecca Downing DESIGNER Ginni Leonard SALES & MARKETING SALES MANAGER Simon Kerslake ACCOUNT MANAGER Rajan Khatak MARKETING EXECUTIVE Anna Keane

MARKET SNAPSHOT

TRAFFIC MANAGER Abby Cayanan

Here’s how the mortgage market looked in January

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley MANAGING DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil

Gender bender ■ Gender discrimination is rife in financial

services, according to an eFinancialCareers survey, with nearly two-thirds (64%) of Australiabased finance professionals claiming that gender discrimination takes place in the industry.

But ANZ spokeswoman, Meg Bonighton, said she’s sceptical of the statistics.

“While I can’t talk on behalf of the entire industry… my experience has been quite different. Our CEO has made it very clear that the advancement of women, particularly in leadership positions, is a key focus.”

13.2%

First homebuyers

36%

Investors

34.1%

Refinancers

16.7% Other

Source: AFG

Debt spurs depression ■ The Financial Security DID YOU KNOW?

½3

The proportion of its loans that mortgage fund Angas Securities says are in 90 days or more in arrears.

The proportion represents more than $72m in loans.

Project at Boston University has published research showing that, for every 10% increase in the dollar amount of a person’s debt, his or her depressive symptoms increase by 14% – but home loans may be an exception.

More severe psychological effects were shown to come from short-term debt, such as credit card or overdue bills. Long-term debt or “good debt” – such as home loans – was not found to have a similar effect.

Editorial enquiries Adam Smith tel: +61 2 8437 4792 adam.smith@keymedia.com.au Advertising sales Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Subscriptions tel: +61 2 8437 4731 fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Toronto, New Zealand brokernews.com.au 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 Australian Broker magazine can accept no responsibility for loss.

Australian Broker is the most-often read industry publication, according to independent research carried out by the EhrenbergBass Institute for Marketing Science at the University of South Australia in December 2008.

The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.

NEWS brokernews.com.au

6

Bank education drive applies positive pressure

THE STRANGER SIDE OF NEWS

■ As banks bolster their service proposition to brokers, the pressure is on aggregators to follow suit, according to Loan Market director of sales Mark De Martino.

De Martino said lenders are upping their game in their proposition to brokers with better PD days and more practically-focused events.

“It puts more positive pressure on all the aggregators to continue to build on our own PD days and add value for brokers,” he said.

Chief economist at St.George, Hans Kunnen, said the economy grew in 2012, enabling most people to save “at least a little”, although the motivations behind saving varied.

CLOSE ENCOUNTERS OF THE ECONOMIC KIND

■ The World Economic Forum in Davos,

Switzerland, recently released a report on global economic risks for 2013. Among the humdrum list of perennial potential downsides was a rather interesting one: first contact with aliens. Evidently, the WEF doesn’t think global leaders – or global economies – are adequately prepared for the possibility of extraterrestrial contact. The WEF team urged “the global elite to prepare themselves and their nations for such a discovery. The scientists suggest that new funding and new brain power will be needed to overcome the challenges that humanity will face as a result of its encounter with an extraterrestrial civilization”.

SPEWING CASH

■ In these tight economic times, just about

everyone is looking for new revenue streams.

Well, next time you visit the beach make sure to keep your eyes peeled for a potential goldmine: whale vomit. A British man has been offered €50,000 for a weird-smelling rock his dog found on the beach. It turns out the rock is covered in extremely rare whale vomit. The ambergris, which is sometimes spewed up by the hapless mammals, is a key ingredient in expensive perfumes. Forget taking metal detectors to the beach. Just give the rocks a good sniff.

LENDERS ARE UPPING THEIR GAME –M ARK DE MARTINO

HOME BUYING ASPIRATIONS ‘ALIVE AND WELL’ ■ Despite overall decline in

conditions, close to 70% of Aussie households have started the year in a stable financial position, according to the December 2012 St.GeorgeMelbourne Institute Household Financial Conditions Report.

The report’s household financial conditions index fell 4.8% from December 2011, and 18–24 year olds experienced the largest decline (13.1%) followed by those aged 65 years and over (7.4%).

St.George general manager, retail banking, Andy Fell, said the report findings are consistent with what the bank is seeing and hearing from its customers.

“It is great that a large proportion of people are still managing to save, which makes the outlook for 2013 positive. It’s also encouraging to see the ‘Great Australian Dream’ of buying your own home is alive and well.”

In the report, 18.1% of respondents cited putting down a deposit or buying a home as a motivation to save; this was further supported by the 2% increase in mortgage uptake to year end.

COSTLY CAPITALS Sydney and Melbourne are listed in the top five cities with the highest cost of living in the world

FAST FACT

14%

NO. 4 OSLO, NORWAY

The proportion of borrowers who do no research before deciding on a home loan

NO. 1 TOKYO, JAPAN NO. 2 OSAKA, JAPAN

NO. 5

MELBOURNE, AUSTRALIA

Source: homeloanfinder. com.au

Source: Economist Intelligence Unit

NO. 3

SYDNEY, AUSTRALIA

NEWS brokernews.com.au

8

CBA’s Aussie buy won’t impact NMB

BANK BREAKUPS The reasons why customers choose to switch banks

■ NMB has welcomed 2013

with a fresh look comprising a new logo and website as part of its ongoing strategy to attract and retain brokers.

Managing director, Gerald Foley, said the new image is the ‘evolution’ of a brand which has serviced brokers for over a decade.

Foley said he’s keen to impart the message that, despite being bought by Aussie Home Loans last July, NMB still maintains its unique identity.

“Aussie acquired NMB back in July and the first part of the process was a review… One thing we felt was important was to refresh our brand and our website – our branding is now over 10 years old – but also to say to the market that ‘we’re still NMB, we’re not becoming a sub-set of Aussie’. We’re here for brokers who want to develop a business under their own brand.”

Foley said CBA’s recent takeover of Aussie Home Loans won’t have much of a direct effect on NMB.

33.3%

US S&P RATES A LAWSUIT

Improved customer support

31.0%

Better pricing

10.3%

Availability of credit

7.7%

Ratings agency Standard & Poor’s recently said it expected to be sued by the US government over its role in the country’s economic meltdown.

S&P has been blamed for doling out good credit ratings to mortgage-backed securities which later tanked, helping to fuel the onset of the GFC. S&P said it had been informed by the Justice Department that it intended to file a civil suit taking aim at the ratings S&P gave out, though the agency denies any wrongdoing.

CANADA

Improved collateral/ security

DEMISE OF BORROWER BONUS A BOON TO BROKERS

7.7%

Better response times and quality

5.1%

More flexible terms

WE’RE NOT BECOMING A SUB-SET OF AUSSIE

WORLD NEWS

4.9% Other

Source: East & Partners

ABA touts customer rights ■ The ABA has revised its Code of Banking Practice, saying the new

version ‘improves rights for customers’.

ABA chief executive, Steven Münchenberg, said the code is contractually binding on subscribing banks and sets out the minimum standards banks have agreed to follow when dealing with personal and small business customers.

“The code sets the standards for fairness, transparency, behaviour and accountability that customers can expect from their banks… and provides ways for customers to complain if they feel their bank has not met its code obligations.”

Australia isn’t the only country seeing first homebuyer concessions being rolled back. In Canada, British Columbia’s new home credit for first-time buyers expires on 31 March – and that’s great news for brokers tired of seeing many clients lured to a developer’s lender.

“Some borrowers were excluding the additional step of research with their realtor and going to projects directly without representation, because they were being distracted by the bonus,” said Angela Calla, a broker with Dominion Lending Centres and host of The Mortgage Show on CKNW AM 980.

UK BRITONS LACKING FOR CHOICE A study in the UK has found mortgage options are limited for borrowers without a large deposit.

Data from financial information service Moneyfacts found that, while there were 831 products for borrowers with a hefty 25% deposit, there were just 84 for those with a 5% deposit.

≥25% - 831 ≤5% - 84

ANALYSIS brokernews.com.au

10

ASIC’s New Year Australia’s independent financial services regulator has vowed to keep a keen watch on the industry in 2013

N

early two years ago as the full weight of NCCP regulations began to come to bear across the mortgage broking industry, Gadens Lawyers’ Jon Denovan assured brokers that ASIC was nothing to fear for the moment. He called the watchdog a “friendly giant”. Denovan warned brokers, though, that the days of ASIC operating like a kindly, benign authority were numbered.

“For the first two years, they’re there to assist.

After that they might be less friendly. They’re the nice uncle at the moment, but they could turn into Uncle Scrooge,” Denovan said.

It would appear, for non-compliant brokers at least, that Uncle Scrooge has come home to roost.

A TOUGH STANCE

ASIC commissioner Peter Kell is less than avuncular in his message to brokers: Comply with the NCCP or get turfed out. He’s been very clear that, while the regulator is still willing to help brokers understand the task of compliance, it will have little patience for those who flout it.

“I wouldn’t characterise ASIC’s approach as ‘light touch’. Since the new credit regime was introduced, we’ve cancelled 14 licences, and we’ve banned 12 people from the industry for a range of problematic misconduct. We’ve also had successful criminal charges laid against a broker, and we’re continuing with quite a wide range of investigations into different parts of the credit sector,” he said.

Two bannings were handed down within two days of one another recently. In one of the instances, ASIC handed a permanent ban to East Perth, WA, broker Constantinos Patniotis for numerous instances for failure to comply with the NCCP, including unlicensed mortgage broking, facilitating loans to borrowers he knew to be poor credit risks, failure to keep proper records and depositing lender and borrower funds to be placed in a trust account into his own personal account.

Kell took a tough stance on the banning, vowing that brokers who “deliberately flout credit laws” would be caught and removed from the industry.

According to Kell, this kind of action is indicative of how ASIC will be tackling the industry from now on.

“We’re sending the message that compliance with the new credit regime is something people have to take seriously, and that where we see misconduct we’ll be cracking down on it,” he said.

A HELPING HAND

This doesn’t mean that ASIC has entirely transitioned from a “friendly giant” to an ogre.

Kell said the regulator still wants to help brokers understand their duties, and help them to remain compliant.

“We also want to help the industry where possible through the issue of regulatory guidance for extra guidance around advice so that the reputable players, the honest players, can understand their obligations more easily and avoid slipping over the wrong side of the line,” he said.

Kell has said that, by and large, brokers are hitting the mark, with some exceptions.

“ASIC conducted a study at the end of 2011 on how brokers were travelling in terms of complying with the new legislation, and we found they generally had a pretty good understanding of the new legislation, but there were some areas where we thought there needed to be improvement,” Kell said.

One of these areas is properly determining serviceability and ensuring that the loans offered to clients aren’t unsuitable to their circumstances.

“Brokers need to understand that they have

DISCLOSURE “We want to make sure that disclosure statements – especially around fees and commissions – are accurate. That includes when commissions are paid not only by the lender, but via third parties, for example, real estate agents. It’s very important that consumers get the full picture when it comes to that sort of disclosure. We will be taking a harder line going forward in that area.”

FRAUD “That’s obviously an area of concern. We’ve already banned six advisers since the new credit legislation came in related to this sort of activity. We’ve also obtained criminal outcomes against a broker for this sort of fraud. It’s clearly unacceptable and we will crack down on it where we see it.”

ADVERTISING “ASIC has signalled a tougher approach to advertising more generally across financial services, and that certainly includes credit. We released a regulatory guide in November 2012 that outlined how we are going to approach regulation of advertising in the credit space. To give you a sense of what we’re doing here, we’ve had more than 40 ads in the credit area alone either withdrawn or modified. That’s sending a signal to the marketplace that we don’t want misleading ads.”

brokernews.com.au

crackdown responsibilities when it comes to establishing the customer’s ability to repay or deal with the credit being offered. They can’t just rely on the information being provided by the lender,” he said.

“While we are seeing generally good compliance, it’s important for brokers to understand that their responsibilities in this area are also quite important to get across. They can’t sort of outsource it to others.”

Apart from this, Kell said ASIC would be keenly scrutinising the industry in 2013. He identified three main areas for the watchdog’s broker crackdown: fraud; advertising; and disclosure.

Brokers seem divided on whether ASIC is a jolly uncle or a pedantic miser, but regardless of where they fall on the issue, they must prepare themselves. This year is set to be the year of ASIC’s wrath.

BROKERS NEED TO UNDERSTAND THAT THEY HAVE RESPONSIBILITIES WHEN IT COMES TO ESTABLISHING THE CUSTOMER’S ABILITY TO REPAY –P ETER KELL

ANALYSIS brokernews.com.au

12

+ YOU

SEARCH

IMAGES

MAPS

for a fair go A High Court ruling on Google may find brokers left out in the cold SEARCH

A

competition case taking aim at search giant Google and the way it displays its sponsored links may not seem like something to concern brokers.

But it could have a direct affect on the way clients find your business.

The High Court of Australia has unanimously ruled that Google is not responsible for the content of third party sponsored links (aka: ‘Adwords’) displayed on search result pages – something which consumer rights groups say could have a detrimental impact on the nation’s small business owners, brokers included.

THE COURT’S RULING

But first, a bit of background: In July 2007, the ACCC issued proceedings against Google in the federal court, alleging that the company had engaged in misleading and deceptive conduct within the meaning of the Trade Practices Act 1974 (TPA) by ‘making’ misrepresentations contained in sponsored links that had been purchased from Google by a number of Australian advertisers.

Essentially, the ACCC alleged that Google was complicit in misleading consumers through its sponsored links. These links appear at the top of search results pages.

The High Court recently overrode the findings of earlier court cases, unanimously deciding that Google did not engage in misleading and deceptive conduct in the way it displayed these links.

HITTING YOU WHERE IT HURTS

But what does the High Court’s decision mean for you?

The problem is, effectively, that within the Adword model, advertisers pay Google to place their name at the top of search results whenever users type in a particular word.

A quick search under ‘mortgage broker, Sydney’, for instance, brings up an ad for Aussie Home Loans as the first result, and Australian Retailers Association executive director Russell Zimmerman says this poses a threat to small start-ups.

“It could well mean that you have to pay to get yourself the right listing, offering an everincreasing amount of money to get yourself situated.”

Otherwise, you could risk sinking into the oblivion of page two, where less than 15% of search engine-users bother to venture.

Zimmerman says the ethicality of Google’s Adwords model is certainly being questioned, but says our own High Court case more or less circumvented the core issue.

“I think it’s interesting that the mode of operation of Google is really being questioned around the globe… The issue really under investigation in other parts of the world is whether Google uses its own prominence to promote higher paying advertisers – side-lining competition… I don’t think the [Australian] case was actually really run on the same basis.”

Rather than focus on the ethicality of the Adword model in general, Zimmerman say ACCC’s

I’M FEELING LUCKY

initial allegations simply challenged whether Google could be held responsible for the content of advertising paid for and displayed on the site. However, following the new High Court decision, he says the consumer group may change tactic.

“I guess it’s going to be of interest to see what the ACCC does from here. I think they could look at it in a different way – they could re-appeal on the other basis. They could see if there’s a market dominance.”

DISAPPOINTING BUT NOT SURPRISING

The Australia Institute’s executive director Dr Richard Denniss, says he’s disappointed with the court’s decision, but not terribly surprised.

“Unfortunately, the courts have been taking a very narrow interpretation of the competition laws for some time now so while the ACCC obviously believed it had a strong case, it’s not a complete surprise that they lost.”

A SEARCH FOR THE TERM ‘REFUND HOME LOANS’ USED TO RETURN AUSSIE HOME LOANS, A DIRECT COMPETITOR, AS ONE OF THE TOP RESULTS

ANALYSIS brokernews.com.au

Denniss says he believes the biggest problem surrounding this issue is the way that the online environment is transforming commerce – and the kinds of market power possessed by some firms – far more quickly than the law is changing.

“Cases like this make it more likely that in five or 10 years’ time, customers and small businesses may be up against some very big online suppliers with very few options available if they are unhappy.”

Zimmerman agrees, saying the High Court’s decision is a backwards step for the country’s small business owners.

“I am a little bit surprised, because if you look at what happened in Europe, there appears to be a very strong case – and furthermore there is some fairly strong evidence from what I can see that this will affect Australian retailers quite heavily.”

Zimmerman says that, compared to similar court cases involving Google overseas, Australia’s version “hasn’t received much coverage” – and that’s odd, really, because Australians are one of the most homogenous search engine user populations on Earth.

“Google has 97% search coverage in Australia – it’s

IT COULD WELL MEAN THAT YOU HAVE TO PAY TO GET YOURSELF THE RIGHT LISTING, OFFERING AN EVER-INCREASING AMOUNT OF MONEY TO GET YOURSELF SITUATED –R USSELL ZIMMERMAN essentially the sole internet gate keeper.” This means the company accounts for nearly 100% of internet searches on our shores and that it holds tremendous advertising sway – even more so than in other parts of the world.

OPINION 14

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Differentiation the key to survival With so many mortgage brokers in the market, Scott Parry says those who thrive must have a point of difference in products

W

Scott Parry is the founder and CEO of Crown Lending, Australia’s specialist in debt reduction and money management. crownlending.com.au

ith as many mortgage brokers in the market as there are home loans, how do you make your brokerage stand out from the pack?

According to a 2012 IBISWorld report on the mortgage broking industry, there are more than 13,000 mortgage brokers in Australia working across more than 5,700 businesses. So not only do we as brokers compete with the banks for customers, but also within our rapidly evolving industry.

The industry itself has been around for fewer than 20 years but as it matures and develops, it is more important than ever to differentiate your business from your competitors in order to give customers a compelling reason to choose you.

Since launching my own mortgage business over a decade ago, I have seen many changes in the industry – but one golden rule still stands. The key to building a successful brokerage is product innovation, client education and personalised service.

Buying a home is often the biggest financial decision people make in their lifetime and it’s our job as mortgage brokers to help clients fully understand what it means for their lifestyle, and

advise of a home loan that best meets their needs. By educating clients and providing exceptional service you not only gain their trust, you empower them to make smart financial decisions.

And, at the centre of it all, is the product you offer, because it’s the product that will ultimately have an enormous impact on your client’s financial future.

But innovative products don’t need to be complicated – quite the opposite in fact. I have built

IT’S THE PRODUCT THAT WILL ULTIMATELY HAVE AN ENORMOUS IMPACT ON YOUR CLIENT’S FINANCIAL FUTURE –S COTT PARRY

STAND APART FROM THE CROWD 1) Define your unique value proposition 2) Offer innovative products that meet your customers’ needs 3) Educate and empower your customers 4) Always offer a personalised service. The loyalty you earn from customers in return is what will make your brokerage stand the test of time.

my own business on a radically simple approach to personal finance that addresses the number one financial concern for most Australians – debt reduction.

Offering a simple product portfolio, our focus is on enabling customers to use their mortgages as a total wealth and savings management solution. Rather than offering a once-off transaction for a home loan, our unique model puts the customer’s total salary into a home loan account where it works for them and not the banks. We also provide customers with a spending plan to help them live within their means, teaching them to avoid credit card debt and implement simple budgeting measures. It’s the first product to market in the debt reduction space and it empowers consumers to cut the average mortgage time by half.

In such a competitive marketplace dominated by the ‘big four’, it has never been more important for brokers to establish a point of difference. For us at Crown Lending, it’s the fact the banks – or any other lender for that matter – don’t have a product to get people out of debt.

Your brokerage may have a different focus but whatever it may be, you need to: differentiate.

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15

Mobility for the masses A former broker is making it affordable for small operators to provide their own apps

M

obile apps are becoming as ubiquitous in mortgage broking as in every other sector. While lenders offer their own broker-specific apps, it’s a pretty big ask for a broker running a small business to make the investment of developing their own. But that’s where Adam King says he can help.

King, a former broker himself, has launched MiBizApps, a company that provides mobile apps for brokers with their own bespoke branding. The company provides iPhone and Android apps, and is planning to release iPad apps in the near future.

“I was looking for one of these for my mortgage broking business two or three years ago,

and I couldn’t find one without paying $10,000 to get the app developed,” he says.

So King launched a company to provide brokers with branded apps their clients can use.

“They’ve essentially got the key core features a mortgage broker would use, such as stamp duty calculator, borrowing capacity and loan repayment calculators. We’ve also added features to help the app become more attractive to the mortgage broker’s customer. They can search for properties for sale, get finance news, get push notifications when the RBA makes an announcement. It creates more reasons for the end user broker customer to use the app,” he says.

King’s company will brand the app for brokers’ businesses for

$397 plus GST, and manage it for $59 a month. He says while the apps would be useful for a business of any size, the price was set to appeal to smaller

Max loan calculator

Stamp duty calculator

broking businesses.

“Coming out of a small business, I wanted to make the product available to solo operators.”

Repayments calculator

Property search

NEWS 16

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CONTINUED FROM PAGE 1

Brokers leaving low-doc money on the table

S

avins has argued that brokers are missing opportunities to serve the needs of specialist clients, and in doing so are failing to tap a huge segment of the mortgage market.

“There’s such a tremendous opportunity there for incremental growth that they’re letting walk out the door,” he said.

Before brokers even think about broadening their revenue streams outside of mortgages, Savins said they should look to the clients who still need their help. “I hear and read all about brokers moving into insurance and moving into financial planning. I totally get that, but you’ve got a mortgage opportunity right in front of you that you’re letting go. People say you’ve got to diversify into other things, but you’ve got business right there.”

A BIG OPPORTUNITY

Low-doc clients, Savins contended, represent a larger slice of the mortgage market than many brokers may realise.

If anything, he said, this market is growing.

“Low-doc represented up to 25% of all Genworth’s insured business pre-GFC, which is a staggering sort of number. I’ve always said that just because the GFC has come along doesn’t mean those borrowers have gone anywhere,” he said.

Certainly, some of the borrowers who were lumped into the low-doc basket pre-GFC didn’t belong there. But even taking this into account, Savins said borrowers in need of specialist finance represent a huge proportion of the market.

It’s a proportion he feels is under-serviced.

“Say for the sake of argument that half those borrowers should never have gotten a loan because they were one-day ABNs or they were no-docs. Fair enough, but that’s still 10–15% of the mortgage market’s monthly flows from Genworth that were legitimate borrowers. Those borrowers still exist, and there are probably more of them today than there might have been back then,” he said.

But this massive demand isn’t represented in Resimac’s flows,

Savins said. This isn’t because the borrowers aren’t out there, he claimed. It’s because brokers are nervous to do business with them.

A CASE OF NERVES

“I think it gets back to the broker having the confidence to write the business in the first place,” Savins said.

Gadens Lawyers’ Jon Denovan previously told Australian Broker that low-doc loans still carried a stigma with brokers, who associated the products with dodgy practices prior to the GFC such as one-day ABNs, no-docs and ‘lie’ docs. Savins agreed, and said because of this association, the terminology surrounding the products needs to change.

“We call it alt doc,” he said.

“I’ve done that deliberately, thanks to our friends at ASIC, I guess. We’ve referred to low-doc as alt doc for probably close to a year, and we think the market and our competitors need to grab onto that and change it.”

He argued that the questionable practices in place prior to the GFC had “pleasingly” been eliminated, and that the days of borrowers “declaring something on a piece of paper and the lender just accepting it” were gone. Instead, Savins said the industry had “come a full circle” to its original purpose of providing finance to creditworthy borrowers who sat outside the traditional profiles serviced by the banks.

“If they’re a legitimate borrower with a genuine need, and they don’t have their financials and they’re willing to pay a premium on the margin, then yes,” he said.

But that doesn’t stop brokers from continuing to associate the products with shady lending practices.

IT GETS BACK TO THE BROKER HAVING THE CONFIDENCE TO WRITE THE BUSINESS IN THE FIRST PLACE –A LLAN SAVINS

NEWS 17

brokernews.com.au

“It’s the contagion of that particular space that some brokers just look at it and go, ‘suitability, NCCP’,” Savins said.

“There’s an element of brokers out there who think they can’t sell that because it’s got to be unsuitable.”

But Savins contended that suitability shouldn’t just be determined on price.

“Nowhere in the NCCP does it say that a particular rate makes a loan unsuitable. It’s unsuitable if the borrower can’t afford it and it’s going to bring on hardship.

It’s unsuitable if the borrower asks the broker to get them the lowest rate and they could have gotten them 6% but the broker puts them on 9%. But if that is the only option and they can afford it, and it’s not going to bring on hardship and you make

IT’S UNSUITABLE IF THE BORROWER CAN’T AFFORD IT –A LLAN SAVINS

reasonable enquiries that it’s not going to bring on hardship, then that’s fine.”

HELPING THE CLIENT AND THEMSELVES

Brokers have to move past the stigma associated with specialist loans, Savins said. In doing so, he said they could open up a new class of borrowers and help more consumers.

“When someone comes into your office, ideally you’d not like to let them walk out without a solution. Even if it’s 18 months and then you -move them into

DID YOU KNOW? Resimac will soon be re-branding Hemisphere as Resimac Financial Solutions

prime, at least it’s a solution,” he said.

In this regard, Savins said specialist lenders had to be better at getting across the message that the sector represents a “growth opportunity for brokers”.

Perhaps the best way to do this, he said, was in dollar terms.

“If you write two loans a month extra, at the moment we’re paying 80bps upfront. Say the average loan size is $400,000.

Four-hundred thousand at 80bps, that’s $6,400/month. Suppose the aggregator takes a cut of that.

Let’s call it $6,000/month upfront just for writing two extra loans.

That’s $72,000 a year extra just by having that awareness.

“Maybe we’re at the point where we have to break it down to that dollar figure for brokers before the penny drops.”

TOOLBOX

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18

A social media strategy you can While there’s no shortage of tips for how brokers should interact with social media, what about their employees? Here’s a social media policy that will keep your business safe

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very business guru and sales consultant is adamant that brokers need to be making use of social media. What few have brought up, though, is that social media use can also get brokers in trouble.

It’s good advice, of course, to keep some distance between your personal social media and your business social media.

Prospective clients and referral partners might not take too kindly to photos from drunken social outings, and over-sharing on personal media runs the risk of decreasing your professional standing.

But another aspect of social media seldom addressed in the broking industry is how brokers with employees should handle social media use.

CompliSpace has released an eBook in response to the increase of reported social media incidents occurring in Australian workplaces. The book provides examples of potential risks with suggested responses and advice on policy development.

HOW TO AVOID

Figures in the eBook show that every minute of every day:

100,000 tweets are sent 684,478 pieces of content are shared on Facebook 48 hours of video are uploaded to YouTube 47,000 apps are downloaded from the App Store 3,600 photos are shared on Instagram 571 websites are created Author of the eBook, CompliSpace founder and managing director James Field says, “barely a week goes by now without hearing a story about an employee who complained about their employer openly on Twitter and it then went viral, or an employer who fired a staff member by sending them a Facebook message.”

Field says employers needed to understand the potential risks that social media posed to their business, consider the consequences, and take steps to manage these risks.

Things that could strengthen an employer’s position if a social media issue did arise are:

FAILS Stay topical and relevant.

“As you are thinking about the most relevant content you could share on Facebook, make sure it is relevant to the season. For example, now is a great time to talk about the New Year, spring cleaning and tax time. Staying topical will keep people’s attention and engage them more in your content.”

KATIE LANCE,

regular contributor to independent real estate news site InmanNext, says there are five things to remember if you want to get the most out of your Facebook business page:

• A clearly defined internal grievance procedures policy (which the employee should use instead of complaining on social media) • A social media-personal usage policy which refers back to the employment contract and reiterates the fact that posting negative comments about the organisation and work colleagues is not acceptable behaviour • An internal training program which covers personal use of social media • Robust record keeping procedures to evidence staff training in the organisation’s policies and the employee’s knowledge of these policies • Discipline and termination procedures to ensure that when the social media event occurs, management is well-versed to manage the situation following principles of substantive and procedural fairness.

It is also likely that organisations will need two social media policies, says Field.

“The obvious policy that all businesses will need is a social media personal usage policy which provides guidelines to staff when they use their own personal social media accounts. Secondly, if your organisation has a social media presence, it will need to develop a social media business usage policy.”

Include humour

“Make sure you incorporate some fun into your posts on Facebook.

Pinterest is a great source for fun quotes and photos that you can share. Keeping it light makes it fun, and it is an easy way to build engagement.”

Brief is better.

“According to Facebook, posts that are between 100 and 250 characters (less than three lines of text) see about 60% more likes, comments and shares than posts greater than 250 characters. Keep it short and edit ruthlessly.”

Don’t post too often

“Statistically, a Facebook post on a business page ‘lives’ about three hours. A post is considered dead when the growth in engagement is less than 10% of the largest growth of engagement between hourly snapshots. The biggest mistake I see people making with their Facebook business page is posting too often.”

Photos still are king

“Posts including a picture generate about 120% more engagement.

Be smart about your photos; are you pinning interesting photos?

Use some of those photos in your Facebook content strategy. Do you take a photo with every single client you work with? Every client has a story and those stories are great pieces of content for your brand on Facebook.”

THE COALFACE

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19

The long and winding road Phil Riches of Model Mortgages has worked in nearly every aspect of finance, but found a home in broking

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odel Mortgages’ Phil Riches says there isn’t much difference between pairing borrowers with the perfect loan whether you’re in his native UK or in Australia – it’s simply a matter of focusing on what you’re good at.

“I found, coming from the UK, the basic business principles are what served me well: calling people when you say you will, setting the right expectations, etc. We have a very structured plan to achieve our targets and we’re looking to develop long-term relationships with our clients. It’s not a sales-type thing.”

However, one thing Riches says brokers should steer well clear from is SMSFs. “One of the things I find difficult to get my head around is mass-market mortgage brokers being encouraged to get involved in the self-managed super funds part of things.

“I think it’s a specialised side of lending and extra care needs to be taken. While you might be missing out on an opportunity, there’s a risk there. Brokers getting in there that don’t know what they’re doing can have a serious impact on their clients.”

He knows what he’s talking about, too. Back in Birmingham, Riches worked as a financial planner and in the 13 years since he immigrated to Australia (initially on a working holiday visa, before falling in love with sunshine and the beach lifestyle), he’s been employed in nearly every side of the finance industry, including a number of years overseeing Westpac’s broker channel.

“I was a BDM in the broker channel, so I had 400 mortgage brokers in my portfolio to look after.

It was quite a tricky role actually because my portfolio was made up of the ‘inactive’ brokers – the ones who weren’t writing any business.”

While he says he enjoyed his role at Westpac and has nothing but good things to say about the major bank, Riches is happy to focus on his and his wife Virginia Graham’s business, based out of a beach town north of Sydney. “[Model Mortgages] has two connotations – Virginia was a model in New York and Miami, but ‘model’ also being a sort of ideal fit.”

When asked if all the mortgage brokers at Model Mortgages are attractive, Riches lets out a hearty laugh.

“Um…no.”

PAUL RICHES

WE’RE LOOKING TO DEVELOP LONGTERM RELATIONSHIPS –P AUL RICHES

MARKET TALK 20

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Capital city update: ADELAIDE

resources, they will be developed, here you go, now get into it’. I think [BHP are] making the end result bigger, because it’s stimulated the government and competitors into thinking ‘let’s have a crack at this’.”

BIG NAME MAKES A MOVE

One investor to take interest in the South Australian capital recently has been billionaire property developer Lang Walker.

According to Peterson, Walker has set his sights on a project in the trendy O’Connell Street precinct of North Adelaide.

“If you look at a guy like Walker, he doesn’t do too many deals against his own interests,” says Peterson.

“It’s a $200m project and that’s a good sign for me. It’s good circumstantial evidence when people like that are putting their dough in there.”

The traditionally subdued market looks set to continue its sluggish ways

A

delaide has always been a subdued market; free from the volatility of some of Australia’s other capitals. Property movements are thoughtful and gradual, like the tortoise to the resource states’ hares.

When the Olympic Dam project was still on the verge of getting underway, South Australia was poised to join its western and northern brothers on the positive side of the national economic average. However, the project has stalled and so Adelaide returns to its subdued state.

“Olympic Dam has flattened confidence in South Australia to some degree,” says Andrew Wilson, senior economist at Australian Property Monitors.

“There’s been no sense of revival in house prices this year. They’re still moving south; not collapsing, but without a lot happening.”

Like a lot of the other capital cities, Wilson says Adelaide has seen some bargain hunting in traditionally higher priced suburbs where value opportunities have come to the fore, but the city of churches is currently bound to play follow the leader for the next year or so.

“I think Adelaide will follow the rest of the country as it moves forward next year,” Wilson says. “But it will be a laggard in terms of that recovery scenario.”

OLYMPIC DAM HAS FLATTENED CONFIDENCE IN SOUTH AUSTRALIA TO SOME DEGREE –A NDREW WILSON

HELP WANTED

For confidence to return to the Adelaide market, commentators agree that someone needs to kick-start the economy.

“Adelaide needs more investment. It’s lacking some of the necessary drivers, until something happens,” says Andrew Peterson, from The Next Hot Spot.

“Had Olympic Dam got over the line, South Australia would have gone from a ‘have not’ to a ‘have’. That’s a 100-year project, so delaying it by four or five years, in the short term, is damaging,” he says.

After missing out on such a considerable boost, the state government has put out the ‘help wanted’ sign.

“They’ve said they’re open for business,” says Peterson. “They know they can’t afford to develop infrastructure themselves, so they are looking for private investors. In the week that BHP pulled their heads in on Olympic Dam, Rio Tinto got into bed with a company called Tasman Resources, which is exploring the Vulcan site, next door to Olympic Dam. Their initial report is that they’re getting the same positive results.”

Peterson says the corporate competition between BHP and Rio has been fuelled further by the state government’s dedication to resource projects. “[Premier] Weatherill has come out and released Woomera for exploration, which has still got some lingering Indigenous rights issues that need to be sorted out,” he says. “They’ve made it very clear, saying ‘we need the business, we have the

SA suburbs on the move CHRISTIES BEACH $340,000 BEACH TOWNS THE EXCEPTION While Adelaide may lag other capitals, SA’s beach towns are booming.

Small, beachside towns in the rural parts of the state have also seen price hikes.

Among them are Yorke Peninsula towns Wallaroo, Kadina, Maitland and Saddleworth, which all saw capital growth increases around the mark of 20%. The tiny beachside community of Moonta, population 3,000, saw 26% capital growth.

40.64%

ROXBY DOWNS $350,000 40%

LINDEN PARK $470,000 32.39%

BARMERA $216,500 31.21%

MOONTA $245,000 31.21%

UNIT HOUSE MEDIAN PRICE 12-MONTH GROWTH

MARKET TALK 21

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SHARES COULD OUTDO PROPERTY AMP Capital’s chief economist, Shane Oliver, says residential property is still a solid choice for investors, but places it second to the share market in predicted medium-term (five-year) returns.

Oliver says that, for the past five years, bonds and cash have been ‘the place to be’ and that while yields on bank deposits have been single-digit, they’ve still been higher than returns from both shares and residential property.

Now, Oliver says, things have changed, signalling good news for those working in the property market.

“Going forward, shares and to a lesser degree property, are likely to be a better option for investors (depending, of course, on their individual risk tolerance) as global recovery supports growth assets and low yields hamper the returns from bonds and cash.”

Oliver says residential property and shares already offer higher yields than cash and bonds and will benefit as economic growth improves.

“House and apartment yields are running around 3.7% and 4.8% respectively, which are well up from their lows last decade. With mortgage rates well off their highs and likely to fall further the residential property market appears to have bottomed out after falling since mid-2010, with a mild cyclical recovery likely over the next 12 months.”

However, Oliver warns that short-term gains are likely to be restricted to around 5–7% as buyers remain cautious about taking on excessive debt.

“More broadly, capital growth in residential real estate is likely to be constrained over the next 5–10 years by still very high property prices relative to incomes, and rents and house prices still above their long-term trends. This suggests that a cyclical rebound in real estate prices over the next year should be seen as part of a broad rangebound market for property prices in real terms as the market continues to work off the excesses that built up over the property boom that started in the mid-1990s and continued into last decade.”

Oliver says that while good quality properties in sought-after locations will no doubt do well, the medium-term backdrop for property returns is likely to remain constrained, though better than cash and bonds.

Rent or buy? You decide Should consumers be shirking the rental cycle? It’s an individual proposition

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any renters considering switching from a lease agreement to a mortgage can find it difficult to fully assess which path is more beneficial, but the best solution can only be decided on a case-by-case basis, according to aggregator Loan Market.

Loan Market corporate spokesperson Paul Smith said that while some public data could be used to justify both sides of the argument, borrowers need to consider their own personal circumstances and financial goals to determine if they’d be better off owning or renting.

“If you’re looking at purchasing a property, you should research similar properties in the area and see what type of rental payments are being asked for.

You should then work out exactly what your mortgage repayments would be after establishing your home loan.”

Smith also argued that it’s crucial for first homebuyers to consider their options on a case-by-case basis and said that when comparing rental and mortgage repayments, it’s important to evaluate the property from both a renter and homeowner perspective, taking into account the different calculations and costs that need to be factored in for each.

Michelle Hutchison, spokesperson for financial

BORROWERS SHOULD PREPARE NOW

BY ADDING TO THEIR REPAYMENTS –M ICHELLE HUTCHISON

comparison website RateCity, agreed. “The biggest danger with buying a home for the first time is that you’ve never experienced re-adjusting your budget and fall short when rates rise.

“Interest rates are currently at record lows. It’s easy to get used to paying low interest but rates are likely to rise eventually and borrowers should prepare now by adding to their repayments,” Hutchison said.

Smith said renters who are considering purchasing their first home should create an educated estimation of rental repayments of the properties they’re interested in buying, calculate inflation of both rent and property value based on current inflation rates – not targeted ranges – and remember that the interest rate on property won’t stay at its initial rate through the course of the loan.

“There are advantages to being both a renter and a homeowner and those benefits should align to your own financial goals.”

WORKSHOP 22

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The multi-step sales strategy Taking some tips from the assembly line can help brokers be more efficient in their sales

T

he key to leveraging your time is the use of a multi-step sales strategy.

When a car gets built, instead of handing all the responsibility and parts to ONE person and telling them “ok, build me a car!”… an assembly line is used, where a GROUP of people each do their part to build the car. The car flows down the assembly line and at each step (or station) the car gets closer to completion – and eventually you have a fully built car ready to drive away.

There are a few reasons assembly lines are used:

EFFICIENCY

Multi-tasking is inefficient, and people are far more productive when asked to concentrate on repeating one particular task compared with chopping and changing all the time.

EXPERTISE

The more you complete a specific task, the better you’ll get at it and the faster you’ll get too.

Expertise, of course, leads to efficiency.

The first step after generating th e lead might be to call the lead five-minute pr and run a eexercise with qualifying th all, you don’t em – after want your time if th to waste qualify, and yo ey don’t u to waste thei don’t want r time either.

EVENNESS

The fact is that at any time an assembly line has products at ALL stages of the production process means stability and consistency in completing products.

Now let’s consider an assembly line, or multi-step sales strategy, in the mortgage broking industry.

If you generate a lead and head straight out to see them for two hours, get to know them, have to sell them on your services, collect all their information and data, run some live scenarios and calculations, fill in the loan application, have two cups of coffee, pat the dog… you get the idea… ALL AT THE SAME TIME during the first appointment – you are trying to build a car yourself! This is how most brokers work.

The alternative is breaking this process up into multiple stages, just like an assembly line.

ADVANC

JAMES VEIGLI James Veigli is the founder of BrokerProfitsVault. com.au, dedicated to helping brokers make more money with less effort

PEOPLE ARE FAR MORE PRODUCTIVE WHEN ASKED TO CONCENTRATE ON REPEATING ONE PARTICULAR TASK COMPARED WITH CHOPPING AND CHANGING ALL THE TIME

Next, if they qualify, you might send them a questionnaire to complete (ie, a needs analysis) and arrange a phone appointment with them to collect information and get to know them and their goals.

The advanced ED: tip Using the mul is simple. ti-step sales model, you ev entual outsource ALL ly want to the funnel and aspects of instead focus purely on fillin g it with new prospects thro ugh marketing your business .

Now armed with all this information (from your phone appointment), you can go away and run your scenarios and calculations, to create a solution to your prospect’s needs.

Using a multi-step model in broking is powerful because: It’s more efficient.

Instead of spending three-plus hours with a prospect to sign up a deal (using the one-step approach), you can leverage and outsource parts of your assembly line and end up spending less than one hour with a client to sign up a deal. When I was broking I got this down to about 30 minutes and my clients loved the process.

You harness expertise.

Remember the saying “a jack of all trades, a master of nothing”.

Your sales funnel will always be full – from new prospects just entering the pre-qualification step… right through to deals getting signed up and settled. A multi-step sales process will enable you to take on, look after, and process MANY more leads and clients than a one-step approach.

Go get ‘em!

The final step might be a face-to-face meeting where you present your solution to them, answer their questions and get a commitment from them.

Of course the process goes on to application, approval, settlement… and can include additional steps along the way, too (such as cross-selling other services as part of your solution).

WORKSHOP 23

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Manage time wisely Does it seem as though there aren’t enough hours in the day? Here are five tips to make the most of your time

A

re you struggling to maintain a good work/life balance while you keep up with ever-changing regulations? Time management expert Jeff Davidson shares 12 tips on how you can manage time by “living in real time”.

home 1withLeave in the morning grace and ease.

If you can manage the ‘beforehand’ by taking care of as many things as possible the night before, in the morning you only have to get bodies out the door. No need to have a mad rush, because you’ve got everything ready to go.

on the 2issuesFocus important facing

your organisation, your department or division, and your job or career.

You have to pay homage to the issues that you identify as important in your life and have the strength to ignore the less important. Magically, when you handle the important things, the others fall into place.

and 3mailHandle address the when it

arrives, keep piles from forming on your

desk, and handle phone calls within 24 hours.

No need to be inundated by receiving too much mail, have piles that rise ever-higher on your desk, or have a mounting number of calls to return.

Take time to 4friends be with and

relatives. People, not things, count most in life.

Carve out time on your scheduling software or appointment calendar to ensure that you don’t shortchange the key people in your life.

time for 5 Make hobbies.

On the way to losing your time, did you abandon enjoyable activities that were a part of what made you who you are? Revisit that stamp collection, your garden, the hiking club, or whatever you let slide. Living in real time means enjoying your most rewarding hobbies and pastimes on a regular basis.

FINANCIAL SERVICES 24

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Opportunity abounds as Aussies believe they’re under-insured

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any Australians do not believe they hold sufficient personal life insurance despite rising levels of life insurance through superannuation, with about 30% not holding any insurance at all.

The findings are part of research conducted by life insurance specialist TAL to construct its Australian Financial Protection Index which measures what form of life insurance is held and whether policy holders believe they have adequate coverage.

TAL questioned more than 1,200 Australians aged between 18 and 69 on the types of life insurance they held and whether they felt their cover was sufficient if they or their partner could no longer work.

The results were given a score from 0 to 100 where the upper

range indicates respondents held each form of life insurance and felt they had adequate cover.

According to TAL, the national average score was 24.2 which TAL managing director Jim Minto says is surprising given the take-up of life insurance through superannuation funds.

However, Minto says while many people may have insurance through a superannuation fund, they may not be aware of it nor if the type of insurance and cover will meet their needs.

MANY PEOPLE MAY HAVE INSURANCE THROUGH A SUPERANNUATION FUND, BUT THEY MAY NOT BE AWARE OF IT

FRAUD COSTING COMPANIES

Tech to make advisers redundant?

Chairman and founder of Trulity – an online DIY financial planning business – Bill Kruger, has told the Australian Financial Review that financial planning is like a supply chain, with a factory feel to it.

The article said that his DIY financial planning website Trulity offered consumers “pretty much everything you need to control your own financial planning and investing activities”, for $27 a month.

“People will begin to scratch their heads and wonder why they’ve paid thousands of dollars for this process.”

The former accountant supplied financial planning services to Deloitte under an alliance arrangement, before selling up in 2008 and subsequently launching Trulity.

Trulity produces model portfolios – composed mainly of direct equities, exchange-traded funds and other low-cost passive products – but it’s up to clients to implement investments themselves if they wish to follow the recommendations.

The firm retains its financial services licence, but human-generated advice is not encouraged and they stopped accepting traditional full-service financial planning clients in July 2009. They encourage consumers to contact their accountant if they require additional assistance, or to call one of their strategists, who charge $40 per 10 minutes.

DID YOU KNOW?

43%

The percentage increase in staff fraud witnessed in 2012 Source: CIFAS

Fraud committed by employees in the UK rocketed by over 40% last year, according to the UK’s fraud prevention service, CIFAS. In terms of just what employees are being fraudulent about, it’s a mixed bag. It ranges from deception in the hunt for employment, namely by holding or falsely declaring information such as qualifications or failing to disclose previous convictions. Furthermore, attempts to gain benefit by deception or manipulation while in a job (such as stealing cash from customer accounts or employers) increased by 22%.

Beyond the damage done by fraudsters within the organisation’s walls – namely to the balance sheets, customer confidence and staff morale – CIFAS communications manager Richard Hurley said it can also lead to regulatory and legal punishments to organisations. “The 43% increase in staff fraud witnessed in 2012 demonstrates, therefore, that some organisations have invested in better protection and controls – enabling them to identify and prevent more fraud. Some of the fraud, however, demonstrates that organisations remain vulnerable,” he said.

“While these types of fraud are thankfully less commonplace than fraud attempts from outside an organisation, the damage that they can cause is as serious, if not more so.”

FORUM 26

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Debt agreements sign of ‘sick’ society?

Insolvency and Trustee Service Australia (ITSA) figures show bankruptcies declined 20% between 1 January 2007 and 31 December 2012, while there were 49,034 new debt agreements made, representing a 68% increase. ThenAttorney General Nicola Roxon said debt agreements provided “a way forward” for stressed borrowers. Brokers begged to differ

It's no wonder so many people get bad advice to go into these sort of agreements when even the Attorney General gives the impression that debt agreements won't affect your credit rating like a traditional bankruptcy.

And they are promoted so much lately.

Each issue, Australian Broker will publish the best online comment from the previous fortnight – along with your other feedback.

So get online, and get participating!

BROKERNEWS. COM.AU

I see at least two or more adverts each night on TV: ‘Have you got more than $8,000 debt? We can help’. I had one client recently who'd gone into a debt agreement where she paid out the debt over five years. She was discharged from it two years later than if she had gone bankrupt and paid nothing back. Effectively by paying the debt instead of wiping it off she ended up worse as it was an additional two years before mainstream lenders would even consider her Edgar on 18 Jan 2013 09:57 AM

W

hile Nicola Roxon may have extolled the virtues of debt agreements over bankruptcies, Jack argued that both were evidence Australia is creating a culture of zero accountability.

“What kind of society are we promoting by encouraging people to ‘go bankrupt’? A sick one, I might suggest.”

Some other commenters took umbrage with this remark, arguing that it failed to take into account the stress caused by massive debt. John said it was “typical of a person who has never found themselves in a compromised financial position

NMB KEEPS ITS IDENTITY

NMB managing director Gerald Foley assured the market that it was business as usual for the aggregator following a new rebrand, regardless of CBA’s increased stake in parent company Aussie (NMB hasn’t ‘painted the orange purple’ after Aussie buy, 31/1/2013).

Brokers seemed to agree.

Michael on 31 Jan 2013 11:05 AM Very happy to see that it’s “evolution not revolution” for this group as they have one of the best reputations around. Sharp new web as well.

Tom on 01 Feb 2013 11:05 PM Hope they continue to recruit to the same quality standard they have currently.

MOBILE MANIA

With the uptake of mobile banking outpacing that of online banking, Stargate’s Brett Spencer urged brokers to get onboard (Brokers must follow as customers go mobile, 4/2/2013). But it

and would have NO idea the stress and strain it places on the affected person, their families, their lives and the damage it does to reputations”.

Kev went so far as to take aim at brokers, suggesting that they could be part of the problem.

“It’s easy to give advice when you don’t have to lug the millstone around on your neck.

You guys just want them to have a clear rating so you can flog them more money.”

seems brokers had mixed views on the mobile tech on market.

MortgageBroker.com.au on 04 Feb 2013 11:27 AM How true! Our demographic IS getting younger, not just for home loans but all types of finance. Clients expect us to be up to date with technology, they associate that with being professional. They have got multitude sources of information and they expect us to have the same.

PeterT on 04 Feb 2013 11:44 AM Having an iPad and running a lenderdedicated app doesn’t make you competent with technology, in fact, it just chains you to that lender. I’ve yet to see a simple app that can run a decent cross lender product comparison or comprehensive eligibility assessment.

There’s also no technology that gives good advice either. The broker’s problem solving skills will always be the best point of difference.

What do you think? Leave your comments at brokernews.com.au

SPOTLIGHT 27

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ONE YEAR ON What a difference a year makes … or not. Australian Broker reflects on the news that made headlines 12 months ago Australian Broker Issue 9.03

No hold on broker backlash after RBA surprise Last February, the Reserve Bank shocked economists and brokers when it chose to leave the cash rate steady at 4.25%. After a couple of successive cuts, the stage was set to see further easing. Instead, the bank drew ire for remaining on the sidelines.

What’s happened since?

Another February, another ‘wait and see’ approach from the RBA. The difference?

This time the rate hold follows an aggressive easing cycle that has seen the Reserve Bank drop rates 125bps over the last year. Most economists believe the RBA will return to its easing cycle in the months ahead.

“We won’t forget Diploma deadline,” MFAA warns As the 30 June deadline for finishing the Diploma loomed, the MFAA warned brokers that it would soon be contacting brokers who had yet to supply evidence of their course completion. MFAA CEO Phil Naylor warned that brokers who missed the deadline could risk losing their MFAA accreditation.

What’s happened since?

Following this dire warning, the MFAA extended its Diploma deadline until 31 January of this year. Naylor said the changes were about getting members across the line, with only 70% of its membership having been on track to complete the Diploma by the previous deadline.

Referral relationships that reap rewards Establishing and maintaining these relationships is vital

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s you prepare for a successful 2013, it’s important to put some energy into where the majority of your business is likely to come from – and Fiona Mackenzie of Macquarie Practice Consulting says research continues to show that referrals trump all other forms of business leads.

“In terms of attracting new clients, our benchmarking research has been consistent over the past five years in showing that it’s really referrals from existing clients and accountants that are the key sources of new business.”

Mackenzie tells Broker TV it’s difficult for many borrowers to decide who to consult when choosing a home loan and says many end up seeking advice from people they trust either personally or on a professional level.

However, establishing a successful referral relationship does take a bit of work and Mackenzie says there are three things to keep in mind when establishing a professional referral relationship: 1. Make sure there’s a good fit between your businesses. This means making sure they’ve got a similar client base, similar levels of service and that the product mix is complementary.

2. Ensure you’re both equally committed to the relationship and making it work.

3. Make it commercial when developing a referral relationship with another finance professional.

“Be clear what constitutes a lead. What does that look like? How many are you expecting? Working through those things over time is really important to make these sorts of referral relationships work – which ultimately brings new clients to your business,” says Mackenzie.

Referral relationships are an ongoing commitment. Mackenzie says brokers repeatedly make the same mistakes, including not spending time nurturing referral relationships, or taking a ‘set and forget’ approach.

“Your referral relationships really need to see you taking leadership and showing your confidence in terms of what you’ll do with clients and how you’re seeing things working out for them.”

“With so much changing in the environment, what may have been the secret to your success in the past may well not be the formula for success going forwards.”

PEOPLE

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28

UP FROM THE ASHES An accident may have left industry newcomer Aaron Russell-Smith in a wheelchair, but it hasn’t dampened his determination

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ledgling broker Aaron Russell-Smith can’t wait to start up his business in early March. He’s got his Certificate IV, he’s got bags of enthusiasm, and his wheels are positively on fire.

Yes, wheels. Following a workplace accident at his last job as a house painter that saw him fall three storeys and shatter his L1 vertebra, RussellSmith is paralysed from the waist down – but the Gold Coast resident says he won’t let that stop him from ensuring his clients are as comfortable as possible.

“I started thinking about becoming a mortgage broker when I got my house, back in 2007. I had a really good broker – it was my first time buying and he was excited for me. I want to share that excitement with others too…

I really want to help the Gold Coast community with the Australian Dream – everyone wants to buy a house and if I can help them do that, I’ll be a very happy person.”

But, while it may be easier, Russell-Smith says he’s not content to sit behind a desk,

waiting for clients to come to him.

“Getting a mortgage is a stressful process; you’re trying to build that rapport with clients and to me, going to a coffee shop or something is a much more relaxed atmosphere.”

As far as he’s aware, RussellSmith will be the only mobile mortgage broker in the country who uses a wheelchair. Since his arms are still fully-functioning, he’s able to drive his car using hand controls and he’ll be able to visit clients just like anyone else.

In fact, he says the hardest thing has been wrapping his head around the mortgage industry itself.

“Coming from not having any knowledge of the mortgage broking industry was quite difficult for me, especially the assignments [for the Certificate IV] because I had no one to help or guide me – but I passed in the end,” he laughs.

That said, Russell-Smith says he’s already started cultivating a referral network.

“I’m just in the process of setting everything up. I’m teeing up with a real estate agent nearby and a friend of

mine is a financial planner, so he’s going to throw a lot of leads my way.”

Working in the struggling Gold Coast property market poses a further challenge, particularly for a broker who’s just getting started, but Russell-Smith says there are signs of improvement that give him hope.

“What’s happened here is that they’ve cut a lot of red tape for buildings to go up. I think housing prices have increased 1.8% – and it’s a lifestyle here.

Everyone moves to the Gold Coast because it’s good weather and the beaches are closer.

There’s movement in the lower end of the market for properties and, if you’re extremely wealthy there are some good prices in the top end range as well.”

He says the fact that he’s in a wheelchair shouldn’t have an impact on his ability to conduct his business in the usual manner. When asked if there’s anything about his mobility that could potentially pose a problem, Russell-Smith just laughs.

“The top half’s good, the bottom half’s not – it just takes me longer to get out of the car.”

AFM HITS MILESTONE

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ustralian First Mortgage (AFM) celebrates its 10th year in business in 2013, with cocktail parties already in the works for offices across Australia.

Managing director Iain Forbes says he and his daughter and son-in-law started the mortgage manager back in 2003 and that a number of staff have been with them since day one.

“Most staff say they enjoy the family atmosphere because [joint directors] Tanya and David are my daughter and son-in-law. After all, I am Dad.” Forbes says he feels part of the reason AFM has stayed in business for the past decade is that they’re “focused on the broker”.

“We have no internal sales force, or agencies under the AFM banner. As such brokers do not compete with AFM

internal sales staff for the broker business. Personally, having been in the lending business for over 45 years, I believe in loyalty to our…brokers.”

HAVING BEEN IN THE LENDING BUSINESS FOR OVER 45 YEARS, I BELIEVE IN LOYALTY TO OUR BROKERS

CAUGHT ON CAMERA 29

brokernews.com.au brokernews.com.au

IN FOCUS

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ortgage broking and financial advising company Bernie Lewis recently saw its office take part in the Santos Tour Down Under Bupa Challenge Tour. The bike ride helps to support the Cancer Council and its efforts toward research, support, prevention and advocacy toward beating a disease that impacts one in two people.

Taormina, ht: pkiewicz, Pino From left to rig afioti, Stefan Li ar M t Na owther and , Cr no n e Roccisa ld Jones, Stephe ra Ge , Vito D’Aloia, Jo od wo rk Ki ic Mercer, Scott Sav Rechichi, Er s ki Chris Klimatsa

View more photos from this event at brokernews.com.au/industry-events

INSIDER

brokernews.com.au

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WORK STRESS LEADS Gifts to creep TO ALCOHOL ABUSE out your clients

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ix weeks into the New Year, many brokers are already feeling the pinch – and the consumption of alcohol is on the rise beyond just Friday pub sessions.

Recently released VicHealth statistics looked at the consumption of alcohol in Australia and found that, as stress increases (particularly for younger workers), so too does the ‘need’ for a wind down drink.

According to Febfast – a charitable trust that encourages people to take a break from alcohol in February – there is a strong correlation with returning to the workplace and returning to habitual drinking.

Howard Ralley, national director of Febfast, says a range of major employers have signed up to the month-long event.

While abstaining from alcohol for one month could be seen as treating the symptom rather than the cause, research by VicHealth found that participating in month-long abstinence events can have a long-term effect.

In fact, just under half of respondents report drinking less over the month following each occasion and nearly all of those drinking less intend to maintain the changes.

Furthermore, more than a third of those who reduced the frequency or amount of alcohol consumed after previous likeevents reported that they maintained the change for at least one year.

The holiday season has come and gone, but it’s never a bad time to show your clients how much you appreciate their business. Bottles of Merlot can get a bit bland, however, so we’ve put together five fresh ideas to help you make a statement with your next client gift.

THE SPIRIT DESTROYS THE ANIMAL’S VENOM, SO IT’S SAFE TO DRINK – BUT IT’S ALSO SAID TO ACT AS A STRONG APHRODISIAC

…CHOCOLATES…WITH YOUR FACE ON THEM

A cafe in Shibuya, Tokyo is offering its customers the use of a 3D face scanner, which in turn creates a silicon mould. The mould is then filled with chocolate truffle, perfectly capturing the shape of your smiling face, with the entire process costing $65 (plus a flight to Japan for the face scan).

…PERSONALISED FORTUNE COOKIES fortunecookies.com.au lets you choose a personalised message to place inside traditionally-shaped fortune cookies, with flavours ranging from rum to barbeque and the intriguingly-titled ‘special fruit cake’.

…SCORPION WINE

BORROWERS FAIL TO RESEARCH PRIOR TO SIGNING UP FOR A LOAN About one in seven borrowers fail to do any research at all before signing up to a home loan, according to comparison website homeloanfinder. com.au.

The site’s publisher, Jeremy Cabral, says many people go to their bank with the expectation that they’ll be looked after, not bothering to shop around.

However, MFAA CEO Phil Naylor says the results aren’t surprising – and neither should they be much cause for concern.

“It demonstrates an opportunity for brokers, because brokers provide that service. While it’s not surprising in terms of numbers, it shows there’s still great opportunity

for the broker channel to grow.”

Naylor says it’s the MFAA’s ongoing aim to promote its registered brokers and says the regulator conducts its own regular research into how consumers choose their home loans.

“According to the research that we carry out every six months or so, over 90% of consumers are generally aware of what brokers do and about 42% use brokers at the moment – and that number is growing.”

He says that, if it’s true 15% of borrowers fail to undertake any sort of research prior to selecting a loan, those who don’t represent a significant growth potential for home loan professionals in the future.

If you enjoy giving clients a bottle of fine wine as a thank-you for doing business, Vietnamese scorpion wine may be just the thing. Not only is it known for being a natural remedy for back pain, rheumatism, lumbago and other health conditions – and the ethanol in the spirit destroys the animal’s venom, so it’s safe to drink – but it’s also said to act as a strong aphrodisiac. Costs about $50, plus shipping.

…FLOWER BOUQUETS

are always appreciated and 2013 is all about being eco-chic. Why not tie the two together and offer one of these arty atlas bouquets from ethikl.com ($80)? Alternatively, make your own out of recycled loan documents.

…CHOCOLATE AND WINE A BIT TOO MUCH? Then perhaps a simple card is in order (nothing too over-the-top though). This one from Greeting Card Universe is elegant, yet understated ($3):

DIRECTORY brokernews.com.au

AGGREGATOR / WHOLESALE BROKER

PLAN Australia 1300 787 814 www.planaustralia.com.au Page 5

FINANCE

ARAP NSW & VIC 0415 210 434 QLD, WA & SA 0434 254 798 Page 15 Semper Capital Pty Ltd 1800 SEMPER (1800 736 737) enquiries@semper.com.au www.semper.com.au Page 21

LENDER

ANZ 1800 812 785 www.anz-originator.com.au Page 7 ING DIRECT 1300 656 226 introducer.ingdirect.com.au Page 9 Liberty Financial 131 133 www.liberty.com.au Page 3

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MKM Capital 1300 762 151 www.mkmcapital.com.au Page 8

Mango Credit 02 9555 7073 www.mangocredit.com.au Page 1

NCF Financial Services Pty Ltd. 1300 550 707 www.ncf1.com.au Page 6

Quantum Credit 1300 135 212 www.quantumcredit.com.au Page 11

Pepper Homeloans 1800 737 737 www.pepperonline.com.au Page 13

Rapid Capital 07 5562 2485 www.rapidcapital.com.au Page 4

RAMS 1800 616 082 http://www.rams.com.au/aboutrams/franchising-opportunities/ rams-franchising/ Page 17

WHOLESALE

REAL ESTATE

Look Property Group Residential Project Sales & Marketing 03 9827 8288 www.lookpropertygroup.com.au Page 19

Resimac 1300 764 447 www.resimac.com.au Page 32

OTHER SERVICES RP Data 1300 734 318 Page 23

Trailerhomes 0417 392 132 Page 27

SHORT TERM LENDER

Interim Finance 02 9982 2222 www.interimfinance.com.au Page 2

To advertise in Australian Broker call Simon Kerslake on 02 8437 4786