AUGUST 2013 ISSUE 10.15
$4.95 POST APPROVED PP255003/06906
+INSIDE + NEWS A look at what’s been making headlines P4
+ SPECIAL SECTION COMMERCIAL SPOTLIGHT
How you can get involved in commercial opportunities P12
+ WORKSHOP OFFICE SPACE
Making your home office productive P20
Attracting a new generation
The lack of young blood in the broking industry has been well-publicised over the past few months as spokesgroups continue to look for ways of attracting fresh faces to loan writing – and one aggregator has decided to tackle the issue head on.
hoice Aggregation CEO, Stephen Moore, has announced that the group will be launching a series of cross-country seminars come September in an effort to attract a new generation of brokers. FULL STORY PAGE 16
Your mobile habits could be hurting your client meetings P22
+ PEOPLE MONOPOLISING THE MARKET
Paul Giezekamp shapes his own destiny P26
+ CAUGHT ON CAMERA Tiffen & Co’s Australian cycling team P29
WHAT THEY SAID...
BUILDING GOING BUST New home construction dropped off in every state but one for the March quarter NSW
“You simply can’t put a barrier in front of education, as it’s an invaluable part of a professional person’s business needs” P10
DID YOU KNOW?
Mortgage inquiries were up 6.9% in the June quarter compared to last year, the biggest increase since 2010.
*The reward being offered by AFG’s Brett McKeon for the successful prosecution of a defamation case against the person spreading the rumour that the aggregator is for sale
TO RENT OR BUY? Home values since 2007 have been outpaced by rental growth across Australia’s capitals
Home value growth
Rental value growth
Source: RP Data
“All the banks seem to want to target each other’s clients, so it’s been a good opportunity for us refinancing” P23
“If we’re providing a broker with an opportunity not just to sell a home loan, but also an insurance policy, then let them share in the revenue” P27
“My advice for brokers looking to diversify and add more income stream is…a lot of [people] are trying to recreate the wheel” P28
Resimac scores RHG acquisition ■ Resimac has successfully outbid Pepper and
acquired mortgage business RHG. RHG directors accepted the non-bank lender’s latest bid of 48 cents per share, as well as a three-cents-per-share dividend, with a total payment of 51 cents per share. The final sum places the company’s value at $157.3m. Resimac initially offered 44.1 cents per share for RHG, which was countered by Pepper’s bid of 46 cents per share. RHG consists of the remnants of mortgage firm RAMS, which was sold to Westpac in 2007.
EDITOR Adam Smith PUBLISHER Simon Kerslake COPY & FEATURES JOURNALISTS Mackenzie McCarty, Aidan Devine PRODUCTION EDITORS Roslyn Meredith, Moira Daniels ART & PRODUCTION SENIOR DESIGNER Rebecca Downing ART DIRECTOR Jonathan Phillips SALES & MARKETING SALES MANAGER Simon Kerslake ACCOUNT MANAGER Rajan Khatak MARKETING EXECUTIVE Anna Farah TRAFFIC MANAGER Abby Cayanan CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley MANAGING DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley
ASIC bans Perth brokers ■ ASIC has had a busy few weeks, first banning
Perth-based finance broker Mathew David Schmelzkopf for three years over falsified loan documents, and then banning fellow Perth-based mortgage broker Eric Ying Ching Chu after he faked a loan approval form. ASIC’s investigation found that, between November 2010 and September 2011, 13 loan applications Schmelzkopf submitted to a lender contained tax invoices that he had created, without
PEOPLE WHO DO NOT TAKE THEIR OBLIGATIONS SERIOUSLY WILL BE REMOVED FROM THE INDUSTRY – PETER KELL authority from the suppliers of the goods to do so. The applications mainly sought to secure approvals for motor vehicle finance totalling almost $366,000. Chu, formerly of Mortgage Specialists Pty Ltd, was banned for life after an investigation found that he had falsified a letter stating finance approval had been provided for a client. He then forwarded that letter to a settlement agent so that CBA would issue a loan in the amount of $256,000. “ASIC takes the role of gatekeepers very seriously. People who do not take their obligations seriously will be removed from the industry,” said deputy chairman Peter Kell.
MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy
NON-BANK LAUNCHES SMSF PRODUCT ■ Non-bank lender Homeloans Ltd has launched a
new self-managed super fund (SMSF) product with an 80% loan-to-value ratio in response to what it described as a “growth in demand”. The ‘Classic SMSF’ product enables established SMSFs to borrow funds for the purchase or refinance of residential investment properties. It has a maximum loan size of $500,000 and a variable interest rate of 5.99% (comparison rate 6.18%). “The new product certainly bolsters Homeloans’ SMSF offering and enables us to provide solutions depending on customers’ unique needs,” said Greg Mitchell, Homeloans’ GM, sales.
CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Adam Smith tel: +61 2 8437 4792 firstname.lastname@example.org Advertising sales Simon Kerslake tel: +61 2 8437 4786 email@example.com Rajan Khatak tel: +61 2 8437 4772 firstname.lastname@example.org Subscriptions tel: +61 2 8437 4731 fax: +61 2 9439 4599 email@example.com Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Toronto, New Zealand, Denver 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.
ARE YOU BEING PAID ENOUGH?
UNITED STATES OF AMERICA
■ Australians expecting to receive a high pay increase in the new financial
BAD MORTGAGE SETTLEMENT DOESN’T DENT BIG BANK PROFITS
UBS, Switzerland’s largest bank, has released results showing a nearly two-thirds increase in profit, Reuters has reported. The betterthan-expected earnings come in spite of a settlement with the Federal Housing Finance Agency (FHFA). The FHFA sued UBS, along with 17 other banks, over the sale of mortgage-backed bonds to Fannie Mae and Freddie Mac. In releasing its second-quarter results today, UBS said it had reached an agreement in principle with the FHFA over the suit. UBS did not reveal the amount of the FHFA settlement, but Reuters has reported the bank took a charge of around $920m to cover litigation costs, provisions and writedowns. Reuters said the bank, along with 13 others, last week lost a bid to have a US appeals court intervene in their cases with the FHFA.
NO US HOUSING BUBBLE IN SIGHT
Rising mortgage rates in the US have spurred fears of another housing bubble, but CoreLogic has shared a more optimistic housing recovery outlook in its July MarketPulse report. CoreLogic chief economist Mark Fleming, PhD, and deputy chief economist Sam Khater say the market is not experiencing a housing bubble. Instead, the recent rise in mortgage rates is helping to slow the pace of current appreciation, preventing another bubble. “Rates would have to rise appreciably higher to cause a housing market downturn,” the economists wrote in the report. Instead, housing affordability is near its height due to historically low interest rates and home prices.
CANADA TOP CANADIAN BROKER BEATING THE ODDS
MPA’s Canadian sibling, Canadian Mortgage Professional ( CMP ), will be releasing its Top 75 Brokers list soon, and one top Canadian broker has said a tough market in the country hasn’t kept him down. “Yes, it was a tough year in the channel; we had to work harder and smarter,” said Mark Goode, a broker with Dominion Lending Centres – Mortgage Man, in Orillia, Ontario. The Ontario broker placed 16 in last year’s CMP magazine Top 75 Brokers list, recording $77.8m in funded volume on 435 deals for 2011. And although it was a struggle, Goode said he upped his game by selling solutions, not product. “I do not use rate sites; I believe that I am selling a solution, not a product,” he told MortgageBrokerNews.ca. “Somebody can and will always beat your rate. I do not advertise rate.”
year could be disappointed, according to a nationwide survey of pay movements by global management consulting firm Hay Group. The 2013 Australian Salary Movement Index report has predicted the average pay increase for the coming 12 months across all sectors will be 3.5%, the slowest growth rate seen since the GFC. In the past 12 months, Hay Group said pay increases to fixed wages were fairly steady at 4.8% for the resources sector, 4.3% for the industrial and service sector, and 3.6% for the financial industry. Perth workers are the highest paid, at 6.8% above the national average (up from 1.3% the previous year). Sydney workers earn the national average, while Brisbane workers earn around 0.4% less than this. Melbourne salaries are 3.1% lower than average and Adelaide’s sit even further below, at -3.2% less than the average.
Top mortgage team switches to LJ Hooker ■ One of Australia’s most
experienced and successful home loan writers and his team has joined LJ Hooker Home Loans, servicing the southwest area of Sydney. Karl Mifsud, formerly of RAMS, said joining the LJ Hooker family and helping residents in key mortgage belt areas of Sydney was a “very exciting prospect”. “I am joining as a franchisee, principal and director and really looking forward to helping the community with all their home loan and investment property needs. I’ve been involved for years in all facets of the industry
– growth, start-ups, sales, and helping clients secure their home and investment properties. My team and I together have more than 100 years’ experience, which makes us reputable, trustworthy and incredibly knowledgeable.” National LJ Hooker Home Loans manager Paul O’Regan said Mifsud “jumped” at the chance to join the LJ Hooker Home Loans team. “Karl could see straight away how competitive the LJ Hooker Home Loan offerings are and was also keen to be part of a growing team where we’re recruiting even more home loan franchisees.”
Something’s ‘eating’ into our productivity ■ Brokers and other Australian workers are skipping lunch, eating
at their desks and catching up on “personal admin” in ever-increasing numbers, according to research conducted by ING DIRECT. The lender said that lunch breaks are “disappearing” as Australians admit work and personal demands are “eating into” their break times. Almost one in three of us (28%) are eating at our desks, and a similar proportion (33%) are skipping lunch entirely at least once a week, while one in 10 “usually” work through their lunch breaks. Health and productivity expert Andrew May believes this could be having a big impact on the overall FOOD FOR THOUGHT health of many The typical lunch break is between Australians. 15 and 30 minutes “What I find scary 37% of us spend lunchtime about this research is catching up on phone calls, 31% that many Australians do personal admin, and 30% go aren’t even seeing the shopping while 24% catch up on social media light of day during their work hours, which has a Almost one in three use detrimental impact on their lunch break to catch up on work health, let alone 9% of Australians say their lunch productivity and break has become less regular in the managing stress.” past 18 months
7% use their lunch break to go to the gym
Commercial broker takes home top bank accolade
New-home lending up in all states but one ■ New-home lending
experienced a slight upswing in May, according to ABS housing finance figures, signalling positive news for brokers in all but one state. The number of loans for the construction and purchase of new owner-occupied homes rose by 0.6%, to a level that was 18.1% higher than a year earlier.
MUCH OF THIS IMPROVEMENT WAS DRIVEN BY LENDING FOR NEW HOMES, WHICH INCREASED BY 17.2% FOLLOWING LAST MONTH’S WEAK RESULT – DIWA HOPKINS
“Looking at new-home lending across the states and territories, it is encouraging to see that
these improvements have been reasonably broad-based. In most jurisdictions, the number of loans over the three months to May 2013 is substantially higher than 12 months ago,” said Housing Industry Association economist Diwa Hopkins. However, Tasmania remains an exception to the rule, with the state continuing to suffer a “particularly protracted decline”, according to Hopkins. “In terms of lending to investors, in aggregate, the value of lending was up by 1.5% in May. Much of this improvement was driven by lending for new homes, which increased by 17.2% following last month’s weak result.” In May 2013 the seasonally adjusted number of housing finance commitments (for both new and established owneroccupied housing) increased by 1.0% in NSW, 2.6% in Victoria, 3.9% in Queensland, 0.6% in SA, 3.4% in WA, 1.7% in Tasmania and 4.7% in the NT. The total number of housing finance commitments fell by 0.5% in the ACT.
■ Westminster National CEO Bruce Williamson
took home Bankwest’s National Commercial Broker of the Year award at the lender’s recent inaugural Super Broker Summit and Awards night. An initiative of Bankwest Business, the two-day event brought together 20 delegates at Bankwest Place, the institution’s Perth headquarters, to engage in interactive sessions on Bankwest’s broker distribution strategy for the 2013/14 financial year and beyond. Williamson said he was honoured to take home the top accolade. “Bankwest Business works closely with its broker partners, and the commercial broker channel values the support Bankwest provides. These awards highlight the value Bankwest places on the commercial broker network.”
BANKWEST’S COMMERCIAL BROKER OF THE YEAR WINNERS: National Commercial Broker of the Year: Bruce Williamson, Westminster National WA Commercial Broker of the Year: Mike Coombes, Southshore Finance Vic/SA Commercial Broker of the Year: Graeme Martin, Nixon Finance NSW/Qld Commercial Broker of the Year: John Petzke, Right Angle Group
White fuming at $2k education cap ■ The Treasury’s proposal to cap work-related education expense
deductions at $2,000 from 1 July 2014 could have a detrimental impact on brokers, particularly those seeking to diversify, according to Finance Brokers Association of Australia president Peter White. “[The legislation] provides nothing but a negative result for industry … or clients of any professional services business (as this could set precedents across a wide range of business services),” said White. “You simply can’t put a tax on or put a barrier in front of education, as it’s an invaluable and integral part of a professional person’s skill set and business needs – and the needs of their clients.” White said he would be meeting with shadow minister for financial services Mathias Cormann and shadow minister for education Chris Pyne sometime in the next three weeks to discuss the “very bad piece of proposed legislation” and the impact it could have on brokers. The Treasury’s current proposal suggests all expenses incurred in education activities would be subject to the cap, including expenses for “both formal and informal education”. This includes registration fees paid for conferences, workshops and seminars, as well as tuition fees and travel expenses, among other costs. But White said the cap was inappropriate, given that brokers are largely already paying for their own upskilling, rather than relying on government aid.
Ethical banking board draws major reps ■ The board of the Banking and Finance Oath (BFO) has
5 OUT OF 6 ABS figures show dwelling commencements fell in five out of six states in the March quarter Source: Fitch Ratings
announced the formation of an independent review panel to assess individual cases of unethical behaviour within the banking and finance industry. The oath comprises of a set of ethical standards, encouraging members of the banking and finance industry to support the motion to improve ethical standards across the industry. As a condition of becoming a signatory to the oath, all those involved must abide by the standards it sets out. If a signatory is found to be operating in conflict with the standards of the oath, they can be referred to the review panel, which can then objectively review the validity of the case brought to them. The BFO panel, led by the executive chairman of the Macquarie Group in Melbourne, Simon McKeon, is made up of independent industry representatives, comprising between 12 and 36 individuals, selected to sit on the review panel on a case-by-case basis by the panel president. The BFO’s chairman, AMP Capital CEO Stephen Dunne, said it was “very pleasing” to have people of such calibre take up this important function. “The BFO Panel will review individual cases of unethical behaviour and have the opportunity to ‘name and shame’ signatories, and ultimately remove from the signatory list those who they believe are guilty of not upholding the desired ethical standards of the BFO,” said Dunne.
FBT changes not beneficial for brokers ■ MFAA CEO Phil Naylor has expressed concern that a planned federal
government change to fringe benefits tax (FBT) claims for cars will increase costs and the administrative burden for brokers and their clients. “This has created confusion and will increase costs for member finance brokers dealing with clients on this matter and on many business owners themselves. It also increases the administrative workload on businesses and employees,” he said. Naylor said businesses and financial advisers required certainty and that an abrupt change like this one did not give people confidence that they could make long-term decisions. “The changes were developed without any input from industry and will affect the entire automotive supply chain, from the manufacturer through to the brokers who give professional advice and provide finance to business,” said Naylor. FBT is calculated by one of two methods. The so-called statutory 80–20 method assumes 80% of use is for business and 20% is for private purposes. The planned changes will no longer allow workers to claim a 20% tax concession on the cost of their cars without proof. A log book can be used to record exact usage. In both cases, private use is subject to FBT that is paid by the company. Under the – PHIL NAYNOR planned changes, the 80–20 method will be scrapped and log books made compulsory.
THE CHANGES WERE DEVELOPED WITHOUT ANY INPUT FROM INDUSTRY AND WILL AFFECT THE ENTIRE AUTOMOTIVE SUPPLY CHAIN
SPECIAL REPORT 12
Building on the commercial opportunity Commercial lending presents an opportunity for brokers to diversify their revenue, and getting involved may not be as difficult as you think
ommercial deals are an all-or-nothing prospect for some brokers. Either they thrive off of commercial lending, or they steer well clear of it. But is there a place for the broker who does the occasional commercial deal? And can primarily residential brokers successfully integrate commercial lending into their business? We talked to some of the nationâ€™s foremost commercial lenders about the opportunities that exist in the space, the pitfalls to avoid and how to make lending to business part of your business.
SPECIAL REPORT 13
WHAT’S THE CURRENT STATE OF DEMAND IN THE COMMERCIAL MARKET? IS IT WORTH BROKERS LOOKING INTO?
STEVE LAWRENCE, HEAD OF ASSET ORIGINATION COMMERCIAL, LA TROBE FINANCIAL
“Our own figures, and evidence sourced from aggregator groups, indicate that brokers’ volume of commercial loans has risen. Our activity in this space has been very busy with solid flows for our traditional solution-based lending as well as newer products such as Lease Doc. We have noticed a significant increase recently in the smaller development finance up to $2m loan size, which indicates to us that our product remains strong and flexible in this space with the added bonus that we are able to complete the take out or completed dwelling finance on the other side.”
PETER VALA, HEAD OF SALES, THINKTANK
“From a commercial property specialist’s perspective, there has definitely been an increase in purchases over the last two quarters while there has also been a marked uplift in refinancing and requests for equity release by existing owners for business and personal investment. Market conditions over recent years have tended to be stop start, but we are seeing evidence of much greater stability and consistency emerging so our outlook for the remainder of the year and into 2014 is quite positive at this stage.”
“A BROKER’S BUSINESS REVOLVES AROUND THEIR CLIENT BASE AND IT IS PARAMOUNT THAT THE BROKER REMAINS A TRUSTED ADVISOR … ACROSS THE RANGE OF THEIR FINANCIAL REQUIREMENTS” – PETER VALA, THINKTANK
SPECIAL REPORT 14
DID YOU KNOW
WHAT DO YOU SEE AS MAJOR GROWTH AREAS FOR COMMERCIAL LENDING THAT BROKERS SHOULD BE AWARE OF?
WHY SHOULD BROKERS LOOK AT THE OPPORTUNITIES IN COMMERCIAL LENDING?
Commercial finance rose a seasonally adjusted 2.5% in May, following on a 2.7% rise in April Source: ABS
SURESH PILLAI, GENERAL MANAGER OF COMMERCIAL FINANCE, LIBERTY
“We’re seeing emerging demand from self-employed business owners looking to release funds for working capital, consolidate debts and even meet ATO demands. The other big area of growth potential is investors and business owners looking to acquire commercial property via their SMSF.”
STEVE LAWRENCE, HEAD OF ASSET ORIGINATION COMMERCIAL, LA TROBE FINANCIAL
“We see Lease Doc – where serviceability is tested against the lease on an income producing property – as an opportunity for growth as investors position themselves in income generating assets. This particularly suits borrowers who don’t want all their business with one provider. Other traditional sections of the market such as the smaller size development finance have been subdued recently and any major movement here will depend on re-engagement by the major banks.”
PETER VALA, HEAD OF SALES, THINKTANK
“A broker’s business revolves around their client base and it is paramount that the broker remains a trusted advisor of their customer to as great an extent as possible across the range of their financial requirements. By having at least a sound working understanding of commercial lending, brokers are able to assist with their customer needs, retain their trusted advisor position, protect their client base and generate additional income.”
SURESH PILLAI, GENERAL MANAGER OF COMMERCIAL FINANCE, LIBERTY
“Commercial lending is a good way for brokers to offer more value to your customers. Almost one in five Australians are self-employed or run a small business, so many of your clients could already be in need of commercial finance.”
WHAT ARE SOME OF THE POTENTIAL CHALLENGES PRESENTED BY COMMERCIAL LENDING?
SURESH PILLAI, GENERAL MANAGER OF COMMERCIAL FINANCE, LIBERTY
“The main challenge is the perceived difficulty of a commercial deal. However, most lenders, like Liberty, recognise that some brokers may not have extensive experience in commercial lending. That’s why we provide training and deal-by-deal support. In fact, we have a dedicated team to assist brokers who are new to commercial lending. I’d encourage any broker thinking about moving into commercial lending to give us a call so we can help find and convert these opportunities.”
STEVE LAWRENCE, HEAD OF ASSET ORIGINATION COMMERCIAL, LA TROBE FINANCIAL
“More complicated transactions will require a broker to have a deeper knowledge of products and the ability to correctly package and analyse the financial strength of the underlying proposal. This is where a close working relationship with a supportive and solutions based lender becomes imperative.”
WHAT’S THE BEST WAY FOR A BROKER TO GET INVOLVED IN COMMERCIAL LENDING? SHOULD THEY TRY TO DIP THEIR TOE IN THEMSELVES, OR LOOK TO SET UP REFERRAL RELATIONSHIPS?
PETER VALA, HEAD OF SALES, THINKTANK
“The best way to get involved with commercial lending is to establish, or gain access to, a number of trusted lenders with whom a broker can genuinely workshop and whiteboard deals. Once the access and assistance is there, the funding of a commercial property is not too dissimilar to that of a residential property. Acquiring knowledge across more complex commercial matters and business loans can be progressively learned along the journey as a broker establishes themselves in the commercial market.”
STEVE LAWRENCE, HEAD OF ASSET ORIGINATION COMMERCIAL, LA TROBE FINANCIAL
“Brokers should call La Trobe Financial. We have an experienced commercial team available to support those inexperienced brokers. Also most aggregator groups now have referral arrangements with established commercial brokers who can offer assistance. We have excellent relationships with our aggregator support BDMs in each state and territory. It could be as simple as making a single phone call to assess the likelihood of a scenario going forward that could start a broker on the path to commercial lending.”
The total value of commercial finance in May Source: ABS
CONTINUED FROM PAGE 1
Attracting a new generation
he first thing we’re doing is running a series of seminars on the future of mortgage broking, so that is unashamedly educational. It’s designed to help those who are new to broking, or considering broking, understand the importance of the industry, the appeal of the industry and the advantages of technology and online trends to building your own broking business… The focus of the sessions is really on the future of broking, he says. Moore believes there’s a distinct lack of understanding around how viable a career in broking can be. “It’s such a fantastic career opportunity. Just not enough people know what a great career it is.” However, while the emphasis in recent media reports has been on attracting young people, some have argued that the energy is misspent – that industry bodies would do better aiming their recruitment initiatives at experienced finance professionals, rather than people fresh out of school. Moore believes it’s not a case of ‘one or the other’. “First and foremost, it’s about attracting experienced professionals and young people. It’s not about either/or. The reason why that’s important [is] what we’re seeing is really a classic supply and demand issue. We’ve got growing consumer demand for quality advice, which brokers provide. We know that we’ve increased the broker share of the market, but we have a shrinking pool of brokers. We have a real mismatch on supply and demand, so we simply must recruit new talent to meet that growing demand. That includes experienced professionals, but it also includes young people.” Furthermore, he says, younger brokers have an important position in the industry. “Young people really have a great role to play in a changing world; that’s combining the digital world – the power of online – with the advice and superior experience that brokers can provide. And it’s young people that are ideally placed for the future of our industry.” He also isn’t buying into the argument that clients will shy away from young brokers under the assumption that they’re inexperienced. “We’ve talked about this with a number of brokers – it’s more of a perceived issue than anything else. We have a number of what would be considered young brokers, you know, twentysomething, who … run very successful businesses targeted right across demographics. It’s a psychological barrier, not a real one. When push comes to shove, it’s all about the quality of advice – and that’s not age specific.” While he acknowledges that the non-salaried nature of the loan writing business can put younger people off, Moore isn’t convinced that getting aggregators to pay new entrants is the best option
FIRST AND FOREMOST, IT’S ABOUT ATTRACTING EXPERIENCED PROFESSIONALS AND YOUNG PEOPLE. IT’S NOT ABOUT EITHER/OR
either. “I think the challenge is how sustainable that is – I think that’s certainly one approach. The resistance for people to become a broker, particularly if you’re an employee, is the day that you start, your income can be zero and that is certainly a key barrier.” But Moore doesn’t believe the lack of immediate income is the primary reason behind a dearth of young people in the industry. And, while bigger aggregators may be better able to afford salaries for new brokers, Moore says smaller outfits still have much to offer in other areas. “I think the root cause is still a lack of awareness on how good a profession broking can be.” Nevertheless, he says the ageing broker demographic is an industry-wide issue – and something needs to be done. “It’s a real industry problem. We need to make sure we’re listening to the full spectrum of consumers who want broking advice and that includes younger clients coming through as well. This is one of the most important industry issues: growing demand for quality advice from a shrinking pool of brokers. In the short term, that’s great, but looking beyond the short term, it’s a real problem because we’re simply not going to be able to keep up with demand. That won’t help us realise the industry’s potential.”
How to make working from home work for you If you choose to make your home your office, make sure it’s a productive one
recent article on Australian Broker Online (‘Work from home brokers treated with suspicion’) sparked debate about the merits of a shop front versus brokers working from home. While opinions differed sharply over the impacts on professionalism that working from home could have, the overriding message from commenters was that one size does not fit all. If you do find it more efficient (or desirable) to work from home rather than renting an office, a recent study has offered insight into productivity among those who do. Examining these trends can help to set you up for success. At a recent conference hosted by Macquarie University’s Faculty of Business and Economics, Professor Tim Bentley of the Auckland University of Technology (AUT) delivered a paper on productivity and working from home. In it, he showcased the preliminary data from around 800 New Zealand participants in the trans-Tasman Telework Productivity and Wellbeing Project – a collaboration between AUT and the University of Melbourne. Bentley believes that working from home – or teleworking – can actually increase productivity, and he is particularly interested in the interaction of variables that support good teleworking: the individual, the technology, the task, the environment, and the organisation. “Where some of these variables don’t sit well together, if people are poorly suited to their situation, their home environment isn’t right, the technology isn’t right, and so on, then there may be issues,” he said. The measures Bentley and his colleagues used in the project were self-reporting and managerial views. The participants were mainly European New Zealanders in permanent full-time work. A majority (57%) were non-managerial staff, while
the others (43%) were managerial. All worked in industries suitable for teleworking, including finance and insurance (34%), education (24%), professional, scientific, and administration (10%). While 16% of the sample teleworked for less than one hour per week, the vast majority (92%) teleworked for less than 20 hours per week. The mean number of hours teleworked was nine per week. More than three quarters of teleworkers (79%) worked at home; co-working hubs are still very uncommon. Only 17% of teleworkers had a written agreement regarding their arrangement. “Organisations aren’t really well prepared for this, and where things are happening they’re often ad hoc. One of the issues with productivity … is that managers are beginning to say in our interviews that they have not yet thought about the productivity issue and how you go about measuring that within an organisation,” Bentley explained. Other key findings were: • Low-intensity teleworkers (one to eight hours per week) had significantly lower teleworking productivity than hybrid teleworkers (nine to 24 hours per week) • Low-intensity teleworkers had significantly lower telework satisfaction and job satisfaction than hybrid teleworkers • Low-intensity teleworkers had significantly lower managerial support for teleworking than hybrid teleworkers • Managerial support is the single most important variable; it reduces social isolation and increases teleworking satisfaction and wellbeing and teleworking productivity “So is telework productive? In this sample yes, but it’s reliant on the necessary support … management support is the key thing, and that reflects a lot of what I’ve read in the literature,” Bentley said. What can teleworking brokers take away from this? While many teleworkers are employed by organisations, brokers are largely their own employers. A look at the findings, though, can still yield insight. It’s important to note that low-intensity teleworkers show lower job satisfaction. It may seem that the most attractive facet of working from home is the flexibility it provides. But flexibility can also be dangerous. When the distractions of home start to encroach upon the home office, teleworking brokers can find themselves less productive, and less satisfied. One strategy could be to devote a separate and specific space to the home office. While taking client calls and filling out applications and fact finds on a laptop while sitting on the couch might be attractive, it’s not necessarily conducive to productivity. By keeping the home office separate and sacrosanct from other areas of the house, brokers can cut down on distractions. Another thing to take away from the report is that broking is actually well suited to teleworking. The largest proportion of teleworkers surveyed in the study were from the insurance and finance industries. Perhaps most striking is that managerial support has the greatest impact on productivity. This is where teleworking brokers can find themselves at a disadvantage. For a work-from-home broker, it can be important to proactively seek out industry engagement. This could come in the form of PD days, aggregator functions, or even a mentoring relationship with a more established broker.
10 TOP LOCATION TIPS for investor clients Location is key when investing in property. Here are 10 tips to help cut through clients’ confusion For investor clients, finding the right location is critical to ensure strong capital growth. As a broker, you may not be able to advise clients on specific locations or properties, but here are some general tips that could give your clients a jump-start on where to begin looking.
1. KNOW THEIR BUDGET
For most buyers, their budget dictates which areas they can afford to live or invest in. “The best way to determine their budget is to meet with a mortgage broker or lender and obtain a preapproval,” says Lisa Parker, buyers advocate from Parker Investment Properties. “Knowing their budget is a must before they begin their search.”
2. NARROW DOWN THEIR OPTIONS
With their budget locked down, they’re in a position to choose from a short-listed number of suburbs where they can purchase their desired property within their price range. Parker suggests they save themselves some time by ringing agents in the area. “Ask what they can buy in their suburb within that price range, and if they can’t buy what they are looking for, ask which suburbs nearby will offer the type of property they want in their budget,” she advises.
3. MAP THEIR SUBURB
Most suburbs have preferred pockets. To best understand the suburb they’re exploring, take a map down to the local estate agent’s office and ask them to map out with a highlighter the different ‘pockets’ in order of popularity. In time, the suburb as a whole will gain in value and the less sought after pockets will become more popular, as the preferred pockets rise rapidly in price – but if they can get into a better pocket up front, they should enjoy faster capital growth.
4. EXPLORE NEIGHBOURING SUBURBS
Neighbouring suburbs offer great options for homebuyers and investors. For example, if buyers go to their favoured suburb and find that they can’t get the type of property they want in their budget, they could move to either side of that suburb until they find one that suits their budget and offers the qualities and features they’re seeking.
5. FOLLOW THE INFRASTRUCTURE
“Infrastructure drives property prices, which is why experienced investors follow infrastructure trends,” Parker says. “The EastLink did a lot to boost prices in areas like Seaford and Ringwood in Melbourne back in 2008, and the extension to Mornington – which commenced construction late 2010 – is already having an impact on areas not usually favoured, like Frankston North, Karingal and Carrum Downs.” She suggests that they look at where the government is upgrading infrastructure, as it is a sure sign of an up-and-coming ‘hotspot’.
6. ISOLATE LIFESTYLE ATTRACTIONS
Areas that offer lifestyle attractions are favoured by buyers and renters when compared with other suburbs that offer fewer amenities. “Walking tracks, large family parks and bushland, creeks, beaches and small community villages all offer unique points of difference,” Parker says.
7. WATER AND CITY VIEWS RULE
Enjoying water or CBD views is a major plus for any suburb. “In Seaford, Victoria, for example, buying on the beachside of the freeway commands an additional $100,000 more than similar properties on the eastern side of the freeway,” Parker explains. “The gap between beachside and non-beachside properties is increasing each year, making it more unaffordable for many new homebuyers and investors to get into the beachside market.”
8. HANG WHERE THE LOCALS HANG
“When investigating a new area, ask the agent why people like living here,” Parker advises. “Then pop down to the suburb’s most popular spots, whether that’s a local family-friendly picnic area or coffee spot, and observe the type of atmosphere and people who are there.”
9. TRANSPORT IS IMPORTANT
Regardless of whether they live in the inner city or outer areas, transport is important. “The more transport options available in a suburb, the more valuable the suburb will become over time,” Parker says. “Easy access to major roads and freeways is a major plus for outer suburbs, because the easier it is to travel to the CBD or other major employment hubs, the better the suburb will be for most buyers.”
10. DON’T LISTEN TO THE NAYSAYERS
“There are many suburbs across every state that locals will caution against buying in. But sometimes having a fresh set of eyes without knowing about a suburb’s ‘stigma’ can work in their favour, because they’re looking at the suburb based on the fundamental merits that make a suburb valuable,” Parker explains. “Stigmas will always be forgotten in time – and they will be pleased they bought into the suburb while it was still cheap.”
MARKET TALK brokernews.com.au
The hottest jobs in property Property analysts, residential development managers and industrial property managers are in demand at present in Australia’s property market, according to recruiting experts Hays Property. The company has released its latest Hays Quarterly Hotspots list of jobs in demand, which points towards the evolution of Australia’s job market. “The gloss has gone off the resources and mining sector, and we are moving away from a two-speed economy to a system of microeconomies that are creating pockets of employment opportunities, even in the most challenged sectors,” says Adam Shapley, regional director of Hays Property. “Demand is not evident in every function in every location, but there are pockets of specific skill shortages,” he says. “Employers are replacing departing staff and making selective staff investments in roles that can add immediate value to their business.” But Shapley warns that employers have high expectations when they recruit. “Employers will only make job offers to the top-tier candidates. They are still looking for industry-specific skills and background that matches their industry. “Job losses tend to be more visible than job gains, but we are seeing more jobs created than lost, and there is still tempered confidence in the market and in a number of sectors.”
Perth FHBs compete with investors A noticeable shift has occurred in Perth’s property market over the last 12 months, one that is likely to continue for some time, according to Damian Collins of Momentum Wealth. Collins explains that during the last eight or nine months rental vacancies in the WA capital have dropped to extremely low levels of around 1.9%, considerably tight for a city area as a whole. This has been coupled with strong rental growth last year and a stream of interest rate cuts. “Tenants are thinking, ‘I can get a loan and buy a home, and it’ll cost me the same as renting’, so a lot of people are moving out of the rental market and into home ownership,” Collins says. A spike in first home buyer (FHB) activity is translating to increased buying activity in the $400,000 to $500,000 price range, and even up to $600,000, to the point that there is a shortage of residential stock in this price range. “A balanced market is considered to be 12,000 to 13,000 properties [on the market], but we’ve been at 8,000 listings,” Collins says. “The sale market has been strong, and there is a shortage of stock, so we’re expecting the market will perform well. It’s moved already, but we’re predicting 6–7% growth in 2014.” Backing up Collins’ positive predictions for Perth is a new RP Data report detailing almost 800 locations nationwide where rental returns are forecast to double in value in the next decade. Of these suburbs – each selected based on their past performance – 181 are in WA.
DURING THE LAST EIGHT OR NINE MONTHS, RENTAL VACANCIES IN PERTH HAVE DROPPED TO ... 1.9% “From an investor’s perspective, these are the ones that have done very well in the last five years,” confirms the report’s co-author Cameron Kusher, adding that each location on the list has experienced “consistent rental growth of at least 7.2%”.
DEMAND IS NOT EVIDENT IN EVERY FUNCTION IN EVERY LOCATION, BUT THERE ARE POCKETS OF SPECIFIC SKILL SHORTAGES – ADAM SHAPLEY FAST FACT
Sydney’s auction clearance rate the weekend of 20–21 July, the city’s highest since the GFC Source: APM
ORGANISATIONAL BEST PRACTICES FOR ONBOARDING According to the Hays Quarterly Hotspots list, demand exists for the following skilled professionals in Australia’s property market: PROPERTY ANALYSTS – In response to greater capital transaction activity, especially foreign money and Australian Real Estate Investment Trusts, the need for property analysts has increased. RESIDENTIAL DEVELOPMENT MANAGERS – Urban infill residential project approvals have increased, which has fuelled this demand. RESIDENTIAL PROPERTY MANAGERS – These candidates are sought in response to the lift in residential sales. RESIDENTIAL AND COMMERCIAL VALUERS – This is a transient job function, with a shortage of people who remain in valuation. As a result, we see constant demand for relevant professionals. INDUSTRIAL PROPERTY MANAGERS – Given the expansion of industrial centres in many locations, demand has arisen for industrial property managers. DATA CENTRE MANAGERS – As more companies use cloud technologies and need hosting sites, the need for data centre managers continues to rise. CLIENT-SIDE PROJECT MANAGERS – Companies are outsourcing project management to consultancies to streamline costs, which is creating demand for client-side project managers. ASSET MANAGERS – The amalgamation of portfolios as companies attempt to maximise revenue from existing assets has fuelled the need for asset managers. CENTRE MANAGERS AND LEASING PROFESSIONALS – The expansion and refurbishment of several major shopping precincts around the country has fuelled demand for centre managers and leasing professionals in retail.
Is switching on turning your clients off? A new study shows the way you interact with your mobile devices could have a major impact on how you relate to clients
ablets and smartphones have become as ubiquitous in mortgage broking as in most other industries. There’s no shortage of technology pundits telling brokers that mobile devices are the future of the industry, and that changing client preferences mean that brokers need to jump on the mobile bandwagon. While there’s no doubt that mobile devices can be incredibly useful tools for brokers, and can make client meetings much more interactive, some new research has pointed out potential downsides to the tablet and smartphone revolution. Interestingly, it all comes down to how the devices can affect your demeanour. New research from Harvard Business School has found that those who regularly use smaller computing devices, such as smartphones or tablets, are likely to be more timid afterwards than those who use laptops or desktops. “People are always interacting with their smartphones before a meeting begins, thinking of it as an efficient way to manage their time,” says Maarten Bos, co-author of iPosture: The Size of Electronic Consumer Devices Affects our Behaviour. Despite this belief, it could actually do the opposite. The study found posture that contracts the body, such as folding arms or hunching over a small screen, decreases the levels of testosterone in the body. This can result in less assertive behaviour, which can affect meetings. The research consisted of a 75-person experiment, in which applicants were given – at random – a smartphone, tablet, laptop or desktop computer. After a number of exercises, applicants were given $2, and told they could choose to take it, or go for a “double or nothing” gamble.
PEOPLE ARE ALWAYS INTERACTING WITH THEIR SMARTPHONES BEFORE A MEETING BEGINS, THINKING OF IT AS AN EFFICIENT WAY TO MANAGE THEIR TIME – MAARTEN BOS While the results of who took the money and who gambled didn’t show correlation with the devices used, the true experiment lay in the researcher pointing at the clock and telling the applicant they would be back in five minutes to pay them. The applicants were told to come and get the researcher at the front desk if they didn’t return in five minutes. Instead of returning, the researcher waited up to 10 minutes and noted interruptions.
THE UPSIDE OF MOBILE This year’s report from the Sage Australian Business Index revealed that:
50% of all businesses agreed their staff could work away from the office,
with of these organisations introducing mobile working policies. Of the organisations implementing such policies, TWO-THIRDS have confirmed an addition to business value. Along with tangible ROI, THREE OUT OF 10 RESPONDENTS indicated ‘intangible benefits’, which included improved morale, staff satisfaction, productivity, and a drop in absenteeism.
While 94% of desktop users interrupted the researcher, laptops users were down to 88% and tablet users 71%. Only 50% of smartphone users interrupted the researcher. The results demonstrate an increase in meek and passive behaviour in the short time after using a smaller device, which can mean skimming notes and emails in the moments before a meeting could make one less likely to speak up and show initiative. While this doesn’t necessarily mean brokers should shun mobile devices before client meetings, it’s important to consider how using mobile devices can impact on how you relate to clients. Assertiveness and initiative can be important to clients, and constantly checking your mobile device during a meeting could be a major turn-off. “We won’t tell anyone not to interact with those devices just before doing something that requires any kind of assertiveness,” Bos said. “Mostly because people won’t listen; they will do it anyway. But if you realise that, ‘Hmm, I’m pretty quiet during this meeting’, then maybe you should pay attention to how devices impacted your body posture beforehand.”
THE COALFACE brokernews.com.au
Just the right angle For commercial broker John Petzke, success has come down to two things: timing and relationships Right Angle Group partner John Petzke must know a thing or two about timing in the marketplace. He and six colleagues started their Brisbane-based commercial mortgage broking firm 18 months ago when the market was at its lowest, and have watched their industry steadily expand ever since. “We started 18 months ago, which was probably, we thought, about the bottom of the market. And we were hoping it was the bottom of the market because a lot of the specialist commercial broking firms were closing their doors. It was a bit of a countertypical move, but we felt the time was right.” The upswing has also been accompanied by an increase in lender competition, which Petzke says he hasn’t seen since around 2007. “All the banks seem to want to target each others’ clients, so it’s been a good opportunity for us refinancing.” Petzke, who has been in the commercial broking industry for 10 years, says Right Angle Group’s clients “typically stay with us for good”. “Most of our business comes from referrals – we take the view that if you look after people they seem to keep coming back and referring other, like-minded people through. In addition to that, one of our key advantages – because there are seven of us – is that we’re able to share information. We did consider setting up individually, but we found that, as a collective, we have a much stronger proposition.” All of Petzke’s colleagues have worked together before, and he says shared values and commitment helped guide the group through the difficult start-up period – particularly important for Petzke, whose first child was born at the same time as Right Angle Group’s launch. “It was a lot [of work],” he laughs, referring to the stress
IF YOU LOOK AFTER PEOPLE, THEY SEEM TO KEEP COMING BACK AND REFERRING OTHER, LIKE-MINDED PEOPLE – JOHN PETZKE
involved in starting a company and welcoming a new baby. “I don’t think I would do that again!” He says the group’s ambition is to “grow with their clients”. “We’ve gone through a period of market retraction for a long time, basically since 2008. We, I believe, will start expanding personnel, etc, over the next couple of years as the market recovers. I think we’re just starting to see the recovery, so if you ask me if we’re going to have more staff in three years’ time than we do now, I’d say we’ll probably have a number of more people on board. But it’s difficult to predict what that number will be.”
FINANCIAL SERVICES 24
FPA speaks out on financial literacy
SIC is reviewing the National Financial Literacy Strategy, and the FPA has called for the advice profession to help improve financial literacy for all Australians. The FPA is concerned that lack of financial literacy and understanding could cause Australians to rely too much on government policies that may not be in their best interests. Further concerns were raised that the establishment of MySuper and the National Disability Insurance Scheme (NDIS) could make Australians complacent and “potentially create a false sense of security”. “It is appropriate that Australians understand the benefits of DisabilityCare but it is equally imperative that they understand and are aware of the limitations. This initiative does not replace the need to have adequate and appropriate insurance protection.” As well as being impersonal, MySuper cannot guarantee that Australians will have enough for super, and it is no more than a safety net, said the FPA. Possible actions to improve financial literacy included training teachers to teach financial literacy in schools, as well as increasing the number of financial counsellors to provide targeted guidance and support to those most at risk. The FPA suggested that greater focus should be placed on those who are disadvantaged and may not have access to tools
Major advice firm cops scrutiny
and resources. The list of groups that should receive greater focus included the long-term unemployed, those suffering from illness and injury, retirees reliant on the age pension, migrants, and young people who may be disadvantaged. “There is potential to establish a more formal program to facilitate financial planners to work with local schools to assist teachers with improving the financial literacy of students.”
THIS INITIATIVE DOES NOT REPLACE THE NEED TO HAVE ADEQUATE INSURANCE PROTECTION
DID YOU KNOW
98% The proportion of SMSFs the ATO found to be tax compliant in the 2012/13 financial year Source: ATO
ASIC WINDS UP MORTGAGE FUND
SIC has sought orders that multi-million LM First Mortgage Income Fund (FMIF) be wound up, and that independent liquidators be appointed as receivers. “It is ASIC’s view that the protracted litigation surrounding the FMIF is not in the best interests of investors and wishes to see the matter resolved as soon as possible”, said ASIC Commissioner Greg Tanzer. LM Investment Management collapsed in March this year. It is the responsible entity of seven registered managed investment schemes including FMIF. It also operates the LM Managed Performance Fund (LMMPF). In proceedings started by two investors of the FMIF, ASIC made a submission that registered liquidators from PricewaterhouseCoopers be appointed as the receivers to wind up the fund. “ASIC took this action as it believes that the appointment of receivers to the FMIF will allow the winding-up to proceed in the most efficient and cost effective way to provide the best chance of achieving the maximum return for investors,” said Tanzer. “As such, ASIC believes that the persons responsible for winding-up the FMIF should be appropriately independent.”
or nine months, an independent expert will monitor the way Professional Investment Services Pty Ltd (PIS) gives financial advice, to ensure that its advice processes meet the standards set out in a major enforceable undertaking (EU). The monitoring will test compliance of PIS’s personal advice with regulatory requirements, its ability to identify poor advice and the effectiveness of its advice audit and pre-vet functions. The expert monitoring program follows the conclusion of an EU in March 2012, that ASIC accepted from PIS in December 2010. ASIC had concerns that compliance and audit functions required further work. PIS has cooperated with ASIC’s inquiries. ASIC acknowledges the work done by PIS as a result of the EU and the monitoring program provides an opportunity to assess whether the implementation of the recommendations at the EU’s conclusion have been effective. The expert will report back to ASIC each quarter. PIS is one of Australia’s largest financial planning firms, with 527 advisers. ASIC deputy chairman Peter Kell said, “ASIC is focused on ensuring advisers do the right thing, so we will require further compliance reviews if we have concerns that advice standards are not consistently at appropriate levels. “ASIC recognises the positive response of PIS to the concerns identified and we encourage all financial services licensees to undertake robust testing of their processes to ensure consumers get high-quality advice”. ASIC will continue to monitor PIS’s advice process and its response to the independent expert’s findings.
ASIC RECOGNISES THE POSITIVE RESPONSE OF PIS TO THE CONCERNS IDENTIFIED AND WE ENCOURAGE ALL FINANCIAL SERVICES LICENSEES TO UNDERTAKE ROBUST TESTING OF THEIR PROCESSES TO ENSURE CONSUMERS GET HIGH-QUALITY ADVICE
ASIC’s debt consolidation concerns The regulator has pointed to ‘weaknesses’ in the debt consolidation industry
Salaries for new brokers? There’s been a lot of talk in the industry about attracting new entrants by offering them a salary. One commenter argued that new entrants need to be made aware of the realities of broking before they enter the industry.
“There needs to be a balance. We always explain that any entrant to our industry needs to be able to cover their living costs for a period of six months and have five years’ banking experience. This industry is not built solely on book smarts, and a lot of training I have seen is logical but not practical given what the industry requires to be a successful business owner and mortgage broker. If you are keen to enter the industry, make sure you have a strong source of funding behind you for six months and buddy up with proven performers. You are better to pay a proven performer a healthy split until you find your feet. Better than paying $10-15K on purely book training where the drop-out rate is considerable. There is a balance but we have to take considerable care of new entrants, not just sell the dream that can very quickly turn into a nightmare.” Marty on 22/07/2013 at 10:40AM
What do you think? Leave your comments at brokernews. com.au
n ASIC review of debt consolidation providers has found that Australian credit licensees providing these services are at risk of not complying with their responsible lending obligations. Brokers were divided on the review, and the debt consolidation industry in general. Daniel Blaine argued the review itself was a misallocation of the watchdog’s resources, given some of the other issues in the industry. “Again another example of ASIC focusing on minor issues while significant matters go unattended. ASIC loves this stuff as it gives the appearance of doing something and justification for their existence. Property spruikers go about their business as usual, serial coy director bankrupts rise from the ashes and coys go out of business today and start up again tomorrow. What is the response from ASIC? ‘We can’t do anything – they have filed all the correct paperwork. Anyway we’re too busy chasing some poor broker or planner regarding file notes!’” Steve McClure pointed out that many credit companies remained virtually unregulated, often putting clients into further debt. “The credit card provider isn’t exempt, but they still dish out debt virtually on a low-doc basis. Motor dealer finance managers also don’t have the same obligations as brokers in regards to consumer regulated contracts.
BROKER COMMS ‘SECRET’
A Fairfax journalist recently angered the industry by claiming broker commissions were kept secret. Brokers took umbrage with the false claim. QEDRisk on 16/07/2013 at 9:47pm “I’m actually surprised that the journo that wrote that still has a job. Most uneducated and poorly focused piece of writing I have read in a while. Still, use
So it is very likely that the debt we are trying to responsibly manage and resolve for the client, wasn’t responsibly obtained in the first place.” Mac said that, while debt consolidation wasn’t ideal, it could save some clients from even worse pain. “We all know this part of the industry is a dirty game, but if someone is about to go down because of excess personal debts which could result in them losing the family home anyway, ASIC needs to be clear that they are not saying the consumer shouldn’t be allowed to make that dirty deal as a last chance get out of jail card. Then hopefully they can refinance back to mainstream a few years later.”
ASIC LOVES THIS STUFF AS IT GIVES THE APPEARANCE OF DOING SOMETHING AND JUSTIFICATION FOR THEIR EXISTENCE – DANIEL BLAINE
enough sloganism and people will take notice. Works for Tony Abbott.” Ticked Off on 16/07/2013 at 11:58am “Funny thing is reporters don’t seem to be required to have the facts straight or from a reliable source to go to print. This is reckless at best. Do your due diligence first.”
ONE YEAR ON 27
ONE YEAR ON
Macquarie looks to the future
What a difference a year Macquarie’s Doug Lee says the makes … or not. Australian bank has spent the last year Broker reflects on the punditry, news and investing in service influential trends that made headlines ooking forward to the year ahead, 12 months ago Australian Broker Issue 9.15
ANZ’s Mike Smith eyed for Barclays top job After former Advantedge head Steve Weston was snatched away by British banking giant Barclays, it looked as though the bank was going to tap the Aussie talent pool (albeit for one of its own countrymen) again. ANZ chief executive Mike Smith was rumoured to be in the running to replace former Barclays chief Bob Diamond. Diamond and chairman Marcus Agius resigned in the wake of claims the bank had manipulated interest rates during the 2008 crisis.
What’s happened since:
ANZ got to keep its outspoken exec, with Barclays instead opting to promote from within. The bank elevated retail and business banking unit head Antony Jenkins to the top role. Forbes called the move a shift away from the bank’s former focus on investment and trading. Smith remains firmly in control of ANZ, and given Barclays’ involvement in the Libor scandal, he may be a lot happier for it.
AFG’s Leedham replaces Kane as MFAA president
In the wake of being appointed to the role of general manager of broker platforms for Advantedge, Steve Kane resigned as MFAA president and was replaced by AFG SA state manager Martin Leedham. Kane had indicated he was reviewing his role as MFAA president following his promotion from CEO of FAST to head up Advantedge.
What’s happened since?
It’s been a big year for Kane. Industry stalwart John Flavell was promoted from his position as general manager of NAB Broker distribution to executive general manager of wealth advice. Kane was then elevated from his role at Advantedge to take on the position left vacant by Flavell’s move. Advantedge has not named a replacement for Kane, but has rather brought the heads of its aggregation groups, PLAN, Choice and FAST, into a closer role working with NAB.
banks need to think about upcoming challenges to overcome and opportunities to be capitalised upon. Doug Lee of Macquarie Bank tells BrokerTV the last 12 months have been all about making Macquarie’s service proposition more attractive by investing heavily in both people and processes. “What we’ve really focused on over the last 12 months is to invest very heavily into our back office, both from a resource point of view and a technology point of view. When I talk about resources… we’ve recruited a lot more additional people into our credit teams and we’ve tried to do that as much as possible ahead of time. So, therefore, should any volume spikes occur, we’ve actually got the people already in place to keep our level of service consistent.” Lee says that revenue diversification is the largest challenge facing the industry right now and that Macquarie is actively pursuing ways that brokers can capitalise on the opportunities appearing – namely through ‘bundling’. “One of the bigger challenges that we’re particularly focusing on is around revenue diversification. From a broker’s perspective, it’s challenging if you’re going to continue to just offer one product. Aggregators are looking at different ways to provide their brokers with diversification opportunities, whether that’s through planning or insurance or other services they can on-sell to their client and, from a lender perspective, that’s something that we’re also looking at and acting on quite deliberately around bundling.” Finally, Lee believes it’s paramount that the process is kept as simple as possible so brokers can maintain their primary focus: the loan. “Take it even a step further and look at how you can make that process as simple as possible for the broker, so that their core focus is still their core focus, which is the loan. That any [additional] product added on, how do you make it as efficient and easy as possible for the broker to bring that into a conversation with a client that doesn’t distract from what they actually do?”
Building a monopoly Paul Giezekamp started early in the property business, trouncing his sister at Monopoly
aul Giezekamp is what you might call an all-rounder. His company, Property Secrets, consists of nine separate divisions, including finance, property coaching, renovations, development and insurance, to name a few, and Giezekamp considers himself “100% an expert” in each area. However, he admits it’s taken a while to get there. “It started with Monopoly when I was six. I would buy houses and hotels and my sister would buy King’s Cross Station, which couldn’t have houses and hotels, and I would beat her all the time. I would say to my parents, ‘When I grow up, I’m going to do this in real life’,” he laughs. When he got a bit older, Giezekamp bought a security business overseeing bars and clubs, which he grew from two staff to 120 and from two venues to 30 in the space of several years. However, he was soon frustrated by a lack of control when it came to his high-turnover clients. “What would happen was I would get two or three pubs, I’d lose one; I’d get four, I’d lose two. I had no control, because I didn’t own the pubs or clubs. But when I was buying properties, I never lost one – I had all the control. “So I decided to sell the security business. I sold it to a guy who tripled it. (I should have made him manager!) I started Property Secrets, but I wanted to make sure that I had a one-stop shop. The frustration I had when I was buying property was that Aussie Home Loans did my loan, a buyer’s agent did the property searches – I was cherrypicking services – and each company didn’t know what the other one was doing. So I thought, ‘Wouldn’t it be good if you actually had a company that did everything?’”
It’s taken him since 2006, but Giezekamp says he’s now fully organised and thoroughly educated in each of his nine divisions. “I’m 100% an expert in each of these areas. I actually believe I’m the best at every single division – I can’t think of anyone better. The interesting thing is that there are people now copying what we do, but the problem is, when you’re copying, compared to when you create, it’s never the same. It’s kind of like Hyundai trying to build a BMW.” Property Secrets has 12 staff members, though Giezekamp says many of the company’s positions are outsourced. “We outsource a lot of jobs. We outsource property management, we outsource insurance, we outsource conveyancing, we outsource the building work… There’s power in outsourcing because, if I have a builder, for instance, and I’m going to give them 20 granny-flat builds per
THERE’S POWER IN OUTSOURCING – PAUL GIEZEKAMP month, then I would normally get discounts for my clients because of the volume.” In the end, he says, offering a full range of services has helped make clients more ‘sticky’, though he doesn’t recommend the service proposition to everyone. “My advice for brokers looking to diversify and add more income stream is … a lot of [people] are trying to recreate the wheel. They’re better off finding property companies like mine – definitely having a referral agreement in place so that the client’s protected – who they can refer to and get a referral fee, instead of trying to start up a whole division from scratch. It’s better to outsource these jobs and take a commission than try and start up a whole division.”
iffen and Co recently announced a sponsorship deal that sees the MPA Top 100 brokerage launching its own professional cycling team. The team, previously known as Velo Canberra, has achieved a number of high-level performances, including national medals and national-level road cycling tour wins.
CAUGHT ON CAMERA 29
Celebrities who have defaulted
ith regular reports of depressing mortgage delinquency rates in various parts of the country, it’s nice to know the issue isn’t limited to us mere mortals. Celebrities have their fair share of financial troubles, and to prove it Forbes has kindly put together a list of famous faces who have defaulted on their home loans. While we may feel sorry for them (all but number five, that is), we must admit to experiencing a teensy bit of good ol’ fashioned schadenfreude...
Property: Southeast Federal Highway, Hobe Sound, Florida The Smokey and the Bandit star has allegedly not paid his US$1.2m mortgage in two years. At time of writing, it’s listed as a short sale for US$5m, a third of his purchase price. The 1,161sqm waterfront estate also boasts a helipad and yacht dockage.
Property: Janice Place, Beverly Hills, California In 2009 the pop star bought a $6.9m, 791sqm home, then flooding caused “extensive damage”, according to its subsequent listing for US$4.5m, as is. The singer defaulted on the home, selling it as a short sale earlier this year to a buyer who ultimately paid more than the asking price.
Property: Las Olas Riverhouse penthouse, Fort Lauderdale, Florida Cassidy, who ascended to teen stardom in the
1970s TV show The Partridge Family, reportedly surrendered a swank rental property to the lender, rather than continue through the foreclosure process.
NADYA ‘OCTOMOM’ SULEMAN
Property: Madonna Lane, La Habra, California The foreclosure process on the 227sqm house of the reality TV star was finalised, with the bank repossessing the property in an auction that produced no bids. The first default notice was filed on the Orange County abode in late 2011. Suleman, who became a household name after giving birth to octuplets, filed for Chapter 7 bankruptcy soon after.
Property: SW 112th Street, Miami, Florida The football star turned convicted felon purchased this 390sqm home after famously being acquitted of slaying of his ex-wife and her friend. Simpson has faced civil suits and financial woes, the foreclosure filing among the latest. The home is currently in pre-foreclosure.
Property: Marcos Lane, Olympia Fields, Illinois The R&B artist’s custom-built 2,044sqm Chicagoarea mansion was slapped with a lis pendens (suit pending) by lender J.P. Morgan Chase. The home came to market as a short-sale listing, asking nearly 45% less than the mortgage note. The listing was pulled several months later and the property’s status is unknown. The filing marked the second time this home faced foreclosure, the first being in 2005.
WHAT YOUR COFFEE SAYS ABOUT YOU
s the internet will tell you, the sort of coffee you drink – or don’t drink – says loads about your personality...
FLAT WHITE: “Straight-up types. No fuss or pomp here. On the downside, flat-white drinkers may lack imagination. These people are not early adopters – they probably still have their Nokia mobile phones. But they will tell it exactly how it is... They’re traditionalists.” LATTE: “You’re a child at
heart who very probably has cuddly toys on your bed at home. You prefer to take your coffee with company. Latte-lovers are the ones who always stay back at work... without ever complaining. They would bring in their own heater and high-altitude
gear rather than ask for the heating to be turned up. They’re generally pretty nice people.”
LONG BLACK: “You’re a survivor with a direct, no-nonsense, ‘if it aint broke don’t fix it’ philosophy on life. This person is busy, fast and on the go (as kids their parents would tell them they had ants in their pants). They also can tend to show off.”
CAPPUCCINO: “The capp-lover
doesn’t really indulge in their coffee as much as they should. They probably had their first ‘capp’ when they were about 25 and haven’t deviated since. They are still a child at heart who really loves that chocolate sprinkle on the top!”
SHORT BLACK: “The purist. The
person who orders the authentic espresso takes life and themselves very seriously. They have no time for fancy adornments like milk or a dusting of chocolate. They want to get straight to business. They are often CEOs and
leaders. They make decisions quickly and rarely back down. There’s not much ‘grey’ in this person’s life which could annoy those around them.”
MACCHIATO: “This is the tipple of
choice for the coffee-savvy young professional. They work and play fast, so have fun but be careful of burnout! This coffee is on the rise. As young gen Y-ers take over the coffee scene, the short mac is cool and everywhere.”
HOT MOCHA: “While this is a great
order Après-skiing, it’s probably not appropriate in most urban settings. Those who order it are often drifters. They find it hard to settle down. They always want to be somewhere else. They’re constantly planning trips and dreaming about other places. Indecisive.”
HOT CHOCOLATE: “Beware of the hot chocolate-drinker. They suffer from Aspirational Caffeine User Syndrome. They can be complete faux coffeedrinkers, posing as latte sippers since
Source: News Ltd and the Daily Mail
hot chocolate is now poured into takeaway cups. Trust issues here.”
CHAI LATTE: “Excellent choice for
after Bikram yoga, a 40km bush walk or a spot of nude surfing. Cool.”
CARAMEL LATTE: “Watch for the
inordinate amount of hair products, tight jeans and sculpted eyebrows – in either sex. They use lots of ‘likes’ in their speech, take lots of selfies and are always connected. Over-sharers.”
TEA: “Tea drinkers are real,
wholesome and deep-thinkers. Beware the drinkers of newfangled flavoured teas. Tea drinkers are usually early morning people and read books. Real books with pages and ink.”
AGGREGATOR / WHOLESALE BROKER Choice Home Loans 1800 188 288 www.choicehomeloans.com.au Page 5
Think Tank Property Finance 1300 781 043 www.thinktank.net.au firstname.lastname@example.org Page 11
ANZ 1800 812 785 www.anz-originator.com.au Page 7 La Trobe Financial Services 1800 707 707 latrobefinancial.com.au Page 9 Liberty Financial 13 11 33 www.liberty.com.au Page 3
TRAINING & EDUCATION
Pepper Homeloans 1800 737 737 www.pepperonline.com.au Page 13
Intellitrain Pty Ltd www.intellitrain.com.au 1300 735 082 Page 17
NON BANK LENDER
Australian First Mortgage 02 9643 4300 www.australianfm.com.au Page 19
Resimac 1300 764 447 www.resimac.com.au Page 32
SHORT TERM LENDER
Interim Finance 02 9982 2222 www.interimfinance.com.au Page 2
Mango Credit 02 9555 7073 www.mangocredit.com.au Page 1
Trail Book Buyers 1300 742 306 or 0434 742 306 email@example.com www.trailbookbuyers.com.au Page 8
RP Data 1300 734 318 Page 23
Trailerhomes 0417 392 132 Page 27
NextGen.Net 02 9929 5999 firstname.lastname@example.org www.nextgen.net Page 15
MKM Capital 1300 762 151 www.mkmcapital.com.au Page 4
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