NEWS ASIC finally releases Broker Remuneration Report The Report contains six proposals to alter broker commissions and incentives P6
OPINION Fake news What are the ramifications of ‘alternative facts’ on the housing market? P12
BUSINESS STRATEGY Entering the Genius Zone Delegate more and improve your bottom line P14
MARCH 2017 ISSUE 14.6
INDUSTRY SPOTLIGHT Waving the flag
Pepper Money’s head of sales and distribution on championing the broker proposition P20
MARKET WRAP VIC takes action to support FHBs The state’s new legislation will give FHBs a leg-up in the property market
P22
ROYDEN D’VAZ Bluestone Mortgages’ national head of sales and marketing on the product catering to a long-abandoned customer segment, and how the non-bank is growing as a result P10
CONSUMER INSIGHTS Great Aussie Dream is “unachievable”
87% of Australians no longer believe that owning a house is possible P26
AGGREGATOR SNAPSHOT 2
NEWS
ASSOCIATIONS
REGULATION
LENDERS
Associations respond to release of ASIC remuneration review P4
ASIC releases mortgage broker remuneration review report P6
Major banks begin rate hike P8
BROKERNEWS.COM.AU
PLAN’S PD DAYS A HIT
EDITORIAL Editor Madelin Tomelty
More than
News Editor Miklos Bolza
900 BROKERS
Journalist Maya Breen Production Editor Carolin Wun
ART & PRODUCTION
across six states attended PLAN Australia’s PD program in its first series of professional development days in February.
Design Manager Daniel Williams Designer Martin Cosme Traffic Coordinator Freya Demegilio
The Melbourne event attracted over 300 brokers.
SALES & MARKETING Sales Manager Simon Kerslake Account Manager Rajan Khatak Marketing and Communications Manager Lisa Narroway
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Publisher Simon Kerslake Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
Source: PLAN
EDITORIAL ENQUIRIES
Madelin Tomelty +61 2 8437 4792 Madelin.Tomelty@keymedia.com.au
MCKEON STEPS DOWN AS AFG BOSS The CEO and managing director Brett McKeon of Australian Finance Group (AFG) has announced that after more than 23 years with the aggregator, he will step back from his full-time executive role. McKeon was one of the co-founders of AFG in 1994 and has led the company from its beginning right through to its national expansion and successful IPO in 2015. McKeon will remain on the AFG board as an executive director with a focus on advocacy and support of AFG’s broker network and their customers. AFG Chairman Tony Gill said that McKeon had established himself as a leading player in the evolution of AFG into the strong business it is today. His impact has been significant and far reaching. “Brett will continue
to be a leading spokesman for the industry and a strong advocate for the role that mortgage brokers play in promoting choice and competition for mortgage customers in Australia.” McKeon said it had been an honour to have led AFG over the past 23 years, from its establishment through to its position today as one of Australia’s largest mortgage broking groups. “I’m immensely proud of the achievements of AFG, our people and our brokers. AFG’s guiding principles of fairness, shared prosperity and the provision of choice for Australian consumers has been central to our success. “The role the mortgage broking channel plays has never been more crucial in ensuring true competition in the Australian lending landscape and I believe
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the business, as evidenced by the release of our half-year results, is well placed to grow even stronger. “I have no intention of disposing of any shares, I remain committed to our team and the brokers who have served us so well over the years, and I know the management team has never been better placed to take the business forwards.” The AFG Board has commenced a formal recruitment process assessing both internal and external candidates to determine the next CEO. AFG’s current chief operating officer (and former CFO) David Bailey will act as interim CEO, Gill revealed. “Brett and the board have every faith in David and the AFG executive team to successfully steer the company through this transition and continue to grow the business.”
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Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Rajan Khatak +61 2 8437 4772 rajan.khatak@keymedia.com.au Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Bengaluru This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry 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 Ehrenberg-Bass 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.
ASSOCIATION HAPPENINGS 4
ASSOCIATIONS RESPOND TO RELEASE OF ASIC REMUNERATION REVIEW The Finance Brokers Association of Australia (FBAA) and Mortgage & Finance Association of Australia (MFAA) have both expressed support for the policy recommendations made in ASIC’s report on its Review of Mortgage Broker Remuneration, which began more than 12 months ago. FBAA executive director Peter White said: “In general, it is a very good report and supports what I have said for the past 12 months or more in that base-line commissions are perfectly responsible in our market place and they should not change, while incentives that promote volumes risk poor consumer outcomes and must go.” However, he also said that whether some of the data goes far
enough to form conclusive outcomes is a question that needs to be discussed further. “There are a couple of such matters that we have already raised and will be further discussing with Treasury.” White said the FBAA is continuing in-depth discussions with ASIC on several fronts, and is formulating its response to Treasury in conjunction with input from members and key industry stakeholders. MFAA chief executive officer Mike Felton acknowledged that ASIC’s process in this instance had been well-informed and consultative, and said the association broadly supports some of the Report’s key recommendations, which included the recommendation that upfront
and trail commission be largely left untouched. “We have continued to reinforce to ASIC that brokers drive competition and provide a critical service to consumers that combines choice, expertise and convenience, in order to help them make informed choices and get the most appropriate deal,” said Felton. “Brokers rely entirely on referral and customer relationships in building their businesses, and are incentivised in a number of different ways that help to drive good consumer outcomes. “The MFAA is supportive of increased transparency and clarity on regulations in the service of better consumer outcomes – this can only continue to strengthen the sustainability of our industry.”
WHAT THEY SAID...
David Chin “Alternative facts make the property sector ripe for people with vested interests to cherrypick information that presents a particular outlook and best serves their interests” P12
, DATES TO WATCH
A rundown of the next fortnight’s events
MARCH
28 What: MFAA VIC Commercial Breakfast Where: Encore St Kilda, Melbourne Details: This breakfast will cover how to get the cut-through needed to deliver real value to business clients. Learn how to uncover new business opportunities, simply and powerfully illustrate concepts that will make a difference to the bottom line, and position your real value as a trusted adviser.
MARCH
Martin North “We think APRA should immediately impose a lower speed limit on investor loans …[or] a counter-cyclical buffer charge on investment lending, relative to owner-occupied loans, as the relative risks are significantly higher in a down turn” P22
John Flavell “[Current government] initiatives may well provide some relief and temporarily treat some of the symptoms associated with housing affordability, but they do very little (if anything) to treat the root cause” P26
31 What: MFAA Tasmania Golf Day Breakfast Where: Tasmania Golf Club, Cambridge Details: This fun day of golf is an opportunity to network with industry colleagues. There will competition holes, prizes and activities, including longest drives and nearest the pin. The format is four person Ambrose and for those without an official handicap, the default handicaps are 27 for men and 36 for women.
APRIL
4 What: MFAA Webinar: How much should a broker spend to acquire a new customer? Where: Online Details: This webinar is for those mortgage brokers contemplating a marketing investment to generate new clients. The learnings will help to avoid over-spending and running a business on an inferior ROI or underspending and running a business of opportunities lost.
REGULATORY ROUNDUP 6
ASIC RELEASES MORTGAGE BROKER REMUNERATION REVIEW REPORT After more than a year of research and consultation, the Australian Securities and Investments Commission (ASIC) has finally made its long awaited report into mortgage broker remuneration public. The Report was released on 16 March, in which the regulator makes six different proposals to alter broker commissions and incentives in order to “improve consumer outcomes and competition in the home loan market”. These include: Changing the standard commission model to reduce the risk of poor consumer outcomes “The standard commission model of upfront and trail commissions could encourage brokers to place consumers in larger loans, even when this may not be in the interests of the consumer,” the regulator wrote in the Report. An example of this is a lender reflecting the LVR of the loan as well as other considerations such as compliance metrics in how they calculate upfront and trail commissions. ASIC also proposes that incentives are not structured in a manner that encourages brokers to create larger loans which initially have large offset balances.
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Moving away from bonus commissions 2 and bonus payments which increase the risk of poor consumer outcomes ASIC has proposed a shift away from bonus commissions and bonus payments, saying: “While bonus commissions and bonus payments do not necessarily cause poor consumer outcomes, they are a form of remuneration structure that creates a higher risk that brokers will place consumers with lenders for the wrong reasons.” ASIC noted that concerns about bonus commissions have already been raised in other parts of the financial services industry, for
instance, with the prohibition of volume-based commissions by the Future of Financial Advice (FOFA) reforms which are now being extended into the life insurance industry. “We consider that the risks posed by bonus commissions (eg, volume-based commissions) in other parts of the financial services industry also apply in the home loan market. Accordingly, we propose that the industry moves away from bonus commissions and bonus payments.” The banks could act on this proposal through the ongoing ABA review, ASIC added. Moving away from soft dollar benefits which increase the risk of poor consumer outcomes and can undermine competition Through its Review, the regulator found that soft dollar benefits increased the risk of poor consumer outcomes. “Like bonus commissions, soft dollar benefits have been prohibited in other parts of the financial services industry under the FOFA reforms. We therefore propose that the industry moves away from giving soft dollar benefits.” As before, the ABA review gives banks the opportunity to act on this suggestion.
3
Clearer disclosure of ownership structures within the home loan market to improve competition ASIC recommended that advisers and mortgage brokers more clearly disclose ownership structures in order to reduce their impact on competition in the mortgage market. “We consider that clearer disclosure of ownership structures should extend beyond mortgage brokers and apply to all players in the home loan distribution chain, including lenders, aggregators, and brokers.” This disclosure should appear in all marketing material and distribution points such as websites and physical office spaces.
4
Establishing a new public reporting regime of consumer outcomes and competition in the home loan market A new public reporting regime has been proposed to improve transparency in the mortgage broking space. ASIC suggested the following information be made public: • The value of remuneration received by aggregators and the potential value if all criteria for remuneration are satisfied • The average pricing of home loans that brokers obtain on behalf of consumers • The average pricing of home loans provided by lenders according to each distribution channel • The distribution of loans by brokers between lenders to give consumers a better indication of the range of loans that brokers within the network offer
5
Improving the oversight of brokers by lenders and aggregators The Report also suggested that the results of this review are combined with the Australian Bankers’ Association’s (ABA’s) review of incentives paid to staff and third parties within banks. “The ABA review, which is being conducted by Stephen Sedgwick AO, provides an opportunity for the banking industry to reconsider the standard commission model. The ABA and other stakeholders – including other lenders and brokers – should consider how they can work together to respond to this proposal.” ASIC recommended that the six proposals made in the Report be implemented before a further review of the market is conducted in three to four years’ time. This second review will determine whether additional changes are required. The regulator has proposed an additional targeted review of the suitability of advice provided by brokers including a “shadow shopping exercise” which will commence this year.
6
LENDER UPDATE 8
BY THE NUMBERS
MAJOR BANKS BEGIN RATE HIKE
Adelaide Bank December quarter results Over the December quarter, the average loan size increased to
$389,254
an increase of 3.8% over the quarter
The total number of loans (excluding refinancing) increased to
112,781 an increase of 7.1% over the December quarter 2016
Source: Adelaide Bank/REIA
NAB and Westpac have both announced changes to their home loan interest rates. Owner-occupiers will see the NAB Standard Variable Rate increase from 5.25% p.a. to 5.32% p.a. while residential investors can borrow under an increased rate of 5.80% p.a. from 5.55% p.a. Both of these changes are effective from 24 March. NAB chief operating officer Antony Cahill said: “The decisions we make on interest rates are difficult ones, and we want to assure our customers we do not take them lightly as we seek to achieve the right balance for all our stakeholders while considering the dynamic financial and economic environment in which we operate. “The difference between what we charge and how much it costs us to fund a mortgage remains under pressure, with intense competition, increasing regulation, and elevated funding costs. “By making a series of changes, both up and down, we are seeking to balance these across our entire mortgage portfolio.” Cahill added: “Interest rates remain at near historic lows, and around 85% of NAB customers pay below our current standard variable rate through a range of discounts available on our home loan products, including NAB Choice Package, and our highly competitive fixed rate terms. “We understand these changes will affect customers in different ways, and we always encourage customers to have a conversation with their banker or broker about what home loan suits them best.” NAB’s Variable Rate for Home Loans (Standard Variable Rate) for owner-occupier customers will increase by 0.07% p.a. to 5.32% p.a. from Friday 24 March 2017. This change will see NAB customers with a standard variable rate home loan pay an extra $13 each month on their home loan principal and interest repayments (based on a $300,000 loan over a 30-year term). NAB’s Variable Rate for Residential Investment Home Loans will also increase by 0.25% p.a. to 5.80% p.a.
The day following NAB’s announcement, Westpac followed suit and stated it would also be hiking its home loan interest rates for both owner-occupiers and property investors. The major bank announced it will increase rates for owner-occupiers by 0.03 percentage points to 5.32% for customers making principal and interest repayments. For owner-occupiers making just interest payments, their rates will increase by 0.08 percentage points to 5.49%. Property investor loans will climb by 0.23 points and 0.28 on interest repayment only loans to 5.79% and 5.96%. The bank cited the rate change is in response to increasing funding costs. “We understand the significance of interest rate changes to our home loan customers, so we take a very careful approach to these decisions,” Westpac’s chief executive of consumer banking, George Frazis said. “We try to balance the needs of owner-occupiers as well as investors in making these decisions, while continuing to provide customers with a competitive offering across our range of products.” Variable rate small business loans will also increase by 0.08 percentage points. However, by contrast to the climbing rates, NAB has announced it will be offering the lowest home loan rate ever offered by the bank. First homebuyers will pay a record low 3.69% p.a. fixed rate for two years, for owner-occupier, principal and interest loans. This compares to NAB’s current advertised two-year Package Fixed Rate for Home Loans rate of 3.98% per annum. “Every dollar counts when you’re buying your first home, and this offer for first homebuyers will provide real support to Australians wanting to enter the property market,” Cahill said. “This is the lowest home loan rate ever offered by NAB, and it will help Australians entering the property market for the first time to achieve their home ownership dreams.” Eligible customers will save around $50 a month in repayments over the two-year fixed period with this special offer (based on a $300,000 loan).
-THE ARM OF THE LAW FLEXES ITS MUSCLES Summary of key enforcement results by misconduct type (July – December 2016):
95 investigations commenced
5 persons charged in criminal proceedings
102 investigations completed
47 criminal charges laid
194 persons charged in summary prosecutions for strict liability offences
194 persons charged in summary prosecutions for strict liability offences
63 infringement notices issued
382 criminal charges laid in summary prosecutions for strict liability offences
$2.9m infringement notices paid
$159.4m compensation/remediation Source: ASIC
10
COVER STORY IN THE SPOTLIGHT
Bluestone Mortgages’ Royden D’Vaz on the product that is enabling a long-abandoned customer segment to finally have its day in the sun
IT’S HARD enough getting a mortgage when you’re self-employed, let alone when you’ve been operating for less than a year. The majority of lenders require a person’s business to have been operating for at least 24 months in order for them to approve a loan, leaving plenty of ABN holders feeling left out in the cold. But while many lenders would shy away from a new small business owner trying to enter the housing market, Bluestone Mortgages welcomes them with open arms. The specialist lender wants Aussie start-ups, it wants ABN holders, and it wants Bluestone to be the go-to lender for this oft-abandoned customer segment. “Recent analysis indicates that 64% of our business came from the products aimed at the self-employed sector,” Royden D’Vaz, national head of sales and marketing at Bluestone Mortgages tells Australian Broker. Bluestone’s Business Easy product only requires a three-month ABN to secure a loan, versus the traditional 24-month requirement, making it the obvious choice for brokers’ self-employed customers. “This means that a previously disadvantaged group has a financial solution that supports their requirements and doesn’t discriminate based on trading history,” he says. In the year to February 2017, there was a 50% increase in the volume of Business Easy loans written, and the business has doubled its year-on-year application volume since 2014. The rise correlates with the consistent growth of the SME sector, says D’Vaz, so he isn’t surprised by the company’s subsequent growth, which he expects to continue as the market’s demand and awareness increases. Bluestone is a lender that is sticking to its knitting. D’Vaz is very clear about the fact that first and foremost, Bluestone is a specialist and non-conforming lender and the obvious choice for sole traders and SME owners. This is the non-bank’s domain, he suggests, and D’Vaz is intent on owning it. “Specialist, or non-conforming lending, has been our core offering since the company’s inception, and remains the business’ primary focus in Australia … we’re very conscious to keep our offering focused on this segment versus diversifying into more mainstream finance,” he tells Australian Broker. A growing segment D’Vaz isn’t wrong about the growing self-employed market. As of August 2015, there were more than
Royden D’Vaz, national head of sales and marketing at Bluestone Mortgages
2.1 million self-employed people in Australia, according to the Australian Bureau of statistics, making up 18% of the Australian workforce, up from approximately 17% in November 2012. And as this number keeps creeping up, so will Bluestone’s success, he says. The Business Easy product is highly flexible with a recently added line of credit facility, Part 9 and Part 10 impairment adjustments (addressing bad credit rating or past and present credit issues), as well as the ability to fix interest rates on all or a portion of the loan. “The line of credit facility benefits day-to-day operations by alleviating immediate cash flow issues,” D’Vaz says, “and without the need for lenders mortgage insurance, the borrower doesn’t need to meet the lending guidelines of LMI providers. Adjusting the way we view borrowers
in a Part 9 or Part 10 agreement means greater flexibility and access to quicker, more customised financial solutions designed to support the sector.” D’Vaz explains that the strategic focus on developing and enhancing products specifically targeted to the self-employed sector has permeated the lender’s broker-facing marketing campaign as well as the non-bank’s training and development programs. “Our current advertising campaign uses a slice of watermelon to visually prompt brokers to question what ‘slice’ of the $4bn specialist lending market they are tapping into,” he explains. “This is a fun, quirky tool that supports diversification, and entices mortgage brokers to realise the potential of tapping into the self-employed market.” In increasing the non-bank’s visibility and presence within the third party channel, D’Vaz
11
says that the company is actively encouraging brokers to discover the possibilities to be found in self-employed clients. In servicing this segment, brokers will improve their value proposition, broaden their customer base, and benefit from a new revenue stream. “If brokers take the time to understand the offering of a specialist lender, they’ll quickly discover the upside for a growing number of clients – particularly those who are self-employed and credit impaired.” D’Vaz stresses that mortgage brokers need not be short-sighted in their attitude towards self-employed and credit-impaired customers. Providing a solution when a customer is facing a challenge provides two immediate benefits, he says, the first being creating a relationship of trusted adviser, thus deepening loyalty and retention. The second is providing the broker the opportunity to have ‘two bites of the cherry’ when the customer moves onto a mainstream loan in two to three years’ time. Servicing an unserviced space “The biggest opportunity brokers have in 2017 is to continue to be solution providers for current and prospective clients,” D’Vaz tells Australian Broker. “The specialist lending space, especially the self-employed sector, is grossly underserviced and represents a sizeable market segment. We encourage brokers to embrace specialist lending as part of their business and not leave revenue on the table.” D’Vaz seems to be reminding brokers that their primary purpose is to provide choice to each and every client, even those without the PAYG payslips, with a bad credit rating, and short ABN tenure. Everybody deserves to have access to finance and the confidence to seek a mortgage, just like their prime borrower counterparts.
But should the stability indicators used by traditional finance institutions still hold so much power? A borrower’s stability and capacity to service a loan are still determined by factors including the length of time they have lived at the one address, having a landline, and having a PAYG income – all things beginning to feel archaic in the current social and cultural climate. D’Vaz says he understands that these factors have their place, but they shouldn’t completely ostracise a perfectly responsible borrower who happens to have different circumstances. “It doesn’t mean that all customers who have short-term employment histories – a modern trend – or who have moved their home address a number of times, won’t pay their bills. “Every customer is different and has a unique set of circumstances, and that’s why we assess every customer based on their individual merits and don’t rely on a credit scorecard based on historical data.” So, what does 2017 hold? D’Vaz says the specialist lender will be continuing its six-monthly “innovation rhythm” of rolling out new products and policy enhancements in the Bluestone product range. Brokers can also expect more BDM boots on the ground. “We will expand our BDM team around the country, so we can give our brokers that one-on-one support, to help guide and advise them on how to structure specialist loans, and remove that fear, uncertainty and apprehension they may have when helping customers who have an unusual set of circumstances or don’t fit the criteria of the mainstream banks.” And with yet another reason to cast the net to a wider client base, if you’re a broker who isn’t writing specialist loans yet, now would be a good time to start. As D’Vaz says: “Quite simply, if they don’t, someone else will, and they will have lost that customer.”
TRAINING AND EDUCATION Bluestone BDMs run a number of workshops around the country in conjunction with aggregators and other finance partners. The focus of these workshops is to educate brokers on the size of the market, and how to recognise and manage the corresponding opportunity and possible points of resistance. The workshops cover: • How to position a specialist or a non-conforming loan • How to manage customer expectations (eg. quantifying higher rates) • Where to find these customers and referrers
“Throughout the workshops, the BDMs have a ‘high touch’ approach focused on guiding and advising brokers on how to overcome the customer’s initial blocks, workshop the scenario, and navigate them through the credit process. Brokers have a complete back-end support network beyond the training where they have 1:1 support from the BDMs and credit assessor team.” Royden D’Vaz
2 MILLION REASONS TO SERVICE THE SELF-EMPLOYED
Distribution of independent contractors, occupation of main job – by sex Managers
Occupation of main job
Professionals Technicians and trades workers Community and personal service workers Clerical and administrative workers Sales workers Machinery operators and drivers Laborers Male Female
0
2
4
6
8
10
12
14
16
18 %
20
22
24
26
28
30
32
34
36 Source: ABS
12
OPINION FAKE NEWS
BasisPoint’s David Chin discusses the prevalence and effects of fake news on the housing market
IT’S AN industry that’s essential to society by catering to its most basic need; that of a home. It’s an industry that serves the largest pool of wealth in the nation ($6.2 trillion), employs hundreds of thousands of people from construction to sales, mortgages to furnishing suppliers, and, via its influence on Australian banks (that in turn dominates the ASX), sets the tone for the nation’s stock market. And yet ‘alternative facts’ and ‘fake news’ abound. Take, for example, the wide variation in indexes measuring house price growth. They range from CoreLogic’s 10.2% return for Sydney prices for the year to Sept 2016, to the 3.1% return for the same period, according to the Australian Bureau of Statistics (ABS). Both are facts using different methodologies, yet one fact
is triple the other … on the same asset pool! These alternative facts make the property sector ripe for people with vested interests to cherry-pick information that presents a particular outlook and best serves their interests. Sales agents wanting to talk up the market can use a roaring number, for example, while the doom and gloom merchants can ‘annualise’ a particularly bad quarter result and present that as ‘fact’ for that year. There is an even larger ramification of fake news on the wealth effect – the psychological theory that says the wealthier people feel, the more they spend. Therefore, if homeowners read a report that indicates their home’s value has increased by, say 15%, they are likely to spend more than if they think their home’s value has increased by, say 7%. This then directly impacts retail sales.
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David Chin is the managing director of BasisPoint (www.basispoint.com.au)
The power of the media Media reports have played a big part in the alternative facts about the property market being presented. For example, in 2016 there were headlines citing dramatic price falls in many off-the-plan apartments in Melbourne, as reported by some property valuers. However, in one of the stories from this theme that was picked up by news outlets and then recited in ensuing property reports, the writer failed to mention that the main reason for the significant drop in value for this particular group of apartments was that the apartment building had suffered significant fire damage due to non-compliant cladding having been used during its construction. Then, there was the 2015 media uproar
easy. But there are divergent vested interests in the housing market, and the nature of information being created, disseminated and consumed in the digital age is changing, along with a growing lack of trust in society, which isn’t surprising! Because while property developers have a natural bias towards selling apartments to the public, lenders and mortgage brokers are also naturally inclined to favour reports that show that now is a good time to buy property. Politicians are also masters at using one set of alternative facts to disparage their opponents, and in an ultra-competitive free market, participants sail particularly close to the wind when presenting fact from fiction – it’s called marketing!
Alternative facts make the property sector ripe for people with vested interests to cherry-pick data that shows a particular outlook and best serves their concerns over the “thousands” of foreigners illegally buying established homes, breaching Foreign Investment Review Board (FIRB) rules. There were 2,200 suspect deals dobbed in by suspicious locals and the ATO, yet just 61 homes have since been ordered to be sold. On further investigation of the suspected illegal deals by the ATO, many were found to be perfectly legal, with the purchasers having either been granted permanent residency (PR) or temporary residency (TR) prior to the transactions taking place. Both PRs and TRs are permitted to buy property in Australia, with the only exception being temporary residents must sell any purchased property when they leave the country. This disconnect between reality and hearsay in property market news is alarmingly evident in situations like this one, and this lack of clarity is all the more dangerous because many of the consumers of this misinformation don’t have the resources to sort fact from fiction. These consumers are the mum and dad investors, down-sizers, up-sizers and first homebuyers, and when people’s selling decisions are influenced by emotion that comes about from reading inaccurate reports, this puts a large part of the Australian population at a disadvantage. Furthermore, emotion sets public sentiment, which influences political decision making. Unfortunately, with neither major political party having overwhelming popular support, they are prone to making short-term populist decisions as they deal with housing affordability, infrastructure spending and rezoning issues. So, what’s the solution? There would be one by now if it was that
While this is true for all sectors of the economy, not just housing, remember that housing is hugely personal and emotionally driven, and so more prone to misinformation. I believe improving the dissemination of information is a key factor in providing a solution to over-hyped, inaccurate or misleading housing stories. Incorrect information should never see the light of day, and it’s up to the readers and consumers of inaccurate information to strongly voice their disapproval. Yes, the smart ones will simply stop reading a certain source, but not everyone realises dud news when they see it, and so the providers of fake news need to be howled down from their pedestal. But how? Perhaps it’s time for a ‘mythbusters of housing’ media outlet to be born. Ultimately, the housing industry has to deal with the problem of alternative facts and fake news because people with vested interests can use this information selectively to ‘groom’ the mum and dad sector into believing that certain conditions exist when they either don’t exist, or exist to a far different extent. This emotion-driven mum and dad market is prone to ‘following the herd’, and as a result, when their ‘animal spirits’ are unleashed, over-exuberant markets often occur, causing problems for regulators such as the Reserve Bank of Australia (RBA), and politicians in setting policy. So this relatively small tail (of alternative facts/fake news) can certainly wag a very big dog when it comes to the economic and social policy implications of a sensitive but large housing market, and it’s something that needs to be addressed.
14
BUSINESS STRATEGY ENTERING THE GENIUS ZONE
Business strategist Matt Malouf explains how doing less and delegating more can improve your bottom line
THE ULTIMATE goal of the Stop Doing List system is to help you spend more time in your Genius Zone. Your Genius Zone is the three to five major tasks you own in the business and that you invest the majority of your time into in order to generate maximum return. A genius task meets the following three criteria: It’s something you’re passionate about. First and foremost, a genius task needs to be something you enjoy, something you love doing. Without that passion, you’re not going to put in the time, energy and effort required to push your business to new heights.
1
It’s something that is essential to the business. It must be done, even if nothing else is done all
2
day. Your business hinges on this task being completed, and being done right. It needs to contribute directly to the profit of the business. As you begin to value your time, it’ll become increasingly important to you to spend your time on profitable tasks.
3
The four zones I first learnt this method of categorising tasks from my studies of Dan Sullivan, founder of the Strategic Coach program and an international author, speaker and coach. I slightly altered his definitions as I began implementing the Stop Doing List system for myself and others. Please note that these are definitions to be applied to tasks or activities only, and are by no
means a definition of either your intelligence or abilities. Tasks fall into one of the following four zones: • Incompetence • Competence • Excellence • Genius For most people, the Genius Zone is where they should spend most of their time, as it’s where most of the profit will be made. Yet most business owners I meet are often spending very little, if any, time in this zone. The ultimate goal is to spend the majority of your time on ‘genius’ tasks, with a bit of time on ‘excellence’ tasks, with the rest of the tasks now becoming your Stop Doing List. When you stop doing the tasks on this list, you’ll find you are now focusing on areas that will ultimately provide more profit. If you aren’t good at a task, you delegate it to someone who can be excellent at it. Meanwhile, you’re freed up to spend more time on what you love doing, and you’ll gain more passion for your business. You’ll find more freedom in your business and find more time for family, health and personal passions. I’ve been discussing genius a bit, and for good reason. When you begin to focus your time on your genius, not only do you start growing your business faster and generating more profit, but you also start enjoying business more. The tasks that you choose to do every day contribute to your overall enjoyment when working, and the time being reclaimed will bring balance back into your life. Incompetence Tasks that are placed into the Incompetence Zone are tasks that you know have to be done, but don’t know how to do them yourself. To give you an example, when we implemented a piece of software in our business called Time Trade, I received the link from someone else, did some quick research and saw it would be a great fit for our business. It could save us both time and money, but I had no idea how to implement it properly. It’s simply not my genius. I suggested the new system to my virtual assistant, and got her to research it, try it out and make a recommendation as to whether or not it was the right fit. It then became her responsibility to integrate it within the business, tying it in with our existing systems. I didn’t need to know how to use it myself, other than telling clients how to book an appointment with me. (Which is pretty simple – click the link and book a time!) We then made sure the system was documented. This was all put in place by my virtual assistant, who is the one using it most of the time. Thanks to the documentation, it can be picked up by anyone in our business in the event my virtual assistant is sick or leaves the company. When we are learning anything new, it often takes a long time and requires a lot of focused energy to implement. These tasks are often low value and create negative energy when you implement them (stress, angst, frustration).
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TECHNOLOGY UPDATE
s
CHAMPION REGIONAL BROKER HAILS APPLYONLINE The goal is for you to spend zero per cent of your time performing incompetence tasks. Competence Tasks placed into the Competence Zone are tasks you know how to do but are not very good at or loathe doing. These tasks really drain you of energy. For most business owners, this is admin, filing, bookkeeping, or many of the current technology needs a business has, such as social media, search engine optimisation or Google AdWords. These are tasks you can do, but you really shouldn’t. Not only will it take longer for you to do it than someone operating in their genius, but it will also often add to your overall lack of satisfaction in your business. In my work with clients, I see a lot of tasks deemed ‘urgent’ falling within the competence category. There is inevitably a long list of these tasks, and business owners tend to procrastinate or avoid doing them, which causes them to build up and create even more stress. Many of these tasks can be performed by someone else for a fraction of your hourly rate. Again, the goal is for you to spend zero per cent of your time doing competence tasks. Excellence Tasks that are placed into the Excellence Zone are tasks that you’re really good at, that are valuable to the business, but you don’t necessarily love doing. An example of this for myself is spreadsheets and financial models. As a trained accountant, I am capable of doing them to a high level of excellence – but I don’t love doing them. Excellence tasks can be stopped; however, in my experience you will generally need to invest a little more money into a person or system to achieve this. The goal is to spend 30–40% of your time doing excellence tasks. This leaves 60–70% of your time for the Genius Zone. Genius The simplest way to describe your Genius Zone is that these are the tasks or activities you love to do and are really good at, and if your day was filled with these tasks or activities you would feel energised and happy. Genius Zone tasks are generally easy for you to do and you tend to do them naturally. Your Genius Zone tasks also tend to be highly profitable. You will often hear yourself saying ‘If only we had more time to XYZ, then we would make significantly more money.’ Owners of fast-growing companies understand this philosophy and understand that the more time spent in the Genius Zone, the faster the company will grow. One of my genius tasks is one-on-one coaching. I absolutely love coaching, I can (and do, at times) coach all day and my energy at the end of the day is the same if not higher than when I started. When you have a day doing the things you love, your energy never seems to waver – in fact, the more you do it, the more energy you seem to create. Remember, you should end up with no more than three to five genius tasks. You want to focus your time on these and delegate the rest. This is an edited extract from The Stop Doing List by Matt Malouf. www.mattmalouf.com.au
“ApplyOnline is the smart conduit between the aggregator and lenders, and I think it’s the best invention – ever,” exclaims Mint Equity Director Zac Peteh. “It’s structured magnificently. The different tabs let you know if you’ve done something wrong. It’s very self-intuitive; so much so, I self-taught and worked through it all myself until Helena, our ‘lucky charm’, came along.” Helena is NextGen.Net Relationship and Training Manager Helena Christakos. Zac jokes that her presence was the catalyst for Mint Equity taking out two recent awards. The Central Coast mortgage broker won ‘Best Regional Office’ for NSW at the 2017 Better Business Awards in Sydney last month and at the end of last year the brokerage won ‘Best Marketing NSW’ at the Connective Excellence Awards. Zac has over 20 years banking experience spread across residential, commercial and SMSF lending. Asked what he gleaned from those years he says, “people want efficiency and knowledge.” “If you are genuine and provide them with educated and experienced knowledge, even if it’s not what they want to hear, they respect you for it. “Some clients have unrealistic expectations and I need to realign their hopes and give them a practical timeline. They appreciate the honesty and frankness.” “Speed and knowledge” is one reason Zac is a big fan of NextGen.Net’s ApplyOnline ‘Supporting Documents’ service, which has reached critical mass with most major and second tier lenders now live. He maintains that the ‘Supporting Docs’ service increases productivity, saving him and his team hours each day. Supporting Docs, combined with Helena’s training and her “invaluable short-cuts,” have enabled Mint Equity to deliver a quicker turnaround time for their clients. “Supporting Docs prevents human error, which is great and I can simply attach a multi-page document in one hit to give the lender everything that they need,” he says. The ApplyOnline Supporting Documents service identifies lender and loan specific requirements, and provides a checklist for brokers to action. Recent upgrades enhance the benefits further by enabling lenders to better configure the service to gain additional efficiencies. The update delivers a refreshed state-of-the-art, condition-driven user interface (UI) and user experience,
Zac Peteh
which allows brokers to review lender requirements then upload a single PDF to meet all requirements. The new UI also means lenders can move to a situation where all documents are uploaded securely. “I love the new UI,” Helena says. It’s like a ‘To Do’ checklist and it’s so easy to see what’s required. You can satisfy all document conditions with one PDF upload, so it’s a lot faster and incredibly user friendly.” Helena introduced Mint Equity to NextGen.Net’s training program and is planning to touch base again when Zac takes on board another couple of brokers this year. She gave Zac and his team tips on how to index faster, utilise the drag and drop function, and how to filter statuses on the checklist. “The true value of our training sessions are to show brokers how to maximise our technology within their business and drive efficiencies,” Helena says. “Brokers in general have a very time consuming job and once they’ve done the hard yards with their customer they want the smartest and quickest way to get their loan approved, which is where our training enters the equation. It’s my role to teach our users new skills, saving them time and money.” “Embrace ApplyOnline’s advancements and make sure you leverage off NextGen.Net training to save as much time as possible,” Zac declares. “There’s so much involved with administration you need to take every opportunity to save time.”
16
A BIG DEAL JUMPING HURDLES Aussie broker Alex Kardasis on the largest loan he has ever written, for a couple with a situation that was so complex, only one out of the 20 lenders on his panel was willing to help
Alex Kardasis
THE SCENARIO A young married couple came in to see me at the end of November wanting to buy an owner-occupied property they had just seen. He was an Australian citizen and she was from the Netherlands, and they had only been back in the country for four months after living overseas for a number of years. The first hurdle was that although the woman was working and earning an income in Australia, she was a Temporary Resident, which immediately narrowed the field for the number of lenders that would offer the couple a loan, as we needed lenders to accept her income as well to service the loan. Also, even though both parties had been working for the same multinational for seven years and had only moved their roles to the Australian office, this was still deemed to be short-term employment within Australia as far as most lenders were concerned. The third issue was that both the husband and wife relied on discretionary bonuses that they would receive from their
employer to be able to service the sizable loan, which they had been receiving over the past three years while working in the US, Italy and the Netherlands. I needed to convince the lender that their bonuses were consistent and regular, as they hadn’t received bonuses while in Australia as yet, and could only show that they had received bonuses while overseas. The next problem was that the house purchase price and loan amount was the largest that I had ever seen in the one application in my 13 years as a broker. This meant that due to the size of the loan they required, the couple wasn’t allowed to borrow more than 70% of the house’s value, so they had to front a 30% deposit plus stamp duty. Consequently, a lot was resting on the property’s valuation. The couple were capped out financially putting down the 30% deposit based on the house purchase price, so if the house valuation came back higher, they would not be able to afford the full deposit and would have to let the house go.
THE SOLUTION The fact that the couple had been with same multinational for seven years helped the fact that they’d only been working for four months in Australia, but the couple’s reliance on their bonuses to service the loan was the tricky part. They had to contact their previous overseas employers, get payslips and proof of historical bonus payments from the past three years, as well as a letter from the employer. The husband was also on an employee stock option plan where the nature of the vesting schedule was so that as long as he stayed with that company, he could liquidate shares within a couple of years which would bring down the loan amount. The couple’s situation was so complex, that of the 20-odd lenders on my panel that were available, only one of them would agree to give them a loan – one of the majors.
However, just to complicate things further, the wife accepted another job during the approval process. This would have been a deal breaker for the lender, but it just so happened that the base salary alone ended up being higher than her previous job’s base salary and bonus combined, which appeased the bank. Because of the size of the loan my clients were seeking, as well as the complexity of their situation and the exceptions for the policy we were asking for, the application couldn’t be approved by a normal credit officer at the bank. It had to go to a higher authority, and in the end it was the state credit manager of the lender who called me and approved the loan in the first week of January. Despite the lengthy process, the couple was, thankfully, able to purchase the house that they had wanted all along.
THE TAKEAWAY The first thing I needed to do was convey to the couple the challenges we were facing in finding a lender. It was really important to manage the clients’ expectations and explain to them that it wasn’t going to be simple and that the approval process may be drawn out. Yes, they were on good incomes; yes, they received bonuses; yes, they had a healthy deposit; but even with all this there were still all of the policy challenges from the bank side and the challenge in securing the property once pre-approved, given the fact there was no opting out of the purchase (no subject to finance clause in contract) once contracts were exchanged. This complex situation also reinforced how important it is to gather as much documentation to support an application
as possible, ahead of time. In this instance, we needed paperwork from the couple’s various overseas companies, which we sourced upfront before submitting the application. Doing this paints a much better picture for the lender and increases the likelihood of your clients’ approval. Also, communication with all stakeholders is crucial to secure a property. Constant communication with solicitors and agents is the key. Once the offer was accepted, the agent and vendor had to be notified and prepared to take the property off market whilst waiting for the valuation to be completed. They were only prepared to do this as we kept them informed very early and through every stage of the application process.
18
TECH FOCUS PARTNERING IS THE ONLY WAY: ANZ The CEO of ANZ has stated that “working in partnerships is inevitable” between banks and fintechs if banks are to avoid increasing operational risks
ANZ’S CHIEF executive Shayne Elliott has expressed he is not concerned that fintechs are a threat to Australian banks, and has flagged further partnerships between banks, fintech startups and regulatory companies in the future. Speaking at the AltFi Australasia Summit in Sydney recently, Elliott said large organisations face a “trap” of driving up operational risks by doing too much themselves, and that banks and startups would increasingly leverage each other’s skills and market advantages, dismissing the notion that fintechs are trying to “eat our lunch”. Elliott also downplayed an interest in lending partnerships, such as with “peer-topeer” lenders, and stated ANZ’s preference was to partner with payments and “regtech” players. “Peer-to-peer lending is not something at the top of our list … when you look at digital transformation, it’s much more likely to be in the area of payments.” Elliott’s comments suggest that ANZ may be taking a different approach from its competitors, however, speculation has been circulating that ANZ has been eyeing a partnership with small business fintech lender Moula. Westpac and Commonwealth Bank have already trialled partnerships with Prospa and OnDeck, respectively. A major benefit of payment partnerships, he said, was reducing risks associated with trying to ‘do it all’ such as offering new innovations and technology themselves. “There’s a trap for large organisations and that is the problem of complexity. The more little things you start doing, they drive up your operational risk and it’s very hard for large organisations to keep on top of those risks, and that’s why they end up having problems,” he said at the summit in Sydney. “So we’re better off picking a few things and doing them well and letting other people like yourselves come in and complement that. Working in partnerships is inevitable.” Elliott added there were products and services that banks were not best placed to provide and “big banks don’t have to hold on to everything”. Last year ANZ became the first – and remains the only – major bank to sign up to Apple’s digital wallet Apple Pay.
P2P LENDER RECRUITS EX-BANK CEO Australia’s second largest peer-to-peer lender RateSetter has welcomed the former CEO of ING Direct, Vaughn Richtor, to its board. Richtor will take up a role as a non-executive director in his first appointment since retiring from ING last year after 24 years with the bank. Richtor’s appointment expands the P2P lender’s board to five, including co-founder Peter Behrens, Australian CEO Daniel Foggo, Stratton Finance boss Rob Chaloner, and Martin Dalgleish. According to Richtor, the online bank has succeeded in Australia thanks to its belief that “there has to be a better way of delivering financial services,” he told The Australian. Fintechs such as RateSetter are
designed exactly for this purpose, he added. “I got quite excited when talking to Daniel – who’s done a good job in getting it going – but to make a difference, it’s really got to get to scale and hopefully I can add some value in doing that,” he said. “It’s shown that there is appeal both on the investor and borrower side; now the challenge is to get it to scale to make a real difference and for it to become structurally relevant in the market.” In order to build a competitive scale, RateSetter required a continual focus on aspects such as satisfying customers and leveraging the advantages of the business, Richtor explained.
19
ONLINE TRANSACTIONS BOOM WHILE BRANCHES BUST
m
Internet (transaction of value)
684
40 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17
130
Branch (deposits and withdrawals)
m 56
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17 Source: CBA
AWARENESS OF ONLINE SME LENDERS GROWS A joint analysis by Moula and Digital Finance Analytics (DFA) has shown that there has been an increase of more than 230% in the number of businesses familiar with the various types of SME lending. The Q4 2016 Disruption Index shows that 14.1% or 300,000 businesses are familiar with not only traditional lenders, but also online and alternate finance providers catering to the SME sector. According to Aris Allegos, CEO and co-founder of Moula, this greater awareness has been driven by a big push by non-bank SME lenders to invest in educating small business customers. “Dedicated teams, digital and above the line marketing, and key strategic partnerships with specialists in small business have all been key to this ongoing education,” he told Australian Broker. The survey also found that SMEs now expect a loan assessment turnaround of 5.4 days, a figure which is trending lower as speedy online loans gain traction, Martin North, principal of DFA, said. “This is based on the response from the SMEs in the survey to the question, ‘How quickly would you expect to get an unsecured loan from a lender?’ which looked at the days between initial application and money in the account,” he said. “We took the average of the response times which ranged from less than 24 hours to three weeks.” Moula promises an average
loan turnaround time of 29 hours or, for simpler structures such as sole traders and companies, loans are executed within 12 hours of the initial application. However, more complex business structures such as trusts can impact the average speed due to additional compliance processes. The firm’s underwriting process assesses creditworthiness through real-time credit decision-making by taking in relevant data provided by the borrower through sources such as cloud-based accounting solutions, said Allegos. “This proprietary technology allows us to assess accurate business data over a relevant time period and extend funding responsibly.” The Disruption Index uses data from 26,000 small business surveys provided by DFA, measuring SME service expectations, awareness of non-traditional lending options, use of smart devices, etc. Moula also adds its own data on SME conversions, average loan amount approved and speed of application processing. “The survey is based on an omnibus and we add 500 new ones each week, and drop off those from a year ago, to maintain the sample size. “We include questions on their digital capability, financing arrangements and borrowing needs. We have more than 100 elements in the database of responses so can drill down across the SME base,” North said.
20
INDUSTRY SPOTLIGHT WAVING THE FLAG
Pepper’s new director of sales and distribution tells Australian Broker how he plans to wave the flag for brokers every step of the way, and why client demand for specialist lending won’t slow down any time soon
MILBURN ON THE NEW BREED OF BROKERS ENTERING THE INDUSTRY
“I think we still have a challenge, and that’s how do you bring somebody into our industry and largely say that after your tertiary education, ‘come on in, but we’re not going to pay you a salary, and you’re not going to earn any money for 9–12 months’. I think there’s a challenge there that we still, as an industry, need to face head on.” “Some of the more successful partnerships out in the marketplace at the moment are these newer brokers coming into the industry, partnering with some of our more tenured brokers, and learning and being guided by them. Coupled with the young enthusiasm and go-get nature, the businesses are flourishing.” Aaron Milburn
IN THE 2016 calendar year, specialist lender Pepper Money experienced an increase of more than 36% in the number of originations for Australian residential mortgages, reaching $2.53 billion. The non-bank also saw a surge in its broker numbers of more than 25%, with 530 new loan writers becoming accredited with the lender over the period. Approximately 2,630 brokers are now working with Pepper Money across the country, and the lender has proclaimed it aims to have 3,100 brokers in its distribution network by the end of the 2017 calendar year.
Off the back of what was a record-breaking year for the company, this goal is in no way unrealistic, and there couldn’t be a more dynamic time for Aaron Milburn to start his post as Pepper Money’s director of sales and distribution, and take in the view. Fresh from a role at Westpac as general manager for brokers and, prior to that, a three-year tenure as head of broker distribution at Citibank, Milburn knows brokers, and they know him – but it’s transitioning from years working with the banks to now a non-bank that is the biggest change for Milburn.
“The understanding of what specialist lending is in Australia is nowhere near what I thought it was,” he tells Australian Broker. “Specialist lending can be around income, it can be around life events, it can be around structures ... we’ve got a job to do to continue that education and support, until we achieve our true north of every Australian understanding their options.” For his part, he tells Australian Broker that in 2017 it’s mind boggling the number of Australians who don’t comprehend – or even have any awareness of – what a specialist lender offers. “No family in Australia should not
21
understand what their options are,” he says. But for brokers to be still in the dark about non-comforming products is even more shocking, and the ramifications for both their clients and their businesses are huge. “At a bank, you help people’s dream of home ownership come to fruition. At a specialist lender, that is a far more special transaction in the fact that people … [see] great challenges to realising their dreams, and we’re in the fortunate position of working with brokers and consumers to make that happen.” Specialist lending, according to Milburn, is one of the biggest opportunities currently in the market for mortgage brokers. “The upside is huge,” he says. “If you’re not offering [specialist lending], a broker down the road is going to offer it. If you want to maintain high levels of customer service, you need to be able to offer the whole spectrum of options available for that consumer. And if you can only offer, say, three options versus the available five options, then they’re going to find someone who can offer all five.” Milburn’s comments come a year after Pepper conducted research that revealed six out of 10 customers who are seeking finance and are told, ‘No, we can’t help you’ by a broker, in fact would have had a loan approved by a specialist lender like Pepper. “It then takes three to five years [for these customers] to have the confidence to re-enter the market. And that is unacceptable to me,” Milburn states. “No family should leave a broker’s office and have to wait three to five years to have the confidence to go back into the market, when they could have been sold an alternative product in the first place.” Communicate and educate The reason for this ill-informed communication on the broker’s part is simply a lack of education about specialist products, according to Milburn. “It seems to be a little like commercial lending used to be and SMSF lending, where it was a case of ‘I know about it, I sort of understand it, but I’m not too confident to discuss it, so I’m either going to refer it or I’m going to not really go down that avenue’, ” he says. “And that’s our job. Our job at Pepper is to provide the opportunity, the product, the process, and the training to enable a broker to be confident about selling specialist lending.” Milburn is palpably passionate about Pepper’s role in enabling more families to enter the housing market. During his interview with Australian Broker, he explains that on his second day on the job, he and a Pepper credit officer worked through a deal to restructure a customer’s unsecured lending debt into a mortgage. This ended up saving the family $2,500 for the month. “Now, not only did we remove the financial stress from that family, but when they sat down at the dinner table that night with their three young children … [we] fundamentally changed the scope and dynamic and the lifestyle that this family enjoys.
THE PEPPER MONEY INSIGHTS ROADSHOW
Melbourne
Perth
Leonda By The Yarra
Crown Perth
Wednesday 31 May 2017, 8:30am - 12pm
Tuesday 6 June 2017, 8:30am - 12pm
Brisbane
Moda Events Portside Friday 2 June 2017, 9:30am - 1pm
Adelaide
Sydney
Adelaide Convention Centre
Waterview Bicentennial Park
Wednesday 7 June 2017, 8:30am - 12pm
Tuesday 20 June 2017, 8:30am - 12pm
“Now, what is unacceptable to me is that every broker doesn’t offer that opportunity to every customer,” he says. But what exactly is Pepper Money doing to prevent more brokers from saying ‘no’ to their customers when they could be saying ‘yes’? Quite a bit, Milburn explains. The non-bank offers a five-step sales process course for brokers who have never sold a specialist lending product before, with the BDMs offering further assistance on this. This year, Pepper Money will also again be hosting its “infamous” Insights Roadshow in each state around the country to educate brokers on specialist lending and inspire them with impressive speaker line-ups. “Numbers are well above last year, which shows me that the appetite for brokers to learn about specialist lending continues to grow,” he says. Milburn also reveals that Pepper Money will be holding its first state-based broker roundtable next month, to which both users and non-users of Pepper products from each state are invited to attend. “We’re interested in people who have never used a specialist lender and to learn from them, as that’s just as important as hearing about the things that are going well.” Milburn also hinted that there will be new technology-driven products coming through in 2017 that will dramatically help mortgage brokers in their businesses. It’s not just about life events The uptake of specialist lending products in 2016 was in part fuelled by the regulatory changes introduced in 2015, which allowed non-banks to ‘swoop in for the kill’ on those clients no longer eligible for finance through the banks. But Milburn doesn’t see Pepper Money’s
growth slowing down after last year’s hot year. As more and more families occasion on big life events such as divorce, unexpected financial hurdles or loss of job, the more they will need specialist lending. “I don’t see [the uptake in specialist lending] abating … I think it’s becoming more the norm.” The climbing divorce rate, for one, has massive financial ramifications and that’s where lenders like Pepper can help people recover, he says. However, Pepper is not set up to solely deal with people who have experienced life events, which Milburn says is a common misperception. “That’s one of the biggest myths about specialist lending – that it’s just about if you’ve had a life event where you’re going to find it hard to get credit, a non-bank is there. That is only one part of it. A huge part of it is around that specialist income and understanding that, and being able to provide a solution,” he says. “If I look at what is termed ‘specialist income’, then mortgage brokers have a specialist income – their income ebbs and flows with their trail and upfront payments. So does an NRL player, so does a freelancer,” he says. “So the more these jobs or these roles come on line in our society, the more a non-bank such as Pepper will come to the fore in enabling a solution for them.” And enabling this solution is, as Milburn is acutely aware, the humble mortgage broker, and he stresses that in his role at Pepper Money, he will be campaigning for them every step of the way. “My goal is that every Australian family understands their options, and my job is to work with our brokers to ensure they have adequate training and adequate programs and processes to feel confident to do that.”
22
MARKET WRAP MARKET TALK
VIC TAKES ACTION TO SUPPORT FHBS
The Andrews Labor Government in Victoria has introduced a series of changes to legislation to support first homebuyers to enter the property market POOR OLD PERTH CONTINUES TO DRAG ITS FEET
Capital city home value changes Weekly change
Monthly Year-to-date 12-month change change change 18.5%
Sydney 0.5%
2.5%
4.7%
4.0%
4.3%
0.1%
0.3%
3.8%
0.4%
1.4%
2.7%
-0.7%
-3.4%
Melbourne 1.2%
14.2%
Brisbane 0.1%
Adelaide 0.4%
Perth 1.2%
0.2%
*Brisbane results are for the combined Brisbane and Gold Coast region. The monthly change is the change over the past 28 days.
Source: CoreLogic
DFA WARNS OF INVESTOR LOANS STEAMING AHEAD The ABS has released its Housing Finance data, showing the flows of loans in January 2017. It revealed $33.3bn in home loans were written for the month – up 1.1% – of which $6.4bn were refinancing of existing loans, $13.6bn were owner-occupied loans and $13.5bn were investor loans, up 1.9%. Data shows that investor demand is exceptionally strong, with investment lending (minus refinancing) making up half of all new lending for the month, while by contrast, first-time buyers fell away. According to Digital Finance Analytics principal, Martin North, this is a trend that has been occurring for several months. “We [had] an indication earlier in the year from our weekly tracker than perhaps investors were getting cold feet – there was talk of changes to negative gearing, lifting
rates and slower home price growth,” he wrote on 10 March. “Last week, the buying signals were back to normal, as investors relished in the recent strong home price growth and Government statements that negative gearing was safe. Despite slow rental income growth, it is all about capital gains.” “Investors are still piling into the market … Intentions are stronger than ever!” he said. North also noted that there was a bigger upswing in lending from credit unions and building societies compared with the banks across both owner-occupied and investment loans for the month. “Perhaps as banks tighten their lending criteria, some borrowers are going to smaller lenders, as well as non-banks,” he said. The building momentum of investor lending and
the contrasting dwindling number of first homebuyers is a problem that could be fixed by the regulator’s intervention, North added. “The regulator – APRA – has just not been effective in cooling things down,” he wrote. “We think that APRA should immediately impose a lower speed limit on investor loans but also apply other macro-prudential measures. At the very least, they should be imposing a counter-cyclical buffer charge on investment lending, relative to owneroccupied loans, as the relative risks are significantly higher in a downturn. “The budget has to address investment housing with a focus on trimming capital gain and negative gearing perks. The current settings will drive household debt and home prices significantly higher again.”
23
THE REAL PRICE OF PROPERTY
Median house and unit prices
managing director, Michael Russell, vehemently agrees with the Victorian Government’s action, saying it is something to be applauded. “First homebuyers are saving – but with Melbourne dwelling prices up 13.8% in the year to February, this represents an increase of around $71,972 in the median dwelling price,” Russell said. “That means that in the past year alone, first homebuyers have had to save an extra $7,197 to be able to pay a 10% deposit on today’s median dwelling price of $610,000. Add stamp duty etc, and it’s been an uphill battle.” Over the past 12 months, MoneyQuest has publicly campaigned and lobbied state governments to take action in the wake of a growing housing affordability crisis facing today’s first homebuyers, and the new legislation represents a big step forwards. Those living in regional Victoria will also get a helping hand, with the Andrews Government also stating it will be doubling the First Home Owner Grant, helping up to 6,000 Victorians to buy their first home in regional areas. The grant will increase from $10,000 to $20,000 from
$14.5 $14.0 $13.5 $13.0 $12.5 $12.0 $11.5 $11.0 $10.5 $10.0
10/10/2014 10/11/2014 10/12/2014 10/01/2015 10/02/2015 10/03/2015 10/04/2015 10/05/2015 10/06/2015 10/07/2015 10/08/2015 10/09/2015 10/10/2015 10/11/2015 10/12/2015 10/01/2016 10/02/2016 10/03/2016 10/04/2016 10/05/2016 10/06/2016 10/07/2016 10/08/2016 10/09/2016 10/10/2016 10/11/2016 10/12/2016 10/01/2017 10/02/2017
65% 63% 61% 59% 57% 55% 53% 51% 49% 47% 45%
$$ BN
Investor property appetite and loan volumes
% of buyers intending to transact
Hobart
Darwin
Canberra Source: CoreLogic
INVESTOR BUYING INTENTIONS STRONG AS EVER
Investment loans written
Perth
Units
$615,233 $400,000
Adelaide
$506,500 $430,000
Brisbane
$510,000 $345,000
Melbourne
$379,000 $308,000
Sydney
$430,000 $315,000
Houses
$503,000 $382,000
$1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0
$692,500 $526,000
announcement that stamp duty will be abolished for first homebuyers for purchases below $600,000, in a bid to help thousands of Victorians to purchase their first home. The move by the Andrews Labor Government is one in a series of changes to policy that have been announced to tackle housing affordability head on in the state. Those buying a home valued between $600,000 and $750,000 will also be eligible for a concession, applied on a sliding scale, the government said, with the exemption and concession applying to both new and established homes, helping 25,000 Victorians find their first home. For a property costing $600,000, FHBs will save approximately $15,535 and for a $700,000 property, savings will amount to around $12,357. The government will also be removing the off-the-plan stamp duty concessions on investment properties to further offer assistance to owneroccupiers. The off-the-plan stamp duty concession will now be available solely for those who intend to live in the property or who are eligible for the first homebuyer stamp duty concession. At the same time, a Vacant Residential Property Tax will address the number of properties being left empty across the inner and middle suburbs of Melbourne. Under the changes, owners who unreasonably leave their properties vacant will need to make them available for either purchase or rent, or face the new levy of 1% multiplied by the capital improved value of the taxable property. For example, if the property has a capital improved value of $500,000, the amount to be paid will be $5,000. Exemptions to the levy will include holiday homes, deceased estates and homes owned by Victorians who are temporarily overseas. “With negative gearing and capital gains tax concessions, the odds are already stacked against first homebuyers. This action will help level the playing field,” Premier Daniel Andrews said. National mortgage franchise MoneyQuest’s
$928,000 $745,000
THE VICTORIAN Government has made the
Investors intending to transact in next 12 months
Source: ABS/DFA
1 July 2017, with the government stating that the boost will make it easier for young people in regional Victoria to build and live in their own community. The increase will also boost local construction jobs and development. “This is a win for first homebuyers in regional Victoria, and it’s a win for local jobs too,” Andrews said. “By doubling this grant, we’re giving young people in regional Victoria even more reason to live locally.” The increased grant will be available to first homebuyers building new homes valued at up to $750,000, and represents an additional $50-million investment in regional Victoria over the next three years. At the same time, the Labor Government is working to make sure people in regional Victoria have the same opportunities as those in metropolitan Melbourne, underlined by the 2016/17 Victorian Budget, which delivered the highest regional infrastructure investment on record. That includes investing in more reliable and frequent public transport, safer roads, better schools and hospitals and creating more local jobs. “Importantly, we’re not making these changes in isolation. As our regional communities grow, we’re also investing in public transport, local roads, and the schools and hospitals they need,” said Andrews. Treasurer Tim Pallas added that the move will make it easier for young people in regional Victoria to buy and live in their community, criticising the Federal Government’s lack of action on the housing affordability crisis. “While the Federal Government talks about housing affordability, this is what real action looks like.” “We want to ensure these communities grow and prosper and are supported by the best infrastructure and services Victoria has to offer.” The grant will be applicable to contracts signed from 1 July 2017 to 30 June 2020, at which time, the government will review the benefits for first homebuyers and businesses in regional Victoria. “These initiatives are important steps towards ensuring today’s families and future generations will be able to afford somewhere to live,” Treasurer Pallas said.
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MARKET WRAP FINANCIAL SERVICES
PARLIAMENT VS BIG FOUR The four major banks have faced up to the House Economics Committee in its inquiry into their banking policies and procedures CEOs of the four major banks have been grilled by parliament for the second time in six months. The parliamentary inquiry took place on 3, 7 and
8 March and aimed to inquire into and report on a review of Australia’s four major banks, at the request of the Treasurer that was made last year.
NAB Andrew Thorburn, group CEO of National Australia Bank (NAB) was the first to face a series of cutting questions before the House Economics Committee on 3 March. Responding to a question on broker financial incentives by committee chairman and Liberal party member David Coleman, Thorburn said he could see why they “would create distortions”. He stressed, however, that NAB did not pay volume-based incentives to brokers, who were an “important group” for the bank. NAB was waiting on the upcoming broker remuneration review from ASIC which it had assisted with, he added. Labor committee member Matt Keogh asked how NAB set its home loan interest rates, saying it was “interesting” how quickly the banks had changed their rates after the committee released its last report in November. Thorburn said the executive committee and heads of customer business were both responsible for choosing how to set the bank’s interest rate. NAB was monitoring this “all the time”, and holding conversations every month on the topic, he said. He reiterated that NAB did not fund its balance sheet on the official cash rate. However, the current financial environment came with its challenges. “Our margins have halved and there’s continued pressure in home
loans,” he told the committee. Responding to a question from Greens MP Adam Bandt about the increasing price of housing in Sydney and Melbourne, Thorburn said this was a matter of supply and demand. While he admitted that there were “increasing risks” with the ongoing surge in house prices, he said that property in these two capital cities was not overvalued. Thorburn also revealed that since the last parliamentary enquiry on 6 October, NAB has uncovered 1,138 people within the bank who did not meet the required code of conduct. “This follows a discipline review in every case by a specialist team that we have. The consequences for those people ranged from a formal warning, through to dismissal. It also involves a reduction or elimination of any bonus,” he said in his opening address. There were five senior managers among those found not to meet this code of conduct. Two of these were dismissed while three faced disciplinary action. “We also went back and looked at issues over the past two years, applied this standard and we’ve taken similar action against 48 additional people,” he said. “Also, since we were here last, we’ve made it a formal policy in the bank that any prudential breach must be investigated by a dedicated and specialist team.”
CBA Ian Narev, chief executive officer of the Commonwealth Bank of Australia (CBA) faced the House Economics Committee on 7 March, and, like Thorburn, responded to questions about housing affordability. He stated the bank has not ruled out support for negative gearing reforms, and that a broad approach to housing affordability is required. Narev said that housing affordability was being tackled in the wrong manner despite being an “issue of great importance”. Mentioning Bankwest’s recent decision to remove negative gearing benefits from its serviceability criteria, Labor’s Matt Keogh asked
whether CBA as a whole would take this step as well. “We have not done it and we have no plans to,” Narev said. Keogh broadened the question, asking about negative gearing and its ability to tackle housing affordability. In response, Narev warned that “tinkering” with individual policies could distort the market, especially since there were impacts from both the supply and demand side. “The starting point needs to be the wellbeing of Australians, of which housing affordability is a part.” He suggested a broad picture approach instead of debating individual policy measures.
25
ANZ Shayne Elliott, CEO of the Australia and New Zealand Banking Group (ANZ), was the third bank CEO to be questioned by the House Economics Committee, and on 7 March addressed the bank’s view on tracker mortgages and their place in the market. “Our research showed only 10% of variable rate customers would think about switching to a tracker,” he told the committee. “In part, this reflects price. We cannot fund the bank with tracker deposits and this risk needs to be priced for.” Launching tracker mortgages would therefore be “commercially unattractive” and make ANZ more complex, he said. However, he admitted that the bank would continue to assess demand. Nationals member Kevin Hogan then questioned Elliott about ANZ’s relationship to mortgage
brokers. While ANZ does not own any brokers [via aggregators or brokerages], Elliott admitted that – with a market share of over 50% – brokers were “satisfying some fundamental need” in the market. He said that ANZ assessed each broker loan application on its own to manage risk. When pressed about broker commissions, Elliott said that while brokers were paid through a commission-based structure, there were no accelerators or volume-based incentives used. Responding to a question from Greens member Adam Bandt on the risks of climate change, Elliott said that ANZ had done a lot of assessment around the impacts of global warming and was in the middle of doing this for housing. Rising water levels were where the bank had a “greatest risk” and ANZ took these factors into account when offering customers a home loan.
WESTPAC The 8 March saw Brian Hartzer, chief executive of Westpac, addressed by the House Economics Committee for the banking inquiry. Responding to questions from committee chair and Liberal party member David Coleman regarding the various allegations from the Australian Securities & Investment Commission (ASIC) about the bank, Hartzer praised the regulator, saying that it was “very active”. For a lot of the issues raised by ASIC, however, Westpac approached ASIC of its own accord, he said. “We went to ASIC and said there’s been a mistake,” Hartzer told Coleman, which was a sign of a “healthy culture” for risk management. Where there were disputes, including over allegations that Westpac gave inappropriate home loans to borrowers, this was merely around how to apply the law. There was “no suggestion of a cultural problem,” he said. When Coleman pointed out that the volume of allegations against Westpac was notable, Hartzer responded saying, “I’d like it to be none.” Hartzer agreed with Keogh’s comments surrounding the responsible lending guidelines implemented by the Australian Prudential
Regulation Authority (APRA). Blanket rules could damage an individual’s home loan refinancing opportunities, Keogh said, and instead, this should be examined on a case-by-case basis. Hartzer concurred, saying there were dangers in the regulator’s current prescriptive approach. However, he added that Westpac was having an “evolving conversation” with APRA relating to this. One of the issues that Westpac was concerned about was regulators expecting the banks to manage their credit policies in one particular way. “We’re not sure that that’s the right answer,” Hartzer said. The questioning of Hartzer came just days after ASIC commenced civil penalty proceedings in the Federal Court against the bank. ASIC alleged that in the period between December 2011 and March 2015, Westpac failed to properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts. This represents contraventions of the responsible lending provisions of National Consumer Credit Protection Act 2009 (Cth) (the National Credit Act).
26
CONSUMER INSIGHTS GREAT AUSSIE DREAM IS “UNACHIEVABLE” New research has revealed that 9 in 10 Aussies believe achieving the ‘Great Australian Dream’ is no longer possible
A SURVEY conducted by mortgage franchise Mortgage Choice in collaboration with CoreData has shown that up to 87% of Australians no longer believe the Great Australian Dream of owning a home is achievable. The survey of 1,000 Australians asked for their thoughts and opinions on home ownership and whether or not it remains the ‘Great Australian Dream’, with the alarming majority stating it is becoming increasingly difficult to achieve the ‘traditional dream’ of home ownership. Mortgage Choice chief executive officer John Flavell said the survey reflects that the Great Australian Dream of 2017 is not the same as what it was 30 years ago. “The Great Australian Dream has traditionally been seen as owning a free-standing house on a quarter-acre block in the suburbs,” he said. “While the research clearly shows that the concept of owning a property continues to be ‘the dream’ for many Australians, it would seem the traditional ‘dream’ is evolving. “Australians no longer consider owning a free-standing home as the ‘Great Australian Dream’. Instead, they believe the ‘dream’ has evolved to include any style or type of property.” Flavell added that Australians have begun embracing apartment living, and there’s no sign that this will slow down or change any time soon. “Over the last few years, we’ve seen a dramatic surge in the number of people embracing apartment living. And, when you look at the level of apartment construction taking place across the country, it is likely that we will continue to see more Australians calling apartments ‘home’. ” Data from the Australian Bureau of Statistics
shows that approximately 52,000 apartments were approved for construction in 2011. Last year, that number had jumped to over 100,000. “While a lot of Australians are happy to buy and live in an apartment, others are only choosing this property purchasing path because they believe that they cannot afford the traditional dream of a free-standing home,” Flavell said.
ONE IN FIVE MORTGAGORS FIX THEIR RATE
22.22%
of all home loans written in February were fixed rate home loans Source: Mortgage Choice
Flavell echoes both the frustration and disillusionment felt by many first homebuyers on the eastern seaboard, fearful that they will never be able to buy the type of property they would like. “We need to help those Australians who are struggling to get their foot on the property ladder find a way to achieve their dream of home ownership,” he said, adding that now is the time that the federal and state governments work together to give serious thought to the issue of housing affordability in order to effectively find a solution. “To date, we have heard myriad
suggestions from both sides of parliament in relation to what should be done to address the issue of housing affordability.” “Many of the suggestions have centred on tax concessions; extended first homeowner grants; and allowing first homebuyers to use their super as a home deposit. “To my mind, such initiatives may well provide some relief and temporarily treat some of the symptoms associated with housing affordability, but they do very little (if anything) to treat the root cause.” The root cause, according to Flavell, is a problem of supply and demand, the same argument the government has been preaching for years. “Property price growth is fundamentally driven by supply and demand. When you get an ever increasing proportion of the population seeking to live in the urban centres for direct access to employment opportunities, education and other amenities, it is only fair to assume that we will see these centres come under greater supply pressure,” he said. Flavell cited “structural changes” and “better infrastructure” as ways to combat the housing supply problem, as well as more opportunities for employment in regional areas, better transport facilities to connect the country’s regional and suburban areas with the major cities, as well as more development within the urban centres. “Only when all of these initiatives are in place can we truly start to treat the root cause of the housing affordability crisis,” he said. “Home ownership should be achievable for all Australians, and as a nation, we should do what it takes to make that a reality.”
27
NO END IN SIGHT FOR DECLINING AFFORDABILITY
STILL ROOM FOR FHBS?
Proportion of family income required to meet loan repayments and median weekly family income
In the December quarter 2016 ... There were
23,273
Australia-wide
$1,681
first homebuyers nationally
30.4%
First homebuyers made up
$2,078 21.6%
$1,636
13.8%
26.8%
$1,983 $1,535
23.3%
25.5%
$1,680 of the owner-occupier market
37.0% $1,629 ACT
$1,381 23.2%
The average loan size to first homebuyers was
31.8% $1,381 23.2%
Median weekly family income Proportion of family income required to pay loan
Source: Adelaide Bank/REIA
$323,633
An increase of 1.3% for the quarter Source: Adelaide Bank/REIA
VICTORIA GIVES FIRST HOMEBUYERS A BOOST Of the total number of Australian first homebuyers that purchased property during the December quarter, 30.4% were from Victoria, the latest Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report has shown. The number of loans to first homebuyers in Victoria increased by 9.5% compared to 6.6% nationally for the quarter, and while there was a 2.1% decrease for the state compared to December 2015, the nation experienced a 0.5% increase during the period. Damian Percy, general manager of Adelaide Bank said: “The number of first homebuyers in Australia increased to 23,273 comprising almost 14% of the owner-occupier market. Average loan sizes increased in NSW, Victoria, Western Australia and the Northern Territory.” “The bad news is that despite this increase in first homebuyer numbers, it is still a figure well below the historical average of 18.5% of the owner-occupier market since the early 1990s. Large land releases such as those recently announced in Victoria can be expected to improve opportunities to enter the market.” Nation-wide, the report shows a slight decline in housing affordability compared to the previous quarter, and a 1.9% decrease in affordability for the year, indicating a property price growth climate that is simply too hot for many. The proportion of median family income required to meet average loan repayments now sits at 30.4% nationally, an increase of 0.9% from the previous (September) quarter. “If current trends continue, young people in Sydney and, to a lesser extent, Melbourne will be living fabulous Facebook lives – but enduring real lives with lousy housing options,” Percy said.
28
PEOPLE MAKING CRACKS IN THE GLASS CEILING The president of Yellow Brick Road’s Women in Finance group tells Australian Broker why it’s important that more women enter the world of finance, and how exactly they are helping this to happen “We’re also facilitating other female business networking opportunities – such as working with like-minded female accountants, solicitors and lawyers. Other firms have approached me to help them establish similar groups for their industry.”
Women looking for financial advice Executive chairman Mark Bouris says, “Some of our strongest performing branches are led by women, and there are no surprises there. “We’ve learnt that women feel more comfortable seeking advice from other women they can relate to. Women also tend to have greater empathy skills and a greater ability to connect with customers, making them excellent advisers and brokers. The industry is at risk of underperforming, and customers are at a risk of being underserved unless more is done to promote women in finance.” Particularly in divorce situations, women feel more comfortable seeking advice around financial support from other women, Nicol adds. “Generally speaking, a lot of women feel more comfortable talking to other women about their finances, because women can empathise with them and understand them.” A Galaxy Research survey conducted on behalf of State Custodians Home Loans also revealed that almost half of all single women (46%) and three in five single mums (60%) say ‘not knowing enough about money-related matters to understand what to do’ or ‘who to turn to for help’ would be the biggest obstacle when trying to get back on track with their finances.
IT’S NO secret that the finance world is a male-dominated one, and the industry’s workforce statistics paint a bleak picture for women intent on tackling it. Globally, women in financial services hold only 19% of senior level jobs, 14% of board seats and just 2% of CEO roles, PricewaterhouseCoopers research has revealed, and this imbalance may be even greater in Australia. At Yellow Brick Road (YBR), almost one in three advisers are female and its Women in Finance Group was established to ensure this ratio keeps heading towards a more balanced playing field. The group’s president and principal at YBR Earlwood, Effie Nicol, says the group helps to educate and provide networking opportunities to women to give them confidence to work in the finance industry. “From what I’ve observed,
“Generally speaking, a lot of women feel more comfortable talking to other women about their finances, because women can empathise with them and understand them.” Effie Nicol women are hesitant to join the financial sector for a number of reasons, but largely because it is so male-dominated. We’re striving to give women more confidence about the sector. “Women make up 31% of YBR advisers, which is higher than what is typical in our industry. We want to see this grow every year,” she tells Australian Broker, just days after the group’s first anniversary, falling alongside International Women’s Day on 8 March.
YBR’s Nicol says their executive committee is made up of almost only women who also manage their own YBR branches. The aim is to lead by example and become the place where anyone can find a female financial adviser, she says. The group holds regular events to connect with like-minded professionals, where everybosdy can share ideas and support local fundraising events such as White Ribbon Day, which Macquarie Bank hosted last year in November.
29
CAUGHT ON CAMERA On 27 February, the second annual AltFi Australasia Summit 2017 – Disrupting the Lending Ecosystem was held at Doltone House in Sydney. The summit was attended by 300 delegates and featured keynotes and panel discussions with some of the industry’s leading Australian and international lending platforms, global investors, regulators and service providers in the Alternative Finance industry.
30
PEOPLE HOT SEAT
LINDSAY ROGERS
The Aussie franchisee on his enduring 20-year broking journey, ‘keeping it in the family’, and what his perfect day would look like
How did your journey in broking begin? Before I joined Aussie, I was self-employed A in a menswear business. My business as well as the local area was going through a period of change and, at this time, I happened to attend a golf day where I saw an acquaintance who was then the regional manager of Aussie. He’d brought along a few brokers and I spoke to them about their work. This was pre-Olympics and everyone was talking about how the market was going to boom, so I thought it would be a good time to get involved and decided to take the plunge. I did mobile broking for 20 months and then became a regional sales manager, managing a team of brokers in Penrith. After 12 months in this role, I moved to Homeworld in Kellyville, looking after the sales team. At the start of 2003, as Homeworld Kellyville was wrapping up, I went back into broking as a senior broker, which was a different experience for me. I was self-sourced and was servicing different areas. Soon after, my son Matthew joined me as a field assistant and we recruited a personal assistant to help with the workload. We worked in this way until 2012 when I opened the Aussie Newtown store with Matthew. Being business partners with my son has been important and a huge achievement for both of us. In 2016, we opened our second store together, Aussie Balmain, which also marked the opening of Aussie’s 200th store.
Q
Who has been your biggest inspiration in your life? The person who has inspired me the most A and who has helped my success greatly is my wife. You need support from someone when you’re working late at night, and having my wife’s interest in my work – asking how I went, did I write the loan, etc – has been encouraging. She’s been involved in everything I’ve done and has supported me the whole way. A lot of people make it in the industry, but if you don’t have someone who understands the struggles and supports you, it’s much harder. We battled at first; but always having her behind me has been hugely reassuring.
Q
What do you think is the ‘secret sauce’ Q for having a successful broking business? Treat everyone with respect, listen to what A they want and do your utmost at all times to deliver the best possible service. The customer is number one. If you can’t do the right thing by them and help them achieve their goals, you won’t get referrals to their family, friends and business
acquaintances. What makes a business successful is the customer liking you for the job that you do for them. This is what will result in referrals and your business growing.
Being associated with Aussie is great because you have so much support helping you understand what has been updated and what the latest requirements are.
What do you think are the biggest challenges in the industry and how will you best meet them? Broking is still a relatively new industry; it’s A still growing and evolving and is constantly changing. The challenge is to keep on top of these changes and to keep improving so that you can deliver for your customers. Having the latest information about products helps your customers achieve their goals.
If you could paint a perfect day from start to finish, what would it look like? In the perfect business day; the customer A walks into my shop, I meet with them, understand what their needs and goals are, we decide on the right loan for them, and then I get to pass it on to my support staff to do all of the work while I start speaking with the next customer! I would also leave enough time in the day to have a game of golf!
Q
Q
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