Australian Broker magazine Issue 9.20

OCTOBER 2012 ISSUE 9.20

OCTOBER 2012 ISSUE 9.20

$4.95 POST APPROVED PP255003/06906

+ INSIDE + NEWS COMMISSION LURE Lenders increase commissions to entice brokers P4

REGIONAL TRIUMPH

Brokers eschew majors for regional banks P8

+ CAUGHT ON CAMERA Loan Market puts on a two-day Melbourne extravaganza P18

Vaughn Richtor ‘Room to move’

There is plenty of space for non-major lenders to grow if their strategy remains firmly focused on the customer

F

or ING Direct’s Vaughn Richtor, returning from Asia to Australia for another stint as CEO of Australia’s fifth largest bank must feel in some ways a little claustrophobic.

After all, he has spent his career since 2006 overseeing the bank’s operations in some of the world’s fastest growing and dynamic banking markets, including India and China.

However, the shift back to a developed market does not faze Richtor, who believes ING Direct and other second tier players still have room enough to challenge the majors.

FULL STORY PAGE 12

+ ANALYSIS Are you getting what you need from your BDM? P16

+ MARKET TALK An optimistic forecast for the property market P26

NEWS

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WHAT THEY SAID...

NUMBER CRUNCHING

TOM KOWPAK

$3m

“On May 26 this year, I was on top of the world. Literally. I stood on the summit of Mount Everest…”

The average house price in Sydney suburb Bellevue Hill, making it one of Australia’s most expensive areas Source: REINSW

DID YOU KNOW?

P20

KEN SAYER

9,000m2

The size of CBA’s new headquarters in Melbourne, due to be completed by mid-2013 Source: CBA

5%

The percentage of Queenslanders looking to switch their savings account to another bank in the next year

99.4% The percentage of Victorian homebuyers who are confident and happy Source: Genworth Australia

Source: Heritage Bank

“To put it bluntly, the assumption that commercial borrowers are safe is a product of brainwashing.”

$150m

The proposed amount Sheraton Hotels wants to invest in an upgrade of its Darling Harbour, Sydney hotel Source: Sydney Morning Herald

2,821

The number of new home builds started in FY11/12 by developer Metricon Homes

P15

JAMES VEIGLI

“Do everything with the view to building a moneymaking business machine…”

P28

Source: HIA

The average loan size in Australia, in 2002 and 2012

2002

2012

$151k $290k Source: Canstar

FRANK PARATORE

“Transactional brokers – whose clients can’t even remember their name – have issues with client loyalty.”

P8

NEWS

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Commission increase sparks competition ■ Two non-bank lenders and

a second tier have increased their upfront commission within weeks of each other, indicating competition is heating up between lenders for broker business.

Macquarie was first off the mark earlier in September, announcing a rise from 0.60% to 0.65%.

A week later, Australian First Mortgage (AFM) announced an increase in upfront broker commissions from 0.65% to 0.70%.

AFM’s national head of sales Clint Hawthorne told Australian Broker the increase was a direct reaction to Macquarie’s increase, as well as a way of “rewarding loyalty with our broker partners.”

“Macquarie has recently come

out with the increase in their commissions and we certainly don’t want to be left behind when it comes to competitive pricing,” he said.

Homeloans Ltd then announced an increase of its own, again to 0.7% upfront, as well as a 50% reduction in its ‘get-in’ fees.

“It’s a tough market at the moment, so we feel it is of utmost importance to reward brokers for supporting us. Our new fee structure also provides a clear benefit to borrowers,” said Greg Mitchell, Homeloans’ general manager sales.

Hawthorne said increasing borrower dissatisfaction with the majors could be used as an incentive for alternative lenders to up

their game. “There’s a lot of negative sentiment, particularly in the area around the major banks jacking up rates outside of the RBA movement.

“For organisations like us, it’s a great opportunity to capitalise on that negative sentiment, and get out there and try and get in front of as many brokers as possible, and promote our offerings.”

He admitted commission increases could be “a trend that starts to develop.”

property investor confidence is high while the intention to buy is low, and there are ‘choppy’ times ahead, it warned.

According to CoreData, positive sentiment hit a 15-month high amongst investors, although overall levels

WE’RE STILL VERY MUCH IN THE RECOVERY PERIOD – K RISTEN TURNBULL

are still low and the intention to purchase is even lower.

The report found intention had dropped from -24.3% in the March quarter to -29.7% in June.

Kristen Turnbull, head of advice, wealth and super at CoreData told Australian Broker the overall low levels were due to the industry being in a serious “rut for some time.”

“We hit an all-time low last quarter for investor sentiment.

We’re still very much in the recovery period, and people are generally still a little nervous, although it has improved.”

She said the results pointed to a disparity between feeling

COPY & FEATURES NEWS EDITOR Caroline Dann PRODUCTION EDITORS Carolin Wun, Moira Daniels ART & PRODUCTION SENIOR DESIGNER Rebecca Downing DESIGNER Ginni Leonard SALES & MARKETING SALES MANAGER Simon Kerslake ACCOUNT MANAGER Rajan Khatak MARKETING EXECUTIVE Anna Keane TRAFFIC MANAGER Abby Cayanan CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley MANAGING DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Ben Abbott tel: +61 2 8437 4716 ben.abbott@keymedia.com.au Advertising sales Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au

All talk, no walk for investors ■ A major analyst claims

EDITOR Ben Abbott

confident and taking the next step and actually investing.

The expectation of further rate cuts over the next three months was also playing a significant part in whether people “would dip their toe in,” she said.

As for the next 12 months, Turnbull said conditions would more than likely remain volatile, making it difficult to predict a strong recovery or even a decline.

“We have a sailing analogy: over the next 12 months, financial services that deal with borrowers [including brokers] will be sailing from gust to gust.

The market conditions will continue to be choppy,” she said.

Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Subscriptions tel: +61 2 8437 4731 fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Toronto, New Zealand brokernews.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss.

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

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

NEWS

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Game on: fixed rate war intensifies ■ The rush to offer the ‘best fixed rates’ in the

DID YOU KNOW?

New family loan is ‘risk free’ for parents ■ A patent-pending family

loan is aiming to “take the stress off Australian families” by easing the liability parents face in helping their children secure finance.

Mortgage manager Bluebay Finance announced the launch of the loan, called Smart Families.

Interestingly, it does not require parents to use their home as security for the loan or be on the title.

Parents are able to contribute to the purchase price, but by no more than 20%. There is also an inbuilt commercial agreement between the parents and their child.

Gerry O’Donnell, general manager of Bluebay Finance, told Australian Broker the creation of the product was in response to young couples finding it increasingly difficult to come up with legitimate finance for a home purchase.

“Young couples are being pushed out of the competitive

rental market and into home ownership. It takes the average couple nearly five years to save a home loan deposit,” he said.

“The ongoing interest repayment by the child to the parent is based on the principal sum and tied to the first mortgage interest rate.

“The system promotes ultimate ownership by the child by limiting the amount the parent is able to invest.”

O’Donnell said Smart Families offered brokers a “brand new solution” for their clients.

“This isn’t available anywhere else on the market, especially for parents who want to help their children without putting their own home at risk.

“It can also help with a child’s serviceability, meaning that if they couldn’t get a loan approved before on a guarantor loan or 95% loan product, they may now be able to do so,” he said.

CBA repossessed two rural Queensland properties, worth $40m, after their owner was found guilty of fraud.

The historic properties are expected to sell at a fraction of their worth.

industry intensified this month, with no less than four lenders slashing rates within a twoweek period.

Of the majors, Westpac cut its fixed rates across its two-, three-, four- and five-year loans by 10–15 basis points, claiming it now has the best rates out of the big four.

Over in the second-tier camp, St.George and Liberty Financial slashed rates even further.

St.George even reduced its three-year fixed rate for its Advantage Package to 5.49%, only a week after cutting its one- and two-year rates.

“We were already leading the major banks with our competitive fixed rates across one, two, three, four and five years. [This] really cements our market leading position against the majors for the popular three-year fixed period,” said Andy Fell, general manager of St.George Retail Banking.

Liberty Financial cut its one-, two- and threeyear fixed rates, to start at 5.79%.

Liberty’s national sales manager John Mohnacheff confirmed it was the lender’s third cut in four months.

Mortgage manager Australian First Mortgage announced it was reducing its fixed rates as well as increasing broker commission.

AFM’s national head of sales Clint Hawthorne said the move was not only to compete with the current spate of rate cutting, but to “reward loyalty.”

“Given that we only deal with mortgage brokers, it’s also a great opportunity to go back and reward those brokers who are supporting us,” he told Australian Broker.

ZEITGEIST

WILL YOU BE ENCOURAGING YOUR CLIENTS TO FIX THEIR RATES?

49% 31% 20%

YES NO

MAYBE

Total votes: 151 Source: Australian Broker Online

NEWS

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Relationships keep clients loyal, argue stakeholders

THE STRANGER SIDE OF NEWS

■ Industry stakeholders hit back

WHAT A CROC

■ A crocodile was found wandering around the

cargo hold of a Qantas flight from Brisbane to Melbourne by a startled baggage handler. The reptile had chewed its way through its plastic pen, en-route to its new zoo, and decided to have a nosey around. Officials are now investigating whether the crocodile was ‘in the right container’ after all.

CHILDISH PLEASURES

■ US website TheChive.com has asked for

readers to submit pictures of themselves reenacting photos from their childhood. So far, submissions include a woman sitting on a high chair with food smeared on her face, an obese man riding a tortoise, and brothers posing together naked in the bath.

POOR BUILD

■ A Sydney apartment block has given its

residents nothing but heartache since being constructed in 2004. The Chippendale building had faulty waterproofing and drainage, no fire safety certification, electrical hazards everywhere and no occupancy certificate. The council is also installing artwork on the side of the building, which a resident says “looks like an exploded vacuum cleaner.” The errant developer is now living in Las Vegas.

‘CYBERLOAFING’ DEEMED PRODUCTIVE

■ Researchers claim ‘cyberloafing’ – casually

browsing the internet to you and me – can in fact be beneficial to employees’ productivity.

The National University of Singapore’s Dr Vivien Lim said such activity was akin to a coffee break. “People usually choose to visit only the sites that they like – it's like going for a coffee or snack break. Breaks of [this] nature are pleasurable, rejuvenating the web surfer,” said Dr Lim.

WET AND WILD

■ At Australian Broker, we can’t imagine how

A-list celebrities manage to get their properties foreclosed, but in the case of singer Rihanna, her foreclosed property was sold for more than the asking price despite reports of ‘extensive damage’ due to flooding. One can only speculate on the activities undertaken there…

DID YOU KNOW? RP Data claims city property bargains still abound, but borrowers have to look 20km from the CBD. The analyst listed key suburbs across Australia’s capitals that were considered part of the city, but without the hefty inner-city price tag.

Australia ranks second in the developed nations for paying off mortgages early. Canada comes out on top, although Australia is quickly catching up. The RBA said around half of Australian mortgage-holders were ahead with their payments.

and CRM activity, coupled with integration of other financial services as opposed to transactional brokers whose clients can’t even remember their name,” he said.

He also admitted diversifying the product offering was another tactic brokers could adopt to foster loyalty.

Mortgage Choice’s head of corporate affairs, Belinda Williamson, said the company’s level of repeat business – signalling loyalty – was as strong as ever.

“The consistency of customer loyalty is likely the result of a number of factors, most notably the strong relationship between the broker and their client.”

at claims client loyalty is waning, although they warned brokers must focus on relationships to prevent it from occurring.

Analyst Max Franchitto initially told Australian Broker that waning loyalty, to both the banks and the broker, was at risk of increasing.

Aggregator Ballast’s CEO, Frank Paratore, said while loyalty was an issue for “transactional-based brokers”, it was in fact increasing for those fostering strong relationship ties with their clients.

“This is the case with relationship-based brokers who demonstrate stronger marketing

Regional banks triumph over majors ■ Regional banks enjoyed

broker channel. “I don’t have access to any statistics that would substantiate this, but some of the regional banks have been the strongest supporters of the broker channel,” he told Australian Broker.

He said the benefits regional banks presented to brokers also came down to “more choice and therefore more competition”.

“I don’t see why it wouldn’t continue, providing there is sufficient funding for regionals to attack the market,” he said.

The FBAA’s Peter White said the trend towards using regional banks would likely continue, provided competitiveness in service and product offerings continue apace.

“Major banks are regularly commented to us as being too slow and difficult to deal with.

“Regional banks, in my opinion, have a greater sense of customer service and they value repeat business,” he said.

greater market share last quarter due to increased broker support, according to data from Market Intelligence Strategy Centre (MISC).

It also found the regionals’ market share was greater than the majors, at 37% of all broker business nation-wide.

The results showed a 12% year-on-year jump, and a 4% increase from the June 2011 quarter.

Queensland formed the vanguard of the regional bank revival, with combined share through brokers reaching 39%, up from 30.3% last year.

WA brokers maintained their strong regional bank support at 42.8% of all business, a slight dip from 44.3% last year, and NSW and ACT saw growth to 36.1% of market share.

The MFAA’s CEO Phil Naylor believes regional banks can offer the strongest support for the REGIONAL BANK SUPPORT: BY STATE

42.8%

WA

39%

QLD NSW/ ACT

36.1%

VIC

36%

SA

24.8% *Source: Market Intelligence Strategy Centre (MISC)

NEWS

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BEST OF THE REST ASIC COMES DOWN HARD WITH CRIMINAL CHARGES ASIC is bringing criminal charges against a former broker for committing fraud, which is an NCCP and ASIC first.

Former NSW broker Daniel Nguyen is accused of “providing false information to banks” to secure approvals for loans, according to an ASIC statement.

Nguyen has pleaded guilty to all 10 charges, which included nine offences of providing false documents to banks for loans totalling more than $3m, and one offence of assisting three clients to “apply for credit contracts that were unsuitable.”

At the time the offences took place, Nguyen was sole director and employee of MAI Home Loans.

He faces a maximum penalty of two years’ imprisonment and a fine of $11,000 for each charge.

HAVE YOUR SAY: Is ASIC coming down hard enough on rogue brokers?

Email the editor at ben.abbott@keymedia.com.au

FLAT MARKET? WATCH OUT FOR DODGY LENDING, SAYS RBA The RBA has warned that a flat property market may incentivise lenders to adopt ‘risky’ lending practices, which it said would “sow the seeds of future problems.”

It made the claims in

its twice-yearly Financial Stability Review.

While banks in Australia were given an overall thumbs-up, it was the risk of lenders softening lending standards to drive profits which had the RBA concerned.

“With demand for credit likely to remain moderate, a challenge

for firms in a competitive banking environment will be to resist pressure to ease lending standards in order to gain market share in the pursuit of unrealistic profit expectations,” the RBA said.

“The challenge… will be to avoid taking on unnecessary risk or cutting costs indiscriminately.”

JOB LOSS A KEY CONCERN FOR BORROWERS

New survey results show the vast majority of new first homeowners fear job loss and rising utility bills over all other concerns.

Mortgage Choice conducted the annual survey of 900 first homeowners, who purchased within the last two years.

It found 32% of survey participants feared increasing utility bills would impact their ability to make mortgage repayments.

Fifteen per cent of respondents were concerned over job security, which was an 8% increase on last year’s results.

Mortgage Choice said general economic slowdown could be contributing to the sharp loss in consumer confidence.

COMMERCIAL LENDING ‘EASIER’ AT NON-BANKS

La Trobe Financial claims brokers looking to enter commercial lending should consider non-bank lenders, who it says have a more ‘streamlined process’.

It cited results from NAB’s Quarterly Australian Commercial Property Survey, which showed improvements in commercial lending in Q2 as a reason brokers should consider diversifying – but with non-bank lenders.

“Commercial lending with a non-bank lender is a great way for brokers to expand their product offering without the need for extensive training or capital investment, and with attractive upfront commission and trail payments on offer for what are usually high-dollar loans, the answer is simple,” it said.

“The very words ‘commercial lending’ are often enough to send a shiver up a broker’s spine as it is often simply too hard and too time-consuming to attempt a commercial loan submission,” Stephen Lawrence, La Trobe’s executive joint head of asset origination said.

NEWS

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Genworth: Australians confident and risk-savvy ■ Mortgage insurer Genworth

painted a very positive picture of Australian homebuyers earlier this month, reporting high confidence levels in its bi-annual Homebuyer Confidence Index.

“In Australia, we have a very debt-conscious society. In the UK, especially pre-GFC, lenders and borrowers were a lot more ‘gung-ho’. Lenders here don’t have a big appetite for lending at greater risk,” researcher Alan Shields told Australian Broker.

The insurer’s index showed a 2.2% increase in positive sentiment from March 2012, bringing it to 98.4% More than half of those surveyed believe now is a good time to buy.

It was a very positive assessment of Australia’s homebuyer market, defying several negative assessments by analysts, including BIS Shrapnel, earlier this month.

However, Shields said the rise in graduates owning an investment property was one of the most surprising results. “[We looked at] recent graduates, and the proportion of them that don’t own their own home, but have an investment

GENWORTH CERTAINLY DOESN’T SUPPORT LVRS ABOVE THE TRADITIONAL RANGE – E LLIE COMERFORD

property is 12%. Compare that to the general population, which is around 5%,” he said.

Genworth CEO Ellie Comerford added Australia had the second-highest rate of younger homeowners, or potential first homebuyers, “living with mum and dad.”

Meanwhile, when asked about low-doc and 90–100% LVR loans, Comerford said Genworth did not support them.

“Post-GFC we saw a move away from that, largely driven by consumer sentiment,” she said.

“At the end of the day, there’s still an appetite for people to borrow above an LVR of 80%… we certainly don’t support LVRs above the traditional range.”

THEN AND NOW: 2008 VS 2012 2008

SEP 2012

Official cash rate

7.25%

3.5%

Inflation

4.5%

1.20%

Unemployment

4.3%

5.10%

HIA Housing Affordability Index

47.6

62.5

Average FHB loan

$243,100

$289,400

Homebuyer Confidence Index

91.1

98.4

% change in Index from previous yr

-8.9%

+2.2%

*Source: Genworth Homebuyer Confidence Index

More RBA cuts please, says economist ■ The RBA’s decision to cut the rate earlier this

month drew a mixed response from the industry, with one economist calling for further cuts to properly boost economic recovery.

Tim Hampton, senior economist at BIS Shrapnel told Australian Broker that while the cut was expected, another one may be necessary before year’s end.

“We think the Reserve Bank will likely deliver one more cash rate reduction before the end of the year, probably on Melbourne Cup day,” he said.

“This will get interest rates to a level that will deliver the recovery in dwelling building and other domestically-focused industries, and take some heat out of the Australian dollar.

“However, if that is not the case, then further cash rate reductions around the second quarter of next year could be on the cards,” he said.

Phil Naylor, CEO of the MFAA, told Australian Broker the real issue was a lack of confidence on the part of borrowers.

“I think a cut might help, but I think the problem for the property market (with already fairly low interest rates and fairly strong employment figures) is one of lack of confidence,” he said.

“Normally with the current economic environment, we would see the property market being pretty active, but that has not been the case – this latest cut may make a difference.”

ING Direct’s CFO Glenn Baker said improvements in affordability, due to potentially lower rates on the back of cuts from the RBA, would benefit the market.

However, he was not convinced another cut was on the cards for 2012.

“There is the prospect of another move of 0.25% in November but the RBA has also indicated that borrowing rates are accommodative/below medium-term averages, so they may be happy to observe developments and review rates again at the first meeting for 2013 in February,” he said.

NEWS

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CONTINUED FROM PAGE 1

Vaughn Richtor: ‘room to move’ There is plenty of space for non-major lenders to grow if their strategy remains firmly focused on the customer

F

or Richtor, who recently replaced Don Koch after the former CEO moved to head up the bank’s Italian operations, the Australian market is in stark contrast to that of Asia’s.

“The difference is Australia is a very well developed market, and in terms of population it is smaller than the bigger Asian markets,” he explains. “Of course in other markets, you also don’t see the same degree of concentration. You do have major players, but it’s less concentrated.

And because it is growing much faster, there is more room.”

But the dominance of the major banks is not something that concerns Richtor. After all, he was previously responsible for launching and growing the bank over a period of 11 years.

“When we first launched, people didn’t think we could really make any money. Well it’s been 15 years and we are still going, and doing pretty well.”

BRANCHING VIA BROKERS

Brokers have been central to the bank’s distribution strategy from the very beginning, and presented an ideal channel for mortgage distribution.

“We saw that firstly and fundamentally branches weren’t the ‘be all and end all’ of distribution. It was in the early days of broker market development and we quickly worked out why a customer would go to a broker – they had choice, with brokers acting in their best interests to give the best products from a range of lenders, not just from one lender.”

Richtor says this change in customer demand made brokers central to its proposition.

“We decided we could pursue that branchless model, and on the mortgage side, distribution would be through third party – and we remain true to that today.”

A CHANGING BROKER

Just as ING Direct eventually introduced a direct mortgage channel to provide customers

with choice, Richtor says, brokers need to continue to evolve to meet demand.

“They basically need to manage the whole customer relationship, not just maintain a simple transaction-based relationship,” he says. “I can see that happening with some brokers; I have seen how they are adapting and changing their models.”

How this will be affected by continued broker market consolidation and bank investment in broker groups – potentially impacting the choice proposition – is yet to be decided.

“Time will tell. As long as the customer goes to a broker because they feel they have choice available – rather than being tied to one brand – or the broker is looking to develop a relationship with the customer, rather than being transaction-driven.”

SIMPLE AND EASY

One of ING Direct’s core propositions is something brokers will have noticed over the past two years – being simpler and easier to deal with.

“That is not always easy. We have made a lot of innovation, particularly in the way we deal with brokers over the last two years, which has really improved things,” Richtor says.

And with ING Direct maintaining this philosophy, as well as its focus on changing to meet customer demands, Richtor says there is scope for growth.

“We have done ok, so far.”

However, optimism and innovation is something that comes naturally to a CEO that has been involved in financial markets and banking since 1981.

“I’ve never felt other than excited, positive and optimistic,” he says. “I think the key to that is looking at the developing changes and understanding the impact they have on our clients, and responding to what the client really wants from us – not what we think they want. If that requires us to change and requires us to adapt, then we have got to feel excited.”

WE SAW THAT FIRSTLY AND FUNDAMENTALLY BRANCHES WEREN’T THE ‘BE ALL AND END ALL’ OF DISTRIBUTION

VAUGHN RICHTOR

COMMENT

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14

LVR is only an issue at the time of selling a home and where do you stop when looking at an appropriate LVR? Banks have been lending 100% on cars and other equipment for decades which are depreciating assets. You will find what is really affecting borrowers is the debt they obtained after obtaining the mortgage (outside of losing your job of course).

Financial literacy needs to be improved for the average household to allow better judgment in taking out debt.

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

BROKERNEWS. COM.AU

At the end of the day, I think you will find it rare for a borrower to be defaulting on today’s interest rates if they have maintained their level of income and not increased their consumer spending/debt.

Ian on 21 Sep 2012 11:20 AM

100% RISKY

When Digital Finance Analytics claimed arrears and stress would increase dramatically in the next three months, readers were divided on whether low-doc or 100% loans could be a factor.

lives interfear [sic] with their professional reliability.”

The forum erupted with colourful retorts.

“Sidbroker: Did you club them on the head before dragging them back to your cave?” said PotKettle.

“Sidbroker, seems the article’s hit a nerve. You make blokes look bad and whiney. Just get on with it mate,” said CJ. “Sidbroker, go and do something constructive… write a loan maybe?” replied Interesting.

Yes to More Women took a stab at why the male readers were up in arms.

“Most of us male brokers are probably putting up barriers, as we know women will do a

The MFAA’s Phil Naylor drew strong – and colourful – comments for his views on how the ban on exit fees was hurting smaller lenders.

Philthyo on 21 Sep 2012 9:15am The downturn in valuations is not the problem – the house could be worth zero but that’s not a problem as long as the borrower maintains payments – lack of financial verification (eg, low-doc/no doc) loans are the cause.

Qld Broker on 20 Sep 2012 10:02am Whilst the government touted competition as the driving force behind their decision, I think it’s fair to assume they done it [sic] for the public exposure. Bank bashing is all the fad these days. I can honestly say I haven’t seen too many of my clients refinance away from the lenders I have set them up with to date.

Overtheborderbroker on 21 Sep 2012 9:59am Lenders have learned nothing. There are still lenders today who will gladly write a 90% LVR loan with 10% borrowed deposit and brokers lining up to find clients for them. More catastrophes just waiting to happen.

1martym1 on 20 Sep 2012 11:44am But regional lenders increased market share by 12% year-on-year? If by small you mean mortgage managers dressed up as nonbanks then I can’t agree. They were never a real competitive force anyway.

John on 21 Sep 2012 1:06pm The level of debt is frightening. Heaven help us when, rather than if, we wake up to this fact. Everything is fine while there is faith that the economy will remain strong and unemployment remains low.

But when that stops we may well have a better understanding of what contagion really means.

Philip StClair on 21 Sep 2012 12:39 PM Mentioning low-doc and 100% loans, whilst they do present higher lending risk, it does not solely qualify them to be linked without proof and further investigation.

The reversal in market values has been compounded [by] tightening lending policy, reducing the active market, and conservative valuations decreasing available and accessible equity into the market.

Battle of the sexes The issue of gender certainly stirs up strong feelings in Australian Broker’s readership.

After running an article focusing on Port Group CEO Voula Kotsiras’s efforts to attract more women into broking, colourful comments began filtering in.

For Truth got the ball rolling with a strong call to action for all the hard-done-by men in the industry.

“If it is politically correct to also push females in front of males, I have had enough. It is time we stand up and stop this constant demeaning of men.”

However, Sidbroker really got things heated up when he claimed his past female employees let “their personal

COMPETITION? WHAT COMPETITION?

better job! The more women, the better, I say.

“Although, you’ll have to sit through a bunch of maledominated functions, talking the usual sexist crap that dribbles out, which is why I’m reluctant to go to most of these things.”

YOU MAKE BLOKES LOOK BAD AND WHINEY. JUST GET ON WITH IT

WIN SOME, LOSE SOME

When news broke of NAB’s and ANZ’s increased loan books, putting them well ahead of rivals Westpac and CBA, Australian Broker readers were polarised in their reactions.

Country Broker on 02 Oct 2012 10:08am There is no surprise here. They have the best products; strange how Canstar has said Westpac is best for first homebuyers – not portrayed in this result!

Greg on 02 Oct 2012 10:10am NAB boss Michael Chaney has said that NAB is not making super profits… What planet are you on?

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

AXE TO GRIND

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15

Small businesses should be protected by NCCP Small mum and dad businesses should be protected under NCCP, not left to the whims of banks sacrificing them to meet Basel III requirements, writes Ken Sayer

O

ver the past few months Mortgage House has experienced a marked spike in applications for commercial loans.

We welcome the additional business but this scenario has a disturbing underbelly.

Our good fortune is the consequence of a situational fall-out.

Distressed small business operators are coming into our branches saying they need up to $3m on the spot because their properties have been re-valued by the banks.

These are the same banks with which they have had long-term relationships.

Many small business operators who accepted these claims at face value saw their banks as their best mates and assumed that their loans were safe. They are now being subjected to a harsh reality check.

THE BASEL REALITY CHECK

The assumption that commercial borrowers are safe is a product of brainwashing.

The vast majority of Australia’s 2.1 million self-employed are unaware that they are at risk.

Their bank can review their state of affairs with little to no notice and demand that they come up with a capital injection virtually overnight.

In fact, they are being hit with a double whammy.

Their asset is devalued and, combined with a riskier component, their LVR ratio is arbitrarily reduced.

In essence, small business operators are becoming victims of Basel III capital adequacy requirements. Because banks need to hold more capital than they did three years ago their ability to borrow has been significantly reduced. Therefore, the money available to be lent to businesses is substantially reduced.

Basel III is shrinking our financial system, even if it’s now safer and more stable.

In the short term this translates as pain – especially for small business operators, who are in the majority. This means a lot of hardship.

AN EXTENDED NCCP

The bottom line is that selfemployed mums and dads should be covered by the credit code.

Clearly, a business like Mortgage House – a fairly large company but still classified as an SME – should not be covered by

KEN SAYER, MANAGING DIRECTOR MORTGAGE HOUSE OF AUSTRALIA

the credit code. It is small business operators who should qualify for cover under the NCCP because they aren’t able to employ risk managers, auditors and compliance managers.

If you are a one-man band stationary shop or green grocer, you are likely to get wiped out in the current scenario.

The NCCP regulations are all about protecting vulnerable clients.

ANALYSIS

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Building better BDM relationships Segmentation breeds winners and losers when it comes to BDM support. So what can you do if you’re not at the top? Andrea Cornish investigates

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ince the GFC, many lenders have restructured their BDM support programs – offering better service to top brokers in their segmentation programs. And while some BDM teams may have been trimmed slightly in the wake of cutbacks, you may not feel the effects, based on where you sit in the food chain.

Leah Busby, owner of Blackfish Finance, is a top tier broker.

“When you work hard enough and long enough to get to that group, you do get better attention. And that’s where we are now, and I appreciate that we do.”

She adds: “If you give them business, then they give you attention. I think it would be really hard for banks to give equal support to the brokers who are writing one loan a month.”

Daniel Edmonds, owner of Hyaline Finance also agrees with a top service for top tier brokers approach.

“Now that they’ve segmented brokers based on the quality and volume of business, for a broker like me, the BDM support has actually been better, because they’re really looking after their top brokers. I have heard anecdotally that if you’re not in the top tier that BDM support can be quite poor, but I guess that’s just the commercial reality,” he says.

“Personally I think it’s great that they segment the brokers, and brokers like myself get more attention and faster service because we are producing more volume.”

But what about brokers not writing huge volumes?

Ownit Finance’s Glen Polley processes between $2.5m and $3.5m a month, “so I’m not at the top of the ladder, but I’m not a newbie either”.

He says while he doesn’t get the same support as top tier brokers, he notes he still gets

exceptionally good service from Homeside.

“As a result, we send a lot of business through lenders like Homeside. Their products are good, but they’re also reliable.”

In a bid to win more broker business, NAB Broker abandoned its segmentation strategy more than 12 months ago to provide all broker partners with the same service previously reserved for its Four Star brokers.

Brokers writing smaller volumes might also find better service from second tier lenders.

ING Direct is another lender that is foregoing segmentation in its BDM support strategy. The lender recently restructured its Broker Partner Program and now has 23 BDMs and relationship managers. “[The Broker Partner Program] is not a segmentation strategy, as we feel that our approach should be determined by what each broker most requires. We also appreciate that there is a customer at the end of each transaction, and we’d like to ensure each customer we deal with experiences excellent customer satisfaction,” says Mark Woolnough, head of broker distribution at ING Direct.

Steven Heavey, head of intermediaries at Suncorp, says the bank recently restructured its BDM team and is trying to focus on brokers who want to deal with the second tier lender.

“So it’s not about going out and choosing a broker because they happen to write a lot of business.

Part of being a second tier bank is making sure the broker has a propensity to want to deal with that brand, because not all brokers see Suncorp as one they would consider in their top three.

I suppose the goal for us is to actually get brokers to see Suncorp as one of their top three lenders.”

From a broker’s point of view, Heavey says, they ultimately want a BDM who is accessible

I DON’T NECESSARILY LIKE THE BDM HOLDING MY HAND, BUT I LIKE THE IDEA OF BEING ABLE TO SHOOT OFF AN EMAIL IF I’VE GOT A QUESTION OR I NEED SOME HELP - D ANIEL EDMONDS, HYALINE FINANCE

ANATOMY OF A GOOD BDM A good BDM can play a critical role in a broker’s business. But what makes a ‘good’ BDM? Brokers insist that for BDMs to win their business they must:

 B e knowledgeable about products/ policies

 Respond quickly  Be realistic  Be honest  U nderstand there is a client at the end of the line

 Be good educators

DID YOU KNOW?

23

The number of BDMs for brokers at ING Direct Source: ING Direct

“I’ve always had a theory of what makes a really good BDM,” says Steven Heavey, head of intermediaries at Suncorp. “A broker wants to know if a deal is going to work within a fiveminute conversation of running that scenario with a BDM. It’s so important that BDMs have very strong credit knowledge. They also have to have an understanding of the process to help brokers submit applications that go through the process smoothly.”

He adds: “At the end of the day, if you’re 99% right every time a broker rings you regarding whether a deal is going to fly or not, you’ll continue to get the support of that broker. Because that’s what they want – they want surety, they want to know that if it’s going to go through. And I think in a lot of cases, brokers would be happy with a fast ‘no’ then a ‘yeah, maybe, we’ll get back to you’ response.”

brokernews.com.au

17

GET MORE FROM YOUR BDM

Liberty Financial BDM and winner of the 2011 AMA’s Best non-bank BDM award Anthony Wickremasinghe handles about 600 brokers. He suggests brokers can get better results from their BDMs by putting as much information as possible into email queries. “That way, when the BDM has to respond, he knows exactly what to come back with.” Too often he says brokers query a loan scenario, then send in something a little different and is disappointed when it doesn’t go through.

He also suggests making friends with your BDM and showing your appreciation when possible. “It seems many brokers only come to the BDM with a problem, and once the problem is sorted they forget about them,” he says. “The best thing you can do is if a particular BDM is going out of their way to return phone calls after-hours, they should be rewarded by the broker emailing the state manager to say so-and-so is doing a great job. That way it gets around to the BDM and it will only encourage the BDM to keep it up.” and can answer their query in a timely manner.

“We try to instil in our BDMs a sense of making sure that they are accessible, that they respond within a reasonable timeframe – within 24 hours is the goal that we set our people – and if you do that you have a better chance of deepening that relationship with the broker because they value that part of the relationship. And if you’re the one ringing back, as opposed to one of your competitors, then you’re more likely to get the deal than if you had left it for a couple of days.”

BROKER’S RESPONSIBILITY

Ultimately, if you’re not getting the BDM support you want, it might be your fault.

When it comes to getting more support, attention and contact from bank BDMs many brokers surprisingly said the onus is on the third party channel to nurture that relationship.

“I think in commercial reality, it probably is the broker’s responsibility. I don’t necessarily like the BDM holding my hand so much, but I like the idea of being able to shoot off an email if I’ve got a question or I need some help,” says Edmonds.

Unless there are policy or product changes, John Evans, principal of the The Mortgage Guy, agrees he does not need BDMs to contact him.

“I will contact my BDM on two occasions,” he says. “The most common requirement is when the lender has screwed up somewhere in the process and we need the BDM’s assistance to correct the problem, and secondly, if we are using a product which we are not familiar with.”

STEVEN HEAVEY

LEAH BUSBY

CAUGHT ON CAMERA

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18

IN FOCUS

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oan Market’s highly motivated broker force travelled to Melbourne this year for the group’s annual conference, which inspired with motivating and visionary speeches from the likes of comedian Anh Do and Contiki Tours founder John Anderson. The group hopes the gathering will help propel it to greater heights in the 2012/13 financial year.

Australian Broker wants to feature your industry event photos. Contact the editor: ben.abbott@keymedia.com.au

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Alesar Kadour with Octavia Hammer

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Mark De Martino, Darren McCoy and Isaac Roundtree Peter Gilchrist Stephen Scahill with David Smith

Phil Rogers, Clayton Doueihi and Ben Cowie

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Sam White Marios Rokka with Pamela Wright Darren McCoy and Sam White

Mark De Martino, Josh Bartlett, Christian Paterson, Jason Basseal

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IN FOCUS

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ankwest held its inaugural broker of the year awards across Australia in September, rewarding loyal broker partners for their support and excellence. The events were well received by brokers in attendance, with all enjoying the venue, drinks – and recognition.

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Australian Broker  wants to feature your industry event photos. Contact the editor: ben.abbott@keymedia.com.au

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Garry Doe, Suzanne Doe, Mick O'Shea

Byron Howard, Leo Bozzi, Andrew Ward, Shane Bright, Shu Yamanashi, Samantha Pendrey

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Ryanne McIvor, Sheree Pendergast, Deslie Taylor, Gregor Donaldson Dean Pieterse and Suzi Trajanovski

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Dave Rase, Shane Bright, Colleen Jeffrey, Anthony Ciavarella Lisha Cui with Jimmy Toon

George Srbinovski, Denise Distler, Dan Heylbut

Mark Haron, Fiona Brown, Mick O'Shea

Aaron Hase, Garry Doe, Suzanne Doe Daniel Yang, Claudia Ni, Nick Ni, Jason Tu, Kevin Li

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John Rice with Michael Karpathakis

Tim Ford with Marcus O'Brien Wayne Dive, Hayden Folbigg, Dawn Inanli, Terri Unwin

Bede Mackie, Maseeh Safi, Ian Rakhit John Rice with Lyndsey Blake

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

PEOPLE 20

k on Everest Tom Kowpak too sponsored nt ce as ic ep an in Group rty pe Pro P WB by

Journey to the top of the world WBP Property Group property valuer Tom Kowpak recounts his perilous journey to the world’s highest peak

O

n May 26 this year, I was on top of the world.

Literally. I stood on the summit of Mount Everest – 8,848m above

sea level.

My expedition up the north side of Everest, through Tibet, took 60 days. That’s 56 days up and four days down. Of these 60 days spent on the mountain, 37 days were dedicated to acclimatisation at various altitudes, including day trips and rest days. Only 19 days were spent on the actual ascent to the summit.

BEING AT ALTITUDE

AUSTRALIAN BROKER WANTS YOUR STORIES! The world of mortgage broking is a lot more than just business – it’s a fun, people industry. Have you got a great photo, interesting story, or a passion you want to talk about? If so, we’d love to hear from you. Email ben.abbott@ keymedia.com.au

Someone asked me what it’s like to be at ‘altitude’. Base camp is at 5,175m, which means the air has 50% less pressure than at sea level. So you have to breathe twice as fast. The result was my pulse was extremely fast, because my body had to work twice as hard to move the oxygen around.

Acclimatisation, put very simply, is the amount of oxygen (red blood cells) in your blood per quantity. When you’re sitting down and go to stand up, you’re totally out of breath and have to hyperventilate to catch it back.

Basically, everyone moves in slow motion, apart from the Sherpas who are genetically acclimatised. The Sherpas don’t need to stay at a certain altitude to acclimatise; their blood is

already thick with excess red blood cells per quantity. Also, their bodies don’t shut down their extremities when they start to get cold, so their hands and feet are always warm. They also can’t ‘over-acclimatise’ whereas our blood can get too thick which puts us at risk of heart attack.

THE SUMMIT PUSH

We were to leave Camp 3 at around midnight. This would get us to the summit just after sunrise. We would spend the first few hours of the summit day walking up the hill towards the ‘Exit Cracks’. Once on top of these we would hit a ridge, which we’d follow up to First, Second and Third steps to the Summit pyramid.

It was somewhere between the First and Second steps that I slipped. This slip scared the bejesus out of me. I had become a little blasé… when one foot slipped and my weight then landed on the other foot and it too slipped. If I had slipped down the rock and relied on the rope to stop me, I would have been a goner!

It was at this slip that I became scared… I was taking every precaution with every step and double checking every anchor and my attachment to it and the rope.

I continued along the ridge line until I got to a famous place called Mushroom Rock; a two

metre-high rock formation in the shape of a mushroom with a nice flat place behind it to rest. There, I had an energy bar and Dawa (my Sherpa guide) changed my oxygen tank for a new one.

ON TOP OF THE WORLD

Reaching the summit isn’t an air-punching feeling like winning at some sort of sport. It is more a sense of pride, a quiet sense of achievement. I think any excitement is dulled by the fact that you are totally cactus and the looming thought of having to get back down haunts any exhilarating feeling you get.

We stayed on the top of the world for around 40 minutes. We weren’t alone; around 12 climbers from the south side made it to the top at the same time as us. We all celebrated as if we had known each other for years.

Tom Kowpak’s blog with a full account of his adventure can be read at kowp.com. au. This article was originally published in WBP Property Group’s Property Outlook Magazine

A RISKY ASCENT During the final day’s ascent to the summit, Kowpak came across the bodies of those who had died during their own attempts.

“As you walk along a bit, you see another body, you pretty much step over his feet, as he lays on his back with his hands above his head and his head facing downhill. He was still connected to the rope that was fixed the year he died. His face was in full visibility – it looked like a mannequin’s face, but his lips and cheek bones had been ground off by years of snow being blown by the jet stream.

It was now I started to look around for other bodies. These bodies are all in down suits which are typically coloured yellow or red. Both of these colours stand out like dog’s balls amongst the stark brown and grey landscape of Everest.”

[Excerpt taken from Kowpak’s blog.]

OPINION brokernews.com.au

21

Emerging value in commercial property Commercial property markets are finally working their way from irrationality, towards a focus on intrinsic worth, writes Harmony Property Group’s Greg Campbell

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t Harmony Property Group, we subscribe to the age-old adage that “you make your money in the buying”.

In our search for new commercial properties in southeast Queensland, we are encouraged by signs that this sector is finally working its way out of the market irrationality that preceded the GFC and balancing out in terms of market price and intrinsic worth.

Whereas in the mid-2000s there was little consideration given to the quality of assets when the industry discussed capitalisation rates, we are now seeing a more appropriate rate spread based on quality. For example, in the mid-2000s commercial properties were marketed and sold based on potentially fully let income, not actual income; empty spaces and expiring leases were marketed as if leased, without consideration of why the space was vacant in the first place nor the cost involved to fix the problem.

Vendors that genuinely want or need to move product are slowly accepting a new market equilibrium. A more rational

market means genuine property developers and investors are now willing to get back into the market and, with banks now also chasing new business, they are able to do so.

Finance brokers will play an important role in facilitating and financing these deals. Earlier this year we were asked by a broker and their client to review a portfolio of houses and a small neighbourhood shopping centre they were having difficulty refinancing. Instantly we recognised the major problem was that the information being provided for the shopping centre made it almost impossible for potential financiers to assess the position with any confidence. It didn’t take us long to review the leases and prepare a comprehensive tenancy schedule that presented an accurate position of the shopping centre. It became clear that the client needed to consider a strategy of selling down some of their residential properties or risk losing the whole portfolio.

Interestingly the final valuation on the shopping centre, which is really an indication of current market price and not a property’s

CASE STUDY A local shopping centre sold on a 9.5% yield based on ‘net passing’ income. The centre has several empty shops and surplus land.

Three years ago, this centre was marketed based on potential ‘fully let’ income (the developers went into receivership).

Purchasing on net passing income means the purchasers essentially got the vacant shops and surplus land for free.

GREG CAMPBELL, HARMONY PROPERTY GROUP

VENDORS THAT GENUINELY WANT OR NEED TO MOVE PRODUCT ARE SLOWLY ACCEPTING A NEW MARKET EQUILIBRIUM

intrinsic worth, almost matched our own estimate of worth.

Market price and intrinsic worth becoming more aligned means the commercial sector is approaching a point where it will move forwards again, albeit at a more sensible pace.

Finance brokers will need to educate themselves on correctly sourcing and preparing the necessary information to present to financiers.

Do you agree with Greg Campbell’s assessment of commercial property? Email the editor at ben.abbott@ keymedia.com.au to have your say

THE WORKSHOP

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22

Establishing your priorities and goals

THE GURU

Being clear about your goals and priorities could be the best strategy for your career in the long term, writes Clifton Warren

D

o you know how much prospecting you need to do each day to achieve your income goals? Establishing your priorities and goals is important. Otherwise, how will you hit your target if you don’t know what you are aiming for?

The ability to be able to generate high quality leads and develop new business is a high demand and critical skill for success. When establishing your prospecting and business development goals, strive to be the best you can.

There are far too many producers who have never had the thrill of testing themselves with a long stretch on a limb.

Instead, their careers are oriented around the self-induced fear of failure.

If there were only one fundamental to be successful in the mortgage broking industry, it would be to see enough people.

To achieve your new business goals you need to have precise new business objectives incorporating the following guidelines: • New loans settled should be your top priority • Aim big but not ridiculous; if you averaged seven loans per month last year, don’t aim for 40 this year. Instead, set your sights at 15 • Always seek to broaden your base with new clients each year • Leverage your existing clients for referrals

NEW BUSINESS PROSPECTING GOAL FORMULA

To achieve your annual new business income goal, there are five key activities required:

 Number of leads Number of qualified leads  Number of appointments/  discussions

 Number of loan applications submitted

 Number of settled/ average size

Break these into monthly, weekly and daily chunks and you now know how much prospecting you must do each day in order to reach your new business goals.

Examples:  To achieve 10 settlements each month  Submit 25 applications  Have 35 discussions/ appointments  Generate 50 qualified leads  Find 75 new leads Seventy-five new leads per month is only four names per day; that’s two in the morning and two in the afternoon. This assumes a 20-day working month, taking weekends off.

STAY THE COURSE, STAY IN BUSINESS

Once you have determined your goal and the amount of prospecting required to reach this goal, you can now build it into your daily plans/activities.

By creating work units, you now have a track to run on that will determine how much prospecting you must do to achieve your production goal.

There are many ways to achieve income goals; many of the top producers settle the same number of loans each year. They continue to stretch themselves by increasing the average amount of each loan.

Prospecting for new business is the single biggest issue that derails the careers of new and seasoned professionals.

The ability to put it into context by establishing your priorities and goals, and building it into your daily plans will provide you with a track to run on and achieve success and longevity in this industry. Welcome to the sales business.



ADDITIONAL TIPS  Start with a goal that is big and excites you  Choose realistic goals  Make sure your goals provide for your basic money needs  Do an inventory of your skills, traits and abilities to ensure you have the tools to achieve your goal  Make the decision  Break your goal into work units so that you know what you must produce to achieve your goal

MARK HARON Q: Can new aggregators emerge?

A: There are certainly some brokers who see value in boutique aggregators. But these days, you pretty much need to stay boutique – the moment you try and step up and become a bit bigger you either scale up and do it significantly or you stay within that boutique environment. I think we will still see a number of boutique aggregators pop up for the right reasons; they’ll have a certain way they will do things which will vary and make them different from major aggregators, and I think that is a good thing. If you are just doing it to make money then generally people will see through that, and it is not going to work.

Q: What do brokers need to focus on?

A: Productivity is a key thing we as an industry need to focus on – we need to be more productive. There seems to be more and more that is required of us to do, and to be more profitable we need to be more productive. So we need to look at how we can make new systems to make things more streamlined, and how we can outsource other things that would be more functional and cheaper to outsource. And in doing so, we can then help the lenders be more productive. Now, if they can be more productive, there is more margin, and if there is more margin, it potentially means better commissions for brokers.

Q: How do brokers become better businesspeople?

A: I think in terms of being a business owner one of Clifton Warren, CMC, principal of Corporate Eye Consulting, is a marketing and sales strategist, coach and speaker who works with banking, insurance and financial services professionals.

Contact him on (03) 9808 1136 or Clifton@ corporateeye.com.au

the challenges for some brokers is to stop being mortgage brokers and be business owners every now and then. Even if you are a one-man band, you have got to take time out to put your business owner hat on and really step right away from your mortgage broking business – looking at other investment opportunities, and asking what else you should be doing with the business. If you are serious about that, you should probably work with a coach, consultants, or get a board together – it doesn’t have to be a formal board – but people who provide you with some guidance and structure around that.

brokernews.com.au

COLUMN 23

Is your social media a waste of time?

Social media is a mind-boggling challenge for some mortgage brokers, but as Claudio Pannunzio explains, it may just be worth your time

C

alling social media a waste of time is a mistake a lot of advisors and small businesses make.

When you engage in social media, you have to follow the so-called ‘hub and spoke’ system.

In other words, you do your social media, but you have to make sure that every single interaction in social media ends up bringing someone to your website.

So, if you are on LinkedIn, maximise your profile and have your website in place and connect.

There are codes that your website designer can lift from LinkedIn, and from Facebook and Twitter, that can embed into your website.

CREATING EVANGELISTS

The scope of social media is mainly to bring traffic to your website, and to create what I call ‘evangelists’.

A lot of advisors make the mistake of thinking ‘I have a presence in social media – every now and then I post something and I’m done’. No, you create your brand evangelists. Without that, social media doesn’t work.

To have a successful social media plan, first of all create a media policy.

In the first instance, you should know how many people will go into posting, what they can post and what they cannot post. Have a compliance system in place.

Then go at least once or twice a day. If possible, make sure that you are consistent and repeat at the same times. I’ll give you an

THE SCOPE OF SOCIAL MEDIA IS MAINLY TO BRING TRAFFIC TO YOUR WEBSITE, AND TO CREATE WHAT I CALL ‘EVANGELISTS’ example. The most important times during the day in the US are the hours between 7:00am and 9:00am, and 3:00pm to 5:00pm Eastern Time. That’s when the majority of people are on social media.

So be consistent, and the people who are reading will start to get used to that and wait for you at that time to post something.

Claudio Pannunzio, president and founder of PR consultancy i-Impact Group

WHEN FREE ADVICE AIN’T FREE

The most important thing in social media is don’t just be dry and cold – posting only articles.

Of course you want to post something that speaks of your expertise. But you have to give actionable ideas – something that your readers, your followers and evangelists cannot follow anywhere else.

Every now and then, as the old saying goes, you’ve got to give to get. Give away a little free advice.

Don’t worry if they don’t turn into clients tomorrow – it will come back to you with interest. It’s a long-term investment.

But also make sure that you’re social. Don’t be afraid to show what your interests are in life.

HOW FIVE MINUTES ON FACEBOOK CAN BOOST YOUR BUSINESS I always say be social. I knew a broker in New Jersey who loves to breed dogs. So I told him to talk about that on Facebook. So he posted, and he got a tweet from someone who loves the same breed of dogs, has had them for 45 years, and then asked if he could stop by.

They start talking at 8am and hit it off, because they were the same age. From talking about dogs they move from coffee to cognac and a cigar.

Turns out this guy sold his business two years ago and got a cheque for $50m. He put most of it with the big banks – Merrill Lynch, Bank of America – but they lost most of it.

Then, he gave the broker $5m and asked him to work with that. Six months later he got $25m of his money. A year ago he got the whole $50m, plus the money of his children – another $20m. Not bad for five minutes on social media.

FINANCIAL SERVICES

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Consolidation trend to mimic planner market

FINANCIAL PLANNERS FACE CRISIS OVER PI COVERAGE The GFC and FoFA legislation are conspiring to make it more difficult and expensive for planners to cover their backs against potentially career-ending negligence claims.

A post-GFC climate and regulatory changes are weighing heavily on insurers’ minds as they baulk at offering professional indemnity (PI) products to financial advisors.

Minter Ellison partner Richard Batten believes FoFA regulations, set to come into effect in earnest next July, are creating uncertainty among insurers.

“I suspect there’s a little bit of holding off,” Batten said.

“FoFA is creating uncertainty now because you won’t be going back into the [PI] market right now, when you’re uncertain what the liability implications of FoFA are.”

FPA policy manager Dante De Gori said the effects of regulatory change will be an ongoing discussion.

“From a membership perspective, we’re starting to have conversations with insurance providers and it’s starting to raise some alarm bells.”

De Gori said the GFC gave rise to a spike in claims from clients, which has fuelled the current PI standoff.

“Consumers’ complaints about financial losses during the GFC have added a lot of pressure. More complaints, more market volatility, more PI insurance price rises, more pressure.

“Consumers need to be protected from breaches of negligence by all professionals in the value chain, including financial planners, accountants, product manufacturers, directors, auditors and fund managers.”

He said Trio Capital was a case in point, being a clear case of fraud that had nothing to do with inappropriate financial advice.

A

leading aggregation head forecasts consolidation in mortgage broking will likely pave the way for boutique aggregators.

Connective principal Mark Haron said boutique aggregators faced the challenge of either scaling up and becoming bigger, or staying within a smaller boutique environment.

However, he said consolidation – which has seen the likes of National Mortgage Brokers being scooped up by Aussie, and banks such as NAB and CBA taking stakes or owning broker groups – is likely to follow a similar trajectory as that experienced by financial planners.

“There definitely was a significant level of consolidation in the planning industry to the point where nearly every major dealer group is owned by a product manufacturer,” he said.

“I don’t think that will happen to that extent within our industry, though it will happen a fair bit in terms of the major aggregators,” he said.

Haron said, in the same manner as the introduction of Australian Financial Services Licences (AFSL), over time financial planning operators saw it was actually not that hard to own and operate an AFSL. “We started to see a lot more boutique financial planning dealer groups come back into the space, and even more are starting to pop up now,” Haron said.

“I think we will still see a

MARK HARON

number of boutique aggregators pop up for the right reasons, and they’ll have a certain way they will do things which will vary and make them different from major aggregators.”

However, Haron said any new operators would need to provide a clear value proposition to succeed – rather than just being in it for the money.

“It’s important to make money, but you also have to have a strong value proposition that appeals to brokers and that is something that continues to be a challenge for us at Connective.”

IN BRIEF

 Broker consolidation to continue, but not to the extent of the planning market  Boutiques to emerge if they provide strong broker value proposition  Group owners to realise operating under licence not that hard

DID YOU KNOW?

60

is the number of financial planning franchises Mortgage Choice aims to open by 2015 Source: Mortgage Choice

Insurance brokers leverage online comparisons Mortgage brokers will have seen the campaigns of online insurance comparison sites such as iSelect which has announced aggressive growth plans, but one financial services consultancy sees opportunity where some traditional insurance brokers see a threat.

Hein Kuiper from Heinsight International believes evidence from the UK market suggests the rise of online comparison sites might not be all bad for Australia’s insurance brokers.

“It is a common misconception that the massive growth of price comparison sites in the UK has led to the demise of the brokers,”

Kuiper told Insurance Business.

“In fact, even at the most aggressive growth stage a few years ago, broker market share was actually growing. How? British brokers played an active role on price comparison sites themselves.

“For example, in motor insurance – the most important online price comparison market in the UK – panel providers account for around 35% of all aggregator sales.

“So, the imminent growth of price comparison sites in Australia need not necessarily mean

massive loss of market share by the brokers,” said Kuiper.

“One thing that brokers around the world agree on is sticking your head in the sand is not an option,” he added.

25% PERCENTAGE OF INSURANCE IN THE UK PURCHASED VIA ONLINE COMPARISON SITES

1–2% PERCENTAGE OF AUSTRALIAN INSURANCE SOURCED VIA ONLINE COMPARISON SITES

MARKET TALK 26

A cautious optimism Forecaster BIS Shrapnel painted a complex picture for the property market’s future, with both declines and successes resulting in a cautiously positive outlook

F

orecaster BIS Shrapnel’s assessment of the future of Australia’s economic climate is a veritable mixed bag of ifs, buts and maybes.

At its bi-annual Economic Outlook Seminar in Sydney, the highly respected chief economist, Dr Frank Gelber told his audience the mining sector was still strong but could collapse “although we can’t say when,” and the non-mining sectors “could” prop up the economy if mining failed, “but” it would all depend on whether state governments could invest properly in areas such as infrastructure and new home builds.

It was a mixed message, but it’s one that is becoming more and more common.

Economists including Gelber agree there’s still a way to go and growth, when it does happen, will be modest because we’re just “not investing enough.”

“Despite [signs of growth] it’s still really tough out there for many businesses. Outside of mining, the overriding logic is to secure growth by reducing costs.

These businesses are still cutting back on investment, making growth really uneven,” he said.

THE MINING BOOM: STILL BOOMING

Gelber said recent reports of the mining sector faltering were overblown, and the outlook was still positive for what is Australia’s biggest cash cow.

“There is a rise in the cost of mining projects, yes, however while previously it was 47% profits, it’s now 42%.”

He went on to claim high commodity prices would remain high, and mineral-based investment would continue to be strong.

“With many of the projects locked in or already underway, resource-related investment is expected to continue growing over the next two years.”

He reiterated the importance of mining investment to the overall attitude towards investment – including residential construction for workers.

“Remember, mining investment is still rising. That means overall investment in the construction industry should grow strongly over the next year.”

IT’S STILL REALLY TOUGH OUT THERE FOR MANY BUSINESSES. OUTSIDE OF MINING, THE OVERRIDING LOGIC IS TO SECURE GROWTH BY REDUCING COSTS – DR FRANK GELBER

SLOWLY, BUT SURELY FOR DWELLING STARTS

While the mining sector received an overall clean bill of health, the residential construction industry

was shaky, but would see a “welcome” recovery in late 2013, reaching a significant high in 2014.

“We are forecasting year-onyear growth in new private dwelling building of 1.4% and 10.6% in the 2012/13 and 2013/14 financial years respectively.”

“We expect this growth to initially be concentrated in NSW, followed by increased building in Western Australia and Queensland.”

However, not all states and territories would see growth. In fact, Gelber forecast Victoria would see very tough conditions over the next two years.

“This is because dwelling building held up well there throughout the GFC, such that they have, if anything, overbuilt in the short term.”

TALKING HEADS

Q HOW CAN BROKERS ENSURE THEIR CLIENTS STAY LOYAL TO THEM?

FRANK PARATORE BALLAST

“As an absolute minimum, regular communication is a must. Brokers that don't need to do this engage and invest greatly in CRM activity and marketing of their database, and have an integrated financial services offering.”

PETER WHITE FBAA

“Look after your client as you yourself would want to be looked after when applying for a loan. Then add tangible value to the great service you already provide, and keep in regular touch with your client base.”

BELINDA WILLIAMSON MORTGAGE CHOICE

“Encourage clients to view you as part of their financial plan. Build rapport by maintaining regular and relevant contact at key stages in the customer’s life and by continuing to add well-suited products and referral partners to your service offering.”

MARK HEWITT AFG

“Getting to know the drivers and the personal circumstances of each client is critical. Once a broker knows what is really important to that particular client, it is easy to over-deliver in the areas that matter most.”

MARKET TALK 27

brokernews.com.au

10

valuation myths you thought were true

AUSSIE CHOICE: LIVE FAR AWAY OR IN A ‘BOX’

Have you ever wanted to step inside the mind of a valuer and see why they undervalued your client’s property?

A

s Propell National Valuers explains, there are ‘myths’ brokers need to be aware of before they go assigning a certain value to a property.

Here are the top 10.

SWIMMING POOLS ADD NO VALUE

A generalisation. Prestige homes or suburbs catering to families may see the added value in pools, whereas inner-city or coastal properties may not.

BANK VALUATIONS ARE ALWAYS CONSERVATIVE

Valuers must act independently and should not be influenced by the party seeking the valuation.

VALUERS DON’T SPEND ENOUGH TIME IN A HOME TO GIVE A SOLID VALUATION Valuers undertake extensive background research and have access to software and data allowing them to check for specific things at the property.

MORE BEDROOMS = MORE VALUE Total floor area may be a better indication of value rather than the number of bedrooms.

THE VALUATION DOESN’T REFLECT MY HOME’S PRESENTATION Buyers have very personal preferences when it comes to interior design, and a valuer may view your favourite colour scheme as subjective.

PROPERTY PRICES NEVER GO BACKWARDS

While in the long run, property markets tend to go forwards due to scarcity of land and increasing population, they can be cyclical in nature and often go backwards in the interim.

COMMERCIAL PROPERTY IS RISKIER THAN RESIDENTIAL PROPERTY

This is a broad generalisation which should not be a guiding principle for investors.

MARKET VALUE IS THE SAME AS SALE PRICE

Market value is an estimate of the price a property would likely attract in a rational and competitive marketplace.

DID YOU KNOW? It’s a widely-used tactic for real estate agents to falsely claim the previous owner was a builder, so the place ‘is welllooked after’.

The most affordable city dwellings in Australia’s capitals are 20km away from the CBD, unless you’re willing to live in an inner-city studio, claims a leading data analyst.

RP Data research has found suburbs within a 20km radius were generally cheaper and still considered part of the city.

The results varied greatly for detached housing versus units, with inner-city units of one or two bedrooms cheaper than bigger units in the outer suburbs.

“In some regions closer to the city, small and affordable one-bedroom units often dominate the product offering,” said RP Data research analyst Cameron Kusher.

“New unit developments are becoming increasingly common across the middle-ring suburbs now which can reflect in higher values,” he said. “[The] results show that if buyers choose to live close to the city centre, the dominance of affordable units within a 20km radius may provide a viable and more affordable alternative given that the cost of purchasing is often significantly lower than it is for a detached house,” Kusher added.

UNITS WITHIN A 20KM RADIUS MAY BE VIABLE AND MORE AFFORDABLE ALTERNATIVE - C AMERON KUSHER

INVESTORS SHOULD ONLY BUY FOR CAPITAL GROWTH

Rental yields for a property should never be overlooked.

Strong rental yields produce a greater cash flow, and therefore allow investors to pay off mortgages sooner and have access to cash flow for future investments.

BUYING INTERSTATE IS A GREAT WAY TO DIVERSIFY

All properties are affected by the macro economy. Interest rates, inflation, taxes and large international events can all have significant impacts on property prices in any location.

WHERE’S CHEAP IN SYDNEY? THE BEST SPRING VALUE LESS THAN 5KM FROM CITY CENTRE Waterloo for houses; Enmore for units 5 –10KM FROM CITY CENTRE Eastlakes for units 10–15KM FROM CITY CENTRE Greenacre for houses; Lakemba for units 15–20KM FROM CITY CENTRE Granville for houses; Glenfield for units

FEATURE

brokernews.com.au

28

The top 10 things I’d do if I were you What are the 10 most important things that BrokerProfitsVault’s James Veigli would do if he stepped back into broking? Well, we’ll let him tell you himself

I

f you are interested in knowing the 10 steps I’d take if I went back into the broking business tomorrow… please read this column with great interest.

The first and most important thing you need to do is identify where you are at, and also where you want to be in six months, 12 months and 2–5 years.

The number one reason I believe most brokers in this industry will never achieve their dreams or goals is they fail to realise that they are running a business and it’s the running of that business, and not the doing of the thing (broking), that will help them reach their ultimate goals.

I don’t know which step you are at right now, but what I know for certain is that there will be at least one (and maybe 10) things on this list that you’re not doing… but should be.

1

Set up an outsourced loan processing arrangement.

Either hire a casual staff member or use an external service. The first thing I would want is more free time to focus on the next nine items.

2

Create a workable expansion strategy based on the success of others in the industry. I would

set about doing everything from this point on with the view to building a moneymaking business machine (instead of trapping myself in a job) that will ultimately be sold to my competitors.

3

G o back to my existing database and network for immediate repeat business and referrals – and set up a plan to communicate with the database approximately once per week.

THE FIRST AND MOST IMPORTANT THING YOU NEED TO DO IS IDENTIFY WHERE YOU ARE AT AND ALSO WHERE YOU WANT TO BE IN SIX MONTHS, 12 MONTHS AND 2–5 YEARS – J AMES VEIGLI where leads are shared between businesses. I want to provide my clients with a complete solution or package… and I would need other professionals to assist with services (or products) I don’t offer.

If I was small I would simply joint venture with them; if I was larger I would look to integrate an existing professional (and their database) under my brand.

4

Create a marketing, referral, sales, cross-sales, follow-up system that can be easily automated or replicated without me having to do it.

5

Focus my core offering on a niche market. For example, I would design my marketing (e-book, free report), sales and cross-sell processes around property investors, first homebuyers, renovators, or SMSF, etc. This would streamline the sales process and make it easy because all customers would be similar in needs and require similar solutions and lenders.

7

Make a list of potential affiliate partners to approach with a view to requesting access to market to their customers in exchange for a split of commission or ‘fee per lead’ arrangement.

8

Hire new entrants in the industry to work for me. I would provide them with surplus leads (see #3, #6 and #7) and the complete system to follow as per #4.

6

Make a list of potential professional partners to approach with a view to creating a joint-venture relationship

9

Buy quality trail books, smaller brokerages, and other databases with a view to quickly expand my database, recurring income and use my system to extract maximum income from these purchases.

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

JAMES VEIGLI

Hire management to take over day-to-day operations.

This would leverage me out to focus more on marketing, growth, acquisition and expansion strategies… with a view to maximising profit. From there, either continue to run the high-level operations or look to sell the entire business to a competitor – at which point I would start all over again (in the same, similar or different industry… the same basic principles apply in any business).

SPOTLIGHT 29

brokernews.com.au

Keeping your aggregator honest

A

re you getting the best deal from your aggregator? Well, as James Green of Oxygen Home Loans says, if you’re not, you should certainly be letting them know about it.

“It’s worth making sure that you are keeping your aggregator honest by comparing the cost of one aggregator back to their cost,” he says.

Connective recently launched an attack on commission-split aggregators, but is the alternative – a flat-fee model – best for all brokers out there?

“With the commission-split model, if you are a start-up it is obviously very low cost because you don’t pay the aggregation fee unless you have actually earned income. With a flat-fee model you have to pay every month regardless of whether you have written a loan,” Green says.

“Therefore, commission-split has advantages if you are a start-up or low volume producer.”

But those looking at commission splits should be careful. Will Foster from Property Planning Australia explains it’s best to think long term about your business.

“Consider how much that will be in year five, year six or year 10 once your trail builds up,” Foster says. “If your aggregator is taking out 5% or 10% of your trail every month and you have 10 years worth of trail in there, it is going to be a significant amount of money.”

Foster says it helps to negotiate better agreement terms upfront.

“It’s important to be able to leave and keep your trail, and also some aggregators will actively move your trail to a new aggregator.” Foster says this helps when selling a business, as potential buyers will not have to read the fine print of two aggregation agreements.

In the end, it comes down to one thing, says Green.

“You get what you pay for.”

IF YOUR AGGREGATOR IS TAKING OUT 5% OR 10% OF YOUR TRAIL EVERY MONTH AND YOU HAVE 10 YEARS WORTH OF TRAIL IN THERE, IT IS GOING TO BE A SIGNIFICANT AMOUNT OF MONEY” – W ILL FOSTER

ONE YEAR ON What a difference a year makes … or not. Australian Broker reflects on the punditry, news and influential trends that made headlines 12 months ago Australian Broker Issue 8.20

Banks put broker share in the balance

Brokers navigate new disclosures

FBAA promises more than ‘a piss up’

Mortgage broker market share was increasing this time last year, according to JPMorgan/Fujitsu’s Mortgage Industry report. A leading analyst said future figures would depend largely on the strategies of the major banks: whether they’d seek to prioritise ownership of the client via direct lending.

Mortgage and finance brokers were still coping with the newly introduced disclosure regime under the NCCP regulations, after it was introduced following a delayed timetable in October 2011. The disclosure implications were said by finance brokers to be “causing a lot of concern.”

The FBAA announced its inaugural conference, with president Peter White promising that the event would be more than ‘a piss up’ – perhaps in reference to other industry conferences.

What’s happened since?

What’s happened since?

What’s happened since?

Broker market share has continued to track around 42%. Banks are showing signs they believe the third party is here to stay, and is a ‘channel of choice’ for customers. However, there is a looming threat that technology investment by banks may impact channel share.

Some of the initial teething problems of the disclosure regime have dissipated in the year since, with brokers coming to terms with their obligations.

However, complaints are still being raised that clients are not reading the supplied documentation.

The FBAA postponed with only a week’s notice, due to unforeseen visa problems with some international speakers. It then suffered from poor attendance numbers and program reshuffles. It was later dubbed ‘the most boring conference ever’ by one insider.

INSIDER

brokernews.com.au

30

Tight belts could swing the election

SLOW AND STUPID CAN WIN THE RACE

Facebook founder likes his mortgage

F

acebook founder Mark Zuckerberg surely has a lot on his plate, what with shares plummeting and the near-dead MySpace relaunching to widespread acclaim.

Nonetheless, Insider found out Zuckerberg has added a mortgage to the mix – although, this being a bonafide billionaire entrepreneur, it’s not the kind of mortgage an Aussie family takes out.

According to Time magazine, Zuckerberg has refinanced a US$5.95m mortgage on his Palo Alto home with a 30-year adjustable-rate loan starting at 1.05%.

Bloomberg reported the average rate on a one-year adjustable mortgage was 2.69% at the time of Mr Zuckerberg’s residential purchase. So just how did he receive an interest rate that low?

HE IS, IN ESSENCE, BORROWING FOR FREE According to the San Francisco Gate, interest rates can be lower if the person is willing to bear the risk of monthly interest rate adjustments – something that in this case is perhaps not so much of a risk.

So while we know how, the question remains: Why? It is, of course, another of Mr Zuckerberg’s calculated moves.

As the initial interest rate is far below the US inflation rate, Mr Zuckerberg can take the money he would have spent on the house and invest it elsewhere.

He is, in essence, borrowing for free.

Brokers, had your fair share of clients who were a little slow?

Insider is sure at least one of you has resented the hand-holding just a little.

Website LifeHacker has published a list of tactics to get the best results from slower clients.

Author and life coach Patty Azzarello says listening to your clients before jumping in is key.

“If you are in a room full of stupid people, try just shutting up.

Speak later, and make the right things happen.

You don’t need to show you are smarter than everyone,” she says, helpfully.

DON’T MAKE CLIENTS PUKE US online magazine Inc is a great source of insightful and downright humorous tips for conducting better business.

Insider loves the latest piece, ‘10 Dumb Sales Tactics to Avoid’ which, dare we say it, is perfectly pitched to the finance market (although this wasn’t their intention).

Among them are anticipating customer objections.

Author Geoffrey James says unless customers have raised a concern, do not pre-empt them. James says you’ll run the risk of creating a problem that doesn’t exist.

Another is ‘faking intimacy’ which is a particularly grating trait of PR mavens and sales staff. James warns against coming across as insincere and smarmy. “The most common manifestation: brightly asking, ‘How

Reports surfaced earlier this month that a new kind of ‘belt’ is developing, but not the biblebashing variety found in the southern US states.

Insider learns Australia’s ‘mortgage belt’ refers to the sprawling suburbia where homeowners are greatly affected by fluctuations in interest rates.

The term is used frequently in the run-up to elections because, so the theory goes, those most affected by rising rates will vote for the opposing party.

The mortgage belt usually occurs on the fringes of a city, where the majority of residents have a significantly high mortgage in relation to their income.

Bernard Salt, a KPMG Partner and an adjunct professor at Curtin University Business School, believes politicians should take note of the increasing squeeze.

“I am sure politicians would also be interested in this mortgage belt analysis so as to identify who they need to manufacture policies for in order to win or to hold crucial city-edge seats,” he wrote in the Sydney Morning Herald.

COMPETITION! are you doing today?’ at the beginning of a cold call. It makes people want to puke,” he says.

At number 10 is ‘asking for a referral too soon’. James says the secret is not to rush, as most clients will want to see results before recommending you to a friend.

“Customers in their right mind do not put their own reputations at risk by recommending somebody whose ability to perform is unknown to them.”

“Fix: Ask for referrals only after the customer is delighted with the products or services that you’ve sold,” he advises.

“The sad truth is that, to customers, people who sell are guilty until proven innocent.”

Sounds like fairly sound advice to us.

Australian Broker has received a number of entries for its recent competition, which asked brokers to send in photos to prove they were more ‘ripped’ than this insurance broker. This is your last chance to compete! Send your photos to ben.abbott@ keymedia.com. au to win!

DIRECTORY brokernews.com.au

AGGREGATOR / WHOLESALE BROKER

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

BANK

Commonwealth Bank 132 015 www.commbank.com.au Page 13

COMMERCIAL

31

Liberty Financial 132 388 www.liberty.com.au Page 3

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

National Australia Bank www.nabbroker.com.au Page: OFC, IFC, IBC, OBC

Quantum Credit 1300 135 212 www.quantumcredit.com.au Page 9

NCF Financial Services Pty Ltd. 1300 550 707 www.ncf1.com.au Page 10

Banksia Financial Group 1800 333 114 www.banksiagroup.com.au Page 11

Versara 1300 CAVEAT (228 328) www.versara.com.au Page 4

FINANCE

REAL ESTATE

Semper Capital Pty Ltd 1800 SEMPER (1800 736 737) enquiries@semper.com.au www.semper.com.au Page 21

LENDER

ANZ 1800 812 785 www.anz-originator.com.au Page 7 MKM Capital 1300 762 151 www.mkmcapital.com.au Page 6

Look Property Group Residential Project Sales & Marketing 03 9827 8288 www.lookpropertygroup.com.au Page 15

Stargate Group 1300 723 613 www.stargategroup.com.au Page 23

WHOLESALE

Resimac 1300 764 447 www.resimac.com.au Page 17

OTHER SERVICES Trailerhomes 0417 392 132 Page 27

SHORT TERM LENDER

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

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