Australian Broker magazine Issue 9.23

NOVEMBER 2012 ISSUE 9.23

$4.95 POST APPROVED PP255003/06906

+INSIDE + NEWS SOCIAL MEDIA WATCHDOG

MFAA extends powers online with social media policy P6

WHITTINGHAM WARNING

Public warning issued to avoid Mark Whittingham P6

+ ANALYSIS 2012 in review: A year of broker challenges P20

‘Choice’ to remain broker saviour The core proposition of the mortgage broking channel will only be strengthened if predicted low credit growth conditions continue into next year and beyond

+ MARKET TALK Leading economist predictions on interest rates P26

F

or Aussie’s James Symond, the value proposition of the mortgage broking channel will be as clear to borrowers in the tight credit policy environment of 2013 as it has always been.

“I don’t buy this idea that lender credit policies are too tough,” Symond says. “As a mortgage broker we are in a privileged position that at any one time some lenders are pushing forward and becoming a lot more aggressive, and some lenders are pulling back. We know who those lenders are and place the customer accordingly. That is why we are about choice.”

FULL STORY PAGE 12

+ PEOPLE Westpac embraces Indian brokers and customers P28

+ CAUGHT ON CAMERA AFM celebrates the Melbourne Cup P29

NEWS

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WHAT THEY SAID...

NUMBER CRUNCHING

$45bn

KELLY CAMERON-TULL “I had chickenpox as an adult, but people would still show up at the door and say ‘just tell her it’s me’.”

The estimated cost of the damage left by Hurricane Sandy on the US East Coast

P10

22%

DID YOU KNOW?

MARK HARON

“There's a lot more competition for less business in our sector.”

NAB’s shock drop in profits for the year ending September 2012

10,000

The number of staff investment bank UBS expects to lay-off within the year

2%

of new business for brokers comes from SMSF lending

2,600

Australians have been victims of investment fraud

The median house price in Davoren Park, Adelaide, Australia’s cheapest capital city suburb

P16

TRACEY CLARKE

“Loan processing is arguably the most tedious, labour-intensive, yet critical task in the mortgage industry.” P19

$175k KEVIN LEE

“We’re probably $10m behind in loans we need to write for clients, that’s how busy we are.”

P20

NEWS

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Aggregators find it hard to let brokers go ■ The head of Finsure has

warned brokers they may face reluctance and delays from other aggregation players if they choose to switch providers.

Managing director John Kolenda, who launched the aggregator late last year, said he had witnessed delaying tactics by “a number” of aggregation groups. He said that this was a “poor reflection” on the service that they provide their broker members. “If the broker has made a decision to move, then by playing fun and games, it is not

helping them, and tactically I think that is a very poor strategy,” Kolenda told Australian Broker.

Kolenda said of the 130 brokers that had come onboard so far with Finsure, about 10–15% had faced problems with delays when leaving their aggregator.

He said that any such behaviour from competitors could actually see them in a breach of compliance obligations enforced

by ASIC, which ensures brokers are not licensed under different providers concurrently. “If a broker has processed a termination notice, then they [an aggregator] have an obligation to provide a termination letter,” he explained.

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

ONE BIG SWITCH CAMPAIGN ‘CYNICAL’ A leading industry figurehead has come out to attack One Big Switch for what he calls a “cynical bank-bashing campaign” that risks misleading consumers about mortgage pricing. John Kolenda, managing director of 1300HomeLoan, said One Big Switch’s ‘Truth in Banking’ campaign was “futile and potentially misleading” when it claimed that banks were ripping off consumers if they were not passing on RBA cash rate cuts in full.

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

John Kolenda

$100 billion: Brokers on track ■ Mortgage brokers are

expected to break through the $100bn mark in lending volumes for the 2012 calendar year.

Industry research group Comparator analysed data from the nation’s top 16 mortgage brokers and aggregators.

Its report shows brokers have continued their growth momentum, achieving 3.76% growth in origination volumes for new home loans during the September quarter. These 16 brokers and aggregators

originated $25.62bn in retail residential lending during July, August and September, compared to $24.69bn in the previous quarter. Brokers lifted their share of the total $62.07bn in home loans written during the last quarter, according to the ABS, from 38.8% to 41.3%.

CEO of the MFAA, Phil Naylor, says the figures are a sign that the broker channel is continuing to grow as more consumers are starting to accept their valuable position as trusted advisors.

41.3% BROKER MARKET SHARE IN THE SEPTEMBER QUARTER

$100bn EXPECTED BROKER LOAN VOLUMES IN 2012

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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MFAA oversight extends to social media

Compliance certificates under ASIC microscope

■ The MFAA has expanded its guidelines and

■ Brokers need to be extra

careful when filling out their Annual Compliance Certificates this year, after confirmation that the regulator will be scrutinising them carefully.

QED Risk director Greg Ashe has confirmed that ASIC will be checking up on responses in brokers’ 2011 compliance application forms and says many in the industry don’t realise when they’ve filled in the applications incorrectly.

“The annual compliance certificate process hasn’t changed at all [this year] – what is different is the level of checking that we know goes on,” Ashe said.

“Last year, I was just making a calculated guess at the layers of control but this time round we’ve seen the evidence and we know that ASIC has been checking on the responses that people gave.”

GREG ASHE

Ashe believes that the terminology used in the form can be confusing and that many brokers focus almost exclusively on responsible lending when, after viewing the application forms, Ashe says there are no questions referring to responsible lending in the application.

Brokers’ public Whittingham warning ■ The MFAA has finally come

out to warn brokers specifically about the activities of Buy a Trail and its director Mark Whittingham, following a warning issued by the director of Consumer Affairs Victoria.

Following long-running coverage by Australian Broker that detailed multiple accounts of brokers left out of pocket by Whittingham’s business Buy A Trail, the MFAA has come out and named the business following a public warning from Consumer Affairs Victoria.

“The company and Mr Whittingham sent unsolicited emails to brokers regarding the sale of loan trail books,” the warning from Consumer Affairs Victoria read. “… Mr Whittingham asks for a deposit

from interested brokers and has received deposits ranging from less than $10,000 up to $60,000.

“Information packs provided

by Mr Whittingham to brokers specify that the deposit is fully refundable if the prospective purchaser decides not to buy the loan trail book.”

Consumer Affairs Victoria added that Whittingham also regularly makes representations to prospective buyers that he will place their deposit money in a trust account.

“Despite these representations a number of brokers have reported that the deposits have not been returned in full, or at all, despite many requests,” the statement read. Buy A Trail is now in liquidation after an order made by the federal court.

MFAA’S TOUGH EVENTS RESTRICTION Users must request permission from the MFAA before posting photos, video or images from MFAA social or professional events on any form of social media.

When making reference to, or commenting on these events, users must identify who they are, ensure their contribution is professional, upholds MFAA objectives, is not offensive and adds value.

enforcement into the realm of social media, with a new policy for its 11,000 members that will police professional and private interaction on all social media platforms.

Developed over several months in consultation with Gadens Lawyers, the MFAA said the policy had been developed at the behest of members of the association after the MFAA became more active in social media.

“Having embarked on more extensive involvement in this new medium it was the view of the National Brokers Committee and the Board that guidelines should be adopted by MFAA to assist members,” CEO Phil Naylor told Australian Broker.

The two-page policy document outlines how members should behave online, with the aim of both protecting and enhancing the MFAA’s brand as well as promoting the professionalism and integrity of the profession and industry.

Naylor said that most organisations have such policies, and that the guidelines had been signed off by the National Brokers Committee chaired by Brad Wood of Astute Financial, as well as the MFAA board.

“While social media is a very powerful selling and communication tool, the MFAA is keen to protect and warn our members that use of this medium leaves a permanent record that can damage our members and the industry,” Naylor said.

Naylor told Australian Broker that no specific incidents involving member behaviour online had provoked the development of a policy, and that no other stakeholders such as major banks and lenders had pushed the move to develop a social media policy.

WHILE SOCIAL MEDIA IS A VERY POWERFUL SELLING AND COMMUNICATION TOOL, THE MFAA IS KEEN TO PROTECT ITS MEMBERS - P HIL NAYLOR

NEWS

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Get online or become obsolete

THE STRANGER SIDE OF NEWS

■ Leading brokers have claimed

ONLY IN AMERICA…

■ A US man robbed a bank for $1 in order to

be sent to a local prison. Fifty-year-old Jeffrey McMullen of Pennsylvania stormed a local bank and asked tellers for “a buck”. Staff initially thought he was kidding, so he had to explain again to the bank’s accounts team. Police would not speculate on why the man was so keen to be locked up.

AN UGLY MESS

■ A man in China has successfully sued his

wife for producing an unattractive child. Jian Feng filed the lawsuit, claiming his beautiful wife couldn’t possibly have given birth to such an “incredibly ugly” baby, and must have had an affair. Turns out, she’d had $100,000 worth of cosmetic surgery before they met to achieve her beauty. The wife was ordered to pay $120,000 in damages.

DROWNING SORROWS

■ Dozens of UBS traders in London, who were

unceremoniously left out in the cold when their building passes wouldn’t work, instead headed to the pub for a pint. They soon found out they were on two-weeks’ paid leave while the banking giant sorted out redundancies. “It’s the right decision, even though it’s horrible for me. The City of London is changing – and this is part of that,” said a philosophical trader. Apparently, banks in London are fond of dumping workers without notice to avoid any messy leaving scenes, or sensitive information being taken away.

FAST FACT Two-thirds of brokers believe credit growth will pick up in 2013, while 12 out of 14 surveyed lenders believe it will contract Source: Genworth

it is time to embrace social media or face the threat of being made obsolete by bank proprietary channels.

Darren Moffatt, mortgage broker and founder of industryspecific social media site Housenet, says brokers must embrace digital platforms or risk irrelevance.

Moffatt believes lender direct online channels are a huge threat to the broker model with predictions their share could rise to 25% in a few years.

Craig Morgan, founder of the I-Financial group and direct virtual broker website findmyloan.com.au, said it’s not just young, first homebuyers that frequent his online channel. “The assumption is you’re going to get

a lot of Gen Y and a lot of tyrekickers, but you actually get a lot of time-savvy people across all generations.”

Pink Finance’s Nicole Cannon says she already used Facebook to connect with clients, but that using an industry-specific social media site is far more straightforward. “From one social media platform you get buyers, brokers, real estate agents… it’s all there.”

25%

THE POTENTIAL MARKET SHARE OF BANK ONLINE PROPRIETARY CHANNELS

YBR clinches Macquarie funding ■ Mark Bouris has succeeded in making national news headlines with a deal that will see Macquarie Bank fund a new range of Yellow Brick Roadbranded mortgage products through the franchise.

After a trading halt on YBR stock yesterday amid rumours of the Macquarie deal, YBR confirmed it would launch an “aggressive expansion into financial services” with the aid of Macquarie.

YBR hopes to drive initial demand for a new range of mortgages by kicking off with a discount of 1.15% off its standard variable rate of 6.65% for the first 12 months and a guaranteed 0.86% discount for the life of the loan.

YBR chairman Mark Bouris said the deal will give YBR access to billions in funding according to the Australian Financial Review, and would use it to become a new force for

competition. “The big four banks have had it for themselves and it is now time for some of that market share in home loans to go to others,” Bouris told the AFR. “This is war and now I’ve got a big, aggressive and smart bank in my corner and that makes a big difference,” he said. Bouris played up the idea that YBR could be the start of a new ‘fifth pillar’ of the banking industry.

MATT LAWLER

NEWS 10

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New Zealand now home to Aussie non-bank ■ A non-bank lender will

officially launch its business in New Zealand today after a three-month pilot.

Resimac chief operating officer Alan Savins told Australian Broker the bank’s initial foray into New Zealand through three broker groups including Loan Market had resulted in a number of settled loans and tested a service delivery that he hopes will set the lender apart.

“That is what we plan to materially compete on in New Zealand,” Savins said.

“Now that we have received a good flow of business, we have the confidence that the business can handle the scalability needed,” Savins said.

Savins said brokers within its initial pilot partners had begun seeing a point of difference in its value proposition, and it was now getting requests for accreditation from more brokers within those groups.

Resimac plans to have 300 accredited brokers by the end of this year.

“New Zealand represents a key diversification strategy for us.

There is a desire to diversify at many levels, including distribution, funding, geography and asset classes,” Savins said.

Savins said that the industry landscape is similar from a legislative perspective, and that it could provide a genuine alternative to the major lenders in that market in a similar way to the Australian climate.

Allan Savins

‘Wild west’ for small business credit ■ The government has been

called on to end a ‘wild west’ approach to credit defaults, by giving small business borrowers similar rights as those afforded to consumers.

Arguing against the extension of NCCP to small business borrowers, MyCRA Credit Rating Repairs’ Graham Doessel said small business should be given a ‘right to remedy’ if they fall into default in the same way as consumers in order to protect their credit file.

“There is a lack of rights afforded to commercial credit file holders before recovery is commenced,” Doessel said.

Doessel said if a consumer account is overdue, then the account holder is given a 30-day right to remedy under the Credit Reporting Code of Conduct, to

ensure that fair and reasonable means have been taken to attempt to recover the outstanding amount before further action is taken.

As commercial credit is not covered under the code, this right is not provided to commercial credit file holders, and Doessel says small business owners have been caught out.

“It’s like the ‘wild, wild west’ out there with some lenders defaulting small businesses with little to no warning.”

Once a default is placed on a commercial credit file, it remains on the credit file for five years.

Doessel said these small business borrowers could potentially be one or two days late in paying a commercial account and have their ability to obtain credit ruined.

Working from home not for everyone, warns broker ■ The government thinks more workers

will consider at-home offices once the NBN is completed, but Get Real Finance’s Kelly Cameron-Tull warns working from home is not always ideal.

National Telework Week, an initiative relating to the new National Broadband Network, opened this month, with the government announcing a goal of having 12% of public sector employees “teleworking” from home by 2020.

However, there is some skepticism in the broking industry about the at-home work trend, with Cameron-Tull – who used to work from home – warning that home offices don’t suit everyone.

“You have to have a lot of discipline. I know a lot of people who aren’t disciplined and start doing other stuff around the house.”

She also says if she was ever ill, businessrelated visitors found it hard to accept her taking a day off.

Despite this, Cameron-Tull says working from home can be great for some brokers and admits that she may have been more productive in her home office.

MFAA’s Phil Naylor says the broking industry has historically tended to move away from home offices, but says it’s too early to say whether faster internet access will change this. “I think the whole NBN project will be beneficial for brokers but it’s impossible to say what will happen because the broking network is very dynamic,” he said. “Many brokers started working from home, but many are now working from offices – that’s how the industry has grown.”

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Price-setting brokers face conflict of interest ■ Brokers who are able to set the price of the product they recommend to consumers could face an ‘irreconcilable’ conflict of interest, according to advice from Gadens Lawyers.

The law firm’s senior partner, JON DENOVAN Jon Denovan, has issued a warning to businesses who hold themselves out to be finance brokers who are able to set the price of a lending product. “This is probably an irreconcilable conflict of interest, possibly even when the broker can only reduce the interest rate,” Denovan said.

“Mortgage managers and brokers who can set the price must make it clear that they are not acting as a finance broker for the consumer and that borrowers should make their own inquiries as to price.”

Denovan said this is made more complicated when mortgage managers and brokers can ‘switch hats’.

“If the house product does not suit and the business then looks beyond their preferred products, there should be clear disclosure when the business switches to acting as a finance broker,” Denovan said.

Equipment finance brokers who can set the price must make careful disclosure so that customers realise they are not acting for the customer, Denovan said. “This is the case despite the fact that most equipment finance is generally not regulated by the NCCP. A failure to properly disclose the capacity in which the business is acting may comprise unconscionable or misleading and deceptive conduct under the ASIC Act.” Denovan has warned affected businesses to review their practices to ensure that the customer knows that the business is not acting for the customer.

The MFAA will be updating its ‘conflict module’ to include guidance on commission-induced conflict.

However, Denovan said the only duty under NCCP is to ensure consumers are not disadvantaged by any conflict. “Competition is good at the wholesale level as well as at the retail level, or the price borrowers pay…

Brokers selling loans which pay a higher commission or carry other additional benefits must ensure customers are not disadvantaged,” Denovan said.

ACCOUNTANT’S LETTERS NOT ALWAYS ENOUGH

For brokers writing ‘low-doc’ – or ’alt-doc’ – loans, accountant’s letters may not be enough, according to Gadens Lawyers. The law firm’s partner Jon Denovan has said that accountants can satisfy requirements to make reasonable verification of a financial situation – but only if they contain sufficient specific information. For best compliance, they should confirm: ■ actual level of income, and the basis on which the statement is made ■ comments on previous earning and information supporting the statement ■ identifies the period for which the accountant has been engaged by the customer

NEWS 12

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CONTINUED FROM PAGE 1

‘Choice’ to remain broker saviour

B

rokers will need to provide their customers with all the choice they have on offer next year, with tight credit conditions in the banking sector expected to continue.

A UBS survey conducted in September and October found that the chief financial officers of Australia’s banks had applied tougher credit criteria to loan applications during the previous six months. With affected borrowers in both residential and business markets, the research found concerns over the economy and the housing market were causing the tightening.

Genworth Financial’s recent Home Grown: Mortgage Industry Perspectives report also showed 12 out of 14 lenders surveyed believe that credit growth will contract in 2013. Lenders cited low consumer confidence as one reason for this trajectory. Only 14% of lenders surveyed agreed that increased access to funding was likely to boost the market outlook.

A POSITIVE PICTURE

Brokers on the other hand are more positive about the 2013 market, with James Symond saying the proposition of ‘choice’ they have always offered allows them an advantage.

Symond says brokers can usually show customers how to save money. “Customers come to you for a reason, and that is advice and knowledge, and we can sit down and the vast majority of times show them how they can save more,” he says.

“It’s just a matter of how much

money, how worthwhile it is for them to refinance. But customers are more sophisticated than ever before and they won’t just refinance for the sake of it and change their banking relationship unless they are unhappy.”

In addition, broker service will continue to go above and beyond that provided by lenders.

“The vast majority of brokers in this country are commission-only – they eat what they kill, so to speak – so brokers, even if it’s a Sunday night at 8pm and they have to go to a customer’s home they do it, because they have to do it because that’s their living.

“Where you differentiate yourself is the customer experience you provide. Top line brokers offer top line customer service because they have to.

Because if their toolkit or product kit is the same as the next person, one of the only key differentiators is the customer experience.”

To what extent do you agree these factors will impact property lending in 2012/13?

Bank lenders having greater availability of funds

Brokers:

83%

AN UPSURGE IN CHOICE?

It may be the inability of the major banks to support a rebound in credit growth – should consumer confidence eventually return – that will be the doorway for more competition, which would play into the hands of the mortgage broking market.

Westpac chief economist Bill Evans says it may be that securitisation and foreign competitors will take up the slack if banks are unable to meet increased lending demand.

Brokers on the whole are more optimistic in regard to credit growth, with only 8 out of 24

TECHNOLOGY NOW ‘FRONT AND CENTRE’ Advancements in technology in the mortgage and lending sector have become so critical they can make or break a business that is not up to scratch with the competition.

“We are in the business of attracting and retaining top sales people, our brokers, and these brokers will often stay or leave in many cases because of your technology,” Aussie executive director James Symond says.

Whether it’s easing the interaction between brokers and customers, or assisting with their ability to run their businesses, James Symond says technology is now “front and centre”.

In fact, brokers or aggregators who aren’t at the forefront will suffer, he claims.

“We are investing a lot in reinventing our technology, but some of the key competitors that don’t have that sort of backing are going to fall by the wayside,” he says.

The embrace of technology does not stop with brokers. “Technology is the bones around which our business is built, that and people,” says NAB general manager of product delivery Damon Cook. “We built a new portal for brokers recently that enables them to see all their deals, where they are tracking in the pipeline, on an iPhone or a tablet or a PC. These are the type of things that allow increased efficiency and better service to the customer.”

Lenders:

14% Continued reductions in credit growth Brokers:

33%

JAMES SYMOND

Lenders:

86

%

Source: Genworth Home Grown: Mortgage Industry Perspectives

WE CAN SIT DOWN AND THE VAST MAJORITY OF TIMES SHOW THEM [CUSTOMERS] HOW THEY CAN SAVE MORE - J AMES SYMOND brokers surveyed by Genworth saying they expected continued reductions in growth.

Regardless, Symonds says the commoditised mortgage broking sector will continue “powering away”, and the Aussie business is looking forward to stellar growth.

“For us 2013 is another year of opportunity. We only see it as a year of growth and more fun, and don’t see anything untoward on the horizon,” he says. Symond says this will include keeping an eye out for further acquisitions, as it seeks to diversify its distribution mix.

THE COALFACE 13

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Wise choice leads to financial planning One mortgage broker’s financial planning journey has now come full circle with his plans to help other brokers jump the diversification hurdle

W

hen Finance Wise principal James Barger-Bos was granted an Australian Financial Services Licence (AFSL) in March 2011, it was greeted with a sigh of relief.

“I thought that the application would be a gentle leap from obtaining an Australian Credit Licence but it turned out to be a cavernous vault,” Barger-Bos explained. “I would never have been granted the licence without external assistance.”

However, with diversification having become a mortgage industry mantra in terms of strengthening relationships with clients, growing revenue and being positioned in a client’s mind as their key financial consultant, Barger-Bos thought it a necessary challenge.

Having been a mortgage originator since 2004, Barger-Bos achieved an authority to become an authorised representative in financial services in 2006 by completing a diploma of financial planning via industry training provider Kaplan.

“I was encouraged to complete the study by a friend and mentor who ran a large number of advisors under his licence. Not having a background in financial planning made it very difficult when I was approached by my first client to help with an income protection policy.”

And the strategy has paid off.

In the last financial year revenue from financial planning was five times that of mortgages and loans. In addition, he expects his financial planning business can be sold for at least double the multiples of mortgage business.

Barger-Bos said he does not think a diversified financial services model is for everyone.

“My model is time consuming on the compliance side. I estimate that one day a week is spent on managing compliance and not generating revenue.”

Barger-Bos is now even leveraging his experience in transitioning into financial planning, with plans to help other mortgage brokers establish boutique advice businesses.

JAMES BARGER-BOS, FINANCE WISE

HOW TO SUCCEED IN OPERATING AN AFSL  Complete the training requirements to achieve a diploma of financial planning  Have a positive attitude towards compliance  Be disciplined in managing a client’s file  Be structured in the way you manage your clients’ requirements  Embrace the attitude that continual education will assist your clients and your financial position

COMMENT

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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!

“I am a member of Plan and yes I do sell Plan Lending [white label] products; however, they – in most cases – sell themselves when the product features match the majors and offer cheaper interest rates and fees. Let’s face it; yes, the product is funded by one of the majors. Yes, I do get paid a higher commission, but I just see that as a bonus if the client likes what the product can offer them. If I did not offer a white label product as a comparison, I believe that I would not be not offering my clients the proper service they deserve.”

Coast Broker on 02 Nov 2012 12:59 PM

BROKERNEWS. COM.AU

GET YOUR OWN HOUSE IN ORDER, SAY BROKERS

When the Commonwealth Bank called for brokers to get onboard with productivity improvements (Join our productivity journey: Cummings 12/11/2012), brokers argued that CBA should be working harder on its own processes as well.

Diomedes 12 Nov 2012 10:11 AM I used to get straight through processing with CBA; that was when the credit managers used to call me to discuss a file prior to decisioning. Now they simply refer, I then call CBA to explain the file to a third party who sends an email to the credit manager, and nothing happens, then I call my BDM. STP is not hard to achieve; do what you were doing 12 months ago.

Country Broker 12 Nov 2012 10:21 AM Why would I join them in productivity when their processes have become SLOWER and I know processing is no longer happening in Victoria where it was seamless! It takes at least one day to have one department to ask another department to do something.

1martym1 12 Nov 2012 11:57 AM I am a CBA supporter but I think you need to look at your own processes. It seems to take an age these days to get a simple deal formally approved. I wait 3–4 days for credit to pick up the file, then wait another 3–4 days for the file owner to issue unconditional and docs. I play the game, order vals upfront, submit quality apps, but it still can take close to two weeks to get formal, and that is provided it doesn’t get stuck somewhere in between credit and the file owner.

‘NOTHING FLASH’ SAY BROKERS ON YBR DEAL

Yellow Brick Road inked a deal with Macquarie to fund a white label product (YBR clinches Macquarie mortgage funding 8/11/2012), but brokers were nonplussed.

Martin 08 Nov Read the fineprint. This is nothing flash.

Not to even start on being funded by Macquarie. How much longer are they going to be around ?

Amazed 08 Nov 2012 04:55 PM What a coup!!!!!! A special intro rate through a white label product, and then reverting to a normal discount off SVR… Terry 22 Oct So it seems YBR’s wealth management model has been put to the back shelf?

Back to focusing on good ol’ mortgages.

Michael 08 Nov 2012 02:51 PM None of my customers even know YBR exists and customers can get these rates now. Bouris is going to need a lot of hot air (and funding) for this new stunt to gain any traction..

Jack 08 Nov 2012 03:21 PM When the GFC hit, Macquarie left all their customers high and dry with an additional 1% on their loan. They did not stick around when the going got tough! So much for looking out for the customer.

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

Roman wisdom, or a step too far?

A

s one of our regular columnists Kym Dalton from SAKS Consulting pointed out online, the Roman poet Horace once said: “A word once uttered cannot be recalled.”

However, is this any justification for the MFAA snooping on your professional – and even private – communications via social media or other online platforms?

According to Dalton, the move to have an association social media policy to protect brand and industry is a “sound” one, because as he attributes, social media has a long memory.

Naturally, the MFAA felt the same. But our readers online – as usual – were not convinced.

“Farsical!” railed OnlineOurs.

“Whilst the membership is ‘voluntary’ in theory, aggregators

make it mandatory. So how are we able to have our own company policy for social media? What gives the MFAA the right to dictate when a company holds its own NCCP licence? Free speech?

I guess not!”

Will also saw the move as an imposition on his right to free speech. “Here we go again. The MFAA being an autocratic undemocratic police state to those of us working in the real world. We don’t need the MFAA anymore, we have ASIC now who is doing a good job.

Ozboy suggested that the MFAA would have problems in monitoring and enforcing the guidelines it had produced. “The bottom line is that the MFAA won’t be able to enforce this; they can’t enforce their current regulations,” he said. “MFAA and ASIC suffer from the same issue,

too many regulations and nowhere near enough resources to police them. These should be called a guideline to social media and nothing more,” he said.

The final word goes to contributor Craig Parker.

“My current post on Facebook is ‘Finance broking can be very loanly sometimes.’ It is receiving plenty of attention.

It would be sad if a comment like this does not comply.” So will we, Craig.

THE BOTTOM LINE IS THAT THE MFAA WON’T BE ABLE TO ENFORCE THIS

ONE YEAR ON brokernews.com.au

15

ONE YEAR ON What a difference a year makes … or not. Australian Broker reflects on the news that made headlines 12 months ago Australian Broker Issue 8.23

Melbourne supplies MPA top broker Melbourne’s Mark Davis topped MPA’s Top 100 after settling a staggering $170m in 2010/11. Davis edged out Sydney’s Jeremy Fisher ($131m) and Justin Doobov ($122m) into second and third.

Davis had recently scooped the Australian Broker of the Year award at the Australian Mortgage Awards 2011.

What’s happened since?

Readers experienced a case of Déjà vu with Mark Davis once again topping the MPA Top 100 list this year, with $169.6m in lending and again following a second consecutive Australian Broker of the Year title. Warren Dworcan ($157m) took the second spot this year, while Rael Bricker ($141m) rounded out the top three.

Segmentation next as Milburn joins Citibank Citibank’s head of mortgages Vibha Coburn welcomed Aaron Milburn to his role as head of broker distribution at the lender, saying one of his primary tasks would be to develop a premium broker service that rewarded its top segment of brokers. The announcement followed much fanfare from other lenders over segmentation strategies that aligned service to loan volume.

What’s happened since?

Citibank has erred on the side of caution in the implementation of segmentation, preferring to work on its overall delivery rather than reward top volume writers.

The focus from Coburn and Milburn has been on delivering competitive and complementary product, being transparent about service delivery, and improving its offering via feedback from brokers.

Sampson departs as Provident goes resi Provident Capital’s head of lending distribution Steve Sampson departed the business late last year to take a up a role with Citibank. At the time, managing director Michael O’Sullivan told Australian Broker that it was focused on rolling out its revamped Platinum product, which was then available to clients looking to purchase or refinance a residential investment property.

What’s happened since?

Seems it was providence that led Steve Sampson to exit Provident Capital. Recently, Provident Capital and its managing director Michael O’Sullivan were paraded through the courts and the press when the company had receivers appointed amid fears it was insolvent and unable to repay debenture fund investors.

CONFERENCE SPECIAL: CONNECTIVE

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16

Diversification could mean taking ‘eye off the ball’  A NSW broker has urged

fellow brokers not to “take our eye off the ball” in the scramble for diversification.

Rob Horner, founder of Jack Horner Financial Solutions in Baulkham Hills, has told fellow Connective brokers they should be wary of trying to expand beyond their expertise. Horner urged brokers to “stick to what we do best” rather than eyeing the one-stop shop model of broking.

“A few years ago I was persuaded that because of the natural synergy between what a broker does and what a financial advisor does, that should mean that I should become a financial advisor as well, which I did. Not so long ago, I threw in the towel and stopped being an advisor, because I think trying to be all things to all people is just too hard,” he said.

Horner commented that the rigours of NCCP compliance mean that it has become more difficult for brokers to diversify outside of their main business.

“It’s hard enough to be a broker these days with the compliance and knowledge requirements, so when you have the added layer of the compliance and knowledge you need to be a financial advisor, I thought I was going to have a nervous breakdown. So I think the importance of sticking to what we do best is very important, and I think the benefits in my business have shown that to be true,” he said.

Rather than adopting a full financial services model, Horner

advised focusing on referral relationships.

“Of course I didn’t just leave my clients in the lurch as far as risk goes, but putting in place sensible partnerships to outsource that function I think is important,” he said.

“We’re all told diversification is the future, but I think the more we try to be all things to all people, the more we take our eye off the ball of what we’re really good at,” Horner added.

“IT’S HARD ENOUGH TO BE A BROKER THESE DAYS WITH THE COMPLIANCE AND KNOWLEDGE REQUIREMENTS” – ROB HORNER

ROB HORNER

‘Old-style banking’ can drive productivity, lender claims  A lender head has urged banks to

Steven Dover

put brokers in closer contact with credit decision makers in order to increase productivity.

Speaking at the Connective conference on the Gold Coast.

National Mortgage Company executive chair Steven Dover has commented that the broking industry’s drive toward productivity can be aided by giving brokers more access to underwriting authorities.

“It’s all good to sit back and say you should be more productive and that people should do this or that in their business, but really what we’ve got to do is get back to the old style of banking,” he said.

“That’s by having decision makers able to make the decisions for the loans that get done. I think that if we were to support brokers more with that type of attention, we’re going to get a lot more productivity from brokers as well,” Dover said.

Dover commented that NMC has put in place systems to give brokers better access to its credit team in order to improve processing efficiencies.

“We’ve actually put a lot of work and effort into our scenario hotline, and that’s been taken up very favourably. It’s not just, ‘Come in and give us a call and we’ll tell you whether we can do the deal’. We actually have reference numbers, we have benchmarks, and those reference numbers actually allow you to submit a deal, and when you get back to us we actually know if that’s been approved in principle,” he said.

Dover said this access would ultimately allow brokers to write more loans, increasing productivity.

“If I know anything from being a broker, it’s that the most productive thing we can do is get more loans written and to have the support of credit people and a delegated lending authority that have actually looked at that scenario and said it’s a deal, and don’t change the parameters by the time it comes back. I think that’s probably one of the best things we’ve done from our side to be more productive,” he said.

CONNECTIVE ON...

PRODUCTIVITY

EQUIPMENT FINANCE

Connective principal Mark Haron has named productivity as the key driver behind the company’s strategy in 2013.

Haron has said aggregators play a key role in improving productivity for the mortgage broking industry. He said increasing productivity had become especially vital in light of reduced credit demand.

“Decreased credit demand has made productivity more important.

Decreased revenue often leads businesses to have to decrease expenses, including shedding staff, delaying investments and delaying projects.

“We’re seeing that in the mining sector, and have certainly seen it through the banking and lending sector as well. There’s a lot more competition for less business in our sector.”

Rather than placing the onus solely on brokers for increasing productivity, Haron said the goal had to be a collaboration between brokers, lenders and aggregators.

Connective will re-launch its plant and equipment finance arm.

Speaking at the Connective conference on the Gold Coast, principal Murray Lees said the company would re-launch plant and equipment finance in 2013.

Lees said Connective had received positive feedback on the program in the past.

“It’s one of those things that the brokers who make use of say is one of the best things they’ve ever used. It’s relatively easy money and relatively quick money,” Lees said.

Lees touted equipment finance as a good area of diversification for brokers.

“We all know the hassles and timeframe involved in settling a home loan. All your clients have car and finance needs, so you should be pushing it out there.

If it’s appropriate for your business it’s relatively easy money,” Lees said.

THE WORKSHOP

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18

The harsh truth about success Success doesn’t come easy, and as BrokerProfitsVault’s James Veigli explains, the best ‘get rich quick’ scheme you’ll find is probably going to mean sacrifice and hard work

I

was invited to speak at a professional development day for a major aggregator over in Adelaide earlier in the year, and in preparing my speech I thought long and hard about success – specifically in terms of the ‘harsh’ truth some may find a little confronting, and a pill hard to swallow for some.

NOW AND LATER

Many ‘get rich quick’ spruikers out there, often with a ‘magic pill’ to sell, rely on selling the idea that success, or attaining riches, is as easy as 1-2-3. Have I invested in some of these products? Yes. Do most people who buy into ‘get rich quick’ programs ever get rich… let alone quick? The answer unfortunately, is no. Why is this so? The exact quote I used in my presentation was this: “Most people in business and life aren’t prepared to sacrifice NOW for a better LATER” – James Veigli

And this quote holds true for time, money and, most importantly, effort or hard work.

But does it apply to you too?

Many of you would have read or seen The Secret, a book (and also movie) that people mistake for teaching a law that basically means whatever you simply ask for in life you will receive. Not so many of you would have seen the spoof videos on YouTube taking advantage of this idealistic approach to the law of manifestation – don’t blame me if you get lost in time watching YouTube videos for hours though.

Will a pile of money fall on your head while you meditate thinking about money and focusing on abundance? Hell, no.

Will having a positive, successful, goal-oriented, abundance mindset help you come into a pile of money? Yes, but there’s a catch. You’ve gotta get off your backside and put in the effort and sometimes hard work to make it happen. Positive expectation is one (important) thing, but taking action is where the magic happens.

Also (and this especially applies to ‘already-successful people who want more’) getting

serious about achieving your (bigger) goals will more often than not require you to sacrifice something (time, money, effort) NOW to enable you to achieve that better (more time, more money, less effort) LATER you dream about.

ME AND NOW

Before I started to invest (‘sacrifice’) time, money and effort in my life, I was staring down the barrel of an unsatisfying 40+ year career lost in the ‘big bank machine’. I wanted and knew there should be a better way – so I sacrificed my hard-earned money, and sacrificed my weekend off work to attend a wealth creation seminar. My first! I continued for years to sacrifice significant time, money and effort to learn the ‘real world’ knowledge about business, investing and life that I needed to pursue my interests and be successful. I’ve invested in learning from those already in the position I wanted to be in.

Because of this sacrifice (that I continue to make, by the way), within a short space of time I’ve built a fast-growing six-figure business that has taken me around the world, working when and how I want – with no staff or overheads to worry about. I continue to this day to sacrifice time, money and effort NOW to give me a better LATER (in my case, growing my business to a seven-figure business – without impacting my current lifestyle).

A HARSH REALITY

The harsh reality is that there is no substitute for putting in effort NOW to give you a better LATER. The harsh reality is that there is no ONE magic strategy, idea, process or set of steps to accomplish everything in life you desire.

Sure, there ARE short-cuts, and you should seek out and invest in these as much as possible. But the underlying secret to my growing success, and that of my mentors, is simple: • Learn proven or new ideas from those who are already successful • Implement the proven or new ideas in your business or life

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

THE HARSH REALITY IS THAT THERE IS NO SUBSTITUTE FOR PUTTING IN EFFORT NOW TO GIVE YOU A BETTER LATER - J AMES VEIGLI • Don’t conform, be different – and don’t worry about the ‘haters’ • Be willing to sacrifice shortterm gain for long-term rewards • Be willing to sacrifice now for a better later • Always mix with more successful people than you • Repeat… for life

THE CHOICE IS YOURS

You have two clear options.

Either get annoyed and frustrated at the fact that achieving massive success means you actually have to DO something (gasp!) – and in which case my experience tells me that your time within this industry is likely to be short-lived.

On the other hand, if you are excited by the prospect of getting stuck into learning how you can cheat the so-called ladder of success by implementing proven money making strategies (that the ‘others’ are too lazy to do) then seek out experts and implement accordingly.

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19

‘Virtual loan processing – the next step’ Outsourcing your loan processing function could just be the most important decision you make as a business owner, writes Tracey Clarke

D

o you currently spend time administering your own loans, trying to obtain approvals rather than maximise your business growth? How efficient could you become by allowing someone else to take care of your follow-up and running around? Wouldn’t you like to have a full-time loan administrator without having to pay a full-time wage?

WHY NOT OUTSOURCE?

The question going around now is not ‘why outsource?’ but ‘why not outsource?’

I have seen an influx of enquiries from brokers that are moving in the direction of virtual loan processing. After speaking with many mortgage professionals before starting my business, it was obvious that an overwhelming need for quality loan processing existed. Many brokers with whom we met were just not happy with in-house processing or just could not afford to employ a loan processor and were really unaware of other options available.

So what do we do as loan processors? The loan processor takes care of the loan from submission through to settlement including data entry, submission of supporting documentation to the lender, follow-up for conditional, follow-up for formal approval whilst liaising with the client, lender, solicitor and broker throughout the loan process with

PAYG LOAN PROCESSOR

WHY OUTSOURCE? ■

Rely on a specialist with an

in-depth knowledge of mortgage loan processing ■ Employ a ‘work smarter, not harder’ strategy ■ Shorten closing cycles and get paid sooner ■ Increase the number of loans settled ■ Avoid hiring and training mortgage processing staff ■ Downsize office space ■ Increase borrower satisfaction ■ Utilise a company designed around the workflow of processing updates and resolving any concerns or questions that may arise. Loan processing is arguably the most tedious, labour-intensive, yet critical task in the mortgage industry. All this while mortgage brokers focus their time on their area of expertise – sales. Increasing sales is at the heart of a mortgage broking business, not pushing paper.

Tracey Clarke is the processing manager and director of loan processing company iadministrate yourloan.com and is a former mortgage broker

EVERYTHING TO EVERYONE

Brokers should not try to do everything themselves, there is a significant cost saving that could be found through outsourcing.

Letting go of low-valued tasks might be the best thing for their business. If mortgage brokers outsource their processing they can increase their internal productivity and efficiency, and, at the same time, reduce costs and increase profit.

VS VIRTUAL LOAN PROCESSING

PAYG LOAN PROCESSOR

VIRTUAL LOAN PROCESSING

Expensive staffing costs. Payroll, taxes, workers No staffing costs to your business. compensation insurance, unemployment insurance, employee benefits, advertising, hiring, training, firing, re-training, additional equipment costs, supplies.

Sick/absent employees. Files sit if no one is there Several experienced processors to help follow to work on them. through with your loans.

Valuable office space is used for ‘paperwork’.

Your office space is now freed up for marketing and increasing sales.

Processor’s experience may be limited to your home state.

Loans are processed for borrowers located all over Australia.

ANALYSIS 20

brokernews.com.au

THE BEST [and worst] OF TIMES A flat property market, the rise in online banking, low valuations, clawbacks – 2012 has held several challenges for brokers, but as Andrea Cornish reports, many are doing better than ever

I

f you believe in the Chinese zodiac, then 2012 – the year of the Dragon – was an auspicious time to be in business. The Dragon is associated with good luck, money, accomplishment, celebrations, longevity and success. It even affects the stock exchange. From 1900 to 2011, the Dow Jones Industrial Average increased an average of 7.7% during Dragon years. The year of the Dragon is also associated with big changes.

It can be tumultuous, but also a good time to try new strategies and take chances.

So what was 2012 like for you?

Australian Broker spoke to several mortgage professionals to find out if the last 12 months were of mythical proportions or a beast of a year.

A GOOD PROBLEM

For many brokers, during the last 12 months “it was the best of times, it was the worst of times”.

Smartline’s Kevin Lee reports a 54% increase in the last financial year over 2010/11.

“We’re probably $10m behind in loans we need to write for clients, that’s how busy we are.

Actually we’re probably even more behind than that.”

As a result, he says his biggest challenge in 2012 has been “coping”. “I have an excellent team though and there’s been a lot of stress this year in getting our systems in place.”

Rate Detective Home Loans’ Warren Dworcan, who ranked second on MPA’s Top 100 list this year, also says he’s wary of falling victim to his own success.

“The biggest challenge has been trying to keep up with the growth and putting together adequate infrastructure and good staff to make sure that I’m continually delivering a high level of customer service and quality – that’s been crucial.”

Significant growth was also a hallmark of 2012 for Charles Howitt of Howitt Partners Mortgage & Finance, despite “lower commission rates and the removal of low-doc loans”. But it was the new regulations that

The dragon is associated with good luck, money, accomplishment, celebrations, longevity and success

COMPLIANCE AND REGULATORY ISSUES REALLY JUST CREATED A LOT MORE WORK WITH NO VALUE TO OUR CLIENTS - C HARLES HOWITT

really impacted on his business.

“Compliance and regulatory issues really just created a lot more work with no value to our clients.”

While Peter Gwynne of Financing Property says regulations have been positive for the industry, implementing them has been his “biggest stress for the last two years”.

“You have to pretty much turn your phone off and say I can’t work on my core business because I have to get this right – that’s been hard for me.”

On another front, many brokers mentioned low valuations as being a problem for them and their clients.

“The amount of money the banks pay for a full valuation is a disgrace. I wouldn’t do it,” Lee says. “And I think it affects what the valuer is prepared to put on paper knowing that they could get sued.”

DIVERSIFICATION

Many brokers report that growth in their business has been achieved from increased referrals and diversification.

On the diversification front, brokers such as Dworcan are moving beyond insurances and getting into commercial and financial planning.

In fact, the marriage between financial planning and mortgage broking is becoming increasingly common, as many, such as Troy Cameron of Stratique Financial, strive to provide a “holistic” service to clients.

“We have always communicated with our clients that we are here to manage and support their financial core.

This includes all aspects of their financial position including accounting, financial planning, insurances, car finance, and general banking; and we formed alliances with key specialists with a strategic focus on ‘customer first’. Due to customer

21

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“Nothing unique in NSW because we have a government that took over 22 months ago and has done very little.

I know that they’re working behind the scenes but we have yet to see the results.”

REGIONAL CHALLENGES QUEENSLAND TERRY HILL QUEENSLAND FINANCIAL

“The market remained depressed with prestige properties continuing to suffer significant valuation reductions of up to 30%.”

SOUTH AUSTRALIA STEVE MARSHALL THE LOAN ARRANGER “There’s been a lack of incentive to the first homebuyers, and we’ve seen the building industry slump and builders going out of business.”

NEW SOUTH WALES KEVIN LEE SMARTLINE – PENNANT HILLS

TASMANIA ALLAN FAINT HFC OF AUSTRALIA

“There’s been a lack of consumer confidence for a while now, but I feel that in the last couple of weeks there’s even been some turnaround.”

VICTORIA CHARLES HOWITT HOWITT PARTNERS “A continued slight slide in the property market.”

SAM CROWLEY ABLE FINANCE SERVICES

“Business is booming. Generally speaking it’s because the government has opened up a lot of new land in and around Darwin, so people are out there buying land and constructing. And the other thing is Inpex, which is the $34bn gas plant being constructed which is bringing a lot of people into Darwin.”

NORTHERN TERRITORY

WESTERN AUSTRALIA WARREN DWORCAN RATE DETECTIVE HOME LOANS “In the last five months the rental market has gone stupid… So people are almost forced now to purchase property because they can’t find anywhere to rent and if they can it’s almost working out to be more expensive than purchasing.”

AUSTRALIAN CAPITAL TERRITORY

CRAIG BUTT LOAN MARKET(PHILLIP, WESTON, DEAKIN)

“We just had a local election and we probably get a little more affected than other areas because we have such a high population of government workers, so that seems to have slowed things down a little bit. Other than that, the only thing was changes to stamp duty concessions for first homebuyers in August.”

ANALYSIS 22

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think a lot of clients just want you to be finance.”

SOCIAL MEDIA

demand we launched Stratique Financial Planning and Stratique Legal in January 2012 and have seen great penetration into the existing customer base and a great reception from new clients,” Cameron says.

Smart Lending’s Melissa Gielnik has also expanded her services through referral relationships, as she likes to stick to her core competencies.

“The past 12 months have been big for us in building strong long-term relationships that have allowed us to fully diversify, and diversify well. We offer almost all services – from leasing and equipment finance, all financial planning products and risk, to conveyancing and property relationships. My team and I, however, specialise in mortgages, so we now have all the right relationships ensuring we can recommend our clients to the right professional to get the job done. You can’t be a jack-of-alltrades.”

Meanwhile, Gwynne says he decided to go the other way and concentrate purely on finance, which he says, “was the best move I ever made”.

“Everybody is talking about diversification. But I think finance is much more specialised now and I wanted to be a finance specialist, I didn’t want to diversify. And when you’re doing other things you’re not learning and growing in finance. And I

41.3%

Brokers originated a larger share of new home loans in the September quarter, with growth of 3.76% Source: Comparator

The other major trend in mortgage broking over the last 12 months has been an increase in broker usage of social media.

Many are choosing to outsource these activities to social marketing professionals to create a more sophisticated presence on online sites such as Facebook, Twitter and LinkedIn. According to Gielnik, it is a space that mortgage brokers cannot afford to ignore.

“This year I undertook the task of getting on social media, and I have begun to concentrate on Facebook, Twitter, LinkedIn, and my blog. It takes time for any great business to develop relationships, and the same can be said for social media platforms. It’s going to take some time to develop a base of online followers, but the result will be worth it.”

MARKETING

Strengthening brand through social media is just one component of a broker’s overall marketing plan and while many brokers are still getting their heads around the online space, an increasing number are employing unique strategies in more traditional forms of marketing.

For example, Stratique commenced an advertising campaign via a local supermarket visual network and has a 30-second advertisement on TV screens located at the counter checkouts. As a result, Cameron says they’ve “noticed an increase in brand awareness”.

Meanwhile, Robert Trewin of Robert Trewin Mortgage Broking concentrated his marketing focus on the local newspaper.

“I am a regular in the local papers – four each week – which

I have been doing for the past nine years and that really helps my profile. I also write a monthly column called the ‘Lending Lo Down’.”

In addition, he sponsors local sporting and community clubs to get his name out locally, and uses Google analytics to get good placement in the search engine to broaden his reach.

“My marketing strategy is around profile and I do not advertise price or bargains.

I prefer to have the angle around my professional reputation and integrity.”

BEST OF 2012?

Trewin’s reputation was also bolstered by winning the 2012 AMA award for Broker of the Year for insurance.

“This generated a lot of local media interest in print and radio and is not only something that I can be proud of, but it is also evident that my existing clients and prospective ones are also very happy about as well, judging by the feedback. Something like the prestige of winning this award may sometimes get lost in a big city, however, in a small regional location I can assure you it is a big deal and newsworthy, given it was a national award.”

Industry accolades played highly in many of the responses from brokers.

According to Gielnik, entering for the first time and being in the top 20 of the MPA Top 100, as well as being the highest ranked newcomer and female in the Elite Business Writers 2012 created excitement in her office, as did the invitation to AFG’s High Achievers trip to LA. Notwithstanding her success, Gielnik takes an optimistic view to not only 2012, but the year ahead and whatever it may bring.

“Every day and year is a good one for us’ it’s just how you look at it.”

CUSTOMER CHALLENGES Mortgage brokers faced a unique set of challenges in 2012, but customers had their own headaches. According to Smart Lending’s Melissa Gielnik, a lack of confidence affected her clients.

“From our point of view, it’s a great time to buy – the banks are competitive, rates are low, prices are balanced or have come off, and yet the challenge for the consumer is definitely still confidence, which I think has a lot to do with the government and job security.”

Consumer confidence has been slumping for the last 16 months, according to the Westpac Melbourne Institute Index of Consumer Sentiment. However, the institute’s most recent reading released in November shows a slight

bump upwards, which could be the result of the RBA’s cuts to the interest rate.

Unfortunately, these cuts could be too late for some. Digital Finance Analysts says 40% of people who bought homes just after the GFC are now facing mortgage stress. Robert Trewin of Robert Trewin Mortgage Broking says in the last year he spoke to lenders on behalf of clients who were having difficulty making repayments.

“I have also seen a few old clients that I could not help with any further consolidation, as they could not afford it – only to lose them to other brokers or lenders that pushed it through. They are now in serious arrears or bankrupt, however not all clients will actually listen at the time, which can come back and haunt them.”

ROBERT TREWIN

ROBERT TREWIN MORTGAGE BROKING

MELISSA GIELNIK SMART LENDING

FINANCIAL SERVICES

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ADVISER: How I survived a three-year ASIC audit

B

rokers may in future have to take a lesson from this financial adviser, who survived an ASIC audit to emerge better and stronger after the personal and financial sacrifice involved.

Edplan’s Phil Campbell recently told an Association of Financial Advisers conference that he had to cope with an ASIC audit for a period of three years.

The ordeal had “massive impact” on how his business – which specialises in giving financial advice to teachers – was run. But Campbell believes that the regulator’s scrutiny has seen his practice emerge stronger than before.

“As strange as it may seem, there are more positives to come out of it than negatives,” he said, adding that one of the negatives that was really hard to handle was dealing with the ‘bad apple’ tag. “We got a call from ASIC in July 2005 stating that they were requesting documents and information regarding super switching advice we had provided to our teaching clients between December 2004 and July 2005.

We were then involved in this

audit up until September 2008,” explained Campbell.

“We had not disclosed the fees correctly in our SoAs,” he added.

“We had overstated the fees, and you cannot claim ignorance just because it might have been a bit more difficult in those days to get the exact fee structure from websites and PDSs.” “We had also not provided enough information in the SoAs in relation to the insurance benefits that were available in that fund, so a proper comparison could be done with the insurance benefits being provided under the

WHAT EDPLAN DID WRONG ✘ F ailed to disclose fees correctly in Statements of Advice (SoAs) ✘ Did not provide enough detail on insurance benefits within SoAs

Client best interest not always wealth creation: ASIC

INSURANCE SECTOR FACING TOUGH 2013 Continued economic pressure means there is a bleak outlook for the insurance sector next year, though new research suggests tough times will force the industry to take a more innovative approach to the role technology plays in decision-making and operations.

A focus on mobile solutions, advanced analytics, and near-realtime systems are expected to come to the fore.

The report from analysts Ovum stated that technology will play a central role in helping to combat falling revenues, with insurers focusing on strengthening channel management and making better decisions through analytics.

Insurers expect that they will need to optimise their core administration systems and make use of advanced analytics in order to remain competitive in the modern insurance market.

Remaining in regulatory compliance will also become more of a pressing issue as deadlines for key regulations draw nearer, according to Ovum.

“There is no hiding that 2013 will be another tough year for the insurance sector,” principal analyst of insurance technology at Ovum said. “The insurance demands of the growing middle class in the emerging economies and the continued economic growth in the Asia-Pacific region provide the only positive news for insurers as we approach 2013.”

Navigator platform that we were recommending.”

Edplan therefore signed up to an enforceable undertaking with ASIC that would see the practice write to each of the affected clients to offer a comparison and the option to switch back to their industry super fund. “We had to compensate them,” added Campbell. “That also meant giving back the fees we had deducted for our financial advice.”

“There are times when you learn more from your mistakes than your triumphs. Whether we realised we had broken the rules or not, we had to get on with it and work through it.”

While Campbell stated that, at the time, the practice’s owners felt that they were being forced to make some major changes – including hiring a compliance manager – the improved systems and structures that were put in place actually benefited the business in the long run.

“If you get a visit from ASIC, don’t have a nervous breakdown.

Listen to what they have to say and, if they say that you’ve done something wrong, talk to them about how it can be solved. Get on with it.”

DID YOU KNOW?

25%

The amount CFP-certified financial planners earn over and above their non-CFP certified colleagues

If mortgage brokers and financial advisers have ever been confused about the financial advice profession’s best interest test and how to apply it, ASIC has now clarified the issue.

And as it turns out, it’s not always about wealth creation.

ASIC commissioner Peter Kell has said that the best interests duty is one that applies to all advisers.

“It’s important to note that the new best interests obligations apply to the advice provider, so this is generally the people who provide the personal advice,” he explained.

However, Kell added that working in your clients’ best interests doesn’t necessarily equate to making them better off financially.

“There are a number of qualifications around this,” he said. “There is no hindsight reexamination of the advice. And it’s also not in some very narrow sense a test of a better financial position.

“In many cases, good advice will put the consumer in a better position because they have a much better understanding of their financial situation, and what they have to do to improve it.”

WHAT IS BEST INTEREST?

Advice that helps consumers understand and hopefully better their financial position

Advice that will make clients a guaranteed fortune

SPOTLIGHT

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25

Trained mentors better than the best brokers Mentors can help even seasoned professionals enter the industry – and they are often better at training than the best brokers

T

rained mentors are better at helping new entrants survive the gruesome attrition statistics that face prospective newbies.

Classic Mentoring & Coaching mentor Nancy Youssef has told Australian Broker TV that only a third of new brokers survive the first 12 months.

She says the key for getting brokers to survive this period was providing them with a structured approach to training, rather than appointing someone without the time to give.

“Whilst we have already identified that experienced brokers have all the technical knowledge, not all of them are really good at training new entrants,” she says.

Sally Ashcroft of Finanz Essentials says finding the right mentor was “really important”.

“You have to find someone that has the time to train you,” she says. Ashcroft’s experience with the MFAA’s mentor program was that it added value to her business, by providing her with holistic help covering all aspects of operating the business.

Graham Wearn of AMW Wealth, who transitioned to mortgage broking after his former career as a stockbroker, says trained mentors also helped new brokers confront their fears.

“I would put off difficult things like marketing and selling financial products – in general, that’s a fairly confronting thing, going out and marketing yourself to sell things,” he says.

“But with a mentor you have to do it and you are accountable to your mentor so there is no escape from confronting your worst fears,” he says.

Wearn says a mentor helped transition him across to the mortgage broking industry.

“I have worked in the bank so I know about lending and loans, and I’ve been a stockbroker so I know how to talk to people and to get them to do things,” he says. “Being a mentee obviously brings a structure to the process.

You are given quite a defined business plan,” he says.

Youssef says= many brokers drop out of the industry because they don’t have the right support.

“In light of that we are looking to lift the success rate.”

“A new entrant should have an MFAA-approved mentor, because time is going to be allocated for a structured approach,” she says.

YOU ARE ACCOUNTABLE TO YOUR MENTOR SO THERE IS NO ESCAPE FROM CONFRONTING YOUR WORST FEARS

NANCY YOUSSEF

SALLY ASHCROFT

GRAHAM WEARN

MARKET TALK 26

brokernews.com.au

Q&A: Bill Evans, Westpac Westpac’s chief economist Bill Evans is among the most respected economic commentators in Australia, and is famous for picking the RBA’s change in direction on interest rates which began its most recent spate of cutting. Here’s what he has to say on four key economic issues that will affect your business into 2013

1

FIRST HOMEBUYER ACTIVITY

In 2009 the grant for all homes – existing and new – was doubled to $15,000 and we saw a huge boom in first homebuyers borrowing.

That coincided with a huge cut in interest rates, and a turnaround in how people felt about job security in the middle of 2009 due to positive GDP growth. That spurred first homebuyers.

This time, people are nervous about jobs, and I don’t see a real circuit breaker like the positive GDP results in 2009.

Also, this is against the background of surprisingly tight fiscal policy at the moment.

Government incentives are different now. Some in WA and New South Wales offer $7,000 for existing, and in Queensland $15,000 is there only for new houses.

I’d be surprised if we see any real surge in first homebuyers like that in 2009. It was a

vintage period, but when the Reserve saw that happening they decided to spoil the party pretty quickly.

2

MORTGAGE FUNDING AND CREDIT GROWTH

Banks are coming under tighter restrictions under Basel III, and that is not going to change. Banks are reliant on offshore funding, and the ratings agencies are uncomfortable with that. The Reserve is looking at the mining boom, which is collapsing, and looking back at that part of the economy that has been ignored, the housing market, which has been the weakest part of the economy, and thinking how do we stimulate that?

Well they can cut interest rates, but the real source will be improved confidence – which will gradually come – but I think you also have to improve availability of credit and I don’t think banks will be the ones to be in a position to support that. So issues around securitisation and sourcing of funding, the potential of foreign banks coming back to the market will emerge if the confidence does return.

3

THE HOUSE PRICE ‘BUBBLE’ THEORY

I think you need three conditions for that. First is oversupply, and one of the real issues around the Australian economy has been we haven’t

IT LOOKS VERY, VERY UNLIKELY THAT WE HAVE A HOUSING SITUATION THAT COULD LEAD TO A SUBSTANTIAL FALL IN VALUES - BILL EVANS

BILL EVANS

been building enough houses, that’s been a factor for many years. Victoria has done well but New South Wales and Queensland have lagged well behind. The second condition is you need a credit crunch, and that is clearly what happened in Spain, in the US and what happened in the UK. We are certainly not having a credit crunch here, the banks are keen to lend, even though if we were to experience a rebound in credit growth back to 10% banks wouldn’t be in a position to support that.

The third factor is a stretch in affordability, and by some measures Australia is stretched, but it is improving as prices come down, incomes continue to rise and interest rates come down.

So it looks very, very unlikely that we have a housing situation that could lead to a substantial fall in values.

4

INTEREST RATES

I would expect to see one rate cut in December.

For the Reserve it’s now not a matter of making room for the mining boom. It’s finding out how we can complement the slowdown in mining with some of the more traditional interest rate sensitive parts of the economy. If you look at the stance of monetary policy at the moment, in 2008 and 2009, it came down to 150 basis points below neutral.

We are now 75 basis points below neutral, so there is plenty of room for interest rates to come down further.

MARKET TALK 27

brokernews.com.au

A dossier of failure They may be very common mistakes, but your first-time investor clients keep making them, leaving them much worse off. Here are the big mistakes they shouldn’t make

1|

6

TAX DEDUCTIONS INVESTORS RARELY CLAIM AFTER RENOVATING 1 Pumps attached to spa baths

2 Free-standing spas

OVERBUYING

Real estate experts cite this as the most common mistake for firsttimers – buying more than they should or can afford. Make sure they have an excellent understanding of all the costs of homeownership involved, as well as a handle on their other expenses, from credit cards to personal expenses to car payments or any other commitments.

2|EMOTION OVER REASON

Buying a first home is emotional and they should be excited about it, but they must keep their head. They shouldn’t let their “love” for a home cause them to become overexcited and lose common sense. It could be too much for the wrong house.

3|

SETTLING

Sort of the opposite of overbuying, they shouldn’t “settle” for a house when there are likely better options available.

They should do their research on their finances, the neighbourhood, location and specifics of the home, so they know they’re making an informed choice.

GETTING 4|NOT PRE-APPROVAL

Brokers know that getting preapproved provides peace of mind, as

clients know what they can afford, giving confidence when it comes time to making an offer and negotiating.

KNOWING YOUR 5|NOT MORTGAGE OPTIONS

While they may feel most comfortable going straight to their friendly neighbourhood bank for a mortgage, brokers know this is not where they can get the best deal. Finding the right mortgage can save clients thousands of dollars, so they should be sure to take the time to examine all options – from banks to brokers, and all the various products available.

THE WRONG 6|CHOOSING LOCATION

is a small price to pay for the peace of mind your clients will gain from knowing their prospective property is free of major defects.

REVIEWING THE 8|NOT CONTRACT CLOSELY

Property purchase contracts are long and detailed, but it’s necessary for clients to review them carefully, both on their own and with their lawyer. They should pay attention to all clauses, covering everything from inclusions in the sale to closing dates.

THE WRONG 9|USING REALTOR

Most first-time investors tend to stay close to their homes. In making their selection they need to think at least a little about the factors that affect resale – either positively or negatively.

Research and pay attention to marketable details of the house, such as proximity to transportation, shopping, schools, parks, planned developments and local crime statistics.

For first-time buyers especially, the services of a qualified and experienced real estate agent are invaluable. But not all realtors are created equal.

In the hot markets over the last several years, more people entered the profession, trying to cash in on booming sales and commissions. But now, in a more challenging market, some of these newcomers are becoming part-timers or leaving the business entirely.

ON THE 7|SCRIMPING INSPECTION PROCESS

AN OFFER 10|MAKING PREMATURELY

The cost of a professional inspection

THE COST OF A PROFESSIONAL INSPECTION IS A SMALL PRICE TO PAY FOR THE PEACE OF MIND YOUR CLIENTS WILL GAIN

This often results from buyers getting too attached to a home too early, without looking at other options, letting their emotions get the best of them and wanting to snap it up before someone else does. They should take the time to review the information on market value for similar homes in the neighbourhood to ensure they don’t overpay.

3 Water tanks

4 Built-in coffee machines

5 Garden gnomes

6 Children’s cubby houses

Source: Paul Bennion, DEPPRO

PEOPLE

brokernews.com.au

28

Embracing community

Kamahl makes a guest appearance

Indian brokers are working closer than ever with Westpac to service their customers by providing the support they need to make a better life in Australia

W

estpac’s NSW state manager Frank Speranza is born and bred Australian, but coming from an Italian family knows the challenges faced by new immigrants.

That’s why he’s thrilled about Westpac’s decision to embrace migrant markets, symbolised recently with a vibrant Indian Diwali extravaganza in Sydney’s suburb of Parramatta.

The bank invited over 300 guests from the Indian community to Parramatta’s Novotel in early November, where it put on a night of celebration The night included Bollywood dancing and music, and even a guest appearance from popular singer Kamahl.

At the celebration, Westpac announced a number of

INDIAN BROKERS ARE VERY PASSIONATE ABOUT WHAT THEY DO AND ABOUT SERVICING THEIR CUSTOMERS AS WELL

initiatives that would deepen its ties and services for the Indian community across Australia.

Firstly, the bank announced that it would open its first branch in India in Mumbai, which it said would help migrants plan their move to Australia before they even get on the plane. It also announced it had introduced its first Hindi-language ATMs at four branches in Parramatta and Blacktown in Sydney, going live in November. The bank will also soon roll out Hindi loan documentation, mirroring efforts in the Chinese market.

Speranza says the Mumbai office would help build connections with aspiring migrants. “This is something that we have done successfully in WA with British immigrants – it is about helping the Indian migrants transition with the least amount of fuss,” he says.

The ATM support in Sydney is also important, says Speranza.

“It’s such a simple idea, but what a great thing it is to give services to those customers outside of banking hours,” he says.

Westpac already has 65 branches located in areas with large Indian communities, while

Broker Shallu Ku nd NSW state mana ra with Westpac ger Frank Spera nza and broker Ma dhu Chaudhari Westpac’s Diwali dancers

the bank has 1,500 Hindi speaking staff.

However, Speranza says Indian brokers are critical to deepening relationships with the community. “Indian brokers are very passionate about what they do and about servicing their customers as well. The relationship with Westpac is not just to offer mortgage leads, but to link with the first party branch network as well, and looking after all the needs of those customers,” he says.

An inspiring story Loan Market Queensland celebrated its first quarter of the financial year results by taking its top 20 brokers to the top of the iconic Story Bridge.

The group’s Queensland state manager Andrew White explained that the brokers are all “proud of being Queenslanders” as well as the results in a challenging market.

“We thought this a fitting end-of-quarter event for our top performers,” he said.

The state’s broker team grew settlement volumes over 62% on the same quarter last year.

James Higgs (Resimac BDM), Carol King, Matthew Dique, Cath Crisp, David Harry, Phil Rogers, Trevor Warburton, Ian Morgans, Andrew White, Phil Jenkins

CAUGHT ON CAMERA 29

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IN FOCUS

I

t’s been 10 years since Australian First Mortgage first invited a who’s who of the mortgage industry for the running of the Melbourne Cup, and guests this year were no less eager for a flutter. Attendees raised $4,200 for two charities with an on-site auction conducted by Yellow Brick Road’s Andrew Morello, and a few even went home richer after the race.

3.

1.

2.

4.

5.

8.

1 2 3 4 5 6 7 8 9 10

AFM founding directors Iain Forbes, Tanya White and David White AFM staff Leanne Sherwood, Karen Micallef and Michelle Bowen

6.

Mandy Sly, ING Bank with Colin Ashelford, AFM Credit Services

7.

Clint Hawthorne, AFM national head of sales

The fundraising auction gets underway Tim Brown, Vow Financial, and Iain Forbes

Dom Del Duca, Advantedge, with Fons Caminiti Bridget Sakr, Genworth, with Geoff Jacobs, ING Bank Auctioneer Andrew Morello, Yellow Brick Road

9.

10.

The running of the Melbourne Cup

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

INSIDER

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30

‘When you grow up, you should not want to be…’

P

arents, friends of parents, and even just random strangers speaking with kids of a young age love to ask the question: “What do you want to be when you grow up?”

And now Insider knows for a fact that not many children of mortgage brokers are going to be encouraged to confidently answer, “I want to be a mortgage broker”. Sad, isn’t it?

It’s not because the industry may be unattractive. After all, why shouldn’t children aspire to become the hero of an almost comic book-like scenario, where they take on the ‘evil’ banks to save struggling, downtrodden

NOT MANY CHILDREN OF MORTGAGE BROKERS WILL CONFIDENTLY SAY, ‘I WANT TO BE A MORTGAGE BROKER’

homebuyers from their greedy clutches? It will in fact be their parents – those now working in the banking and finance industry themselves – who will warn those starry-eyed youngsters to steer well clear of the industry.

New statistics in from the US show only 24% of those working in finance and banking would recommend their profession to their offspring, putting them behind even those making your early morning coffee (hospitality/ tourism), of which 25% would be happy for their children to follow in their footsteps.

The figure for banking and finance is well behind agriculture (67%), professional services (44%), IT (43%), healthcare (42%) and energy and utilities (41%).

Thankfully, banking and finance salvaged some self-respect by being significantly ahead of the retail industry (18%). Let’s hope mortgage broking doesn’t die out in a generation.

BOURIS: ‘WHY I AM THE FIFTH PILLAR OF BANKING’ 40+ IS THE NEW 20

HANKS HOODWINKED BY BROKER’S INSURANCE FRAUD Actor Tom Hanks is one of the alleged victims of a California insurance broker accused of overcharging clients hundreds of thousands of dollars for insurance premiums.

Broker Jerry B Goldman now finds himself in jail after a federal grand jury in Los Angeles indicted him on 30 October this year for fraud.

It is alleged that between 1998 and last year, Goldman overcharged Hanks, musician and guitarist for the rock band The Police Andy Summers,

and two other victims by more than $US800,000 on their insurance policies.

He sent the insurance companies the premiums and kept the overcharged amount himself, prosecutors claim.

It is alleged that when clients asked him for copies of their insurance policies, Goldman sent them altered copies that didn't disclose the true premium "in order to lull his clients into a false sense of security" and keep them from either suing him or seeking criminal prosecution.

A fifth of first homebuyers are over 40 years old, according to data on people who plan to buy their first home in the next two years.

The 2012 Mortgage Choice Future First Homebuyer Survey, which analysed 1,000 people, shows 14% will be 40–49 and 6% will be aged over 50 when they buy their first home.

That brings them a lot closer to the average broker age, according to Insider’s subjective estimates.

Recommending those 30-year loan terms just got harder.

If it turns out that Yellow Brick Road’s white label deal with Macquarie Bank does not create the nation’s much-anticipated ‘fifth pillar’ of finance and become the vanguard of resurgent competition, Insider muses there will be lessons other lenders can draw from this.

And that is, how to make out you are a new fifth pillar, when what you are actually doing is launching a standard white label product like many other brokerage firms.

Think Smartline or Mortgage Choice – both of whom have white label products and brands of their own available through their brokers.

Of course, Yellow Brick Road has come to market with an offer that will appeal to customers looking any which way for some form of competition in the banking sector.

And of course, they’ll do so with the backing of the straighttalking entrepreneur and consumer champion Mark Bouris, whose gung-ho approach to the industry (and recent advertising deal) will help him resonate with a public dissatisfied by the banks.

But competition is good, right?

Even if it is slightly exaggerated.

DIRECTORY

To advertise in Australian Broker call Simon Kerslake on 02 8437 4786 brokernews.com.au

AGGREGATOR / WHOLESALE BROKER

Choice Aggregation Services www.choiceaggregationservices.com.au 1300 135 389 Page 32 PLAN Australia 1300 787 814 www.planaustralia.com.au Page 5

FINANCE

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

LENDER

Liberty Financial 131 133 www.liberty.com.au Page 3 & 19 MKM Capital 1300 762 151 www.mkmcapital.com.au Page 6 National Australia Bank www.nabbroker.com.au Page 7

31

NCF Financial Services Pty Ltd. 1300 550 707 www.ncf1.com.au Page 8

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

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

Rapid Capital 07 5562 2485 www.rapidcapital.com.au Page 10

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

TECHNOLOGY PROVIDER

REAL ESTATE

Stargate Group 1300 723 613 www.stargategroup.com.au Page 15

Look Property Group Residential Project Sales & Marketing 03 9827 8288 www.lookpropertygroup.com.au Page 31

WHOLESALE

SHORT TERM LENDER

RP Data 1300 734 318 Page 25

Interim Finance 02 9982 2222 www.interimfinance.com.au Page 2 Mango Credit 02 9555 7073 www.mangocredit.com.au Page 1

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

OTHER SERVICES

Trailerhomes 0417 392 132 Page 27