Australian Broker 11.07

APRIL 2014 ISSUE 11.07

$4.95 POST APPROVED PP255003/06906

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

+ ANALYSIS TALK-FEST OR TRANSFORMATION? What will the Financial System Inquiry achieve?

P10

+ BUSINESS

INTELLIGENCE

CUTTING THROUGH YOUR EXCUSES How to tackle the tasks you hate P12

+ ANALYSIS CLAWBACKS CALLED ON CARPET Brokers have taken aim at lender clawbacks P18

Kim Cannon:

HARD AT WORK Firstmac’s founder says the veteran company is still evolving, and argues brokers have to do the same

F

irstmac founder and managing director Kim Cannon isn’t one to rest on his laurels. After 30 years in the finance industry, Cannon has indicated he’s still pushing Firstmac forward. He argues that brokers must do the same as the economic climate and consumer preferences continue to change and evolve.

FULL STORY PAGE 16

+ FORUM BASHED BROKER BACKLASH

Brokers respond to a pundit who predicted their demise P27

+ PEOPLE FROM BACKPACKER TO BROKER Daniel Jansen came for a holiday but built a career P28

NEWS 2

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NUMBER CRUNCHING

MAJOR MARKET SHARE

HOW HOUSING IS SHAPING UP

A look at major vs non-major market share

Some highlights from the year to March 2014 BEST PERFORMING CAPITAL CITY:

31.6%

31.8% Refinance

First home buyers

68.2%

68.4%

23.2%

FAST FACT

US $885m The amount paid out by international banking giant Credit Suisse to settle a US government lawsuit over its mortgage backed security sales

25.4%

Investors

Total

76.8%

Source: FHFA

74.6% Major

Non-major

WEAKEST PERFORMING CAPITAL CITY:

Melbourne

Perth

+5.4 per cent

-0.6 per cent

HIGHEST RENTAL YIELDS:

LOWEST RENTAL YIELDS:

Darwin

Melbourne

houses with gross rental yield of 5.9 per cent and units at 6.2 per cent

houses with gross rental yield of 3.3 per cent and units at 4.1 per cent

MOST EXPENSIVE CITY:

MOST AFFORDABLE CITY:

Sydney

Hobart

with a median dwelling price of $630,000

with a median dwelling price of $338,000

Source: AFG

Source: RP Data

WHAT THEY SAID...

STEWART SAUNDERS

“For us the commission campaign is a way for us to get into the consideration set for brokers” P4

GREG MEDCRAFT

“It is frustrating – both for us and the public – when the penalty available to respond to misconduct is much less than the profit someone made in the process” P6

TIM BROWN

“[Clawback policy is] not as clear cut as people say it is and there’s always room for negotiation” P19

MARTIN NORTH

“To get good growth we need business investment to flourish. Inflating house prices is not a substitute” P23

NEWS 4

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Non-major offers commission sweetener

EDITOR Adam Smith PUBLISHER Simon Kerslake COPY & FEATURES

■ Commission incentives seem to be popular among lenders at the

moment, and another non-major has jumped on board the trend.

ME Bank recently announced it would offer its 4,600 accredited brokers a 10bps bonus upfront commission, on top of current commissions, on all home loans settled from 1 April to 30 June.

The bonus will be paid to brokers in the monthly commission runs.

ME Bank national broker manager Stewart Saunders said the lender had decided to offer the bonus after listening to broker feedback.

“For us the commission campaign is a way for us to get into the consideration set for brokers. We understand that, when making recommendations, the brokers will put a number of banks on the table,” he said.

Saunders said he felt that the bank’s current offering – a threeyear fixed rate of 4.74% – stood out as an “attractive” product.

“We’re looking at commissions to raise the profile of that offering, and obviously look at other ways we can help support brokers.”

ME Bank pays 0.60% upfront and has a trail commission of 0.15% from the first day of the loan, so the 10 extra basis points takes the upfront to 0.70%.

The bank is following in the footsteps of other lenders who are offering bonuses as an incentive on Stewart Saunders top of commissions.

RBA keeping keen eye on home loans ■ The Reserve Bank of Australia has indicated it is

keeping a close eye on banks’ lending practices.

“Given that low interest rates and rising housing prices have the potential to encourage speculative activity in the housing market, one area that warrants particular attention is banks’ housing loan practices,” the RBA said in its March financial stability review.

While there are signs of an increase in high-LVR lending among some institutions, the aggregate share of banks’ housing loan approvals with high LVRs is around 13% and has remained fairly steady for the past two years, the RBA said.

Low-doc lending still accounted for less than 1% of loan approvals in the December quarter of 2013. In aggregate, the interest-only share of new lending has been slightly below 40% in recent quarters, following its gradual rise since 2009, RBA data shows.

DID YOU KNOW?

243,941 The number of unique residential properties advertised for sale across the country in March was recorded at 243,941 Source: RP Data

JOURNALIST Calida Smylie PRODUCTION EDITORS Roslyn Meredith, Moira Daniels ART & PRODUCTION DESIGN MANAGER Daniel Williams DESIGNER Loiza Caguiat SALES & MARKETING SALES MANAGER Simon Kerslake ACCOUNT MANAGER Rajan Khatak

FINANCE BROKER ADMITS IDENTITY THEFT

MARKETING EXECUTIVE Alex Carr TRAFFIC MANAGER Abby Cayanan CORPORATE

■ A young former finance broker

has admitted to stealing the identities of former clients so she could buy two cars, sell them to acquaintances and keep the cash from the sale.

Riyanka Puteri Shiraz, of Canterbury, NSW, appeared before Sydney’s Downing Centre Local Court in March and pleaded guilty to two fraud charges.

She faces a maximum penalty of 10 years’ imprisonment for each charge.

The fraud occurred between December 2011 and October 2012 when Shiraz worked as a business manager with finance broker We R Finance, said ASIC. The business placed its staff in motor dealerships to help the dealers’ customers get finance to buy cars.

An ASIC investigation found that Shiraz, 22, used tax, employment and income documents and personal details of two former clients to create false loan applications in their names, without the clients’ knowledge or consent.

The applications were submitted to a lender, which approved the loans, and Shiraz used the money to buy the cars, ASIC said.

CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Adam Smith tel: +61 2 8437 4792 adam.smith@keymedia.com.au Advertising sales Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Subscriptions tel: +61 2 8437 4731 fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Auckland, Toronto, Denver, Manila 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 Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008.

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

NEWS

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6

CBRE announces new regional head

WORLD NEWS UNITED STATES OF AMERICA

■ International real estate and mortgage company

22,000 MORTGAGE JOBS GET THE AXE

If you thought things were bad in the Australian mortgage industry, spare a thought for your counterparts in the US. Twenty-two thousand mortgage employees were fired in the fourth quarter of 2013, the most in six years, according to a Los Angeles Times report.

There were 3,000 new jobs added in the industry during the quarter, resulting in a net loss of 19,000 jobs, the Times reported. California saw the biggest losses, with nearly 3,000 more firings than hirings.

For all of 2013, mortgage employment was slashed by 31,931 employees – the most since 2008.

The nation’s biggest lenders were also the biggest firers last year: Wells Fargo gave more than 6,000 employees their walking papers, while Bank of America and JPMorgan Chase handed out about 4,000 pink slips apiece, the Times reported.

CANADA NEW MINISTER ZEROES IN ON MORTGAGES

New Canadian finance minister Joe Oliver has weighed in on the country’s mortgage industry, saying he’ll be keeping a watchful eye on the market.

“Our government has taken action in the past to reduce consumer indebtedness and the government’s exposure to the housing market,” Oliver told CTV News. “I will continue to monitor the market closely.”

In early March, Oliver took over from Jim Flaherty, whose zealous mortgage rule changes have greatly impacted the industry, much to the chagrin of many mortgage brokers.

Oliver stated that a major priority during his reign would be to “protect” Canadian taxpayers.

TECH PROVIDER UNVEILS BIG BROKER PLANS ■ Rubik Financial has made a multimillion-dollar software acquisition which it wants to roll out to mortgage brokers at the end of the financial year.

Rubik bought 100% of the share capital of AMEE Easy Software Solutions and AMEE IP Holdings – the owner of revenue management program Easy Dealer Software – for $2.7m before adjustments, it was announced on the ASX in March.

While Easy Dealer is currently used by financial planners, stockbrokers and life insurance advisers, the product is “malleable” and Rubik is looking to adapt it for mortgage brokers, Rubik wealth managing director Wayne Wilson said.

This interface integrates Rubik’s wealth planning software, COIN, with Stargate’s loan management tool, SymmetryCRM, used by over 2,500 Australian mortgage brokers.

The product allows financial planners using COIN and mortgage brokers using Symmetry to push client information to each other’s respective platforms.

BY THE NUMBERS

70% The percentage of businesses reporting that regulatory burdens have increased over the past 12 months, with almost a third saying they have become “much higher” Source: Australian Chamber of Commerce and Industry

CBRE has created a new role of regional managing director to head up its brokerage services in the Asia-Pacific region.

Manish Kashyap will now be responsible for leading the company’s brokerage activities across the office, industrial and retail business lines.

This will include overall leadership of CBRE’s brokerage teams in Australia and New Zealand.

Brokerage is one of the core strengths of CBRE’s market-leading professionals across the region, CBRE Asia-Pacific CEO and chairman Rob Blain said.

“We see significant opportunities to enhance our capabilities, accelerate market share gains and drive revenue growth,” he said. “Creating this new role reflects the approach we are adopting globally to complement our professionals with strong, experienced leaders, who can set strategy, promote best practices and help to secure new business.”

ASIC wants harsher penalties ■ You wouldn’t know it from the watchdog’s recent rash of bannings,

but ASIC believes it needs to toughen up. Chairman Greg Medcraft has claimed ASIC’s trifling penalties do not do enough to deter white-collar fraudsters from breaking the law.

In his opening address at this year’s ASIC annual forum, Medcraft highlighted the need to “inject fear” into would-be criminals.

“It is frustrating – both for us and the public – when the penalty available to respond to misconduct is much less than the profit someone made in the process. If this is so, unscrupulous players in the market may quite rationally decide to make the trade by looking at the risk versus reward – and, in doing so, break the law,” he said.

Medcraft acknowledged frustration surrounding some of ASIC’s penalties, which were found to be significantly lower than those overseas in a recent senate inquiry into the commission’s performance.

“On setting penalties, behavioural insights need to be considered in what motivates people to break the law,” Medcraft said. “Often this is the fear versus greed equation. We need penalties that incentivise the right behaviour.”

Unscrupulous players in the market may quite rationally decide to make the trade by looking at the risk against the reward, and only tough penalties will have a powerful deterrent effect, he said.

“We’ve got to have penalties that inject fear and overcome the urge some may experience Greg Medcraft to break the law when driven by greed.”

NEWS

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8

ACCC could lend clout to MFAA rules

YBR on the acquisition path ■ Yellow Brick Road has unveiled major expansion plans

to shareholders, including its discussions to take over three mortgage-related companies.

The unnamed companies are a consumer product comparison website and lead generation group, a mortgage aggregator and a mortgage manager.

YBR told investors in a briefing that the value of its mortgage book would jump from $2.2bn to more than $20bn if the deals proceeded.

YBR is currently in “exclusive discussions” with the three companies, executive chairman Mark Bouris said.

“We have started this calendar year in earnest and have currently executed three confidentiality and exclusivity agreements to acquire accretive businesses in the financial services sector.

“These are currently subject to due diligence investigations and, whilst there is no guarantee that these acquisitions will be completed, there are strong strategic imperatives behind them for our group.”

The company also divulged an organisational restructure, stressed it is on track to be profitable by next year, and unveiled plans to grow to 300 branches.

Bouris said YBR Group wanted to be a leader in the non-bank segment, and to help do this it would form a listed non-bank holdings company which would own the Yellow Brick Road Wealth Management business.

Mark Bouris

INVESTORS DOMINATING Investors accounted for nearly two in five mortgages processed by AFG in March, the highest proportion since the aggregator began tracking in 2007

37.1%

12.9%

35.7%

14.3%

10.7%

33.9%

15.8%

MARCH 2013

39.6% MARCH 2014 INVESTORS

FIRST HOME BUYERS

REFINANCERS

OTHER Source: AFG

■ The ACCC has issued a draft determination

FAST FACT

83% The amount YBR’s branch network saw its revenue increase by in the first six months of the 2014 financial year Source: YBR

proposing to grant authorisation for five years to MFAA’s disciplinary rules, including the constitution and code of practice that outlines the requirements and professional standards expected of members.

Since the ACCC last authorised the disciplinary rules in 2009, the National Consumer Credit Protection Act started in 2010.

“The MFAA’s membership requirements impose higher educational and professional standards on its members than required under the NCCPA,” ACCC deputy chair Delia Rickard said.

Authorising the rules would help MFAA enforce the standards and would likely improve consumer confidence and protection in the mortgage and broking industries, the ACCC said.

The MFAA welcomed the draft determination of the disciplinary regime, which outlines the process for investigating complaints, expulsion of members and hearing appeals against refused applications for membership or accreditation.

ASIC accepts enforceable undertaking after unlicensed lending ■ ASIC has accepted an enforceable undertaking from a company it

found to be engaged in unlicensed credit activity.

The regulator has announced that it accepted an enforceable undertaking from Franchelen Pty Ltd for providing loans before being licensed to do so. The company has since applied for and obtained a credit licence.

The company, created by Kawana Island Properties to allow buyers of its Ocean Reach development to complete their contracts, provided loans totalling $7m to 49 purchasers.

The enforceable undertaking requires the company to limit its engagement in credit activity to the management and finalisation of the 49 loans it provided, cap interest payable on those loans at the rate last negotiated with the individual borrower, and engage an independent consultant to review the company’s compliance with credit legislation and any credit licence conditions.

ANALYSIS 10

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Financial System Inquiry: Transformation or talk-fest?

A new inquiry is meant to take a hard look at the Australian financial system’s competitive landscape. Will it make a difference?

W

hen the Coalition campaigned ahead of the 2013 election, one of its promises was to institute a “Son of Wallis” style inquiry that would delve deep into the financial services sector. The now-government has followed through, and the first round of submissions to the Financial System Inquiry recently closed.

The previous Senate banking inquiry which played out in 2011 saw a suggestion to reverse the ban on exit fees, but nothing came to fruition. With a new inquiry gearing up, will all the talk, political posturing and lobbying yield anything for brokers? The MFAA is hoping it will.

AN MFAA LOOK AT LENDING

The MFAA recently released its submission to the inquiry, and much of it echoes points the association has been pushing for several years. The submission laments the erosion of competition and the dominance of the big banks, argues that first homebuyers are being locked out by a lack of lending competition and innovative products, and claims that 2010’s ban on exit fees hamstrung smaller lenders.

“It has been argued by some that competition in the lending sector does not need to be characterised by a large number of lenders and that competition can be effective even if there are only a small number of (large) participants. That might be valid if those participants in the market were providing a wide range of choice of different lending products and interest rates. But, because in the Australian lending market four institutions command 80% of the market (roughly equally divided amongst the four), there is no competitive ‘blowtorch’ which forces them to innovate and differentiate,” the group’s submission states.

The submission concedes that the last few years have seen “sporadic” competition between the majors for deposits and on some lending products, but says that this is inadequate. What is needed, the submission argues, is “systemic or ‘game-changer’ innovations”.

“Meaningful competition which produces innovation and differentiation only occurs when survival is at stake – which was the driver of non-bank lenders when they entered, and

WHAT THE INQUIRY WANTS TO ACHIEVE The Financial System Inquiry aims to “refresh the philosophy, principles and objectives underpinning the development of a wellfunctioning financial system”. It will examine: • balancing competition, innovation, efficiency, stability and consumer protection; • how financial risk is allocated and systemic risk is managed; • assessing the effectiveness and need for financial regulation, including its impact on costs, flexibility, innovation, industry and among users; • the role of Government; and • the role, objectives, funding and performance of financial regulators including an international comparison.

Source: fsi.gov.au

MFAA OVERVIEW The MFAA’s submission argues that the competitive landscape is skewed heavily in favour of larger players. The key points of the submission are: • Competition in the lending sector needs to be enhanced by a strong securitisation market to enable a vibrant and innovative non-bank and small lender sector • Regulation of the sector must either be competition enhancing or, at least, competitively neutral in its impact on the various players in the lending market

Source: MFAA

ANALYSIS 11

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disrupted, the industry, to the benefit of consumers, in the mid-90s. Such innovations as phone banking, internet banking, low-doc lending in its original form (which subsequently was abused), redraw products and deferred establishment fees emanated from this period.”

The answer? As any who’ve paid close attention to the MFAA in recent years could no doubt predict, the group calls for a change to the securitisation market.

CEO Phil Naylor cited Canada as an example where a strong securitisation market has driven competition amongst lenders, in particular smaller lenders.

The submission said all banks in Canada, including their Big Five, hold 75% of the market compared to Australia’s 94%.

Credit unions in Canada hold 15%, while in Australia it is just under 5%. And other lenders, such as non-bank lenders, hold 10% of Canada’s market, while in Australia their market share is less than 2%.

“A simple glance at this comparison indicates there is a much more competitive dynamic

SMALLER LENDERS HAVE THEIR SAY Bendigo and Adelaide Bank, BOQ, ME Bank and Suncorp Bank made a submission to the inquiry, pointing to “competitive irregularities” which have provided a significant advantage to larger banks. The submission considers the competitive irregularities to include: • The significant disparity between the application of risk weightings under the standard and advanced prudential capital adequacy framework • The increased access to funding and the cost advantage available to banks deemed systemically important • The higher cost for regional banks, in relative terms, of the constant flow of new regulatory and prudential requirements

Source: Pegasus Economics

at work in Canada,” MFAA said.

This is the Canadian Mortgage-Backed Securities program, guaranteed by the Canadian federal government.

“This program produces about 30% of all mortgage funding in Canada. So that while Australia relies on the volatile global markets for around 35%+ of its mortgage funding, Canada is able to access a much less expensive and certain funding source.”

STUMPING FOR BROKERS

The group also took aim at the regulatory environment in its submission. While the MFAA said it was one of the strongest proponents of NCCP, it claims the regulatory framework has become too cumbersome.

“The resultant Act and regulations, plus various ASIC Regulatory Guides, have produced hundreds of pages of details which effectively seek to micro manage each business in the credit sector.”

The MFAA said aspects of the regulation create cost and time pressures for brokers’ businesses.

Specifically, the association has

taken aim at the requirement to produce a Credit Guide, Credit Quote and Credit Proposal for consumers.

“Prior to the NCCP, state regulation combined the information in all three in a single Finance Broking Contract which worked well,” the group’s submission said.

Also under fire is the requirement for brokers to conduct a preliminary assessment of potential borrowers before recommending finance. The MFAA argued that lenders already carry out their own assessment, and that brokers do not have access to much of the information available to lenders.

“In the above cases, the regulations referred to demonstrate no benefit to the consumer and simply add to compliance time and costs.”

In short, the MFAA has argued that the government should intervene in securitisation to blunt the disproportionate competitive advantage of the Big Four, but should take a less prescriptive approach with smaller players and brokers.

BUSINESS INTELLIGENCE 12

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Cutting through the excuses Not every job a broker has to do is fun, but confronting your excuses could see your business flourish

I

t’s a rare broker who loves every aspect of their job, but just because you don’t like something doesn’t stop it from needing to be done.

Jon Dale, director of Small Fish Business Coaching, takes a no-nonsense approach to confronting your excuses for what they are.

Often the tasks brokers enjoy doing involve dealing with their existing clients, whereas jobs such as marketing and prospecting new clients can often be postponed.

EXCUSE #1: “I DON’T HAVE TIME” “Nobody is going to shout at you if you put your marketing off until tomorrow,” says Dale.

This makes it easier for brokers to ignore these deferrable tasks under the guise of concentrating on more urgent matters.

What’s key to understand here, says Dale, is that one doesn’t exclude the other. “People waste a lot of time, and the reality is you can fit it in.

Doing some sales and marketing doesn’t really mean that all of your customers are going to have a shit time forever from now on.”

Do the urgent tasks, but schedule in time for the things you don’t like, eg ‘From 10am to 12pm tomorrow I will call X number of prospective clients’.

“What happens then is they realise it’s not true that they stop doing all the other stuff. Things carry on as before, but the change they’re looking for also comes.”

EXCUSE #2: “I ALREADY TRIED THAT” So maybe you have tried tackling these tasks before, and maybe things didn’t work out so well.

“So many people have been damaged by an experience they’ve had,” says Dale. “Maybe they’ve taken out an ad and spent their $300 and not got any calls, so they think ads don’t work. In reality, that ad didn’t work, but it’s not quite the same thing.”

This kind of resistance often comes out of embarrassment over past errors, and this only serves to add to the fear of what can be a daunting task.

Dale says it’s important to understand that most things in business involve a process of trial and error – some with more errors than others.

EXCUSE #3: “NOBODY ELSE CAN DO IT AS WELL AS I CAN” If you really, really don’t want to do something, and you have the resources to do so, outsourcing or delegating to someone else is a great option, says Dale.

WE ALL THINK WE HAVE TO DO EVERYTHING, BUT YOU CAN GET SOMEONE ELSE TO DO IT IF YOU WANT – J ON DALE “We all think we have to do everything but you can get someone else to do it if you want. It costs money, so everything is a trade-off, but for example I don’t like admin or bookwork so I pay someone else to do it.

“Getting someone else to do something that you do really well doesn’t mean that it’s going to be crap forever and everyone is going to hate you and your service is going to drop,” says Dale.

EXCUSE #4: “I DON’T KNOW WHAT YOU’RE TALKING ABOUT” When there’s nobody around to call you up on it, denial can be a little too easy, says Dale. “[Business owners] usually understand when I point it out, they know they’ve been hiding from it or ignoring it or pretending they’ve got better things to do.

“If I say to someone ‘How many times today has your business asked someone to consider what you do?’ and they reply ‘None’, it’s a bit hard to hide from that.”

If you’re in a situation where you really are the only one that can tackle a task, and outsourcing isn’t an option, it’s time to take a reality check, says Dale.

Break the tasks up into achievable chunks, and then find someone to hold you accountable for completing them – whether that be a business coach, a sales manager, another broker or a partner.

“Look at the activity and not the end result.

Rather than try and persuade yourself you need to turn into a sales and marketing demon and be amazing at it, do something like make two calls a day. When you do that and you get a few coffee meetings and people are generally supportive and nice, you continue to expand your circle and suddenly calling two strangers a day is a habit – and business comes out of it.”

It’s not always easy to hear, says Dale, but sometimes you need to face some hard truths as a business owner.

“If it was easy everybody would be doing it. You can either do it or get a job for an organisation where somebody else does all the hard bits. If you want to work for yourself you’re going to have to spend at least some time doing the things you don’t like – suck it up and get on with it.”

BEST PRACTICE 14

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Forget the GOLDEN RULE Motivational coach Roger Ellerton makes his case for why treating others as you want to be treated could be missing their needs

A

s a mortgage broker, you are constantly influencing others to accept you, your ideas, products or services. Many people have difficulty with influencing others because they tend to use the same strategies and emphasise the same needs and values on other people that they would like other people to use with them. Or they take the “spray and pray” approach, hoping their client will find something useful in the information provided.

Each of us has different needs and different strategies for buying. If we didn’t then there would be only one type of mortgage with one rate. To be truly effective at influencing others, you need to view the situation from their perspective. That is, determine what is important to them and how they like to purchase.

I am not a mortgage broker and from my perspective, with my limited knowledge of your profession, all mortgage brokers have access to mortgages with various terms and rates. So it is really up to you to provide the difference that makes the difference. Help me feel good about the process and allow me to buy the mortgage that I need rather than have you sell me a mortgage. How you interact with a potential client will have a significant impact on your success rate in closing mortgage deals and obtaining motivated referrals.

DETERMINE YOUR CLIENT’S NEEDS AND VALUES Far too often, we think it’s the product or

service that people want to buy. In reality, however, people buy the benefit that the product or service provides. If you are not certain of what is important to your client, you will not be able to present your products or services clearly.

HAVING AN UNDERSTANDING OF YOUR CLIENT’S NEEDS AND VALUES CAN: Shorten the whole influence process Provide a better understanding of how to present your offering Lead to a better agreement for both parties – may give you an opportunity to suggest something the other person forgot, did not think was possible or was out of their awareness Create a firmer foundation on which to conclude this and future interactions positively

So how do you become the difference that makes the difference? Begin by asking questions. Listen for what is important to your client and how they express what is important to them. As you know, some clients come to you with their minds already made up as to the best mortgage for them – having obtained “expert” advice from their friends or an internet search. For example, your client may start by saying they would like a fixed-rate mortgage. Rather than telling them why their choice is not a good idea given the current financial climate or simply offering the best available rate, acknowledge their choice and explore the reason behind it.

Once you have clearly identified the underlying need or value, you can raise the possibility that this need could be addressed in ways that provide additional benefits.

Even if a client comes in looking for the lowest possible interest rate, there is a need or value behind their decision that may be better addressed in a different manner.

For some people, you may have to ask lots of questions. For others, you may have to interrupt politely to ask questions to get them back on track.

A client’s needs and values can be intangible such as respect or tangible such as a monthly payment that is within their budget. Having an understanding of your client’s specific needs and values will provide clarity on what truly is important to them and will help you recognise where you can compromise, suggest trade-offs or hold firm.

Although not comprehensive, I have found that specifying your client’s most important needs and values in terms of the acronym RIGHTS can stimulate your thought processes, encourage you to take a more concerted look at their needs and values and help you remember what is important for your client.

To begin, take a moment and for your typical client determine their RIGHTS. If you have more than one typical client, e.g. commercial vs residential mortgages, do this exercise for each typical client. That is, identify at least one need or value that corresponds to each of the letters in RIGHTS. To get the most out of this exercise, you may wish to act as if you are a typical client and imagine you are talking to a mortgage broker. Having the RIGHTS specified for a typical client is a good starting point. As you meet each, customise this list to focus on their specific needs. For each subsequent meeting, use this list to refresh your memory about this client and modify as you get new information.

The more RIGHTS you satisfy, through the way you interact with your client and the mortgage package you arrange, increases your closing success rate and provides more motivated referrals.

SUGGESTIONS FOR ASCERTAINING CLIENTS’ NEEDS

R

REPUTATION, (minimise their) risk, reduce (costs), RESPECT (their view point – you don’t have to agree with them, just respect they have a different perspective), RESPONSIVE (to their needs).

I

INFORMATION (on rates or how to better handle their financial resources), INVESTMENT (alternatives). (low) INTEREST

G

GUARANTEE (interest rate for a specific period of time), GREEN (environmental, e.g. electronic rather than paper documents).

H

HEALTH (reduced stress), HELPFUL (broker), (feels respected and) HEARD.

T

(convenient meeting) TIME, TIME (to closing, amortisation), TIMELY (response to requests).

S

SAFETY (affordable monthly payments), SAVE (money), SATISFACTION (with process and results).

THE COALFACE 15

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Former travel consultant flying higher as a broker International flight consultant turned mortgage broker Nichelle Borg says being a mobile broker helps her connect with clients

A

n international flight consultant turned mortgage broker has picked up a new all-encompassing role, dislikes the accompanying paperwork and loves exploring the outdoors on four-wheeled drive adventures.

Australian Property Finance’s newest finance broker, Nichelle Borg, decided a decade ago she’d had enough of working in the travel industry and thought she would try her hand at mortgage broking.

Borg, who lives in Brisbane but grew up in Armidale, NSW, started out as a mobile broker before moving into loan processing and becoming a credit and broker assistant with an aggregator. This led her back to her “initial love” of being a broker and working with clients to achieve a happy outcome.

On the first day of March, Borg joined APF – whose aggregator is Vow Financial – where she provides an assortment of services which help her clients manage their financial situation, including facilitating home loans, clearing up existing debts and sorting out personal finance.

Through a joint venture with Vow and real estate agency RE/MAX Australia, finance brokers with APF work with real estate agents to write a wide range of financial services for home buyers.

Borg said this partnership makes a difference compared to jobs she has done previously, as it allows her to get clients through real estate agents whilst being able to source her own referral business externally too.

Being a mobile agent, Borg’s office is technically from her home, but she sees clients and business partners where it’s best for them. “A lot of the time this is in their home at a time that is convenient to them,” she says.

[LENDERS] KEEP TELLING US THEY’RE PAPERLESS, BUT WE STILL HAVE TO GET IT TO MEET COMPLIANCE REQUIREMENTS While Borg enjoys broking, there are always going to be parts of a job to loathe. In this broker’s case it is excessive paperwork. “[Lenders] keep telling us they’re paperless, but we still have to get it to meet compliance requirements,” she explains.

She believes the big issue which brokers should be focusing on is balancing credit reporting reforms with how this affects the funding environment – “and how we as brokers can better service the client with this information at hand”.

Borg, who is “happily married” with two dogs and a cat – which she describes as “our children” – enjoys spending time with her husband and going on 4WD adventures with friends whenever possible outside work.

NEWS 16

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CONTINUED FROM PAGE 1

Kim Cannon: HARD AT WORK Firstmac’s founder says the veteran company is still evolving, and argues brokers have to do the same

O

ne of Cannon’s biggest focuses is competition. As a non-bank lender, Cannon said Firstmac is positioned well to provide alternatives to the majors. But Cannon argued that, due to the regulatory environment, non-banks often start on the back foot.

A big reason for this, Cannon said, is the bank obsession with “owning the customer”.

“I hear the banking industry talk about cross-sell and owning the customer. That’s just crap. I hear of brokers saying it’s their customer. What I’ve learned over the years is you don’t own the customer unless you own the account where their pay goes,” he said.

For the most part, this puts non-bank lenders at a significant disadvantage.

“If I’m putting them into a home loan with an offset account with Firstmac, that’s a different ballgame and I own the customer. But if I’ve just got the home loan and the account their pay goes into is with Westpac or ANZ or the like, they still own the customer,” Cannon said.

With this in mind, Cannon said it behoves non-banks to evolve their offering. But, once again, the regulatory environment can stand in the way. Cannon said the barriers to evolving to take on banks on a more even footing are often onerous.

“If you look back in history, the likes of Firstmac have tried to get hold of a banking licence over the years, and haven’t had too much success with that. Firstly, that’s because of trying to

partner with some of the entities out there that are just lost in time. Another major issue is that the most any private individual can own in a bank is 15%. It makes it difficult to come on as a shareholder somewhere and then be able to make a difference,” he said.

But Cannon indicated that Firstmac was far from giving up.

With the upcoming Financial System Inquiry, he said the lender would again make its case to the government for broadening the competitive landscape.

“We’re going to submit to the [Financial System Inquiry] that bank ownership should be loosened up a bit and allow people like us to come in. I want to do what we did to home loans 20 years ago and provide competition to the banks out there. I want to pay people an honest day’s interest for their money rather than pay them nothing and charge them exorbitant fees.”

SPRINTING AHEAD

In spite of the regulatory barriers, Cannon said Firstmac would forge ahead in its goal to offer a broader suite of products to customers. A new partnership could help the lender achieve this goal, he said.

“We’ve now acquired a large 15% shareholding in a small ADI in Kalgoorlie called Goldfields Money. It’s a listed entity that does banking, and we’re working with them at the moment backwards and forwards to provide us with full banking products. That gives us the ability to go after that customer and own the customer,” Cannon said.

NEWS 17

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YOU CAN DO REALLY WELL IN THE MARKETPLACE BUT YOU HAVE TO KEEP WORKING AT YOUR BUSINESS TO DO WELL

DID YOU KNOW? In 2012, Firstmac signed a three-year sponsorship deal with the Brisbane Broncos. Cannon has said the deal significantly increases the lender’s visibility in the marketplace.

This partnership could open up new avenues for Firstmac, he said.

“It’s going to open up a lot of things. The customer’s money is still safe on deposit with the bank. We don’t need the money to fund home loans, because we do that through securitisation.

It’s about getting that second and third product to the customer.”

In addition to the partnership with Goldfields Money, Cannon said Firstmac was also expanding its lending suite.

“We’re also starting up an asset finance business with equipment finance, car finance and that sort of thing,” he said.

These developments mean a more holistic approach to the market, Cannon has suggested.

“Suddenly we’ve got a mix and match of all the market and what we can do.”

WORKING THE BUSINESS

Cannon argued that the new developments are indicative of Firstmac’s continuing growth and evolution as a business, from mortgage manager to securitiser and non-bank lender to eventual deposit taker. Cannon does concede, though, that mortgage management has become tougher since the GFC. While the industry used to be open to new entrants, he said he sees this changing.

“Over the years you saw brokers who wanted to expand their business, and they saw their future in becoming mortgage managers and maybe owning their customer and getting their brand out there.

You don’t see that these days, and you haven’t seen it for four or five years. I just don’t think the natural progression is there,” he said.

And for companies already operating in the mortgage management space, Cannon argued that the move to become a true non-bank is a difficult one.

“When I first started securitising in 2000, you were able to step up from being a mortgage manager to being a non-bank funder. The world has changed a lot since the GFC. That barrier to entry is so high now with the capital requirements needed to support a business like this, skin in the game and the like. You don’t see new people coming through,” he said.

In fact, Cannon said traditional mortgage managers could face tough times if their businesses don’t evolve.

“Unless you’re a mortgage manager who has a direct source of business either through online or a retail network, just being a middleman mortgage manager taking loans from brokers and

giving them somewhere else isn’t going to cut it in the future.”

But Cannon believes success in the mortgage industry is possible, he said, if companies are willing to continue working.

“I was what you call a first generation mortgage manager.

We’re probably up to the fourth or fifth generation mortgage managers. What happens, and you see it in broking as well, is you can do really well in the marketplace but you have to keep working at your business to do well.”

He argued that this is where some companies in the mortgage industry fall down. Early success can breed complacency, he said.

“The biggest failing I see is a lot of people go out and do really well for a couple of years, and then go out playing golf and going on holidays and they come back every three or four years and basically get lazy in the business and stop working in the business. I still see people from the first or second generation of mortgage managers, they go away for a number of years and then come back and the world has changed around them. If you’re going to be in this business you have to work at it and keep at it and not just come and go because you’re making money,” Cannon said.

ANALYSIS 18

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AHEAD + MARKET TALK AFFORDABILITY WOES UNDERSTATED?

An economist claims the affordability problem is bigger than we acknowledge P22

+ MARKET TALK PROPERTY GROWTH COULD TRIGGER RBA

As the housing market continues to heat up, the RBA could be forced to move P23

+ FINANCIAL SERVICES ADVISERS THREATENED

BY TECH

A study has claimed advanced computers could replace advisers P24

+ SPOTLIGHT UNTAPPED OPPORTUNITY

Small business owners could present a new market P26

+ INSIDER WOLF OF WALL STREET’S SECOND ACT

The face of Wall Street excess is trying to make amends P30

CLAWBACK CONTROVERSY The debate around clawbacks has reignited. We take a look at differing perspectives on the practice

ANALYSIS 19

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“C

lawbacks” may have nine letters, but it’s a four-letter word to brokers. The practice of lenders taking back upfront commission when a broker-introduced client refinances with another lender has brokers up in arms. Australian Broker has explored the issue of clawbacks from a variety of perspectives. Here’s the industry’s – and your – view on the practice.

THE ASSOCIATION VIEW

MFAA chief executive Phil Naylor said the association has done a lot of work on the longstanding issue in the past.

“All aggregator groups were surveyed in 2011 to identify the incidence of clawback – their response was that it is minimal,” he said.

In 2012 MFAA issued a statement to members on its position on clawbacks, and this position has not changed. “…the view of the MFAA National Brokers Committee is that clawback issues should be resolved between the aggregator/ broker group, on behalf of the broker, and the individual lender.

The issue of clawback should not be one in which MFAA involves itself unless there is evidence of MARK HEWITT systemic unfairness by a particular lender as to the implementation of its claw back policy,” it said.

FBAA chief executive Peter White said clawbacks are only appropriate when churning is taking place, otherwise the lenders are punishing the broker for circumstances outside their control.

It is important brokers stand up for their rights and make a noise about unfair clawbacks, he said.

“You’ve done a certain job, you’ve been paid for that job – why should your money be taken away 12 months down the track? It’s not the broker’s fault if they decide to refinance with someone else.”

However, FBAA cannot do anything apart from talk publically about unfair clawbacks as it is a commercial agreement where associations have no legal standing to act, White said.

“People power – that’s what it needs. Brokers should publically speak up about it. And your biggest power is just to take your loans elsewhere.”

day you’ve also got to see it from their perspective.

They’ve had to fork out money for a client but then the client hasn’t stayed with them, and so they’re entitled to get their money back.”

Brown said when clawback happens after 12 months this is unfair and gets “distorted” by the lender, which is when Vow is happy to step in.

“Some clawbacks are very harsh and clawback the whole amount, which I think is wrong. But if the lender is only clawing back their loss, that is fairer… It’s difficult to find a happy ground for everyone, as everyone’s got a reasonable excuse.”

Boutique aggregator Outsource Financial CEO Tanya Sale does not believe the clawback system will change anytime soon, because third party distribution arms have to be profitable.

“I think it works and it’s totally transparent. The lenders put the clawback period into the agreement; the aggregators usually provide strong communication within their commission schedule about the clawback schedule. It’s not a hidden agenda; it’s there in black and white.”

While Sale said clawbacks should be restricted to 18 months and to unique and unusual situations out of the control of the broker, she disagrees most circumstances are outside the broker’s control.

Unlike Vow, Outsource Financial rarely gets complaints from its brokers about clawbacks – Sale said the last time her company had to step in to help was two-and-a-half years ago.

I think it is working, I really do. If I have to say anything strongly, it is that it is transparent – everyone knows what page we’re playing on.”

AFG general manager of sales and operations Mark Hewitt said clawbacks remained an issue, but were one aspect of the overview of broker remuneration.

“We view it as part of the whole remuneration package with lenders, and the general trend for the whole remuneration package over the last couple of years has been upward,” he said.

But Hewitt said the aggregator continued to advocate on behalf of its members in regard to clawback policies.

“We will continue to talk to lenders about our concerns around clawbacks,” he said.

WE WILL CONTINUE TO TALK TO LENDERS ABOUT OUR CONCERNS AROUND CLAWBACKS -

THE AGGREGATOR VIEW

Vow Financial CEO Tim Brown said if a client pays out before lenders have covered their costs, then the lender “has every right to clawback”, although whether they have the right to clawback the whole amount or just the amount lost is topical.

“It’s not unreasonable for them to clawback but I think they should only be clawing back for the loss of the client. We’ve found that when we’ve talked to lenders in those situations, the majority will reason here and they will rebate and cut it back to a reasonable amount. It’s not as clear cut as people say it is and there’s always room for negotiation.”

Vow regularly gets complaints from brokers who feel their commission has unfairly been taken back, and if the broker has a good case the aggregator will negotiate with the lender.

“There is an opportunity to reason with the lender, no doubt about that, but at the end of the

THE REGULATOR VIEW

Regulators have tended to remain tight-lipped on the subject of clawbacks. When contacted by Australian Broker, an ASIC spokesman referred to a 2012 ASIC report, as the regulator’s position on clawbacks has not changed.

In the report, ASIC looked at factors which could increase the likelihood of a bank’s early termination fee – prohibited after 1 July 2011 – being declared ‘unconscionable’.

These included fees that did not reduce over time, were calculated by reference to the loan amount and, crucially, did not account for clawbacks of broker commissions due to the termination of the loan.

Interestingly, the report found less than 1% of consumers who were charged an early termination fee made a complaint.

YOUR SAY Brokers were incredibly vocal on the issue of clawbacks on the Australian Broker Online forums.

Here’s what you had to say …

“In 8 yrs of broking I have had 2 clawbacks. I work hard to get my client the “Best” loan for them and that makes them stay. Both clawbacks, I made another upfront elsewhere because the clients came back to me when their circumstances changed.” – TonyM “Surely there isn’t a single broker out there that thinks clawbacks are fair and just... and I agree, they should only be applied in the case of proven churning. If a client sells or refinances due to the circumstances beyond the broker’s control, there is absolutely no fairness at all.”

– Brado “Are the branches hit with clawbacks if a branch written loan is refinanced away?

If not then why are brokers penalised?” – GC “The answer is simple: have a clause in your broker contract that states if the client discharges the loan within the time frame of clawback, with the lender you have placed them with, that you will pass the clawback amount onto the client as a fee. Tell the client up-front before they sign the broker contract of the clause and its implications and then have them sign it.” – Ian “I had a clawback last year because the client had an accident and got a payout, and a clawback yesterday due to a forced sale after a death. Why is it I have to wear it?”

– Not happy

ANALYSIS 20

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INDUSTRY BODIES AND GOVERNMENT REGULATORY BODIES SHOULD BE SHAMING THE LENDERS. THEY EITHER DON’T UNDERSTAND OR DON’T CARE - M ARIA RIGONI PETER WHITE

Clawbacks are allowed to happen under the Australian Competition and Consumer Act 2010, regulated by the Australian Competition and Consumer Commission.

The ACCC website says: “Unconscionable conduct is generally understood to mean conduct which is so harsh that it goes against good conscience.

Under the Australian Consumer Law, businesses must not engage in unconscionable conduct, when dealing with other businesses or their customers.”

THE LEGAL VIEW

Gadens Lawyers partner Jon Denovan said to brokers wishing clawbacks would go away to “do the math” as it is not going to happen.

Instead, the solution which would benefit lenders and brokers is for the government to bring back client exit fees, he said.

“Everyone agrees they shouldn’t have banned exit fees. The reason the banks have clawback is there’s no exit fees. No one would need to ‘bash up’ anyone else if there were exit fees.”

Borrowers switching banks every two years each time they find a better deal is not fair, he said.

“It’s so inefficient for our economy – it’s ridiculous and doesn’t happen anywhere else in the world.”

Some brokers on the Australian Broker Online forums suggested ditching aggregators and entering into direct contractual relationships with lenders as a way to negotiate clawback policies. But Denovan does not believe this will work because very few banks want to deal directly with brokers.

“There are 11,000 brokers in Australia, and most of them are accredited with the four majors, and do you think the four majors are going to look after 11,000 people? They would find that all too hard,” he said.

Brokers who do not want to deal with aggregators are missing the point of why they are needed, said Denovan.

“If there were no aggregators, people would just go straight to the banks. The banks don’t want to be paying commission – they’d much rather everyone just logged onto their site and purchased their brands. It does not cost less to originate with a broker.”

Denovan’s message to brokers who are ‘aggregator bashing’? “Don’t bite the hand that feeds you.”

THE LENDER VIEW

Australian Broker asked 15 lenders about their position on clawbacks, why they introduced them,

MARIA RIGONI

whether they could come up with an alternative which would allow cost recovery while still acting fairly towards brokers, and whether they would consider limiting their clawbacks in future.

St.George, ING Direct, AMP, Liberty Financial, Macquarie Bank, ANZ, Pepper and Citibank all declined to comment.

Commonwealth Bank and Resimac indicated they would respond in due course. Others have not responded.

It seems clawbacks are an issue few lenders want to discuss. But there are some notable exceptions.

ME Bank broker national manager Stewart Saunders said the bank is guided by what brokers want and is “definitely open” to discussion around the structure of commissions and subsequent clawbacks.

He said when ME Bank came into the market it followed the industry status quo on clawbacks and commissions. The bank takes back 100% of broker commission in the first 12 months and 50% in the first 18 months should the client take their loan somewhere else.

Clawbacks cannot be talked about in isolation as they are intertwined with upfront and trail commission – and when the lender pays the broker upfront commission it is money not yet received from the client over the life of the mortgage, Saunders said.

“What brokers need to understand is the bank’s paying that commission prior to receiving the income from customers. It’s only fair to clawback when banks haven’t received any income.”

Currently aggregators and brokers have indicated they want an upfront and trail commission structure of income, but if there is significant kickback from the industry, lenders should think about changing this, Saunders said.

“We are definitely open to discussion around the structure of commissions. But we need to have a consolidated feeling from aggregators as to which direction to take.”

Other lenders, particularly in the non-bank sector, have touted the fact that they do not claw back broker commissions.

Future Financial general manager Troy McLachlan said his company has never introduced clawbacks for brokers and instead covers the cost themselves.

“If a reasonably small mortgage manager can offer this in the market and maintain strong profitability, I ask why other lenders in the market cannot offer no clawback or even an option [or] model in between what is currently on offer?”

YOUR SAY “Clawbacks were brought in to stop ‘churning’. I don’t know any brokers who actively seek to churn, so maybe the banks should have a softer line on this and stop just screwing us whenever they can.” – Glenn “The banks say the incidence is minimal, so therefore, there is minimal impost on them. Yet as individual brokers, the impost can be massive. Vote with your feet.”

– Michael Eberand “As frustrating as clawbacks are, the banks aren’t a charity case. Why should they pay upfronts and then have to carry the costs if a loan is repaid within 12 months?

The banks have a responsibility to look after shareholders.

Running a model that potentially exposes the bank’s business to churn and large upfronts with no recourse would be a model that is destined to fail and in the long run would only serve to create bigger issues for the broker industry.” – Melbourne Broker “I think it should be a case-by-case basis on clawbacks. I would be happy to do this extra paperwork to keep my commission if I had deserved to retain it.” – Nicole “It is manifestly unjust and would be deemed immoral for a large industry to expect unpaid workers to share the risk of what should be the cost of the lenders doing business.” – Anne

ANALYSIS 21

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STEWART SAUNDERS

La Trobe Financial is another lender that does not clawback commissions.

“Our position has always been to pay brokers a reasonable upfront fee. That is, one reflecting the true economic value of the loan based on expected loan revenue and term, to compensate the broker for work done,” La Trobe head of credit sales Craig Robertson said. “Therefore, we have no reason to impose a clawback policy.”

La Trobe Financial senior vice president and chief investment officer Paul Wells said the lender decided more than nine years ago that it would never introduce clawbacks, and that the decision has proven to be the right position. “We want to work with our brokers in partnership and in our view you can’t do that when you have your hand in their pocket and clawback,” Wells said.

THE BROKER VIEW

Regardless of where other parties stand on clawbacks, it’s ultimately the broker who wears them. Broker Maria Rigoni said she was recently hit with a clawback to the tune of $2.674 for a loan settled on 7 June last year.

The long-term client told Rigoni there had been no relationship fallout but it worked with their business plan to refinance with another lender.

TANYA SALE

Even before the issue became a personal one for Rigoni, she indicated she was passionate about the lack of equity in the broker/lender/aggregator relationship that clawbacks reveal.

“The remuneration contracts are masqueraded as payment for ‘the introduction of new business’ but are really a manipulated way of not paying for marketing and outsourced loan writing tasks.”

Part of the problem is brokers have no support to help them challenge clawbacks, Rigoni said.

“It’s not okay, but how can you protest when the people in this industry refuse to help? Industry bodies and government regulatory bodies should be shaming the lenders. They either don’t understand or don’t care.

“The banks will say it is ‘industry standard’, the MFAA and FBAA will say they ‘cannot interfere in commercial agreements’, the ACCC and ASIC will say ‘the broker willingly completes the tasks knowing clawback is part of the deal’, and Fair Work Australia does not cover sub-contractors,” she said.

Meanwhile, Rigoni said she “feels like a worn out record” every time she talks about clawbacks, and also thinks it is time for brokers to be proactive in campaigning against the practice.

“The industry needs to be made accountable for this unfair, unjust business practice.”

TIM BROWN

YOUR SAY “Where is the ‘commercial agreement’ accepting clawbacks? This clawback policy, as with earlier commission cuts, was unilaterally imposed on aggregators and brokers.

In the case of clawbacks, as surrogate exit fees when exit fees were banned by legislation” – Patrick McMenamin “I’m surprised some clever insurance policy hasn’t been developed to protect us against clawbacks.

Imagine the premium!” – Papery

MARKET TALK

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22

Affordability woes understated?

Most pundits seem to agree housing affordability is an issue, but one economist claims it’s an even bigger problem than we realise

I

t seems the issue of housing affordability in Australia is a perennial one. With a dearth of first homebuyers, getting a foothold in the housing market appears to be getting more difficult. True, interest rates have fallen, but one economist has predicted a decline in house prices is the only way affordability will truly improve.

The trouble is that’s a solution no one seems to want.

The HIA and Commonwealth Bank housing affordability index showed an easing of 0.5% in the December 2013 quarter but is 8.4% higher than December 2012 quarter record.

“Those in the housing market or who have been on its cusp and then entered in recent years have experienced a considerable improvement in affordability.

This improvement has been driven by an easing interest rate cycle which now sees borrowing costs at or near record lows,” said HIA chief economist Harley Dale.

He predicted further house price hikes throughout the year.

The recent REIA/Adelaide

Bank Housing Affordability Report also showed affordability taking a hit. The report showed the proportion of income required to meet loan repayments increased one percentage point over the December quarter of last year to 30.8%.

Both the REIA and HIA seem to agree affordability is an issue.

But economic commentator Leith van Onselen has claimed the problem is still being understated. Van Onselen said the HIA index is “dodgy”, misleading and does not stack up compared to other housing indexes.

While the index says the December median dwelling price of $470,400 has increased by 1.8% over the year and has fallen by 1.1% since December 2011, the ABS’ house price index recorded 9.5% growth over the year, and 12.3% growth since December 2011.

“HIA’s measure of house prices seems to be way off. If you read the methodology they use they base it on the median price of home loans that the banks issue,

UP AND DOWN AFFORDABILITY OVER THE PAST THREE YEARS DEC QUARTER 2011

$475,800 6.80% DEC QUARTER 2012

$461,900 5.82% DEC QUARTER 2013

$470,400 5.10% MEDIAN DWELLING PRICE

INTEREST RATE Source: HIA

but it doesn’t take into account changes in composition of homes. There are heaps of house price measures out there that give you a sample for the entire market,” van Onselen said.

“The thing that’s particularly curious about it is they’ve used a bias for the sample of house prices but when it comes to income they’ve just used the ABS income measure for the nation as a whole. So while they’ve adjusted down the house prices because the sample’s skewed, they don’t adjust the fact that the people buying that home are probably on a lower income. So it’s not a particularly good measure.”

A LOT OF ‘HOT AIR’

The REIA has called for discussion on the subject of affordability. The group recently convened a roundtable of industry leaders to talk about the subject. Chief among the symptoms of affordability issues is the drop-off in first homebuyers. Last November the proportion of first homebuyers in Australia dropped to its historically lowest point and action is needed by the government to address housing affordability, said attendees, which included Social Services Minister Kevin Andrews, REIA president Peter Bushby, MFAA CEO Phil Naylor and HIA CEO Graham Wolfe.

“As industry leaders, we acknowledge affordable housing is a complex issue, with a number of economic, social and infrastructure factors influencing the issue. These include: the deposit gap for prospective first home buyers; demographic change; the effect of stamp duties and taxes; insufficient supply of dwellings for both purchase and rental; land release and planning processes, and, importantly; a lack of urban infrastructure,” the group said in a communique from the meeting.

At the meeting, Andrews talked about the Coalition’s election policy to address housing affordability and indicated his willingness to work closely with states and territories to find a solution.

However, van Onselen said there is no such housing policy within the coalition’s 48 policies and discussion papers in their 2013 election platform.

“The federal government has absolutely no housing policy, no housing minister,” he said. “All this stuff is just window dressing and empty platitude.”

The roundtable suggested greater consumer awareness and government support of lenders’ mortgage insurance – and enhanced competition amongst lenders – would drive product innovation, especially focused on prospective first home buyers.

This would be helped by a strong securitisation market, and unlocking the potential of shared equity as an alternative form of housing finance should be considered, they said.

Taxes were also identified as one of the important factors determining housing supply and influencing housing affordability, with state-based stamp duties discouraging housing turnover.

But van Onselen said the discussion is just hot air and nothing is going to change anytime soon.

“The problem is not one of these organisations [at the roundtable] would ever support any measure that would lead to lower house prices, which is basically what you need to improve affordability. Without that, it’s pretty much a waste of time. The problem is house prices are too high, and unless they take steps to improve this fundamental issue, you’re not going to get improvement in affordability.”

MARKET TALK brokernews.com.au

23

Could rampant property price growth cause a rate hike?

The RBA has stood firm for the eighth month in a row, but surging property could trigger a move

A

nother quarter, another record-breaking price growth across most capital cities.

While this is welcome news to property owners, the unprecedented price growth across the board could trigger a rate hike earlier.

Property prices across Australia’s capital cities surged strongly during March, taking prices to a whole new level according to the latest RP DataRismark.

Melbourne led the charge with an impressive 5.4% median price growth during the first quarter of 2014. Sydney buyers pushed prices up by another 4.4% and Hobart continued its growth momentum by adding another 4.7% growth.

Perth was the only capital city to experience a negative result for the quarter, falling -0.6%, however for the month of March the city did experience growth of 0.6%.

While Melbourne recorded the strongest quarterly growth, the Sydney housing market showed the most substantial increase beyond its previous market high, according to the report.

“Sydney dwelling values are now 15.8% higher than their previous peak, substantially more than Melbourne where dwelling values are 4.7% higher than their previous peak,” RP Data research director Tim Lawless said.

“Perth and Canberra values have also risen to be 2.9% and 1.2% higher than their previous high point, respectively.”

The results are also causing experts to reinforce sentiment that the Brisbane market could be the one to watch.

With the market remaining 5.2% below its previous peak, and offering one of the best rental yields of all Australian capital cities, 5.5% for units, Ben Skilbeck, Rismark’s managing director, believes recent results have negated any idea the city may experience a downward trend.

“With Brisbane dwelling values up 2.9% for the month ended 31 March 2014, it now looks like the 2.0% fall in February was representative of natural market volatility as opposed to being indicative of a downward trend,” he said.

“TIME FOR SOME ACTION, NOT SITTING ON HANDS” – MARTIN NORTH

CHANGE IN DWELLING VALUES IN MARCH REGION

MONTH

QTR

YOY

MEDIAN DWELLING PRICE

Sydney

2.8%

4.4%

15.6%

$630,000

Melbourne

2.3%

5.4%

11.6%

$515,000

Brisbane

2.9%

1.5%

4.8%

$435,000

Adelaide

1.4%

1.2%

4.6%

$390,000

Perth

0.6%

-0.6%

4.7%

$515,000

Hobart

1.2%

4.7%

0.9%

$338,000

Darwin

3.3%

2.8%

3.8%

$547,000

Canberra

2.2%

2.0%

1.7%

$526,000

Combined capitals

2.3%

3.5%

10.6%

$510,000

Rest of state

0.9%

2.2%

4.5%

$347,500

*rest of state change in values are for houses only to end of February Source: RP Data-Rismark

“OVER THE LONG TERM, I DON’T BELIEVE SUCH A STRONG PACE OF GROWTH CAN BE SUSTAINED” – TIM LAWLESS

RBA SHOULD TAKE NOTICE

While the growth results are positive within the housing market Australia-wide, Lawless warned that the current pace of growth cannot be sustained long-term.

“Dwelling values increased by just 2.9% over the first 12 months of the cycle, however since last June, values are up by close to 13%,” Lawless said.

“Over the long term, I don’t believe such a strong pace of growth can be sustained – we expect housing market conditions to cool down as the year progresses.

“If the pace of capital gains doesn’t slow, we may see higher interest rates realised much earlier than previously expected.”

Investment activity should also be on the RBA’s radar, Lawless said.

“It’s not just the pace of capital gains that will be causing some concern to the Reserve Bank, but also the amount of investment in the housing market… the last time investment activity was so strong was just before the housing boom peaked back in 2003,” he said.

He believes the RBA board will have to raise the official cash rate in coming months.

“If value growth continues along the current trajectory I think the Reserve Bank will be forced to take action to quell the level of exuberance via higher interest rates.”

Digital Finance Analytics principal Martin North agreed, and said the RBA should pay closer attention to surging property prices, and take action.

“To get good growth we need business investment to flourish. Inflating house prices is not a substitute.

To ease the over-stoked property market we need rates up at least 1% – despite the damage to householders who took maximum mortgages out when rates were rock bottom,” he said.

“We are, as they say, between a rock and a hard place. Time for some action, not sitting on hands.”

FINANCIAL SERVICES 24

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STUDY CLAIMS ADVISERS TO BE REPLACED BY COMPUTERS

ASIC issues lifetime FAST FACT ban to businessman 85%

A

Queensland businessman has been banned for life by ASIC after an investigation found he had engaged in misleading and deceptive conduct to the tune of $555,000 in client funds.

Phillip Gregory Spark of Surfers Paradise in Queensland was a director and officer of CS Heritage Securities Limited – which is now in liquidation – from June 2008, until he filed for bankruptcy in November 2012.

Spark also acted as the solicitor for CS Heritage since its incorporation, and as an authorised representative and project manager of all of its projects until he was removed in February 2012.

The ASIC investigation revealed that the man had made statements to a client that were false and misleading to induce the acquisition of a financial product, when he knew (or should have known) them to be false or misleading.

The false statements related to CS Heritage being the trustee for the Santandar Trust, as well as providing incorrect details about the trust itself.

Spark also engaged in misleading and deceptive conduct by concocting the existence of the trust, and using a name that closely resembled the name of a trust for which CS Heritage was the trustee, being the Santander Trust.

The investigation concluded that Spark was not of good fame or character, and ASIC deputy chairman Peter Kell said this sort of behaviour would not be tolerated.

“Those who engage in misleading and deceptive conduct will be removed from the industry,” he said.

CS Heritage was the holder of an Australian financial services licence and was responsible for several entities that acted as trustees for a number of unregistered managed investment schemes by way of debt funding.

The schemes acted to fund various property developments in Melbourne’s inner suburbs.

CS Heritage reported Spark’s conduct to ASIC in February 2012 in relation to an investment of $555,000.

He now has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.

Proportion of superannuation providers who offer full financial advice.

In spite of this, 75% of consumers said they were unwilling to pay more than $250 for advice Source: ASFA

Pundits seem to love to predict that technology will edge brokers out of the market. But take heart, brokers. You’re not the only ones in the talking heads’ firing line. Personal financial advisers have a 58% chance of being replaced by a mobile robot or a “smart” computer, according to a major Oxford University study.

The study, which investigated how new technology could affect the United States job market, revealed that almost half of the work force – from taxi drivers to lawyers – is at risk of automation, Bloomberg reported.

This is mainly due to the emergence of tools that use intelligently wired mobile robots and complicated algorithms that “learn” from past examples.

Carl Benedikt Frey, co-author of the study, said it will be possible to automate occupations employing almost half of the US workforce over the next two decades.

Appropriately, he and his colleague themselves applied a computerised algorithm to estimate the impact that atomisation could have on 632 US occupations. The computer then spat out the percentage of probability that each human job could be replaced with a machine.

The study revealed that loan officers had the highest chance (98%) of being automated in the near future, while financial advisers sat at more-than-half with a 58% chance.

School teachers, physicians and surgeons had the lowest chance of being replaced at 0.4%.

“It’s a race between technology and education,” said Frey.

NAB RESTRUCTURING WEALTH ARM National Australia Bank has just announced it is merging JANA and MLC Investment Management to create a world class investment research, advisory and portfolio management business.

The move to combine the businesses aims to better utilise the broad range of investment skills across both, enhance investment outcomes and product solutions for clients, and position the business to capitalise on changing market conditions.

The announcement follows the combination of the JANA Implemented Consulting and MLC Implemented consulting teams two years ago, which at $32bn under advice, was the largest consulting team in Australia.

The asset management executive general manager at NAB, Garry Mulcahy, said the latest merger will put the bank in an “incredibly strong starting position”.

“Together, we have an extraordinary breadth and depth of investment talent that will be even more effective in helping any client achieve their investment objectives,” he said.

The new business, which will operate under the JANA name, will consist of two parts.

The first, advice and research, will provide asset consulting to both traditional and implemented consulting clients, and span asset allocation and investment strategy.

The second, portfolio management, will cover the construction and ongoing management of all multi-manager sector and diversified portfolios provided through NAB group platforms, to both retail and institutional clients.

NAB’s asset management business in total now manages over $130bn in funds for Australians.

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ONE YEAR ON 26

ONE YEAR ON What a difference a year makes … or not. Australian Broker reflects on the punditry, news and trends that made headlines 12 months ago Australian Broker Online, April 2013

Let my trail book go, brokers demand

Last year saw an industry forum convened to discuss trail book portability between aggregators. Stephen Dinte of the Independent Finance Brokers Forum brought together aggregator heads to discuss the sticky subject. Dinte argued that trail was transferable in financial planning, and that there was no reason the same couldn’t hold true for mortgage brokers.

What’s happened since?

A year has done little to quiet the debate on the issue. Outsource Financial CEO Tanya Sale argued in February that the extra cost incurred by lenders transferring trail could threaten commissions. But Connective principal Glenn Lees said the majority of lenders were happy to transfer trail, and that aggregators could negotiate with those who threw up roadblocks.

Housing affordability up, no thanks to lenders

The HIA-CBA Housing Affordability Index last year saw a jump of 18.4% from the same period a year prior. HIA senior economist Shane Garrett said the figures showed eight consecutive quarters of affordability increases. But Garrett lamented the fact that lenders had yet to pass on several RBA cuts in full.

brokernews.com.au

Small business owners could be untapped opportunity

B

rokers looking for a further chance to diversify should pay extra attention to small business owners who may not be aware their SMSF offers commercial property opportunities, says one lender.

Thinktank Commercial Lending’s Per Amundsen told Australian Broker TV that brokers’ existing client bases could contain clients open to this type of transaction.

“The type of individuals that we’ve found have been most attracted to the SMSF lending structure are self-employed individuals who have a small or medium-sized business and are either renting their premises right now and would like to take the opportunity to acquire those premises, or they’ve previously acquired those premises but they’re in a structure outside of an SMSF,” he said.

Amundsen said that SMSF structures could help such clients.

“By putting it inside an SMSF, they can take advantage of the tax benefits that accrue,” he said.

For Amundsen, the key starting point is understanding the client’s exact needs: “things such as what loan-to-value ratio is being sought, what amortisation period is going to suit their investment and retirement plans, because that’s what an SMSF is for,” he said.

“It can be as low as a 50% loan-to-value ratio, in which case the member guarantees may not be needed. [It] can range all the way up to 75% where you have a principal and interest repayment plan over 25 years.”

But Amundsen warned that in order to avoid carrying liability, brokers need to ensure they get the steps involved with SMSF lending right.

What’s happened since?

Affordability dropped in the December quarter of 2013 but was still 8.4% higher than the same period in 2012. In spite of the data, economic commentator Leith van Onselen claimed the HIA figures were misleading. Van Onselen has also criticised the fact that the Federal Government has no housing minister or housing policy, and said house prices – not just rates – would have to come down to truly impact affordability.

ALLAN SAVINS

For the full interview, head to www.brokernews.com.au/tv

FORUM 27

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Business strategist bashed for broker comments A business strategist has predicted that mortgage brokers could be made redundant by technology

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TAKE YOUR FUTURE INTO YOUR OWN HANDS

A discussion about the fairness (or lack thereof) of clawbacks saw some heated debate on the forums, but OldBroker argued that the only way the situation would change was if brokers had a direct relationship with lenders rather than relying on aggregators.

What do you think?

Leave your comments at brokernews. com.au

“The contractual relationship to the lender needs to be via the ACL. This current system and all its warts is directly attributable to the fact that the contract that we all operate under is between two self-serving entities, neither of which is representative of the professional who does all the work, and now holds the credit license. I implore brokers to do the following: First of all, get your own ACL. This is imperative. Your only power is the ACL. If your aggregator wants you as a CR, move. Number two, we need to open-up a discussion with Jon Denovan and get his view on whether the current lender/aggregator contractual relationship is now at odds with the new NCCP credit-licensing/ regulations. If he believes that the contract must be between the ACL and the lender, then the path is clear. We need to lobby the MFAA and FBAA to act correctly and start the processes necessary to change this contractual relationship, or we use legal means.”

OldBroker on 27/03/2014 10:59AM

usiness strategist and four-time bestselling author Michael McQueen recently wrote an article on news.com.au predicting mortgage advisers – along with taxi drivers, newsagents, parking inspectors and tailors – would “go the way of the milkman” and be remembered with nostalgia in years to come. Brokers had a few choice words on the subject.

GC said ASIC requirements meant that technology wouldn’t fully replace brokers.

“I think McQueen needs to go the way of the milkman. The younger generation uses the internet to do relevant research only. We are required by ASIC and law to identify the clients so we must see them in person. The banks require it and so do we.

That will never change.”

ING Direct’s Mark Woolnough said brokers were here to stay, and it was only the means they used to interact with clients that would change.

MCC agreed wholeheartedly.

“Woolnough is on the money. IP retained by brokers in relation to credit knowledge, etc., will ensure their survival. It’s just a matter of making sure communication with clients is offered through a number of options.”

22,000 US MORTGAGE JOBS LOST

Mad Steve suggested that McQueen take a look at his own profession, though we hope his prediction is wrong!

“Judging by the way newspapers are going it will be journalists that will be redundant in the future, not mortgage brokers.”

WE ARE REQUIRED

BY ASIC AND LAW TO IDENTIFY THE CLIENTS SO WE MUST SEE THEM IN PERSON. THAT WILL NEVER CHANGE EF agreed that some brokers might not make the cut, but said brokers worth their salt were here to stay.

“Transactional brokers, maybe, but not advisor/strategist type brokers. We will become more in demand. This guy needs to get a real job.”

And Mrs Skybum argued that increasingly busy clients would see broker demand rise rather than taper off.

“Some people will do it themselves, but the majority will have less in time than they do now, so would prefer to let us professionals do our job.”

A report showed that 22,000 mortgage workers in the US lost their jobs in the fourth quarter of 2014.

their income streams and their positions.

Relying totally on one product to support income is a dangerous. Surely their clients need more than mortgages throughout their life cycle.”

Jeff Mazzini on 27/03/2014 11:00AM “Perhaps diversification of their business models and offerings may have secured

Papery on 27/03/2014 11:18AM “The corporate world in America is one scary and self-serving place.”

COULD THE RBA CAP LVRS?

The RBA recently discussed whether they could use macroprudential tools to manage the housing market.

Harry Myers on 24/03/2014 10:02AM “The outcome in NZ has been less first home buyers getting into the market, an increase in rents as tenants have their options limited, a reduction in sales prices

for vendors and fall-off in activity across the board. Those low deposit buyers with enough income have just gone out and borrowed the shortfall in deposits or family have done it for them.”

James on 24/03/2014 10:11AM “Or they could reform the LMI rules.

The premiums are obscene and the percentage that is paid out is minimal.”

PEOPLE 28

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From backpacker TO BROKER

Daniel Jansen came to Australia from the Netherlands for a holiday, but stayed to build a career

A

FAST FACT Daniel Jansen spent two years as sales manager for the largest personal loan intermediary in the Netherlands, AFAB MoneyServices

fter working for several years in the financial services industry, Daniel Jansen decided it was time for a break. Jansen said he came to Australia initially as a backpacker.

“I had worked in finance for about six years already, and I wasn’t 100% sure what I wanted to do. I decided to go to Australia, and I ended up in Melbourne where I met an international student,” he said.

“It took a couple of months before I finally convinced her to go on a date with me, but once I got her I never let her go again.”

Jansen said he and his partner decided to settle in Australia. She continued with her studies, while Jansen milked cows and worked as a removalist while trying to find a job in the finance industry. But Jansen said finding a job in his field proved difficult.

“I decided I wanted to keep going in the finance world, but my Dutch qualifications didn’t really count here in Australia. I had to find an employer who was happy for me to be on a one-year visa, so no bank wanted to hire me,” Jansen said.

But Jansen said he found a financial services firm willing to take a chance on him.

“I knew I had to start at the bottom and thankfully, Full Circle Financial Group was looking for my kind of person and I decided to apply for a Financial Strategist position, while getting my paperwork done here in Australia,” he said.

So Jansen began his work at Full Circle while simultaneously getting his qualifications as a mortgage broker. In July 2012, Jansen acquired the qualifications he needed.

“Full Circle said, ‘You can start here meeting with clients, showing them how to invest, showing them how negative gearing works’. They let me work on the paperwork I needed, and once I got it all in place I started broking,” he said.

The move wasn’t Jansen’s first foray into mortgage broking, he indicated.

“I had done mortgage broking as well in the Netherlands as a financial adviser for ING. I really liked it.”

While seeking his broking

DANIEL JANSEN

I DECIDED I WANTED TO KEEP GOING IN THE FINANCE WORLD, BUT MY DUTCH QUALIFICATIONS DIDN’T REALLY COUNT HERE IN AUSTRALIA

qualifications, Jansen said he learned other important skills from his work at Full Circle.

“The first year I worked at Full Circle, I got a feel for how property investment worked and how the property market worked in Australia.”

Now that he’s obtained his broker qualifications, Jansen said he wants to continue to expand his skillset. With this in mind, he said he’s seeking further education.

“I’m about to start a Bachelor’s in economics. I’m proud that I can continue to improve myself and the level of services I can give.”

Jansen praised the team at Full Circle, and said the company stood apart from other mortgage brokerages

in the full suite of services it provided to clients.

“It’s probably the total package and high level of service we provide. We take clients by the hand and put them on the path of a 15- to 20-year strategy of how to be wealthy. We do accounting, mortgage broking, property investment, shares and managed funds. We’re aiming to give better service than the client expects.”

And as a broker, Jansen said he enjoys being part of delivering this high level of service.

“Being a mortgage broker is a very nice part of it because I can assist in helping clients create wealth for themselves, their kids and their families.”

PEOPLE 29

brokernews.com.au

The young guns: SYDNEY BROKERAGE TAKES OFF A Sydney brokerage with an average broker age of just 26 years old has hit a record in its first year

WE’VE GOT YOUNG BROKERS WHO HAVE NO PRECONCEIVED IDEAS ABOUT THE INDUSTRY AND WE CAN TEACH THEM HOW TO DO IT WELL

DID YOU KNOW?

ALEX NOCHAR

A

fledgling Sydney brokerage is crediting its team of young mortgage brokers for its record home loan applications lodged in March.

Shore Financial was established just a year ago and lodged $100m home loan applications last month, beating its previous record of $63m and well on the way to achieving the company goal of $150m by December.

Managing director Alex Nochar credits his fresh and enthusiastic team – the average age is a youthful 26 – for the company’s success.

“We’ve got young brokers who have no preconceived ideas about the industry and we can teach them how to do it well. They’re hungry, dynamic, bright, intelligent people from different backgrounds and I think it makes a difference. They’re able to generate inquiries with enthusiasm and professionalism.”

Nochar has been in the broking industry for just five years although has worked in the financial services industry for around 14 years, and

says his staff is made up from diverse backgrounds like investment banking, sales or even straight from university.

To support the new entrants, Shore Financial has developed a robust training and mentoring program that develops potential while retaining a strong trusted value proposition, he said.

“When we get someone new in from a different industry obviously there’s a huge amount to learn. We all work in the same open office environment, so they are around people doing the job every day. We get them to do the back office first for around six months, where they work with a senior broker and understand the back process as well as the front end.

“So they get a really holistic view of broking in general. That in itself means they fast-track their training very quickly – not only doing the processing but getting to understand how to generate referrals. They also come with us when we do presentations to new referral partners so they get a really good

Shore Financial sales director Theo Chambers was a finalist for Quality Young Gun of the Year at the 2012 Australian Mortgage Awards

understanding of how the industry works.”

Shore Financial pays the new entrants a salary to keep them afloat while they are doing their training, diploma and accreditation.

Capturing potential brokers in their twenties is the key, said Nochar, as it is before people get embedded in a career yet know what they want out of a job and lifestyle.

“It’s a great opportunity to jump into something like mortgage broking which offers so many benefits… If I knew back then what I know today I would have got into broking a lot earlier – it’s a fantastic industry.”

Nochar believes brokerages that are reluctant to employ inexperienced new brokers are potentially missing out on a great opportunity.

“When you’ve got someone new and hungry to the industry it’s very exciting, and I think for anyone getting into the industry now the income potential is absolutely fantastic.

“Younger brokers will support your business as long as they are paid in the correct manner and looked after, and part of a good culture and team.

It gives your company a lot of longevity as they develop and grow in their career path.”

Shore Financial, which plans to go nationwide, may be just a spring chicken but its director and staff know to learn from the experts.

“We have good relationships with a lot of the top brokers because we believe if someone is doing something well then we want to understand what it is and adopt that if it improves the way we do things,” said Nochar.

“There are so many different business models out there [and] we often have other people in from successful brokerages to talk about how they got there. It’s all about learning and improving.”

INSIDER 30

brokernews.com.au

‘Wolf of Wall Street’ trying to make amends

HANDSOME MALE BROKERS GET UPPER HAND?

e had Leonardo DiCaprio tell his story in the smash hit movie The Wolf of Wall Street, and now the real-deal Jordan Belfort has emerged from the dust of his crooked ways to cash in.

Believe it or not, Belfort is selling a program on how to be a successful salesperson by using what he calls “ethical persuasion”, CBNC reports.

The convicted former broker, who made millions manipulating stock offerings, expressed very strong views about ethics in a free webinar in March.

“Success in the absence of ethics … is failure; it’s not success at all,” he said.

Belfort also spoke about becoming a self-taught closer and succeeding by using the right “tonality”, which he said gives you control of the conversation.

Insights such as these are now part of a sales program he is selling called ‘‘Straight Line’’.

During the webinar, which went on for more than two hours, Belfort agreed that he had broken the law and completely deserved to go to prison.

“I never felt good. People asked, ‘Why did you do all those drugs?’,” he said. “Why do you think?”

Belfort said he viewed his life as a success, having survived addiction, ripping people off, and broken relationships.

Handsome male financial services workers are just the ticket for investors, according to the latest study by researchers from MIT, Harvard and the Wharton School.

Reuters reports that the research, which was published in the Proceedings of the National Academy of Sciences, revealed that good ideas or experience weren’t the only driving factors for investors putting their money on the table.

Rather, gender and physical attractiveness are other critical criteria that investors base their decisions on, the report said.

The study analysed several business pitches, both at real pitch competitions and in a controlled-experiment setting in which the content was the same but the presenters were different, to reach the arguably superficial conclusion.

Investors “prefer pitches presented by male entrepreneurs compared with pitches made by female entrepreneurs, even when the content of the pitch is the same”, it was discovered.

It added that “attractive males were particularly persuasive, whereas physical attractiveness did not matter among female entrepreneurs”.

H

Despite still owing his victims nearly $100m in restitution, he is now getting calls from celebrities to “do lunch”.

But no matter. “Buy these books, all the money goes to investors,” Belfort said.

HIS RULES INCLUDE: You only have about four seconds on a phone call to be perceived as sharp as a tack, enthusiastic as hell, and an expert in your field Be an active listener (“Bill Clinton was the best”) Don’t say stupid s***

DIRECTORY FINANCE Semper Capital Pty Ltd 1 800 SEMPER (1 800 736737) www.semper.com.au enquiries@semper.com.au Page 21

LENDER

Liberty Financial 13 11 33 www.liberty.com.au Page 3 Macquarie 13 62 27 macquarie.com.au/mortgages Page 32

ME Bank (03) 9708 3994 mebank.com.au Page 13 MKM Capital 1300 762 151 www.mkmcapital.com.au Page 4

National Australia Bank www.nabbroker.com.au Page 5 Pepper Homeloans 1800 737 737 www.pepperonline.com.au Page 11

NON-BANK LENDER

Firstmac Brokers 1800 635 228 www.firstmac.com.au/brokers Page 9

SHORT-TERM LENDER

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

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

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

Quantum Credit 1300 135 212 www.quantumcredit.com.au Page 8

WHOLESALE

Resimac 1300 764 447 www.resimac.com.au Page 7

OTHER SERVICES RP Data 1300 734 318 Page 15

Trailerhomes 0417 392 132 Page 26

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