Australian Broker 11.09

MAY 2014 ISSUE 11.09

$4.95 POST APPROVED PP255003/06906

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

+ SPECIAL REPORT MFAA CONVENTION GUIDE

A look at the can’t-miss sessions of the upcoming MFAA Convention P10

+ SPECIAL REPORT TECHNOLOGY SPOTLIGHT

How new technology offerings can boost your business P18

+ BEST PRACTICE 5 THINGS YOU SHOULD KNOW ABOUT CREDIT REPAIR

A specialist tackles credit repair misconceptions P22

Keiran Evans: INVESTING IN THE INDUSTRY ANZ third party head Keiran Evans says the bank is investing massively in better serving brokers and their customers

I

n October 2012, ANZ announced a massive initiative to invest in its Australian business and improve its service proposition to customers.

While the lender’s Banking on Australia initiative may be aimed at consumers, ANZ third party head Keiran Evans says it is delivering major benefits to brokers.

FULL STORY PAGE 14

+ FINANCIAL SERVICES TIME TO RETIRE RETIREMENT?

A new report has called for a rethink on retirement P24

+ FORUM HOW OLD IS TOO OLD?

Brokers square off on claims of age discrimination P27

NEWS 2

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NUMBER CRUNCHING

FIXED RATE FAD

BUYERS VS. SELLERS

A look at home loan demand for April

Housing market sentiment for March

Fixed rate

Basic variable

FAST FACT

Standard variable

11.3% Introductory rate

Line of credit

26.5% 2. 2 % 3%

13.8%

5,740 The number of mortgage broking businesses in Australia in 2013-14

HOME LOAN

43.2%

Source: IBISWorld

Ongoing discount

BUY

Is now a good time to buy a property?

YES-68%

SELL

NO-32%

Is now a good time to sell a property?

YES-60%

Source: Mortgage Choice

NO-40% Source: RP Data and Nine Rewards

WHAT THEY SAID...

MARK HEWITT

“[Non-majors] are finding it a struggle to challenge the overall dominance of the major lenders.” P4

BRENDAN WRIGHT

“Brokers are recognising that the key to adapting in today’s dynamic mortgage market is offering a multitude of services” P6

PHIL QUIN-CONROY

“If you’re ignoring what’s happening in the social [media] space, you’re going to potentially get blindsided by a major trend” P26

GERARD TIFFEN

“Supporting the community is a big thing. It’s great kudos and it comes back to you tenfold” P28

NEWS 4

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Non-majors grabbing back market share ■ Despite increasing competition, non-major

lenders are struggling to shake the grip of major lenders, which continue to have about 75% of all new home loans each month.

But AFG’s quarterly competition index shows that non-majors are faring best with first-home buyers, with their share of first-home buyer loans rising to a high of 31.7%.

However, the dominant lenders in this sector are state government organisations set up to help first-home buyers. Keystart in WA took 9.7% of this market and HomeStart in SA took 3.8%.

The next biggest non-major in the sector is Suncorp, with a 3% share last month.

While non-majors made significant inroads late last year in the fixed-rate mortgage space – seizing 42.3% of all new fixed-rate loans in November – by March this year their share has fallen back to 35.2%.

Mark Hewitt, AFG’s general manager of sales and operations, said competition has been partly restored in the past two years, with non-major lenders agile in targeting specific products and markets.

“But they are finding it a struggle to challenge the overall dominance of the major lenders.

Collectively they still only account for around a quarter of all new home loans each month. We would like to see this figure higher and are looking forward to seeing if the financial services inquiry offers a solution.’

Mark Hewitt

NON-MAJOR MARKET SHARE A look at the top non-major lenders by mortgage market share 5 4 3

4.1% 3.8% 3.7% 2.3%

2 1 0

SUNCORP

AFG

MACQUARIE

ING DIRECT

1.9% CITIBANK Source: AFG

INFLATION STILL BENIGN DESPITE TWO-YEAR HIGH ■ Inflation is at a two-year high but has remained

within the Reserve Bank of Australia’s target range and is unlikely to trigger interest rate hikes.

The Australian Bureau of Statistics recently released its March quarter inflation statistics, which show a headline inflation rate at 2.9% – just within the RBA’s target range of 2 to 3%.

Lower than expected inflation in the March quarter means interest rates are set to remain at current record-low levels, reports the Housing Industry Association.

The RBA had forecast that inflation would reach 3.25% by June, but compared to its preferred measures of underlying inflationary pressures, this is well within target – the trimmed mean is at 2.6% and the weighted median at 2.7%.

“These figures auger well for continued recovery in Australia’s residential building industry. There were fears that inflation would break the 3% threshold during March, but today’s figures will have soothed these worries somewhat,” said HIA senior economist Shane Garrett.

Credit union slams Big Four subsidiaries ■ In its submission to the financial systems

inquiry, Credit Union Australia has asked the government to examine anti-competitive issues which impinge on the customer-owned sector and introduce a positive disclosure requirement on major banks. Specifically, the mutual wants major bank subsidiaries to disclose their Big Four ownership.

Recent research conducted for the customerowned sector found more than 80% of Australians are unaware the Big Four, which hold nearly 90% of mortgages, own other mainstream home loan lenders too.

As an example, when Westpac advertises for Bank of Melbourne and BankSA, it conveys a misleading impression to consumers by making Westpac’s ultimate ownership of both brands obscure, said CUA. But although CUA has complained to regulators over what it sees as a misleading practice, the ACCC said the issue is not relevant to its responsibilities, and ASIC said there is no legislative basis for it to force divulgence on the banks and it is difficult to interpret the advertising as misleading or deceptive.

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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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Broker poll finds new growth opportunities

WORLD NEWS UNITED STATES OF AMERICA

■ Aggregator FAST recently polled 147 of its brokers for their views

SERIOUSLY UNDERWATER HOMES AT LOWEST LEVEL IN TWO YEARS

The number of seriously underwater residential properties in the United States has reached its lowest level in two years – but the pace of equity recovery is slowing, according to recent data.

There were 9.1 million seriously underwater homes in the US in the first quarter, down 26% from 10.9 million in the first quarter of 2013, according to RealtyTrac’s US Home Equity & Underwater Report.

A home is defined as seriously underwater when the combined loan amount on the property is at least 25% higher than the property’s estimated market value.

There were also fewer distressed properties with negative equity in Q1, with 45% of all properties in foreclosure seriously underwater. That’s down from 48% in the fourth quarter of 2013 and 58% from a year ago.

CANADA FIXING FAD GROWS IN CANADA

Australia has seen fixed rates spike in popularity, and it seems Canadians are jumping into a fixing fad as well. “Even though we’ve had a relatively stable rate environment for a number of years, Canadians are being prudent when it comes to mortgage planning and are factoring in the possibility of higher rates in the near future,” Barry Gollom, vice-president, secured lending and product policy at CIBC recently said.

CIBC conducted a Nielsen consumer insights survey of 1,005 Canadians between February 6 and 10. The survey found that 48% of Canadians would choose a fixed-rate mortgage if they had to make the decision today, compared to 31% who would choose variable. Nineteen per cent were undecided.

Undecided Variable

31%

19%

48%

Fixed rate

DID YOU KNOW?

22% The percentage of FAST brokers said they already offer loan advice to small businesses Source: FAST

on the current state of their business and future opportunities in the market.

Of those surveyed, 51% said the greatest opportunity to grow their business in the next year would come from retaining existing clients, followed by 27% who said the best opportunities would come from referral relationships with other service providers.

FAST chief executive officer Brendan Wright said the research demonstrated the extent to which brokers were actively seeking out ways to better service their customer base.

“Brokers are aware that there is more they can do for their clients than helping them with their home loan.

“Brokers are recognising that the key to adapting in today’s dynamic mortgage market is offering a multitude of services.

These can include offering credit advice for a business loan or asset purchase, or helping them manage and protect their wealth through financial planning and insurance.”

FAST is pushing to get brokers engaged with ways to unlock their potential through broadening their client services – in particular commercial and asset finance services – and Wright encouraged brokers to talk to the aggregator about options.

“Commercial lending is set to experience the similar growth in the broker channel as residential, so it’s important brokers understand the opportunity of catering to this market,” said Wright.

Brendan Wright

Age discrimination claim against major thrown out ■ A 66-year-old who claimed he could not get home loan refinancing

because of his age has had his discrimination case thrown out.

Melbourne architect Giulian Ashton Lomax took National Australia Bank to the human rights division of the Victorian Civil and Administrative Tribunal after NAB cancelled credit secured by a mortgage over a property owned by the applicant.

NAB said further finance proposals were rejected after Lomax fell into financial difficulty and stopped paying interest repayments, but Lomax complained NAB engaged in ageism.

Lomax, who represented himself, referred to Australian Broker articles relaying various brokers’ experiences in having difficulty in securing finance for older borrowers.

The articles referred to older borrowers being the victims of ageism and discrimination and suggested lenders were being unnecessarily constrained by the NCCP Act, amidst concerns about how older borrowers can meet the responsible lending guidelines where they do not have traditional income sources.

But Tribunal member Anna Dea dismissed the proceedings, saying it is reasonable for a lender such as NAB to have regard to a prospective borrower’s capacity to repay.

NEWS

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8

Aussie spending hitting 20-year highs

Foreign investment demand at all-time high

■ The financial situation of Australian households has deteriorated

■ There has been a notable increase in foreign

over the last quarter, yet more Aussies are willing to spend their savings.

The St. George and Melbourne Institute household financial conditions index decreased 7.9% to 122.2 in March, which is 1.8% below its value a year ago.

The proportion of households adding to their savings decreased four percentage points, while the proportion of households that were drawing on their savings reached the highest level in nearly 20 years at 15.6%.

It shows a marked change from the previous quarter, which recorded the biggest annual improvement in financial conditions for Australian households since the survey first launched nearly 20 years ago.

The index increased 4.3% in December to 132.6, the highest level since 2009. That result was the fourth consecutive quarter increase and a rise of 9.3% over 2013.

But the research authors, after surveying 1,200 respondents, put the deterioration in household financial conditions in this quarter down to more households drawing on their savings, and said Australians were easing their consumer caution, which would help support economic growth.

Genworth’s US parent to reap Aussie IPO benefits ■ Mortgage insurer Genworth Australia has filed a prospectus for its

initial public offering ahead of an ASX float on 22 May. It plans to float the business at the indicative price range of $2.20 to $2.90 per share and a market capitalisation of $1.4bn to $1.8bn.

Genworth expects to make gross proceeds of $429m to $754m, but Genworth Australia is not expected to retain any net proceeds from the offer. Instead, the proceeds will be used to repay intragroup funding arrangements with parent company Genworth Financial Group, headquartered in Virginia, US. Genworth Financial states that an IPO of Genworth Australia will allow it to reduce risk and rebalance capital among its three major mortgage insurance platforms – the US, Canada and Australia.

FAST FACT

40.2% The proportion of Australian households with a mortgage Source: St. George and Melbourne Institute

buyer activity in the new housing market, reaching an all-time high of 13.9% of national demand.

The first quarter residential property survey report by NAB shows foreign buyers are particularly active in Queensland, making up 24.4% of new property market demand.

In NSW, foreign buyers preferred to buy established property and made up 12.7% of demand in this market.

Demand for all types of new property weakened slightly, although it is still very strong in NSW. Credit availability and housing affordability continue to be identified as the biggest impediments to buying new property, but concerns over interest rates are beginning to rise.

However, the report said first-home buyers seem to be returning to the market with 21% market share, especially in Victoria (29%) and NSW (25%).

BILLION-DOLLAR BOOK BUYER BOASTS BROKER EXPANSION ■ Bank of Queensland has announced buoyant half-year results, and has

also pipped the competition to become the successful bidder on Investec Bank’s $2.3bn loan book.

BOQ will pay $440m to buy Investec’s professional and asset finance and leasing businesses.

BOQ beat Bendigo and Adelaide Bank after third bidder ANZ pulled out.

The acquisition will grow its commercial loan book by 38% and add $38m in net earnings in the first year, excluding acquisition costs, the bank said.

The businesses are being sold as a going concern, with a total team of more than 310 people transferring to BOQ. Investec will no longer own an ADI after the sale but will focus on investment banking.

BOQ also announced it had expanded its mortgage broker distribution network through new partnerships with Vow Financial and Custom Equity Group.

This means there are now about 650 BOQ-accredited brokers servicing customers in NSW, Victoria, WA and SA. “The new partnerships are crucial to BOQ’s future plans in the broker channel, especially to build presence in New South Wales,” said the bank’s head of third-party distribution, Brad Rockwell.

SPECIAL REPORT 10

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AHEAD + BUSINESS

INTELLIGENCE

WINNING HEARTS AND MINDS The key to communicating effectively P23

+ FINANCIAL SERVICES ADVISERS OWE BIG TIME FOS says advisers haven’t paid up on judgments P24

+ SPOTLIGHT DEVELOPING A TECH STRATEGY

Why you should act now or be left behind P26

+ PEOPLE AMAZING RACE

A broker and lender take an epic trip for charity P28

+ INSIDER AMAZING JOB PERKS

Fringe benefits offered by well-known employers P30

MFAA PREVIEW: 2014 Soon brokers, lenders and aggregators will begin to converge on the Gold Coast for the 2014 MFAA National Convention.

We spotlight the event’s can’t-miss sessions

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T

he MFAA National Convention is always an opportunity for brokers to liaise with their peers, as well as to hear from industry leaders and world-renowned motivators. This year, the convention will take on a different tone as sessions encourage interaction and conversation. The theme flows from a consumer-facing advertising campaign launched by the MFAA, referring to the life-changing conversations brokers have with clients.

“Don’t be a bystander – participate more effectively in those Life-Changing Conversations which could lead to uncovering greater synergies, potential opportunities and significant results,” MFAA CEO Phil Naylor said.

It’s rare that MFAA convention attendees make it to every session, but here’s a rundown of the sessions – and potential conversations – you can’t afford to miss.

WEDNESDAY 14 MAY: DAY 1 3:10PM PHIL NAYLOR’S OPENING ADDRESS Naylor will kick off the convention by addressing attendees, and running through an overview of the previous year and the MFAA’s lobbying efforts. Naylor’s addresses are always worthwhile sessions to attend. He often announces major association news through this venue, and it could have an immediate impact on MFAA members.

4:00PM TIM LAWLESS Australia’s housing market has been performing strongly since late last year, and Sydney and Melbourne in particular have seen some stratospheric price growth. Recent ABS data has shown housing finance commitments hitting their highest volume since 2009. RP Data research director Tim Lawless will look into whether the property boom is sustainable, which markets are set to continue their strong performance, and which are vulnerable to a major slowdown.

7:00PM GALA DINNER This year, the Gala Dinner will have a “Mad Hatter’s Ball” theme. If you’re having a difficult time discerning what precisely that means, black tie attire is a reliable alternative. The evening will also feature entertainment by INXS’s Ciaran Gribbin and his band.

DIVERSIFICATION UPDATE

Future-proofing through natural progression Mortgage brokers should think of diversification as strategic, natural progression to protect their future, and confidently embrace other services into their operations, according to a financial services expert.

Matt Mercer, economist and Head of Corporate Development at the fast-growing financial planning and property advice franchisor Chess Wealth Partners, said brokers are at a distinct disadvantage to other financial services operators, and should see diversification as a necessity rather than an option: “Traditional mortgage broking is essentially a transactional relationship. Brokers don’t really have a reason to speak to their clients on an ongoing basis, whereas other operators in the financial services sector are constantly strengthening their client relationships, and therefore, their income, by regularly touching base with clients,” said Mr Mercer “Savvy clients are increasingly switching financiers and brokers, almost as quickly as new products are released onto the market. This leads to the end of the relationship and destroys the broker’s trail book,” he said.

Mr Mercer also said more and more accountants and financial planners are adding mortgage broking services into their businesses with great success, and it’s time brokers became confident enough to start expanding their services to protect their own position: “The current level of regulation in the mortgage industry means information already being collected by brokers is only about 30 per cent less than what’s required for financial planners.”

“As a broker, by adding financial planning and property advice services to your operations, you can start building lifelong relationships with the clients you already have.

There’s a warm market at your fingertips already,” he said.

“You could be talking to them regularly about their goals, investments, super, insurances and retirement plans, as well as their lending requirements.”

Mr Mercer said that whilst there is definitely a learning curve for brokers who explore new services, the successes he has seen so far

MATT MERCER

BY ADDING FINANCIAL PLANNING AND PROPERTY ADVICE SERVICES TO YOUR OPERATIONS, YOU CAN START BUILDING LIFELONG RELATIONSHIPS WITH THE CLIENTS YOU ALREADY HAVE amongst the growing Chess Wealth franchise network were extremely promising and have far exceeded their initial expectations: “Brokers who have moved forward into this space have realised the potential to significantly and quickly boost their revenue stream as well as strengthening client relationships.

In addition, by choosing a good business model that is tailor-made for them, they have done it easily and with maximum support” he said.

“We are excited to be operating alongside so many forwardthinking professionals and we have a great network of businesses already integrating new services” said Mr Mercer.

“Whilst increasing revenue is definitely a large factor in the uptake of our model, one of our key achievements is that by giving others the confidence to diversify we are helping to protect the industry, and doing it all whilst still looking after the best interests of the client.”

SPECIAL REPORT 12

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DON’T MISS...

THURSDAY 15 MAY: DAY 2 9:05AM MATT CHURCH Making a morning session the day after the convention’s welcome reception – not to mention the inevitable after-parties – may seem like a big ask, but renowned motivational speaker Matt Church’s session ties in perfectly with the convention’s theme. Church’s presentation, “Thought leadership – better thinking, better conversations”, will show you how to position yourself as a thought leader in the industry, leading to more meaningful client conversations.

1:30PM PLENARY SESSIONS There are a number of interesting plenary sessions in the afternoon, with CBA’s Sam Boer tackling the topic of productivity and NAB Broker’s Steve Kane sharing on the importance of technology. For our money, though, the most intriguing sessions are the ones run by brokers. Ruan Burger and Melissa Geilnik will be sharing stories of their success, while James and Marissa Schulze will discuss how engaging the younger generation can help build a successful business.

10:45AM NON-BANK LENDER PANEL This panel discussion will bring in some high-profile and outspoken non-bank representatives, including Pepper’s Mario Rehayem, AFM’s Tanya White, First National Home Loans’ Lee Woolf, and compliance expert Greg Ashe of QED Risk. The panel will be chaired by FirstPoint Mortgages director Troy Phillips, who will guide discussion on why brokers should consider non-bank lenders, and what the future holds for the sector.

11:30AM GREG ASHE QED Risk’s Greg Ashe will give brokers a different view of NCCP compliance in his session, “Turning your compliance obligations into gold”. Ashe will look at how compliance translates to best business practice, and how ASIC requirements can actually assist brokers in reaching their goals. The session will also look at CRMs, and how using them properly can increase leads, referrals and repeat business.

THE VENUE

This year’s MFAA National Convention will be held at the Gold Coast Convention and Exhibition Centre in Broadbeach. The venue is located along the Gold Coast Highway, and is convenient for plenty of food and shopping, not to mention Jupiters Casino.

2:30PM BAZ GARDNER Baz Gardner spent 14 years building a successful insurance and retirement planning advice firm specialising in providing holistic financial advice to high net worth clients. His session – “Do you want more clients, more time, less cost?” – will focus on client engagement, developing a stream of new clients, and delivering better service and building deeper relationships with less time and less cost involved.

Gardner says brokers will succeed by making it easier for clients to make difficult decisions.

4:15PM CIARAN GRIBBIN INXS’s Ciaran Gribbin grew up in war-torn Northern Ireland. He’ll share his journey, from starting a career in music in clubs run by the IRA to working with artists like Powderfinger, Snow Patrol, Madonna, Paul Oakenfold and Paul McCartney. His presentation, appropriately titled “It’s a long way to the top if you wanna rock & roll”, will be an inspirational story of striving towards goals against difficult odds.

SPECIAL REPORT 13

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DON’T MISS...

FRIDAY 16 MAY: DAY 3 9:40AM DR CHARLES TEO It’s worth fighting through the post-Gala Dinner hangover for this morning session.

Dr Charles Teo is a world-renowned neurosurgeon and the director of Sydney’s Centre for Minimally Invasive Neurosurgery.

His pioneering techniques have allowed him to perform surgery on tumours other neurosurgeons considered inoperable. Teo’s story of offering hope to families in crisis is sure to be inspiring.

11:00AM CHARLIE LYNN Charlie Lynn knows the Kokoda Trail well.

So well, in fact, that he’s led 65 expeditions across it, usually as part of corporate or personal development programs. Lynn, who served in the Australian Army for 21 years, including active service in Vietnam, will share his experiences leading groups on Kokoda expeditions and the enormous impact it has on them as individuals.

12:45PM COMEDY FINALE LUNCH Always a great way to cap off a busy convention, this year’s finale lunch features comedian Sam McCool.

McCool is billed as a “conceptual comic with a cross-cultural edge”. The finale lunch also features the all-important announcement of next year’s MFAA Convention destination.

NEWS 14

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CONTINUED FROM PAGE 1

Keiran Evans:

INVESTING IN THE INDUSTRY ANZ third party head Keiran Evans says the bank is investing massively in better serving brokers and their customers

MORE THAN JUST INVESTING IN THE PEOPLE, WE’VE ALSO BACKED THAT UP WITH A FOCUS ON TRAINING AND DEVELOPMENT FOR THE TEAM

T

he bank’s investment will ultimately make processes simpler for brokers and their customers, Evans said.

“ANZ is investing $1.5bn over five years to transform the way we do things. What that means for the broker business is ongoing simplification. We’re building the ability of people to meet changing customer demands,” he said.

One of the major areas of focus for the bank’s third party distribution has been on developing its BDM team, Evans said. He said the bank had not only bolstered its numbers but also its expertise.

“We’ve increased our BDM team by 35%, which is a significant investment. But more than just investing in the people, we’ve also backed that up with a focus on training and development for the team,” Evans said.

Evans said the bank had invested significantly in delivering training to its BDM team. Across the institution, ANZ’s Banking on Australia initiative has seen the bank deliver more than 200,000 training hours to its employees.

While training and developing its BDM team, the bank has also focused on recruiting BDMs who already have a strong background, Evans said.

“Brokers are looking for diverse income streams, so we’ve recruited deliberately with BDMs who have experience in home loans as well as commercial facilities. ANZ is renowned in the market for its dual applications between commercial and home loans. For our BDMs, we’ve recruited more, trained them solidly and recruited from a diverse background in finance. It demonstrates that we can provide a holistic financial services proposition to brokers,” he said.

INVESTING IN PROCESS

Part of providing better service to brokers and customers means investing in processes, Evans said. By delivering simpler processes for brokers, the end customer benefits.

“Firstly, we have to be making things easier for the customer, and we have to make it easier for brokers to service their customer.

That’s why we’ve introduced a new process for loan renewals which makes it so much easier

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and reduces time. This means the broker’s customer receives faster service,” Evans said.

Streamlining processes has meant an investment in technology, he said, and technology is key to delivering better outcomes for brokers and customers.

“Technology underpins all our interactions with brokers and their customers. The better the technology platforms, the more time we have to deliver great outcomes for brokers and their customers,” Evans said.

The bank has seen strong uptake of its mobile banking app, goMoney, he said. ANZ’s half-year results recently revealed that 1.1 million of its customers actively use the app for mobile banking. Evans said the bank’s BDM team was trained to help brokers show their clients how to navigate ANZ’s technology offering.

“We’ve had a great response from our goMoney app. The role of our BDMs is to help brokers and to help their customers to navigate these great propositions to make banking easier.”

Evans said another recent technology upgrade would also streamline processes for brokers.

“We’ve also introduced electronic delivery of letters of offer. This means the fulfilment of applications happens so much quicker. It makes the whole process so much easier and quicker,” Evans said.

He urged brokers to take full advantage of the technology platforms being offered by lenders, and to leverage them to deliver better customer experiences.

“I think brokers need to embrace what’s being offered.

My experience has been that the aggregators provide some fantastic software. When you get aggregator software and bank software working together, that’s where you get great outcomes,” he said.

STAYING COMPETITIVE

As the housing market continues to perform strongly, lenders will have to remain at the top of their game to keep a competitive advantage, Evans argued.

The same is true for brokers, he suggested.

“I think there are clear signs of activity, and the Australian

15

DID YOU KNOW?

$78bn The value of transactions processed through ANZ’s goMoney app Source: ANZ

housing market is performing very well. We’re also in an environment of relatively lower interest rates. That’s creating plenty of opportunity for brokers. It’s also creating an intensely competitive environment. The brokers and banks that support their customers and make the home loan process easier for their customers will have an easier time,” he said.

While streamlining the home loan process will be an important part of remaining competitive, Evans said brokers should also look to more holistically serve their clients’ needs.

“I think there’s ease of process, but there’s also ensuring that the customer receives a service that satisfies all their financial needs.

Where we find this works extremely well is where brokers and the branch network combine. Where we work collaboratively is where we get phenomenal customer outcomes. We’re in it together,” he said.

Offering a broader suite of financial services to clients is a natural evolution for the broker channel, Evans said.

“I think the customer is always looking for someone who they can trust to satisfy all their financial requirements.

For me, it’s a sign of the further maturity and evolution of the broking industry, driven by the great service that brokers, in conjunction with banks, provide.”

And for brokers looking to expand into new areas of service – and the new revenue streams they provide – Evans said the bank would provide the training and support necessary.

“At ANZ, we’ve backed brokers from day one with coaching and support. I’d encourage brokers to make the most of the training and development opportunities.

We’re training and coaching brokers who see commercial as an opportunity as well. I’d encourage brokers to be looking at satisfying all the customer’s financial needs, not just the home loan. ANZ is really well positioned to help brokers help their customers.

That’s why we exist.”

SPECIAL REPORT 18

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Industry spotlight:

TECHNOLOGY TRENDS Shifts in customer behaviour are being driven by technology. How should your business react to keep up with a changing competitive landscape?

T

echnology is the catalyst for a major shake-up in the way businesses operate, and the mortgage broking industry is no different. Not only are technological innovations changing brokers’ capabilities, they’re also changing the way customers interact and the expectations they bring to the home loan process. What may seem a trendy bit of consumer technology one day quickly becomes a business essential the next.

“A couple of years back, mobile was

considered a trend, and it was a bonus if you had a website that worked on people’s smartphones. Now if you don’t have that, you’re not doing things right,” Stargate director Scott Spencer says.

But tech providers also have to keep up with business trends. PLAN Australia CEO Phil Quin-Conroy said the way the industry operates is changing, and so should the way technology providers think about the services they offer.

“If I think about what the industry might

look like in the future, there’s a real shift from the emphasis being on completing the transaction to providing ongoing service to the customer,” he said. “I think it’s critical to ensure that the focus of technology development is business-led and not IT-led.

We achieve that by talking to the customer around what the challenges are and how we can use technology to solve those challenges and leverage off the opportunities.

It’s an important philosophy in driving technology solutions.”

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THERE’S A REAL SHIFT FROM THE EMPHASIS BEING ON COMPLETING THE TRANSACTION TO PROVIDING ONGOING SERVICE TO THE CUSTOMER - P HIL QUIN-CONROY

PUTTING THE FOCUS ON THE CUSTOMER

For technology providers in the mortgage industry, putting a greater focus on the customer has meant developing products with the broker in mind. For brokers, this means learning to use technology to empower their customers.

“I think in the past the focus of technology has been around efficiency. Much more of that focus is now on the customer. At the end of the day, mortgage broking is a customer focused industry. There’s more focus on how to leverage and utilise technology for the customer,” Quin-Conroy says.

Quin-Conroy says technology has changed the way brokers can interact with clients, meaning brokers are now free to spend their time demonstrating their value rather than on administrative tasks.

“I’m a real believer in the ability to use some of the modern hardware capabilities of tablets to do work with the customer that is bringing to light the benefits that brokers can bring to the equation. Rather than starting from scratch with data entry, you can have the data entry finished before you sit down with the client. Then the broker can focus on the value they bring. They’re focusing more on the customer interaction and using visuals to demonstrate their value add. That’s going to solidify the relationship and increase conversion rates,” he says.

Part of providing positive customer experiences is streamlining processes.

Technology can deliver this capability, and Spencer pointed to Stargate’s new ePass application as a tool to smooth the process for brokers and borrowers.

“You can order property reports through RP Data, send insurance referrals, send financial planning referrals all within your CRM without having to re-key information.

If they have affiliations with insurers they can turn around and send off home and contents insurance referrals. That allows the broker to generate passive income,” he says.

SPECIAL REPORT 20

PHIL QUIN-CONROY, PLAN AUSTRALIA

BIG DATA REVOLUTION Tony Carn, sales director at lending technology provider NextGen.Net, says big data will provide massive opportunities to the broking world in just the next three years.

He agrees with Deloitte’s recently released annual mortgage report, which concluded the $1.3trn Australian mortgage market is “on the cusp of exciting change” led by a digital and data revolution.

The data revolution, or Big Data, will have an enormous impact on the way lenders design and price their products and how they manage their risk, Carn tells Australian Broker.

“Positive and comprehensive reporting is probably a good call-out of where big banks have the advantage, but this is just one aspect of how big data will impact the way mortgages are originated in the Australian market.

“I’m not just saying that from a broker or third party distribution perspective, but also the area of direct consumer where it will change the dynamic as well.”

Apart from positive credit reporting, initiatives that bring quality measurement back to the point of sale are heavily reliant on data and digital innovation.

“I envision better packaging by way of loan quality scoring being the industry norm in the not-too-distant future,” Carn says.

“Risk and complexity scoring are also very useful aspects for big data and they drive the ability to achieve straight-through processing.”

The broking industry is always looking at how to effectively drive better efficiencies and costs to get more business, Carn says.

“There’s a huge opportunity to bring quality management of loan applications forward in the mortgage origination process. There should be a way to manage the quality of the application at point of sale… Lenders investing in that type of innovation will drive real outcomes from 2015 to 2017.”

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SCOTT SPENCER, STARGATE

HELPING THE CLIENT HELP THEMSELVES

Focusing technology use on customer experience means paying attention to shifts in customer behaviour. One of these shifts is an increasing propensity toward self-service.

Spencer said the downside of this trend is that brokers often have to dispel misconceptions.

“The biggest problem is that there is just enough information for the customer to be dangerous. That’s where the broker’s value proposition is to defuse where the customer is thinking they got the right information versus what the reality actually is. There are borrowers out there thinking they’re armed with the right information and that they know enough, and they don’t,” Spencer says.

But Quin-Conroy said the trend can also be positive, with clients happy to take on some of the legwork, leaving brokers time to focus on building the customer relationship and emphasising the value they can bring.

“In some respects it could sound counterintuitive, because a lot of what the broker brings to the table is allowing the customer to outsource the work of getting a home loan.

We know some customers are happy to delegate that, and want to outsource all the work. We also know that typically younger customers like to be a bit more self-directed an in control. Cloud-based solutions allow brokers to connect with that customer who wants to be more self-directed to kick off the process,” he says.

Spencer agrees that clients taking on some of the administrative process can be positive, and says Stargate has provided platforms for customers to do this.

“Our eFind retail project allows that whole self-service so customers can complete the entire application online and send it through to the broker’s CRM,” he says.

The use of a self-service mentality can also help identify clients who are serious, QuinConroy says.

“What the cloud bit can do is it can actually test out customer commitment to the process.

It can show if they’re just a tyre kicker or if they’re committed to moving forward.”

BUILDING SOCIAL MEDIA CREDIBILITY

One of the driving factors behind clients

WHAT MOST PEOPLE FAIL TO REALISE IS THAT SOCIAL MEDIA IS MORE ABOUT BECOMING A TRUSTED ADVISER - S COTT SPENCER

seeking more involvement and selfdetermination in the home loan process is social media.

Spencer said social media as a tool has often been misunderstood in the industry.

Brokers have been told time and again of its importance, but few have been given a clear strategy.

“The whole scenario around social media as a business tool is misunderstood. People think they should be able to jump on social media and straight-away be able to market to them. Social media is not about being a marketing platform. Yes, it can generate some leads using the advertising platforms that sites have in place, but that’s just basic advertising in the digital world. What most people fail to realise is that social media is more about becoming a trusted adviser,” Spencer says.

Quin-Conroy agrees, and pointed to research showing that social media was often involved in consumers’ buying decisions.

“The customer might actually jump on social media to find out more about the broker and to see if they’re a good fit.

Research shows that 20% of users of social media are using it for product research. If you have no social media presence, that could have a flow-on impact on some of the research the customer is doing.”

Spencer argues that borrowers engaging social media do so because they put enormous stock in the opinions of their peers.

“You can go and read review after review on TripAdvisor about a holiday destination from a whole bunch of randoms, and see that 72 out of 100 gave it a thumbs up, but if you get one of your friends who says ‘I put a review on there and it’s shit,’ you immediately discount all the reviews that were good,” he explains.

And this trend, Spencer says, can be a competitive advantage to brokers, provided they put the time in to positioning themselves as a trusted adviser on social media platforms.

“Your value immediately goes up versus the broker down the road who has the same deal, but has never been seen before,” he says.

Quin-Conroy said social media has the

SPECIAL REPORT 21

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IS YOUR SITE MOBILE FRIENDLY? Ever researched a restaurant on your smartphone only to be thwarted by text which refuses to comply with the limits of your screen and so you give up?

Well, unless your broker website is mobileoptimised, it is likely your clients and potential customers give up too.

Mobileforze commercial manager Stephen Lawson said a whopping 80% of mortgage broker websites are not mobile-optimised yet, meaning the consumer is driven away in frustration.

Lawson, who used to be national sales manager at Australian Financial and BDM at AFG,

understands how important it is for brokers to stay in touch with clients.

“When I got out of the [mortgage] industry I realised there was a void. Either we’re too scared to take on new technology, or someone big hasn’t taken it on for us to follow suit. People are contacting clients a lot more now because of the increased competition, so there’s a need for viable contact… You can now interact with clients any time of day as they’re always on their mobile or tablet.”

Research shows 90% of smartphone owners use them to search the internet, making up half of all searches globally, with tablets and computers making up the other half.

potential to significantly change the way brokers interact with clients.

“Social media and the web are contributing strongly to a shift in the sales process.

Typically what’s occurred is the broker might have received a lead, had a phone conversation and then had a face-to-face meeting. What’s happening now is that the broker receives a lead, the customer might do research on the broker by having a look at their website and on social media, and their first interaction might be a Skype call,” he says.

data that is stored and used. What you can do is reuse that data to do analysis for customers, reuse it to complete your compliance requirements, reuse it to submit a commission claim, reuse it to connect with the customer to provide ongoing service and to possibly market additional services and reuse it in a broad way to see how the business is going,” he says.

But Spencer warns that brokers must be clear about how they want to use the data.

He argues that collating data, in and of itself, was of little use. Instead, he says it is important to determine the right questions to ask before looking for the answers in the wealth of data available.

“You have to sit there and think about what questions you’re trying to answer before you begin looking at Big Data. What am I trying to determine? Do I care that the average home loan in my portfolio is $273,000 or to find out where my customers live? It’s all about asking the right questions of yourself, and until you do that there will be a massive amount of data sitting there

USING DATA WISELY

Another benefit of technology is the power it gives brokers for data use. CRM platforms contain a wealth of customer data, and Lees says this is data that can be used intelligently.

Quin-Conroy agrees, and says brokers should fully utilise their CRM platforms to mine the data available.

“For me, it’s just absolutely essential that the broker invests in their CRM capabilities.

That’s not just the technical abilities of their CRM, but the quality and quantity of the

that you don’t know what to do with.”

Spencer says Stargate is working to put more useable data into brokers’ hands. He pointed to an application the company is currently developing.

“The other little project we’re working on which has finally come to fruition is an industry-wide serviceability application. You can run all the relevant serviceability requirements for any lender in the industry, and you can do it all from your phone. It handles pretty much everything you’ll find on the serviceability spreadsheets that any of the lenders issue,” he says.

Quin-Conroy says PLAN Australia would continue to try to give brokers the tools to use their data in meaningful ways.

“If I think about what the industry might look like in the future, there’s a real shift from completing a transaction to providing an ongoing service to customers. That’s service that brokers are increasingly providing. I’m keen for us as an industry to arm brokers with more data to assist in managing ongoing relationships with customers.”

BEST PRACTICE 22

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Five things you should know about credit repair in Australia Merri Mansfield of Princeville Credit Advocates clears up misconceptions about credit repair

1

CREDIT REPAIR HELPS BROKERS WRITE MORE LOANS CASE STUDY: Aggregator wrote $60

million more in loans as a direct result of sending credit-impaired clients to a credit repair company to repair their credit files. Once they were repaired, the credit repair company sent the clients back to the brokers, who then had approved $60 million more in loans. The credit repair company was 92% successful in repairing the credit reports of this aggregator’s clients.

There is a common misconception in the broker world that it is best to show a creditimpaired client the door. Many brokers report not wanting to waste time with these clients because they think working through their issues is going to be time-consuming. And they also think the credit-impaired client must have deserved their poor credit rating.

But one of the largest aggregators in Australia has taken a very different view, and with outstanding results. This group has written $60 million more in loans because they sent their credit-impaired clients to a reputable credit repair company that achieved a 92% success rate when clearing the credit reports of their credit-impaired clients. The benefit to the broker is that every lead, impaired or not, can potentially turn into a deal.

This builds a reputation that brokers are “can do” brokers who look after their clients.

It also increases the broker’s profile in their organisation as someone who is writing a high volume of loans from a wide variety of leads.

2

CREDIT REPAIR IS HIGHLY SUCCESSFUL IF YOU USE A REPUTABLE COMPANY

Brokers are sometimes suspicious about how credit repair works and if it can really assist their clients. The last thing a broker wants is to refer a client to a credit repair company who charges high fees and makes promises they cannot keep about the time it takes to do the repair.

In this scenario, the client quickly starts to hassle the broker when the deadline passes, and the broker doesn’t have the time or energy to deal with it.

But credit repair performed by experienced and committed credit repair companies works most of the time. These companies charge realistic fees, give average timeframes for the work, have high success rates (over 80%), and make no promises they cannot keep. They employ skilled negotiators to do the work – people who will fight for your client’s right to a correct credit file.

But I hear you ask: ‘How does credit repair work? And how can these listings be removed?’ The reason these listings can be removed is that they were placed in error in the first place. The client should never have had a default, judgement or writ placed on their credit file.

Credit repair companies ask credit providers (financial institutions, energy and Telco companies, for example) to verify that they followed the rules when they placed the adverse listing. Reputable credit repair companies report that credit providers do not follow the rules in up to 80% of cases, so the listing must be erased from the credit file.

3

CREDIT REPAIR IS EASY FOR BROKERS

Brokers sometimes think that referring a client for credit repair will create unnecessary hassles for them. They do not want additional paperwork, nor do they want a client hassling them about the outcome of their credit repair case. Some brokers are also concerned that credit repair companies might sell their lead on to another broker to write the loan after the credit repair is done, or that they write loans themselves.

But reputable credit repair companies have relationships with brokers whereby the broker refers a client to them, the credit repair company does the credit cleaning for that client (keeping the broker in the loop),

and then the credit repair company tells the broker when the file is cleared so they can write a loan.

Some less-savoury credit repair companies offer credit repair to capture credit-impaired (and often vulnerable) clients and offer them high-interest loans. They have no intention of fixing the credit report because their interest is in writing a high-interest loan.

Reputable credit repair companies know this because they get all their failed clients credit repair work.

Reputable credit repair companies do not write loans and they do not sell one broker’s leads to another broker. They build relationships with brokers based on trust and excellent results.

4

CREDIT PROVIDERS ARE THANKFUL FOR CREDIT REPAIR CASE STUDY: Credit repair company

receives a letter from NAB thanking them for ‘getting the facts straight’ and removing a default listing from a credit file based on the case put by the credit repair company.

Because there is a defined process that credit providers must follow prior to placing a listing on a credit file, they are often thankful when we alert them that one of their processes has failed. They are often keen to rectify this situation as quickly as possible because they understand the consequences of having an adverse listing on a credit report (high interest rates or not being able to get finance at all).

Reputable credit repair companies work closely with credit providers and build relationships with them based on the rules that relate to credit reporting. They understand that credit repair companies are advocating on behalf of consumers because they have a legitimate right to a correct credit report.

5

CREDIT REPAIR IS NEEDED BY MANY AUSTRALIANS

One in 10 Australians have an adverse listing, or “black mark”, on their credit file that prevents them from getting the loan they deserve for a car, house or their business. These black marks can stay on credit files for up to seven years, even if the outstanding debt was paid. This is especially bad news because not only could your client’s finance be rejected, but these black marks can trigger higher application fees and higher interest rates on a loan.

Credit repair companies specialise in removing negative credit listings (defaults, judgements and writs) and have helped thousands of Australians with credit file issues and put them back in control of their finances.

In the UK, where positive credit reporting has been in place for 10 years, one in five citizens has an adverse listing on their credit report. With positive credit reporting having begun in Australia last month, the numbers are likely to match the UK before long.

Now is a good time to build a relationship with a credible and respected credit repair company to assist your clients with their credit repair needs. It will ensure you write the maximum amount of loans.

BUSINESS INTELLIGENCE

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23

Winning hearts and minds Can leadership authenticity really be a key to capturing the hearts and minds of employees, and can it be developed? Corporate Crossroads CEO Walter Bellin believes so

O

ver the past 25 years I have used the following exercise in my leadership development workshops many times: I ask groups of five or six participants to identify someone from the present or anytime in the past who they all agree is (or was) a truly great leader – and then I ask them to come up with the four or five traits or qualities that made them great leaders. There has been an amazing consistency in both the leaders chosen and the qualities or characteristics that made them great.

The most common leaders chosen have been leaders of great social movements, such as Mahatma Gandhi, Nelson Mandela and US civil rights leader Dr Martin Luther King Jr. The typical characteristics identified as making them great leaders have been integrity, courage, a deep commitment to their cause, and a clear and compelling vision of the future that they wished to work towards.

WHAT IS AUTHENTICITY?

Authenticity implies two basic things when applied to leaders such as the three identified above.

Firstly, it implies something about the qualities of the leader as a person, the quality of their values, and the quality of their actions that follow from these values. It implies that they have good motives and intentions, which are broad and inclusive of the welfare of all whom they lead and all who are affected by their leadership.

Secondly, authenticity implies that the leader is real, that they are exactly who they claim to be and exactly how they present themselves. This means, among other things, that what they say they believe in or value is exactly what they believe in or value; their motives or intentions are exactly what they say they are; they ‘walk the talk’; they do (or at least attempt to do) what they say they will do.

A leader who demonstrates this authenticity will earn the trust of the people they lead. The vision of the future that they want others to join them in creating will be both mentally attractive, credible and emotionally compelling. Their authenticity will inspire people, win their loyalty, and people will follow them because they want to.

WHAT YOU CAN DO TO ASSESS, DEVELOP AND DEMONSTRATE YOUR OWN AUTHENTICITY

A LEADER WHO DEMONSTRATES THIS AUTHENTICITY WILL EARN THE TRUST OF THE PEOPLE THEY LEAD – W ALTER BELLIN

HOW DO PEOPLE PERCEIVE OUR AUTHENTICITY – OR LACK THEREOF?

There are two primary means by which people will perceive our authenticity as a leader. The first is very obvious: they will simply watch our actions and – over time – compare these with what we have said.

There is a second subtle but equally powerful factor that affects people’s perception of our authenticity – and does so more quickly than by comparing words with actions. When we speak, in addition to the words we are using we express non-verbal cues contained in our voice qualities and body language (especially facial movements)

that others pick up subconsciously.

This occurs through our brain’s right hemispheric function, which subconsciously but simultaneously picks up these non-verbal cues, while our conscious mind is listening to the words. According to extensive studies by psychologist Albert Merabian, only 7% of a message’s meaning is conveyed by the words and 93% by non-verbal cues.

When we are speaking, the right brain of our listeners is subconsciously picking up and assessing the congruence of these non-verbal cues with the words they consciously hear. If they are congruent, there is a greater likelihood that the listener will accept and be positively influenced by the message.

Conversely, if they are incongruent, the listener will experience a kind of internal ‘dissonance’ and more likely reject the message and (perhaps) become sceptical or cynical about the leader.

Walter Bellin is the CEO of Corporate Crossroads and author of the new book Climb a Different Ladder: Self-awareness, Mindfulness and Successful Leadership (Jane Curry Publishing, $29.95). For more information, visit corporatecrossroads.com.au

Make sure that you have set and are working towards personal development goals. Here I am not talking about learning a new management or leadership skill, but rather working towards building the personal character traits that are found in the leaders you most admire. This means, quite literally, cultivating those qualities that make you a better person. Utilising the services of a coach to assist you with this process can be invaluable.

Keep working on the most fundamental leadership skill of all: good self-management.

This means especially managing yourself well under emotionally challenging and stressful situations – which is when we are most likely to speak or behave in ways that violate our stated values. It is simply impossible to be an effective, authentic leader of others without being effective in managing ourselves.

In spite of how busy you may be, it is important to do a regular internal audit, at a quiet time and place that is regularly set aside for this, asking yourself: What is really important to me? What are my most important priorities? Do I actually feel, value or fully believe what I am telling the people I lead? Should I be changing my message to make it more congruent with the above? To succeed with this internal audit, you need to be really honest with yourself.

Do a regular external audit of your daily behaviour. Most people are boss watchers. They will be constantly comparing your daily behaviour with the messages you are giving them about what is important to you and what you believe and value.

Seek feedback about this from people you trust to be honest with you.

Finally, as part of this external audit, open your diary and compare the use of your time with your messages to others. Does how you use your time demonstrate commitment to your stated priorities, beliefs and values? If not, reprioritise your time usage to become more congruent with your message.

Such changes will usually take you out of your comfort zone initially – but as a leader the payback to you and your people will be manifold. As your authenticity is increasingly expressed more fully in both words and actions, you will win hearts and minds – creating trust, inspiration and commitment in those you lead.

FINANCIAL SERVICES 24

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FSC calls for end to full-time retirement

FOS REPORT SHOWS ADVISERS OWE MORE THAN $7.6M

D

iscrimination towards older workers is on the decrease and older people are more willing to stay in the workforce for longer, according to a research report from the Financial Services Council.

The How Older Workers are Valued report, conducted

by Kreab & Gavin Anderson, has revealed surprising trends and attitudes towards Australia’s older workers.

The results are timely in regard to the current hot discussion taking place about retirement age, which treasurer Joe Hockey has indicated could be one of the casualties in his effort to trim, cut or scrap unsustainable expenditure.

The FSC research shows that an increase in the age of retirement may not have as terrible an effect as some are predicting because many older workers want to stay in the workforce anyway.

“This decision is being made regardless of their financial situation,” said FSC CEO John Brogden.

“By 2050 there will be 2.7 working Australians for every citizen over 65,” he said. “We need to end the concept of full-time retirement.

Australians remaining in the workforce for longer periods will stretch retirement incomes by supplementing superannuation through part-time work as well as reduce our nation’s skill shortage.”

The retirement savings of Australians would be increased by $200bn for every year the government increases the preservation age to keep people in work, and lifting the age to at least 65 would improve public finances, said Brogden.

OFFER WHISTLEBLOWERS COMPENSATION, WHISTLEBLOWER SAYS Whistleblowers should be offered financial incentives to encourage them to come forward and cover the losses spurred from the backlash of their revelations.

The Senate Inquiry into ASIC’s performance has heard these recommendations put forward by a number of parties in regard to the handling of the investigation into the Commonwealth Bank of Australia’s wealth management arm.

ASIC accepted an enforceable undertaking into Commonwealth Financial Planning (CFPL) in 2011 due to revelations by a group of whistleblowers that widespread unethical behaviour existed within the workplace.

Subsequently, and after a lengthy investigation,

ASIC banned seven financial advisers and secured $51m of compensation for more than 1,100 affected customers.

Another former CFPL adviser was also banned last week.

But one of the key whistleblowers, former CFPL planner Jeff Morris, told the inquiry that he no longer worked in financial services due to the stress caused by his decision to blow the lid on the workings of the workplace.

Morris also said that the most important way to help and encourage whistleblowers was to provide some form of financial compensation.

This would provide more incentive for potential whistleblowers to come forward, and subsequently allow them to move on with their lives.

FAST FACT

$591,000 The amount advisers reportedly owe on unpaid determinations by the FOS Source: FOS

Financial advisers have been revealed as the main culprits in having outstanding compensation payments, following a report on unpaid determinations by the Financial Ombudsman Service (FOS).

Since 1 January 2010, 18 financial service providers (FSPs) have been unable to comply with 99 determinations made in regard to disputes brought by consumers about their conduct.

Thirteen of these – or 72% – are financial advisers, with the average unpaid amount per adviser sitting at a pretty $591,000.

In total, the value of the outstanding amounts awarded by these determinations across FSP reached almost $8.4m plus interest at 31 December 2013.

“While affecting only a very small percentage of all FOS members and of the awards issued by FOS across all our jurisdictions in banking, insurance, life insurance and investments, this does represent a significant proportion of the determinations issued by FOS relating to disputes in the financial planning and advisory sector,” the report said.

FORMER SONRAY DIRECTOR SENTENCED The former sole director of an AFSL that collapsed owing more than $46m has been charged with multiple offences and sentenced to six and a half years in jail.

Russell Andrew Johnson, the former director of Sonray Capital Markets Pty Ltd, received the sentence in the Victorian Supreme Court, which was handed down as a result of an ASIC investigation into the company.

His offences included false accounting, theft and deceptions, and conspiracy to steal.

In total, he faced up to 65 years of imprisonment.

Johnson will be eligible for parole after three and a half years of jail time.

The former CEO of Sonray and Johnson’s brother-in-law Scott Kenneth Murray was sentenced to five years in jail for 10 charges in October 2011. He had a non-parole period of two years and six months.

Sonray, one of the first brokers in Australia to provide advice on contracts for difference, was established in 2003 and held an AFSL. On 22 June 2010, John Lindholm and George Georges of Ferrier Hodgson were appointed voluntary administrators, and on 27 October 2010 Sonray was placed into liquidation.

According to Ferrier Hodgson, Sonray had a shortfall of $46.7m as at 22 June 2010.

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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, May 2013

LMI needs fair play and full disclosure

Last year’s ING Direct Financial Wellbeing Index painted a pretty sunny picture of Australian consumers and their finances. The Index found 93% of consumers were comfortable with their mortgage, and 44% were ahead on their payments. The index also showed Australian households had median savings of $15,427 – the highest since tracking began in the first quarter of 2010.

What’s happened since?

This year’s Index shows Australians are far less comfortable with their financial position. Results showed 64% of Australian households have been strapped for cash between pay days, and one in three are saying they use a credit card to fill the gap. Almost half of all respondents (46%) stated they would need at least an extra $300 a week to be comfortable with their take-home pay. But ING Direct said part of the reason households were feeling the pinch was an increased propensity toward saving and paying down debt.

Lender offers brokers olive branch

Concerns were raised last year that insurance giant QBE may be planning to raise its LMI premiums by as much as 12%. Claims paid from QBE’s mortgage insurance arm more than doubled to $60.8m in 2012, up from $27.6m in 2011, according to The Age, due to “unfavourable economic and housing market conditions”. Kevin Lee, mortgage insurance broker at Smart Line, said he feared QBE would push up its premiums in response.

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The importance of a tech strategy

T

echnology is a huge part of many rapidly evolving industries, and mortgage broking is no exception. PLAN Australia CEO Phil Quin-Conroy has said the focus of technology has already shifted.

“A classic example of this is some research Gartner released recently talking about chief marketing officers spending more money on technology than chief information officers. We’re seeing a real shift in the focus of technology from back office efficiency to the customer,” he said.

Quin-Conroy said there are three major trends dominating the technological landscape at the moment.

“If I think about the big three trends happening in technology, for me they’re cloud, social and mobile. We’ve really embraced cloud technology and the benefits that can bring to the table. Brokers can get, for example, a lead via their smartphone now with information they need to connect to the customer straight away. They can go and see that customer; it might be 15 minutes after receiving a lead. When they’re out of the office with their smartphone, they can have a conversation with the customer, log in to the Podium tablet app on their iPad, do some quick modelling for that customer and demonstrate for that customer some of the benefits they can bring to the table,” he said.

Quin-Conroy said it was important for brokers to develop a technology strategy, as well as to keep up with their online presence.

“Twenty per cent of users of social media are using it for product and service research. If you’re ignoring what’s happening in the social space, you’re going to potentially get blindsided by a major trend that’s occurring.”

Quin-Conroy also urged brokers to be cognisant of how their online presence was presented.

“Research out of the States suggests that nine out of 10 SME websites aren’t mobile compatible.

They haven’t been developed using modern responsive design.”

What’s happened since?

It looks like LMI premiums should stay put for now. Genworth Australia recently announced it will not increase LMI premium rates over the rest of this year.

Genworth had increased premium rates four times in six years but supply and service contracts with three major banks – which account for 66% of its gross written premium in 2013 – and competitive market forces were limiting it from doing so again.

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

FORUM 27

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How old is too old for responsible lending?

Brokers are divided on the fairness of turning down borrowers on the basis of age

BROKERS TOO ‘SCARED’ TO DIVERSIFY?

A mergers & acquisitions specialist recently claimed that brokers must get on board with diversification or risk being left behind.

Brokers begged to differ, with one claiming the industry had a long way to go before diversification could truly work.

“Brokers have not (and will not) earn the right to speak to clients about anything other than mortgages until such time as the industry is seen as more professional and the general professionalism of industry members is raised a few bars from where it currently sits. How many people go to the local butcher to buy a loaf of bread? The only reason broker aggregators are continuing to peddle this is out of their own self-interest – that is, to be seen to have a more diverse asset base that becomes more appealing to potential suitors. Now ask yourself, does that help the aggregator or the individual broker more? Ask yourself seriously; is a consumer more likely to deal with a broker to buy an insurance or investment product, or a financial planner to buy a mortgage?”

Gordon on 22/04/2014 at 1:43PM

What do you think?

Leave your comments at brokernews. com.au

A

66-year-old Victorian man recently complained of age discrimination when he could not get refinancing from NAB. However, the human rights division of the Victorian Civil and Administrative Tribunal ruled in the bank’s favour, saying it is reasonable for a lender to have regard to a prospective borrower’s capacity to repay.

Brokers were divided as to whether or not this was fair.

Dpathle said lenders do not take age into consideration enough. “Hopefully this case is an example to all of us getting close to retirement (or already in retirement) that there is no point having a debt that costs more each year than the asset it is over.”

Gray Gray agreed: “Excellent to see a bank taking an ethical lending approach.

Too many people are not taking retirement plans into account for servicing loans.”

around retirement, pensions and super. For Joe average, it’s tough enough trying to earn enough to keep the average family going in today’s economy, let alone squirrelling away another chunk for a retirement you may not live to see.”

Bottom Line thought lawyer Jon Denovan’s advice in the article to brokers was flawed. “Decline them based on age, but make up another reason...bizarre.

Wouldn’t that be perjury if banks then stuck to that ruse in court?? ” But Frank disagreed with that and believed Denovan meant brokers have a responsibility to educate customers around why their application for finance has been declined, not make up a reason.

“Banks don’t decline a loan based on the age of a customer, they decline it because they will be older than the retirement age before the loan expires.

I CANNOT UNDERSTAND WHY ACCESS TO QUALITY INDIVIDUALISED AND COST EFFECTIVE RETIREMENT ADVICE IS NOT PART OF THE GOVERNMENT’S EDICT GIVEN THE CURRENT DISCUSSIONS AROUND RETIREMENT, PENSIONS AND SUPER Papery offered up comment on how hard it is for retirees these days.

“I cannot understand why access to quality individualised and cost effective (if not free) lifetime financial planning/ retirement advice is not part of the government’s edict given the current discussions

CREDIT UNION SLAMS BIG FOUR

CUA has called on the government to force major bank subsidiaries to reveal their ownership.

Papery on 23/04/2014 at 12:26PM “Most consumers don’t think too deeply when considering who owns the company when making a purchasing decision.

The primary drivers are cost, speed and

Why would you give a 66year-old applicant a loan with a 30 year term if they don’t have an exit strategy in place? Too many brokers and banks choose the quick option and don’t go into enough detail educating customers upfront before they take an application. ”

actually getting an approval, [and] in some cases branch and internet presence and perceptions of trust.”

Stephen Sillett on 23/04/2014 at 10:02AM “CUA should concentrate on becoming more competitive and this wouldn’t be an issue. There is a reason the Big Four dominate. Consumers are more informed today than ever before.

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Amazing journey Top broker Gerard Tiffen and Homeloans’ Greg Mitchell are preparing for the ride of a lifetime

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his November, MPA Top 100 Broker Gerard Tiffen of Tiffen & Co will once again set off on an epic trek. Tiffen will mount up for the 1,050km ride from Melbourne to Adelaide in the Future2 Wheel Classic, a charity fundraiser organised each year by Future2, the charitable foundation of the financial planning profession.

Last year, Tiffen was one of the event’s top fundraisers. Tiffen says the gruelling ride is actually a great way to network with other finance industry professionals, and he’s hoping other brokers will join in.

“This will be my third year doing the event, and I was introduced to it through a financial planner I deal with. It’s a bit casual and quite social.

That’s what got me into it in the first place. The financial planner I deal with in Canberra was part of it and dragged me along,” Tiffen says.

“It’s great for relationships. That’s why I want to get a broking team together. I’ve just gotten so much out of it, I thought there might be brokers out there who ride bikes and they might want to be involved.”

Future2 provides grants to help disadvantaged youth throughout Australia. The Future2 Wheel Classic, sponsored by AMP, has thus far raised $420,000 for the charity, and Tiffen

says this year’s ride will aim to add $100,000 to that total.

Joining Tiffen for the second year in a row will be Homeloans general manager Greg Mitchell.

“It’s great. Last year I dragged Greg along and we just had such a good time. It’s very bonding,” Tiffen says.

But Tiffen has extended an invitation to other brokers, and says it’s time for the mortgage industry to make their presence felt at the event.

“This year it’s time to give all the financial planners who take part a bit of a run for their money, so Greg and I thought we could get a broking team together to raise money for a great cause and network with Australia’s best financial planners and great people living in Melbourne, Sydney, Perth and Adelaide,” he says.

In spite of how daunting the journey may sound, Tiffen argues that it presents a good bonding opportunity, and that Future2 presents ample support to the riders.

“You get up and have breakfast, and you’re on the bike by about 6:30 or 7:00. They have great support along the way. Future2 is a great group of people anyway,” Tiffen says.

And the relationships forged along the way can continue to pay dividends for brokers in the future, Tiffen suggests.

DID YOU KNOW?

$114,000 Last year’s Future2 Wheel Classic raised $114,000 Source: Future2 Foundation

“The guys that ride have been great to build relationships with from a business point of view. Even apart from it being a great community thing, there’s huge potential to create relationships with some of Australia’s best financial planners,” he says.

Tiffen and his business have put charity at the forefront of their values.

As Tiffen embarks on another Future2 ride, the business has also sponsored charity events in Canberra. Tiffen says this has helped raise the business’s standing in the local community.

“I’ve had clients say they’ve called me because we sponsored the Walk for Prems. It may not pay off right away, but when they’re looking for a broker they’ll think of you,” he says.

Tiffen encourages brokers to look for opportunities to give back to their own communities. He argues that community involvement is important for brokers.

“I truly think supporting the community is a big thing. Canberra is a bit different, but we try to support our community here as much as possible. It’s important to be doing something in the community rather than just lining your own pocket. It’s great kudos and it comes back to you tenfold,” Tiffen says.

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FREE HOLIDAY, ANYONE?

New brokers turn to mentors in times of need Finding an experienced mentor can be the key to success for new entrants to the industry

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ot having a finance background can make the transition into broking particularly tricky, but one budding broker recommends doing so with the help of a mentor.

Edwena Dixon had worked for nine years in higher education and ran two small businesses on the side before re-evaluating, at the age of 32, what she wanted out of a career.

Dixon decided to apply her strengths to something she was passionate about, and since she had some investment properties and friends were already seeking her advice on things like refinancing, she decided mortgage broking was the perfect fit.

Not having a finance background made the transition a hard slog, but Dixon carefully researched mentoring options and decided on the MFAA model because its structured two-year program appealed to her as an industry newbie.

She contacted a number of brokers listed as mentors on the MFAA website, and decided that experienced broker Therese O’Neill of Alpha Broker was the right teacher for her.

Dixon and seven other mentees meet face-to-face with O’Neill each month, with the mentees able to contact her “round the clock” for help with problematic clients or complex loans.

“Therese has been fantastic.

I found a few of the other

mentors were not able to make themselves quite so available, but I really needed someone who could answer my questions and explain the industry in a way I can understand,” Dixon says.

Dixon, who now works under the umbrella of sub-aggregator Buyer’s Choice, pays a flat fee of $550 a month to do the MFAA program, which she prefers to having a cut of her profit taken each month, as would be the case with other mentor programs.

“I spent a lot of time researching options on how to gain entry into the industry.

I met with aggregators and brokerages, and everyone thinks they have the best model to help new entrants. But I wanted the ability to grow business at the pace I wanted … I want to carve out my own path,” she says.

Melbourne-based Dixon entered the program in July of last year and became an authorised broker in August.

She is busy building a successful independent broking business that only helps clients under 40, mainly people looking to buy their first investment property.

MFAA professional standards head Rod Edge says the rationale behind the mentoring program is to support experienced brokers, who “have a wealth of knowledge to teach to those who are new to the industry”, with the systems, processes and teaching materials required to take new entrants

under their wing for two years.

The $1,650 base cost may seem steep to some, but Edge says it is worth it as brokers can potentially reap big rewards by training up new entrants for their brokerages.

The cost covers the prospective mentor’s three-day training program – open to MFAA members – and also covers teaching materials, a two-year mentor master plan, and 24 fully documented ‘how to’ lesson plans for each month of the two-year program.

Once you are an MFAA Certified Mentor, you can access all existing intellectual property the association has on the topic, at a cost per mentee of $2,800.

“A high percentage of our members are using mentoring to bring on other loan writers. One experienced broker wanted to build his business by bringing on new loan writers, but didn’t have the time to do so without following an already-developed program. He did the course and was given all the materials and program on paper, which cut down on time and made it easier for him,” says Edge.

“The program is good as it makes sure new entrants are set up from day one, and ensures we have minimum standards within our industry.”

Over 70 MFAA members have completed the Certified Mentor training over the past five months. The next course starts on 21 July.

Non-bank lender Bluestone is offering an incentive to brokers to write more loans – with a $4,000 holiday up for grabs.

The broker who settles the most loans with them from April to June will win a travel voucher, to be used for domestic or international travel and accommodation, as the broker chooses.

The winner will also get a chance to pick the brains of Bluestone founder and chairman Alistair Jeffrey, who is keen to have dinner with the successful broker when he is next over from the UK. Bluestone decided to run the competition to thank brokers for supporting its re-entry into the non-conforming mortgage market.

After expanding into the UK, the lender re-entered the Australian market in the second half of last year. It had pulled out after the GFC shut down the syndicated funding system used by non-banks in Australia and New Zealand.

“The competition is about acknowledging the value that we place on our broker relationships and recognising and rewarding their support,” Bluestone Asia-Pacific general manager Peter Wood said.

“Brokers that offer non-conforming loans provide extra value to every client that would otherwise be unable to secure a home loan. This is our way of providing added value to our broker partners.”

As Bluestone is looking to increase its broker numbers, non-accredited brokers can also enter the competition if they become accredited and settle a loan before 30 June.

To enter the competition, accredited brokers must: 1. Register by emailing promotions@bluestone.com.au 2. Provide their name and contact details 3. Submit to confirm registration

INSIDER 30

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Amazing job perks These companies don’t just think outside the box when crafting their employee perk packages – they also think around it, under it and through it to conceive incentives such as free holiday homes, regular house-cleaning and everything in between

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ne of the perks of being a broker is determining your own earning potential and – for many – being your own boss. Unfortunately, most brokers do miss out on some of the perks offered by major companies. Is the trade-off worth it? We’ll let you be the judge.

ZAPPOS

Some employers think an employee’s family commitment can be disruptive at work. That’s not the case at Zappos, an online shoe and clothing retailer based in Las Vegas. In addition to an abundance of health and wellness benefits, like Weight Watchers classes and ‘quit smoking’ programs, Zappos offers up to $6,000 annually towards fertility and adoption expenses.

FACEBOOK

The free on-site ice-cream parlour is offset by the free bikes Facebook provides to help staff navigate the tech giant’s 57-acre ‘campus’. Facebook’s range of staff perks may seem fun and frivolous, but the strategy behind them is anything but – the HR team reportedly tracks detailed metrics related to each perk and measures their cost against the resulting level of employee productivity.

KPMG

Among a whole host of fairly generous yet standard perks, KPMG offers a couple of standout options for its Australian staff, including ‘career breaks’ (which effectively allow you to take three to 12 months off work without losing your job) and

full-pay maternity leave of up to 18 weeks.

THOMAS DURYEA

This Melbourne technology firm provides pinball machines and foosball tables, but the best perk is the real estate – Thomas Duryea reportedly offers a three-bedroom holiday house where staff can take friends and family for free.

KOGAN

Ruslan Kogan, founder of online retailer Kogan, has an HR philosophy that allows staff to choose their own working hours and schedule performance reviews whenever they feel they’ve improved the company (one employee had six pay rises in six months). What’s more, as a

Christmas present one year, he flew his employees to Las Vegas for an all-expenses-paid holiday.

“We’ve got a philosophy of work hard, play harder,” Kogan says.

EVERNOTE

A software company valued at $1bn, Evernote has 250 full-time employees, and all of them – from receptionists and cleaners through to the top execs – receive the benefit of having their homes cleaned twice a month on the company’s dime. “Happy workers make better products,” CEO Phil Libin says of the perk. He also gives each employee $1,000 of ‘holiday money’ per year, saying: “The output we care about has everything to do with your state of mind.”

DIRECTORY AGGREGATOR / WHOLESALE BROKER FAST 02 9233 8222 www.fastgroup.com.au Page 5

PLAN Australia 1300 78 78 14 www.planaustralia.com.au Page 16 & 17

BANK

ANZ 1300 781 043 13 13 14 www.anz.com.au Page 9

DIVERSIFICATION

Chess Wealth www.chesswealth.com.au 07 5574 0760 Page 11

FINANCE

Rhino Money www.rhinomoney.com.au 1300 654355 Page 8

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

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

LENDER

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

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

Homeloans Ltd 13 38 39 www.homeloans.com.au Page 15 Liberty Financial 13 11 33 www.liberty.com.au Page 3

SHORT-TERM LENDER

TECHNOLOGY PROVIDER

Macquarie 13 62 27 macquarie.com.au/mortgages Page 32

Stargate Group 1300 723 613 www.stargategroup.com.au Page 19

ME Bank (03) 9708 3994 mebank.com.au Page 7

MKM Capital 1300 762 151 www.mkmcapital.com.au Page 4

OTHER SERVICES

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

Trailerhomes 0417 392 132 Page 26

Nominations Opening soon

save the date Friday 17th October 2014 Sydney Town Hall

www.austr alianmortgageawards.com.au