Australian Broker 11.19

OCTOBER 2014 ISSUE 11.19

$4.95 POST APPROVED PP255003/06906

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

+ ANALYSIS CLAWS OUT ON CLAWBACKS Brokers have come under fire for clawback clauses P10

+ SPECIAL REPORT BOUTIQUE AGGREGATORS Why bigger isn’t always better P12

+ BEST PRACTICE COMMUNICATING TO CREATE STICKINESS Effectively keeping in contact with your clients P20

+ BUSINESS

INTELLIGENCE

John Kolenda:

CONFESSIONS OF THE FASTEST-GROWING AGGREGATOR

Finsure’s managing director on how the aggregator handled lightning growth and successfully diversified its business

J

ohn Kolenda, co-founder and managing director of leading aggregator Finsure, says they are the fastest-growing group in the history of mortgage aggregation. Since launching in 2012 with a total of zero brokers, the aggregator now has over 600 brokers who, combined, are settling over $600m a month in mortgages.

FULL STORY PAGE 18

THE SCIENCE OF MINDFULNESS

The ultimate brain training for business P21

+ CAUGHT ON CAMERA The MFAA’s WIMBN series P29

NEWS 2

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NUMBER CRUNCHING

AUSTRALIA LOOKING UP?

TOP SUBURBS WITH HOUSES SELLING ABOVE LIST PRICE

Key economic forecasts for Australia Percentage of houses sold above list price

7 6.4% 5.9%

6

6.2%

5

$304,467

4 2.9%

2.8%

3

2.8% 2

2.0%

13/14 GDP

14/15

Core CPI

3.4% 2.5% 15/16

Unemployment rate

The average loan size to first home buyers increased 0.7% over the June quarter, and by 5.3% compared to the same time last year, to $304,467

100 % 96.

6 95.

9 8

Winston Hills, NSW

% % % 4.4

BY THE NUMBERS

Middle Cove, NSW

Alexandria, NSW

94.1% Kilsyth South, Vic Knoxfield, Vic

Source: REIA

Source: NAB

Source: Aussie

WHAT THEY SAID...

PHIL NAYLOR

“The well-publicised events which cost millions of lost funds and life savings to consumers and drove FOFA have not occurred in broking and nor could they” P6

MARIO REHAYEM

“At the end of the day, if there is no broker or consumer demand for what we are about to launch, then we wouldn’t expect it to take off” P8

JON DENOVAN

“It doesn’t matter what brokers or lenders do; it does seem that the consumer law centre will say we are acting unfairly” P10

TANYA SALE

“All aggregators irrespective of size still have to show that they can offer a strong business proposition” P13

NEWS 4

brokernews.com.au brokernews.com.au

WHITE: BRANCH MANAGERS MUST STOP POACHING FROM BROKERS ■ An industry leader has

praised the recent move by banks to increase broker commissions, but he says banks need to stop branch managers from taking business away from brokers if they really want to support the third-party channel.

FBAA CEO Peter White responded to an article published in Australian Broker last week, quoting the latest J.P.Morgan Australian Mortgage Industry Report, which “points out that the banks are increasingly looking to increase upfront and trail commissions to attract greater market share”.

Australian Broker spoke to the principal of Digital Finance Analytics and co-producer of the report, Martin North, who said “banks have become more reliant on brokers as an essential pipeline for new business”.

However, White has responded by saying that the relationship must be a “two-way street”.

“We’ve had a number of members telling us that bank branch managers have intentionally tried to influence their clients to switch to bank products directly, bypassing the broker who introduced the client to the bank in the first place,” he said.

“If the banks truly believe what the surveys are saying – that brokers are more regarded by consumers than banks – and they want to increase broker business, then they must educate their branch managers to support our clients. Branch managers should not intentionally try and claim brokers’ clients but should refer them back to the broker.”

4 points*

BY THE NUMBERS *According to the NAB Monthly Business Survey, the business conditions index dropped 4 points in the month after a 5-point increase in July, while the business confidence index dropped 2 points in August.

Source: NAB

Aussie announces aggressive recruitment drive

■ A franchise brokerage has announced a major recruitment

drive to add 200 more brokers to its network.

Aussie Home Loans has launched a recruitment campaign that the franchise brokerage says aims to add 200 brokers to its network over the next year.

Aussie executive chairman John Symond argued that the franchise network provided an attractive proposition for brokers.

“We have a competitive remuneration structure for Aussie mortgage brokers and provide them with attractive commissions. On top of that, Aussie offers award-winning development and training and a range of flexible business opportunities designed to reward our business owners and brokers directly for the effort invested. They’re also supported through accredited and free mentoring so they can build better businesses and write more loans,” he said.

The company grew its retail channel by 17% last year to 451 loan writers, while increasing its number of franchise stores by 10 to 160. Aussie mobile brokers saw a 14% John Symond increase to 438.

Housing market dictating monetary policy ■ The heated housing market is preventing the Reserve

Bank from making further cuts to interest rates, which are needed to push the exchange rate down, according to leading economist Ross Garnaut.

He said the Australian economy was facing “very difficult circumstances” and a lower exchange rate was needed to prevent our economy from weakening further, Fairfax reported.

“There may be excessive price inflation in housing, and if that is the case it is very important that we deal with that problem with specific measures rather than running our whole monetary policy to suit the housing sector,” Garnaut said.

He said changing the capital adequacy rules that bias housing lending would go some way towards helping cool the property market without raising rates.

“It is ludicrous to be worried about lending risks in the housing sector on the one hand, while at the same time requiring banks to put more capital aside when they are lending to BHP,” he told Fairfax.

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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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Industry leaders rubbish fee-for-service claims

■ Two industry leaders have poured cold water on the

WORLD NEWS UNITED STATES OF AMERICA BAD TIME TO BUY?

Fewer consumers think it’s a good time to buy or sell a house in the US, according to data released in August by Fannie Mae. The percentage of consumers who think it’s a good time to buy matched its all-time low.

According to Fannie’s August 2014 National Housing Survey, the percentage of consumers who think it’s a good time to buy a house hit 64%. Those who think it’s a good time to sell fell to 38%. While the percentage of consumers who think housing prices will go up in the next 12 months held steady at 42%, the percentage who think prices will fall increased to 9%.

“The August National Housing Survey results lend support to our forecast that 2015 will likely not be a breakout year for housing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The deterioration in consumer attitudes about the current home buying environment reflects a shift away from record home purchase affordability without enough momentum in consumer personal financial sentiment to compensate for it.”

CANADA

commission versus fee-for-service debate.

The debate was refuelled after financial services firm EY stated in its submission to the Financial Services Inquiry that a fee-for-service structure would mitigate exposure to conflict of interest and bring consistency of regulation to the mortgage broking and financial planning industries.

Phil Naylor MFAA CEO Phil Naylor told Australian Broker that the comment from EY was unwarranted as it assumed that the circumstances in the financial planning industry should be superimposed onto the mortgage broking sector.

“In fact, the operations are quite different. In financial advice the money flow is from the consumer (investor) to an investment advised by a financial adviser. In broking the money flow is from a lender to a consumer (borrower) based on the mortgage broker’s recommendation as to what is appropriate for the borrower.

“The risk is different and should not be confused. The well-publicised events which cost millions of lost funds and life savings to consumers and drove FOFA have not occurred in broking and nor could they because of the direction of the money flow,” he said.

FBAA CEO Peter White shares the same opinion that EY may be drawing a line that shouldn’t be drawn. He also believes brokers haven’t done anything that would cause disclosure of interest to be an issue.

“I think the finance broking sector have come great lengths in making sure they mitigate issues that would surround conflict of interest,” he said.

Levelling the playing field a risky move

■ Credit ratings agency Standard & Poor’s has argued that DID YOU KNOW?

10.5%*

HOME BUILDING COOLING OFF

New figures from the Canada Mortgage and Housing Corporation (CMHC) showed a cooling in house building in August, with new starts falling for the first time in five months. The trend measure of housing starts in Canada was 189,837 units in August compared to 189,596 in July, based on a six-month moving average and seasonally adjusted figures. The stand-alone monthly SAAR was 192,368 units in August, down from 199,813 in July. Bob Dugan, CMHC’s chief economist, commented: “The currently elevated level of inventory of newly completed and unoccupied condominiums, and units under construction, supports CMHC’s view that condominium starts will likely see a declining trend over the coming months as developers and builders seek to limit risks of overbuilding.”

*Investment lending for new construction in the three months to July rose 10.5% compared to the same period last year. For owner-occupiers, this figure was 8.8% Source: ABS

‘levelling the playing field’ for regional lenders could create new risks in the banking system.

Regional lenders have told the Financial Services Inquiry that they face an entrenched disadvantage in the mortgage market due to the current risk-weight and capital adequacy rules, which require the big four banks and Macquarie to hold only about half as much capital for every dollar lent out.

Standard & Poor’s is concerned that allowing regional banks to hold less capital would funnel more credit into the heated housing market, Fairfax reported. This would put even more pressure on the economy when the market faces house price corrections.

“Greater access to housing credit may put further strong upward pressure on house prices. This would increase the risk of a disorderly correction in property prices down the track, which may hurt economic growth and risk financial instability,” the ratings agency said.

“We already view the household sector as highly leveraged, driven by previous run-ups in house prices. Promoting higher household leverage could therefore raise households’ financial vulnerability even further.”

The looming prospect of a property market correction has been a focus of the Financial Services Inquiry, with APRA and the Reserve Bank expressing concerns to the Inquiry about the consequences a market correction might have on the economy, as competition in the mortgage lending sector has been on fire.

NEWS

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Bank control of brokers no threat to competition – Symond ■ Aussie chair John Symond has claimed that banks’ control of mortgage broking

Mario Rehayem

Pepper hits employment milestone ■ Non-bank lender Pepper has hit a new milestone,

recently employing its 1,000th employee. The lender says its success and growth can be put down to two simple, albeit important things: a common-sense approach to lending, and taking the time to listen to the market.

Earlier this year the specialist lender ventured out, extending its product range to include prime mortgage products. This decision came off the back of broker and consumer demand.

“Brokers were searching for a product that had the same aspects of our service that we delivered in our specialist program, but in a prime product,” Mario Rehayem, director of sales and distribution at Pepper, told Australian Broker.

The broker channel currently represents almost 95% of Pepper’s total originations. Rehayem said the broker channel would always remain a sole focus for the lender, and its success had been driven by their commitment to the channel.

“We have been lucky to experience a lot of success each time we release a new product or feature into the market, and the main people to thank for that are the broker groups and customer focus groups we form before we launch any type of products. At the end of the day, if there is no broker or consumer demand for what we are about to launch, then we wouldn’t expect it to take off.

It is crazy not to take the time to listen to what your market want.”

Rehayem also attributes the lender’s growth to its company culture aimed at providing clarity and keeping things simple.

businesses does not pose a threat to competition.

Speaking to the Australian Financial Review, Symond argued that bank ownership of broker distribution channels did not hamper customers’ access to good home loan deals. While regional banks have claimed in a submission to the Financial Systems Inquiry that there are anecdotal reports of “distortions” caused by bank ownership of brokers, Symond said this was untrue.

Symond told the AFR that bank ownership of broker distribution networks had already occurred in countries with more “mature” mortgage markets than Australia’s. He said the trend would not impact on consumers.

“So long as consumers believe they are getting a good deal, they don’t care where the money comes from,” Symond told the AFR. “It’s like going to a service station.

You need petrol and you need super; do you jib at whether it’s BP, Caltex or Shell?

If you need it you’re going to take, generally, one of those, without saying ‘Who owns Shell? Who owns BP?’ ” Symond claimed that Aussie Home Loans had actually reduced the share of its mortgages written through CBA by around 20%, despite the bank’s stake in the franchise brokerage.

Symond also poured cold water on claims that home loan competition in Australia is inadequate. He claimed banks were competing “vigorously” for residential mortgage business.

“Consumers have lenders tripping over each other to get their business; some of them are even offering $1,000 cash and no expenses and all that, loans with all the features and flexibilities that you cannot get anywhere in the world. We take things for granted,” Symond told the AFR.

AFG inks comparison site deal ■ Leading mortgage broking group Australian Finance

FAST FACT

$811,837* *Median house price in Sydney for August. This is the first time Sydney’s median house price has risen above $800,000 Source: REIA

Group (AFG) has partnered with comparison site comparethemarket.com.au to launch a dedicated home loan comparison service.

Beccy Ras, state manager at AFG, said the partnership was developed in response to the increasing number of consumers going online to search for a home loan, and this represented an opportunity for the group to embrace this change and engage with consumers.

“Our partnership with comparethemarket.com.au will allow homebuyers to still do their own research and get the choice, but then help them to speak with an experienced broker who can assist them with the process. It is giving consumers the best of both worlds.”

The website allocates consumer enquiries based on the postcodes provided, putting homebuyers in contact with their local AFG brokers. Ras said the partnership would not only provide a benefit for consumers, but also a great opportunity for their national network of brokers.

“It will be a fantastic source of leads for our brokers. It’s the first time AFG have supplied leads to our network of brokers, so it is going to be great for our business and our growth,” she said.

ANALYSIS

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10

Claws out on clawback clauses The Consumer Action Law Centre has trashed brokers over clawback clauses, but leading solicitors say the claims are bogus

T

IT DOESN’T MATTER WHAT BROKERS OR LENDERS DO; IT DOES SEEM THAT THE CONSUMER LAW CENTRE WILL SAY WE ARE ACTING UNFAIRLY – J ON DENOVAN

he use of clawback clauses to protect brokers can be controversial, even among the broker community.

Some believe it’s a fair guard against clients who want to chase rates, while others believe it could be off-putting for borrowers. But when clawback clauses are written into a broker’s contract, it seems fair to expect that the consumer signing on the dotted line will abide by the agreement. Evidently, this isn’t the view of the Consumer Action Law Centre (CALC).

CALC recently told News Ltd that the use of clawback fees was “certainly another reason not to use a mortgage broker”.

This sweeping statement came after a Sydney couple argued against the need to pay a clawback fee to their mortgage broker when they refinanced their $940,000 home loan from St.George with ANZ at the end of last year.

According to a News Ltd report, the Home Loans Experts broker is attempting to recover a clawback fee, which was clearly specified, along with the circumstances in which it would be payable, in the original contract.

The Credit Ombudsmen Service (COSL) has already rubbished the couple’s complaint.

However, CALC chief executive Gerard Brody told News Ltd: “If you get your home loan directly with the bank they can’t charge you these fees. We would also argue that clawback fees are potentially in breach of Australian Consumer Law in that they’re what are called ‘unfair contract terms’.”

Gadens partner Jon Denovan was particularly blunt in his assessment of the situation, calling CALC’s claim “bullshit”.

“It doesn’t matter what brokers or lenders do; it does seem that the consumer law centre will say we are acting unfairly.”

Denovan lashed out at the idea that the contract in question – or any clawback clause in a broker’s contract – could be termed unjust.

“I can’t imagine why the contract would be unjust. The one thing you can’t argue about in a contract is the price. For example, I can’t agree to buy a television set for $1,000, then go back and argue about the price and say I would only like to pay $500 for it. I could argue if the contract had a clause which said I couldn’t turn the television on, because that is an unfair term. But I can’t argue about the price, which is what is going on here. The customer can’t agree to enter a contract with the broker and then expect not to pay.

Customers always have a right to back a claim, but it doesn’t seem to be fair that these people have decided that they are going to use this broker’s services and not

pay for it when the conditions were clearly stipulated in the contract.”

Australian Broker also spoke to Amine Berrada from Home Loan Experts, the couple’s mortgage broker who settled their loan with St.George. He said he followed the proper processes and gave them great service, so he was blindsided.

“Mr Lee shopped around, and repeatedly came to my office to get the best service and deal. He came back to me with lots of offers and asked me to match or beat those offers, which I managed to do. He was very happy with the process and my service. After I got him an offer he was happy with, he brought his wife and his kids to my office to chat about what would be the next step and how we could organise the loan. Everything went perfectly,” Berrada said. This is why the disagreement has come as a shock.

“At no point did they give me any indication that they were going to refinance the loan. I was shocked when I got the notice from St.George that the account was closed.

I was surprised; I thought that maybe they had to sell their property. They never came to me and asked me about refinancing.”

There are many times throughout the loan process when the contract – in particular, the clawback clause – is discussed, Berrada said. So he believes it is not unfair and that he is entitled to be paid what he is owed.

“Mrs Lee is also a solicitor, and I explained everything to her about our services and what the repercussions would be if the loan was repaid within the first 18 months. This was all stipulated clearly on the application that she signed to,” he said.

Berrada said he believed this would cut against any claim that the borrowers didn’t understand or fully agree to the contract.

“As a solicitor, you wouldn’t engage in a contract and sign a contract if you didn’t read, understand and reread the contract. A few questions were asked, which I answered clearly and then the document was signed.”

Most of all, Berrada is just disheartened that his client didn’t come to him for advice.

As a broker, he only wants what is best for his clients.

“I am not here to rip people off. If they engaged my services to refinance, then the clawback fee would be waived. Home Loan Experts never charge an existing client.

Our aim is to keep our clients and keep them happy,” he said.

Home Loan Experts’ position on clawbacks echoes the position of many other mortgage brokers: it is unfair for brokers to wear the cost from the bank, particularly after the work brokers have put in for the client to get their mortgage approved.

SPECIAL REPORT

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12

Boutique aggregation: Is bigger always better?

Many aggregators tout the benefits of scale, but smaller platforms bring their own value to the table

T

he one constant in aggregation seems to be consolidation. Large aggregators become larger as they acquire medium-sized platforms, and independent aggregators see investment dollars pumped into them by lenders. But amidst the consolidation and vertical integration, boutique and independent aggregators are also thriving.

While a boutique may not suit the tastes of every broker, there’s undeniable value in staying small.

KEEPING IT PERSONAL

Outsource Financial CEO Tanya Sale believes one of the major benefits of remaining independent is remaining nimble. She said smaller aggregators are able to react to their members’ needs much quicker than some of the larger platforms.

“Boutique and independent aggregators provide the flexibility to quickly respond to industry change and react faster to business opportunities. Members tend to have more accessibility to senior staff as there are

more resources per quota. Relationship building is an integral part of the overall proposition. The member is far less likely just to be a fish in a very big pond,” she said.

Ballast Finance chief Frank Paratore agrees. Paratore said independence lends aggregators the ability to offer its members more one-on-one attention.

“The advantage of going with a boutique aggregator in terms of size is the personalised service you can get as a member, unlike with larger groups where

SPECIAL REPORT

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you can feel more like a number. Being a smaller aggregator, we can also offer quicker turnaround and response times,” he said.

This isn’t to say that scale is without its benefits. Larger aggregators tout their scale as part of their value proposition, the philosophy being that such scale allows them to invest heavily in the services offered to their broker networks. But Sale said smaller scale does not negate excellent service and a strong value-add.

“Whilst I tend to agree in this day and age a certain scale is important, one must never forget that quantity is not always quality. At Outsource Financial we can certainly offer the same opportunities and extensive suites of services that an aligned aggregator can. It is not about having a large bag of Smarties but rather Smarties that are top quality and taste good every time. All aggregators irrespective of size still have to show that they can offer a strong business proposition,” Sale said.

Paratore said Ballast delivers a variety of benefits to its members, and that scale isn’t a hindrance to the company’s competitive proposition. Moreover, there are no questions in regards to ownership or the incentives the company offers, he said.

“There is total transparency. The reasons brokers will choose Ballast is specifically for that transparent and personalised service.

Any of our brokers can pick up the phone

13

BOUTIQUE AND INDEPENDENT AGGREGATORS PROVIDE THE FLEXIBILITY TO QUICKLY RESPOND TO INDUSTRY CHANGE AND REACT FASTER TO BUSINESS OPPORTUNITIES - T ANYA SALE and talk to me, the CEO, at any time.

There aren’t too many larger groups that can talk the talk and walk the walk; it is about being out on the streets yourself too,” Paratore said.

ADDING REAL VALUE

Every aggregator needs a strong and clearly-stated value proposition. Sale said for Outsource, this is the support the aggregator offers in business development.

“We not only become our member’s partner in lending but play a strong role in assisting them to grow a multi-faceted business which is required in this current environment to ensure longevity and success. Marketing development is a strong

part of our business as a support mechanism to our members and writers – and is designed to the individual business as we find ‘one size does not fit all’ – it comes down to knowing your members and listening to what they need,” she said.

Paratore said Ballast’s primary value proposition is its ability to provide a broad suite of services.

“Ballast’s unique value proposition in the market is that we are an absolute full service financial provider – we are an aggregator, we hold our own dealer group licence, we are our own registered tax agent, we have our own SMSF administration, we have our own property division, we have our own mortgage management division, we have our own in-house compliance and we are our own registered law firm. We are an absolute one-stop shop,” he said.

This actually puts the aggregator ahead of some of its larger competition, he said.

“As some of the other aggregators in the market are playing a little bit of catch up in regards to the integration of financial services, we have already done it. Where they are getting to now – seeing brokers integrating with financial planners – was what our model has been since 1996 and we have only expanded from there.”

STAYING INDEPENDENT

Of course, for any smaller aggregator there

SPECIAL REPORT 14

always remains the spectre of consolidation.

Many small or medium-sized aggregators have been snapped up by larger platforms, and for boutiques seeking scale, partnering with a large aggregator may make sense.

Nevertheless, Sale believes independence in the aggregation market will never completely fade. If anything, the wave of consolidation may actually strengthen the independent proposition.

“The future for boutique and independent aggregators is strong. It really depends on the model that the particular aggregator has chosen. It doesn’t matter if you are boutique or large. It will come down to the model, how it is managed, focusing on your core business and providing your membership with the tools to assist them in building a strong and profitable multifaceted business,” she said.

Paratore said that boutiques will continue to flourish by virtue of their independence, and argued that even more boutique aggregators could challenge the market in the future.

“Boutiques and independents are definitely required in the aggregation market to provide a true alternative to larger groups. I would actually encourage greater competition in the aggregation space. That is, I would like to see more independent and boutique players, not less.

The more players in the aggregation space you’ve got, the better you have to be at the service you provide in order to maintain your broker. It can’t just be a handcuff clause or it can’t just be a commission incentive, it has to be the true value of the service,” he said. “Having more boutique and independent aggregators will foster healthier competition than the consolidation and ownership of aggregators. I think it is great that the banks are realising the value of the aggregation space, but it needs to be more about service offering instead of ownership. Monopolies and oligopolies aren’t going to increase competition, increase the value proposition, and better the market the way more independent aggregators entering the marketplace can.”

But Paratore conceded that consolidation would still continue in the market.

“Yes, we still see consolidation evident.”

Sale believes that consolidation itself may be symptomatic of a business that is struggling to get by on its own merits. For those with a strong business model, she argued that consolidation is unnecessary.

“Consolidation usually happens though when it is not a profitable situation or a certain amount of scale is just not evident. If the growth is there, you have a strong business proposition and it is a lucrative model you would have to ask yourself why consolidate?” Sale said.

And Sale said that the ability to remain independent and boutique is in itself a sign of success.

“As Henry Ford said, ‘Coming together is a beginning; keeping together is progress; working together is success’. I think this says it all,” she said.

brokernews.com.au

TANYA SALE, OUTSOURCE FINANCIAL

FRANK PARATORE, BALLAST FINANCE IAIN FORBES

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15

15

TECHNOLOGY UPDATE

Thinktank - Electronic lodgement the commercial way FACING THE CHALLENGES

This isn’t to say that boutique aggregators don’t face unique challenges. But Sale said as long as boutiques remain true to their core values, they can overcome the challenges inherent to a competitive aggregation environment.

“Opportunities will come and the challenge will be how that aggregator can deal with the challenge of it – i.e. resources, systems, processes, training and education etc – ensuring that they keep to the mantra that got people to join them. The challenge will be not to lose focus on their initial strategy that made them successful – focus will be the key component – also they will be sought out by likeminded businesses who also believe in independence and clear waters,” Sale said.

For Paratore, attracting new-to-industry brokers is a challenge facing independent aggregators.

“Young, new professionals have a completely different grasp of technology and they can bring fresh ideas to the industry. New people bring innovation because they can think about the industry in a different way. It is about combining these fresh ideas with what experienced brokers know and have tested which will bring about this innovation and change. The industry needs to be open to change too,” he said.

HAVING MORE BOUTIQUE AND INDEPENDENT AGGREGATORS WILL FOSTER HEALTHIER COMPETITION THAN THE CONSOLIDATION AND OWNERSHIP OF AGGREGATORS - F RANK PARATORE

But this is a challenge Paratore said Ballast was tackling.

“One of the things Ballast is doing in regards to attracting new-to-industry brokers is taking part in the MFAA’s Education Advisory Committee, with one of our members on the advisory committee. This committee looks at how we can get involved with getting younger people into the industry earlier, such as at high school stage – can we get a broking course acknowledged or are courses being acknowledged from a tertiary perspective? The committee is even working with sporting clubs; to help and encourage athletes to have a career plan as their sporting careers can often be over by 30,” he said.

And when it comes to boutique aggregators navigating the competitive landscape, Paratore argues they are well-positioned.

“In regards to small aggregators competing with large aggregators, I would be asking how the larger aggregators can compete with us, not the other way around. Smaller aggregators are a whole lot more nimble. As a boutique aggregator, we can adjust and accommodate more easily to the market. While the larger aggregators may have deeper pockets based on ownership, boutique aggregators can react very quickly. To put it into an analogy, large aggregators have the turning circle of the Queen Mary whereas smaller aggregators have the turning circle of a speed boat.”

PETER VALA Electronic lodgement is now de rigueur in the residential space and the commercial sector is fast closing the gap; clearly recognising the need to embrace new opportunity.

Electronic lodgement has long demonstrated that it’s the way of the future and takeup by commercial lenders is on the increase. Yet some brokers operating in the commercial sector are still confused about the process and therefore hesitant about making the switch.

Peter Vala, Head of Sales and Distribution at Thinktank, a boutique specialist commercial finance lender, has discovered there is a common misconception among some commercial brokers that electronic lodgement submission means the deal is credit scored.

“That is not the case with Thinktank,” Vala stresses.

NextGen.Net is the pioneering market leader of solutions for the mortgage lending industry and the technology service provider’s celebrated system, ApplyOnline, is the standard online lodgement platform in Australia.

Thinktank launched ApplyOnline 18 months ago and Vala expresses disappointment that takeup by brokers has been slow due to a misunderstanding about credit scoring.

“At Thinktank, electronically lodged submissions from brokers go to a BDM or a relationship manager. They don’t go straight to credit,” explains Vala.

“Commercial tends to be more tailormade than residential lending, which is generally ‘straight off the plate’.

“At Thinktank we ‘workshop’ a transaction with a broker, and when we know the structure that they’re looking for and they’re happy with it, that’s when they gather the data and put in a submission for finance.”

NextGen.Net Sales Director, Tony Carn, says the significant point for brokers to note is, “NextGen.Net has delivered an ApplyOnline solution that fits Thinktank’s specific model”.

MICHAEL TONG “Thinktank is able to take advantage of ApplyOnline to ensure quality data is submitted after the broker has ‘workshopped’ the deal with their BDM,” says Carn.

“We get the transaction, work that transaction out with the broker and then the broker gets an opportunity to pitch that transaction to us. In residential you don’t get a chance to pitch,” says Vala.

Thinktank’s ApplyOnline customised solution enables brokers to leverage their CRM data. Information drawn out of brokers’ CRM goes straight into ApplyOnline. There is no re-keying.

Other advantages that Thinktank brokers are discovering is that ApplyOnline can auto-populate all their ‘print forms’ and they can get backchannel messages regarding the status of their loans.

“With ApplyOnline, turnaround times are dramatically sped up because all the information, including all the supporting documentation, can be input directly into the system; and it goes straight to one of our BDMs or relationship managers,” says Vala.

Michael Tong, who manages training at NextGen.Net, remarks that a good example of ApplyOnline adding quality to loan data is the new ACN and ABN search and lookup.

Through this new function, brokers can access the Australian Business Register and ASIC to obtain or check the ABN and/or ACN included in the loan application.

“ApplyOnline ensures correct and standardised information is received by the BDM, and they are able to easily put together the deal submission and send through to credit,” says Tong.

Referring to it as “a data management tool for online applications” Vala talks of the value of ApplyOnline enabling all the data to be collated into one place.

“For us that supports our industry because it makes the submission process cleaner, quicker and much more streamlined,” he says.

BIG IDEA

THE COALFACE

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Man of many talents Matt Centrone has expanded his business into areas beyond residential broking

M Leading the commercial charge FAST CEO Brendan Wright says the aggregator shows its expertise in helping brokers move into commercial lending

W

hen it comes to the decision to diversify, FAST CEO Brendan Wright believes it comes down to an individual proposition. But for brokers who are looking to build on their residential business, Wright believes FAST is the aggregator that can help.

“From a FAST perspective, when you talk about diversification it’s OK if you’re a broker and you just want to focus on residential, asset finance or commercial, but we are the aggregator that can help you move across those ones, particularly being the market leader in commercial,” Wright says.

Wright says the ability to move across these asset streams comes down to having the right help.

“There is an enormous opportunity in that space, but more importantly for us it is about having the right people, so we pride ourselves on having the right people who can have those business-to-business conversations with our brokers and help them execute and deliver on their strategies over the long term,” he says.

Wright says this extends to both on-the-ground business development managers and office support.

“We call it agile two-tier support, so quality partnership managers who understand business and can have those conversations with brokers, supported by associates who can back them up as well.”

Supporting brokers to grow their business also entails providing software solutions, he says. But flashy software on its own isn’t enough to set aggregators apart.

“All aggregators have strong platforms, but it’s also the aggregator’s responsibility to say, ‘How do I help brokers leverage that?’, depending on whatever strategy might be in their business,” Wright says.

att Centrone, director of Centrone Finance, is a broker of many talents.

With over seven years’ experience in the world of finance, he has established himself across residential, commercial and self-managed super fund (SMSF) lending.

Centrone, who holds a bachelor’s degree in law and legal practice, originally intended to make a career in the legal world. But when he bought his first home through a broker at the age of 25, he decided he wanted to help people achieve their property dreams.

Starting off in residential lending – which still makes up a big part of his lending profile – he took the plunge into the commercial game after he found that more and more commercial enquiries were creeping into his business.

“I enjoy commercial lending because it involves more problem-solving; it can be more challenging than residential.

I like the fact that every deal is so different and there are several different and complex solutions for each deal.

“I also enjoy my negotiating position when writing a commercial loan. I find you can negotiate to a certain extent with residential lending, but with commercial there is more back and forth with terms and conditions and pricing. You can push the limits a little further with negotiating commercial transactions.”

Centrone also specialises in SMSF lending for commercial properties. He says SMSF lending can be highly specialised and regulated but it can also offer attractive incentives for the right borrowers.

“Self-managed super fund lending can be a very tax-effective way to invest in property; however, there are a lot of considerations to take into account. A borrower has to meet the ‘sole purpose’ test under the act; they are not allowed to develop the property and they

can’t raise equity from the property to buy another property. It does have its restrictions so it isn’t always the right choice for borrowers, but it can offer great benefits for the right person.

“I specialise in SMSF lending for commercial investments, and when I find the right deal for the right person it is very rewarding. Getting business owners out of renting and owning their own premises is a good feeling.”

For brokers who are interested in adding SMSF lending to their suite of services, Centrone’s advice is to work alongside a financial planner.

“I would highly recommend working alongside a reputable financial planner if you don’t already have financial planning qualifications yourself, to ensure that your clients’ needs are properly met. SMSF lending is more complex and regulated with the types of deals and what is needed from the bank.

“I also recommend to my clients that they speak with their accountant before making a decision to go ahead with purchasing property through their super fund, to ensure they are fully educated. I look at the process as a three-piece puzzle made up of the financial planner, the accountant and the broker.”

Centrone has been named one of FAST’s ‘Young Gun’ brokers and he says his ‘secret’ may not be so secret.

“Honestly, I don’t have any tricks. I just work hard and don’t worry or take notice of what other people are doing.

I just focus on myself and my own business and how I can continually improve my processes and relationships.

“I strive to be a man of my word and simply deliver what I say I am going to deliver.

I also stay on top of what is happening in the industry. I try not to rely on software or other processes and tools. I spend time doing my own hard research and familiarising myself with each lender and each product.”

NEWS 18

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John Kolenda:

CONFESSIONS OF THE FASTEST-GROWING AGGREGATOR Finsure’s managing director on how the aggregator handled lightning growth and successfully diversified its business

J

ohn Kolenda, co-founder and managing director of leading aggregator Finsure, says they are the fastest-growing group in the history of mortgage aggregation. Since launching in 2012 with a total of zero brokers, the aggregator now has over 600 brokers who, combined, are settling over $600m a month in mortgages.

Plus, since acquiring a major stake in Spectrum Wealth Advisers (SWA) earlier this year, the aggregator has also added 250 financial planners to its portfolio, who are selling up to $1m in risk and insurance policies per month.

Kolenda says the aggregator’s success has come down to a combination of healthy organic growth and smart acquisitions.

“A large reason behind why we have grown so quickly is because we were sufficiently prepared for organic growth.

Other aggregators that have experienced quick organic growth had to adapt after they grew. As the business grew they looked to put on additional support and infrastructure, which means they ended up probably lagging behind the requirements of their brokers.

“Whereas from day one our business had the complete infrastructure that provided brokers entire and comprehensive support; we had the marketing support, we had the

call centre capability, we had the compliance team, we had the technology and we had the recruitment capability. We built that infrastructure before we started growing, which is why we have been able to grow so quickly and achieve success.”

The strength of their business-to-business solutions has been the point of difference for the aggregator, Kolenda says.

WE BUILT THAT INFRASTRUCTURE BEFORE WE STARTED GROWING, WHICH IS WHY WE HAVE BEEN ABLE TO GROW SO QUICKLY AND ACHIEVE SUCCESS “We differentiate because we provide extremely strong business-to-business solutions, and that is essentially what brokers want. They want their aggregator to be a partner that gives them a diversity of solutions that is designed to cater for their inherent needs at the time and provide support and infrastructure for them to grow.

From day one, we were able to tailor-make

solutions to fit them. This is where we are unrivalled in the industry.”

In June, Finsure announced its second major deal in less than a year – after purchasing mortgage aggregator LoanKit from Mortgage Choice – acquiring a significant stake in financial planning company SWA. The decision to diversify was a ‘no-brainer’ for Kolenda.

“The acquisition of SWA made a whole lot of sense in achieving large-scale distribution and also being able to vertically integrate and provide more solutions for our brokers. There has been industry talk about diversification for many years, but I think Finsure was the first aggregator to actually go and buy into a dealer group. Brokers are our customers, so it is our job is to provide very sound solutions and support for them to mature and develop professionally, and achieve success.”

Kolenda says the move to diversify into financial planning has been so seamless and successful for the group because they invested heavily in aligning the two channels, ensuring the merger had a common and clear goal of providing broader solutions to support their broker network in growing their businesses.

“From my point of view, it makes more sense to diversify by setting up your own planning arm, rather than doing it through a third party. We have had third-party relationships that we have tried to integrate with sales, but because there is no common alignment or strategy it doesn’t seem to work as coherently. By taking a stake and working together, you are able to achieve much deeper penetration and more buy-in from your brokers. That is why we decided to buy a stake into Spectrum Wealth Advisers.

“When you are fully aligned you have a common goal, a common strategy and a shared vision. Both of the businesses [Finsure and SWA] understand and value the relationship that we have with our brokers and planners in the same way: that they are our customers. They understand the obligation to provide them with the support, infrastructure and training that allows them to be able to grow and develop through the services that we offer to them. Relying on a third party, it can just be harder.”

Like starting anything new, there have been some bumps along the way; however, Kolenda says it comes down to providing different options and choices for your brokers.

“We have been getting mostly very positive feedback from our brokers. You are going to get some brokers who want to engage and do it straight away and, some

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NEWS 19

brokers who can be nervous and unsure about it. It comes down to catering for the whole spectrum and giving them multiple options.

“We have individual brokers who write their own loans, we have individual brokers with assistants, and we have brokerages with multiple loan writers – they are all in a different life cycle. Therefore, we have the option for brokers to refer to a [SWA] planner, we have the option to provide brokers with the training to sell risk policies themselves, or we can help them recruit an in-house financial planner.

“They can get different solutions depending on where they are in their business life cycle and how broad and deep their offering is. There is also a channel at SWA that does the full financial investment advice which brokers can refer clients to.”

But brokers are increasingly seeing the benefits of integrating and introducing risk sales as a part of the mortgage themselves, he says.

“We have brokers who are literally more than doubling their income by providing a customer something that is of value to them and their family in protecting their assets and livelihood. They are offering financial planning services that suit the lending transaction; they aren’t trying to be complete wealth experts.

“Within a very short space of time we have had around 8% –10% of our brokers who have actually gone through the training to get their RG 146, which is the necessary training to be able to execute a general advice sale – and these are just the early stages. We have quite a number of other brokers now who want to do it.”

Looking ahead at 2015, Kolenda says the aggregator’s key focus will be on maintaining solid growth momentum and further investing in technology.

“We are growing organically very aggressively, putting on 20 to 25 brokers a month, and I want to maintain that.

The organic growth target I would like to hit over the next 12 months is to reach 800 plus mortgage brokers and 350 to 400 financial planners in the group.

“We are also investing very heavily in our LoanKit technology. Over the next year I would like to have it as a stand-alone, central CRM with a multivertical offering that is keeping up with our diversification, allowing seamless integration in referring clients to a planner.

“In regard to acquisitions, I’m always looking at acquisitions. If you can integrate them pretty seamlessly, the value propositions are aligned and there is a lot of commonality, then it will work. I’m always talking with people and on the lookout,” he says.

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frequency need to reflect these nuances.

Finally, with respect to timeliness, know when to quit. If a consumer fails a given sales cycle (the newly assigned contact doesn’t return your call or email) it is safe to assume that they have ‘tuned out’. This doesn’t mean you want to burn them out with incessant messaging. You will want to, however, have different messaging that emails out at longer intervals with messaging inviting them to re-engage where they left off. These ‘nurture’ emails are great follow-up emails that, when delivered in a timely fashion, reconnect the client to you.

RELATIVITY

The messaging in your CRM must be relative to the pipeline stage of the client and the length of time they have been in that stage. As an example: you wouldn’t send an email inviting a client to call you about their appraisal if they hadn’t completed an application yet. Keep the message relative to their actual position in your pipeline. Finally, keep the message short. The best-read emails contain only a few sentences that convey a welcome, the steps they need to take to move forward, and a close. Providing excessive ancillary information in a preformatted email risks not being relative to your client’s interests.

If you’re not relative you’re one step closer to your client’s deleted folder.

Communicating to create ‘sticky’ clients Mortgage tech expert Adam Stein shares tips to make sure your client communications don’t end up in the rubbish

S

tickiness’ can be defined as the art of keeping your customer engaged at each stage of the sales cycle.

When accomplished, stickiness increases sales conversion ratios and differentiates your offering from those of your competitors. The object herein is to keep the customer ‘stuck’ to you via your messaging. To do so your messaging needs to reflect the customer’s stage in the transaction cycle and contain messaging that induces them to move to the next stage of the cycle.

Four considerations to effect ‘sticky’ communication • • • •

Timeliness Relativity Validation Call to action

Ask yourself this question: how often do I receive email, even from a known service provider, that goes directly to my deleted or spam folder? The object of this section is to

‘not to be like those senders’! By creating timely messaging that is relative to your client’s request and stage in the transaction, you can validate their concerns, answer questions and, by doing so, induce them to complete your call to action. Here are a few suggestions on the subject:

TIMELINESS

Know the logical timeframe associated with the given stage of a transaction. Frequency and timing of messaging are critical to your messages being either read or dumped.

As an example, it is not uncommon to have three emails in a week inviting a newly assigned contact to return your call; it would be a poor practice, however, to send a prequalified home buyer three emails in a week telling them about the home buying process. In one instance you have a defined sense of urgency: “you have a question about a loan; I have an answer – please return my call”. In the other, you have a prolonged sales cycle while the client shops and finds their eventual home. The timing and your

VALIDATION

In order to move a client from one stage to another, you will need to have content that provides the consumer with validation.

Validation in simple terms is the answer to the client’s question: “What’s in it for me?”

Additionally, validation at one stage of the pipeline is different than at another. A client who has made an application could be induced to lock in a rate and move forward, with a message that speaks to interest rate volatility. A prospective client could be moved to contact you about an application with a message that validates the terms of the mortgage they are looking for. In each email that you send at a particular stage you’ll need to validate why the client should progress forward in the pipeline.

CALL TO ACTION

If you have kept your message timely and relative, and provided validation, then you are in position to place a call to action in your email. Without the aforementioned, however, the call to action will be shallow in nature and will not be acted upon. The call to action should be simple: a ‘Do This Now’ statement.

Depending on the pipeline stage, the call to action ranges from “call me” to “send in your documents”. In each email you will want a call to action that induces the client to move forward accordingly.

Adam Stein currently serves as CEO of LoanTek, Inc. Under his direction LoanTek’s pricing engine has grown to price and deliver over one million qualified offers to consumers every day. LoanTek creates transaction efficiencies, cost savings, and an improved return on investment.

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The art and science of mindfulness Mindfulness is perhaps the ultimate in brain training for better personal and professional outcomes

I

t’s human nature to act before thinking, right? It is, but it doesn’t necessarily have to be. The concept of mindfulness is not new; in fact, as a concept it is over 2,500 years old. However, its relevance to the corporate world is increasingly being recognised, thanks to recent developments in neuroscience.

Detailed brain scans show that mindfulness practice changes both the physical structure and activity in regions of the brain associated with emotional regulation, memory, learning and decision-making. In addition, mindfulness practice reduces reactivity, giving us a bit of space to choose our responses rather than reacting automatically. These capabilities are critical for effective leadership and, with mindfulness training, they can be enhanced, regardless of where you’re starting from.

“Mindfulness practice is essentially attention training combined with attitudes which promote awareness and self-control,” says Eric Winters, trainer and coach, Chocks Away Mind Skills Consulting.

“The result of mindfulness is greater awareness – of self, others and context – and less reactivity. These mindfulness skills are foundational to greater emotional intelligence.”

TEAM BENEFITS

Being aware of your own state, your intuitions and strengths, and having a greater ability to manage your emotions and behaviour, supports the notion of authentic leadership – that is, being able to more consistently walk the talk.

“Teams respond well to people they experience as genuine,” says Winters.

“Relationships with teams improve as people sense they are truly being listened to rather than neglected or taken for granted.”

Mindfulness also develops empathy for others, vital for sustaining productive working relationships. And noticing how others respond to your leadership is valuable feedback in recognising what’s effective and what’s less helpful leadership behaviour.

STRESS BUSTER, INNOVATION BOOSTER

Life is stressful and so is work. An acronym helps to sum up what we all face: PAID. That is, Pressure, Always On, Information Overload, Distracted.

“These pressures impact our productivity, creativity and even our wellbeing,” says Gillian Coutts, senior trainer, The Potential Project. “The pace of change externally now is constant and organisations need to adapt, so this idea that we’ll be able to control and get all the ducks lined up in a row and then life will be great is not the reality. We can’t use the methods we’ve used in the past to grapple with the issues we currently face.”

For all employees, the enemy of innovation and creativity is stress. When we’re stressed our minds narrow to focus on the threat at hand, and our thinking is habitual.

Mindfulness can help diminish stress and nurture the broad, open and flexible thinking required for innovation. Indeed, Winters notes that one of the most important aspects of mindfulness is that it helps us to step out of auto-pilot, when we behave and think in routine ways, and instead step into the more flexible thinking and behaviour required for innovation.

MINDFULNESS TRAINING

Mindfulness can be learnt either in groups with a mindfulness teacher guiding practice or by listening to a recording guiding your attention. The ideal approach involves a combination of the two. Group practice with a teacher is particularly effective because questions can be addressed regarding optimal practice and students learn a great deal about the human mind from listening to each others’ experiences. Group training sessions are typically held weekly with daily home practice.

Like most things in life, mindfulness can be sustained, but it requires the discipline of regular daily practice. The Potential Project recommends daily 10-minute practice, which can be done at home or in the office.

“It’s like a muscle-building or physical exercise – once you stop training you lose the benefits after a while,” says Coutts.

MARKET TALK

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Sydney’s fevered frenzy calms After a whirlwind of a year, Sydney’s market seems to be calming. But predictions for its future remain bright, and there are still some good investment prospects to be found

T

he frenzied winds that have surrounded Sydney’s property market in recent times look to be abating, at least a little. However, it would be a mistake to think the heat is disappearing from the market.

While both sales and prices continue to be strong, the market has slowed somewhat.

For example, the latest RP Data-Rismark Hedonic Home Value Index results show that Sydney’s dwelling values grew by just 1% over the June quarter.

That was still enough to make the NSW capital the best-performing capital market over the quarter. It also leaves the city’s median dwelling price at $690,000, which makes it the most expensive of all the capital cities.

RP Data’s Tim Lawless says that, from a total returns perspective, Sydney stood out as providing the most outstanding performance. “If you combine the capital gain with the gross rental yield over the financial year, Sydney home owners have got a total return of 20.2%.”

These results are stellar, but the seasonal lull in June has left interested parties wondering just how long Sydney’s market can keep up the pace. As optimistic and pessimistic assessments fly backwards and forwards, a number of commentators say the market’s immediate future remains bright.

GROWTH TO CONTINUE

According to the BIS Shrapnel Residential Property Prospects 2014–2017 report, Sydney’s market is likely to continue to show strong growth, although the report does forecast a fall-off in growth by 2016/17.

Angie Zigomanis, from BIS Shrapnel, says the market has surged due to a sizeable undersupply of dwellings and improved affordability from low interest rates. These factors should continue to drive the Sydney market over 2014/15 and 2015/16, with 14% price growth forecast for that time.

As affordability becomes increasingly strained, healthy sentiment in the market and strong investor demand should continue to underpin further price rises, he continues.

“Although new dwelling construction is rising, it takes time for the high level of apartment projects to work their way through to completion and impact on vacancy rates. Consequently, demand from investors should remain strong until new supply comes on stream in sufficient numbers to impact on the market.”

Increased supply is likely to hit the market around the same time that a tightening in interest rate policy is forecast. Much of the pent-up demand pressures will have dissipated, so prices are predicted to decline over 2016/17.

The peak level of capital growth has passed by and can’t be sustained in the longer term, Metropole Property Strategists’ Sydney office director George Raptis agrees.

“Due to the low interest rate environment, investors are still feeling confidence, and there continues to be a lot of activity on the ground. But I think the sting has come out of the tail a bit, as compared to the fever pitch frenzy late last year and early this year.”

There has been much comment on affordability problems and the fact that rental yields have flatlined in comparison to price growth. However, Raptis does not see these as huge issues for investors.

Once the pace of capital growth slows a bit, rents are likely to pick up, he says. “As for affordability … 10 years ago, people weren’t earning as much and interest rates were much higher. There are higher salaries now and interest rates are at a historic low, so I think it is probably just as affordable.”

IDENTIFYING INVESTMENT PROSPECTS

Taking advantage of the current low interest rate environment to invest in the strong

Sydney market is still a good bet, Raptis says. But, given the whirlwind surrounding the market, it is crucial to marry that with buying the right properties in the right sorts of locations.

He recommends looking at the inner middle-ring suburbs, which are close to infrastructure and amenities as well as to work and lifestyle/recreation hubs.

Alternatively, investors should look at suburbs that are piggybacking on a ripple effect from a ‘flavour of the month’ suburb.

Find a suburb that is attracting favourable interest and then analyse the surrounding suburbs, Raptis says. “Look at things like whether there is the same sort of infrastructure and amenities, access to transport, atmosphere and feel, and so on.

Because if they do, history shows they can be sleepers and become sought after too.”

Suburbs in the inner west, like Croydon and Belmore, would be his pick for potential sleeper success stories. This is because they are near the currently popular Marrickville and Dulwich Hill but are comparatively affordable and also in the midst of change.

NSW price performance Area

Type

Median price

Growth over 12 months

Growth over Gross three months rental yield

Rent amount

Sydney

H

$735,000

12.4%

5.0%

3.5%

$500

NSW country

H

$367,500

3.2%

0.7%

5.0%

$350

Sydney

U

$565,000

9.1%

3.7%

4.4%

$480

NSW country

U

$310,000

4.4%

-1.6%

5.2%

$310

Source: RP Data, June 2014

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23

Spotlight on: Sydney’s best deals within 10km of CBD Suburb

Type (house/ unit)

Median price

Rental yield

Distance from CBD (km)

Ultimo

Unit

$425,000

7%

2

Rushcutters Bay

Unit

$445,000

5%

2

Eastlakes

Unit

$450,000

5%

6

Hillsdale

Unit

$447,000

5%

8

Dundas

Unit

$473,950

5%

10

Hurlstone Park

Unit

$480,000

5%

9

Rockdale

Unit

$519,500

5%

10

Brookvale

Unit

$531,250

5%

10

Stanmore

Unit

$535,000

5%

5

Potts Point

Unit

$540,000

5%

2

Source: RP Data, June 2014

SUBURB TO WATCH: EASTLAKES Developed around an extensive lake system (which the suburb takes its name from), Eastlakes’ major attraction is its proximity to the Sydney CBD and Coogee Beach.

The suburb is 8km from the inner city, near the highways, and has good public transport, says Ersin Esmek from McGrath Coogee. “This means it is close to everything you might need. It is a great central location in the Eastern suburbs.”

Thanks to the lake system, a large swatch of parkland and a renowned golf course, Eastlakes also offers some good recreational options. In terms of amenities, there are several schools and a shopping centre in the area.

Esmek says the existing shopping centre is due to be knocked down and rebuilt more extensively as a mixture of shops and apartments. “It’s a biggie for the area as it means people will have everything they need on their doorstep. And it means lots of development and change over the next five years or so.”

Eastlakes’ market is dominated by one- and two-bedroom apartments, although there are some houses. This means it is an affordable option for investors and first home buyers.

It also has a healthy rental market and offers solid rental returns of about 5% per annum, which makes it good value for investors, Esmek says.

“Plus there is decent growth potential in the area. Currently, you can get a two-bedroom apartment for under $500,000. With the way the market is going, I think apartments will hit the $600,000 mark. Yet it’s still a comparatively affordable suburb to buy in.”

Eastlakes indicators Median price (units)

Quarterly growth

12-month growth

$450,000

6%

13%

Average Gross rental annual growth yield 4.6%

5% Source: RP Data, June 2014

Eastlakes recent sales Recent sales

Type

Price

62 Mascot Drive

3 bed, 1 bath, 1 carport

$580,000

7/2 Maloney Street

1 bed, 1 bath, 1 carport

$421,000

7/3 Longworth Avenue

2 bed, 1 bath, 0 carport

$524,000

6/193 Gardeners Road

2 bed, 1 bath, 1 carport

$550,000 Source: PriceFinder.com.au

Eastlakes sales and growth

Source: PriceFinder.com.au

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CONSTRUCTION SEES BOOM IN AUGUST

Property lobby praises energy scheme repeal

T

he property lobby, the Property Council of Australia, has praised the repeal of the Energy Efficiency Opportunities (EEO) scheme, which could ease the pressure on Australia’s property market.

The Energy Efficiency Opportunities Act 2006 was created to improve the identification, evaluation and public reporting of energy efficiency opportunities, to encourage the uptake of cost-effective energy efficiency opportunities.

Property Council chief executive Ken Morrison said the repeal of the EEO scheme would generate substantial savings for property companies by removing duplicative reporting requirements.

“Requiring property companies to demonstrate that commitment on an annual basis was redundant and costly.

“Eliminating needless reporting means that property companies can focus on the real business of sustainability, rather than filling in paperwork,” he said.

Morrison said the repeal also demonstrated that the government was finally starting to reduce red tape. He claimed this would allow property companies to pass on these savings to the market, and allow some price relief in the heated housing market.

FAST FACT

121,000* *Increase in employment numbers for August Source: ABS

The month of August saw the construction industry experience its strongest performance since November last year, and the second strongest since April 2010.

According to the Australian Industry (Ai) Group’s Performance of Construction Index, the national construction industry expanded its growth momentum for the third consecutive month in August, and at a faster pace than in July.

Growth in activity occurred across most major sectors of the industry. However, Ai Group director of public policy Peter Burn said the result was carried by solid performance in the residential construction sector.

“The construction industry is continuing to rebalance away from the large projects that have lifted mining and minerals export capacity and towards the residential and commercial construction subsectors.

“The combination of low interest rates and strong gains in asset values is underwriting continued strength of apartment and house building,” he said.

Apartment building was the best-performing sector, increasing by 13 points to 64.9 points in the index.

Housing construction increased by 7.7 points in August to 60.9 points, rising to its highest level this year.

Housing Industry Association economist Diwa Hopkins said this was good news for the broader economy too.

“The labour market has been a key area of weakness in the wider economy. The labour-intensive nature of construction means that growth in this sector and the associated job creation can make a significant contribution to improving broader labour market outcomes,” she said.

a

ECONOMIC GROWTH PULLS BACK

LABOUR MARKET ON THE MEND?

Growth in the Australian economy pulled back in the June quarter, with ABS figures showing that GDP grew by just 0.5%.

This is down from a 1.1% increase in the March quarter, but it exceeded forecasts as economists had predicted slightly weaker growth of 0.4%. The main drivers of growth were an increase in household consumption, a surge in new home building and a rise in inventories.

The Housing Industry Association (HIA) has warned, however, that inventories aren’t the most reliable economic predictor. “Much of the growth which did take place was due to the highly volatile inventories component of demand, something which cannot be relied upon next time round,” cautioned Shane Garrett, HIA senior economist.

The overall performance of the economy was affected by weak international trade, but slower growth this quarter was unlikely to affect the market, Garrett said.

“International trade had helped boost growth in previous quarters. This time, the combination of a stronger dollar and lower commodities prices has resulted in net overseas demand actually hurting growth.” But the figures were not likely to prompt any change in the RBA strategy of low and stable interest rates, he said.

Job advertisements crept up by 1.5% in August, suggesting that conditions in the labour market may be on the mend.

According to the latest ANZ Job Advertisement Series, job advertisements are up 8% from August last year. This comes as encouraging news after the unemployment rate hit a decade high of 6.4% in July.

ANZ chief economist Warren Hogan said the improvement was in line with the recent pick-up in business confidence and consumer sentiment.

“Recent trends in business confidence and capacity utilisation suggest a relatively solid pick-up in the preconditions for hiring, while business surveys also show that the labour market looks a little tighter lately. Moreover, there has been a drop in the number of unemployment

benefits recipients and consumers’ unemployment expectations have improved. All of these developments are consistent with a very gradual turnaround in conditions in the labour market,” he said.

However, Hogan maintains a conservative view of employment for the near future.

“We envisage the unemployment rate remaining a touch above 6% for a few quarters and only very gradually falling from there. On the one hand, strengthening labour demand in some labour-intensive industries, such as in construction, health and retail, is an encouraging sign. However, the effect on employment from the wind-back in mining investment is likely to have further to run, which will be a hindrance to a strong improvement in the unemployment rate over the next year or so,” he said.

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, October 2013

New role for Sinodinos in cabinet reshuffle

Following the Coalition’s success at last year’s federal election, Prime Minister Tony Abbott announced a cabinet reshuffle for financial services. Senator Mathias Cormann, who had been shadow treasurer and shadow minister for financial services and superannuation for the past three years, took over the finance portfolio. Senator Arthur Sinodinos was appointed assistant treasurer. The financial services industry welcomed the appointments, given Cormann’s and Sinodinos’ previous involvement in the sector.

What’s happened since?

Senator Arthur Sinodinos stood down from the front bench earlier this year in the wake of his involvement in a major corruption case. Sinodinos stood aside in response to allegations of his involvement with Australian Water Holdings, which was at the centre of an inquiry by the NSW Independent Commission against Corruption due to its links with crooked former powerbroker Eddie Obeid. Federal treasurer Joe Hockey has since backed a return to the front bench for Sinodinos.

Brokers name top non-major lender

Australian Broker last year held its inaugural Brokers on Non-major lenders survey, which saw Macquarie best its industry peers to take out the top spot. The bank topped seven of eight categories and was ranked number one overall. James Casey, Macquarie’s head of mortgages product, said the bank’s success had been due to getting “the boring bits right”.

What’s happened since?

This year saw the second edition of the Brokers on Non-major lenders survey, but the results were the same: Macquarie topped the survey. Other non-major lenders saw some major moves from 2013 to 2014. Adelaide Bank and ING Direct performed strongly, taking out the second and third positions in the survey. Brokers also gave kudos to Suncorp and Bankwest.

brokernews.com.au

Fraud red flags a concern for brokers

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ew research from Veda has shown more than $1.9bn in credit applications last year were red-flagged as potentially fraudulent.

Imelda Newton, Veda’s general manager of fraud and credit identity solutions, said the result was an increase on previous years.

“Back in 2012, we did a study where we took all the credit enquiries we received across the market and compared it to the fraud data we held at that time.

We were looking for elements on those enquiries we had seen in previous confirmed investigated fraud events and to see if there was a link or a match with those events. That exercise in 2012 red-flagged $1.25bn of possibly fraudulent credit applications.

We thought it would be interesting to conduct the same exercise two years later,” she said.

Newton maintains the largest issue is still identity takeover, but other issues are appearing.

“We’ve definitely seen an increase in fraudsters using a technique of using stolen identities or identity takeover as a means of application fraud. We’ve seen an increase in this of over 103% just in the last 12 months. One of the emerging trends, though, that is just starting to come out is fraudsters creating a perception around certain employment and income details, and this is something we’re investigating further,” she said.

IT IS IMPORTANT FOR BROKERS TO DO AS MUCH AS THEY CAN TO NOT ONLY PROTECT THEIR REPUTATION, BUT TO PROTECT THEIR CUSTOMERS Newton urged brokers to take steps to remain vigilant to protect clients and themselves.

“Whilst we didn’t include channel analysis as part of this particular exercise, we have done other analyses in the past which looked at channel.

We have found it is across all different channels,” she said. “It is important for brokers to do as much as they can to not only protect their reputation, but to protect their customers. This is largely around identifying cases where stolen identity or identity takeover has been involved,” Newton said.

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

FORUM 27

brokernews.com.au

Stop poaching broker clients, FBAA says The FBAA has called on bank managers to stop the practice of poaching brokers’ clients

COMMISSION HIKES STILL HAVEN’T SEEN BROKERS BREAK EVEN “The latest J.P. Morgan Australian Mortgage Industry Report points out that the banks are increasingly looking to increase upfront and trail commissions to attract greater market share.

In spite of some moves on commission, not everyone is convinced.

“Up-fronts have almost got back to their 2007 levels.

Trail still at 0.15% compared to 0.25% in 2007. Not many industries are being paid at rates lower than that received seven years ago, making these corrections purely catch-up. Strange thing is, my licence fee keeps increasing each year, my COSL [went] from $200 to $380 despite never having a complaint, PI the same, MFAA, etc. Maybe they aren’t aware commissions are lower than they were seven years ago. How do I become a compulsorily paid ‘middle man’?”

Bottom Line on 8/09/2014 at 11:23AM

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BAA president Peter White recently called on banks to ensure they don’t steal clients from brokers. White praised recent moves by lenders to introduce commission incentives, but said FBAA members had told the association that bank branch managers had tried to influence clients to switch to direct bank channels and bypass brokers.

Support Those That Support You told of personal experience with channel conflict.

“Happened to me recently. Branch manager re-wrote a deal because at the time we couldn’t get the value of a swimming pool into a valuation. Branch manager financed the pool into the deal.

Valuation of course worked. My BDM has since reversed the loan back to me for trail purposes and an argument is still going on about the claw. I gotta tell you though, my client knew nothing of the consequences and were not at all advised. Worse I know this branch manager so I can’t imagine what sort of pressure he is under.”

Virendra Anand said channel conflict often occurs at particular points in the loan process.

“It is usually done when the client is forced to go to the branch to complete their identification. When they identify as a broker customer, it seems like it’s ‘game on’ for the branch.”

Meanwhile, Poor Show said brokers should use their relationship-building skills to their advantage in their competition with bank branches.

“You can’t stop this no matter how much to the contrary the third-party management within the banks will tell you. Branches have quotas to meet and get paid commission for selling a home loan. Where we excel is we don’t sell products we build relationships, and that is the banks’ Achilles heel. Use it and expose it. When your client goes into a branch explain the difference between a genuine bank employee and one who is looking after themselves your client will make their decision from there. If they choose the employee who is in it for themselves then you probably never wanted that client anyway.”

AGGREGATOR INKS COMPARISON DEAL

AFG recently signed a deal with comparethemarket.com.au that will see its brokers receive leads from a new mortgage comparison site.

Tony on 3/09/2014 at 8:56AM “Good on you AFG. Great to see you are looking forward in a progressive manner and assisting your brokers grow their businesses.”

What do you think?

Leave your comments at brokernews.com.au

John M on 3/09/2014 at 9:39AM “Probably get better leads from comparethemeerkat.com.au.”

PEOPLE 28

brokernews.com.au

Always up for a challenge A financial services company head has taken on one of the world’s highest peaks

D

aryl Hill is always up for a challenge. Hill, the head of major clients at La Trobe Financial, has undertaken difficult feats before. In the early 1990s Hill tackled the Kokoda Track.

Recently, he decided on an even tougher challenge: Mount Kilimanjaro.

Standing at 5,895 metres (or 19,341 feet above sea level), Mount Kilimanjaro in Tanzania is the highest mountain in Africa and the highest freestanding mountain in the world. Hill decided to take on the peak along with his son Bryce.

There are seven official hiking routes heading up Kilimanjaro, and they can be completed in six or seven days. Hill and his son decided to attempt the trek in six days. Hill said he made it to the summit base camp, but with the onset of altitude sickness he

decided to remain at the base camp, allowing Bryce and the rest of the team to continue to the top.

Hill described the climb as “a hell of an adventure”, and said it was an even tougher challenge than the Kokoda Track. The route takes climbers through dense rainforest, alpine desert and an arctic summit resembling a desolate lunar landscape.

Some 25,000 people each year attempt to reach the summit of Mount Kilimanjaro, with onethird turning back. Altitude related health problems are the most common reasons climbers fail to reach the summit.

Hill, who has worked for La Trobe Financial for more than 30 years, said it was important to take on new and difficult challenges.

“From time to time, all of us should try to get out of our comfort zone. It is amazing what

can be achieved if you push yourself a little. A different culture, meeting the locals and living in their environment is an amazing experience. It also helps put life into perspective, making you appreciate your life, family

BROKER WINS TOP FRANCHISE AWARD

A mortgage brokerage firm has won a top franchising award for the sixth year in a row.

Smartline Personal Mortgage Advisers has been ranked number one by Topfranchise.com.au in the site’s latest survey of franchisees.

Smartline has held the number one position in the survey since 2009.

The Topfranchise.com.au top 10 franchise ranking surveys franchisees on areas such as the support offered by their franchisor, whether they’re satisfied with the lifestyle their franchise affords them, opportunities to expand, passion for their product or service, marketing support and brand value. Of seven sub-categories ranked by the survey, Smartline was awarded the number

IT IS AMAZING WHAT CAN BE ACHIEVED IF YOU PUSH YOURSELF A LITTLE – D ARYL HILL and working environment. We all face difficult stress levels and every day, we always are making difficult business decisions in our industry, but in my case I can take a step back and say, hey, I have dealt with Mount

Kilimanjaro, I can deal with this!” Hill said.

La Trobe Financial president and CEO Greg O’Neill praised Hill’s effort.

“Daryl Hill, is one of those special people. To have attempted such a challenge with his son says a lot about him as a person. His close relationship with his family and the importance of giving yourself the best opportunity is what life is all about. He breathes and lives the company’s core values of trust, exceptional service, accountability and motivation. Everyone that meets Daryl knows that he is a person you can depend on. He is an exceptional team player and has recently won the company’s BDM of the Year (for a second time), an award voted by his peers. He has also been a recipient of our Distinguished Service Medal (DSM).”

one ranking in six.

“It’s certainly no small feat to win this award – which is very important to us as a group – against some of the very strong franchise systems that are currently operating,” Smartline executive director Joe Sirianni said.

Sirianni said the win comes on the back of strong growth for the 2013/14 financial year. The franchisor saw its network grow by 10%, and its average settlements per franchisee also increase by 10%.

“Having new blood in the business in the form of new franchisees brings with it fresh ideas and experiences which only make us stronger as a business,” Sirianni said.

brokernews.com.au

IN FOCUS

T

he MFAA recently hosted a series of seminars with its Women in Mortgage Broking Network (WIMBN). The Sydney luncheon featured a presentation by Melissa Gielnik of Smart Lending, this year’s MFAA Mortgage Credit Adviser of the Year.

CAUGHT ON CAMERA 29

INSIDER 30

brokernews.com.au

A job for the dogs LIVING ON THE JOB

A North Sydney brokerage has recently hired a unique staffer

The expression ‘living and breathing the job’ is supposed to be metaphorical, but some Google employees are so enamoured of the company’s free perks that they’ve decided to take it literally.

The company’s Mountain View, California, headquarters became home to some sneaky workers, who took advantage of things like complimentary meals, a free laundromat and nap chairs, the Daily Mail reported.

Two former employees told their tales of living on Google’s campus on the Quora website.

One employee wrote that although they weren’t technically supposed to live there, some got around the rules by living in their cars in the parking lot.

Former programmer Ben Driscoe lived on campus in a custom conversion van for more than a year to save money.

Google site ecologist Matthew J. Weaver told the Mail he also lived in the Google parking lot for 13 months in 2005 and 2006 in an RV. The living situation started as a dare from a co-worker but ended up being “excellent” for his career.

“We would hold regular parties at the RV on Thursdays when the weather didn’t suck. I had an astroturf lawn and a white picket fence,” he said.

icking your co-workers’ faces would get you fired in most companies, but for a new hire at a North Sydney mortgage brokerage, it’s in his job description.

Graeme Salt of Origin Finance told Australian Broker the company had recently appointed an office cocker spaniel as its “stress management strategist”. Henry Daniell, as the stress-busting dog is named, has his own LinkedIn page and is soon to have his own blog on the brokerage’s website. Salt said Henry was brought on board to help lift staff and client spirits, as well as to set the company apart from its competitors.

“It’s hard for brokers to differentiate themselves.

Having Henry in the office makes the clients appreciate that we are real humans. When they leave the office, they clearly remember us,” he said.

Henry also helps brokers take

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everyday frustrations in stride,” Salt said.

The home loan process can be a stressful one, and Salt said Henry helps put clients at ease.

“Clients love him (assuming they are dog people). We are in the business of providing finance for people’s homes – having a dog there makes them understand that we are a family. His stress-busting factor cannot be discounted here either. Buying a home is very stressful; Henry’s wagging tail is very reassuring that everything will be alright.”

Henry’s impact on clients can be clearly seen, Salt said. After leaving Origin’s office, potential clients invariably check out Henry’s LinkedIn profile. But Henry isn’t there just for Origin’s clients, Salt said. He also provides a boost to the company’s brokers.

“He has had a huge impact on morale. If you are a broker who is getting frustrated while on hold to a bank, having a chin to scratch calms you down,” Salt said.

HAVING HENRY IN THE OFFICE MAKES THE CLIENTS APPRECIATE THAT WE ARE REAL HUMANS – G RAEME SALT

DIRECTORY AGGREGATOR/ WHOLESALE BROKER Ballast 1300 270 942 www.ballast.com.au frank@ballast.com.au Page 11

FAST 02 9233 8222 www.fastgroup.com.au Page 7 PLAN Australia 1300 78 78 14 www.planaustralia.com.au Page 5

BANK

ANZ 13 13 14 www.anz.com.au Page 9

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

Pepper Home Loans 1800 737 737 www.pepperonline.com.au Page 13

SHORT-TERM LENDER

Eastwood Securities 08 8408 0800 eastwoodsecurities.com.au admin@eastwoodsecurities.com.au Page 6 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 2

TECHNOLOGY PROVIDER NextGen.Net 02 9929 5999 sales@nextgen.net www.nextgen.net Page 15

WHOLESALE

Resimac 1300 764 447 www.resimac.com.au Page 25

OTHER SERVICES

MFAA 1300 554 817 www.mfaa.com.au Page 17

RP Data 1300 734 318 Page 27 Trailerhomes 0417 392 132 Page 26

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