Australian Broker 12.11

MARCH JUNE 2015 2015 ISSUE ISSUE 12.05 12.11

$4.95

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

+ ANALYSIS APRA’S INVESTOR WARNING

The banking regulator takes aim at a hot housing market P10

+ BIG IDEA SHORT-TERM LENDING, LONGTERM PRICING Equity One brings a unique twist to bridging finance P15

+ BEST PRACTICE FINDING YOUR IDEAL CLIENT

Sandi Sims: MAKING WAVES IN THE BROKER MARKET MyState’s head of broker services on grabbing the attention of the industry

M

yState has made some serious moves in the broker sector over the last year, bringing on board well known industry stalwarts. Last year the non-major lender brought in former RAMS and Westpac broker head Melos Sulicich as CEO, as well as former Westpac broker head Huw Bough as its general manager of sales and distribution. The lender’s appointment of former Westpac state manager Sandi Sims early this year continued its trajectory as a challenger in the broker space.

FULL STORY PAGE 16

A top broker on how to market to your niche P18

+ BUSINESS

INTELLIGENCE

WORTH THE FIGHT? When are office politics worth the trouble?

P22

+ CAUGHT ON CAMERA DFIA’S RED TIE GALA P28

NEWS 2

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NUMBER CRUNCHING PRICE GULF

AUSSIES IN DEBT

CONSUMERS’ DEBT LEVELS EXCLUDING MORTGAGES

PERCENTAGE PRICE DIFFERENCE BETWEEN UNITS AND HOUSES ACROSS AUSTRALIA NORTHERN TERRITORY

WESTERN AUSTRALIA

BY THE NUMBERS

MORE THAN $50K

17.4%

QUEENSLAND

LESS THAN $5K

43.2%

DID YOU KNOW?

66%

Age 35

LARRAKEYAH

162%

ASCOT

NEW SOUTH WALES

216% PEPPERMINT GROVE

66% of respondents said that they either didn’t know their broker was a part of the MFAA or FBAA, or wouldn’t care when searching for a broker

448%

UNLEY PARK

318%

CENTENNIAL PARK

752%

FORREST

237%

TOORAK

346%

SOUTH AUSTRALIA

Source: MPA

VICTORIA

AUSTRALIAN CAPITAL TERRITORY

Of Australians who’ve had a credit default, 70% of defaults occur before the age of 35, and almost two-thirds (58%) take place before age 30 Source: Ratecity.com.au

$40,001 - $50K

3.2%

$30,001 - $40K

3.5%

$20,001 - $30K

8.2%

$10,001 - $20K

11.6%

$5,001 TO $10K

12.9%

MOUNT NELSON

104%

Source: CoreLogic RP Data

TASMANIA

Source: Mortgage Choice

WHAT THEY SAID...

STEWART SAUNDERS

SIOBHAN HAYDEN

WAYNE BYRES

“I’m looking forward to joining such a talented broker team and providing great customer service” P4

“We continue to call on members to look to diversify their services offering to take advantage in the consumer switch to the broker channel” P6

“Given the currently very strong growth in investor lending, supervisors will be particularly alert to plans for rapid growth in this part of the portfolio” P10

DOMINIQUE BERGEL-GRANT

“Being able to actually articulate your value and understand what your point of difference is is really important” P18

NEWS 4

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BOQ CHANGES LENDING PRACTICES FOLLOWING ASIC PROBE ■ Bank of Queensland has made improvements to its lending

BY THE NUMBERS Stewart Saunders

SAUNDERS HEADS TO BANKWEST

54%

■ Bankwest has appointed

ex-ME Bank broker head Stewart Saunders to the role of general manager, broker sales. As the national manager of broker sales at ME Bank, Saunders was responsible for launching ME Bank’s third-party distribution of residential loans nationally.

Bankwest executive general manager, retail, Andrew Whitechurch said Saunders had led a team that delivered significant growth for ME Bank over the past three years. “… I know he will deliver the same and more for us at Bankwest,” he said.

“Stewart is an experienced banker and brings with him a diverse background that covers technical financial experience and project management, as well as business development and broker distribution.

“As the newest member of our retail leadership team, Stewart will take on responsibility for broker sales but will also play a key role in the development of our retail banking strategy.”

Saunders said he was extremely excited to be joining such a dynamic organisation.

“I’m looking forward to joining such a talented broker team and providing great customer service to brokers at an exciting and challenging time in the current market.”

Investor finance has risen by 54% in the two years to March 2015, to double that of owner-occupier finance Source: Mozo

practices following ASIC’s concerns about the way it had been assessing applications for home loans.

ASIC was concerned that the non-major was using a benchmark figure, the Henderson Poverty Index (HPI), to estimate the living expenses of consumers applying for home loans, rather than asking borrowers about their actual expenses.

In ASIC’s view, the lack of enquiry about actual expenses, and reliance solely on HPI – which is used as a measure for estimating the minimum amount of money families of different sizes need to cover basic essential needs – was not consistent with responsible lending obligations imposed by the National Credit Act. BOQ has now updated its home loan application forms to obtain more information about a customer’s living expenses. The bank will now have to carry out an assessment of the suitability of a loan using the higher of either the living expense figure supplied by the customer or an appropriate benchmark figure.

Connective expands white label offering ■ Connective has officially launched its new range of white label

home loan products under its Connective Home Loans brand.

The aggregator said the national roll-out of Connective Home Loans Smart Options and Connective Home Loans Essentials is set to deliver Connective brokers market-leading customer rates, competitive commissions, comprehensive credit and BDM support, and confidence in client ownership. Following recently announced arrangements with Macquarie and Advantedge, Connective’s new products provide Connective brokers with an integrated dual funding approach, which will give brokers significant competitive advantage.

Connective’s general manager, strategy distribution and digital, Steven Heavey says it is clear there is strong appetite for leading white label solutions as brokers are looking for ways to get ahead in today’s competitive market conditions.

“Research tells us that almost one in every 10 broker-written loans are the brokers’ own branded product, and customers are embracing what a white label offering can provide,” he said.

“We’ve worked hard, both with our members and our new funders, to ensure that these new product ranges – Smart Options and Essentials – will deliver what Steve Heavey our members asked for, and more.”

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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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ASIC bans fraudulent broker ■ ASIC has banned a Sydney broker from

DID YOU KNOW

WORLD NEWS UNITED STATES OF AMERICA

PRIVATISING FANNIE AND FREDDIE COULD SEE U.S. MORTGAGE RATES SOAR Many frustrated shareholders in Fannie Mae and Freddie Mac want the mortgage finance companies released from federal control so they can reap the profits of their investments.

But that might not be so great for the mortgage industry, according to a new study.

A report by Jim Parrott, senior fellow at the Urban Institute, and Mark Zandi, Moody’s Analytics chief economist, found that privatising Fannie and Freddie could cause mortgage rates to spike by almost a full percentage point.

If the mortgage giants were privatised, the report states, they’d most likely have to increase their capitalisation – which in turn would lead to higher costs that would be passed on to borrowers. Mortgage rates could jump by up to 97 basis points, in addition to other costs, ultimately borne by borrowers, that would come with privatisation. Higher-risk borrowers would see their rates jump even more. “[Fannie and Freddie] would need to hold more capital against riskier loans than others, forcing them to either increase mortgage rates more for those borrowers or lend less to them,” Parrott and Zandi wrote. “Either way, the range of averages understates the ultimate impact on pricing for many of the low-income borrowers most affected by price increases.”

71% Mortgage brokers were responsible for 71% of the growth in the residential mortgage market in the 12 months to March 2015 Source: MFAA

engaging in financial and credit services, following her conviction for loan fraud.

In July 2014, Shashi Kanta Prasad pleaded guilty after ASIC found she had created false loan documents for seven clients.

Prasad pleaded guilty to making seven false statements, producing 41 fake documents and instruments, and using those statements, documents and instruments with the intention of obtaining a financial advantage for her employer in Peter Kell the form of commissions.

The fraud occurred between February 2008 and March 2011, while Prasad was employed by Raj Prasad & Co Pty Ltd trading as Premium Financial & Retirement Solutions.

ASIC deputy chairman Peter Kell has now announced that the corporate regulator has banned Prasad from engaging in credit activities and from providing financial services for 10 years.

“Removing unscrupulous operators like Ms Prasad from the industry will protect consumers and help ensure borrowers have trust and confidence in the lending sector,” Kell said.

“In September 2014, following an ASIC investigation, Ms Prasad was convicted and required to enter into a good behaviour bond for 18 months after pleading guilty to creating false loan documents in an attempt to secure home loans totalling more than $3.6m for her clients.”

Broker market share hits new high ■ The total broker market share of new

home lending has hit a record high, according to new research.

The research, commissioned by the MFAA, reveals that total new home loan lending attributable to brokers was $165bn for the 12 months to March 2015, an increase of 19% over the equivalent figure for the period to March 2014.

This brings the total broker market share of new home loan lending in the March 2015 quarter to 51.9%, the highest result in the history of the MFAA survey.

MFAA CEO Siobhan Hayden says the research also proves that, on top of dominating the market, brokers are driving competition and consumer choice.

“The research also shows that brokers are offering the consumer real choice and driving competition; 30.2% of broker-initiated home loans went to smaller lenders, which is a true indicator of competitive behaviour,” Hayden said.

“Based on this success we continue to call on members to look to diversify their services offering to take advantage in the consumer switch to the broker channel.”

NEWS

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8

Majors clawing back market share ■ The major banks have clawed back home loan market share after they lost

FAST FACT 6.4% Mario Rehayem

PEPPER LAUNCHES CONSUMER CAMPAIGN ■ Non-bank lender Pepper has launched

a new consumer-directed campaign, Absolutely Positively Pepper, to increase the profile of specialist lending.

The non-bank says third-party mortgage brokers and white label partners will continue to be its primary distribution channel, and the launch of the Absolutely Positively Pepper campaign represents an exciting opportunity to educate borrowers and promote brokers.

The campaign has been launched in response to independent research Pepper conducted in 2014, in partnership with Fifth Dimension Research and Consulting, which found that as many as six in 10 potential non-conforming or specialist borrowers do not end up receiving a home loan.

“Buying your own home is still the great Australian dream today just as it was 40 or 50 years ago, but with housing affordability an increasing issue, that can seem out of reach to many,” Pepper director of sales and distribution Mario Rehayem said.

The non-bank says brokers and white label mortgage partners will continue to serve as their most important partners in connecting Australians who can’t receive finance from traditional lenders with home loans.

“We remain more committed than ever to providing tools to our broker network to help them explain the Pepper story to their customers, so that when they position one of our specialist loans to a customer, they’re not met with a ‘Pepper who?’ response,” Rehayem said.

Rise in the Westpac/ Melbourne Institute index of consumer confidence in May. The index saw its largest post-budget rise since May 2007 Source: Westpac/ Melbourne Institute

ground to the non-majors at the end of 2014, new data reveals.

AFG’s Competition Index shows that the overall 67.7% of loans processed for major lenders last December, which represented an all-time low since the GFC, climbed back to 74.7% by April 2015.

This figure is in line with the market share held by Australia’s big four banks and their subsidiaries for most of the past two years.

The fight-back by major lenders has been more successful in some sectors than others. Their share of refinancing loans bounced back from 58.6% in December 2014 to 69.3% in April 2015. Among investors there was a rise during the same period from 73.3% to 77.3%.

However, fixed rate loans processed for non-majors have continued to perform strongly, with their market share of 38.7% in December 2014 rising to 46.6% last month.

“We’re seeing a keener and more diversified market than ever before. Many borrowers are well aware of this and are increasingly using brokers to help them find the best deal. The growth of white label products is starting to become a competitive factor, and we expect this trend to grow in coming months,” said Mark Hewitt, AFG’s general manager of sales and operations.

Westpac launches marketing support for brokers ■ Westpac has launched direct marketing

communication support for broker-introduced home or investment loan customers, to help support brokers and their clients.

The new communication will be an electronic direct email (e-DM) that will communicate and highlight the benefits customers will receive with a Westpac Premier Advantage Packaged home or investment loan.

Kerri Webster, Westpac’s state general manager, Vic and Tas, says it is about helping brokers stay relevant and top of mind for their clients.

“It’s about our continued support of the industry, and I guess in particular, with our brokers using Westpac, it’s supporting them really to stay relevant. It is a changing digital world, and being relevant, as [Westpac] has quoted before, really looks like everything but the home loan,” she said. “… The key thing to tell [brokers] would be that this is an industry first, and it is about continuing to build on our strong partnerships

and to continue to make not only ourselves relevant but also their business relevant, and to grow their relationships with their customers – and to do that through a ‘one team’ approach where we are working together to create relevance.”

If the customer has opted to receive marketing support from Westpac in their loan application, the e-DM will be sent out following the conditional approval of their home or investment loan application, and will include the broker’s name and contact details to direct the customer back to the broker for any further queries.

ANALYSIS 10

APRA cracks down on investors

The banking regulator is looking to wind back investment lending

brokernews.com.au

A

s first home buyers have remained inactive, the investor market has been red hot. The total of residential term loans to households held by all ADIs climbed 1.9% in the March quarter, according to APRA quarterly statistics, reaching a record $1.3trn. The total residential mortgage market increased 9% over the 12 months to March 2015.

Investor loans were behind the majority of this growth, increasing by 2.6% from the December 2014 quarter. Over the year to March 2015, loans to investors surged 12.4%.

This has all been troubling news for APRA. The banking regulator wants to keep investor loans below a certain threshold, and has warned banks to wind back lending to investors. In a letter sent to all ADIs about reinforcing sound residential mortgage lending practices earlier this year, APRA chairman Wayne Byres said any material growth in investor loans over 10% will “likely result in a supervisory response”.

“Given the currently very strong growth in investor lending, supervisors will be particularly alert to plans for rapid growth in this part of the portfolio. For example, annual investor credit growth materially above a benchmark of 10% will be an important risk indicator that supervisors will take into account when reviewing ADIs’ residential mortgage risk profile and considering supervisory actions,” he said.

However, lenders have made considerable steps over the past week towards reducing their exposure to the investor market. All four major banks reduced discounts offered to new investor borrowers.

Other lenders, such as Heritage Bank and Bankwest, have even applied LVR caps on investor loans.

According to the APRA statistics, the major banks now

ANALYSIS 11

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hold 81% of the total residential mortgage market and 83% of the investor market.

However, the major banks increased their total market share by just 1.7% over the March quarter and 8.6% over the year to March. Meanwhile, other domestic banks increased their total market share by 4.2% over the quarter and 18.6% over the year.

“Further reforms to bank capital requirements are in the pipeline, emanating both from the FSI and the Basel Committee,” Byres said at the AFR Banking & Wealth Summit in Sydney recently.

“While we want to deal with the various proposals in an orderly manner, I’ve made the point elsewhere that we do not need to wait for every ‘i’ to be dotted and ‘t’ to be crossed in the international work before we turn our minds to an appropriate response to the FSI’s recommendations.

“Some – such as Recommendations 2 (mortgage risk weights) and 4 (international capital comparisons) – seem able to be

dealt with sooner rather than later. We’ll have more to say on these issues shortly, but with continued sensible capital planning the industry is wellplaced to accommodate them.”

POPULAR MOVE

APRA’s more conservative view on investor loans has been welcomed by some, though.

“In our view, these initiatives are credit positive since they reduce the banks’ exposure to a higher-risk loan segment,” Ilya Serov, a vice president of Moody’s, said.

However, the growing imbalances in the Australian housing market pose a longerterm challenge to the Australian banks’ credit profiles, over and above the immediate concerns around investment lending, according to the ratings agency.

The Australian housing market is characterised by elevated and rising house prices, declining mortgage affordability, and record levels of household indebtedness. In this context, Moody’s says addressing the tail risks embedded in banks’

Wayne Byres

ANALYSIS 12

housing portfolios is likely to entail further tightening in the banks’ lending criteria and/or increases to their capital levels.

“Accordingly, we expect the banks to further curtail their exposure to high [LVR] loans and investment lending over the coming months. Moreover, we expect that over the next 18 months, the banks will gradually improve the quantity and quality of their capital – likely through a combination of upward revisions to mortgage risk weights and capital increases,” Serov said.

But expectations of more conservative loan originations and increasing capital will support Moody’s stable outlook for the future of Australia’s four major banks.

“We expect the changes made by the banks will slow investment lending growth closer to regulatory benchmarks,” Serov said.

“These considerations, in conjunction with the banks’ actions to improve their underwriting standards, support our stable outlook on the major banks’ credit ratings.”

Philip Lowe

brokernews.com.au

DANGERS AHEAD

But curtailing investment lending could have some dangerous outcomes, according to some commentators.

Speaking at the Thomson Reuters’ 3rd Australian Regulatory Summit, deputy governor of the Reserve Bank Philip Lowe said the use of macroprudential tools to control lending can only be pushed so far, the ABC reports.

“This is an issue that’s very clearly on our radar screen. How far can you push the tighter regulation of the banking system without causing the same volume of loans to be made but just through a different financial intermediary,” the ABC quotes Lowe.

“In the ’70s and the ’60s we had a lot of the tools that are currently in vogue and we ended up getting rid of them because what happened was that institutions found out ways of getting around the rules.

“Finance is very flexible and people are very good at moving the money from the people who have it to the people who want it.”

Lowe’s comments come after a number of lenders – including all four major banks – announced stricter lending guidelines around investor loans, including reducing pricing discounts and implementing LVR caps on investor loans.

These moves were made in response to recent warnings from APRA to curb any material growth over 10% in investor lending, as house prices in Sydney and Melbourne continue to head north.

House prices in Sydney climbed 14.5% in the 12 months to April, while Melbourne house prices rose 6.9%, according to CoreLogic RP Data.

This growth is significantly above the third best performing capital city, Brisbane, where prices increased 2.2% over the same period.

And the crackdown on investor loans could have unintended consequences by favouring foreign investors, says Aussie founder and chairman, John Symond.

FINANCE IS VERY FLEXIBLE AND PEOPLE ARE VERY GOOD AT MOVING THE MONEY FROM THE PEOPLE WHO HAVE IT TO THE PEOPLE WHO WANT IT – P HILIP LOWE, RBA DEPUTY GOVERNOR

DID YOU KNOW?

83% According to the APRA statistics, the major banks now hold 81% of the total residential mortgage market and 83% of the investor market Source: APRA

Speaking to Ross Greenwood on the 2GB Money News program, Symond said APRA’s crackdown, which has seen many major and non-major banks implement measures to wind back foreign investors, may unintentionally discriminate against local investors.

“I am just worried that there is going to be unintended consequences here because you might find these foreign investors have even a bigger go because regular Australians are going to find it tougher to get through the hoops to be able to borrow money to buy an investment property, in most cases their future nest egg,” he said.

“Without picking on the Chinese, they have had a huge spike on new housing, something like $12bn in the last 12 months – now this doesn’t come under APRA as a lot bring money from China.

“They are certainly [helping to drive] the pricing up and driving the shortage of properties available for first home buyers and people looking to buy their home in Australia.

“It is not just the Chinese; there are other foreign investors who love Australia.”

NON-BANKS TO BENEFIT?

However, despite the speculation that this could be the outcome, Firstmac CFO James Austin says the non-bank has not seen any spike in loan applications from investors since APRA moved on the banks.

Whilst Firstmac is not regulated by APRA, Austin says the non-bank has taken careful note of developments in the regulatory environment and made its own policy adjustments ahead of any broader prudential measures to control house prices.

“In response to recent tightening of policies targeting banks, we have ceased SMSF lending and will review our investor loan variable interest rates, on top of the robust controls we already have in place.”

Austin says Firstmac’s recent $1bn RMBS transaction attested to the non-bank’s outstanding credit quality.

“Our success in bond raising is due to our credit quality, which has never been better,” he said.

“Our 30+ days arrears numbers are at 0.61% which means more than 99% of our borrowers are current in their payment schedule. This is better than industry averages which are dominated by APRAregulated banks.

ANALYSIS brokernews.com.au

13

John Symond

FAST FACT 12.4% Growth in investor loans in the 12 months to March 2015 Source: APRA

“Eighty-nine per cent of the loans written in 2015 had a loan to value ratio below 80%. Just because our interest rates are at record lows, doesn’t mean we have relaxed our credit criteria.”

Firstmac’s growth rate is at 20%, with a similar balance of owneroccupier to investment loans as it has traditionally observed. In fact, in the year to April 2015, investment loans have fallen as a percentage of the portfolio by 3%.

“The mix of investment loans has not increased even though our growth has accelerated, which shows we are a viable option for owneroccupiers and investors alike,” Austin said.

“Non-banks remain a crucial pricing point to keep the banks accountable to the lending public.”

The move by the major banks to clamp down on investor lending is a good step, according to a leading ratings agency, however lenders will also need to implement additional changes to fully address the risks in the housing market.

According to the ABC, Lowe said Australia has not experienced rapid growth in non-bank loans yet, but any tougher regulations would make that far more likely.

“Maybe a few more loans are being made through non-bank lenders than through the banking system as a result of the tougher requirements, but it’s very much at the margins.

“But it’s a margin that we do need to watch very carefully, and history tells us that if you make the incentive too misaligned between the banks and the non-banks then the funding will follow to the non-banks.”

THE COALFACE 14

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Broking on the road: Unlimited horizons Award-winning mobile broker and one of Aussie’s best, Romeo Raad takes his business with him as he visits clients throughout Sydney

A

broker for barely two and a half years, Romeo Raad joined Aussie Home Loans in November 2012 and hasn’t looked back at the career in debt collection he left behind. He has since won the Achievement Award NSW/ACT at the MFAA 2015 National Excellence Awards and struck a perfect customer satisfaction score last financial year.

Raad says it was an unexpected surprise to receive the award after only a few years in the industry.

“It was a great honour and a very humbling experience.”

Working for himself appealed to Raad when he realised during his time as a collections manager that he was working harder and harder for less pay.

“I’ve gone from collecting debt to giving people responsible debt,” says Raad. “I wanted to work for myself in a job where the harder I worked the more reward I’d get, and I spoke to a couple of people who were doing broking at the time and it sounded like a great idea.”

So he transferred his relationship management skills to broking, along with his can-do attitude and tireless work ethic.

“I understood early on that if I was going to be successful quickly I needed to get the volumes in, so I was at work very long hours, worked weekends, whatever it took, because I knew when

my business became successful I could slow down – it wouldn’t be forever.”

Raad enjoys the flexibility of being a mobile broker, and has the work-life balance he was looking for, with the option to either work from home or use the office facilities provided by Aussie.

“This work-life balance suits me to a tee – if I need to take my kids to school, I can. If I need to pick them up, I can.”

As a broker starting out, Raad says Aussie surpassed his expectations.

“The training and support, I think, is second to none. I’ve talked to brokers from other aggregators and other brokerages, and you’re kind of on your own. With Aussie you’ve got your sales managers, your credit coach, your marketing manager, and such a good network of experienced brokers that if you get stuck you’ve got someone to talk to.”

Aussie also asked Raad to become an accredited mentor with the franchise, which he says was a great opportunity to give something back. “When I was new, the senior brokers helped me, and without their help I would’ve struggled.

So now I’m in a position to help others, I’m happy to do it.”

GETTING A PERFECT NPS SCORE

When asked how new brokers could go about achieving a perfect NPS score, Raad had some tips to share.

Providing a reliable and fast service where communication is key is the first step. “I get back to them when I say I’m going to,” he says, calling clients back within the hour if they’ve left a message.

“If they’ve emailed me, I’m an email junkie so I always respond to their email ASAP.” Perseverance is also important, with broking being a long-term game. “If you

I’VE GONE FROM COLLECTING DEBT TO GIVING PEOPLE DEBT work hard and you put the hours in, you will see the rewards come later, but you’ve got to be patient – it takes time to build your book. If you hang in there, look after your customers and work hard, you’ll succeed.”

And thirdly, but equally important, is building rapport and trust with your customers. “By listening to the customer, you can gauge their reactions and you can get a gut feel for what they’re thinking so you can tailor your approach to how they’re feeling.”

RAPPORT AND TRUST

Raad noticed that most of his customers picked their product at the first appointment, so instead of a two-appointment process he tailored his approach to suit, saving time so that he could see more customers.

“I’ve found that if you build that rapport and you make them feel comfortable with you, and they trust you and can see you know what you’re talking about, they’re confident enough to pick a product with you then and there.”

However, he recalls one occasion when the clients were nervous and unsure whether to chose fixed or variable, or which lender to use. So, noticing this, Raad said he would email them the best three options, and told them to have a think and let him know.

“The relief on their faces was so obvious – that I wasn’t going to try and get them to pick a product then and there. And the next day they came back and said, ‘Yep, we’ll go with this one’.

You’ve got to gauge that – if you’ve got your head in your laptop and you’re not really watching, you’re not going to pick that up.”

In his early days Raad turned up for a meeting and the client already had another broker there. “I was the third broker that they’d met that day and I had to wait for about half an hour on the porch.”

While waiting he found common ground with the husband on fishing, but when it was his turn they said the previous broker had offered a better deal than his. Rather than pushing his deal further, Raad closed his laptop and agreed it was a good deal but said they should check its ongoing fees, and then he spent the remaining half-hour of the appointment talking about fishing, and left with some hooks and sinkers.

He emailed the client the next day to find out if they’d heard back about the fees, which they hadn’t, then a few hours later the wife called and said, “My husband wants to go with you because he likes you. Even though you can’t beat the rate, he’s prepared to pay a little bit more because he likes you.”

Raad says: “If the customer likes you and trusts, you they’ll do business with you regardless of the rate sometimes, and that stuck in my mind and taught me a valuable lesson early on: it’s all about building that rapport with your customer.”

And as much as he appreciates the unlimited earning potential and flexible working hours of his job, he says the best part is “the satisfaction on people’s faces when you get them that loan”.

BIG IDEA 15

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Short-term finance, long-term pricing Bridging finance doesn’t have to be exorbitant, according to one lender

“WE’RE TALKING ABOUT RATES WITH A SEVEN IN FRONT OF THEM, AND IN TERMS OF BRIDGING FINANCE THAT’S VERY CHEAP - D EAN KOUTSOUMIDIS, EQUITY ONE

W

hen the term ‘bridging finance’ comes up, most brokers think of premium rates and high fees. After all, borrowers seeking bridging finance need money urgently, and may be forced to pay dearly for it.

But Equity One executive chairman and managing director Dean Koutsoumidis says short-term finance doesn’t have to be prohibitively pricey.

“We can be a bridging option, but without the bridging pricing. We’re talking about rates with a seven in front of them, and in terms of bridging finance that’s very cheap,” Koutsoumidis said.

Koutsoumidis said the lender offered short-term finance at more long-term rates, and without penalties for paying out early.

“Our strong suit with brokers at the moment is we provide interest-only fixed rate solutions with the ability to break contract early without penalties. If someone wants a one-year term, instead of going to a short-term lender which can typically be on the pricier side, the broker can place it with us with longterm pricing, but after two or three months still get out of the loan with no break costs,” he said.

Koutsoumidis said the lender looked to offer brokers’ clients a temporary solution before moving back to a major lender.

“The reality is most borrowers want to go back to a major. We have no issue with a borrower deliberately wanting to

pay out after three months. We know that sometimes borrowers have the intent to break contract, and they’re not going to be penalised for entering into a three-month term and then renegotiating,” he said.

Solutions like these, Koutsoumidis said, meant brokers could provide options to clients they may previously have turned away.

“Essentially any type of nonconforming deal we’re happy to look at, be it secured by residential, industrial or commercial property,” he said.

“Where we really try to get traction is where the enquiry doesn’t fit or it’s not quite right, we at least try to offer what we can do.”

This gives brokers the option to shop around and come back with deals that may not fit with other lenders, Koutsoumidis said.

“At least they have something from Equity One to fall back on. Brokers should not be embarrassed to come back and say, ‘Hey, remember me?’ We invite them to come back if their preferred option doesn’t pan out the way they want,” he said.

And in offering a short-term solution, Koutsoumidis said the lender also worked to turn deals around in short timeframes.

“Everyone says they have quick turnarounds, but we’ve been doing this for 20 years so it’s a little more than rhetoric. We really have to deliver as fast as possible,” he said.

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Sandi Sims: Making waves in the broker market MyState’s head of broker services on grabbing the attention of the industry

T

BY THE NUMBERS

225% MyState increased its home loan originations by 225% from 2013 to 2014 Source: MyState

he lender has set a strong pace for the year, with the first quarter seeing it achieve its highest quarterly growth thus far. The company saw strong growth from both MyState Bank’s and The Rock’s mortgage broker channels with $155m added to their total loan book for the half year to end December 2014.

The loan book grew by 5.1% to $3.2bn and more than 1.6 times system, with $115m achieved in the second quarter.

MyState Bank and The Rock group’s arrears were less than half the average trend for regional banks, which the group says was aided by tight cost management, technology savings and securitisation efficiencies, resulting in a reduced cost to income ratio of 64.5%.

Sims said she’s excited to be part of a fast-growing brand. She said the lender’s next priority is to expand its footprint across more of Australia.

“It’s really exciting times for MyState and I’m thrilled to be on the journey of change. Our short-term goal is to simplify the business and replicate the customer advocacy we enjoy in Tasmania onto the mainland. The MyState brand has really resonated well with brokers and customer so we will be expanding access to the MyState suite of products via brokers into all states,” Sims said.

Brokers will form a key part of the

I LOVE TO INNOVATE AND SEE MY ROLE AS BEING THE CONDUIT OF CHANGE

lender’s strategy in the future, and have driven much of MyState’s growth over the past year. In December, MyState general manager of sales and distribution Huw Bough said the broker channel would be a key strategic pillar for MyState as the organisation continues to expand and broaden loan diversification nationally.

“Already, we have experienced a 225% year on year increase in home loan originations by making critical improvements to how we work with mortgage brokers,” he said.

“We have made some important changes including innovations in the way we communicate, establishing dedicated teams to speed up loan decisions and introducing product pricing tiers to become more competitive. Our experienced originations team has re-engineered processes striving to provide a better experience for brokers.”

Sims said this re-engineering of processes is set to continue as the lender becomes more active in the broker channel.

“We are building efficiencies into our systems and processes so we have a solid foundation to grow. We will have full electronic lodgement in place by July and an increased support team to help our brokers get faster approvals for their clients. Top of the priorities for us is also to innovate. We are always looking at ways we can bring fresh ideas to life to support brokers to grow their business and also help customers’ dreams come true,” Sims said.

Improvements such as these were important in order to make sure the brand was ready to make significant moves in the broker channel, Sims indicated.

“For us it’s been a slow approach because we wanted to make sure we had all the processes in place to enable us to grow. We have six BDMs nationally, so their role will be to go out and build relationships with brokers, talk about MyState and how we’re different. We’re also partnering with aggregators so they’re aware of who we are and the value we can bring to their brokers,” she said.

Slow approach aside, MyState seems to have made a name for itself relatively quickly. Sims said the fast-growing nature of the lender was one of the factors that drew her to her new role.

“I love to innovate and see my role as being the conduit of change. Whilst we

DRAWING TALENT MyState managed to draw former Westpac broker execs Melos Sulicich and Huw Bough to its management team, as well as former Westpac state manager Sandi Sims.

The lender has also brought on board David Harradine as CFO. Harradine came to the lender from Deloitte, where he worked in risk services and financial advisory. Ross Illingworth, an investment industry veteran, also joined the company’s board as an independent non-executive director. With over 28 years’ experience, Illingworth has held senior management and executive positions, including chief investment officer of Carnbrea & Co Limited and senior vice president, wealth management at Citi Smith Barney.

are one of Australia’s fastest growing banks we are still quite small and by virtue of size this allows us the advantage of being nimble. I have been actively seeking broker feedback on where the gaps are in the market in terms of products and policies and have made it my mission to deliver where possible. There is so much competition on price and I believe the way we will differentiate ourselves in the market by having a deeper relationships with our brokers, listening to their needs and acting on what they want,” Sims said.

Sims said brokers should also look to be staking their own place in the market on the strength of their relationships with their clients.

“Brokers really need to differentiate themselves on relationship as well as giving their clients a real value add service. In the current environment of competition and change, brokers need to partner with lenders that support them, where they have strong relationships with a knowledgeable and accessible BDM and support team and can rely on a consistent level of service and transparency,” she said.

This differentiation is increasingly important in a highly competitive market, where brokers face challenges such as the changing regulatory environment, Sims said.

“With the pressure on restraining investment property growth as an example and banks clamping down on their policies in investor lending, it’s got to be tough on a broker keeping abreast on which lenders are doing what. The competitiveness of rates is also challenging. Selling purely on price, this really puts a broker at risk of losing the client in the long term.”

BEST PRACTICE 18

Understanding your ideal client A top broker says it’s important to know when a client isn’t the right fit

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S

acking clients might seem like a ludicrous idea for brokers, who largely rely on commission to get paid. However, one awardwinning broker says having a clear definition of who your ideal client is and learning to sack the ones who don’t fit the mould will help you be a better broker and run a more successful business.

Dominique Bergel-Grant, founder of Leapfrog Financial, says understanding your ideal client as much as you understand your own point of difference will not only help you attract clients and referrers but will help you keep them.

“Being able to actually articulate your value and understand what your point of difference is is really important. The next thing is really, really clearly being able to articulate who your target client is,” she said in an industry roundtable at the MFAA Convention in Melbourne.

“The other thing is to be really confident in what your message is. My message is going to be different to each and every one of you, so if I go in and I have a conversation with a potential referral client, it’s about saying these are the types of people I don’t want and these are the types of people I do want.

This is what I specialise in; this is what I am really, really good at. Then they will start to think about names; they will start to think about real people that they will actually refer to you.”

When figuring out who your ideal client is, Bergel-Grant says you have to think outside the box.

“Sit down and actually go through and think, ‘Who is my ideal client?’ [and] describe them. Typically, we go, ‘Our ideal client is between the ages of 35 and 45 and they need a mortgage’.

But who are they? What do they do for a living? What types of social media platforms are they using? What events are they going to? Who do they trust?

Who do they listen to?”

Then you can create a community around them, and position yourself as the central contact and person of trust.

“To get people continually excited about money is actually quite difficult, so in knowing who my ideal client is, I’ve realised other things that are really important to them,” BergelGrant said. “It could be how they live a healthier lifestyle or how they volunteer in the community around them.

“So now I’m launching a new community around that. It’s a more holistic view of their life. Now people don’t just have to join our community because they are interested in money; they have to join because they are

interested in yoga, or interested in wellness, or interested in how to volunteer in the community. What that does for us is it broadens our scope and it recognises the fact that people aren’t as excited about money as I am, as what [brokers] all are.

“I’ve had to go out and source experts in all of these other fields – I’m not a wellness expert and I’m clearly not a yoga teacher, so I’ve had to go out and find other experts – but it gets me out of my comfort zone and it gets me out of the industry and outside of the box.”

Once you have a clear idea of who your target client is, you will also be able to target better referral partners. For Bergel-Grant, who largely targets women, her referrers go far beyond the typical accountants and real estate agents.

“Accountants, solicitors and financial planners are sick of having a mortgage broker knock on their door.

FINDING YOUR NICHE Marketing expert Clifton Warren says finding your market niche can be the secret to attracting your ideal client Focusing on a market niche is one of the most important strategic decisions you can make regarding the growth of your business.

Research of successful top producers shows that focusing offers several advantages: specialty/niche business is more profitable, easier to retain and obtain leads for, and it provides a stream of new business through referrals.

The first step to finding an ideal market is to become very clear about the type of client (or clients) that are best suited to you. Once you know what you are looking for, everything else will fall into place. There is no magic formula for finding your ideal market. Begin with the markets that you’re currently serving, using these questions:

What are the markets of your best clients?

Is this of interest to you and your staff?

Is this a good fit for you and your business?

Do you have strong non-client referral sources?

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BEING ABLE TO ACTUALLY ARTICULATE YOUR VALUE AND UNDERSTAND WHAT YOUR POINT OF DIFFERENCE IS IS REALLY IMPORTANT – D OMINIQUE BERGEL-GRANT

“I’ve got a number of family lawyers, accountants and real estate agents that I work with very, very closely, but I also have beauticians and hairdressers because they are actually the ones that sit there and hear some really interesting stories from [my ideal] clients. They hear their life story and will say, ‘Go have a talk to Dominique’. It’s really important to think outside the norm.”

Having an ideal client will also help you diversify your revenue stream, again allowing your business to be more successful.

“If you have all of the same type of client, then what you can do is start to build diversified revenues and products specifically for that type of client,” she said.

“So, if you’ve got a client that is 35 to 45 and perhaps they have just gone through their first divorce, they are looking at purchasing a home for the first time by themselves and they might have a couple of young kids they have shared custody with, what are the things that this client needs to learn? If all you do is write loans for a living … you’ll be out of a job in five years.”

But when a client doesn’t fit the definition of your target audience, brokers should not be afraid to let them go and refer them to a different broker.

“Now, we all have clients in amongst our client bases who we wish we didn’t have in there. Some of the most satisfying moments you’ll ever have are those moments where you actually get to fire those clients. And it is actually OK to fire a client and say, ‘I don’t want to deal with you because you are not going to get the value from me ... but, most importantly, you don’t value or don’t trust what I have to say to you’,” Bergel-Grant said.

However, when letting go of a client, Bergel-Grant says brokers should always speak to the referral partner or client who referred them before making the decision.

MARKET TALK

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20

What property boom?

While the property market in Australia is hot, it’s nowhere near the fever pitch of previous boom cycles

Cameron Kusher

L

ow interest rates, rising house prices and a crackdown on investor lending may look like a housing boom, but new research shows that this current growth cycle is much slower than that recorded between the ‘boom’ period of 2001 and 2004.

While the spotlight has been on the Sydney and Melbourne housing markets in particular, which have climbed 14.5% and 6.9% respectively over the past year, data compiled by CoreLogic RP Data, which compares the current cycle with the post-2000 cycle, paints a different picture. “…Although the rate of capital growth in Sydney, and to a lesser degree Melbourne, is strong, it is nowhere near as strong as the rapid home value growth recorded between 2001 and 2004,” CoreLogic RP Data research analyst, Cameron Kusher said.

In the current cycle, home values began rising from May 2012 and have increased by 38.8% in Sydney and 23.6% in Melbourne. In comparison, over the same period post2000 they had risen by 60.2% in Sydney and 58% in Melbourne.

According to Kusher, other major differences between the post-2000 growth phase and the current growth phase are that the current phase has been largely contained in Sydney and Melbourne and the post-2000 phase was not preceded by falls in home values.

“Another major difference is that post-2000 growth was broadbased whereas the current growth in home values has been narrow, largely focused on Sydney and Melbourne,” he said.

“At the same time, household debt levels were substantially lower in 2001 than they are now, which is another key contributing factor for strong increases in home values then, compared to now.”

In fact, the research reveals that Hobart and Darwin were the only two capital cities where the post-2000 level of capital growth even comes close to current capital city growth levels.

Home values in Hobart reached a low point in November 2013 and have increased by 8.9%, compared to a 16.7% increase over the same time frame after 2000. Home values in Darwin hit a low point in January 2012 and have since risen by 17.3%, compared to 22.1% post-2000.

BUSINESS INVESTMENT TAKES A HIT New business spending on property or equipment took its biggest hit in five and a half years, which will keep the Reserve Bank tipped towards an easing bias.

Business investment fell by 4.4% in the March quarter, according to figures released by the Australian Bureau of Statistics, which is the biggest fall since the September quarter in 2009.

Spending on buildings fell by 6.5% in the quarter while spending on equipment fell by just 0.5%. Investment is down 5.3% over the year, with buildings down by 9.5% while equipment is up by 3.5%.

Expected business investment in 2014/15 is $149.9bn, down 8.1% on a year ago, while expected business investment in 2015/16 is $104bn, down 24.6% on a year ago.

Craig James, chief economist at CommSec, says there wasn’t a lot of good news in the business investment report, however, that may change quickly.

“The main good news is that the data is old... Rates have been cut in early May and the budget cut taxes for small businesses as well as providing taxation provisions for writing off spending on new assets up to $20,000,” he said.

When it comes to interest rates, James says the Reserve Bank won’t panic, but the latest data will likely keep an easing bias in place for monetary policy.

Queensland sees strong gains

FAST FACT

57 days Median time on market for a home in Brisbane Source: REIQ

PROPERTY: AUSTRALIA’S BIGGEST INDUSTRY The property industry contributed almost 12% of Australia’s gross domestic product last financial year according to figures released by the Property Council of Australia recently.

Figures in a report commissioned by the Property Council from consulting firm AEC Group show that property-related financial, professional and construction services contributed $182.5bn to the economy last year, which makes up 11.5% of GDP. The Property Council claims these figures make the industry Australia’s biggest contributor to the economy, ahead of home-ownership ($147.1bn) and mining ($140.9bn).

While the strength of the industry has grown, Property Council chief executive Ken Morrison believes the sector has more to offer.

If we can unlock the potential to increase property’s contribution even further, that will mean more jobs and more prosperity for Australians,” Morrison said.

“Governments can help make this happen by

abolishing our most distorting taxes, like stamp duty, and streamlining planning processes to make housing more affordable for all Australians.”

Morrison also believes changes aimed at allowing the property industry to keep growing would also help the economy stay strong as the mining boom slows.

“We know that governments at all levels are looking for ways to secure strong and consistent economic growth,” he said.

“This report confirms that they should be focused squarely on property as the industry that can deliver this for them.

“Our contribution to jobs and growth eclipses that of any other industry.”

As the Queensland property market continues to strengthen, Brisbane has been revealed as the state’s big improver.

Data released by the Real Estate Institute of Queensland recently has shown the Queensland capital has experienced the strongest lift to median house values for the year ending March 2015 and also has the fastest selling homes in the Sunshine State.

The median time on the market for a home in Brisbane is 57 days, an eight-day improvement compared to last year, while median house prices rose by 1.6% over the March quarter.

Brisbane was one of five major regions in Queensland to see an increase in median house values over the past 12 months, with the Gold Coast, the Sunshine Coast, Toowoomba and Cairns all showing increases in value from 1.5–1.9%.

Gladstone had a small but significant median value increase of 0.8%, which is its first move into positive territory in five quarters.

Townsville also saw a small increase in median values with a 0.7% increase.

Outside of Brisbane, Toowoomba is the fastest selling region, with days on market at 63 days, and the Garden City continues to hold the lowest vendor discounting rate of 4.7%.

REIQ chief executive officer Antonia Mercorella believes the data shows Queensland to be in the midst of sustainable growth.

“This report supports the REIQ’s long-held view that those areas of Queensland that have been doing well are continuing to do well,” Mercorella said.

“Those areas that are struggling to recover from the resources downturn are still trying to stabilise,” she said.

“But what we don’t have is the start of another boom and bust cycle, which, as we all know by now, doesn’t really benefit anyone in the long term.”

MARKET TALK brokernews.com.au

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Construction booming, but T HIA wants policy changes Construction rates have hit record highs, but a housing lobby says more needs to be done

he Australian Housing Industry Association (HIA) believes policy reform is required to stop people being priced out of the country’s property market.

The HIA released it Autumn 2015 National Outlook report in May, which showed the current strengths and weaknesses of Australia’s construction centre.

“The HIA Autumn 2015 National Outlook shows new housing construction is at record levels and is singlehandedly propping up Australia’s domestic economy,” HIA chief economist Dr Harley Dale said.

“On-going momentum in 2015 is narrowly driven compared to

last year, in terms of both geographical area and dwelling type – it’s far from a universally strong story.”

While the number of new dwellings under construction is at record levels, Dr Dale would like to see more done to allow people to enter the market.

“It is disappointing that despite record new housing supply, many Australians are being priced out of the market due to the excessive and inefficient taxation and regulation governments impose on the new housing sector,” Dr Dale said.

“Super low interest rates are doing their job, but there is a lack of complementary policy reform.”

THE HIA’S STATE BY STATE BREAKDOWN: WESTERN AUSTRALIA

NORTHERN TERRITORY

QUEENSLAND

• Dwelling starts in Western Australia are projected to rise by 4.6% in 2014/15 to a level of 30,570.

• Starts are forecast to drop by 16.4% in 2015/16, with another 6.7% decline predicted for 2016/17.

• Multi-unit starts are projected to rise by a staggering 24% in 2014/15, while detached house starts are predicted to fall 1%.

• Dwelling starts in the Northern Territory are projected to fall by 6.7% in 2014/15 to a level of 1,880.

• Starts are forecast to drop by a further 10% in 2015/16, before growth of 12.9% in 2016/17 takes activity to a level of 1,909.

• Renovations activity in the Northern Territory is projected to increase by 22.8% in 2014/15 and by a further 4.8% in 2015/16. This would bring the value of the territory’s renovations market to $278m.

• Dwelling starts in Queensland are projected to increase by 18.8% in 2014/15 to a level of 42,268.

• Starts are forecast to ease by 0.8% in both 2015/16 and 2016/17, reaching a level of 41,577.

• Renovation activity in Queensland is projected to remain flat in 2014/15, but then increase by 3.7% in 2015/16. This would bring the value of the state’s renovations market to $6.69bn.

NEW SOUTH WALES • Dwelling starts in New South Wales are projected to increase by 18.2% during 2014/15 to a 20-year high of 54,680.

• Starts are forecast to decline by 9.1% in 2015/16, with a further reduction of 8.6% taking the level to 45,440 in 2016/17.

• Renovations activity in NSW is projected to increase by 2.6% in 2014/15 and by a further 6.5% in 2015/16. This would bring the value of the state’s renovations market to $8.32bn.

SOUTH AUSTRALIA • Dwelling starts in South Australia are projected to fall by 1.4% in 2014/15 to a level of 10,565.

• Starts are forecast to drop by 10.6% in 2015/16, before growth of 4.4% in 2016/17 takes activity to a level of 9,852.

• Renovations activity in South Australia is projected to fall by 5.4% in 2014/15 and by a further 8.3% in 2015/16. This would bring the value of the state’s renovations market to $1.69 billion, from over $2.0 billion five years ago.

VICTORIA TASMANIA • Dwelling starts in Tasmania are projected to jump by 25.5% in 2014/15 to a level of 2,407.

• Starts are forecast to decline by 6.9% in 2015/16 and by a further 4% in 2016/17, taking the level to 2,151.

• Renovations activity in Tasmania is projected to drop by 12.4% in 2014/15 and by a further 2.9% in 2015/16. This would bring the value of the state’s renovations market to $591 million.

• Dwelling starts in Victoria are projected to increase by 15% in 2014/15 to a level of 59,805.

• Starts are forecast to drop by 16.5% in 2015/16, with a further reduction of 6.4% taking the level down to 46,732 in 2016/17.

• Renovation activity in Victoria is projected to drop by 9.9% in 2014/15 and hold steady in 2015/16. This would bring the value of the state’s renovations market to $6.70bn.

BUSINESS INTELLIGENCE 22

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Office politics: How to know if the hill is worth dying on

Office politics can seem like war. If that’s what it feels like to you today, then the question you need to answer is whether this particular hill is worth dying on, says Cindy Tonkin

I

t’s just a hill.

But it is your hill.

It’s a strategic hill.

You don’t know if you want to be a hero. And if you really need to be a hero to keep this hill, you could be dead already.

Let’s get concrete for a moment!

This ‘hill’ could be that your boss caves every time a client criticises your area and you have to pick up the pieces, backtrack and rework things.

It could be that you need to take time off outside normal days and your boss doesn’t believe in that kind of stuff.

Maybe you are convinced that following current strategy will shut off the company’s main source of income.

It’s not about the hill as such. It’s whether you will be the hero who takes the hill and goes off in a blaze of glory, or whether you will live to fight another day.

Here are five questions to help you decide.

QUESTION 1. WHO IS YOUR BUDDY?

In every good war movie the hero has buddies. From The Magnificent Seven to

The Dirty Dozen via Platoon and Saving Private Ryan, it’s the people supporting you in taking the hill that make the difference. So, the first question to ask is, who is your buddy?

Who is on your side?

If you are the only soldier standing up to the corporate psychopath, the only one trying to fix the supply chain problem or to reconfigure the roster, then you need some buddies before you start your assault.

QUESTION 2: WHO WILL SEE?

The second question is, who will see you? And who should see you?

If you are behind enemy lines and are about to blow up the bridge before dawn, then it’s important that no one sees you.

On the other hand, if this assault

is an action designed to flush out the friendly locals, make sure it’s visible enough that those who understand what your action means can find you.

In real-world terms, if you want to be seen, consider some well-placed, strategically crafted questions at a work in progress meeting as a first salvo.

If you don’t, then ask the same question one-on-one, starting with the lowest-ranking person with power. Ideally you will gain an ally, and you won’t be blamed if they ask the question again themselves.

QUESTION 3: WHAT’S THE ESCAPE ROUTE? The third question is, what’s your escape route?

Don’t blow up the

MAYBE YOUR STRENGTH IS YOUR ABILITY TO FIND THE POSITIVE, TRANSFORM PEOPLE’S IDEAS, OR JUST THAT YOU ARE RESILIENT. FIND YOUR STRENGTHS AND PLAY TO THEM. AND LET YOUR WEAKNESSES ALONE. THEY WON’T HELP YOU HERE

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bridge if you have no way of crossing it yourself. Or at least blow it up from the side you want to end up on.

In corporate terms this means you need to put your feelers out to the market. Update your LinkedIn profile. First turn off those notifications that tell your boss you’re updating!

And talk to agents. Often. Just in case. Don’t wait to be found. Have lunch with your old boss and colleagues. Renew your network.

Just in case you need more allies, a safe house or an escape route!

As a sidebar: if your boss is part of the problem, consider giving their name to the agent!

QUESTION 4: WHAT DOES RECONNAISSANCE TELL YOU?

Before soldiers blow up any bridge, they go on a reconnaissance. Reconnaissance is French for recognition. It literally means ‘re-know’.

So, if you have a political issue that you want to broach, a hill you have to take, go check out the territory. Re-know current policy.

Re-know who supports it. Re-know the players in your industry.

Is what you want already happening somewhere in your organisation?

Is it happening somewhere in your industry?

How does what you want align with industry best practice?

How do your systems and

IF YOU ARE THE ONLY SOLDIER STANDING UP TO THE CORPORATE PSYCHOPATH, THE ONLY ONE TRYING TO FIX THE SUPPLY CHAIN PROBLEM OR TO RECONFIGURE THE ROSTER, THEN YOU NEED SOME BUDDIES BEFORE YOU START YOUR ASSAULT

procedures support it (or not)?

Check out how big this hill really is. If you don’t know anyone to ask in your industry, then that’s a weakness you need to patch up pretty quickly!

QUESTION 5: WHAT ARE YOUR SPECIAL SKILLS?

Every soldier has a special skill. Can you whistle, are you a ventriloquist, or do you have a friend in intelligence? Do you have a good heart, an eye for a bargain, or a lot of great connections?

Ask yourself what makes you different, not just in terms of solving this political problem but also in terms of your value to the organisation.

How can you use this special skill as leverage?

This isn’t just about your LinkedIn profile. It may be your family that will get you through. Or your loyalty.

Maybe it is your ability to find the positive, transform people’s ideas, or just that you are resilient. Find your strengths and play to them. And let your weaknesses alone. They won’t help you here.

There are also some things not to take into account in your hill assault. When considering whether or not to take this hill, these things should not come into the equation: I can’t afford to be a hero It’s not good for the team HR should look after me This shouldn’t happen Why me?

Every time you weigh up the pros and cons of taking that political hill, assemble your buddies, make sure you’re seen (or not) by the right people, get your escape route clear, do some reconnaissance, and work to your strengths.

In the end hills don’t matter.

Integrity, courage and connections within your platoon matter. Get to it, soldier!

Rider: I have never been to war. All I know about war I have learnt from my slim knowledge of war movies.

Please take this metaphor in the way it is intended: as a tribute to soldiers who have worked hard and sacrificed their lives and livelihoods so that others may live better lives.

Cindy Tonkin helps your team be more politically astute.

Find out more at www.politicalacumen.com.au/ wisdom/

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ASIC CRACKS DOWN ON AFS LICENSEES

HOUSE PRICES UP IN ALL BUT ONE CITY

ASIC has cancelled the AFS licences of four licensees that failed to lodge audited annual statements.

These cancellations are the result of ASIC’s most recent proactive review of the conduct of 14 AFS licensees operating in the financial advice industry that had failed to lodge their audited annual statements.

Peter Kell As part of this review, in addition to the cancellations ASIC has suspended one AFS licence, because of the licensee’s failure to lodge audited annual statements, until the outstanding documents are lodged; achieved voluntary compliance by seven AFS licensees who have lodged all outstanding documents; and prompted two entities to voluntarily cancel their AFS licences because they are no longer operating financial services businesses.

The requirement to lodge annual audited accounts is an important one, according to the regulator. Through it, the licensee can demonstrate that it has adequate financial resources to provide the services covered by its AFS licence and to conduct its business in compliance with the Corporations Act. “In our experience, a licensee’s failure to comply with reporting obligations can indicate a poor compliance culture,” ASIC deputy chairman Peter Kell said. “After our last review, ASIC warned licensees that their failure to lodge audited annual statements may result in the cancellation or suspension of their AFS licences, and we are disappointed that some licensees do not seem to be heeding this message.

“Be clear, ASIC will continue to contact AFS licensees who have not lodged audited financial statements, and take action where they fail to lodge these statements.”

CoreLogic RP Data’s latest Home Value Index results for April 2015 show home values have risen 0.8% across the combined capital cities.

Dwelling values went up in every capital over the month, except Canberra, which saw a drop of 1.5% in April.

The data shows that Sydney was the best-performing capital city over the quarter, up by 5.4%, and the weakest city was Perth, down by -1.6%.

RP Data head of research Tim Lawless said that although dwelling values had slowed down month-onmonth, the annual rate of growth had made a comeback, with dwelling values 7.9% higher over the past 12 months across the combined capital city index.

Lawless said Sydney’s dwelling values were up 65.4% post-GFC when including the previous 2009/10 phase of growth.

Melbourne was the only city with numbers close to Sydney’s, with dwelling values 52.3% higher post-GFC. “While the headline growth figures remain strong, it is clear that some markets are winding down,” Lawless said.

“The rate of growth in Perth and Darwin has slowed substantially in line with the winddown of major infrastructure projects associated with the resources sector, and the housing market in Canberra has also softened postfederal election.”

FAST FACT

53.5% Rise in Melbourne dwelling values since the GFC Source: RP Data

New home building hits 32-year high

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ew home building approvals hit yet another all-time record high in March of this year, according to the latest building approval statistics.

Total dwellings approved rose 2.8% in March, ABS data revealed, and rose 23.6% over the 12 months to March, in seasonally adjusted terms. This represents the largest yearly result in 32 years.

Growth was concentrated in the multi-unit segment of new home building, with a 5.3% increase occurring in March. Detached house approvals rose by 0.5% in the same month.

Shane Garrett, economist at the Housing Industry Association, says home building has been buoyed by a range of factors, and it is important that this continues.

“New home building continues to benefit from the exceptionally low level of interest rates, as well as strong population growth over recent years in the key home buyer age group,” he said.

“New home building is keeping domestic demand above the waterline. Were it not for the performance of the residential construction industry, Australia’s economy would be in a far weaker state.”

During March 2015, seasonally adjusted new dwelling approvals increased most strongly in Tasmania (42.3%), followed

by SA (35.2%), WA (18.9%) and Queensland (8.1%).

The volume of new home approvals declined both in Victoria (-6%) and in NSW (-3.7%). In trend terms, both the NT (-14.6%) and the ACT (-3.8%) saw fewer dwelling approvals during March.

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WEARABLES A GAME CHANGER FOR INSURERS Almost two thirds of insurers expect wearable technology to have a “significant impact” on the industry, according to a new survey of global insurance executives conducted as part of Accenture’s yearly Technology Vision report.

In particular, 63% believe that wearables will see wide-scale adoption in the next two years.

Lending credit to that prophecy is the fact that 31% currently leverage wearable devices to engage and interact with consumers, employees or partners.

“While insurers have traditionally based their underwriting and pricing processes on a limited view of certain customer variables, emerging technologies such as wearables and other connected devices can help insurers break from their traditional business models and provide outcome-based services for their customers,” John Cusano, senior managing director of Accenture’s global insurance practice, said in a statement.

Cusano cited John Hancock Insurance as evidence of this shift. The company announced in April that it planned to provide new policyholders with a Fitbit in order to encourage healthy lifestyle habits, which could then make clients eligible for rewards and discounts.

Insurers such as John Hancock that have already begun to incorporate wearable devices into their operations feel encouraged by the ensuing success – 50% reported favourable returns on their investments in “personalised technologies”.

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, June 2014

Huge increase in investor loans likely to continue

Data from Roy Morgan Research last year revealed investment property loans had grown by 37% over the previous four years, compared to an increase of only 4% for owner-occupier loans. At the time, 1st Street Home Loans director Jeremy Fisher told Australian Broker he had seen a marked increase in investor loans over the previous six months, and that he expected the trend to continue.

What’s happened since?

The trend has definitely continued, with investor loans growing by 12.4% in the year to March 2015. The growth has troubled banking regulator APRA, which has warned ADIs that it wants investor loans to account for no more than 10% growth. APRA’s comments have seen several lenders pull back on discounts and incentives for investors.

Brokers urged to foster stronger ties with overseas investors Connect Financial Service Brokers CEO Paul Tynan last year urged brokers to focus on relationships with overseas investors. He argued that Asian investors had capital to spend in Australia, and all that was lacking was communication skills to properly connect overseas investors with brokers. Tynan said Australia often suffered from a lack of understanding of Asian culture and ways of doing business.

What’s happened since?

The rhetoric around foreign investment has reached fever pitch over the past year, with new rules introduced to curtail illegal investment in the Australian property market. Despite some negative press surrounding foreign investment, a recent ANZ and Property Council survey found that foreign investment was crucial in bringing new housing supply to the market.

brokernews.com.au

Majors tussle for market share

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he mortgage market is becoming increasingly competitive, and major banks are finding they have to do more to win the attention of brokers and fight for market share. Australian Broker TV spoke to the broker heads of the major banks at the recent MFAA conference in Melbourne to ask them what moves they would be making to set themselves apart from the competition.

NAB Broker general manager Steve Kane said the bank was staking its bid for market share on delivering superior service.

“I think it really depends on the type of offer you’re going to market with. We’re basing our offer around service and relationship and product. It’s very important that our service is maintained through this very busy period. It is highly competitive, and your product needs to remain competitive, but your service and relationship counts,” Kane said.

Westpac’s state general manager for Victoria and Tasmania, Kerri Webster, said the bank was building a culture of teamwork with brokers.

“It’s how we utilise across segments across the group to really bring an extra value-add to our brokers through the expertise and specialisations we offer, and really doing that as a group force and a team,” Webster said.

ANZ head of third party relationship channels Keiran Evans said it was important in delivering a broker proposition to focus on the end customer.

“We’ve spent a lot of work on our front end with our BDMs, so we have more BDMs throughout Australia. We’re investing significant time and money into training them. We’re also looking at our back end. Our turnaround times are just outstanding. We’re doing 95% of deals same-day.

We’re operating on Saturday morning, so we’re doing six days. All of that is around doing what’s right for the customer,” Evans said.

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

FORUM 27

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Broker associations should focus on consumers Consumers seem unaware of brokers’ alignment with industry associations

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ccording to MPA Magazine’s Consumers on Brokers survey, 66% of respondents said they either didn’t know their broker was a member of the MFAA or FBAA, or wouldn’t care when searching for a broker. Both the MFAA and the FBAA have employed considerable steps in increasing consumer awareness over the past 12 months, but brokers are divided on whether they want their industry associations stumping for them to consumers.

MCC said industries without a peak body could be seen as “retrograde” by consumers.

“An industry body provides a point of contact for its members and external parties alike.

Perhaps it would be seen as a retrograde step to not have an industry body in place? Like everything, you would hope that improvements are made along the way in pursuit of better operations. From 2003 when I left banking to now I’m comfortable in saying that structure and professionalism has largely replaced the ‘wild west’. I think industry bodies have contributed to that.”

Skeptikal argued that even large industry associations aren’t well known to consumers.

“When was the last time the

Certified Practicing Accountants Association bothered to let consumers know who their members were, or the Chartered Accountants Association or the Financial Advisers Association?

They are for the members, not for the public. The members can give their client a copy of their membership certificate if they are that worried about it.

“I have been a finance broker since 1996. I have never had a client ask me if I was a member of any association or if I was even licensed for that matter. All the information they needed was on my business card or advertising.

If I was doing my job properly why should they even ask?”

Brado agreed that consumers put little stock in industry associations.

“I also don’t think that the industry bodies really need to have any public awareness. It isn’t what they are there for.

Consumers don’t go searching for a broker based on the member association, do they?”

And Harold Spencer offered an outsider’s perspective as a consumer.

“As a consumer, ASIC is the interest for me. Show me your licence then I get it. Never heard of MFAA or FBAA, and now after having a look at their websites I don’t see any benefit for me.

A code of conduct? HAHAHA.”

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DIVERSIFY OR DIE?

According to MPA Magazine’s inaugural Consumers on Brokers survey, 84% of respondents would feel confident in using their mortgage broker for a non-mortgage related product or service. While many commenters on the Australian Broker Online forums argued for specialisation, Scott Beattie said his business had made diversification work.

“If you don’t offer it, your competitors will. We offer a number of products and services from health, commercial and general insurance, financial planning and property along with home and vehicle finance. Forgetting the additional income that comes from offering those services, we have found that our clients like that we have a number of insurance and finance offerings under one roof.

For myself and the two other brokers at our office, we do home and commercial loans, we have other team members that focus and solely do what they do best, so we just refer internally rather than externally and that allows each person to focus on what they do. I certainly don’t do health insurance quotes and the like. I just get one of our team to call the client if they would like a review as an example.

For things like conveyancing, building and pest inspections, etc., that’s what we refer externally to.”

Scott Beattie on 21/05/2015 at 12:42PM

BROKERAGE TAKES HOME BUSINESS AWARD

Central Coast based brokerage Astute Ability Group has beat lawyers, accountants, financial planners and marketing professionals to take home a win from the Australian Small Business Champion Awards.

Michael Burgin on 21/05/2015 at 4:49PM “I have dealt with the wonderful staff at Astute over the past 15 years, and they have proven to be the best and most consistent brokerage firms I have dealt with. I refer all my clients/friends and relatives to Astute because I have full confidence that they will get brilliant and friendly service. Astute really are astute when it comes to knowing their finance.”

Stephen Hale – MFAA on 21/04/2015 at 10:35AM “Well done to one of the hardest working and most innovative finance brokers in the country. Great team and great result.”

BROKER PLEADS GUILTY TO FRAUD

A NSW broker recently pleaded guilty to fraud charges brought by ASIC.

Regional Broker on 26/05/2015 at 3:00PM “I hope this ends well for ASIC and not a slap on the wrist bond.”

Arvin on 26/05/2015 at 5:54PM “ASIC should now take a long look at the rest of the industry.”

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

PEOPLE 28

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Diary of a new broker: Control the uncontrollable?

First-year brokers Phil Barton and Natalie Duong discuss the challenge of dealing with external parties

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s a mortgage franchise owner you have to wear several hats at once: those of business owner, mortgage broker, compliance officer, chief financial officer, human resource manager, marketing manager, IT specialist, and business development manager, to name a few.

Owning a franchise means you need to be in complete control of all aspects of your business. Herein lies the issue of what to do with external parties over whom we have little or no control.

As brokers we deal on a daily basis with solicitors, settlement agents, real estate agents and clients, who have their own agendas.

As much as we try to successfully manage the process of meeting a

potential customer and nurturing them through to application, settlement and beyond, there are times when parties unrelated to your business seem to unintentionally conspire to derail the train to success.

It is becoming more commonplace for banks to outsource settlements to external solicitors, and accountability can often be lost.

A case in point: I made a call to a large solicitor (who acts for multiple banks) after a refinance fell over for a customer because the ‘other party’ failed to show up at the agreed time, with no investigation carried out.

After some gentle probing by us (and a little surprise which quickly turned to outright horror from them), it was pointed out that the very same solicitor was acting for both parties!

How strange that they were waiting for themselves to turn up to a settlement!

The irony of this was lost on the nameless individual on the phone (who up to this point had been fairly blasé), but in a matter of minutes the refinance was again booked in to settle within the hour.

This type of incident is not uncommon in our business, and the consequences for the broker can be huge. Clients have expectations to be met and brokers have reputations to uphold.

In this instance there was really nothing we could do other than to follow process and be aware of when settlements were occurring, and if in doubt make the call to the solicitor to ensure all was on track.

We now have a process of ensuring that all parties know which solicitors are attending, and we confirm several days before the deadline that there are no outstanding issues. It is surprising how many errors can be picked up by this simple process.

Constant education is also paramount. We have established an excellent relationship with a local settlement agent, Mink Settlement Services, and we refer to their superior knowledge of all things conveyancing.

We invite them to talk to our team about the settlement process and common pitfalls, and to encourage familiarity with documents such as for the transfer of land, etc., and consequently potential problems can be identified and avoided.

With growing experience I try not

MOVERS AND SHAKERS

ZACCARI TO HEAD THINKTANK MELBOURNE OFFICE Commercial non-bank lender Thinktank has announced the opening of a Melbourne division, marking the company’s first interstate expansion outside its head office in Sydney.

The move to establish a Victorian presence is a direct response to increasing commercial property activity and enquiries from the broker channel, in conjunction with the development of stronger associations with the major commercial brokers and aggregation groups in the state.

The new state office will be headed by ex-Bankwest manager Tony Zaccari. Zaccari has more than 20 years’ experience in financial services, with the last nine spent at Bankwest as a senior manager in business and commercial banking in the broker and acquisition team.

Thinktank’s head of sales and distribution Peter Vala said the expansion marked a major milestone for the non-bank lender.

“It is genuinely exciting to see the tremendous growth in the company and to now have a team on the ground in Victoria where there is so much potential. It allows us to build on the great relationships we have by looking after them on a more permanent basis,” he said.

WITH GROWING EXPERIENCE I TRY NOT TO BECOME DRAWN INTO THE BLAME DEBATE WITH THIRD PARTIES

to become drawn into the blame debate with third parties, and prefer to look for someone in the process who is willing and able to solve the problem.

My philosophy when trying to work with others to achieve successes for our clients is now drawn from a simple quote: “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

CAUGHT ON CAMERA 29

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IN FOCUS

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he Debtor and Invoice Finance Association recently held its inaugural Red Tie Charity Dinner to raise funds for Variety, the children’s charity. The event was emceed by Channel Seven personality Karen Ledbury, and raised nearly $40,000 through the auctioning of donated items.

INSIDER 30

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Narrow house sells for a wide price The narrowest house in Sydney fetches a hefty price

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n a bold display of how heated the Sydney property market is, the narrowest home in Sydney has sold for $965,000.

At only 2.85m wide, with an internal area of 48sqm and a land area of 38sqm, the two-storey Victorian terrace at 29 Terry Street, Surry Hills, is roughly the same size as a one-bedroom unit – or just enough room to swing a cat, the Daily Telegraph reported.

According to CoreLogic RP Data, the property was last sold in 1981 for $54,000 but went for well above the anticipated $700,000 when it went to auction in late May. First National Spencer & Servi’s selling agent Annie Hodgson told the Daily Telegraph prior to the auction that a number of interested buyers had walked through the home, with more than six contracts handed out and strong interest from investors.

“It had been rented out and is

looking a little sad and sorry,” Hodgson said.

“It needs an enormous amount of work. I don’t think anyone who buys it would put tenants straight back in it.”

Depending on the quality of renovations, Hodgson said the property could have a rental return of between $600 and $650 per week.

“That little street is coming alive, it’s been dormant for so long. All those streets around there below Riley St have been quite gentrified and have been changing a lot,” she told the Daily Telegraph.

“In that lower part down to Elizabeth there are some little pockets there that people are stumbling across and realising the potential.

“This is one in a cute little row of narrow little terraces; it’s like a backstreet in Melbourne.”

SHAKING HANDS WITH THE FUTURE The traditional handshake may have come under scrutiny in recent years for being outdated and unhygienic, but a new study has found that the age-old backbone of business etiquette is still an effective trust builder in an increasingly modernised world.

The scientific investigation found that when two people who are located thousands of miles apart communicate through a robot – including physically shaking hands with the machine – cooperation and mutual understanding is developed.

Researchers at the University of Bath set up mock house-sale negotiations using Nao, a 58cm-tall humanoid robot designed to accompany people around the property.

A total of 120 human participants were involved. and each was randomly assigned the role of buyer or seller – one person was present at the meeting with Nao, while the other took part remotely, through the robot’s built-in camera and microphone.

Sensors in Nao’s hand transmitted a signal when it was grasped, making a controller in the distant person’s hand vibrate at the same time.

The experiment tested how participants behaved when they did or didn’t engage in a virtual handshake, and results showed that the act was actually as important when people interacted virtually through the robot as when people negotiated face-to-face.

The virtual handshake created a sense of “connectedness” between both people as they experienced the sensation of grasping a hand, or vibration through a controller during the handshake, said the research team – they even revealed that estate agents were less likely to treat each other unfairly if they’d engaged in a handshake of some sort.

Dr Chris Bevan, of the university’s Department of Psychology, said: “This experiment highlights just how important the symbolic ritual of shaking hands is upon the way people come to judge others as being trustworthy and willing to cooperate.”

Experts say the discovery could provoke a revolution in the practice of conducting video conferences and Skype interviews.

A GOUDA INVESTMENT Celebrities the world over make headlines for insuring their body parts, whether it’s David Beckham’s legs or Dolly Parton’s biggest assets, but one renowned cheesemaker has just taken out a multimillion-dollar policy on his most important possession – his nose.

Nigel Pooley, who works for cheese manufacturer Wyke Farm in the UK, has sniffed and tasted cheeses for the last 18 years and has just insured his prized schnoz for $9.8m, the UK’s Daily Mirror reported.

The yearly premium of over $49,000 is nothing compared to the value of Pooley’s trained nose, according to a spokesperson for the company.

“As cheese is maturing it’s flavour hasn’t fully developed, so you can’t taste what it is going to be like in 12 months’ time,” the spokesperson told the Daily Mirror.

“Nigel’s nose can pick up flavours at one month old that will develop in up to 12 months’ time. Nigel’s nose gives him the unique ability to be a kind of

cheesy fortune teller and that is why his nose is so incredibly valuable to Wyke farms.”

Pooley, whose career in smells started at a British dairy where he sniffed out tainted milk over 50 years ago, noted he’d always been blessed with a keen sense of smell and it was vital to the success of the company.

“I’ve always been picky about scents, good and bad,” Pooley said.

“I can make or break a cheese because it depends on my choice.

“I have to be confident it’s the correct one to ensure sales and tailor-make decisions for vital major customers.”

Despite his world-class nose, Pooley admits that he isn’t the biggest cheese-eater when he leaves the office – after all, who wants to take work home with them?

“I don’t eat much cheese out of work because I consume so much in.

I certainly don’t like pungent French cheese which smells strong but has little taste.”

“Winning Broker of the Year - Productivity was a fantastic acknowledgment from the industry.

This award recognises the seamless, efficient and personalised approach I take towards new and existing clients. Being able to market myself further with the AMA award has seen a real increase in new business coming in the door.”

Mardee Thomas, 1st Street Home Loans, Broker of the Year – Productivity 2014

Nominations close 19 June Friday 30th October 2015 The Star Sydney Event Partner

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