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www.brokernews.com.au ISSUE 10.09

top brokers {commercial}

Who are they and how much did they make?

LOOK THE PART THE IMPORTANCE OF PROFESSIONAL STYLE

PAYING THE PENALTY A CLOSER LOOK AT EXIT FEES

CLOUD NINE? THE POTENTIAL PERILS OF STORING DATA ONLINE


EDITOR’S LETTER

Poll position As this issue of MPA lands on your desks, the country is heading to the polls to decide whether to actually vote our default PM Julia Gillard permanently into office, or whether to plump for Abbott’s Liberal/ National Coalition. The federal election may have garnered plenty of column space in the national press and infinite television coverage, but here we’ve been preoccupied with voting of a different nature. The Australian Mortgage Awards aren’t upon us until next month, but in this issue we unveil the nomination shortlists – after an extensive period of voting by you, the mortgage industry. Our event is far from a two-horse race, so stay tuned for the night itself and our issue 10.11, to find out who the winners are.

issue

10. 09

We’ve also been emptying out the ballot boxes to establish who are the country’s Top Commercial Brokers. The commercial market has endured a challenging 12 months and voter participation wasn’t as high as we had expected, but we’ve still managed to track down the sector’s best performers. Elsewhere, we look at a number of issues affecting your daily operations. ‘Cloud computing’ may not mean anything to you, but chances are you already engage in using shared resources or software to host company information, such as databases or CRM systems. But have you ever thought about the possible dangers? Turn to page 20 to find out more about the phenomenon. We also take a look at the importance of professional style and how to make the best impression on clients; exit fees come under the microscope; and we profile a clutch of industry movers and shakers. Enjoy the magazine and all the best for a busy month.

Barney McCarthy Editor

MPA 2.0 Our multimedia edition features on-camera interviews with the industry’s biggest players. Visit Brokernews. com.au/MPA to hear their thoughts on the hottest issues facing mortgage brokers.

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CONTENTS

cover story

46 Australian Mortgage Awards The finalists for the mortgage calendar’s most prestigious honours are announced

36 Top Commercial Brokers

MPA runs the rule over Australia’s premier commercial intermediaries

10. 09 issue

BROKERNEWS TV EXPERT PANEL DISCUSSION Visit our website now to see a range of clips from our roundtable event covering: »» The future of mortgage industry associations »» Potential pitfalls of licensing »» What the next 12 months holds for the industry www.brokernews.com.au


CONTENTS

EDITOR Barney McCarthy

20

COPY & FEATURES CONTRIBUTOR Andrea Cornish PRODUCTION EDITORS Jennifer Cross, Moira Daniels, Carolin Wun ART & PRODUCTION DESIGN MANAGER Jacqui Alexander DESIGNERS Paul Mansfield, Lucila Lamas SALES & MARKETING

FEATURES 14 Exit fees have long been a necessary evil to allow lenders to offer competitive rates, but have some providers gone too far? 32 What you wear to work may not seem important – but you don’t have a second chance to make a good first impression on your clients

SALES MANAGER Rajan Khatak ACCOUNT MANAGER Simon Kerslake MARKETING EXECUTIVE Kerry Buckley MARKETING COORDINATOR Anna Keane TRAFFIC MANAGER Stacey Rudd CORPORATE DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley PUBLISHING DIRECTOR Justin Kennedy

COLUMNS 20 Tim Ford of Linx Software discusses the potential pitfalls of ‘cloud computing’ 28 Tony Hayek of Blue Wealth Property highlights the importance of diversification

PROFILES

10. 09 issue

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24 Broker: Former AFL star Anthony McDonald talks about his new life as a broker and partner with Port Finance Group 58 Lender: After the small matter of an ownership change and a portfolio acquisition, the Pepper Homeloans team sits down with MPA

LIFESTYLE

CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil

Editorial enquiries Barney McCarthy tel: +61 2 8437 4790 barney.mccarthy@keymedia.com.au Advertising enquiries Rajan Khatak tel: +61 2 8437 4772 Sales Manager rajan.khatak@keymedia.com.au Simon Kerslake tel: +61 2 8437 4786 Account Manager simon.kerslake@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media www.keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Hong Kong, Toronto www.brokernews.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as MPA magazine can accept no responsibility for loss

12 A day in the life of... Stephen Light, Macquarie Leasing 64 My favourite things: Aaron Milburn, Bankwest

This magazine is printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry


NEWS MARKETS

Consumers buoyed by unchanged rates Consumer sentiment surged upwards in response to the RBA’s decision to hold rates for the second month in a row. The Westpac-Melbourne Institute consumer sentiment index rose 11.1% in July – almost completely bouncing back from the 12.3% fall it took over the previous three months. “Another substantial fall would have put it in dangerous territory with a slide comparable to that seen entering the early 1990s recession, and in 2007/08 prior to the global financial crisis,” noted Westpac chief economist Bill Evans in the report. “However, we were surprised at the vigour of the bounce back… this is the strongest monthly increase in the index from a base above the 100 level since records began in the mid-1970s.” Evans blamed the fall in sentiment on disruptions in global financial markets, rate hikes and the government’s disputed mining tax. A recovery in financial markets, combined with steady interest rates, have combined to boost consumers’ confidence.

Broker perception needs work: Homeloans National licensing laws present an opportunity for mortgage brokers to improve their image among homebuyers, which is “less positive” than expected, according to research from Homeloans Ltd. The group’s Homebuyer Barometer found over 50% of consumers surveyed have never used a mortgage broker, and that one in four who have would be unlikely to use one again. “We know that over the past couple of years, over 80% of borrowers have been referred by brokers to a bank,” Homeloans general manager Tony Carn explained. “This finding strongly suggests they will choose to deal directly with the bank in the future.” Carn added that the figures are likely a harbinger for brokers to ensure they stop channel conflict occurring. The research suggested mortgage brokers have some work to do on their professional images, according to Carn. “Consumers’ opinion of brokers – which were in no way negative – were less positive than we would have expected,” he said. More promisingly, 64% of consumers surveyed were open to using a broker in the future, which Carn labelled a “wonderful opportunity” to change perceptions under the new national licensing regime. Other key findings were that consumers relied primarily on word of mouth when choosing a mortgage broker, with 67% of respondents saying they relied on referrals from friends, family or a professional service provider.

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Fixed-rate demand fails to materialise

50% of consumers have never used a broker Source: Homeloans Ltd

The demand for fixed-rate loans fell during June, despite a rash of rate cutting from lenders, according to Mortgage Choice. Loan approval data suggests the proportion of borrowers opting for a fixed-rate mortgage fell from 3.3% in May to just 2.6% in June. “Perhaps the price tag is still too high when potential borrowers weigh up the advantages and disadvantages of fixed versus variable, or perhaps whispers of a much steadier cash rate are seeping through,” said Mortgage Choice spokesperson Kristy Sheppard. Its figures are in stark contrast to several industry commentators’ belief that demand for fixed-rate mortgages would increase as a result of higher interest rates, as well as efforts by nearly all the major lenders to promote fixed-rate loans by slashing rates in the last few weeks.


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NEWS

ABS hints at property market recovery

MARKETS

Consumer debt on the rise One in five households expect their debt levels to increase in the coming months, according to the latest Dun & Bradstreet consumer survey. Almost a quarter expect to apply for new credit and 13% intend to make an application for a limit increase on a current account. Meanwhile, 49% of households are indicating that an increase in interest rates would negatively impact household finances. The survey found that certain demographics such as families with children are more likely to experience financial stress, with vulnerable groups having significantly higher proportions of people anticipating a need to use credit to pay for otherwise unaffordable expenses and indicating that another interest rate rise would negatively impact their household finances. Christine Christian, Dun & Bradstreet’s CEO, said the apparent lack of concern about the consequences of potentially unmanageable debt levels is worrying. “It is clear that some consumers are finding it tougher to make ends meet, which could in part be the result of rising home loan repayments, while for others, consumer conservatism has fallen by the wayside,” she added. “Consequently, it is imperative that credit providers conduct the appropriate due diligence to ensure they provide appropriate levels of funding for each individual’s situation. In addition, this process will ensure that lenders effectively manage their lending book as default risk will remain prominent in the months ahead.”

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3.5% Australian economic growth forecast for 2011 Source: IMF

The latest Australian Bureau of Statistics housing finance figures suggest that the property market may be recovering thanks to investors. While figures in real terms show a decrease of 0.7% in the value of finance commitments and a 1.2% drop in the number of commitments, seasonally-adjusted figures show an increase of 0.7% and 1.9% respectively. That seasonallyadjusted growth is being driven by investors: investment finance was the only category to increase in real terms, by $77m. Even so, some commentators were pessimistic about the figures, with REIA president David Airey pointing out that, while property investment is rising, it is at a slower rate than previously. Housing Industry Association’s chief executive, Graham Wolfe, pointed to a slowdown in ‘trade-up’ buyers. Even so, economists seemed relatively pleased with the figures, with UBS chief economist Scott Haslem pointing out that “the sharp down cycle after the end of the first homeowner incentives appears to have ended.” New home purchases increased by 1% in real terms in May.

Australia ahead of curve: IMF Strong employment figures, lower unemployment and much lower debt than other advanced economies have made Australia a world leader in the global economic recovery, according to the International Monetary Fund (IMF). The IMF has forecast the Australian economy to grow by 3% in 2010 and 3.5% in 2011. It is forecasting advanced economies as a group to grow by 2.6% in 2010 and 2.4% in 2011, with the world economy expected to grow by 4.5% in 210 and 4.25% in 2011. Despite noting concerns around sovereign debt in some European countries, the IMF stated that so far “there is little evidence of negative spillovers to real activity”.


NEWS REPORT FAST CONFERENCE

excellence Recognising

FAST recently held its Business Excellence Conference in Palm Cove, Queensland. MPA was there to exclusively cover the event

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F

AST hosted a conference for over 100 delegates in North Queensland in July, providing an opportunity for brokers to not only share ideas and thought processes but also to celebrate the success of the intermediaries at the heart and soul of the aggregator’s business. The forum also provided an opportunity for brokers to chew the fat with representatives from several of the top lenders in break-out sessions, with CBA, ANZ and NAB Broker all in attendance. FAST CEO Steve Kane opened the conference by revealing the impressive progress of its FASTLend product, which has already assumed 3% of the market since its March launch. This means the white-labelled product now places Advantedge Financial Services as the eighth largest provider of mortgages in Australia, behind the traditional banks. Kane also revealed a series of FAST roadshows in the capital cities in August. They will ensure brokers are up to speed with NCCP requirements and are well informed of the various options available to them, in addition to helping them prepare effectively ahead of their licensing decision in September. Delegates at the conference were treated to a wide range of guest speakers. John Coutis gave an inspiring presentation about the importance of doing the best you can in business – and in life – and making the most of the chances we are all given. Economist Phil Ruthven, founder of IBISWorld, gave his predictions for the global

economy which offered reassurance for how well Australia has fared relatively, throughout the GFC. Tom Potter, founder of the Eagle Boys Pizza chain, gave an illuminating speech on how he grew his business from scratch, stressing the importance of “taking ownership of the situation” when times are tough. Crime writer John Silvester, writer of the Underbelly series, had listeners rapt with his gritty tales of gangland life. The two-day event was wrapped up with a gala dinner to reward FAST’s top-performing brokers, with Kane saying the aggregator was keen to recognise business excellence. The awards were categorised by state and by size of operator and the winners are listed in the box below. MPA

Award winners GROUP OPERATOR (> two loan writers) • VIC/TAS – Money Choice • NSW – Lawform Financial Services Group • SA/NT – Bob Wigley Home Loans • WA – Select Mortgage Services • QLD – Premium Financial Services • National recognition award – Select Mortgage Services SMALL GROUP OPERATOR (< two loan writers) • VIC/TAS – Q&K Finance Pty Ltd • NSW – General Home Loans • SA/NT – APR Financial Services • WA – Premium Private Finance (WA) • QLD – Go Mortgage Corporation Pty Ltd • National recognition award – Q&K Finance Pty Ltd


COLUMN

A DAY IN THE LIFE OF...

A day in the life of… Juggling roles as family taxi driver, school president and national manager of the proprietary distribution channel at Macquarie Leasing is all in a day’s work for Stephen Light

0630h

Stephen Light

“ June was the biggest month in the history of the company ”

Get out of bed, grab the lead and take the dog for a walk around the block. Back home for breakfast and am out the door just after 8am to drop the kids off to school. Given I am also school president at my second daughter’s primary school, I quickly pop in to see how things are travelling with the principal and have a quick look at how construction of the new classrooms is progressing. Fortunately, I don’t live too far from the office so it’s a short and easy commute to work.

0900h

Into the office, grab a cup of tea and sort through and respond to the more urgent e-mails. I receive my e-mails through my phone so there’s rarely any surprises waiting for me. I take a few moments to plan out what I need to do for the day. Also check on application and settlement numbers to see how we are tracking for the month and undertake some analysis to assist with forecasting.

1045h

Head downstairs to the cafe for a coffee with my colleague and discuss the pressing issues for the week. June was the biggest month in the history of the company, and while it’s naturally a busy time for us, we’re continually developing strategies to maintain momentum. We, of course, schedule a few minutes to analyse the footy results from the weekend.

1100h

Meet with an aggregator head to discuss current performance of their members in terms of submissions and settlements. Also work through some strategies and ideas for member training and promotion of our products. We’re currently receiving tremendous support from the channel as brokers increasingly recognise the benefits of adding equipment leasing to

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their service suite. One of my key objectives is to work with aggregators to ensure their brokers have the very best understanding of leasing and all the tools they require to get started and complete deals. Given leasing/ equipment finance is a non-core service/product for brokers in my sales channel, it’s important to keep them focused on the benefits. The supplementary remuneration is very good for those brokers who can successfully transact a deal for their clients, rather than giving the business to someone else.

1230h

Grab a bite of lunch; today it’s just a sandwich from the local deli. Have a quick read through the papers and check out Broker News to see what is happening out there! It’s not uncommon for me to have a working lunch scheduled, but I certainly take advantage of every opportunity to enjoy a quiet lunch behind my desk.

1330h

Spend the next few hours on a variety of tasks: catching up on e-mails, talking to my BDMs and major broker groups around the country and working through our latest projects under development. While our MacLease system is comprehensive and we have a highly resourced broker support team, our goal is to make processing a leasing deal as easy as possible for our brokers.

1800h

After reviewing the calendar for tomorrow and making sure I have cleared the decks as far as possible – you never know what challenges tomorrow might bring – I head home for dinner with the family. Tonight is somewhat unusual in that there is no running around for the kid’s sports training, dance classes, music lessons or the like.


FEATURE EXIT FEES

No Exit? Concern over competition in the mortgage industry has led the federal government to examine exit fees more closely, says Andrea Cornish. But will increased pressure on the fees actually have an adverse effect?

I

t costs $140 in NSW to change your name, $550 to apply for a divorce and $7,000 for the average funeral. But one of the most expensive fees you might face in your lifetime comes from changing your home loan. A report released in 2008 by the Australian Securities & Investments Commission revealed that homeowners faced up to $7,500 in early termination fees – some of the highest in the world. According to the regulator, penalties paid by Australians switching loans are nearly five times greater than for those borrowers in the US and the UK. Lenders argue that high exit fees are necessary to keep rates down and recover their losses, however ASIC’s report revealed that these fees are also profitable. In 2008, early mortgage termination fees accounted for 42% of

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FEATURE EXIT FEES

the fees raised by the sector – more than double that of the 19% figure recorded in 1995. This concern over the effect of such fees on consumers and competition in the lending arena has led ASIC to examine the issue more closely.

ASIC on fees The Australian government has been increasingly concerned over the effect of exit fees on competition, particularly in light of the major banks’ market dominance in the mortgage sector throughout the financial crisis. Scrutiny resulted in the recent announcement that ASIC would be given increased authority to pursue institutions trying to charge unfair or unconscionable exit fees. Federal Treasurer Wayne Swan and Minister for Financial Services Chris Bowen assured Australians that these new powers would make it easier for borrowers to shop around for cheaper rates.

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“ Exit fees can be so high that there is no incentive to switch to another lender, even if they are offering a substantially lower interest rate ”

“Currently, some banks are using mortgage exit fees to lock customers into their home loans,” Swan and Bowen said in a statement. “Exit fees can be so high that there is no incentive to switch to another lender, even if they are offering a substantially lower interest rate. “The government is determined to make the banking system work for families, not against them, and these tough new powers are a major step to delivering on that commitment.” Both ministers added that ASIC would most likely act against lenders who were profiting from exit or establishment fees, rather than fees that reflected a fair recovery of the costs. Fees that are determined to be unfair by a court can be declared void and customers can receive full refunds. The federal government also gave consumers the ability to challenge early exit fees that were considered unfair. ASIC has released guidance on how it proposes to define and handle unfair fees and is in the process of consulting with industry to develop a specific framework on the regulation of early exit fees. “The GFC has created some significant challenges for competition in the mortgage market,” Swan and Bowen said. “These can’t be solved overnight but the Gillard government is determined to take action wherever possible, to boost competition and improve protection for Australian families.”

ABA on exit fees The Australian Bankers’ Association has defended the early termination fees charged by banks. According to ABA chief executive Steve Munchenberg, Australia has low entry fees for mortgages compared to the US and the UK. “That means it is cheaper to get a mortgage here than in other countries. Banks achieve this by deferring some of the costs of establishing a mortgage and only charging those customers that change their mortgages in the first few years,” he says. Munchenberg adds that early mortgage exit fees can include the bank’s unrecouped costs associated with the establishment of the loan.


Exit fees may also include the lender’s administrative costs and any loss arising from early termination. “For example, a credit provider may agree not to charge the full loan establishment costs at the start of the loan on the basis that it may recoup those costs if the loan runs beyond a certain term,” he says. According to Munchenberg, low upfront mortgage fees benefit all customers and support customer switching. “The effect of deferring these upfront fees – for example, legal service fees – is that it reduces the cost to the customer of setting up a new loan at a time when they are incurring many other costs.” Finally, Munchenberg points to evidence that exit fees are not deterring borrowers from switching loans, as about 30% of owner-occupied home loans are refinanced each year. While most of the major banks deferred to the ABA’s position on the subject of exit fees, NAB has been outspoken about its support for the new measures. Not only will this benefit customers, but NAB maintains they will benefit those lenders who offer borrowers the best deals. NAB embarked on a new lending strategy in late 2009 to grab a greater share of the mortgage market. By offering a more competitive rate than the other major lenders, the bank managed to increase its market share more aggressively in the first quarter of 2010 than it had in the previous five years. According to NAB group chief executive Cameron Clyne, the new government rules will be good for competition and will “give bank customers looking for a fairer deal on their home loan the power to walk down the road and get a better rate”.

Steve Munchenberg

Cameron Clyne

Non-banks on exit fees The review of mortgage entry and exit fees was particularly revealing, in respect of fees charged by non-banks. It found that borrowers ending a $250,000 basic mortgage after three years from a non-bank could be hit with fees as high as $7,580, or $2,665 on average.

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FEATURE EXIT FEES

When other fees and charges were added in, non-bank customers could be paying exit fees as high as $9,000. By comparison, the report found that the maximum exit fee charged by major banks over three years was $3,750, with an average of $1,081. Customers of regional banks or second-tier banks paid $703 on average. The MFAA came out swinging on behalf of non-banks after ASIC announced it was seeking consultation on exit fees. MFAA chief executive officer Phil Naylor says that “MFAA strongly supports all measures which promote competition in the mortgage industry and enable greater loan choice for consumers”. “That said, the reality is the issue of mortgage exit fees is multi-dimensional. According to our members, there are industry concerns that any changes to mortgage exit fee structures will further inhibit the ability of non-banks lenders to compete in the mortgage market – thereby impacting the range of services non-bank lenders can provide consumers. “It’s important to note that non-bank lenders have been able to offer consumers very competitive interest rates by deferring some of their setup costs into deferred established fees which are paid only if there is an early termination of the loan. Non-bank lenders were the most heavily affected by the GFC and are still recovering from this significant challenge,” he adds. MFAA says it takes comfort in the comments made by ASIC that make it clear the regulator sees early exit fees, including deferred establishment fees, as only generally imposed to recover costs that arise from early termination. Mortgage Ezy chief executive officer Garry Driscoll says ASIC’s increased authority to crack down on exit fees will not negatively impact the non-banks. “ASIC is concerned about exit fees and the high cost for consumers to move from one bank to another. Most mortgage managers have small exit fees, which are lower than the banks and are in line with the actual costs to prepare and process a discharge,” he says.

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“ Most mortgage managers have small exit fees, which are lower than the banks and are in line with the actual costs to prepare and process a discharge ”

Phil Naylor

Garry Driscoll

“The issue of deferred establishment fees (DEFs), while separate to exit fees, are also charged when the loan discharges and there has been some concern expressed about the level of these fees. The DEF is an establishment fee, which the borrower may choose to pay upfront or defer over the period of the loan. These upfront costs are explained to the borrowers at application stage and clearly set out in the loan contracts so there can be no misunderstanding,” Driscoll says. He adds that DEFs are an extremely important pricing mechanism used by mortgage managers in order to provide lower ongoing rates to borrowers. “Without DEFs, managers would need to either charge the establishment fee upfront or possibly reprice their products to cover this upfront cost. Either way the consumer would be worse off and competition would be affected,” he explains. Driscoll remains confident that the government will act in the best interest of market competition. “We have all seen what has happened in the last two years where the major banks have had a monopoly on the home loan market,” he says. “They have independently driven rates above the Reserve Bank increases, some have cut broker commission, some have increased bank fees. Some have forced brokers to push business their way under the threat of minimum volume criteria and most have basically stuck their noses up at the government and borrowers. The government has done everything it can in the last two years to encourage competition during the financial crisis and I see no reason why this would change now.” MPA


FEATURE EXIT FEES

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COLUMN TECHNOLOGY

Head in the

clouds

Technology continues to change the way we do business, with new developments happening almost every week. The latest trend is ‘cloud computing’ and, if you believe all the hype, it’s the future of IT. But what is it – and are there any risks that brokers need to assess? Tim Ford explains

I

n a nutshell, ‘cloud computing’ is just a fancy way to say ‘online’, meaning that your data – such as your client database – is no longer in your office but somewhere out there in the ether, on someone else’s computer. A good example of cloud computing would be Google Apps, where you can do word processing or edit a spreadsheet online and share it with someone else. Even YouTube is a form of cloud computing. These services are free and are great for students – but rarely used by businesses, and with good reason, as we’ll see. Microsoft has been pushing cloud computing for the last few years, but at an entirely different market. It encourages serious business use with heavy-duty databases that link its users to massive ‘servers in the sky’. Why? The claim is that it makes it easier for users to access their data from anywhere in the world, but if you dig a little deeper, you’ll see that it’s also a commercial exercise of grand proportions. It comes with a hefty price tag that is most suited to governments and large corporate users, rather than small businesses.

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Brokers and the cloud As a finance professional dealing with sensitive information, there are some things that you need to consider before moving all of your business-critical information – like your customer relationship management (CRM) system, client correspondence or accounting – into the cloud. For brokers there is an extra matter to consider, such as the services offered by your aggregator or franchise head office to store all your client information for you. But whoever the potential service provider is, the same questions should be asked before taking that step. Perhaps most important to ask is the question ‘can it be switched off’ – and how would that impact on your business? What would happen if your relationship with the business controlling your data breaks down? A lot of brokers have changed aggregators a number of times over the last couple of years, and of those that haven’t, many are considering it. While you are in the honeymoon period with your aggregator or software provider nothing is too hard: promises are made and assurances are

“ The claim is that [cloud computing] makes it easier for users to access their data from anywhere in the world ”


COLUMN TECHNOLOGY

Tim Ford

“ The whole issue of trans-border data protection law is truly a nightmare ”

given. Things do change, however, especially if you are not the one in control. If your provider does go out of business, change direction or if the relationship ends, can you retrieve your data? And will it be in a usable format? Your clients aren’t concerned about changes within your business, they just expect – and deserve – a seamless flow of service. It’s not just about keeping your client information secure, it’s also about protecting your source of income, too.

Data and privacy Most cloud computing users don’t know where their data is physically located or how well it is portioned off from the other information on that server. Is it sitting on an aggregator’s system alongside all of your closest competitors? Or is it in a country that has a different legal jurisdiction? The whole issue of trans-border data protection law is truly a nightmare. Every time you put data online you are potentially making it available to the world. If the Pentagon can be hacked, so can your data. You also need to think about the implications of the federal government’s Privacy Act. What exposure will you have to litigation if your data,

hosted by a third party, gets into the wrong hands? Compliance requires absolute certainty, which sadly does not exist in the cloud. It’s well documented that the big issue with cloud computing is trust. As finance professionals, your clients entrust you with their private information. By storing this information on an online system – like the one provided by your aggregator – you need to put your trust in the aggregator, their software supplier, the data centre and so on, going down the line. While you might reasonably expect a bank to have a massive security system (and to take responsibility when there is a breach) will this be true of any smaller entity hosting your data? You need to trust that not only do the companies have the right systems in place to keep your client data and your livelihood secure, but you also need to trust that all of their staff have access as well: even those having a bad day. Keep in mind Chris Hoff, a renowned information security expert, when talking in relation to cloud computing: “If more trust means less security, we’ve got a real problem.” MPA Tim Ford is customer service manager at Linx Software

Top tips on staying safe Is there a storm brewing over cloud computing? Some believe so, but here are some tips that will help your business stay safe: • Only put your data online if it is absolutely necessary. Why put your data in harm’s way, or your business at risk, if you don’t need to? • If you need to fill out an online application, make sure you keep a copy in your own CRM system so you are never without your client contact information • Seek legally-binding, written assurances from any online service provider holding your data that they will indemnify you against legal action for breaches of privacy legislation or licensing obligations. If they won’t provide such assurances, think again • Maintain control. All online systems give control to the service provider – which is why they are pushed so strongly. Make sure you stay in the driver’s seat by keeping everything in an on-premise system • Don’t be pressured into an online system because of the perceived benefits of world-wide access and automated backups. Both these features can be easily achieved (for free) with on-premise systems which remain under your control • Have a good back-up plan. This involves more than just backing up your data. It’s about having a contingency plan in case the people that you are relying on let you down. These people could include your software provider, aggregator, franchisor and even your internet service provider • As a business owner, handing over any level of control should be done with serious considerations taken into account. Cloud computing may be a great ‘buzzword’ but the software you choose for your business should reinforce and add great value to your business, not put it at risk

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PROFILE BROKER

Oval to office

Former AFL footballer-turned-broker Anthony McDonald shares his on and off-field experiences

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erseverance and the ability to quickly adapt to change are skills that former AFL footballer Anthony McDonald says have served him well as a mortgage broker. McDonald, who hung up his boots in 2002 after a persistent foot injury took him out of action, played 104 games with the Melbourne Football Club over seven seasons. In that time, his side made it to the 2000 Grand Final against Essendon. While the match ended in favour of the Bombers with a score McDonald says he doesn’t care to remember, it was still one of the highlights of his career. According to McDonald, the experiences he gained in the AFL – both the wins and the losses – have been valuable training for his career as a broker. “The discipline and challenges required to make it at [the top of] AFL certainly prepared me for the rigours of the broking industry,” he says. “You receive a lot of setbacks and are constantly challenged as a footballer and I can draw many parallels with my footy experience when running a business in the broking industry. Time management, prioritising what is important, the challenges of external forces and how to react when things don’t go your way are just a few examples of what is required. I found that if you persevere and persist, you will get there in the end. Some have more natural ability than others,

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but few have the discipline and attitude to keep at it when things get tough.” Footy to finance Football is a shared passion in the McDonald family. Growing up on a farm in the small Victoria town of Waubra, McDonald says you had three choices as a kid: do farm work, homework or play footy. As an adult, McDonald played alongside his brother James for his entire career, and against his eldest brother Alex. James, known as a hardworking midfielder, is the current captain of the Melbourne Football Club, while his equally talented eldest brother Alex retired in 1999 from Collingwood. “All three boys in the one match was certainly a high for our parents,” McDonald says. He recalls his mum would wear one club’s scarf and the other team’s hat. “People must have thought she was crazy!” Early in his career, McDonald played in the VFL with Coburg. At 19 he was drafted to Carlton for a short stint, then was delisted and drafted again to Hawthorn. After being delisted from that squad, McDonald spent three years in the Victorian Amateurs with the Old Xaverians. It was there he received “a lucky break”, he says, and was drafted as a rookie with the Melbourne Football Club. McDonald finally made


his senior debut in 1997 at the age of 25 – “an age considered old in the AFL these days”, he says. McDonald appeared in six finals for Melbourne, but at 30, a foot injury commonly called “turf toe” forced McDonald into retirement in 2002. While it took 12 months to fully recover, McDonald says he can now enjoy running pain-free. McDonald’s involvement with footy continues. He was a Melbourne FC runner until 2009 and was then offered the opportunity to coach the Xavier 1st XVIII this year, which he says has been extremely rewarding. “To see all sides of the game gives me great perspective. I am also still heavily involved with Melbourne Football Club as the president of the past players.”

“ I can draw many parallels with my footy experience when running a business in the broking industry ”

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PROFILE BROKER

While his passion for sport dominated his early years, McDonald says he has always had a love of finance. He completed his CPA while with Melbourne Football Club and during his secondlast year playing with the Demons, McDonald says he was anxious to do something on his day off. So after several meetings with the club, he set up Demon Home Loans and began to write loans for members and friends of the football club. “We offered chances to have your mortgage witnessed by the captain at the time – David Neitz – and photos taken with your favourite player as a marketing tool. It was a win for my personal development and a fantastic new venture for the club,” McDonald says. He was drawn to mortgage broking because he finds it rewarding to assist people. “The challenge of making sure clients understand their finances, and what they want from their mortgage is important. To see a plan put in place, whether it be a first homebuyer or someone buying their next investment property, the end result is always rewarding for me.” Meanwhile, the rapidly changing mortgage industry doesn’t leave McDonald much time to practise as an accountant.“I still read a lot and have a general understanding of what is relevant in the accounting profession, but the days of churning out tax returns are behind me. Completing my CPA has enhanced my overall knowledge though,” he says. After retiring from football, McDonald says he wanted to make a clean break from the club. Paul Filippone, who is currently a state manager for ING Direct, suggested McDonald contact a few brokers before going out to set up his own business. McDonald arranged a meeting with Andrew Baker. McDonald says he went to Baker’s office that afternoon and commenced work the next day. “We’ve been partners now for eight years and have recently expanded, moving to 409 St Kilda Road.” In the early days, McDonald says there just wasn’t enough time in the day. “2002/03 was a very busy period and deals just had to be done,” he says. “Initially I think people were prepared to give me a go because they knew who I was. It wasn’t until I decided to go full-time as a broker people started taking me more seriously and distinguished me

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“ The contacts I made through football and the exposure to elite business mentors has been one of the great assets to my business ” from the footballer of past. Things seemed to just take off from there. I will say being a broker in Melbourne and having a football background doesn’t hurt, even if I am a Demon, something that doesn’t equate to success at the moment. Although I would say that the contacts I made through football and the exposure to elite business mentors has been one of the great assets to my business.” As in his football career, McDonald has faced some challenges as a broker. The GFC resulted in a massive reduction in volumes for the company, coupled with a 30% loss in commissions. “In most businesses this would mean closing the doors but we managed to get through this period and have come out the other side a lot wiser,” he says. The company realised it needed to diversify its offering and as a result, it introduced a financial planner and now offers equipment finance. “We concentrate on residential loans and also car and equipment finance.” Port Finance has an aggregator business – Port Group – with a membership of more than 25 brokers. “This business has seen rapid growth in the last 12 months as we see the value in looking after good brokers who are keen to get better.” In terms of goals, Port Finance is currently working with a consultancy firm – 2integrity – to help make the business more corporate. “We’re structuring our business to spend enormous amounts of time on database management, functionality of staff and creating an end-to-end experience for the client. We want to have a business that has a lead distribution plan unreliant on loan consultants’ sales techniques. The achievement of this goal will be extremely rewarding and a true sign that we’ve kicked a goal.” McDonald and his wife, Bridget McIntyre who is known for the Brand Power advertisements, have a seven-month-old son, Max. MPA


PROFILE BROKER

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Driving diversification The mortgage broking industry has evolved over the past few years, from delivering a specialised service to offering a more diverse product range. Tony Hayek discusses the benefits of providing property investment services to your clients

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ith commission cuts, consolidation, tighter lending policies, fewer lenders and the effects of the recent GFC threatening their income, smart brokers are now diversifying their business to offer investment property solutions to clients. Diversification has been dubbed the panacea for enhancing the efficacy of business and is inevitably becoming the rule, rather than the exception, across the industry. Enterprising mortgage brokers are quickly recognising diversification as an attractive option, with potential for increasing the return per transaction and generating an additional revenue stream simply by expanding their services.

Tapping into new territories As residential lending remains firmly at the core of the industry, brokers are realising they can

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perform better by cross-selling products that go hand in hand with home loan products, such as access to investment property opportunities through a research advice model. With property investment becoming an increasingly popular avenue for clients, it makes sense for brokers to be well versed within this market. In the present broker landscape, we see many brokers who have clients that are investing in property but are doing so without their broker’s assistance. As a result, advisors are missing out on this additional business and potentially losing their clients to other lending sources. And that’s something that no broker should dismiss. One of the reasons that a client engages a mortgage broker is to enjoy having access to opportunities and services that are not available to the mass market. Clients like to feel special. Therefore, in order for a broker’s business to not only survive but also thrive, brokers need to diversify and expand this service repertoire. As the future of mortgage broking lies in the ability of the broker to evolve into a trusted adviser to clients, becoming a financial ‘general practitioner’ on all wealth creation and finance areas not only enhances the broker/client


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Case study Mark Mellick, Auspak Financial Services Mortgage broker Mark Mellick set up his business in brokering, real estate and financial planning more than three years ago and has learnt first-hand how diversifying his product range can generate significant additional income simply by tapping into an existing client base. He says: “These days clients are looking for people that they can trust in relation to their financial affairs and if I am not looking after this, someone else will. Being a one-stop shop is definitely the way to go moving forward in this industry, and brokers should be seriously doing a SWOT on their business, along with some long-term planning. My role is to educate clients and assist them in their strategy moving forward, so support from [property investment company] Blue Wealth has helped underpin my business model. People tend to buy where they live because that’s where they know. However, that doesn’t necessarily make it the right investment decision. Everything has to stack up.” Mellick believes buying at the right time in the property cycle, in the right area, in the right place and making sure that you are paying the right dollars are all crucial elements of the investment process. Infrastructure, government spending, population movement, age and resident demographic are also key towards making successful choices. “It’s simple: knowledge is power. But even more importantly, it is how you use and execute that knowledge, which can make it even more effective,” he says. “Good news travels fast and bad news travels even faster. My clients who have attended these seminars have learnt a lot from them and have thanked me for the opportunity. Because of this service, I have received referrals for further business opportunities,” he says. “Purchasing is a long-term journey and that’s the view that investors need to take. It’s not about getting a tax deduction because there are many ways you can go about doing that. Rather, it’s about long-term planning and having the right strategy and research in place before you invest.”

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What’s in it for the broker? ��� Repeat business • Referrals • Retention of clients • Differentiation from other brokers • Peace of mind – smart decisions/investments

relationship, but strongly diversifies the income streams away from a reliance on the banks.

Post-crunch climate Normalisation appears to be slowly returning to the marketplace. Topped off by the Reserve Bank announcing holds on the cash rate in recent months, property investors are returning to the market in full force as investment mortgages become easier to obtain and property values continue to rise. Certain credit criteria have also been tightened, adding complexity – not to mention confusion – for would-be investors. Enter the role of the diversified mortgage broker. Recognising their potential for increased value as a vehicle for delivering a range of financial services should be a natural progression for all mortgage brokers to implement, in order to stay on top of their game. Rather than just meet their clients’ financial needs, brokers should aim to surpass their needs and expectations in order to remain a ‘broker for life’. While the potential to generate extra remuneration is the obvious advantage of having a diverse product offering, other key benefits include maintaining a stronger client value proposition, saving your client both time and money, increasing loyalty and appreciation, the opportunity to strengthen existing relationships and add another dimension to the broker/client relationship, increasing retention rates and boosting word of mouth recommendations and referrals. With some banks shifting strategies to rival those used by mortgage brokers – such as a greater emphasis on personalised service and customer relationships – the clear message is for brokers not to become complacent or rest on their laurels. The more brokers can satisfy their clients the easier it is to keep them on a long-term basis, and lessening their need to go elsewhere. One way brokers can diversify and strengthen their business is to work with a property investment company. Blue Wealth Property is one such company, a research house studying the Australian property market and identifying growth markets and strong investment opportunities. Its acquisitions team


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aims to secure the best investment properties – and often negotiates exclusive opportunities for investors. Blue Wealth Property does not deal directly with the public, instead choosing to work with selected business partners, supporting them to provide investment property to their clients. Blue Wealth’s business partners include accountants, financial planners, real estate groups and mortgage brokers. Mortgage brokers are a good fit for our business. They have clients who are buying property, and by working with us the broker can help their clients make informed investment decisions based on research – we believe it’s a win for the client, and for the broker who creates a new source of income.

Competitive edge Clients want holistic financial solutions so there’s definitely a niche opportunity for mortgage brokers who can provide a range of services. Some brokers are comfortable recommending a property, others simply want to refer a client. Either way, there are companies who can help brokers grow and diversify their business. Blue Wealth supports brokers by providing training, regular seminars, research and education. The group has a national focus which enables clients to invest not only locally, but to be privy to investment opportunities available nationwide, and in many cases they have access before the general public. They have a proven track record in identifying growth markets and investments that outperform the market. The responsibility of the mortgage broker is to provide the best advice in accordance with the duty of care and industry’s professional code of ethics. Providing unique investment opportunities from a specialist dedicated to sourcing a gamut of new and interesting investments ensures the broker is doing just that. MPA Tony Hayek is the CEO of Blue Wealth Property, a company that works with mortgage brokers, supporting their clients to invest in property. Visit www.bluewealth.com.au for more details

Tony Hayek

“ The clear message is for brokers not to become complacent ” BROKERNEWS.COM.AU  

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FEATURE FASHION

Looking the part Brokers, who have long clamoured for the kind of recognition received by accountants and lawyers, are finally in the same professional ballpark. But do they look like they belong on the same team? Andrea Cornish finds out

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rom a regulatory standpoint, the mortgage industry has undergone an extreme makeover. After years of consultation with the industry, the Australian government has instigated a series of changes that has fundamentally cleaned up the mortgage broking profession, ridding it of rogues, fly-by-night brokers and part-time practitioners. Janette Ishiyama, owner of Image Consultants, says that given the recent shake-up in the industry legitimate brokers need to re-establish their credibility, trust and professionalism. “In order to provide consumers with the highest level of professional expertise and to instil public confidence, all members need to present a professional image that supports the industry and themselves,” she explains.

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Shopping

The best place to start is with your closet. My Image Consultant founder Annalisa Armitage suggests that as you move from winter to summer, chuck out anything that hasn’t been worn in a year. “Get onto eBay, have a market stall or give to friends or charity. If you can’t bear to part with it give it one more season and then let it go,” she says. Then when you’re ready to add to your wardrobe, try to do so in a controlled way. “Ideally, shop twice a year with a professional who can help you to resist the things that don’t work in your wardrobe, and find clothes that will fit you and that you can mix and match.” One of the biggest mistakes people make when buying clothes is simply buying too many unnecessary items, Armitage says. She also says to beware of so-called bargains.


FEATURE FASHION

“[Another mistake is] thinking that a top that has been reduced to $200 down from $600 is a bargain and never wearing it. Often items are on sale because no one can think of how to wear them,” she says. The saying ‘buy cheap, buy twice’ is also a good one to remember, according to Ishiyama. “Investing in high quality garments or accessories that will last for years is a much better idea than buying cheap items that will only last a few months. Your business wardrobe is your visual resume and is as important to your career as your education and experience,” she says. As a guide, she suggests spending one month’s salary a year on your professional wardrobe.

“ Often items are on sale because no one can think of how to wear them ”

lot about a person by the condition of his shoes. “Attention to every detail means a well-cared for leather shoe, with a clean and polished heel. A good quality black leather lace-up shoe, with a leather sole, is a staple in every broker’s shoe collection,” she says. As for accessories, less is more.“Don’t go overboard with accessories. A conservative watch and wedding band would be enough. Watches in silver or gold are a good place to start, but a leather band always looks nice too. Watches are a powerful indicator of style and personal accomplishment,” Ishiyama says.

Women’s wear Menswear If brokers want to be seen as providing a service that is on par with lawyers or accountants, then logic would dictate that brokers should dress along the same lines as those professionals. “When you think of those sorts of people, what are they wearing?” asks Armitage. “Mostly they are wearing darkish coloured suits with lightcoloured shirts, with a light tie to blend with the shirt or a brighter tie to contrast.” Ishiyama concurs on the colour scheme for men’s suits. “A single breasted, two-button suit is a classic and timeless staple to a man’s professional wardrobe. The colour of choice is charcoal or navy as these colours suit most men. These colours are commanding without being intimidating. The darker the colour, the more weight it carries. However, avoid black as it is considered too formal and severe for men to wear for business, and is more appropriate for evening and social events,” she says. Armitage agrees that a “classic” style is best. “Lapels on a jacket at the widest part should measure half way to the edge of the shoulder and should be single breasted – two or three buttons. If wearing a tie, the widest part of the tie should be the same width as the widest part of the lapel. Classic will serve you well.” As for shirts, Ishiyama suggests a blue or white French cuff dress shirt, as these styles have a polished and sleek look. She adds that a tie should never be an afterthought. “A high-quality silk tie is a powerful accessory that can not only complement but enhance that great-fitting suit. Stick with ties that are either strongly contrasting or go for plain, small pattern or stripe ties.” Footwear is also a key part of the overall picture. According to Ishiyama, you can tell a

While women remain a minority in the broker industry, MPA’s Top 100 list indicates that an increasing number are enjoying the same levels of success as their male counterparts. According to Ishiyama, a professional woman’s outfit should reflect the level of professionalism and skill she has. “It’s critical that they don’t dress down too far as they will lose all authority,” she says. “Start with a pants suit or a skirted suit to achieve the most conservative look. Except for some exceptions, dresses are not able to give the same credibility unless wearing them with coordinated jackets. Your suit should be in a basic colour such as black, navy or charcoal grey. Unlike men, black shouldn’t be avoided. It’s a great colour to give women additional business power.” A dress made from the same material as a suit would be one exception to the rule, Armitage argues. She also suggests that women can wear T-shirt type tops instead of shirts, assuming they don’t take the jacket off. Brown is another suitable colour for women, she says. When it comes to skirts, they should be worn knee-length or a bit below the knee, ensuring that extremes are avoided. While blouses can provide colour and variety to a woman’s professional wardrobe, Ishiyama warns that they should be appealing rather than revealing. Pay attention to the waistline and neckline, as, again, extremes at either end can give the wrong impression. Another thing to look out for is pairing a dark suit with a bright coloured top. Armitage argues that bright fuchsia pink, yellow, orange and some reds can look a bit flashy or playful, rather than professional. When it comes to shoes, women should opt for something on the conservative side. Leather closed-toe pumps with medium, tapered heels are

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always appropriate, and are perceived as more professional than flats or high heels. As for accessories, like men, less is more. According to Armitage, wearing jingly jewellery to work should be avoided, as it’s a distraction.

Business casual Certainly one size does not fit all when it comes to professional style and brokers. Where you live and how you operate also play a big part on how you dress. For instance, brokers working in a small regional town might actually intimidate customers by overdressing, while brokers that make home visits in the evening or on weekends might also want to alter their style accordingly. Janette Ishiyama, owner of Image Consultants, explains. “The idea when meeting with a potential client is to instantly put them at ease and make them feel assured and comfortable in their presence. If you overdress then you run the risk of intimidating the client. So ultimately dress to a similar standard to your audience. We must also bear in mind that we still need to look credible and professional so certain colours and having some structure to our outfit is important.” She advises brokers dressing in business casual style to consider shirts or knit tops in blue, green or purple, as these colours “instil trust and appear friendly and approachable”. And in terms of suiting, business casual brokers should stick to the tried and true charcoal and navy as these are the most versatile “core colours” and they “allow you to instil credibility and professionalism in your outfit,” she says. Ishiyama also advises brokers to consider wearing one piece of clothing that has some structure, for instance a suit jacket, shirt or trousers. “Having some structure enables you to strike a nice balance between appearing professional and trustworthy and also appearing approachable and friendly,” she says. There are five variables that affect the formality of the way you dress. According to Ishiyama, these are: 1. The number of pieces of clothing you’re wearing: The greater the number of pieces you wear at one time, the greater the degree of formality you exhibit. 2. The colour combinations: The darker the colour you wear the more powerful an image you’ll project, ie, black, navy, and charcoal. 3. The pattern and texture of the fabric: The smoother and plainer the fabric, the more formal a garment will be. Once you start adding texture and/or pattern to your garments, you’ll look more casual. 4. The style of your garments: A matched suit is more powerful than a blazer worn with pants or a skirt. For women, wearing a dress has less impact than wearing a suit. A collared shirt is more formal than a collarless shirt. 5. Accessories: Wear fine accessories – for example, shoes with thin soles, fine jewellery in gold or silver. With business casual clothing, your accessories can be bolder and heavier.

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Trends

Janette Ishiyama

Annalisa Armitage

Armitage argues that in this industry it’s important to look ‘not out of date’, but brokers don’t have to look up-to-the-minute fashionable. “If you are wearing something that is very highfashion, such as some of the extreme shoulder detailing that’s around for women and the large patterned floral shirts for men, you could be seen as being flighty and fickle – not a quality people want to see in their mortgage broker,” she says. Ishiyama also advises brokers not to follow every trend of the season. “Only buy clothes that suit your profession and personal style. Trends come and go, so make sure that you do not over-shop for any clothes of this season’s trend, because you might end up with a closet full of outdated clothes,” Ishiyama says. But if you’re keen to keep up with the currency this spring/summer, women should be on the lookout for floral prints. “Flowers are everywhere – they emphasise a softer and more fluid silhouette,” says Ishiyama. As well, pastels are making a comeback – with plenty of choice in colour. According to Ishiyama, washed-out nutmeg, peach, grey with icy blue, creamy cognac and beige are all available. While the ‘1980s look’ has been around for a couple of years, now we’re seeing the denim that made such an impact in that decade come back. As well, tribal prints and the safari look will be present. “Try everything from tribal earrings to statement necklaces. Choose the safari trend (khaki and beige) for a more balanced look,” Ishiyama advises. The draped look, which can create a subtle, sophisticated appearance, will also make a good addition to women’s spring/summer 2010 wardrobes. For men, there’s a move away from the ‘skinny boy’ suit, Ishiyama says. “That’s not to say slim is out altogether, nor that a boxy cut has replaced it. Instead, think of a cut that would appeal to a military officer, one that accents a sense of the masculine through three key silhouette elements: broad shoulders, a slim waist and slim trousers.” As for vents, it’s really simple – choose a suit with two side vents. Ishiyama advises that the only time to break this rule is if you’re buying a


dinner suit. When tailored correctly, a suit jacket with side vents is always preferential due to the perfect silhouette it can provide, she says. Ishiyama says men should look out for the peaked lapel. “Since the mid-20th century notched lapels on a suit have been the staple, but as we return towards classic tailoring, we’ll see a return of the peaked lapel,” she says. “The peaked lapel is another of the great visual elements of a men’s suit: it helps convey the much-coveted V shape. That said, notched lapels aren’t out of fashion and both are an equally good investment.”

Size matters The most important thing for men and women is to buy clothes that fit. Both Ishiyama and Armitage agree that this is one of the biggest mistakes people make when shopping for clothes. Be prepared to have your clothes altered and when you change shape chuck out the clothes that no longer fit. “Fit is everything and size is purely subjective. Remember every store uses a different sizing system. Make sure to have items altered so

you look and feel your best in your garments,” Ishiyama says. And if the size really bothers you – just cut off the tag.

Grooming Lastly, both image consultants recommend brokers pay attention to grooming – perfect collars, polished shoes, clothes ironed and a tidy appearance. “Poor grooming makes people think ‘if they can’t take care of themselves how can they take care of my money/mortgage/dreams?’ ” Armitage says. When it comes to hair, medium length hair is seen as pragmatic, professional and business-like. “You risk losing your authority if the length of your hair, its state of cleanliness, its colour and style are not conforming to conventional professional standards,” Ishiyama says. For women, make-up and nails are also an important part of completing your total presentation. “A bare face should be reserved for the weekend only. Keep your make-up light, current and conservative,” says Ishiyama. MPA

“ Only buy clothes that suit your profession and personal style ”

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Top Commercial Brokers If commercial brokers thought 2008/09 was tough, it was only a taste of things to come for the harsh climate experienced in 2009/10, as Barney McCarthy finds out

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t was the best of times, it was the worst of times.” So reads the first line of A Tale of Two Cities, and the commercial brokers featured in our list this year can most likely empathise with the words of Dickens. For while those who have made our rundown have performed excellently to make the cut, they have done so against a backdrop of funding issues and restricted criteria that have hampered their counterparts. In fact, so trying have conditions been that the number of brokers putting themselves forward for recognition this year was down on previous instalments. This may also have something to do with the exacting standards we have at MPA – brokers had to settle at least $20m of commercial loans to be considered for entry into this year’s list – meaning that many introducers fell short of the requirements. All this makes the achievement of the top eight featured intermediaries all the more impressive. Congratulations to those brokers, and before we profile those at the top of their trade, here is an introduction from our sponsors, IMB (see box, right).

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George Sotiros, IMB

Commercial insights The last 12 months have been a significant challenge in the commercial arena. Aggregators and brokers are aware of the importance of diversifying their business, with an increase in focus on the areas of insurance, asset purchase and commercial lending. The key fundamentals of working with clients, understanding their current and future plans and tailoring solutions to meet their needs continues to be the prime reason why borrowers seek the services of a quality broker. This is even more relevant in the commercial arena which, while having longer lead-in times, can be extremely rewarding if you do the right thing by your client for ongoing business and referral opportunities. Over the last year, as major lenders have reviewed their risk appetites, reduced their LVRs and priced accordingly at annual review

times, there has been a reduction in the options for borrowers in the commercial arena. The brokers who have succeeded are the ones who have been prepared to look at all alternatives for their clients (not just from the majors), have a thorough knowledge of their client’s business and have put together a strong proposal including detailed analysis of their client’s historical capacity to pay, explaining any significant variances in income and business changes and the character of the business. I believe the next 12 months will see a continued conservative approach from lenders and a cautious approach from the SME market in capital investment and borrowings. Refinance opportunities will exist for clients who have seen a change in their lender’s risk appetite and either not renewed facilities at annual review time or increased price for risk, or taken additional securities to improve their comfort levels. Small businesses may look to purchasing premises as rentals continue to increase. Many solid businesses that have come through the last few years have been able to continue to pay their commitments and are now looking for a lending solution that will allow them to consolidate and grow. Some considerations for a broker in determining which lender to place their business with include: • What is the history of the lender in pricing and product benefits? u

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• Are they generally competitive and is the current offer sustainable after the special offer period ends? • What are the ongoing fees and charges? Is there a monthly, quarterly or annual fee? • What security will the lender insist on, including directors’/ partners’ residential homes and fixed and floating charges over the business? • What are the exit and early termination fees? • Will there be any channel conflict and how will the lender manage that conflict? • Does the lender attempt to cross-sell the borrower all access options and love your clients as much as you do, or are they single-product focused? • What is the lender’s history in service delivery at all stages of the application? Can you discuss your application with a skilled staff member and do their BDMs have the knowledge and pull to assist with escalations and problem resolutions? • Do the BDMs meet your expectations, ie return calls, assist with scenarios, help put the application together? The successful brokers in the commercial arena continue to maintain strong professional standards and undertake ongoing development and training. This has ensured they have succeeded in the last 12 months and laid the foundation for the year ahead. IMB Building Society, as a real alternative in the commercial lending arena, is pleased to be associated with and sponsor the MPA Top Commercial Brokers list. George Sotiros is senior manager of direct and third party channels at IMB Building Society

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08 Tony Rossi WHK Lending & Finance Settled:

$20,556,000 Tony Rossi, state manager of WHK Lending & Finance, puts a positive spin on the tough commercial climate experienced over the past 12 months. “If you get a deal through in these conditions, you have the added level of comfort of knowing that it’s a high standard case,” he reasons. “Increased levels of scrutiny and diligence on behalf of the lenders simply mean that brokers have a responsibility to manage customer expectations of what cases have a realistic chance of making it through.” Rossi is based in Launceston, Tasmania and says that while the state is not large geographically, it is big on commercial opportunities, a fact often overlooked by his contemporaries on the mainland. “In an ever-changing market, it is important for brokers to ensure they remain cutting-edge and demonstrate clearly how they can add value,” he says. “Educating clients and maintaining strong relationships with the banks are just two ways they can do this.” Careful not to place all his eggs in one basket, Rossi calculates that commercial broking accounts for around 40% of his business, with the rest made up of residential and equipment deals.

As part of a larger accounting and financial services firm, Rossi hasn’t really witnessed the drop-off in business levels that has beset some commercial brokers this financial year. “The current climate is a little unique, with cycles of credit being difficult to obtain,” he says. “But quality operators will survive and those not willing to adapt to market conditions will be casualties.” Licensing also presents a new set of challenges to the commercial market, but Rossi expects the majority of companies that are already trading compliantly and transparently to come through the changes unscathed. “Over the next 12 months, I expect the commercial market to follow a similar path,” he predicts. “The journey to obtaining an unconditional offer may have more hurdles and due diligence, but this can only be a good thing in the long run.” Rossi’s former life as a banker helps him understand the machinations of why institutions review their portfolios in terms of risk and confirm to him the importance of continuing to place quality deals. Based on the evidence of the past 12 months, he’s certainly not doing a lot wrong on that front.

“ Quality operators will survive and those not willing to adapt will be casualties ”


A relative newcomer to the commercial broking arena, Sam La has wasted no time in making an immediate impact. Ninth in our rundown last year, La came in seventh this year by settling over $8m more business in what has been a tougher market. Sam La Twelve months ago the Brandi Financial Services general manager of Brandi Settled: Financial Services $31,477,737 conceded his mantra was that if he could make it in austere conditions, he could do it anytime. “It has certainly been harder getting the larger ticket deals over the line,” La confesses. “While the banks seem to be clamouring for commercial business, when it comes to reviewing the risk profile of an individual case, they shut up shop and look for any reason not to allow it.” La also accuses the banks of not being consistent with their feedback. “The risk analysts seem to be the ones bottlenecking the progress,” he observes. “General managers and the public faces of the lenders talk about growth, but the message is the opposite of what we’re

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experiencing. When we submit a loan, the banks are initially happy, but get cold feet when the time comes for approval.” Such procrastination can be terminal for La’s clients in a sector where “speed of market is everything”. Like many of our featured brokers this year, La also handles residential home loans alongside a mix of commercial settlements, from refinancing business premises to property developments. He also helps businesses sort out their banking needs, but says there are only certain institutions he can refer his clients to. “The Big Four banks have a stranglehold on the commercial market because they can provide the whole kit and caboodle,” he explains. “Second-tier lenders offer lending solutions, but they can’t meet other banking requirements such as transactions and EFTPOS.” Looking to the future, La expects the introduction of licensing to signal an exodus from the commercial broking and general mortgage introducing spheres, but says there are still opportunities in the specialist finance field. “Brokers who want to prosper in this sector need to recognise the importance of fostering strong relationships with the big banks,” he advises. “Having a healthy alliance with two or three good lenders is better than trying to spread yourself across the whole market.” We look forward to seeing if La can continue his steady ascent up the commercial ladder.

“ When we submit a loan, the banks are initially happy, but get cold feet when the time comes for approval ”

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“ It [a commercial deal] does take more work than a residential case to get a good deal across the line, but the rewards are there if you persist ”

06 Kim Wilson Acuity Funding Settled:

$35,210,000

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The first of two representatives from Acuity Funding to make our list – relationship manager Kim Wilson – occupies sixth position this year. And he might not have made the list at all were it not for a late spurt of activity. “Things were quite slow up until four or five months ago, but we’ve had a real pick-up since then,” says Wilson. “The market seems to have turned a corner since then and we’ve had a lot of enquiries, particularly in terms of leasing.” Wilson acknowledges that things aren’t quite running at 100% in the commercial space. “Lenders still have the jitters and are playing it safe,” he observes. “LVRs have tightened up quite a bit and the money just isn’t there.” Its position as a mortgage manager means that Acuity has a good selection of funders to choose from and is

sometimes able to repackage commercial deals that have not been accepted through traditional broker channels. Despite the potential remuneration on offer, Wilson concedes that many brokers are put off commercial deals by the amount of paperwork involved. “It does take more work than a residential case to get a good deal across the line, but the rewards are there if you persist,” he admits. Due to the complicated nature of the sector, Wilson does, however, suggest that the uninitiated team up with someone who has done commercial before if they have an interest in diversifying their expertise. After pushing through three deals worth more than $35m in total, Wilson could well be their man.


“It takes a long time for a big ship to turn around,” is how Pete Dossett, commercial lending manager of Zobel Business, describes the process needed for lenders to change their policies and attitudes. “The risk side of banks Pete Dossett controls the lending Zobel Business appetite and they are Settled: being picky and choosy at $36,936,998 the moment – there is still a difference between what the credit and sales teams are saying.” Despite these mixed messages, Dossett again made our prestigious list and says that things look to be on the up again. “The first three quarters of the financial year were rocky and rugged, but in the last two to three months, there has been an increased appetite for refinance. There has been a slight loosening off on behalf of the banks, and the fact they are communicating with and approaching brokers more is a sure sign things are heading in the right direction.” Dossett operates purely as a commercial broker and refers any residential enquiries to a separate part of the business. He handles a diverse mix of business, a reasonable component of which is equipment leasing to manufacturing businesses. Part of the reason Dossett has managed to consistently perform well is attributable to federal and state government grants to industry, which has led to companies acquiring new equipment and looking to improve their carbon footprint. Looking ahead, Dossett thinks the health of the sector will continue to improve over the next six to 12 months and says Zobel remains positive about the commercial landscape. With such a positive attitude in what has been a rollercoaster year, Dossett’s spell in the upper echelons of our commercial countdown shows no sign of ending.

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Another usual suspect in our commercial broking elite, UniQ Finance Australia director Veki Brdjanin climbs to fourth place this year by virtue of settling almost $10m more business this year, no mean feat in the current climate. Despite this stellar Veki Brdjanin performance, Brdjanin is UniQ Finance Australia acutely aware of the Settled: dangers of putting all his $45,192,000 eggs in one basket. “We’ve had to focus more on residential in the last 12 to 24 months,” he says. “Income diversification is increasingly important as you can’t rely solely on one income stream.” He has also noticed a marked difference between the attitudes of banks towards brokers in the commercial and residential spheres. “The commercial market is not supportive of brokers the way the residential sector is,” he observes. “A lot of lenders on the commercial side still have the attitude that they don’t want to pay intermediaries commission and they act like they are doing you a favour by dealing with you despite the fact you are bringing them a transaction.” While Brdjanin concedes that restricted lending practices have been caused by banks sticking to policy – “and rightly so, the criteria we have now is probably what we should have had to start with” – he also calls for providers to be more transparent. “Lenders need to be clear about their policy and stop chopping and changing,” he explains. “It is often difficult to gauge what is a deal or not and we need some consistency.” He attributes much of the lender fussiness to banking competition not being so ripe in the post-GFC market and brokers being forced to use the major players. Brdjanin’s parting shot for his contemporaries is a positive rallying cry. “Stick at it and educate yourself as much as you can,” he advises.

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In only his second year as a commercial broker, Daniel Zadnik, general finance manager at Hawthorn Finance, is in at third place with a bullet, settling over $78m in the last financial year. Prior to his latest incarnation as a commercial broker, Zadnik Daniel Zadnik spent 18 years with ANZ. Hawthorn Finance This corporate background Settled: has given him an insight $78,133,260 into how things work on both sides of the fence, and he mentions the importance of having “skin in the game”, a term coined by investment guru Warren Buffett that refers to having a vested interest – putting your own money on the line. “Banks are more selective about who they lend to,” says Zadnik. “They are making sure the deals are right and are being less speculative than before.” Like many of his peers in the top eight this year, Zadnik handles a real mix of commercial deals, from working capital facilities for large SMEs and private companies to helping businesses who want to buy property for storage. He attributes much of his success to the good, open relationships he has with the lenders he deals with, and the importance of such contacts cannot be underplayed. “It is important to sit down with the BDMs, but having access to their credit counterparts always helps,” he explains. “We prefer to operate at this senior level rather than have each case go through six sets of hands, because then the message and intent of the case is lost.” Alongside his commercial prowess, Zadnik also handles residential, leasing and consulting work, as well as helping clients in distressed properties seek an alternative. A jack of all trades he may be, but Zadnik is a master of commercial broking to boot.

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“ It is important to sit down with the BDMs, but having access to their credit counterparts always helps ”

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Last year’s victor came in second this year, meaning Danny Masri, GM of Mortgage One Australia, has occupied each different top-four berth since the list’s inception four years ago. He was one of only two commercial brokers to break the Danny Masri nine-figure ceiling this Mortgage One Australia year, settling over $118m of Settled: business in 2009/10. $118,030,311 Although his impressive figures might suggest otherwise, Masri says things have not been easy. “At the moment there seems to be too many deals and not enough appetite, and the biggest problem is capital requirements for lenders. They don’t have the access to cash and it is easier for them to lend on home loans, even though the quality of commercial deals is usually higher.” Despite this caution, Masri has still seen a lot of demand for development and business finance deals, but has noticed a difference in the size of deals being accepted. “The market under $10m has certainly improved over the last 12 months, whereas getting the bigger deals over the line is tough,” he says. For any residential brokers looking to make the leap into commercial, Masri warns it is not an easy transition and suggests it is best to work with someone already well versed in the sector under a mentoring arrangement. Although Masri just handles commercial business himself, Mortgage One Australia took the shrewd decision to diversify into areas such as general insurance a couple of years ago. “This means that if the wheels fall off any sector, we can take up the slack elsewhere,” he explains. Masri’s continued involvement in our list suggests that Mortgage One won’t be needing to do that any time soon.

02

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Name

Company

Location

Amount

Deals

Support staff

Experience

1

Ranjit Thambyrajah

Acuity Funding

Pennant Hills, NSW

$131,980,000

6

2

27 years

2

Danny Masri

Mortgage One Australia

Parramatta, NSW

$118,030,311

31

1

10 years

3

Daniel Zadnik

Hawthorn Finance

Hawthorn, Vic

$78,133,260

57

2

2 years

4

Veki Brdjanin

UniQ Finance Australia

South Melbourne, Vic

$45,192,000

25

1

6 years

5

Pete Dossett

Zobel Business

Norwood, SA

$36,936,998

125

1

5 years

6

Kim Wilson

Acuity Funding

Pennant Hills, NSW

$35,210,000

3

0

20 years

7

Sam La

Brandi Financial Services

Richmond, Vic

$31,477,737

91

3

2.5 years

8

Tony Rossi

WHK Lending & Finance

Launceston, Tas

$20,556,000

130

1.5

5 years

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Acuity Funding director Ranjit Thambyrajah is our top dog this year and his 27 years of experience helped him settle over $130m of commercial business in 2009/10. After experiencing an “incredibly busy” spell up until Christmas, Ranjit Thambyrajah Thambyrajah says the Acuity Funding first four months of 2010 Settled: were pretty quiet before $131,980,000 another pick-up in enquiries since May. Acuity Funding handles a wide spectrum of commercial deals, with Thambyrajah himself handling the larger ones. As well as the more mainstream development deals, he also handles goodwill funding, specialised securities and interests overseas. Like other brokers on our list, Thambyrajah says it has been hard for banks to source funds and says the picture has been made harder for brokers by second-tier lenders disappearing from the commercial arena. Despite this, he envisages a growing demand for commercial brokers in the 12 months ahead and says intermediaries will continue to be attracted to the sector by the higher remuneration on offer and as a result of brokers needing to diversify. “Commercial broking is not easy to step into though,” he warns. “I have almost three decades of industry experience and it takes a while to develop a good understanding of it. You need to be very thorough with applications as lenders need more information than with residential loans.” Thambyrajah also mentions the onus on lenders to train brokers and ensure they are confident in submitting and understanding deals. Congratulations to Ranjit – and all of the commercial brokers who made this year’s list – for performing admirably in trying conditions. MPA

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EVENT PARTNER

Now in its ninth year, the Australian Mortgage Awards has become one of the pinnacles of the year for the mortgage industry. Over 700 brokers and business leaders will congregate in Sydney in September to toast the winners and enjoy a night of unrivalled entertainment and networking.

The following pages reveal our finalists who have been hand-picked from hundreds of nominations by members of the general public and industry insiders. The winners will be chosen by an illustrious panel of judges and unveiled on the night.

MPA and publisher Key Media would like to thank all those who voted, our This exciting event – to be held at the sponsors for again showing their plush Westin Hotel in the CBD – support for the industry’s premier celebrates and recognises the showcase and congratulate all of the achievements of individuals and finalists on making the shortlist. businesses in the mortgage industry. See you on the night! The awards night itself is the culmination of months of nominations, research, submissions and planning.

Westpac is Australia’s first bank and first company. We have 193 years of experience helping customers to achieve their financial goals, through good times and bad. With a strategic focus on Australia, New Zealand and the near Pacific, the Westpac Group provides a broad range of banking and financial services – including retail, business and institutional banking. Westpac is passionate about and extremely proud of its deep heritage. However, today Westpac strives to offer its mortgage broker distribution partners firstclass service and a broad range of award-winning home loan products, with a focus firmly on the future and delighting the 10 million customers they put at the centre of everything they do. Neville Anitelea, manager, communications & marketing, Westpac Mortgage Broker Distribution – Westpac Retail & Business Banking. P: 02 8254 8133 E: nanitelea@westpac.com.au W: www.westpac.com.au

www.australianmortgageawards.com.au


Official event partner

most effective internet presence ANZ

ING DIRECT “At ANZ, we strive to provide our brokers with a high level of support, from online applications to our BDM support. This nomination is a great recognition of the ongoing work we are doing to enhance the broker experience.”

BANKWEST “Bankwest is pleased that our broker website is being recognised in the most effective internet presence category. We are committed to providing our brokers with the tools to enable them to self serve and our aim is for our website to be a one-stop shop for all of our brokers’ needs.”

LIBERTY FINANCIAL “ING DIRECT is proud to be nominated as a finalist for our innovative introducer website. By improving the communication and access for our broker partners, we are ultimately enhancing the experience of doing business with us.”

“Liberty Financial is very pleased to receive a nomination for the Most Effective Internet Presence at this year’s AMAs. The internet is a phenomenally powerful tool and we are proud to be recognised for our leading online application and customer service platform.”

ST.GEORGE “This prestigious nomination recognises St.George’s focus on innovation and our commitment to providing our customers with a range of secure and intuitive online options. We’re proud to be a market leader with a wide range of online features.”

WESTPAC “Westpac is committed to assisting professional brokers, and we’re proud to have our Introducer Net recognised as a key online tool that helps support broker businesses everyday.” COMMONWEALTH BANK “Today, the internet allows brokers to maximise their efficiency and therefore their profitability. We are pleased that brokers recognise the value of our website and are very honoured that they have nominated us for an AMA award.”

best industry advertising campaign CITIBANK

MORTGAGE EZY “We are delighted to receive this prestigious AMA nomination from the mortgage broking community. Our integrated advertising is designed to communicate positive reinforcements of the exceptional service provided by our professional and award-winning team of BDMs.”

LIBERTY FINANCIAL “Liberty Financial is extremely pleased to be nominated for the “Best Advertising Campaign” at this year’s AMAs. We strive to create innovative campaigns that reflect our innovative product range, so we are very proud to have received this recognition from our industry peers.”

PEPPER HOME LOANS “What a treat to be a finalist in the AMAs again in 2010. uQUIT Bank Replacement Treatment has been one of our most productive, thought-provoking and fun marketing campaigns to date. We want to thank all those Quitters out there for making our nomination as a finalist possible.”

MORTGAGE HOUSE

“We are delighted to have been nominated for the Best Industry Advertising Campaign category. This nomination represents the culmination of an extensive brand review and relaunch to the market to provide our broker partners with more opportunities.” RAMS HOME LOANS

“It is an honour to be recognised by our peers and the industry for our advertising. We focus our campaigns on the message we believe the consumer is seeking, not just the message we want to deliver.”

“The franchise recruitment team is particularly pleased that they were able to successfully communicate what a great opportunity we have to offer, and that we’ve attracted the right people to our business.”


best industry service RP DATA

INTELLITRAIN “RP Data is extremely pleased to be selected as a finalist in the AMAs for the Best Industry Service Award. As a newcomer to the industry this is a real compliment and confirms that we are providing real value to the mortgage industry.”

FRONTRUNNER CONSULTING GROUP “We are absolutely delighted to be nominated for the Best Industry Service award. The Australian Mortgage Awards are one of the highlights of the year for the industry and being recognised by colleagues and clients feels very rewarding.”

STARGATE “We are honoured to have been nominated again this year. We love working in this industry and really enjoy working with brokers, aggregators, franchises and lenders. It’s rewarding being able to help people achieve their goals through our various courses and development programs.”

“On behalf of the Stargate team, we are delighted to be nominated as a finalist, demonstrating our Symmetry CRM dependable loan processing platform is proving instrumental in redefining our industry efficiency.” FINWARE AUSTRALIA “Brokers choose our software, over and above their aggregator-provided software due to our business tools; best commission audit tool, the only policy search engine and automated workflow to assist with NCCP. This nomination is a reward for listening to our brokers and delivering solutions.”

RESIDEX “The team at Residex are delighted that their ongoing commitment to Mortgage Brokers has been recognised with a nomination to such a prestigious award. Thanks to all who voted.”

best customer service from an individual office AFM

MORTGAGE CHOICE – SUNSHINE “AFM have been a winner as well as a finalist in the AMA Awards over the years. The founding directors of AFM work full time in the business, and provide the marketplace with quality products and attractive commissions with no clawback, as well as excellence in customer service to its brokers and borrowers. We are proud to be nominated for the AMA Award in 2010.”

“It’s fantastic to receive the recognition within the industry, and know that the service our office provides is among the best in the country. The client is the most important aspect of any new loan – with no clients there is no business. Love your clients and they will love you back.”

“Being nominated in this prestigious event brings immense satisfaction and joy, helping reinforce our personal vision of commitment and diligence towards not only our clients, but also the industry.”

best new office on the block

“It is a real honour to be a finalist in the Best New Office on the Block award. The office opened its doors in November 2009 and has rapidly established a reputation for service excellence.” MORTGAGE HOUSE – FRANKSTON “I am thrilled to be nominated. It gives me great confidence to be recognised and it justifies all the hard work.”

CHOICE HOME LOANS – BLUE MOUNTAINS

E: info@australianfm.com.au W: www.australianfm.com.au

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www.australianmortgageawards.com.au

INTELLIGENT FINANCE “It was such an honour to win this award last year and to be a finalist again this year shows our continued dedication to our customers, by always providing outstanding customer service.”

SPONSORED BY AUSTRALIAN FIRST MORTGAGE

MORTGAGE HOUSE – POINT COOK

Iain Forbes, director sales & marketing P: 02 9643 4301 Tanya White, managing director P: 02 9643 4302 David White, director credit services P: 02 9643 4303

“It certainly is an honour to be nominated for such a prestigious award. Our team always maintains a strong focus on ensuring our clients’ needs are fully met and we continually exceed our clients’ expectations throughout their lending process.”

MORTGAGE HOUSE - BELLARINE

CHOICE HOME LOANS – BLUE MOUNTAINS

Australian First Mortgage (AFM) is a national mortgage manager and owns its offices located in NSW, VIC, QLD, SA and WA. The founding directors are David White, Tanya White, and Iain Forbes. AFM specialises in residential and commercial lending: our products are competitively priced and our senior credit staff can approve loans up to $2m. All staff are dedicated to offering excellence in service and providing our clients with a ‘higher standard’ at all times.

SMARTMOVE

“I am overwhelmed with pride that my clients felt they could nominate me and very excited and honoured to be chosen as a finalist for the award of “Best Customer Service from an Individual Office”.”

“We not only feel honoured to be nominated for this award but also feel a deep sense of pride and appreciation that our efforts have been recognised by our peers.”

CLUB FINANCIAL SERVICES – NORWOOD “The rapid growth of our business and now our finalist nomination is a result the whole Club Financial Services Norwood team is proud of.” CENTRAL CHOICE “To be nominated for this award for the second year in a row is a huge honour. We’re in a much stronger position than we were last year, so fingers crossed we can go one better in 2010.”


Official event partner

franchise operation of the year OASIS HOME LOANS

LJ HOOKER

SMARTLINE

“Oasis Home Loans, as a small franchise group, are honoured to again be finalists in this prestigious category of the Australian Mortgage Awards.”

“We are proud and honoured to be nominated for this prestigious award. It’s a reflection of the strength of our network as well as the passion and professionalism of our people here at LJ Hooker Finance.”

CLUB FINANCIAL SERVICES “The whole Club Financial Services team is proud of our finalist nomination, as it is a great reflection on the dedication, unity and pioneering culture being demonstrated throughout the whole network.”

RAMS HOME LOANS “We’re honoured to be nominated for this award two years in a row – especially when our team has been working so hard to deliver the best franchise network in the mortgage industry.”

brokerage of the year ≤ 5 staff TOUCH OF FINANCE

“This nomination recognises the value of our franchise model which has been built on delivering great service to clients, providing quality business to lenders and creating the opportunity for our franchisees to each build a successful business.”

SPONSORED BY VOW FINANCIAL

CLUB FINANCIAL SERVICES – NORWOOD “GFC, European crisis, US housing disaster, earthquakes around the world, volcanic ash and now Touch of Finance - fifth year in a row.”

“A big well done to the whole of our Club Financial Services Norwood team - three AMA finalist nominations in our second year is a great testament to the fantastic client dedication they demonstrate.”

DARGAN FINANCIAL / THE HOME LOAN EXPERTS “We’re honoured to be a finalist for brokerage of the year. After years of hard work and determination it is fantastic to be recognised by the industry for the results we are now achieving.” BAYSIDE HOME LOANS “Fantastic! All of the team here at Bayside Home Loans are very excited and really proud to be nominated for this prestigious award. It’s a great feeling receiving this recognition, especially as it is founded on our clients’ genuine feedback of our performance.”

INTELLIGENT FINANCE “We are so delighted to be a finalist in the best brokerage firm category. Our clients always receive market-leading service from our team and being a finalist reaffirms that it is a team effort.” NICHE LENDING “Niche Lending and its staff are delighted with this achievement as it associates our brand name in the industry with that of a business committed to service excellence.” WHO FINANCE “To win Best New Office on the block last year and now be a contender for best brokerage (under 5 staff) this year is a humbling experience; it shows us we need to keep doing what we are doing.”

Drawn by a shared desire to build a more empowering business for brokers, National Brokers Group, The Mortgage Professionals and The Brokerage merged in 2010 to create a new force in the industry. The result is Vow - a company founded on a solemn promise of empowerment, change and leadership. We are focused on ensuring that brokers needs remain at the heart of our business because we believe that brokers must be empowered to take back control of their business future. Vow Financial represents more than 900 brokers across Australia and has loans under management of about $16bn as at December 2009. Matt Mitchener, Marketing Manager T: 1300 666 622 E: mattm@vow.com.au W: www.vow.com.au


brokerage of the year > 6 staff

SPONSORED BY MORTGAGE HOUSE

CHOICE HOME LOANS – BERWICK

LOAN MARKET

“We are ecstatic to be a finalist in this category. It is great recognition for our whole team for the hard work they put in each and every day for our clients.”

“Loan Market’s guiding principle is to develop a company our brokers and staff can be proud of and this nomination is a great testimony to the efforts of our entire team. Thank you.”

THE LOAN ARRANGER (WA)

Mortgage House was established in the mid 1980s. With a network of representatives nationwide and having secured several business/industry awards for excellence, Mortgage House always strives to excel in customer service. It is a funder in its own right and in addition, has access to 34 other major banks, building societies and other financiers in order to arrange a solution for its customers’ needs. Sean Bombell, general manager P: 02 9407 3000 E: seanb@paladin.net.au W: www.mortgagehouse.com.au

“We are delighted to be a finalist in this year’s awards. To be a high-achieving company recognises the efforts of our staff and loan writers who continually excel in meeting our customer requirements.”

CENTRAL CHOICE “We’re absolutely stunned by this huge nomination. However, it has certainly not been without hard work and has provided a massive boost for our brokers, who are all on their way to building fantastic businesses from the quality leads that are generated by our business.”

MORTGAGE SOLUTIONS AUSTRALIA “It is fantastic to be considered for such a prestigious award; and great for a small boutique business like Mortgage Solutions Australia to be acknowledged for our consistent and ongoing successes.”

OXYGEN HOME LOANS “Oxygen Home Loans is proud to be nominated for Mortgage Brokerage of the Year. This award reflects the high standards of our team and the excellent support we get from McGrath Estate Agents.”

GEORGCO FINANCE “It is very exciting to be nominated at such an event like the AMAs. To be recognised among other great businesses and individuals is a tremendous honour. We are looking forward to a great night.”

BOWER FINANCE “We are honoured, thrilled and delighted to be nominated as a finalist. We thought that our hard work and dedication goes unnoticed and so are thrilled that our nominees have acknowledged our efforts.”

TIFFEN & CO / THE MORTGAGE DETECTIVE “We are thrilled to be nominated for this award. The ability to continue to develop and grow our business in a complex market is all attributable to our fabulous team and loyal clients.”

best aggregator BDM

“Working for the management, team and outstanding brokers at NMB is a great reward. To be nominated and recognised amongst my industry peers for this is a great bonus.”

Duco Sickinghe, director, sales and marketing P: 1800 737 737 E: ducos@pepperhomeloans.com.au W: www.pepperonline.com.au

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“We at Smartmove focus to go beyond simply arranging finance and look to meet the diverse needs of each individual client. We treat each client as more than a number and develop each client relationship as a priority.”

SPONSORED BY PEPPER HOME LOANS ANTHONY BOULOS, NATIONAL MORTGAGE BROKERS

Pepper is a flexible, service-driven home loan specialist. Our residential mortgage products are designed for self-employed borrowers and the growing number of prime-quality customers who want a mortgage but are excluded by the big lenders because they fail LMI criteria or an automated credit scoring decision.

SMARTMOVE HOME LOANS

LEAH NUGENT, FAST “My momination as an AMA finalist is a delight. It’s also great recognition for the broker and lender partners I have the pleasure in assisting - they make my job almost effortless.” PETER SOLOHUB, VOW

DAN HEYLBUT, AFG “It is an honour to be nominated and recognised by my members at this year’s AMA. I look forward to a fantastic evening and good luck to all the nominees.”

“What an absolute privilege. It is always an honour to be recognised by my industry peers and the broker partners within the Vow Financial network. I look forward to the AMAs.” WENDI KENT, CHOICE AGGREGATION SERVICES

FIONA BROWN, CONNECTIVE

www.australianmortgageawards.com.au

“Wow! It is an awesome feeling being recognized by your customers and lender partners for the contribution you make to their businesses and the industry.”

“I am proud to be recognised by the industry and believe that this is not only a reflection of myself but also my team and our overall approach to building business partnerships.”


Official event partner

best non-bank BDM NEIL MANUEL, AFM “I feel honoured that I have been chosen as a finalist for this award. Just to be nominated gives me the encouragement to push myself even further, aim even higher and be the best that I can be to my brokers and AFM.” LYNN SAWYER, BARNES HOME LOANS “While I am thrilled to be recognised as an AMA finalist, it’s our valued brokers and brilliant credit team that have made this possible. Their passion and dedication to service stand out.”

JAMES KEARNEY, MORTGAGE HOUSE “I love what I do and this is just surreal. I am humbled and honoured to be nominated for this award. Thank you to all the people I work with.”

FOTI APOSTOLIDIS, NATIONAL FINANCE CLUB “Being a successful BDM requires a unique mixture of skill, hard work and resilience. To be recognised by this nomination is extremely gratifying and is a testament not only to my hard work and effort but, also that of our credit and customer service teams.”

EKREM ONUK, MORTGAGE EZY “It is a great pleasure to be recognised for this award. Thanks to Mortgage Ezy for the opportunity, co-workers for the support and my distinguished business partners for the enduring challenge.” PETER HOLMAN, NATIONAL MORTGAGE COMPANY “I always aim to add value to our broker partners’ businesses, so to be acknowledged by them and subsequently nominated as a finalist for the AMAs is something I am very proud of.”

best bank BDM ADAM BRINK, ANZ “I am passionate about assisting my brokers to go from strength to strength, so it is an honour to be nominated for this award especially given the level of BDM talent within ANZ and across the industry as a whole.” SALLY HILLMAN, ST.GEORGE “To discover that my broker partners have nominated me as a finalist for Best Bank BDM within my first year of making the transition to St George Bank is a fantastic accolade.” JULIE NGUYEN, BANKWEST “For me, being a BDM is about supporting my brokers to help end-customers achieve their goals. I feel extremely honoured to be recognised by my brokers and peers for these efforts.”

TIM DAMIEN, SUNCORP BANK “What an honour it is to be a finalist for this prestigious award. To even get this far makes me feel I have already achieved a goal.”

NATASHA KELSO, COMMONWEALTH BANK “I am flattered that my brokers have nominated me for this prestigious award, that they support me in my business as much as I support them in their business.”

DEBBIE NEALE, WESTPAC “I am extremely proud to be nominated, and grateful to brokers for allowing me to assist with growing their business together with Westpac.”

MICHAEL PIPER, WESTPAC “Working for Westpac and bringing our local strategy to life for brokers is exciting. I am honoured to be recognised, and hope the work I do contributes to their success.”

DAMIEN MUIR, COMMONWEALTH BANK “It is great to be acknowledged by my brokers for doing a job that I enjoy. The bottom line is I need to add value and uncover opportunity at every broker interaction.”

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With a vision to be Australia’s finest financial services organisation through excelling in customer service, Commonwealth Bank is market leader in the third party broker market and the Australian home loan market. We offer strength in uncertain times and are determined to be different through our partnership approach to doing quality and mutually profitable business with mortgage brokers. Broker Assist P: 13 25 88 (option 3)

E: brokerassist@cba.com.au

W: www.commbroker.com.au

quality young gun of the year – franchise SPONSORED BY COMMONWEALTH BANK SIMON REIBELT, OASIS HOME LOANS

LYN JONES, MORTGAGE HOUSE

“I am very pleased to be nominated as a finalist in the 2010 Australian Mortgage Awards for Young Gun of the Year in my first year of business. It has taken a lot of effort and determination, but the results have obviously shown. Thank you and congratulations to all finalists.”

TERRY AZZOPARDI, SMARTLINE

“I feel excited and grateful that my efforts have been recognised and I am humbled to be a finalist for this award. I appreciate the opportunity to represent a great team that provide service delivery excellence to my customers.” JENNI ADAMS, THE MORTGAGE GALLERY

MIKE WEGENER, CLUB FINANCIAL SERVICES – NORWOOD

KATRINA PARRINGTON, ELDERS HOME LOANS

“I am passionate about my role in the finance industry, which is why it is an honour to be nominated as a finalist for the AMA. This is only possible due to the support I receive from my family, friends and colleagues at The Mortgage Gallery.”

“Thanks to the team at Club Financial Services Norwood, as my success to date and finalist nomination is great reflection on the fantastic support and mentoring they have given me as I’ve entered into the competitive mortgage industry.”

“It’s an absolute honour to be nominated for this award. I feel privileged representing Smartline in this category being testimony to the support provided to not only new entrants like myself, but to all franchisees.”

“I’d like to thank my clients as they are the heart of my business and with this in mind I simply provide solutions tailored to their needs. Their successful outcomes are my success.”

quality young gun of the year – independent SPONSORED BY COMMONWEALTH BANK ALEX NOCHAR, OXYGEN HOME LOANS

BILL JARA, CHOICE HOME LOANS – BERWICK

“I am proud to be recognised by my peers for this prestigious Australian Mortgage Award. Many thanks to the Oxygen team for making me part of such a high calibre team.” ARNO NEL, HOMELOANS ETC

MARK LYONS, SMARTMOVE

“I am absolutely thrilled to have been recognised by my peers for all the hard work from not just myself, but a fantastic support team at Choice Home Loans (Berwick).”

WARREN DWORCAN, RATE DETECTIVE HOME LOANS/HHL

CAMERON WILES, SMARTMOVE

“Being nominated for this award is great for me and the people that work with me. I believe that tapping somebody on the shoulder and saying “well done” is the best way to motivate a person. This is best tap on the shoulder that I could have wished for.”

“It is an honour to be nominated. My strongest motivation and behaviour is to always to put the client first.”

“Being a 2010 AMA finalist means recognition for going above and beyond for every client regardless of circumstances or loan size. It proves that by putting your clients’ needs first, success will ultimately follow.”

“I am honoured and privileged to be nominated for the 2010 AMA awards. To have my efforts recognised is a significant achievement and I look forward to accomplishing further success in the future”

Have you booked your table yet? Make sure you book now to ensure you and your team have a place at the mortgage industry’s night of nights. Last year the event sold out well in advance so make sure you don’t miss out! To book, visit

www.australianmortgageawards.com.au

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Official event partner

broker of the year – insurance (mortgage protection & life) SPONSORED BY ALI GROUP ANTHONY IGRI, AI MORTGAGE SERVICES “It’s nice to know that some organisations value and acknowledge the effort you put in. ALI Group have been fantastic to deal with and are an important part of my business.” IRENE CUJKO, MORTGAGE CHOICE “Honestly, I’m surprised by my finalist status. Offering mortgage insurance is now a fundamental part of my service philosophy. It’s rewarding to help ensure borrowers are protected and informed.” JOSHUA EGAN, CLUB FINANCIAL SERVICES – GIPPSLAND “We don’t ever plan to become sick, injured or die. I consider it is therefore essential to ensure my clients are covered financially for the future and for any unforeseen circumstances that may arise. It is an honour to be named a finalist for this award.” PHILIP PATTERSON, KEYSTONE FINANCIAL “I am very pleased to have been chosen as a finalist for an AMA. I have worked very hard over the last year to build my insurance business and the results have been beyond my expectations.”

KAREN LE COMTE, SMARTLINE “I am thrilled to be nominated for this year’s award. I am passionate about demystifying the process of managing money and offering my clients a holistic approach to their finances.” BILL JARA, CHOICE HOME LOANS – BERWICK “I am absolutely thrilled to have been recognised by my peers for all the hard work from not just myself, but a fantastic support team at Choice Home Loans (Berwick).” PETER TRETHOWAN, PINNACLE FINANCE BROKERS “This nomination is a great reward for myself and my team who continually strive to ensure our clients are protected in the event of a personal tragedy.”

ALI Group provides comprehensive, affordable mortgage protection that is easy to understand, obtain and claim. We help mortgage brokers establish the genuine need for mortgage protection with their clients and provide brokers with a compelling product and service to meet this need as part of their core mortgage process. Alexandra Yaniv, Marketing Manager P: 02 8224 2536 E: alexandrayaniv@aligroup.com.au W: www.aligroup.com.au

SONIA ROHLF, CHOICE HOME LOANS – BERWICK “It is exciting to be a finalist for the inaugural award for Broker of the Year - Insurance and fantastic to see the industry really promoting the importance of duty of care to a client.”

broker of the year – short-term lending DAVID CARTER, NORTHWEST COMMERCIAL “While we have always strived to provide a professional service to our clients, receiving this nomination reinforces our belief that we are on the right track.” NICK CAPPELLERI, ALPHALEND “I am honoured to be nominated for this short-term lending award in 2010. It’s pleasing to know that my efforts to provide quality customer service and positive outcomes and results is noticed and appreciated.”

JUSTIN GOODWIN, A LOAN 4 U “It is a great feeling to be nominated and recognised for an AMA , in an industry that I have enjoyed working in for many years.”

SCOTT MARSTON, INDIGO MONEY “I am honoured to be nominated for this award and it feels excellent to be recognised for a job well done. Events like this keep the spirits high and make you want to continue to work hard, so thank you.”

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broker of the year – SME/debtor finance ANGELO BENEDETTI, ORACLE LENDING SOLUTIONS

TIM LEA, CASHSTREAM “I am very proud to be nominated as a finalist for AMA debtor finance broker of the year. It has been a tough year for SMEs and I am pleased that by specialising in debtor finance we have been able to help numerous clients fulfill their business goals and ambitions.”

“Oracle Lending Solutions is honoured to be recognised by its peers as a finalist, especially during a global financial crisis. We have not let this difficult time in our industry stop us from growing our business and achieving our goals.” GREG WELLS, WELLS PARTNERS/MORTGAGE LINK GROUP

CHRISTOPHER VOUK, PRATT & CO FINANCIAL SERVICES PTY LTD

“With the focus on diversification and quality in our industry, I am proud to be a finalist in this important industry category and lead the team at Wells Partners/Mortgage Link Group, all of whom are a part of this acknowledgement.”

“It’s fantastic to be nominated as broker of the year in the SME category. Pratt & Co has been successfully negotiating mortgage and asset Finance for its SME clients since 1978.”

broker of the year – commercial real estate SPONSORED BY IMB BANKING & FINANCIAL SERVICES DANIEL ZADNIK, MCLEAN DELMO INCORPORATING HAWTHORN FINANCE PTY LTD “I am delighted to be nominated by industry peers for this award. Ultimately the success of our clients’ business is our success.”

PETER ACHELLES, FASTNET MORTGAGE GROUP “To all my relationship managers who have supported my business and answered my afterhours phone calls, I could not have achieved this award without your help and I sincerely thank you.” ROBYN STRICKLAND, MORTGAGE HOUSE

Established in 1880, IMB is the longest standing mutual building society in NSW and winner of Money Magazine’s “Building Society of the Year” Award for the last two years. With more than $4.5bn in assets, IMB continues to work with our Third Party Partners to distribute our commercial lending products nationally.

GARY DAVIS, COMMERCIAL BROKERS AUSTRALIA

George Sotiros, Senior Manager, Direct & Third Party Channels

GREG WELLS, WELLS PARTNERS/MORTGAGE LINK GROUP

“I am proud and privileged to be nominated in the category for commercial broking. It is an important market segment within the industry.”

“The past three years have seen a difficult market in commercial lending. I make every attempt to find a solution that is best for the customer’s needs, given the gaps in the market.”

“I regard the AMA as one of the most prestigious industry acknowledgements as it is open to all brokers. I am thrilled to have the opportunity to potentially hold the trophy for the second year running in this category.”

E: gsotir@imb.com.au P: 02 4298 0313 W: www.imb.com.au

broker of the year – non-conforming GRAHAM REIBELT, OASIS MORTGAGE GROUP

ALLEN FERGUSON, MORTGAGE-MART AUSTRALIA “Nomination came as a big surprise but it is great to know that your efforts are appreciated by others. Makes the blood, sweat and tears all worthwhile.”

“Being a finalist in any Australian Mortgage Award category is a particular honour, especially the Broker of the Year – Non-Conforming category.”

SCOTT VINE, LENDING SOLUTIONS GROUP

PAUL MITCHELL, BEAT HOME LOANS – GREENSBOROUGH

“Giving credit where credit is due – non-conforming is all about making sure our clients are in a better position than where they started. Having won this award previously, I look forward to the night again.”

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“It is great to be part of the AMAs again and I would like to thank my clients, lenders and staff for their most-valued support.”

JOHN PARASKEVAS, FARADAY WEST “I am extremely delighted and honoured to be nominated and recognised as a leader in the non-conforming lending space.”

BRIAN BUTLER, PROMPT CAPITAL “I’m thrilled to be nominated for the non-confirming award. We settle private non-conforming loans for rural, development, commercial and residential properties every single week, so a big thank you to whichever one of our referring brokers nominated me.”


Official event partner

Founded in 1937, as a housing-based financial institution, St.George is now Australia’s fifth largest bank and one of the top 15 publicly-listed companies in Australia. Employing over 8,500 people, its national operations span all aspects of the financial services industry including: retail banking, institutional and business banking and wealth management. At the bank’s core is a close relationship with its customers and this remains the cornerstone of future strategies, an important tradition that differentiates St.George from other Australian banks. St.George work hard to maintain excellent customer service and consistently exceed service expectations. That’s why they’re proud to say “we’re good with people and we’re good with money too”. Colleen Naidoo, channel communication manager P: 02 9236 2952

E: naidooc@stgeorge.com.au

W: www.stgeorge.com.au

broker of the year – franchise WENDY HIGGINS, MORTGAGE CHOICE “Having previously decided that I wasn’t going to enter any more awards, I was very excited to receive a nomination, having had one of my most successful years in terms of business written.” JEFF HART, CLUB FINANCIAL SERVICES – UNLEY “My journey in the mortgage industry has been rewarding and it’s an honour to be acknowledged among the best mortgage brokers in the country.”

SPONSORED BY ST.GEORGE 

CATHY ANDERSON, SMARTLINE – BLACKWOOD

“I feel honoured to be nominated and think it is great recognition for the hard work my support staff and I have put in over the past 12 months.”

GRANT RENSHAW, ADVANTAGE FINANCE (SA) “I was surprised for my nomination as a finalist for the Broker of the year - Independent. To be nominated for such a recognised award is a great honour. A big thank you to my dedicated and professional team and all who nominated me.” JOANNE WALL, PINNACLE FINANCE “I definitely feel honoured to be nominated for Broker of the Year Independent – it’s great to be identified as a performer in this competitive industry.”

“I’m very pleased and proud to be nominated as a finalist under the Broker of The Year – Franchise category. I hope my hard work in the past seven years will take me further on the awards night.” IAN WATCHEL, ELDERS HOME LOANS

SCOTT CAMERON, LJ HOOKER FINANCE

“To be nominated and accepted as a finalist for these prestigious awards is one of the highlights of my mortgage-broking career. It’s nice to be recognised after a very tough year in our industry.”

“I am honoured to be a finalist for this prestigious award. To me, mortgage broking is about helping people achieve the great Australian dream of home ownership, something that gives me great satisfaction.”

broker of the year – independent ANDREW MONK, INVESTLOAN

ALAN LAU, AUSTRALIAN MORTGAGE BROKERS

“This much-appreciated nomination recognises my passion to continually exceed my clients’ expectations, my drive to build a great business, and the ethics and values which have been integral to my success.”

SPONSORED BY ST.GEORGE

SCOTT MARSHALL, THE LOAN ARRANGER “To be selected as a finalist with so many individuals competing for recognition is very satisfying. It is rewarding to receive this nomination as it confirms the dedication I put into servicing my clients.” SIMON ORBELL, SMARTMOVE HOME LOANS “Rather than a dollar figure, I believe word of mouth is the strongest asset we have. Focusing on the client experience ensures long-term relationships are developed and makes the lending process as smooth as possible for the client.” KELLY CAMERON-TULL, GET REAL FINANCE

JEFF FALCONER, PARK FIRST HOME LOANS “It was a lovely surprise to hear that I have been nominated for Broker of the Year award. I know that there are a lot of deserving people also working in this industry so it is with a real sense of pride and satisfaction that my 13 years of broking have been individually recognised. After all I’m just doing what I love – helping people and families buy their own home.” SONIA ROHLF, CHOICE HOME LOANS – BERWICK “I am honoured and flattered to be nominated for an AMA. If it goes no further than being a finalist, it will still be a highlight of my year.”

“We are delighted to be nominated as a finalist in this year’s awards. We are very appreciative to have our commitment to our clients recognised by our industry peers.”

Nominations for the Genworth Financial Golden Morgie for Lifetime Achievement in the Mortgage Industry, Commonwealth Bank Australian Quality Rookie of the Year, Australian BDM of the Year and Westpac Australian Broker of the Year will be announced on the night.


MPA LENDER NEWS

CONTENTS 56 NEWS: A REVIEW OF NEWS IN THE WORLD OF NON-BANK LENDING AND MORTGAGE MANAGEMENT 58 IN PROFILE: PEPPER

NFC teams up with ING Direct Adelaide-based National Finance Club (NFC) has clinched a funding partnership with ING Direct that will see the mortgage manager expand its product range and geographic reach. NFC managing director Andrew Clouston said the addition of ING Direct – on top of Advantedge, FirstMac and Resimac – will significantly boost the mortgage manager’s funding base. He added: “Partnering with ING Direct will bolster NFC’s product offering and sees us now outperforming most of the major banks in terms of range and access to products.” NFC has been considered by ING Direct since 2007, though the deal was put on hold for three years through the financial crisis. Clouston said NFC was “first cab off the rank” following the downturn, making it the lender’s first point of expansion back into the market. The deal will broaden NFC’s product offering, with additions such as ING Direct’s family guarantee product, and its low-doc 60% LVR loan. The lender’s more lenient postcode restrictions will also allow the mortgage manager more scope to lend regionally. Laurie Shaw, ING Direct head of mortgage management, said: “National Finance Club has grown significantly since its inception in 2006, and we have been impressed with the business’ structure and plans for growth, particularly following the recent investment in national distribution.”

Pepper exercises RMBS call option Pepper Homeloans has exercised its call option on the residential mortgagebacked securities (RMBS) trust it recently purchased. The transaction, which sees Pepper call the First Permanent Super Prime RMBS Trust 2006-1 to the tune of $39.5bn, completes its purchase of loans originated by First Permanent Financial Services. The company stated that the purchase demonstrates its capacity to “refinance high quality residential mortgage assets, despite continuing volatility in global securitisation markets”. “Fixed-income investors need comfort that RMBS issuers have the financial capacity, and indeed intention, to fund call options on all RMBS issues which they sponsor,” said Pepper’s managing director Patrick Tuttle. “Pepper’s capacity and desire to complete the call demonstrates our ongoing commitment to satisfying the intended refinancing obligations for all RMBS transactions in which we retain an underlying beneficial interest.” By calling the trust, Pepper becomes the first Australian non-bank financial institution to have refinanced a publicly issued RMBS transaction sponsored by another issuer.

Banking alliance to challenge Big Four Virgin Money and Citibank are to launch a new retail bank that aims to challenge the tight grip Australia’s Big Four banks have on the mortgage market. The lenders have apparently committed to a 10-year deal that unites them in providing retail banking products, including mortgages. Other products to be offered by the new bank will include savings products, credit cards and transactional banking services. Virgin Money Australia head Matt Baxby said the “competitive environment is ripe” for a challenger to the Big Four, which he said write more than 80% of home loans. Baxby added he has received good signs from the government, due to ongoing competition concerns following the banking consolidation during the financial crisis.

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The size of the RMBS trust Pepper has exercised its call option on


COLUMN LMI

How soon is now? High loan-to-value lending has played an important role in supporting the first homebuyer market in Australia since the federal government introduced lenders mortgage insurance in 1965, says Paul Caputo

W

Paul Caputo

ith affordability proving a major disincentive to first homebuyers (FHBs) trying to get into the property market, the availability of high LVR loans, in conjunction with lenders mortgage insurance, has never been more crucial to Australians realising their dream of home ownership. There has been speculation recently that mortgage insurers are no longer supporting the high LVR market. As one of Australia’s leading mortgage insurers with over 45 years in the business, Genworth Financial (Genworth) is as committed as ever to supporting FHBs and the high LVR market. Indeed, amid rising property prices and rental increases, responsible high LVR lending and the use of LMI can help FHBs address house price affordability issues and exit the rental trap. For those unfamiliar with LMI, it allows borrowers to take out loans of up to 95% of the property value of their home by insuring the lender against borrower default. This means borrowers can buy a home with a lower deposit than is usually required, on the same terms and interest rate as those with a larger deposit. Without LMI, lenders typically require borrowers to have at least a 20% deposit. Let’s use the example of a newly married couple to illustrate this point. Many young couples struggle to save enough for a deposit but are well placed to service a mortgage if they are able to find finance. By using LMI, and assuming the First Home Owner Grant will be received, a couple with $20,000 of genuine savings can meet the requirements for a deposit on a $400,000 house, and the associated costs of a mortgage, such as solicitor and loan application fees. The additional cost of a Genworth LMI premium can often be capitalised onto the loan, and can provide this couple with an opportunity to purchase a home. Based on the case study above, capitalising LMI will only add approximately $81 per month to their repayments, based on a standard 30-year mortgage at the current variable

interest rate. So for less than the price of a coffee a day, a young couple can achieve their dream of home ownership sooner. This case study is a simple example of how LMI is being used throughout Australia to facilitate home ownership. Rising house price appreciation and interest rate rises are pricing many FHBs out of the market. LMI offers them a way in. Recognising that home ownership remains a priority for most Australians, Genworth continues to insure loans with LVRs of up to 95% to help turn this dream into a reality. Our continued support of this market is paramount to the lenders we work with, and the wider economy. Indeed, the strength of the first homebuyer market throughout the global financial crisis, as supported by government incentives, would not have been possible without the assistance of LMI. Genworth regularly monitors the market for high LVR loans which performed well during the global financial crisis and has continued to do so into the recovery period. While Genworth supports high LVR lending, it is essential that these loans be originated and underwritten prudently and responsibly. As we highlighted in this column last month, Genworth has implemented minimum verification and validation techniques to help ensure these objectives are met. When implemented effectively, verification and validation processes provide for increased security and confidence in high LVR lending markets. So, the short response to speculation about mortgage insurers not supporting high LVR loans is that at Genworth, we have always been comfortable with high LVR loans, and we will continue to support this area of the market to bring about home ownership sooner in a responsible and prudent manner. Paul Caputo is acting CEO of Genworth Financial BROKERNEWS.COM.AU  

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BUSINESS PROFILE LENDER

Pepper shakes it up Pepper has undergone a dramatic change over the last year, and as its executive team tells MPA, it is back in the business of lending

P

epper Homeloans is back. After two years of relative hibernation, the non-bank has re-emerged with a new brand, new slogan, new products and new owners. And according to managing director and CEO Patrick Tuttle, it is here to stay. “In light of the upheaval and changes to the non-bank mortgage sector as a result of the GFC, impacting both lenders and mortgage brokers alike, we felt it was timely to refresh the Pepper brand. We have been in business since 2001, so we wanted to make a statement to the market that we’re here for the long haul,” he says. “Our main goal has been to remind our accredited brokers that Pepper is well and truly back in the lending business, offering flexible home loans for customers no longer able to qualify for a standard bank home loan as a result of ever tightening lending criteria.” Pepper unveiled its relaunch at the 2010 MFAA conference in Melbourne, as well as a new ‘Can Do’ slogan.

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Tuttle explained that the motto reflects Pepper’s attitude as a business and its proven ability to provide fast, pro-active customer service, particularly for its accredited brokers. It also reflects the inherent flexibility of its home loan products, he says. “Pepper offers innovative mortgage products which provide access to credit for the increasing number of customers who are unable to satisfy the lending criteria of the major banks.” The non-bank recently announced the launch of two new products – Flexi Advantage and Self-Employed Advantage. Duco Sickinghe, director of sales and distribution, says the new products will benefit a wide range of borrowers who are either just missing out on a home loan from the major banks or who require a lender who can offer flexible lending criteria and can cater to their specific circumstances. “We can lend to couples seeking to purchase a new home and have a deposit gifted by their parents, but who cannot evidence genuine savings. We can also refinance existing low-doc loans provided by other lenders with a new home loan up to a maximum LVR of 80%, with the ability to take cash out on refinance for approved purposes,” he says.


BUSINESS PROFILE LENDER

According to Sickinghe, there are enormous opportunities available to specialist lenders in the post-GFC environment. “These have largely been driven by the recent lending and credit policy changes implemented by Australia’s two main mortgage insurance companies, Genworth and QBE, and the equivalent tightening of credit criteria implemented by the major banks, regional banks, building societies and credit unions.” He adds that the GFC has also seen a significant number of non-bank lenders exit the Australian residential lending market, reducing the number of potential lenders to help fill the void. “Pepper is looking to provide flexible home loans, on both a full-doc and low-doc basis, to prime-quality customers who would have otherwise been able to obtain the equivalent loan from a major bank less than 18 months ago. We are also seeking to provide home loans to those self-employed and small business owners who may

be looking to refinance their existing low-doc loan to obtain cash out to support or expand their business.” While the company’s immediate focus will be on rebuilding new lending volumes in its core home loan products, Tuttle indicates Pepper is on the cusp of venturing into new asset classes. “Once we have re-established our public securitisation program, we will also explore a range of other potential asset classes which complement the specialist range of mortgages which we currently offer to our broker network. These could potentially include auto loans, equipment leases and possibly even commercial mortgages. These are asset classes in which we have gained extensive experience as a third party servicer.” Acting as a third party servicer has been a core strategy for the non-bank and key to its survival during the global financial crisis. Chief operating officer and executive director David Holmes

“ Pepper is looking to provide flexible home loans, on both a fulldoc and lowdoc basis ”

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BUSINESS PROFILE LENDER

Patrick Tuttle

explains that from around September 2007, Pepper made a conscious decision to actively diversify into this area – a departure from its previous focus on Pepper’s own-branded specialist residential lending business. “With the benefit of hindsight, this proved to be a sensible move as it enabled us to diversify our sources of revenue-generation at a time when securitisation markets had effectively closed,” he explains. “Like all non-bank lenders and smaller ADIs, Pepper was forced to significantly reduce new lending volumes during the GFC due to lack of access to the debt capital markets.” Pepper’s sortie into third party servicing also led to its recent acquisition of the $110m First Permanent loan book, which chief financial officer and executive director Todd Lawler says is the

first time Pepper has entered the whole loan acquisition market. “We were ultimately successful after a highly competitive bidding process, mainly due to our intimate knowledge of the loan book as servicer and our ability to source cost-effective funding to complete the deal,” says Lawler. “The First Permanent transaction is a milestone for Pepper as it marks our first foray into asset finance, acquiring a loan book which we did not originate as a lender.” Its successful venture has opened the door for Pepper to look at other similar acquisitions. According to Lawler, a large number of originators have either exited the market completely or ceased new lending as a result of the GFC, while Pepper – in its capacity as a third party servicer and whole loan buyer – is continuing to review a number of potential portfolio acquisitions. “This is highly complementary to our core lending and asset-servicing activities. That said, we will only undertake acquisitions which make economic sense and where we believe we can enhance or maximise the underlying value of the assets we acquire,” Lawler says. Pepper’s expansion is reflective of the company’s recent change of ownership. The non-bank announced in late June that it had been acquired by Pepper Singapore – a special purpose holding company that is owned by a consortium of institutional and individual investors. Pepper’s management team also received a stake in the deal as part of the sale. According to Tuttle, while the recent change of ownership will have no impact on the business’ day-to-day operations, it’s a strategic move for the company as a whole.

Exit fees The federal government recently enhanced ASIC’s power to challenge institutions trying to charge unfair or unconscionable exit fees. According to Pepper’s chief operating officer David Holmes, the regulator’s efforts may actually hinder competition in the mortgage market. “While ASIC’s recent focus on mortgage early exit fees is understandable in the current environment, we do believe that competition will be adversely affected by creating an unnecessary bias against, say, deferred establishment fees. Smaller non-bank lenders have been able to create attractive products by offering highly competitive interest rates and charging lower upfront fees. It should also be remembered that a deferred establishment fee is never payable by a consumer if the consumer does not repay early within the required DEF period which is typically three to four years.”

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“ We will only undertake acquisitions which make economic sense ”


BUSINESS PROFILE LENDER

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“Our new shareholder group is highly experienced in owning, operating and managing financial services businesses such as Pepper,” he points out. “It also brings extensive relationship networks and significant financial strength. As evidenced by the recent First Permanent transaction, our new shareholders will enable Pepper to strategically expand our business model and take advantage of the many opportunities which will inevitably emerge in the post-GFC environment.” And the climate is one of opportunity, Tuttle says. Despite the recent softening of conditions in both Europe and the US, mainly driven by sovereign debt-related concerns, Tuttle is very optimistic about the outlook for Australia’s securitisation market. “Australia is probably the only RMBS market issuing new transactions to genuine real money investors on a regular basis,” he adds. But that is not to say that the market is by any means back to

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“ Our new shareholders will enable Pepper to strategically expand our business model ”

‘normal’, Tuttle adds. “Much is still to be done to ensure that fixed income investors regain their confidence to invest in Australian RMBS at pricing levels that provide a sustainable cost of funding to support a highly competitive lending market. Much of this will be driven by the continued support of the federal government in ensuring that the market recovery is not unnecessarily stymied by excessive over-regulation.” According to Tuttle, the securitisation market is currently undergoing, and will continue to experience, long-term structural change driven by both regulation and a fundamental shift in the underlying fixed-income investor base. “While I anticipate that annual issuance volumes will be much more modest in the future, I cannot emphasise more strongly the need for a viable Australian securitisation market as a vital source of funding to the Australian economy and individual consumers and business owners alike,” says Tuttle. MPA


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LIFESTYLE FAVOURITES

CELEBRITY: Barack Obama – a true leader

VACATION SPOT Koh Wai, Thailand. It’s an unknown jewel where only 20 people at a time can stay on the island

MUSIC The Killers – Mr Brightside. It’s an anthem that will never age

Aaron Milburn + Head of broker sales + Bankwest Business

Favourite things

Aaron Milburn

HOBBY Fishing. The coast of Western Australia provides the perfect backdrop to some awesome beach fishing

BOOK Of Mice and Men – John Steinbeck MOVIE Stand By Me – a true classic, a real boy’s adventure

SPORT English Football – I support Arsenal and Brighton & Hove Albion (who are rubbish, but you can get a great pie at the ground!)

FOOD Thai, especially pad thai fresh from the local vendors on the Khaosan Road, Bangkok. Pure backpacker heaven, cheap and delicious

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DRINK Hahn Super Dry and I also love Solo – it’s an Aussie classic



Mortgage Professional Australia magazine Issue 10.9