Mortgage Professional Australia magazine Issue 10.11

www.brokernews.com.au ISSUE 10.11

SPECIAL ISSUE

AMA AWARDS Celebrating excellence

STAY IN TOUCH KEEPING IN CONTACT WITH CLIENTS

DIVERSIFICATION ADDING INSURANCE TO YOUR ROSTER

EDITOR’S LETTER

And the winner is…

Legend has it that what happens in Vegas, stays in Vegas, but we are breaking that golden rule in this month’s issue as we bring you all the winners and gossip from the Sin City-themed Australian Mortgage Awards, the home loan industry’s Oscars. Hundreds of you went head-to-head in over 20 categories and a splendid time was had by all on the night, networking and establishing new business relationships.

Congratulations to all those who triumphed, but you are all winners, having managed to steer your ships through the unsettled waters of the financial crisis.

Away from the celebrations, there is plenty to get your teeth into elsewhere in this edition of MPA. The future of broker remuneration has long been a hot topic in the Australian third-party sector and we look at whether commission payments will still have a part to play if there is an eventual shift towards a fee-for-advice model. We also delve into the recent raft of white-labelled mortgages being launched by aggregators and explain why you really should be incorporating insurance into the product suite you offer your clients.

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We also have columns explaining the importance of maintaining strong lines of communication with your clients and how you can harness the social networking site LinkedIn as a powerful tool for your business, alongside all your usual favourites.

Finally, don’t hesitate to contact me if you think there is a burning topic that MPA should be getting to the bottom of or investigating further.

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

18 Protection money Making money from insurance has never made so much sense

36 Australian Mortgage Awards 2010 All the winners revealed and interviewed

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BROKERNEWS TV AUSTRALIAN MORTGAGE AWARDS 2010 Visit our website now to see a range of clips from the mortgage event of the year including: »» Highlights of the night »» Footage of the winners »» Exclusive interviews with event partner Westpac www.brokernews.com.au

CONTENTS

EDITOR Barney McCarthy

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COPY & FEATURES CONTRIBUTORS Andrea Cornish, Laura Carew PRODUCTION EDITORS Jennifer Cross, Moira Daniels, Carolin Wun

NEWS ANALYSIS

ART & PRODUCTION

10 25 Not Out: Non-bank lender RESIMAC celebrates a quarter of a century in the industry

DESIGNERS Paul Mansfield, Lucila Lamas, Ivee Caburian

12 All systems go: MPA reports exclusively from Loan Market’s annual conference

NATIONAL SALES MANAGER Rajan Khatak

DESIGN MANAGER Jacqui Alexander

SALES & MARKETING BUSINESS DEVELOPMENT MANAGER Lisa Tyras

FEATURES 18 Protection money: Diversifying into insurance shouldn’t be too complicated for mortgage brokers 32 Product placement: Aggregators launching white-labelled mortgages have proved a welcome boost to competition

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

COLUMNS 16 Networking to win: Digital marketing consultant Raz Chorev details why LinkedIn can prove an invaluable networking tool for your business 30 Close contact: With a variety of communication methods at your fingertips, there is no excuse for not staying in touch with your clients

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PROFILE

60 Lender: Frank Ganis gives MPA the lowdown on Macquarie’s return to the market

LIFESTYLE 14 A day in the life of… Stephen Craig, AMP Banking 64 My favourite things: Damian Percy, Adelaide Bank

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 Sales Manager Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Account Manager Simon Kerslake tel: +61 2 8437 4786 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

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

NEWS MARKETS

Homeowners to go hungry One in five mortgage holders believe they will have to cut the amount of money they spend on grocery bills in order to keep up with their home loan repayments, a survey by Beat Home Loans has found.

The survey canvassed the opinions of 1,000 customers paying off their mortgages and found the majority believed interest rates would rise by at least 0.5% by the end of the year, which would force cuts to expenditure on food.

Nearly half of 25–34 year old homeowners are paying over 40% of their monthly household income on their mortgages, according to Beat, compared with 28% for 35–44 year olds and 19% for 45–54 year olds.

Beat said the results indicated “an alarming level of mortgage stress”, particularly among first-time borrowers whose budgets are stretched the most.

Beat general manager Kelly Humphreys said: “Interest rates have been extremely low for the last couple of years, so those borrowers who entered the mortgage market during that period are likely to feel the strain first if rates rise.”

RBA hints at rate rise RBA governor Glenn Stevens has dropped the biggest hint yet that the Reserve Bank will raise interest rates in the near future.

Stevens said the RBA expects a key monetary policy task in the coming months to be “managing a fairly robust upswing” fuelled by the resources sector.

“We expect, and indications from businesses are that they do as well, that resource sector investment will rise further, as we experience the largest minerals and energy boom since the late 19th century,” said Stevens. “Even with continued caution by households, that probably means that overall growth, which has been at about trend over the past year, will increase in 2011 to something above trend.”

The RBA governor cautioned that this forecast could be wrong, perhaps due to a return to an economic contraction in the US, or a bigger than expected slowdown in China, or the resumption of financial turmoil curtailing bank access to capital markets.

He also accepted that, while a single Australiawide monetary policy was “a blunt instrument” and that it affects different groups in different ways, it is better than the alternatives – which, he suggested, would most likely result in draconian regulations around money transfer between regions or even separate regional currencies.

The overall cash rate has remained stable at 4.5% since May, following a period of rapid increases over the preceding six-month period.

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House price growth to slow by a third

30% How much house price growth could slow by over the next 40 years Source: Bank of International Settlements

House price growth may slow by up to 30% over the next 40 years due to Australia’s ageing population, according to the Bank of International Settlements. Research by the Swiss-based organisation revealed that capital growth is likely to slow as Baby Boomers retire and start living off their capital.

“In English-speaking countries it seems that Baby Boomer purchases drove up house prices in the past, while their sales will drive real house prices down in the future,” said the report. “In the past 40 years, these economies have experienced the positive impact of ageing. As Baby Boomers reached working age and started buying housing, they pushed up property prices. However … as Baby Boomers age, they would reduce their housing stock – and thereby depress prices,” the report added.

NEWS ECONOMY

Delinquencies level off Delinquency numbers levelled off in the second quarter of 2010 after spiking in Q1 in response to rate increases. According to the Fitch Ratings Dinkum Index, there was a slight increase in delinquencies in the mortgage market in the first half of the year, but it has stabilised.

“The three consecutive hikes in the cash rate over fourth-quarter 2009 put a stop to the improvement in prime RMBS performance during the second half of 2009 and contributed to a peak in arrears in the first quarter of 2010,” said James Zanesi, associate director in Fitch’s structured finance RMBS team.

“A long-term impact is rather unlikely as households are currently bearing a standard variable rate that is still lower than long-term historical levels,” added Zanesi.

Fitch Ratings predicts mortgage delinquency rates will remain level in Q4 2010, due to stable unemployment, unchanged interest rates and increased global liquidity levels.

Existing clients provide rich pickings

Brokers warm to Vow reward program Aggregator Vow Financial has launched a rewards program, the ‘V Growth Club’, as part of its pledge to empower brokers, and once intermediaries accrue points they can cash them in against software packages, marketing material and legal advice. Brokers can rack up points by diversifying into non-mortgage products, gaining professional development by attending events such as Vow’s Leading Edge series and signing up to business services that increase efficiency. They can also earn points by registering three years of continuous business growth or high performance.

Vow CEO Jeff Zulman said it was important to note that brokers could earn ‘V’ points outside the traditional route of increased mortgage sales.

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34% The percentage of consumers without a mortgage who would consider using a broker.

Source: Datamonitor

Current mortgagors are more likely to use a mortgage broker than non-mortgagors, a report from research firm Datamonitor suggests.

Half of current mortgagors that are expecting to keep their mortgage for three years or less would use a mortgage broker if they decided to take out or refinance their mortgage, Datamonitor’s 2010 Australian Financial Services survey found.

This compared to 45% of all other current mortgagors, and consumers without a mortgage, of whom only 34% would seek consultation with a third party broker.

The report also found that these existing clients – upgraders and refinancers – are taking centre stage among lenders, as they continue to play a more active role in the market.

The general outlook presented by the AFS survey was positive, with Australians having “strong property purchasing intentions despite rising interest rates” – 8% intend to purchase an investment property in the next 12 months, while 7% plan to purchase their first home.

Datamonitor’s financial services analyst Petter Ingemarsson said: “Consumer confidence in the Australian property market has rebounded after the tremulous last year. The surprising strength in first homebuyer intentions is being driven by property price confidence. The residential property market weathered the storm of the financial crisis without a major price correction, contributing to the wave of current strong consumer confidence.”

NEWS

REVIEW

If it’s support you want, it’s support you’ll get.

At Commonwealth Bank, we want to ensure you get the right support to help your business grow. It all starts with commbroker.com.au which gives you all the information you need to lodge a home loan application, plus access to useful tools including real-time loan tracking 24/7. We also provide the most advanced training and education programs in the industry.* And when you do need personal assistance, our Relationship Managers will give you the one to one support you’re looking for.

To find out more about how our service can help yours, call your Relationship Manager today.

*The Adviser – Third Party Banking Report 2010. Commonwealth Bank of Australia ABN 48 123 123 124. CBACM2011_B BROKERNEWS.COM.AU

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NEWS ANALYSIS

25 Not Out Non-bank lender RESIMAC has fought gamely against the majors over the past few decades and is now celebrating a quarter-century milestone.

Barney McCarthy casts his eye back over the last two and a half decades of business

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or a business, surviving for 25 years in any sector is no mean feat, let alone in the fiercely competitive arena that is financial services.

Factor in the presence of four banking giants who account for the lion’s share of home loans written in Australia – and such longevity becomes all the more impressive.

History lesson RESIMAC was born out of a desire to help low income earners access home finance. High inflation and interest rates in the mid 1980s led the NSW government to create the First Australian National Mortgage Acceptance Corporation (FANMAC) which imported the securitisation model so popular in the US, with the NSW government guaranteeing the mortgages.

US-based banks became shareholders in the scheme and the concept was based on the Fannie Mae concept, hence the acronym.

Despite the strength of the securitisation structure, because the mortgages were fixed rates, like their US equivalents they carried high interest rates. As the FANMAC program began to wind down, the company introduced a new nongovernment lending program through RESIMAC (or Residential Mortgage Acceptance Corporation) and the principal business changed to RESIMAC

in June 2001. The NSW government was then bought out in 2003.

Pioneering times RESIMAC broke new ground in Australia by becoming the first issuer of residential mortgagebacked securities in 1988 and has issued nearly $11bn since then. It paved the way for other Australian lenders to follow suit and adopt securitisation technology, and it also played a key part in developing the third party intermediary market through its wholesale distribution partners.

Looking ahead, Allan Savins, chief operating officer of RESIMAC, said the non-bank lender is seeking to capitalise on what it believes will be a strong resurgence in the non-bank sector over the next few years. “We have the opportunity now to strategically align and build depth with our key distribution partners to … deliver greater competition to the banks and more awareness for the non-bank segment,” Savins said.

“There is a challenge in making consumers and the mortgage broking industry as a whole, again realise the benefits of non-bank lenders.”

RESIMAC also plans to continue to diversify the range of financial solutions it offers and the distribution base to which it sells. “We are delighted to be celebrating our 25th birthday,” Savins said.

“Thanks to the support of our mortgage managers and other business partners – and the tireless work of our staff – RESIMAC has prospered throughout some of the most challenging times encountered by our industry. We have exciting projects in the pipeline and look forward to 2011 and beyond.” MPA

NEWS ANALYSIS

All systems go Ben Abbott reports from Loan Market’s annual conference in Sydney

Sam White

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oan Market’s executive director Sam White set the tone for the group’s annual conference at the Sydney Hilton recently when he announced that Loan Market had recently overtaken rival Aussie as the largest retail broking group in the state of Victoria. Opening the two-day gathering with his “state of the nation” speech, White touched briefly on their brokers’ successes during tough economic times. He preferred, however, to focus on his ambitious vision for Loan Market’s future as part of Australia’s highly competitive mortgage market.

What followed at the conference was two days of education, celebration, acclamation and motivation, leaving delegates equipped and energised in line with the conference theme – ‘All Systems Go’. White detailed the group’s plans for the next 12 months, promising to put “more brokers in more offices”, as well as challenging brokers to increase diversification, and focus more on their clients.

In doing so, White said Loan Market would target continued growth in market share, in a challenge to the top two players, Mortgage Choice and Aussie. The group will target increased profitability after a year that saw productivity rise from $1m to $1.18m per broker per month, an increase of 12% on the previous 12-month period.

Loan Market’s top brokers

Dean Rushton

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1

Denise Sisavanh-Chan (Individual Broker of the Year)

NSW

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Paul Hale

QLD

3

Alex Shumsky

VIC

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Andrew Kemeny

QLD

5

Robert Kent

SA/NT

6

Steve Matsoukas

VIC

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Andrew Walker

WA

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Michael Sudarski

VIC

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Grant Rheuben

VIC

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Mary Ramsay

NSW

Chief operating officer Dean Rushton also outlined the role Loan Market’s new in-house commercial lending business would play in this future growth, as well as innovations to technology.

With diversification a key plank in Loan Market’s plan, Ross McEwan, head of retail from principal sponsor CBA, told delegates that their cross-selling of additional products could be improved. As keynote speaker, McEwan also detailed how CBA’s approach and re-orientation towards customer service had steered the bank through the financial crisis, as part of his speech on cultural change and the future of financial services. He said the third party channel had to focus on its key offering – client service – and brokers had to broaden their outlook, taking a more holistic approach to providing services for home loan customers. Looking at the future of the mortgage market, McEwan told delegates they would have to brace for further rate rises, as banks seek to break out of the Reserve Bank cycle due to funding costs.

Picking up on current critical trends, Loan Market hosted break-out sessions that spanned a range of topic areas, including prospecting, the interview process, making seminars work, technology and tools for ‘new age’ brokers, as well as diversification, commercial and leasing. Brokers were also treated to panel sessions with experienced brokers who elaborated on the things that had worked successfully for them in their businesses, as well as new brokers, who detailed their successes in the industry from a standing start.

But it wasn’t all hard work. Motivational speaker Amanda Gore made sure brokers were limbered up for the year ahead, after a perspective-changing (and colleague-embracing) presentation on leadership, innovation, and high-performing team dynamics.

The event also included an awards night that recognised outstanding achievement. Denise Sisavanh-Chan from NSW was the standout winner on the night, taking home the group’s Australian award for ‘Individual Broker of the Year’, while Bruce Patten made it across the Tasman to accept recognition as top New Zealand Broker. MPA

FEATURE SUB-PRIME

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COLUMN

A DAY IN THE LIFE OF...

A day in the life of…

Stephen Craig, head of sales and marketing at AMP Banking, shares a typical day in his busy schedule with MPA readers

0545h

Up early to take my eldest daughter to swimming. When it’s not a swimming day, I try to spend time on my bike or out walking the hills of Glenhaven. It’s time to get fit.

0700h

Stephen Craig

“ In sales you need to know your numbers 24/7, and make sure your people are working on the right things to achieve them ”

I either get in early for work, or try and catch a few minutes with my wife and three girls before I head off for work. Usually I have a peek at the BlackBerry while I’m having some breakfast, and see what’s happened on the world stock markets overnight. If the Dow is up, I feel good – as it usually means the Australian market will follow.

0830h

My days are filled with meetings, meetings and more meetings. Every Tuesday morning the national sales managers and I hold a ‘Sales Gap’ meeting to check progress to plan. This is our way of focusing on what we need to do. Any free time is spent clearing emails, making phone calls, or checking in with staff.

1000h

Attend the product and pricing committee meeting. As a member of the bank leadership team, I sit on most of the bank committees, and this is one of the most important.

1200h

Conduct an interview for a new national marketing manager. The employment market is starting to move again and there are a lot of quality candidates out there.

1330h

Time to grab a quick bite. I’m trying to be healthy at the moment so I usually go for sushi, soup or a sandwich – although the burgers and fried stuff smell good! I use the time to reply to emails on the BlackBerry. What did I do before I had that?!

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1415h

Back to the office to read meeting papers and attend to administrative matters. We usually have the prior day’s results through by then, so we spend some time reviewing these. In sales you need to know your numbers 24/7, and make sure your people are working on the right things to achieve them.

1530h

The credit committee meeting. At this meeting we review credit policies, performance of our portfolio, valuers’ performances and also consider market trends. These policies set the framework for what we sell.

1700h

Back to the desk to catch up on emails and phone calls. I usually have a line-up of people wanting to catch me before they go home.

1830h

Head for home, often via the pool again or the girls’ dance school to do the pick up.

1930h

Home for dinner – usually the family has eaten before me during the week. Maintaining a work/life balance is easy to say but hard to do.

My wife Louise is absolutely amazing, juggling the demands of the family, she keeps things going. After dinner I’m often helping with a bit of homework or trying to get the kids into bed.

2100h

All the kids are in bed now, and it’s time to relax a bit. If it’s not too late we’ll have a glass of wine and watch a show on the telly, or it’s often reading papers and documents for the following day’s meetings.

2300h

Lights out!

COLUMN LINKEDIN

Social networking sites like LinkedIn are a cheap and easy way of liaising with peers and clients. Raz Chorev explains their usefulness

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Networking to win

usiness success is all about the network – it’s about who you know, but more importantly, who knows you. We are all well aware of the fact that we need to constantly be out there actively looking for new clients, and getting more deals over the line. Many of us frequently go to networking events with the local Chamber of Commerce and other opportunities, we mingle at parties, on the rugby field on the weekend and enjoy getting to know as many people as possible to grow our network – don’t we?

Now, when we know so many people and so many people know us, what do we do? Nothing!

We keep a Rolodex of business cards or shove them in the top drawer, and tell ourselves that we will get around to them later. Most of these people we’ve just met will remain a name on a business card for us – and so will we. How disappointing would it be to have a 15–20-minute casual chat with someone, give him or her a business card and hear nothing from them? What a waste of time.

But not every person we meet is a potential client.

Some of the people we meet will never buy from us. However, keeping in touch with them as a member of our network will allow us to have access to the people they know, who may somehow, someday, buy from us. Now, we all know that keeping in touch is either expensive or timeconsuming, or both. But it is important, nonetheless. So what can we do?

LinkedIn is a cheap (or mostly free) way to keep in touch and top-of-mind, and maintain relationships with a network of people with very little time invested. I see LinkedIn as a business and professional network: some call it Facebook for business. However, LinkedIn is an online toolbox

COLUMN

LINKEDIN

DO… P Have a complete and attractive profile. If you’re

sending out invitations, I want to be proud to have you in my network (so I can refer you to others in my network) P Have a professional head shot. I want to see who I’m dealing with

P Participate in discussions. It will add a lot of credibility, and will attract people to your profile, to learn more about you P Give people a reason to contact you. If you participate in discussions, ask and answer questions, people will be drawn to hear more from you P Advertise your blog. When you share useful information (not bluntly advertising your services), people will buy from you. Trust me, it does work P Use it personally. This is your online brand: manage it yourself P Make it part of your daily activity. Maintaining business relationships is time consuming, but the return on investment is invaluable. Spend 10–15 minutes per day checking out your contacts’ activities, follow companies’ activities, answer a question or two in your field of expertise, participate in a group’s discussion and update your status

DON’T… O Use the standard LinkedIn invitation to

connect unless you’ve discussed this with the invitee prior to sending, and they know you well.

Personalise your invitation, tell the person why you’d like to connect, and also indicate your existing relationship (choose from the menu of options) O Tell me you’re my ‘friend’, unless of course you are.

If we had no prior interaction, you’d need to explain to me why I should accept you into my network O Spam. Even if I’m in your network, I haven’t opted in to get your newsletter. If you think there is something which will interest me personally, by all means share it. Don’t use LinkedIn to send out your marketing materials. If you want to advertise, use the proper tools (LinkedIn Ads) O Advertise on group discussions. There is a time and a place for everything. Group discussions are a great way to share information, show your expertise and get feedback. Nothing else O Be a LION (LinkedIn Open Networker). The strength of your network is in the quality of your relationship with your network, it isn’t a numbers game. Don’t accept all invitations

Raz Chorev

which goes way beyond keeping in touch with your business contacts.

Although LinkedIn is online, it is very similar to an offline network and it is just a lot easier to manage and maintain. LinkedIn is a place where you can store your contacts (like your address book), and keep yourself up-to-date with their activities. It is a place to share information, to make new business connections, to introduce your contacts to one another, to be informed about industry trends and news, develop new opportunities, to look for service providers, employees, affiliates and much more.

You’ll find people who will use this toolbox properly and professionally, and there will also be people who will exploit it. You may find that people will try to connect to you for no apparent reason.

You’ll find that some people advertise their wares, directly and indirectly.

If you haven’t signed up yet, I strongly recommend that you do. Like any other network, offline or online – learn the dos and don’ts (see left column), what is acceptable and recommended, and what isn’t. As a rule of thumb: give more than you ask for and remember, be yourself – everyone else is already taken! MPA

Bio: Raz Chorev

Raz Chorev is a Sydney-based digital marketing consultant and Australia’s leading LinkedIn expert, assisting corporations in design and implementation of digital strategies. For more information and to see Raz’s blog – Marketing in the New Millennium – visit razchorev.com

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FEATURE INSURANCE

protection

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FEATURE INSURANCE

money If you haven’t incorporated insurance into your mortgage broking business you are missing out on a valuable source of income, says Andrea Cornish

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ou might not be able to lose 30 pounds in 30 days, or earn thousands of dollars working from home, but once in a while something comes along that is as good as it sounds. According to Hugh Peck, national manager of Lifebroker, mortgage professionals can earn substantial commissions a month simply by referring their clients to insurance providers. “We have some brokers earning more money from us than they are from writing mortgages. One of our partnering brokers recently received over $7,000 for one referral,” he says.

If the monetary argument isn’t enough to convince you that it’s time to diversify your offering, then perhaps you should consider your clients’ needs. Statistics reveal frightening levels of underinsurance in Australia.

Underinsurance The ‘Lifebroker Life Insurance Report 2010’ confirmed findings of previous studies that revealed Australians are dangerously underinsured when it comes to life and income

insurance, in contrast to their rates of car, home and health insurance. According to the report’s findings, 21% of Australians have income protection insurance and 49% have life insurance.

But roughly half the life and income protection insurance policies are held within superannuation, where policyholders often accept the default level – and in the case of life insurance that can be as low as $7,000.

In contrast, 56% of Australians have private health insurance, 80% have some form of home insurance and 86% had some type of car insurance.

“If you look at Australians’ attitudes to insurance in general, you see they are quite prepared to buy insurance when they realise a risk exists that is worth protecting,” comments Lifebroker CEO Chris Eade.

Part of the problem of underinsurance in Australia can be pinned on some common misconceptions.

The report found that 71% of Australians incorrectly believe the federal government is required by law to provide financial support to families in the event of the premature death of a family member.

“ Some brokers earn more money from us than they do from writing mortgages. One of our partnering brokers recently received over $7,000 for a referral ” BROKERNEWS.COM.AU

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FEATURE INSURANCE

Hugh Peck

“ A one-size-fitsall approach to insurance does not work in the best interests of the client ”

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Another 70% mistakenly believe the federal government is required by law to pay a replacement income to workers if they stop work due to illness or injury not caused at work. And 82% wrongly believe income protection insurance pays a replacement income if they lose or quit their job, while 85% erroneously believe life insurance pays you a lump sum amount if you live past retirement age.

The figures clearly illustrate that there are a lot of Australians who could benefit from being made aware by their mortgage broker of what insurance options are out there for them.

Earning power Given that there’s a genuine need, it makes sense to incorporate insurance options that complement your broking business. According to Peck, the best products to augment a broker’s core business are those that mirror your selling proposition as a broker; ones that provide choices and flexibility – taking into account each client’s unique circumstances. Paul Davies, business manager of Mortgage Shield, says these include life insurance, income protection, and house and contents/ landlord’s insurance.

Speaking strictly dollars and cents though, Davies says both life insurance and income protection offer the greatest reward financially and “give brokers that added element of securing the client’s best interests in-house, as banks and planners generally won’t be able to offer a better product and premium that what has been organised”.

With Mortgage Shield, brokers receive 30% upfront commission of the client’s annual premium and it has other arrangements in place for house and contents and landlord’s insurance. Davies says Mortgage Shield can also help brokers transition to fully qualified advisors, which allows for a much higher commission structure.

With Lifebroker, Peck says that generally speaking, income protection policies have higher premiums due to the greater chances of the policyholder claiming, which in turn means greater commissions. He adds that the premiums are tax deductible for the client, so the end cost to the client is greatly reduced. According to Peck, trauma policies are also more expensive on a ‘per dollar of cover’ basis when compared to life insurance, but the amount of cover taken out tends to be much smaller.

Lifebroker Founder and managing director Chris Eade launched Lifebroker after he identified a niche in the market for a no-advice model. The company has since grown to be the largest online broker in Australia.

Lifebroker entered the broker channel when it made an alliance with Mortgage Choice in July 2009. The company also recently partnered with Connective and is currently testing a number of pilot programs, building its broker membership and conducting discussions with other aggregators.

According to national manager Hugh Peck, the business aligns itself perfectly with mortgage brokers, given that it is a personal risk broker.

Lifebroker offers insurance for income protection, life, TPD, trauma, key person, business expense, mortgage protection, child trauma and more.

While many brokers feel they will lose ownership of their clients once they have been referred to an insurance company, Peck assures that the clients will always belong to the brokers who referred them. “We have a very transparent process; brokers are constantly updated on how their clients are progressing throughout the process.”

Training and tips One big stumbling block for mortgage brokers looking to diversify into insurance is gaining the confidence and expertise to offer these products to their clients. Lifebroker provides training on how and when to introduce the products into the sales process, key messages, brochures, database marketing techniques and email/mail templates.

Peck adds that state relationship managers constantly review conversion rates through the various steps of the process to see where additional training may be required with its partnering brokers. Lifebroker training teaches brokers to be mindful that each person’s circumstances are different. “Which means a one-size-fits-all approach to insurance does not work in the best interests of the client,” Peck says.

He adds that brokers earning good income from insurance understand that it’s all about selling the need for insurance. “The best sellers of risk products are those who believe in them. If brokers haven’t taken out cover themselves or at least gone through the process of obtaining quotes, it’s hard to sell the need. Most people know of someone who

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FEATURE INSURANCE

Mortgage Shield Mortgage Shield is the distribution arm of PD Financial Group. The company’s expertise lies in risk insurance and it has relationships with all of the life insurance companies in Australia. Mortgage Shield’s clients are predominately small broker groups and individual brokers; however, the company also has arrangements with online providers and franchise groups.

According to business manager Paul Davies, Mortgage Shield’s biggest asset is that it is not aligned with any one group or insurer, “giving us the ability to act independently and give nonbiased advice with a large variety of solutions available that others are unable to offer”. Mortgage Shield has brokers who are referral-based, as well as brokers who are licensed under the company with access to its back-office services.

Mortgage Shield offers advice products by a simple referral system, specialising in life insurance, total and permanent disability (TPD), income protection (aka sickness and accident), trauma insurance, and key man insurance (business clients).

has fallen seriously ill, become injured or even passed away, leaving behind debt and no future income for the ones they love. When a broker believes in the product, they can sell the need.”

Like Lifebroker, Mortgage Shield gives product knowledge training along with all the necessary sales materials, which are non-branded, giving the broker’s brand maximum exposure. Davies says this includes pre-approach letters, telephone spiels and training, online and newsletter content. “Most brokers tell us that when taking insurance on board, the hardest part is trying to get their head around products and solutions to fit the client.

This is in addition to confidence in introducing these products, or at least the idea of them to the client. We help brokers and their staff understand the products available, with an easy-to-explain method because this is an add-on, not their core business, and we understand that,” he says.

According to Davies, throughout the process brokers need to remember that it is a very personal subject, and needs to be discussed carefully and not as a commodity. “Nobody wants insurance until they need it. You have to bring the subject back to feelings. Women understand this

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very well, so we need to use emotional words and images in this space,” he says. Another key point to remember, Davies says, is to always check the difference between a cheaper policy and a standard retail product.

“You get what you pay for.”

With Mortgage Shield it’s pretty hard to make a mistake “apart from missing a question on the forms”, Davies says. But he adds one common misconception is that many brokers think insurers require a medical in many cases. “Most insurers can issue a policy solely on information in the application,” he says.

One mistake Peck has noticed is where some brokers offer personal risk products because they feel they have an obligation to, rather than seeing the real need for their clients to be protected. He also cautions that brokers need to be mindful that what they say is not deemed as advice.

Legislation ‘Advice’ is the sticky point when it comes to insurance and legislation. How legislation affects you as a broker offering insurance to your customers really depends on which model you’re working under. When a broker simply refers their client to another provider, brokers don’t need an Australian Financial Services Licence or to be RG146 compliant. However, if they offer products directly, they will need to be an authorised representative of the licence holder. According to Peck, who holds the AFSL, it depends on the products being offered. “If it is a no-advice product, the broker will operate under their AFSL – if not, it will have to be under their own,” he says.

Peck says there are risks involved when it comes to offering advice. “If a broker is not licensed to do so, they could be held liable if they were deemed to be giving advice. From a compliance point of view, we recommend having an insurance acknowledgment form that is filled out with every client. By only offering the product to some clients, this may be seen as offering advice.”

He adds that brokers have a duty of care to their clients whereby they should offer their clients some protection if they couldn’t work, fall ill, have an accident or die. But a potential conflict of interest arises when the same person who writes their loan dictates the type and amount of risk protection they need. By referring clients, this risk is quashed. MPA

Paul Davies

“ Nobody wants insurance until they need it. You have to bring the subject back to feelings.

Women understand this very well… ”

FEATURE COMMISSIONS

Fee for

A

necdotally, borrowers are often surprised to learn that the hours spent with their mortgage broker identifying their needs, poring through their finances and finding the right loan are free of charge. One can hardly blame customers for their confusion. Two decades ago, fee for service was the norm. But competition in the home loan market led to rising commissions, and rising commissions led to a fee-free environment.

However, commissions took a beating at the beginning of the credit crisis and it looks like the fee-for-service debate is once again gaining some traction in the industry.

Commission crunch The commission cuts that occurred in 2008 caused mortgage brokers to look at their bottom line a little more closely. This ‘commission restructuring’ – as it was euphemistically called at the time – amounted to a 30% decrease in profits. For many, it was the push they needed to take talk of diversification more seriously.

Brokers boosted their product knowledge and investigated cross-selling options such as insurance. Some took one step beyond their Certificate IV education and completed a Diploma

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Good service should be rewarded, but are clients ready to pay mortgage brokers who bend over backwards for them? Andrea Cornish takes a closer look at the fee-forservice debate

of Financial Services; others started to think about their role as being more of an advisor than as someone who simply files home loan applications.

This evolution of the mortgage broker has some starting to question whether the way industry professionals are paid could shift to a fee-forservice approach.

Fee for advice Advantedge chief executive officer Drew Hall says the industry is moving into a new era and there could be room for change in the traditional payment model. According to Hall, brokers have expanded their role to provide customers with a more holistic service and could justifiably charge a set fee, in addition to receiving commission. “I like to think of it as more of fee for advice, rather than fee for service,” he explains.

The 30% pay cut brokers faced two years ago could be offset in part by charging a fee for advice.

“Fee for advice is a natural evolution to fill in that hole that was left behind,” he says. But Hall is clear that this fee would not replace the current commission system. “I think commissions definitely have a place. It’s a payment for the service that the broker is providing to the lender.”

FEATURE COMMISSIONS

The move would require the full support of both aggregators and lenders. “We at Advantedge are thinking of how we can support our members, how we can facilitate how they collect their fees.”

In regard to the current commission structure, Hall adds that banks should be creating structures that do not give customers the impression of bias.

“You don’t want clients to think they’re being pushed into a loan because a broker has to meet a volume requirement,” he says.

Great expectations Are consumers ready to pay for a service that was previously offered free of charge? If you visit an accountant, a stockbroker or a financial planner you’d expect to pay. Perhaps it has something to do with perception.

While state laws and industry body requirements helped set some rules, there was still room for rogue brokers and semi-professionals. But the much-publicised National Consumer Credit Protection Act has raised the profile – and professionalism – of mortgage brokers.

Consumers can now access the services of mortgage brokers with more confidence and in turn, qualified brokers won’t have their reputation

? “ You don’t want clients to think they’re being pushed into a loan because a broker has to meet a volume requirement ”

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FEATURE COMMISSIONS

dragged down by a few industry outlaws.

Recently, some mortgage brokers and originators have trialled the fee-for-service model and initial reports indicate that they have been successful.

Vanilla Home Loans Vanilla Home Loans’ Geoff Brieger launched his fee-for-service business in 2009. The business uses software to identify loans that fit customers’ needs, then with the authority of the customer, walks into a branch and negotiates the loan on their behalf.

“I’ve enjoyed pioneering a fee-for-service model over the past year and a bit,” Brieger says, adding that while the business has hit plenty of obstacles, fee for service “is working brilliantly at Vanilla”.

And the response from customers has been favourable, he says. “I’ve only ever cared about what customers think, because only they make or break you – no one else. Vanilla’s fee-for-service model is easily sold to customers because the value proposition is strong and true – but it took a bit of working out.”

Customers are willing to pay for loan advice that they feel is free from bias, Brieger says.

“We’re on the customer’s side. We’re clearly for our customers only because they’re the only ones paying us. This means that we don’t have to deal with claw backs, accreditation fees and other mechanisms created and imposed by lenders and aggregators that create conflicts of interest for brokers and ultimately impact negatively on customers. The simple and unpopular truth of the matter is that brokers will never truly represent customers when they are paid and controlled by lenders and their underlings.”

Brieger says customers are also swayed by the promise of better loan packages. “We will generally obtain a much better deal. The above-mentioned points are great (and good enough for customers who really need help to get a loan), but this is the cruncher at the end of the day for plain Vanilla customers. When we have a strong customer, we can get some incredible results.”

Brieger’s fee-for-service model does have its problems, however. He says explaining to customers that the business acts as a borrower’s agent, rather than a traditional mortgage broker can be difficult. “We’ve now developed good visual aids and calculators to convey our differences and advantages. These are being further developed as we gain an even deeper understanding of our own

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Geoff Brieger

“ I’ve only ever cared about what customers think, because only they make or break you – no one else ”

position in the marketplace,” he explains.

Getting paid can also be a problem, Brieger admits. “That said, we are prepared for non-payers and have mechanisms in place to gently encourage payment like any business. I would mention also that the money is better.” And Brieger says brokers should be considering a move to the fee-forservice model. “We are developing IP that brokers could use if they wanted to have a go under their own brands without abandoning their existing businesses.”

He adds that the business will work the model some more and develop the remainder of the IP in this financial year, before making a final decision.

Wealth Today Another pioneer is financial services dealer group Wealth Today. The company works with brokers to help them qualify and operate (as an authorised representative of the group) to give personal financial advice to clients, under a predominately fee-for-service model. It currently has around 50 franchises nationally covering every mainland state and territory.

Wealth Today’s motto is that getting a client a mortgage is only half the job. According to managing director Tony Pennells, helping customers to “terminate their mortgage, while building wealth with protection” is the true job of a financial services professional. Pennells says Wealth Today decided upon the fee-for-service approach to give customers unbiased advice. “We recognised that clients are getting deeper into debt and needing access to uncompromised professional financial advice that is focused entirely on their

Across the pond Brokers in the UK are past debating the merits of the fee-for-service model – more than half are already charging clients to source a loan for them.

A recent survey by RBS Intermediary Partners found that 56% of mortgage intermediaries receive fees from customers, while another 14% say they were considering introducing fees. One in five UK brokers don’t plan to charge a fee.

According to the survey, replacing lost income from lower demand for mortgages was the biggest problem for the majority of brokers (69%), followed by generating new leads (40%), managing cashflow (34%), and dealing with regulation (29%).

Only 19% listed charging fees as a major concern.

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FEATURE COMMISSIONS

needs. To do this, brokers and advisors needed to find a way to be remunerated by means other than only when a mortgage is sold.”

In addition, he says that brokers need to find a more secure way to make a living. “The industry is currently almost entirely reliant on what banks are prepared to pay brokers for sending loans their way,” he says.

Pennells adds that reduced new home approvals, increasing interest rates and tighter credit criteria mean that more than 60% of all brokers are settling less than $500,000 per month.

“There needs to be a move away from reliance on the banks’ commission model in order for the industry to seize back control of its own future potential, on its own terms. To make the move towards becoming a trusted advisor also means that brokers need to move away from product sales being the only way to get paid.”

According to Pennells, clients already have a desire and expectation that their brokers will be able to give them personal financial advice. “A professional broker will work with the client to help them terminate their mortgage and set a long-term financial plan in place. Clients don’t want a mortgage, they want the property. The mortgage is only a tool to help them reach their dream,” he says. And he adds that while brokers value their trail as an asset, this may place them in conflict with seeing the amount of that trail diminish if people start paying their loans off faster.

So far customer response to Wealth Today’s model has been positive, Pennells says. “We have very focused step-by-step training to assist brokers to transition to fee for service.” The new approach also has a strong impact on trust in the relationship, Pennells says, which has resulted in far less shopping around, and easy transition to the idea of a long-term relationship with regular reviews. “We are also seeing our advisors enjoy far more referrals for their services than before.”

Wealth Today charges clients between $440 to $2,000 for a Statement of Advice, depending on the complexity of the advice. Pennells says not all clients want to pay for advice, but adds that once an advisor explains Wealth Today’s proposition to them, they can see the value in their service. “We also offer a payment plan that can break the payments into manageable amounts.”

Currently there are strict rules around how advice can be given to clients. Brokers (as either ACL holders or credit representatives) can

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“ There needs to be a move away from reliance on the banks’ commission model in order for the industry to seize back control of its own future potential ”

Climbing commissions?

Charging a fee for their service could be less attractive should brokers start to see a rise in commissions. According to Mortgage Choice CEO Michael Russell, a resurgence of competition in the mortgage market could push commissions up again.

During the release of the company’s end-of-year results for 2010, Russell suggested that despite pressure on banks from higher funding costs, there was no indication that commissions would be reduced. “The last commission cuts came in the depths of the GFC, when the wholesale funding situation was significantly worse than it is now,” commented Russell. “The industry has also done a tremendous job to work with lenders to reduce origination costs, particularly around e-lodgment and quality of submissions. As a result, there should be less pressure on commission structures.”

Russell suggested increased competition could actually drive commission rates upward.

“We have three majors who are keen to write mortgages, as well as new players coming onto or returning to the scene in the second tier,” he comments. “I can see lenders looking at rewarding brokers as the market begins to return to previous levels of competitiveness.” However, he indicated that upfront commissions would likely remain unchanged. “If we see commission increases, it will be focused on loan life and trail commissions – probably based around years four and five of loans and beyond.”

generally only give credit advice (or recommend financing options) around a current transaction of a client. While general recommendations can be made around budgeting and offset accounts, brokers cannot give personal advice any further than this, otherwise they will invariably be stepping into the financial planning world, and need to be appropriately authorised as a representative of a financial planning dealer group or AFS licensee.

Pennells believes that the commission-only broker will gradually become the exception.

“Moving to a payment model is not only financially more viable, but also aligns a broker’s interests much closer to their clients’ interests. This model will become the norm for future brokers.” MPA

COACH’S COLUMN COMMUNICATION

Close contact Consultant Doug Mathlin explains why keeping in touch with your clients has never been so easy

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H

ere’s something we know about the average broker business. Most of the leads generated come from past clients, and most clients refer at around the time their loan settles or when they meet the broker (usually within three months). What do we learn from this? If a new client does not refer their friends or family within the first few months of applying for their loan, the likelihood of them referring in the future is substantially reduced.

During this period, the recommended philosophy is to err on over-communication and make sure that you communicate promptly with good or bad news. A good rule of thumb is to speak with each client with a loan application or settlement pending every week. The key word here is ‘speak’. This can mean leaving a detailed message or speaking directly with the client – just to keep them informed of their loan status.

There is no coincidence in the fact that brokers receive the majority of their referrals during the application to settlement period and shortly after.

Your face-to-face and telephone communication has the most impact on your clients and prospects, far more than any written communication.

If you could call or meet with your clients every month without them feeling like you were stalking them, this would be a very effective marketing and communications strategy. This is why you should send messages to clients through other mediums, to remind them of the great service provided at the

outset of the relationship and to provide valuable relevant information about your business and the services that you offer. Hopefully, this will lead to clients recommending you to people they know.

There is no excuse for not communicating with your clients post-settlement if you are serious about building a sustainable business. What you do after a loan settles is important for building a ‘repeat and referral’ business.

One of our clients has a unique way to commence the post-settlement communication program: they meet with their client shortly after the loan settles to confirm that the client got what they expected and to explain any of the features of the product that they have arranged. This is a great opportunity to obtain feedback on your service and to sell your referral program.

If you don’t (or can’t) do a post-settlement meeting, you should conduct a client service review. Ideally, a third party will conduct a brief telephone survey on your behalf or clients will complete an online survey. Or set up a feedback section on your website (obviously, post the positive comments for all to see and address the negative comments directly with the client). When asking for feedback, all you really want to know is whether the borrower was happy with the service provided, would they use you again for a similar transaction and would they recommend your services to people they know. Conducting client and product reviews is a great part of your

COACH’S COLUMN

COMMUNICATION

communications program, but this doesn’t need to be done within the first 12 months of settlement, unless the market changes dramatically. Sending regular, short messages will lead to much better results than long bland messages sent quarterly. Just think of your own reading habits – are you more likely to read a two-paragraph message on a topic that you might be interested in or a four- to eight-page document that includes a summary of the federal budget, interest rate forecasts and property price trends?

Varying your delivery of message will also keep your clients more interested. Try sending emails, SMS messages, DL cards, video files, create a blog or send your mail in a postal tube. Make sure that you never send junk – they will remember that too.

If you want to implement a communications plan now that will generate leads for your business, call on five past clients and prospects every business day from now to ask them some of the following questions: 1. Can I confirm that I still have your correct contact details?

2. Are you looking to buy or sell real estate within the next 12 months?

3. (If they have had the same loan for more than three years) Would you like me to conduct a debt review for you? (If yes, use your new ‘fact find’ to conduct the review.)

4. Thinking back to the service that we provided, was there anything that we could have done to improve our service to you?

5. Are you happy with the service that you are getting from the lender?

6. Is there anything else that I can help you with?

The important thing is to plan your communications program at the beginning of the calendar or financial year – don’t make it up on the run. Make sure that you schedule a telephone call or meeting with your client every year. If you have more than 300 clients, invite them in to your office for a client function – you can afford it! MPA

“ Sending regular, short messages will lead to much better results than long bland messages sent quarterly ”

Doug Mathlin is a founder of FrontRunner Consulting Group, which provides performance coaching programs. Visit frcg.com.au

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Product

placement R Now that securitisation has started to rebound ever so slightly in Australia, access to wholesale funding has opened up – allowing a number of aggregators to create their own suite of products, giving the banks a run for their money

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emember the GFC? Commissions were cut, competition was weak and loan turnaround times were blown out way beyond acceptable levels. While it is all starting to seem like a distant memory, the nation’s aggregators took away some valuable lessons. And chief among them appears to be ‘if you want something done right, you have to do it yourself’.

Lessons learned Mortgage Choice CEO Michael Russell told Broker News in September that the need to introduce the company’s own loan products became apparent during the economic crisis. A virtual hibernation by non-banks and some mid-tier lenders, combined with a record number of loan applications from first homebuyers looking to take advantage of government stimulus grants, meant the major banks were inundated with new

FEATURE

AGGREGATOR PRODUCTS

loans. Tightened lending criteria also played a role in slowing down loan turnaround times: in some cases approval times were blown out to 30 days. It was difficult for brokers trying to manage client expectations.

Russell says the worst part for Mortgage Choice was that the company had no control over what was occurring.

“We don’t ever want to be held ransom again to turnaround times like we were during the GFC, when we were experiencing three-week turnarounds in some instances,” he says.

“Pursuing this solution will hopefully insulate us from that, as we’ll be able to agree on certain service level agreements with the lender on issues such as that.” He also stressed that the main impetus for branching out into mortgage management would be to “increase the number of touch points with customers”.

According to Russell, the product would not be branded Mortgage Choice, to ensure that it stacks up against the other product based on its own merits. He also stresses that franchisees would not receive higher commissions for the whitelabelled product.

At the time of writing, the company was waiting to make the transition, citing the need to ensure “sufficient flows” were achieved in the white-label product, and that what Mortgage Choice is designing will be attractive.

However, Mortgage Choice is not the only aggregator to consider launching its own branded products. Vow Financial is in the advanced stages of bringing both branded products and services to the market. According to CEO Jeff Zulman, the aggregator has been thinking about the move for a while. “As Vow has been saying for quite some time, the securitisation market is starting to open up again. At the same time the major banks are being very selective about who receives a mortgage,” he says. “We hear anecdote after anecdote about brokers taking clients with a good

credit story to a major bank only to get a ‘no’. In addition, the brokers are not being told why their clients are being refused a mortgage. In this environment it’s not surprising that brokers, and their clients, are looking for products where there is more transparency and better service.”

The products, which are still being developed, will be competitive with what’s on offer from the majors – and not just in terms of price, says Zulman. “Why? We are in the process of putting together a panel that involves experienced brokers and senior Vow management to structure these products. What the brokers bring to the table is vast knowledge about what the market is looking for in a mortgage product, and we believe this will ensure we engender strong demand. At this stage we are waiting for improved pricing before launching these products, but if all goes to plan it will be sooner rather than later.”

While Zulman promises that the commissions on Vow’s products will be competitive, he suggests that they will be able to stand on their own merit, regardless. “We don’t believe commission alone is what should motivate brokers’ decisions. In saying that, of course we will be commissioncompetitive, but we firmly believe from the perspective of our brokers, that the totality of what these products will offer will be so attractive that brokers will enjoy increased sales, and this in turn will drive more commission dollars.”

Dean Rushton

Proven success Some aggregator groups have moved past the development stage and are already enjoying some success with their own white-labelled products.

The creation of Advantedge has given FAST, PLAN and Choice access to wholesale funding and allowed the aggregator groups to create their own range of home loan products.

According to FAST national sales manager David O’Toole, their brokers have been waiting for these products for some time. “For a number

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FEATURE

AGGREGATOR PRODUCTS

David O’Toole

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of years, FAST brokers had provided us with feedback that they would like to be able to offer a product that was an alternative to the major banks, with FAST having more control over the quality of the pre and post-settlement service levels, including recognising the role of the broker as the primary relationship holder,” he says. “Our goal was to offer our broker partners an alternative to our existing panel that provided easy-to-understand products, competitive rates and great service with access to customer loan information if required. Advantedge has given FAST the opportunity to provide this offering to our broker partners.”

The provider launched FASTLend in January 2010 to its top-performing brokers in each state, as a trial to ensure service levels were marketleading. After this successful test run, FASTLend was made available to all FAST brokers in March this year. According to O’Toole, the aggregator anticipated FASTLend would be within its top 10 lenders by July 2010, but lodgments and settlements exceeded its expectations, reaching the top 10 by May. FASTLend products include Performance Plus variable and fixed-rate facilities and the Equity Plus line of credit. These facilities are available as both full-doc and low-doc options and “compare favourably to products offered by the major lenders,” adds O’Toole. According to him, FASTLend is looking at broadening its suite to include products beyond home loans.

Both PLANLending and ChoiceLend offer the same suite of products, funded by Advantedge.

ChoiceLend is now being written by 60% of its members and has reached number five on the aggregator’s lender panel in terms of monthly volume. And while the aggregators under Advantedge are relatively new to the whitelabelling game, others have been offering their own products for some time.

Loan Market has been offering its own product suite since 2006. The products, funded by

“ We don’t want to be held ransom again to turnaround times… ” RESIMAC, give Loan Market a point of difference and provide further choice to customers, says chief operating officer Dean Rushton. “Take-up has been strong,” he says, adding that the white-label product is the best performer of the non-banks. “The products provide the consumer with greater choice. We have started with a basic range of products but will continue to broaden the range, particularly into niche areas. The pricing is extremely competitive and the features are equal to the basic products in the market where we have positioned this product.”

The other big aggregator playing in the mortgage management space is AFG, which relaunched its mortgage management division with a new consumer focus in July. According to Paul O’Donnell, general manager of AFG Home Loans, the GFC sparked an image overhaul.

“Non-major bank lenders have had a tough time since the GFC, with a significant drop in market share. However, the world has changed in recent months, and from AFG’s point of view we wanted to move from being a very industry-focused brand (AFG Mortgage Management) to one that was more consumer-facing,” he told Broker News.

“Essentially, we’re aiming to improve competition in the marketplace by putting our money where our mouth is. We want to be able to say to our members, ‘look, there are alternatives to the major lenders’. It’s about being able to offer a healthy range of products for our members,” he adds. O’Donnell indicated that the company may be developing some new products, particularly in areas such as high LVR loans, fixed rate loans and low-doc lending. MPA

FEATURE

AGGREGATOR PRODUCTS

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And the

winner is...

The mortgage industry’s finest came together last month for a star-studded event to toast the winners of the 2010 Australian Mortgage Awards

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V

iva Las Vegas! The American gambling mecca was the theme for this year’s Australian Mortgage Awards and plenty of attendees got into the spirit of things with some dazzling outfits. While the men had it easy by donning tuxedos that are synonymous with the high rollers on the Nevada strip, the women pulled out all the stops to impress, with plenty of trashy Vegas brides and showgirls in evidence.

Others got more creative, with some donning A1 playing cards and one committed pair even coming dressed up as slot machines. The Sin City premise was continued with a superb introductory video which featured the finalists aping Elvis, sitting around blackjack tables and driving flashy motors. Guests were also entertained by an uncanny Elvis impersonator and a troupe of exotic dancers.

TV presenter Cameron Williams (above) chaired proceedings, alongside Westpac ambassador and Olympic double-gold medallist swimmer Grant Hackett. As well as introducing the awards and regaling guests with sporting anecdotes, Williams also kept guests up to date with proceedings from Suncorp Stadium where the Titans and Roosters were going head to head in the first NRL preliminary final.

Away from the glitz and glamour, there was a serious side to the evening with 24 awards given out to the industry’s top achievers in a range of categories. One of the evening’s big winners was Mortgage Choice’s Wendy Higgins who landed

www.australianmortgageawards.com.au

the Australian Broker of the Year award, as well as the gong for top franchise broker of the year, having recently topped the MPA Top 100 Brokers list for the second year running. She attributed her success to her commitment to her customers.

“I care about the client, I’m passionate about every deal and we always make sure we do the right thing by them – we don’t just write the deal to get commission,” she explained on the night. “I work 24/7 and answer emails at 2am – I’m dedicated and always in a hurry to get back to the client and I think they appreciate that.”

Other major winners included Advantedge’s Steve Weston who scooped the Golden Morgie which celebrates lifetime achievement in the industry, Smartmove’s Cameron Wiles who was named rookie of the year and Westpac’s Debbie Neale who was voted top BDM.

Official event partner

Huw Bough (below) of event partner Westpac said: “The AMAs have, over the last nine years, built up a great reputation for recognising the best in the industry, those who have clearly shown a track record of success, who have demonstrated good quality operations and have shown leadership in changing times.”

MPA interviewed all the winners on the night and you can read what they had to say over the next few pages, as well as watching exclusive footage from the night at brokernews.com.au Congratulations to all this year’s finalists and particularly to our Australian Mortgage Awards winners.

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Official event partner

winners

BROKER NEWS

most effective internet presence

COMMONWEALTH BANK OF AUSTRALIA “We’ve put a lot of effort into improving our site over the years, including allowing diamond brokers to print documents, a first for the industry. We’ve also done a lot of maintenance on the CommBroker domain too.”

Simon Elwig (right)

Broker News is a free online information resource brought to you by the team at Australian Broker and MPA magazines.

Featuring daily breaking news, an interactive online forum, client newsletter tool and loans database, Brokernews.com.au combines all of these elements with the regular features and profiles from Australian Broker and MPA. Broker News is the perfect online support vehicle for all Australian mortgage professionals.

Justin Kennedy, Publishing Director P: 02 8437 4700 E: justin.kennedy@keymedia.com.au W: www.brokernews.com.au

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CREDITWISE best industry advertising campaign best industry service (print/digital/tv)

LIBERTY FINANCIAL

INTELLITRAIN

“It’s all about brokers enjoying the experience. It was an integrated roadshow and advertising tour and we’re happy it was recognised as a successful campaign.”

“We try to add value to the broker’s business. We exist because they are there. We try and do anything we can to help them make their business better.”

Rick Zylinski (left)

Paul Eldridge (left)

CreditWise is a legal and compliance practice specialising in finance industry regulation. We provide brokers and lenders with legal, compliance and training services to support marketing, product development, customer service and regulator management. We aim to provide our clients with confidence their businesses are compliant with the complex regulatory environment that governs them.

Kate Keating, Director P: 07 3311 1066 E: kate.keating@creditwise.com.au W: www.creditwise.com.au

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www.australianmortgageawards.com.au

MPA

best customer service from an individual office

AUSTRALIAN FIRST MORTGAGE

best new office on the block

CHOICE HOME LOANS, BLUE MOUNTAINS

MORTGAGE HOUSE, POINT COOK

“We have survived in a tough market by leveraging a strong brand, having the ability to have the right support structure and maintaining relationships. The next 12 months will bring further opportunities as strong and professional brokers rise to the top.”

“We try to add value to the broker’s business. We exist because they are there. We try and do anything we can to help them make their business better.”

Grant Everett (right) (accepting the award on behalf of James Manche)

Peita Davies (centre)

Published monthly, Mortgage Professional Australia (MPA) is the leading monthly magazine dedicated to the latest news, developments and changes that affect the mortgage broking industry. MPA has established itself as a trusted source of news and as a forum for industry debate. As well as keeping you in tune with the evolution of the mortgage industry, MPA delivers practical advice on a host of business issues.

MPA is also very well known for its annual surveys, such as the Top 100 Brokers list, which not only recognise key individuals and their accomplishments but also provide a unique snapshot of an industry that is continually evolving.

Barney McCarthy, Editor, MPA T: 02 8437 4700 E: barney.mccarthy@keymedia.com.au W: www.brokernews.com.au

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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.

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

Official event partner

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DEPOSIT POWER

franchise operation of the year

SMARTLINE “Successful franchises come down to a lot of people putting in a lot of hard work. We have some marvellous people who support our franchisors and our structure has served us well. The GFC was a tough time for everyone, but with perseverance and support we’ve worked our way through challenging times and we’re proud of where we’ve got to.”

Terry Jewson (left)

Deposit Power is Australia’s leading provider of deposit guarantees. Having issued the first guarantee in Australia in 1989, Deposit Power has now assisted over 750,000 Australians.

Deposit guarantees substitute for a cash deposit when purchasing residential property and can be used by investors, first homebuyers, people buying and selling simultaneously and for off-the-plan or vacant land purchases.

David Taylor, Senior Business Development Manager P: 0428 579 475 E: david_taylor@depositpower.com.au W: www.depositpower.com.au

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VOW FINANCIAL

brokerage of the year (≤ 5 staff)

CLUB FINANCIAL SERVICES, NORWOOD “Having a smaller team means we can dedicate more resources per customer. Being in a strong franchise network has allowed me to focus on what I do best which is building customer relations and I let the franchise handle everything else. If we can capitalise on what we have done this year, next year will be even better.”

David Wegener (left)

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

Official event partner

MORTGAGE HOUSE

brokerage of the year (> 6 staff)

SMARTMOVE HOME LOANS “We have a young and dynamic team that has helped us create a good culture at our business over in Neutral Bay. Everyone gets on really well and enjoys each other’s company and I think that helps us learn a lot faster and enjoy our jobs more.”

Simon Orbell (second from right)

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

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PEPPER HOMELOANS

best aggregator bdm

best non-bank bdm

DANIEL HEYLBUT, AFG

EKREM ONUK, MORTGAGE EZY

“If you have a commitment to your members and to the team that work around you, you will always succeed.

AFG has been around a long time, is a profitable organisation and is strong across the board. If you’re a broker in our space and you’re not talking to us, you’re not a broker in our space. I love the industry and clearly the industry loved me back a little bit tonight.”

“Being a successful BDM takes lots of hard work, lots of hours and lots of support. The key is treating your business like your own and having lots of passion.

Non-banks don’t have a retail presence, but we create competition as we are committed to the broker. Whatever you want, we are here to support you.”

Daniel Heylbut (right)

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.

Duco Sickinghe, Director, Sales and Marketing P: 1800 737 737 E: ducos@pepperhomeloans.com.au W: www.pepperonline.com.au

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Ekrem Onuk (right)

Official event partner

best bank bdm DEBBIE NEALE, WESTPAC “This is an absolute honour. I love my brokers, I love Westpac and it is great to be recognised. I am passionate about my job, my brokers and their businesses. As long as I see them grow, I’m happy. I know how important it is for brokers to have full support from their BDMs and to get decisions quickly.”

Debbie Neale

NEWS AT YOUR FINGERTIPS

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COMMONWEALTH BANK

quality young gun of the year – franchise

TERRY AZZOPARDI, SMARTLINE “It has been a tough time to come into the industry, but this is reward for a bit of hard work. It’s not an impossible industry and success is very achievable if you put your mind to it. There are plenty of opportunities out there if you stay positive. Licensing will only improve things and make the pool bigger for a smaller number of brokers.”

Terry Azzopardi

COMMONWEALTH BANK

quality young gun of the year – independent

CAMERON WILES, SMARTMOVE HOME LOANS “The environment we have at Smartmove is incredible, it’s made surviving the tough market a lot easier.

Someone I work a few metres from (Mark Lyons) was also a finalist in this category which is testament to the atmosphere in the office. We all enjoy coming to work which is half the battle. It is vital for inexperienced mortgage brokers to be pro-active in obtaining the knowledge they need to help their customers. Licensing will help turn our business into a real profession.”

Cameron Wiles (left)

With a vision to be Australia’s finest financial services organisation through excelling in customer service, Commonwealth Bank is a 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.

Raechelle Inman, General Manager, Marketing, Communication and Events, Third Party and Mobile Banking P: 02 9118 1842 E: raechelle.inman@cba.com.au W: www.commbroker.com.au

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Official event partner

ALI GROUP

broker of the year – insurance (mortgage protection & life)

IRENE CUJKO, MORTGAGE CHOICE “As long as you plan for the bad times when things are good, you can ride them out. If mortgage brokers want to continue in their chosen field in the future, they have to diversify and they should move into insurance.”

Irene Cujko (left)

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

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NCF FINANCIAL SERVICES

broker of the year – short-term lending

JUSTIN GOODWIN, A LOAN 4 U “There have been a lot of changes in the last 12 months, but short-term lending has opened a lot of doors for me as a broker and complements the other products I offer.

Short-term lending is a growth sector and I’m sure more brokers will start to realise the benefits of it.”

Justin Goodwin (right)

Gold Coast-based NCF Financial Services is a leading provider of short-term and bridging loans. With in excess of 10 years’ experience and understanding of the Australian short-term lending market, NCF Financial Services prides itself on its speed and efficiency in putting short-term funding solutions together for prospective borrowers.

Being co-owned and backed by a major international financial services group, NCF Financial Services has substantial funds at its disposal to fund potential short-term or bridging loans.

John Pyke-Nott, Director P: 1300 550 707 E: john@ncf1.com.au W: www.ncf1.com.au

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Official event partner

double award winner broker of the year – sme/debtor finance

IMB BANKING & FINANCIAL SERVICES

broker of the year – commercial real estate “I didn’t think I would win one award tonight, so to win two is a great thrill. I’ve got great accounting partners and I would like to thank them, the staff I have are sensational and we have lending partners that are out there doing business too, so it is great. I’m buoyant about the prospects for the commercial market going forward.”

Greg Wells

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.

George Sotiros, Senior Manager Direct & Third-Party Channels

GREG WELLS, WELLS PARTNERS/ MORTGAGE LINK GROUP

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

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broker of the year – non-conforming

ST.GEORGE BANK

broker of the year – franchise

PAUL MITCHELL, BEAT HOME LOANS – GREENSBOROUGH

WENDY HIGGINS, MORTGAGE CHOICE

“The non-conforming sector is getting tougher and lenders are looking for the hardest clients you can find and they want things a particular way. It’s hard work, but you have to not make a killing on your clients. Do the right thing and you will make money in this industry.

Brokers work harder now for a quarter of the money they made before. The banks need to realise we are here to support them.”

“Passion, doing the right thing by the client and caring about them to the nth degree is what has helped me win this award and top the MPA Top 100 Brokers list.

Having the right systems in place and sticking to the rules of the franchise helps us thrive within the Mortgage Choice framework.”

Wendy Higgins (left)

Paul Mitchell (right)

St.George Bank is one of Australia’s leading retail and business banking brands.

At the bank’s core is a close relationship with its customers. This remains the cornerstone of future strategies and an important tradition that differentiates St.George from other Australian banks. Our goal is to be the best mortgage lender for our broker partners, providing award-winning products and service and more satisfied customers.

Colleen Naidoo, Communications Manager St.George Bank, Intermediary Distribution P: 02 9236 2952 E: naidooc@stgeorge.com.au W: www.stgeorge.com.au

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Official event partner

ST.GEORGE BANK

broker of the year – independent

JEFF FALCONER, PARK FIRST HOME LOANS “The key is looking after our customers because they are our business. We don’t advertise and rely solely on word of mouth from satisfied clients. If our customers are happy, then we are successful and it is fantastic to have this recognition.”

Jeff Falconer (left)

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GENWORTH FINANCIAL

golden morgie for lifetime achievement in the mortgage industry

STEVE WESTON, ADVANTEDGE “It’s very humbling to receive this award and it makes me think back to all the great people I’ve worked with over the years, whether it be on teams in banks or non-banks and particularly the mortgage managers and brokers – really good people working in a dynamic industry. This is one of the few industries where you can genuinely make a difference to people’s lives. I jump out of bed with a spring in my step looking forward to work every day and to get recognised like this is just a bonus. I don’t know of another industry that has grown so consistently and strongly as the mortgage industry in the last half century.”

Steve Weston (right)

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Genworth Financial is a leading provider of Lenders Mortgage Insurance (LMI) and credit enhancement product solutions in Australia and New Zealand. Working with close to 200 lenders, our aim is to make home ownership more accessible to borrowers through the provision of LMI. Contact: P: 1300 655 422 E: infoau@genworth.com W: www.genworth.com.au

Official event partner

COMMONWEALTH BANK

quality australian rookie of the year

CAMERON WILES, SMARTMOVE HOME LOANS “This is reward for a lot of hard work and a reward for the whole team at Smartmove for their support, so it’s not just my award, it’s for all of them too. It’s also for my wife Nicole for her support – I wouldn’t be able to do it without her. I was lucky enough to be given an opportunity by the guys at Smartmove and I’m doing everything I can to progress as quickly as possible.”

Cameron Wiles (right)

With a vision to be Australia’s finest financial services organisation through excelling in customer service, Commonwealth Bank is a 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.

Raechelle Inman, General Manager, Marketing, Communication and Events, Third Party and Mobile Banking P: 02 9118 1842 E: raechelle.inman@cba.com.au W: www.commbroker.com.au

NATIONAL MORTGAGE COMPANY

australian bdm of the year

DEBBIE NEALE, WESTPAC “I am overjoyed and totally honoured by receiving this award. I started in the bank 40 years ago and I’ve worked in branches, in the audit division, I’ve been an HFM and I love the client base. I’ve spent a lot of time with clients and I understand their needs. I love the broker channel and I love what I do.”

Debbie Neale

National Mortgage Company was established in 1997 and has grown to C 100 become a leading home loan provider. Our success is built on the back of our M 75 service and competitive products. Building relationships exceptional customer with our clients Y is0 our No. 1 priority: we ensure that we deliver honest, reliable and trustworthy information to all of our clients. Whether you’re looking to build, K 35 invest in property or are a first-or second-time homebuyer, we can help.

Fernando Lemos, Head of Sales P: 1300 722 217 E: fernando@nationalmortgage.com.au W: www.nationalmortgage.com.au

PANTONE 281C

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WESTPAC

australian broker of the year

WENDY HIGGINS, MORTGAGE CHOICE “I’m overwhelmed. I didn’t even know there was an overall broker of the year award, so to win this as well is great. I had a good year and my numbers were good, but I really didn’t expect to win Broker of the Year. I care about the client, I’m passionate about every deal and we always make sure we do the right thing by them – we don’t just write the deal to get commission. I work 24/7 and answer emails at 2am – I’m dedicated and always in a hurry to get back to the client and I think they appreciate that. I was inspired to become a broker by a promotion at a major bank that didn’t inspire me. It made me think about what I wanted to do with my career and I wanted my own business and franchise and Mortgage Choice has been brilliant for me. I can do what I want to do and promote my business how I want to. It’s great being your own boss and doing your own thing. If you put the hours in and look after your clients, the rewards are there. It’s a fantastic industry.”

Wendy Higgins (left)

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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 first-class service and a broad range of award-winning home loan products, with a focus firmly on the future and delighting the 10 million customers we put at the centre of everything we 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

MPA LENDER NEWS

CONTENTS 58 NEWS: A REVIEW OF NEWS IN THE WORLD OF NON-BANK LENDING AND MORTGAGE MANAGEMENT 60 IN PROFILE: MACQUARIE BANK

Liberty in prime push Liberty Financial has taken the first step in a strategic realignment that will see it reposition its offering in the eyes of brokers as a genuine contender across the credit spectrum.

The lender announced that for any prime home loans it would absorb almost all non-government customer upfront fees (including valuation fees), which it said would lead to savings of over $1,000 per loan. The offer applied to Liberty prime residential loans submitted or approved in September.

Liberty group sales head John Mohnacheff said the lender is seen by brokers as operating only as an alternative lender – where to go when the banks say no – and had become “the ultimate victim of its own success”.

The prime offer is the first in a series of moves that will seek to reposition Liberty as a genuine non-bank lender of choice for prime loans, in addition to its traditional strength of servicing customers with financial difficulties.

Mohnacheff added: “What we are saying to people is that Liberty is able to play in the entire credit spectrum, so everything from ultra-prime, through to people who have had financial difficulties.”

The strategy is a direct push into the lending segment dominated by the major banks, and Mohnacheff said if it was to have an impact, it would need to capture the hearts and minds of brokers.

“We are starting to engage with the broking community and are relying on the brokers to give the message to the consumer that we are a genuine alternative to the major banks,” Mohnacheff said.

Australian banks to recover costs Despite ongoing funding and liquidity issues, a new report has found Australian banks are well placed to recover costs and minimise the impact on margins.

The 180-page report prepared by investment bank Nomura Australia noted that Australian lenders had emerged from the global economic crisis in better shape than their peers.

It outperformed the wider market by 10% and was broadly in line with stronger Canadian and Asian banking peers.

Nomura analyst Victor German said: “Over the past few years, the majors have gained market share, successfully managed credit losses and appear relatively well-positioned for pending regulatory changes.”

German predicted returns would fall in the medium term by 1%, with return on tangible equity remaining “solid” at 20%.

Despite a resilient sector, share prices have fallen 16% since August 2007.

Caveat lenders launch industry body Short-term lenders are to launch their own industry association in an attempt to improve the industry’s chequered reputation.

HomeSec Finance Express director Paul Stone revealed that the association, to be called the Australian Short-Term Lenders Association (ASTLA), will attempt to provide one voice for caveat lenders, as well as establishing a code of conduct for the industry.

“The short-term business lending industry is very fragmented,” said Stone. “So, regulators only hear the negative stuff, such as where a loan is used inappropriately.”

The body will provide a complaints process for consumers and businesses and regulatory updates for member lenders. It will also liaise with government and regulators, with one of its first priorities to make a formal response to ASIC’s consultation on phase two of the national consumer credit regulation. However, Stone also highlights that simply making caveat lenders more visible will also be a key task.

“We probably haven’t been overt enough about what we do,” continued Stone. “For every bad loan, professional lenders can provide evidence of 100 good ones that have helped small businesses out of a spot or helped them take up an opportunity. We can also talk about the thousands of times where lenders haven’t funded loans because it would be inappropriate. ASTLA’s about showing that caveat lending isn’t some shady secret society – it’s an essential service for small businesses.”

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Rate by which Australian banks outperformed global counterparts.

Source: Nomura Australia

COLUMN

LEADERSHIP IN LENDING

Leading the way in changing times Paul Caputo explains the importance of quality leadership

I

Paul Caputo, acting CEO of Genworth Financial

n times of change, the quality of leadership plays a pivotal role in determining how successful a new environment will be for an industry. We are experiencing such a time, as the global mortgage industry evolves, and consequently results in changes in our approach to licensing and regulation in Australia.

For Genworth Financial (Genworth), Australia’s largest lenders mortgage insurer, we believe leadership means being innovative and responsive to change. It also means having the courage to make tough decisions. In all instances, working closely with your customers and your industry peers is key.

In keeping with these values, Genworth was proud this year to support the Australian Mortgage Awards’ highest honour, the Golden Morgie.

Each year, the award recognises an individual who is making an outstanding contribution to the Australian mortgage industry over the long term.

The winner is selected based on their innovation, responsiveness to change and professionalism. All of these attributes are reflective of Genworth’s own commitment to responsible lending practices and high industry standards.

The 2010 winner of this award, as covered in this issue of MPA, is Steve Weston, general manager for broker platforms for Advantedge.

Genworth would like to take the opportunity to congratulate Steve on this accolade and for his contribution to the mortgage industry.

Having worked previously for St.George, Steve joined Advantedge (formerly Challenger) in 2005, and recently helped spearhead the introduction of a new licensing model to assist mortgage brokers transitioning to requirements under the National Consumer Credit Protection Act (NCCP). The Act introduced new national regulation of mortgage brokers, including a responsible lending obligation.

The new licensing model is designed to allow brokers to continue to operate responsibly and profitably under Advantedge’s Australian credit licence (ACL) as credit representatives, or alternatively, brokers can decide to operate under their own ACL with access to support services from Advantedge.

Endeavours such as this show the vital role that strong leadership plays in a climate of industry-wide change. In particular, prompt and pro-active steps are required to adapt to changing regulatory environments.

In addition to responsiveness, good leadership requires that participants don’t lose sight of the basics that have contributed to the stability of our industry. These practices include upholding sensible and responsible lending practices, maintaining close relationships with customers, and working together with other industry participants to produce favourable outcomes for our industry.

As a lenders mortgage insurer, we view our role as one of support for brokers, lenders and the end borrower, particularly first homebuyers.

Genworth seeks to demonstrate its industry leadership by casting a fresh set of eyes over our customers’ lending and operational processes, offering support and options to borrowers who face financial hardship, and as a facilitator of discussion between industry participants on issues impacting the mortgage and lending space.

As an industry, we have worked collaboratively to ensure the continued strength of the Australian mortgage industry, against the backdrop of lessons learned from the global financial crisis. However, it will require leadership on the part of all industry participants to safeguard our relative strength.

Paul Caputo is acting CEO of Genworth Financial BROKERNEWS.COM.AU

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BUSINESS PROFILE LENDER

They’re back!

Buoyed by a renewed sense of optimism in the securitisation markets, Macquarie has returned to the home loan sector with a competitive product suite designed for savvy borrowers

M

acquarie has re-entered the home loan market with a new product suite that reflects what the lender does best – create wealth for astute individuals. “Wealth creation is what we understand and what we know how to do. It fits well with our brand and it’s where we can offer the most value to brokers, planners and borrowers,” explains executive director Frank Ganis. “There are lenders with a basic mortgage with very sharp pricing – that’s not the place where our brand is positioned or where we want to compete.”

Macquarie began trialling its new product suite with AFG late last year before rolling out to other aggregator groups and planners. When the Macquarie Bank Mortgage Solutions product range was officially launched in July 2010, it was on the panel of 10 aggregators and financial planning intermediaries.

However, over the following eight weeks, more than 20 third party distributors quickly adopted the range. “We’ve been spending a lot of time getting intermediaries accredited and positioned to write our new product range. We are now writing healthy volumes of new business which we expect to grow further during the

“ We’ve been spending a lot of time getting intermediaries accredited and positioned to write our new product range ”

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Frank Ganis

BUSINESS PROFILE LENDER

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BUSINESS PROFILE LENDER

coming months,” Ganis says. Macquarie’s strategy to compete in a home loan market which is currently dominated by the major banks is to target a specific segment and offer a “feature-rich” product suite that appeals to those clients. According to Ganis, this needs to

Personal profile: Frank Ganis, executive director, Macquarie Bank + Frank Ganis joined Macquarie in 1989 as part of the original team that established the mortgage and securitisation business, which grew to become one of the most influential financial services businesses in Australia. In 2003, he took over as Macquarie’s head of mortgages + In his current role, Ganis oversees product and technology for all of the Macquarie intermediary distribution businesses, which includes Macquarie Bank Mortgage Solutions and other key strategic businesses of Cash and COIN (financial planning software) + Outside of the banking and finance world, Ganis is a youth league referee, a Manchester United fan and has a love of European motor cars

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be underpinned by strong distribution relationships with intermediaries, a diversified funding strategy and exceptional service delivery to writers and borrowers.

As a result, Macquarie has brought to the market an integrated financial services product range. “We think borrowers want choice and believe that there is a part of the market which is demanding more from their mortgages,” Ganis explains. “This segment wants to manage their mortgages and investments in an integrated manner as well as have access to investment, deposit, transaction and protection options. They are looking for the flexibility and the tools to help them achieve their wealth creation objectives.”

According to Ganis, Macquarie’s ultimate goal was to put together something that would appeal to this type of borrower. “Essentially, we see a mortgage as being a core part of a person’s wealth creation strategy and an integral component of that person’s relationship with their broker or planner and Macquarie. We don’t see a mortgage as something you sell as a ‘once-off’ product.” At the same time, he says an integrated financial services product also supports intermediaries who are seeking greater diversification, by enabling brokers to expand their service proposition to clients.

The products are aimed at borrowers who see property as part of their wealth creation strategy. However, Ganis explains that the range is not limited to property investors. “I am also talking about those borrowers who are financially astute and who see their investment in their home – and by extension their mortgage – as a key part of their wealth creation strategy,” he says. “These borrowers want a competitive rate and they also want the flexibility and support to help them achieve their financial objectives.”

The appeal to borrowers and their brokers is not just the product features. Ganis says brokers can rely on Macquarie’s BDMs and service team to make a deal happen quickly. “We have always been known for our speed, consistency and quality,” he says, adding that a key difference at

BUSINESS PROFILE LENDER

Macquarie is that brokers can talk directly to a credit decision-maker. “Data doesn’t go into a black box, data goes to people – our highly experienced credit analysis team. We don’t think of the mortgage business as selling a home loan.

We look at each loan application as a large credit transaction between two parties. You need people to talk to each other so that you can understand the borrower’s objectives and circumstances. You can only do that when you have people assessing the credit application – systems can’t do that talking for you.”

So far, Macquarie reports that the product range has been well received by brokers. “We have been focused on reinvigorating the business for some time. Our BDMs are happy to be out there again talking to aggregators, loan writers and planners about our products. We are hearing that writers are welcoming back Macquarie’s focus on service and like having an alternative to offer their clients. From borrowers there has been a positive reaction to the product’s investor-friendly features such as the global borrowing limit, cash as security and interest in advance,” Ganis reports.

Predominantly reliant on the wholesale securitisation market for funding, Macquarie decided to “wind down” its origination business in March 2008, in response to the global economic crisis.

Ganis says there was a false perception at the time that Macquarie left the market altogether. “We continued to service our existing portfolio and during the past two years we have worked on developing and launching a new product range which would fit with the changed needs of the borrowers and intermediaries,” he adds. During this episode, brokers and originators expressed disappointment at Macquarie’s course of action, but Ganis says it was not a decision the lender took lightly.

“Brokers and aggregators told us at the time that though they didn’t necessarily like our decision, they respected that we clearly communicated our intentions and position.”

Macquarie maintained its relationships throughout the period in which it wound back

origination. When markets showed some signs of improving, Ganis says a number of aggregators asked the group to consider increasing activity levels again, to bring back some competition to the market.

“We have been working closely with aggregator groups and brokers, some for almost a year now, to reinvigorate our business. I think the record speaks for itself in terms of the quality and number of aggregation partners who have added Macquarie Bank to their panel. Our origination business is up and running again and we have very much turned our attention to providing quality service to intermediaries and clients, and bringing some competition back into the mortgage market.”

Ganis adds that the group has now put in place a more diversified funding strategy in order to reduce reliance on wholesale securitisation, and its business model looks a bit different as well. He says Macquarie chose to re-enter the market now because it saw an opportunity for increased competition and that there was a demand for products that make the mortgage part of a borrower’s overall financial and investment strategy.

“We also believe that there is demand from brokers to deal with a lender that provides a high-quality and consistent service experience.

That’s certainly what we have been known for during the years and where we intend to focus our efforts,” he says.

Increased activity in securitisation markets has also played a part in Macquarie’s return – in the last calendar year there have been a number of issuances which have been well supported.

Macquarie’s securitisation program, PUMA, recently completed its first public securitisation since 2008. The deal was upsized from $500m to $750m after it had been announced. “I think people were happy to see the PUMA name return to the market,” Ganis says. “Prior to the financial crisis, we were one of the most dominant issuers of RMBS. Funding in the current market remains difficult for all lenders but some confidence appears to be returning to the capital markets.” MPA

“ We have very much turned our attention to providing quality service to intermediaries and clients ”

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LIFESTYLE FAVOURITES

MUSIC Mick Thomas, Paul Kelly

DRINK Rockford Barossa Valley Shiraz

Damian Percy + General manager, third party mortgages + Adelaide Bank

SPORT AFL and NFL (American Football)

Favourite things

Damian Percy

VACATION SPOT Italy for the food and its culture

PLACE TO BE The US for fun and friends MOVIE Blade Runner

BOOKS I’ve just started AC Grayling’s Liberty in the Age of Terror: in Defence of Civil Society and the West’s Enlightenment Values

FOOD Anything but “the vegetarian alternative”

CELEBRITY Comedian Jon Stewart HOBBY Golf and sharing my love of profanity, usually contemporaneously

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