BROKERNEWS.COM.AU ISSUE 12.4
FIRST AMONGST EQUALS
LEADING FRANCHISE BROKERAGES RANKED
SOCIAL ANIMALS HOW TO BUILD AN ONLINE BRAND ESTATE PLANNING DIVERSIFYING INTO REAL ESTATE FLYING HIGH NAB'S ANTONY CAHILL SPEAKS
CONTENTS / ISSUE 12.4
Brand new How to build an online brand
WEEKLY INVESTIGATIONS NOW ONLINE:
48 A new dawn Sunnier times ahead for commercial lenders
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Mutuals COVER STORY 26 | Top Franchise Brokerages Find out who’s king of the franchise pile
Broker qualifications Segmentation » brokernews.com.au
CONTENTS / ISSUE 12.4
NEWS & VIEWS
8 | Round-up The latest market intelligence from the world of property, economics and mortgages
62 | Your Mortgage index The latest data from our sister website shows a recovery – but in which states?
12 | Product news A round-up of the latest rate changes and product launches to keep you up to date
64 | The data This month’s statistics round-up looks at where to pick up a prestige bargain
14 | The Big Story A compilation of the top quotes from our weekly multimedia broadcasts – and broker responses
70 | A day in the life of… John Kolenda
54 | Gold mines The low down on mining towns 58 | Get real (estate) How to diversify into real estate
PROFILES 40 | Antony Cahill NAB’s third party chief on the bank’s future plans 60 | Rael Bricker … on his entrepreneurial spirit and passion for business
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68 | My favourite things… Greg Charlwood, Bibby Financial Services
72 | Words of wisdom… How to work like a rock star, according to Steve Jones
NEWS / ROUND-UP
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CONTENTS / EDITOR’S LETTER
STRONGER TOGETHER It’s a simple fact that a great team, working together, can achieve significantly more than the sum of its parts. It’s with that in mind that our latest special report – supported by ING DIRECT – identifies and highlights who Australia’s top franchise brokerages are. It’s not just the teamwork within these brokerages that is crucial to their success – it’s also the relationship with their franchisors that has to be just right to enable these brokers to succeed. So, which is the top franchise brokerage in Australia? You’ll have to turn to page 26 to find out. Elsewhere, we’ve looked at the question of how to take your brand online, whether diversifying into real estate is a profitable enterprise, and have canvassed the commercial lending sector on whether green shoots are starting to appear. The big interview this month takes us right into the heart of NAB, with Antony Cahill giving his first major press interview since taking over as the bank’s head of growth partnerships. That’s not all you’re getting with this issue of MPA, however. Alongside this issue, we’ve also published the first of our standalone Special Report magazines. This time around, we’re taking an in-depth look at business strategy – taking the best thinking from business schools around the world, boiling off the fat and turning it into concrete advice to help you grow your business. I’m really keen to hear your feedback on this new addition to the MPA family, so please get in touch and tell me what you think. Kevin Eddy, Editor P.S. Don’t forget that our industry standard Brokers on Banks survey opens on 10 April: have your say, and you could be in with a chance of winning a five-night golf getaway in the Hunter Valley.
Contact the editor: firstname.lastname@example.org
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COPY & FEATURES EDITOR Kevin Eddy CONTRIBUTOR Andrea Cornish PRODUCTION EDITORS Sushil Suresh, Carolin Wun
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NEWS / ROUND-UP
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NEWS / ROUND-UP BANKING
Defcredit morphs into Defence Bank
Don’t be lax in good times, warns RBA The RBA has warned that banks must not become lax on lending standards in times when “everything seems rosy”. RBA head of financial stability Luci Ellis told the Australian Mortgage Conference in Sydney that the Australian market is well-placed to avoid the pitfalls of the US subprime crisis. Ellis said prudential standards are much higher in Australia, but warned against the temptation to ease these standards. “It must be hard to resist the disappointed customers who just want to borrow that bit extra to purchase their dream home, especially when the loan officer is also trying to make budget on new loan approvals. But in the experience of the United States, we have seen what can happen when lenders yield to that temptation,” she said. Ellis suggested that consumers would ultimately be disadvantaged by a relaxation of lending standards. “If lenders were to ease lending standards beyond the point of prudence, they would not be doing anyone any favours. Their customers, the borrowers, would be overburdened by their debts. The firm would face difficulties if loan defaults were to rise. And financial stability would be much harder to maintain,” Ellis said.
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The amount CBA paid in tax in 2011. The bank says it’s Australia’s third-largest taxpayer. GOING CHEAP(ISH) THIS MONTH’S DATA LOOKS AT THE BEST PRESTIGE SUBURBS IN WHICH TO GRAB A BARGAIN. TURN TO PAGE 64 TO CHECK PRICES IN YOUR STATE
The Defence Force Credit Union has become Defence Bank after being granted permission to become a bank by the Australian Prudential Regulation Authority (APRA). The new bank insists it will remain committed to Defcredit’s original principles as a mutual or member-owned organisation. “The decision to become a bank was to enable the organisation to further capitalise on its strong growth, obtain greater access to more diverse sources of funding, and deliver more products
Rental squeeze resumes Vacancy rates
and services to members,” said CEO Jon Linehan. “Becoming a bank will also enable the organisation to better compete in the broader marketplace.” Linehan added that Defence Bank had been built on responsible lending and investment practices, a strong culture of innovation and delivering high levels of customer service. The move has been seen as part of the government push to create ‘a new pillar’ in the banking system based on the combined competitive power of Australia’s mutual credit unions and building societies.
Sydney: Adelaide: Canberra: 1.6% 1.4% 0.8% Melbourne: 3.5% Hobart: 2.1% Source: SQM Research, January 2012
What buyers want
ASIC more ‘reactive than proactive’
Most valuable elements of properties to buyers:
1. Extra bathroom
2. Quiet street 3. Decent-sized backyard
4. Close to bus route/shops
5. Off-street parking Source: Turf Australia
ASIC’s Greg Kirk has conceded that much of the watchdog’s activity must be “reactive”. Speaking to the ASIC Summer School in Sydney, Kirk, the regulator’s senior executive leader of deposit takers, credit and insurers, said ASIC’s limited resources meant much of its enforcement action had to stem from reacting to consumer complaints. “Our enforcement action is more often than not going to be arising from complaints, so it’s more likely to be reactive than proactive,” he said. However, Kirk said ASIC’s proactive enforcement would largely focus on “high risk” sectors the watchdog deemed likely to see noncompliant activity. “My team has much more opportunity to be proactive, so the next step for us is to try to pick a few areas we feel are high risk,” he said. Kirk reiterated his earlier vow that low-doc lenders would be next to come under the regulator’s scrutiny.
WESTPAC LAUNCHES NEW BROKER TOP TIER
Westpac has launched a new top tier segment for its best brokers, offering preferential service and support at the bank. The new Platinum Broker tier sits above the bank’s Advantage + offering, and includes a suite of service sweeteners, such as a dedicated team of credit managers, free upfront full valuations,
a two-hour response guarantee and 24-hour conditional approvals. Westpac head of mortgage distribution Tony MacRae said that another key benefit of the invitation only club was access to cobranding materials that would provide Westpac’s seal of endorsement. Platinum brokers will be entitled to use a ‘Platinum Broker’ logo, and will receive a Westpac Platinum Broker certificate for display, and will be included in some customer marketing campaigns. To be considered for the top tier, Westpac has stipulated a minimum requirement
of 15 applications per calendar quarter, a conversion rate of at least 70%, a low arrears book, a minimum settled book with the bank of $20m, and a minimum application quality of 65%. Around 100 brokers have achieved Platinum status. Platinum brokers will also receive discounts of between 30% and 50% off Davidson Institute courses for themselves and their staff, as well as 50% of APM data subscriptions, 15% off advertising campaigns on Fairfax’s domain. com.au, and discounts on magazines. Westpac will also offer Platinum brokers access to personalised banking services.
Positive credit to stop client ‘poor track record’ The incoming positive credit reporting regime has been touted as a solution to consumers’ “poor track record” of self-reporting. Veda head of legal Olga Ganopolsky has defended the positive credit reporting regimen, saying it will be a “game changer” for both the regulatory environment and lenders’ risk assessment practices. Ganopolsky claimed consumers often inaccurately report their credit situation, and argued the new regime would alleviate this. “The research that’s been conducted shows that consumers have a very poor track record of self-reporting on one’s liabilities,” she said.
Ganopolsky pointed to studies showing consumers with poor and clean credit alike often misrepresent their credit history. “When research is done on bankrupts, the astonishing results were that more than 95% of people in bankruptcy were applying for credit virtually on the eve of bankruptcy. A lot of even solid credit individuals don’t provide accurate credit information. Just under 20% of people don’t accurately report,” Ganopolsky said. In contrast, Ganopolsky argued that the wider array of information available in the new reporting regime will enable lenders to make more informed risk decisions.
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NEWS / ROUND-UP NON-BANKS
Pepper urges brokers to give them a crack Non-bank lender Pepper Australia has launched a promotion asking brokers to try them out by promising to beat the variable interest rate offered by a specialist or non-conforming lender on any unconditionally-approved home loan. The unconditional approval needs to be less than 30 days old and for a similar home loan product to those offered by Pepper. All home loan applications received by Pepper that settle prior to June 30 will earn the broker an entry into a draw to win either a 64GB 3G iPad 2 or a 64GB iPhone 4S.
Bank funding cost claims ‘mathematically impossible’
The Big Four’s claims of rising funding costs has been rubbished by a major French bank. The major banks have pointed to higher funding costs for their recent rate hikes, but Fairfax has reported that Société Générale Asia Pacific head of interest rate strategy Christian Carrillo has called the claim “almost mathematically impossible”. According to Fairfax, Carrillo dismissed the majors’ claim in a research note. “The claim that the recent increase in mortgage rates is due to higher funding costs is very dubious. The mortgage hikes seem aimed at protecting their higher profit margins,” Carrillo wrote. Carrillo instead argued that nearly all sources of funding for Australian banks are less expensive than their post-GFC highs and have continued to fall in absolute terms since the second half of 2011. “Australian banks are essentially an oligopoly. They control most of the market anyway. They can effectively set rates where they want to,” he said. Australian Bankers’ Association CEO Steve Munchenberg dismissed Carrillo’s research, saying it lacked specific bank funding models. “I would be surprised if he had access to the detailed funding of the banks on a bank-by-bank basis. You can’t just look at the continuum of prices and average that out, because the banks tap the market at different times,” he told Fairfax.
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The average amount One Big Switch refinancers can expect to save on their home loan. Was it worth it? Source: CHOICE SUDDEN SPIKE HOW HAVE INTEREST RATE MOVEMENTS AFFECTED THE APPEITITE OF MORTGAGE HUNTERS? CHECK OUT THE YOUR MORTGAGE INDEX ON P62 TO FIND OUT
BIG SWITCH SEES SMALL FINISH Consumer watchdog CHOICE has closed its controversial Big Bank Switch campaign with only one in 20 registrants potentially switching lenders. The group said in February that the campaign – a joint effort with One Big Switch – has closed, after attracting 40,000 registrations. Of these 40,000, CHOICE said 2,000 “went on to have discussions” with lenders participating in the promotion. Those who switch lenders stand to save an average of $375 each, the group claimed.
BANK OUTSOURCING TO BOOST BROKERS MFAA chief executive Phil Naylor has predicted 2012 will see a boost for the mortgage broker job market. Naylor has echoed comments from AFG’s Mark Hewitt, saying that mooted bank job cuts could prove a boon to mortgage broker numbers. “Many of the new jobs to be added will be filled by former staff members of the major banks, which are seeking to control their costs while maintaining their strict lending and service practices by using MFAA accredited members,” Naylor claimed.
Naylor said broker market share for 2011 reached more than 43%, and suggested that this number could climb as banks cut back on staff and ramp up distribution through the third party in order to outsource many of their functions. “We expect that the mortgage broker share of the market should expand further this year. We are seeing quite a few of our corporate members looking to expand their mortgage broking operations to meet customer expectations,” he said.
A fresh lick of paint? 28% of Australians are planning to renovate in the next 12 months
51% of Australians are planning to renovate in the next four years
37% will renovate their bathroom
28% will renovate their kitchen
25% will renovate their living areas
18% will renovate the laundry
Source: Winning Appliances
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NEWS / PRODUCT ROUND-UP
A bite-size guide to the industry’s newest products and rate changes
Who: St.George What: Mortgage Broker Toolkit The spec: St.George has released an iPad app providing brokers up-to-the-minute information on the bank’s products and pricing. The Mortgage Broker Toolkit app includes serviceability, LMI and stamp duty calculators, as well as a resources library with up-to-date information on the St.George product suite. The app’s functionality will also expand over time, with future updates adding new features, including loan lodgement through the app The app will also be available for the bank’s regional BankSA and Bank of Melbourne brands. What they say: “We did research in the market on the number of brokers in the marketplace with iPads. There’s a considerable number of brokers using iPads: about 2,500 that we know about. “I like to think about it as a broker who has a briefcase. In that briefcase would be brochures, serviceability worksheets and all the things like that they take with them on an appointment. With the app, they don’t need all that,” – Gary O’Sullivan, Senior Manager Systems – Mortgage Broking, St. George
Who: Homeloans Ltd What: Combo loan The spec: Homeloans Ltd has launched a new split arrangement, dubbed the Combo loan. The loan offers savings of up to 0.25% on split loans, by combining the discount earned on a split loan with savings on lower LVR loans. Rates start from 5.99% per annum (one-year fixed) on loans of
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75% LVR or less with the Homeloans Ultra Plus; the Combo loan allows borrowers to fix up to 50% and save 0.15%, and combine this with a further saving for loans of 75% LVR and below to save a total of 0.25%. What they say: “Borrowers know there are opportunities out there, but they are incredibly confused as to which is the best deal. This is where the combo loan offer comes in. It minimises the uncertainty and gamble for those borrowers, provides flexibility and enables them to maintain control. Each part of the loan is treated separately when the contract is drawn up, but the overall loan amount is still considered the total.” – Greg Mitchell, General Manager – Sales, Homeloans Ltd
Who: Intouch Finance What: Personal loan The spec: Non-bank Intouch has launched a consumer finance arm with a personal loan honeymoon facility. The loan allows consumers to borrow funds for a whole range of purposes, including furnishing a new home. The product also comes with a redraw facility where the borrowers can repay some of the principal and still have access to those funds through the redraw, as per a standard home loan. What they say: “We have had so many enquiries about personal loans through our distribution network that we decided to develop our facility. Borrowers are doing as much as
they can to save the deposit on a new house and because it is such a challenge they can find themselves short of being able to buy new furniture. The Intouch personal loan not only allows them to buy the furniture but we also provide some breathing space for three months before they have to make a repayment.” – Paul Ryan, CEO, Intouch Rates correct as of 14 March 2012
LAUNCHING A NEW PRODUCT?
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NEWS ANALYSIS / MULTIMEDIA
Australian Brokernews investigates the burning issues affecting the mortgage industry. Here are the biggest stories highlighted by our weekly newscasts – and uncensored feedback from brokers themselves
The story The mandatory MFAA membership debacle
The lowdown Should third-line enforced MFAA membership be scrapped? Brokers have their say James Green, Oxygen Home Loans: It’s
dangerous because organisations need to be competitive on their own. They shouldn’t be passive and rely on membership being compulsory. It stops them from innovating and being marketleading. They need to remain competitive, and to remain competitive they need to listen to the people that are paying that fee because they want to be involved not because they have to.
Ian Jordan, The Selector Group: I really
think it should be a voluntary commitment. The MFAA is a good organisation and people should belong to it; however, I also feel the MFAA needs to stand on its own two feet. The biggest concern for brokers is that they don’t get fair value for their membership fees from the MFAA. I don’t think that most brokers will understand whether the MFAA is backing them or if 14 | BROKERNEWS.COM.AU
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NEWS ANALYSIS / MULTIMEDIA
This month’s guests... James Green, Oxygen Home Loans
Ian Jordan, The Selector Group
Raymond Xue, ACA Mortgage Solution
Matt Kidd, Omniwealth
Nicole Cannon, Pink Finance
it’s backing the banks – whether the larger groups such as Aussie and Mortgage Choice have so many members and therefore influence outcomes through those channels. Your standalone, single brokers are probably more likely to be moving away from the MFAA unless it’s able to demonstrate the value it adds to those brokers.
Raymond Xue, ACA Mortgage Solution:
There should be a choice for brokers. We should also have an organisation which will voice our opinion – on behalf of the broker, not the lender.
James Green: If [smaller brokerages]
don’t feel like they’re getting value, they feel like they’re getting expense and additional cost: that’s what they don’t like. The feeling I get from my brokers and others in industry is that they really just want the MFAA to add value.
From the forum Paul Gollan Whilst my personal view is the MFAA is a wonderful organisation that does great work, if the requirement of compulsory industry membership was removed by all lenders as condition of accreditation large numbers of brokers would exit faster than a colony of ants on a blueberry muffin. Laurie – an NSW country broker We earn great money, with tremendous job satisfaction and have lots of fun on the journey. The MFAA have helped us much more than most suggest, and I for one will continue to give them my full support.
Craig Morgan, SMSF Loans
Will – Perth The absolute majority of brokers are not happy with MFAA. I do not know of a single individual who thinks it adds value to our business. MFAA by most has been seen as a ‘banker’s policeman’ against us.
Daniel O’Brien, PFS Finance
Many brokers like me just kept quiet. I wrote to MFAA before and the response from MFAA left me stunned. The reply was incredibly dismissive and almost aggressive. I never wrote back, waste of time. But I did show others the reply and they were not surprised.
Moshe Moses, Niche Lending
Donut As a broker, I value the MFAA and what they do. I am of the opinion that to be the industry body that represents all
stakeholders in the industry is a major bonus, not a handicap. To be able to communicate with all stakeholders in the industry as closely as the MFAA can, and does, is for me, a serious reason why I belong to the MFAA and not any other contender.
The story Time to get skilled up on SMSFs The lowdown SMSFs could be the biggest growth area for brokers since diversification. What do you need to know to get it right? Matt Kidd, Omniwealth: It’s a massive
opportunity to set yourself apart from your competitors – why wouldn’t you do it? Go out and find out how it all works – study it, immerse yourself in it – so that when you are liaising with financial planners and accountants, they can see you’ve done the work.
Nicole Cannon, Pink Finance: I think
there is an increased interest in SMSF lending. At the height of the GFC when everything was in superannuation and balances started to drop a bit, people started to look for ways to diversify their assets.
Craig Morgan, SMSF Loans: You need to
be all the way in or all the way out. I’m seeing a lot of people dabbling in this area: a lot of non-complying transactions being put together – those things are going to come back and haunt people later. Unfortunately, this is not an area where you can rely on the banks’ instructions as being correct, as lenders themselves are putting people into non-complying transactions. They might suit the bank, and the bank thinks it gives them the best possible protection, but somewhere along the line an auditor is going to pick that up. The question then is whether the broker should have avoided that.
Matt Kidd: It’s not like walking into a
branch and getting a bank loan. There are many pitfalls – the bare trust wasn’t set up properly, the corporate trust or bare
NEWS ANALYSIS / MULTIMEDIA
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NEWS ANALYSIS / MULTIMEDIA trust isn’t correct, there are so many things that can go wrong. You might have a lender who hasn’t ticked the boxes along the way. It could come to settlement, and you can’t settle because there’s something wrong.
given us a service delivery platform that we can provide for our clients.
James Green, Oxygen Home Loans: It’s
Craig Morgan: You definitely need to
preferential treatment for us, really. It’s very important that we deliver [our customers] a turnaround in a very short period of time. If we use traditional channels, we sometimes can’t meet those very fast required timeframes given to us by those borrowers: segmentation allows us to deliver a rapid turnaround time to those urgent borrowers that we couldn’t get normally.
The story To segment or not to segment
The big drawbacks are the disadvantages to new entrants, particularly competitors within the same office environment. We might have two brokers in the same office, servicing the same referrers: if one has the preferential service offering and one doesn’t, the one that doesn’t is looked past and all the business goes to the other broker. That’s a big disadvantage, particularly when you’ve got a good, up and coming young gun, someone who’s really hungry and wants to do the business, but can’t do the same preferential deal that someone sitting right next to them can.
There’s a big difference between saying you understand, and actually understanding it. Once a broker can get themselves in that position, their businesses are going to do a lot better. know the Section 67of the SIS Act back to front; you also need to have a good general awareness of the SIS Act across the board, and where that butts up against things like taxation law and estate law. You’re not necessarily going to give that advice to the borrower, because you’ll be stepping in to areas you’re not licenced for, but you need to be able to have these conversations with accountants, financial planners, and lawyers.
The lowdown Is segmentation an effective strategy or discrimination? Here’s the market view Daniel O’Brien, PFS Finance: If you’re giving a lot more volume than the guy down the road, you should get priority: that’s business 101. You reward loyal supporters with better service than the guy down the road.
Moshe Moses, Niche Lending:
Segmentation has brought in efficiencies for the banks, likewise for us: it’s also Have brokers been sliced and diced too much?
Daniel O’Brien: It’s something that we’ve
all had to build our way up to, the lesson there is there are only so many ways we can reinvent the wheel when it comes to a home loan. Any good broker should have a handful of banks that they use: I don’t think there’s any need to be supplying loans to 20 different banks. If you’re giving loans to five or six then you can build a better, stronger relationship. For those who aren’t at that level it gives them something to aim towards.
Moshe Moses: Two banks are not in favour of segmentation, two are. Likewise, the brokers are also in the same [split] mindset because segmentation brings along issues about controlling commissions, but it also provides a service proposition that we can provide to our customers. At this current
stage, until the market does turn around, there are negatives and positives to segmentation as a whole.
From the forum Stephen Dinte The problem with segmentation is that it takes time and a number of deals to become an A+ broker (or whatever title a lender chooses to give). During that time, the service level is not as good as that offered by other lenders. So, my clients are disadvantaged because I am not an A+ broker. Lenders who do not segment have the better answer. Treat all brokers equally, give great service to all and let the market decide which is better. Giving the majority of deals to one lender due to this segmentation may cause a broker to fall foul of ASIC. Ray Where is the duty of care to the client if the broker has to ‘push’ loans which are not as good as other loans available to the broker and his client. I will not provide loans to my clients purely on the basis of volume requirements. I would prefer to receive less commission (if I had to), but still provide the best loan product for the client’s circumstances. I think the high moral ground is inhabited by the majority of brokers, and there’s no room for those who do not put the client first. Wayne Most of these ‘top performing’ brokers are little more than mobile lenders for a particular bank. They channel most of their business through one lender because it is easier for them and only write them with someone else if it doesn’t fit with their main lender. They do no favours for the industry because by supporting these monster banks they give them the power. If they did a bit more broking and a lot less banking then the broking industry, and the broader public, would all benefit.
WATCH IT NOW!
To watch the industry-leading newscasts and have your say on the issues of the day, visit brokernews.com.au 18 | BROKERNEWS.COM.AU
NEWS ANALYSIS / MULTIMEDIA
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FEATURE / ONLINE BRANDING
NEW Looking to grow your brand? Turn on your computer. Andrea Cornish investigates the world of fan pages, followers and likes
Mortgage brokers are increasingly looking at ways to harness the marketing power of online media to promote their brand. But many don’t know where to start, how to take full advantage of these platforms and most importantly, if it’s really worth it. MPA takes a closer look at how some brokers are using social media and what you can do to emulate their success.
WHY BOTHER? As of February 2012, more than 845 million people were members of Facebook, 150 million people were using LinkedIn, and 500 million were on Twitter. If nothing else, the sheer potential to reach customers makes
10 ways to use twitter for your business 20 | BROKERNEWS.COM.AU
1 Watch this space: Use “Twitter Search” to find out what people are saying about your company, your competitors and any words related to the mortgage industry
2 Follow: Interact with professionals related to the mortgage industry – real estate agents, accountants, solicitors, etc
3 Just out of interest: Share links to interesting new stories or blogs
4 Quick tips: Give followers pithy words of wisdom
5 A little personality: Feature updates about employees
6 Opinion poll: Ask questions of your followers
7 Set limits: Try to pull back on shameless self-promotion
8 Re-tweet: Comment on othersâ€™ tweets to build community and rapport
9 Images: Pictures say a thousand words â€“ add a photo of yourself
10 Greater involvement: Get employees involved by tweeting about the company as well
Source: Ernst & Young
FEATURE / ONLINE BRANDING
investigating social media worthwhile. Almost everyone with a computer and an internet connection is using some form of social media in their personal lives and more importantly, many are now using the medium to interact with companies. “A lot more communication, interaction and networking is occurring in the social media space these days,” says Paul Gollan, CEO of Australian Mortgage Brokers. “I think there’s an assumption that it’s only just the younger generations that are using social media, but from my experience that’s not the case – it’s going across all age groups, all demographics and I think it’s just getting bigger and bigger all the time.” Another good reason to build your brand online is that it costs next to nothing. Social media really levels the playing field for small broking businesses to compete against major mortgage operations. With a little initiative and creativity your business has the same opportunity to reach customers online as Aussie Home Loans, Mortgage Choice or the big banks. But perhaps the greatest advantage of social media is its ability to increase your business’s visibility. Blogging, tweeting, posting are simple ways to help you keep your business top of mind with your clients.
‘LIKE’ WHAT? Establishing an online presence means more than just putting up a website. It’s a bit like setting up a second life for your business. If your website is your “home” on the web, then Twitter is where you go for coffee and Facebook is the pub. These are all just online locations that give people the opportunity to interact with you and your business. There are many, many social media outlets – Facebook, Twitter, LinkedIn are the biggies, but don’t forget YouTube, Blogger, Google+, Pinterest, SlideShare… well, you get the idea. No one has time to maintain a presence on all of these outlets. The key is to identify which ones will bring the greatest benefit to your business and focus your energies there.
“Another good reason to build your brand online is that it costs next to nothing” 22 | BROKERNEWS.COM.AU
Facebook for businesses Chances are you’re familiar with Facebook on a personal level, but you may still have questions about how it fits with your business. Here are just a couple of ways you can use Facebook to reach customers and support your brand… ompany C announcements: Moving your office, changing your business hours, taking on a partnership… your business is changing all the time, and this is a non-obtrusive way of sharing this information with your customers I ntroducing employees: New staff, baby announcements, promotions – Facebook is a great way to tell your clients about changes in the office and help them get to know your employees. These types of connections help build a feeling of familiarity harities or sponsorship: C If you sponsor a local team, or are involved with a charity, you can use Facebook to involve
customers in upcoming events &A: You can use your Q wall to answer mortgagerelated questions ar to the ground: E Comment on recent news such as rate changes, house prices or bank decisions ontests: Giving people C the opportunity to win something is a great way to draw attention to your business and increase traffic to your Facebook page. You can run it on your wall or through a special Facebook app. Be aware, however, that while it will boost the number of likes or fans, you may have to keep giving away gifts to keep people interested hotos: P Customers like to see you – put a face to the name and post photos of yourself, your employees and even snaps from special company events
FEATURE / ONLINE BRANDING
AMB mortgage broker Peter Bentham started using Twitter 12 months ago with the handle “mortgagebroking”. “I tweet interest rate changes, specials on fixed rates and other banking events that may be of interest, and sometimes my feeling towards banks. I have received a couple of responses from this but no deals as yet,” he says. According to Gollan, Facebook, Twitter and LinkedIn are the main areas of social media for AMB. While he says Twitter has been valuable in getting the AMB brand out there, Facebook has been more valuable in terms of interacting with potential clients. “I think Facebook is definitely the best out of all of them for brokers, no question about that,” he says. “A lot of our brokers report that just through their own personal pages on Facebook they’ve generated business.” Facebook has also paid dividends for House & Home Loans managing director Rael Bricker, who has a multi-prong approach to social media. “I have a blog and I have Facebook, LinkedIn and Twitter. I use HootSuite so whatever I send out on Facebook, LinkedIn and Twitter goes out simultaneously, and if I want to write my own content, I write it on my blog and then I post it on Twitter,” he says. “And while
“A lot of clients follow me on Facebook, so I’m building that up. It improves our Google rating” I’ve only started the blog a few months ago, I’ve done the Facebook, LinkedIn and Twitter for a long time and I’ve probably picked up two or three deals out of it.” According to Bricker, he’s built up enough of an online presence that if he fails to post his “words of wisdom”, people will ring him up. “A lot of clients follow me particularly on Facebook, so I’m slowly building that up.” Bricker is also cognisant of the benefits his business receives by linking his blog to his web page. “It improves our Google rating, so there’s a logic in doing that.”
The power of LinkedIn If you’re not actively managing your profile on LinkedIn, you’re missing a golden opportunity to expand your reach, not only to customers but also to prospective employees. Here are just a few ideas on what LinkedIn can do for you:
Increase your SEO
Include the keywords that borrowers are likely to put into a search engine when trying to find a home loan on your LinkedIn business page and watch as your company climbs the Google charts.
Highlight customer satisfaction
Ask a satisfied customer to write a testimonial on your LinkedIn page to take advantage of the 21st Century’s answer to word-of-mouth.
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Become an expert
Take advantage of LinkedIn’s “Answers” section to provide expert advice to mortgage hunters. Spend half an hour a week providing the most up-to-date mortgage advice and send a private message to the questioner letting them know you can assist further if needed.
If your specialty is arranging mortgages for first-time homebuyers, seniors or the self-employed, then you can take advantage of LinkedIn’s targeted advertisements. These allow you to deliver your message to people of a
certain age, in a certain geographic area or even by job description.
Build your professional contacts
Every mortgage broker worth his salt has a deep bench of contacts in real estate, insurance, law and commercial lending. Use LinkedIn to find these contacts and you will be able to refer your clients to trusted professionals and they will return the favour.
WHAT’S NEXT? After you’ve identified which social media outlets to concentrate your efforts on, have a think about what your goals are and how much time you are willing and/or able to commit to it. By listing your goals and comparing them against your effort/time you can get a better gauge on whether these activities are furthering your business. If you’re failing to see any benefits, then perhaps take a step back and re-evaluate the outlets you’re using. If blogging bores you, try YouTube. If LinkedIn isn’t to your liking, why not use Plaxo? Also look at what kind of content you are posting on Facebook, Twitter, YouTube and so on. Shameless self-promotion is not the goal here, and people will quickly tune you out if that’s all you ever post. Look for ways to communicate with your audience, as opposed to talking at them. And lastly, look at what your competitors are doing. There are a lot of great ideas out there and you don’t need a massive marketing budget to adopt some of those ideas to build your own online presence.
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FIRST AMONGST EQUALS
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Brand power is all-important in today’s business environment – but which brokers are making the most of having a franchise firmly behind them? Welcome to MPA’s inaugural Top 10 Franchise Brokerages special report
eing part of a franchise may not be to every broker’s taste – but to others it makes perfect sense. Whether you’re a new entrant to the industry or an old hand, the lure of a solid brand behind you, a wide range of support systems and an established model means that you’re able to concentrate on what you do well: spending time with clients and finding the right home loan for them. Indeed, such is the strength of franchises and other branded arrangements that many of Australia’s most successful brokers have made their names under these models. But which franchise brokerages are the most successful – and why? Following on from the success of our market-first Top Independent Brokerages report in the spring, we decided to find out. We canvassed all of Australia’s franchises, large and small, to discover just which business was Australia’s top franchise brokerage in terms of loan book, annual volume and customer service. You can find out who the top 10 are overleaf: however, I’d also like to extend our congratulations to those who just missed the cut – including Mortgage Choice Melbourne CBD, Smartline Keilor, Club Financial Services Norwood and Aussie Parramatta. Kevin Eddy, Editor, MPA
A word from our partner ING DIRECT is proud to support this MPA special report on the Top 10 Franchise Brokerages in Australia. We acknowledge the success and achievements of these brokers and all who support them in what has Mark Woolnough admittedly been a tough environment over the past year. It is inspiring to see brokers performing at such a high level in the industry, particularly given the challenges presented to brokers, lenders and customers in 2011. ING DIRECT continues to be a strong advocate of the broker channel in Australia. With intermediaries accounting for over 90% of our mortgage production, brokers are integral to mortgage distribution at ING DIRECT. With no branches, we view our broker partners as our branch managers and place strong value in the vital role they play for us and their customers. This no doubt contributes to ING DIRECT leading its competitors in home loan customer satisfaction. We aim to build on and improve our broker proposition further by placing a strong focus on excellence in broker service as our brokers’ needs and demands evolve. This report recognises professionalism, determination, innovation and excellence in customer service, linked to strong, valuable brands in the market. All of these align closely with what is important at ING DIRECT. I am passionate about an ever-improving industry, brokers that are inspired to achieve and an industry which rewards those who accomplish that success. Well done to everyone who has played a part in featuring in the Top 10 Franchise Brokerages in Australia, and I look forward to a great year ahead for ING DIRECT and our brokers. Mark Woolnough Head of Broker Distribution ING DIRECT
METHODOLOGY We approached all of Australia’s major franchises and branded aggregators, asking them to nominate up to five brokerages for submission. We then ranked the 30-odd brokerages nominated on four key metrics: • total loan book • loan volume for 2011 • average volume per broker/loan writer • conversion rate Ranking on these metrics meant that, like last year’s Top Independent
Brokerages report, we were able to create a rounded picture of each brokerage’s offering, rather than a picture where size prevailed above all. Scores in each rank were compiled to produce an overall score: the top 10 overall scores made the hall of fame. A note for accuracy: While many of the head groups we approached are ‘true’ franchises, we also decided to include groups who use variations on the franchise theme, particularly those groups which license or require brokers to use a national brand.
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LJ Hooker Finance ACT & Southern NSW Locations: ACT/Southern Highlands, Macarthur, Illawarra and Central West NSW Loan book size: $535m Annual volume (2011): $115m Number of brokers: 12 Annual volume per broker: $9.5m Conversion rate: 90%
LJ Hooker Finance ACT & Southern NSW covers four franchise areas in the LJ Hooker network. Owned by franchisees Scott Cameron and Warren Urquhart, the business has been in existence for the last eight years, and is based in a head office in Tuggeranong, with brokers operating on a mobile basis. The franchise scored particularly highly on conversion rate and loan book size. Cameron reveals more.
What is the secret to a successful brokerage? Teamwork, professionalism, ongoing skill development and referral partnerships.
What are the strengths of being part of a franchise rather than ‘going it alone’? There is a great deal of value in the LJ Hooker brand, and our formal relationship with the real estate offices is critical to our success. The LJ Hooker Finance franchise network is a strong group of finance professionals and business owners. We maintain contact across the network – providing support to each other, sharing successes and so on.
How is 2012 going so far? It’s still very early, but signs are good for growth over last year. We are continuing to look for brokers to join our team, and take advantage of the strong lead flow we enjoy from the network.
What’s your goal for 2012? Our goal for 2012 is to settle $300m, and continue to grow the referral levels from our real estate network.
How do you market your business and how important are referrals? Referrals are the lifeblood of our business. Our marketing and business development energy is split between working on the referral partnerships we have with the LJ Hooker real estate network, and keeping in contact with our existing clients. We do very little external advertising; however, we do still receive external enquiries due to our presence in the local communities within which we operate.
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“We continue to look for brokers to join our team, and take advantage of the lead flow from the network” Have you diversified your business or do you just offer home loans? Diversifying income sources has become very important in our business, particularly since the reduction of commissions in recent years. We have a strong relationship with a financial planning business to whom we refer our clients for their insurance needs. While there is a referral income arrangement in place, it is important for our clients to reassess their risk position, particularly given the recent borrowing transaction they have undertaken.
What effect has licensing had on your business? Licensing has been important for the industry, in removing some of the unprofessional elements that did exist. We always had fairly strict compliance processes in our business, and review processes to uncover our clients’ needs, so there was no major change there. The additional documentation that is now required is very cumbersome, and can be quite confusing for clients, which has the opposite effect to its intent.
What’s the most important thing a broker can do to grow their business? Continue to develop your own skills and those of your team, look for new opportunities, and look after your clients and referrers and they will look after you.
Aussie Dee Why Locations: Dee Why and Balgowlah, NSW Loan book size: $384m Annual volume (2011): $95m Number of brokers: 2 Annual volume per broker: $47.5m Conversion rate: 79%
The first of two Aussie entries into the top 10, this franchise was formed in 2006 by cofranchisee Serge Scekic and Jim Sharif in Dee Why. A Balgowlah office followed in 2009. The franchise ranked extremely well on average volume per broker, with the secondhighest average out of all nominations. Scekic explains more about the business.
“I could not imagine being where we are today without the great and continuing support from Aussie”
What is the secret to a successful brokerage? Customer service occupies the number one spot, and every spot all the way down to 10. You just can’t justify not going a little bit further with your service every time.
leads and referrals. We are on track to increase settlements by approximately 15–20% from 2011.
What are the strengths of being part of a franchise rather than ‘going it alone’?
To be healthy, happy and to laugh more! Business-wise, to try to land anywhere between $150m and $200m in settlements between our two offices.
I could not imagine being where we are today without the great and continuing support from Aussie. It’s really hard to imagine being in the game under any other banner. Aussie helped us to get in front of my clients originally, to get invited to their homes.
How is 2012 going so far: how are your volumes tracking compared to 2011? We really started the second half of this financial year running. We are experiencing an increased number of
What’s your goal for 2012?
How do you market your business and how important are referrals? One of the most important parts of our business – if not the most important part – is our referral network. I am trying to recommend to my clients one or two of the local real estate agents which send clients back to me regularly. I am often a guest speaker on the information nights, too.
The top 10 BROKERAGE 1
Choice Home Loans Leederville
Mortgage Choice Glenelg
Choice Home Loans Berwick
TOTAL LOAN BOOK
TOTAL VOLUME FOR 2011
NUMBER OF BROKERS/ LOAN WRITERS
AVERAGE VOLUME PER CONVERSION BROKER RATE (2011)
Mortgage Choice Cheltenham
Smartline Personal Mortgage Advisers Balmain
Aussie Dee Why
LJ Hooker Finance ACT & Southern NSW
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Mortgage Choice CBD Adelaide (and others) Locations: Adelaide CBD and Prospect, Central Northern WA, Cronulla NSW, Mitcham/Happy Valley SA, North Suburbs WA Loan book size: $1.1bn Annual volume (2011): $163.7m Number of brokers: 9 Annual volume per broker: $18.2m Conversion rate: 80%
The only franchise to stretch across multiple states, this Mortgage Choice franchise is owned by Richard Crommelin, Dennis Aplin and Michelle Towner. The choice to grow interstate was partly circumstantial for the WA-originated business, as explosive house price growth meant no one wanted to sell their business in WA. Crommelin adds that it’s also served to diversify the business, giving it a spread across more than one market. It’s the brokerage with the largest single loan book in the top 10 at $1.1bn, and also ranked solidly in annual volume and average volume per broker. Crommelin talks more about the franchise’s growth.
What is the secret to a successful brokerage? It’s people. We’ve had some great people working for us, now and in the past. Because of our range of locations, we’re pretty process-driven – customers will get the same experience regardless of who they speak to. We also want to address the fact that if someone’s not here – on holiday or ill – we can pick up a file, answer questions and do what needs to be done.
What are the strengths of being part of a franchise rather than ‘going it alone’? They can support your own inadequacies. Mortgage Choice offers IT support, marketing support, HR support, and so on. You can’t be all things in business today, and it’s great to be able to draw on the resources they’ve got in the areas that I need it. We also get to benchmark ourselves a bit: rather than working in isolation, you can see how you’re tracking against other franchisees and we have our software that gives us a good lead-to-settlement ratio, too. You can look at your processes and identify areas in which to improve by looking at what other people are doing, and improve your conversion rates as well.
How is 2012 going so far? 2011 was a year of two halves – the first half was a little quiet. We had a reasonable May and June, and we’re just flying now. At Christmas-time, we were 24% up on the previous year. It’s across the board, each location has
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risen. NSW is a bit quieter now because first homeowners have quietened down since the end of December, and Perth is booming at the moment.
What’s your goal for 2012? We’re aiming at $240m in 2012.
How do you market your business and how important are referrals? Most of our marketing is a two-stage process. We know where every lead comes from – customer referral, etc – so marketing focuses on areas that we get best conversion rates out of. We do a lot of database marketing, we have 8,000–9,000 customers on our books. Every month we send out a newsletter, also regular communications. We do a bit of alliance marketing, and we do focus a lot on referrals. It’s a mix: we do a whole lot of different things with the aim of getting leads through the door.
Have you diversified your business or do you just offer home loans? We do everything: insurance, car and equipment finance, commercial property finance, and business finance. I wouldn’t say we’re the gurus in every single area, but we do have an eye out in a range of diversified product types.
What effect, positive or negative, has licensing had on your business? In WA (and Mortgage Choice), we’ve had licensing since 2006. So to us, it hasn’t really made any difference – we’ve worked this way for a number of years. The only thing is that the time to do a loan these days and the paperwork required has exploded. It’s not the same returns you were getting three or four years ago. On the other hand, it’s been good for businesses like us as some operators have exited the marketplace, and it’s good for consumers, too.
What’s the most important thing a broker can do to grow their business? Consistent marketing; employing well-trained people; chasing customer referrals; get alliance partners; know your numbers and use them to manage performance.
“Licensing has been good for us as some operators have exited the marketplace”
Smartline Personal Mortgage Advisers Balmain Location: Balmain, NSW Loan book size: $196m Annual volume (2011): $57m Number of brokers: 1 Annual volume per broker: $57m Conversion rate: 94%
The only Smartline entry in the top 10, Ian Simpson’s Balmain franchise was originally formed in 2003. The only single-broker franchise in the top 10, it was ranked highest for volume per broker at $57m. The franchise is based in a shared office with seven other franchises: Simpson comments that “even though we are separate businesses, we really enjoy sharing ideas. All the franchisees in the office have their own particular strengths, so it means when you hit a brick wall someone can usually come up with a solution for the problem or scenario”.
What’s your goal for 2012?
What is the secret to a successful brokerage?
Have you diversified your business or do you just offer home loans?
Focus on giving as much as possible to clients (and referrers) without expecting anything back – you become a trusted advisor and not a salesperson; be responsive to client needs, and never go ‘off the air’ at the important times in a transaction; be knowledgeable about your products and the wider industry (banking and property); be confident in your advice without being pushy; and put in lots of hard work and be as efficient as possible.
What are the strengths of being part of a franchise rather than ‘going it alone’? Firstly, motivation. Being part of a team has many subtle but important influences on your productivity and work ethic. You can share ideas, and specialists can look after the implementation of ideas while we get on with the business. There’s also access to systems and IT knowledge and support, management support and encouragement, diversification is easier, and it helps the long-term saleable value of the business.
How is 2012 going so far? It feels busier but is actually tracking close to last year so far. There’s a lot more refinance activity due to a potential turning point in fixed rates; compliance also adds a notable burden to paperwork so this means longer hours for a similar result.
To streamline loan processes further to alleviate said compliance burden, improve delegation of responsibilities to support staff, build on 2011 loan volumes by 10% and build insurance business by 25%.
How do you market your business and how important are referrals? Existing client referrals represent 95%-plus of my new business so they are crucial. As for marketing, I use direct email contact with existing clients and prospects – regular communications with helpful and interesting content to stay front of mind.
Life insurance has become a small but growing offering; car leasing and general insurance are also growing but will only remain a small part of the business. A broad solution to a client’s needs covering many bases can only be good for a client because it is less legwork they have to do themselves with better outcomes all round.
What effect, positive or negative, has licensing had on your business?
“Be the most trusted person your clients think of when it comes to finance and property”
It’s increased workload per file by around 20% but it is great for the long-term health of our industry. Becoming professional trusted advisors on par with financial advisors and accountants should be our goal.
What’s the most important thing a broker can do to grow their business? Be the most trusted person your clients think of when it comes to finance and property – spread the word by providing meaningful information through all forms of electronic communication. Streamline your back-end processes so that you can focus more on delivering upfront responses to existing, new and prospective clients. Being in constant contact with a client at the important periods of their purchasing or refinancing process is crucial to building a relationship, which then leads to more referral business.
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Aussie Carnegie Location: Carnegie, Victoria Loan book size: $268m Annual volume (2011): $94m Number of brokers: 2 Annual volume per broker: $47.5m Conversion rate: 87%
Aussie’s second entry in the top 10 hails from Carnegie, in south-east Melbourne. While its book and annual volume are relatively small, average volume per broker is amongst the highest in the top 10, with strong conversion rates too. Franchisee Glenn English explains more.
What is the secret to a successful brokerage? It comes down to the team. There are now six of us here, and we all work well as a team to deliver 100% in customer service all of the time. We all share the same goals, which is why we deliver consistent results. The number one priority for me is my team, number two is my clients and number three the shareholders. If I have a happy team, then my clients will be happy. And if my clients are happy, then the shareholder(s) will be happy also.
referrer on every occasion. I then send the referrer a $50 gift voucher, regardless of whether a new application proceeds or not. It’s just a way to say thank you.
What are the strengths of being part of a franchise rather than ‘going it alone’?
Have you diversified your business or do you just offer home loans?
The brand – I enjoy the support from John Symond and the Aussie brand. When you’re going through hard times, such as the GFC, people want to stick with a brand. The overall support you get is fantastic, too.
Predominantly it’s home loans, but through Aussie we do personal loans, credit cards, and insurance. It’s a growing part of the business. We cater for the commercial side of things as well.
How is 2012 going so far?
What effect, positive or negative, has licensing had on your business?
Great – every year just gets better. When a GFC hits, it just makes us busier. It comes down to customer service. People are still buying, and they want to go to someone they can trust, who’s given them good service in the past.
What’s your goal for 2012? I am aiming for at least $110m this year – we’re already seven months into the financial year and at $110m year-to-date.
How do you market your business and how important are referrals? My business is built around referrals. I‘ve worked in industries before where you never received a referral. So it is a real buzz when you receive your first referral. You can’t take them for granted either. You need to make sure that you ring and thank the
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When NCCP came in, it made us even busier, due to brokers exiting the market. Obviously, I don’t enjoy the extra paperwork, but I welcome things being tightened up. It means those who are successful become even more successful.
What’s the most important thing a broker can do to grow their business? It all comes back down to customer service: treating your client the way you want to be treated. Return phone calls, follow up properly, go the extra mile in terms of service – providing RP Data reports, for example. Be one step ahead in terms of offering things before your clients ask, and have in place the referral network that you can pass customers onto – the accountant, the conveyancer – so you’re an all-in-one stop, a hub.
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Mortgage Choice, Cheltenham Location: Cheltenham, Victoria Loan book size: $687.7m Annual volume (2011): $143.8m Number of brokers: 7 Annual volume per broker: $20.5m Conversion rate: 85%
The Cheltenham franchise of Mortgage Choice is the second of three in the top 10. Focused around one office but with several mobile brokers, the franchise has clients across the whole spectrum but specialises in investors. The franchise ranked highly across all categories. Director Anthony Smith explains more.
What is the secret to a successful brokerage? Brokers, mobile lenders and bank branches are all selling the same products at basically the same price so the point of difference has to be in other areas. We focus on loan structuring to suit current and future requirements, customer service and professionalism to stand out in a crowded marketplace. Every successful brokerage I know is built on delivering a good service and over time receiving many repeat and referred clients; there are no magic bullets that I know of! Of course, having a great team is vital to this and I extremely lucky to be surrounded by a fantastic and loyal bunch.
What are the strengths of being part of a franchise rather than ‘going it alone’? Brand and support are two key strengths of being part of a franchise system. Mortgage Choice is fortunate to have a brilliant CEO in Michael Russell steering the ship, and in Victoria we are served well by the passionate Max Billi and his team. This leadership allows franchisees to concentrate on what they do best. The hardest part to measure as a franchisee is what impact ‘brand’ has on your success. You pay for that brand in reduced commissions, but does the increased business make up for that? I firmly believe that it does. How many people call you after being referred or respond to a marketing activity because they know the brand as well? Would they have called anyway? In 2000, shortly after starting the business up, I did a small marketing exercise and received four leads. One of those leads turned into a good client and his referral tree now stands at nearly $200m that can be directly linked back through that tree to the client.
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Would he have responded if the advertisement had said ‘Anthony Smith Mortgages’ instead of Mortgage Choice Cheltenham? I will never know, but I am glad that particular logo was on the ad because it turned out very well for me.
How is 2012 going so far? Settlement-wise we will be down for the first three months because the end of 2011 was fairly quiet for us and we basically closed the business in December to do a complete review of systems and procedures. It certainly cost us some business but we are excited about the long-term benefits. Leads, submissions and approvals are ahead of 2011 and we expect 2012 to end up being a good year.
What’s your goal for 2012? To settle $180m and reach a $750m loan book.
How do you market your business and how important are referrals? We are a mature business, so referrals and repeat clients are a very large part of our business. As a result, the vast majority of our marketing budget is spent on our customer retention program. The remaining budget is spent on maintaining a strong online presence.
Have you diversified your business or do you just offer home loans? We offer our clients a very wide range of services that we either write ourselves or refer through to trusted partners.
What’s the most important thing a broker can do to grow their business? A marketing department is expensive and beyond the reach of most brokers; however, if the broker provides specific, appropriate and clearly explained lending solutions that are delivered to the client in a fast, friendly and professional manner they will create an army of fans that will be referring the broker to family, friends and colleagues. That will grow the business faster than any marketing department could ever hope to.
“We are a mature business, so referrals and repeat clients are very important”
Citiwide Homeloans Locations: North Melbourne, Forest Hill, Victoria Loan book size: $545m Annual volume (2011): $151.5m Number of brokers: 7 Annual volume per broker: $21.6m Conversion rate: 85%
The only locally-based franchise in the top 10, Victorian franchise Citiwide was founded in 1988 by Patrick Marion. The company’s head office is based in North Melbourne and it has one other office in Forest Hill. Franchisees are also represented in the northern, western and central regions of Melbourne metro. Citiwide’s customer base of 8,500 clients is made up mainly of individual borrowers, ‘mums and dads’ and a minor percentage of small business owners. The rest is made up of commercial loans. Marion explains more.
What is the secret to a successful brokerage? To succeed a brokerage must tick a number of boxes. Importantly, the business owner must put in place a system and clear procedures for brokers to follow. Brokers’/loan writers’ time is best spent on two things – prospecting for new business and spending time in front of clients. To achieve this, the business must provide considerable support by way of administration staff to take care of routine follow-up tasks; marketing support and collateral; ongoing training and coaching opportunities; and assistance with compliance and audits. A business plan and regular goal setting at every level are also a key ingredient to success.
What are the strengths of being part of a franchise rather than ‘going it alone’? A franchise system has many advantages over ‘going it alone’: some of the benefits can be summarised as follows: • Branding. It is important (and expensive!) to build a brand. The single operator generally doesn’t have the time or the financial resources to build a brand • The collective knowledge and experience acquired from delivering the service in a consistent manner by a number of franchisees • Benefits from collaborative marketing and group purchasing • Economies of scale for investments such as IT, training and support staff • Statistics prove that there are lower risks involved in buying a franchise as opposed to ‘going it alone’
What’s your goal for 2012? Our goal this year is to add six new franchisees to our group now that our model has been finetuned. We expect business volume to grow by 15–20% allowing for the fact that new brokers take some time to start writing volume business.
How do you market your business and how important are referrals? Citiwide has traditionally marketed its services through referrals. Brokers are actively involved in networking groups to generate new leads. Centres of influence such as real estate agents and accountants also provide a constant flow of referrals. Approximately 50% of the business is currently generated from existing clients, however as good as this may sound, new blood is constantly required if the loan book is to grow. Over-reliance on existing customers can be detrimental to growth in a mortgage broking business. Having just released a new iPhone app, social media and a higher online profile will also be our focus in 2012.
Have you diversified your business or do you just offer home loans?
“A business plan and regular goal setting at every level are key ingredients to success”
Although Citiwide has traditionally offered three services to borrowers (finance, insurance and conveyancing), our core business remains focused on what we do best, that is mortgage broking.
What effect, positive or negative, has licensing had on your business? On the positive side, licensing has forced all businesses, us included, to document their processes in a way they never had to previously. Although we already had in place practices relating to many of the provisions contained in the NCCP Act long before they became law, these processes are now better documented. On the negative side, licensing has added considerable costs in monitoring the activities of credit representatives and in the ongoing audit of files.
What’s the most important thing a broker can do to grow their business? Make a plan, set goals and share it with someone (a mentor) who will keep you accountable.
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Choice Home Loans Berwick Location: Berwick, Victoria Loan book size: $680m Annual volume (2011): $200m Number of brokers: 12 Annual volume per broker: $16.6m Conversion rate: 85%
Rounding out the podium is the Berwick franchise of Choice Home Loans. The 12-yearold business operates 23 satellite offices throughout Melbourne alongside its Narre Warren head office. It specialises in new home construction finance, and was ranked joint first for annual volume, writing $200m worth of business in 2011. General manager Leith Wickstein explains more.
What is the secret to a successful brokerage? Being the one to provide the solution to the problem; knowing your product and knowing how to fit the most appropriate solution to your client; and being the professional/expert for your referral partners as well. But, above all else, delivering the right outcome for your clients and referrers seamlessly as possible.
What are the strengths of being part of a franchise rather than ‘going it alone’? They enable a platform with which to work from rather than re-inventing the wheel, so to speak. Franchises also provide a tremendous amount of ongoing support, like a coach of sorts. No matter how long you’ve been in business, you always need someone there to bounce ideas off.
How is 2012 going so far? The residential construction industry has experienced some leaner times over the last few months, and as such it’s been a tough slog for us, also. However, our volumes so far are tracking in line with the previous year.
What’s your goal for 2012? To consolidate our loan writer team and then grow the volume despite the market conditions.
How do you market your business and how important are referrals? We market our business via an array of methods, including the traditional brochure/flyers, newsletters, online electronic direct marketing and so on. However, referrals are the key: they are by far the most important source of our business and without them we wouldn’t have succeeded to achieve what we have so far.
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“Diversification is always on the radar; it’s finding the right product and partner to fit with our business model” Have you diversified your business or do you just offer home loans? We have diversified from just home loans, but only really in relation to life and/or loan protection cover, and the spinoffs from those. Even so, the area of diversification is always on the radar; it’s a matter of finding the right product and partner to fit with the business model we have.
What effect, positive or negative, has licensing had on your business? If I had to pick, it would be a negative impact, but only because there is slightly more paperwork to be completed and there’s an extra cost to the business in terms of the licensing fees. These two things aside though, there really hasn’t been that much of an impact – all it’s really done is to formalise the process that we already followed internally.
What’s the most important thing a broker can do to grow their business? Stay ahead of the pack as best you can. Continue to grow your knowledge and keep working on becoming that professional that everyone comes to for advice. Continue to invest in your business and stay in touch with the clients you worked so hard to obtain in the first place – even if they don’t need you right now, you need to let them know you’re still there for when they do need you. Finally, find a niche that you’re good at – no one can be an expert on everything.
Mortgage Choice Glenelg Location: Glenelg, South Australia Loan book size: $1bn Annual volume (2011): $171.8m Number of brokers: 6 Annual volume per broker: $26.6m Conversion rate: 85%
Regular readers may be surprised not to find the acknowledged queen of mortgage broking at the top of the list, but that doesn’t mean that Wendy Higgins’ Mortgage Choice franchise is going off the boil, as it scored highly in all metrics and is one of only two brokerages with a total book over $1bn. Based in Glenelg, Adelaide, the 14-year-young franchise employs eight staff and services a range of clients, from first homebuyers to upgraders and investors. Higgins speaks.
What is the secret to a successful brokerage? Hard work, hard work and more hard work! Having the passion for the business is the number one key, it has to be the most rewarding thing you can ever do in advising a client their dreams have come to fruition. Having the right team of people around you is very important as a business grows.
What are the strengths of being part of a franchise rather than ‘going it alone’?
How do you market your business and how important are referrals? We sponsor 11 sporting clubs where we get huge exposure with signage, and by attending club games and events. We send out a quarterly newsletter and a monthly e-newsletter. Word-of-mouth referrals from clients are the best source of business: happy clients are more than happy to refer their family, friends and work colleagues onto us and they have already been ‘sold’ on us, making the sales process very easy. Referrals from accountants, financial planners, real estate agents and conveyancers are also very important to our business: again, they ‘sell’ us to their clients. It is a mutually rewarding arrangement.
Have you diversified your business or do you just offer home loans? Yes, we have our own Mortgage Choice motor vehicle loan, personal loans, insurances and commercial lending, and self-managed super fund loans.
There are numerous strengths in being part of a franchise. The branding, the advertising and marketing, the IT support and compliance are all in place for you to use. If you stick to the system with an excellent franchise system, like Mortgage Choice, the chances of success are far greater. Just knowing you have the support in everything you do makes it far easier to write the loans, and this is what we get paid to do.
What effect, positive or negative, has licensing had on your business?
How is 2012 going so far?
What’s the most important thing a broker can do to grow their business?
2012 feels like it is going to be a challenging year; having said that, in the first two months our settlement dollars are 10% up on 2011. The tough (us!) will get tougher and work harder than ever before.
What’s your goal for 2012? I have three goals: • Settle at least $18m per month • Loan book to reach $1.05bn by the end of December • Remain at number one at Mortgage Choice based on number of loans sold
“Wordof-mouth referrals from clients are the best source of business”
Licensing has had a positive effect on my business in that everything is documented and clients are aware of our responsibilities in sourcing them a ‘not unsuitable’ loan. There is extra paperwork and this takes time, but now that licensing has been in for some time, it has settled down and it is just a part of what we do each time we prepare a loan for submission.
Treat each lead like gold. Treat each enquiry with enthusiasm and passion and it will show through that you care. Even if you can’t help at that stage, they will take your advice and come back when the time is right. If you treat customers professionally and with compassion, they will pass your name and contact details to other people that may need you.
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SPECIAL REPORT / TOP FRANCHISE BROKERAGES
Choice Home Loans Leederville Location: Leederville, WA Loan book size: $913m Annual volume (2011): $200m Number of brokers: 9 Annual volume per broker: $22.2m Conversion rate: 95%
Straight in at number one is the Leederville franchise of Choice Home Loans. As you’d expect from the number one brokerage, it ranked highly in all categories, notably coming joint first in annual volume, third in total loan book and second in conversion rate (and highest in the top 10). The 11-year-old business, owned by Marco Meloni, Dennis Timms and Lucio Baroni, operates out of one office in Leederville, servicing a wide client base. Meloni explains what’s made the franchise so successful.
What is the secret to a successful brokerage? Put the client first. With every client, we ask what the best outcome is and try and achieve that.
What are the strengths of being part of a franchise rather than ‘going it alone’? It’s the backing and the expertise. Choice is fantastic with its quoting system and its CRM; it has great BDMs, very personable. You don’t feel like you’re in a big organisation, it still feels like a family to us.
How is 2012 going so far? We’ve probably had our best three months between November 2011 and January 2012; we’re probably on track to beat that if it keeps going. 2011 was a slow year for us!
What’s your goal for 2012? I don’t set targets as such; our goals are really to do everything a lot better and pick up a lot of collateraltype business, such as insurance, depreciation-related work, that sort of thing.
How do you market your business and how important are referrals? With how competitive it is today, not only with other brokers but with the online direct market, it’s all about referrals and looking after your client. It’s all about going that extra step. I’d prefer to have one referral from an existing client than 10 from a real estate agent!
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“You have to know your clients. If your clients like you they will trust you. If they trust you, you’ve got them for life” Have you diversified your business or do you just offer home loans? We’ve been a bit slack with it, and realised how important it is to pick up the collateral business. If you don’t, others will. We’re training up in that area.
What effect, positive or negative, has licensing had on your business? The NCCP has added about 20 pages of what we consider to be unnecessary paperwork; however, in saying that, we’re a lot more thorough in profiling clients now. It’s had a positive effect overall, but we believe in keeping things simple and we think it’s been overcomplicated when there’s no need to be.
What’s the most important thing a broker can do to grow their business? Get back to basics. You have to know your clients. Your clients have to like you, and if they like you they will trust you. If they trust you, you’ve got them for life.
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HEAD TO HEAD / ANTONY CAHILL
A year-and-a-half ago, Antony Cahill stepped into the hot seat at NAB as head of all its thirdparty businesses. He sat down with Kevin Eddy to discuss the last few months – and the future
MPA: So, you’ve been with NAB for about a year-anda-half – how’s it been? Have you achieved what you wanted to achieve? AC: It’s everything I expected and more. The company’s absolutely committed to broker and third party, and we’ve had the funding given to us to ensure we can grow. The amount of change that we’ve delivered in the business in the last 14 months is unsurpassed. We’ve made huge improvements on the NAB Broker side. Every single facet of NAB Broker has seen a significant shift: broker proposition, product proposition, pricing relationship with brokers, moving to 65 basis points commission, upfront valuations. We’ve seen our broker satisfaction go from less than 40% about a year-and-ahalf ago to over 80% in our last survey – that’s testament to all the changes, and the good news is there’s more to come. We want to see that broker satisfaction figure above 90%.
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On the Advantedge side, there are obviously two sides of the business [aggregation platforms and wholesale funding]. We’ve been really happy with progress made on white label lending. Part of the big challenge initially was integrating all the core systems and lining up credit policies: we’ve got a comprehensive suite of policy changes that are going to be launched over the next few months. It’s all about leveraging NAB’s balance sheet and taking advantage of the strength of the wider company. We’ve seen a lot of success with white label lending through PLAN, Choice and FAST brokers. Mortgage managers are still an important part of our customer base – we like to think of ourselves as the premier white label funder and we’ve got no intention of giving up that position. That market will continue to change in terms of number of mortgage managers who are actively participating.
HEAD TO HEAD / ANTONY CAHILL
MPA: Do you think we’ll see that market return? AC: In terms of volumes, there’s no reason why not. In
Out of office I used to fly aeroplanes – in fact, I learnt to fly before I learnt to drive. I haven’t flown for a number of years but I was talking to a colleague in New Zealand who’s learning to fly, and he’s given me the bug back. I also ride my bike and spend time with my son James.
terms of numbers of mortgage managers, there has been consolidation. The companies that are there are showing they’re resilient, that they can adapt what they can do to the environment. We’ll continue to work with them and support them.
MPA: Do you see white labelling becoming an increasingly important part of the business? AC: White labelling will certainly play a valuable part. It’s a capability that none of the other majors have at this point in time. When a customer goes to a broker, they’re going there for advice, opinion, guidance. A white label product can absolutely be in that consideration set. We want to significantly grow our white label products and we’re very comfortable supporting mortgage managers and delivering our own products.
MPA: One of the criticisms of aggregator white labels is that there’s a conflict of interest – there’s a perception that brokers can be ‘pressured’ to push an aggregator solution. Do you think that’s realistic criticism? AC: I don’t think it’s a well-founded criticism. If you look at white label volumes versus other lenders that go through our platforms business, you wouldn’t see that the majority of lending is going to white label products – far from it. The brokers who aggregate through us are not employed by us: that’s important to remember. They ultimately will work and make recommendations to their customers. All we do is ensure those white label products can be in consideration. I don’t believe it is a conflict of interest. Remember, we also have very good relationships on the aggregation side with the other lenders – we also distribute other lenders’ products across our platforms.
MPA: What about the aggregation side of Advantedge? AC: In the platforms business, we’ve had the major industry shift with the whole industry moving through NCCP. We started rolling out our Podium software last year: that’s now completed and we’re now working hard to get that asset producing, so our broking partners can ensure they can be more efficient – marketing to clients, running their CRM, walking clients through needs analyses and so on. The aggregation platforms are now in ‘acquisition mode’ – in terms of bringing new brokers onto the platforms, not necessarily acquiring other aggregators. One of the questions around the aggregation business is how they mature and operate over time. Aggregation
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economics are very different from where they were four years ago: the question for us is how we get those businesses to offer products and services to help brokers improve their revenue? A big part of that is our practice management discipline – a dedicated team working with brokers to find out where are they looking to take their business and how Podium and our other tools – such as insurance – can help brokers move through into the next level of helping borrowers through what are a complex set of decisions. How can they ensure customers are protected, and earn some revenue off the back of that?
MPA: One of the big pieces of news in the aggregation side is the departure of [Advantedge GM] Steve Weston, which will obviously leave a sizeable void. What will be the impact on the businesses? AC: Steve’s a personal friend as well as part of the management team and we spoke at length about that role that came through. It’s a great opportunity, which will help him move to the next stage of his career, and he’s leaving with our best wishes. Saying that, he’s one of my GMs and a key part of the team: it’s essential that we have a good strong performer to pick up the reins. We are carrying out a global search, and will ensure that we get the right person into the role. We have succession planning in place, and we’re prepared for a handover period if necessary. In terms of significant departures from strategy, there won’t be any. We’re clear as a management team about what we need to do, and we’ll continue to forge through the path we’ve carved out.
MPA: Is helping brokers develop their businesses going to be a leading theme for 2012? AC: It’ll definitely continue. If the aggregator purely becomes a facilitator between a lender and the broker, that becomes a commoditised service, and I’m not sure that can add huge value. Where we can add real value is working with brokers to develop their businesses. Most brokers are small businesses, they don’t have significant infrastructure, access to tools, training, and resources
“I’d love to see broking in the same space as veterinarian, doctor, accountant and lawyer. Why shouldn’t it?”
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HEAD TO HEAD / ANTONY CAHILL
we can provide access to. The industry will continue to evolve as professionalism continues to come through: the industry has moved markedly compared to where it was 10–15 years ago, and there’s more to come. Diversification is a case in point. Insurance is the obvious area: the other area we see in relation to home loan packages, you see credit card and transaction accounts, and there are other opportunities that haven’t been explored yet. It’ll be really interesting to see how that develops. I was having a discussion with a broker the other day, who asked, “why do we call ourselves mortgage brokers? Brokers talk about mortgages only – we could be doing many other things”. There’s absolutely that opportunity, but the lending products need to be set up appropriately as well to facilitate and operate in that channel. There are a lot of changes that can take place. Everyone’s talking about it, it can, should happen – it will continue to progressively happen. But it’s not binary – we won’t shift to everyone doing it overnight. It’ll be a progressive change, much like the fee for service debate. Lots of opinion, some of it quite heated. There’s absolutely no reason, given the value of the advice and the professionalism of a lot of brokers that they should be inclined and able to charge a fee. Some brokers do that today: I mentioned, I’ve been all around Australia in the last few months, talking to members of PLAN, Choice and FAST: some members are confident, comfortable and willing in relation to fee for service; they’re charging it successfully. Others aren’t yet comfortable: they’re thinking, exploring. It will be a staged transition, and some brokers will never go down that path. One of the things we definitely need to face is the average age of brokers – mid-40s. We have to think through how we get the best, the brightest, the most talented people in Australia to view mortgage broking as the career path they want to take. All participants in the industry – be it brokers, aggregators or lenders – can help forge that path. I’d love to see broking in the same space as veterinarian, doctor, accountant and lawyer. Why shouldn’t it? In terms of the advice a broker gives clients, the value a broker brings to clients, through complex financial decisions, there’s no reason that shouldn’t be the case. But there’s a way to go on that.
MPA: Is there space there for academy programs, the likes of which are becoming more popular? AC: That’s a good question: I’ve had conversations with Phil Naylor about the industry and what the industry can do. While we think about what some of the options might be, we haven’t landed on a firm option at this point in time. There are different avenues that can be pursued and that could be one of
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Cahill on… NAB promising the cheapest SVR of the majors for 2012 Cameron [Clyne, NAB CEO] has made that commitment to the marketplace and we’re determined to deliver on that. That potentially does have some ramifications: it’s a very competitive market right now. All the lenders are keen to remain competitive but we’re all very cognisant of what’s happening in the funding environment. Global economic volatility The situation seems to change depending on the time of day. It’s a fascinating situation that’s playing out but it has ramifications in terms of funding costs. We watch that very closely, but it’s an undeniable fact that cost of funds for institutions have gone up quite significantly in the last six months. We’re very aware of that, and very aware of the cost of living for Australians. You’ve got to weigh that up, and be aware of the needs of your various stakeholders. Diversification It’s certainly compelling in a number of ways. We all know that most consumers are underinsured. There can be a really valuable opportunity to build the relationship with the customer and have a discussion around insurance needs. It also provides an opportunity to diversify the income stream. What we need to work through as an industry is helping brokers down that path, equipping them with the skills, the tools, the techniques, the products to enable that sell, and then ensuring we set up the end–to-end value chain to facilitate that sale, and ensure the channel is optimised to do that. Fee-for-service I’m a supporter: there’s absolutely no reason, given the value of the advice brokers provide that they should not be inclined to or able to charge a fee. That may not be right for some brokers’ business models, but philosophically I believe that brokers can feel very justified in charging a fee for the services they provide.
them – different paths, methods, processes that can come into place. As an industry, though, that’s something we need to face into because in five, seven years we’ll start to see the exit of older brokers and we have to make sure we have a vibrant industry that will continue to grow.
MPA: The industry’s clearly professionalising as a result of compliance – is that going to increase? AC: There’s a real opportunity for the industry to work with the regulator in a cohesive and constructive manner. This is an area that’s continuing to evolve. The broad regulatory environment is appropriate, and it’s the right thing to do: it will help the industry move down that professionalised path. What we need to do is see how that manifests in the way we work as an industry. Is it efficient, inefficient, are there any areas that are still ‘grey’… how does it really come through when a customer is seeing a broker. I think the environment will continue to evolve – whether that means more or less regulation is hard to say, but there will be continuing dialogue. It’s been codified in terms of regulatory documents, but how do we actually put that into practice? [NAB is] very
comfortable with how we’ve interpreted the regulatory environment, but there’s an opportunity for active dialogue. In our capacity within the aggregation space, we meet with the regulator on a frequent basis, asking how they see things playing through, and if the environment has translated how they thought it would. Those dicussions are a good opportunity to work together, and we, the MFAA, the other lenders, and other major players can continue that dialogue. It can be fruitful and constructive, we just need to work that through.
MPA: You’ve recently rebranded both NAB Broker and Homeside: how has that been received? AC: The first reaction has been very positive, from aggregation heads and brokers. Why did we rebrand? NAB has worked very hard in the last few years to increase and improve its profile in the retail sector, and we’re seeing results in terms of the brand itself and the red star. We weren’t necessarily leveraging that – Homeside wasn’t always being associated with NAB. Rebranding helps the customers make that link. We also want to ensure customers can and do interact through NAB’s various channels as they wish to. The
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HEAD TO HEAD / ANTONY CAHILL
“We think that we’ve got the right balance between Homeside as a product suite that is exclusively for brokers, but also with the identity of NAB” primacy of the relationship obviously remains with the broker. However, some customers choose to use internet banking, some use the contact centre, some go into branches. The Homeside package also now provides NAB current accounts, Qantas frequent flyer credit cards too. It’s very important to allow those products to integrate in an appropriate manner, and that we give our customers those visual signposts to enable them to do that. Aligning the Homeside brand with NAB was key for us. Another key reason, in terms of timing, was to signify that the proposition Homeside has is very different from the proposition two years ago. It’s a really important marker point for us, and a statement that we have changed. We’re proud of that and we want people to come and try us again. There are some brokers who may not have used us for a couple of years. We believe we’ve now got one of the best propositions in the marketplace – rebranding enables us to reach out to some of those brokers again.
MPA: Why not just go all the way with Homeside and call it NAB? AC: It’s an interesting question. When I arrived, I spent the first four or five months working through strategic options – what we would do, where we want to take the business. We’ve chosen to stay with Homeside because it’s a product suite that’s exclusively available to brokers. We don’t have that price for risk strategy in NAB. We are able to offer features that aren’t made available through the rest of the NAB network. It’s important, we feel, that we can demonstrate to brokers that we are very focused on them and they can see that there are products, decisions and activities that are exclusively designed around them and their needs. For example, in relation to Homeside, all of our end to end fulfilment is geared solely around brokers. Other lenders don’t have that environment in place – they’re channel agnostic. Brokers do have slightly different needs, and that’s why we’ve gone on this particular journey. We think that we’ve got the right balance between Homeside as a product suite that is exclusively for brokers, but also
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with the identity of NAB. The two are balanced.
MPA: So Homeside’s here to stay? AC: Homeside is here to stay. And grow. MPA: You said earlier that there’s more to come with NAB Broker. What’s in store? AC: What can I talk about … There’s a lot of activity coming in the next three to six months. There are a couple of things we can talk about: we’ve been trialling a single documentation pack in the last few months: that will be rolled out nationally. We’re continuing to look at simplifying documentation and product suites. The technical sessions which we ran last year were hugely successful, and we’ll be doing that on a bigger scale. We’re also developing some new distribution options relating to how we interact with brokers – a new telephone broking service team, for example. It’s about giving brokers more options. We’re constantly looking at whether we’ve got the assets, people and resources in the right place to give brokers what they need. There are other things as well, but we can’t put everything on show at this point.
MPA: Any plans to reintroduce year one trail and any further commission changes? AC: No, we’re very comfortable now with where we are. 65bps for all brokers has gone down extremely well. We’re very happy with our ramped trail arrangement and the feedback we get time and time again is that there’s real value there, it’s aligned with the principles we have about creating sustainable value in the marketplace. The model we have is attractive, it remunerates brokers in an appropriate manner, and we’re comfortable that’s it’s a sustainable arrangement.
MPA: If we were to sit down this time next year, what would you want to be saying are your big achievements for 2012/13? AC: In general, 2012/13 is very much about growth. We grew at more than 6x system last year, so it certainly wasn’t as though we were resting on our laurels. We grew two or three times faster than any other player. We’re very proud of that, and will be continuing that growth mode going forward. While we never talk publicly about financial achievements and growth, what I would say is we’re absolutely continuing to grow above system. We’re looking for a multiple of system, and that’s where we’d like to be. We set ourselves those satisfaction targets (90%) and we abolsutely want to be seen as the premier partner: it’s not around sheer volume, it’s about how we interact with brokers, how
brokers perceive that, the fact that we’re seen to be contributing to the ongoing development of the industry. That’s also where the platform businesses play a part: how can we contribute to the ongoing development of the industry. What can we do in terms of helping put structures in place, how can we actively contribute to the debate. What are some of those options, like academies, and get the dialogue going. I think this is a wonderful industry and we can work together to make it grow. For us, we’re seen as a core part of NAB in terms of contribution to the business and where we’ve taken the brand, a customer who’s originated through broker is now part of the NAB family – continuing that relationship, seeing it deepen. Our people are very important to us too: we’ve got 700 staff, we run engagement surveys on a regular basis and we’re seeing really pleasing results in terms of people being crystal clear about strategy – what is it, what role do I play, etc. We take all of those things extremely seriously. As well as the results we’d like to generate for 2013, it’s also making sure we’re well-positioned for the future. We’ve got very clear targets: I can assure you that we’ve got a roadmap, not only for those targets but also
the deliverables, the objections, how we keep redefining and reallocating assets. It’s a complicated environment out there at the moment. Depending on the time of day, Greece is in or out, austerity will get through or not, China will step in as a backstop… that’s a fascinating situation that’s playing out but it has ramifications in terms of funding costs. It’s something we need to remain cognisant of. We watch that very closely, there’s a lot of active debate around interest rates and the true cost of funds, but it’s an undeniable fact that cost of funds for institutions have gone up quite significantly in the last six months. We’re very aware of that, and very aware of the cost of living for Australians. You’ve got to weigh that up, be aware of the needs of the various stakehodlers that you have. For me, it’s been a fantastic experience and I’m really enjoying the journey. We’re really excited about where the business is, the momentum we’ve got: the people we’ve got in the business, and the reception and warmth we’re seeing in the marketplace. It’s a wonderful company, and I’m really happy to be part of it and leading it. I’m looking forward to 2012/13, notwithstanding the complex environment.
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FEATURE / COMMERCIAL LENDING
A NEW DAWN? 48 | BROKERNEWS.COM.AU
The commercial lending sector has been in the doldrums since the GFC. But is there light on the horizon? Kevin Eddy takes a look at the market and finds out what lenders have in store
t’s been a long night for the commercial lending sector. Since the darkness of the global financial crisis descended, it’s been a volatile part of the economy, with lenders pulling out left right and centre, funding drawbridges being pulled up and borrowers left high and dry. However, it seems that the witching hour may be passing and that a brighter day might be approaching – despite the ongoing volatility in Europe. “The market is actually looking pretty good,” says Ranjit Thambyrajah, principal of Acuity Funding and holder of MPA’s Top Commercial Broker crown. “Lenders are much more predictable. Even staff within lenders, credit managers and BDMs, have seen some consistency so they’ve got more confidence in what they’re doing.” Even so, while Thambyrajah suggests that the market may have found a ‘new normal’, there are still challenges ahead. Simple access to funding is the key issue that he highlights. Anthony Downey, director of commercial lender Owenlaw Trust, also raises this as a challenge he has encountered.
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FEATURE / COMMERCIAL LENDING
“Owenlaw Trust’s greatest challenge is the ability to raise additional investor funds to meet the increase of applications we are receiving through financial brokers,” says Downey. “Our goal is to source new streams of investor funds to facilitate growth, a difficulty after the global financial crisis.” Jonathan Street, CEO of Think Tank, highlights valuation as another bugbear. “One of the major issues impeding both borrowers and lenders is the impact of valuations coming in lower than expectations – regularly below purchase price,” he says. Street argues that this prevents finance applications from meeting ordinary acceptability criteria. Still, Thambyrajah is positive about the possibilities ahead. His experience is that lenders are willing to extend finance – they’re just being much more circumspect when it comes to servicing. “[Lenders are] looking more at business lending,” he comments. “Existing businesses, with good cash flow in predictable industries. We’re doing a lot of service stations and retirement villages. We are doing some developments… cash flow is important though. The clients who are getting finance are those that could service the debt whether you’ve got presales or not. Banks aren’t lending on the ability to sell the final product.” Playing it safe seems to be the rule of thumb for lenders: Cathy Dimarchos from Sintex warns her industry counterparts not to try and ‘do all things for all people’, taking on risks that would normally be outside of the square in an effort to gain market share. “This has seen many a business get caught out in the long term. Don’t overcommit and underdeliver,” she says. “Stay in touch with what the market is doing in each of the states and be realistic about what can and can’t be done for the consumer.” Even so, all our pundits are broadly optimistic about the future trajectory of commercial lending: especially as self-managed super fund lending gains more of a foothold in the general consciousness. Expect to see more movement in this space as the year rolls on. Thambyrajah highlights that markets like this are more often good times for commercial brokers, too. “People talk about a prolonged GFC. For commercial brokers, that’s a good thing,” he says. That’s when people need to put in the effort to secure funding. If it’s easy, there’s less need for a specialist broker.”
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CATHY DIMARCHOS, SINTEX Sintex was one of the original funders offering customers long-term solutions for their commercial loans. It has been a commercial wholesale funder for seven years. All decisions are taken inhouse, and funds are supported as a major bank warehouse arrangement. Cathy Dimarchos is general manager.
Where do you see the opportunities in the current market? The appetite of funders and lenders change continuously, therefore it’s important to ensure that you stay at top of mind with borrowers. Key business partners must also remember that commercial lending is an integral part of their business, so that they too can sustain changes in the market and offer customers more than home loans.
What are the features of your standout product? Our loans are set over 20 years with no ongoing fees or revaluations. There are no annual reviews and the customer has many home loan-type features available, such as redraw and split facilities, as well as interest-only options of up to five years. Loans are not rolled over every 30, 90 or 180 days as per bank bill facilities, so the customer also has more stability in knowing where his or her loan stands.
What are your plans for the year ahead? Sintex has opened the market to the broker network and is keen to ensure that customers are given more options in the commercial space through the third-party channel. Training for partners and access to decision makers have always been part of our business offering, and this will continue to be provided to the brokers and originators that come on board.
Why should brokers come to you? With Sintex, we keep things simple and transparent. Business is about the customer, so we know how important it is to turn things around quickly. We look at ways that a transaction can be done and offer options where possible. If it simply can’t be done we let you know quickly. We encourage brokers to expand their knowledge and are prepared to take the time to mentor them. While others now talk about access to decision makers, Sintex has done this from inception. Likewise with quick turnaround times, others are making these claims now.
JONATHAN STREET, THINK TANK Think Tank commenced business six years ago, and is now the largest specialist commercial property lender in the country. Despite coming up against the GFC in its second year of operation, it has had uninterrupted growth and access to capital markets funding. Jonathan Street is executive director.
Where do you see opportunities in the current market? Market conditions in commercial property are trending in a positive direction for both investors and owneroccupiers, particularly with interest rates around current levels. For investors, the corresponding yields of 8%+ present far more attractively than for comparative residential investment, especially when the prospects of capital appreciation on residential appears limited in the near term. For owner-occupiers, meeting the lower financing costs on a property on the reduced purchase prices around at the moment compare very positively to renting and not having the security of bricks and mortar as a long-term asset. With the eligibility of SMSFs to borrow commercial premises, we see significant potential and growth in that segment over the next few years.
“New products, senior resources, and IT enhancements will drive our organic growth”
What is your standout product and what are its features? Our 75% LVR interest-only full doc product up to $5m is currently at the forefront of our range although we are seeing just as much activity within our Lite Doc (alternative verification) product range at the moment. Many of our current and new borrowers simply want a straightforward, ‘set and forget’ financing solution from a responsive, flexible lender that isn’t bureaucratic, slow and inconsistent like the banks have been proving themselves to be.
What are your plans for the year ahead? The focus for us this year is on driving ongoing organic growth, which we are supporting with the introduction of new products, hiring of additional senior resources and rolling out of a number of key IT enhancements. We are also pursuing a couple of collaborative projects with other established industry participants which we anticipate being able to make an announcement on soon.
Why should brokers come to you? One of our key areas of advantage is our ability to approve finance quickly. When we have all the loan information submitted in a concise and well-presented manner, we can provide formal approvals on straightforward deals inside 24 hours. Our other advantages include the fact that we have fully flexible upfront and trail commissions to introducers, there are no ongoing fees, we do not require annual reviews or regular security re-valuations and all of our team is always accessible and responsive. Perhaps most importantly, we respect the introducer as the ultimate owner and manager of the borrower relationship, and we never step across that line.
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FEATURE / COMMERCIAL LENDING
IAIN FORBES, AFM COMMERCIAL
ANTHONY DOWNEY, OWENLAW TRUST
Established in 2003, Australian First Mortgage (AFM) is a wholly Australian-owned business offering competitive residential, commercial and leasing finance to the Australian market. Iain Forbes is one of the company’s founding directors.
Owenlaw Trust is the successor to the mortgage business established in 1958 by the late Fredrick Owen. The firm has over 53 years’ experience in first mortgage lending and investing. Anthony Downey is director of Owenlaw Trust.
Where do you see opportunities in the current market?
Where do you see the opportunities in the current market?
We have identified mortgages from $250,000 to $3m as our target market. We, however, do larger mortgages as well (up to $10m).
What are AFM’s standard commercial products? AFM offers full-doc, lo-doc and lease-doc products, as well as no-doc. Generally, we lend up to 75% LVR on full and lo-doc loans. No-doc loans are limited to a maximum of 60%–65% LVR. Interest rates start from 8.39% for a full-doc loan with an LVR under 65%. At Australian First Mortgage, we also assist mortgage brokers who have limited commercial experience. We provide brokers with a competitive suite of commercial products and the ability to deal with commercial customers where they may not have been capable to do so in the past.
What’s your standout product, and what are its features? The AFM Commercial no-doc product, on which AFM could lend from 60%–65% for a term of 25 years with an interest only period for the first five years. This no-doc product is best described as a ‘set and forget’ commercial loan
What are your plans for the future? We plan to promote commercial lending in all states by recruiting specialist commercial lenders to work in all AFM offices. Our commercial lending proposition differs to the majority of our competitors. Rather than targeting experienced commercial brokers we look to assist inexperienced brokers. We assist the broker along the way and help them place a deal which ordinarily they may not have been able to place. We are looking to promote and grow this side of our business this year.
Why should brokers come to you? Brokers complete the AFM commercial application form which, when submitted to AFM, may be used for any of AFM’s commercial lenders. If the application does not fit the guidelines for a particular lender, we then structure the deal to fit the requirements of another. At AFM Commercial, we say, “We structure, we lend”.
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Diversification within the lending market has resulted in a large increase of finance applications via different types of commercial securities, be they income producing securities through to development sites. The quality of applications is extremely strong having full financials and good debt cover. These borrowers have previously been reliant on larger banking institutions and for varying reasons have not been able to set a deal. The opportunity for Owenlaw rests with having accessible investor funds sufficient to convert the increase of borrower applications we are receiving.
What’s your standout product and what are its features? We lend on income producing commercial securities at 8.75% with a maximum LVR of 70% and fund construction at 60%–70% of the GRV ex GST at the rate of 10.25%. In regards to construction funding we hold 100% of the cost to complete and developments are to be located in the CBD or major regional centres, of a residential type or commercial unit basis. On both facilities we are looking for full financial borrowers with interest cover to meet our interest. Rates can be fixed or variable for the term of the loan.
What are your plans for the year ahead? Over the next 12–24 months our goal is to substantially grow our mortgage books in unison with our investor base. We are looking forward to a further 50 years and beyond in the mortgage lending and investing market.
Why should brokers come to you? Due to the nature of our company, coming from a legal background, we are able to transact all our legal work inhouse, resulting in quick settlements and decisiveness on new loan applications. We believe our service and focus on customer relationships is a strength of our company. Our rates are competitive and by doing so we hope to attract borrowers of excellent calibre.
FEATURE / CREDIT REPORTING
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SMART BUSINESS / MINING TOWNS
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The largest resources project in the country is the $43bn Gorgon offshore LNG project in Western Australia
MINES Mining towns present some of the most attractive opportunities for property investors at the moment. Patrick Cornwell, winner of Your Investment Property magazine’s Investor of the Year Award in 2010, reveals the top 10 things to consider when buying into these areas It would be fair to say that never before in the history of property investment in Australia have ordinary investors been presented with such a golden goose as the mining and resources boom that is upon us. There are probably only three obvious ways of participating in this opportunity for most: either get a job or start a business in the industry; buy shares or equities related to the sector, or invest in property in resourcedriven towns or cities. I don’t advocate for a minute that buying just mining town properties is the only thing or the best thing to do; however, for many it will be an opportunity to leverage off the boom to the maximum, turbo-charging a property portfolio and allowing them to move onto bigger and better things. For others it will be a way of replacing income, escaping the rat race and being the envy of their former work colleagues. Even so, there are some points you need to consider when doing your diligence before launching off and buying a mining town property.
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SMART BUSINESS / MINING TOWNS
As in all property markets, there will be a typical cycle, which some might describe as ‘boom to bust’. Within that cycle, the growth phase can well be more prolonged than other property markets, and is driven by external factors rather than just the emotion of the market. These include increased demand for resources; mineral or gas prices; infrastructure spending; mining expansion from exploration to extraction; rapid increase in workforce as new contracts are awarded; the availability or lack of land for property development. This tends to drive property values and rent up in spurts. In between these growth spurts, you get a plateau where market forces stabilise for a period. These are the points to look for to enter the market to get set for the next market upsurge.
PHASE OF MINE DEVELOPMENT
From exploration to extraction, there is typically a large surge in employment in the local area as a new mine is brought online. Typically, it takes a much larger workforce to develop and open a new mine than it does to run and support an operational mine: so, there could well be a contraction in the local property market once extraction of the dirt begins, unless there are other projects in the pipeline.
TYPE OF MINING INVOLVED
The current demand – and, more importantly the forecast future demand – for the mineral or gas being mined will have a major bearing on the future health of the local economy and property market. There needs to be a clear indication of long-term demand and profitability for the product coming out of the ground. Currently, the regions that are benefitting the most from the demand for resources are associated with iron ore, coal and natural gas. The Pilbara in WA leads the way, followed by Queensland, then the Northern Territory, with SA showing latent potential.
NUMBER OF MINES A TOWN SUPPORTS
This is significant for building momentum in the local property market and long-term tenure. The impact of a mine closure or workforce reduction on a ‘one mine town’ can be devastating to the local community. An example of this is the impact on Hopetoun in WA after BHP’s Ravensthorpe mine closure in 2009.
Towns that will do the best (from an investment standpoint) long-term have significant infrastructure spending. In areas such as port, rail and
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Gladstone is set to receive over $88bn in private and state investment over the next few years
roads, hospitals and schools, local shire development and beautification programs, coupled with property development. They will have a diverse industry, not supported by just mining, and they will have future projects in the pipeline – both shire and state coupled with big business spending. Typically, the bottleneck or choke point that has caused many mining town land prices to soar so dramatically is the shortage of land and the delays in making new land available for development by local council. In essence, forward planning has been caught out or non-existent, and reaction to the demand increase has been slow in coming. In many cases, more land will eventually be brought onstream to sate the demand which could well help to stabilise or reduce sky-high land values. The towns to look for have long-term sustainability, diversity of industry and diversity of infrastructure, and are well supported by one or more large mining companies.
INFLUENCE OF FIFO
Some smaller, less sustainable or desirable locations will never achieve a critical mass for long-term sustainability due to the reliance on a FIFO workforce, denying the local area of infrastructure spending and money spent in the local economy. This will prevent a community developing.
LIFESPAN OF MINES AND THE OUTLOOK FOR THE RELEVANT MINING SECTOR
The lifespan of the project is determined by the size and quality of the resource deposits, as well as the long-term demand and profitability of the resource. You would want to know the forecast lifespan of the mines in the area you are targeting. At present, Australia’s resource industry is in the grip of an Asia-led economic expansion, with China being the dominant force with its near-insatiable demand for the raw materials for making steel. Coupled with this are more recent developments for the supply/export of natural gas and coal seam gas. When conducting risk analysis in a given mining area we need to be concerned with issues such as the long-term mineral price forecast, long-term demand forecast, and what’s in the pipeline.
KNOW WHAT TYPE OF TENANT YOU’RE GOING TO GET
A renovated property, nicely presented, will attract not only higher rent but a better quality of tenant. A more basic property in need of some attention could potentially give you more problematic tenants in terms of paying the rent reliably and taking care of your property.
CORPORATE/COMPANY LEASE The good
Longer tenure is common, with one and two-year leases normal, and even three or four-year leases possible with renewals. For a good corporate tenant, a high standard of property is required, which will be new or almost new. Going forward, as supply finally catches up with the demand for rental property, it will become harder and harder to tenant the poorer quality or older houses. Companies can afford lofty rentals, and you can bank on the rent being paid each month.
The bad There can be a high turnover of people in the property, causing excessive wear and tear. For example, air conditioners get left running 24/7 so there is a high maintenance and replacement rate.
RENTAL RETURN The good
Obviously you’re in this market for the higher returns that are available. I typically look for a 10% return at purchase on a mining town property
with lots of room on the upside in the near term as well. It is not uncommon to have the rents jump quite dramatically over a six-month period if vacancy rates drop back and demand puts the squeeze on to turbocharge your returns and property values. Valuations tend to be more volatile as values seem to keep pace with (you might say are arbitrarily ‘pegged’ to) rental return, which fluctuates with demand.
The bad Rental rates are known to fluctuate downwards also if vacancies dramatically increase due to a mine closure or staff cutbacks. When a mine is in the expansion or development phase you usually have the peak number of people employed or contracted, so these numbers will fall away as the mine becomes fully operational. This is an edited version of an article that originally appeared in Your Investment Property magazine, a fellow Key Media publication. Your Investment Property magazine is available from all good newsagents: for more property investment news and tips, visit yourinvestmentpropertymag.com.au.
The median house price in Port Hedland is $1.1m – with the average rent $2,000 per week, according to RP Data
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COLUMN / DIVERSIFICATION
Brokers are turning their passion for property investing into a profitable addition to their services. MPA talks to three brokers who’ve made a go of it
GET REAL (ESTATE) THE PROPERTY INVESTMENT ADVISOR According to Smartline mortgage broker Kevin Lee, too many people in the property industry “are all in it for themselves and the quick buck”. Angered by what he saw as a lack of credible property investment advice, Lee decided to take matters into his own hands and launch Smart Property Adviser alongside his operation late last year. Lee offers clients financial education in real estate investment that is born out of Lee’s own experiences as a successful property investor. Lee started his own portfolio in 1996 and now has 11 properties worth $5.5m. Smart Property Adviser clients pay a flat fee of $1,000: this fee covers individual advice on how to develop a real estate investment strategy based on neutrally geared properties; it also gets clients access to all Smart Property Adviser reports, resources and library; contacts with “trusted tradies” and suppliers; as well as mentoring, among other things. “One of the reasons I can charge only $1,000 is because the expectation is we’ll write the finance for
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those people. And if we earn their trust we will.” While Lee sees the new direction as a powerful diversification strategy, he’s not worried about other brokers entering this space. “I don’t just talk the talk, I actually have the experience, whereas a lot of people may be thinking – what’s another way I can make a buck, well, if they can’t back it up then why would you believe them? That’s what it’s got to come down to. So if brokers out there want to get into something on the side they need to have the runs on the board.”
THE PROPERTY BUYER Like Lee, Andrew Morel of Club Financial Services North Melbourne sees property activities as complementary to his work as a mortgage broker, but it was the recent changes to commission structures that really persuaded him to look for ways to diversify his business. “The margins are too tight writing a new loan in this era of compliance and regulation and I knew it was time to get my real estate licence out and offer a complete solution to property investment.”
As a result, Morel launched Buyproperty, an organisation that assists clients in the acquisition of real estate. “We don’t want to tell our clients what to buy but more show them a cross-section of different types of properties being offered for sale by wholesalers, developers, builders and buyer’s advocates for established property. In essence, it’s a little like an aggregator for property.” Given his mortgage broking background, Morel says he sees many buying decisions go wrong, which is why he elected to set-up a business in which he could screen what was available. “I use only an experienced property consultant to take our clients through what we have to offer, and should the properties or potential sites be local they will be taken out to view and inspect the area to get a better feel for what they are investing in.” Going forward, Morel plans on expanding his business model to include external brokers as well. “Using the same experienced property consultants, brokers who have identified a client to be in a position to purchase an investment property can simply book in a one on one consultation with our property consultants to go through all the different types of properties available.”
THE REAL ESTATE AGENT-TURNED BROKER Unlike Lee and Morel, Multifocus CEO Philippe Brach did not cross from mortgage broking into property. Brach, who was working in real estate, became increasingly frustrated by clients’ reticence to talk about their financial situation. “Initially when I saw a client I was trying to sell them a property or get them interested in investing in property without understanding at all their financial situation. So
“The margins are too tight writing a new loan and I knew it was time to get my real estate licence out” there was a piece of the jigsaw missing in the sense that people were reluctant to tell me what they earned. But then I decided one of the things I should do is open a mortgage broking business and specialise in investment properties. “The decision was also due to the fact that when I referred people to mortgage brokers, very often I got disappointed because I didn’t know what the mortgage brokers were doing and they didn’t understand the client. There’s very, very few mortgage brokers who truly understand property and that’s why as far as I know there’s not many mortgage brokers who get into property: it’s a whole different ballgame.” “The interesting thing is some of my competitors on the investment property side are referring their clients to me for the mortgage broking side. So probably 70% of the loans I’m doing are for other real estate agents: that’s because we know what they’re talking about. “It makes a big difference when you’ve got a niche market and we can deal with a client being a novice or an experienced investor, we can deal with them at every level in terms of the legal structure and taxation, obviously financial. To me that’s a whole package.”
BROKER PROFILE / RAEL BRICKER
BUSINESSMAN AND BROKER:
An entrepreneurial spirit and passion for business underpins House & Home Loans’ Rael Bricker’s success as a mortgage broker Q: What do you attribute your success to? A: Everyone always attributes their success to customer
Q: What was the biggest turning point of your career? A: Probably the rebranding of the business. I started the
service. It is a major part of it, because if you don’t service your customers, then word spreads. But another part is that I’m out there as a public speaker – I probably do one public seminar a week. People hear me talking and the level of knowledge and depth of knowledge that I put across makes them comfortable with dealing with us as a group. I also would have to say the fact that I haven’t employed ex-bankers is a big part of my business, because no one in the office thinks like a banker. Everyone gives a ‘yes’ first and then a ‘maybe’, rather than a ‘no’ and a ‘maybe I’ll look at it’. People are empowered to make decisions and communicate with clients and give them alternatives. This includes training the staff on what to do if you’ve got bad news, if the bank’s declined the deal, and how to go to the client with this. Well, you find an alternative. You find some good news and go back to them with the good news. I am an entrepreneur. I listed my first company in 1996 on the Johannesburg Stock Exchange and I guess I’m a serial entrepreneur. I could be selling widgets and I could be selling mortgages. I apply general business principles – I’m not focused on being a mortgage broker. I’m focused on being a businessman and then you deliver a different kind of service to your clients.
business in 2001 working from home. I was quite successful: in my second year of business I wrote $40m in loans. Then, in 2003 I joined up with my ex-partner from South Africa and we rebranded the business from Mansion Capital to the much more friendly, consumerorientated House & Home Loans. We found the URL and made it a whole package with the website. We both put a lot of money into the branding. We advertised heavily in the local press and in the local property pages. I’ve always had branded merchandise to give out – water bottles, magnetic pens – right now we give out cleaning cloths for glasses and iPhones that say on them “For clear vision of your financial future”.
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Q: How does your geographic location affect your business? A: We probably do more eastern state settlements in a month than we do local settlements, because that’s where we’re marketing, that’s where our client base is sitting. Western Australia is a big state, so dealing with someone in Karratha, which is a two-hour flight north of here, is no different to dealing with someone who is five hours away in Sydney or Melbourne.
Q: In what ways has the industry changed for the better since you started broking? A: It’s definitely got more professional. As much as we
Rael Bricker, managing director of House & Home Loans ++ Business established: 2001 ++ Location: Perth, WA ++ No. of staff: 19 ++ Top 100 ranking 2011: 6th ++ Settlements 2010-11: $94,160,000 ++ No. of loans 2010-11: 204 ++ Hometown: Johannesburg, South Africa ++ Family: Wife, three kids
went up 50% because deals had to be reworked. It required smart thinking on how to make your business more efficient in order to make it work better. I went back to basics to rethink our systems in the office to work out how to make my staff more efficient, because it was costing me more and I was earning less.
Q: What kind of advice would you give to a new mortgage professional? A: I would say that the days of starting out like I did working from home are dead. You can’t maintain credibility, professionalism and compliance as a one-man band unless you’ve been in the industry a long time and know what you’re doing. The best advice for people would be to join up with an umbrella – we take on a lot of young mortgage brokers and we feed them with leads. We’ve had guys working for me for 10 years on that same basis. And they obviously benefit from our compliance and marketing.
Q: How do you build brand awareness for your business? A: E-marketing all the time. Once every two weeks or so hate ASIC, we love them too. WA has always had regulation, but it was a bit of a toothless tiger. Whereas with ASIC it’s more serious. We’ve seen 20% of brokers fall out of the industry because of ASIC licensing and regulation. So I think it has definitely got more professional.
Q: In what ways has it changed for the worse? A: I think the cutting of commissions has been the biggest issue. Our income was cut 30% overnight and credit policies tightened and so your workload probably
there’s a newsletter update or some other emails going out. We try to get six to eight touch points a year.
Q: Do you feel fee-for-service is the way forwards in the industry? A: I don’t like it. If that’s the way we went with a complete drop in commissions, I would probably just step back and live on my trail. I do think I should charge for my service because I do a lot of structuring work for my clients and I’ll probably get my head around it one day, but right now my head is not in that space.
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STATISTICS / YOUR MORTGAGE INDEX
Mining states on the charge
More than 150,000 visitors use yourmortgage.com.au every month – and its user activity statistics provide a unique insight into Australia’s borrowing trends.
TYPE OF BORROWER
Overall, first homebuyer interest remains strong with the start of a new year and attractive interest rates encouraging many to consider entering the property market. Investors also continue to view property as a good choice with the latest Index recording a 5.4% increase in the proportion of enquiries from this demographic, compared to 12 months ago.
The average value of a home loan has increased to just under $365,000 up from $348,000 in January 2011. While standard variables continue to be the most popular type of loan, the Index indicates an increased interest in fixed rate loans as homebuyers seek to take advantage of the attractive rates currently available.
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Purpose of loan 60% 50% 40%
• Slight increase in FHB enquiries • Significant increase in investor enquiries
RELEASE SPENDING MONEY
0% FIRST HOME
The influx of investment into the mining industry could be having beneficial effects on the Queensland and Western Australian property markets. Data from the latest Your Mortgage Index compiled from user activity statistics from mortgage comparison website Yourmortgage.com.au is charting an increase of over 4% in the proportion of homebuyer enquiries in Western Australia compared to 12 months ago, and a 3% increase in enquiries from Queensland. This is compared with a significant fall in enquiries from NSW – possibly as a result of the restriction of state incentives for first homebuyers to new properties only.
Buyer activity by state 35% 30% 25% 20%
10% 5% 0% ACT
• Enquiries up from WA and Qld visitors • Enquiries down in NSW
Type of loan 70% 60% 50% 40% Jan 11 30%
20% 10% 0% SVR
• Interest in fixed loans remains high
NEWS / ROUND-UP
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With prestige markets volatile, we find the best value exclusive postcodes
The prestige suburbs clustered around Parliament House – popular with politicians, civil servants and diplomats – are the prestige suburbs that have seen the largest drops, with Griffith seeing the largest 12-month fall in median house price. Furthest afield is south-western suburb Isaacs, a small suburb bordering the Isaacs Ridge nature reserve.
12 MONTH GROWTH
AVERAGE ANNUAL GROWTH
Houses on Sydney’s lower north shore have taken the biggest beating over 2011, with Kirribilli and Wollstonecraft showing massive median price drops of more than a third – good hunting in two of Sydney’s most attractive postcodes. Values in eastern suburbs Tennyson Point and Rose Bay have also seen significant drops in value, while millionaire’s retreat Palm Beach is also looking more affordable. The good news is that the long-term average for all these suburbs is still positive, so now may be the perfect time for wealthy buyers to pounce.
12 MONTH GROWTH
AVERAGE ANNUAL GROWTH
Melbourne’s Bayside area has seen the brunt of the slide in values as the city’s market cools, with four of the five prestige suburbs highlighted all being in this part of Melbourne. Northern suburb Parkville, nestled north of the Royal Melbourne Hospital, is the only high-value suburb seeing value falls that’s not in Melbourne’s prestige heartlands.
12 MONTH GROWTH
AVERAGE ANNUAL GROWTH
ST KILDA WEST
Riverside suburb Newstead has seen a change in fortunes over recent months – after seeing a bull run in value growth, the median house price has dropped by a quarter in the year up to November 2011. Fellow riverside suburbs Hamilton and St Lucia have also seen median price drops, while acreage properties in agricultural Pullenvale are also looking like good buys.
12 MONTH GROWTH
AVERAGE ANNUAL GROWTH
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STATISTICS / HIGH NET-WORTH
Unley Park – previously flagged by MPA as Adelaide’s most expensive suburb – has lost its crown for now, with the median house price dropping by a fifth to $1.2m. Fellow six-figure suburb Rose Park also sees a drop in median price, while north-eastern suburbs Walkerville and Gilberton also see price falls.
12 MONTH GROWTH
AVERAGE ANNUAL GROWTH
Source for all data: RP Data, November 2011
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Millionaires’ playground Dalkeith tops the list in terms of largest price falls – but its median price is still more than half-a-million dollars higher than next nearest rival Cottesloe. Other high-value suburbs are located around Perth, with rural suburb Mariginiup being furthest from the CBD.
12 MONTH GROWTH
AVERAGE ANNUAL GROWTH
Darwin’s ‘prestige’ market isn’t as established as those of the other capitals, and values have held up relatively well – perhaps due to tight land supply. Oceanside suburbs Fannie Bay, Nightcliff, look like good options for buyers with deeper pockets.
Hobart’s high-end market is typically concentrated south of the CBD. Hobart’s most desirable postcode, Battery Point, sees the largest proportional drop in median house price to $685,000.
12 MONTH GROWTH
AVERAGE ANNUAL GROWTH
12 MONTH GROWTH
AVERAGE ANNUAL GROWTH
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LIFESTYLE / FAVOURITES
Favourite things... Greg Charlwood Bibby Financial Services Food: Indian. I’m a
real Indophile. I’m extremely lucky to be a director of an Indian finance company so I get to go there a few times each year.
Book: Churchill’s biography by Roy Jenkins. A really wellbalanced book about the 20th century’s greatest man.
Music: Steely Dan – because I love the mix of blues jazz and soft rock.
Celebrity: Jim Carrey – a seriously funny guy.
Drink: VB when
Vacation spot: Nelson Bay, NSW. It’s unpretentious and one of the most beautiful places in the world.
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I’m with my mates at the pub; gin and tonic in a tall glass with lots of ice and fresh lime on a hot day.
Movie: I can’t go past Forrest Gump. Everybody loves to see a battler succeed.
LIFESTYLE / A DAY IN THE LIFE OF
A day in the life of…
John Kolenda, managing director, 1300 Home Loans incoming and outgoing leads, strategies. Return calls and emails.
Meeting with the national sales team. Work through a general overview of last week’s activities and results. Raise a new initiative and allocate responsibilities for delivery of plan. Discuss various new marketing proposals from our marketing company. Confirm production of two new TV commercials.
Alarm goes off and I get up to wake up my son. Quickly rush to the kitchen and make myself an authentic strong flat white to help me wake up, while also putting a milkshake together for my son before his swimming lessons.
Rush out the door holding my coffee and drop my son off at the the local swimming pool
Get home, make some toast before wandering out to water the plants.
Paper arrives and go back into the house to make another coffee before settling down to read the Financial Review. Read it from front to back. Prepare a coffee for my wife and get some toast for her and my daughter.
Collect my things and leave for the office. While driving, make some calls both personal and business.
Start by checking emails and then appointments for the day. Check on
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Go through a revamped Powerpoint presentation on 1300HomeLoan. Make some minor changes and adjustments before giving the final go ahead for distribution to the team.
Meeting with two partners of a broking business looking to join Finsure. Discuss their needs and run through our value proposition in relation to supporting their growth plans.
Retrieve more call messages and start returning calls. Have some lengthy discussions with prospects looking at joining Finsure. Talk to a number of our existing brokers under 1300HomeLoan and Finsure to see how they are going, how advertising is going and the quality they are seeing from the leads. There’s been a very promising response to date and brokers are very happy with results.
Meeting with another broker who is joining Finsure and finalising documentation with internal staff. Make sure everything is ready so that it can be completed quickly.
Receive a few calls and make some calls out to prospects/partners. Get a draft of a press release and read through while making some adjustments and send back to agency for release.
Help a Finsure broker with a better contact at one of the banks for a tricky application.
Meeting with Head of Operations for 1300HomeLoan on website, telephony system, lead tracking, broker portal and voice recording.
Make some calls to arrange appointments with brokers to present 1300HomeLoan and/or Finsure. Return calls from earlier.
Take time to discuss a commercial application one of our brokers is having challenges with and come up with various options.
Get back to finalising document for an RFP in a bid to secure a large sub-aggregator. Add my comments to questions and review answers prepared by the team.
Make the last three calls to Finsure brokers and head home for dinner.
Arrive home, enjoy a home-cooked dinner and catch up with kids. Have a look at some of their homework questions on maths.
Watch a pre-recorded episode of Grand Designs before bed.
NEWS / ROUND-UP
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LIFESTYLE / MOTIVATION
Steve Jones reveals the five rock stars your business needs to pay attention to The Grateful Dead Did The Dead get deep into social media 30 years before it was even invented? In the early 70s, they started a fan club that evolved into the famous “Deadheads”. They allowed fans to communicate with each other, tape and share the band’s shows, and invite new members into the tribe. There is so much we can learn from the Grateful Dead when it comes to giving and sharing, and reaping the rewards of your generosity. Don’t be afraid to give something away – your time, knowledge, advice – without any expectation of getting in return.
Steve Jones is the author of the new book Brand Like A Rock Star: Lessons From Rock ‘n’ Roll To Make Your Business Rich And Famous. His website is brandlikearockstar. com
His laid-back beach-bum hit ‘Margaritaville’ has spawned a restaurant chain, casinos, hotels, a publishing division, and clothing lines. Buffett has done it by creating an experience around his music. It isn’t about the songs with Jimmy, it is about the experience of living carefree on a tropical beach. Does your business sell an experience to your customers, or do you just sell products and services?
KISS No band has defined the idea of being different like KISS has. They weren’t the best musicians of their day, but they were the most unique. When KISS started wearing make-up, spitting
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You might think rock stars are uneducated, but when you turn up the music loud enough you might just notice some business brilliance that you can learn from. So hit play on your iPod and turn your passion for music into this five-step MBA.
blood, and breathing fire, they gave the world a band unlike any they had ever seen before. KISS proved that you need to get noticed first, and then you can demonstrate how great you are. If your business looks just like your competitor, chances are good you’re not going to get noticed.
U2 In business, we often try to appeal to everyone. U2’s lead singer Bono has wisely realised that the band cannot possibly be loved by everyone. So Bono isn’t afraid to be honest and work his political and moral views into the band’s image. Bono stands out because he stands up for what he believes in, even if it isn’t popular. Is your business brave enough to have a set of clearly defined values?
AC/DC Australia’s most famous hard rock export has done one thing, and they’ve done it well. For 40 years the band has been pumping out the same three-chord rock ‘n’ roll, with lyrics about partying, drinking, womanising, and having fun. They’ve never sung about third world hunger or the heartbreak of love lost. AC/DC is consistent. They’ve had the same sound and look for four decades. Is your business consistent in look, feel, voice, style, and attitude?
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