Mortgage Professional Australia magazine Issue 12.09

MPAMAGAZINE.COM.AU ISSUE 12.9

CHARTING THEIR OWN COURSE NON-BANKS NAVIGATE STORMY WATERS

DEBT DEBACLE THE EURO CRISIS AND YOU

TECH WARS FINDING THE RIGHT SOFTWARE

WORK THE PLAN HOW A BUSINESS PLAN CAN SET YOU FREE

CONTENTS / ISSUE 12.9

40

18

Going off the reservation Can credit reps do off-panel deals, and should they?

Eurovision How the European debt crisis could hit your business

WEEKLY INVESTIGATIONS NOW ONLINE: Complex loans COVER STORY 26 | Brokers on Non-Banks The third party has their say on challenger lenders

2 | MPAMAGAZINE.COM.AU

Finding your value proposition » mpamagazine.com.au

CONTENTS / ISSUE 12.9 NEWS & VIEWS

STATS

8 | Round-up The latest market intelligence from the world of property, economics and mortgages

60 | Your Mortgage Index The latest mortgage hunter trends from our sister website

12 | On line The best from MPA Online and Australian Broker Online 14 | Product news A round-up of the latest rate changes and product launches

54

SMART BUSINESS 46 | Star tech Software solutions that drive efficiency 54 | Plan of attack Forming a business plan and making it work for you

PROFILES 36 | Meg Bonighton on being quiet achievers 58 | Kelly Cameron-Tull explains how the right location has boosted her business

36

4 | MPAMAGAZINE.COM.AU

60 | Risky business Australia’s riskiest investment suburbs

LIFESTYLE 64 | A day in the life of...

Sam White, Loan Market

NEWS / ROUND-UP

BROKERNEWS.COM.AU | 5

CONTENTS / EDITOR’S LETTER

A NATURAL FIT Mortgage brokers and non-banks have a lot in common. Both emerged from a homogenised market dominated by major lenders to offer consumers an alternative. Both positioned themselves as iconoclasts, marketing themselves as rebels who took the side of the battler to save them from an unfeeling oligopoly. Both injected life into a bland lending landscape, and, in recent years, both brokers and non-banks have matured, growing into respected sectors with a high profile and increasing levels of professionalism.

That’s why it’s only natural to ask Australia’s mortgage brokers to sound off on the sector that worked in tandem with them to change the face of lending. Though broker support of non-banks can sometimes be a contentious issue, the third party and challenger lenders share the fundamental philosophy that borrowers deserve a competitive offering.

This month, MPA reveals brokers’ appraisal of Australia’s top non-bank lenders. How does their service stack up to the majors? Are their products keeping ahead of the curve? Have they continued the path of innovation that established their place in the market? And, perhaps most importantly, are brokers still keen to support the sector, or do the major banks have a lock on the market? Turn to page 28 to find out.

Elsewhere in MPA, you’ll find tips on forming a business plan, how to thrive as an entrepreneur, and an in-depth analysis of the Eurozone.

Adam Smith, editor, MPA

COPY & FEATURES EDITOR Adam Smith CONTRIBUTORS Andrea Cornish, Cindy Tonkin PRODUCTION EDITORS Carolin Wun, Moira Daniels

ART & PRODUCTION DESIGN MANAGER Rebecca Downing DESIGNER Ginni Leonard

SALES & MARKETING NATIONAL SALES MANAGER Rajan Khatak ACCOUNT MANAGER Simon Kerslake MARKETING EXECUTIVE Anna Keane TRAFFIC MANAGER Abby Cayanan

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley MANAGING DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Adam Smith tel: +61 2 8437 4792 adam.smith@keymedia.com.au Advertising enquiries Sales Manager Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Account Manager Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Auckland, Toronto brokernews.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as MPA magazine can accept no responsibility for loss

CONNECT

Contact the editor: adam.smith@keymedia.com.au

6 | MPAMAGAZINE.COM.AU

Printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

NEWS / ROUND-UP

BROKERNEWS.COM.AU | 7

NEWS / ROUND-UP MOVES

COMPANIES

Gollan returns

Provident defiant in face of administration

STATS:

47%*

Provident Capital has certainly seen a rough patch of late. After details emerged of the group putting investor equity at risk through a number of bad debts, court action by Provident’s debenture holders saw the company put into court-ordered administration. Provident reportedly raised $131m from debentures, and sank the majority into risky loans to property developers, many of whom defaulted or failed to pay interest. In spite of being placed in administration, the group remained defiant, saying it was confident it could have met all obligations to its debenture holders as they came due. Provident also vowed that the administration would not affect broker commissions.

8 | MPAMAGAZINE.COM.AU

*The proportion of Australian businesses that believe the country will face “bad times” economically over the next 12 months.

GOT INVESTOR CLIENTS? TELL THEM TO LOOK BEFORE THEY LEAP WITH THIS MONTH’S LIST OF AUSTRALIA’S RISKIEST SUBURBS, ON PAGE 62

After bowing out of Australian Mortgage Brokers 12 years after founding the company, industry figure Paul Gollan recently revealed he was returning to the broking market with a family-focused business. Gollan’s new firm, BrokerLoans, will be both a brokerage and high-end consultancy aggregated under AFG. Gollan will run the business with his wife.

“It’s a different model to a lot of businesses out there. While I started Australian Mortgage Brokers with a group of shareholders, this will be a family-owned business. We’re aiming for an exceptional level of service, expertise and interaction,” he said.

“[Mortgage broking] has become far too transactional”

PROPERTY

INFOGRAPHIC

No room to spare: Australia’s most crowded suburbs PEOPLE PER SQ/KM

12,458

Pyrmont (Sydney)

12,734

Ultimo (Sydney)

12,869

Wentworth Point (Sydney)

‘Insanity’ keeps house prices high According to Peddle Thorp design director and architect Peter Brook, governments at all levels are placing demands on developers for infrastructure, such as electricity substations, roads and drains – and then imposing huge rates and charges as well, he claims, and this is pushing up the cost of housing stock.

“Developers are increasingly being asked to pay for basic infrastructure to get a building even started,” he said. “With planning regulation and costs centred on vague concepts such as neighbourhood character, we find costs escalating and there seems to be no end to this insanity.”

DATA

DATA PROVIDERS IN SLANGING MATCH Property data providers recently took a break from commenting on the housing market to take aim at one another.

The tiff started when SQM Research managing director Louis Christopher was

incredulous over RP Data claims of median price rises in soft markets such as Melbourne and Hobart.

Christopher questioned the company’s methodology, and slammed its Home

Value Index. Brokers weighed in as well, with Hobart-based Robert Brand sceptical that Tasmania had seen the gains claimed by RP Data. RP Data defended its figures, claiming they were the timeliest and most accurate on the market.

15,221

Rushcutters Bay (Sydney)

20,165

Elizabeth Bay (Sydney) Source: RP Data

EDUCATION

SELF-STUDY MADE SIMPLER Brokers may be divided on the value of increasing education standards in the industry, but few could argue with moves to make attaining qualifications simpler and less intrusive.

Intellitrain says it has overhauled its self-study model to make courses more engaging, simpler to use and closer to a real

classroom experience, after receiving feedback from brokers.

The new program will include interactive eLearning modules, downloadable PDFs of course units, downloadable support material, and individual self-assessing quizzes. Students will also be able to download all assessment materials and submit responses online.

MPAMAGAZINE.COM.AU | 9

NEWS / ROUND-UP DEBATE

CONSUMERS IN THE DARK ON BROKER SERVICE

Loan Market sparked a controversy with a recent survey of its brokers. The company asked its brokers about their clients’ biggest misconceptions regarding mortgage brokers, and found the biggest mistaken belief they faced was consumers believing a direct-to-bank approach would result in a cheaper loan.

The second biggest misconception was that broker services came at a cost.

Loan Market spokesperson Paul Smith said it was crucial consumers know the value of

HOUSING

Saying no to NIMBYs A think-tank has taken aim at “narrow-minded, self-interested individuals” who don’t want new houses built in their suburbs. The McKell Institute has submitted a paper to the NSW government supporting NSW Planning Minister Brad Hazzard’s proposal to develop terrace housing in Sydney suburbs.

The paper claimed there are 41 suburbs in Sydney “ripe for a terrace revolution”, and said the government should ignore the cries of “not-in-my-backyard” opponents to the plan.

“These vested interest groups have been given a megaphone through our planning system while the hundreds of thousands of Sydney residents struggling to enter the housing market or simply meet their rental payments are denied a voice. This is unacceptable,” the paper said.

10 | MPAMAGAZINE.COM.AU

using brokers, not only to secure a good deal but to utilise their experience in the market.

“A mortgage broker can negotiate your needs between several lenders and uncover discounts not available to those shopping on their own,” he said.

AFG’s Mark Hewitt claimed the poll showed more marketing needed to be done to educate consumers on the broker proposition, and MFAA chief executive Phil Naylor vowed that the association would work to build consumer knowledge of brokers.

M&A

PEPPER PICKS UP PROPERTY GROUP STATS

48%* *THE

PROPORTION OF BORROWERS GETTING AHEAD ON THEIR MORTGAGE PAYMENTS ACCORDING TO ING DIRECT’S FINANCIAL WELLBEING INDEX

Pepper is back on the acquisition trail, this time snapping up Grant Samuel Property, the retail advisory arm of Grant Samuel Holdings Limited, in a bid to strengthen its commercial offering.

Pepper will own all of Grant Samuel Property’s share capital, and has renamed the company

Pepper Property Group Pty Limited, or Pepper Property. Pepper chief executive Patrick Tuttle is anticipating Grant Samuel Property will provide “access to the commercial property market arena where we can leverage our capital raising platform, credit, loan servicing and securitisation expertise”.

INFOGRAPHIC

CONFIDENCE

Gene-rate-tion gap:

Put on a happy face

How have this year’s rate cuts impacted Gen Y borrowers?

32%

saving more

14%

50%

spending more

hasn’t made a difference

4%

paying off extra on mortgage Source: Loan Market

Australians are becoming less gloomy about their future according to a recent survey of consumer optimism. The Allianz Future Optimism Index has indicated a substantial rise in “feelings of optimism towards their future prospects and happiness for themselves and their family”. The index rose from a 12-month low in March. The survey found that South Australians and Queenslanders experienced the sharpest rise in optimism, followed by residents of NSW. Optimism remained flat in Victoria and WA. Political affiliation also played a role in the results. Labor voters showed a greater degree of optimism than Coalition supporters.

MPAMAGAZINE.COM.AU | 11

NEWS / MULTIMEDIA

ON LINE The latest highlights from MPA Online and Australian Broker Online

In motion The latest from Broker News TV

BEAR MARKET Market heavyweights have declared the housing boom over – so how are good brokers advising their clients?

DOLLAR SIGNS Switching lenders in a play for commissions

ETHICAL INVESTMENT Brokers to brush up on NRAS

12 | MPAMAGAZINE.COM.AU

SAY WHAT? THE BIGGEST QUOTES FROM THE MONTH

“We may see more and more people seeking online means.

However, that’s still a way away. There’s still the overriding issue of hand holding. There’s nothing brokers need worry about at the moment” SAKS Consulting’s Steve Paterson on the online channel and its impact on brokers

“There may be opportunities for Australian brokers to expand across Asia and as an industry organisation, we are keen to pass on the benefits of our experience to other countries”

SEGMENTATION JUSTIFICATION

LIBERTY GIVES GOOD REASON Liberty’s John Mohnacheff argues that segmentation can work for both lenders and brokers.

“The primary objective of segmentation, therefore, is to understand how to win and retain customers. Segmentation and its corresponding product differentiation strategy can give a company a commercial advantage.

“How segmentation manifests itself within a chosen market can vary dramatically, and as such opinions are divided on the segmentation strategies that lenders have chosen.”

BATTLING THE BLOWOUT

ST. GEORGE TACKLES SERVICE ENHANCEMENTS St. George general manager of mortgage broking Clive Kirkpatrick has vowed to turn around the bank’s service to the third party channel after higher-than-expected volumes blew out turnarounds and call waiting times to Mortgage Central.

Kirkpatrick says applications being submitted to St. George by brokers increased by 1,000 per month earlier in the year, while calls to its Mortgage Central call centre experienced waiting times of up to 13 minutes.

The surge caused conditional approvals to increase from a targeted one- to two-day turnaround time, to up to four days.

Although the upsurge had caught the bank ‘flat-footed’ initially, Kirkpatrick says the hiring of 80 back-office staff had mitigated the turnaround problem.

Mortgage Central call waiting times are also back down within a targeted one-minute waiting time.

MFAA CEO Phil Naylor on the association’s words of wisdom to the Asian mortgage market

“We remain well positioned to continue to grow above system and increase our market share.

We will continue to work hard to grow volumes further”

NAB executive general manager Antony Cahill on the bank’s hunger for growth

To find out more on all of these stories, as well as latest business strategy advice, special reports, profiles, news, views and analysis, visit mpamagazine.com.au

BROKERNEWS.COM.AU | 13

NEWS / PRODUCT ROUND-UP

PRODUCT NEWS A bite-size guide to the industry’s newest products, key updates and fresh initiatives EDITOR’S CHOICE Who: Adelaide Bank (Australian First Mortgage, Iden, Nationalcorp Home Loans) What: NRAS products The spec: This month’s Editor’s Choice is a unique one. Three non-bank lenders have released their own products accepting applications under the National Rental Affordability Scheme, all funded through Adelaide Bank.

Australian First Mortgage, Iden and Nationalcorp Home Loans have all announced they will accept applications through NRAS. The government initiative seeks to stimulate the supply of up to 50,000 new affordable dwellings.

Applicants are entitled to a government incentive for each approved dwelling as long as they are rented to eligible low and moderate income households at a rate that is at least 20% below the prevailing market rate.

While the take-up of NRAS has so far been less than stellar (only 8,600 properties turned into low-rent housing), the philosophy behind the scheme is sound, and AFM joint managing director David White recently predicted that participation will improve in the year ahead as potential applicants begin to see the scheme pay dividends for current participants. Ultimately, the scheme not only provides an opportunity for

Who: Macquarie What: First year discounts The spec: Macquarie is offering first-year discounts on its Classic, Premium and Line of Credit loans. The discounts will take the bank’s variable rate to 5.85%. The discounted rate will apply during the first 12 months of the loan, and is available for all loans settled |on or before 28 September 2012.

investors, but helps address the social issue of the lack of affordable housing in Australia.

What they say: “On the basis of a strong level of interest on the part of our white label partners, we’ve extended our acceptable security list to accommodate NRAS properties, subject to a range of conditions. Adelaide Bank has a long history of supporting initiatives that improve the housing prospects of Australians so we were happy to invest time and effort in developing a response to NRAS.” Damian Percy, general manager of third party lending, Adelaide Bank

WHAT WE SAY:

NRAS loans are enticing to investors, and help provide housing for low to middle income families. A win-win.

14 | MPAMAGAZINE.COM.AU

What they say: “We firmly believe that choice is the key to a healthy market for borrowers, brokers and originators, and this new rate is all about choice, providing a compelling and competitive pricing option.”

Doug Lee, head of broker sales, Macquarie Adviser Services

Who: ING DIRECT What: LVR based pricing The spec: ING DIRECT has launched LVR based pricing for its Orange Advantage and SmartPack Mortgage Simplifier products, with discounts available for LVRs of less than 80%. Low LVR customers borrowing $500,000 or more will receive a rate of 5.88%, while those borrowing from $250,000 to less than $500,000 will get a 5.98% rate.

NEWS / PRODUCT ROUND-UP

In brief AUSTRALIAN FIRST MORTGAGE CONSTRUCTION VARIABLE RATES CUT BY 20BPS AFM cut rates on its SmartSuite Commercial Variable loan by 20bps, bringing its rate to 7.89% for LVRs below 65%, along with a 1-year fixed rate of 6.64%.

“We are determined to pass on every rate reduction to our borrowers.”

Iain Forbes, director, Australian First Mortgage

REALCOMMERCIAL.COM.AU COMMERCIAL PROPERTY APP The commercial property site has launched a dedicated commercial property app for iPhone and iPod Touch. The app will allow users to research offices, retail spaces, warehouses and land for sale and lease.

“The app provides convenient on-the-go access to all of our commercial listings with a simple and familiar interface, ensuring users can find properties fast.”

Henry Ruiz, chief product officer, REA Group

16 | MPAMAGAZINE.COM.AU

What they say: “Whilst we’ve made a number of improvements to our service proposition this year, we certainly haven’t overlooked the importance of sharply priced, competitive products, and these changes highlight this.”

Mark Woolnough, head of broker distribution, ING DIRECT

Who: Liberty What: Slashed commercial rates The spec: After reducing rates for its residential and SMSF offerings, Liberty has made cuts to commercial rates as well. The lender cut rates for its Enterprise, SMSF and LeaseStream loans to 7.70%. The rate applies to full-doc and lease doc products, with low-doc rates from 8.30% Liberty also revised its bridging finance loan, Boost, with rates starting at 10.50%.

What they say: “Liberty has one of the widest ranges of commercial finance in the market with multiple verification options, the ability to consider standard and specialised securities and a diverse range of credit profiles. These reductions just further our ongoing commitment to provide our customers with competitive products.”

Suresh Pillai, general manager of commercial finance, Liberty

LAUNCHING A NEW PRODUCT?

If you are launching or updating a product and want it to be considered for inclusion on this page, send the details to adam.smith@keymedia.com.au

NEWS / ANALYSIS

MPAMAGAZINE.COM.AU | 17

FEATURE / EURO CRISIS

DEBT DEBACLE HOW THE CRISIS IN EUROPE COULD HIT YOUR BUSINESS

The economic turmoil unravelling the European Union may seem a long way offshore, but Australia is not completely immune 18 | MPAMAGAZINE.COM.AU

MPAMAGAZINE.COM.AU | 19

FEATURE / EURO CRISIS

O

n January 1, 1999, the Euro currency officially came into existence, marking the final realisation of a political dream that traces its origins to the 1950s, in a post-World War II Europe. Meanwhile by the late 1990s in Australia, the non-bank sector had transformed the mortgage industry, heralding greater competition in the home loan sector and birthing a new class of mortgage professionals.

Who could have foretold that less than two decades later, the situation in Europe would have such a profound effect on Australia’s by now well-entrenched mortgage industry?

SITUATION IN EUROPE The interconnectedness of the European countries’ economies means turmoil in one country has the potential to completely undermine the others – knocking each other down like dominoes. While the world has already witnessed the unravelling of smaller economic states – Portugal, Ireland, Greece and Spain – the biggest threat at the moment is the teetering economy of Italy. The world’s eighth largest economy has government debt of US$2.6 trillion (more than Portugal, Ireland, Greece and Spain combined). France has US$400bn at risk in Italy, while Germany has US$150bn. Italy passed a ¤50bn austerity budget in 2011 to balance the budget by 2013, however many key measures were watered down in parliament. Investor concerns over Italy’s ability to reduce its debt were

20 | MPAMAGAZINE.COM.AU

“A Canadian system would enable Australian banks to access funding cheaper than they could otherwise access” – PHIL NAYLOR renewed in April 2012, as Italian borrowing costs increased.

Meanwhile France, along with eight other Eurozone countries were downgraded by credit ratings agency Standard & Poor’s in 2012, for failing to deal with the debt crisis. In June, former UK chancellor of the exchequer Gordon Brown warned France and Italy might need a bailout.

At this point it appears Germany is continuing to weigh up its options – underwrite fiscal consolidation or accept a break-up of the euro.

AUSTRALIA As Federal Treasurer Wayne Swan stated at last year’s APEC Summit: “Everybody is affected by events in Europe. The volatility we’ve seen in the last 24 hours does transmit to economies right around the world, even economies like ours, which are in good nick. When you have an impact on the share market, you have an impact on retirees, you impact across the board; it has an income affect and a welfare affect, that’s why everybody has got an interest in ensuring that the Europeans actually get their act together, because we are all interconnected in this global economy.”

There are several ways in which the European debt crisis is affecting the Australian mortgage industry.

“The main effect of the European debt crisis is on perception and the uncertainty in the minds of consumers,” says Phil Naylor, MFAA CEO. “It’s quite clear from our research that consumers are hanging off borrowing because they are a little bit uncertain of what’s going to happen in the world and in particular

€

Italy, the world’s eighth largest economy, is carrying US$2.6 trillion of government debt

MPAMAGAZINE.COM.AU | 21

FEATURE / EURO CRISIS

what impacts the European situation might have on Australia.”

The Westpac Melbourne Institute Index of Consumer Sentiment revealed that despite a second consecutive cut in the official cash rate, consumer sentiment increased by only 0.3% in June. According to Westpac economist Bill Evans, “that was another disappointing result”. Consumer sentiment remains 1.7% below the level recorded in October 2011. The survey also included questions on “news” and the results indicated that negative news regarding international conditions played heavily on the minds of consumers. Recall on news regarding international conditions was 40.4%.

“Evidence from the June survey confirms the fragility of confidence and the critical role played by the global economic situation in impacting confidence,” Evans stated.

Mortgage Choice has also indicated that global uncertainty is affecting people’s willingness to buy property, but the news overseas needs to be balanced with what’s happening domestically.

“While global factors are undoubtedly causing some concern for brokers and their customers, it is important to view this in the context of what is going on locally.

“It is important to be aware of what is going on overseas but borrowers should keep in mind that the economic data coming out of Australia is relatively strong. We are approaching near full employment, our banking system is robust, inflation is controlled, interest rates are at historically low levels and borrowers are paying down debts. The contrast with many European nations could not be starker,” says Belinda Williamson, Mortgage Choice corporate affairs spokesperson.

CREDIT CRUNCH According to Ivan Colhoun, head of Australian economics and property research at ANZ, there are a number of different ways Europe is having an effect.

22 | MPAMAGAZINE.COM.AU

EUROPE AT A GLANCE: Key facts  The Eurozone is expected to see -0.3% growth for 2012  Eurozone growth is anticipated to edge up by 0.7% for 2013  Expected unemployment in the Eurozone for 2012 is 10.87%  Global growth for 2012 is expected to slow to 3.5%, down from a forecast of 3.6%  Global inflation is tipped to fall from 4.5% in the final quarter of 2011 to 3–3.5% for 2012–13

“The biggest concern for me at the moment is the higher liquidity requirements put on the banks” – TIM BROWN

“[It’s affecting] the cost of funds, of banks in overseas markets, but also the competition for deposits in domestic markets as well. So that’s sort of a direct and indirect effect of European issues.”

A major concern for mortgage industry stakeholders is the potential for a liquidity crisis. Robert Jenkins, a policy member of the Bank of England warned members at the Global Alternative Investment Management conference in June that cheap and ready access to liquid assets is under threat and markets could seize in a re-run of the credit crunch after the collapse of Lehman Brothers.

Vow Financial’s Tim Brown says a liquidity freeze could have dire effects on the third party channel in Australia.

“The biggest concern for me at the moment is the higher liquidity requirements put on the banks. It’s going to cause us issues in two or three years’ time,” he says.

“If people start moving money out of banks and into equities and let’s say the equities market improves over the next two or three years, the banks are going to struggle to fund loans the way they fund them today.

And if the debt markets are still chaotic like they are today – which I assume they will be as I can’t see any real solution at the moment – it means that they’re going to struggle to raise capital. And if they haven’t got the depositors’ funds as well then we’ve got a credit crunch.”

MPAMAGAZINE.COM.AU | 23

FEATURE / EURO CRISIS

€

The Bank of England has warned of an impending liquidity crisis

Brown says there is potential for the banks to completely cut back on lending, which would severely hurt brokers.

“And guess what? If you’re an intermediary and I’ve got a retail franchise to fund, which one am I going to fund first? It’s going to be the retail franchise. So I think it’s a real concern.”

COMPETITION The other casualty of a credit crunch sparked by the Euro-debt crisis would be competition. Non-banks that relied on securitisation took a beating during the GFC and are anxiously watching events overseas. Significant volatility in funding costs continues to hurt wholesale funders and subsequently their distribution partners.

Many argue the government has not done enough to boost competition.

“The only thing they’ve done so far is put in a reduction in penalties for early payout, but that’s done nothing for competition at all. If anything, the only thing we’ve seen in the last six months is a greater level of lending going to the major banks. And the minor banks and regional banks are continuing to struggle,” Brown says.

“If the government doesn’t introduce some sort of reasonable level of funding for second-tier lenders we could have a real problem here in two or three years’ time with funding loans.”

The MFAA has put a number of submissions forward

to the Australian government to take a look at the Canadian model to boost non-bank competition.

“We’re broaching it again in the senate inquiry that is coming up in August. It will help the smaller lenders, but in the Canadian environment the larger lenders also use it because it provides them with less expensive funding than they can get elsewhere. So if Australian banks generally have an issue with the pricing of their funding, then a Canadian system would enable them to access funding which would be cheaper than they could otherwise access,” Naylor says.

BROKER TALK According to the MFAA, as advisors to their clients, brokers are in a position to help their clients better understand the situation overseas.

“On the basis that the value of brokers is giving advice to consumers, I think they can certainly advise them about the relative strength of the Australian position at the moment and accordingly put them into appropriate finance based on the circumstances in Australia,” Naylor says.

According to Mortgage Choice, this is a great time for brokers to be offering a point of differentiation by giving their clients sound advice. “Brokers can take advantage of the current environment and stand out from their competitors by keeping their customers up to date with economic news and factors that may affect home loan interest rates and the economy,”

Up or down?

Interest rate predictions for the coming months suggest there won’t be any major movements.

According to ANZ economist Ivan Colhoun, the Reserve Bank will likely sit back over the coming months to see what kind of impact earlier cuts will have. “[The RBA] described the moves over the last six months as having been a material easing of monetary policy in Australia and the normal course of events would be that they would sit back and look at the effect that has on the economy before considering any further moves. So in the next few months,

24 | MPAMAGAZINE.COM.AU

we’d say no. Maybe from October or November if the economy is still sluggish… in the interim if there was a material development in the world economy or the Australian economy then I’d certainly say that they could come back but my expectation is that there would be no change in the next three months,” Colhoun told MPA in a July interview.

As for the Aussie dollar, conditions indicate it will remain stable.

“In the periods of greatest stress, the Aussie dollar tends to go down because when people are uncertain and thinking global

growth is much weaker, then the Aussie dollar has weakened and commodity prices come down. And when those periods of greater stress and sentiment have eased back it’s tended to go up.

“But if you look at it broadly speaking, it’s been pretty stable for some time and the other thing we’re seeing consistently is still very strong inflows into Australia, related I think to foreigners and official foreign investors buying lots of Australian dollar assets, particularly bonds – attracted by high interest rates and good credit rating,” said Colhoun.

“In my opinion [the Euro debt crisis] puts a negative feel on consumer sentiment” – JEREMY FISHER Williamson says.

“Our message to borrowers is simple – focus on what is going on in your own backyard and take control of what you can control, your finances and mortgage options for example. Borrowers should see the steady cash rate as a vote of confidence in favour of our economy and use this time to the best of their ability by taking control of their mortgage to help lessen any hip pocket pain.”

1st Street Home Loans director Jeremy Fisher has already taken this onboard.

“In my opinion, [the Euro debt crisis] puts a negative feel on consumer sentiment so it will most likely slow down our economy until a satisfactory resolution is made. So given this, all my clients are provided with additional information upfront to assist with their decision-making. This includes a conservative approach to borrowing, a detailed budgeting tool to ensure they are borrowing well within their means given the uncertainty, and also we quote interest rate repayments with a 2% loading to ensure that our clients are well prepared should anything unexpected occur.”

BROKERNEWS.COM.AU | 25

SPECIAL REPORT / BROKERS ON NON-BANKS

CHARTING THEIR OWN COURSE

26 | MPAMAGAZINE.COM.AU

The non-bank sector has managed to survive in a tough environment, continuing to stand apart as an alternative to the big lenders. MPA examines what brokers think of Australia’s challenger brands

U

pon reading his own mistakenly printed obituary, Mark Twain once quipped that “rumours of my death have been greatly exaggerated”. Australia’s non-bank lenders could very well make the same claim.

The death knell has been sounded for non-banks countless times. First, the GFC was set to send them to an early grave. Next, tightening wholesale funding markets were predicted to finish them off. The government’s unilateral exit fee ban was forecast to be the final nail in the coffin.

But non-banks keep battling back, regardless of the hurdles the market throws in their path. This year’s Brokers on Non-Banks survey shows that the iconoclastic lenders still have a place in the market, and are still winning business from brokers.

Liberty was the big winner this year, claiming top spot in an amazing six of 13 categories and showing strongly in most other areas. Homeloans and Australian First Mortgage followed, each racking up wins and strong performances. But the results of the Brokers on Non-Banks survey ultimately paint a picture of a varied and vibrant non-bank sector, with high commendations going to a wide variety of lenders such as Iden, Loan Avenue, Pepper and Better Mortgage Management.

Read on to find out what brokers have to say on Australia’s challenger brands.

A NOTE ON METHODOLOGY Brokers were asked to rate their top three non-bank lenders across the categories of turnaround times, BDM support, commissions, information provision, interest rates, product range, overall service to brokers, credit policy, online platforms, service to consumers, product innovation, marketing and branding and diversification opportunities.

Respondents rated the top three in each category, in order of performance.

Brokers were also asked to rate each category in terms of importance, scoring each from 5 (most important) to 1 (least important).

MPAMAGAZINE.COM.AU | 27

SPECIAL REPORT / BROKERS ON NON-BANKS

A WORD FROM OUR SPONSOR The mortgage industry is currently experiencing one of its biggest home loan price wars for some time, but competing on price can only take you so far.

While price is important to consumers and the brokers that service them, service, speed and flexibility are critical – and these three core qualities are at the very heart of the non-bank service proposition.

Non-bank lenders grew from a consumer need for personalised, focused servicing and the innovation around product and positioning that this sector brought to the market has helped to not only ensure choice for borrowers, it has also evolved brokers’ overall proposition to clients.

The non-bank proposition today has only been enhanced by experience, maturity plus accessibility to competitive, stable and accessible funding. Indeed, the sector is alive with a driven resolve to support brokers and borrowers alike and offer a very real alternative to the banks.

As Australia’s top wholesale funder, Advantedge is committed to supporting our non-bank partners to deliver competitive, innovative mortgage solutions to their clients. This has always been central to our focus and will remain so in spite of market fluctuations.

Our decision to partner MPA’s non-bank survey once again is a clear indication of our unwavering commitment to providing brokers with an ever-evolving range of market leading products and to ensure borrowers have choice for their home loan needs.

Brett Halliwell General Manager, Advantedge Distribution Advantedge Financial Services

28 | MPAMAGAZINE.COM.AU

TURNAROUND TIMES 1ST PLACE

Liberty

2ND PLACE

Australian First Mortgage

3RD PLACE

Iden

HIGHLY COMMENDED

Pepper, Loan Avenue, Future Financial

Turnaround times are an important sticking point for brokers, ranked as the third-most important category.

Non-banks in general were offered some constructive criticism on their turnarounds, with many brokers tipping it as an important area for improvement. But brokers also indicated that non-banks were besting the majors on turnaround times, citing more personal service as a key factor in speeding up approvals.

Liberty was highly lauded for its turnaround times.

The lender ran away with the category, placing far in front of any other non-bank.

Australian First Mortgage ranked second for turnaround times, followed extremely closely by Iden.

Pepper, Loan Avenue and Future Financial also received kudos in this category.

BDM SUPPORT 1ST PLACE

Liberty

2ND PLACE

Homeloans

3RD PLACE

Loan Avenue

HIGHLY COMMENDED

Pepper, Australian First Mortgage, Better Mortgage Management

Brokers seem very happy with the support they’ve received from non-bank BDMs, with some even going so far as to mention and applaud their BDM by name.

Personalised service again arose as a major theme and an important factor distinguishing non-banks from their ADI brethren.

Liberty took out the top spot for BDM support, with Homeloans following. Loan Avenue also rated highly, receiving third place for its BDM support. Perhaps indicative of the high level of support brokers feel they receive from non-bank BDMs, Pepper, Australian First Mortgage, Better Mortgage Management and Iden all received high marks for their BDMs.

COMMISSIONS 1ST PLACE

Liberty

2ND PLACE

Australian First Mortgage

3RD PLACE

Loan Avenue

HIGHLY COMMENDED

Iden, Homeloans, Firstmac, Future Financial, National Finance Club

Surprisingly, survey respondents weren’t all that fussed about commission levels from non-banks. While the Brokers on Banks survey ranked commissions a 4.21 out of five in terms of importance, respondents to the Brokers on Non-Banks survey only rated the category a 3.28 out of five, indicating that it was the third-least important factor in their perception of a lender.

But brokers did sound off on non-bank clawbacks.

While 75% of brokers said they were satisfied with the commissions on offer from non-banks, several brokers commented that expanded clawback policies were unacceptable.

Nevertheless, brokers again picked Liberty as the dominant player in the category. Australian First Mortgage took out the second spot, and Loan Avenue scored its first top three ranking of the year in third place. Iden, Homeloans, Firstmac, Future Financial, and National Finance Club also received praise for their commission offerings.

WHAT PERCENTAGE OF YOUR BUSINESS DO YOU SEND THROUGH NON-BANKS?

30%

0–20% 21-40% 41-60%

19% 17% 21%

61-80% 81-100%

13%

Brokers have their say ... on turnaround times “On the whole their services are good and quicker than the major four; however, they are all starting to have too many departments to process each loan. Some lenders allow us access to the assessor of the loan and they handle the loan all the way through. That gives us better service and is ultimately better for our customer.”

MPAMAGAZINE.COM.AU | 29

SPECIAL REPORT / BROKERS ON NON-BANKS

INTEREST RATES

ARE YOUR CLIENTS OPEN TO CONSIDERING NON-BANKS?

1ST PLACE

Australian First Mortgage

2ND PLACE

Liberty

3RD PLACE

Better Mortgage Management

HIGHLY COMMENDED Homeloans, Firstmac, Loan Avenue, Pepper

21%

79%

Yes No INFORMATION PROVISION 1ST PLACE

Liberty

2ND PLACE

Australian First Mortgage

3RD PLACE

Pepper

HIGHLY COMMENDED Economy Home Loans, Homeloans

In general, brokers were happy with information provision from non-bank lenders. The smaller institutions seem to be nimble enough to communicate any changes quickly, and keep on top of their correspondence with the third party. Easier access to decision-makers seems also to have played a role in non-banks’ performance in the category.

Liberty continued its domination, taking out first place once again. Australian First Mortgage also continued its run of strong showings at second place, while Pepper took the third spot. Brokers also commended Economy Home Loans and Homeloans for staying in touch with their intermediaries.

Interest rates are an interesting category when it comes to ranking non-bank lenders. For some non-banks, having the sharpest rate on the market is not as important as providing high levels of service and innovative products. Low-doc lenders will rarely win any awards for bargain basement pricing, but they offer products to a class of borrowers who could otherwise be locked out of the market.

But brokers ranked non-banks favourably on their interest rates. Australian First Mortgage managed to snare the top spot. But Liberty still ranked well at number two, while Better Mortgage Management made its first top three appearance. Homeloans, Firstmac, Loan Avenue and Pepper also received recognition for their pricing.

HOW MUCH OF YOUR BUSINESS WOULD YOU LIKE TO SEND THROUGH NON-BANKS?

2%

0–20%

23%

21-40% 41-60%

17%

61-80%

17% 41%

81-100%

RANKING THE RANKINGS: Categories in order of importance to brokers Overall service to brokers

Customer service

Turnaround times

Credit policy

BDM support

Interest rates

Product range

4.51

4.44

4.35

4.15

4.07

3.93

3.78

MOST IMPORTANT......................................................................................................................................................................................................

28 | MPAMAGAZINE.COM.AU

Brokers have their say ... on their favourite non-bank lender

OVERALL SERVICE TO BROKERS

“Over the years I’ve worked closely with Better Mortgage Management. They have long-term BDMs with excellent product knowledge.”

“I have to say that I have three favourites: Better Mortgage Management, Pepper and Liberty. At the end of the day all of them are doing the best they can. They all deserve medals.”

PRODUCT RANGE 1ST PLACE

Australian First Mortgage

2ND PLACE

Homeloans

3RD PLACE

Liberty

HIGHLY COMMENDED

Better Mortgage Management, Loan Avenue

1ST PLACE

Homeloans

2ND PLACE

Liberty

3RD PLACE

Australian First Mortgage

HIGHLY COMMENDED

Loan Avenue, Iden

Overall service levels were tipped as the single most important factor influencing brokers’ opinion of non-banks. Most brokers felt this was an area in which non-banks performed particularly well, with 71% saying the level of service from non-banks was better than that of ADIs. But brokers still offered criticism on insufficient staffing levels and a lack of preparedness for large volumes.

Still, brokers were complimentary of Homeloans, ranking it number one for service, followed by Liberty and Australian First Mortgage. Loan Avenue and Iden also received a nod.

ARE YOU HAPPY WITH NON-BANKS’ SERVICE LEVELS?

Having a diverse stable of products is meant to be one of the key propositions of the non-bank sector, and one which distinguishes them from the banks. But nonbanks didn’t rate as highly in this category as many of the others. As mortgages become increasingly commoditised and homogenised, it will be interesting to see how non-banks respond in the future.

While the category saw some lower scores, Australian First Mortgage stood apart from the pack.

Homeloans ranked second, and Liberty still managed to make its way into the top three. Better Mortgage Management and Loan Avenue were also ranked highly.

Yes No

31% 69%

Product innovation

Information provision

Online platforms

Commissions

Marketing and branding

Diversification opportunities

3.58

3.57

3.52

3.28

3.20

2.76

..................................................................................................................................................................................................... LEAST IMPORTANT MPAMAGAZINE.COM.AU | 29

SPECIAL REPORT / BROKERS ON NON-BANKS

WILL NON-BANKS INCREASE THEIR MARKET SHARE IN THE NEXT 12 MONTHS?

13%

87%

Yes No CREDIT POLICY 1ST PLACE

Liberty

2ND PLACE

Australian First Mortgage

3RD PLACE

Loan Avenue

HIGHLY COMMENDED

Homeloans, Better Mortgage Management, Iden, Future Financial

Credit policy was also an important category to brokers.

Respondents to the survey ranked it fourth, behind overall service, customer service and turnaround times.

Again, flexible credit policies are one of the key value propositions of non-banks, and the lenders performed well in the category.

Liberty was the clear winner on credit policy, far outpacing the other lenders tipped in the category.

Australian First Mortgage took the second spot, while Loan Avenue made its second appearance in the top three. Brokers also praised the credit policies of Homeloans, Better Mortgage Management, Iden and Future Financial.

ONLINE PLATFORMS 1ST PLACE

Australian First Mortgage

2ND PLACE

Liberty

3RD PLACE

Better Mortgage Management

HIGHLY COMMENDED

Homeloans, Iden, National Finance Club

Online presence is simply not a big issue for most brokers.

Respondents to the survey ranked online platforms as the fourth-least important category, and said web presence had little impact on their perceptions of non-banks.

Still, lenders ranked fairly poorly in this category.

Online platforms consistently saw some of the lowest scores of any category in the survey.

But some lenders did stand out for their web appeal.

Respondents ranked Australian First Mortgage at number one, its third win in the survey. Liberty came in at second, while Better Mortgage Management ranked third.

Homeloans, Iden and National Finance Club performed solidly in the category as well.

SERVICE TO CONSUMERS 1ST PLACE

Homeloans

2ND PLACE

Liberty

3RD PLACE

Australian First Mortgage

HIGHLY COMMENDED

Loan Avenue, Iden, Pepper

Service to brokers is incredibly important, but of equal importance is a lender’s service to consumers. If a lender delivers poor customer service, it could reflect negatively on the broker who recommended the loan. Thus it’s little surprise that customer service was the second-highest ranking category in the Brokers on Non-Banks survey, narrowly edged out by service to brokers.

All in all, brokers had positive things to say regarding non-banks’ service to customers. Homeloans took the top spot for customer service, followed by Liberty and Australian First Mortgage. Brokers also gave high marks to Loan Avenue, Iden and Pepper.

BRAND AWARENESS: Which non-banks have the highest profile among consumers?

1ST PLACE

2ND PLACE

3RD PLACE

LIBERTY

PEPPER

HOMELOANS

28 | MPAMAGAZINE.COM.AU

PRODUCT INNOVATION

MARKETING AND BRAND AWARENESS

1ST PLACE

Liberty

1ST PLACE

Homeloans

2ND PLACE

Australian First Mortgage

2ND PLACE

Liberty

3RD PLACE

Better Mortgage Management

3RD PLACE

Pepper

HIGHLY COMMENDED

Homeloans, Iden

HIGHLY COMMENDED

Australian First Mortgage, Better Mortgage Management

Much like product range, product innovation serves as a cornerstone of non-banks’ offering. Prior to the GFC, non-banks made a name for themselves by thinking outside the square in terms of their product structuring, oftentimes introducing loan features that have now become the industry standard.

The non-banks ranked well in the category overall, but Liberty stood out from the pack. The lender far outstripped its competitors, and received its highest ranking of any category. AFM took second place, with Better Mortgage Management coming in third.

Brokers also praised Homeloans and Iden for innovative product offerings.

Brokers have their say ... on where non-banks can improve “Many of the mortgage managers use the same four funders behind the scenes. We need new funders that will do different niches.”

Marketing is an area where non-banks may always be on the back foot. Smaller lenders simply don’t have the deep pockets of the majors, and have limited resources to devote to getting their message out to consumers.

Many challenger brands have historically relied upon the third party to spread their message rather than marketing directly to consumers, as evidenced by the fact that the majority of brokers said fewer than 20% of their clients actually enquired about non-bank lenders.

Perhaps unsurprisingly, then, non-banks rated low in this category compared to others.

However, some non-banks have succeeded in getting themselves in front of borrowers and building brand awareness. Homeloans was tipped as the most successful in this category, followed by Liberty and Pepper. Australian First Mortgage and Better Mortgage Management also received accolades for their marketing and branding.

MPAMAGAZINE.COM.AU | 29

SPECIAL REPORT / BROKERS ON NON-BANKS

HOW MUCH OF YOUR BUSINESS WOULD YOU LIKE TO SEND THROUGH NON-BANKS?

56%

0–20%

23%

21-40% 41-60%

15%

61-80%

4%

81-100%

12%

DIVERSIFICATION OPPORTUNITIES 1ST PLACE

Better Mortgage Management

2ND PLACE

Australian First Mortgage

3RD PLACE

Homeloans

HIGHLY COMMENDED

Pepper, National Finance Club

Offering brokers the opportunity to diversify their income is an area where non-banks have generally fallen down. The lenders were uniformly rated the lowest in this category. The four-way tie for first place saw lenders picking up their lowest winning scores of any category in the survey.

But brokers still gave recognition to some non-banks for offering opportunities outside of traditional residential mortgages. Better Mortgage Management, Australian First Mortgage and Homeloans were all acknowledged for diversification, taking the top three spots. Pepper and National Finance Club also rated well.

Brokers have their say ... on whether non-banks are outdoing the banks on service “Infinitely better, especially with the mortgage managers where you can have a common sense discussion before and during the application process to avoid wasting any time.”

“Generally, but not at the moment regarding turnaround times. Access to credit assessors is very important.” “ ’Big is beautiful’ be buggered!

The banks tend to forget who they are dealing with and act as though brokers are idiots. Nonbanks are better.”

ARE NON-BANK SERVICE LEVELS BETTER THAN BANKS’?

Yes No 34 | MPAMAGAZINE..COM.AU

29%

71%

HEAD TO HEAD / MEG BONIGHTON

36 | MPAMAGAZINE.COM.AU

HEAD TO HEAD / MEG BONIGHTON

ACTIONS

SPEAK LOUDER ANZ doesn’t make as much noise in the market as some of its major bank rivals, but Meg Bonighton says results are what counts

MPA: ANZ has consistently ranked highly in MPA’s Brokers on Banks surveys. What do you think has led to the bank’s success in the third party channel?

Meg Bonighton: I think it really comes down to two main things. The first is making sure we’re consistently delivering on what the broker is looking for at the core, and that’s consistent delivery to their clients. It’s fast turnaround times, clarity of policy and on-time settlements. It doesn’t sound all that sexy, but it’s making sure we can deliver consistently.

We’ve had record volumes coming through over the last year, and I think brokers fully expected us to fall over on the service side. Brokers I’ve spoken to were pleasantly surprised to find we stood up and were able to take those volumes in.

The second piece is really around relationships. We treat brokers as partners. It’s never been an ‘us versus them’ attitude. It’s always been about how to work together to make sure we’re delivering for their clients. We also make sure we’re always seeking feedback from brokers, and when we get that feedback it helps us to deliver those foundational pieces.

The other core is our BDMs. I’ve very proud of the BDM team we have on board. They’re people who

have been with the team for some time, so we definitely don’t have a group of fly-by-nighters. We talk a lot about the fact that this is a relationship role.

It’s not one you come into for a short period of time for your own development. The way to be successful is to develop successful relationships. We have a number of different communication methods, but what we find is our BDMs bring those communications to life, because they know the core values of the brokers they work with, so they know which messages are crucial.

MPA: Does most of this communication happen on the ground? It seems like ANZ has been a bit quieter in the press than many of its rivals.

MB: We do tend to take a little bit more humble of a approach. It may not sound so humble saying that, which is a bit ironic, but we tend to take more of a ‘look at the scoreboard’ approach. Rather than talking about what we’re going to do and what we’re going to deliver, we’d rather be judged by what we’ve actually delivered.

We’ve done a whole raft of work around the service side in the last couple of years. Rather than go out and talk about it before we do it or while we’re in the

MPAMAGAZINE.COM.AU | 37

HEAD TO HEAD / MEG BONIGHTON

midst of it, we’d rather have brokers come to us and say we’ve delivered on it.

MPA: What are some of the main challenges you see facing the broking industry at the moment?

MB: The challenge we’re all facing is the slowdown in credit growth. For all of us, in terms of the opportunities out there, we need to be looking harder and working harder.

I don’t think it’s about a dramatic change to the way we do things. The most successful broking businesses I’ve seen are the ones who are very clear on their value proposition and deliver on that proposition.

MPA: Has ANZ identified any specific opportunities arising from the slowdown in credit growth?

MB: The thing I love about the broker industry is that you have thousands of folks looking at different opportunities, so I can’t say that there’s one specific opportunity we’ve uncovered that brokers haven’t.

But one thing we can look at in a world where credit growth is less strong is customer segmentation.

For us being a super-regional bank, one of the key things we look at is the international customer segment, whether they be new arrivals to Australia or offshore customers. That fits well in our value proposition as a whole, and we have the superregional culture to make sure we can deliver on that from a service perspective. It’s something we kicked off in a pilot program a few months ago, and we’ve been working with brokers to make sure we deliver around the service piece.

We also continue to look at things like credit policy improvement. I know brokers understand that banks need to set their own risk appetite, but it is beholden upon us to make sure we’re clear and transparent in terms of what that appetite is.

MPA: What kind of priorities has ANZ set for the year ahead in terms of its relationship with the third party?

MB: Given the solid foundation that we have in terms of our relationship with the broker channel, we’ll be working on what we can do to help deliver to the professional development in the industry.

We’ve taken a few steps on that in the last year, for example by running our business leaders workshops.

Those workshops have been really well received by those in attendance, and by those who viewed them via the webinars. We’ll be looking at how we can build on that foundation. That’s really centred on the fact that, being one of the core players recognising the value of this channel, we need to look at what else we can bring to the channel in terms of the relationship we have with brokers.

The other priority for the year ahead is our comms.

We’re working through our options for how we can get more clarity in terms of our comms. You’ll see a few things focused around that area in the next three to four months, which is very exciting.

We’ll also work on particular customer segments like the international banking segment, and we’ll be working with the broker channel to see how we can deliver that well.

Bonighton on Brokers on Banks ANZ scored well in this year’s Brokers on Banks survey, taking third place overall and ranking number one for its product range.

Brokers also tipped the bank’s Breakfree loan as the third-most popular product. Meg Bonighton discusses how important the survey is to ANZ’s strategy.

HOW VALUABLE ARE THE RESULTS OF THE BROKERS ON BANKS SURVEYS FOR YOUR STRATEGIC PLANNING?

The Brokers on Banks survey gives us great information

38 | MPAMAGAZINE.COM.AU

on our strengths as well as insight into areas we need to focus on to ensure brokers are getting the support they need from ANZ. It's always good to hear feedback from brokers about what they think.

Our team spends a lot of time talking with brokers listening to their feedback about what is working well, what’s not and what needs to be improved for customers.

This helps us identify areas where we need to lift our game so that we continue to give our customers a great experience from BDM to branch.

FEATURE / OFF-PANEL

OFF THE

RESERVA Going off-panel is usually off limits for credit representatives, but there are ways to work around the rules

W

orking as a credit representative has its advantages – no compliance issues, less risk, and it’s cost-effective.

But those benefits come at a price, and one of the biggest sacrifices is independence.

Prior to the NCCP, brokers had the freedom to use the lender of their choice. But new rules make going off-panel out of the question for some credit representatives. FBAA president Peter White acknowledges it can really impact business for some brokers.

40 | MPAMAGAZINE.COM.AU

“I had somebody come to me the other day about this. They wanted to do a loan and they were commercially being restricted by what the aggregator would allow them to do, even though the aggregator couldn’t do the loan with their panel.

It’s frustrating.”

WHO IS AFFECTED? There are a couple of variations of credit rep appointments and the ability to deal off-panel varies.

According to Gadens Lawyers, there are two main appointments for credit representatives operating under another entity’s ACL – be that of an aggregator, a franchisor or a master broker. The appointment may

TION

MPAMAGAZINE.COM.AU | 41

FEATURE / OFF-PANEL

“Most aggregators are residentially focused” – DARRYL BENN either authorise: • lodging deals only with the licensee’s panel lenders; or • lodging deals with the licensee’s panel lenders or any other businesses approved by the licensee The other party to be affected by these restrictions are small lenders and mortgage managers.

“It has become increasingly difficult for smaller lenders or alternate lenders and mortgage managers to distribute their products unless they are on an aggregator panel,” says Darryl Benn, representative for the Independent Finance Brokers Forum.

Australian Capital Home Loans managing director Barry Parker says mortgage managers are definitely losing business because of restrictions on credit representatives regarding the use of off-panel lenders.

“Absolutely. We lost bucketloads. In 15 years of trading, I’ve never been on an aggregator panel ever.

We only ever dealt direct with brokers.”

Previous attempts by Parker to get Australian Capital Home Loans on some aggregator panels were met with resistance. According to Parker, one aggregator head laughed out loud when he brought forward his desire to join the panel, and said “you and everybody else.”

“To get on an aggregator panel is an exceptionally difficult thing,” Parker says.

WHY NOT? Benn concludes that the reason ACL holders (whether that be an aggregator, franchisor or master broker) restrict credit representatives to their lending panel is because they are ultimately accountable to ASIC for their activities. There is also the issue of PI insurance cover and compliance with NCCP regulations – in both cases the ACL holder bears the burden of responsibility.

Benn also notes that some aggregators may restrict

42 | MPAMAGAZINE.COM.AU

credit representatives from going off-panel in an effort to protect their income streams “as they are unable to share in the commissions distribution when trading ‘off-panel’.”

According to Gadens Lawyers, the ASIC register does not indicate the extent of a credit rep’s authority.

It simply indicates whether the credit rep has the same authorities as the licensee. “In most cases the answer would be ‘no’, because the licensee will hold broader authorities and will have given the credit rep limited authority.”

WHY BOTHER? Many of the top aggregators in the country boast impressive lender panels. PLAN, Choice and FAST give brokers a choice of 62 lenders, while AFG has 37, and Connective has 50-plus.

Otto Dargan, director of Home Loan Experts, also points out that brokers should consider why that lender is not included on the licensee’s panel in the first place.

“I think many brokers don’t consider why a particular lender is not on their panel. Often it is because their introducer agreement is very onesided, they have poor commission management, channel conflict or have lower than market commissions which makes doing business with them unprofitable.”

The panels provided by aggregators are generally sufficient to cater for a large percentage of the borrowing market, Benn says.

“The problem occurs when endeavouring to source funding for a client who may not qualify with the lender or comply as ‘not unsuitable’ for NCCP purposes.”

The other reason a credit rep may need to use a lender not on the panel, Benn notes, is when they endeavour to provide loans other than residential mortgages including asset finance, commercial finance, personal loan finance, etc.

“Most aggregators are residentially focused and their commercial lending panels are often through alignments with external asset or commercial aggregation.”

And lastly, there is always the chance that a client has requested to use a specific lender that is not on the ACL’s panel.

WHAT TO DO? Brokers who risk using an off-panel lender without proper authorisation could lose their credit

Case study: Robert Trewin Director of Robert Trewin Mortgage Broking

Robert Trewin, director of Robert Trewin Mortgage Broking, is no stranger to off-panel lenders. Prior to the introduction of NCCP, Trewin developed a strong working relationship with one off-panel lender, submitting upwards of 10 deals a year.

Trewin says he wasn’t looking for an off-panel lender but in certain geographical or niche markets, sometimes the best lender is one that can offer specialised products and service.

When licensing came in, Trewin considered getting his ACL, but in

the end opted to be a credit representative under nMB’s ACL. “I have considered getting my own ACL. But the ACR status seems to be working fine at this stage. So if we can just get that other lender back on board at some stage, that would be handy.”

Given his history with the off-panel lender, nMB has been working on coming to an agreement that would allow Trewin to continue using the lender.

While using an off-panel lender means the credit representative does not have to pay their aggregator, Trewin points out that it can actually be a negative.

“Then you’ve got to chase the commission yourself and make sure you’re paid right, as you haven’t got the aggregator’s support staff doing that for you.”

In terms of the actual commission received from off-panel lenders, Trewin says there is little difference. “From a commission point of view it’s pretty similar really. And when I lend money I don’t lend it based on commission, I do it based on suiting people’s needs. I prefer to look after my clients and the money will just take care of itself.”

“I have considered getting my own ACL. But the ACR status seems to be working fine at this stage” – ROBERT TREWIN

MPAMAGAZINE.COM.AU | 43

FEATURE / OFF-PANEL

representative status as well as their ongoing trail with the aggregator. But there are a few alternatives to consider, should the opportunity to use an offpanel lender arise.

In most instances, credit representatives would be encouraged to look for a lender already on the panel that has a similar offering. However, if this is not an option, then the credit representative could request the ACL holder to appoint that lender to their panel.

Most aggregators, however, would not be prepared to go through the lengthy process of adding a mortgage manager or lender to their panel for a one-off deal.

Vow Financial CEO Tim Brown says if a credit representative comes to the aggregator with a proposition to use an off-panel lender, they would consider what that lender could add for the whole group, not just for one individual. They would also have to do considerable due diligence on the mortgage manager to ensure it would survive in tough times.

“We’ve got two on there now – AFM and Barnes Home Loans – and the reason we went with them was because of their history with the heritage groups and also their ongoing service proposition. And they give a point of differentiation.

For us, it’s always been ‘we’re not going to stick you on the panel if you look like everyone else. We want to put you on the panel because you’re different’.”

Another option is for the credit representative to request an exception from their ACL holder to refer clients to a specific lender.

Those mortgage managers or lenders dealing with credit reps would need to see the appointment to ensure that the credit rep is authorised to lodge deals off-panel, as there are significant penalties for dealing with someone who is unauthorised.

Alternatively, the broker could be appointed as a credit representative to the lender, however this would require the consent of the broker’s first licensee.

This could be hard to obtain as being appointed by more than one licensee means both ACL holders would be jointly liable for the conduct of the credit rep and most would not want to be liable for conduct relating to deals that did not involve them.

Benn also suggests that the credit rep could

44 | MPAMAGAZINE.COM.AU

“I think many brokers don’t consider why a particular lender is not on their panel” – OTTO DARGAN refer their client to an accredited broker with that lender and obtain a referral fee. “Though they would need to be careful not to provide credit assistance – making a suggestion regarding using a lender could be deemed ‘credit assistance’ or completing an application for or gathering information on behalf of the party you are referring the business to, as this would all constitute the act of ‘credit assistance’ and in violation of their duty to the ACL.” And lastly, the broker could endeavour to obtain their own ACL, which would give them the independence to deal with the lender of their choice.

Spoiled for choice?

The past year has seen aggregators add a spate of new lenders to their panels, with many opening access to mutuals and increasing their range of non-bank lenders. This is good news for brokers, who last year indicated in an Australian Broker poll that their aggregator panels needed expansion.

DOES YOUR AGGREGATOR OFFER ENOUGH PANEL CHOICE?

45% 55% Yes

No

Source: Australian Broker

MPAMAGAZINE.COM.AU | 45

FEATURE / SOFTWARE SOLUTIONS

STAR TECH New technology is bringing about a wave of change, and brokers can either surf the tide or struggle against the current

46 | MPAMAGAZINE.COM.AU

C

Computer illiteracy is no longer an option for most mortgage brokers. We live in a world where technology is a driver of – rather than a reaction to – social change.

With technology changing the way we communicate, the way we do business, and even the way we view the world, mortgage brokers are coming to terms with the fact that software and tech will redefine the industry in the years ahead.

While many aggregators see software and technological innovation as their prime value proposition, many brokers opt to shun aggregator software for offerings from independent tech providers.

And independent tech providers are searching for ways to stay steps ahead of the market in the midst of lightning-fast change.

A FIRM FOUNDATION

Most brokers’ businesses are built around a good CRM. This essential piece of software is a galvanising topic for brokers, and has been the singular factor spurring many to switch aggregators. But Finware managing director Jason Hayden says many brokers have a murky understanding of what a good CRM should do.

“We often have brokers call us asking if we ‘do CRM’.

When asked what they want the CRM to do, they reply with a birthday list or other features supplied by pretty much every free address book tool.”

Loanworks general manager Wayne Macartney

agrees, and says even the term “CRM” means different things to different brokers.

“We get calls where brokers say, ‘I need a CRM’.

When you drill down enough, what they’re really saying is ‘I need to do email marketing’,” Macartney says.

True client relationship management, Hayden says, is far more sophisticated than generating birthday lists and doing mail merges.

“A true client relationship management tool will provide you with rich information about your clients and their activities. It should be easy to segment your clients by any number of segments and sub-segments. Your CRM should allow you to easily email a link to an article in the AFR to self-employed clients with a loan over $500,000, for example,” he says.

“Similarly, sending letters to clients coming off their fixed rate loan in six weeks should be an automatic job done by 9am every day. A prompt to call a client who has paid-off $40,000 in a lump sum should be considered a standard procedure. Of course, all of these functions along with the client workflow milestones should all auto-populate a client log where ASIC can easily see all actions, phone calls, messages left with lenders, as well as letters and emails sent and tasks completed by your para-broker. These are simple jobs that a true CRM should do as standard.”

Hayden says Loanworks created its iLend CRM with this kind of functionality in mind.

BROKERNEWS.COM.AU | 47

FEATURE / SOFTWARE SOLUTIONS

“A true client relationship management tool will provide you with rich information about your clients and their activities” – JASON HAYDEN, FINWARE “In iLend we add the value of a super-CRM to mission critical jobs that brokers need for a complete business solution. The same information you gather for your NCCP fact find should complete your client borrowing capacity profile with all lenders accurately.

This information will then help you identify and solve problematic policy issues such as handling foreign income or rural-resi security issues. And, of course, the same info will feed through to the electronic lodgment, then send an SMS to advise the referrer the loan is lodged, then create a task for your admin to chase the approval in two days,” he says.

This kind of functionality should form the basis of a broker’s business, Hayden says. Macartney agrees, and says CRM functionality has become even more important with the advent of NCCP. Documenting workflow has become an essential part of doing business, and Macartney says this is especially true of broking businesses. It’s for these businesses that Macartney says Loanworks has catered its CRM. “The focus of a lot of other tools in the marketplace is very much around the independent broker. Our software caters for that, but where it really comes into its own is where you have the small broking company, not necessarily just the man and his book,” he says.

While Macartney argues that Loanworks’ offering is scalable, and can add value to the businesses of solo operators, its true functionality is best utilised to manage workflow across a number of staff.

48 | MPAMAGAZINE.COM.AU

“When you start getting into more sophisticated environments and it starts firing on all the bells and whistles, that’s when the software really comes into its own.”

Likewise, Hayden says iLend is not for everyone. But he argues that the right CRM for a broker’s business has more to do with mindset than size.

“Size doesn’t matter. Our target clients are professional mortgage brokers who want to drive profits and growth from productivity and process gains.

“If a broker understands that to get to the next level they need to improve their efficiencies then we can help.

Regardless of their location, aggregator or even their business model, implementing our iLend solution will provide massive benefits in time gains, branding, staff effectiveness, client retention and your bottom line, ” says Hayden.

IT’S ALL ABOUT MOBILITY When Apple released its iPad in April 2010, few (aside from Steve Jobs) could have predicted it would be such a game changer. A couple years on, many technology commentators now predict that tablets will soon render laptops entirely obsolete. Mortgage broker software providers have seen this writing on the wall, and are working to incorporate mobile platforms as part of their offering.

Stargate Group has already planned for the mobile revolution, with a stable of products for iPads, iPhones, Google’s Android and the launch of the Windows 8 mobile operating system.

“We’ve traditionally been at the forefront of CRM systems in the market, and we have the largest individual solution through our Symmetry CRM, but 18 months ago we looked around and said ‘where will we be in 18 months to two years from now?’ With the advent of the iPad and iPhone, we really needed to go down the mobile path,” chief executive Brett Spencer says.

The company has already launched its eFind app for brokers, and has further apps ready for launch in the months ahead. Spencer says eFind, a client interview and loan application tool, was designed with the client experience in mind.

“It’s designed purely to take the whole interrogatory process away for clients. When you’re interviewing clients, it can be a very interrogative process, whereas

with consumers having such a love affair with Apple products we felt that if we could create a streamlined solution that enables consumers to enter information on an iPad with a broker while still meeting all the NCCP aspects, it 100% removes all interrogative aspects of the interview. It becomes a conversation. It gives control back to the consumer and takes away the nervousness,” he says.

Spencer says Stargate’s upcoming mobile apps are designed to seamlessly integrate with both eFind and its Symmetry CRM, to provide brokers with a complete mobile experience.

Its Mobbie search engine app will allow brokers to perform complex searches through lenders’ policies and product guides, while its MyProductGuide app contains a near-exhaustive listing of up-to-date product listings available from each lender.

“A mortgage broker can go out and see a customer with their iPad, get the customer to apply on eFind, use Mobbie and MyProductGuide to find the product and submit it to the CRM, and before they’ve even left the customer they can have the loan processed, approved and sent to the lender,” he says.

Spencer also says the low price point of mobile apps puts mobility within the reach of most brokers.

“Mobbie and MyProductGuide are both $9.95 per month for use on up to three devices per account and eFind is currently $19.95 per month per user. All are on a month-by-month subscription basis with no lock-in contracts,” he says.

HEAD IN THE CLOUD They may be difficult to find, but there are brokers out there who are actually quite satisfied with their

MPAMAGAZINE.COM.AU | 49

FEATURE / SOFTWARE SOLUTIONS

aggregator’s CRM. They may have no desire to migrate to a new system. But some brokers may still want added functionality that their CRM isn’t delivering.

Most software providers offer standalone solutions – such as comparison engines or loan calculators – that brokers can employ without switching CRM providers.

But there are also software offerings on the market brokers may not have even considered, but that nonetheless could provide a boost to their business.

One such solution is cloud storage. Cloud storage is one of those technology buzz-phrases people tend to throw around without truly understanding what it is. But Infraworx director Antonne Ghobrial says the crux of the issue is securing important data.

“We’ve talked to a lot of clients, and they either back up their data to tape – which is expensive – or they back up to USB or CD and have to manually transfer the data and take it with them, or they don’t do backups at all,” Ghobrial says.

Infraworx provides brokers a secure way to back up the data stored on their CRM without fear of losing it to computer crashes. And secure storage, Ghobrial says, should be an issue of utmost importance to mortgage brokers.

“This is a good service for the broker market, because they need secure backups. They’re hosting customers’ personal financial data. That needs to be very secure, and we think we have the right solution,” he says.

Ghobrial says brokers can use the service to automatically schedule backups of their data as often as they like, and that the data is encrypted so only the

“With the advent of the iPad and iPhone, we really needed to go down the mobile path” – BRETT SPENCER, STARGATE

50 | MPAMAGAZINE.COM.AU

broker can read it. He says the offering goes beyond that available even from most aggregator CRMs. “A lot of aggregators provide backup facilities, but half the time it’s manual and the person doing it has to remember to do it. Even if they do run automated backups, they’re often not secure enough.”

A LOOK AHEAD …

Technology is changing rapidly, and the pace of change is only accelerating. Thus, the best technology and software companies in the mortgage industry are already looking for the trends and innovations that will define the next 10 years. Hayden believes social media will continue to dominate society, and that smart technology providers will look at ways to integrate social media communication into CRMs. “More and more customers will want to communicate on their own terms using many different mediums.

Having clients fill in your forms online is available now.

Integrating with social media forums will become normal business quicker than many brokers are prepared for,” he says.

Macartney, meanwhile, predicts that the way clients interact with brokers will change to more closely mirror the online retail environment.

“When you look at the growing acceptance of online retail and the advances in things like tablets and smart TVs, the reality is people are going to continue to want to speak to a human being about their home loan, but I could see a scenario where a borrower is sitting in their lounge room and the broker may be conducting the interview via their smart TV and showing them things dynamically on the TV. It potentially provides a richer experience for the borrower, and is more cost-effective for the broker,” he says.

And changes in communication won’t just affect the way brokers and consumers interact, but also the way brokers interact with lenders. Ultimately, Hayden thinks software innovations will make for a smoother process in brokers’ dealings with lenders.

“Of course, electronic lodgment and communicating with lenders will slowly get better as lenders provide more funds to this area of their business.

“In fact, more and more lenders are moving their BDMs back into the office in order to increase their effectiveness and to deal with their broker partners

FEATURE / CONSOLIDATION

Behind the scenes Some of the software on the market may not have a direct touch-point for brokers, but impacts their day-to-day business just the same. NextGen.Net’s Tony Carn says the company’s Apply Online functionality delivers some direct benefits to brokers.

“In the vast majority of cases, when a broker is lodging a loan to a lender, they’re actually using our software,” Carn says. “Our focus is on driving efficiency and providing tools to achieve straight-through processing for

lenders and brokers. That reduces re-works or ‘more information required’ messages. We believe we can dramatically improve conversion rates, get faster turnaround times and a better customer experience.”

Likewise, Infinitive’s Jega Rajan says the company has provided a “submit” button for lenders’ online lodgment, delivering a boon to brokers they may not be aware of.

“Our lodgment is used even by our competitors,” he explains.

more efficiently using online technologies.”

Infinitive’s Jega Rajan agrees, but goes a step further in predicting that the entire loan process may be placed further in the hands of brokers. New technology, Rajan says, will empower brokers to submit truly complete deals to lenders.

“I think you’ll be able to present a clean application to a bank; and a clean application doesn’t involve going back to do the valuation, it doesn’t involve going back to do the credit check or do LMI. The future could be that you submit an application and the bank says ‘yes’ without any more work,” he says.

Whatever changes technology brings to the broker market, Hayden says they must be made with the end consumer in mind.

“I firmly believe that key changes in the future will be driven by clients and not lenders. For the past 20 years technology advancement has largely been driven by lenders and what they believe is important to the industry. In the very near future – and you can see it already – the consumer is driving the change,” Hayden says.

And Spencer urges brokers to stay ahead of the game.

In an environment where consumer demand drives technological innovation, Spencer warns that consumers will expect their brokers to remain at the cutting edge.

“If I went to see a broker and he was sitting there in his office behind a mainframe or desktop, it wouldn’t impress me. But if I saw a broker who was at the cutting edge of using new technology, that person would get my vote every time.”

MPAMAGAZINE.COM.AU BROKERNEWS.COM.AU | 51

FEATURE / SOFTWARE SOLUTIONS

SOFTWARE

PRODUCT GUIDE Stargate MortgageFinder™

MyProductGuide™

Lead with MortgageFinder™ … A new way for consumers to find their home loan… and a broker.

MortgageFinder is the first truly independent mortgage product search tool for the consumer market.

Allowing consumers to search for the product that best suits their individual needs, they can also find their nearest mortgage broker to help them get that loan they want… That’s you!

MortgageFinder™ gives consumers instant home loan results from over 1,000 products, and by using the GPS built into most mobile phones, MortgageFinder™ gives you targeted local leads from people that need your services. And for only $5 per month per postcode, walk-in business has never been easier.

Confirm with MyProductGuide™… the only mobile-driven aggregation of thousands of lender products into one easy-to-search guide designed for the on-the-go mortgage broker. Never again will you not know the minute details of an individual lender’s product, with MyProductGuide™ you have the industry’s most comprehensive up-to-date product listing at your fingertips.

Whether it’s searching for product rates, fees or the most obscure feature, MyProductGuide™ has the product information you need available on your mobile phone, tablet or PC. Downloadable from iTunes, it’s only $9 per month for use on up to three devices, and if you find an incorrect product, we’ll also give you a money back guarantee, no questions asked.

Mobbie™

eFind™

Search with Mobbie™… an M innovative new search engine for mortgage professionals needing accurate information while out and about … It’s the Google of the Australian mortgage industry …

No longer do you need to navigate cumbersome lender websites in order to find the latest policy guidelines.

Mobbie™ can search thousands of documents for anything you need and even searches within the documents themselves for specific terms, or better still, search for multiple terms and get the most accurate results.

Best of all Mobbie™ works on your mobile phone, tablet and PC, allowing you to get the information you need wherever you are at any time of the day.

Downloadable from iTunes, it’s only $9 per month for use on up to three devices.

Mobbie

52 | MPAMAGAZINE.COM.AU

Guide

efind

Apply with eFind™ … the only iPad-based loan application and client fact find tool

for brokers. eFind™ was borne from a frustrating experience of having to complete loads of paperwork and that feeling of being interrogated at the initial loan interview. eFind™ turns that awful experience into a streamlined conversation by allowing the consumer to complete their application online on your iPad. With digital signing, photo capture of supporting documents and the auto creation of NCCP compliant documentation, paperwork is now a thing of the past.

Best of all, once you’ve captured all the information you need, simply export it to your CRM system for easy straight-through processing. Think of the time savings you get for only $19.95 per month. Available for download at e-find.com.au

Loanworks Loanworks Product Suite The Loanworks product suite is an industry-leading platform providing proven solutions for: lead and application processing; loan origination; CRM and marketing; workflow automation and document management; broker and referrer management; commission processing; smartphone portals; and B2B integration.

Loanworks Technologies also offers the option to customise and adapt the software, making it the ideal platform for innovative, targeted business models.

Established in 1998, Loanworks Technologies’ experience, responsiveness and innovative approach means that it is the trusted solutions partner of choice for some of the premier brand names in the financial services industry.

For more information, contact Wayne Macartney on 0438 929 635 or visit loanworks.com.au

Infinitive Lodgement The complete electronic loan application lodgment solution.

Lodgement, as part of Infinitive’s Spectrum Suite, isa web-based tool used to submit electronic loan applications and is available on all browsers and operating systems, including the iPad. With unique pre-submission form validation and the ability to clone applications, Lodgement saves on data re-entry and time.

Being a web-based tool, you can access anywhere, any time, and there is no software to download.

Updates are applied automatically which means you can be confident that all forms, products and lender policies are up to date.

Lodgement allows users to easily track loans from the application, all the way to settlement helping brokers provide their clients the highest quality service.

Using Lodgement in conjunction with Infinitive’s Spectrum Suite provides a comprehensive client and loan management system.

For more information, visit infinitive.com.au

Infraworx Infraworx Protector is a high security, advanced backup and recovery product that enables businesses of any size to continuously and securely back up their servers and PCs to remote (offsite) and local destinations.

Most businesses transfer their backups manually every day to another location such as a home of one of their staff. Or they pay a premium price to have it moved to an offsite location. Infraworx Protector eliminates any manual intervention in order to offsite their backups, making the whole backup process a lot simpler, for a not-so-premium price. It does so by continuously running in the background, sending data across as it changes. Restoration of files is very convenient; whenever needed, a user simply chooses a “point in time” to restore from. Businesses can also choose to receive backup reports, which can assist in audits.

One key concern of businesses for such a product is the security of their data. Data is encrypted when being transferred, and is also encrypted with 448-bit encryption while stored on our servers. This is one of the highest levels of encryption available. Businesses can be rest assured that no one can view their data, not even Infraworx’s own staff members. Backups are stored on redundant enterprise class servers (located in Sydney), and are replicated to a second location automatically.

For more information, call 1300 277 211 or email protector@infraworx.com

PRODUCT LICENCE DESCRIPTION NAME COST Infraworx Protector

Secure backup and recovery

Licence per device (Minimum of five) is a one-off cost of $87.50, plus an annual maintenance cost of $15.75

DATA STORAGE COSTS 100GB is $50/month 250GB is $70/month 500GB is $100/month 1,000GB is $170/month 1,000GB+ upon request

MPAMAGAZINE.COM.AU | 53

PLAN TO SUCCEED

F

A good business plan can act like a compass, not only helping you stay the course, but also gets you where you want to go For new mortgage brokers setting up shop, a business plan is an essential tool in helping you realise your goals.

“Without a business plan, you have a dream with no stepping stones,” says Michael Griffiths, small business coach and CEO of Michael Griffiths & Associates.

“A business plan ensures you know where you’re going, what you want to achieve and the action steps required to get to your goals,” Griffiths says.

“Business owners without a business plan usually find themselves not growing or taking the required steps to move the business forwards. Their heads are usually stuck in day-to-day routines rather than business growth strategies.”

Even veteran business owners often fail to recognise the importance of creating a business plan, adds Michael Altenburger, Small Fish business coach.

“In my experience, only very few SMEs have a formal written down business plan. Not many know exactly what a business plan is or what purpose it serves. Those who do know often feel overwhelmed by the daunting task of creating one. Lack of experience adds to the problem.”

54 | MPAMAGAZINE.COM.AU

COLUMN / BUSINESS PLAN

MPAMAGAZINE.COM.AU | 55

COLUMN / BUSINESS PLAN

Altenburger adds that having a plan – especially in written form – helps to quickly determine that things are heading in the wrong direction (hence ‘not going to plan’) – not when it is already too late.

PUTTING IT TOGETHER

Top mistakes TOO VAGUE Part of the value in putting together a business plan is to help you visualise and focus on your objectives. A plan that fails to clearly identify tangible and realistic goals misses the point.

POORLY WRITTEN Maybe this is not a huge deal if the plan is for your eyes only, but if it is to be viewed by third parties, you want to ensure that there are no mistakes in spelling, punctuation or grammar.

STOPS SHORT OF BEING A GUIDE It’s great to outline your goals, but to get real value from your business plan you need to clearly identify how you intend to reach them.

INADEQUATE RESEARCH Failing to properly identify and research your target market can lead you to make foolish marketing choices. Get some facts.

Find out as much hard information about your target market as possible. Do they read the local newspaper, are they mums and dads of the local footy team, and/or are they tech savvy?

GOING SOLO You may be a one-man show, but there is no reason why you have to create your business plan in isolation. There are tons of resources available for small businesses. Get professional help.

The right business coach can help you turn what may seem like a daunting task into an invaluable tool for your business.

UNREALISTIC If your goals are over-ambitious and rely on too many forces that are out of your control, then perhaps you need to scale back your expectations. Creating a 10-page plan with world domination as the end goal can only lead to disappointment.

UNDERESTIMATING THE COMPETITION Failing to recognise that there are other brokers operating in your space is foolish. You need to look at their business and figure out how you can offer a point of differentiation.

56 | MPAMAGAZINE.COM.AU

Simply put, a business plan is a written description of your business and your business goals. It can be used to help you describe your business to potential investors, attract employees, or prospect for new business.

The structure of your business plan will reflect who is using it. If you’re looking for finance, your business plan might be slightly more detailed than one that will be used internally for staff.

So step one in creating a plan is to determine who the plan is for. Deciding whether the plan will be used internally or viewed by third parties will help you target your answers. According to Griffiths, it doesn’t need to be pages and pages long.

There are many variations of business plans, but a basic business plan typically includes: Description of the business: This is your management plan. It typically covers information regarding the structure and premises, staff, your relevant experience and services.

Market analysis and strategy: This section includes an analysis of your industry, your target market, and your competition. It should also outline your key marketing tactics to reach your target audience.

Future planning: You might want to include your business’ vision statement, your plans for the future, your business goals (short and long term) and how you intend to reach them.

Finances: This includes how you’ll finance the business, and outlines the operational costs and earnings, and projections.

“Remember, a goal is no good unless it has action steps to get you there” – MICHAEL GRIFFITHS

Executive summary: This can be short and sweet – just a one-page overview of your business.

When it comes to outlining your goals, Griffiths suggests: “Start with 12-month goals and ask yourself what outcome do you want in the next 12 months; set three to five goals you want to achieve, then break it down to three months, six months and the next 30 days. For example, if you want 100 customers in 12 months then how many do you need in the first 30 days? What stepping stones or action tasks do you need to be doing to ensure that your goal comes true?

Remember, a goal is no good unless it has action steps to get you there.”

AND AGAIN There are no hard and fast rules regarding how often you revisit your plan, although Griffiths suggests business owners check at least on a quarterly basis.

“We revisit ours every month to ensure we focus on the next 30 days and what needs to be achieved.”

According to Altenburger, a formal review of the plan should be conducted annually.

“On these occasions the goals would be re-evaluated based on new information available.”

5 reasons to update your plan |Market 01 changes: If there has been a

significant change in the market, for instance you’re picking up increased business from property investors, you might want to revisit your plan and figure out how to capture this burgeoning segment

02|

Regulatory changes: The industry has undergone a regulatory overhaul – does your plan reflect this? Perhaps one of your goals is to move from being a credit

representative to getting your ACL in two years’ time Personnel |changes: 03 Perhaps you are in

the process of adding loan writers, or maybe the business has lost a partner – the business plan should be revised and each person should be aware of the management structure

| 04 Diversification: One way to grow your business revenue is to look at how you

can incorporate diversification into your strategy. Your chances of embracing new opportunities will increase if you visualise how it will fit into your business

|New 05 financial period: There are no

hard and fast rules on how often you should update your plan, but a new financial period – annually, quarterly, monthly – can be a good time to update if your goals are being met and your plan is realistic

MPAMAGAZINE.COM.AU | 57

PROFILE / KELLY CAMERON-TULL

S

eeing her grandparents struggle to keep their house convinced Kelly CameronTull at a young age that she wanted to help people achieve financial security.

Upon graduation, Cameron-Tull worked in business finance, but was switched onto mortgage broking a few years later by someone already working in the industry.

Mortgage broking, together with her passion for real estate investing, has put Cameron-Tull in an even better position to help her clients achieve their financial and housing goals. And recently, her business took a large step forwards.

With a ‘build it and they will come’ attitude, CameronTull put her growth strategy into action last year by purchasing a large commercial premises in Fortitude Valley, Brisbane. It is big enough to accommodate Cameron-Tull’s plans to add a few more brokers in the next two years. As well, the office is more convenient for clients, and the increased number of appointments from clients stopping by in the evening is testament to that.

Cameron-Tull works alongside her husband and operations manager, Brett Tull. She also employs two mortgage brokers and one staff member for client support.

MPA caught up with Cameron-Tull to find the keys to her success and where she sees the industry heading.

Q: What do you attribute your success to?

A: A supportive husband, a can-do attitude, a willingness to work hard, and a brilliant team of great people.

Q: What keeps you motivated?

A: Trying to better the business all of the time. The changes to the industry keep us on our toes, but the positive feedback that we get from our clients is what keeps us always looking forwards.

Q: What was the biggest turning point of your career?

A: There have been a few. Becoming a broker, then going out with another broker in partnership, then leaving that and backing myself. Then I sold, went interstate, got

IF YOU BUILD 58 | MPAMAGAZINE.COM.AU

“Use every interaction with a lender or a client to learn, and develop your technical skills”

Q: In what ways has it changed for the worse?

A: The changes to legislation have made the compliance

– KELLY CAMERON-TULL

If the answer you are given does not seem to make sense, hang up and call again. Use every interaction with a lender or a client to learn, and develop your technical skills.

bored, started a new business after six weeks, and literally walked the streets again to get clients. Two years later, my husband and I moved back (to Brisbane) and we just kind of re-started again. I have moved aggregators a few times, moved the business a few times… and here we are. So there have been a few turning points. Having a baby has forced me to rely on others in the business more, so that has been a big change for me.

Q: How does your geographic location affect your business?

A: We moved almost a year ago from Windsor to Fortitude Valley, and we are now much easier to get to. Many people working in the city or locally now come in during the day and evening. Also, we can fit more appointments in each evening, because it is faster for people to get here. We have also picked up more local clients, and they generally are borrowing larger amounts of money.

Q. Why did you become a mortgage broker?

A: Another broker introduced me to the mortgage industry. It was a welcome change from business banking, which I wasn’t enjoying.

Q: In what ways has the industry changed for the better since you started broking?

A: More technology has been difficult to adjust to at times, but has certainly made it easier to get loan docs in a hurry! And it has made it easier to stay in touch with clients, perform reviews, and serve remote clients.

IT ...

piece of our business quite onerous, and it has added a fair bit of cost.

Q: What kind of advice would you give to a new mortgage professional?

A: Keep asking questions until you understand it all.

Factfile Kelly CameronTull, Get Real Finance ++ Location: Fortitude Valley, Qld ++ 2011 MPA Top 100 Ranking: 31

Q: Do you diversify and if so, in what areas?

A: We are still just referring insurance and other

++ Hometown: Brisbane

products out to other professionals.

++ Education: BA, and several post-graduate diplomas, in finance and other business areas

Q: What business development activities have you focused on?

A: I am only ever really interested in the business development activities that teach me something new.

Q: How do you build brand awareness for your business?

A: We focus on word of mouth, but we are going to wrap my car, so that I can drive it around the local area and get our brand out there a bit more locally.

Q: Do you feel fee-for-service is the way forwards in the industry?

A: It will happen at some point in the future.

Q: What is the most challenging issue facing the industry at the moment?

A: Trying to streamline the compliance piece, to make us all more productive.

Q: How do you see the mortgage industry evolving in the next 10 years?

A: More technology, more streamlined processes, and

++ Family: Husband, a stepson and stepdaughter, and a 13-month-old ++ Hobbies: I love exercise, and team sports or team activities, but I have much less time than I used to for these

the introduction of fee-for-service.

Get Real Finance’s Kelly Cameron-Tull has had several turning points in her career as a broker, but has consistently managed to be among the top 100 brokers in the country MPAMAGAZINE.COM.AU | 59

THE DATA / YOUR MORTGAGE INDEX

What’s motivating borrowers?

Why are Australians looking for home loans? The latest data from yourmortgage.com.au reveals their motivation

51%

21%

16%

10%

1%

1%

I want to buy my first home

Refinance to get a better deal

To buy an investment property

Move house

Give my home a makeover

I want some spending money

Key facts

$340,833 Average loan size required

60 | MPAMAGAZINE.COM.AU

70%

are looking for a variable-only loan

48%

want to refinance immediately

NEWS / ROUND-UP

BROKERNEWS.COM.AU | 61

THEDATA

RI$KY NORTH WARD, QLD – UNITS

PALM BEACH, NSW – UNITS

THE DATA / RISKIEST SUBURBS

BUSINESS MEDIAN PRICE: $397,500

Think twice before investing in these suburbs, where vendors are dropping prices in response to sluggish demand

AVERAGE DAYS ON MARKET: 189 AVERAGE VENDOR DISCOUNT: 13.7%

MAIN BEACH, QLD – HOUSES

MEDIAN PRICE: $1,130,000 AVERAGE DAYS ON MARKET: 180 AVERAGE VENDOR DISCOUNT: 12.7%

MEDIAN PRICE: $336,000

SURFERS PARADISE, QLD – UNITS

AVERAGE DAYS ON MARKET: 177 AVERAGE VENDOR DISCOUNT: 16.5%

SURFERS PARADISE, QLD – HOUSES MEDIAN PRICE: $1,260,500 AVERAGE DAYS ON MARKET: 217 AVERAGE VENDOR DISCOUNT: 26.7%

MEDIAN PRICE: $1,392,500 AVERAGE DAYS ON MARKET: 238 AVERAGE VENDOR DISCOUNT: 20%

Source: Your Investment Property MPAMAGAZINE.COM.AU | 63

LIFESTYLE / A DAY IN THE LIFE OF

A day in the life of…

Sam White is executive chairman of Loan Market market is up 15%. That’s fantastic news for an economy that has had some really bad luck.

about the business support we offer, including our Loan Market concierge service.

7.45am

3.30pm

8.30am

4.15pm

Arrive at the Loan Market corporate office and take a quick call from Queensland state manager Andrew White about our Broker Academy.

We’re trying to clear up some confusion the industry has about our two-year Academy program.

Internal sales team meeting. Our South Australian/NT state manager Steve Pettitt has some great news about his Ray White referral numbers for the month.

10.00am 6.15am

My day begins with a brief alarm whose intimidating beep is quickly muted by the always effective snooze button.

6.30am

Alarm sounds again and I’m the first into the kitchen setting the table and making sure my kids are set for breakfast and lunch. It’s a humble start to my day considering my wife comes in and has to reorganise everything I put out.

6.45am

Catch up on the big stories that came through internationally and domestically overnight. I smile as I see a headline about Ray White listing Cate Blanchett’s house in Sydney just above a story about the US elections. I’ll be sure to congratulate the Ray White PR team when I get into the office.

7.30am

I give Loan Market New Zealand CEO David Hart a call while heading into the office. David informs me the

64 | MPAMAGAZINE.COM.AU

Two lender representatives come into the office to talk about flows and policy. It’s an open and honest discussion about how we can help one another.

11.30am

Attend an update session with the Loan Market and Ray White marketing teams. The discussion focused on our new websites for brokers and agents.

2.15pm

My dad, Brian White comes by for a chat about the upcoming Ray White office in Singapore and our plans to open a Loan Market office in Jakarta.

2:45pm

I join a broker recruitment meeting down the road with NSW/ACT BDM, Melissah Douglas. We talk

Get an update on the upcoming OzHarvest charity event. It’s a tremendous organisation to be involved with and they have done some amazing work over the years ensuring the needy don’t go without essential food.

I spend a few minutes putting the finishing points on the personal letters I am sending out to our latest elite brokers. It’s a real privilege to have such an outstanding team and I’m really proud of them all.

4.30pm

Another solid month of customer satisfaction scores for our broker team – I sign 64 100% Customer Satisfaction scores for the month, including three for Craig Butt in the ACT.

5.30pm

Catch up with Loan Market’s national sales director Mark De Martino. Mark’s very excited for two of our brokers, Phil Rogers and Josh Bartlett who have been nominated for ‘Newcomer of the Year’ in the upcoming AMAs.

7.00pm

I get home for dinner and I enjoy hearing about the things my family got up to today. After we eat and clean up I help out my eldest who is having some algebra problems.

“It’s a real privilege to have such an outstanding team and I’m really proud of them all”

NEWS / ROUND-UP

BROKERNEWS.COM.AU | 65