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MPAMAGAZINE.COM.AU ISSUE 13.01

HOT LIST

STAFFING FOR SUCCESS FINDING AND KEEPING QUALITY PEOPLE

2012 22 PEOPLE WHO’VE IGNITED THE INDUSTRY

MPA’S INAUGURAL YEAR IN REVIEW


CONTENTS / ISSUE 13.1

48 Super opportunity The what, why and how of incorporating SMSF into your offering

38

iew Year in Rev surveys, ’s ar ye All the newsmakers rankings and

2 | BROKERNEWS.COM.AU  

WEEKLY INVESTIGATIONS NOW ONLINE: COVER STORY 30 | MPA Hot List A look at the people who shaped the industry in 2012, and what they think the future holds

Tech transformations Problem solving » mpamagazine.com.au 


CONTENTS / ISSUE 13.1

9

NEWS & VIEWS

PROFILES

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

24 | Lisa Montgomery on the biggest fight of her life

12 | Online The best from MPA Online and Australian Broker Online 14 | News Analysis What JP Morgan’s mortgage outlook means for your business

SMART BUSINESS

60

24

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18 | Staffing for the long haul How to recruit and retain quality staff 60 | Sales stuff-ups The worst mistakes salespeople make

18

STATS 64 | Your Mortgage Index The latest mortgage hunter trends from our sister website


NEWS / ROUND-UP

BROKERNEWS.COM.AU | 5  


CONTENTS / EDITOR’S LETTER

FORWARD AND BACK It’s the end of the year, and the industry is winding down. End of year drinks and Christmas parties abound, and it’s a great time to get together and take stock of what’s been an interesting year. Certainly, 2012 has presented challenges. Credit growth has remained slow and housing demand is far from booming. Yet, 2012 has also seen mortgage brokers make significant strides, as evidenced by the combined $6.8bn in settlements written by our Top 100 Brokers this year. It’s appropriate that we take some time to reflect on the issues and people who have shaped the industry over 2012. That’s what we’ve done in our 2012 Hot List (page 30) and our Year in Review (page 38). But it’s also a time for looking forward to the year ahead. While 2012 has thrown hurdles in the path of the industry, brokers – as always – have overcome. Doubtless, 2013 will present many of the same challenges, but it’s a good bet the mortgage broking industry will continue to prevail and be stronger for them. Adam Smith, editor, MPA

COPY & FEATURES EDITOR Adam Smith CONTRIBUTOR Andrea Cornish PRODUCTION EDITORS Carolin Wun, Moira Daniels

ART & PRODUCTION SENIOR DESIGNER 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

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


NEWS / ROUND-UP

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NEWS / ROUND-UP SCAMS

NON-BANKS

Tough times for debenture ventures

MFAA NAMES AND SHAMES ON TRAIL TROUBLES

STATS

34%

It’s been a tough few months for non-bank lenders funding themselves through debentures, with the collapse of Provident Capital, followed by Banksia Financial Group. Both companies have entered receivership, leaving investors in the lurch with millions owing. The future is also uncertain for brokers who wrote loans through the companies. AFG director of sales Mark Hewitt said it was “too early to speculate” on the possible commission impact of the Banksia collapse. ASIC has now vowed to undertake a wholesale review of the way it regulates the debenture industry. The regulator is reportedly examining requirements that debenture issuers must disclose if they meet a set of suggested capital ratios, with no penalty attached if they are under-capitalised.

HOUSING

WHAT BUBBLE? The Australian housing bubble is the gift that keeps on giving for journalists and economists. It’s always lurking just over the horizon. But one economist says people positing the existence of said bubble are

8 | MPAMAGAZINE.COM.AU  

THE DECLINE IN JOB OPPORTUNITIES FOR FINANCIAL SERVICES PROFESSIONALS IN AUSTRALIA DURING Q3 2012. THE DECLINE WAS THE SHARPEST IN THE WORLD FOR THE PERIOD.

fundamentally misguided. BT chief economist Chris Caton recently told the Vow Financial conference that the Australian market cannot simply be compared to the US market. When other countries are thrown into the mix, the argument that we have a housing price

The saga of Mark Whittingham is well known to many brokers in the industry. The Buy a Trail owner has been accused of failing to refund the deposits of brokers who have done business with him. The MFAA had previously been reticent to name names when warning brokers to be wary of trail book dealers, but a recent release from Consumer Affairs Victoria has prompted action from the association. The consumer watchdog issued a warning about Whittingham’s business, which entered liquidation in August, and the MFAA has followed suit by finally calling a spade a spade, and cautioning brokers about Whittingham specifically.

bubble in Australia is much harder to sustain,” Caton said. “The fact is our housing prices are in broad alignment with many similar economies, so it’s my belief that talk of a housing bubble is misplaced.” Caton added that mortgage brokers were likely to see lower rates

and higher housing prices over the next 12 months. “Although I’m not as bullish as some other economists on lower interest rates, I still expect at least one cut in the cash rate and possibly two as the Reserve Bank prepares for a downturn in mining,” he said.


YOU CAN’T SPELL “CUSTOMER SATISFACTION” WITHOUT THE SMSF Self-managed super funds have continued to outperform other types of super in customer satisfaction

Industry funds – 48.9%

Don’t want to get “trampled” by your competition? Better up your service proposition. That’s the claim of top broker Ian Jordan of The Selector Group, who claims that brokers who could not set themselves apart from larger rivals by offering “stellar” customer service were in for hard times. “I think that is where brokers might be missing a little bit, and this is their competitive advantage against the really big boys in town, their one-on-one ability to provide phenomenal service. “That is really their unique proposition and if they are not doing that they really are competing with the big boys and I think they are going to get trampled,” Jordan says.

SMSFs – 64.2%

Stellar service, or prepare to get trampled

INFOGRAPHIC

Retail funds – 42.5%

SERVICE

Source: Roy Morgan Research

GIVING

MILLION DOLLAR MILESTONE FOR CHARITY A broker group’s commitment to fundraising for charity has seen its combined donations exceed $1m. Smartline, along with merger partners The Mortgage Gallery and Mortgage Force, have raised over $1m for a total of close to 40 organisations, according to the group. The beneficiaries have included ACT for Kids, Care Flight, Ronald McDonald House, Ride Aid, Day of Difference and the Motor Neurone Association. Smartline managing director Chris Acret said

that not only is the support good for the organisations who have received funds, but it also benefits the whole business, including franchisees and staff. “It’s a great feeling knowing that the work we do every day doesn’t benefit only our clients, it helps many other people who really need this assistance,” he said. Smartline’s charitable efforts started soon after the group was established, initially with a donation of $5 per loan written, with the amount soon increased to $10 per loan.

MPAMAGAZINE.COM.AU | 9  


NEWS / ROUND-UP BORROWERS

MUMS AND DADS BEWARE As housing gets more expensive and saving for a deposit becomes more onerous, parents may be stepping up to the plate to provide equity for their first homebuyer kids. But MyCRA Credit Repairs CEO Graham Doessel has predicted this trend could lead to a rise in credit trouble for parents approaching retirement. Doessel says if the loans fall into arrears, parents would be liable, forcing them to work much longer than anticipated to pay off the debts that impact their own credit rating. “Many people go guarantor for their children, without assessing the risks to their own finances should the repayments not be met. If the child falls into arrears with payments, the parent is liable for any debt, and they are also blacklisted from credit accordingly,” Doessel said.

COMPETITION

One Big Swindle? The One Big Switch campaign, spearheaded by consumer group Choice, has drawn the ire of mortgage brokers since it launched. Now, 1300HomeLoan founder John Kolenda has added his voice to the chorus of derision, saying One Big Switch amounts to a “cynical bank bashing campaign” that could mislead consumers about mortgage pricing. “This company is taking spin to a whole new level by pushing a ‘Rate Gap Calculator’ that implies the banks should fully pass on cuts to RBA cash rates even though the RBA governor Glenn Stevens has repeatedly stated that is not the case due to their cost of funds,” Kolenda said. “This may be good for generating publicity for One Big Switch but the truth is that no one can lend money at the rates implied by this calculator.” Kolenda added that unsuspecting borrowers would potentially think they can save more than what is currently available in the market and were “being burdened with a needless sense of grievance”.

10 | MPAMAGAZINE.COM.AU  

Doessel said if the child fails to make repayments the parents are liable for this debt, and if this extends past 60 days, the creditor can place a default on both credit files. “In some cases parents are not aware repayments have stopped, and it’s not until they attempt to take out credit themselves and are refused that they realise there is a problem,” Doessel says.

TECHNOLOGY

NATIONAL BROKER NETWORK?

STATS

$3.1bn

THE VALUE OF MORTGAGES PROCESSED BY AFG IN OCTOBER, THE AGGREGATOR’S BIGGEST MONTH SINCE MARCH 2009

The NBN has been a hot-button issue, with critics calling it a waste of money while proponents say it will help Australia remain competitive with its Asian neighbours. Now one mortgage industry figure is claiming the NBN could be a “game changer” for brokers. LoanKit CEO Simon Dehne claims the

network could drastically change the way brokers operate. “Picture a typical family, a husband and wife with two children, for example,” he said. “Instead of having a bank manager or mortgage broker visit them in person, they visit the mortgage broker’s website, click the button to speak to a broker.”


INFOGRAPHIC

EDUCATION

✘ ✘✘ Invest, if you dare ✘

Your Investment Property recently revealed Australia’s riskiest suburbs. Here’s a look at some perilous investment spots Suburb

Houses or units

Vacancy

Stock on market

Mortlake, NSW

Units

3.26%

6.56%

Greenvale, VIC

Houses

9.76%

8.85%

Mount Pleasant, QLD

Houses

4.73%

7.48%

Collie, WA

Houses

5.72%

5.92%

Lesson learned The MFAA’s education push may have sparked controversy among some brokers, but it has earned accolades from training experts. The association’s Certified Mentor Program and its Train the Mentor Program were both finalists in the ‘Best Implementation of a Blended Learning Solution Award’ category at the National Training Excellence Awards. The awards, run by the Australian Institute of Training and Development, acknowledge innovation and best practice within the learning and development business community, with a focus on functionality and business outcomes. MFAA CEO Phil Naylor said its training programs were a key part of its goal to constantly improve the professionalism and capabilities of all of the association’s members. “The talented team behind our national mentor programs – Rod Edge our executive director of professional development and events, Therese O’Neill of Alpha Broker Mentoring and Karen Hambleton-O’Grady of Simply Mentoring – have worked together to produce great results,” Naylor said.

Source: Your Investment Property magazine

MPAMAGAZINE.COM.AU | 11  


NEWS / MULTIMEDIA

ON LINE In motion The latest from Broker News and MPA TV

Life insurance

The latest highlights from MPA online and Australian Broker Online

ARE YOU ON ASIC’S HIT LIST? ASIC recently sounded a warning to financial advisers outlining the major issues it aims to crack down on. Should mortgage brokers take notice? Speaking at the AFA Conference, ASIC commissioner Peter Kell highlighted the areas of concern that ASIC wants advisers to focus on to keep themselves out of trouble.

Worryingly, Kell noted that ASIC continues to see some “inappropriate switching” of life insurance policies “resulting in detriment to consumers, where we frankly can’t see why the policy’s been changed”. “In some cases unfortunately there have been very poor outcomes for the consumer,” he added. This issue may have greater impact on financial advisers, but mortgage brokers looking to diversify into risk products should take note.

SAY WHAT? THE BIGGEST QUOTES FROM THE MONTH

“They may bring a broader range of products to the market but we all know that all roads lead to Rome when it comes to the source of the funds for these loans” National Mortgage Brokers’ Gerald Foley on white label offerings from bank-owned aggregators

New licensees BROKERS DIVIDED ON NCCP EXPANSION Controversial calls to broaden the NCCP to cover commercial deals

BROKERS GAIN FROM HAPPY HOMEBUYERS With homebuyer sentiment up, good times may be ahead for the industry

GETTING THE BEST FROM YOUR BDM How to improve your BDM relationships to ensure your business benefits

12 | MPAMAGAZINE.COM.AU  

Kell began by pointing out that ASIC’s program of visiting new licensees was set to continue. He noted that, while the regulator has been impressed with the level of FoFA readiness amongst new licensees, there were several who still had some way to go. With the credit licensing regime still in its early days, most brokers fall into the category of relatively new licensees the regulator has vowed to keep an eye on.

Internal audits and reviews

When it comes to preventing ASIC action in the future, Kell noted that it’s vital to follow up on any issues that are identified when your business conducts a review or internal audit, as all too often these issues get swept under the carpet. “If you undertake a review, internal audit or compliance program within your firm, it’s very important that you follow up and implement change addressing the situation, and take appropriate remedial action.” He noted that there have been a couple of recent cases where ASIC has had to step in and deal with licensees who have failed to follow up on issues identified in audits.

“It is a logical extension of a mortgage broker’s duty of care and helps to satisfy their NCCP responsible lending obligations which require better knowledge and understanding of their customers’ financial positions”

ALI’s Ray Hair on insurance cross-sales

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 ANALYSIS / JP MORGAN REPORT

TOUGH TIMES?

Overall broker profitability is low, indicates the latest JP Morgan Australian Mortgage Industry report. MPA finds out what you can do to boost your bottom line in the next 18 months…

T

he good news is a greater proportion of consumers are using mortgage brokers. The recent JP Morgan Australian Mortgage Industry report indicates almost 45% of new loans are being originated through brokers – a figure that is approaching pre-GFC levels. “In fact, there is a slight increase in loans being sourced through the broker channel, and the research that I do in terms of consumers’ attitudes to brokers is very positive now. So consumers actually value the advice of the broker and believe that they get better

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choice or opportunity when they speak to a broker,” says Martin North, principal of Digital Finance Analytics and co-author of the report. But despite this positive turn, the report indicated overall broker profitability is down – and it doesn’t look like it will turn around for the next 18–24 months.

WEAK VOLUMES The JP Morgan Australian Mortgage Industry report explores the key drivers of housing loan growth in Australia’s mortgage sector and the changing dynamics


of mortgage refinancing against stalling property values and tight funding conditions. According to the report, the key reason for lower profitability is lower demand. “If you look at it in total volume terms, then the demand is actually pretty much as low as it’s ever been,” North says. “Everyone is talking the market up but we’re just not seeing it come through in the numbers.” The report finds that despite lower official interest rates, loan approvals remained weak and some borrowers were finding it increasingly difficult to refinance their mortgages, resulting in longer loan durations and signs that some segments of the market are being ‘locked out’. “Although lower mortgage rates have provided an avenue for borrowers to repay debt, it has not contributed towards an offsetting uplift in mortgage approvals. Moreover, not only is the volume of approvals weak, but the average value of approvals is declining. The lack of recovery in owner-occupied approvals may be a reason for concern,” says JP Morgan Banking Analyst Scott Manning. Although the total value of mortgages continues to grow, to now stand at $1.25 trillion, the dollar value of growth each period is declining – with particular weakness in the owner-occupied segment. The report finds housing credit growth has continued to soften since breaking below double-digit growth rates in mid-2008. “In fact, the most recent three-month annualised growth rate of 3.6% for housing credit in August 2012 is the lowest level since the RBA started disclosing credit aggregates in 1976. Given the current outlook, we expect low rates of credit growth to continue – with risk to the downside – as opposed to watching out for a quick rebound off the back of lower interest rates,” the report states. According to North, the property market started entering a period of weakness in 2008, but government incentives resulted in a surge of first-time buyers, which was followed by an increase in the volume of new construction. “If you look at what happened, there was a very big spike post-GFC with all the government incentives,” North says. So essentially, the whole market went through that peak in 2009/10 and it’s been going downhill since then.”

WHY? Several factors are contributing to the current lows in the Australian mortgage industry.

“I’m also now seeing more of the mainstream brokers questioning whether they’ve got a sustainable business model going forwards” – MARTIN NORTH, DIGITAL FINANCE ANALYTICS “Affordability is not very good,” indicates North. “If you compared average house prices with average incomes, they are still very high. So people have to spend a lot of money to get a property.” And despite the RBA’s 150 bps reduction to the official cash rate over the last 12 months (as of October 2012), loan rates to consumers remain relatively high, North says. Stricter lending criteria and new regulations are also keeping approvals down. “I reckon there are about a million households in Australia who would like to be first homebuyers but can’t get into the marketplace, and the reason they can’t get into the marketplace is because the lending criteria blocks them – either they don’t have the savings or the income to be able to do it,” North says. And, lastly, North points to the difficulty borrowers are experiencing in trying to refinance. “Refinancing kept the market a little buoyant in 2010 and 2011, but people trying to refinance now are finding it much more difficult,” he says. According to the report, around 30% of first-time buyers are seeking re-financing, twice the rate of other borrowers, and 15% of those applications are being declined. This is substantially above other categories of borrowers.

BROKER PRESSURE Combined with lower loan volumes, changes to commission structures and increased operating costs means brokers are finding it tough. “My research with brokers indicates that it’s costing brokers a lot more than it used to in order to write the loan and that’s because they have to comply with the new supervisory guidelines, keep better records and satisfy themselves that the loan is not unsuitable. And therefore, despite more electronic submissions than

MPAMAGAZINE.COM.AU | 15  


NEWS ANALYSIS / JP MORGAN REPORT

“[I’m] working both smarter and harder” – ROBERT TREWIN, ROBERT TREWIN MORTGAGE BROKING

previously, the average time it takes for a broker to get a deal done has blown out. So the cost side has gone up, the revenue side has gone down, and brokers are being squeezed,” North says. As a result, more brokers are leaving the industry. And it’s not just the part-timers weighing their options. “I’m also now seeing more of the mainstream brokers questioning whether they’ve got a sustainable business model going forwards. Because, to be honest, the income that they were being able to generate pre-GFC just isn’t there any more.” North speculates that many are holding on in the assumption that new loans are going to bounce back and, with rates being cut, the market will bounce back. However, according to the report’s findings, that might be wishful thinking. “We don’t see where that bounce is going to come from. Going back to my point that property prices are still high, that interest rates are still quite high, and we’ve got all these people who would have refinanced and would like to get into the market but can’t. So where is the growth going to come from?” North says. According to North, brokers who are thinking about how to manage their business for the next 24 months need to ask themselves how they’re going to run a sustainable business on the sorts of volumes they’re currently writing, because the market isn’t likely to see a big bounce back.

SHIFTING FOCUS One way to improve profitability could be as simple as changing your target market. According to North, brokers who spend a lot of time with potential first homebuyers have higher failure rates, simply because this segment is struggling to get into the market place and the incentives of 2008/09 are no longer there.

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Other market segments, however, could be more lucrative for brokers. “The most interesting areas for the next 12–18 months, I think, are those households that are looking to trade up,” North says. “There are quite a few of those around and they are not actually being very well served by the broker community at the moment because you need a different conversation when you’re trading up versus first homebuyers. So it seems to me that brokers should definitely be thinking about that.”

ON THE GROUND While the report casts a wide view of the mortgage industry, not all brokers will be experiencing the current situation exactly the same way. Smartmove’s Haley Bellamy agrees regulations have affected her business, but mostly in a positive way. “In some ways the market is now tougher to do business in than it was five years ago, although many of the changes are for the better, both for our industry as well as for the country as a whole. Tougher regulations have of course meant some cumbersome paperwork requirements and the necessity for time to be spent developing new processes and so on, however, the end result is a more professional standard for the industry which is definitely a good thing for consumers, and brings confidence to consumers when dealing with a broker. “Many brokers have reported reduced business, however, we find that if you are always doing the right thing by your customers there is always business out there – it is just a matter of making sure you are the one who has the opportunity of writing it.” According to Bellamy, the pull back of government incentives has had a greater impact on first homebuyers than stricter lending conditions. “I haven’t found any of my clients have been locked out of the market by stricter lending policies. I fully support the banks’ tightening of lending policies and feel it is really protecting the consumer in the long run as well as being a factor in ensuring a stable banking system which, of course, is good for all of us. I have found the removal of stamp duty exemptions for first homebuyers buying existing properties has had a far greater impact on some of the first homebuyer market, meaning potential


buyers have either had to save around an extra 5% deposit or pay higher costs to get into the market by means of lenders mortgage insurance if the family isn’t in a position to help by acting as guarantor or gifting them funds.” While uncertain market conditions, tougher lending criteria, valuation issues and additional compliance and regulation requirements have made it tougher for brokers, Robert Trewin, managing director of Robert Trewin Mortgage Broking, says his business has never been better. “Reflecting on my figures from five years ago, business has actually increased and certainly so has my profit, however, I would put this mostly down to being forced into being smarter in relation to additional income streams and in cutting business expenses. Some ways I have managed to do this have been sub-leasing

“If you are always doing the right thing by your customers there is always business out there” – HALEY BELLAMY, SMARTMOVE office space, cloud technology, staff wages, introducing a brokerage and offering added-on services such as insurances. Working both smarter and harder.”

MPAMAGAZINE.COM.AU | 17  


BUSINESS STRATEGY / RECRUITMENT

STAFFING FOR THE LONG HAUL

Recruitment isn’t just about finding the right people. It’s about keeping them

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M

Mortgage broking can be a lonely occupation. Many brokers run small, one-person operations. But when the time comes to bring new staff onboard, it’s important to make certain you find recruits who fit your business. Company culture is a bit of a nebulous concept, but Daniel Di Conza of Acceptance Finance says finding people who fit the ideals and principles of his brokerage is vital. Di Conza believes corporate culture is important enough to be a deal-breaker in bringing on potential new recruits. “They have to meet with not only the sales manager, but with their future potential colleagues. Our staff has as much say in the recruitment of the next person as does our sales manager. We don’t dictate to the team who joins. It’s very much a team decision,” he says.

CANVASSING FOR CANDIDATES

Finding any candidates – let alone the right ones – can be a task in and of itself. Sorting through CVs can seem like an onerous task. After all, anyone can make themselves sound good on paper. This is where a recruitment agency can help separate the wheat from the chaff. Carla Pibworth of Pathways, a recruitment agency specialising in the mortgage and finance industry, says brokerages have unique needs when it comes to new hires that traditional recruitment agencies may not understand. “I’ve produced a fact find document that asks what they’re looking for in terms of clientele, the business they’re expected to write, the stress levels involved. The placement of those brokers is really important. If you’re going for the first homebuyer market, you might need someone a bit younger, a bit more approachable. If you’re going for high-end investor portfolios you might want someone who has experience or relevant knowledge in that area. So, I fact find right down to the nitty gritty of what people are looking for rather than, ‘I’d like a mortgage broker please’.” Pibworth, a former broker herself, focuses on thoroughly screening applicants to ensure she only

delivers qualified candidates to brokerages. She says she helps potential brokers tick all the administrative boxes – including COSL membership, Diploma training and licensing – before trying to place them with a brokerage. “That time between taking a day and going away and doing their Cert IV, and taking a few days to do their courses and assessments, that’s all time taken away from writing business. So if I can deliver candidates to the interview process who already have those essential qualities, then they can start being trained in terms of client time, bank knowledge and accreditation, they can be sitting in on interviews and doing the training they need to be doing as opposed to the stuff that comes out in the beginning,” she says. Another barrier to using traditional recruitment agencies could be cost, Pibworth says. “When you take on a new broker, you have to wait nine months for them to be bringing in income to the organisation. I thought about it, and thought the way to overcome that barrier was to offer payment terms over six months.”

“You need to take time, and you need to make sure you’re looking in the right places” – WARREN DWORCAN, RATE DETECTIVE HOME LOANS

MPAMAGAZINE.COM.AU | 19  


BUSINESS STRATEGY / RECRUITMENT

Why employees leave The latest report from recruitment company Robert Walters found that:

80%

of those surveyed would leave a role if there wasn’t sufficient career progression available – and 79% of hiring managers had been given a lack of career progression as a reason for leaving a role.

75%

of those surveyed ask specifically about career progression during the interview process.

More than half (55%)

of those surveyed actively search for job advertisements that promote career progression – yet only 37% of organisations address it in their job adverts.

65%

of organisations only address career progression in the later stages of the recruitment process.

FINDING THE RIGHT FIT Personality testing can be a vital part of ensuring the staff you hire fit the culture of your company, and stick around for the long haul. Recruiting employees who are the right fit for your company is easier said than done – so it is not surprising that the use of psychometric testing to screen job applications is on the increase, even for non-client facing roles. Understanding how to optimise personality – or psychometric – tests can help you find employees with specific traits that are best suited to the position you’re trying to fill, Paul Forti, from US-based PCM Management Consultants, said in a recent interview. He listed the following points as essential to keep in mind to ensure the effective use of psychometric tests:

Make sure they’re legal: Not all tests are equal in the eyes of the law. If a test is not properly created or administered, it could be considered discriminatory. Hiring an experienced personality testing firm or consultant can also mitigate your risk, but that can

20 | MPAMAGAZINE.COM.AU  

end up costing a lot of money – depending on the scope of the testing, number of employees, and type of test administered.

Create a detailed job description: It’s critical to understand the job for which you’re hiring before you apply the test. If you need a salesperson who is outgoing and good with people, you’re going to be looking for a different personality type than someone who works with numbers in the office all day.

Choose the test that measures what you need: There are many different personality tests available to employers, measuring everything from “morality” and “integrity” to whether a person is an introvert or extrovert. Be sure that you’re measuring the criteria you need for the position you wish to fill – or you’re wasting your time.

Be aware of the test’s limits: While reputable tests can tell you what personality traits a person has, the tests can’t tell you whether the person will succeed in the job. Work environment, management style, corporate culture, practical experience and training all have significant impact on the performance of an employee. A test can tell you some things about an individual, but it should not be used in place of extensive interviewing and reference-checking. Warren Dworcan of Rate Detective Home Loans says he has used personality testing in his business not only to find new staff, but to discover the best way to communicate with his existing staff. “You need to take time, and you need to make sure you’re looking in the right places, whether it’s uni grads or someone in the finance industry looking to get into the mortgage broking industry. Something we used when we took on staff is a personality test to see how people fit into our social culture, and to see their strengths and weaknesses and find the way to communicate with them to get the best results,” Dworcan says.

KEEPING QUALITY PEOPLE Finding good staff is of little use if you can’t keep them. Staff retention can be tricky in mortgage


MPAMAGAZINE.COM.AU | 21  


BUSINESS STRATEGY / RECRUITMENT

broking, with brokers looking to strike out on their own as they gain more skill and build up their own client contacts. But Richard Manthell of recruitment company Robert Walters says providing a path for career progression can keep new recruits around for the long haul. “Organisations need to recognise career progression as a major motivator, and make the most of every opportunity to promote their brand as an employer of choice throughout the recruitment process. Not doing so is a wasted marketing opportunity.” Research from the company suggests that the best professionals want to join organisations where good career progression is offered, he said. “So, from the moment a potential employee reads a job advertisement through to when they sign their employment contract, they should feel that their future career progression is a priority for your organisation.” If this is done successfully not only will it be easier to source quality professionals but also easier to retain them, Manthell adds. A recent Robert Walter report offered the following key lessons for companies looking to retain quality staff:

Recognise career progression as a major motivator: Having something to aspire to and achieve is a major personal motivator for many. Presenting pathways to progression is just as important as any other aspect of a role.

Make first impressions count: The job seeking process is often the first contact with a brand, and the first impression is formed by the job advertisement. Ensure your job advertisement presents a persuasive, accurate

“Our staff has as much say in the recruitment of the next person as does our sales manager” – DANIEL DI CONZA, ACCEPTANCE FINANCE

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reflection of a role and what the organisation can offer. Not taking the time to include some basic information on what progression opportunities are available is a wasted branding opportunity. Career progression doesn’t have to mean a promotion; education, training and professional development is the most sought-after career progression offering – so ensure they are articulated and on offer from the word go.

Don’t overpromise: Overpromising and not delivering leads to staff disengagement, and also damages your employer brand. Being honest about what you can offer and what candidates can expect, as well as following through on progression opportunities, will ensure you recruit and retain the best candidate for longer. Make sure expectations are aligned from the beginning of the recruitment process.

Set consistent organisational standards and development programs: Career progression programs should include one or more of the following – development planning, talent identification, performance feedback, internal mobility, and training and development.

Provide the right tools to help employees manage their own career progression: Give

your employees the opportunity and encouragement to take control of their own careers. Give them the necessary tools and feedback to progress and support their goals. Performance reviews and development planning are vital to this process, but ensure goals are measurable and the individual accountable.


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HEAD TO HEAD / LISA MONTGOMERY

LISA MONTGOMERY:

GIVING UP WORK FOR LIFE JILL FRASER speaks to the Resi CEO about the toughest challenge of her life It’s an all too common scenario. A colleague, friend or family member who looks a picture of health, possesses boundless energy and appears to be deftly juggling the demands of a high-flying career along with home and personal commitments, is suddenly struck down with a life-threatening illness. Lisa Montgomery recently issued a statement announcing that she is taking a 12-month leave of absence from her position of CEO at Resi in order to devote time to her recovery from breast cancer. She agreed to an interview with MPA for two reasons: to stress that “no one is bullet proof”; and to urge people not to dismiss the subtle signs of ill health under the delusion that busy people can outrun and outmanoeuvre illness. Sounding depleted but upbeat, Montgomery spoke to MPA of the shock when the fast-growing cancer was diagnosed and what it will mean to swap the buzz of boardrooms for the tranquillity of mindful meditation, meals grabbed-on-the-run for a wellplanned, nutritional diet, and time to smell the roses and heal following a 10-hour operation later this month.

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MPA: Were there early warning signs that something was amiss?

Lisa Montgomery: There were a couple of health nudges that I didn’t think were significant. Now in hindsight I know I should have heeded them.

MPA: Are you saying that you pushed through them?

LM: I acknowledged them but continued with the same lifestyle that probably caused them. That’s what we tend to do in this business. We think because we’re so busy there is no time for illness. And illness only happens to others. A day in the life of any mortgage professional begins at 5.30am. We’re up exercising, reading emails or looking at the news. Our first meeting is at 8.30am and we get home at 7.00 or 8.00pm and immediately check our emails again. I wouldn’t say I’ve been defined by my career, but for 30 years it’s been a dominant part of my life. I didn’t even take a break to have children.


“I decided to control the things I could control and rely on my medical professionals to do the rest”

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HEAD TO HEAD / LISA MONTGOMERY

Lately I’ve been consulting with a Buddhist monk psychologist who has been teaching me mindfulness meditation. During a recent consultation I admitted: my life has been my work and I’ve given up my life for my work. Now I need to give up my work for my life.

MPA: How did the chemo affect you?

MPA: When was the diagnosis?

MPA: Did you go through disbelief?

Only 10 months prior to that I’d had a mammogram. I have had regular mammograms and ultrasounds for years but I still got breast cancer. That’s part of what I want to emphasise. You have to be in tune with your body and all changes must be observed.

myself from thinking the worst. My husband, Drew, has been my strength. When you get news like this, your mind starts to imagine the worst and doubt takes over. It’s easy to get scared. After every medical appointment, Drew would talk me through what we had heard and he would latch onto every positive comment and instil me with optimism and restore my confidence to the point where I could start to deal with it. I made a decision when I was first diagnosed that I was going to effect change immediately. I started researching the regimes of the 85% of women who have survived breast cancer. I didn’t want to know about the women who didn’t survive. I decided to control the things I could control and rely on my medical professionals to do the rest. A word of warning: the internet can be your friend and your foe. Through Google, you find all sorts of things including life expectancy calculators, which I didn’t go near.

LM: On 12 June I was diagnosed with breast cancer.

MPA: Did you discover a lump?

LM: Yes, but that lump was not the cancer. It was diagnosed as a cyst. It was during the process of having the fluid removed from the cyst that the doctor discovered cancer underneath and it was fast growing. If I had waited until my next mammogram perhaps the story wouldn’t have been as rosy. Because it was fast growing, the decision was taken to have chemotherapy as a preventative measure. That was a huge issue for me. I didn’t take any medication. Not even Panadol. I never thought that I would have to put chemicals like that into my body. It was a very confronting moment. I had to walk into a room, sit down and have someone put a needle and destructive chemicals into my arm – chemicals that I knew were going to save my life.

LM: I’ve seen enormous changes in my body. There have been many side-effects, including weight and condition loss. Sometimes I think I have the strength of an 85-yearold woman.

LM: I went into shock for about a week and had to stop

MPA: Did you ask a lot of questions of your oncologists?

LM: I’m still asking questions! I’ve been incredibly MPA SPOKE TO CANCER AUSTRALIA AND BREASTSCREEN VICTORIA about the diagnosis of a cancerous tumour in Lisa Montgomery’s breast just 10 months after regular breast screening. (For the average woman, mammograms are advised every two years between the ages of 50 and 69. Montgomery is 48.) Cancer Australia said: “Mammograms are not as effective for women in the 40–49 year age group as they are for older women because breast tissue is denser in this younger age group, making early signs of breast cancer more difficult to detect. Generally, breasts become less dense as women get older, particularly after menopause, which is why mammograms become more effective closer to 50 years of age.” BreastScreen Victoria CEO Vicki Pridmore says no screening program is able to provide a 100% guarantee of cancer detection. She says: “A very small number of women may be diagnosed with breast cancer between screening mammograms. “If you notice any unusual breast change after a mammogram such as a lump, pain, or discharge from the nipple, please see your doctor without delay.” All BreastScreen Australia services collect data on interval cancers. In Victoria, the latest statistics (2008) determined that 5.9 women per 10,000 screened aged 50 to 69 were diagnosed with an interval cancer within 12 months of a mammogram. The National Accreditation Standard is 7.5: 10,000 women aged 50 to 69.

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impressed with the level of honesty. You tend to grasp onto anything that indicates that you’re going to live a long time. I’m pleased to say that this message is coming regularly now.

MPA: You’ve been at work through much of your treatment. How did you cope with the side-effects?

LM: I had a lumpectomy and then chemo. I was due to have six weeks of radiation therapy but on 26 July, I learned I had the breast cancer gene. I was not expecting that result because there is no evidence of breast cancer in our family. What I didn’t realise is that ovarian cancer is linked to breast cancer. It’s the breast cancer/ovarian cancer gene. My mother passed away from ovarian cancer. So did her sister. I had the genetic test and the result was positive. This means I have a high predisposition to breast cancer and ovarian cancer and rather than walk around with a time bomb in my shirt, I have made the decision to have what


HEAD TO HEAD / LISA MONTGOMERY

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HEAD TO HEAD / LISA MONTGOMERY

Australian breast cancer facts – Breast Cancer Network Australia Breast cancer occurs when abnormal cells in the breast grow in an uncontrolled way. • Every day 37 women will be told they have breast cancer and 7 will lose their lives to this disease • Over 14,500 women and around 105 men are diagnosed with breast cancer every year • Each year, more than 2,700 Australian women die from breast cancer • One in 8 Australian women will be diagnosed with breast cancer in their lifetime • Breast cancer is the most common cancer diagnosed in women • It is estimated that in 2015, approximately 15,600 women will be diagnosed with breast cancer • Survival rates continue to improve; the current 5-year survival rate is 89% Breast Cancer Network Australia (BCNA) works to ensure women diagnosed with breast cancer, and their families, receive the very best information, treatment, care and support possible. For more information, support or to donate, visit bcna.org.au or call 1800 500 258

they term risk reduction surgery, which is a double mastectomy and the removal of my ovaries and tubes. That happens on 21 November. It’s a 10-hour operation, including removal and reconstruction. That will reduce the risk to 0–2%. If there’s a history of breast cancer or ovarian cancer in your family, be proactive. Check with a genetic specialist and if you are eligible for a test, have it. If I had known this I would have had my ovaries removed when I was 40 as knew I wasn’t going to have kids. That may have changed the outcome because having your ovaries removed reduces your risk of developing breast cancer.

MPA: Have your colleagues been supportive?

LM: They have been remarkable. I have been blessed with an amazing team. Not only my senior team but Resi’s two managing directors, Peter James and Jim Christie. They are incredibly compassionate human beings as well as great businessmen.

MPA: How has your lifestyle changed?

“I’ve given up my life for my work. Now I need to give up my work for my life” – Lisa Montgomery

LM: The 85% of people who have beaten breast cancer share three factors in common. One is their nutrition. I’ve now dramatically changed my diet and reduced my intake of alcohol. The second is their mind. In this business, we’re always thinking about tomorrow’s appointments or an upcoming job, but mindfulness is about being present with what is happening right now. Third is about exercising and managing the body so that it’s fit and strong.

MPA: How difficult was it to step down as CEO for 12 months? LM: The first 12 months after breast cancer treatment is critical and I want to give myself the best chance of a long life. To do that, I need to focus on the three things I’ve just mentioned. In other words for the next 12 months, I need to be the CEO of Lisa Montgomery! Also, Resi needs a CEO who is fully engaged. It’s got great momentum happening at the moment and we want that to continue.

MPA: Were you part of the selection process for the choice of your temporary replacement, Angelo Malizis? LM: Yes. Angelo was my CEO at Wizard for 12 months

and I experienced firsthand his capable and competent management style and vast knowledge of the space. He is analytical and strategic. It’s a great opportunity for Resi to have someone with a different skill set and approach at the helm for 12 months.

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HEAD TO HEAD / LISA MONTGOMERY

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SPECIAL REPORT / HOT LIST

HOT LIST 2012

The industry’s leaders and opinion makers have made 2012 an unforgettable year. Here’s a look at who’s hot and who’s off the boil

22 PEOPLE WHO’VE IGNITED THE INDUSTRY

T

he last few years have been tumultuous ones for the mortgage broking industry, and 2012 was no different. Credit growth remained slow, homebuyers were still wary and brokers continued to come to terms with the compliance regime. Despite all the turmoil, brokers have still managed to prosper and the industry’s leaders have still used their platform to advocate for the third party. This year’s Hot List takes a look at the year’s top newsmakers in mortgage broking, and how they’ve shaped the industry in a difficult period.

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SPECIAL REPORT / HOT LIST

THE YEAR’S MOVERS

& SHAKERS

Who: Vaughn Richtor What: CEO Where: ING DIRECT Australia

Who: Vibha Coburn What: Head of mortgages Where: Citibank

Richtor took over the chief executive role for ING DIRECT when Don Koch departed to head the bank’s Italian operations. But Richtor was no stranger to the job. He served as CEO from 1996 to 2005, helming ING DIRECT’s Australian launch. With the bank making strides in its service proposition to brokers, Richtor has said he will continue to look to the third party to grow its books.

Coburn came into Citibank’s Australian business last year after serving in senior roles with the bank throughout the Asia-Pacific region. She has helped position Citibank front-of-mind with brokers, and has crystallised the lender’s place as a bank catering to premium, high net-worth clients. Coburn has also driven forward the bank’s fixed rate proposition and positioned Citibank as a leader in fixed rate pricing.

Who: Scott McWilliam What: CEO Where: Homeloans This year saw Homeloans’ takeover of the beleaguered Refund business, netting it an additional 54 brokers. McWilliam said the move had massively expanded Homeloans’ branded broker distribution as the company tries to raise its profile in the marketplace. McWilliam’s masterminding of the deal saw him bumped up the ranks to CEO.

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Who: Brendan Wright What: CEO Where: FAST Wright was the last piece of the puzzle formed after the shakeup caused by Steve Weston’s departure from Advantedge, taking over the CEO role from Steve Kane. Wright was formerly the general manager of distribution for NAB’s small business lending. He’s vowed to make the FAST brand more visible in the marketplace, and to brokers looking for an aggregator.

Who: John Mohnacheff What: National sales manager Where: Liberty Financial Mohnacheff’s drive to see Liberty move beyond specialist lending to the prime space has seen the non-bank move forwards by leaps and bounds with brokers. Liberty Financial took the top spot in six out of 13 categories in the MPA Brokers on Non-banks survey, while also showing strongly across the board. Mohnacheff also spoke out this year on low-doc lending, saying that the onus of responsible lending had to be shared by lenders, and urged ASIC not to push the weight of verification fully onto brokers.


Who Wha Whe

Who: Martin Leedham What: President Where: MFAA Leedham, AFG’s South Australian state manager, took over the top role at the MFAA after Steve Kane stepped aside to take the reins at Advantedge. Leedham has said his number one priority as president will be member engagement and providing brokers with a variety of delivery methods as the association continues its education push. Leedham has also made it a personal mission to see more young blood brought into the mortgage industry.

Who: Tony MacRae What: General manager of third party distribution Where: Westpac Under MacRae’s watch, Westpac has continued to perform strongly with elite brokers. With its push for segmentation and premium service for premium business writers, Westpac ranked fourth overall among Australia’s Top 100 brokers. MacRae has also pushed forwards the bank’s online platforms and mobile apps, and has been a vocal proponent of the opportunities presented by the SMSF sector.

The v at th after cons opening, plan plethora of n

Who: Kathy Cummings What: Executive general manager of third party banking Where: Commonwealth Bank Cummings caused some controversy this year with her suggestion that brokers should have to prove practical competency through the introduction of a mandatory practising certificate. But her drive for broker quality seems to be working for the bank. CBA topped the Brokers on Banks survey for the second year in a row, ranking either number one or two in nine categories.

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SPECIAL REPORT / HOT LIST

Who: Steve Kane What: Head of broker platforms Where: Advantedge Former FAST head Kane moved to fill the shoes of Steve Weston after Weston departed this year for a role at Barclays in the UK. The move saw him step down from his role as president of the MFAA. Kane has said he would like to build a legacy of helping consumers understand the value and relevance of the broker channel.

Who: Ranjit Thambyrajah What: Managing director Where: Acuity Funding

Who: John Flavell What: General manager of distribution Where: NAB Broker Flavell has been one of the most vocal advocates of the third party channel among the major banks, and has spent the last two years driving NAB service improvements. The results are showing, with NAB moving up the ranks of MPA’s Brokers on Banks survey from fourth overall in 2011 to second in 2010. Under Flavell’s watch, the bank saw its turnaround time ranking improve from dead last in 2011 to third this year.

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Thambyrajah managed to nab the top spot in MPA’s Top Commercial Brokers list for the third year in a row by settling more than $289m. In addition to his commercial broking hat trick, Thambyrajah also won Broker of the Year – Commercial Real Estate at the Australian Mortgage Awards. In a segment of the broking industry that supposedly suffers from weak demand, Thambyrajah continues to consistently outperform the market.

Who: Sam White What: Executive director Where: Loan Market This year has seen White take centre stage in Loan Market’s consumer marketing, while putting brokers in the public eye as well. Loan Market’s mass-media ad campaign featured White, along with some of the company’s brokers, in an appeal to consumers over the third party value proposition. 2012 also saw White tout the company’s Broker Academy, a 24-month mentoring and training program for new-to-theindustry brokers.

Who: Jenny Boddington What: CEO Where: QBE LMI Boddington took over this year upon the retirement of long-time CEO Ian Graham, but she’s not new to QBE. Boddington has served in senior roles with the company since 2005. The Oxford-educated former Deutsche Bank director has worked in banking strategy, investment banking and private equity for two decades. Taking the reins from stalwart Graham, Boddington said she did not enter the company with a “mandate for change”, but looked to “continue the journey”.


Who: Meg Bonighton What: Head of third party and relationship channels Where: ANZ

Who: Jon Denovan What: Partner Where: Gadens Lawyers

Who: Mark Davis What: Director Where: The Australian Lending and Investment Centre Davis has stormed out of the gate and become a household name in the industry in a very short time. After leaving a career at ANZ to transition into broking three years ago, he’s managed to top the MPA Top 100 list two years in a row, and grab the Australian Broker of the Year title at the AMAs two years running. His reign at the top doesn’t look set to end any time soon, as Davis says he’s on track for half a billion in settlements for next year.

Denovan has been especially vocal as brokers attempt to navigate the tumultuous waters of the NCCP. He stirred some controversy earlier this year by leaping to the defence of banks in the wake of a wave of litigation by over-leveraged borrowers. Denovan said that borrowers were shirking their personal responsibility, and that the media was unfairly branding banks as the bad guys. Brokers – for the most part – agreed on this.

Bonighton has hailed a quiet but confident “look at the scoreboard” approach for ANZ’s perennial success in the MPA Brokers on Banks survey. The major ranked third overall this year, and Bonighton put the result down to a focus on broker communications and BDM relationships.

Who: Glenn Stevens What: Governor Where: Reserve Bank of Australia Governor Stevens made himself a very popular man with brokers and borrowers alike over the course of the year, slashing the cash rate four times since the Reserve’s initial cash rate cut on Melbourne Cup Day last year. Whether all this aggressive monetary action stimulates economic demand remains to be seen, but at least Stevens is doing his bit to jumpstart the market.

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SPECIAL REPORT / HOT LIST

Who: Lisa Claes What: Executive director of delivery Where: ING DIRECT Claes has been vocal over the last year about convergence within the financial services industry that could see the lines blurring between mortgage broking and financial planning. The bank recently restructured its BDM strategy to offer guidance to finance professionals on both sides of the balance sheet, and Claes stated that, while specialists will always exist in the market, financial services will continue to see the rise of “a co-branded, fully integrated or a referral business model” catering to clients’ holistic financial needs.

Who: John Kolenda What: Managing director Where: 1300 Home Loan

Who: Chris Slater What: Head of distribution Where: AFG

Who: Clive Kirkpatrick What: General manager of mortgage broking

Where: St.George St.George took a bit of a beating in this year’s Brokers on Banks survey, ranking last in the field of 12. But Kirkpatrick responded in a way unique to most bank execs: He copped the criticism, promised to do better and then explained how he planned to deliver on that promise. The bank’s ensuing self-improvement drive has seen Kirkpatrick put in place systems he says will cut turnaround times in half. If his plans pan out, St.George could well see itself moving up the rankings next year.

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In his previous role as NSW/ACT state manager, Slater was always one of the aggregator’s most vocal and visible leaders. This year, he waded into the Connective controversy, saying the intense competition between AFG and its rival was ultimately good for brokers, pushing aggregators to up their game, invest in technology and focus on service.

The former Loan Market executive director re-emerged strongly last year as he launched his new aggregator, Finsure. In addition to the Finsure launch, Kolenda’s 1300 Home Loan began its full-on consumer advertising blitz, blanketing television, web, radio and print with the brand.

Who: Murray Lees What: Principal Where: Connective Connective has had a lot to crow about over the past year. Their settlements have consistently been topping the $1bn a month mark, broker numbers are expanding and their white label offering is seeing good support. Lees has made this year most interesting, however, by way of some healthy feuding with rival aggregator AFG. From criticising commission split setups to claiming Connective was “dislodging some bricks” from AFG’s WA operations, Lees has sparked some angry reactions from AFG execs – and injected some much-needed colour and controversy into the industry.


OFF THE BOIL Who: Mark Forsyth What: Former CEO Where: Firstfolio The Firstfolio CEO took the company through a period of rapid, transformational acquisitions, but he couldn’t take it into the black. Forsyth departed his role hastily this year after seeing the company post an 86% drop in half-yearly profits and an evereroding share price. His replacement, former CBA executive general manager David Hancock, lasted less than six months in the role.

Who: Wayne Swan What: Treasurer and Deputy Prime Minister Where: Australian Federal Government Swan made our hot list last year, but he’s found little love from the industry this year. From ineffectually hammering away at the banks over out-of-cycle rate moves to steadfastly standing by the unpopular exit fee ban, Swan hasn’t exactly ingratiated himself to brokers or lenders.

Who: Wayne Ormond What: Founder Where: Refund Home Loans Ormond makes another appearance on the Off the Boil list following the protracted administration of his Refund Home Loans business. The process left franchisees twisting in the wind for eight months before the business was acquired by Homeloans. At the height of the debacle, Ormond promised that at its conclusion he would grant MPA’s sister publication Australian Broker a full and frank interview. We’re still waiting by the phone, Wayne.

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SPECIAL REPORT / YEAR IN REVIEW

2 1 0 2 N I R Y EA W E I V RE

at 2012: k c a b k o o l a MPA takes dustry got right, n What the i rong and w what it got the top o who rose t

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SPECIAL REPORT / YEAR IN REVIEW

MPA 12.1 – HOT LIST

MPA 12.2 – PREDICTIONS

We asked industry leaders for their forecasts on the year ahead. Banks, franchises, aggregators, financial planners, non-banks and brokers sounded off on their outlook for 2012.

MPA’s annual Hot List serves as a snapshot of the industry and the people who have shaped it over the past year. The Hot List for 2011 saw both stalwarts and new faces.

WHO WAS HOT Some of the prominent industry leaders included in last year’s Hot List were Genworth’s Ellie Comerford, Mark Bouris of Yellow Brick Road, Michael Russell of Mortgage Choice, Australian First Mortgage’s Iain Forbes and ACCC chairman Rod Sims.

WHO WAS NOT Our Off the Boil list last year took aim at increasingly unpopular characters such as Choice CEO Nick Stace, whose One Big Switch campaign alienated brokers. Refund Home Loans founder Wayne Ormond also found himself on the Off the Boil list after the company was sent into administration. Finally, former Hot List entry Prime Minister Julia Gillard was firmly Off the Boil last year after the government’s introduction of the carbon tax. • Last year’s Hot List featured 38 newsmakers from the mortgage broking and banking & finance industries • All four major bank CEOs featured on last year’s Hot List • Two of the industry figures on last year’s Hot List found themselves on this year’s Off the Boil list

HITS AND MISSES HIT: The majority of industry figures we polled in 2011 foresaw tumbling cash rates throughout 2012.

MISS: BIS Shrapnel predicted the RBA would begin tightening rates by year end.

HIT: FAST

Q. WHAT ARE YOUR COMPANY’S OWN TARGETS AND OBJECTIVES FOR 2012? “In 2012 and beyond, we’re looking to continue growing our share” – John Flavell, NAB

Q. WHAT WILL THE CASH RATE BE AT THE END OF 2012? “I’m game to look to the middle of next year, and I’m reasonably confident that we’ll see one further 0.25% cut in the cash rate” – Michael Russell, Mortgage Choice

Q. WHICH MARKET SEGMENT WILL BE THE MOST IMPORTANT? “We have seen investors hit record levels in November so they, along with the continued re-emergence of first homebuyers, will be the market segments that we see performing the best” – Mark Hewitt, AFG

national sales manager David O’Toole predicted that ASIC would ramp up its compliance monitoring and reviews in 2012.

Q. WHICH COMPANY OR INDIVIDUAL SHOULD WE KEEP AN EYE ON?

MISS:

“If you’re smart and understand the new world that’s on the horizon, you’ll be building your own brand and your own private label away from the aggregators” – Kim Cannon, Firstmac

Perennial doomsayer Steve Keen predicted in September of last year that a market “swan dive” was six months away. Better luck next year, Steve.

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CRYSTAL BALL: HOW THE INDUSTRY FORESAW 2012

“I would suggest that Connective will emerge as players that have their brokers’ success at heart – this will stand them in good stead in a fast-changing environment” – Michael Stephenson, Wealth Today

Q. WHAT WILL BE THE MOST IMPORTANT THING MORTGAGE BROKERS CAN DO TO HELP THEIR BUSINESS?

Q. WHAT WILL BE THE ‘GAME-CHANGER’ ISSUE IN 2012? With the continuing changes to NCCP and compliance procedures, many brokers will find it challenging to meet the requirements and some brokers may be forced out of the market” – Jeremy Fisher, 1st Street Home Loans


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SPECIAL REPORT / YEAR IN REVIEW

MPA 12.3 – YOUNG GUNS

MPA 12.4 – TOP FRANCHISE BROKERAGES

Broking is all too often characterised as a middle-aged profession; however, MPA’s Young Guns recognises the mortgage industry’s rising stars. Each year, we highlight the top rookie brokers who will shape the industry in the years to come. This year, MPA threw in the added twist of imposing an upper age limit of 35.

Franchises offer the opportunity to leverage a wide range of support systems. MPA spotlighted the nation’s top 10 franchise brokerages.

Proudly sponsored by:

YOUTH AND WISDOM: YOUNG GUNS SPEAK OUT “Commission only just drives me to work harder” – Theo Chambers, Oxygen Home Loans “We take a long-term view on wealth creation – you might be buying a house but let’s get you set up long term as well” – Andrew Morel, Club Financial Services North Melbourne “It’s really rewarding helping people get their first homes, then coming back and buying investment properties, too” – Shannon Lindsay, Smartline Personal Mortgage Advisors Dandenong “When you have your own business, you need to build more trust” – Mohammad Hammoud, Sydney’s Best Home Loans “Service is the key to everything” – Hayley Grant, Vantage Financial “Customer service is a huge part of what we do: it’s that level of

service that gives us the point of difference” – Phil Rogers, Loan Market Townsville “I believe mortgage broking and wealth management is an ongoing relationship right through to retirement and beyond” – Lachlan Cottee, Yellow Brick Road Manly “Compared to financial planning, mortgage broking is too easy to enter. Too many people are doing it part-time” – Ben Gao, Shining Crown International “I love making the process of buying a home easy” – Brad Quilty, Elders Home Loans ACT “Do everything that you possibly can to build a pipeline and database in the first 12–24 months and then the rest will flow” – Monica Van Riet, Mortgage Choice Port Melbourne “You’ve got to have big ambitions in this industry” – Josh Bartlett, Loan Market Cheltenham

“My present for doing a great job is someone else coming to see me on a client’s recommendation” – ANTONY MUIR, MORTGAGE CHOICE BURLEIGH WATERS

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Proudly sponsored by:

THE TOP 10 BROKERAGE 1 Choice Home Loans Leederville

CREDIT WHERE CREDIT’S DUE This year’s Young Guns also saw recognition at the Australian Mortgage Awards, with Lachlan Cottee nominated for and Monica Van Riet winning the Commonwealth Bank Quality Young Gun of the Year – Franchise award, and Ben Gao, Phil Rogers and Theo Chambers nominated for and Josh Bartlett winning the Commonwealth Bank Quality Young Gun of the Year – Independent award. Bartlett also picked up the award for Australian Young Gun of the Year.

2 Mortgage Choice Glenelg 3 Choice Home Loans Berwick 4 Citiwide Homeloans 5 Mortgage Choice Cheltenham 6

Aussie Carnegie

7

Smartline Personal Mortgage Advisers Balmain

8 Mortgage Choice 9

Aussie Dee Why

LJ Hooker Finance ACT & 10 Southern NSW

$6.3bn

The Top 10 Franchise Brokerages represent a loan book totalling more than $6.3bn

$1.4bn

Between them, the Top 10 wrote nearly $1.4bn in loans for 2011

$28.7m

The average volume per broker among the Top 10 Franchise Brokerages was $28.7m

What are the strengths of being part of a franchise rather than ‘going it alone’? “It’s the backing and the expertise. Choice is fantastic with its quoting system and CRM; great BDMs, very personable. It still feels like a family to us.” – Marco Meloni, Choice Home Loans Leederville


MPA 12.5 – BROKERS ON AGGREGATORS

MPA 12.6 – SUPERBROKERS

Aggregators form a vital part of the industry. We polled brokers on their sentiment towards aggregators. Here are the results. BR

MPA’s Superbrokers feature took a look at the aggregators dominating mortgage broking, and picked their brains on the top issues facing the industry.

O K ERS

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G

RE

Yes: 86%

Yes: 86%

Yes: 88%

Yes: 65%

Yes: 61%

G ATO R S

Are you happy with the sustainability of your aggregator’s business model? Yes: 86% No: 14% Would you support your aggregator in launching branded products/further branded products? Yes: 86% No: 14% Yes: 65% Are you happy with the support provided by your aggregator in relationship to NCCP legislation? Yes: 88% No: 12% Do you think the credit representative fees charged by your aggregator are reasonable? Yes: 65% No: 35% Are you satisfied with the level of commission payments you receive? Yes: 61% No: 39%

WHAT’S THE BIGGEST CHALLENGE THAT AGGREGATORS HAVE FACED OVER THE LAST 12 MONTHS?

WISH LIST

Brokers listed their top three priorities in choosing an aggregator

1.

Quality of lending panel

2.

Licensing/ NCCP support

3.

Training and education

“Significantly slowing lending growth, decreasing commissions and higher operating costs have materially impacted financial outcomes for aggregators” – Steve Kane, Advantedge “Like the rest of the industry, the main challenge we have had to deal with is the lack of consumer confidence. Our members and staff have done a very good job staying positive in this environment and have been able to grow market share as a result” – Mark Hewitt, AFG “Value for money and continuing to add value to our brokers’ businesses. It comes back to brokers wanting to be independent – you’ve got to help them to be independent by giving them the tools to run the business the way they want to” – Murray Lees, Connective “We will need to assist brokers to consolidate and partner as the escalating cost of compliance will force brokers to share back-office costs” – Tim Brown, Vow “Wholesale aggregators have faced challenges such as managing regulation across multiple systems and businesses and margin compression. Retail broker groups, on the other hand, have dealt with those challenges and in addition have focused on delivering a strong, more multi-layered proposition to their broker network” – Sam White, Loan Market “Ongoing development and training for brokers and how they apply the new compliance regime within their business” – Simon Dehne, LoanKit

MPAMAGAZINE.COM.AU | 43  


SPECIAL REPORT / YEAR IN REVIEW

MPA 12.7 – BROKERS ON BANKS

Perhaps the most keenly awaited survey of the year, this year’s Brokers on Banks survey revealed which banks were outperforming with the third party, and which needed to lift their game.

OVERALL RANKINGS 1. Commonwealth Bank 2. NAB 3. ANZ 4. ING DIRECT

Brokers ranked Turnaround Times as the most important factor influencing their opinion of a bank. They picked Online Platforms as the least important.

5. Bankwest 6. Suncorp 7. Macquarie 8. Citibank 9. Westpac 10. Adelaide Bank 11. AMP 12. St.George

BROKERS’ TOP PRODUCT PICKS 1. Homeside HomePlus 2. Bankwest Premium Select 3. ANZ Breakfree 4. CBA MAV Package 5. ING DIRECT Mortgage Simplifier 6. Citibank three-year fixed 5.75% 7. St.George Advantage Package 8. Suncorp Money Manager 9. CBA No Fee Home Loan 10. Westpac Premier Advantage (Rocket Repay Offset)

44 | MPAMAGAZINE.COM.AU  

Commonwealth Bank grabbed the top spot in 6 out of 10 categories NAB saw its overall ranking improve from 4 to 2, taking top honours for Interest Rates and Information Provision ANZ ranked number 1 for Mortgage Product Range AMP was lauded by brokers as number 1 for Commissions


MPA 12.8 – BANKS ON BROKERS

MPA 12.9 – BROKERS ON NON-BANKS

Banks responded to brokers’ praise, critiques and concerns, and told MPA how they’d connect with the third party in the year to come.

Non-banks represent the competition and consumer choice that forms the crux of the broker proposition. Proudly sponsored by:

BANKS’ PRIORITIES FOR 2013

TURNAROUND TIMES

“We will focus on continuing to grow our market share through delivering a highly competitive product to brokers and their customers, further enhancing and delivering an even more consistent service proposition to brokers and their customers” – John Flavell, NAB

Australian First Mortgage

3RD PLACE

Iden

1ST PLACE

Liberty

2ND PLACE

Australian First Mortgage

3RD PLACE

Loan Avenue

1ST PLACE

Australian First Mortgage

2ND PLACE

Liberty

3RD PLACE

Better Mortgage Management

OVERALL SERVICE TO BROKERS

“We will continue to act on broker feedback and improve on a number of our processes to reach our aim of reducing our turnaround times in half” – Ian Rakhit, Bankwest

– KATHY CUMMINGS, CBA

2ND PLACE

INTEREST RATES

“Our Broker Partner Program has generated a lot of positive commentary from our broker partners, so we want our BDMs and RMs to build on this momentum” – Mark Woolnough, ING DIRECT

Liberty

COMMISSIONS

“We will continue to work hard to make improvements to our product policy, to give brokers and customers more clarity and certainty, and to make sure we have the right lending solution for our customers” – Meg Bonighton, ANZ

“We will continue to work with our brokers to help them with customer retention and deepening customer relationships through CONNECT”

1ST PLACE

1ST PLACE

Homeloans

2ND PLACE

Liberty

3RD PLACE

Australian First Mortgage

MARKETING AND BRAND AWARENESS Brokers listed Overall Service Levels as the most important factor in shaping their opinion of a non-bank lender. They listed Diversification Opportunities as least important

1ST PLACE

Homeloans

2ND PLACE

Liberty

3RD PLACE

Pepper

BROKER SURVEY: HOW MUCH OF YOUR BUSINESS DO YOU SEND THROUGH NON-BANKS?

30%

0–20% 21–40% 41–60%

19% 17% 21%

61–80% 81–100%

13%

MPAMAGAZINE.COM.AU | 45  


SPECIAL REPORT / YEAR IN REVIEW

MPA 12.11 – TOP INDEPENDENT BROKERAGES

MPA 12.10 – TOP COMMERCIAL BROKERS

Australia’s Top Independent Brokerages have retained the entrepreneurial spirit that defines mortgage broking.

A tough commercial market couldn’t stop this year’s crop of top brokers.

Proudly sponsored by:

THE TOP 10 1. Ranjit Thambyrajah, Acuity Funding 2. Scott Smith, Cairns Finance 3. Daniel Green, Green Finance Group

THE TOP 10 1. Tiffen & Co

4. Mark Churchill, Churchill Financial Services

2. Oxygen Home Loans

5. Daniel Zadnik, Hawthorn Finance Pty Ltd

3. Mortgage Solutions Australia

6. Tom Waltham, Capital United Pty Ltd

4. The Australian Lending and Investment Centre

7. Alex Sobolevsky, Link Mortgage Services

5. Smartmove

8. Scott Woodhouse, Healthy Lending

6. Acceptance Finance

9. Simon Chesson, AustAsia Finance Brokers

7. Better Choice Mortgage Services

10. Daryl Currie, Commercial One Pty Ltd

8. 1st Street Home Loans 9. Niche Lending Pty Ltd

$679.4m

10. Pinnacle Finance Brokers

This year’s Top Commercial Brokers settled a combined $679.4m in commercial deals The Top 10 wrote a combined

365 commercial deals for the financial year

Two brokers, Alex Sobolevsky and Mark Churchill, made the Top 10 in their first year as commercial brokers

$8.7bn

The Top Independent Brokerages represent a combined loan book of $8.7bn The biggest staff among the Top Independent Brokerages was OXYGEN HOME LOANS, with 25 brokers The average

88.4% Winner Ranjit Thambyrajah topped the list for the third year in a row

CONVERSION RATIO of the Top Independent Brokerages was 88.4%

THE AUSTRALIAN LENDING AND INVESTMENT CENTRE had the highest average volume per broker, at $65.6M

46 | MPAMAGAZINE.COM.AU  


MPA 12.12 – MPA TOP 100 This year’s MPA Top 100 hit a record number of settlements – at $6.8bn. Here’s a look at the numbers.

STATE OF PLAY How the Top 100 broke down geographically:

NT 2 WA 13

54

of the Top 100 were repeats from last year, while 46 were new entries or re-entries from previous years

$169.6m

This year’s top broker settled $169.6m in 2012. The top broker in the inaugural list in 2005 settled $85.9m

QLD 9 SA 5

NSW 35 ACT 3 VIC 33

THE TOP 10 1. Mark Davis, The Australian Lending & Investment Centre 2. Warren Dworcan, Rate Detective Home Loans 3. Raymond Xue, ACA Mortgage Solution

17,865

4. Rael Bricker, House + Home Loans

The Top 100 wrote a combined 17,865 loans

5. Justin Doobov, Intelligent Finance 6. Jeremy Fisher, 1st Street Home Loans

$6,774,205,639 The Top 100 settled a combined $6,774,205,639. In 2005, the Top 100 settled $3,956,532,757

7. Ruan Burger, Home Loans Etc. 8. Katrina Rowlands, Mortgage Success 9. Gerard Tiffen, Tiffen & Co 10. Colin Lamb, Mortgage Solutions Australia

MPAMAGAZINE.COM.AU | 47  


FEATURE / SMSF

SMSF:

THE WHY, HOW, CAN AND CAN’T Brokers who don’t get onboard with SMSF lending could really miss the boat on a golden opportunity. MPA investigates…

48 | MPAMAGAZINE.COM.AU  


MPAMAGAZINE.COM.AU | 49  


FEATURE / SMSF

L

ast financial year the Australian superannuation industry lost $18.5bn of its clients’ money. The top seven largest super funds have returned 2.1% pa over the past five years. And retail super funds have returned just 2.9% on average over the past 10 years. “Everyone has super, everyone wants to be wealthy in retirement, but based on today’s super environment, few will,” says Blue Wealth Property CEO Dr Tony Hayek. “If your client’s super hasn’t lost money like most Australians, it hasn’t made much,” he says. The failure of the Australian superannuation industry to create real wealth for Aussies facing retirement has many considering taking matters into their own hands. Almost one million Australians now have an SMSF member account – around 4% of the population. But according to SuperShift Australia principal Nic Ellis, that number is expected to balloon to 15% by 2020. “That’s around 400% growth in the next seven years,” he says, adding: “It’s expected that by 2020 over $3trn will be in Australian superannuation and SMSFs will hold over 50% of that.” According to AAMC managing director Jeff Mazzini, the fastest growing asset in the self-managed super funds is property. “People are frightened to invest their money in shares, so property is the hot investment,” he says. The latest figures from self-managed super fund administrator Multiport show investors’ allocation to direct property is at its highest level since December 2008. The administrator indicates that investments in the asset class rose from 13.7% in June 2011 to 15.8% in June 2012. And a Genworth survey published in September 2012 reported that 53% of survey respondents with existing SMSFs find residential property an attractive

“People are frightened to invest their money in shares, so property is the hot investment”

– JEFF MAZZINI

50 | MPAMAGAZINE.COM.AU  

investment and many are willing to actively pursue property investment through their SMSFs, with 43% saying “they would consider investing in residential property through the fund”. According to Ellis, “Now that Australians are arming themselves with information and education and surrounding themselves with brokers and advisors that understand SMSF is a tax structure that can provide long-term wealth for all through diversified assets including property, there is a soft rumble to the jungle of suburban streets that surely will lead to a heightened crescendo in coming months that will change the face of superannuation and investing in this country.”

WHY If the potential for growth in the SMSF sector isn’t enough of a reason to get involved, then brokers should consider the other benefits that diversifying in this area can provide. According to Homeloans general manager of sales Greg Mitchell, the nature of SMSF loans makes them very “sticky”. “It’s probably not like a stand-alone which may get refinanced within one, two or three years, you would think that you go through the effort and cost of setting up a super fund and the longevity around that is there.” Another compelling reason to get involved in SMSF lending is the competitive edge it offers your business. “Should [brokers] not refer the client on to someone to set up the SMSF and write the business, they are open to losing that client to another broker who can do it,” notes AFM managing director David White. Brokers offering SMSF solutions to clients also increase their chances of getting referrals and repeat business with their clients, notes Hayek. “If brokers have an SMSF solution, there is greater possibility of repeat business, which typically has less cost – it’s the low hanging fruit for brokers,” Hayek says. “You will retain clients by diversifying into this sector, and there is also the possibility of more lead generation through referrals because of the hype surrounding the SMSF movement – it is now the BBQ discussion of middle Australia.” And lastly, offering SMSF loans to clients can potentially be quite lucrative. According to Ellis, under the SuperShift model there are up to seven “touches” in an LRBA deal.


“In terms of dollars it can mean a referral fee can be paid to [the broker] for finding the opportunity, plus a percentage of income on the property sold, any replacement insurance put in place for the clients, estate planning ordered, SMSF admin and compliance and other areas.”

HOW A couple of years ago, most brokers put SMSF lending into the “too hard” basket and left it at that. But the massive growth in this area, coupled with increasing ease of putting these deals together, has encouraged brokers to look more closely at the sector.

BENEFITS TO CLIENTS Dissatisfaction with the performance of their super has prompted many Australians to consider managing the fund themselves, and one of the fastest growing asset classes within SMSFs is property. According to Liberty’s general manager of commercial finance Suresh Pillai, there are a number of benefits from investing in property via an SMSF, including tax, investment diversification and asset quality benefits. “For example, SMSFs may be eligible for a concessional tax rate on rental income from an investment property. In addition, under current taxation law, capital gains tax may not be payable on any capital gain on the sale of the property if all members of the SMSF have commenced drawing a pension,” he says. The introduction of direct real estate investment (either in residential or commercial property) into an SMSF’s investment portfolio also provides an additional option for diversification of assets, he adds. Suresh also indicates that the introduction of leverage may enable SMSF trustees to acquire investment properties of greater value, higher quality and enhanced long-term investment value potential. “Some SMSF products, such as Liberty’s SuperCredit, provide for gearing of up to 80% of the security asset where it involves residential property or 70% for commercial property – allowing fund trustees to significantly increase their fund’s net returns.”

MPAMAGAZINE.COM.AU | 51  


FEATURE / SMSF

“It’s that big S, big M, big S, big F that sort of scares people, but less and less so. Brokers are beginning to realise they are really well positioned as a debt adviser to really bring value to this transaction,” says James Casey, head of mortgages product for Macquarie Bank. Brokers shouldn’t be too frightened by the legalities of the lending policies surrounding SMSF lending, adds White. “But they should engage the educational piece surrounding it first and get themselves clued up a little bit more.” ASIC requires professionals providing advice to have the minimum of Advice in Superannuation and Advice in Self-Managed Super Funds as a qualification. Some dealer groups who are the licence holders may also require professionals to have their Diploma in Financial Services and Financial Planning as well. Brokers’ involvement in the SMSF sector depends on the education level and individual desire. Without a licence in financial services brokers cannot provide advice to clients. However, there are several opportunities for brokers without a licence to get involved in the SMSF sector, either on a referral basis only, or by referring and writing the SMSF loan. Referral The first step in getting involved for referrers is to “spot potential”. According to White, brokers are in the perfect position to see which customers are good SMSF candidates. “All they need to do is dissect that customer base to see how many are of mature age who would have sufficient funds within their existing fund itself to look

SMSFs on the up: report

The Financial Services Council’s (FSC) inaugural report on the flow of funds into SMSFs found Australians contributed $24bn into SMSFs during the 2010/11 financial year – up 15% ($2.8bn) on the previous year’s tally. Other key findings included: Member (discretionary) contributions grew by $3.2bn (19.8%) to $17.2bn and employer (compulsory) contributions grew by $0.3bn (4.9%) to $7.2bn. After falling for three consecutive years, net flows to SMSFs increased by $2.8bn (22.5%) to $15.4bn. Inward transfers grew by 15.3%, while outward transfers were almost flat – increasing by 0.4%. Benefit payments out of SMSFs increased by 13.9% to $19.7bn. SMSFs held assets valued at $438.9bn in June 2012.

52 | MPAMAGAZINE.COM.AU  

“Treasury has told us that the draft regulation is not intended to prevent brokers from recommending credit to SMSFs” – PHIL NAYLOR at the possibilities of rolling them into their own fund.” According to Pillai, the number of potential SMSF clients in a broker’s portfolio is sizeable. “In fact, we recently conducted a study that concluded that almost 20% of all Liberty home loan applications from one aggregator group were from applicants with sufficient superannuation to consider an SMSF loan. So, put simply, the first step to getting involved is a critical analysis of current and past clients to identify potential interest and making these clients aware of SMSF lending products.” The minimum “recommended” amount of money that a client needs in their super account to make it worth their while to set up an SMSF is about $300,000, however some industry specialists indicate you could go as low as $200,000, particularly if the client is interested in investing in property. Once identified, brokers can refer the client on to strategic referral partners or specialist SMSF groups. According to Ellis, “once an opportunity is found, advice needs to be provided as brokers can’t provide advice – they need to work with a planner and provide a referral to provide the advice, or have that planner do some initial calculations on maximum capacity to purchase and servicing of cash flows in the new SMSF which the broker can pass onto the client generically to stimulate interest”. For brokers interested in pursuing SMSF opportunities, strategic partnerships are key. Brokers can set up their own strategic partnerships with


FEATURE / SMSF

financial planners who can advise on the investment strategy, and accountants who can set up the structure. Alternatively, brokers can align themselves with specialist SMSF groups or lenders. In a referral arrangement with SMSF Loans, for instance, all the broker has to do is provide their client’s details and the group does the rest. The broker owns the client, is kept up to date during the process, and receives a percentage of the upfront and trail commission. SuperShift offers a similar arrangement with its broker referral partners. After completing a Tier 2 educational program, SuperShift offers brokers the opportunity to refer their client to the company and have SuperShift set up the fund and do the loan, or the broker can choose to refer the client and then write the loan after the fund is set up. National Finance Club also offers two models. According to Phil Foweraker, national business development manager, NFC offers a true referral model – brokers provide a name and number, and NFC sets up the SMSF and deal with the client on the broker’s behalf. “Our brokers will be paid an upfront and trail, which will give them more time to focus on their core business and leaving the SMSF to our team to handle.” Alternatively, brokers who are fully trained and have a history of writing SMSF loans can write the loan “just like any other product”, Foweraker says. Writing the loan According to Casey, brokers are increasingly being brought into SMSF lending transactions by other professional advisers. “They are being sought by both planners and accountants as debt specialists and as debt advisers to

“If brokers have an SMSF solution, there is greater possibility of repeat business” – TONY HAYEK

50 | MPAMAGAZINE.COM.AU  

help execute on the deal. I think brokers are really, really well positioned and they should be confident that they are a key part of the transaction and it’s not as if they have to beseech people to get the business.” Writing an SMSF loan is not that different from other loans, Casey adds. “It is a debt product. A lot of brokers have dealt with cost structures and just because you put the label SMSF on it, doesn’t suddenly make it extra scary.” Macquarie, like most lenders, requires that brokers go through special product training, but that’s not unusual for any new product. According to Casey, “you don’t suddenly have to learn all this extra stuff. You need to understand the landscape, you need to understand the partners you’re working with like accountants and what they need to know and what they need to be aware of, because that means you can then talk the talk with the people that are referring your work because you understand their world. But beyond that it’s a debt product”. Competition among lenders in the SMSF loan space is increasing, as a number of providers including Macquarie, Bankwest, AMP Banking, Liberty Financial, Homeloans Ltd, National Finance Club, AFM, Westpac, NAB, CBA, ANZ, St.George, Resi, Mortgage Ezy, Australian Financial and Iden Group, have all developed attractive offerings.

CAN A broker can only identify potential SMSF candidates and talk generically about what clients could do with their superannuation – such as set up SMSF and purchase property. They can ask questions such as: “how much super do you have?” and “did you know you can pool funds with up to four members?” They can also let a client know that with x amount in super they could buy x amount in value of property, but that’s where it ends and they need to refer the client on for specific advice.

CAN’T The number one thing brokers need to know about SMSF lending is they can’t provide advice. They can’t offer advice on rollovers, or setup structures or replacement insurance, etc, unless they upskill and get the necessary educational requirements. While at the moment brokers are able to write


SMSF loans without further qualifications, there is the possibility that this window could close. Proposed changes under the Exposure Draft Corporations Amendment Regulations, published on 9 June 2010, would regulate limited recourse borrowing arrangements for SMSFs as financial products under the Corporations Act. If approved, mortgage brokers would be unable to write SMSF loans unless they had a Diploma in Financial Services. According to MFAA CEO Phil Naylor, there have been no further developments on this. “Treasury have told us that the draft regulation is not intended to prevent brokers from recommending credit to SMSFs and that they will redraft the regulation – however to date nothing further has transpired. The impact of all that is that there is no problem in brokers recommending credit to SMSFs.”

“It’s expected that by 2020 over $3trn will be in Australian super and SMSFs will hold over 50% of that” – NIC ELLIS

MPAMAGAZINE.COM.AU | 51  


FEATURE / SMSF

SMSF: PRODUCT GUIDE St.George Phone: 1300 137 532 Web: www.stgeorge.com.au PRODUCT NAME

RESIDENTIAL/ INITIAL TERM COMMERCIAL RATE

VARIABLE/ MAX FIXED LVR

START-UP FEE

St George Super Fund Home Loan

Residential

6.69%

30 years

Variable

80%

$1,500 establishment fee and $615 legal fee

St George Super Fund Home Loan

Residential

5.94%

30 years

1 year fixed

80%

$1,500 establishment fee and $615 legal fee

St George Super Fund Home Loan

Residential

5.84%

30 years

2 year fixed

80%

$1,500 establishment fee and $615 legal fee

St George Super Fund Home Loan

Residential

5.94%

30 years

3 year fixed

80%

$1,500 establishment fee and $615 legal fee

St George Super Fund Home Loan

Residential

6.34%

30 years

4 year fixed

80%

$1,500 establishment fee and $615 legal fee

St George Super Fund Home Loan

Residential

6.34%

30 years

5 year fixed

80%

$1,500 establishment fee and $615 legal fee

MAX LOAN AMOUNT

LOAN REQUIREMENT FEATURES

$2m

Interest Offset

Standard residential property - no specialised securities

$2m

Interest Offset

Standard residential property - no specialised securities

$2m

Interest Offset

Standard residential property - no specialised securities

$2m

Interest Offset

Standard residential property - no specialised securities

Interest Offset

Standard residential property - no specialised securities

Interest Offset

Standard residential property - no specialised securities

$2m $2m

Westpac Darren Oregioni, Phone: 02 8254 1110 Web: www.westpac.com.au PRODUCT NAME SMSF Investment Property Loan

Fixed Rate SMSF IPL

Business Loan

Business Loan

Fixed Rate Business Loan

RESIDENTIAL/ INITIAL TERM COMMERCIAL RATE

Residential

6.71%

Residential

Fixed period 6.04% – from 1-12 7.95% years applies

Residential

Commercial

Commercial

30 years

VARIABLE/ MAX LVR START-UP FIXED FEE

Variable

80% Company, 72% Personal

$1,500

80% Company, 72% Personal

$1,500

25 years PIF; 10 Variable yrs I-only

80% Company only

on application

8.61%

15 years PIF; 10 Variable yrs I-only

65% Company, 58.5% Individual

6.98% – 7.85%

Fixed term period from 1-10 years applies

65% Company, 58.5% Individual

7.86%

Fixed

Fixed

on application

on application

MAX LOAN LOAN AMOUNT FEATURES

REQUIREMENT

$2m

P&I or IO option. IO max 15 years, unlimited repayments.

Residential property, or refinances of investment property owned by an SMSF from another lender

$2m

P&I or IO option. IO max 15 years, $30,000 additional repayments allowed during fixed term.

Residential property, or refinances of investment property owned by an SMSF from another lender

$5m

Residential property, P&I or IO or refinances of option. IO max investment property 10 years owned by an SMSF from another lender

$5m

Non-specialised commercial property, P&I or IO or refinances of option. IO max non-specialised 10 years commercial property owned by an SMSF from another lender

$5m

Non-specialised commercial property, P&I or IO or refinances of option. IO max non-specialised 10 years commercial property owned by an SMSF from another lender

Interest rates are subject to change and margins may apply; Fees and Charges apply to the lending products; Details of terms and conditions are available on request. These may be varied or new terms and conditions introduced in the future; Loan terms and max LVR quoted are maximum; All loans are subject to the Bank’s normal lending criteria

50 | MPAMAGAZINE.COM.AU  


Australian Financial Phone: 1300 888 684 Web: www.australianfinancial.com PRODUCT RESIDENTIAL/ INITIAL NAME COMMERCIAL RATE

SMSF loan Residential

6.55%*

TERM

VARIABLE/ MAX LVR FIXED

START-UP FEE

30years

Fixed & Variable available

"Simple 330 structure & Settlement + $2,000,000 limited Legals on-line banking available"

70%

MAX LOAN AMOUNT

LOAN FEATURES

REQUIREMENT

Flexible commission structure

* Pro-pack - annual fee of $399

Liberty Financial Suresh Pillai, Phone: 03 8635 8888 Web: www.liberty.com.au PRODUCT RESIDENTIAL/ INITIAL NAME COMMERCIAL RATE

SuperCredit

Residential/ Commercial

From 6.99% residential/ From 7.70% commercial

TERM

10-30 years residential/ 5-15 years commercial

VARIABLE/ MAX LVR FIXED

Variable

80% Residential/ 70% Commercial

START-UP FEE

MAX LOAN LOAN AMOUNT FEATURES

$695 flat fee $1m+

• No size restrictions • No minimum asset balance • Property trusts established at no cost • Corporate or individual trustees

REQUIREMENT

Signed letter of comfort provided by financial advisor

MPAMAGAZINE.COM.AU | 51  


FEATURE / SMSF

PRODUCT GUIDE CONTINUED... Homeloans Phone: 13 38 39 Web: www.homeloans.com.au PRODUCT NAME

Homeloans ProSmart SMSF

RESIDENTIAL/ INITIAL COMMERCIAL RATE

Residential

6.74 (variable)

TERM

10 - 30 years

VARIABLE/ MAX FIXED LVR

START-UP FEE

Both

$599 + GST Application Fee $600 + GST + Disbursements $600 + GST – SMSF Trust Deed Review $600 + GST – SMSF Trust Deed $140 Settlement Fee $260 Valuation Fee

70%

MAX LOAN LOAN AMOUNT FEATURES

$2m

To $2M Extra Repayments Choice of Repayment Frequency P&I or I/O repayments

REQUIREMENT Must be established SMSF Already prepared Property Trust Deed No non-resident or foreign entities Property Trustee(s) must be separate entity from SMSF Trustee(s) All adult members MUST be Guarantors

NFC Phone: 1300 327 600 Web: www.nationalfinanceclub.com.au PRODUCT NAME

Super Gear

RESIDENTIAL/ INITIAL TERM COMMERCIAL RATE

VARIABLE/ MAX FIXED LVR

Residential

Variable and 70% fixed

58 | MPAMAGAZINE.COM.AU  

6.69

30

START-UP FEE

1,500

MAX LOAN LOAN AMOUNT FEATURES

REQUIREMENT

$2m

Corporate Trustee, Independent legal advice, Independent financial advice if not referred to financial advisor

Splits/fix/var


BUSINESS STRATEGY / SALES

SALES STUFF-UPS YOU CAN AVOID 60 | MPAMAGAZINE.COM.AU  


Doug Mathlin explores how avoiding common missteps can boost sales and energise your business SHORT-TERM NEEDS ANALYSIS AND PROVIDING SHORT-TERM SOLUTIONS The average rate of client advocacy is low in many industries and the mortgage broking industry is no different. Borrowers regularly realise in the first few years that their loan structure is not right for them in the long term (or their situation changes). Unfortunately, this can create doubt about the value/worth of the original broker and many clients ‘walk’ as a consequence. Brokers should understand the short- and long-term goals of each client to ensure that they can provide the best structure at the outset and for the future. They should also ensure that the client understands that if their circumstances change, they should meet with their broker to discuss new borrowing strategies.

NOT EDUCATING CLIENTS THAT YOU’RE SELLING RELATIONSHIPS AND ADVICE – RATHER THAN TRANSACTIONS Most clients contact brokers because they’ve decided they need to borrow or restructure their debts. Brokers don’t really need to ‘sell loans’, the client has already bought into that. Borrowers will often only focus on the loan that they need now and not think about what brokers really do. The broker's job is to fully understand their clients’ needs, provide advice where appropriate, and educate their client how they will assist them with borrowing for the long term. I hear some brokers tell their clients that they are their ‘personal banker’ when it comes to debts and wealth creation – which hopefully means that the client will turn to the broker first when they next want to borrow.

ONLY MEETING CLIENT NEEDS RATHER THAN EXCEEDING THEM Experienced brokers are often guilty of just doing enough to complete the transaction and not finding a way to do the 1% extras. Client satisfaction comes from needs being met; client

MPAMAGAZINE.COM.AU | 61  


BUSINESS STRATEGY / SALES

“Experienced brokers are often guilty of just doing enough to complete the transaction and not doing the 1% extra”

clearly. Many brokers turn up to client appointments and ask ‘how can I help?’ and make it up from there. Take control of future meetings by setting the agenda and keep clients on track with what you are doing. You are the one being paid for this meeting, therefore you should control it. Great salespeople have anecdotes to back up their experience and to sell their knowledge. Top performing salespeople have a sales presentation plan and structure that they follow and have the ability to adjust it to the differing personality styles of their prospects. Keep a record of the questions that you need to ask each client. Prepare to deliver your key messages (eg, your value proposition, your personal experience, your referral program) and anticipate any unasked questions.

NO URGENCY TO PERFORM loyalty begins when client expectations are exceeded. Top performers will often check to make sure that they over-deliver to every client.

EXPECTING THE PROSPECT/CLIENT TO DO THE WORK FOR YOU Sending a detailed needs analysis to a prospect who doesn’t know you and expecting them to complete it is not a good way to engage with clients. Firstly, some people will not be willing to complete it due to the personal nature of the questions, while others won’t have the information required at their disposal. Most brokers’ value propositions are about saving clients time and money. Brokers should make it easy for clients to do business with them. Have someone help the client complete the fact find and you will more likely have a very pleased client who is willing to recommend your services. Sending a high-level fact find to identify the client and to ensure that the client is a serious buyer is fine – but not a 10-plus page questionnaire.

NOT HAVING A SYSTEM OR PROCESS TO FOLLOW AT THE POINT OF SALE OR BEYOND IT ‘Winging it’ is never a good presentation plan. Salespeople need to be professional communicators who can articulate their message

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One of the things that brokers can do to outperform the competition is to provide a truly personal service to each client and referrer. The energy and enthusiasm of the salesperson are the things that the client will remember well beyond the interest rate and the application to settlement process. Quickly reacting to client needs (and anticipating them) is a great way to demonstrate your care and commitment to client needs. Set yourself a benchmark to respond to client enquiries of less than an hour on average. Answer all inbound calls where possible. These are the details that clients will remember.

NOT MANAGING CLIENT EXPECTATIONS One of the things that clients get annoyed/frustrated or confused about is ‘not knowing what’s happening with their loan’. Brokers write and settle loans all the time, whereas clients do this a few times in their lives (some only take out one or two loans). As this is a really important decision for the client and is a stressful time, the least the broker can do is keep them informed about what is happening. It’s important to provide clients with a flow chart on the application to post-settlement process. It’s also important to stay in contact with the client directly (by phone or email). In the early stages, it will pay to call the


client almost every day to let them know what is happening, explain the next steps and ask this question: ‘when would you like to hear from me again?’

THE INABILITY TO SELL YOURSELF AND YOUR REFERRAL PROGRAM If you rely on repeat and referral business from clients, it is critical that you tell your clients about this. I’m always staggered by the number of brokers who ‘hope’ for referrals and recommendations rather than be direct about it. Tell your clients why you are going to do the best you can for them and tell them how you generate business (ie, client referrals). Don’t ask for specific names of people that you can call but make sure they know how to repay you for your great service!

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THE DATA / YOUR MORTGAGE INDEX

STATE OF PLAY Data from Yourmortgage.com.au shows the borrower breakdown for the past months

BORROWER BREAKDOWN 56% ARE BUYING WITH A PARTNER

76%

19%

REFINANCERS

said they had good credit history,

21%

PROPERTY INVESTORS

while

44% WILL BE BUYING ALONE

24%

FIRST HOMEBUYERS

had some blemishes

79%

of refinancers are doing so to get a better interest rate

11%

want an interest-only loan

38%

need finance urgently

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60%

4%

ONLY ARE LOOKING FOR A HOME ABOVE $1M PRICE RANGE

59%

HAVE NO DEPENDENTS

19%

have more than a $100k deposit

25%

have a current mortgage of less than $100k

ONLY

3%

have a household income above $200k a year



Mortgage Professional Australia magazine Issue 13.01