Mortgage Professional Australia magazine Issue 14.01

SMSFS HOW TO GET DEALS OVER THE LINE

MPAMAGAZINE.COM.AU ISSUE 14.01

ANTHONY WALDRON NAB’S BIG PLANS FOR THE BROKER MARKET YEAR IN REVIEW MPA LOOKS BACK ON THE YEAR THAT WAS

The movers and shakers who have made waves in the mortgage industry

CONTENTS / 14.1

18

COVER STORY

Hot List 2013 Movers and shakers who’ve made waves in the industry

NEWS

4 | Round-up The latest market intelligence from the world of property, economics and mortgages 10 | News analysis Valuations: a necessary evil?

60 | Data Inflation: a global picture

FEATURES 30 | Year in review MPA takes a look back at the year that was

12

MORTGAGE INSIDER

Anthony Waldron

NAB’s broker proposition explained

BUSINESS STRATEGY WEEKLY INVESTIGATIONS NOW ONLINE: Communication and staff retention How to manage Gen Y brokers mpamagazine.com.au

52 | Client relationships How to build and maintain them effectively 56 | Succession planning Key insights for a successful exit strategy 62 | Presentation skills Wow clients and colleagues with your patter

MORTGAGE INSIDERS 28 | Andy Drake Busting down the door into broking

40 FEATURES

SMSFs Expert insight into getting SMSF deals right

JANUARY 2014 | 1

EDITOR’S LETTER / 14.1

LOOKING BACK

If you’re anything like me, at this time of year you’ll find yourself looking back on the past 12 months and reflecting on the thrills and spills that ensued. Certainly here at MPA there’s no shortage of contenders to add to the proverbial 2013 highlights reel.

While flicking through the last 12 months’ worth of magazines and compiling the year’s memorable moments for our “Year in review” feature, it became clear that the common denominator that threaded its way throughout our proudest moments of 2013 was you, the mortgage broker.

Whether it’s the Australian Mortgage Awards, the MPA Top 100 or one of our ground-breaking industry surveys, broker involvement is central to our mission, so a hearty thanks must go out to all of you for making 2013 a truly memorable year for MPA. Speaking of memorable years, in this issue we’ve also compiled our annual “Hot List’’ of the movers and shakers who have made waves in the mortgage industry over the past 12 months. You may be surprised to see how many new faces are appearing in this year’s list.

Looking ahead, there’s no doubt that the popularity of investing in property through SMSFs will continue to grow, and this issue’s SMSF feature quizzes some of the industry’s leading lights on how to get these loans over the line.

And if you’re looking for food for thought on how to boost business in the year ahead, then look no further than this issue’s features on business strategy and motivation.

Robin Christie, managing editor, MPA

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COPY & FEATURES

EDITOR Robin Christie JOURNALIST Amy Rosenfeld PRODUCTION EDITORS Roslyn Meredith, Moira Daniels CONTRIBUTORS Nikki Heald, Cindy Tonkin, Craig West

ART & PRODUCTION

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CONNECT

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NEWS / ROUND-UP

INFOGRAPHIC BROKERS

BROKERS TIPPED TO TAKE 50% MARKET SHARE

The value of mortgages being written through the broker channel has hit record levels, according to data from the MFAA. The latest figures from the association show that $32bn worth of mortgages came through the broker and aggregator channel in the September 2013 quarter.

What’s more, the market share now held by the third-party channel has hit a record high, with 46.4% of all home loans coming from brokers.

According to the MFAA, the value of loans coming through brokers and aggregators is set to reach $120m for the 2013 calendar year – which would also be a new record.

“Mortgage brokers and aggregators are well on course to smash the 2012 record lending figures, with two big members of the MFAA already reporting record figures for October,” said MFAA CEO Phil Naylor.

“We expect that brokers and aggregator members of the MFAA will provide more than 50% of all home loans written in Australia over the next two years, if this growth trend continues”.

According to the MFAA, this would put the broker share of the mortgage market in Australia on par with that of the UK – where brokers write around 50% of all home loans.

Australian brokers are more than holding their own when compared to other English-speaking markets, however, with the MFAA reporting that brokers in Canada write around 27% of all home loans, US brokers write less than 40% and New Zealand brokers write 25%.

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BROKER MARKET SHARE

50% UK

STATS

46%

Australia

4O% US 27% Canada

89%

The satisfaction rate recorded by Choice in its latest annual survey Source: Choice annual survey

25%

New Zealand

MPAMAGAZINE.COM.AU

DECEMBER 2013 | 5

NEWS / ROUND-UP

DIVERSIFICATION

BROKER BUSINESS PRIORITIES REVEALED

Are you looking at diversifying your financial services offerings over the next year? You’re not alone.

According to a FAST survey, 89% of broker respondents say they’re prioritising growing their business outside of residential home loans over the next year – branching out into either commercial lending, asset finance, or both.

According to FAST CEO, Brendan Wright, the past 12 months have been difficult for brokers, with many realising they’ll need to diversify their business proposition if they want to survive.

“It’s been a challenging time for the broader economy with uncertainty and instability in the business environment. There’s still that element of uncertainty and ‘what does the future hold?’ That plays on the brokers’ minds – they’re looking for support and insight,” he said.

One positive sign to come out of the survey included the fact that, of the brokers who had already diversified into the above channels, 75% report seeing an increase in their business growth as a result.

For its part, Wright said FAST plans to focus in 2014 on how brokers can evolve and adapt in a ‘constantly changing’ environment.

“We’ve refreshed our brand presence in the market over the last 12 to 13 months and it’s continuing to build on that momentum. In an environment where there’s a bit of ambiguity and constant change, we’re keen to – and have, over the last 12 months – continue to support our brokers and offer them opportunities to adapt and grow their businesses.”

The survey also uncovered some interesting insights into the state of the market, with 79% of brokers stating they did not believe Australia was in a housing bubble, while 95% indicated they had seen some activity from SMSFs in the residential property space.

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INFOGRAPHIC

BROKER FEEDBACK

89%

The percentage of brokers prioritising branching out into commercial lending, asset finance, or both

75%

had already diversified into the above channels and seen an increase in business growth as a result

43%

rated diversification as ‘moderately important’

43%

rated diversification as ‘extremely important’

STATS

$30k

The grant available to homebuyers in Tasmania who qualify for the First Home Owner Grant and First Home Builder Boost Source: Tasmanian Department of Treasury and Finance

79%

didn’t believe Australia is in a housing bubble

95%

had seen some activity from SMSFs in the residential property space Source: FAST survey

4O%

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WELLBEING

ARE YOU SUFFERING FROM END-OF-YEAR STRESS?

As the year draws to a close, now is a good time to ask whether you and your brokers are coping with the stresses of work.

According to new research from the Medibank 24/7 Health Advice Line, 85% of Australians experience severe stress at work, with half of full-timers feeling ‘seriously pressured’ most weeks of the year. Feeling stressed rolls over into 15% of Australians taking sick days at least once a month, resulting in 20 million days off per year. All up, this costs the economy $14.81bn annually. The manifestations of workplace stress can be seen in 68% of workers having sleepless nights as a direct result of it.

“Stress is caused by a range of issues including long hours, large workloads, job insecurity or conflicts at work and the symptoms can severely impact on quality of life,” said Fran Quinlan, CEO of the Mental Health Council of Australia.

The research also indicated that women are less likely to experience stress than men. Women are more likely to deal with stress by speaking to colleagues, partners and friends, whereas men gravitate towards telling their employer.

With mortgage broking often being described as a 24/7 job, brokers would do well to heed additional research from the Australian Psychological Society (APS), which found that lifestyle issues actually outweighed work issues when it came to the causes of stress. The primary stress catalysts for Australians were found to include financial issues (52%), family issues (47%), personal health issues (43%), attempts to maintain a healthy lifestyle (41%) and concern over the health of others (38%).

INFOGRAPHIC

STRESS MANAGEMENT •• Identify the warning signs that indicate you’re getting stressed •• Identify situations that trigger stress and look at reducing their frequency or impact •• Monitor ‘self-talk’ that may be negative and contributing to unhappy feelings •• Eat well, exercise and undertake calming activities •• Invest time with people that you care about and who care about you •• Do not ‘bottle up’ feelings

%

JANUARY 2014 | 7

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NEWS / ROUND-UP

BUSINESS

2014’S BUSINESS BARRIERS REVEALED

New research has revealed the key barriers that Australian businesspeople believe will prevent their operations from growing in 2014, and the results may well look familiar to brokers.

According to the latest Dun & Bradstreet Business Expectations Survey, 45% of respondents saw operational costs as the largest barrier to growth in 2014. This was followed by online competitors, unpaid invoices, access to skilled labour, demand for products and access to funding.

Overall, however, the Australian business community appears to be more optimistic than it has been for a long time, with 36% of survey respondents expecting to increase their earnings during the first quarter of 2014. This result helped the survey’s profits index to reach a 10-year high.

“Although these are still early days, there’s a clear shift in the near-term optimism of businesses,” said Dun & Bradstreet CEO Gareth Jones. “In recent years we’ve see a temporary improvement in the run towards Christmas, so it’s encouraging to see that the business outlook into early 2014 isn’t tailing off.”

STATS

$25,151m Australia’s housing

INFOGRAPHIC

finance figure for all dwellings

BARRIERS TO GROWTH IN 2014

Source: ABS Lending Finance, seasonally adjusted estimate, September 2013

Operational costs Online competitors Unpaid invoices Demand for products Access to funding Access to skilled labour No barrier Source: Dun & Bradstreet Business Expectations Survey

0

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

$20,353m The value of building work carried out in Australia

DEBT

MORTGAGE DEBT WORRIES EASE

Things are looking up in the consumer sentiment sphere, with a large majority of householders now saying that they’re ‘very comfortable’ with their mortgage debt.

Almost seven in 10 respondents to the latest quarterly ING DIRECT Financial Wellbeing Index (69%) ticked the ‘very comfortable’ box when asked how they felt about their mortgage – a 4% increase on the previous quarter’s result. The survey also found that 38% of households with a mortgage were ahead with their loan.

The general attitude of the nation towards credit card debt saw a similar quarterly improvement, with responses in the ‘very comfortable’ category rising from 55% to 60%.

“Low interest rates and improved confidence have given households a tremendous boost – especially in the key areas of home loan and credit card debt,” said John Arnott, executive director of customer at ING DIRECT.

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Source: ABS Building Activity, seasonally adjusted estimate, June 2013

INFOGRAPHIC

WELLBEING: LONG TERM DEBT – INCLUDING MORTGAGES National

NSW & ACT

Vic

Qld

SA

WA

Comfort level (out of 10)

5.81

5.79

5.91

5.84

5.67

5.62

Paying extra on mortgage

38%

32%

34%

36%

56%

47%

MPAMAGAZINE.COM.AU

DECEMBER 2013 | 9

NEWS ANALYSIS / VALUATIONS

Valuations a necessary evil?

Property valuations are a crucial part of any mortgage application but, for some brokers, they’ve become something of a necessary evil, with claims of undervaluations circling the mortgage broker community.

Amy Rosenfeld speaks to valuers to get their side of the story Take a look at the comments on valuations that have appeared on the MPA and Australian Broker Online forums and it would appear that brokers aren’t too pleased with the number of deals that have fallen through due to lower-than-expected valuations.

So what’s really going on in the valuation industry?

Well, nothing, according to RP Data head of corporate affairs Craig Mackenzie.

“There are currently no undervaluation issues within the industry,” he says. “We are not suggesting there are not isolated undervaluation issues from time to time but, overall, there is no systemic issue with undervaluing in the present market.”

And yet a number of brokers have taken to online forums to highlight undervaluation examples.

On MPA Online, for example, Queensland broker Andrew Hill tells of four different valuations of the same property, ranging from $375,000 to $420,000; an Adelaide broker quotes a difference of more than $100,000 on one innercity property; and a Sydney home was given a valuation of $500,000, followed by another of $580,000 one week later.

But these sorts of issues are mostly confined to small pockets of the market, says Herron Todd White national chairman Gavin Hulcombe.

“Some areas of the market have softened in the past few years, particularly in the established market, and, at the same time, we haven’t seen construction costs come up to the same extent,” he says. “It’s a reasonably unusual phenomenon where that gap has widened as much as it has.”

10 | JANUARY 2014

Valuers often struggle to access contemporary information, says Jones Lang LaSalle director and API NSW divisional president Tyrone Hodge; and, in a rising market, it can be difficult to interpret sales and understand just how quickly prices are rising.

“One of the ways valuers will deal with that is they have regard to what the property has

“Overall, there is no systemic issue with undervaluing in the present market” Craig Mackenzie, RP Data

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transacted for, but what you’ve got to remember is when there’s heat in the market sometimes people can pay over what the market might be,” he says.

“If somebody pays a premium it could be they were just going for a knockout punch or they got carried away on auction day.”

MAKING THE BEST OF A BAD LOT By encouraging clients to source valuations earlier in the buying process, brokers can raise the chances of getting results that meet expectations, says Hodge.

“They may be able to make a more informed decision if they were doing some preliminary work prior to buying,” he says.

“Buyers will go in and spend a lot of money on a pest inspection and a building inspection but rarely will they have sought advice from a valuer prior to making an offer.”

Brokers should also use tools at their disposal, such as RP Data or suburb reports, to keep client expectations realistic, says Hodge.

Doing your own research, and providing as much information upfront to the valuers as possible, will increase the chances of an agreeable outcome.

As an example, in to-be-constructed properties, details, plans and speculations in the schedule of finishes are often lacking, making the valuers’ job more difficult, says Hulcombe. Providing equity information and doing plenty of research on the market and other properties in the area is also crucial.

The same approach should be taken when challenging valuations: emotional or accusatory challenges will not get a valuation overturned, but an evidential, fact-based one often will.

The first thing brokers should do is ask for a copy of the valuation, although often if a bank has constructed the valuation they won’t make this information available to the broker.

“One of the challenges with residential mortgages is a lot of that discussion with the valuer is deliberately removed from the process and the banks keep all parties at arm’s length – but they still have the right to question it and to make a query, and they should exercise that.”

BRIDGING THE GAP Improving relationships between the two industries could help resolve some of the issues, Hulcombe says. “There hasn’t been a mass

education process; it’s been on more of an ad hoc basis, and I think education can solve a lot of problems – and that’s on both sides. Perhaps that hasn’t been as strong or as orchestrated as it could have been.”

One valuer recently lamented on Australian Broker Online that relationships between valuers and brokers are not as strong as they have been in the past: “It wasn’t that long ago we talked to each other, then Valex came along, made up their own rules and stopped all that relationship building.

Brokers you know your local valuers, pick up the phone and talk to them… [And valuers,] don’t be afraid to defend your valuations. Explain to brokers where the problems lie: Lack of sales evidence, poor instructions, poor documentation or whatever”.

Mackenzie, however, believes that strong relationships still exist between the industries.

“This is not correct,” he says. “Yes, there have been changes in the ordering processes to reduce the ability for brokers/lenders to select valuers at the point of ordering, but interaction between valuers and lenders can occur when there are differences in opinion on a valuation.”

Hodge agrees that opportunities for positive relations and dispute management still exist, but says the process has been made more difficult by banks outsourcing so many parts of the lending process and deliberately keeping parties apart from each other.

“One of the things brokers need to be aware of is this has the potential to get a lot harder because there is an increasing reliance on automated valuations and approval through scorecards where the valuation is just one piece of it. If you think it’s hard now trying to talk to a person, I don’t know how you’ll go when the computer says no.”

Thankfully, certain locations – including Sydney, Melbourne and Perth – are starting to show signs of an improved market for valuations, says Hulcombe.

While this won’t stop valuation disparities from being a problem again in the future, there should start to be some temporary respite for brokers and valuers.

“As the value of established property starts to move up, the gap between new and established properties starts to close and those valuation issues will start to be less of a problem moving forward as market dynamics change,” he says.

“I think education can solve a lot of problems – and that’s on both sides” Gavin Hulcombe, Herron Todd White

JANUARY 2014 | 11

HEAD TO HEAD / ANTHONY WALDRON

GROWI AMBITIONS Anthony Waldron took on the role of executive general manager, growth partnerships, at NAB last year. He tells MPA about the bank’s big plans for the broker market MPA: What are you aiming to bring to your role, and what message would you like to pass on to brokers on where they fit into NAB’s growth plans?

Anthony Waldron: Mortgage brokers are a huge part of what we do. If you look at the whole industry, it’s roughly 45% of all flow. From our perspective, this is the fastest-growing component of the market, and we see that as absolutely core to our business.

This is an absolutely core component. It is one of the fastest-growing components of the industry and, because we own aggregation, it’s an even bigger part of what we do. As an organisation we want to continue to grow market share in mortgages, and we see that brokers are absolutely pivotal in us growing that share.

MPA: In terms of growing your mortgage market share, what’s the relationship between NAB’s retail arm and mortgage brokers?

AW: They coexist. A customer will choose where they want to go. So if a customer wants to go to a store, fine. If a customer wants to go to a broker, fine.

We absolutely recognise that that’s going to be the customer’s choice. We need to support the customer choice, and we need to be where the customers are.

12 | JANUARY 2014

If customers are going to brokers, which more and more of them are, then we need to be there to support that. Those customers will walk into stores at some stage, or they’ll get on the internet, and they’ll need to be serviced in the other channels.

And really we need to make sure that that integrated channel experience works, but if the primacy of the relationship started with the broker, then we also need to recognise that. And I think that we’re doing a better job of that over time.

“Each of PLAN, Choice and FAST have different value propositions, and that’s why they exist as three different businesses”

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ING JANUARY 2014 | 13

HEAD TO HEAD / ANTHONY WALDRON

“We want to continue to grow market share in mortgages, and we see that brokers are absolutely pivotal”

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MPA: Tell us about NAB’s growth partnerships leadership team.

AW: We’ve always had a growth partnerships leadership team. The structure’s changed a bit with people moving around – John Flavell coming into the wealth business and Steve Kane coming in to run NAB Broker.

Steve brings 30-plus years’ experience, and he’s a veteran in this industry. He really understands how brokers work. He’s got a great relationship out there with many of them. There’s no one out there in the marketplace better suited to do this role. He has such a great background in the industry.

We’ve also changed the structure so that the CEOs of the aggregation firms now report directly to me, and that highlights how important the aggregation businesses are to us – and the fact that we want to grow those businesses. We spent the last few years embedding them in our business, and going through those NCCP changes and regulation changes, and really we want to make sure that we continue to grow our aggregation footprint as well.

MPA: What does it mean for a broker to be part of the NAB group through one of its aggregation channels?

AW: Each of PLAN, Choice and FAST have different value propositions, and that’s why they exist as three different businesses. And they will continue to exist as three different businesses, because we 14 | JANUARY 2014

want to attract those three different sets of brokers.

Each of those businesses is now focused on growing their broker base. And we’re finding that our recruitment is going well across each of the three. But we’re also finding that we’re getting different brokers into each of those three at the moment, which is great. So they’re not competing in their core components.

Each of them will grow differently. Choice is particularly focused on our Choice Home Loans offering at the moment, which is effectively growing our retail aggregation business. PLAN is a highertouch aggregation business, for those who want more support, and FAST tends to be for those who require less support and want just the day-to-day services of aggregation.

MPA: Steve Kane has moved from the general manager role at Advantedge to become general manager at NAB Broker. Are there plans to announce a new general manager of Advantedge?

AW: We’re not replacing Steve’s old role. Those CEOs report directly to me. And the whole reason for that is that I want to be close to the aggregation businesses because there’s a big opportunity for us to grow those businesses at the moment, and that’s core to me – staying close to the distribution businesses and trying to help them grow.

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DECEMBER 2013 | 15

HEAD TO HEAD / ANTHONY WALDRON

“We think that having a parent who wants to put capital into the business and wants to grow is actually a very good thing for brokers ultimately”

MPA: Are brokers going to notice any differences with the new reporting structure?

MPA: What would you say to brokers who are concerned that PLAN, Choice and FAST are owned by NAB?

AW: I certainly hope it’s business as usual. It shouldn’t be much of a change for them. The CEOs of each of the aggregation businesses are very visible in the marketplace, and they’re going to continue to be.

For 99% of them the person that they deal with every day is still the same person – the BDMs are exactly the same people.

We’ve put more people out in the field as well, particularly in our aggregation businesses. So, whilst there have been changes and so on throughout the bank, we’ve put more people out on the ground servicing brokers.

AW: What we’ve shown over the last few years is that that is very manageable. The other thing is that with aggregation – for the investment that you need to grow those businesses – you need a parent who’s prepared to invest heavily. We’ve spent over $20m on the Podium platform. We’re going to continue to invest, so you’ve got to have those deep pockets to do that.

We think that having a parent who wants to put capital into the business and wants to grow is actually a very good thing for brokers ultimately.

MPA: Phil Quin-Conroy became CEO of PLAN this year. What do you think he brings to that role?

AW: Phil’s been in the financial services industry for over 20 years; about 14 years with third party distribution, including the last six to eight in mortgage broking. He brings a wealth of knowledge around the technology side as well, having run our Podium platform for the last few years, and core to that technology is making businesses efficient and being able to grow your business around efficient technology. He brings a real heavy understanding of that, as well as a lot of experience working with growing businesses.

Those are absolutely key for us in PLAN, because that’s what we want to be able to do. We want people dealing with PLAN to get efficient in their businesses through the technology we provide in Podium, and we also want them to be able to grow their business.

1997

2005

Worked at Plum Financial

General manager MLC Platforms

2001

2009

Program director NAB Wealth

General manager of customer development at NAB

General manager MLC MasterKey

16 | JANUARY 2014

AW: Our priorities have been to make sure that the value propositions of each of the aggregation businesses are very clear, and to allow those businesses to set themselves up and get the right number of people out there to support the growth.

So we’ve made some changes to make sure that we’ve got the right number of people out in the field to be able to do that.

Our other key priority is to make sure that we continue to invest in the technology that sits behind them. Podium, in particular, we want to continue to invest in and continue to grow – and to continue to get out there and help people use it; because it’s great to have good technology, but you’ve still got to train people and show them the full range of capabilities out there, and we think that that has to be a priority as well.

MPA: What are your thoughts on what the next 12 months will hold for mortgage brokers?

CAREER TIMELINE

2002

MPA: What are your priorities in terms of investing in the aggregation businesses?

2012 Executive general manager of growth partnerships at NAB

AW: Consumers will continue to choose brokers.

That is a trend that we’re seeing. We’re already back at pre-GFC levels in terms of the flow coming from brokers, and we don’t see that subsiding. In a period of low interest rates, it’s a classic time for consumers to want and need the advice that brokers give. So this is an absolute chance for this part of our industry to show the value that we can create for customers, and to really get out and help them in a time where providing them with that help and guidance that they need can really create value for them. We see in the next year or two that brokers have a great opportunity to take market share effectively.

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MPA: Do you think there’s more brokers can do to sell themselves and the value of their advice?

AW: There’s always more that we could do, but consumers are choosing them for a reason because they’re seeing the value that can be added. I’m talking to brokers every day and you’re getting those great stories about their value every single day. And more and more consumers are continuing to choose brokers, so they’re doing a lot already.

MPA: Do you think that the change in government will have a positive impact on the mortgage market?

AW: I think the biggest thing to come out of the election right now is some surety. We now know who we have in government, and we know that we’re going to have them there for a period of time.

So I think that, in the short term, there’s probably going to be a bit more confidence around the market, which is a really good thing in terms of generating a bit of growth.

MPA: Are there any other key messages that you’d like to pass on to our readers?

AW: [Brokers are] absolutely core to us. Forty-five per cent of flow in the market around mortgages is coming from brokers. We’ve got a disproportionate share of that, and we’re the fastest growing of the

“I want to be close to the aggregation businesses because there’s a big opportunity for us to grow those businesses at the moment” majors in the broker channel. Our book has grown 20% per annum over the last few years due to the flow that we’ve got from brokers. This is not a business about whether we’re committed to it – it’s absolutely core to what we do.

JANUARY 2014 | 17

SPECIAL REPORT / HOT LIST

18 | JANUARY 2014

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As we look back on what has been a remarkable year for the mortgage broking profession, MPA presents its hot list of the industry players who have made waves... or dropped off the radar

JANUARY 2014 | 19

SPECIAL REPORT / HOT LIST

Who: Keiran Evans What: Head of third party relationship channels Where: ANZ

Who: Lyn Cobley What: Executive general manager, retail products and customers Where: Commonwealth Bank One of the hottest stories of 2013 – in terms of comings and goings in the mortgage industry – was the news that Kathy Cummings would be stepping down from her role at CBA at the end of the year, with Lyn Cobley stepping in to assume responsibility of the broker sales service team. Cobley appears to be inheriting the broker-facing role after a good year for CBA: in 2013 the bank delivered its long-awaited Everyday Offset account, while it also took the number one ranking for the third year in a row in MPA’s Brokers on Banks survey.

Who: Damien Muir What: BDM Where: Commonwealth Bank BDMs are an importtant conduit between brokers and lenders, and Damien Muir’s enthusiastic approach to the job and glowing appraisals saw him scoop the Australian Mortgage Award (AMA) for Best Bank BDM as well as for Australian BDM of the Year. This is a man whose star is well and truly on the rise.

20 | JANUARY 2014

Who: Steve Kane What: General manager, broker distribution Where: NAB Broker Industry stalwart Steve Kane was the obvious choice to take the hot seat at NAB Broker after his predecessor John Flavell moved into NAB’s wealth division.

With years of experience under his belt, most recently as general manager at Advantedge, Kane has been given the seal of approval to continue NAB’s strong work in the broker space.

Kieran Evans moved into his new role at ANZ in 2013, and wasted no time in hitting the road to ask for honest feedback from the broker community on the bank’s service proposition. ANZ came third in MPA’s Brokers on Banks survey but, when discussing the results with MPA, Evans stressed that ANZ wouldn’t be resting on its laurels.

Who: Doug Lee What: Head of sales Where: Macquarie Mortgages Lee and the Macquarie team really set their stall out in 2013 and made it clear they were making a serious play for a larger share of the mortgage market, using the broker channel as their conduit. This year, the non-major lender made waves by jumping from seventh to fourth in MPA’s Brokers on Banks survey, winning the AMA for Best Industry Advertising campaign, and partnering with Yellow Brick Road.

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Who: Patrick Tuttle What: CEO Where: Pepper

Who: Fons Caminiti What: Senior manager, broker distribution Where: Adelaide Bank Fons Caminiti was installed in November 2013 to lead Adelaide Bank’s broker distribution division at the national level. The new role is a key part of the restructuring and repositioning of Adelaide Bank’s broker business, meaning that Caminiti will be one to watch as the bank continues to reinvigorate and enhance its value proposition for the broker channel.

Who: Anthony Waldron What: Executive general manager, growth partnerships Where: NAB The NAB/Advantedge family went through a management restructure in 2013, with Anthony Waldron stepping into the position of executive general manager, growth partnerships, and taking charge of NAB’s growth leadership team, which includes the CEOs of PLAN, Choice, FAST and NAB Broker.

Pepper may have ultimately conceded defeat in the bidding war for RHG, but elsewhere it’s been a successful 12 months of expansion for the company. In 2013, Pepper was added to Aussie’s lender panel; acquired a $250m small-balance commercial mortgage portfolio from Citigroup; updated its suite of mortgage products; and announced its second public securitisation issue utilising prime loans originated by the GE Capital Australian mortgage portfolio (acquired

by Pepper in 2011). This is a company that’s on the move.

Who: Stephen Moore What: CEO Where: Choice Under Stephen Moore’s custodianship, Choice has gone from strength to strength. In October 2013, for example, Choice reached the milestone of hitting $1bn in loan settlements – an uplift of over 30% from October 2012.

And it appears that Choice’s brokers are a happy bunch, with its latest annual survey showing an 89% satisfaction rate and an inflow of new brokers choosing to partner with the group.

The leading magazine for the mortgage broking industry Mortgage Professional Australia continues to be the key resource that mortgage brokers and industry professionals turn to for in-depth industry issues, market trends, business analyses and intelligence.

Each issue is packed with updated relevant information such as all the latest mortgage products, diversification strategies, sales and marketing tools, career education and training, regulation & legislation updates.

Visit www.mpamagazine.com .au to subscribe today JANUARY 2014 | 21 MPAsubs_Thirds_Ad.indd 1

25/11/2013 10:11:12 AM

SPECIAL REPORT / HOT LIST

Who: Joe Hockey What: Treasurer Where: Federal Government It doesn’t get much hotter in finance circles than being in charge of the nation’s budget. It’s too soon to pass judgment on how Hockey’s time in office is being received by the mortgage industry, but no doubt the lenders will be hoping for some relief from the bank-bashing Wayne Swan indulged in during his time in charge of the government coffers.

Who: Peter Vala What: Head of sales and distribution Where: Thinktank Thinktank initiated a reinvigoration phase in 2013, and Peter Vala joined the executive team in the newly created role of head of sales and distribution.

Fresh from six years as a senior manager and executive at ANZ, Vala will be bringing his industry experience to the fore and will be a very visible face and presence with the specialist lender.

Who: Gerard Tiffen What: Managing director Where: Tiffen & Co

Who: Paul Eldridge What: CEO Where: Intellitrain Paul Eldridge has achieved something of a game changer in the world of broker education by securing VET Fee Help for Intellitrain’s courses. This ‘study now, pay later’ option, funded by the Federal Government, is a HECS-style loan that allows brokers to defer repayments until they’re earning over a certain threshold.

22 | JANUARY 2014

Who: Tim Brown What: President Where: MFAA The Vow Financial CEO took on the role of president of the MFAA in November 2013. Tim Brown’s industry experience of working as a broker at a lender, and now as CEO of an aggregator, should serve him well when it comes to his MFAA duties.

Gerard Tiffen has been a consistently strong performer in the mortgage broking world for some time, but 2013 has to be one of his hottest years. Not only did he make the top 10 in the MPA Top 100, but Tiffen and Co took out the AMA for Brokerage of the Year > 6 Staff – Independent, along with the top spot in the MPA Top 10 Independent Brokerages rundown for the second year in a row.

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Who: Colin Lamb What: Director Where: Mortgage Solutions Australia The year 2013 will be one to remember for Colin Lamb. Not only did he boost his settlement figures to take out the number one spot in the MPA Top 100, but he was also awarded the AMA for Australian Broker of the Year.

Who: Phil Quin-Conroy What: CEO Where: PLAN

Who: Stewart Saunders What: National manager, brokers Where: ME Bank Stewart Saunders and the ME Bank team made major inroads into the broker channel in 2013 with a slew of offerings – some of the lowest rates on the market. ME Bank managed to get itself on the panels of 11 aggregators over an 11-month period, with loan applications from brokers more than doubling from 9% to 20% between August and September 2013.

Phil Quin-Conroy took the CEO hot seat at PLAN this year. With his wealth of financial services and mortgage broking experience, most recently heading up the team in charge of Advantedge’s Podium platform, he’s been charged with helping PLAN brokers grow their businesses efficiently.

Who: Keith Levy What: National manager Where: Deposit Power Late in 2012 Deposit Power was sold to New Zealandbased CBL Insurance, meaning Keith Levy has had a busy time overseeing the handover from Vero to CBL. Having managed the run-off, Levy was officially installed as Deposit Power general manager with CBL in January 2013 – and with the change of ownership comes a renewed determination to increase awareness and grow the company’s deposit guarantee portfolio in Australia.

Who: Allan Savins What: COO Where: RESIMAC It’s been a busy period for Savins and the RESIMAC team, with a syndicate from the company making moves to acquire RHG, a mortgage management firm that consists of the remnants of mortgage firm RAMS, which was sold to Westpac in 2007. Pepper also stepped up to the plate, engaging RESIMAC in a fierce bidding war, with the RHG board eventually accepting the RESIMAC bid. This included a cash offer to all RHG shareholders of 50.1 cents per share.

JANUARY 2014 | 23

SPECIAL REPORT / HOT LIST

Who: Justin Doobov What: Managing director Where: Intelligent Finance It was a good year for Intelligent Finance, with the brokerage taking out the AMAs for Brokerage of the Year <5 Staff – Independent and Australian Brokerage of the Year, while, on a personal level, Justin Doobov made the top 10 in MPA’s Top 100 hall of fame.

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Who: Jega Rajan What: COO Where: Infinitive Jega Rajan has been busy working on introducing innovative software solutions to the broker market. His aim has been to introduce a CRM solution that helps brokers in three key areas – productivity, mobility and diversification – and he believes his e-Lodge+ product is just the ticket. He claims that his offering improves efficiency by removing the need for data re-entry, reduces lodgement times to 10 to 15 minutes, and gives 100% accuracy.

Who: Tony MacRae What: General manager of mortgage broker distribution Where: Westpac Tony MacRae and the Westpac team came up with a few eye-catching broker incentives this year, such as its volume incentive deal that saw members of aggregators who hit their targets receive an extra 10bps of upfront commission on Westpac deals, regardless of their individual volumes through the bank. Meanwhile, the bank was awarded the AMA for Most Effective Internet Presence as a result of its ongoing commitment to mobile and online channels.

Internet Presence.

Who: Iain Forbes What: Director Where: AFM

Who: Ranjit Thambyrajah What: Managing director Where: Acuity Funding Despite the 2013 MPA Top 10 Commercial Brokers rundown drawing its most competitive field to date, Ranjit Thambyrajah managed to beat off all comers by a significant margin to take the number one spot for a mightily impressive fourth year running.

24 | JANUARY 2014

AFM celebrated its 10-year anniversary in 2013, and Iain Forbes deserves a huge pat on the back for steering the company through some of the most turbulent times to have ever hit the Australian financial services landscape. AFM’s robust processes and prudent approach to funding have seen it ride out the worst of the GFC, and Forbes is determined to continue to provide a viable alternative to the majors for brokers to have in their arsenals.

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DECEMBER 2013 | 25

SPECIAL REPORT / HOT LIST

Who: Peter Wood What: General manager Where: Bluestone Asset Management Australasia Who: John Kolenda What: Director Where: Finsure

Who: Moshe Moses What: Director Where: Niche Financial Group Moshe Moses proved to be a leading light when it came to diversification in 2013. To cement his status as one of the country’s top providers of diversified financial services, Moses won the AMA for Broker of the Year – Finance, while his company, Niche Financial Group, was awarded the AMA for Brokerage of the Year – Diversification.

John Kolenda went on the acquisition trail over the past year or so, with Finsure’s acquisition of LoanKit in particular making a splash in the broker space.

Kolenda believes that combining the two businesses will create a solid platform for his operations, and the plan moving forward will be to mainly concentrate on what each company individually does best, while capitalising on any opportunities produced by the new acquisition.

Bluestone is back in the lending business, and Peter Wood has been busy partnering with major aggregators, such as AFG, to get his lender’s name back on the list of panellists.

Bluestone took a step back from issuing mortgages during the GFC, but continued to fulfil its contractual obligations, service its mortgage book and pay trails to brokers – and it’s this solid business background that is helping Bluestone to make its comeback.

Murray Lees

Who: Glenn and Murray Lees What: Directors Where: Connective

Glenn Lees

26 | JANUARY 2014

Connective hit some major landmarks in 2013, announcing record settlements and an increase in broker numbers. Additionally, with the launch of Connective Socialise, the aggregator is aiming to enable brokers to engage their audiences through social media. Glenn and Murray Lees have also become vocal advocates of transferable trails, labelling the issue as “a fundamental right for all brokers”.

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OFF THE BOIL

Who: Chris Bowen What: Shadow treasurer Where: Federal Parliament Chris Bowen got a shot at the big time when he was appointed federal treasurer after Kevin Rudd reclaimed the prime ministership from Julia Gillard in dramatic circumstances. However, his tenure as treasurer proved to be short-lived, as Labor was voted out of office within months of the Rudd coup.

Who: Stephen Porges What: Former CEO Where: Aussie Home Loans Stephen Porges took a step back from the limelight when he resigned from his role as CEO of Aussie Home Loans. Porges had been with the company since 2008, and had guided it through a number of important acquisitions. According to an official statement, Porges resigned in order to “pursue other interests”. At the time of Porges’ resignation, Aussie’s executive chairman, John Symond, thanked Porges for his contribution to the company’s success and wished him well in his future endeavours.

Who: Greg Medcraft What: Chairman Where: ASIC Why: The year 2013 was a difficult one for Medcraft, with the ASIC chairman finding himself having to defend the corporate watchdog against media claims that it failed to adequately respond to the Leighton Holdings foreign bribery allegations. In setting the record straight, he admitted that ASIC had limited resources, generally focused on enforcement actions for corporate governance on public companies, rather than proprietary ones.

JANUARY 2014 | 27

PROFILE / ANDY DRAKE

BUSTING DOWN

THE DOOR Former landscape gardener Andy Drake had been keen to get into mortgage broking for several years before a move from the UK to Perth gave him the opportunity he craved.

But it didn’t fall into his lap without some serious door-knocking.

Amy Rosenfeld reports MPA: You used to be a landscape gardener before getting into broking. What made you decide to make the switch?

AD: In the UK I had my own business for 11 years and with the way the economy was going I could sense what was coming. I wanted to try broking, but in the UK it was quite a difficult field to get into.

The exams are quite expensive and unless you’re working for a bank or someone who’s willing to help it’s very difficult. So I relocated to Perth and I knocked on James’ [Pibworth, founder of Iconic Home Loans] door… and kept kicking the door and asking him to give me a chance and eventually he said yes. That was four and a half years ago now and I’ve never looked back.

I had brokers help me get into my first home in the UK and found it a rewarding experience. There’s a bit more of a care element; if you go to a bank 28 | JANUARY 2014

Andy Drake

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you’re just another number to them. We deal with a lot of first home buyers, and when you get it right it’s such a good feeling for everyone. It’s a life-changing decision for them.

MPA: What advice can you offer new-to-industry brokers?

AD: You’ve got to be prepared to put in the long hours – six or seven days a week, potentially 12-hour days. If you work hard the rewards do come. I can absolutely vouch for that after last year, breaking through the $50m barrier, which was a personal target for me. I really wanted to break into the top 100. You’ve got to have good enthusiasm and selfmotivation, and you’ve got to have an aptitude to retain information. I think one of my strong points is the ability to retain policy. It’s like a giant jigsaw puzzle; out of all the lenders you take a client and try to fit them in. You need to become very good at your niches. Study all the lenders and learn the policies inside out so when you come back to the client you’re very confident and you can sell yourself to them.

MPA: You’ve developed a very effective cross-selling technique. What’s your secret?

AD: I position myself as, not just someone who can give you a home loan but present a whole suite of services. These first home buyers are borrowing upwards of half a million dollars, some on not-great incomes, and you want to make sure you give them the peace of mind that they’ve got advice on income protection, because if something happens, these guys they quickly run out of money. It’s a duty-ofcare aspect.

I do investment advice for some of the more established guys that work up in the mines and are commanding good salaries, getting the planners to give them advice on building retirement funds, investment portfolios, shares.

We sort out a lot of Englishmen too, so there’s that familiarity. Often they’ll have debts in the UK, so I chat to them about transferring those over. A lot of them are middle-aged so they want to know how to set themselves up in a new country. It all helps retain the client, but also it makes you more than someone who’s just written a loan.

MPA: How do you keep your quality submission ratio so high?

AD: When I came into the industry I was trying to

prove that I could do it. I never wanted to let anyone down. Even now, if I get a ‘more info required’ I’ll take it personally. They all laugh because it takes me twice as long to package up a loan, but if you get it right the first time it goes through more smoothly and the client gets a better experience. It was not wanting to fail, and priding myself on that. Even from the landscaping point of view I always had a great attention to detail; I’m probably just a bit of a perfectionist.

MPA: What can employers do to encourage new brokers to hit the ground running?

AD: A lot of my success came down to James motivating me and constantly driving me to maintain excellence and a very high level of service.

James writes 20-page emails but he does it because he’s very passionate about what he does, and he passes that down through the whole team. He’s put some of us into key positions now where we can pass on his work ethic and his attitude, and that seems to work very well because eventually they’ll be able to move into that role. It seems to create a lot of balance; we end up with some good brokers at the end of it.

We’ve always had that support network; always emailing through scenarios and information. My aim is to learn one new thing every day and at the end of the day I’ll ask the guys what they’ve learnt, so in that way you’ve suddenly learnt five new things. That’s what broking is about: learning every single day. I don’t think you stop learning throughout your whole life as a broker, and if you can retain that information it’s just going to make you more powerful and stronger in the industry.

“When I came into the industry I was trying to prove that I could do it. I never wanted to let anyone down”

MPA: What are your plans for the future?

AD: I’ve told my aggregator I’ve set my target at $100m. After cracking $50m, it probably took me two weeks at the end of July just to pull myself together. When you first meet one of your big milestones, you’ve got to pick yourself up and think “I’ve got to do it all again now”. You’re only as good as your last year, so moving forward I have set my target high. I’ll be trying to drive forwards now and pick up a bit more established business, targeting my existing client base too. So it’s going to be a big year, probably busier than last year, especially with this mentor role looking after four or five guys.

It’s going to be a challenge, and I’m really looking forward to it.

JANUARY 2014 | 29

SPECIAL REPORT / YEAR IN REVIEW

30 | JANUARY 2014

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YEAR IN REVIEW

2013 was a year full of thrills and spills for the mortgage industry. MPA takes a look back at the year that was

JANUARY 2014 | 31

SPECIAL REPORT / YEAR IN REVIEW

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MPA 13.2 – Women in broking FAST FACTS Hot List 2012 Proudly sponsored by

25

The number of newsmakers featured as ‘movers & shakers’

MPA 13.1 – Hot list 2012

At the beginning of each year, MPA takes a look back at the previous 12 months and highlights a selection of movers and shakers that shaped the mortgage market. The 2012 Hot List saw some new faces enter the fray, while some familiar names from the previous year’s list warranted inclusion.

WHO WAS HOT The year’s movers and shakers included some of the biggest names in the Australian mortgage scene.

These included: • • • • • • • •

ING DIRECT’s Vaughn Richtor and Lisa Claes FAST’s Brendan Wright Westpac’s Tony MacRae CBA’s Kathy Cummings QBE LMI’s Jenny Boddington The RBA’s Glenn Stevens St.George’s Clive Kirkpatrick Connective’s Murray Lees

WHO WAS NOT Our ‘off the boil’ list included a handful of big names who didn’t have the most successful of years, namely: • Former Firstfolio CEO Mark Forsyth • Former Treasurer and Deputy PM Wayne Swan • Refund Home Loans founder Wayne Ormond

32 | JANUARY 2014

22

The number of big names who were labelled as ‘hot’

3

The number of people who were labelled as ‘off the boil’

10

The number of lenders represented in the Hot List

4

The number of aggregators or franchises represented in the Hot List

In issue 13.2’s cover story, MPA celebrated some of the female brokers in the industry who had interesting stories to tell. What was clear is there’s a wealth of talent in the female ranks of mortgage broking.

BROKERS SPEAK

“I love the fact the women I’ve mentored see strength of relationship as so important.”

- Katrina Rowlands, Mortgage Success

“Traditionally women have been drawn to professions that are nurturing and caring and I think a good mortgage broker has exactly those qualities.”

- Susanne Massingham, Shire First Mortgages “It’s a bit of a boys club out there, and this gave me the opportunity to run my own business and deal with other women in business as well.”

- Effie Nicol, Yellow Brick Road “I’ve mentored my daughter who works with me. She’s moved away a few times over the years and gone off to work for larger organisations, but she’s always come back.”

- Marie Belfliore, Mortgage Achievers “Being a mortgage broker, there’s no glass ceiling. The sky’s the limit, and you can achieve as much as you’d like. You can work as long as you like and as hard as you want, and if people are happy with your service they’re going to refer to you.”

- Nancy Youssef, Classic Finance Group “In many relationships, women actually make the decisions. If I can relate to them better then I’m more likely to get them to make a decision, because the woman is going to end up doing it anyway!”

- Leeanne Scott, Mortgage Choice “I was an at-home mum prior to getting into mortgage broking ... I wanted to move into something where I was able to determine my income based on the work I put in.”

- Rochelle Hall, Aussie Home Loans

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DECEMBER 2013 | 33

SPECIAL REPORT / YEAR IN REVIEW

Proudly sponsored by

FAST FACTS Top 10 Franchise Brokerages

MPA 13.3 – Young Guns

The gloomy Australian economic landscape that prevailed at the beginning of 2013 didn’t seem to prevent bright young things from considering joining the mortgage profession, and MPA’s Young Guns feature showed that the industry’s in good hands. For this feature, aggregators were asked to nominate brokers who had been in the industry for no more than two years, and were no older than 35.

“I only see positive things for the industry. There has been consistent growth in our local franchise business. I envisage this to be replicated industry wide.”

- Karli Martin, Mortgage Choice

“While working for a large accounting firm, I purchased a house with the help of a mortgage broker... we became friends and not long after that I quit the accounting firm and started working as a trainee mortgage broker in his company.”

- Matthew Ford, Finestream Group “The mortgage industry has seen rapid growth and has become a force to be reckoned with, as more and more consumers are using mortgage brokers, instead of approaching the banks direct.”

- Ashleigh Wight, Diversifi “Becoming a mortgage broker allowed me to become mobile and work wherever I am – and take control of my business growth.”

- Catalina Milla, Loan Market “I’ve always wanted to do things for myself and play a more active role... It gives me a chance to get out there and do something more proactive.”

- Aaron Chong, Ace Capital “I was far too comfortable in that role [mobile banker], I needed to be back on commission and out of my comfort zone.”

- George Samios, Madd Mortgages

34 | JANUARY 2014

$6.8bn

The Top 10 Franchise Brokerages had a combined loan book worth just under $6.8bn

$1.6bn

Proudly sponsored by

MPA 13.4 – Top 10 Franchise Brokerages

The franchise model is a tried and tested route to running a successful mortgage broking operation and, in this issue, MPA looked at 10 of the best franchise brokerages in the country.

These businesses were truly making the most of the resources at their disposal

TOP 10 Rank

Brokerage

1

Mortgage Choice Glenelg

=2

Choice Home Loans

=2

The Mortgage Gallery Joondalup

4

Mortgage Choice CBD Adelaide (and others)

5

Mortgage Choice Cheltenham

6

Mortgage Choice North and West Brisbane (and others)

=7

Loan Market Earlwood

=7

Club Financial Services Gippsland

9

Loan Market Oakleigh

10

Aussie Parramatta

The value of settlements made by the Top 10 during the 2012 calendar year was just under $1.6bn

59

The total number of brokers/loan writers employed by the Top 10

$28.8m The average volume written per broker/ loan writer across the entire Top 10’s workforce

89%

The average conversion rate across all of the Top 10

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MPA 13.5 – Brokers on Aggregators

MPA’s Brokers on Aggregators survey provided a litmus test of how the aggregators were performing in brokers’ eyes. The results provided a fascinating insight into what the aggregators do well, and the services that brokers most appreciate.

OVERALL RANKINGS Rate for importance

Rate for aggregator service

Rank

Category

Score

Rank

Category

Score

1

Accurate and on time commission payments

4.71

1

Quality of lending panel

4.43

2

Quality of lending panel

4.61

2

Accurate and on time commission payments

4.33

3

Communication with brokers

4.51

3

Communication with brokers

4.15

4

IT and CRM support

4.46

4

Compliance support

4.04

5

Compliance support

4.33

5

IT and CRM support

4

6

Training and education

4.15

6

Training and education

3.93

7

BDM support

4.13

7

BDM support

3.87

8

Marketing support

3.64

8

3.4

9

Additional income streams

Additional income streams

3.53

9

Marketing support

3.35

10

White label offering

3.14

10

White label offering

3.29

11

Lead generation

2.86

11

Lead generation

2.29

RESPONDENT BREAKDOWN AGE

21-34 35-44 45-54 55-64 65+

INCOME

12% 28% 35% 21% 4%

$0-50,000 $50,001-75,000 $75,001-100,000 $100,001-150,000 $150,001+

$0-10m $10,000,001-$20m $20,000,001-$40m $40,000,001-$60m $60m+

30% 32% 24% 8% 6%

AGGREGATOR SATISFACTION Are you concerned about the sustainability of your aggregator’s business model

Y: 13% N: 87%

Are you happy with the fee/ commission split?

Y: 76% N: 24%

Does your aggregator keep you well informed around industry wide issues?

Y: 84% N: 16%

Diversification has been a buzzword in the mortgage broking industry for several years now, but how can brokers go about diversifying successfully? In this issue, MPA spoke to a number of brokers who have diversified outside of residential home loans, in various different ways, to discover the secrets to their success. There were plenty of lessons to learn from these diversification gurus.

“If you don’t diversify you will get left behind. You need to be able to cover more than just one product.”

- Graham Lee, Corporate Finance and Leasing

“What we’re doing is offering home loans, but so many brokers aren’t actually offering the other component of it, which is insuring the mortgage.”

- Bianca Long, Mortgage Choice “I think it’s very important to gain a full understanding of each area you diversify into so you can take a holistic approach.”

- Melinda Patterson, 8888 Loan Group

VOLUME

14% 16% 22% 25% 23%

MPA 13.6 - The Diversifiers

“Have a clear strategy, and there’s a fair bit of work involved. For me to see the growth that I’ve got now, it probably took two years.”

- Tony Bice, First Choice Mortgage Brokers “I would strongly recommend adding asset finance to your range of products – of course, depending on the demographic of your client, colleague and referral network.”

- Andrew Barley, Macquarie Commercial Finance “You’ve got to keep in touch, that’s most important. We have our annual review process that we follow up with our clients... if you aren’t doing a good job it won’t take too long for people to find out.”

- Jayesh Kasim, Yellow Brick Road

JANUARY 2014 | 35

SPECIAL REPORT / YEAR IN REVIEW

MPA 13.7 – Brokers on Banks

MPA 13.8 – Banks on Brokers

MPA’s annual Brokers on Banks survey, independently researched by Beaton Research + Consulting this year, caused a stir as always.

The top five banks in each of 10 of the key performance metrics were revealed – as well as the bank of the year.

As always, MPA gave banks the right of reply when it came to the issues raised by the previous issue’s Brokers on Banks survey, and outline their third-party plans for the year ahead.

Independently researched by

THE BIG WINNERS Cateogory

Rank 1

2

3

4

5

Turnaround speed

CBA

ANZ

Adelaide Bank

NAB/ Homeside

Westpac

Interest rates

NAB/ Homside

CBA

Macquarie

St.George

ANZ

ANZ

Citibank

BDM support

CBA

Macquarie

NAB/ Homeside

Product diversification opportunities

CBA

St.George

Macquarie

NAB/ Homeside

ANZ

Communications, training and development

CBA

NAB/ Homeside

Macquarie

ANZ

Citibank

Product range

CBA

ANZ

NAB/ Homeside

Macquarie

Westpac

Commission structure

AMP

NAB/ Homeside

ANZ

Suncorp

CBA

Service levels

CBA

NAB/ Homeside

Macquarie

ANZ

Citibank

Online platform and services

CBA

NAB/ Homeside

Westpac

Macquarie

ANZ

Credit policy

CBA

ANZ

NAB/ Homeside

Adelaide Bank

Macquarie

BANK OF THE YEAR Rank

Bank

Score (out of 10)

1

CBA

7.75

2

NAB/Homeside

7.14

3

ANZ

7.09

4

Macquarie

6.96

5

Suncorp

6.45

BANK OF THE YEAR: 2011-2012 Rank

2012 rankings

2011 rankings

1

CBA

CBA

2

NAB/Homeside

ANZ

3

ANZ

Bankwest

4

ING DIRECT

NAB/Homeside

5

Bankwest

ING DIRECT

36 | JANUARY 2014

Commonwealth Bank managed to hold on to its first place ranking from 2012 and 2011 thanks to a string of first places and top five finishes in the 10 categories that the banks were scored on. NAB/Homeside was hot on its heels in second, with ANZ, Macquarie and Suncorp rounding out the top five.

While the top three banks remained unchanged from 2012, there was a shakeup at the bottom end of the top five, with Macquarie and Suncorp both rising up the ranks in 2013.

“We are committed to the mortgage broker industry and to brokers.”

- Kathy Cummings, CBA “The broker channel is integral to NAB’s overall strategy.”

- Steve Kane, NAB Broker “I’m really interested in continuing to work alongside our broker partners.”

- Keiran Evans, ANZ “We recognise the important role brokers play in the industry.”

- Doug Lee, Macquarie “Suncorp Bank has made a genuine commitment to our third party distribution channel.”

- Steven Heavey, Suncorp “AMP is a strong supporter of the broker market.”

- Glenn Gibson, AMP “We’ll... continue to build on our strategy with feedback from our broker partners.”

- Aaron Milburn, Citibank “ING DIRECT values feedback from the broker network.”

- Mark Woolnough, ING DIRECT “Westpac works closely with its partners to ensure holistically we can help support all brokers.”

- Tony MacRae, Westpac “We’re truly a ‘broker only’ bank.”

- Damian Percy, Adelaide Bank “Our brokers can expect an ongoing commitment to them.”

- Ian Rakhit, Bankwest “Brokers can expect to see improvements across the board.”

- Clive Kirkpatrick, St.George

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MPA 13.9 – Brokers on nonbanks

MPA 13.10 – Branson on Business

Hot on the heels of MPA’s Brokers on Banks survey, the broking community was asked to turn its attention to how the non-banks were performing. The results, as always, provided a fascinating insight into how the non-bank lenders were viewed in brokers’ eyes.

Proudly sponsored by

NON-BANK OF THE YEAR Rank

Non-bank

1

BMM

2

AFM

3

Pepper

4

Liberty

5

Homeloans

BRANSON SPEAKS

IMPORTANCE RANKINGS

ON BUILDING AN EMPIRE…

Rank

Category

Average score (out of 5)

Better Mortgage Management managed to take the top spot in this year’s Brokers on NonBanks survey. Hot on its heels was Australian First Mortgage, with Pepper, Liberty and Homeloans rounding out the top five.

1

Turnaround speed

4.4

=2

Credit policy

4.3

=2

Overall service to consumers

4.3

4

Overall service to brokers

4.2

5

BDM support

4

6

Interest rates

3.9

=7

Product innovation

3.8

=7

Commission levels

3.8

=7

Mortgage Product range

3.8

=10

Communications and training (product information, training, seminars, etc.)

3.5

=10

Online platforms

3.5

12

Marketing and brand awareness

3.2

13

Diversification opportunities (e.g. insurance, credit cards, SMSF loans, etc.)

2.7

ON FINDING AND KEEPING THE BEST BUSINESS TALENT…

“I have found that choosing enthusiastic, talented and positive people has helped to shape a positive character for our businesses.”

ON INNOVATION…

“In business, the picture is constantly moving and changing so I try to employ people who enjoy thinking outside the box and are constantly creative and inspiring.”

TOP 10 COMMERCIAL BROKERS

Proudly sponsored by

Rank 1

“Big or small, I believe that all successful and innovative companies need to have an excellent product or service, they need strong management to execute the plan and a good brand to give it the edge over competitors.”

In MPA 13.10 we also ran our annual Top 10 Commercial Broker special feature. Here’s some advice from the top three.

THE BIG WINNERS Cateogory

MPA turned to one of the world’s most successful entrepreneurs, Sir Richard Branson, for his advice on how mortgage brokers could build their own empire the Virgin way.

2

3 Homeloans

Turnaround speed

AFM

BMM

Credit policy

BMM

Pepper

AFM

Overall service to consumers

BMM

Homeloans

Pepper

Overall service to brokers

AFM

Pepper

Iden

BDM support

BMM

AFM

Pepper

Interest rates

AFM

Liberty

Firstmac

Product innovation

BMM

Liberty

AFM

Mortgage product range

BMM

AFM

Homeloans

Commission levels

BMM

Pepper

AFM

Online platforms

BMM

AFM

Liberty

Communications and training

Liberty

Pepper

AFM

Marketing and brand awareness

AFM

Pepper

Homeloans

Diversification opportunities

AFM

BMM

Homeloans

1. Ranjit Thambyrajah, director, Acuity Funding: “It is very important for residential lenders to ensure that they do not lose their clients to other brokers.”

2. Daniel Green, director, Green Financial Group: “Pick up a speciality and develop your knowledge of that space until you know it inside out.”

3. Fay Baker, operations manager, Sky Financial Services: “Invest into a commercial lending course. It pays to have knowledge on what you are dealing with.”

JANUARY 2014 | 37

SPECIAL REPORT / YEAR IN REVIEW

MPA 13.11 â&#x20AC;&#x201C; Top 10 Independent Brokerages

While franchise brokerages were celebrated towards the beginning of the year, the independent mortgage broking businesses had their moment in the limelight in issue 13.11.

The competition was hot, and the insights that came from the winners were truly inspirational.

When asked what the secrets are to building a successful brokerage, answers from the Top 10 varied, but the one consistent ingredient was the need to have good quality people on board to create a winning team.

FAST FACTS

$9.4bn

The Top 10 Independent Brokerages had a combined loan book worth just under $9.4bn

$3.1bn

The value of settlements made by the Top 10 during the 2012/3 financial year was just under $3.1bn

124

Proudly sponsored by

TOP 10 Rank

Brokerage

1

Tiffen & Co

2

The Australian Lending and Investment Centre

=3

The Loan Arranger

Quality people and business principles

=3

Oxygen Home Loans

The right brokers, systems and support

5

1st Street Home Loans

=6

In Mortgage & Finance Services

=6

Financing Property

Hard work, customer service, relationships and commitment

=8

Acceptance Finance

Making everyone win: brokers, clients and the business

=8

ACA Mortgage Solution

10

Loan Gallery Finance

38 | JANUARY 2014

Secrets to success Systems, people and long-term relationships Passion and commitment

Brokers and support staff Business practices, people and a supportive culture

Excellent service, consistency and training Hard work and providing value to brokers and referrers

The total number of brokers/loan writers employed by the Top 10

$24.9m

The average volume written per broker/ loan writer across the entire Top 10â&#x20AC;&#x2122;s workforce

83.7%

The average conversion rate across all of the Top 10

MPAMAGAZINE.COM.AU

BROKERS SPEAK

FAST FACTS You’ve got to build relationships, educate yourself, learn to meet the right people and work with the right people, and you’ll go far.

21,360

The total number of loans written by the Top 100

- Gerard Tiffen, Tiffen &Co.

Be honest and professional, have an excellent attitude and listen to your customers’ needs closely and drop it down in your fact find. There is no magic!

- William Chen, Pacific Mortgage Centre Be consistent and focus on what you do and do it really well.

- Raymond Xue, ACA Mortgage Solution Be committed. Building a brokerage takes time and from both my experience and seeing the performance of 1st Street brokers, those who are dedicated succeed over time.

- Jeremy Fisher, 1st Street Home Loans

MPA 13.12 – MPA Top 100

In usual MPA fashion, we rounded off the year with our rundown of the Top 100 mortgage brokers in the country. The competition was fierce, with many records being smashed by the class of 2013.

The key to success is being able to trust your team to do the right thing in the background whilst I do what I do best – talking to clients and referrers – i.e. writing business and generating more business for the team.

- Rael Bricker, House and Home Loans There are four ingredients of success when starting in this industry: a mentor, a significant amount of capital, time and a great team.

- Warren Dworcan, Rate Detective Finance

Proudly sponsored by

TOP 10 Rank

Broker

Brokerage

1

Colin Lamb

Mortgage Solutions Australia

2

Mark Davis

The Australian Lending & Investment Centre

3

Justin Doobov

Intelligent Finance

4

Warren Dworcan

Rate Detective Finance House and Home Loans

5

Rael Bricker

6

Jeremy Fisher

1st Street Home Loans

7

Raymond Xue

ACA Mortgage Solution

8

William Chen

Pacific Mortgage Centre

9

Gerard Tiffen

Tiffen & Co

10

Wendy Higgins

Mortgage Choice

Come up with a technique to ensure that your clients give you all the supporting documents for the loan application the first time. It is unproductive to keep chasing clients for outstanding documents.

- Justin Doobov, Intelligent Finance Don’t join the industry unless you are truly passionate about helping people. It’s hard out there. The industry can be tough and if you don’t have what it takes, you definitely won’t be very successful.

- Mark Davis, The Australian Lending & Investment Centre Keep building a referral base and pounding the pavement – you are the only one who can increase the number of leads.

- Colin Lamb, Mortgage Solutions Australia

$7.486bn

The total volume written by the Top 100

$350,493

The average loan size for this year’s Top 100

585

The highest number of loans settled to make the Top 100

51

The lowest number of loans settled to make the Top 100

$54.4m

The minimum amount of settlements needed to make the Top 100 this year. A big increase on last year’s figure of $46m and more than double the list’s first-year figure of $22.7m in 2005.

JANUARY 2014 | 39

FEATURE / SMSFs

40 | JANUARY 2014

MPAMAGAZINE.COM.AU

SMSFs DOING THE DEAL

MPA speaks to some of the leading lights in the SMSF lending space for their tips on how to get these complicated deals over the line

T

here’s been a buzz around the SMSF market in financial services circles for some time now.

You’re probably aware that it’s the fastestgrowing area of the superannuation industry in Australia. You’re probably also aware that SMSFs can invest in property and are allowed to take out a loan on the property purchase through a limited recourse borrowing arrangement (LRBA).

But how can brokers go about finding clients who want to take the SMSF property investment route, and how can you put the deal together while navigating the compliance minefield that surrounds this area of lending?

For starters, AMP Bank national sales manager, Glenn Gibson, points out that giving advice on SMSFs is a no-no for brokers who don’t also hold the requisite financial advice qualifications.

“Brokers are not able to give advice on SMSFs,” he says. “They certainly need to highlight the different features and benefits of the SMSF lending products but they will need to refer their customers to a financial planner or accountant to assist them with their SMSF advice requirements.”

He adds, though, that it’s essential to understand

what the SMSF establishment process is – and not just the lending component.

“Through knowledge of this process, brokers will be able to understand the likely delays and pressure points that may occur and will be better equipped to service their clients,” he says.

Echoing Gibson’s sentiments, RESIMAC COO Allan Savins explains that brokers should only focus on the credit element of the process when discussing SMSF issues with clients.

“Brokers are only licensed to provide credit advice. Anything other than credit advice and handling the paperwork to get the loan set up is out of the realm of the broker who only holds a credit licence,” he says.

In addition to a credit licence, he adds that, before attempting to write an SMSF loan, it’s essential to complete substantial training to understand the complexities of SMSF lending.

“At the very least, we recommend all brokers wanting to write an SMSF loan complete the MFAA, SMSF accreditation course,” he advises.

Turn the page for more essential advice from some of the country’s lending SMSF experts.

JANUARY 2014 | 41

FEATURE / SMSFs

PER AMUNDSEN, DIRECTOR, THINKTANK COMMERCIAL PROPERTY FINANCE How can brokers find SMSF clients?

If you work with self-employed individuals they are probably the most likely to already have an SMSF. If you do have SMEs or their owners as clients you are really off to a good start as they are probably the ideal prospect to buy and fund their own commercial premises through their SMSF. Who does a broker need to partner with in setting up an SMSF loan?

If you can build up good working relationships with a network of skilled, licensed professionals – such as lawyers, accountants and financial planners – you will have the advantage of being able to refer existing clients to them for good advice. You can also expect that they will refer clients to you. Delivering appropriate finance options in a prompt fashion and appropriate structure can make you an invaluable member of any professional network.

How much advice are brokers allowed to offer?

To give advice about setting up an SMSF or about investing in direct property, you need to hold an Australian Financial Services Licence (AFSL) or be an authorised representative of a licensee. You can refer clients to a licensed professional who can give them specific advice. If they proceed, they’ll look to you to assist in establishing the financing they require. Having the knowledge and skill to assist in this area will set you apart from many others and getting yourself accredited by any one of the industry groups that provides training in SMSF – LRBAs is a great start.

What kind of support should a broker expect from their SMSF lender?

Any SMSF lender that is serious about this segment of the market will have already devoted a lot of time and effort into establishing themselves as a source of LRBA financing. They should be willing to share this with you in terms of training 42 | JANUARY 2014

for accreditation purposes together with forms and guides that make it easier for you to meet their approval criteria.

How long does it typically take to set up and gain approval for an SMSF loan?

If your client already has an SMSF and is working with well qualified licensed advisers then you are half way there. The lending decision is usually straightforward as most lenders will have wellestablished guidelines that have been communicated to the broker. If you have the investment strategy and all the relevant documentation in place you can get an approval as quickly as for a non-SMSF loan, and the lender’s legal team should be well trained and efficient in dealing with your clients’ solicitors.

Most advisers suggest that clients plan on at least a 60-day settlement period from the vendor of the property they plan to purchase. This allows for things like reviewing the existing SMSF trust deed, updating its investment strategy and setting up the ‘bare trust’.

What is the typical structure of an SMSF loan?

The structure is dictated by the SISA legislation and interpretations issued by the ATO. The property that is subject to the mortgage must be a ‘single acquirable asset’ and must be held in a ‘bare trust’ that holds the property for the beneficial interest of the SMSF. The SMSF is the borrower, and the trustee(s) of the SMSF sign the loan documentation, but the mortgage itself is from the trustee of the ‘bare trust’. Most lenders also require the SMSF members to personally guarantee the LRBA, although Thinktank will approve LRBAs without personal guarantees when the LVR is 50% or below.

Do you have any other advice on implementing SMSF deals?

While it may be a bit repetitive, make sure you know what you are doing and that you and your client have access to experienced and qualified advisers. Allow plenty of time to get things organised especially if your client does not yet have an SMSF. Once you know the facts of the transaction, select your lender carefully but if you have all your information together the actual lending decision won’t be a problem and especially once you have done one or two transactions. Like so many things experience counts for a lot.

MPAMAGAZINE.COM.AU

MPAMAGAZINE.COM.AU

THINKTANK SMSF LOAN CHECKLIST Documents required: Thinktank provides a detailed checklist and what we call an ‘SMSF – LRBA Essentials Guide’ so you can follow what is required step by step. For starters though, once they have had licensed advice on proceeding with an SMSF – LRBA your client will need a SMSF Trust Deed with an Investment Strategy that includes investing in direct property on a geared basis. Their ‘bare trust’ should be set up and we think everyone should have a statement of advice from a licensed financial adviser i.e. one who holds an AFSL or is an authorised representative of a licensee. The lender will require a valuation instructed by themselves. Historical financial information of the SMSF is needed and that of any personal guarantors that will be required, just like any other loan transaction.

Residential/commercial: There are some basic differences between the two that are dictated once again by the SISA and the ATO, but in the case of Thinktank we only lend against commercial income producing properties so it is pretty straightforward. The main difference is that in respect of SMSFs, ‘business real property’ can be acquired from related parties and can be leased to related parties whereas residential properties may not. This opens up a wide variety of opportunities for SME owner occupiers to acquire their business premises and deal with them at market rates while investing in them for their retirement in keeping with the ‘sole purpose test’ of the SMSF regulatory regime.

LVR available: Our LVRs range from a maximum of 75% and have various repayment and members’ guarantee provisions down to 50% LVR where no members’ guarantees are required but repayments must be on a principal & interest basis from the start of the loan. Where the LVRs are 70% and below and the members provide guarantees, interest only repayments are available for up to five years. All our SMSF options allow loan terms up to 25 years.

Set-up costs: Our costs are very competitive for commercial loans and include a basic $1,800 plus GST for legals plus valuation costs on a cost recovery basis. Our establishment fee is 0.75% of the loan amount and during the period to 31 December 2013 for loans settled by 31 March 2014, we are offering a limited early release single fee for all of the above plus a ‘bare trust’ template from our solicitors for $3,750 plus GST for loans up to $300k and $4,500 plus GST for loans up to $600k. The borrower’s own costs will vary depending upon whether they have an existing SMSF and their arrangements with their financial adviser so it is best to thoroughly check these out before you start.

Special conditions: Thinktank does have a requirement for a minimum net asset level of $250,000 for the SMSF before we will settle an LRBA. There is no SISA or ATO requirement for this but we think it is prudent in view of concerns expressed by the regulators about low value SMSFs being established for the purpose of LRBAs. It is also important from the point of view of liquidity and ensuring that problems don’t arise if premises are vacant for periods of time or owner occupiers experience trading lulls in their businesses. Interest rates are low right now but sooner or later they will rise again and borrowers need to be prepared for that.

Thinktank’s unique selling point within the SMSF market: Our loan facilities are genuine long-term loans with up to 25 years’ amortisation periods that are exceptionally well suited to investments with long horizons such as ‘business real property’ held in SMSFs. A short-term loan that needs to be renegotiated every few years can be costly, inconvenient and introduce risks around the ability to roll over or re-finance when required.

DECEMBER 2013 | 43

FEATURE / SMSFs

MPAMAGAZINE.COM.AU

GLENN GIBSON, AMP BANK NATIONAL SALES MANAGER How can brokers find SMSF clients?

With over half a million SMSFs now in operation and roughly 4,000 new ones being established every month there are about 900,000 Australians who are members of a self-managed super fund.

SMSF clients for brokers would normally be seeking to make property one of their holding assets. In most cases the SMSF will need to borrow to purchase a property and will need the services of an experienced lender in limited recourse borrowing. Brokers with existing relationships with financial planners and accountants are finding this an effective way to expand their business into SMSF.

AMP BANK SMSF LOAN APPLICATION CHECKLIST Must be an investment (ie it cannot be owner-occupied).

Must be already constructed and have its own separate title details (ie no construction loans).

Must be zoned residential or rural residential (ie no part residential, part commercial is allowed).

Must be fully serviced by power, water, electricity and sewerage and have road access.

No company title, serviced apartments or display homes.

No more than two residential units on one title.

For strata title properties with more than one title, only the unit’s title can be used as security (ie if, for example, an outbuilding or garage is on a separate title, it cannot be financed by the same loan as for the unit).

The maximum land area is 2.2 hectares (5 acres).

We lend up to a maximum of 80% of the value of the residential investment property.

An AMP Bank SMSF loan can be used to refinance an existing loan with another financial institution, on a dollar for dollar basis only.

An AMP Bank SMSF loan cannot be used for renovations or repairs.

We take a registered first mortgage over the residential investment property.

No second mortgage or other kind of charge over the residential investment property is ever permitted.

The vendor of the residential investment property must not be a related party of the SMSF. (Your lawyer or financial planner will be able to explain the meaning of “related party” to you.)

You must demonstrate the capacity of the SMSF trustee to service the AMP Bank SMSF loan, to our satisfaction.

The security custodian and each director of the SMSF trustee (which is a corporate trustee) must agree to guarantee the performance of the SMSF trustee’s obligations under the loan agreement with us. We take a registered first mortgage over the residential investment property.

We never take any charge over any SMSF asset other than the residential investment property as security for our SMSF loan.

44 | JANUARY 2014

Who does a broker need to partner with in setting up an SMSF loan?

A broker will need to work with accountants, financial planners and lawyers, which is not dissimilar to what they would do with a normal loan process. As most SMSFs start with a financial planner or accountant, these individuals need the skills of a person who knows SMSF lending and that is where most planners and accountants will need the services of a mortgage broker.

What kind of support should a broker expect from their SMSF lender?

A good SMSF lender will have extensive experience not only in the lending aspect of SMSFs but also experience and knowledge in the establishment and administration of SMSFs. Brokers want a lender where all staff know and understand SMSFs. For example, at AMP Bank all staff (including the managing director) have completed SMSF training & accreditation. That’s the kind of commitment brokers like to see from their SMSF lender.

How long does it typically take to set up and gain approval for an SMSF loan?

In most cases the first step in the SMSF loan process is to obtain a pre-approval so that the anticipated loan amount is confirmed as being acceptable. As the purchase process is quite different to a normal property purchase, the preapproval is an important step. Under normal circumstances you would expect to receive an answer within four days of lodgement. The settlement of the loan will vary depending on whether the SMSF is already established and the length of time it takes to produce the required trust deeds. While brokers won’t need to get involved in this process, an understanding of the different stages is important.

What is the typical structure of an SMSF loan?

A typical SMSF loan has a ‘set and forget’ style.

Normally they are a variable or fixed loan but with the option to split. As all SMSFs need a transactional deposit account, an SMSF loan with an offset is a popular option. As you can’t borrow to improve an asset, holding excess funds in an offset is one way to optimise the borrowing for future repairs.

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DECEMBER 2013 | 45

FEATURE / SMSFs

MPAMAGAZINE.COM.AU

ALLAN SAVINS, COO, RESIMAC How can brokers find SMSF clients?

Understanding the complexities of SMSF lending is critical if brokers want to avoid breaching ASIC guidelines. Before a broker attempts to find SMSF clients we recommend they undertake substantial training, including the MFAA training program to obtain self-managed superannuation fund lending accreditation.

Once a broker has obtained SMSF accreditation, building close referral relationships with accountants and financial planners is a good way to build SMSF clients.

Who does a broker need to partner with in setting up an SMSF loan?

SMSF lending is influenced significantly by the SIS Act. A breach could make the fund noncomplying with a large financial penalty being applied. Should a property investment and its funding need to be unwound the consequences can be huge. With this in mind, it’s important that brokers partner with reputable lenders such as RESIMAC who can assist to establish the right structure the first time.

Brokers also need to partner with experienced lawyers, accountants and financial planners to ensure they can provide appropriate support to their clients.

RESIMAC also provide the option that our

RESIMAC SMSF LOAN CHECKLIST Residential/commercial: The SMSF Loan is suitable for the purchase of a single residential investment property or to refinance an existing SMSF residential investment property loan. Other types of properties including commercial real estate, vacant land or owner-occupied property are not acceptable.

Documents required: Apart from the standard loan application documents, SMSF loan applications require a copy of the SMSF deed and a copy of the property trust deed. This is to ensure that the SMSF is structured correctly.

LVR available: Up to 80%.

Set-up costs: Typical set up cost are $1,050. The costs cover the documentation fee and review of trust deeds and loan contracts.

Special conditions: SMSF trustee applicants and guarantors must obtain legal and financial advice and must show RESIMAC proof of advice.

Additional servicing capacity: Will be considered above the required mandatory contribution where regular additional contributions have been made and can be verified over a two-year period.

RESIMAC’s unique selling point within the SMSF market: Low get in costsNo annual or monthly fees, no application fees. Up to 80% LVR with NRAS properties as acceptable security.

46 | JANUARY 2014

lawyers (Gadens) can assist their client in the establishment of the necessary property trust paperwork.

What kind of support should a broker expect from their SMSF lender?

Lenders should have programs or BDMs to assist with training needs. RESIMAC also provides direct access for brokers to speak with credit staff that underwrite the loans.

At RESIMAC we try to make it as easy as possible for the broker by giving them direct access to our panel lawyers.

How long does it typically take to set up and gain approval for an SMSF loan?

The longest part is actually setting up the SMSF. This can take 6-10 weeks. It is certainly true that an SMSF loan is more complicated than an ordinary home loan. However, there is a lot of help, support and training available.

The average broker is quite capable of handling these loans if they put in the time to learn the basics. The most complicated parts are actually taken care of by the lenders’ panel lawyers. Once all the paperwork is submitted, RESIMAC can assess the deal within 24 hours.

What is the typical structure of an SMSF loan?

1. Borrower sets up an SMSF. 2. The trustee of the SMSF selects a residential investment property to purchase.

3. The trustee of the SMSF appoints a Custodian (Property Trustee) to purchase the residential investment property on its behalf.

4. The trustee of the SMSF applies for a loan with the lender.

5. The SMSF pays the deposit and exchanges contracts on the purchase. The Property Trustee will purchase the property and become the legal owner (i.e. it is the purchaser shown on the contract for sale). The SMSF will obtain the beneficial interest in the property.

6. The loan is advanced to the SMSF (not the property trustee).

7. The lender takes a mortgage over the legal interest in the property from the Property Trustee and a charge over the beneficial interest in the property from the trustee of the SMSF. There is no recourse against the assets of the SMSF other than the security property.

8. A guarantee is obtained from beneficiaries of the SMSF. Collateral security cannot be taken from the SMSF itself.

9. Loan funds must only be used for the purchase or refinance of a property and there can be no redraws or further advances.

MPAMAGAZINE.COM.AU

DECEMBER 2013 | 47

FEATURE / SMSFs

MPAMAGAZINE.COM.AU

GREG MITCHELL, GENERAL MANAGER SALES, HOMELOANS How can brokers find SMSF clients?

It is important to have an affiliation with financial planners, accountants or lawyers, and for brokers to be able to tap into their existing client base to identify those who have self-managed super funds and are interested in investing directly in residential property.

Who does a broker need to partner with in setting up an SMSF loan?

In the first instance, brokers need to have good contacts with financial planners, accountants or lawyers. But it’s also important that they acquaint themselves with the process that’s involved. For example, they need to have a reasonable understanding of what an SMSF looks like, how they’re structured and the responsibility of the trustees.

How much advice are brokers allowed to offer?

Brokers take care of the loan application, and Homeloans has a dedicated credit team to streamline the process. Lending is just one piece of the puzzle, and a financial planner and solicitor are required for the other elements.

Brokers can advise on the different types of products and lenders. Clients will need to get independent financial and legal advice as part of the application process.

What kind of support should a broker expect from their SMSF lender?

To help navigate the maze, Homeloans conducts regular seminars for brokers interested in offering Homeloans’ SMSF products and wanting to learn more about this sector. As part of those seminars, we get a financial planner and solicitor to present 48 | JANUARY 2014

HOMELOANS SMSF LOAN CHECKLIST Residential/commercial: The Homeloans Classic SMSF product allows established SMSFs to borrow funds for the purchase or refinance of residential investment properties.

Documents required: Evidence of income – full documentation only. Credit history. Evidence of independent advice.

LVR available: Up to 80%.

Other features: Choice of repayment frequency. $500k max loan. P&I or I/O repayments.

Extra repayments.

Set-up costs: Application fee: $599. Solicitor’s fee: $600 + GST + disbursements. SMSF trust deed review fee: $600 + GST. Property trust deed review fee: $600 + GST. Loan processing/ contract fee: $200. Settlement fee: $65.

Valuation cost payment required following conditional approval. Ongoing fee: Nil.

on what the process involves and making sure clients are purchasing in the right entity. The lending side of the process is quite basic, but it’s obviously important to ensure all the other aspects of purchasing residential property within an SMSF are properly complied with.

Homeloans has a specific application form and a dedicated credit team to streamline the process.

Of course there are specific set up processes, which are handled by the financial planner or solicitor. The overall process is very involved, so it’s vital to use the relevant experts for the different components.

How long does it typically take to set up and gain approval for an SMSF loan?

As an SMSF loan has basically the same structure as a normal home loan, it typically takes the standard approval time – i.e. three to four days.

Do you have any other advice on implementing SMSF deals?

It’s vital to fully understand all facets of the SMSF product/structure/market. I would highly recommend that brokers consider undertaking the course conducted by MFAA. It’s also important to build a strong relationship with a financial planner / accountant. For Homeloans-accredited brokers, our BDMs would work with them to train them and thus be able to fully understand the credit assessment process.

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DECEMBER 2013 | 49

FEATURE / SMSFs

MPAMAGAZINE.COM.AU

SINCLAIR TAYLOR, HEAD OF SMSFs, AUSTRALIAN FINANCIAL SERVICES, WESTPAC How can brokers find SMSF clients?

Building referral relationships with accountants and financial planners is key to tapping into this affluent group of consumers.

Brokers are also likely to come across clients at various stages in the client’s decision making process around establishing an SMSF, or using an existing SMSF to buy an investment property.

Brokers can talk in general terms about the pros and cons of SMSF borrowing, however they should recommend that the client seek independent financial advice before proceeding. Brokers can fulfil a client’s request to recommend and establish an SMSF loan to purchase an investment property through an SMSF structure. As such, they can make a recommendation as to the right SMSF loan product.

How long does it typically take to set up and gain approval for an SMSF loan?

The origination of SMSF loans takes a little longer than a standard residential investment property loan, due to the additional documentation required to correctly establish the loan, and to ensure that the transaction being entered into by the SMSF complies with the requirements of the superannuation legislation.

Borrowers should consider seeking an approval in principle, prior to purchasing the property, to help speed up the formal loan approval and settlement process. It is recommended that borrowers allow 6-8 weeks to complete the loan.

What is the typical structure of an SMSF loan?

Westpac accredited brokers are provided training on how to establish an SMSF deal. This training covers the basics of SMSF, the SMSF loan structure, credit criteria and documentation requirements. SMSF lending is more complex than traditional property lending, given the very specific requirements of the superannuation legislation that SMSFs must comply with. As such, it is critically important that the loan structure and documentation complies with the limited recourse borrowing arrangement (LRBA) provisions in the superannuation legislation. This means that the lender’s recourse is ‘limited’ to the property that has been purchased, not to any other assets owned by the SMSF. The purchased property must be legally owned by a separate property trustee, with the SMSF being the beneficial owner of the property. The relationship between the property trustee and the SMSF trustee is through a bare trust. This will require a new trust structure to be established, by a professional, prior to the purchase of the property. Westpac requires that the property trustee be a corporate entity, not individuals.

Additionally, if the SMSF uses a corporate trustee structure, that company cannot also be the corporate trustee of the property trust. Once the SMSF loan is repaid, the property trustee transfers the property to the SMSF trustee.

The lender may seek personal guarantees from the members of the SMSF, especially if the fund is reliant on further contributions being made into the SMSF, to support the ongoing serviceability of the SMSF loan.

WESTPAC SMSF LOAN CHECKLIST Residential/commercial: The property purchase must meet the requirement of the superannuation legislation. The property must be a single acquirable asset. Residential property must be purchased on an arm’s-length basis, from a party unrelated to the members of the SMSF. Business real property may be purchased on an arm’s-length basis from a related party of the fund’s members. Exclusions: vacant land, rural property, NRAS property, specialised commercial (by exception), joint borrowers (ie two SMSFs wishing to jointly borrow).

Documents required: SMSF trust deed; property trust deed; two years’ financials for the SMSF (if already existing); two years’ financial for the SMSF trustees; financial advice certificate.

LVR available: Up to 80% LVR for residential; up to 65% LVR for commercial.

Set-up costs: $1,500 establishment fee, plus bank legal fees and stamp duty.

Special conditions: All borrowers are required to receive financial advice from an accountant or a financial planner, confirming that the members of the SMSF understand the transaction that they are entering into and that it is consistent with their SMSF’s investment strategy.

The borrower is required to provide a Financial Advice Certificate to Westpac, as part of the loan approval process.

Westpac’s unique selling point within the SMSF market: Westpac is able to support brokers with SMSF loans, through our network of local business bankers, who specialise in SMSF lending. Through our Westpac broker squads, brokers are able to make local referrals to these specialist bankers, who will complete the loan origination, on behalf of the broker.

50 | JANUARY 2014

Get your customers moving

To find out how to get your customers moving into their next property, call us one 1800 678979 or visit depostipower.com.au.

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BUSINESS STRATEGY / RELATIONSHIPS

CLIEN RELATIONS HOW TO DRIVE SALES

52 | JANUARY 2014

NT SHIPS There’s no getting around the fact that customers like to do business with people that they like, and in today’s market building effective client relationships is more vital than ever. Nikki Heald explains that, while you may have all the skills, experience, knowledge and expertise in the world, if you can’t get your relationship marketing strategy right you’re never going to see exponential growth in your business

MPAMAGAZINE.COM.AU

So you think you’re pretty savvy technically, right?

You know all your stuff and have spent years acquiring skills and experience. Additionally, you know your product inside out, back to front. You believe you are the technical guru. Unfortunately, you can’t seem to hit your sales targets and don’t understand what’s going wrong…

Welcome to the world of relationship marketing – a process whereby sales are increased via the relationships you have created with others.

Technical is out; rapport is in!

At a time when competition for clients is intensifying and profits are shrinking, building effective alliances has never been more vital.

The reality is that business is not business – business is personal and people do business with people they like.

HUMAN NATURE Unfortunately though, not everyone we meet in business will instantly warm to us. Human nature is such that people can be indifferent, inconsistent and unpredictable. Diversities in personality, viewpoint and needs come into play, and rolling out a generic ‘client relationship strategy’ simply won’t work.

Successful sales professionals realise that their results are achieved due to a willingness to adapt to their prospect. They individualise their approach to client interactions and build unique connections.

They research, ask questions and observe to gain insight. They realise clients are not driven or motivated by the same things. Effective salespeople forego taking shortcuts and recognise that outdated selling tips such as ‘always be closing’ are no longer applicable.

All too often, opportunities are lost due to assumptions made or jumping in with the hard sell. Today’s clients are seeking a business partner who assists them with the right solution and responds to their needs.

If we think about it, the very heart of the sales process should be underpinned by wanting success for our clients, rather than success for ourselves. The underlying goal should be to understand their challenges, create solutions, and add value wherever possible. So, how do relationships influence the sales process?

Effective salespeople forego taking shortcuts and recognise that outdated selling tips such as ‘always be closing’ are no longer applicable

JANUARY 2014 | 53

BUSINESS STRATEGY / RELATIONSHIPS

MPAMAGAZINE.COM.AU

10 CLIENT RELATIONSHIP TIPS

THE STAGES OF ENGAGEMENT The cycle of sales can be attributed to various stages of engagement identified as follows.

Clients are most likely to buy from you when in the moderate and high trust zones – when rapport and credibility have been firmly established.

However, time and patience must be observed in progressing through the initial stages. No one likes to be rushed into anything!

Diversities in personality, viewpoint and needs come into play, and rolling out a generic ‘client relationship strategy’ simply won’t work Each interaction you have with clients, no matter how small, contributes to solidifying and cementing the relationship. Making your clients feel valued and important is essential to a solid foundation and future business prospects. Let potential or prospective clients feel as though they have chosen you, rather than feeling ‘sold’ to.

Think about how you and your team currently interact with clients in your business: • What tools do you presently have in place?

Is there room for improvement?

• Could you try something different or learn new strategies to nurture alliances?

Perhaps it’s time to take a different approach targeted specifically at implementing and boosting client engagement.

1. Invest time, energy and commitment into getting to know your client: It won’t happen overnight.

2. Be determined to focus on your client: Remember, it’s about them, not you.

3. Adapt your communication style to suit: A one-size-fits-all approach won’t cut it.

4. Find out their interests and hobbies: Create a database to store the information you learn.

5. Say ‘thank you’ in a tangible way: You don’t have to go to great lengths or expense to do this.

6. Keep in touch regularly: Look for reasons to keep yourself at the forefront of their mind.

7. Generate ideas: Be creative with solutions and provide unique options.

8. Design a shared goal and ask for their opinion: Work together to construct a collaborative alliance.

9. Don’t sell on price: Focus on explaining your value and the outcomes you generate.

10. Finally, invest in ‘interpersonal skill’ staff training: Your employees should understand the importance of complementing their technical ability with connection ability.

BETTER AND BETTER Nikki Heald is a corporate trainer, presenter, businesswoman, founder of Corptraining and co-author of Views On The Way To The Top. Head to corptraining.com.au for more information.

54 | JANUARY 2014

The interesting thing about all relationships, including those in business, is that, once established, they have the potential to get better and better. The challenge is to ensure this occurs. Ongoing contact and maintenance should form part of your overall relationship management plan to ensure that clients feel a genuine, rather than token, connection with you.

See the ‘10 client relationship tips’ box above for some tips that may assist you in building better and more effective relationships.

Remember, once you have built solid relationships, those alliances instinctively want you to succeed and are more than happy to refer or recommend you to others.

Additionally, some clients are willing to pay more for a product or service if they feel they have a personal connection in place. The decision to focus your energy on a relationship with your client is an unlimited method for increasing sales and capturing new opportunities.

BUSINESS STRATEGY / SUCCESSION PLANNING

SUCCE

PLA

When it comes to succession planning, there are some essential points to bear in mind to ensure that you maximise the value of your business and achieve a successful exit, explains Craig West

Most business owners go into business planning to maximise the value of the business and extract that value (most often by selling) when they exit. But the research tells us most don’t have a plan or strategy around how to do this and therefore often fail to either maximise or extract the value or both.

Achieving a successful outcome is really around focus on two areas: internal and external.

INTERNAL AREAS When it comes to internal areas, the question to ask is ‘what are the key things we can focus on to ensure our business is valuable, attractive and saleable?’

In my experience, there are eight key areas to focus on when answering this question: 56 | JANUARY 2014

MPAMAGAZINE.COM.AU

ESSION

ANNING 1

Size Simply put, ‘size does matter’. There is plenty of research supporting the fact that businesses with a turnover of $5m or more nearly always sell at higher multiples than their smaller counterparts.

While I am not in favour of growth for growth’s sake, designing your business to grow to at least this level of turnover will maximise value.

2

Business model Is your business operating under a boutique or scale model and, even more importantly, is every aspect of your business aligned with your model? This includes: • • • • •

customer service online presence the people you employ your pricing strategy your marketing materials: I met a financial adviser recently who told me he looked after high-net-wealth individual clients, was extremely good at what he did and as a result charged a premium. But he then gave me a business card on very flimsy paper that looked like it had been printed as cheaply as possible

3

Revenue Recurring revenue is vital. Do you have clients on long-term retainers, extended contracts, or some type of residual income trail?

4

Sales and marketing Your business needs to be able to generate new business, leads, enquiries and, ultimately, sales without relying on either your or a key person’s skill and sales ability. All businesses need a sales and marketing machine.

5

Systems Save yourself time, effort and money: not only are systemised businesses far simpler to run, far less stressful and generally far less risky, but they are also more valuable.

6

Employees Do you have an employee incentive plan whereby employees are rewarded based on performance? This could either be a profit sharebased plan, or ideally an employee share ownership plan. This substantially reduces one of the key risks for buyers – that your employees will exit when you do!

Inadequate planning in this area can cost you a large percentage of the sale price in taxation

JANUARY 2014 | 57

BUSINESS STRATEGY / SUCCESSION PLANNING

7

Corporate governance and compliance Corporate governance and compliance is often ignored by business owners as either something only large businesses need to worry about or something that’s simply too hard and far too boring.

Focusing on this area can add considerable value (particularly when we look at attracting the right type of buyers), as well as reducing risk.

8

Owner dependence The business must be able to run independently of your involvement.

For example, you must be able to leave for two months for a holiday in Europe without contacting the office, while the business maintains, continues and even improves its performance in your absence.

EXTERNAL AREAS When it comes to external areas, the question to ask is ‘what do we need to prepare to attract the right buyer (who will pay more)?’

Having bought and sold several businesses over the last 15 years, there are several factors that stand out to me when answering this question:

1 Craig West is the president of the Australian chapter of the Exit Planning Institute. He is a strategic accountant who has over 20 years’ experience in advising business owners. His practice, Succession Plus, provides mentoring, advice and strategy for clients looking to prepare their business for a successful exit.

He is currently working on a PhD in Business Succession and Exit Planning.

Visit successionplus. com.au for more information.

58 | JANUARY 2014

Strategic buyer For every business there is a strategic buyer who will pay more for your business simply because they benefit more than most other buyers.

The most common example of this is complementary products and services.

MPAMAGAZINE.COM.AU

improving the value of the business. If all of your documentation is complete, accurate, up to date and demonstrates a well-managed business, it will support your value proposition, not detract from it.

5

Negotiation Being in a position to create some competitive tension by attracting several of the right buyers is a good start, but the conduct of the negotiations and discussions leading to the actual sale is very important aspect of the process.

6

Legal agreements Often business owners are concerned that legal agreements will ‘scare off the buyer’, but this is very rarely the case.

Far more importantly, legal agreements need to be structured to protect you after the sale – particularly around the key issues of any warranties, assurances provided, and also any event or finance included as part of the sale terms.

7

Corporate advisers Business owners should not try to sell without the best advice. Well-represented businesses are generally taken far more seriously and are perceived to be far more valuable than those without representation.

A corporate adviser who has a reputation for selling good-quality businesses automatically

2

The business must be able to run independently of your involvement

3

positions your business in that category.

Importantly, post-exit you also need assistance with asset protection, estate planning and ongoing investment planning. The change from business owner to self-funded retiree is substantial.

Information memorandum (IM) document It is amazing to see the number of businesses, which are otherwise quite valuable, whose owners are prepared to sell up on the basis of a cheap, home-made flyer-style document. A wellprepared IM will be able to attract and convince the right buyer.

Tax planning Every exit has several different elements of taxation; nearly always CGT, often stamp duty, and sometimes other taxes as well. Inadequate planning in this area can cost you a large percentage of the sale price in taxation.

4

Due diligence and documentation Many transactions fall over at this point, but this can actually be used to assist in

KEY OUTCOMES The correct implementation of the items outlined above will achieve two key outcomes: maximise the value of the business and successfully extract that value upon exit.

Read Mortgage Professional Australia anywhere, anytime

SPE CIA

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58 | DEC

Total num ber 149 209 145 190 104 122 83 103 148 283 156 179 150 124 130 117 138 236 178 186 195 133 200 173 193 196

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Rank Name 100 Neil Surname 99 Alana Massingh 98 Michelle Company Massigna am 97 Shire First Trevor Towner ni 96 Growing Mortgages Location Tom Equi Ryan 95 Mortgage ty Gymea Andrew State Mewing Choice 94 Total valu Aussie Runaway Richard Home Loan NSW Baker e of loan Bay 93 Aussie Perth s s FY 2012 Joshua Hom QLD Hoenig 92 $54,414,9 /13 Port Finan e Loans Sunshine Matthew WA Durrant ce Grou 91 $54,615,4 83 Arleon Kenmore Coast p Paul Capital QLD Rose 90 $54,716,7 85 Choi Melbourn ce Capi Kevin QLD Wright tal 89 $54,809 07 Aussie Bondi Junce Alex ,000 Home Loan VIC Lee tion 88 $55,029, Choi Albe s ce Hom Aaron rt Park NSW Shumsky $55,303, 000 87 Smartline e Loans Adelaide Bridget 203 VIC Grofski $55,304, 86 Loan Mark Wollongo Serge 182 SA Headland et $55,307, 85 Aussie Pennant ng Max 040 Home Loan NSW Scekic Hills $55,499,0 84 Aussie Oakleigh s Stephen 00 Hom NSW Ivanoff e Loan $55,561,2 83 Aussie Morley s James Hom VIC Lemm $55,900 09 82 Mortgage e Loans Darwin Dennis ,908 WA Hasselle $56,327,9 81 Mortgage Fair Balgowla Sewa NT Mrljak $56,344, 89 80 Mortgage Choice Elsternwi h Paul 000 NSW Singh $56,553,0 79 Smartline Choice Neutral ck Scott VIC Prindiville Bay $56,661,5 00 78 Reliance Miami Scott NSW Home Loan Le Ques $56,680 13 77 Blackbur Parramatt ne s Pamela ,760 QLD ne Mon Cameron $57,042, 76 Aussie ey Parramatt a Darin 882 Home Loan NSW Mangafa a $57, 75 LJ 193,9 Wes s Hook s Patrick t Pert NSW er Hom Yacopetti $57,242,1879 e Loan Aussie Parramatt h s Hom WA Bouquiau $57,242, 1 Able Finan e Loans Tuggeran a x 752 NSW STA TS $57,635, Tiffen & ce Narellan ong 266 ACT Co $57,990 Perth ,000 NSW $58,000 Kingston ,000 WA $58,306, 000 ACT $58,818,8 $58,860 61 Similar ,516 to

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FREE

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inlab.c ® aish om www.k Australia magazine iPad app is designed The Mortgage Professional for Mortgage professionals on the go. Packed with all the features, insights, news and analysis from your favourite magazine. This is your www.kaishinlab.com opportunity to keep up-to-date wherever you are. Take a look at the current emag, or download previous issues.

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THE DATA

HOUSING MARKET PRESSURES A country’s cost of living can have a major impact on its property market. As goods and services get more expensive, potential house hunters begin to think about holding off on that property purchase and avoiding taking on mortgage debt.

The good news, however, is that – while consumer prices are expected to have risen on average by 2.5% in Australia over the course of 2013, according to IMF estimates – things could be a lot worse. Belarus, for example, suffered a staggering average consumer price increase of 59.2% in 2012, making its predicted figure of 20.5% for 2013 something of a respite.

Troubled neighbouring states Sudan (35.5%) and South Sudan (45.1%) also saw consumer prices skyrocket over the course of 2012, while Iran (30.6%), Ethiopia (22.8%) and Malawi (21.3%) also saw worryingly large average consumer price increases.

CANADA 2012: 1.5% 2013*: 1.5%

UK

2012: 2.8% 2013*: 2.7%

FRANCE 2012: 2% 2013*: 1.6%

US

2012: 2.1% 2013*: 1.8%

SPAIN

2012: 2012: 2.4% 2.4% 2013: 2013*:1.9%* 1.9%

PORTUGAL 2012: 2.8% 2013*: 0.7%

SWITZERLAND VENEZUELA 2012: 21.1% 2013*: 27.3%

ARGENTINA 2012: 10% 2013*: 9.8%

*predicted

60 | JANUARY 2014

2012: -0.7% 2013*: -0.2%

ITALY

2012: 3.3% 2013*: 2%

BRAZIL

2012: 5.4% 2013*: 6.1%

MPAMAGAZINE.COM.AU

Source: IMF World Economic Outlook

RUSSIA

2012: 5.1% 2013*: 6.9%

GERMANY 2012: 2.1% 2013*: 1.6%

BELARUS

CHINA

GREECE

JAPAN

2012: 59.2% 2013*: 20.5%

2012: 2.6% 2013*: 3%

2012: 1% 2013*: 0.8%

2012: 0% 2013*: 0.1%

IRAN

2012: 30.6% 2013*: 27.2%

ETHIOPIA 2012: 22.8% 2013*: 8.3%

HONG KONG 2012: 4.1% 2013*: 3.5%

INDIA

2012: 9.3% 2013*: 10.8%

SUDAN

2012: 35.5% 2013*: 28.4%

SOUTH SUDAN

SINGAPORE 2012: 4.6% 2013*: 4%

2012: 45.1% 2013*: 15.5%

MALAWI 2012: 21.3% 2013*: 8.1%

AUSTRALIA 2012: 1.8% 2013*: 2.5%

JANUARY 2014 | 61

MOTIVATION / PRESENTATION SKILLS

PRESENTATION

SKILLSand the

art of persuasion If you want to make a compelling case to a client or business associate and persuade them to do what you’re asking, it’s vital to hone your communications skills and use them to support your case. Cindy Tonkin offers seven essential strategies for making a world-class professional presentation

You probably spend a large chunk of your life getting others to do things for you: persuading your boss to give you time off; influencing your spouse to spend time with you; convincing the kids to go to bed.

But right now we are talking about major deals.

You have to stand at the front of the room, take a deep breath, and make such a compelling case that they can’t say no. Here’s how you can do this:

1

Take a breath First off, it is important to start breathing.

When you’re nervous you can hold your breath. This makes your brain stop thinking. It triggers a fear response in the brain: you retreat into defensiveness. You just want to run away or punch someone. So breathe.

Practise deep breaths right down into your belly as you rehearse your presentation. Unclench your fists. Move your elbows away from your rib cage. If you find it hard to breathe, here’s a tip: speak lower and slower and your breath will slow down.

62 | JANUARY 2014

MPAMAGAZINE.COM.AU

2

Prepare the words Begin as you mean to end – calmly. Prepare the first two sentences. Practise them until they sound natural and normal. Then the rest will flow.

You should also prepare the rest of the presentation of course!

3

Use images and props If you stand up and use visual aids, your audience is more likely to be onside. And, according to research, they will spend 26% more on your product. Examples of visual aids include posters, photographs, PowerPoint images or actual props. If your audience tends to fiddle with pens or rubber bands or telephones, give them each a prop; it will keep them focused as they listen. And if the prop promotes your business, that’s even better.

4

Practise what you will say It may seem obvious, but practise what you will say. It feels silly, but the more you do it the less it becomes so. Practise not just the words but how you will say them. People read your intention from your gestures. Consider what gestures you want to use, and choreograph your presentation. If you want to come across as open, open up your gestures. If you want to be seen as thoughtful, adopt the pose of the thinker. But you must practise this so it comes across naturally, not like a kid doing show and tell at kindergarten.

5

Don’t read to me In case you haven’t heard, there is an epidemic of death by PowerPoint. Your PowerPoint slide is not a substitute for palm cards. Do not put every word you will say on the slide. Choose an image that prompts you to remember what you need to say, or an image that intrigues the audience.

If you must read to me, then read me something significant. If you feel you must have all the words on a slide, then pause so people can read the words for themselves. Then say what you want to say.

6

Focus on them, not you Working with hyperconfident, powerful people, I am constantly surprised to find how much some of them dread public speaking. Consistently they focus on themselves and their shaking voice, their wobbly knees and whether someone will find out that they are fake.

To calm your nerves, focus on the audience. The old advice of picturing them naked is just one device

for doing this. I suggest you pay attention to the small signs that tell you they are listening and interested. When your focus is on them, the room and its energy, then you can give them what they want. As an aside, know you always have the option to say: “I don’t know – I’ll get back to you”. You don’t need to know everything. In the age of the internet most information is available with a quick Google search. People do not expect you to be the internet.

Take a moment upfront to clarify the audience’s ‘WIIFM’ (what’s in it for me). When you know what they want out of it, you know how to sell them rather than tell them.

7

Tell stories People will forget facts. They remember stories. Tell a ‘once upon a time’ story or a ‘funny thing happened on the way to the forum’ story – like a case study. Make it relevant and follow the three-step formula:

1. Incident (what happened) 2. Point (the punchline or pay-off) 3. Benefit (why I am telling this story) Telling a story alone has an impact. Telling an enjoyable story and then making it relevant to the audience (the benefit) lifts you to professional level. If you can read, illustrate, and engage your audience, you’re well on the way to convincing everyone.

Cindy Tonkin is ‘‘the consultants’ consultant’’. She is the author of seven books, including AIM bestseller The Australian Consultant’s Guide: Setting Up Your Consultancy Business Profitably andPainlessly. Sign up for her newsletter at consultantsconsultant. com.au.

JANUARY 2014 | 63

MPAMAGAZINE.COM.AU

THE DATA / YOUR MORTGAGE INDEX

BUYER TRENDS

Key stats from borrowers making enquiries at Yourmortgage.com.au

$401,051

PURPOSE OF MORTGAGE

LOAN AMOUNT THE AVERAGE MORTGAGE $420,000 SIZE REQUIRED Average loan amount

16.1%

$409,000

To buy an investment property

52.19%

$398,000

The percentage of enquiries from first home buyers

$376,000 Nov

54%

$387,000 Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

First home buyer

TYPE OF MORTGAGE

13%

40%

32.49%

Move home

30% 20%

1.4%

10% The percentage of borrowers looking for a standard variable rate product

0%

Give my home a makeover

Nov

Dec

Jan

INTRODUCTORY

Feb

Mar

Apr

STANDARD VARIABLE

May

Jun

Jul

BASIC VARIABLE

Aug

Sep

Oct

FIXED INTEREST

Visit www.mpamagazine.com.au/consumer-borrowing-data for all the latest borrower trends

64 | JANUARY 2014

15.2%

Refinance to get a better deal

0.2%

I want some spending money

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A look at what’s been making headlines P4

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HARD MONEY DEMAND FOR PRIVATELY FUNDED LOANS IS RISING

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GREG FROST THE COUNTRY'S FIRST BILLION DOLLAR ORIGINATOR

+ AXE TO GRIND THE TIDE AGAINST CREDIT REPAIR

MORE THAN JUST A PRODUCT PROVIDER

John Dickinson argues not all credit repair is ‘evil P16

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INTELLIGENCE

The Best Bank BDM of the Year on why he has to know brokers’ businesses inside and out

MANAGING CHANGE

Will your business be ready for market shifts?

P18

EXCLUSIVE INTERVIEW

+ BEST PRACTICE

BRANSON

KNOW YOUR RIGHTS

B

usiness development managers can have a tough gig. Long hours, lots of travel and a huge number of brokers with whom to build relationships can all take their toll. And depending upon the broker, they can either feel neglected by a BDM who doesn’t visit enough or harried by one who’s around too much. But Commonwealth Bank’s Damien Muir has embraced the difficult role.

What aggregators can and can’t do with your trail P22

+ CAUGHT ON CAMERA AFM’s Melbourne Cup Day celebrations P29

FULL STORY PAGE 20

ON BUSINESS How to turn your business into an empire the Virgin way

Australia’s best-performing brokerages revealed

INDUSTRY LEADERS INTERVIEWED ROBERT KELLY AND DALLAS BOOTH SPEAK

TROUBLE AT SEA THE LATEST ON MARINE INSURANCE

SMALL IS BEAUTIFUL THE BIG LIABILITIES FOR

SMALL COMPANIES CRACKING THE CODE CYBER INSURANCE – THE NEXT BIG THING?

WIRED WORLD INSURING AGAINST CYBER RISKS

FIRE ALARMS HOW PRODUCERS REBUILT A STRICKEN COMMUNITY

The movers and shakers who have made waves in the mortgage industry this year

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Events AUSTRALIAN MORTGAGE AWARDS

4

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• Best Single Issue: Top 25 Issue - Number 22, Number 23 • Best Opening Page or Spread: Top 25 - Number 13, Number 14

Maggies • B2B Cover of the Year 2010 - Finalist • B2B Cover of the year 2012 - Finalist

Tabbies 2013 • Best Special Section 2013 - Gold • Best Front Cover, Photograph Honourable mention • Best Front Cover, Digital Imagery - Honourable mention

Bell Awards • B2B magazine of the Year 2006 - Winner • B2B Magazine of the Year 2007 - Runner up • Best B2B Website 2007 - Winner • Best B2B Cover 2005 - Winner • Best Opinion Segment 2007 - Winner

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