Mortgage Professional Australia issue 14.09

MPAMAGAZINE.COM.AU ISSUE 14.9

EXCLUSIVE

ASKING THE AGGREGATORS ALL QUESTIONS ANSWERED IN ROUNDTABLE WITH AGGREGATION’S LEADING LIGHTS

BROKERS ON NON-BANKS 2014 THE BEST NON-BANKS NAMED AND RATED

COLIN LAMB COLLABORATE, DIVERSIFY, SUCCEED

DECADE OF DISRUPTION TECHNOLOGY PREDICTIONS FOR 2024

CONTENTS / MPA 14.9

MPAMAGAZINE.COM.AU

18

COVER STORY

EXCLUSIVE: Asking the aggregators MPA asks aggregation’s leading lights for their views in our exclusive roundtable

30 FEATURES

NEWS 4 | News and tips Intelligence and tips for the cutting edge mortgage professional 8 | Data The latest statistics from MPA sister site Your Mortgage

Colin Lamb

Collaborate + diversify: his formula for success

10 | News analysis The end of negative gearing?

FEATURES

WEEKLY INVESTIGATIONS NOW ONLINE: Technology Productivity mpamagazine.com.au

56

14 | Murray Cowan Long game: Better Mortgage Management’s CEO on the past and the future 34 | Brokers on non-banks The top non-bank lenders named and rated

BUSINESS STRATEGY

Negotiation

How to negotiate – and get your own way most of the time

44 | Technology Decade of disruption? Your guide to technology in 2024

BUSINESS STRATEGY 48 | Personal branding Nikki Heald of Corptraining explains the importance of consistent, personal branding 52 | Leadership An ex-Navy SEAL’s guide to leadership in tumultuous times

MORTGAGE INSIDERS 63 | Day in the life Ballast’s Chris Wisbey 64 | Favourite things Gadens’ Jon Denovan on natto, train rides and the song that will play at his funeral

SEPTEMBER 2014 | 1

EDITOR’S LETTER / 14.9

MPAMAGAZINE.COM.AU

THE REAL CONSOLIDATION THREAT

When aggregators are asked these days about the threat of consolidation in the broker market, the response is clear: they see only competition and space for new aggregation offerings as the channel grows, rather than wallowing in former fears of domination by a few.

In this edition’s exclusive aggregator roundtable, we put the consolidation question to the aggregators – including those now wholly owned by the banks, and those fresh from inking deals of their own – to see if they feel the ‘threat’ still exists. It is interesting that mergers, joint ventures, changes of ownership and equity investments are now viewed less suspiciously, as part of the natural cycles industries go through. But one threat that could emerge – that has perhaps always been present – comes not from inside it but from outside it: the financial planners.

Though they have focused to date on investments and to some extent risk, aggregators are seeing more planners look to enter the industry, not with a genuine interest in becoming brokers but, instead, in recruiting loan writers into their own businesses, most likely to service higher net worth and investor clients, including on SMSF-related matters. In doing so, they subsume the broking proposition, bringing it under a ‘financial advice’ umbrella.

Though the need to look at both sides of the balance sheet for a client makes sense, the question remains – who will be the first point of call for finance advice?

Ben Abbott, acting editor, MPA

2 | SEPTEMBER 2014

COPY & FEATURES

EDITOR Ben Abbott PRODUCTION EDITORS Richard Wood, Moira Daniels, Roslyn Meredith CONTRIBUTORS Sarah Megginson, Josh Masters, Nikki Heald

ART & PRODUCTION

SR. GRAPHIC DESIGNER Red Redrico DESIGN MANAGER Daniel Williams

SALES & MARKETING

NATIONAL SALES MANAGER Rajan Khatak ACCOUNT MANAGER Simon Kerslake MARKETING EXECUTIVE Alex Carr TRAFFIC MANAGER Abby Cayanan

CORPORATE

CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil

CONNECT

Contact the editor: ben.abbott@ keymedia.com.au

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

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ROUND-UP / NEWS AND TIPS

MPAMAGAZINE.COM.AU FINANCES DRIVE ANXIETY AND POORER WELLBEING

MANAGEMENT

THE SECRET TO ENSURING A NON-TOXIC WORKFORCE Working as a broker can be fast-paced and stressful, which can lead to individuals affecting the culture of an office. But it’s not always something as obvious as a tyrannical boss or openly disgruntled employees that can create a poisonous workplace atmosphere. It can be subtle behaviour that turns the place toxic over time and drives out employees. A survey by beyondblue showed that almost half of Australian workers had left a job because it was mentally unhealthy, and workplace mental health ranked second only to pay as the most important factor when choosing a job. Behavioural scientist and strategist Darren Hill, co-founder of Pragmatic Thinking, shares his top tips for recognising workplace toxicity.

1. Passive-aggressive communication is the norm “People agreeing on a matter to each other’s faces, then immediately rubbishing it (or you) when out of earshot, runs rampant in the Australian workplace. In its more subtle form, the passive-aggressive method is when people create third-party conversations where an issue between two people suddenly grows into three, then four, then five, when it could easily have been sorted out with a direct conversation between the original two colleagues.”

2. Lack of discretionary effort “’It’s not in my job description’ is not a healthy mantra.

Whilst union reps might jump up and down about organisations taking advantage of people doing ‘extras’, one common behaviour in a thriving culture is people stepping outside of their responsibility areas to help others. It’s called caring. Avoidance of care and

responsibility (other than for yourself) is a red flag that your culture has become toxic.”

3. Death by committee “Decisions always needing approval from a committee are not only dysfunctional but a killer of agility and innovation.

Great cultures embrace a principle of ‘seek forgiveness rather than permission’. Cultures that require permission as a first step are cultures where trust has left the building.

There’s always room for good governance, but that is distinctly different to distrust.”

4. People become clock-watchers “At 4pm the desk starts to get tidied; at 4.15pm, email is shut down. By 4.25pm, all eyes are on the clock, and at the stroke of 4.30pm employees are halfway to the lift.

Constantly burning the midnight oil is ridiculous, but when people can’t stand to be at work a second longer than they have to, it’s a sure-fire sign of a workplace becoming toxic.”

5. There aren’t any quality shared experiences “Workplaces are social settings and human beings are social animals. So to be our best at work, we must be social.

Newsflash: your weekly team meeting is not a high-quality shared experience. Dysfunctional cultures are cultures where people are expected to work together but not actually like each other, and that is rubbish. Whilst we don’t expect people to get on like the Partridge family, a team that has each other’s back is a functioning team. Have lunch simply to break bread or perhaps work on a corporate social responsibility project together; but most of all, take time to celebrate success. That’s what great team cultures do.”

FOREIGN INVESTMENT: THE ‘REAL’ REAL ESTATE STORY

There was $51.9bn worth of approved investment in real estate during 2012–13.

4 | SEPTEMBER 2014

$17.15bn was invested in residential property, and $34.75bn in commercial.

Meanwhile, $4.9bn came from Canada, and $4.4bn from the USA.

$5.9bn of this investment came from China, the source of the majority of investment.

Source: Financial Investment Review Board

45%

THE PROPORTION OF AUSTRALIANS RATING THEIR GENERAL FINANCES AS THE BIGGEST DRIVER OF ANXIETY

51%

THE PROPORTION OF WOMEN WHO SAY FINANCES ARE THE MAJOR CAUSE OF THEIR ANXIETY

39%

THE PROPORTION OF MEN WHO SAY THEIR FINANCES ARE THEIR BIGGEST DRIVER OF ANXIETY

13%

THE PROPORTION OF PEOPLE WHO SAY ANXIETY COMES FROM BUYING, SELLING OR FINDING A HOME

The power of listening and advice has never been so real in the marketplace.

ChoiCe Loans It’s the driver behind Choice Home Loans and home our vision to be Australia’s most trusted mortgage business.

Full Colour & Greyscale Lo

A partnership with Choice Home Loans gives you access to:

Choice Home Loans’ model

Trusted advice

Through the strength of our nationally recognised brand, supportive business model and lead generation program, we empower our members to make decisions, take control of their business and achieve their full potential.

Backed by Choice Home Loans’ extensive specialised support network, we give you the support and advice you need to help you reach your goals and improve your key business drivers.

Award-winning white label lending solution

A business partner for the future Vertical Reverse Logo:

Vertical Positive Logo:

use on CHL Black backgrounds.

Illustrator: Rest CHLLogo_V_CMYK.eps As a Choice Home Loans member, you get exclusive access assured that you are withForthe right business CHLLogo_V_RGB.eps Illustrator: CHLLogo_V_CMYK_R.eps to the award-winning ChoiceLend loan products - voted partner for the future with no “hand cuff” clauses, timely CHLLogo_V_RGB_R.eps 300dpi Jpegs: CHLLogo_V_CMYK.jpg the best white label program at the 2012 Australian commission payments, state-of-the-art technology, and CHLLogo_V_RGB.jpg 300dpi Jpegs: CHLLogo_V_CMYK_R.jpg CHLLogo_V_RGB_R.jpg 72dpi Jpeg: strong CHLLogo_V_RGB72.jpg Lending Awards. commitment to invest in you and your business.

72dpi Jpeg:

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Speak to a Choice Home Loan’s Partnership Manager today and start harnessing the power of advice for your business.

Visit choicehomeloans.com.au/join or call 1800 188 288 Horizontal Positive Logo:Loans . Choice Home Pennley Pty Limited ABN 40 071 979 498 as trustee for the Pennley Unit Trust trading as Choice Home Loans is a Credit Representative (No. 392528) of BLSSA Pty Ltd ABN 69 117 651 Illustrator: 760, Australian Credit Licence 391237 CHLLogo_H_CMYK.eps CHLLogo_H_RGB.eps

Horizontal Reverse Logo: A103368-0713 For use on CHL Black backgrounds.

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ROUND-UP / NEWS AND TIPS

MPAMAGAZINE.COM.AU

SALES

PRODUCTIVITY

10 KEYS TO MAKING SOCIAL MEDIA PROFITABLE

HOW TO DO LESS, STRESS LESS, AND STILL MAKE MORE

Managing director of Obviam – Creative Social Media, Jay Pring knows a thing or two about how to take your social media strategy from being an expense to making a profit.

So what are the 10 best ways to turn social media into money? Here are his 10 top tips: 1. Engage in two-way conversation If reposting something interesting, add your own opinion or question; that way people can interact with you and spark discussion.

2. Don’t brag You might love your recent successes, but most social media audiences won’t care. Add context to your success stories to ensure your posts have meaning and relevance.

3. Give a proper response Don’t just say thanks if someone’s posted a comment. Add a personalised response.

4. Post different content on each platform No one wants to read the same message on Twitter, Facebook, LinkedIn, etc. It shows a lack of creativity and fails to consider the unique benefits of the various platforms you employ.

5. Be consistent with your topics If a certain post gained a lot of attention it means that people want to hear or see more.

Make a second post asking your fans for their opinion.

6. Don’t act like the authority If you’re well informed on a topic, that doesn’t give you the right to act as an authority on it in your posts. Don’t talk down to your fans.This could come off as intimidating or unappealing.

7. Use LinkedIn at least once a day LinkedIn is a great place to connect with old colleagues, classmates, or customers. It’s a great way to promote your professional services.

8. Add a little humour Who wants a bland brand? Spice up your posts with some gentle, thought-provoking humour. But avoid sexism, racism or religion so as not to offend.

9. Ask and you won’t receive Asking people to like and follow you isn’t very effective. Give them compelling content and a reason to follow you and share your posts.

10. Do not use tragedy for promotion Brands have suffered by using a tragedy to promote themselves. It’s not only incredibly disrespectful but shines a terrible light on your brand and personality. No apology can fix that.

STATS

$25,000

The amount Canadians can access from super to buy their first home

85%

The proportion of NAB mortgage customers who are ahead on their home loans

2%

The rise in new home sales across Australia in the June quarter

HOW ARE FIRST-TIME INVESTORS AFFORDING THEIR FIRST PROPERTY?

74.3%

are spending less 6 | SEPTEMBER 2014

56.3%

are eating out less

25.7%

are drinking less alcohol

You know you could do some things better, but it’s hard to know where to start and what will give the best bang for your buck. Documenting answers both those questions and more. Cindy Tonkin gives seven reasons to document what you do – you’ll find you do much more than you think.

Alex regularly got to the end of the day feeling like he’d achieved nothing. It seemed he lurched from one urgent important task to the next. Then he wrote down everything he did for one day and felt better when he saw he had actually achieved something. That was before he even changed anything. List your tasks and feel better too.

Dump it Alex showed his list to Kym at reception. She showed him her handwritten list of client contacts, which duplicated the spreadsheet he kept. And that triplicated the main client database which Kym also maintained. They dumped both extra tasks and each saved 20 minutes a day. List what you do, and work out what you can dump.

Delegate it After documenting for two weeks, Alex realised almost half of his time was spent doing things an administrator could do for him. He delegated some of it to the receptionist, and out-tasked some more. When you have two weeks’ worth of data, you can begin to see what you can delegate.

Improve it Now he had time to focus. It became clear that what mattered was lead-generating and client follow-up. First he chose to delegate parts of his client follow-up. He sat down with Post-it notes and documented the client follow-up process with Kym. They not only documented what Alex did but also added some steps designed to wow their clients. When you take the time to document a process, you can see more clearly where it can improve.

Teach it Alex then mapped his lead-generating process with the whole team. He did it live, with Post-it notes and coloured markers on a large piece of brown paper. He not only told them what he did, step by step, but could also explain why he did it like that. The team added their own ideas.

Release it Alex let the team do things the way they had documented for a week or so. He says it was a little like when he taught his daughter to ride a bike: he needed to take his hands off and risk falling. This part of the process was tough but had an excellent payoff. He began to take days off for conferences and events; a long weekend here and there.

When you document and delegate, you can begin to release yourself from the responsibility of some things!

Take a holiday When he knew the team could look after his clients whenever he needed them to, Alex took four weeks’ holiday. He received no calls or emails from the office. Alex chose to take his holiday in Thailand. Where will you go?

THE DATA / YOUR MORTGAGE INDEX

MPAMAGAZINE.COM.AU

BUYER TRENDS Key stats from borrowers making enquiries at Yourmortgage.com.au LOAN AMOUNTS $414,000

Average loan amount

$403,000 $392,000 $381,000 $370,000 Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Dec

Jan

Feb

Mar

Apr

May

Jun

HOW SOON MORTGAGE IS REQUIRED 50% 40% 30% 20% 10% 0% Jul

Aug

Sep

Oct

Not immediately

57% First home

Nov

In the next few months

Right now! Hurry!

TYPE OF MORTGAGE REQUIRED

buyers

50% 40% 30%

PURPOSE OF MORTGAGE

20% 10%

18% Refinance

to get a better deal

10% Move home

Intro

Basic variable

Fixed

Jun

May

Apr

Standard variable

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

8 | SEPTEMBER 2014

Mar

Feb

Jan

Dec

Nov

Oct

Sep

investment property

Aug

Give my home a makeover

Jul

1%

13% To buy an

0%

NEWS ANALYSIS / NEGATIVE GEARING

MPAMAGAZINE.COM.AU

The end of

negative gearing?

It’s been the staple tool of investors for many years, with landlords leveraging their negative gearing tax breaks to the tune of $8bn annually. But does negative gearing have a limited shelf life? And if it were phased out, how would it impact investor-focused brokers and their clients? Sarah Megginson reports The benefits and drawbacks of negative gearing as it relates to real estate are often debated, to the point where even economists are divided on the issue.

In the lead up to May’s Federal Budget announcement, whispers of negative gearing tax reform were reported alongside passionate commentary from high profile industry experts, who each firmly argued their position for or against.

Ultimately, negative gearing was left alone – for now. But many believe that it’s only a matter of time before this ‘tax break for the wealthy’ is at least amended, if not abolished altogether.

“The Federal Government did the right thing leaving negative gearing in its current form, and its retention is critical to maintain the supply of housing and the level of rents,” says Peter Bushby, president of the Real Estate Institute of Australia.

“The view that negative gearing is for wealthy investors is a myth,” he adds. “ATO data shows

“My take on it is that the real issue is a lack of supply, and if you restrict or remove negative gearing, you could make that worse” Shane Oliver, AMP Capital 10 | SEPTEMBER 2014

almost 80% of the total individual taxpayers who are claiming a tax deduction for property earn less than $80,000 a year.”

In Bushby’s view, it’s the ‘mum and dad’ investors who will be hardest hit if negative gearing were to be tinkered with. But according to Saul Eslake, chief economist of Bank of America Merrill Lynch Australia, it’s the same group of people – hardworking, everyday Australians who struggle with issues of unaffordability – who will benefit if it gets the chop.

In his presentation, “50 Years of Housing Policy Failure”, Eslake suggests that the 30% of Australians who rent would be in a better position to become homeowners, should real estate transactions be excluded from negative gearing.

“Suppose that a large number of landlords were to respond to the abolition of negative gearing by selling their properties; that would push down the prices of investment properties, making them more affordable to would-be home buyers,” he says.

“This would allow more of them to become homeowners, thereby reducing the demand for rental properties in almost exactly the same proportion as the reduction in the supply of them.”

Shane Oliver, AMP Capital chief economist, firmly disagrees. “My take on it is that the real issue is a lack of supply, and if you restrict or remove negative gearing, you could make that worse,” Oliver says.

NEWS ANALYSIS / NEGATIVE GEARING

“Any broking business that is catering to investors and is not assisting their clients in building their portfolio in a low-risk way could be in trouble” Jane Slack-Smith, Investors Choice Mortgages IF INVESTORS FLEE THE MARKET, WHAT HAPPENS NEXT?

Fast fact Landords in 1998-99 enjoyed a combined profit of $700m from their property investments. But by 2011-2012, the nation’s investors not only failed to turn a profit, but their property losses amounted to a whopping $8bn.

Source: Reserve Bank of Australia

12 | SEPTEMBER 2014

In Oliver’s opinion, getting more new property stock to the market is a more important issue to address than restricting the tax breaks available to investors.

“We’re building around 30,000 homes less than we need in Australia each year and we’ve now got a shortfall of around 200,000 homes. That’s the reason why property prices are so high in Australia – not negative gearing,” Oliver says.

“Much of the new property that comes to the market is from investors and if you discourage investors from buying into the market, it potentially means that over time, they’ll seek to look elsewhere.”

Any changes to property tax deductions could prompt investors to flee the market, he cautions.

And even if what Eslake is suggesting eventuates, and house values were to slump as a result, there’s still no guarantee that the existing pool of renters would suddenly become interested in home ownership.

Yet, unless a significant number of them were to swap their rental payments for a mortgage, a new problem would emerge, as the government would be forced to play a larger role in constructing new homes and managing a portfolio of properties.

At present, according to 2011 Census data, the government owns and rents out just 4.1% of national housing stock at present.

“Only a very small proportion of new housing approvals are granted to the public sector,” says Cameron Kusher, senior research analyst, RP Data.

“This would suggest that the government has little interest in building or managing rental accommodation, [and that] they probably see that foregoing almost $8bn in taxation revenue is more

cost effective than developing and managing a greater proportion of new housing stock.”

As well as the logistical issues involved with supplying more accommodation to the market, the government would also have to contend with rolling out a more complicated tax system, Oliver adds.

“Not only would it not solve the housing affordability property, and it would probably make it worse, but it could actually make the taxation system more complex,” he explains.

“If I invest in a factory, it stands to reason that I should be able to write off the interest on the loan as a deduction against my income, as I’m using that investment to boost my income over the long term. That’s what property investing is: an investment. So to say we’re going to restrict access to negative gearing for property investors opens up a hornet’s nest of potential issues. For instance, why not restrict negative gearing on commercial property? Or shares?”

WHY BROKER MODELS NEED TO CHANGE – PRONTO Negative gearing remains in place for now, but according to Oliver, the possibility of this tax break being amended or abolished for real estate investments remains a clear and present threat.

“The government might take the view that a limit is necessary, so that perhaps investors can only apply negative gearing across three properties,” he says.

“The probability of either a restriction or abolishing it altogether seems low, although it’s not impossible. It would make the affordability situation worse in Australia, which is why hopefully and ultimately, common sense will prevail and it will remain in place.”

In the meantime, brokers should seriously consider what the impact would be on their business if it were to be phased out.

Jane Slack-Smith, director of Investors Choice Mortgages, believes that if there were going to be any changes made to negative gearing, they would likely be handled the same way that depreciation is treated: prior to a certain date, you would have access to certain benefits and after that date, investors would have access to less benefits, or none.

This is known as “grandfathering” the previous tax regime, and although it produces another level of complexity for accountants, it could create

MPAMAGAZINE.COM.AU

some opportunities for brokers who have excellent systems in place for reaching out to existing clients.

“Those who already have negatively geared properties may be excluded from any changes, so there will be opportunities for brokers in refinancing those properties,” Slack-Smith says.

“In saying that, investors in the last five years have become more sophisticated and they are balancing their property portfolios by having good growth areas, which is usually negatively geared assets, with positively geared properties that support the negatively geared portfolio. Any broking business that is catering to investors and is not assisting their clients in building their portfolio in a low-risk way – with diversification across geographic areas, as well as balance in both growth and yield properties – could be in trouble.”

Slack-Smith suggests that brokers who are heavily focused on the investor market should canvas their clients to find out what concerns them, so they can then adapt their products and services to meet their needs.

“Adding education and services to a current client database and being the ‘go to’ person is key.

We identified a number of years ago that to have a client for life and be part of their property journey, we needed to be part of their education on how to build a low-risk, sustainable portfolio and assist them in achieving their goals,” Slack-Smith says.

For instance, she recently pushed a survey out to her database, asking her clients to list their biggest challenges in the current market. She discovered that a number of clients were having trouble sourcing quality property investments interstate, so she canvassed her database once more, asking for positive feedback on buyer’s agents who excelled at their service.

“We then contacted the best agents and told them who we were, who our clients were and that we did not want any financial referral fee, but we wanted them to offer a special discount for our clients,” Slack-Smith says.

“The buyer’s agents were delighted, as they had a lead on well-educated clients, who were clear on their buying criteria and had a pre-approval in place, and our clients had a professional finding them the property to suit their criteria, at an affordable rate. This is the future for mortgage brokers, regardless of whether their clients are investors or not – identifying the need, then providing the solution.”

MPAMAGAZINE.COM.AU

NIXING NEGATIVE GEARING COULD:

Save the tax department

$4bn

in its first year

Put

$2bn

annually back in the federal budget over the long term

Cause rents to rise by

4%

Source: Grattan Institute, REIA

SEPTEMBER 2014 | 13

HEAD TO HEAD / MURRAY COWAN

MURRAY COWAN BUILDING THROUGH BROKERS Better Mortgage Management CEO Murray Cowan has worked with brokers since the birth of the channel.

MPA asks how he has weathered the GFC, why brokers remain a sound distribution model, and how BMM took out non-bank of the year for the second year running.

Murray Cowan is one individual very well known to the broker channel, having been involved in it at Citibank since the lender initially pioneered partnerships with third party distributors many years ago. Fast forward to 2014, and Cowan has only just successfully steered Better Mortgage Management to its second consecutive year as the highest rated lender in MPA’s Brokers on Nonbanks Survey (see page 34). MPA sat down with 14 | SEPTEMBER 2014

Cowan to ask him for his views on BMM’s future, non-bank competition, and the evolving role of brokers.

MPA: Better Mortgage Management has been rated by brokers as non-bank of the year for the second year running. What was your initial reaction to the news?

Murray Cowan: Our first reaction was ‘Oh, wow!’

MPAMAGAZINE.COM.AU

We are humbled and proud of the result. At BMM we are proud of our business, and we are very humbled by all the support from our broker partners who voted in the survey. It’s also very rewarding to see that all of the hard work the whole team has done over the past 12 months has been recognised! We had been talking about it a little bit here at BMM, and thought perhaps some of the brokers may have marked us a bit harder the second time around. Like in life, you can achieve things once and it may seem like good luck or a one-off, so to back it up the following year is substantial.

MPA: Is there anything in particular that BMM has achieved or rolled out in the past year or so that you feel has contributed to your results?

MC: We focus on brokers – we don’t have any other distribution channels. Certainly, the banks have multiple distribution channels, and some of the other non-bank lenders might have other channels as well, whereas we just have the one channel – brokers. So I believe that always ensuring we are focussed on helping our broker partners, being clear about what we do, establishing true points of differentiation and demonstrating them is an initiative in itself.

Now, brokers sometimes say, ‘all you mortgage managers are the same, because you have all got the same funders’. But we have gone out of our way to negotiate a differentiated product offering, and that allows us to do things that are different – that has definitely helped open doors and get into meetings and get the conversations and relationships started.

To us, there is little doubt that product innovations like our Capital Specialise range and more recently the launch of our Flexi Ultimate product have earned us merit points in the eyes of brokers. We also still have to back it up with good service and looking after the people we work with.

MPA: Do you think that mortgage managers and non-banks can significantly grow market share in today’s market?

MC: There’s no hiding the stats. Looking at the preGFC market, the big four banks and their subsidiaries made up 65% of new lending volumes.

Now that number is more like 85%. So we aren’t writing the same level of business as we were preGFC. But compared to those days, we’ve re-shaped the business and focused again on going forwards. I think it’s a case of understanding what you do well and articulating that well in the market. We are

now hearing news of improved funding and competitive rates for our wholesale funding partners, and we are hopeful that things like the current Financial System Inquiry could lead to some good outcomes and help us to get back to being as competitive as we were seven years ago.

MPA: So you see some cause for optimism given the Financial System Inquiry? Is there anything in particular you are hoping to come out of that?

MC: In terms of the prospects for growth in the nonbank lending sector, some might look at us and say we are eternal optimists. But I think certainly with the FSI, there has been quite a few mentions of the need for growth in competition, and it’s interesting to note that in quite a few different areas now it has been acknowledged that non-bank lenders were the drivers of competition, by driving rates down and reducing the margins of the big banks in the 90s. Due to the GFC and the banks benefitting from federal government guarantees on both deposits and the big banks’ borrowings, it has undone some of that position, and it seems as if there is some sort of acknowledgement now that the big four banks have been “over supported” and of a need to level the playing field.

It is interesting to note that Adelaide Bank – which is one of our funders – are party to that suggestion, and so we would like to think they can gain some benefits that could be passed on in their funding and offering to us down the line. The MFAA has promoted following the Canadian model as a way forward, and if Australia could get half way to where Canada is in terms of competition, it would be a reasonable position for non-banks and it wouldn’t put a strain on Australia’s balance sheet.

MPA: Why should brokers consider using BMM and other non-bank lenders?

MC: Brokers should consider non-bank lenders that specialise in the broker market only – who don’t have any channel conflict – as the ‘natural partner’ of mortgage brokers. We have similar backgrounds and history as that of the brokers, and going forward a similar objective. Lenders with other distribution channels have the issue of channel conflict and looking after their proprietary channels first and foremost, but we don’t have similar issues. When the GFC happened, some brokers felt they needed to put customers with a big lender, in case something went wrong in the future – the flight to quality you

Proudly ‘old school’ MPA: What do you think Better Mortgage Management does best?

MC: Our strength is the

way in which we individually assess each transaction and leverage off our wealth of technical and industry expertise to assist our broker partners in finding solutions for their customers. We have an excellent cross-section of employees here that do a great job, and we proudly call ourselves ‘old school’. Most of the lending we do is not credit scored unless it is a loan that requires mortgage insurance, and our brokers enjoy that ability to be able to talk a transaction through with our BDMs or with the credit team.

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HEAD TO HEAD / MURRAY COWAN

A prime target MPA: Is there anything BMM can do better, or you are trying to improve on?

MC: A lot of our brokers

do a lot of deals that fall ‘outside the square’ –what we call ‘alt doc’ or ‘specialist lending’. But what we could definitely do better is make it more widely known that we actually have the same sort of service and expertise in doing prime full doc loans. We hear that some brokers are just pigeon holing us in that alternative category, but we have a lot of good solutions 50% of our volumes month-in and monthout are prime full doc loans. A lot of brokers that have been with us longer term know that, but some of the brokers that have used us less frequently are maybe just starting to learn some of that.

might call it – but we have gradually seen a gradual unwinding of that trend, and would like to think that will continue. Some of our funding comes from Australia’s third-largest and sixth-largest banks, which should be right up there when quality or size is a consideration. I guess some of us in our sector think we are sometimes a bit misunderstood by brokers that only use the big four.

MPA: What is your view on the future of mortgage brokers? Does the mortgage broking proposition hold strong, or does anything need to change?

MC: The proposition definitely holds up. I have long said that broker market share will probably increase as time goes by, and perhaps in the past we couldn’t quite understand why America and the UK markets had higher broker penetration than Australia did.

Since the broker channel has recently hit 50% market share, I see no reason why it can’t get as high as 60%. I think the strength of the channel is the independent advice and choice brokers give their customers. I think the future is very bright as long as this remains the focus.

MPA: Do you intend to remain focused on brokers in terms of distribution?

MC: We have no intention to change our distribution model. We think that, for us, broker distribution is a better model, because our management team is a firm believer in doing one thing and doing it very well; you focus on that one thing, and continue trying to improve what you are offering. If you try and be too many things, you can spread yourself too thin, and you will only end up half good at a number of things. And you don’t get much growth that way.

Our primary focus is on providing knowledge, products, and support only to our broker partners; supplying them with the best tools to allow them to provide the best overall solution for their customers is critical. This is why BMM focuses heavily on education and our technology platform, as these both allow us to deliver on these outcomes.

MPA: Are there any plans or developments in the works for the coming year?

MC: We will continue to innovate and improve everything we are doing, and keep reviewing and enhancing. There is no one big thing we are looking to do – it is more of a gradual improvement as time

16 | SEPTEMBER 2014

goes by. In the last 12 months, we have brought on board some additional aggregators – Allco and Loan Market among them – and we think that is further endorsement of what we are doing; we are not just saying we have got something different, but demonstrating that we have something different, that isn’t widely available otherwise.

MPA: You also do prime lending – is growth in the prime market a target?

MC: We would like to grow our prime book. Prime full doc loans tend to last – on average – longer than some of the alt doc or specialist loans. In terms of alt doc or specialist loans, a percentage of them are always going to be reasonably short term – between 12 to 24 months – and then others will probably be longer term – more like five years or longer. Prime full doc loans on the other hand tend to be medium to longer-term. So we are working on innovations with our funders to see what we can do to keep our customers on board longer term – which is a challenge. Because we don’t have market leading products in those areas at the moment, where we do lead the market is where we have been advertising. So we will continue in the short term to promote our business where we have competitive advantages, and as we develop the relationships with brokers, we’ll look to see if they can utilise our other products, which some of the brokers who have been with us longer term do use and continue to use.

MPA: What’s been the key to surviving the GFC from a BMM perspective?

MC: We have been flexible enough to adapt to the changing environment, and because of our solid fundamentals – great service, and being open and honest – our customers, broker partners, and funders have stuck with us during those changing times.

MPA: On a personal note, what has kept you going strong at the helm of BMM? MC: Red wine! That, and a sense of accomplishment, the challenge of doing something that makes a difference in the marketplace, and seeing constant improvement ‘on the journey’. Partnering with key stakeholders such as our broker partners and our wholesale funders has also meant that I’ve formed many great business – and personal – friendships.

SPECIAL REPORT / AGGREGATOR ROUNDTABLE

MPA EXCLUSIVE

ASKING THE They are the questions brokers most want to ask their aggregators, and from the uncertain prospect of further industry consolidation to the potential profits of diversification, MPA’s panel of aggregation leaders have answered them all. Pooling their insights, they provide revelations on the fast-changing aggregation market and a roadmap for broking business owners.

18 | SEPTEMBER 2014

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AGGREGATORS T

o hear Connective principal Murray Lees tell it, a great gulf can sometimes exist between what brokers and banks think, sitting as they do at opposite ends of the mortgage chain. “’Broker think’ and ‘bank think’ can be very, very different; it’s all in English, of course, but that’s the only common thing that you have sometimes,” Lees says.

Though said partly in jest at MPA’s recent roundtable with the market’s biggest aggregation businesses, the kernel of truth in his remark is obvious – as he went on to explain.

“We sit in the middle between micro businesses and the biggest institutions in the land. So we

would see our role a lot of the time as being to facilitate that communication.”

Aggregators do indeed bridge the gap between brokers and lenders, in terms of communication, and in many, many other ways. Whether it be in the field of technology, making the mortgage application and customer relationship management process fast and effective, or in professional development, encouraging brokers to grow and flourish, aggregators are playing a vital role in the future of the mortgage broking industry.

So what are they thinking? In this feature, MPA’s panel of leading executives share their thoughts on some of the key trends shaping their businesses – and yours.

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THE PANELLISTS

Phil Quin-Conroy, CEO, PLAN Australia

Malcolm Watkins, executive director, AFG

Brendan Wright, CEO, FAST

A NATURAL CYCLE “Consolidation was a big buzz word and almost a fear going back 10 or 15 years ago, that there’d only be one or two or possibly three big broking supergroups and the industry would all be allied to them. But that just hasn’t happened and I don’t think it is going to happen.”

So said Malcolm Watkins, and it seems that many aggregator chiefs agree. Though changes of ownership have occurred in the market, the feeling is this has been a ‘natural cycle’.

“Businesses buy and sell, close down, JV, people retire; it is just a natural process that goes on,” Watkins continued. “I think the only thing that is a little bit different is big four bank ownership stepping into the industry, but within the entities themselves, competition is still thriving and I think

“When it comes to a dispute, if there is uncertainty, it is about bringing the parties together. The test we apply across everything we do is the hand on heart test; can you put your hand on your heart and say absolutely this is the right thing or the wrong thing to do?”

Stephen Moore, CEO, Choice 20 | SEPTEMBER 2014

Tanya Sale, CEO, Outsource Financial

Murray Lees, principal, Connective

it will continue to be a great place to be for quite a few years to come.”

The heads of the bank-owned aggregators believe bank-sourced investment has in fact been a good thing for the broking channel, and in this sense a positive effect of consolidation.

“First and foremost the level of investment that we have been able to make in Choice would not have been possible under private ownership; the investment, the level of staffing, the investment in our retail brands, would not have been possible without NAB’s ownership,” Moore said. Likewise, PLAN’s Quin-Conroy. “When you get a strong parent investing in the business, giving unprecedented access to different suppliers – global best practices in the technology space, for example , that might not have been accessible previously – and

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Tim Brown, CEO, Vow Financial

Stephen Moore, CEO, Choice

“Diversification is only one of the pathways to growth, and that may be appropriate for a particular business or it may not. We try to work through with a particular business what their best possible growth strategy is.”

Phil Quin-Conroy, CEO, PLAN Australia

the ability to roll out additional services, you see there are plenty of positives,” he said. “Many had a view that a panel would contract under large institutional ownership, but it has been the exact opposite, the number of panel lenders on our panel has actually expanded.”

FAST’s Wright said competition is definitely still alive and well, despite changes in ownership, and this has to be communicated. “The advantages of having a major ASX 200 listed company as your owner are obvious,” he said. “But it also creates wariness, and my antenna is always up as the CEO of a bank-owned aggregator to ensure that our brokers understand that we are committed to aggregation first, regardless of who our owner is.”

Fresh from a recent deal, Vow’s Brown said brokers should ‘watch this space’. “I think different people will want the distribution for different reasons,” he said. “In our case, the recent acquisition of YBR was basically a synergy between the two groups; we were both trying to diversify, they brought capital to the table to help our business develop and that was a good fit for us, and it made sense for our brokers and our shareholders at that time.”

However, Outsource’s Sale cautions against further consolidation. “What we don’t want to see again is the big banks coming in and buying more and more of the aggregators. I think that’s a danger.

I hold a very strong view that I think it muddies our waters with the big four involved. We don’t want to get to that situation where – like with the mortgage insurers – there is only a couple remaining. That is a dangerous situation.”

However, Watkins said there are just as many small and big businesses in broking as there were,

and with almost 50% of the lending market he expects new competition to keep arising. Lees agreed. “Consolidation has occurred to some extent and maybe there will be more of that, but at the same time markets are never static, so what we’ll see, the fact that certain things have happened here mean other opportunities open up.” Sale, who says she will “shout from the highest mountain that Outsource is fiercely independent and will look to remain so”, agreed independent players have

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SPECIAL REPORT / AGGREGATOR ROUNDTABLE

opportunities. “What I feel we will see going forward, is more of the independents coming through. There will be more opportunities there, and they are arising now, and you will see them drift in and they will just grow and grow and grow.”

But should further consolidation happen, brokers will maintain their power, Lees argued.

“I don’t think any of us really know what a mortgage broker will look like in five or 10 years’ time, but given that a mortgage broker is fiercely independent they will drive the shape of aggregation in the future. If we don’t get it right, somebody else will come in with a better model or a different model that suits the broker. So I think the market will always sort itself out. And it will not stay static, so there will always be change.”

THE NEW COMPETITION White-label products are still a contentious proposition among some aggregators, though the majority of aggregator heads believe they just add more competition to the market.

“We sit in the middle between micro businesses and the biggest institutions in the land. So we would see our role a lot of the time as being to facilitate that communication.”

Murray Lees, principal, Connective 22 | SEPTEMBER 2014

“First of all, we have very strong consumer protections in place in our industry, and under NCCP there’s very strong standards, a disclosure regime and controls in place, including legislative responsibility for any broker when recommending a product that the advice they give is not unsuitable – and that is a given,” Choice’s Stephen Moore said.

“White labels have evolved on the back of broker demand for a product that has more control; they have been successful, frankly, because brokers and their customers are voting with their feet.”

Wright said even product manufacturers agree.

“I think it is part of being competitive in the marketplace as an aggregator, and it has been interesting to watch over the past 20 months as the CEO of FAST, how the other lenders on our panel have adapted to that; they acknowledge the fact that it’s another product that is competing to meet the needs of brokers’ clients. So it is an interesting example of how the market can evolve and adapt.”

Independent aggregators also see white labels as good competition. “White-label products are just another level of competition, and these days customers, consumers are very savvy, they have access to information at the tips of their fingers, so it is very unlikely that you can market and sell a product that doesn’t fit within the marketplace and isn’t suitable for their customers,” Watkins said. “I think it’s a fantastic move back to the good, old days when you had multiple lenders, and offshore and credit unions – you had everyone in the marketplace.

Sadly, we have seen a lot of that disappear. So white labels now are to a certain extent the re-entrance of that, in the respect that you can educate customers about niche products available, and it doesn’t necessarily have to be from their local bank.”

However, not all aggregators are convinced by the competition argument. Outsource’s Tanya Sale said there may in fact be two different categories of white label products.

“I think there are two lots of white labels, and I am going to call a spade a spade here, I think we have seen in the aggregators that are owned by a lender – specifically a major lender – that product will be marketed very strongly to the distribution,” she said. “I don’t necessarily agree with the idea that brokers and the customers are voting with their feet.”

Sale said these products are being made attractive not necessarily on the pricing side, but on the commission side, to give writers an incentive to write a little bit more of that product.

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THE AGGREGATORS SPEAK: CULTIVATING NEW INDUSTRY TALENT Is the mortgage broking industry doing enough to cultivate new talent? MPA asks the panel about the challenges and opportunities for new and existing brokers

“White label products are just another level of competition; these days, consumers are very savvy, so it is very unlikely that you can market and sell a product that doesn’t fit within the marketplace and isn’t suitable for customers.”

Malcolm Watkins, executive director, AFG “We believe it definitely muddies the water, and it definitely muddies if further when you have major banks owning an aggregator 100% and really pushing that product.”

She said that, in the case of mortgage manager white labels, “you can probably bet your bottom dollar that if one of the majors wanted to come in on that type of pricing for the white label they will wipe it out in five minutes.”

Lees said any product – including Connective’s – should be able to compete on its merits. “Our message to our partners is that it has to fight for its own space on the shelf. There are no guarantees,” Lees said. “If the product is good – and define good however you will, whether that’s on pricing, on features on service – it will get its deserved share of the business.”

Phil Quin-Conroy “I think mortgage broking can absolutely now be positioned as a profession and as a vocation for individuals to target when the leave school or university, and there is probably more opportunity as an industry to do more on that front.”

Malcolm Watkins “The biggest barrier for potential new brokers is cash flow and customer acquisition. It is very, very hard for someone to enter the market unless they have some sort of customer acquisition strategy, so unfortunately you can get some very good people trained and up and running and all the rest of it, but if they simply don’t have the skill set, or they can’t plug into a referral source, they’ll leave the market as fast as they join it.”

Brendan Wright “I think what attracts new talent to the industry is the opportunity – if you are up for it – to run your own business. So these people can join the industry, either new to industry or from other industries, and have the opportunity to be a small business owner in an industry that is serious and here to stay. That is the real opportunity.”

Murray Lees “What is really interesting is that of the people who have got industry experience, the planners and the accountants are looking to effectively buy a broker a lot of the time - they are not very often looking to become a broker themselves. I think it is something we should all be careful of in the industry; that we don’t end up becoming a subset of financial planning because that is a possible trend that could occur.”

Tim Brown “We are building infrastructure more so for our existing brokers, because it is our existing brokers bringing those new brokers into play. Often, they don’t know how to do that, or didn’t have the time or the energy, and I think just giving them the capability to utilise our services – and we charge for those services – helps them to bring on new recruits.”

Tanya Sale “We have high growth of new entrants, probably because we have implemented our own new entrant program and we don’t charge for it. For us it is definitely the financial planners, the accountants that are wanting to value add to their core business. We mentor them, and we are great believers in not actually removing that person from their environment, so we train and educate them within the environment that they are going into.”

Stephen Moore “We recognise that attracting new professionals to the broking market is critical for the industry; we have growing consumer demand for brokers, but if we don’t grow supply to meet that we are going to cap ourselves as an industry, and that doesn’t make any sense to me.”

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“I think there are two lots of white labels, and… I think we have seen in the aggregators that are owned by a lender, those products will be marketed very strongly to the distribution.”

Tanya Sale, CEO, Outsource Financial

Lees said he does not believe that as an aggregator, Connective has a great deal of influence over what brokers do, as they are independent businesses who use aggregators for services. Therefore, he suggests a cure for handling potential conflicts – disclosure.

“Every one of us faces conflict of interest at times.

So how do you handle a conflict of interest? It’s simple, it’s about disclosure. If I tell you that I have an incentive to do this, and you know that, then you make your own decision, and I have got a clear conscience because that is the reality. Conflicts of interest are a natural thing in business.”

CHOICES AND CHANGE Diversification is by no means a fait accompli, say aggregators, who argue it is up to individual business owners to chart their own course, though aggregators can assist.

“Diversification is a topic that has been talked about since the birth of the industry and the reality versus the theory are two very different things,” Malcolm Watkins said. “The reality of implementing an effective diversified business is much, much 24 | SEPTEMBER 2014

more difficult than the theory behind it, and there are a lot of businesses that have done it very, very well, but individually to diversify a business is a much more difficult challenge.”

Watkins said it depends on business models, practices, their previous skill sets and the nature of their customers. “It is a very, very broker and company specific thing to do.”

It seems most aggregators recognise this, as PLAN Australia’s Phil Quin-Conroy agreed.

“At the end of the day our view is that diversification is only one of the pathways to growth, and that may be appropriate for a particular business but it may not, so we try to work through with a particular business what their best possible growth strategy is.”

Quin-Conroy said PLAN – like some other aggregators – supports brokers to move into different areas such as the risk insurance, general insurance and financial planning.

Likewise Choice’s Stephen Moore, who said diversification decisions should depend on the individual broker’s model, and should be seen through the prism of meeting customer needs. “I do think the individual one stop shop – whilst it’s a possible model – tends to be more unique in the marketplace, given broking in its own right is quite a specialisation,” he said.

Vow Financial’s Tim Brown said two things have been helping Vow brokers to diversify: training, and systems and processes, designed to identify customer needs. “It is really identifying those needs and who is the most appropriate person to deal with those needs, and in most cases they [brokers] are happy to refer away, and we just make sure the partners we have got have got really strong service agreements in place and that they follow through on the enquires, because we find the quicker the enquiry is dealt with the greater the success.”

Outsource Financial’s Tanya Sale said Outsource is very pro-diversification, encouraging its members to pursue the goal of a multi-faceted businesses. “A lot of them like sticking to their knitting or their core business, and then looking at the value-adds on top of that, such as asset finance and motor vehicle and equipment finance, which is a biggie for us.”

Sale said the group’s business model attracts writers because they do not need to be accredited, but can utilise an online quoting system that allows them to keep a firm hold on their clients.

FAST’s Brendan Wright said a specific opportunity he sees for FAST brokers in the future

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– and one it is pursuing now – is meeting the needs of small business owners. “There are 2.8 million small business owners in this country, and there are about five thousand business bankers – that’s not enough financial advice to go around,” he said.

“There is definitely an opportunity and a groundswell around good finance brokers being able to meet the needs of business owners and that means their personal investment needs as well.”

Connective offers a full range of diversification opportunities to brokers, from plant and equipment finance, to planning, risk insurance and general insurance. Though diversification may not be for everybody, Murray Lees said it’s clear what the worst option is for brokers.

“I think the key is every broker has to do one of four things: skill up, form a JV, refer out or do nothing. And I think of those four strategies, the ‘do nothing’ strategy is not a great one. Unfortunately a lot are doing that, so people need to be more aware of their opportunities.”

“The minimum expectations [of brokers] will continue to rise; we are dealing with fair-dinkum business owners, and they need different types of support, and it is the role of an aggregator to tailor their professional development programmes to meet those needs.

Brendan Wright, CEO, FAST

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“We don’t have our own proprietary software, and that is a strategic decision because the investment required in a system on an ongoing basis is just phenomenal.”

Tim Brown, CEO, Vow Financial LEADING FROM THE MIDDLE Aggregators all feel they can and do play a central role in advocating for brokers, whether that is ameliorating disputes with lenders or promoting the channel generally.

“There are many things we do to advocate for our brokers, whether that is standing shoulder-toshoulder with them when dealing with issues that might emerge with a lender, or supporting them to grow their profile in their local community, or supporting them to put themselves up for an industry award,” said Quin-Conroy. “We absolutely see that one of the roles we play is to champion the cause of the broker, and that can take on many different forms, and we look to do that within the business and with other industry stakeholders.”

Watkins said aggregators like AFG can leverage the size of their balance sheets to improve outcomes for brokers, which can include higher levels of integration, service and prioritisation. “I suppose fundamentally the most important thing is 26 | SEPTEMBER 2014

commission preservation and contract, and those are the two things we leverage very, very strongly; we know we pretty much have industry unique contracts, we have industry unique PI clauses, and we consistently push back on them to protect both ourselves and our brokers,” Watkins said.

“Whether we like it or not, we have a mighty big balance sheet - it is nearly 90-odd million dollars now - so our lenders look to us as the first port of call when our brokers do something wrong, for example.

Because we offer security, in return we ask them to improve the general conditions for our brokers and the preservation of their income sources.”

Aggregators say the relationship extends to leveraging lender resources. “It is about being proactive and trying to understand issues from a lender’s perspective, whether that is around compliance, or being more efficient, or getting applications completed,” Vow’s Brown said. “There is an array of things where they can assist, because they have an unlimited resource base where we have a limited resource base, so we often draw on that for induction or compliance training or sales training and continue to use those resources as we can.”

Wright said this extends to new lines of business in the case of FAST. “We have six or seven lenders in particular on our diverse panel focused on helping support the engine room of the Australian economy - that is small business. So we are working closely with the lenders to help brokers move across resi, commercial and asset finance.”

Sale said lender-aggregator relations are on the whole good. “They are pretty good, they really are, and it goes both ways; we expect so much from them, they come back to us, and it is a two way street, they expect things from us as well from our writers but they are usually very accommodating.”

Moore said that it is integrity that is the guide for Choice when it comes to lender relations. “When it comes to a dispute, if there is uncertainty, it is about bringing the parties together,” he explained. “And our focus is on the benefit of the doubt, and the test we apply across everything we do, is the hand on heart test. Can you put your hand on your heart and say absolutely this is the right thing or the wrong thing to do? If you flinch – even a little bit – you know what, it’s probably the wrong thing to do and we won’t do it. It is the test that we apply, and I think it services us quite well when it comes to our integrity.”

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THE AGGREGATORS: THEIR CORE VALUE PROPOSITION EXPLAINED

AFG

AFG provides a full-service support model targeting those brokers that wish to leverage all the components of that offering, from compliance services and PI cover to automation in back-office systems and CRM.

Malcolm Watkins: “We attract the people that are experienced, and are looking to leverage and outsource to a certain extent back to us a lot of their services so they can continue to grow and market face forward.”

CHOICE AGGREGATION SERVICES

Choice is an ‘unashamedly’ full-service support model, which aims to fundamentally understand broker business models and assist them with their own unique needs and goals. It provides tailored support and is ‘agnostic’ about business brand.

Stephen Moore: “What we are increasingly doing is being focused on more business growth support, practice management support, helping brokers run more effective and more efficient business. The feedback from members is very positive on that.”

CONNECTIVE

The owners of Connective have a background in broking, and for that reason bring the ‘broker mindset’ to their offering. With a focus on technology and automation, the business tries to provide brokers all the things they don’t have the time, the skill, or the capital to do themselves.

Murray Lees: “Anything a broker is going through we probably experienced ourselves, the highs and the lows, the good the bad and the ugly. We feel that puts us in a position where we can understand what a broker is thinking, and that flavours everything that we do.”

FAST

FAST brings top-notch expertise in commercial finance to the table, and helps its brokers – whether they are experienced ‘serious business owners’ or ‘young and savvy’ entrepreneurs – expand into this area, and diversify into others. It employs people that can speak intelligently about commercial.

Brendan Wright: “When we talk about diversification, it is fine if you are a broker and you just want to focus on residential, asset finance or commercial, but we are the aggregator that can help you move across those areas, particularly being the market leader in commercial.”

PLAN AUSTRALIA

PLAN’s focus is on assisting growth through the delivery of a comprehensive range of services helping member brokers run great businesses and provide great client solutions – a ‘dual’ focus. On top of an ‘extensive’ range of services, it targets good execution and implementation, and delivering on promises.

Phil Quin-Conroy: “Sometimes it’s not the best strategy that wins, it’s a focus on execution.

We have a particularly strong focus on working with a broker’s business to understand their priorities and delivering our services through an experienced team so they can achieve the goals they want to achieve.”

OUTSOURCE FINANCIAL

Outsource aims to be a business partner for brokers, and to this end sits down regularly with its members to talk with them and put into action services that will help their needs. This could be anything from tools to use or additions to their service offering.

Tanya Sale: “They [members] may want us to build something for the business overall, so we will go and build it. They may want us to create certain tools, and we will create it for them.

How we are perceived by our members and the market, is that we are their business partner.”

VOW FINANCIAL

For Vow, it comes down to a flexible commission structure, and diversification opportunities. On the commission front, the aggregator offers brokers a choice of a transaction fee, a percentage model or a flat fee.

Its diversification aims to go broader and offer more choice than its competitors in the market.

Tim Brown: “We just don’t offer one source of property, we have over four or five different groups that we are very comfortable with, and each of those are different offerings as well. I think it is just a broad offering and giving the broker the choice of what products that they see value in.”

FOR THE CUSTOMER’S SAKE The message that aggregator’s are giving brokers loud and clear is that, when it comes to technology, it should be all about the customer – not just technology for its own sake.

“I think using technology in your sales process can certainly help, especially with things like the graphical interpretations of paying down the loan, and comparing it to other products,” Brown said.

“But it doesn’t take away from the person who has to build the rapport and the relationship and the trust factor to get the customer’s confidence to make the decision to go with them. If you ever try and get a computer to do that you will probably end up failing, so I would suggest that technology really is an enhancement component.”

Lees said he agrees with the argument that technology is not a substitute for customer service, but instead, an enhancement to it. “If you have things happening in the back of your office that mean things go through more smoothly from lodgement to settlement then that frees up your time to actually deliver the really personal stuff which is what service is all about.”

Freeing up time – or efficiency – is a key impact of technology for Moore. “For me it’s not about technology in its own right, it’s about technology as a means to an end, and the rarest commodity for any good broker is in fact their own time,” he said.

“Technology is about business efficiency to create time to focus on higher value add activities, and those higher value add activities are of course seeing clients. And that is what a good CRM system will do.

It will capture data once, reuse it all the way through the application process, from compliance documentation to the application, and store all that information in one repository, which means then ongoing efficient management of those clients.”

Brown said CRM is where aggregators can really differentiate themselves. “We don’t have our own proprietary software, and that is a strategic decision because the investment required in a system on an ongoing basis is just phenomenal. Because technology is changing so quickly, I don’t think that’s a place Vow will ever go,” he said. “Everywhere that I have travelled around the world we are seeing a lot more consolidation on the IT component and the CRM is where your point of differentiation is, and the back-end components are generically owned, so it is really the CRM where you can differentiate in technology.”

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Sale said brokers could give a little bit more attention to the applications and software that are out there that could assist them in streamlining their businesses, including CRM. If they do, they will be able to meet the needs of the changing customer, said Watkins.

“Brokers are seeing it loud and clear and it is being driven by consumers – their own customers want to know more and they don’t want them necessarily ringing up at 10 o’clock at night, they want the ability to check whenever they like, just like you can check your Qantas booking and your seat allocation or your shipping instructions are for what you ordered online form the UK – you want to see where it is in the transaction process,” he said.

“You don’t want to have to ring someone up and wait on hold and then get put through and ask them to call you back when they come back from the bathroom, so that’s where technology is leading and it is just purely giving customers complete visibility.”

BUILDING UP BROKERS Aggregators are now focusing less on the technical aspects of good loan writing and finance broking, and more on training entrepreneurial brokers on how to own and build a business.

“I think there are three elements to education,” said Lees. “The technical ability to put a loan together is fairly simple and straightforward, but that is not enough to guarantee success in broking.

The next level is to be really good with people, and then when you are really good with people, the next thing is to be really good at business. So I think the best brokers in our industry are business owners who happen to be in mortgage broking.”

It is brokers that are demanding a focus on business building and expertise, Brown said. “A lot of them really want to grow their business, but don’t have the necessary levels of support or expertise to help them do that. So we sit down with them and say, ‘where are you taking this business, where do you want it to be, what’s your vision, what’s your exit strategy?’ And a lot of them – being sole owner operators – hadn’t really given that a lot of thought.

For a lot of them, at least initially, it was just about getting a job and getting an income.”

“I think there is a far greater emphasis on business development, as opposed to professional development,” agreed Moore. “That ranges from structured programmes, be it on marketing in your

28 | SEPTEMBER 2014

The top three predictions

1

Mortgage brokers are at risk of becoming a subset of the financial planning industry, if planners continue to subsume brokers within their own businesses over time.

2

Further consolidation – and particularly bank ownership – of aggregators risks muddying the waters of the industry, due to conflicts of interest such as bank white label distribution.

3

The one-stopshop solo operator is now recognised as very much a sub-optimal proposition, with diversification now seen as depending primarily on individuals and business models.

business and CRM, to financial management to resourcing and skilling of staff, to recognising that brokers have different needs – face-to-face versus webinars, for example.”

Moore said brokers increasingly want to learn business-focused skills from someone that is ‘living and breathing it’, rather than professional speakers with no recent experience.

“What we are doing around the country is running numerous sessions on a state and local basis on subjects driven by the brokers. It could be SMSFs, CRM, referral sources – you name it. We facilitate it, if need be we bring in someone with subject matter expertise, but often brokers will share and learn from each other – we think that’s really quite powerful.”

Quin-Conroy said PLAN is also helping brokers wear the ‘two hats’ of business owner and credit adviser. One of the initiatives that we are in the process of rolling out is a benchmarking exercise, so that a broker can understand what their relative strengths and weaknesses are and then seek support from a training and development perspective around the areas where they can improve, rather than attending a session they are an expert on.”

Watkins agreed business development is the key for further development of broking professionals.

“It’s about understating your business, where its cost bases are, where you time on lead acquisitions, through to your fulfilment processes, through to your human one-on-one touches, to your customer service and your back-end, and of course the allimportant book maintenance,” he said. “These are areas we can really focus on and work with our guys, and they can actually weigh up very quickly. Even building a business plan: it sounds very fundamental, but unless you have got someone to sit down and help you with a business plan, they are actually quite a challenge to get anything meaningful out of.”

The rising demand for business development assistance means the heat will fall squarely on aggregators, according to Wright. “My view is that the minimum expectation will continue to rise; we are dealing with business owners, fair-dinkum business owners, and they need different types of support, depending on where they have come from, on getting into business, or growing their business or diversifying their business, that it is the role of an aggregator to tailor their professional development programmes to meet those needs.”

PROFILE / COLIN LAMB

COLLABORATE + DIVERSIFY Colin Lamb’s formula for success 30 | SEPTEMBER 2014

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Colin Lamb has become one of the country’s top mortgage brokers, but he’s not content to rest on his laurels. Having settled more than $160m in loans last year, his business has recently launched a sub-aggregation model that he hopes will boost the profits of other brokers in the industry. Sarah Megginson reports With a staff of 30 and several mortgage-related businesses, Colin Lamb is undoubtedly one of the mortgage industry’s star performers. But he’s the first to admit that when he launched his brokerage, Mortgage Solutions Australia, in January 2001, he “didn’t even know what broking was”.

“I was a mobile mortgage manager with NAB, doing home loan lending for around four years, when I handed my resignation into NAB on Christmas Eve of 2000,” Lamb explains.

“It was natural progression into broking and the following month, I helped set up Mortgage Solutions Australia (MSA). It was the brainchild of Murray Joseph, who actually got me out of the bank and supported me in setting up the business.”

He may have needed some support in the beginning, but over the years, Colin has moved firmly into the driver’s seat at MSA. Today, the parent company has several divisions, including a financial planning arm and a settlement agency that handles conveyancing for real estate transactions.

Plans are afoot to diversify into car and asset finance, so they can capture this business from current clients, rather than referring them onto other parties.

Lamb has also been heavily involved with the Ausnet Real Estate Group, which encourages independent real estate offices to collaborate.

Members operate under their own names and identities, giving them complete independence in the market, but through Ausnet they gain some of the advantages of being part of a wider group, such as access to expert advice, specialist training and coaching, networking opportunities, bulk-buying rebates and corporate awards.

“When we started out, our business model was derived from [our] real estate [agency]. Ausnet has

CAREER TIMELINE

1990

Commenced working with NAB.

2001

Launched Mortgage Solutions Australia (MSA).

2008

MPA magazine ‘Broker of the Year 2008’

2009

Fourth place in MPA ‘Broker of the Year 2009’. Also voted best lender in Australia at the Professional Lenders Network Australia Awards for the third year running.

2013

After MSA settled over $163m in loans, Lamb was named MPA magazine’s ‘Top Broker of 2013’.

2014

Australian Broker of the Year – Australian Mortgage Awards.

2014

Partnered with Finsure and launched a sub-aggregation model.

SEPTEMBER 2014 | 31

PROFILE / COLIN LAMB

3 THINGS ALL BROKERS SHOULD BE DOING 1 Collaborating “I think it’s important to get to know other brokers in different states so you can build a network of people to collaborate with. No one knows the industry and the challenges quite like other brokers. If another broker calls me, I’m more than happy to discuss ideas and transactions, and I ring other brokers myself to throw around ideas to do with a difficult deal.”

2 Networking “It’s about getting involved and being in the industry. I go to quite a few functions and awards and people often just aren’t there. If you’re going to be in this industry, you really need to support it and be involved.”

3 Training “You need to make sure you’ve got your knowledge up to speed. I encounter a significant number of transactions on a weekly basis that I take over from other brokers, and they just didn’t know what policies were relevant or how to put the deal together. Product knowledge and bank policy is so important.”

32 | SEPTEMBER 2014

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33 independent real estate offices throughout WA and they refer a lot of business,” Lamb explains.

Today, however, real estate referrals is just one of many successful strategies Lamb and his team use to generate leads. He processes upwards of $15m in lending per month, whilst the business collectively processes up to $35m per month, with recent growth bolstered by targeted email campaigns arranged by a marketing group.

“In addition to our already intense database marketing program, we engaged Your Client Matters, who have helped us create regular email touch point with clients. We send them updates, news, articles and competitions. The content has been fantastic and customers are engaging, which has been very important,” Lamb says.

“Revisiting past clients has been a huge priority for us as part of this process. It has, for me personally, unearthed around $2m a month in new deals.”

SUPPORTING SMALLER OPERATORS Last year, the business evolved in a new direction when Mortgage Solutions Australia moved across from Plan Australia to Finsure, a decision that was almost two years in the making.

“We were regularly reviewing our aggregator – if anyone’s not reviewing their systems and process including their aggregator on a regular basis, they’re going to get left behind – and after reviewing a few different aggregators over 18 months, we finally found what we wanted with Finsure. They gave us the flexibility and everything we wanted to do,” he explains.

“Plan were fantastic in regards to their support during the transition, they didn’t spit the dummy – they’ve been fabulous and made the move as seamless as possible.”

Moving to Finsure has given his business access to more tools and resources, including a fully staffed call centre, but it is also the opportunities for strategic partnerships and Finsure’s proactive attitude that encouraged Colin to make the switch.

“We’ve got the ability to be a lot more flexible now, as we can talk directly to the decision-makers to make things move a lot more quickly. The call centre is also a huge resource, as it allows us to do sub-aggregation a lot better than we would have before,” Lamb says.

“With sub-aggregation we saw an untapped market in terms of what a small broking business needs, and we wanted to provide some economies

of scale to their business. Our aim is to go to the smaller operators that are writing reasonable dollar figures that can actually write more dollars – the $1m to $2m writers that should be writing $4m a month – and offer the back-office support to write a lot more volume.”

He plans to build the sub-aggregation model to include 50 brokers over the next 12 months, while also building their loan book within MSA. Part of its success to date has been its diverse client base, including first home buyers and upgraders to renovators, investors and retirees.

“It’s probably why we’ve been successful, because our business is spread across most segments of the market. Others go up and down depending on the market, but we’ve been fairly constant because when one area is in decline, the rest are up,” Lamb says.

“We are constantly looking at where things are at, where the real estate market is going and where the finance industry is going, and we review our clients on a regular basis. At the minimum, we reach out to them every two years, hence why the call centre is imperative – it means our clients are getting called and invited to sit down and review their situation at least once every year or two.”

HARNESSING SOCIAL MEDIA Never one to shy away from new ways to generate business, Lamb says he sees plenty of opportunity to gain quality leads via social media – but he admits he hasn’t yet had time to dedicate to the cause.

“Facebook is becoming a good avenue for generating leads, I just need to get the time to actually commit to it. I’ve seen some horrible Facebook executions where I’ve thought, ‘There’s no way I’d touch that business if I saw their Facebook page,” Lamb says.

He has been less conventional strategies to rustle up fresh leads of late, including a binge texting session over the newspaper every Saturday and Sunday morning.

“I’ve been browsing the real estate listings and then SMSing a few agents each day, just to let them know that I’m open for business,” he says.

“It’s a bit cheeky, but it’s paying off – I’ve picked up a couple of loans already.”

Simple strategies such as this can be some of the most effective in generating leads, he adds.

“It’s so important to keep it simple. Too many people are trying to make this job complicated,” Lamb says.

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SPECIAL REPORT / BROKERS ON NON-BANKS

Which non-bank lenders are building the strongest reputation in the broker channel and are set to challenge the banks for your business? All is revealed in this year’s MPA Brokers on Non-Banks special report

34 | SEPTEMBER 2014

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M

ortgage brokers are crucial to the performance of the non-bank lenders, both in terms of presenting non-banks as a borrowing option to their customers and explaining their value when compared to the better-known bank brands.

But are the non-banks holding up their end of the deal by presenting brokers with a genuinely attractive alternative to the established players?

This is one of the key questions MPA sought to answer when inviting brokers to take part in this year’s Brokers on Non-Banks survey and, as always, respondents weren’t backwards in coming forwards with their opinions.

We’ve asked respondents to highlight the non-banks that they think are doing the best by brokers and their clients in several key areas. The results for each category are presented in this special report, and the non-bank lender that achieved the best overall result has been crowned 2014’s non-bank of the year.

METHODOLOGY Brokers were invited to take part in an online survey to offer their opinions on how the non-bank lenders were performing. This year, respondents were asked to name the non-bank that performs the best in each of the following 11 key service categories: • Turnaround speed • Overall service to brokers • Credit policy • BDM support • Interest rates • Product range • Commission structure • Communications, training and development • Online platform and services • Product diversification opportunities • Marketing and brand awareness

The three non-banks with the most nominations in each category have been highlighted in the report, while the bank with the best average rank across all categories has been crowned as this year’s Non-Bank of the Year.

We also wanted to present an overview of what brokers’ priorities are when it comes to the services they’re after from the non-banks. To that end, respondents were asked to rank each of the 11 services presented in the survey for importance, on a scale of one (least important) to five (most important).

Based on this feedback, the category results have been presented in order of importance, from most important (turnaround speed, and overall service to brokers) to least important (marketing and brand awareness).

But this report isn’t just about scores and rankings. We also asked brokers for their opinions on several of the issues that we think are most important to the non-bank lenders – from barriers to writing more non-bank business to how well the non-banks service the broker channel when compared to the banks. Broker feedback on these issues is presented throughout the report.

The non-bank sector acts as a powerful force driving competition in the mortgage industry.

Non-bank lenders differentiate themselves in the market through flexibility, innovation and tailored service. By playing to their strengths in this way, they provide a genuine and credible alternative to the major lenders.

Over the past 12 months we’ve seen a number of mergers and up-scaling of capabilities in the non-bank sector, as manufacturers and distributors of non-bank mortgage products join together to streamline the supply chain and create more robust economies of scale. This increased activity presents an opportunity for non-bank lending to head in a bold new direction, and as Australia’s leading funder of mortgage managers, Advantedge is optimistic on the future prospects of the sector.

Advantedge will continue to be an active partner and supporter of non-banks, through industry advocacy, and by providing competitive funding solutions that help our non-bank lender partners to elevate their business and grow the sector’s market share. Our continued partnership with MPA’s Brokers on Non-Banks survey demonstrates our ongoing commitment to the industry and to ensuring brokers have access to a range of market-leading products to uniquely fit each of their borrowers’ needs.

Brett Halliwell General Manager Advantedge Distribution

SPECIAL REPORT / BROKERS ON NON-BANKS

WHAT’S IMPORTANT TO BROKERS? RANK

CATEGORY

SCORE

=1

Turnaround speed

4.5

=1

Overall service to brokers

4.5

=3

Credit policy

4.3

=3

BDM support

4.3

=5

Interest rates

4

=5

Product range

4

7

Commission structure

3.8

8

Communications, training and development

3.7

9

Online platform and services

3.6

10

Product diversification opportunities

3.4

11

Marketing and brand awareness

3.2

THE TOP FIVE The battle for nonbank of the year was closely fought between BMM and Pepper – with both lenders featuring in the top three in all 11 categories. Ultimately BMM came out slightly in front of Pepper to take the top spot.

Liberty came in third, thanks to a respectable number of top three finishes, while Firstmac and AFM completed the top five.

FIRST

SECOND

THIRD

FOURTH

FIFTH

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TURNAROUND SPEED 1

PEPPER

2

BETTER MORTGAGE MANAGEMENT

3

OVERALL SERVICE TO BROKERS =1

PEPPER

=1

BETTER MORTGAGE MANAGEMENT

3

PLAN LENDING

LIBERTY

IMPORTANCE SCORE: 4.5/5 It will come as little surprise to busy brokers that turnaround speed has once again been labelled as the most important issue in MPA’s Brokers on NonBanks report. But this year it had to share the top spot with overall service to brokers as the most important non-bank service category. Pepper outshone all comers in this category this time around, with Better Mortgage Management (BMM) and Liberty rounding out the top three.

A number of respondents said the non-banks were outperforming the banks for turnaround speed. Comments included “better turnaround times and access to credit personnel” and “turnaround times are better and banks seem to be worse for different departments not communicating”.

But brokers thought the non-banks could still improve. “Turnaround times can always be quicker, but that’s true of every lender, bank or non-bank,” said one respondent. “They are victims of their own special rate offers. But, you just need to work with that, or find another lender with a similar offer without the turnaround delays,” added another.

IS THE SERVICE OFFERED BY NON-BANKS BETTER THAN THAT OFFERED

BY BANKS?

76% YES

IMPORTANCE SCORE: 4.5/5 Judging by the fact that overall service to brokers managed to share the top spot on the importance scale with turnaround speed in this year’s report, it’s clear that brokers want to feel like the nonbanks are offering top notch service across the board.

Competition was tight in this category, with Pepper and BMM scoring the same amount of votes and sharing first place. This pushed PLAN Lending into third to complete the top three.

Given that 76% of brokers said that the service offered by non-banks was better than that offered by banks and 86% were happy with the service offered by the non-banks, there were numerous positive comments on the subject of overall service to brokers. Comments included “to a non-bank lender, the client does not appear to just be a number in the system, as it does with many of the banks” and “more streamlined and genuine ownership taken by staff”.

But brokers did offer some recommendations on where the non-banks could improve. These included “better and simpler application forms”, “one person looking after the loan from start to finish” and “they require third party legal preparation, and it always takes a long time”.

24% NO SEPTEMBER 2014 | 37

SPECIAL REPORT / BROKERS ON NON-BANKS

CREDIT POLICY

BDM SUPPORT

1

PEPPER

1

BETTER MORTGAGE MANAGEMENT

2

BETTER MORTGAGE MANAGEMENT

2

PEPPER

3

LIBERTY

3

PLAN LENDING

IMPORTANCE SCORE: 4.3/5

IMPORTANCE SCORE: 4.3/5

There wasn’t much between the top four categories when it came to their average importance scores, with joint third-placed credit policy and BDM support only missing out on the top spot by 0.2 out of five. On the credit policy front, Pepper scored the most votes, followed by BMM and Liberty.

Brokers highlighted direct communication with credit assessors as something that the non-banks did well. “No credit score, much less red tape and bureaucratic delays,” said one broker, who believed that the non-banks had more of a “can do” mentality than the banks.

Other respondents, however, pointed to some negative credit policy experiences with non-banks.

One said that non-banks “add more credit conditions and tend to overwork files” while another stated that the banks’ credit policies were “more flexible”.

There wasn’t much between the top four categories.

Tying with credit policy for third place on the importance scale, BDM support was another area that this year’s respondents thought was vitally important for the non-banks to perform well in.

The battle for the top three places in this category was tight, with BMM edging Pepper and PLAN Lending into second and third places respectively.

A number of brokers praised the non-bank BDMs for their work ethic in comparison with their bank counterparts. Comments included “BDM is far more helpful than most bank BDMs” and “BDM and support teams respond quicker”.

However, other brokers highlighted room for improvement in this area. “Timely contacts with BDMs can be improved,” said one, while another added that “BDMs need to be more proactive”.

86% YES ARE CLIENTS TYPICALLY OPEN TO CONSIDERING NON-BANK PRODUCTS?

82% YES 38 | SEPTEMBER 2014

14% NO ARE YOU HAPPY WITH THE SERVICE LEVELS PROVIDED BY NON-BANKS?

18% NO

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INTEREST RATES

PRODUCT RANGE

=1

BETTER MORTGAGE MANAGEMENT

1

PEPPER

=1

FIRSTMAC

2

BETTER MORTGAGE MANAGEMENT

3

PEPPER

3

FIRSTMAC

IMPORTANCE SCORE: 4/5

IMPORTANCE SCORE: 4/5

Interest rates came in equal fifth in the importance rankings this year. This may only be a mid-table ranking, but its average importance score of four out of five suggests that it’s still a matter of huge importance to brokers. There were joint winners in this category, with BMM and Firstmac receiving an equal number of votes. Pepper took out third place.

Respondents offered mixed opinions when it came to assessing how the non-banks performed on rates compared to the banks. Positive comments included “better rate, lower fees and better processing”. However, the not so positive comments ranged from “service may be a little better, just need to match rates and fees” to “while each have niche markets, overall non-banks generally are poorly priced and slower to respond”.

It would appear that it’s not just the banks that are expected to be able to provide a decent range of mortgage products. Brokers put it in equal fifth place with interest rates in the importance rankings.

Pepper was the clear winner in this category, followed by BMM and Firstmac.

When it came to comparing bank and non-bank products, our respondents offered some insightful opinions. “Clients are calling brokers for a reason and that is to see what is best for them not just what a bank recommends. If a non-bank product is the best fit, customers are happy to go with that,” noted one broker. One broker believed, however, that without the flexible lending policies and better service that non-banks can offer, all customers would choose bank products.

BROKERS SPEAK: BARRIERS TO PUTTING MORE BUSINESS THROUGH NON-BANKS “Clients’ preference for branch network” “Brand awareness and online platforms” “As a broker it is important to keep a balanced book of your business” “Overall BDM support from all the non-bank lenders” “Turnaround times and flexibility. Poor communication” “Brand awareness and preference of clients for larger banks (unfortunately)”

SEPTEMBER 2014 | 39

SPECIAL REPORT / BROKERS ON NON-BANKS

MPAMAGAZINE.COM.AU

COMMISSION STRUCTURE =1

BETTER MORTGAGE MANAGEMENT

=1

LIBERTY

3

COMMUNICATIONS, TRAINING AND DEVELOPMENT PEPPER

=1

BETTER MORTGAGE MANAGEMENT

3

LIBERTY

PEPPER

IMPORTANCE SCORE: 3.8/5 The seventh most important non-bank service category this year was commission structure, with an average importance score of 3.8 out of five. Once again we saw joint winners, with BMM and Liberty receiving the same amount of nominations. Pepper rounded out the top three.

The majority of respondents (83%) were happy with non-bank commissions, with many using phrases such as “fair”, “competitive” and “comparable with the market”. Some brokers stated that commissions could be higher, but few were outraged with the current state of affairs. “Could be higher, but no point sweating on that happening,” said one broker, for example.

83% YES

17% NO ARE YOU SATISFIED WITH THE COMMISSIONS PAID

BY THE NON-BANKS?

40 | SEPTEMBER 2014

=1

IMPORTANCE SCORE: 3.7/5 With an average importance score of 3.7 out of five, communications, training and development was virtually on a par with commission structure on the importance scale. Just the smallest of average score margins pushed this service category into eighth place in the importance rankings this year.

Once again, this was a category in which it was impossible to split the top two non-banks based on the number of nominations they received. This meant that BMM and Pepper shared the spoils in joint first place, with Liberty taking the third spot.

As discussed in the credit policy section, respondents praised the non-banks for their ability to offer direct access to credit teams. One broker stated that non-banks offered “better communication by far” than the banks.

There were a few negative observations, however. These included “better communication on status updates via online portals would be handy” and “I have spoken to some poorly trained assessors in my 11 years”.

“The banks tend to forget the little guy and concentrate only on the high flyers, whereas the non-banks are equal in their treatment of all brokers”

SPECIAL REPORT / BROKERS ON NON-BANKS

ONLINE PLATFORM AND SERVICES =1

BETTER MORTGAGE MANAGEMENT

=1

PEPPER

3

AUSTRALIAN FIRST MORTGAGE

IMPORTANCE SCORE: 3.6/5 We may be coming into the tail end of service categories when it comes to their importance ranking, but online platform and services’ average importance score of 3.6 out of five is nothing to scoff at. Pepper and BMM continued their closely fought battle in this category, once again sharing first place.

Australian First Mortgage came in third.

There were some interesting suggestions on the online platform and services front. One broker made the general observation that “banks are more streamlined, efficient and their online systems tend to increase decision speeds”. Another suggested that the non-banks could up their game by offering “electronic updates with the ability to respond by return email or text for action”. Indeed, several respondents recommended that the non-banks invest in technology, system tracking and SMS updates.

PRODUCT DIVERSIFICATION OPPORTUNITIES =1

BETTER MORTGAGE MANAGEMENT

=1

PEPPER

3

LIBERTY

IMPORTANCE SCORE: 3.4/5 With an average importance score of 3.4 out of five, product diversification opportunities came in second to last place on the importance scale in this year’s report. In what’s shaping to be a titanic battle to be named as this year’s Non-Bank of the Year, Pepper and BMM once again shared first place – without a single vote splitting the two. Another strong performer this year, Liberty, took the third spot.

Perhaps in line with its importance rank of 10 out of 11, product diversification opportunities was not a subject that this year’s respondents discussed at length. One suggestion that several brokers put forward, however, is that the non-banks could improve their after-settlement service. This could perhaps represent an opportunity for non-banks and brokers to work together on offering diversified services to existing clients.

BROKERS SPEAK: THE TOP FIVE BMM “Easy to deal with, big range of flexible products, easy access to BDM, best interest rates on non-standard products” Pepper “They are the most innovative at bridging the gap between mainstream and specialist lending. Especially in the grey area” Liberty “Have a fantastic ‘can do’ attitude. They always look into my submissions and try to find a way to do it” Firstmac “Competitive pricing, efficient processes and BDMs with influence. They also have a market presence with sponsorship of Brisbane Broncos which consumers can relate to” AFM “Been around a long time, they know their stuff and also come up with new initiatives and products”

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MARKETING AND BRAND AWARENESS

WHAT PERCENTAGE OF LOANS DID YOU PUT THROUGH NON-BANK LENDERS IN THE LAST 12 MONTHS?

1

PEPPER

30%

2

BETTER MORTGAGE MANAGEMENT

25%

3

FIRSTMAC

20%

IMPORTANCE SCORE: 3.2/5 Marketing and brand awareness matched its result from last year’s report, achieving an average importance score of 3.2 out of five. This put it in 11th place on the importance scale, which was one place higher than last year. However, this year the number of categories in the survey was reduced from 13 to 11, meaning marketing and brand awareness gets the lowest importance ranking this year.

The familiar duo of Pepper and BMM took out the top two spots in this category, with Pepper this time getting the better of its rival and taking first place outright. Firstmac completed the top three.

There was no shortage of discussion on how nonbanks are perceived, and it looks as if they would do well to focus on educating consumers on their service proposition and safety record. Broker comments included “the GFC has created a level of doubt with consumers in relation to non-bank lenders”, “clients don’t know who they are and are suspicious particularly after the GFC” and “I usually have to explain that non-bank lenders exist”.

“Non-banks have flexible lending policies and better service to attract customers. They are more nimble and less entrenched in the ‘bank mentality’ ”

15% 10% 5%

29% 25% 23% 14% 9% 0-20%

21-40%

41-60%

61-80% 81-100%

0%

WHAT PERCENTAGE OF YOUR BUSINESS WOULD YOU LIKE TO PUT THROUGH THE NON-BANK LENDERS? 30% 25% 20% 15% 10% 5%

9% 20% 29% 22% 20% 0-20%

21-40%

41-60%

61-80% 81-100%

0%

SEPTEMBER 2014 | 43

FEATURE / TECH

After a decade of

digital disruption…

what’s next?

Innovations in IT have transformed the broking industry over the last 10 years.

Following this decade of digital disruption, what changes can we expect moving forward? Sarah Megginson reports

44 | SEPTEMBER 2014

In the modern workplace, a faulty internet connection can cause mild panic. But a decade ago?

Back then, it was a dodgy fax connection that had the potential to leave brokers and their support teams bereft of work and productivity for hours on end.

Like the pager and car phone before it, the fax has become a redundant piece of technology. This is largely due to the fact that over the last 10 years, we’ve experienced a greater move towards digitalisation in every area of business.

“Ten years ago, everyone was still filling out paper-based loan applications and faxing them to a lender, and people quickly forget how much carnage that caused,” explains Tony Carn, sales director, NextGen.Net. “There was always data that was missing, data that couldn’t be read. By migrating to electronic systems it has radically reduced costs, simply by ensuring that at the point of submission, all of the data that is required by a lender is validated.”

This allows for a number of checks and balances that didn’t exist before, eg if a broker lodges a PAYG application through NextGen’s software and it is processed as seeking a low-doc loan, then the system may throw up a red flag.

“Today, electronic application lodgement is utilised by over 95% of Australian brokers; it’s well recognised as the industry standard. But there’s also been a real move towards getting data quality right for loan processing, which is being able to recognise at the point of submission whether a potential issue exists,” Carn says.

“That’s been pretty significant, and I’d have to say that the last two years have delivered as much change at the last 10.”

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THREE REASONS WHY INTERNET-ONLY BROKERS WON’T WORK HOW TECHNOLOGY HAS CHANGED THE BROKER SPACE The most significant evolution for brokers has been the move to the cloud, which has had the impact of improving the efficiencies for the entire broking industry.

“Our software, Mercury, is a cloud offering; we used to have software on the desktop but five years ago we went to the cloud. It’s been one of the biggest changes we’ve made and it was the best thing we did – it’s simply the best practise, the benefits are compelling,” director of aggregator Connective Glenn Lees says.

Obviously, the other big change in the last 10 years has been the transition from filling out a paper form and sending it in to a lender, to now collecting that data in a digital device for semiautomatic approval. This has had a big impact on helping brokers and lenders achieve ‘straight through processing’ (STP).

“It’s hard to imagine that just a decade ago, brokers were wasting a substantial amount of their precious time on administration tasks. But technology has come along in leaps and bounds over the past 10 years, allowing brokers to now spend their time much more efficiently,” says Phil Quin-Conroy, CEO of PLAN. “Our software, Podium 2.0, has evolved enormously over the past 10 years, as our focus has been on simplifying procedures and creating greater efficiencies for brokers.”

What are some of the other important and impactful IT changes that the broking industry has witnessed?

1

The human component is critical A loan transaction is still going to be the biggest single transaction that anyone enters into, so there is always space for a human component and a face-to-face interaction, according to Lees. “We may use computers to achieve an end, but the human component is critical,” he says. “Trust is trust, and software – no matter how good – can’t replace those human elements.”

Modern consumers are needy “If anything, the millennial generation will be much more demanding, in terms of service, efficiencies, more accurate responses and services,” Carn says. “There’s a very small market or consumer appetite for dealing with this type of model, so time will tell.”

Technology adds to, but doesn’t replace, personal relationships Unquestionably, developing an online presence and leveraging the opportunities social networks present is important. But Quin-Conroy says he views technology as “a powerful tool that can be harnessed to support and strengthen client relationships, as opposed to replacing them”.

“A broker who engages with potential and existing clients online as well as offline, and utilises his software and technology to its full potential, will be best placed to deliver clients the best service possible,” he adds.

2 3

Online data capture and lodgement Gone are the days of brokers needing several faceto-face client meetings in order to fill out forms and collate client details.

“Online customer data capture tools speed up the application processing time for brokers and their customers, by enabling customers to submit their details to the broker at their own pace, in their own time,” Quin-Conroy explains.

“Our eClient feature for example allows captured data to be loaded directly into Podium 2.0, so clients’ details can be used for all relevant application forms – saving brokers’ time and enabling them to have richer conversations with their customer.”

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EYES ON 2024: WHERE TO FROM HERE? The last 10 years has seen upgrades in technology rapidly change all manner of businesses. So what can we expect in 10 years’ time?

“WE’LL EACH HAVE A PERSONAL DATA VAULT”

“Here’s my vision for the future: everyone will have a personal data vault that will contain everything a lender needs to approve their loan. My salary data, my tax returns, data from my credit card provider and lender: it will all be stored in one place. It’ll be biometrically signed, so that a third party is validating that information all the time. With this type of system underway, you could address issues of fraud and really improve productivity in processing loan applications. You could potentially even buy a house one day and transfer all of the documents immediately, and take possession right away. I’m sure I’m not the first person to come up with this; the idea was probably thought of 30 years ago!”

- Greg Lees, director, Connective

“MACHINES WILL TALK TO MACHINES”

“Going forward, we see better integration and efficiencies between systems. For instance, we’ll see services that will make things easier, faster and cheaper, with machines talking to machines to verify salary income or rental income, rather than a person having to ring an employer or a real estate agent to check personally. The technology is definitely there already, but we’ll find ways to better utilise it. I also think we’ll see very quickly the death of the Excel spreadsheet – a lot of brokers still rely on them to do serviceability calculations, but there are much more effective programs on offer that can harness lender policies and other relevant information in real time.”

- Tony Carn, sales director, NextGen.Net

“WEARABLE SMART TECHNOLOGY IS JUST AROUND THE CORNER”

“The focus of technology is going to increasingly shift from back-end efficiencies to client engagement. Cloud and mobile technologies will continue to evolve; in just a few years, smart devices and mobile technologies have revolutionised business and we see this as just the tip of the iceberg, with ultra mobile systems and wearable smart technology just around the corner. ‘Big data’ is another area to watch – that is, the use of information to better make sense of customers and their behaviour. There is a lot of potential for the industry to more effectively leverage client information in order to better understand and predict client behaviour, and I expect this to be a major area of investment in our industry.”

- Phil Quin-Conroy, CEO, PLAN

Acquiring actionable intelligence “We not only have the ability to capture data in a digital format, but we can also use that data much more comprehensively,” Lees says.

“The efficiency of getting information from point to point, what we call the speed of transfer of information, is the part that has really changed.

Now, when information is in the system, a broker can actually encapsulate the real value in their business, which is actionable intelligence.”

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Software that looks for mistakes Modern broking software acts as another set of eyes across the application, checking that all relevant information has been correctly inputted. But its ability to add value during the application process extends much further than that.

“There’s a lot of infrastructure we’ve developed and a lot of inroads we’re making in terms of enhancing data quality. For example, our software can actually check to make sure that the application meets the lender’s policy criteria, which can change almost daily,” Carn explains.

“And if the loan doesn’t service according to the lender policy, the software will say so. Before you officially push the button and apply, and it will halt the submission and alert you to the fact that the loan falls short $10k in serviceability, and ask if you want to proceed.”

Targeted marketing/harnessing big data Savvy brokers can leverage the latent value locked up in their customer data files to create meaningful relationships and targeted marketing campaigns.

We’ve barely scratched the surface of what can be achieved with big data, “whether people like it or not”, Carn says. “There’s a lot of data that is available to be utilised by everyone in the food chain.”

“Technology is giving you an efficient and effective way to market to your customers. For instance, if you notice that a client is due to come off their three-year fixed rate in December, you could send them information on next fixed-rate products in November. Or you might decide to contact all of your clients that fit within a certain age bracket and certain income level, to ask whether they’re looking to invest?” Lees says.

“It allows you to become a proactive broker that provides solutions; the possibilities are absolutely endless.”

Bespoke automation While there are clearly huge benefits in being able to market to your clients in a bespoke way, no one has enough hours in the day to look up every single file and follow up accordingly.

“The bespoke nature of this data is where the true value is, and the best thing about it is that you can automate it,” Lees says. “If a client says, ‘We want to look at buying a new car in 12 months’, you can set up an automatic remind to contact them, and then tailor your marketing to what they’re interested in.”

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BUSINESS STRATEGY / PERSONAL BRANDING

TAKING YOUR PERSONAL BRAND FROM ‘NOW’ TO ‘WOW’ When you Google yourself, what’s the first thing that comes up? Is this image consistent with how you want to be portrayed? Nikki Heald, managing director of Corptraining, explains the importance of consistent, personal branding

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DISCOVERING YOUR PERSONAL BRAND Today, it’s more important than ever for you to make your brand stand out. The term personal branding is certainly not new and has been bandied around for many years. Simply put, it relates to the way you market ‘you’ to the outside world. It’s about your professional profile and reputation. It’s about the value that others perceive you possess.

Branding incorporates reputation and credibility. It influences whether people will buy from you, do business with you or even want to associate with you. If you want to stand out from competitors and position yourself to win, then developing, fine-tuning or tweaking your current brand is the way to go. Yes, the good news is that you can shape and control your brand.

Personal branding should be an integral part of your overall marketing strategy and if you don’t particularly like the term ‘personal brand’, then substitute it for another term such as personal visibility, personal perception or professional profile. Ultimately, it doesn’t matter what you call it; the fact is, there is a proven link between projecting a professional image and success.

Celebrities are good examples of personal brand managers. They work tirelessly and consistently to promote their visibility in their fields of expertise.

They find ways to be unique and memorable.

However, you don’t have to be a superstar or celebrity to build a strong and unique brand proposition.

Whether you wish to market yourself for a new career, increased sales or diverse opportunities, it’s essential that your brand is genuine and promotes authenticity. How well you know yourself is vital.

Do you have a strong sense of your professional message? Do you know your brand story? Do you communicate your brand consistently using multiple sources?

Identifying what distinguishes you from others is no easy task, especially in the world of marked competition, but it’s unquestionably worth the investment. For those of you who own a business perhaps, you’ve spent loads of money on marketing campaigns to promote your business, but consider the last time you invested in you?

WHERE DO I START? The first step is to reflect upon your current brand and then determine whether this is your ‘ultimate’ or ‘desired’ personal brand. Ask others around you for feedback – clients, colleagues and your

The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence.

Be mindful of what you publish or post

management team. What words do they associate with you? What do they believe are your strengths?

What areas do they perceive you may be able to develop? What makes you different from others?

A clear understanding of what your brand looks like now as opposed to what you would like it to look like in the future allows you to identify those gaps that will require your attention.

Generally, the identifiable gaps will fall under one of the ‘Five Keys to Personal Branding’ that I have developed and use in my workshops: 1. Presentation – dressing to reflect your position and meet client expectations. Good grooming, hygiene and presenting an image that conveys credibility.

2. Communication – how you position yourself verbally, non-verbally and in written communication. Ensuring your online presence communicates the right messages.

3. Behaviour – how you conduct yourself at business events, meetings and day-to-day interactions. Demonstrating courtesy, respect and correct protocol for the situation.

4. Skills – ensuring you keep your knowledge and competencies up to date. Be top of game in what’s happening in your profession through training, mentoring and coaching.

5. Service – providing an exceptional level of service to both internal and external parties. Do what you say you are going to do and find ways to delight your clients.

After careful analysis of these five core areas and discovering the gaps, the next step is to determine what action you plan to undertake to take your brand from ‘now’ to ‘wow’. Remember, this will take time, energy and effort; it won’t happen overnight.

SOCIAL MEDIA AND BRANDING The growth of LinkedIn, Twitter, blogs and Facebook has made it even easier for prospective clients to research you; and believe me, they will. In this digital day and age, people rely heavily on social media and what you post is of interest to them.

People are using Google personally and professionally on a daily basis.

The first thing to do online is to find out what is being said about you and what information comes up in searches. Google your name and see how you go. What do social media sites reveal about you?

Does the content support the brand or perception you wish to convey to others? Could they be

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updated or improved to enhance your online image? The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence. Be mindful of what you publish or post.

Whether you wish to market yourself for a new career, increased sales or diverse opportunities, it’s essential that your brand is genuine and promotes authenticity.

How well you know yourself is vital

Nikki Heald is the managing director of Corptraining, established to provide dynamic and modern training solutions appropriate to the insurance and financial service industries. Nikki co-authored the book Views On The Way To The Top, publishes numerous articles and her input is sought from various media channels. For more information, visit www. corptraining.com.au

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From a business perspective, LinkedIn’s powerful position in search engines will mean that your LinkedIn profile will probably come up first.

Make sure you have a professional photo that creates a great first impression (not a dodgy one taken after a few ales), provide all necessary contact information, customise your profile URL, load your summary, skills and work history, add recommendations and honours or awards you have achieved.

Social media is just one way to promote your visibility and whilst blogs, articles and LinkedIn assist with this, video is the future of personal branding. Take time to create some short videos (ideally, no more than 90 seconds) about who you are, what you do and the value you are able to offer.

Load them onto You Tube, your website, LinkedIn or other relevant sites for current or prospective clients to view.

BROADCASTING YOUR BRAND So after all the time, energy and effort you’ve invested into cultivating your ultimate personal brand, you need to do something with it, otherwise you’ve effectively wasted your time!

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FIRST IMPRESSIONS...

DID YOU KNOW? From a career and social perspective, first impressions count. They also impact on your personal brand. It only takes a quick glance, for a few seconds for us to size each other up. While we may like to perceive ourselves as being nonjudgmental, unfortunately we are. With each new encounter we evaluate and are being evaluated, so it’s essential to generate the right impression, particularly from a sales perspective. Generally, people buy from people they like. Additionally, how you are perceived internally is important if you want to progress in your career or be exposed to new or exciting job opportunities.

Reflect on your current brand and the impression you would like to convey to others. Consider your clothing and general appearance. Do you dress to reflect your role and meet your clients’ expectations? We know that not every situation in business requires full corporate garb; however, being well groomed and appropriately attired puts you one step ahead. Be mindful of your non-verbal cues and build on your first impression with a warm handshake and smile. We’ve all received the wet-fish or limp handshake at some point and never remember it favourably. Finally, ensure that your verbal communication backs up your professional image and demeanour. Use language that is suitable, professional and free from any technical jargon or slang. Three simple tips to get your impression right: 1. Immaculate presentation and grooming 2. Open and approachable body language 3. Appropriate and friendly speech

There are countless ways to communicate your value to both internal and external markets; don’t be shy – it’s your time to shine and get your name out there. Here are a few ways that you can build your presence: sponsorship, community involvement, networking, hosting an event, chairing a meeting, getting involved in committees, writing articles, newsletters or a book, producing a white paper or speaking at events.

Remember, discovering or enhancing your personal brand is not difficult and impacts significantly on sales and career advancement.

Your individual marketing campaign is essential to building credibility and confidence but must be backed up by consistent, day-to-day action. Have fun!

BUSINESS STRATEGY / LEADERSHIP

THE WAY

OF THE SEAL

Never is it more important to have true, solid leadership than in lifeand-death situations, so who better to coach leadership and human performance than an ex-Navy SEAL? Here MPA talks to Mark Divine, bestselling author and founder of SEALFIT, on how the ways of SEALS can be translated to the world of business 52 | SEPTEMBER 2014

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After a brief career as a CPA for the firm that is now PricewaterhouseCoopers, Mark Divine left the corporate world to follow his dream of becoming a Navy SEAL officer. At 26 he graduated as honourman of his SEAL BUD/s class 170. He retired as a Commander in 2011 and embarked on his entrepreneur career, founding a number of courses for businesspeople and athletes alike, tapping into his expertise in human performance, mental toughness, leadership and physical readiness. Here, he answers questions about how business leaders can tap into the training and knowledge used by SEALs to better lead their own teams.

Q1. How do SEAL commanders gain loyalty and respect from their troops, and how can this be translated to the business world?

SEALs must lead the most dangerous and complex special operations missions in the world. To succeed, they must gain the loyalty and respect of their team. This trust starts as SEAL leaders endure the same exact training as their troops. They must perform side by side with the troops, meeting the same physical and mental toughness standards, while exceeding the academic standards.

Assuming the SEAL officer makes it through the arduous 45 weeks of training (and little more than 20% of all SEAL trainees do) then they have proven to their troops that they can walk their talk. This gives them the initial bank account of professional respect. They build upon this respect and further develop the trust and loyalty of their team by continuing to lead from the front during their careers.

Business leaders can use this same approach by getting their hands dirty and by being willing to do everything they ask of their teams. They can show that they are willing to prove their mettle against the standards and share in the bonding experience.

In this manner, respect and loyalty are earned every day in the trenches rather than conveyed by the privilege and power of the position.

Participants at the 50-hour SEALFIT Kokoro camp

Q2. In your experience, can anyone be a leader?

No, not everyone can be a leader. The most important element of leadership is character. The character to lead is a combination of natural and acquired talent. Natural talents associated with leadership include the ability to accept unusual risk, and a burning desire to learn and grow.

Assuming one has the natural talent to lead, then competence is developed through a willingness to embark upon a daily effort to master the many skills required to lead well: communication, trustworthiness, consensus building, visioning, planning as well as the tactical skills and knowledge of one’s particular domain of leading. Not everyone is willing to work that hard to be an exceptional leader, which is why it is rare to see it in action.

Q3. I imagine being a SEAL requires a degree of conformity. How do you know when to conform and when to be unconventional? Does the ability to choose wisely come from training or intuition and natural ability?

Unconventional methods and conformity are not mutually exclusive. SEALs follow orders but those orders allow for flexibility of thought and action uncommon in other military units (including other special ops units). This way of thinking is trained

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Q5. You talk about Front Site Focus, where a SEAL must engage one target at a time. Yet in the business world there is an emphasis on multi-tasking. What’s your view on multitasking... is it productive or not?

Participants at the 50-hour SEALFIT Kokoro camp

starting in BUD/s [basic training] and continues at the team level. The freedom allowed for field level decisions requires that SEALs develop deep intuition to guide their decision-making. Deep intuition is acquired through repetition and mastery of the requisite skills so that they are done with an unconscious competence. In addition, the level of risk and intensity of the missions that SEALs take on deepens intuition naturally.

Q4. How can businesspeople conquer their fears in business situations, just like SEALs do?

Fear is nothing to fear. SEALs learn that fear can be managed and be used as a focusing energy. On the other hand the absence of fear can indicate burn out and lead to hasty decisions that negatively impact mission success (or worse, your life).

Business leaders can learn to control fear and use it to advantage. They must lean into things they fear and learn from it. The more one takes bold action with those things they fear most, the more they are able to transmute the fear energy into determined, focused action.

It is OK to multi-task when conducting simple tasks that one can train to do without much cognitive energy. A healthy example of this includes walking on a treadmill while talking on the phone.

However, the way multi-tasking is done in the business world leads to many mistakes and misunderstanding. For instance, holding an important phone call and checking email at the same time will lead to both being done poorly.

So I am not a fan of multi-tasking and believe that we can only do one thing at a time with excellence. Major performance and productivity gains are found when a business leader can learn to focus on one thing at a time, and do it with excellence. The key to this skill is to learn what things are the right things to focus on. This is the essence of my Front Sight Focus concepts that I teach in my book The Way of the SEAL.

Q6. How do SEALs deal with conflict in the ranks? And can this translate to the business world?

Though conflict can be uncomfortable it is not necessarily bad – it is an opportunity to grow and learn. Conflict is feedback that a system is in need of upgrade, or that a person or persons do not share the same view of reality. In both cases it provides an opportunity to come out of the situation stronger and wiser. In the SEALs, conflict is dealt with head on, and immediately. It is not done through secretive back-channel communications.

Rather, it is dealt with directly, immediately and all team members are expected to have the emotional resiliency to deal with the feedback even if about a personal failure. Perpetual growth accrues to those who constantly challenge their own beliefs, the

“Not everyone can be a leader. Assuming one has the natural talent to lead, then competence is developed through a willingness to master the many skills required to lead well. Not everyone is willing to work that hard to be an exceptional leader, which is why it is rare to see it in action” 54 | SEPTEMBER 2014

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Mark Divine (back, centre) on active duty with fellow SEALs

systems they operate within, through accepting their own limitations and stepping up to make positive changes.

Q7. If businesspeople reading this were to choose between honing their minds or their bodies for business success, which should they choose?

Both. When you hone your body you are developing mental control, focus and resilience. Training your mind without training your body is like tuning your car’s engine daily while letting the body rust and decay. Eventually the mind will be destroyed by the failing body. My students in Unbeatable Mind tell me that they are operating at a much higher level of effectiveness as they train their body, mind and spirit in an integrated fashion.

Q8. How do you think clearly when things go wrong?

By controlling your breathing and then learning to focus your mind under pressure. These are advanced skills learned by SEALs in training and which I teach in my online program ‘Unbeatable Mind’. I refer to the core skills for this level of thinking “the big four of mental toughness”.

Q9. When is the risk worth the reward?

A risk is worth the reward when you have trained for victory so that you see it happen in your mind clearly and convincingly before you execute the mission. To achieve this level of confident execution, you must train relentlessly at a level of

“Business leaders can gain respect by getting their hands dirty and by being willing to do everything they ask of their teams. In this manner, respect and loyalty are earned every day in the trenches rather than conveyed by the privilege and power of the position” risk near or equal to the risk involved in what you seek to achieve. The chances for success must be high or else you are gambling and the project should be avoided if possible. SEALs train relentlessly for mission success and are able to take on projects with a risk level inconceivable to most.

They succeed because their level of competence meets the level of challenge.

Mark Divine is the founder and CEO of SEALFIT and NavySEALs.com, and creator of Unbeatable Mind. After working with thousands of special-ops candidates and professionals developing mental toughness, Mark self-published his first book Unbeatable Mind in 2011 and launched the at-home study program www. unbeatablemind.com.

He is also the author of the WSJ bestseller The Way of the SEAL, published by Readers Digest, and the NYT bestseller 8 Weeks to SEALFIT, published by St. Martins Press

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How to

negotiate

to get your own way

Contrary to what many people think, negotiation is not about ‘winning at all costs’. Josh Masters explains that if you take the approach that negotiation is a process where all parties achieve the best outcome, you may well find that you start achieving more success in your dealings with others, and not tread on as many toes along the way...

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The art of negotiation is one that is truly underestimated in the corporate and small business world, with many professionals fixated on playing either good cop or bad cop when it comes to sealing a deal. This turns what is actually a science, into a gambling game where the high stakes don’t always pay.

The basic premise of negotiation is to work together with another party to achieve an outcome that works for you both and, rather than come from a traditional stance, where there’s a winner and a loser, it’s best to think flexibly.

However, in closing hundreds of deals throughout my career as a professional property buyer on behalf of my clients, I’ve learnt a number of techniques to master negotiation that will have you getting what you need, without damaging any relationships along the way.

CREATE A THIRD POSITION It’s important to remember that a negotiation is an exchange of energy. Place two people face to face and they will feel confronted. Pride, stubbornness and ego can get in the way because each person feels they’re being threatened personally.

Creating a third position, where both people turn to face the problem, diverts the intense energy of each person away from confrontation and focuses their attention on solving the issue.

Separating the problem from the person avoids any personality clashes and reduces the chance of offending the other person. Rather than reacting harshly to the other party not wanting to budge from their original offer because they’re ‘stubborn and unreasonable’, you can instead focus attention on the problem. Take personality out of the equation and focus on finding a solution rather than becoming defensive and equally unreasonable.

LOOK FOR THE ‘WHY?’ Most people will make a decision based on reason.

Finding out what that reason is can be an invaluable strategy as it gives you the opportunity to create a solution, often in return for what you want. For example, if a colleague has asked for a three-month extended vacation during the business’ busiest time, you can negotiate on looking at whether they can work remotely via email during some of this period.

AVOID GETTING PERSONAL No one likes to be attacked personally. Even when you’re negotiating through a third party, you have

to assume that this third party may communicate your every word to the person you are trying to settle a deal with. So keep it polite and remember that you’re trying to get them to cooperate.

Playing the blame game or reacting negatively will work against your goals. Even when something doesn’t go your way, stay calm and be respectful and remember you may lose in the short term, but as long as your eye is on the prize, your long-term goals should come to fruition.

Creating a third position, where both people turn to face the problem, diverts the intense energy of each person away from confrontation and focuses their attention on solving the issue You also need to avoid thinking the worst of the other party. For example, just because they request that you make an upfront payment before receiving the goods, does not mean that they’re going to steal your money. This can be difficult as you don’t necessarily know the background of the person you’re dealing with in a negotiation. However, assuming the worst of the other person will rarely be productive – and remember, they may actually be thinking the same about you!

BE FLEXIBLE The more flexible you can be towards the other party, the more likely they will be willing to give you what you want.

If you can decide what you want before you go into the negotiation, such as your best offer and what terms you can and can’t waver on, you can often give the other party what they want without having to sacrifice your position.

THINK OF THE OTHER PERSON At the end of the day, a negotiation, however brief, is a relationship. If you fail to consider the other person’s feelings or what they want, then it is unlikely you will have much success.

If they are resolute about particular terms of the negotiation, it can be beneficial to withhold your judgment and put yourself in their shoes. Is there a reason why they’re being so firm? Is there

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something important to them that you haven’t considered? After all, you may very well do the same thing if you were in their position.

Having some empathy for the other person will often ease the pressure in a negotiation – enough to get them across the line on the other things that are important to you.

USING ‘IF’ One of the secrets to a successful negotiation is to never give anything up without asking for something in return, even if it’s small. Using ‘if’ through your negotiation is a good way to handle this.

If I give you … then I would like …

I’m happy to give you … if …

If you can … then I’d be more than happy to...

If you can … then I’d be more than happy to …

USE SILENCE

With more than 15 years’ experience in the industry and hundreds of property purchases under his belt, Josh Masters is one of Australia’s most respected buyer’s agents. He is author of new book and investment guide, Why Property Why Now; learn more at www.joshmasters. com.au

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One of the most effective ways to negotiate is to stay quiet. This may not be appropriate in situations where there are five other parties all trying to win over your potential customer, but it can be invaluable when the other party is poised on a favourable outcome.

When you remain silent, you automatically get the ‘ball in your court’, so to speak, which leaves you with the power to make the next call. In the meantime, the other party waits in anticipation, hoping that they may achieve their outcome. This can create the impression for the other party that the negotiation process may soon end with a good result and they can walk away happy. When you do come back to the table with a counter offer, their anticipation of closing the deal immediately will make the seller more willing to sacrifice items that they may have fought hard to get earlier, all because they’ve seen the light at the end of the tunnel.

Silence can be useful for difficult negotiations as it can give the time needed for both parties to ‘cool off’. Sitting back can give you the perspective you need to get a better understanding of the situation and provide you with the long-term view that you need.

AVOID ANY CONFUSION Sometimes it can be difficult to draw the line between offering help and asking for business, especially with people with whom you have developed a relationship within a casual setting.

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If you feel that you’re approaching a level of information that you feel you should be charging for, it can be handy to say things like ‘call me if you would like to work together on something’, or ‘this is the sort of information I often provide to my client base’; that way you’re being clear on your expectations for the future, without severing the lines of communication altogether.

STRIKE A POSE While most of us have come across an overbearing tyrant trying to win power by force, an equally destructive force can be approaching a negotiation lacking confidence and presence.

Having some empathy for the other person will often ease the pressure in a negotiation – enough to get them across the line on the other things that are important to you Harvard’s Amy Cuddy has a wonderful presentation on conveying ‘presence’ in front of peers which shows that it can be as simple as the way you hold your posture before you enter the room. Two minutes with your head up, shoulders back and hands on hips can really provide the confidence you need to stand your ground and muster the courage to ask for what you want.

The biggest misunderstanding surrounding the art of negotiation is in its actual definition. It’s important to remember that negotiation is not used to get the best deal possible or get the most out of someone for the least amount of budget; it’s about coming to the most positive outcome for all parties involved. The origin of the word negotiation comes from the Latin term negotiates, meaning ‘to carry on business’, and with the right techniques, you will carry on closing deals, securing clients and building relationships.

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WHOLESALE FUNDING A SILENT SUCCESS

RAEL BRICKER A BUSINESSMAN AND A GENTLEMAN

FINDING YOUR FEE CHARGING WHAT YOU’RE WORTH

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THE DATA / KEY STATS

AUSTRALIA’S REVERSE MORTGAGE MARKET Deloitte recently categorised equity release offerings such as reverse mortgages as a “missed opportunity” for both retirees and financial services providers in Australia. According to the accounting firm, Australians need all the help they

Source: Deloitte, SEQUAL

can get when it comes to funding a sustainable retirement, and with more than $500 billion locked up in their homes, Australians aged over 65 could be better utilising this mode of funding to improve their retirement.

REVERSE MORTGAGES: THE KEY INDICATORS At 31 December 2013, the reverse mortgage market in Australia consisted of more than 41,000 reverse mortgage facilities, with total outstanding funding of $3.56 billion. The 4,300

new borrowers in 2013 offset the existing borrowers who repaid their facility during the period, and the average loan size advanced remained around $85,000.

DEC 06

DEC 07

DEC 08

DEC 09

DEC 10

DEC 11

DEC 12

DEC 13

OUTSTANDING MARKET SIZE

$1.51B

$2.02B

$2.48B

$2.71B

$3.01B

$3.32B

$3.58B

$3.56B

NUMBER OF LOANS

27,898

33,741

37,530

38,788

41,640

42,410

42,455

41,435

AVERAGE LOAN SIZE

$54,233

$60,000

$66,150

$69,896

$72,474

$78,249

$83,840

$85,881

SETTLEMENTS

$520M

$466M

$321M

$264M

$322M

$317M

$305M

$302M

FACILITY (SETTLEMENTS)

$714M

$627M

$426M

$367M

$449M

$426M

$385M

$404M

ADDITIONAL DRAWDOWNS

N/A

$125M

$116M

$126M

$131M

$73M

$65M

$47M

DISCHARGES

N/A

$203M

$253M

$309M

$354M

$338M

$350M

$504M

WHERE ARE REVERSE MORTGAGES BEING WRITTEN? WA • Around 77% of 13% SA the outstanding The majority of equity release customers are couples (64%) aged between 70-79

Almost half of released funds are used to provide a regular income (50%)

6%

loans are in capital cities

NT

TAS

3%

0.1% ACT

1%

• Larger regional areas in NSW

and Queensland lead non-metro lending

Other uses of funds include debt repayment (30%) and home improvements (14%) 60 | SEPTEMBER 2014

Brokers and planners account for 22% of settlements, while 77% are sold direct

• However, 88% of recent settlements are in capital cities

QLD

19% VIC

21%

NSW

37%

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BUYING OR RENTING? AN ONGOING QUESTION Australian Property Monitors’ Rental Price Series Quarterly Report presented bad news for Sydney and Melbourne tenants who are choosing to rent instead of buy, as rents continued to rise in the two capital cities.

However at the same time, the RBA has produced calculations that suggest it might in fact be cheaper to rent than buy as house price growth tapers.

MEDIAN WEEKLY ASKING RENTS ($) HOUSES JUN 14

MAR 14

JUN 13

QOQ

YOY

SYDNEY

510

500

500

2.0%

2.0%

MELBOURNE

380

380

360

0.0%

5.6%

BRISBANE

400

400

390

0.0%

2.6%

ADELAIDE

345

350

340

-1.4%

1.5%

PERTH

460

480

493

-4.2%

-6.6%

CANBERRA

450

455

480

-1.1%

-6.3%

DARWIN

650

700

690

-7.1%

-5.8%

HOBART

310

310

310

0.0%

0.0%

JUN 14

MAR 14

JUN 13

QOQ

YOY

SYDNEY

500

490

475

2.0%

5.3%

MELBOURNE

370

365

360

1.4%

2.8%

UNITS

BRISBANE

365

370

360

-1.4%

1.4%

ADELAIDE

285

285

280

0.0%

1.8%

PERTH

400

400

425

0.0%

-5.9%

CANBERRA

385

400

410

-3.8%

-6.1%

DARWIN

550

560

520

-1.8%

5.8%

HOBART

260

250

250

4.0%

4.0% Source: APM

A CASE FOR BUYING? BUYING

VS

• The average value of a mortgage broker loan from January to March this year was $355,000.

• This equated to loan repayments of $431.52 a week based on Aussie Select’s current rate of 4.84% (comparative rate at 4.85%) for a 30-year loan.

• This is $70 a week less than the median rental payment, which rose 2% over the June quarter to $500 a week, according to RP Data.

Source: Aussie Home Loans

RENTING

“Real house prices have increased at an average annual rate of slightly less than 2.5% per since 1955. If this rate of appreciation is expected to continue then our estimates suggest that houses are fairly valued. That said, many observers have suggested that future house price growth is likely to be somewhat less than this historic average. In that case, at current prices, rents, interest rates and so on, the average household is probably financially better off renting than buying” Source: Reserve Bank of Australia

SEPTEMBER 2014 | 61

THE DATA / KEY STATS

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TAX AND SPEND: THE DESTINY OF 2014 TAX REFUNDS The Australian Bureau of Statistics reported in May 2014 that household debt in Australia is at its highest level since 1988, with Australians owing $1.8 trillion to lenders – an equivalent of a

21%

Will use their tax refund to pay down their mortgage

18%

1 in 3

Will put it towards other debt such as their credit card

Will spend this year’s tax refund on holidays

62 | SEPTEMBER 2014

whopping $80,000 per person. However, Homeloans research has suggested we are far from irresponsible, with a lot of tax refunds this year heading to pay down debt.

26%

Will invest any refund or put it into a savings account

13%

Have house renovations planned with their refund

$2000

The average Australian tax return, according to the ATO

64%

The proportion of Australians expecting a tax refund for the 2013/2014 financial year

IN THE MINORITY Though debt was top of the agenda, there were some other less popular choices for using tax refunds.

These included HECS debts, bolstering maternity leave savings, childcare or school fees, weddings and honeymoons, council/land rates, and buying solar panels for the home.

Source: Homeloans Survey, May/June 2014

LIFESTYLE / DAY IN THE LIFE OF

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Day in the life of...

Chris Wisbey, head of mortgage management, Ballast Lending Central The events of this day occurred Monday, 14 July.

10.30am: First official meeting of the day occurs

5:00am: Oh god, it’s Monday and I’ve agreed to an

with Peter McNamara to discuss further integration of planning, superannuation and finance between our organisations.

hour session of Arakan martial arts in the park at 5.30. Quick coffee, fire up and hit the road to the adventure that lies ahead.

6:45am: Home for a quick refreshing shower followed by rigorous shirt ironing session combining second cup of coffee. Time to make a move to get into the office.

7.15am: Arrive at the office, grab a shot of coffee and sort through the weekend email traffic (again) and prioritise immediate action items with appropriate responses.

7.30am: OK, time to plan the day and work out which projects need some tender love and care for progression. Usually allow an hour of just fleshing out the key items. Today’s obsession is deploying our latest lending program and getting all the required support material into market-ready format. Bit of work to do here so follow my rule to ‘start slowly and then it gets done’. Well, that seems to work for me.

8.45am: Time for a quick ‘head shed’ with Guy Martin, who runs Lending Central’s back-office operations. Share updates on where submissions are at and poke about between us for any new useful nuggets of intel on which lenders are playing nice. Just joking, they all play nice all the time. Not so sure about the LMI’s though, no, again just kidding.

9:30am: Time for coffee, lost count of consumption at this point so just roll with it.

Meanwhile, it’s 7.30am in Perth and I await the expected phone call from Ballast CEO Frank Paratore to just ‘touch base’ while he makes his journey into the office. Radio for a change. We’ll see.

11.30am: Catch up on the phone with Troy McLachlan, from Future Financial and fellow member of the MFAA mortgage manager committee, to discuss items to take to the next meeting in Sydney.

12.30pm: Grab a bite of lunch at Café 50 in Surfers with Guy and enjoy the lovely scenery that only Surfers Paradise can provide. Had the steak sandwich with fries; delicious.

1.00pm: Back from lunch and the proverbial has hit the fan. Time to chase up inter-related service colleagues to get timelines on when valuations will be back on some urgent submissions to ensure finance dates are met.

3.00pm: Meet with new broker at Helensvale shopping centre and, you guessed it, a cup of coffee is on the menu. The day is panning out quite well as our latest recruit to the Ballast cause is confirmed with a new accreditation.

Chris Wisbey

4.30pm: Winding down now back at the office in 50 Cavill. Must finish strongly so it’s onto the tools to respond to emails and return calls from across the country.

6.00pm: Time to get out of Dodge and head home to see the people who matter most in all of this.

Very lucky man to have such an awesome family to come home to.

7.15pm: Final entry; the furry, four-legged, freeloading, fleabag is sniffing about doing what she does so well, guilting me into a nice evening walk. As always, I cannot refuse those beautiful, big, brown eyes. Out the door again.

SEPTEMBER 2014 | 63

.

LIFESTYLE / FAVOURITES

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Favourite things

Jon Denovan, partner, Gadens Lawyers

Place to be: I hate driving, so I love being on trams and trains... the older and quainter the better. For the ride of your life, try the Gulflander between Normanton and Croydon. At Croydon the local hotel’s rooms are used freight containers! http://www.gulflander.com.au/Pages/Default.aspx Book: John Le Carre books are hard to go past. They never fail to surprise and delight, transporting the reader away to another time and place.

Jon Denovan

Best thing about working in the mortgage and finance industry: The ability to work with the MFAA to bring about change and ensure regulation doesn’t go too far. We’ve had some great successes and look forward to ensuring an appropriate balance between consumer protection and business continues into the future.

Drink: Margarita on ice with salt. The location and the moment makes the drink come alive.

Music: Roy Orbison of course. Years ago I saw the Rolling Stones play as a support act for Roy for an audience of about 200 people – incredible! I have written into my will to have Just Running Scared played at my funeral.

Vacation spot: Cruising on one of the two incredible Seadream ships. Extraordinary destinations with incredible service. Only about 100 guests and so nothing like big ship cruising. A different port every day!! http://www.seadream.com/

Movie: Any Lars Von Trier movie – probably Zentropa being the best. This Danish director creates such a wonderful magic world populated by incredible characters – a bit Felini-esque

64 | SEPTEMBER 2014

Food: Japanese, the quirkier the better. For example, natto. The thing that turns most people off about natto is the smell. It’s fermented soy beans–and it smells like it.

Celebrity: Phil Naylor? I don’t do celebrities.

Sport: Rugby union – but I reckon they need to change the rules a bit to ensure that it is running rugby and can fairly claim to be the game they play in heaven.

Celebr ate your success at the 13th annual Austr alian Mortgage Awards

Friday 17th October 2014 Sydney Town Hall www.austr alianmortgageawards.com.au

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