Mortgage Professional Australia issue 17.03

MPAMAGAZINE.COM.AU ISSUE 17.3

YOU’VE GOT THE POWER The technological revolution enabling today’s brokers to go head to head with the banks NON-BANKS Industry leaders on the big issues

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CHINESE BUYERS Are currency controls a nail in the coffin?

PAUL O’REGAN The rebirth of LJ Hooker Home Loans

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MARCH 2017

CONNECT WITH US

CONTENTS

Got a story or suggestion, or just want to find out some more information? twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU

UPFRONT 04 Statistics

VEDA’s figures on the real threat of fraud to the industry

34

20

FEATURES

NON-BANKS ROUNDUP

Industry leaders give their views on products, funding challenges, and other threats and opportunities

PAUL O’REGAN

16 LJ Hooker’s Paul O’Regan on the franchise’s rebirth and recruitment drive

08 News analysis

How Chinese property buyers will be hit by new currency restrictions

12 Update

Looking at industry associations, aggregators and ongoing remuneration reviews Greg Ashe of QED Risk Services on staying compliant

TECHNOLOGY AND BROKING

THE BIG INTERVIEW

Three brokers on their big business plans for 2017

14 Opinion

SPECIAL REPORT

How technology can empower rather than disrupt your business, with input from Australia’s biggest technology developers and aggregators

06 Head to head

MORTGAGE INSIDERS

56 FEATURES

PERFORMANCE REVIEWS

Why it’s time to replace them with targeted real-time feedback

50 YBR Sydney CBD

How Rogan Yates built the jewel in Yellow Brick Road’s crown

62 Ray Hair

Homeloans boss’s two decades traversing the third party channel

64 Nathaniel Nhan Truong

MPA Young Gun on building a brokerage to fight modern slavery

BUSINESS STRATEGY 52 Millennials

How to make the most out of your youngest recruits

60 FEATURES

EMPLOYEE DISENGAGEMENT

Five signs your employees don’t care any more, and how to respond

54 Time management

Why you should slow down and spend more time ‘on’ the business

58 Rebranding a brokerage

One Top 10 Commercial Broker shares his experiences and tips

MPAMAGAZINE.COM.AU

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UPFRONT

EDITOR’S LETTER

YOU CAN’T SOLVE AFFORDABILITY WITH A TOP 10

W

e’ve found at MPA that nothing concentrates the mind, or gets clicks, quite like a list. Both Sydney and Melbourne are back in the international spotlight, making the world’s ‘10 Least Affordable Housing Markets’, at second and sixth place respectively. Top of the list was Hong Kong, and Auckland, Honolulu and the UK beach resort of Bournemouth all made the list, which was published by research agency Demographia.

Lists appear objective, scientific even, but Demographia is neither: it is backed by the American Wendell Cox Consultancy, which supports unfettered urban expansion. This year’s report was quick to assign blame: “The most severe house price increases have been limited to housing markets where urban containment policy (or its equivalent) have been implemented.” Demographia

In trying to build a global list on a single metric, Demographia overlooks specific national trends takes a similar view to the Australian government: that more supply is the primary way to improve housing affordability.

Australian cities bear the scars of this approach: Sydney sprawls so far west that Chief Commissioner Lucy Turnbull and the Greater Sydney Commission propose dividing it into three; and a new Melbourne suburb, Rockbank, announced in 2015, is 29km from the city. Yet the median price-to-income ratio, which Demographia base their list upon, has continued to worsen.

In trying to build a global list on a single metric, Demographia overlooks specific national trends. Prices may be soaring above wages in Australia, but low interest rates mean repayments as a proportion of income have only marginally increased, to 29.5% according to the latest REIA Housing Affordability Report.

People can borrow, enabling the price of property to remain high.

Nor does Demographia account for stamp duty, or why employers are concentrated in the cities, as LJ Hooker CEO Grant Harrod has pointed out.

Demographia doesn’t even mention negative gearing, or the way that property itself has become a road to riches in Australia, with investor lending surging 21.4% in a year.

You don’t need a list to tell you Australia has a problem with housing affordability. Rather than comparing Sydney with Hong Kong, or Melbourne with San Jose, let’s look at Australian problems that we can and should solve.

www.mpamagazine.com.au MARCH 2O17 EDITORIAL Editor Sam Richardson Journalist Maya Breen Contributors Angela Lockwood Karen Gately Hiam Sakakini Anneli Blundell Jayden Vecchio Production Editor Roslyn Meredith

ART & PRODUCTION Design Manager Daniel Williams Designer Loiza Caguiat Traffic Coordinator Freya Demegilio

SALES & MARKETING Publisher Rajan Khatak Account Manager Simon Kerslake Marketing and Communications Manager Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

tel: +61 2 8437 4720 sam.richardson@keymedia.com.au

SUBSCRIPTION ENQUIRIES

tel: +61 2 8011 4992 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES

rajan.khatak@keymedia.com.au simon.kerslake@keymedia.com.au

Key Media Regional head office Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL justin.darosa@kmimedia.ca T +1 416 644 8740

Sam Richardson, editor, MPA Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

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UPFRONT

STATISTICS

THE TRUTH ABOUT FRAUD VEDA’s 2016 Cybercrime and Fraud Report adds hard data to the debate around mortgage fraud, and highlights the groups and areas most at risk REMEMBER THE three topics you should never discuss at the dinner table? It’s now four: to politics, money and religion you can add fraud. Fraud is the topic no one in the industry wants to talk about, yet as a new report by credit agency VEDA demonstrates, the problem of fraud is real.

VEDA’s shared fraud database tracks incidents of fraud across all the major lenders, and so provides the closest thing we have to a comprehensive measure of fraud. Being based on lender data makes it different to other surveys, namely UBS’s controversial October 2016 report, which alleged the broker channel had a fraud problem, based on a survey of

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IS THE BROKER CHANNEL MORE VULNERABLE TO FRAUDSTERS? The share of fraud going through brokers decreased in FY2015/16, whereas fraud through branches rose. However, as the total amount of fraud increased by 33%, the actual number of cases of fraud through brokers remained similar.

Bank branch Broker

borrowers. When UBS’s findings emerged, industry leaders loudly denounced the fear of fraud as groundless.

Overall, fraud has grown by a third in FY2015/16, but the share of fraud going through the broker channel has fallen, VEDA found. In contrast, fraud through bank branches has risen.

While this suggests the broker channel doesn’t have a particular problem with fraud, the actual number of fraud incidents connected to brokers has remained steady. Evidently, fraud is a challenge the broker channel is yet to solve, and this year will demonstrate whether VEDA’s findings will spark genuine concern and subsequent change in the third party channel.

Dealer Lender Direct marketing Online Phone call Other

MORTGAGES AND FRAUD

TYPES OF FRAUD

Mortgages are the third most common product to be involved in fraud, accounting for 12.91% of all fraud. The most common products involved in fraud are consumer credit cards, at 45.68% of all fraud, followed by personal loans at 15.87%.

Encouragingly, between 2015 and 2016 mortgages’ share of all fraud fell from 17% to 12.91%. However, as VEDA explains, an increase in a product’s share of fraud may not necessarily be a bad thing. Telecommunication fraud rose between 2015 and 2016, due to improved fraud detection techniques used by telecommunication companies. Furthermore, VEDA says, “these techniques have an ongoing compounding effect; data from confirmed fraud cases plays a key role in detecting subsequent attempts”.

Although identity takeover grew by 80% from 2015 to 2016, falsifying personal details remains the most common type of fraud, according to VEDA. Payslips were most affected, “by a large margin”.

80 70 60 50

70.96%

2015

2016

58%

40 30 20

22%

10 0

19.16% 9% 3.72%

Falsifying personal details

Identity takeover

Undisclosed debts

8%

3.73%

Fabricated identity

3%

2%

Other

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3%

2%

3.98%

11% 3.16% 21%

Channel source of fraud

50%

12.78%

2015

56.94% 5%

15.08% Channel source of fraud

2016

7% 1%

3.74% 4.02% 0.29%

FRAUD HOTSPOTS

FOCUS ON IDENTITY THEFT

In 2016, 72% of fraud incidents occurred in Sydney and Melbourne, according to VEDA, with the overall distribution of fraud in Australia mirroring the distribution of its population. However, fraud grew fastest in non-metropolitan NSW.

VEDA’s report focused on the continuing rise of identity theft.

Eleven percent of Australians were the victim of identity fraud in 2015/16 alone, an increase from 6% in 2015.

Overall, VEDA estimates that 27% of Australians have been a victim of identity fraud at some stage of their lives, but also adds that this figure may itself be an underestimate.

In many cases people may be unaware that their personal data has been stolen, the report explains, even months and years after the fact. Those aged 18–29 are particularly vulnerable, VEDA says, as this group is less concerned about online identity fraud and less likely to use antivirus software and change passwords.

frauds per 10,000 people

12.32

9.29 Sydney frauds per 10,000 people

7.99 Melbourne frauds per 10,000 people

Sydney Parramatta

Sydney Southwest

Melbourne Northwest

7.86

7.59

frauds per 10,000 people

frauds per 10,000 people

Sydney Inner Southwest

Sydney Inner West

Note: Figures reflect the number of frauds taking place in H2 FY2016

Source: VEDA, 2016 Cybercrime and Fraud Report, November 2016

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UPFRONT

HEAD TO HEAD

What do you want to achieve with your business in 2017?

Sharon Bal

Michael Deegan Director DO Financial

Principal Mortgage Choice Glenwood & Kellyville

Our plan this year is to get more support staff on board, providing quicker turnaround times to initiate a smoother process and to build capacity to grow.

Our aim is to concentrate more on the full process, break it down and delete inefficiencies; this will drive our business to growth in future.

We have already started the recruitment process and have hired highly industry experienced and awarded personal assistant Dee Matrenza.

Another avenue we will concentrate on is our existing database, which has a lot of potential, and our aim this year is to have minimum clawbacks and service existing clients in a way that they feel connected with us after settlement.

We will be having a dedicated person allocated to liaise with an existing database and referral partners.

We will also be mentoring new-toindustry brokers and will help them grow as well.

We aim to have the highest NPS score (currently 94) in Australia.

I commenced business two years ago

Eighteen months ago I opened up a second franchise [in Kellyville], and so the last 12 months has been getting that second franchise off the ground. We managed to do that with flying colours, and it’s running at a million miles an hour, which is really good. And now we’re at that point where I’m trying to manage two franchises, we’re going to spend the next 12 months ramping it up, putting more back-end organisation on to try and simplify it.

That means process, process, process and new software. Currently there are two brokers so we’re looking to take it to four brokers by the end of the year.

We’re moving to a system where instead of three staff members touching one file, we’ll have one person responsible for the whole client process from submission right through to settlement.

By doing that we’d be looking at doubling our numbers from what we’re doing at the moment. It might be ambitious, but it’s absolutely achievable, because I know what we’ve already done.

Broker Loan Market Cannington

6

Bianca Long

straight out of the bank, with ad hoc planning and being very reactive to the demands of a growing business and client requirements. This year, I’m looking forward to achieving a much more proactive approach to business growth by having a stronger focus on strategic planning and implementing the 90-day-plan model.

With some significant branding and technology

changes

completed

late

last year, 2017 will see the launch of our marketing and nurture campaigns, which will further enhance the experience for our clients and referral partners.

We are striving to achieve an increased online presence this year and seek to become known for delivering informative and

relevant

market

insights, writing

articles in e-magazines and distributing videos and podcasts.

From a finance perspective, our goal this calendar year is to grow settlement numbers by 25% on last year whilst

maintaining our customer focus and service delivery.

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UPFRONT

NEWS ANALYSIS

SLAMMING THE DOOR Chinese buyers have been hit by new restrictions on converting money, making it much harder to buy property in Australia.

MPA editor Sam Richardson asks if this spells the end of the foreign investor boom

FROM SNAPPING up mansions in Sydney’s Point Piper to buying countless off-the-plan apartments, Chinese buyers in Australia have earnt themselves a reputation for being ‘cashed up’. These property purchases frequently run into millions of dollars, yet Chinese citizens are officially allowed to take just US$50,000 (approx. A$66,500 at time of writing) out of the country per year.

Something doesn’t add up, and it seems the Chinese government has noticed. On 31 December the Chinese State Administration of Foreign Exchange ordered banks to tighten the rules on converting money, particularly for unapproved reasons, which include buying property. This was no advisory ASIC bulletin.

CT Johnson, general manager of AustraliaChina consultant Basis Point, argues that it was “a signal, coming from the Chinese government and going to the state-owned banks; that this is a serious problem and they’re looking at in a serious way”.

Chinese conversion rules matter to the Australian property market in a big way.

There’s precious little you can buy in Sydney or Melbourne for $66,500, and it’s more than a question of money: the Chinese government and consequently the Chinese banks simply don’t want their citizens investing in foreign property, hence, says Johnson, “if you say you’re going to make an overseas property purchase the bank just won’t approve it”.

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With the world’s biggest country trying to turn off foreign property investment, MPA asked currency experts, leading brokers and real estate agents whether it could succeed.

The $3trn barrier The $66,500 limit for Chinese citizens has been in place since 2007 without noticeable effect; previously it was just US$20,000 (approx. $26,500), as Gavin Norris, head of Australia for Juwai.com, the biggest international property website for Chinese

“This policy will definitely affect [many] Chinese agents, like real estate project marketing companies, broker companies and also foreign currency companies” Eric Cui, Alliance Mortgage Solutions buyers, has pointed out. However, after years of Chinese citizens moving money into perceived safe havens abroad, including Australian property, the Chinese government is approaching what Basis Point’s Johnson calls a “psychological barrier”: foreign currency reserves have dropped to 2012 levels (a casual US$3trn), and the Renminbi has fallen relative to the US dollar. Stopping money leaving China is one way to slow down these

developments. As the State Administration of Foreign Exchange told reporters, the “tough stance on foreign exchange irregularities [is] in a bid to safeguard China’s economic and financial security”.

Although the new requirements don’t officially come into force until July, already two of the country’s largest banks have started demanding that customers fill in a form declaring what their foreign currency is

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FOREIGN BUYERS IN AUSTRALIA

10.2% Proportion of new property purchases made by foreign buyers in Q3 2016 – the lowest level since 20121

6.4% Proportion of established property purchases made by foreign buyers in Q3 2016 – the lowest level since 20121

25% $1 in every $4 of foreign real estate investment since 2012 came from mainland China2

$122 The amount that prices increase in Melbourne every quarter because of foreign demand (as part of a $12,800 rise overall). The figure is $80 in Sydney3 Sources: 1NAB Residential Property Survey, Q3 2016, 2Foreign Investment Review Board, Australian Treasury, Foreign Investment and Residential Property Price Growth working paper, 2016

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for, and rejecting conversions for investing in property. Banks have also restricted the use of their credit cards for purchases and taking money from ATMs abroad. For Chinese citizens looking to buy property in Australia “it’s already too late”, Johnson told MPA. He said “the important part is not the rules exactly; it’s the tone, and the tone that has been set”.

How brokers will be affected Two brokerages have revealed to MPA what these changes mean for them: Australian Mortgage Award-winning Alliance Mortgage Solutions and ASX-listed N1 Holdings.

Eric Cui of Alliance said “this policy will definitely affect [many] Chinese agents, like real estate project marketing companies, broker companies and also foreign currency companies”. Chinese citizens who reside in

Australia but hold savings in China could find it hard to access those savings, Cui added, including some of his clients.

For Ren Wong, CEO of N1 Holdings, it’s now “a lot harder if not impossible for middle-class Chinese to bring money out of China, and I believe [this] does affect Australia and other countries’ real estate markets at various scales”. There are exceptions, such as buyers with money already held outside China, “but not many of them are willing to exhaust the overseas cash reserve for property investment”, Wong said.

Neither brokerage sees the changes as a dire threat to their business. Rooted in the Australian–Chinese community, Alliance only recently started targeting mainland Chinese and still has few such clients, Cui explained. N1 Holdings has far greater links with China, including offices in Shanghai,

Guangzhou and beyond. Now they are looking beyond China, Wong said. “Foreign buyers from Singapore, Malaysia and Indonesia in one way do fill the gap because these buyers can still borrow from their local banks to buy properties in Australia.”

Since its initial public offering in 2016, N1 Holdings has been diversifying, and has acquired a boutique real estate agency in Sydney’s McMahons Point.

With a well-publicised focus on China, Juwai.com could be a high-profile real estate casualty of foreign conversion restrictions, but Norris is upbeat about the changes. “There may be fewer headline-grabbing, billiondollar-plus asset purchases,” he said. “But the long-term attractions of the Australian market remain: liquidity, quality of life, proximity to China and a solid legal framework.”

Chinese investment in Australia is at an

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FEATURE / BROKER EDUCATION UPFRONT

NEWS ANALYSIS HOW MONEY LEAVES CHINA With a little help from your friends Previously many Chinese citizens looking to convert more than their annual $66,500 limit would use the conversion allowances of family members and friends, but with banks paying more attention to currency conversions this could become more difficult.

Hong Kong insurance You can buy life insurance policies in Hong Kong with Renminbi and then quickly cash out those policies in Hong Kong dollars, which are easier to exchange abroad. One Hong Kong insurer swiped the credit card of a single client 800 times for the purchase of $4.7m worth of insurance policies, according to Bloomberg. However, the Union Pay Bank has recently prevented its credit cards from being used for insurance.

Bitcoin The virtual currency provides a way for money to leave the country, with locals buying bitcoins on Chinese exchanges and then selling them on offshore exchanges, although regulators are beginning to take an interest.

Physically taking cash out yourself You could just load a suitcase with cash and head to the airport.

However, individuals are limited to CNY20,000, or the equivalent of US$5,000 in other currencies.

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all-time high, Norris told MPA, and he expects “that it will continue setting records in the years to come”.

Getting around the rules Preventing money leaving China may prove to be a Sisyphean undertaking. “You cannot sequester the world’s second-largest economy; it’s a physical impossibility,” argued Basis Point boss Johnson. He said citizens “absolutely will [find ways around those tightened rules]. They already are finding

savings could make them look for finance in Australia, Norris said. “We see increasing numbers of upper-middle-class buyers willing to use leverage to get on the overseas property ladder.” Cultural shifts within China have made it more acceptable to borrow money, while “there are still plenty of cashed-up buyers” on the lookout for Australian property.

For foreign clients, getting a mortgage has become considerably more challenging since 2016. In April, Westpac and the St. George

“It’s time for those who relied heavily on the mainland Chinese market to diversify, and don’t bank on change of policy in the near future” Ren Wong, N1 Finance ways around those tightened rules and they will continue to find them”. Johnson expects a slowdown in foreign investment in the first half of the year, partially mollified by the Chinese New Year, followed by a recovery towards the end of 2017 as people find ways around the rules. However, the currency conversion rules could tighten further, Johnson said, which could delay any recovery.

Alternatively, it’s possible the government could relax rules, publicly or implicitly.

“You can understand what they might do in the future by looking at what they have done in the past,” Juwai.com’s Norris said.

“In fact, we have seen the Chinese gradually loosen up restrictions over time.” Further­ more, he argued, “any time the government provides more clarity on the rules it provides more certainty to the market and makes things easier for consumers”.

At N1 Holdings, Wong is less hopeful: “I think it’s time for those who relied heavily on the mainland Chinese market to diversify, and don’t bank on change of policy in the near future.”

Brokers could, in theory, be one of the few groups to benefit from tightened currency conversion rules. The newfound inability of Chinese buyers to access huge

Group simply stopping lending to offshore non-residents and temporary visa holders, following the discovery of widespread application fraud, some of it involving brokers.

NAB then banned lending to foreigners who could not prove a local income, and CBA, ANZ and a number of non-majors also announced restrictions on temporary residents using foreign income to prove serviceability, including reducing LVRs to the 70% mark.

Foreign investors are also facing stamp duty surcharges in Victoria, as well as in NSW from June, and there are hikes proposed in other states.

For Chinese clients, buying property and borrowing in order to do so will therefore become increasingly difficult, and at the very least, more expensive. Yet the attractions of Australia for Chinese clients remain, and have indeed been intensified by recent restrictions. Bloomberg chief Asia economist Tom Orlik has described the situation as a “deadly loop”. “The more controls the government puts on, the more desperate it seems,” he said. As the Renminbi continues to fall, and property values in Sydney, Melbourne and Brisbane continue to rise, Chinese buyers will continue buying, and continue using brokers.

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UPFRONT

AGGREGATION NEWS BRIEFS Borrowers to suffer, delinquencies to rise in 2017 Housing affordability is worsening, and delinquencies are rising and look set to rise further in 2017, newly released figures reveal. Affordability worsened by 7.4% across Australia in the December 2016 quarter, the Housing Industry Association reported, with Perth and Hobart the only cities to avoid a decline. HIA senior economist Shane Garrett put the increase down to rising house prices, adding that “the sluggish pace of earnings growth in the economy has been an impediment to better affordability”.

Mortgage delinquencies are also on the rise, up 25% in the year to November 2016, according to ratings agency Standard & Poor’s. Of mortgages underlying Australian prime residentialbacked mortgage securities, 1.15% were more than 30 days in arrears, while delinquency rates for non-conforming loans decreased over the same period. S&P said delinquencies were at “historically low” levels in 2014 and 2015, but voiced concern at the rise in 2016 having taken place despite interest rates being at historically low levels and unemployment remaining stable.

S&P said delinquencies were “likely to increase in 2017”, partly driven by the sharp decline in full-time employment since late 2015. For regulators, “concerns over debt serviceability have surpassed those of a decline in property prices”, the ratings agency said.

Volume-based commission under fire from banking review Broker commission, and specifically volume-based remuneration, has been flagged as risky by the Sedgwick review into banking. The review’s interim Issues Paper says “the success of campaigns based on increased commission deals suggest that the risk of commission-related mis-selling is not insignificant in this market”.

Stephen Sedgwick was commissioned

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by the Australian Bankers’ Association (ABA) to review remuneration in banking and third parties in July 2016. The Issues Paper backs away from recommending a full banning of commission, saying the evidence was insufficient to prove it led to poor customer outcomes. The paper does, however, note that the payment of volume-based bonus commissions to brokers “increases the risk of poor customer outcomes”. Fees for introducers and referrers were also criticised for being “disproportionately high in comparison to brokers and aggregators”.

With regard to broker commissions, Sedgwick says he will wait until after ASIC completes its remuneration review before publishing his final report, a stance welcomed by ABA executive director Diane Tate. “Importantly, the issues paper has not identified systemic issues warranting the outright banning of product based payments,” Tate said.

Sedgwick did, however, question whether volume-based payments could be ended and whether the contracts between banks and brokers were sufficient to avoid poor customer outcomes.

6.9% of Australians have little or no equity in their homes A total of 302,000 Australian mortgage holders have little or no real equity in their homes, according to research by Roy Morgan, with the amounts they owe being equal to or more than the value of their homes.

The figure was slightly lower than it was in 2015 (345,000) but had risen significantly in WA to 10.4% of mortgage holders having little or no equity in their homes, and in SA to 8.0%. Sydney was the city with the best results, with just 3.9% having little or no equity in their homes.

Roy Morgan communications director Norman Morris warned that low equity would continue to be a concern: “With some early signs that home loan rates are rising, the problem is likely to worsen as repayments increase and home values may decline, which has the potential to lower equity levels even further.”

THE FIRST 100 DAYS New MFAA CEO Mike Felton is making regulation his primary focus, but has said little about the association’s other roles 2016 was a “challenging year” for the MFAA, CEO Mike Felton said in his opening address to members in December. Felton highlighted “significant internal change impacting our ability to perform and to communicate promptly with our members”, referring, presumably, to the departure of the previous CEO, Siobhan Hayden, last June.

Felton is not, it must be said, joining an organisation in crisis. MFAA membership is growing – by 9.75% in 2015/16 – suggesting that vocal criticism from MFAA members and the FBAA isn’t yet driving many brokers to leave the organisation.

Membership growth may not be keeping up with industry growth, however. The number of mortgage brokers increased by 6% in the six months to March 2016, the MFAA’s own Industry Intelligence Service has found.

In a year that saw ASIC’s remuneration review, debates on industry funding and broker fraud, having no permanent CEO did indeed hamper the MFAA’s ability to comment on growing regulatory issues in a timely manner. Brokers were left with the impression that the organisation was slow-moving, and perhaps putting more effort into its industry reports and Global Money Week initiative.

It’s encouraging therefore that Felton is joining MFAA chairman Cynthia Grisbrook in a series of six roundtables and PD days, telling brokers exactly what the MFAA is doing.

Felton has said the remuneration review is of “primary importance”, and his introductory message, in addition to the MFAA’s 2016 Annual Report, makes it clear that dealing with regulators is now the association’s overwhelming focus. This will

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no doubt satisfy brokers with a limited view of what an industry association should do; ie be a pro-industry lobbyist. As an industry association, however, the MFAA can do much more than that.

The MFAA National Convention in 2014 attracted more than 1,000 brokers over three days, making it a natural focus for the industry’s year. While the move to state-based ‘Broker 2020’ one-day conferences in 2016

Dealing with regulators is now the MFAA’s overwhelming focus made it more convenient for members, it hardly held the same attraction, as the poor turnout made clear: just 570 brokers across all events. Plans released last year suggested 2017’s ‘Business Builders’ events will be shorter still.

Finally, Felton didn’t even mention the issue of diversity in his introductory message.

The MFAA is just as male dominated as it was when Hayden became CEO (74% of members are men). Although the MFAA has excellent advisory panels for female brokers and young professionals, their advice will be wasted if the MFAA’s leadership focuses exclusively on regulation.

Q&A

CHANGES IN AGGREGATION Frank Paratore National operations manager SPECIALIST FINANCE GROUP

Fast fact Poor IT and CRM support is the biggest reason brokers leave their aggregators, MPA’s 2016 Brokers on Aggregators survey found

Have the demands brokers put upon their aggregators changed over the last two years?

Our industry is one which is constantly changing. Below is a snapshot of the landscape within which we operate: • Reviews are being carried out by regulators and lenders.

• Tech-driven personal and business finance lenders are offering brokers new opportunities.

• New players have entered the industry.

• Challenges exist around encouraging new talent into the mortgage broking industry.

• The current market is generating 55% plus of new lending business.

• Economic and market conditions also present a unique set of challenges.

Along with the above, our own internal business reviews demand that Specialist Finance Group as an aggregator changes where necessary, in order to remain at the forefront of our professional industry … we are constantly evolving!

The constant development and enhancements of the compliance service continue to provide brokers with cutting-edge compliance, training and auditing to provide and ensure 100% adherence with regulations and beyond in an efficient and timely manner.

SFG consistently undertakes strategic and periodic reviews of marketplace lenders to ensure an extensive panel is available to cover all aspects of lending, from residential to commercial, equipment and specialised. With an innovative and extensive lender panel the aim is to assist members in transitioning from transaction-based to relationship-based; in mitigating risk, and increasing their income through diversification of services.

How involved do you need to be in your members’ businesses?

In addition to our regular PD training and compliance days held and weekly updates provided, we are actively involved with our members’ businesses in an agreed and structured manner.

Our Business Owner Meetings allow for innovative ideas to be workshopped and shared with like-minded individuals. These regular meetings also allow for ongoing guidance in business structuring and continued ongoing support around business and marketing plans.

Here’s one example of SFG’s work: market research indicates there is a significant underutilisation of databases for cross-selling purposes within financial services. SFG has over the years developed a dedicated ‘Broker Assist’ program to support groups in establishing their own in-house badged brokerage. Carbon Group is one such group.

Another example is that SFG provides a private lending and funding line to assist and support our business partners. This assists business partners in managing cash flow, associated costs, and allows for structured growth.

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13/02/2017 1:39:12 PM

UPFRONT

OPINION

HOW BROKERS CAN STAY COMPLIANT IN 2017 Greg Ashe, founder of QED Risk Services, explains how ASIC and the banks are taking a much closer look at brokers’ compliance MANY CONVERSATIONS that the QED team has with brokers hinge on ‘what’s coming’, particularly from ASIC but, increasingly so, from lenders. The law hasn’t changed for some time now, so there are no new obligations as such. It’s more a case of ASIC becoming more aware of what’s going on in the industry and brokers becoming more aware of what all these obligations actually mean to them.

ASIC has introduced a couple of new topics over recent years. These opinions mostly surface through ASIC’s reports and, most often, these reports are particularly focused on one channel of the industry. Many brokers therefore dismiss them offhand as only applying to that specific channel. This is a big mistake as the opinions expressed on one topic will surely be more universal.

Topics to which ASIC has drawn attention recently include borrowers’ requirements and objectives, interest-only loans and debt consolidation. However, towards the end of 2016, QED heard ASIC talking about what we think is their next major focus – a licensee’s ‘general conduct obligations’. What these are is the topic of a whole other article, but for now it is sufficient to say that they relate to “everything other than responsible lending”. It can be summed up even better by the question: “What is the licensee’s compliance program?”

What makes this very interesting is that all of the large aggregators and banks are starting to ask the same question.

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Aggregators have been all over their credit reps for ages, but banks are now starting to ask aggregators, “What are you doing about your licensees? How do you know about their state of compliance?”

This is not new. Having a compliance program has been part of s47 of the Credit Act since day one. The expectation is that you will at least broadly follow this thing called ISO19600.

ISO19600 is an international standard that evolved from the Australian AS3806 – there you go, we Aussies invented the standard and gave it to the rest of the world.

If you are not doing everything in the above six steps in your licensee business, no matter how big or small, you are breaking the law. So, what can you do about this? You can do it yourself but you may miss things and, well, you might just not be bothered.

You can engage an established consultancy firm that will do a great job – but think fivefigure costs.

I believe QED’s CompliFast solution is the only product that covers all the bases in a package that is affordable for the majority of mortgage brokers; $50-odd per month (depending on who you aggregate through)

Towards the end of 2016, QED heard ASIC talking about what we think is their next major focus – a licensee’s ‘general conduct obligations’ For those readers that missed it or perhaps thought compliance means reviewing your credit files once every so often, this is what compliance means: • Understanding what all your business obligations are, not just NCCP • Having written documents – policies – that explain what your business does to meet these obligations • Identification of the controls you have in your business that ensure the policies are being followed • Regular testing of the controls to ensure they are still working • Documentation of the testing to demonstrate that it was done and what the results were • Planning of the corrective actions that are going to fix the things you found were ‘broken’ and therefore get you back to full compliance again.

will provide you with a report that tells you exactly what your overall compliance status is.

To the authorities, ignorance about compliance is no excuse. Every year when you fill out your Annual Compliance Certificate you declare that you have “adequate arrangements and systems in place to ensure your compliance with the credit legislation”. If you haven’t followed the steps mentioned above, you have lied to ASIC and again broken the law. You didn’t do it on purpose, but now you know.

Greg Ashe is the director of QED Risk Services, having started the business in 2009 to help brokers deal with new regulatory requirements. He has a background with Citigroup and has worked for the regulator APRA. You can contact Greg about any of the issues raised in this article on 1300 817 662 or through the website www.complifast.com.au.

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PEOPLE

BIG INTERVIEW

“We certainly don’t want to be the biggest, with 60 franchise owners, but we want to make sure we become the most trusted and admired home loan provider”

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PAUL O’REGAN: THE THIRD WAY LJ Hooker Home Loans is being relaunched, its CEO tells MPA, with a business model that goes beyond traditional broker networks and mortgage managers MPA: What is changing at LJ Hooker Home Loans?

PAUL O’REGAN: Lots of change. We’ve come out with a new business model, which is pretty unique in the market: it’s not a broker model, and it’s not a mortgage manager model either. It’s something pretty unique in that we’ll just be using three funders, Advantedge, Macquarie Bank and Pepper, and that’ll be it. It’ll all be white label; it’ll all be LJ Hooker.

What we’ve done is gone for extremely large territories; we only want a maximum of 60 franchisees around Australia. From my point of view, why we’ve come up with this is I want to help the franchise owners in my business, and when you’ve got 60 it is very easy to help with the support team I’ve got, in strategy, growth and recruitment, but with the bigger models it gets pretty difficult.

We’re going to be very focused on the customer experience side of the business, making sure we get repeat business and our customers are satisfied as much as they can be to do that. Part of the model is local digital marketing with SEO and SEM; we’re tailoring that to each of the franchise owners rather than just doing a LJ Hooker national campaign, to ensure they become known in their local markets.

The business is going to be very much like-for-like with the real estate business ... so they can form a really strong relationship

and partnership with the real estate side of the business, which has been going okay but certainly not setting the world on fire in terms of the number of referrals we’ve received, which we can get from this new model.

We certainly don’t want to be the biggest, with 60 franchise owners, but we want to make sure we become the most trusted and admired home loan provider.

MPA: What sort of brokers are you looking for, who would suit those large territories you’re offering?

POR: First, alignment with the brand: we do have an iconic brand, although it’s been skewed to real estate rather than home loans.

Outside of the majors we’re sitting in the top 10 in terms of the size of our loan book, about $5bn, but not a lot of people know that.

We want them to build a medium to large home loan business, in terms of what’s out there in the marketplace at the moment, and we want brokers who are really focused on the customer experience side.

We’d like to get the 60 territories filled tomorrow, but we’re not in any hurry; we’d like to make sure we get the right culturally aligned people … we’re looking at getting people as quickly as they can to their first $100m loan book size and then helping people grow their loan book to $500m over the medium term of their franchise.

PREPARING FOR THE BEST Of the various local marketing campaigns being planned by LJ Hooker Home Loans, one of the most unusual is their collaboration with digital marketing agency Peazie. Paul O’Regan first noticed Peazie’s work at the AFL, when a spectator won $50,000 by kicking a ball into a tyre. “I’m sitting at home going ‘how the hell can they afford to give away $50,000?’” O’Regan recalls. The reason was insurance: companies pay a regular premium and then the insurance pays out if somebody wins the competition.

Insurance is used extensively by game shows and other competition events.

LJ Hooker has already run competitions as part of marketing campaigns on the residential side; in one competition, customers could win a house. O’Regan says they’re looking to run multiple competitions to promote LJ Hooker Home Loans.

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PEOPLE

BIG INTERVIEW PAUL O’REGAN’S CAREER TIMELINE

1980 Starts work as a teller at ANZ

2000 Joins RAMS, eventually becoming national head of franchising, steering the securitisation-dependent business through the GFC

2011 Moves to Westpac as its regional general manager in Victoria

2012 Joins LJ Hooker as regional manager, going on to become the COO for home loans

2016 RAMS founder John Kinghorn returns to the industry and looks to reinvigorate LJ Hooker Home Loans, with O’Regan becoming CEO and taking a share in the business

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MPA: In terms of experience, do you have any specifications for potential franchisees?

POR: Current brokers that are looking for an opportunity to grow their business and in the current environment are finding it hard to get leads. We’ve got potential through the real estate network; we’ve got local digital marketing; we’ve got a really good partnership with CoreLogic with regard to lead generation.

The other source we’re not afraid of is people who want to start in broking and have really good small business experience and

in terms of the customer seeing LJ Hooker loans and LJ Hooker business cards, you could make a comparison. We want the customer to feel part of a brand; we want franchisees to be part of this brand too.

We love that brand because, from our point of view and the information we’re getting from some of the funders, loan life appears to be greater for a white label product versus a traditional broker product. We want the broker to know you’re part of the brand; these are your customers, and everything is headed up by LJ Hooker Home Loans and

“Outside of the majors we’re sitting in the top 10 in terms of the size of our loan book, about $5bn, but not a lot of people know that” runs on the board. We’ve had some really good success, in previous roles that I’ve been in, with people with really good people skills and business acumen that can join and really grow the business.

MPA: What are the costs involved for brokers that want to join LJ Hooker Home Loans?

POR: There’s obviously the capital required to keep the business going in the first few months, pending settlements. That’ll depend on what the personal expenses are and what the initial business expenses are. There is capital required within that first 12 months to set up a shopfront; signage, for example, is only a couple of grand.

There’s also an initial franchise fee of $15,000 which covers the start-up packs and inductions to come into the business. [From that point on] it’s a traditional model in terms of upfront and trail [commission split]; there’s no variance in regard to that.

XYZ franchise and we want to keep that relationship as close as we can, so we can continue to service that customer.

MPA: In terms of the products you’ll be offering, are we talking about vanilla home loans?

POR: Anything that Advantedge and Macquarie Bank offer at the moment: fixed rates, investments, variable rates, and we’ll also have Pepper on board by the end of March, who obviously offer low-doc products as well. For us the reason we chose Advantedge, Macquarie and Pepper was they provide that full suite of products that’s required by a customer.

MPA: Will your product suite include commercial products?

POR: No; commercial is outside of that, but if people want to do commercial we’re not opposed to them continuing to do commercial with the current arrangements they’ve got.

MPA: You say LJ Hooker Home Loans

MPA: Will franchisees have privileged

is neither a broker nor a mortgage manager. Would you say this is closest to the RAMS model?

POR: RAMS had their own product, through mortgage-backed securities; this isn’t. However,

arrangements with LJ Hooker real estate offices in their local area?

POR: What they will have is the ability to form a relationship straight away with these real estate offices. We’ve got the ability to

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introduce them to the franchise owner and the franchise owner’s team.

Having the LJ Hooker branding helps on the franchise owner’s side. We are looking for like-for-like broking and real estate businesses; real estate with their property management and brokers with their loan book, to work together and leverage off each other in their local community. We will be introducing all franchise owners to real estate offices in their loan area, and providing training, skills and tips to maximise referrals from their offices.

MPA: Are LJ Hooker real estate offices locked into referring to LJ Hooker Home Loans offices, and vice versa?

POR: It’s not mandatory, no.

MPA: You say offshore processing will be offered to all franchisees. How will this help brokers?

POR: What we’ve tried to do is look at a business model that’ll free up franchisees and loan writers to do what they do really well, which is sales and relationships and strategy.

We’ve enabled them to do some administration and processing offshore, working with a company called Boutique Offshore Solutions, who are pretty well known. We’ve contracted two staff already and commenced a pilot … this is one way to reduce the time constraints

franchisees have with administration and processing, at a pretty competitive cost.

MPA: Will offshore processing be an optional extra for franchisees?

POR: No, it’s mandatory for anybody new coming in.

to have them tomorrow, we’re going to be very patient and make sure we have the right people. I’ve been in franchising now for 20 years and it really is a cultural, personalbased relationship that you’ve got to have with these people, and if you haven’t got that, it’s pretty difficult.

“I’ve been in franchising now for 20 years and it really is a cultural, personal-based relationship that you’ve got to have with these people” MPA: How will you be marketing LJ Hooker Home Loans to consumers?

POR: It’s very, very much a local, digital approach. We’ve also just released our new website, which is pretty cool, state of the art.

We’ve got one of the best calculators out there right now; if you’re new, you’d hope it would be that! Certainly in terms of search engine optimisation, we’ve got really good capabili­ ties, both on the website and on a local level.

MPA: How would you like LJ Hooker Home Loans to develop over the next two years?

POR: The key for us is just getting the right franchise owners on board. Whilst we’d love

Really it’s about filling our territories, in terms of recruitment, and also getting the business model bedded down, and getting those relationships with our business partners, to help them grow their businesses and our businesses in turn.

We don’t want to be the biggest; we just want to make a really positive difference to the franchise owners and their teams whilst they’re part of us, and therefore helping us grow our business.

I’ve got a really good team that I’ve put together in the past three months, all handpicked, and they can support franchisees and understand the franchise culture, to help those people grow.

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FEATURES

TECHNOLOGY

PUTTING THE POWER IN YOUR HANDS Forget digital disruption; technology is empowering brokers. MPA editor Sam Richardson talks to industry leaders, software developers and start-ups to find out how today’s broker can do things only the biggest banks could do just 10 years ago, and explore what’s coming next

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‘DIGITAL DISRUPTION’ is a term that sums up broking’s problem with technology.

It’s a term that invokes helplessness, and a fear that barbarian hordes from Silicon Valley will tear down the industry, using systems and concepts we can’t even understand.

Yet while it’s essential to keep an eye on the competition, it’s the fear of digital disruption that’s holding the industry back.

An iPhone 6 has more processing power than NASA used to send a man to the Moon; so does your WiFi router. Brokers now have access to technology that can do more, and is far easier to use, than many banks in the 1990s and even 2000s. In fact brokers can do much more with technology in 2017 than they could just five years ago, from automated customer relationship management to electronic signatures.

This article is about how that technology is enabling, not just disrupting, broking.

We’ve talked to the three biggest technology providers in the industry: NextGen.Net, Rubik and Sandstone, and the two biggest aggregators, AFG and Connective, to see how broking is changing and what’s coming next. We’ve also talked to a number of lesser-known companies and start-ups that are developing technology to enable you to do more.

We explore how technology is adding to and not eliminating a broker’s value proposition. You can talk a borrower through their mortgage application at the park during their lunch break, or alternatively on video from the other side of the planet.

Having uploaded electronic documents and signatures, your software can then split those documents up or group them together, while redacting tax numbers and other data, before submitting to a lender. We also look at the technology brokers are missing out on, and why we’re still waiting for the paperless mortgage in Australia.

Whether you’re a single operator or a national franchise, technology is enabling you to do more. Read on for some ideas on how to get started.

TECH TERMS WITHOUT THE JARGON API An application programming interface provides tools for building software. An open API allows others to modify and improve your software. It also helps different systems ‘talk’ to each other.

Big data Extremely large data sets can be analysed by computers to reveal patterns, such as customer behaviour.

Chatbot A chatbot is a computer program designed to simulate conversation with human users, usually in order to acquire information.

The Cloud Cloud computing allows you to store data and host programs on the internet instead of your computer so they’re available anywhere with an internet connection.

Cybersecurity This protects computer systems from theft of data (such as personal details) or damage to the hardware or software.

Data scraping A computer program ‘reads’ a document, such as a bank statement, or website to extract data.

Digital disruption Technology-driven innovation offers customers a better way of solving existing problems, undermining incumbent providers.

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FEATURES

TECHNOLOGY

PAST Technology is getting cheaper and more user-friendly, and is being used in a different way by brokers and aggregators TO SEE how far broking has evolved over the last five years, you can’t just consider the technology itself – the actual hardware and software available to brokers – you also need to look at the utilisation of technology by brokers.

Utilisation matters: Kodak infamously took too long to take digital cameras seriously, despite the technology being first invented in the 1970s.

According to Connective CEO Glenn Lees, brokers are utilising technology more than ever. “Everyone’s been talking about technology for years, but often people wouldn’t use it, or wouldn’t use it fully. What we’ve found in the last two years is a greater uptake of technology.”

Connective has been looking at how brokers use their Mercury platform, and Lees explains that the functions being used aren’t necessarily “the new and fantastic things in Mercury”. He says “quite often the things that add the most value are the simple things”.

Change is being driven by both the younger, more technologically savvy brokers that are emerging and the regulatory challenges Lees says. “Interestingly, surprisingly – and quite boringly – the compliance tools we’re providing are being used more and more.”

Brokers are choosing to enter what Jaime Vogel, CIO at AFG, calls the “digital ecosystem”, particularly when it comes to

dealing with customers. Digitised CRM systems can automate many tasks and track individual customers’ situations, “making the broker proposition more professional”, Vogel

by necessity, Carn says. “When real challenges emerge in the market people scramble to respond, and that was APRA making changes to investment lending, and it meant that a lot

“What’s critical to assess is not the direct cost of technology but the cost of not investing” Tony Carn, NextGen.Net says. Contacting customers prior to the end of a fixed rate is a well-established practice; now technology can analyse changes in property values and a customer’s employment to prompt refinancing approaches, and AFG is introducing machine learning to further improve this technology.

The last few years have seen notable technological leaps forward in the area of uploading supporting documents, electronic signatures, and electronic applications for commercial loans. Less well known is the introduction, in late 2015, of APIs to allow broker groups to track lender requirements in real time. This is a huge improvement from the previous reliance on Microsoft Excel spreadsheets, says Tony Carn, sales director at NextGen.Net, and reduces mistakes and application rewording. It was a change driven

of changes were required of broker groups.”

He predicts that half of broker groups will be using APIs to track lenders by the end of 2017.

Developing technology The way that broking technology is developed is also changing. Over the last 12 months Rubik Group has been taking a “humancentred approach”, explains Emily Chen, head of product – financial services. Software was traditionally developed for the immediate user, such as brokerage support staff. Now the end customer experience is paramount, with Rubik’s considerations including “what the customer expects from the broker; what is the experience they’re looking for and, most importantly, what does the future look like so we create a future-proof solution and don’t design ourselves out.”

A DECADE IN AUSTRALIAN BROKING TECHNOLOGY JAN 2007

JAN 2008

December 2007 Legislation to prevent money laundering and terrorism funding (AML/CTF) changes to be ‘channel neutral’, opening the door for electronic verification of identity

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JAN 2009

JAN 2010

June 2009 Apple launches iPhone 3G, which enables internet tethering with a computer, allowing brokers to conduct meetings anywhere with a phone signal

JAN 2011

JAN 2012

June 2010 ValEx and VMS valuation platforms both acquired by RP Data (now CoreLogic), creating a single platform for ordering and reporting valuations online

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FEATURES

TECHNOLOGY

Developers are looking for end-to-end solutions across the lending process, explains Linda Stanojevic, global chief product officer at Sandstone Technology. “We look at building smart connections; we’re building smart connections between digital and physical flows [of information].” She says it’s “not just about working your end well, but really collaborating across the value chain”. That means, for example, that banks get the right pieces of information from brokers at the right stage of the application, reducing the time to approval.

“We’re seeing the emergence of really gamechanging technologies, but they do take longer than we’d like to see,” says Carn at NextGenNet. The challenge is not necessarily about the take-up of technology but comes from the regular updates required for modern software, he explains. That doesn’t mean technology isn’t moving forward in the meantime.

Beyond the traditional developers and large projects there are hundreds of bolt-on services for project management and document storage that brokers can use, explains Connective’s Lees. “The real power comes when the platform we provide has an open API,” he says. “You can find the bits you want and integrate them yourself, or with our help.

There is a whole universe out there of really small, well-devised micro-services which you can put together.”

Using technology Cost is a perennial concern for small businesses, but the developers and aggregators MPA spoke to argue that the cost of technology is falling.

Lees points towards the low subscription costs of the above-mentioned bolt-on technologies; one example is the Trello project management app, which costs US$10 per month yet was bought by technology giant Atlassian for $577m in January.

Carn talks about replicable technologies.

“The cost of technology such as hardware, developers, data storage, etc, is not going down, but it’s important to look at the cost efficiencies … going to build 50 bespoke solutions for 50 lenders is an enormously expensive thing to build and maintain.” The prestige attached to highly expensive bespoke solutions is misplaced, he suggests. “What’s critical to assess is not the direct cost of technology, but the cost of not investing.”

Technology is also getting easier for brokers to use, according to Lees at Connective and Vogel at AFG. Much of the ‘heavy lifting’ in applications is done by relatively simple software, Vogel says. Brokers who have more time available can make use of customer analytics; for brokers without the time the aggregator can step in. “We know that some brokers have the time to do that, but a lot don’t, and we see that as an opportunity,” he says.

Finally, brokers are looking beyond the technology their aggregator is offering them, according to Lees. What the aggregator is offering on a plate “is necessary for but not sufficient for adoption”; brokers can see that adding other bolt-on services can give them an edge. For technology, simply being new is not enough. Lees says the “key measure of success is actual use and actual engagement”.

MORTGAGE TECHNOLOGY WORLDWIDE Rocket Mortgage, USA Quicken Loans’ Rocket Mortgage was unveiled to Americans in a glossy Super Bowl ad last year, which appealed “to the power of America itself”. Using a smartphone app, customers can get a conditional approval in less than 10 minutes. Quicken Loans pulls information about their property, employment history and bank accounts from other sources. It has a sliding bar for customers to choose their desired fees and interest rates, while using live market data when offering the final interest rate. The Rocket Mortgage took a team of 450 engineers to build, and Quicken Loans plans to spend $132m on promoting it.

Habito, UK Launched in April 2016, Habito is a ‘digital mortgage broker’ that uses an automated chatbot to talk to clients about their needs and recommend mortgages in less than 10 minutes, which customers can then apply for. The software also tracks changes in the mortgage market, such as eligibility criteria, interest rates, affordability and product features, to identify trends that could affect borrowers. The company claims it has been used by 20,000 people and handled $82m worth of lending. In January 2017 it raised $9m in funding from Silicon Valley.

A DECADE IN AUSTRALIAN BROKING TECHNOLOGY JAN 2012

JAN 2013

October 2013 NextGen.Net launches the ApplyOnline Supporting Documents service, enabling brokers to upload and submit documents electronically

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JAN 2014

November 2013 LIXI 2.0 launched, helping lending and broking software better communicate through a common language

JAN 2015

JAN 2016

March 2016 Property app launched by Commonwealth Bank, allowing borrowers to apply for conditional approval on a mortgage using their phones

September 2016 First fully electronic mortgage in Australia signed by Bank Australia customer

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FEATURES

TECHNOLOGY

PRESENT We’ve picked out six lesser-known technology companies and platforms that are changing the way you write mortgages LOAN FLARE Founded: 2016

Founded: 2012

Who pays: Brokers, through a monthly subscription

Who pays: The user, which could be lenders or brokers

Training available: Helpdesk, chatbots and product ideas portal

Training available: Little training required; demonstration videos available

What is new about what you do?

David Kim, founder: LoanFlare is a platform allowing brokers and their customers to work on the mortgage applications documents together – the first software to connect brokers and their clients.

Some of our exclusive features include a customisable, multistage fact-find, real-time serviceability calculations, as well as automatic identification and renaming of supporting documents.

“We aim to turn brokers from a one-time sale into financial concierges for life” How do you help mortgage brokers?

DK: LoanFlare arms brokers with the technology they need to remain competitive, allowing them to manage and track home loan applications completely online and export all the data to aggregator CRMs and ApplyOnline. We’re working on a loan tracker tool that taps into bank feeds to trigger broker alerts, and a marketplace for cross-selling products.

How do you help mortgage customers?

DK: We make the application process fun and informative through a contextual chatbot and by updating serviceability metrics every time information is added. We then use this information to recommend related products and services to borrowers, unlocking significant revenue streams for the broker. By capturing borrowers into a digital ecosystem that persists even after loan settlement, we aim to turn brokers from a one-time sale into financial concierges for life.

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BREEZEDOCS

What is new about what you do?

Hany Pham, CEO: Breezedocs provides groundbreaking new technology which automatically splits and organises borrower supporting documents in loan applications. This provides lenders with consistency and uniformity across all incoming loan applications, which increases the speed and reduces the cost of loan assessments and approvals. Breezedocs was also the first company to use software to automatically redact tax file numbers, and is currently the leading solution in the market.

How do you help mortgage brokers?

HP: Lenders are increasingly pushing more and more of the workload onto mortgage brokers … for example, many lenders are now requesting that brokers individually split up each document before submitting the loan. This means that brokers need to either scan files individually or use software such as Adobe Acrobat to manually split up each file. Breezedocs automates this process as it is able to recognise the textual content of each document and accurately splits up and relabels each attachment.

How do you help mortgage customers?

HP: Within our existing lender partners, we have seen savings in loan processing time and cost of up to 75%. They have also been able to achieve consistent turnaround times within hours on the same day. This greatly benefits mortgage customers as turnaround times continue to be a pressing issue for the industry. Borrowers want rapid responses from lenders, and Breezedocs is able to dramatically reduce turnaround times, which significantly improves the borrower experience.

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PEXA

ZipID

Founded: 2010

Founded: 2013

Who pays: Depends on arrangement customer has with lenders/lawyers/conveyancers

Who pays: App is free for brokers; lender pays for the report.

Agency services dependent on broker–lender arrangement

Training available: Free PEXA Direct training for lawyers and conveyancers

Training available: Simple to use; support available at www.zipidbroker.com.au

What is new about what you do?

Mike Cameron, group executive operations: The PEXA e-Conveyancing network operates like a private virtual space, bringing banks, conveyancers and land registries together to securely settle property transactions. With PEXA operating in five Australian states, electronic property settlement is now within reach of about 95% of Australians. Importantly, the Victorian, NSW and WA governments have unveiled deadlines to ‘turn off ’ certain paper-based property transactions in 2017, while the NSW government plans to phase out paper transactions by 2019.

How do you help mortgage brokers?

MC: PEXA ultimately is a breakthrough for end property consumers. It means that their transactions are safe, efficient and fast. Brokers can recommend electronic conveyancing to their customers for these efficiency benefits. PEXA is currently working through options to bring mortgage brokers greater visibility of the progress of their clients’ property transactions. This development has the potential to significantly change the service offering mortgage brokers offer their clients.

How do you help mortgage customers?

MC: An increasingly technology-savvy public will ask to settle property transactions online in preference to traditional paper-based conveyancing. Consumers are already searching for properties on their digital devices and embraced electronic banking transactions when the technology emerged in the 1990s.

What is new about what you do?

Sean Simmons, founder: ZipID (now part of Veda) digitises and mobilises customer ID checks. We’ve focused on solving the pain points for brokers, banks and consumers around face-to-face mortgage ID requirements. The ZipID mobile app puts brokers in control of a paperless, safe and standardised ID process using their smartphone or tablet. If the broker can’t meet the client, they can book a ZipID agent appointment to carry out the ID check at their home or work.

How do you help mortgage brokers?

SS: ID processes cause common problems for brokers. They’re paper heavy and inconsistent across banks. This results in lots of rework, causing unnecessary delays and frustration. ZipID helps mortgage brokers streamline the path to approval by improved submission quality. ZipID is ID done once, done right.

How do you help mortgage customers?

SS: Customers no longer have to be inconvenienced as a result of insufficient or illegible ID, or concerned about insecure collection of their ID. The ZipID app guides the broker to capture high-quality images of the necessary ID documents, the customer’s signature and a photo as proof of the face-to-face meeting. The ZipID system then securely protects the customer information.

ZipID’s ‘come to you’ agency option saves many customers from having to go and find a JP or queue up at a branch or post office.

“We’ve focused on solving the pain points for brokers, banks and consumers” www.mpamagazine.com.au

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FEATURES

TECHNOLOGY

DOCUSIGN

KUBIO

Founded: 2003

Founded: 2016

Who pays: The broker; always free to the signer of the document

Who pays: Brokers, through a monthly subscription Training available: Online user and development support

Training available: DocuSign University website

What is new about what you do?

Brad Newton, vice president Asia Pacific: While other providers may offer one or two of the features DocuSign has, the key differentiator for us is the fact that we genuinely offer an end-to-end solution for transaction management – something new to the Australian market. Our Winter ’17 release announced the addition of Supplemental Documents to allow for more disclosures to be included in a single contract, as well as our payments capability coming in March, where you can sign and pay in one step using a credit card, Apple Pay, or Android Pay.

“We genuinely offer an endto-end solution for transaction management – something new to the Australian market” How does it help brokers?

BN: DocuSign’s Digital Transaction Management (DTM) platform and eSignature service enables preparation, execution and management of transactions in an all-digital environment. With DocuSign you can boost compliance by meeting the demands of the Electronic Transactions Act. 1999, simplify loan processing, increase accuracy and productivity, while saving money. In real terms, DocuSign delivers on average $32 in value per transaction – including hard dollar savings, accelerated revenue and productivity gains – and reduces turnaround time with more than 60% of transactions completed on the DocuSign Global Trust Network in less than one hour.

How does it help consumers?

BN: The signing and management of paper-based contracts can be a timeconsuming and inconvenient process for borrowers. With DocuSign DTM and eSignature, the consumer can sign documents quickly and easily any time, anywhere, on any device. Borrowers can sign loan contracts from the comfort of their home, or on the road, without the need to physically visit an office or have documents overnighted to them.

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What is new about what Kubio does?

Mark Churchill, managing director, AllFin Financial Services: Kubio is one of Australia’s advanced business origination platforms for commercial brokers. Designed by brokers for brokers, its technology platform automates loans from lead through to settlement and beyond, providing efficiencies as brokers grow. As a cloud-based platform, brokers can access and update their clients’ information anywhere, any time. Kubio increases brokers’ abilities to manage sales, customer relationships, operations and finance – all within one platform.

How does Kubio help mortgage brokers?

MC: The platform provides a single view of clients and their assets, and makes it simple to track leads from opportunity through to settlement. Kubio makes every process simpler – for the broker, clients and referrers. Straightforward online forms, streamlined signatures and authorisation are all on the one platform to facilitate faster financing and increase capacity for a more personalised service. The platform allows brokers to build custom workflows to help automate business processes. This way, brokers can meet lender submission requirements, thus improving the likelihood of a quicker submission.

“Until now commercial loan applications have been very manual and paperwork-intensive” How do you help mortgage customers?

MC: Kubio automates the application process from lead through to settlement, making the process simpler and more efficient for clients.

It’s designed to manage client authorisations using digital signatures, and performs credit checks and business verifications without the need for the client to chase the information themselves. Unlike mortgage broking, until now commercial loan applications have been very manual and paperwork-intensive, and this has been time-consuming for brokers. Kubio makes data more accessible, and provides a seamless and easy experience for clients.

www.mpamagazine.com.au

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FEATURES

TECHNOLOGY

FUTURE More data and end-to-end systems are pushing us ever closer to the paperless mortgage and point-of-sale approvals PREDICTING THE future of technology is a risky business. From the millennium bug to Google Glass, we’ve seen plenty of ‘game changers’ which were no such thing.

Rather than take an impossibly broad view of the future, we asked our industry leaders to explain what brokers should expect over the next few years, starting with the paperless mortgage.

Glenn Lees, CEO of Connective, says the entirely paperless mortgage is “closer than ever … I think what’s driving it now is lenders understand what a competitive advantage it can be”. The barriers are simply “institutional inertia”, he says, with lenders’ risk and compliance teams “understandably nervous” about changing the application process.

NextGen.Net sales director Tony Carn

is less optimistic; he believes the paperless mortgage will take some time to come about due to the current focus on credit risk.

However, he says the technology is there, and mortgages are already becoming increasingly electronic thanks to e-conveyancing platform PEXA and increasing use of electronic verification by lenders.

At AFG, CIO Jaime Vogel believes that “we will end up with a significant number of applications being digital end-to-end”. The process will be similar to the gradual take-up of ApplyOnline. “As lenders understand the benefits of that innovation it’ll progressively change and we’ll find the vast majority will be digital end-to-end,” Vogel says. “We feel the technology would be relatively easily implemented in the broker process.”

VERIFYING WITH VIDEO AT HASHCHING Identifying borrowers, under the Know Your Customer (KYC) guidelines, has long been a time-consuming part of the application process. It was a particular problem for online marketplace HashChing, CEO Mandeep Sodhi recalls. “The broker was seeing ‘the consumer is in Cairns, but I’ve got this great deal and I’m in Sydney’.” For brokers there was an additional problem: having to visit a bank or Australia Post outlet to get identified was causing many customers to walk away from a deal.

HashChing’s virtual online identification (VOI) technology uses a video call to compare the borrower to a photo on their Australian passport or driver’s licence, giving the broker a percentage of how much they match. It also does a behind-the-scenes DBS check and tells the broker the borrower’s current location, and the video is stored for seven years in case of an enquiry from ASIC. The system is currently being trialled by 150 brokers, saving them eight hours on average, with a full rollout scheduled for 1 March.

There’s no legal barrier to video identification; the challenge is persuading lenders to accept it. While HashChing has an exclusive partnership with the South African developer of the software, E4, it is encouraging lenders to work with E4 to use VOI technology.

Combined with online document collection, VOI can free brokers from the tyranny of distance, Sodhi believes. “With this technology the broker can be anywhere in Australia and the consumer can be anywhere in Australia … the geographic barrier is gone.”

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Using data In March 2016 Siobhan Hayden, then-CEO of the MFAA, predicted the next evolution in mortgage broking would be driven by data scraping. Data scraping is extracting data from documents, web pages and storage vaults, which can then be put to use in a number of ways: automatically filling in forms, reducing the need to ask borrowers for documentation, and more informed decisions by lenders.

Data is already changing the mortgage application process. Electronic mortgages through Bank Australia and conditional approvals via the CommBank Property app are available to customers of these banks, as the banks already have the relevant data.

Data scraping across institutions is in its early stages, warns AFG’s Vogel. “There’s certainly not enough data available to make a complete and proper assessment, but we’re trying to make the best of the data which is available to use.”

Other professions are further ahead in data scraping. Next.Gen.Net’s Carn points out that accountants can already access information on their clients held by the ATO; giving brokers the same access would be a “very simple technology solution, but there [needs to be] a risk appetite to allow that to happen”.

At Rubik Group a current project is looking at using wealth management to provide solutions for property investors. “One of the top unmet needs is around investment property,” head of product Emily Chen says.

“It’s almost personal financial management: how do I budget? How do I know when I’m ready to buy that next property?”

Already some banks offer digital ‘dashboards’ that show customers the funds available in their current, savings and super

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accounts. Chen suggests that property could be added to this mix, bringing in external data on property values on fixed loan terms, creating “a total wealth view for the customer”.

What’s holding back data scraping – and

The role of aggregators and developers Part of the institutional inertia holding back broking technology is the question of responsibility: who should be developing, implementing and advocating for new

“Customers are looking for a seamless experience, and less of the fragmented user experiences we may have had in the past” Emily Chen, Rubik Group by consequence paperless mortgages – is concerns around security. Computer hacking has become international news, and 71% of Australians are concerned about having their information stolen, according to Veda’s 2016 Cybercrime and Fraud Report, with older Australians more concerned.

“A lot of brokers are not aware of how much is invested in secure data processing,” argues Carn. However, he warns that vulnerabilities remain: “We’re operating in a market that’s heavily regulated, and everyone’s aware of data security, yet we still see a lot of emailing of personal customer information, which I think is quite horrifying.”

Vogel believes younger borrowers are more accepting of their data being used.

“If there is value for the customer and the opportunity to get a reduced interest rate then I’d certainly expect that a high percentage of customers would be willing to provide that information.” That is conditional, however, on those customers trusting that brokers can keep their data secure, which is why AFG is investing heavily in data security.

technology? MPA asked technology developers and aggregators what they were doing, and what role they play.

Vogel sees AFG’s role as a “technology and marketing partner” for broker groups.

“These are a couple of areas where we as an aggregator have the resources and capability to invest heavily to benefit the broker,” he says. AFG has been repositioning the company as a technology provider for its brokers, leading the way into emerging fields such as machine learning and data security.

At Connective, Lees sees the aggregator’s role as going beyond that of a product provider: “Our role is to look to the horizon in ways brokers simply don’t have the time or the knowledge to do: to sort through what’s out there and try to pick the winners, if you like, and to give brokers a true platform that is relevant to their business and the way they choose to work.” It’s crucial that new technology suits brokers, he argues. “People are looking for technology to be a silver bullet, but technology never trumps activity; you can have the best tool in the world, but if people don’t like it or trust it they won’t use it.”

THE LIMITS OF ONLINE CHANNELS Deloitte surveyed 1,000 borrowers who had taken out a home loan in the two years to September 2016 on their channel preferences:

30% of customers would ‘consider’ doing their next loan application entirely online However:

5% would do their next loan themselves online rather than use a broker or go direct to lender Talking to consumers in focus groups, Deloitte found that participants valued having a personal relationship with brokers/lender staff, as well as the ease and advice associated with those channels Source: Deloitte/MFAA, Customer Experiences of Using Mortgage Brokers, October 2016

At Sandstone, global chief product officer Linda Stanojevic aims to develop seamless, end-to-end systems for lenders to cut down turnaround times. “We’re very much talking to the LIXI community and looking at standardisation.”

In 2017 NextGen.Net will be enhancing

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FEATURES

TECHNOLOGY

WHAT WAS THE FUTURE IN 2014?

In 2014 Glenn Lees of Connective and Tony Carn of NextGen.Net were asked to predict the technology brokers would have by 2024. MPA decided to revisit these predictions and ask how close they were to reality.

Glenn Lees – Data vaults Data vaults are already being constructed by the private sector, says Lees, with initiatives such as Apple Pay and biometric security. “I see us getting there a little more every day.”

Tony Carn – Machines talking to machines Machines are now talking to machines through APIs, used in processes such as the electronic verification of identity and real-time updating of lenders policies, Carn explains.

the user experience of ApplyOnline, says Carn, starting in March. It is also looking at how it can increasingly integrate the borrower into the ApplyOnline process.

Chen at Rubik sees her organisation’s role as helping brokers take on new technology, while navigating tightening compliance requirements. They’ll be continuing their ‘human-centred approach’ with borrowers in mind, Chen explains. “Customers are looking for a seamless experience, and less of the fragmented user experiences we may have had in the past. It’s actually a very exciting time to be a technology vendor.”

Predictions Finally, we asked the aggregators and technology providers to give us their predictions of what brokers will see change in the next two to five years.

Turnaround times will continue to fall, predicts Sandstone’s Stanojevic. Application processes will be more driven by consumer perspective, and consumers will demand immediate responses and more relevant information. “Don’t just give me an email with a long list of the information I might need; give me the information that’s applicable to me,” she says.

Aiding this reduction in turnaround times

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will be more take-up of electronic signatures, predicts Connective’s Lees. Brokers will increasingly use bundles of microservices to construct their own customised platforms.

“There’s not necessarily a killer app for finance or mortgages,” he says.

Falling turnaround times and improving technology will eventually enable point-

result will benefit brokers: “I think we should see brokers becoming empowered to provide better quality at the point of sale.”

AFG’s Vogel also believes that improving technology, and specifically the establishment of data sharing ‘digital ecosystems’, will give brokers an edge. Even the individual broker will be “presented to the customer as someone with a significant technical underpinning in their business”, he predicts.

“It’s giving brokers the same technical online digital solution that you would expect from a much larger organisation, putting them on the same foot as online lenders.”

Correspondingly, there will be a growth in virtual broking, according to Rubik’s Chen.

Again, brokers rather than disruptors will benefit. “We’re not necessarily talking about Uber for mortgage brokers, but instead providing broking advice digitally, the customer experience, whether it’s through Facetime or Skype,” Chen says. The key is learning how to store the evidence of advice delivered virtually in a way regulators can accept.

For many, changing technology equates to

“It’s giving brokers the same technical online digital solution that you would expect from a much larger organisation, putting them on the same foot as online lenders” Jaime Vogel, AFG of-sale approvals, according to Carn at NextGen.Net. “We’ll see technology allow us to get closer to real-time point-of-sale approvals by increasing integration in the loan approval process – automatically verifying identity, automatically verifying income, using optical character recognition.”

CBA is already using optical character recognition technology, Carn says, and he predicts that automated risk pricing of loans by lenders could also begin to emerge. The

disruption, but for Carn, the mortgage space is far more complicated: “I read a comment from a gentleman this week talking about how Airbnb and Uber get thrown around a lot, and he said they have capitalised on the use of underutilised resources, but you don’t see underutilised resources in the financing game; you don’t see the underlying restrictions of APRA and the other regulators in the market.

Brokers rest assured that broker groups are investing heavily to protect their interests.”

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FEATURES

NON-BANKS

NON-BANKS: THE ULTIMATE ROUNDUP MPA brings together Australia’s leading non-banks to address the big issues, including new products, wholesale funding, technology, and responding to threats from white label lending and the banks

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IN 2016 the job of a non-bank was straight­ forward: capture the clients left high and dry by the banks as their lending policies and the regulations made them ever more cautious.

Frustrated property investors drove a customer boom that non-banks hadn’t seen in years. In 2017 there’s no such simple answer; instead we’re seeing non-banks go in very different directions, seeking a number of different clients.

At the extreme, non-banks have responded with restructuring. RESIMAC and Homeloans have merged, with the former providing funding and the latter brand applied to products, which is why Homeloans appears in this feature. Nonbanks have also launched new products, such as loans for first home buyers and the elderly, loans for construction, and loans for consumer segments previously considered prime but now blacklisted by the banks for various reasons.

Some lenders have chosen to embark on ambitious and expensive TV marketing campaigns, and some have invested heavily in new technology to make the application process easier for brokers.

Non-banks need to adapt because they’re faced with a number of threats, particularly with respect to funding. Firstmac left the wholesale funding market in late 2015, and other wholesale funders are turning their attention away from mortgage managers and towards the funding of white label products. The 2016 Deloitte Australian Mortgage Report warned that non-banks “will be impacted more than the banks” if spreads in the securitisation market continue to rise.

Innovation is vital, but reputation is also becoming more important to non-banks as they look to secure funding lines and complete RMBS transactions. Australian non-banks are winning accolades abroad, even if they still have a long way to go in raising local consumer, and occasionally broker, awareness. Most of all, nonbanks need to continue to appeal to brokers, and show why they offer a unique service in an era of increasingly commoditised lending.

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FEATURES

NON-BANKS

Do you have any plans to market yourself to consumers, and would this make it easier for brokers to recommend you?

Homeloans

La Trobe Financial

Homeloans’ distribution strategy is predominantly focused on the broker channel. However, we do market directly to consumers in order to further enhance the Homeloans brand, making it easier for brokers to recommend our products. One of the most significant activities is our sponsorship of the Perth Scorchers in the Twenty20 Big Bash League, which sees our brand being exposed to millions of people Australia-wide.

We have recently commenced a campaign promoting our ability to cater for a borrower’s finance needs at every stage of their life cycle, starting with our P2C® loan for their first home purchase and ending with our Aged Care loan, along with catering for everything else in between. This campaign has generated plenty of positive feedback from finance brokers and consumers who tell us that this is a simple story they can easily relate to ... we [also] have embarked on a television advertising campaign encouraging consumers to think about “how hard they have worked hard for their money”.

AFM Our brand and offer is exclusive to brokers at this stage, and our marketing efforts are all focused on the third party channel. We may look at direct avenues to increase brand awareness amongst customers down the track, but at this stage that’s not a priority.

Liberty This time last year we launched our branding and advertising campaigns. We recognised that by increasing the awareness of our brand, and educating consumers about our diverse range of products, we would make brokers’ jobs easier. To achieve this, we’ve rolled out full-scale marketing and advertising campaigns that cover a range of digital, outdoor, print and radio advertising.

We’ve also sponsored the Team Tekno V8 Supercar team … We’ll continue to ramp up this activity in the next 12 months, so this will make it even easier to write Liberty business.

Better Mortgage Management Not at this stage; we concentrate on broker business only. We don’t do as some mortgage managers/non-banks do, by having a separate retail or internet brand.

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Bluestone While our marketing is broker-industry focused

at present, Bluestone may in the future decide to market the brand directly to consumers …

Some brokers do feel that we are biting the hand that feeds us when we market direct to consumers and subsequently take business away from them by advertising directly to consumers.

Pepper We will continue to roll out our brand awareness campaign to the broader Australian market in order to assist brokers in introducing a Pepper Money product to their clients. We’ll do that through our existing sporting sponsorships, radio, TV advertisements and digital media.

Our aim will be to tell the story about who we are and what we do.

WHAT CAN A NON-BANK DO THAT A BANK CAN’T? The answer: provide a whole host of policies, offers and approaches, as regulation increasingly restricts the ingenuity of ADI lenders. We asked our non-banks to name one standout policy each: Homeloans To name just one: self-employed applicants with just six months’ trading history.

Liberty Liberty can do investment loans up to 95% LVR, plus cap the full LMI onto the loan as well.

Pepper Pepper Money offers a magnitude of policies in a single assessment – prime, near prime and specialist, with no affiliation to a mortgage insurer up to 95% LVR.

La Trobe Financial Versus the banks we allow unlimited debt consolidation (including ATO debts), along with cash-out for established purposes, and this stands out as a highlight.

Bluestone Start-up self-employed borrowers and borrowers with unlimited credit impairment.

Better Mortgage Management BMM assists some customers with multiple properties to qualify on servicing.

Alternative answer would be creditimpaired/ex-bankrupts/payout part 9/10.

Consolidation of unpaid tax debt.

Australian First Mortgage 100% offset with 100% fixed rate during the construction period.

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FEATURES

NON-BANKS

With wholesale funders pulling out and securitisation markets tightening, what are you doing to ensure you have funding over the next three years?

Bluestone Bluestone has a very strong relationship with our warehousing banks, Macquarie and CBA. … Although securitisation volumes have reduced, non-banks are making up a bigger share of issuance. In 2016 Bluestone completed two RMBS transactions for a total of over $400m. More recently we have seen an increase in the number of offshore banks showing interest in the region, and with the upcoming regulatory impacts on the domestic banks’ pricing, who can blame them?

Homeloans

funding mix, focusing on both breadth (number of funding types) and depth (number of sources). Our model is a unique blend of three funding lines:

Homeloans’ business model is underpinned by a diverse range of wholesale funding sources, which include both balance sheet and securitisation ... The recent merger with RESIMAC also provides Homeloans with a well-established product manufacturing capability … Our strong funding position means Homeloans is well placed to continue to grow in 2017.

• First: We have a proven track record and capability in structuring and managing large wholesale funding mandates from domestic and international financial institutions … we still see liquidity in this space and La Trobe Financial is an attractive counterparty given our history and balance sheet strength.

been able to attract and maintain funding to provide confidence to our partners.

Pepper Please note that we are not privy to wholesale funders pulling out, so I am not agreeing with that statement … Pepper was the most active participant in the Australian market in 2016, raising more than $2.5bn, a trend which will no doubt continue in 2017 … [and we are] expanding our investor base to the US. Foreign investors are actively looking for quality notes issued by a quality issuer such as Pepper. That has allowed us to access more liquidity at a good price.

Better Mortgage Management Whilst a couple of funders have pulled out of wholesale funding in the last couple of years, a couple have entered the market. There is also some talk of others entering the space.

Liberty Liberty is the only non-bank with an investment-grade credit rating. The strength of our business recently saw this rating upgraded from BBB- to BBB. This higher rating reflects our durable capital position and the way our business has consistently

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AFM We continuously review our funding panel to ensure we have strong, reliable and relevant funding. We will only use funding channels that can meet our service proposition, which includes price, service, niche offering, reliability and commitment.

La Trobe Financial We have always maintained a very diverse

• Second: We also manage Australia’s largest, and multi-award-winning, retail investment Credit Fund with over $1.2bn in FUM and 14,000 investors.

• Third: We complement our funding needs with the capital markets sector, having successfully completed three RMBS offerings, and will complete a fourth transaction in early 2017.

OUR PLANS FOR 2017: DANIEL CARDE, GENERAL MANAGER – THIRD PARTY DISTRIBUTION, HOMELOANS AND RESIMAC With the recent merger between Homeloans and RESIMAC having taken place, the Homeloans brand, existing wholesale funding arrangements and distribution have come together with RESIMAC’s established and well-regarded securitisation program and strong product development. This partnership coupled with new technology solutions means 2017 will see a more expansive sales team, new products and enhanced processing efficiencies to deliver the best solution to brokers and borrowers alike.

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FEATURES

NON-BANKS

How has technology helped you improve your applications and processing experience for brokers and customers?

La Trobe Financial Keeping ahead of the curve is important for us and we have recently partnered with Simpology to launch a groundbreaking e-lodgement tool, which is a dynamically configurable loan application that keeps our external broker partners on the same page as our internal processing teams. This new platform allows greater user experience and streamlines processing efficiencies, which means brokers have an easier time doing their job, and we can do ours faster and better.

Liberty Liberty is always looking for ways to provide a better service to its brokers, and we make no exceptions with the technology we develop. While tools like Liberty’s LoanNET have helped brokers provide quick answers to their customers, we’re constantly looking at what else we can provide, so new tools are on the horizon.

Better Mortgage Management For a mortgage manager such as BMM that utilises funding from multiple wholesale funders, one of the challenges can be getting the right information and application forms to our broker partners, so we rely upon technology for that. We receive good feedback with regard to our PAL system and this year introduced an Application Pack, which has been popular with broker partners and our staff.

Pepper Pepper Money has continued to lead the market in turnaround times for a fully assessed deal, by delivering same-day approval … We have developed a product

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selector tool that empowers the brokers to pre-approve their customers in less than two minutes. This digital enabling tool aims to remove any confusion a client may have …

We’ve also launched the most innovative 100% online digital experience for our personal loan platform that we look forward to rolling out to the broker market in 2017.

Homeloans In recent times, technology has given us greater flexibility in processing by enabling us to perform tasks seamlessly … With interfaces to our business partners becoming more prevalent and feature-rich, it has enabled us to process applications faster than ever before. This is set to further improve in early 2017 with the launch of our new end-to-end ARMnet system, which will manage the full loan life cycle process from

deal submission right through until the ultimate discharge of a loan.

AFM AFM’s systems and platforms enable us to provide very quick turnaround times. They allow us to easily identify volume spikes, both on a business and individual credit assessor level … Our tracking platforms internally timestamp every stage of the loan process to ensure our SLAs are industry leading.

Bluestone We are currently testing a technology platform, built internally within Bluestone specifically for the brokers, which will give them instant approval letters, helping them to secure their clients’ business and giving their customers comfort at the same time.

OUR PLANS FOR 2017: CORY BANNISTER, CHIEF LENDING OFFICER, LA TROBE FINANCIAL We have many great plans for the new year ahead, on the back of a recordbreaking finish to 2016.

It is our view that the macroprudential measures put in place by APRA are unlikely to be reversed in the medium term. Therefore there is a great opportunity in the market now for quality non-bank lenders (and in turn brokers) to take advantage of this and grow their portfolios.

In preparation for what looks to be another growth year ahead, we are expanding both our sales and credit teams to ensure that we continue to deliver the same high standard of service consistently in 2017, albeit on a larger scale.

On the investment side of our business we continue to receive very good inflows reflecting our stable, consistent returns in this low-rate environment … we are working on, and will be releasing shortly, several further product enhancements and initiatives to further assist the underserved markets that have always been the focus of our efforts.

It looks to be another exciting year ahead!

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FEATURES

NON-BANKS

Do you see any prospects for growth in the non-conforming market, or are you looking at low-doc or prime lending instead?

Better Mortgage Management BMM in the past couple of years has concentrated on alternative markets: alt doc, specialist, and in 2016 prime investor lending became more prominent for us as other lenders moved away from the sector and debt servicing became more of an issue. For 2017

conforming mortgages being written … let’s make it clear – the demand has always been there. It’s whether a broker knows that demand exists, or whether they know when to offer an alternative product to a customer, which determines whether they participate in that segment. As it has for the past

“Let’s make it clear – the demand has always been there” Mario Rehayem, Pepper I would see opportunities for growth in all of these sectors.

AFM AFM offers both low-doc and non-conforming, and we absolutely see growth opportunities across the board. The banks are changing lending policies and tightening criteria on a seemingly daily basis – everything from income verification and postcodes to living expenses.

six years, Pepper will play a pivotal role in 2017, driving awareness amongst brokers in conjunction with a heavy focus on improving the average borrower’s awareness of alternative lending products.

Homeloans As a solutions-based lender, our suite of loans spans prime, alt doc and specialty in order to meet the needs of the differing market segments. It’s not uncommon for an individual borrower to migrate from a non-

conforming style of loan to a prime product as their financial situation becomes more attractive to lenders and mortgage insurers, or from alt doc to full doc as they become in a better position to substantiate their financials.

Bluestone The world has changed since the GFC, and so has the language in which non-conforming is now referred to as specialist lending. While credit-impaired borrowers remain at the core of this segment, self-employed borrowers are a growing part of the specialist space.

Liberty Liberty offers products in all home lending categories, including non-conforming ... We also have a flexible approach which results in more opportunities for customers to achieve their financial goals. In times of frequent change, this approach is very popular, so we expect the strong growth we experienced in 2016 to continue in 2017.

La Trobe Financial The non-conforming market continues to grow and evolve as more and more traditional ‘conforming’ deals are being passed over by the major banks in light of recent regulatory change. We see this new ‘non-conforming’ market as a fantastic opportunity for continued growth in 2017 … in addition to the traditional non-conforming scenarios.

We believe this tight regulatory environment will remain in play for the medium term, providing great growth prospects for specialist lenders like ourselves.

Pepper 2017 will definitely be another year in which we will see well above system growth of non-

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OUR PLANS FOR 2017: NATASHA SULTAN, HEAD OF BROKER SALES, AUSTRALIAN FIRST MORTGAGE AFM will be bringing on board a significant new funding channel in 2017, which we intend to launch via a roadshow event series.

We have recently completed a hugely successful national roadshow, and we have since been inundated with feedback from brokers telling us how beneficial they found it.

So we will run another event series early this year and use that as a platform to announce the new funder and provide attendees with the opportunity to join our VIP broker program.

More broadly, we will continue to listen to feedback from our broker network and respond by adjusting our product and service offering to ensure we are always maximising the broker and customer experience.

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FEATURES

NON-BANKS

Non-majors are now offering low rates and improved turnaround times. How do you plan to compete?

Pepper

Homeloans

Even with their improved turnaround times, the non-majors still don’t stack up to the same-day turnaround times we’ve had in place for three years ... We’ve never said we can compete with the ultra-low rates out there in the marketplace, but it has to be said that the non-majors simply can’t match our flexibility or approach to credit.

Homeloans has always been competitive and agile, offering some of the lowest rates in the market without compromising on features … Our in-house credit assessment team has delegated underwriting authority to approve applications on a number of

Bluestone Rates have become a commodity; it’s the service we offer that will resonate and linger with the brokers and their customers. The broker and customer experience is a strong focus and is embedded into the culture of the business. We constantly strive to not just provide good service but ‘breakthrough’ service, right from when our BDMs are engaged to the post-settlement welcome call.

Better Mortgage Management In business we are constantly striving to improve our offering. But so is the competition! How do we plan to compete?

By innovating and highlighting competitive advantages that we may have from time to time.

AFM Non-majors still struggle with maintaining SLAs during peak volume or promotional months … We have also carved out a market position as specialists in the house and land construction space, which has been our bread and butter for the past 20 years.

Focusing on a niche yet profitable market segment has enabled us to become the best construction lender in the market, and in many ways we feel we aren’t competing against the non-majors.

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“Service is not something we dial up and down along with the latest rate special or product initiative” Cory Bannister, La Trobe Financial our products, leading to fast turnarounds and effective communication ... Rather than simply decline an application because it doesn’t fit the policy applicable to the loan requested, Homeloans may be able to provide

an approval on an alternative product ... This saves the broker from trying a range of different lenders and leads to a fast turnaround of the application.

La Trobe Financial Our turnaround times remain among the best in the market, and pleasingly this has been consistent for many years. Service is not something we dial up and down along with the latest rate special or product initiative.

Brokers tell us our consistency and reliability over time is what drives them to use us.

Liberty Liberty has always set the benchmark for customer service and turnaround times, so as our competitors improve brokers already know they can rely on Liberty... we’ve invested heavily in strengthening our team in the last 12 months, which includes hiring additional underwriters, sales managers and customer service representatives. In addition, our rates are highly competitive, which means brokers are increasingly turning to Liberty as their first-choice lender.

OUR PLANS FOR 2017: ROYDEN D’VAZ, NATIONAL MANAGER – SALES, MARKETING AND DISTRIBUTION, BLUESTONE After an outstanding 2016, Bluestone is gearing up for an even bigger year, with a target of nearly doubling these volumes in 2017. We aim to do this by: enhancing our product range and tweaking policies maintaining our high-contact personal service increasing our BDM team to help our brokers navigate through specialist lending enhancing our technology with POS approvals

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FEATURES

NON-BANKS

Some wholesale funders are refocusing on white label products. Do you see these as a threat to your business?

Liberty Liberty has almost a 20-year heritage in the lending space ... In contrast, there isn’t a white label offering that we’re aware of that consistently offers broad solutions with leading service and competitive pricing. In fact, white label generally means less choice, more decision-makers, more hand-offs and lower clarity for and accountability to customers. More broadly, we welcome any competition that can bring consumers benefit in the form of a wide range of lenders and loans to choose from.

La Trobe Financial No, because we focus on particular segments of the market. We generally do not cater for white label products. Our customers are those whose financial needs are not adequately met by the traditional banking sector, and white label products are often simply replicating bank offerings. With La Trobe Financial you will always deal with the decision-makers, and that’s a key difference versus white label offerings.

Pepper Pepper Money has been a strong advocate for, and issuer of, white label products since 2004. Pepper Money prides itself on having an agnostic approach to funding its products, whether it be on a Pepper Money branded basis or through one of 20-plus white label branded products in the marketplace today.

In fact, 44% of all loans originated through Pepper are originated on a white label basis.

AFM We don’t really see this as a threat to our business. Most white label products are predominantly built around price, and at the

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end of the day the process and outcome is not significantly different to writing a loan directly with the lender ... One call or email to AFM will cover nine policy guides and save a broker many precious hours that could be spent on growing their business. Our service proposition and multiple funding channels also allow us to workshop applications rather than issue a decline if a loan doesn’t fit neatly with one policy.

Better Mortgage Management In some ways yes. In our time in business there has always been competition, and there will be in the future. I would see the white label as more a threat to the big four. There are still plenty of opportunities and market niches that can be accessed. Some of the consolidation that has occurred in the sector has actually opened up some space for us to operate in and obtain business from new partners.

Bluestone Our strategy is to have a concentrated shopfront of products that focuses on our core offering of specialist products, and commit to doing that well. By offering a wide range of products and spreading our resources thin, we get distracted from what the brand stands for – providing quality products and service to the specialist borrowers in the country.

Homeloans Homeloans products compete directly with white label offerings on price and policy; however, Homeloans’ in-house assessment, ‘one application, multiple lending policies’ philosophy, and dedicated settlement and post-settlement client service teams, among other points of difference, set us apart.

OUR PLANS FOR 2017: JOHN MOHNACHEFF, NATIONAL SALES MANAGER, LIBERTY The forefront of our mission is always to meet and exceed the expectations of brokers.

To this end, our resources have centred around strengthening our technology platforms to deliver greater service for our business partners.

We’ve also invested heavily in our skilled teams to support the needs of our business partners. Liberty is committed to reinforcing its heritage of providing top-quality BDM support, speedy scenario feedback, and market-leading turnaround times.

Additionally, we will continue to actively support industry sponsorships and increase our advertising program to lift Liberty’s profile to new heights. All of these efforts will see Liberty solidify its position as a top 10 lending group.

Our competitive advantage remains our ability to quickly respond to market conditions and deliver appropriate lending solutions. Liberty is dedicated to providing certainty to brokers by offering the widest range of solutions in the industry.

www.mpamagazine.com.au

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FEATURES

NON-BANKS

What is your top product for 2017 and why?

AFM We will continue to lead with our construction products in 2017. Construction lending has been our target market for the past 20 years, and it accounts for the majority of our business across all of our funder lines.

Better Mortgage Management Flexi Ultimate is an excellent product for customers, with a market-leading rate and no Risk Fee or LMI up to 70% LVR.

interest repayments), it’s a truly compelling product that will be a contender for our top product.

La Trobe Financial We see our ‘P2C® – First Home Assistance’ loan really taking off in 2017 as housing affordability continues to impede many young prospective homeowners. More and more parents and family members are assisting young Australians into homes, often

“Our appetite for investment lending is still strong, and with flexible features and a competitive interest rate” John Mohnacheff, Liberty Bluestone Our Lite Blue™ product is the most popular, catering for clean or credit-impaired selfemployed borrowers with an ABN that is >12 months, who can verify their income with one of the following three documents: business bank statements, BAS or an accountant’s letter. In 2016 we introduced a LOC and fixed rates to give our borrowers more flexibility and comfort, a unique offering in the specialist market. Our Business Easy™ complements the Lite Blue™ product and caters for clean or creditimpaired self-employed borrowers with ABNs <3 months old.

Homeloans Because of its low rate, our flagship Homeloans Ultra Plus loan is typically our top seller. But outside of our vanilla offering, the Homeloans Accelerate Prime sees clients paying no LMI premium or Lender Protection Fee up to 85% LVR, nor will they be at the mercy of a credit-scoring approach to assessment. With owneroccupier and investment loans at the same low, competitive rate (for principal and

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secure the family members’ investment without requiring personal guarantees or putting their credit file at risk. Additionally, parents can set the loan rate.

without protection of their investment. Our award-winning P2C® loan has the potential to not only allow young borrowers to access up to 105% of the purchase price without lenders mortgage insurance, but also to

Liberty Liberty Star for investors. Our appetite for investment lending is still strong, and with flexible features and a competitive interest rate. Our broking partners may be looking for a product like Liberty Star for their investor customers in 2017.

Pepper No one product is the silver bullet when it comes to loans. In fact our top product happens to be how we view credit … our cascading product set. It gives you multiple solutions through one application. Using this approach, the probability of being approved for a loan is much higher than going through a funder restricted to a mono-line product offering – ie a bank, non-bank or the nonmajors.

OUR PLANS FOR 2017: MARIO REHAYEM, MANAGING DIRECTOR – AUSTRALIAN MORTGAGES AND PERSONAL LOANS, PEPPER At Pepper Money, we have been preparing for 2017 since June 2016.

In 2017, Pepper Money has some exciting initiatives in the digital space that will support brokers on a 24/7 basis to convert more loans.

We’ll also be launching to the broker market a 100% online personal loan product that’s intuitive and easy to use.

We’ve identified those client groups, or personas, that will be most impacted by comprehensive credit reporting, and we plan to share those findings with our broker groups next year.

We’ll do our best to increase the awareness of alternative lending products by focusing on marketing messages that encourage borrowers to visit brokers asking for a Pepper Money loan. Importantly, in anticipation, we’ve bolstered our scenarios team and desk-bound BDM teams in order to ensure fast support for the broker channel.

Finally, our now infamous Pepper Insights Roadshow will be back for its third year, focusing on what brokers need to support their own future business initiatives.

R D

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16/01/2017 2:21:26 3:04:20 PM 13/02/2017

PEOPLE

BROKERAGE PROFILE

YBR SYDNEY CBD Rogan Yates is Yellow Brick Road’s top broker, running the franchise’s top brokerage. He told MPA how he engages clients in his exclusive city centre neighbourhood BLIGH STREET, on which Yellow Brick Road Sydney CBD is based, is at the exclusive end of the Harbour City’s office precinct.

Turning left you’ll find Neil Perry’s high-end restaurant, Rockpool Bar & Grill, and the brokerage is literally back-to-back with 1 Chifley Square, the tower block in which YBR’s head office and its executive chairman, Mark Bouris, are housed. This is a place for high-achievers, and they have an equally highachieving broker in Rogan Yates.

YBR Sydney CBD wrote $160m in loans last year – a figure that put Yates in the top 10 of MPA’s Top 100 Brokers – and won National Branch of the Year and National Outstanding Performer Lending at YBR’s 2016 awards.

Yet despite these accolades, Yates is just as accessible as your local broker: you can ring his mobile direct or walk into the office, whatever is in your bank account. “I’ve got such a wide range of clients,” Yates says. “I’ve always had the policy that I’m open to everyone, whether it’s a first home buyer or a high-flying exec on a couple of million dollars a year.”

Being accessible is why the CBD’s exorbitant

rents are worthwhile, Yates explains. “If you work in the city you get the flexibility of being able to come over here at lunch or pop over during the day; that’s the idea of our business.”

As the banks can easily afford CBD branches, a broker needs to stand out. “If you want to become a mortgage broker you need to differentiate yourself from someone having to go to the bank and wait in line … we need to be there.”

Inevitably, the CBD’s high-net-worth business executives tend to have pre-existing relationships with accountants and financial

“I would back myself against a private banker any day … a private banker has one set of products he has to push; I’ve got all of them” planners as well as bankers. Compared to the former, Yates believes, the broker’s commission model is a huge advantage: “we don’t get paid unless there’s an outcome”. Compared to the latter, Yates’ 16 years’ experience makes the

SYDNEY’S PROPERTY MARKET STORY

0.6%

10.6%

95.7%

$800,000

increase in dwelling values over October 2016

increase in dwelling values in year to October 2016 (the highest in Australia)

increase in dwelling values since the GFC (the highest in Australia)

median house price (the highest in Australia)

BUT 3.8% gross rental yield – the second-lowest in Australia Source: CoreLogic Hedonic Home Value Index, October 2016

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difference. “I would back myself against a private banker any day,” he says. “I would back myself on knowledge: a private banker has one set of products he has to push; I’ve got all of them.”

What Yates lacks is time, and with two new brokers in the office he is trying to make the best of it. “I’m in that process of transitioning, of trying to let go of being there for everybody, but not so they think they don’t deserve that, because what has made my business so successful is being there for everybody.”

The new brokers are currently doing extra

training in reading financial statements and tax returns, which Yates says is a necessity.

“In the city we do get that client that is selfemployed or has those family trusts, and they’re not easy to read … there’s not one vanilla return that everyone uses; they’re all a bit different.”

Yates’ recruits are entering a brokerage not only with a recognised national brand but also Yates’ own network. “I’ve always relied on repeat business from just one good job,” he explains. “I think if you get into broking the number one thing you need to rely on is that you can get a referral from the client you worked with. How do you quantify what comes through marketing anyway?”

With referrals well understood in the local business community, doing a good job does get you recognised. “I don’t encourage referrals,” Yates says. “I’ve been told many times I need to ask for referrals, but I never do!”

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FAST FACTS Year founded 2009 Services Mainly owner-occupiers (70%); investors (30%) Staff 4 brokers + 2 assistants + 1 financial planner Premises Street-level shopfront Owner Rogan Yates Income Upfront and trail commission/upfront and ongoing fees (financial planning only)

“I’ve always had the policy that I’m open to everyone, whether it’s a first home buyer or a high-flying exec on a couple of million dollars a year” Despite having an established network, Yates still pays to be under YBR’s brand.

“For me personally I think you need to be aligned with a brand if you’re a broker; I think there’s some comfort,” he explains.

“Would I survive on my own? I’d say yes, but Mark [Bouris] gave me a start 16 years ago, looked after me and has always been a good role model to me, and I’m loyal to that.”

Furthermore, Yates says, “Mark is one of the best marketing guys in the business”, and YBR provides much marketing collateral.

YBR now brands itself as a wealth management business, and fittingly Yates has a financial planner in-house. Although broking is typically what brings clients through the door, Yates points out that brokers play a role in all three areas of wealth management:

buying a home, superannuation and other investments (including investment properties).

“It’s still expected that if someone walks in for a mortgage, we would open the door to our other services at some stage, whilst being very mindful of not pushing someone.”

Next year Yates plans to send his young brokers out into Sydney’s countless offices, offering employees broking and wealth services, building on Yates’ reputation in broking and YBR’s reputation in wealth.

“I’d like to see our business actively infiltrate the city more,” Yates says, “I think there’s more capacity for us to get out there and offer our services, whether that’s being the trusted broking firm or wealth management firm for individual companies.”

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BUSINESS STRATEGY

MILLENNIALS

A GENERATION SET UP FOR FAILURE? Much like millennials have changed the way we work, soon they will change the way we lead. However, Hiam Sakakini suggests the old leadership development models will not work for this generation

WE’VE NOW moved firmly into an era in which millennials are taking on the responsibility of managing people.

The problem is their predecessors haven’t given serious consideration to the unique ways millennials learn, adapt and grow as professionals, consequently not arming them with the critical leadership capabilities that ensure future sustainability of an organisation.

I see it everywhere: senior leaders taking a page from the old textbook, ‘How to manage and grow a workforce’. This advice simply doesn’t work any more for the 6.1 million millennials in the workforce today. How scary to think that we are potentially missing easy opportunities to engage this segment of future leaders.

Having spent a significant portion of my career both managing a team of millennials and learning about their needs, it has become apparent to me that this old way of developing our future leaders, well, doesn’t develop leaders any more.

To get some perspective, let’s look at the trends Gen Y bring with them: • Millennials typically have itchy feet and tend not to stay in a position longer than two to three years maximum.

• They like to work in sprints: short projects with rotating teams increase their productivity and engagement.

You’ll notice emergent leaders will feel compelled to solve a problem presented

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through a project and then retreat to being part of the team once the problem they noticed is solved.

• They prefer a leader who is involved and inclusive: a mentor and a coach, as well as a friend; someone who is accessible, not hierarchical; someone who genuinely cares about them as a whole person, not

just during their working hours.

• They need immediate feedback on their performance. They want it straight after a milestone is achieved. They are digital natives, which has propelled the art of instant feedback.

• They are driven by their core values, which anchor their every decision. This seems to

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be instilled by a great relationship with their parents, who tend to be the key influencers in their decision-making.

• They enjoy a challenge, they like to be constantly stimulated, and they aren’t afraid to stretch themselves out of their comfort zone, especially when the project has impact.

So, with all these trends in mind, the challenge now is how do you grow leaders who typically don’t spend very long in a single role or with the same employer? What strategies do you need to implement to fulfil their need to feel challenged and learn best on the job? And how do you factor in their care about impact, not status and titles?

How we incorporate all of this into a journey that develops leaders for the future will determine the long-term success and stability of your organisation.

It starts with managers-of-managers Typically, promotion, and therefore by default succession planning, rewards bottom-line results. Type A personalities that are quite driven, fearless, competitive and focused do exceptionally well as individual contributors, rising through the ranks because they are as goal driven in their careers as they are with their KPIs. They get noticed, they openly ask for a promotion, and they are seen as natural leaders over and above those who seem ‘too emotional’.

I will admit that as a young saleswoman at Google who loved to smash through every target handed to me, I was that person. Before I knew it I had a team and was expected to teach them the tips and tricks that I knew instinctively. The problem was that I was never equipped to coach, and as a result I faltered ... badly.

How can managers-of-managers play a crucial role?

1 Pay attention to how your superstars are achieving their KPIs. Are they collaborative?

Are they inclusive? Do they ask for feedback from their teammates as well as from you?

Are they helping their team towards achieving their collective goals?

Rewarding the how as much if not more

CHANGING STYLES OF MANAGEMENT Old-school

New-school

Hire for a specific team

Hire for personal values and cultural fit

Hire for skills and experience

Hire for motivation, growth mindset and aptitude for change

Promote based on bottom-line results and short-term achievements

Promote on results combined with behaviours and long-term impact

Develop leaders through high-potential fast-track plans and programs

Develop leaders through experiential on-the-job projects that bake in coaching, reflection, tools and guides

Give feedback at performance review time

Give feedback in real time

Pay attention to how your superstars are achieving their KPIs. Are they collaborative? Are they inclusive? than the what through your competency and behaviour frameworks will by default get the right future leaders into the next leadership layer.

2 Support your new managers with learning the art of coaching. This is a new skill that typically only gets taught after an individual contributor becomes a manager, and is crucial to their success and the success of their team.

Be the meta-coach.

Deconstructing leadership learning This is a challenge! And it will require an investment of time and the support of a good internal or external learning and development business partner, but the investment will pay off.

Within everyday workplace teams, projects and initiatives, there exist golden opportunities to learn valuable leadership lessons. This all starts with a) identifying the learning opportunity; b) keeping the right tools, principles and techniques at your fingertips to match the scenario at hand; and c) having the guidance of an experienced facilitator who allows the team time to stop, reflect, give feedback and experiment.

I don’t think leadership programs will be replaced entirely by this approach; however, the tools and principles that lie within them can be deconstructed into bite-size easy-touse downloadable items, facilitator guides and ‘how to’ videos that can be used within the life cycle of any project or initiative.

Capitalising on the learning opportunities within everyday business projects will mean a richer experience for all involved and potentially less time and money spent on formal leadership learning courses.

Ultimately, the ramp-up time to upskill future leaders will be significantly shorter, which will coincide with the trends of millennials and their itchy feet!

Hiam Sakakini is the co-founder of Think Change Grow and is the former head of leadership development at Google APAC. During 14-plus years of working in Fortune 500 companies in a range of roles, Hiam has developed a passion for pinpointing the simplest strategies to help individuals and teams build the skills, confidence and competence needed to become genuinely customerfocused and deliver outstanding bottom-line business results.

Visit thinkchangegrow.com.

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BUSINESS STRATEGY

WORK-LIFE BALANCE

WHY SLOWING DOWN IS VITAL TO BUSINESS SUCCESS Ever feel like life is moving too fast? Do you wish you had more time to work on your business? The great news is you can – you just need to slow down, writes Angela Lockwood IN BUSINESS there is a lot to do. Whether it is your own business or you are working for a company, there is always an endless list; people are expecting a lot of you and a mountain of tasks are vying for your attention.

Whether we like it or not the situation is not going away, and if future predictions are correct things are not going to slow down; in fact, strap in because we are in for a long and fast ride. Advancements in technology, an overwhelming amount of choice, and everchanging expectations are impacting on our ability to cope with the speed of change and the expectation that we will keep up.

Unfortunately, if we are finding it hard to keep up there’s no big red button in front of us to press when things are getting too overwhelming. Instead we keep persisting with working late, working on weekends and pushing through sickness in an attempt to get the basics done, even though we know the long hours and constant connectivity are not doing us any favours.

Constant connectivity to people, technology and our workloads is resulting in our work and life becoming overwhelming, making it hard to ever switch off. Our frenetic pace, racing from one meeting to the next and one client to the next, is affecting our ability to take time out, slow down, switch off and refuel. We are in a state of chronic ‘overconnection’; overwhelmed and overstimulated. With our bodies and

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minds constantly ‘switched on’, our health, wellbeing and relationships are increasingly paying the price. Despite our best efforts to manage focus and productivity alongside creativity and progress as a society we are finding the pursuit of ‘more’ and ‘now’ is not working and is an ever-growing concern we must address before it gets out of hand.

Life-role evolution Over the last two decades in particular we have seen a significant shift in life roles for men and women. Stay-at-home roles and part-time work that was predominantly undertaken by women is now being embraced as an option for men, allowing them to pursue their passions outside of work or share family responsibilities with their partners so they can both develop careers.

According to a report released in 2016 by the Workforce Gender Equality Agency, an estimated 9% of Australian men are now working in part-time employment across their working careers in order to take on more family-focused roles. The evolution of our value of work and its purpose in our lives on a personal level is creating a shift in our expectations of our workplaces as we look for new ways of working that allow us to be engaged in productive and meaningful work as well as spend time with family while pursuing our interests. From workplace health and wellbeing incentive programs to paid mental health days and health education sessions, the responsibility for employee health and wellbeing is now lying in the hands of both the employee and the employer.

Continual shifting of work roles and workplace expectations is evidence that people are searching for ways to better manage their lives and all this involves, knowing that without optimal health we are not performing at our best.

Doing more by doing less To achieve more, we do not have to keep pushing ourselves to do more; in fact, we are capable of achieving more by doing less. How? By slowing down. By taking our foot off the pedal we are allowing ourselves three important gains that will improve our

motivation for work while improving our productivity and progress.

necessary if we want to keep moving forward with energy and stamina.

1 Perspective. When we slow down we can take a big metaphorical step back from our lives and see what is happening to our health, our relationships, our businesses and our goals. When we are too bogged down in our to-do list, looking down constantly at our devices, our field of view narrows and we can miss the opportunities that are right in front of us. Giving ourselves the opportunity to step out of the detail of our day and take a look at the big picture will provide perspective on whether we are moving in the right direction.

3 Sharper focus. We all know what it feels like to hear the alarm sound and it feels like we have just fallen asleep – it feels awful! Sleep deprivation is known to affect our ability to make rational decisions and respond to situations, and it impacts on our mood and emotions. Not getting enough sleep could be holding you back in business, and if you are not an early riser then you could be missing out on your peak period of productivity. Early morning is when our circadian rhythms are at their most alert, our

With our bodies and minds constantly ‘switched on’, our health, wellbeing and relationships are increasingly paying the price This can be as simple as setting a reminder to look out the window, going outside to eat lunch to take in your surrounds, or reflecting on your week with a friend or partner.

2 Renewed energy. Ever tried sprinting a marathon? It would be impossible. Our bodies are not designed to go full throttle for long periods without rest. When we try to push ourselves beyond our limitations the effects of burnout take over and we find ourselves without the energy, focus and motivation to get through the day. Energy, focus and motivation are three factors crucial to success in any business. When we slow down we give our bodies the time they need to rest and re-energise, boosting their resistance to illness, meaning less sick days and more energy. With energy we become agile in our responsivity to unexpected challenges that arise; this enhances our ability to make better decisions, and our creativity flows. If you live life at full throttle, slowing down can feel like you are being lazy or wasting your time. But it is far from the truth. Resting can be as simple as a five-minute break in your day when you stand up from your desk and take a big, deep breath. Slowing down is

attention and energy peak, and it’s the perfect time to work on priorities, setting a frame of clarity and calm for the rest of the day.

The argument that slowing down is impossible in today’s society is not true, and there is ample evidence to show how people are successfully integrating the skills of slowing down into their fast-paced lives.

Slowing down can feel like an impossible scenario when we lead such full lives, but switching off isn’t about doing more; it means doing less! If we focus on the payoff of taking time to slow down – better health, improved energy, clearer thinking and a renewed motivation for work – switching off will no longer seem a cop-out or a luxury, and instead a necessity if we are to keep up with the pace of life.

Angela Lockwood is an occupational therapist whose retreats, corporate education programs and keynotes help organisations, schools and individuals prioritise their health and wellbeing. Angela is the author of Switch Off: How to Find Calm in a Noisy World and The Power of Conscious Choice. To connect with Angela go to www.angelalockwood.com.au and follow her on Twitter @angelockwood and Instagram @angelalockwood_.

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BUSINESS STRATEGY

PERFORMANCE REVIEWS

TIME’S UP FOR PERFORMANCE REVIEWS Annual performance conversations no longer cut it.

Targeted real-time feedback means we can change, grow and develop the skills needed to stay in the game, says Anneli Blundell

PERFORMANCE

DEVELOPMENT

needs a performance upgrade. As far back as 2014, Deloitte stated that “managers who provide regular feedback and opportunities to improve are far more likely to field highperforming teams than those who retain once-a-year rankings”.

People need constant and targeted feedback, in real time. That’s how leaders create high performance. Imagine the coach of an elite sporting team giving performance feedback once a year: ‘“OK, Ritchie. I really like how you improved your kicking accuracy this season. That second-quarter goal in the third game was amazing. If you could do more of that and pass the ball more often, our results will improve. I’ll sign you up for a collaboration workshop and we’ll see how next season goes.”

Ridiculous concept, isn’t it? Sport is fast.

It requires skill, teamwork and individual performance. What makes us think the game of business is any different? Leaders need to pay attention and give feedback in the moment – not in a year’s time.

State of play for performance reviews Many large companies remain loyal to annual performance reviews, much to the frustration of those involved. For employees,

it can be an administrative formality that ‘ticks the box’ but doesn’t develop or change actual performance; for managers, it’s an administrative burden that interrupts ‘real work’. Research is beginning to empirically support what we intuitively know: annual performance evaluations don’t positively affect performance.

• Feedback interventions, like performance reviews, improve performance 41% of the time and make matters worse 38% of the time (Dixon, Rock and Ochsner).

• 58% of executives believe their current performance management approach drives neither employee engagement nor high performance (Harvard Business Review).

• 70% of respondents to a Deloitte survey stated that they were either ‘currently evaluating’ or had recently ‘reviewed and updated’ their performance management systems.

TIME FOR A CHANGE? Deloitte surveyed companies worldwide and found that dissatisfaction with annual review performance management systems was leading to companies changing their systems.

Respondents’ plans for updating performance management systems Plan to review in the next 18 months

18%

Currently evaluating

29%

Reviewed and updated in the last 18 months No plans to review

42% 11% Source: Deloitte, Global Human Capital Trends 2015

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www.mpamagazine.com.au

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they want to know what’s next, and they want opportunities to get there.

The annual evaluation is a time-consuming, non-value-adding and possibly destructive process that does not positively improve performance at work. The future of annual performance reviews, as a management tool, is bleak. So, what’s the alternative?

The performance conversation trifecta The simple solution is regular performance conversations: timely, targeted development conversations that drive engagement to both develop performance and produce results.

However, simple does not mean easy. Effective performance conversations require the right consistency, style and mindset.

1 Conversation consistency “Organisations where employees reviewed their personal goals quarterly – or even more often – were nearly four times more likely to score at the top of the Bersin by Deloitte’s Total Performance Index” – Deloitte Developing performance requires feedback that is regular and in real time. You develop a better kick by doing it repeatedly and getting real-time feedback. Regular conversations mean in-the-moment, unscheduled feedback

when it’s needed most. Establishing a regular conversation cadence gives the brain the attention and repetition needed to create sustainable behaviour change. The greater the gap between action and adjustment, the slower any change takes hold. Ongoing focus and reinforcement provides optimum conditions for growth and learning.

2 Conversation style “High performing individuals, teams and organisations focus on exploiting development opportunities in the workplace because that’s where most of the learning happens” – Charles Jennings Leaders need to coach and develop their staff, not just direct and control them. A coaching conversation is more than a simple check-in about daily tasks. It includes a broader conversation about career potential, role progression, required skills and new opportunities. It covers both the skill and the will.

Motivation and engagement, barriers and blockers – these are the topics required to kick organisational goals. The new player on the elite team is ambitious. They want progress;

3 Conversation mindset ‘Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others’ – Jack Welch The leader’s mindset towards performance conversations plays an important role in how effective the conversations are. A leader’s role is to develop their staff. This is not in addition to their regular work; it is their regular work.

In fact, some progressive organisations, for example Hindustan Unilever, the Indian subsidiary of the consumer goods giant, feel so strongly about the competitive advantage this mindset offers, they expect their leaders to spend 30–40% of their time developing their people – hence Unilever’s reputation as a ‘talent factory’ (Heath & Heath).

It’s not rocket science. Leaders who have not embraced this idea will struggle to make the time to develop their staff. Eventually, their staff will leave in favour of a manager who will make the time. If the leader does not embrace this mindset for themselves, no amount of policy, sophisticated performance systems or culture change programs will make a difference.

The elite player wants to play for the best team – the team that is continually challenged and growing and called forth into their greatest potential by the coach and leader.

They want to be inspired.

A call to action Leaders can take action today with regular real-time conversations and a mindset that embraces the crucial role leaders play in developing high performance. There is no need to wait for the cultural tide to turn or for new processes to be developed and sanctioned.

As the leader, you’re the coach on the field.

Are you giving your team the performance feedback they need to win?

Anneli Blundell is a professional People Whisperer who specialises in decoding people dynamics for improved performance. She is the co-author of Developing Direct Reports: Taking the Guesswork out of Leading Leaders.

Contact her at www.anneliblundell.com or ab@anneliblundell.com.

www.mpamagazine.com.au

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BUSINESS STRATEGY

BRANDING

BRANDING IS MORE THAN A BUSINESS CARD Jayden Vecchio, former MPA Top 10 Commercial Broker, explains why he began taking branding seriously, and how it can help your brokerage get noticed faster ALMOST FOUR years ago I left a safe and secure job with a bank to become a broker.

Like many brokers who have also taken the plunge, it was one part exciting and 10 parts completely overwhelming, because not until you leave a large company do you realise all the parts that a high-performing business needs: systems, processes and a strong brand.

As a banker writing deals, I was directly involved in the systems and processes day to day; however, branding wasn’t a large focus of what I did. To me, it never seemed to be an important part of the equation because I figured that being out there pounding the pavement was the most important element, and I carried this attitude with me when I started my business, Discovery Finance, in 2013.

I spent months working on systems and processing, but not a lot of thought went into the branding behind it. I created the logo myself late one night (over too many episodes of Game of Thrones), then that same weekend I designed a simple business card and put a website online with some basic details. I was stuck in the mindset of thinking that the brand and how it looked came secondary to the business and systems itself – and initially as a one-man band this was probably right. But in the years since, I have learnt that if you want to grow your business to be more than one person pounding the pavement, then having a strong brand is the single most important factor.

For me the problem was this: as Discovery Finance began to grow beyond just myself we

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didn’t have a strong and clear brand. With very limited marketing exposure outside of the business cards and website I made myself, my staff found it hard to explain clearly what made our business unique. Our clients would get confused as to what we stood for and what our brand was because it just hadn’t been developed to begin with.

Equally, most of them hadn’t even heard of our brand, or seen it around, so we were starting every new client conversation on the back foot. It was frustrating to say the least.

Headed for change, in May 2016 we merged Discovery Finance with Red Brothers Property Management and Red Truck Development Management to form Red & Co.

Having learned from my earlier mistakes, I know now how important it is to build a brand that doesn’t revolve around one individual, and if I could rewind to four years ago I would have focused on this.

It took four years to build Discovery Finance into a brand, but just six months to do the same with Red & Co. Why? What did I miss the first time around? And what are the simple things I could have done to speed things up?

Lesson 1: Be clear about who you are speaking to. In today’s increasingly visual, Instagrammable world, you and your brand need to be visually appealing – and

QUIRKY WAYS TO GET NOTICED You don’t need to spend a fortune to get your brokerage’s name out there. Here are a few ideas I’ve tried and come across: The walking billboard: Branded gym shirts do surprisingly well!

Fun for the whole family: Ready-made showbags for the kids (www.busynippers.com.au) Keep them hydrated: Branded bottles of water are great for appointments in your office.

The pen is mightier: Pens are cheap to buy, and people use them a lot, keeping your brand front of mind.

Don’t stop at the shirt: We have given all our staff socks that fit with the Red & Co brand, and when they do home visits and have to take off their shoes clients notice! www.happysocks.com/au/navy-filled-optic-sock.html

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Lesson 5: A brand isn’t just about having a pretty logo and a website. For the first three years of my business I only had business cards, a laptop and a website, and this worked just fine. Today, however, I’ve realised that the more you can get your brand out there, the more trust this builds and, in turn, referrals. I now have branded jelly beans to give to kids at loan appointments, branded pens, document folders, polo T-shirts, gym shirts (as surprising as it might be, these generate two to three new enquiries a month just from sweating my pants off and wearing my brand at the gym), branded cars and signs on construction projects we have funded.

Lesson 6: Branding is neverending.

Like your business, branding and marketing is an element that needs to continue for as long as the business does. If you look at massive brands like Red Bull or Apple you need to understand that making a lasting brand doesn’t happen overnight; it is a process that you need to chip away at a little bit every day. unfortunately for me, my old Arial-font Discovery logo didn’t quite cut it. One thing we did early on with Red & Co was clearly define who our target audience was: we wanted a young, energetic brand that didn’t look like a real estate company. I looked for similar designs on Behance, Pinterest and Inspiration Grid to get clearer ideas of what I wanted.

Lesson 2: Get a professional on board. Not doing this is a classic mistake made by a lot of small business owners, including me! When you are starting out you generally don’t have a big budget to spend on hiring professionals, but this can be your undoing. As a broker it was ironic that I spent my days educating customers on why they should use me and leverage the skills of a professional – and then when it came to branding I didn’t follow my own advice! With Red & Co I finally learnt my lesson, and using Behance I found our designer. If you don’t want to spend a lot, another great option is to find freelancers through 99designs, Design Crowd, Upwork or Fiver.

Lesson 3: Same same, but not different. Being different just to be different is silly, but if your brand looks the same as everyone else, then how do you expect to get different results from them or stand out from the growd? This is why, when deciding what the brand would look like, I didn’t want it to look like a bank with a bland-looking logo, or like most real estate agency businesses with a sleek black font, and instead went for something that looked a bit different.

Lesson 4: Annoy your friends and family by asking for lots of feedback.

Before we settled on Red & Co as a business name, some of the others shortlisted included Red Discovery, Red Finance and Red Rocket.

The last of these names surprisingly made it a fair way along – we wanted to be known as a super-responsive, client-focused business – but a quick search on Urban Dictionary showed that this name wasn’t very appropriate for a professional business!

Make sure you test your brand pitch on friends, family and previous customers – it’s amazing what a fresh perspective can show and the ideas you can take away.

The exciting thing for our industry is that branding isn’t limited to business owners.

It can also be used just as effectively by individual brokers. In a similar vein to real estate agents, you can use your personal brand to stand out from the competition.

Regardless of whether you are in the early stages of starting a business or have been working at it for years, try applying these tips and see the difference it makes to your overall business exposure.

I have personally found that this branding process has been paramount to Red & Co’s success, and now we ensure we make our brand the driving factor in every marketing and promotion decision we make, which has become just as important to the business as our systems and processes.

Jayden Vecchio, director of Red & Co in Brisbane, has been an MPA Top 10 Commercial Broker and an MPA Young Gun. He was also named the FBAA’s Commercial Broker of the Year for 2016.

You can read his regular advice column every Friday on MPA’s website. Find out more at www.redandco.com.au.

www.mpamagazine.com.au

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BUSINESS STRATEGY

MANAGEMENT

FIVE SIGNS YOUR EMPLOYEES DON’T CARE ANY MORE From absenteeism to poor-quality work, leadership expert Karen Gately identifies the warning signs of employee disengagement and what you can do about them PUT SIMPLY, engagement is the extent to which people feel connected with and committed to their job, team and organisation.

Being connected is most clearly reflected in the emotional ownership people feel; in other words, how much they really care about achieving their own objectives as well as about the success of their team.

The ultimate indication of disengagement is when it results in a decision to leave the job.

While some people will stay in a role they’re not happy in, most will eventually choose to look for a new and better opportunity elsewhere. Of course, some people leave feeling satisfied with their employment experience, but the reality is many don’t. Inspiring people to build a career rather than simply do a job is an important challenge for the leaders I work with.

Most people move on because they are looking for something they don’t have or can’t get where they are. Whether it be to find a more interesting or challenging job, or more money, a greater work–life balance or a healthier workplace culture, the reasons people choose to leave are many and varied.

How to spot disengagement The five most common signs of disengaged staff include:

harder to get out of bed and go to work when they are dreading what’s waiting for them when they get there.

2 Lack of discretionary effort – What people do because they want to, not because they feel obligated to. Disengaged people typically do only what they have to do to keep their job. Some deliberately limit their contribution in silent protest at their unhappiness.

3 Absence of teamwork – People who

1 Absenteeism – High rates of frequent and unplanned leave. Most people find it much

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are disengaged will often fail to work well with other people. Those who are engaged

will often find their disengaged colleagues frustrating and a roadblock to success. The potential for these frustrations to escalate to conflicts is very high.

4 Suboptimal productivity – Simply focusing on the task at hand, let alone driving to achieve optimal results, is a challenge for disengaged staff. While they struggle to find energy and focus, their job is not getting done.

5 Poor-quality work – Errors, overlooked priorities and missed deadlines are just a few examples of the impacts disengagement has on the standard of performance achieved.

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Common challenges in small business Keeping people engaged in a small business environment can be especially difficult.

Among the most common challenges leaders face include: 1 Providing rewarding careers. Often small businesses are not in a position to offer the career advancement steps people are looking for. Looking for and providing opportunities for people to learn and grow with the business are critical challenges.

2 Investing the time needed to help people feel valued and supported. Often leaders in small businesses have a heavy individual workload to manage. The demands of service delivery, business growth and financial management make spending time with staff challenging. Typically, this leads to inadequate focus on the essentials of people management, ie providing clarity, coaching and accountability.

Driving engagement Identifying and accepting the fact that you have a staff engagement issue is the first step towards overcoming it. Choosing to do something about it is the next. The leaders I work with are typically frustrated by the demands on their time and energy of having to deal with performance issues; however, all too often they fail to act. Overlooking or avoiding obvious signs of disengagement is a common mistake I observe leaders make.

Each person is unique, and to influence their commitment takes understanding of what makes them tick. As I share in my latest book, The People Manager’s Toolkit, the most important thing any leader can do to improve engagement is focus on the spirit of their team.

Our spirit is the positive energy that we have in reserve and draw on to get our job done.

People who are energised typically choose to behave in ways that enable success. Conversely, when people are drained they become more likely to disengage and behave in ways that undermine not only their own success but also that of their team. Following are four common influencers of a person’s spirit and therefore engagement at work.

1 Sense of personal value How we feel about ourselves as well as how we believe others feel about us energises or drains our spirit. Feeling valued, qualified, capable and successful are powerful energisers and drivers of engagement. Influence people to feel valued and they are more likely to remain connected with their job and your business.

2 Relationships The quality of our relationships with our boss, colleagues, staff, clients, service providers, etc, influence the way we feel about being at work.

When we trust and respect the people we work with we are more likely to be engaged.

Contemplate for a moment the people who inspire you to give your all. Equally, reflect on those who cause you to minimise your efforts and do no more than you have to.

3 Purpose and meaning

How people feel about what they and their organisation contribute to the world matters. Doing a job that has an altruistic purpose energises many people, while for others purpose and meaning derive from the harmony between their values and those of the organisation they work for. Still other people want to feel a part of something bigger than themselves or to contribute to their organisation’s success.

4 Belief The strength of our belief is reflected in how we feel about the future and our ability to influence that future. Examples of the types of positive emotions we want people to feel include being hopeful, optimistic, confident and empowered.

Make engagement matter. Hire and retain people who want to be there, understand your team, deliberately influence the things that energise their spirit and you are well on your way to overcoming most causes of disengagement. On a final note: as a leader there is a lot you can do to influence the engagement of your team, but only so much.

Expect people to also take ownership of their own spirit and level of engagement. As the age-old saying goes, you can lead a horse to water but you can’t make it drink.

KEEPING EMPLOYEES ENGAGED Market researcher International Data Corporation surveyed employees across the Asia-Pacific region, asking them the following question: What makes you happy and engaged as an employee?

Better pay/salary and reward 16% Enjoying the work I do 13% Work-life harmony 8% Feeling safe about my job 7% Feeling connected to my work and organisation 6% Effective leaders 6% Well-defined goals and objectives 6% Feel that I am making a difference 6% Flexible working hours and days (eg choose the hours/days I want to work) 6% Flexible to work remotely (eg work from home) 5% Source: International Data Corporation white paper: Focusing on the Employee Segment of One for Higher Engagement and Productivity, June 2016

Karen Gately is a leadership and people management specialist and a founder of Ryan Gately. Karen works with leaders and HR teams to drive business results through the talent and energy of people. She is the author of The People Manager’s Toolkit: A Practical Guide to Getting the Best from People (Wiley) and The Corporate Dojo: Driving Extraordinary Results Through Spirited People. For more information, visit www.karengately.com.au or contact info@ryangately.com.au.

www.mpamagazine.com.au

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PEOPLE

CAREER PATH

THE FULL SPECTRUM OF FINANCE Homeloans Ltd’s Ray Hair worked at the ATO, Deloitte and ALI Group, and spent a decade building PLAN, traversing the third party channel

PR

1981

Crossing ‘the ditch’ in 1978 to study economics in Australia, Ray Hair WORKS FOR soon found himself short on cash.

THE TAXMAN He got a job at the Australian Taxation Office, where he spent six years while completing his degree and getting travel 1993 “out of my system” in Europe, India and Nepal.

FIRST STEPS IN FINANCE

1999

MEETING THE THIRD PARTY

Having got to know finance, Fortis was where Hair began to work with the third party channel. “It was my first major third party experience, distribution-wise.”

A large European insurer looking to build its presence in Australia, Fortis was eventually sold to CGU Insurance.

2001

BUILDS PLAN AUSTRALIA

Hair was reunited with Moulieris at PLAN, which had by then been going for two years. Broking in 2001 was a different world, with brokers comprising a mix of entrepreneurs and recent departures from the banks. “Right from the early days there was that two-speed nature,” Hair explains, “those that were happy enough to pay their way on top of what they already had post-25 years in the bank, and those that saw it as a business.” Over five years Hair moved from national sales manager to CEO, while PLAN grew through increasing broker numbers and user-friendly software.

2011

JOINS ALI GROUP

Uninterested in working in a large organisation, Hair left PLAN shortly after it was acquired by NAB, becoming CEO of insurer ALI Group. Diversification was then in its infancy. “Getting a broker to put a mortgage protection product into their process and the discipline to follow that process was our biggest challenge, and the biggest success we had was with Aussie.”

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When Hair joined the Royal Automobile Club of Victoria he did so as a tax expert, but soon became immersed in finance – life insurance, vehicle finance and even home loans – as general manager of financial services. He also recruited Alex Moulieris from Aussie. Moulieris later founded the aggregator PLAN Australia.

“I’m a big believer in working with people like Alex Moulieris, like Huy Truong, like Scott McWilliam, who are good operators who have a vision.”

2008

KNOCKED BACK BY THE GFC The GFC hit PLAN in two different ways. Challenger had bought into PLAN, Choice and FAST as distribution channels but soon found funding drying up. Challenger was later bought up by NAB. Commission cuts hit PLAN’s members, Hair recalls.

“The major cut was not the cutting of upfront, but the cutting of trail…a 40% revenue cut which didn’t hit most brokers for several years.”

“You had the GFC and regulation coming together… you were working harder for less.

Systems became far more important, and scale became far more important” 2014

MOVES TO HOMELOANS LTD “What attracted me to Homeloans was the size of the organisation, the culture and the opportunity, but also Scott McWilliam the CEO,” Hair explains. He took on the challenge of establishing Homeloans on the east coast, growing the business 24% YOY in the first year. “That was what made the merger with RESIMAC logical,” Hair explains. RESIMAC merged with Homeloans in 2016.

www.mpamagazine.com.au

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PEOPLE

OTHER LIFE

A21 and The Freedom Hub There are 4,300 slaves in Australia, the Global Slavery Index estimates.

A21 (www.a21.org) and The Freedom Hub (www.thefreedomhub.org) work to prevent human trafficking and slavery, prosecute those responsible, and help survivors get back on their feet.

Nathaniel Nhan Truong

MUCH MORE THAN 10%

MPA Young Gun broker Nathaniel Nhan Truong gives one tenth of his brokerage’s turnover to charitable causes, come rain or shine “GROWING UP you always want to make a difference,” says Nathaniel Nhan Truong, “but you don’t always know how.” For brokers who are interested in charitable and community work but lack specific skills, this is a major barrier. It’s a question Truong asked himself, when considering what do after a corporate career at ANZ and CBA. “I thought, ‘What am I good at?

I’m good at finance; I’m good at lending.’

That’s when I came up with the tagline ‘Finance a difference’.”

Truong’s brokerage, the Loan Lounge, takes this ethos literally: the brokerage gives

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10% of its upfront and trail commission to charity, year-round. With Truong an MPA Young Gun now writing $6–8m a month, that 10% has become quite substantial. And although many brokers make charitable donations, giving a set amount is still rare.

Funds from the Loan Lounge go to two charities, A21 and The Freedom Hub, which help survivors of human trafficking and slavery. It’s a cause Truong is particularly interested in. “I can get very in-depth stats on what the money does,” he says. “For example, if we give $500 that means the survivors get one term in the survival school … it’s about

helping individuals recover from trauma, learn about Australia, integrate them and prepare them for the workforce so they can get back on their feet.”

Clipping 10% from your turnover seems daunting, Truong says, but “I would say give it a go before you dismiss the idea”.

Giving regularly isn’t just a good habit; Truong believes it’s changed his approach to business. “When you work with that sort of mentality you always look for innovation, for ways to improve your business, and you work with what you have and what’s in your hand.”

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