Mortgage Professional Australia magazine Issue 14.07

S R E K O R B NKS A B ON 14 20 MPAMAGAZINE.COM.AU ISSUE 14.7

WHICH BANKS ARE AT THE TOP OF THEIR GAME? SMSF LENDING YOUR STEP-BY-STEP GUIDE

IAN RAKHIT WHAT’S NEW AT BANKWEST

BUSINESS LEADERSHIP KEY TIPS ON IMPROVING YOUR BROKERAGE

MPAMAGAZINE.COM.AU

S R E K O R B ANKS B ON 2014 18

NEWS

4 | Round-up The latest market intelligence from the world of property, economics and mortgages 8 | Data The latest statistics from MPA sister site Your Mortgage 10 | News analysis Is your business leadership plan on track?

FEATURES WEEKLY INVESTIGATIONS NOW ONLINE: Leadership Business growth mpamagazine.com.au

COVER STORY

Brokers on Banks 2014

MPA reveals the banks that are doing the business in brokers’ eyes

50 | Coaching How can coaching assist us in adapting to change?

52 | Authenticity Capturing the hearts and minds of employees 54 | Professionalism The keys to success revealed

MORTGAGE INSIDERS 32 | Jayden Vecchio How he wrote $60m in loans in his first nine months

56 | Motivation How to achieve success before it’s too late

63 | A day in the life Stewart Saunders, national manager brokers, ME Bank

BUSINESS STRATEGY

64 | Favourite things Adelaide Bank’s Fons Caminiti on The Godfather, Muhammad Ali and Vegas

48 | Leadership The leader-follower dynamic explained

34 FEATURES

SMSF lending

Your step-by-step guide to doing the deal

14

MORTGAGE INSIDERS

Ian Rakhit

How Bankwest has strengthened its broker proposition

JULY 2014 | 1

EDITOR’S LETTER / 14.7

MPAMAGAZINE.COM.AU

ENTREPRENEURIAL SPIRIT

This month I’ve well and truly been trying to get into the mind of today’s entrepreneurial mortgage broker as the third instalment of MPA’s annual business strategy guide has come together (which should be sitting on your desk alongside this issue of MPA).

On reflection, probably the single biggest reminder for me of the modern way in which brokers do business these days was this year’s MFAA convention.

As well as the social element (and sore heads) that go hand in hand with the annual industry event, there was a wealth of business advice on offer. And attendees couldn’t get enough of it.

From reinvigorating your web presence to making the most of opportunities that already lie within your client book, the topics of discussion were many and varied. One common theme, however, was that there are a huge number of opportunities for brokers who are willing to proactively go in search of them – even if it means changing the way they do business.

Couple this with outgoing MFAA CEO Phil Naylor revealing that broker market share has reached the magic 50% mark, and there are many reasons for brokers to be positive and embrace their inner entrepreneur.

Robin Christie, managing editor, MPA

2 | JULY 2014

COPY & FEATURES

EDITOR Robin Christie PRODUCTION EDITORS Roslyn Meredith, Moira Daniels CONTRIBUTORS Matthew Michalewicz, Dr Hilary Armstrong, Walter Bellin, Doren Aldana

ART & PRODUCTION

SR. GRAPHIC DESIGNER Red Redrico DESIGN MANAGER Daniel Williams

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

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

CONNECT

Contact the editor: robin.christie@ keymedia.com.au

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

Editorial enquiries Robin Christie tel: +61 2 8437 4787 robin.christie@keymedia.com.au Advertising enquiries Sales Manager Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Account Manager Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 Offices in Auckland, Toronto, Denver, Manila mpamagazine.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as MPA magazine can accept no responsibility for loss.

NEWS / ROUND-UP

MPAMAGAZINE.COM.AU

STATS

MANAGEMENT

5 WAYS TO AVOID BEING A ‘BAD BOSS’ It can be hard to transition from one-man brokerage to the leader of a growing business. Nick Deligiannis, managing director of Hays in Australia and New Zealand, explained that new leaders can easily slip unconsciously into poor behaviours without realising it.

“Sometimes people are so keen to prove their leadership skills and make a difference that they forget to stop and think. This leads to poor leadership, which impacts their team and leads to rising turnover,” he said.

To avoid falling into ‘bad boss’ territory and become a successful and respected leader, Deligiannis offered the following tips: 1. Be unique when you lead “Don’t just try to replicate others,” Deligiannis said. “As a new leader, you need to find your own way; breaking free from stereotypical leadership behaviours marks out a good leader from an average or poor one.

“So find time to assess your behaviour objectively.

Consider your leadership performance in terms of coercion, reward and inspiration. Aim to be a role model who uses your own unique expertise to lead and inspire your team.”

2. Be aware of stress triggers According to Deligiannis, it pays to learn what your stress triggers are.

“When stressed we do not always make a rational decision but can instead react emotionally,” he said.

“But if you know your stress triggers, you can modify your

behaviour and remain calm under pressure. It’s also important to recognise these triggers in your team so you can predict their likely responses and provide assistance when necessary.”

3. Seek out honest feedback Those in leadership roles are often surrounded by ‘yes’ people who will tell them what they want to hear. That’s why Deligiannis recommends seeking out appraisals from trusted contacts inside and outside the business who will give honest insight.

“This will keep you grounded as they will point out objectively what’s happening, what’s going wrong and whether you are part of the problem; 360-degree appraisals can also provide feedback on how your team members feel they are led,” he says.

4. Think globally In a globalised economy, leaders need to be able to work­seamlessly across different cultures. Avoid a narrow-minded view that if an approach works in one country it will work in another.

“Cultural sensitivity is an important competency for leaders today,” he said.

5. Exercise While it can be difficult to find the time to exercise, with a new role it is essential. “Keeping yourself and your brain healthy will build personal resilience and enhance decision-making capabilities and effectiveness,” Deligiannis said.

FEEDBACK FROM EMPLOYEES

56.5%

TRAINING COURSES

Source: Bankwest Business Leaders report. Multiple answers allowed.

4 | JULY 2014

51.8%

FEEDBACK FROM PEERS

34.1%

PERSONAL COACHING/ MENTORING

Source: Sensis 2014 Yellow Social Media Report

$887.3M The combined wages of mortgage brokers in Australia Source: ibisworld.com.au

5,740

LEADERSHIP

What activities, if any, do you undertake to develop yourself as a leader?

60%

80%

The percentage of SMEs that are blindly investing in social media

30.6%

FURTHER EDUCATION

The number of mortgage broking businesses in Australia Source: ibisworld.com.au

NEWS / ROUND-UP

PEOPLE

MORTGAGE BROKING REVENUE BREAKDOWN

5 BODY LANGUAGE NO-NOS THAT COULD LOSE YOU CLIENTS

Body expert Alan Pease, co-author of The Definitive Book of Body Language, has revealed the signals you may be sending without even realising it, and how to change them.

1. Crossing your body “Most people, when they’re giving bad news, have a tendency to cross their arms on their chest or hold hands with themselves in front of their body or clench their fingers together,” said Pease.

“These are all self-protection signals. Somebody who sees you do that, particularly females, will think that you’re not feeling very confident about what you’re saying.”

2. Signals that imply superiority “The worst thing a man can do is sit back in his chair with his hands behind his head. It’s called the catapult – it looks like you’re about to fire your head at someone,” said Pease.

“That’s a superiority position used almost entirely by men. It’s the most intimidating management pose that a male can take in the presence of a female subordinate.”

He suggested leaning forward to make people feel relaxed: “We lean forward towards people we like, admire and sympathise with.”

3. Too much eye contact If the person you’re talking to is having difficulty maintaining eye contact, and if you maintain eye contact, it gives the impression that you’re trying to stare them out or being critical or judgmental, Pease explained.

4. Hiding your hands Don’t have your hands in your pockets or under the desk.

Have them visible, and talk with them facing upwards.

“Monkeys and chimps do this too. It’s the most non-threatening position a human or primate can take because it shows you’re not concealing things in your hands or under your arms,” said Pease.

“We’ve done quite a bit of testing with people presenting to audiences with a palm-up position, the second audience where they’re talking mainly with the palm down, and the third audience where they use a finger point.

17.5% 0.8% QLD

15% 5.7%

NT

FLEXIBLE WORKING HOURS

38.8%

CASH BONUSES

TRAINING COURSES

27.1%

EMPLOYEE RELATIONSHIP STRATEGIES

Source: Bankwest Business Leaders report. Multiple answers allowed.

6 | JULY 2014

1.8%

26.8% ACT VIC

Source: ibisworld.com.au

1%

“The palm-up users get up to 40% more retention of what they said and are described by the audience in much more favourable terms than the palm-downers. The finger pointers get the worst results. If you talk with your palms down, you’re seen as authority, management, maybe telling them what to do or telling them off. It’s very powerful when you’re in a situation where you’re delivering bad news such as redundancies.”

5. A poor handshake Getting the handshake wrong can create a bad first impression. Pease offers his tips for getting it right.

“To create a rapport where people feel accepted, you keep your palm vertical,” he said. “The origin of the handshake is arm wrestling back in the Roman era, and the guy with the hand on top had the upper hand. Keep your palm straight and exude the same pressure you receive, and people will feel like you’re accepting them and not trying to dominate or threaten them.”

TAS

9.4%

Strategies used to retain key staff

35.3%

NSW

SA

STAFF RETENTION

51.8%

31.4%

WA

23.5%

PAYING FOR FURTHER EDUCATION

16.5%

TELECOMMUTING/ REMOTE WORK

16.5%

ADDITIONAL CONTRIBUTIONS TO SUPER

8.2%

COMPANY EQUITY/ STOCK OPTIONS

RETAIL DISCOUNTS

7.1%

CHILDCARE SERVICE

4.7%

DISCOUNTS ON INSURANCE PRODUCTS

MPAMAGAZINE.COM.AU

LEADERSHIP

8 QUESTIONS YOU MUST ASK YOUR BROKERS

Getting the best out of your broking team is much more than setting targets and doing the occasional formal performance reviews.

It’s important to take a page out of the book of motivational managers and provide ongoing feedback, said Lisa Hunter, national business manager at Elephant HR. “Motivational managers have performance conversations all year round and cover off recognising achievements when they happen,” she said.

Following this approach can give your broking team feedback at a time when they can actually use it. This approach also allows you to update goals and objectives regularly and look at areas the broker wants to develop in.

Looking at the bigger picture, it’s important to take into consideration what the broker does (goals and objectives), how they do it (competencies, values, behaviours) and the contributions they make to the business (roles they play in the team, ideas for improvement).

Another key trait of motivational managers is adaptation. Hunter explained that they think about their team member and adapt their style to recognise the employee’s potential.

“For example, high achievers want to come out of their reviews knowing what challenges are coming up, and that their performance has been recognised. Solid performers want to know why their contributions to the team and company are valued as well, and want certainty about what they’ll be doing in the coming year,” she said.

“New starters want to feel they’re making progress and are on track and feel motivated to keep on track.”

The questions you ask of your brokers can also help give a bigger sense of purpose to reviewing their performance. Hunter explains that open questions are best for facilitating a productive conversation, as they allow the employee to talk from their perspective.

EXAMPLES OF OPEN-ENDED QUESTIONS INCLUDE:

• What are the achievements you’re most proud of this year in relation to your role?

• What are the things you’ve enjoyed the most, both within your role and within the team?

• What are your strengths and how have you been able to use them this year?

• What have you learnt from the things that haven’t gone as planned?

• What roadblocks or challenges have there been, and how have these impacted on your year?

• What could I have done differently to help you manage these roadblocks?

• What development would help you keep on track or improve?

• What type of support can I give to help you with your career plans?

JULY 2014 | 7

THE DATA / YOUR MORTGAGE INDEX

MPAMAGAZINE.COM.AU

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

Average loan amount

$403,000 $392,000 $381,000 $370,000 May

Jun

Aug

Jul

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

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

Jun

Jul

Aug

Not immediately

54% First home

Sep

In the next few months

Right now! Hurry!

TYPE OF MORTGAGE REQUIRED

buyers

50% 40% 30%

PURPOSE OF MORTGAGE

20% 10%

16% Refinance

to get a better deal

12% Move home

Intro

May

Apr

Mar

Feb

Standard variable

Basic variable

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

8 | JULY 2014

Jan

Dec

Nov

Oct

Sep

Aug

Jul

investment property

Jun

Give my home a makeover

May

1%

17% To buy an

0%

Fixed

NEWS ANALYSIS / BUSINESS LEADERSHIP

LEADERSHIP

ARE YOU

ON TRACK?

Do you have a business leadership plan to see you through the challenges that the future holds? Fascinating research suggests that market leaders are always thinking one step ahead 10 | JULY 2014

These days, mortgage brokers are faced with a plethora of sources of business advice, but are you aware of how your peers are facing up to the challenges ahead? New research hopes to provide some answers to this question, illuminating the leadership strategies that market leaders in the mid-size business space are employing.

So, what are the leadership trends that brokers should consider following in their own businesses?

According to the Bankwest Business Leaders Report, mid-size businesses currently have a heightened focus on people-based strategies to overcome future business challenges.

Breaking this result down into its constituent parts reveals that recruitment of talent and staff retention are the big issues that business owners are focusing on to avoid disruption: just over 41% of respondents ticked the talent recruitment box, while almost 37% opted for staff retention.

MPAMAGAZINE.COM.AU

So what should brokers do to keep their staff engaged? The report’s results suggest that the two most important motivational strategies are:

AVOIDING BUSINESS DISRUPTION Which of the following would the business in which you work need to focus on in order to overcome potential challenges that could disrupt the overall direction of the business?

• being a good role model and fostering employees’ ownership of a common vision and goals • focusing on individual team members, including providing coaching and mentoring

Recruitment of talent

41.2%

Staff retention

36.5%

Pricing strategies

36.5%

Diversification of products and services

31.8%

Being a role model to foster ownership of common vision and goals

61.2%

New distribution channels

30.6%

Focusing on the individual and providing coaching and mentoring

58.8%

IT/technology upgrade

22.4%

Providing non-monetary reward in recognition of effort and/or achievement of goals

32.9%

Social media marketing

18.8%

Leading in a command and control structure

32.9%

Traditional advertising/ marketing activities

17.6%

Leading by charisma to raise expectations and beliefs

31.8%

Debt reduction

17.6%

25.9%

Team-building activities

Providing monetary reward in recognition of effort and/or achievement of goals

16.5%

Acquisition of competitors

11.8%

Obtain more capital

9.4%

Business insurance

7.1%

Other

2.4%

Source for all infographics: Bankwest Business Leaders Report.

Multiple answers allowed.

Given the importance that retaining the right people plays in avoiding business disruption, the report’s authors suggest that leadership and staff motivation are crucial.

Interestingly, while the report highlights that monetary rewards and open recognition are common motivational strategies for many Australian businesses, respondents appeared to suggest that these aren’t necessarily the most effective routes to take.

LEADING STAFF Are the following approaches to leadership very effective in motivating and influencing staff?

“Perfecting your leadership strategy is crucial for any business and the Bankwest Future of Business Series report certainly supports that in identifying some specific trends, particularly around people-based strategies and new techniques for motivating staff,” says Bankwest executive general manager of business banking Sinead Taylor.

LEADERSHIP STYLE Adopting the best leadership style to get the best out of your team is crucial to any business leader, and brokers are no exception. After all, as Taylor points out, “profit comes from productivity and we all know that a motivated team is a benefit for any business”.

What’s the favoured leadership style among mid-sized businesses in Australia? If the results of the Bankwest report are anything to go by, a democratic approach to leadership is by far the most popular one.

JULY 2014 | 11

NEWS ANALYSIS / BUSINESS LEADERSHIP

GENERATIONAL APPROACHES Over 47% of the business leaders surveyed opted for the democratic approach, leaving transforma­ tional leadership in a distant second place with a response rate of 18.8%.

The full results were as follows:

Do you believe there is a difference in which approach of leadership best motivates and influences senior staff and junior staff?

PERSONAL LEADERSHIP Which of the following best describes your personal leadership style?

1. Democratic Share the decision-making abilities with employees by promoting the interests of the employees and practising social equality: 47.1% 2. Transformational Work to change or transform employees’ needs and redirect their thinking. Create a vision of what you aspire to be, and communicate this idea to others: 18.8% 3. Paternalistic Act as a father or mother figure by taking care of your subordinates as a parent would: 15.3% 4. Authoritarian Keep strict, close control over employees by keeping close regulation of policies and procedures given to employees: 12.9% 5. Transactional Motivate employees through a system of rewards and punishments. Focus on increasing the efficiency of established routines and procedures:

4.7%

6. Laissez-faire All the rights and power to make decisions are fully given to the employee: 1.2%

GENERATION GAP Given that mortgage broking is an industry that is encouraging fresh young talent to give it a go, one set of survey results that brokers with an eye on the future would do well to pay attention to are the responses to questions on how to work with junior staff.

More than seven in 10 respondents, for example, cited the need to employ different motivational tactics with junior and senior staff. When it came to identifying strategies to get the best out of junior staff, 71% of respondents said focusing on providing coaching and mentoring was effective.

At the other end of the experience scale, 73% of respondents said the top approach for leading senior staff was to lead by being a role model.

12 | JULY 2014

Not sure 11.8%

Yes 70.6%

No 17.6%

Which of the following leadership approaches do you believe are most effective for junior staff?

Focusing on the individual and providing coaching and mentoring

71.7%

Being a role model to foster ownership of common vision and goals

58.3%

Providing monetary reward in recognition of effort and/or achievement of goals

38.3%

Leading by charisma to raise expectations and beliefs

31.7%

Providing non-monetary reward in recognition of effort and/or achievement of goals

28.3%

Leading in a command and control structure

26.7% 1.7%

Other

Which of the following leadership approaches do you believe are most effective for senior staff?

Being a role model to foster ownership of common vision and goals

73.3%

Providing monetary reward in recognition of effort and/or achievement of goals

48.3%

Focusing on the individual and providing coaching and mentoring

46.7%

Providing non-monetary reward in recognition of effort and/or achievement of goals

43.3%

Leading by charisma to raise expectations and beliefs

35%

Leading in a command and control structure

30%

Other

0%

MPAMAGAZINE.COM.AU

There also appeared to be a consensus on the need to incentivise junior and senior staff in different ways. For example, almost three in five respondents said career progression opportunities were most effective for motivating junior staff, while 48.3% believed cash bonuses were the best way to motivate senior staff.

INCENTIVES

Not sure 18.9%

Do you believe there is a difference in the effectiveness of the current range of incentives in the business in which you work in motivating junior staff and senior staff?

Yes 54.7%

Which of the following incentives do you believe are most effective for junior staff?

No 26.4% Which of the following incentives do you believe are most effective for senior staff?

Interested in Selling Your Trails

?

Sell a portion of your Trails

Career progression opportunities

58.6%

Cash bonuses

48.3%

Cash bonuses

51.7%

Additional contributions to super

41.4%

Time in lieu

44.8%

Career progression opportunities

37.9%

Gift cards

44.8%

Time in lieu

37.9%

Free or discounted tickets to events

24.1%

Free or discounted travel

37.9%

Retail discounts, including gym discounts

24.1%

Gift can rds

27.6%

Free merchandise

17.2%

Free or discounted tickets to events

24.1%

Additional contributions to super

13.8%

Free or discounted meals or accommodation

24.1%

Free or discounted travel

13.8%

Discounts on insurance products, including health insurance

24.1%

Free or discounted meals or accommodation

10.3%

Retail discounts, including gym discounts

17.2%

Discounts on insurance products, including health insurance

10.3%

Free merchandise

13.8%

M: 0434 742 306 (James Turk)

Other

3.4%

Other

3.4%

E: info@trailbookbuyers.com.au

Retain your clients Raise capital for expansion Exiting the industry Hi James & Mark I appreciate all your efforts in the sale of my trail book. You achieved for me a great sale price. To any broker or group looking to sell their Trail Book give these guys a call.

Dale Heremaia - QLD Call us today for a confidential discussion about your trail book or email us your latest trail statement for a free appraisal.

T: 1300 376 719

www.trailbookbuyers.com.au JULY 2014 | 13  

HEAD TO HEAD / IAN RAKHIT

DRIVING

AMBITION

Bankwest head of broker sales Ian Rakhit has been busily strengthening the bank’s broker proposition in line with some ambitious goals. He tells MPA what brokers can expect MPA: How do you see the property market performing during the second half of the year?

Ian Rakhit: I suspect that growth in prices and transactions will continue, although we may be seeing a slowing of growth in a couple of sectors.

MPA: Are there any regions or buyer types that are particularly active at the moment?

IR: Bankwest is benefiting from growth in the investor market, particularly from ‘mum and dad’ investors who already own their occupied property and are using equity or cash to invest. The largest growth here for Bankwest has been in NSW. First home buyers are still strong in every state, and we continue to enjoy a great demand from these buyers.

MPA: What are Bankwest’s main areas of focus in the broker market for the rest of the year and beyond?

IR: Bankwest intends to remain the largest lender of retail home loans to the broker market, excluding the big four. We will achieve this through a variety of people, price, product, process and policy initiatives.

14 | JULY 2014

As always, brokers will be asked frequently to offer feedback on where Bankwest performs strongly and where we can improve. It is this open and honest partnership which continues to help Bankwest perform strongly.

MPA: What kind of feedback have you been receiving from brokers on Bankwest’s services recently? Have you made any changes based on this feedback?

IR: Brokers like the responsiveness and quality of our people. They also appreciate the timeliness of our update processes. To further strengthen our relationship with brokers, we are increasing our numbers of desk-based BDM support to ensure brokers have a local contact to help get their deals to approval and settlement.

“First home buyers are still strong in every state and we continue to enjoy a great demand from these buyers”

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“Bankwest intends to remain the largest lender of retail home loans to the broker market, excluding the big four”

JULY 2014 | 15

HEAD TO HEAD / IAN RAKHIT

CAREER TIMELINE

MPAMAGAZINE.COM.AU

Brokers also like our speed of updates so we’ve continually enhanced our Webchat service, allowing broker updates over the web in a very short amount of time.

“To further strengthen our relationship with brokers, we are increasing our numbers of desk-based BDM support” 2000–2005 Area sales manager, HBoS, UK

2005–2007 Head of sales operations, HBoS, UK

2007–2010 Head of east coast stores, Bankwest. Developing the Bankwest presence on the eastern seaboard through a new set-up of physical distribution points

2010–present Head of broker sales, Bankwest

MPA: Do you have any new products or services in the pipeline that you’d like to make brokers aware of?

IR: The recent Bankwest Complete Home Loan is performing strongly, accounting for one third of all new sales. This product is suited to both investors and owner-occupiers and has helped Bankwest succeed in lending to those customers with larger deposits or larger equities in their properties.

Bankwest is also pleased to be involved in the early rollout of digital property settlements, often referred to as e-conveyancing.

MPA: You mentioned in last year’s Banks on Brokers interview that you would be focusing on improving your web presence and direct document upload. How have these issues progressed this year?

IR: Bankwest continues to focus on these areas and we are constantly improving our presence and processes.

MPA: What do you think are the key issues brokers are facing at the moment that are proving to be a barrier to growth in their businesses?

IR: Brokers are enjoying the growing market and the only barrier I occasionally hear of is not having enough hours in the day to keep on top of their workload!

16 | JULY 2014

BROKER TIPS Rakhit offers his top three tips to brokers for submitting clean applications, and improving conversion rates and turnaround speeds To help achieve a ‘right first time’ application, Bankwest would advise brokers to: • follow the checklist provided • ring our credit team if your customer cannot provide the documents we require • utilise Bankwest Webchat to get progress updates

MPA: Are there any areas outside of residential home loans that you think brokers would do well to diversify into?

IR: I hear a number of head groups are focusing their brokers on a wider range of lending, while others are helping their brokers to offer a full financial review, including health and wealth opportunities.

I welcome all approaches to diversification, providing the broker feels it’s right for their business.

“I welcome all approaches to diversification, providing the broker feels it’s right for their business” MPA: Are there any other key messages you’d like to pass on to brokers?

IR: Bankwest enjoys the highest volume of broker business of any lender, excluding the big four.

We view this as a privilege to be enjoyed, but we guard against complacency and want to continually improve.

Personally, I’d like to thank all our broker partners for their ongoing support.

SPECIAL REPORT / BROKERS ON BANKS

S R E K O R B ANKS B N O

4 1 0 2 H

ello and welcome to MPA’s Brokers on Banks report for 2014. Those of you who have been in the business for a while may remember the first ever Brokers on Banks report hitting desks over a decade ago – can you believe that it’s now into its 11th edition?

While the mortgage and banking industries have changed a great deal over the course of the last 11 years, MPA’s Brokers on Banks survey has remained the bellweather for how the banks are performing in the broker channel. So what’s new this year?

The big headline is that we have a new Bank of

18 | JULY 2014

ain. g a e m at ti h t nks s ’ a t i B , n o Yes okers led the r B s ’ A MP revea g the s a h y surve hat are doin yes e t banks s in brokers’ s busine

the Year (revealed later on in the report), but there have been a number of movers and shakers in each of the key metrics that the banks were measured on.

Read on to discover all the big news from this year’s survey.

But before we continue, a huge thank you has to go out to all the brokers that took the time to offer their feedback on how the banks are performing this year. It’s thanks to you that we were able to compile this special report and let the banks know where they’re excelling and in which areas you think they could improve.

MPAMAGAZINE.COM.AU

METHODOLOGY Brokers were invited to take part in MPA’s Brokers on Banks survey online earlier this year, and the participation levels were unprecedented. All up, over 600 responses were received, which was the best result in the survey’s 11-year history.

• Turnaround times • BDM support • Commission structure • Communications, training and development • Online platform and services • Interest rates • Product range • Service levels • Credit policy • Product diversification opportunities

To keep the results as relevant as possible, participants were asked to rank only the banks they had dealt with in the past 12 months. To get a wider perspective than last year, brokers were given the option to rank a larger selection of banks than they were in 2013. Brokers then gave each of their selected banks a score of between one (very poor) and five (very good) in 10 categories (see box).

The average scores were then totted up for each bank for each of these metrics, and these scores determined which banks made the top five in each category. These top five performers are presented throughout the report.

The five banks with the highest average score across all 10 metrics have also been presented in the report, and the bank with the highest overall average score has been named Bank of the Year. In addition, the single product that scored the most votes for being the best in the industry over the past 12 months has been named 2014’s Product of the Year.

Brokers were also asked for their opinions on several key industry issues, and the insights that were gained in these areas are highlighted throughout the report.

HOW IMPORTANT? This year we asked brokers to rank each of the 10 performance metrics that the banks were being judged on for importance, from one (don’t really care) to five (very important). The average scores and importance rankings are presented below, and the results for each category will be presented in order of importance, from most important (turnaround times) to least important (product diversification opportunities).

Importance ranking

Category

Average importance score

1

Turnaround times

4.78

2

BDM support

4.66

3

Service levels

4.65

4

Credit policy

4.57

5

Interest rates

4.42

6

Product range

4.14

7

Online platform and services

4.11

8

Commission structure

4.07

9

Communications, training and development

3.74

10

Product diversification opportunities

3.57

JULY 2014 | 19

SPECIAL REPORT / BROKERS ON BANKS

TURNAROUND TIMES Rank

Bank

Score

1

NAB/Homeside

3.16

=2

Westpac

3.15

=2

Suncorp

3.15

=2

Heritage Bank

3.15

5

Bankwest

3.14

Rank

2013 ranking

2012 ranking

2011 ranking

1

CBA

CBA

CBA

2

ANZ

ANZ

ANZ

3

Adelaide Bank

NAB/ Homeside

Adelaide Bank

4

NAB/ Homeside

Adelaide Bank

Suncorp

5

Westpac

ING DIRECT

ING DIRECT

We don’t need to tell you how important turnaround times are to a broker’s business. A speedy approval can be the difference between getting the deal over the line or not, so it’s not surprising that respondents ranked turnaround times as the most important performance metric for the banks.

Competition was extremely tight in this category – the tightest of any of the 10 categories presented in this report. This year, NAB/Homeside managed to just pip joint second placed banks Westpac, Suncorp and Heritage Bank to the post to take out the top spot. Bankwest took fifth place in a top five whose average scores were separated from top to bottom by only 0.02 points out of five.

78%

IMPROVED

22%

WORSENED

20 | JULY 2014

When asked if turnaround times had improved or worsened over the last year, 78% of brokers said they had improved versus only 22% that said they had worsened. Here are some of their comments on the issue:

“As banks continue to cut costs and more and more pressure is placed on BDMs (to look after more brokers and get better results from those brokers), turnaround times have blown out.

Escalations now take far longer than they have done previously (as there’s fewer staff to action them).”

“Banks continue to struggle when it gets busy, especially when they release a market-leading product. As soon as they do this the turnaround times suffer.”

“For good and simple proposals, the mainstream lenders have certainly improved turnarounds in most instances.”

“Generally improved across the board, but as always when a bank releases a good special rate or incentive, they end up getting swamped and the service levels blow out.”

“Generally improved for initial application, but follow-up in a lot of areas, and communications, have declined.”

“Most banks we deal with have implemented a strategy to allow faster turnaround time, as the banks are becoming aware how important a fast turnaround time is to brokers.”

Total industry average: 2.98 Major bank average (big four): 3.09 Non-major bank average: 2.94

HAVE TURNAROUND TIMES IMPROVED OVER THE LAST YEAR?

BROKERS SPEAK: TURNAROUND TIMES

RESPONDENT DEMOGRAPHICS: SEX

72%

MALE

BDM SUPPORT Rank

Bank

Score

1

NAB/Homeside

3.37

2

ME Bank

3.29

3

CBA

3.28

4

St.George/Bank of Melbourne/Bank SA

3.24

5

Westpac

3.21

Total industry average: 3.17 Major bank average (big four): 3.14 Non-major bank average: 3.24

28%

FEMALE

If the comments left by brokers in this year’s survey are anything to go by, a great BDM does wonders for a bank’s reputation in brokers’ eyes. This anecdotal evidence of the importance of BDMs has been backed up by the fact that respondents ranked BDM support as the second most important of the 10 performance metrics presented in the survey.

This was another category in which NAB/ Homeside managed to take first place and, in contrast to the turnaround times result, it managed

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to win by an average score margin that showed a sliver of daylight between itself and second place.

The fight for second and third places was a lot tighter, with ME Bank just slipping in front of CBA by 0.01 points to take second place. The St.George Banking Group (St.George/Bank of Melbourne/ Bank SA) came in fourth, followed by Westpac.

front (see service levels box), and their comments suggest that a great service experience can do wonders for a bank’s relationships with its brokers.

Each of the big four banks was represented in the top five for service levels this year, with ANZ and CBA taking first and second places. Westpac shared third place with Macquarie, while NAB/ Homeside and Citibank took out equal fifth spot.

Rank

2013 ranking

2012 ranking

2011 ranking

Rank

Bank

Score

1

CBA

CBA

CBA

1

ANZ

3.40

2

CBA

3.32

=3

Macquarie

3.30

=3

Westpac

3.30

=5

Citibank

3.28

=5

NAB/Homeside

3.28

2

Macquarie

NAB/ Homeside

Bankwest

3

NAB/ Homeside

Bankwest

Suncorp

4

ANZ

Citibank

Citibank

5

Citibank

ANZ

ANZ

BROKERS SPEAK: BDM SUPPORT “BDMs generally seem to take a greater interest in our role as finance consultants.”

“Any bank providing fast turnarounds, good BDM support for curly applications, and good commission structure gets my interest.”

“With a good relationship with your BDM, your deal can be pushed through the queue.”

“The BDMs that provide exceptional service are consistent in supporting me and my businesses.”

“The best incentive for me is a BDM that goes the extra mile.”

“BDM support has improved turnaround times.”

“With some of the lenders, without the BDM’s assistance, you cannot get a deal assessed in a timely fashion.”

SERVICE LEVELS

Total industry average: 3.32 Major bank average (big four): 7.15 Non-major bank average: 3.14

Service levels was the third most important category, according to this year’s crop of respondents. Overall, brokers appear to largely agree that the banks have upped their game on this

Rank

2013 ranking

2012 ranking

2011 ranking

1

CBA

CBA

CBA

2

NAB/ Homeside

ANZ

ANZ

3

Macquarie

NAB/ Homeside

ING DIRECT

4

ANZ

ING DIRECT

Bankwest

5

Citibank

Suncorp

Adelaide Bank

RESPONDENT DEMOGRAPHICS: ACL HOLDER/ CREDIT REP

67%

CREDIT REP

33%

ACL HOLDER

BROKERS SPEAK: SERVICE LEVELS This year we asked if service levels/credit policies had improved or worsened over the last year. Seventy-three per cent of respondents ticked the improved box, while 27% went for worsened. They also had some candid comments on the service subject:

“Service levels have improved in almost all areas, but credit policy has tightened in most.”

“All banks I use are really working hard to achieve their goals.”

“Banks are up front with service levels, which is great.”

“Competition drives better service.”

“It is great when an assessor has your file and calls to ask a question that can keep the file moving.”

“As property market activity returns, workflows increase and unfortunately bank turnaround times and service levels decrease. Most banks have reduced employee numbers or offshored them to cut costs, and this has really impacted their service levels.”

“It would be better if banks could provide ‘silver service’ – or should it be ‘platinum service’ – to all brokers who are genuine in their dealings with them, and not just ‘one trick ponies’ who effectively offer only one lender’s products to their clients.”

JULY 2014 | 21

SPECIAL REPORT / BROKERS ON BANKS

CREDIT POLICY

Total industry average: 6.89 Major bank average (big four): 7.11 Non-major bank average: 6.27

Brokers and clients alike can find credit policies infuriating, but they’re an essential ingredient of a secure banking system. That said, this year’s broker comments suggest that they believe that more could be done to help clients out on the policy front, and to communicate policy requirements to brokers.

So, which banks are keeping brokers happy on the credit policy front? Macquarie managed to hit the top spot by a handy average score margin in this category. The fight was closer for second, with CBA coming in just above Westpac. ME Bank and NAB/Homeside completed the top five, in fourth and fifth places respectively.

BROKERS SPEAK: CREDIT POLICY

Rank

Bank

Score

1

Macquarie

3.56

2

CBA

3.33

3

Westpac

3.31

4

ME Bank

3.29

5

NAB/Homeside

3.26

Rank

2013 ranking

2012 ranking

2011 ranking

1

CBA

CBA

CBA

2

ANZ

NAB/ Homeside

BankWest

3

NAB/ Homeside

ANZ

ANZ

4

Adelaide Bank

Suncorp

AMP

5

Macquarie

Adelaide Bank

Adelaide Bank

SEGMENTATION

“Certainly a little more flexibility with credit policy, although common restrictions of lenders’ mortgage insurers prevail. They have a noose around the market, which needs to change.”

This year’s survey asked brokers if they were in favour of the banks’ segmentation strategies, which proved to be a question that divided the mortgage community.

Fifty-four per cent of respondents were in favour of segmentation, while 46% were against it. Here were some of their comments on the subject:

“Changes to NCCP have altered credit policies, and some lenders are quite pedantic in following their own interpretation, but still reasonable.”

“Yes: Personally I’m all for segmentation. Why should a broker who lodges one deal with a lender get the same level of service than someone who lodges, let’s say, 20.

My only issue I have is that segmentation does favour those that write a very high level of volume overall.”

“Credit policies have become more conservative in a time that we as a market are increasing.”

“Credit policies have improved around the type of security acceptable to banks. Banks are taking on securities they didn’t want before, or are reducing the minimal size requirements.”

“Credit scoring is too unpredictable to give clients accurate advice.”

“Family guarantees seemed to have tightened without notifying brokers, and mortgage insurers have tightened their policies as well.”

“First home buyers and been dealt with adversely as not all are able to save the required deposit and don’t have relatives that can help. Banks and government should do more to help – and not just the FHB; everyone needs a fair go.”

24 | JULY 2014

“No: You should treat all brokers fair and not play one against the other.”

ARE YOU IN FAVOUR OF SEGMENTATION STRATEGIES?

54% YES

“Yes: Brokers who bring both volume and quality should get better treatment as they are more valuable to the bank.”

“No: Segmentation discriminates against clients. They all deserve the same service; it doesn’t matter which broker submits the deal.”

“Yes: Shorter turnaround times, better rates, more promotions for top-tier brokers, and maybe special service channel for top-tier brokers as well.”

“No: I am always impartial and will always send clients to the bank that suits their needs and not to a bank to make up numbers.”

46% NO

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PRODUCT RANGE Rank

Bank

Score

1

Macquarie

3.62

2

CBA

3.40

3

NAB/Homeside

3.35

4

ME Bank

3.29

5

Westpac

3.28

BROKERS SPEAK: PRODUCT RANGE Have product ranges and pricing improved or worsened over the last year?

That was one of the questions put to this year’s respondents, and the results were pretty unequivocal. Ninety-three per cent of respondents said that ranges had improved. Here’s what a few of them had to say on the matter:

“A definite change to lenders’ pricing mindset. Great opportunities for borrowers to cash in on current offers available. Probably the best pricing environment for the past 15 years since I have been a broker.”

Rank

2013 ranking

2012 ranking

2011 ranking

1

CBA

ANZ

ANZ

2

ANZ

CBA

NAB

3

NAB/ Homeside

NAB/ Homeside

“Banks are looking at things other than rates to win business, and each provide good incentives for the right customer and have given those banks a niche.”

CBA

4

Macquarie

Bankwest

Westpac

“Been very competitive on price. It is frustrating that we have to perform extra paperwork with almost every deal for pricing. They should just apply it automatically.”

5

Westpac

St.George

Bankwest

“As the market quietened off it was great to see the banks become more competitive with one another, which has continued now clearance rates are picking up.”

“Being able to apply for additional discounts with some lenders based on total lend and LVR has helped achieve better rates than advertised.”

“For me being new, I feel there are far too many and it does get a little confusing. Keep it simple and have a more complex option for the few clients who need/request it.”

Total industry average: 3.2 Major bank average (big four): 3.27 Non-major bank average: 3.21 Product range was ranked by this year’s crop of broker respondents as the sixth most important service metric out of the 10 that the banks were being ranked on in the survey. This was another area where the competitive nature of the market came to the fore in broker comments.

Macquarie took the top spot in this category by a decent margin of 0.2 points out of five. CBA came in second, followed NAB/Homeside, ME Bank and Westpac.

“Have improved with LVR-based pricing and the fact banks are happier to negotiate individual deals where appropriate. Gives us as brokers more value to the client.”

“I think that many of the lenders have dropped their new-to-bank lending to encourage borrowers to come to them, but they have not passed this on to their existing customers unless put under pressure to do so.”

RESPONDENT DEMOGRAPHICS: AGE

28% 2%

25–35

UNDER 25

12%

HAVE PRODUCT RANGES AND PRICING IMPROVED OR WORSENED OVER THE LAST YEAR?

93%

IMPROVED

56 PLUS

7%

26% 46–55

32%

36–45

WORSENED

JULY 2014 | 25

SPECIAL REPORT / BROKERS ON BANKS

INTEREST RATES Rank

Bank

Score

1

AMP Bank

3.30

2

ME Bank

3.29

=3

Citibank

3.25

=3

NAB/Homeside

3.25

=3

St.George/Bank of Melbourne/Bank SA

3.25

Rank

2013 ranking

2012 ranking

2011 ranking

1

NAB/ Homeside

NAB

NAB

CBA

Bankwest

2 3 4 5

Macquarie St.George ANZ

AMP ING DIRECT Macquarie

ANZ ING DIRECT Bankwest CBA

Total industry average: 3.19 Major bank average (big four): 3.19 Non-major bank average: 3.19 Finding a super competitive interest rate may not be the first priority for clients who are desperate to secure a home loan before settlement, but competition on this front is obviously an important ingredient when it comes to the options brokers will present to their clients. All up, interest rates were ranked as the fifth most important issue by this year’s respondents.

Perhaps as a reflection of the competitive nature of the mortgage market at present, the fight for the top five spots in the interest rate category in this year’s Brokers on Banks survey was fierce.

Ultimately, AMP Bank took first place, beating ME Bank into second place by the tightest of average score margins. Competition for third place was also stiff, with Citibank, NAB/Homeside and St.George/ Bank of Melbourne/Bank SA sharing the honours.

BROKERS SPEAK: INTEREST RATES “If a bank is going to cut rates to generate new business, make sure they ramp up the assessment team so that turnaround times don’t blow out.”

“They need to look at the discharge and substitution of security areas as, with the current trend of fixed rates, this will continue to be an area that is needed – and some urgency needs to be instilled in staff in those positions.”

“Be more consistent with rates.”

“Align interest rates to enable simplicity of choice and then use banks for policy and appropriate product and service.”

ONLINE PLATFORM AND SERVICES Rank

Bank

Score

1

CBA

3.30

2

ME Bank

3.29

=3

Westpac

3.25

=3

NAB/Homeside

3.25

5

St.George/Bank of Melbourne/Bank SA

3.24

Rank

2013 ranking

2012 ranking

2011 ranking

1

CBA

CBA

CBA

2

NAB/ Homeside

ANZ

Westpac

3

Westpac

NAB/ Homeside

ANZ

4

Macquarie

Westpac

St.George

5

ANZ

St.George

NAB/ Homeside

Total industry average: 3.14 Major bank average (big four): 3.24 Non-major bank average: 3.1 There’s a lot of talk within the mortgage broking industry about the importance of the digital world we now live in and how it’s changing client interactions with brokers and broker interactions with banks. That said, online platform and services only came in seventh out of 10 on this year’s list of the most important bank services to brokers.

However, it’s average importance score of 4.11 out of five shows that brokers still consider the online space as something that it’s important for banks to focus on.

CBA edged out ME Bank to win this category, with Westpac and NAB/Homeside earning a joint third place finish. Competition for the final top five spot was hot, with St.George/Bank of Melbourne/ Bank SA taking fifth place.

74%

IMPROVED

26%

WORSENED

26 | JULY 2014

HAVE TECHNOLOGICAL DEVELOPMENTS IMPROVED DEALING WITH THE BANKS?

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BROKERS SPEAK: ONLINE PLATFORM AND SERVICES We wanted to know if brokers thought that technological developments, such as improved websites, mobile and tablet apps and social media, had improved their dealings with the banks. A significant majority (74%) thought that technology was aiding their interactions with the banks, while 26% disagreed. Here’s what some of this year’s respondents had to say on the matter:

“Online platforms are slowly improving but need to be more ‘real time’.”

“The online supporting docs has made a massive difference to my business, making what we do so much better.”

“Upfront/online valuation systems have come a long way.”

“More online and electronic processing, communication and documentation has significantly improved turnaround times.”

RESPONDENT DEMOGRAPHICS: STATE

1% 16% WA

NT

5% SA

18% QLD

32% NSW

26% VIC

1% ACT

1% TAS

JULY 2014 | 27

SPECIAL REPORT / BROKERS ON BANKS

COMMISSION STRUCTURE Rank

Bank

Score

1

Macquarie

3.78

2

NAB/Homeside

3.45

=3

AMP

3.31

=3

CBA

3.31

5

ME Bank

3.29

Rank

2013 ranking

2012 ranking

2011 ranking

1

AMP

AMP

AMP

2

NAB/ Homeside

NAB/ Homeside

ANZ

3

ANZ

ANZ

ING DIRECT

4

Suncorp

ING DIRECT

Bankwest

5

CBA

Citibank

NAB/ Homeside

Total industry average: 3.28 Major bank average (big four): 3.31 Non-major bank average: 3.27 Sitting in eighth position on the importance scale this year is commission structures. Often a thorny issue among brokers, especially when it comes to clawbacks and first-year trails (or the lack thereof ), commissions never fail to bring out a range of opinions from the broker community. So which banks are keeping brokers happy on this front?

Macquarie came in first by a decent margin in this year’s survey, with an average score of 3.78 out of five. NAB/Homeside also did well, scoring 3.45 on average. Just 0.02 points divided the next three banks, with AMP and CBA sharing third place, and ME Bank completing the top five.

76%

IMPROVED

One of the questions that brokers were canvassed on in the survey was whether commission structures had improved or worsened over the last year.

The majority of brokers were in the ‘improved’ camp (76%), while 24% weren’t so sure. Here are some of their comments on commission structure:

“Banks have taken away trail in the first year. There is no justification for this and shows contempt for the work brokers do!”

“As brokers we would always like to see better remuneration for the level of service we provide. But the commission uplift/incentive promotions have definitely served as an encouragement to build our businesses.”

“Banks changing commission structures is a pain as we have to declare our commission. I think they should be contracted to stay at that commission for a period of time.”

“Banks realise that the broker market is growing, and some banks have offered bonuses.”

“Certainly some commission offerings have improved, but clawbacks remain an unwelcome component of the industry – as has been advocated in many public forums. It is often (nearly always) not the broker’s fault that a clawback situation has been triggered.”

“The work brokers are doing in ensuring that a loan is not unsuitable for a client makes the banks’ job easier. They should be paying us for the extra work we are doing.”

CHANNEL CONFLICT Do you believe channel conflict exists? This was one of the questions asked of this year’s batch of respondents, with 68% saying ‘yes’ and 32% saying ‘no’.

Below are some of their comments on the channel conflict issue:

“Yes: Some customers tell me they can get a better rate and cash refund and/or annual fee waiver from a branch, which I cannot offer. So they go to a branch instead!”

“No: I work well with local branches. No issues.”

“Yes: As a broker, sometimes I lose clients to the local branches, which offer lower interest rate or other benefits.”

“No: Not really. People always choose the best way, so if the policy, product and promotion are good, clients and brokers would like to stay with each other.”

“Yes: In some banks, branches can do some things that brokers can’t do, and can offer better rates than brokers.”

HAVE COMMISSION STRUCTURES IMPROVED OR WORSENED OVER THE LAST YEAR?

24%

WORSENED 28 | JULY 2014

BROKERS SPEAK: COMMISSION STRUCTURE

DO YOU BELIEVE CHANNEL CONFLICT EXISTS?

68% YES

32% NO

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COMMUNICATIONS, TRAINING AND DEVELOPMENT Rank

Bank

Score

1

Macquarie

3.44

2

NAB/Homeside

3.37

3

ANZ

3.35

4

Westpac

3.34

5

CBA

3.29

Rank

2013 ranking

2012 ranking

2011 ranking

1

CBA

NAB/ Homeside

n.a.

2

NAB/ Homeside

CBA

n.a.

3

Macquarie

Macquarie

n.a.

4

ANZ

Suncorp

n.a.

5

Citibank

ING DIRECT

n.a.

Total industry average: 3.21 Major bank average (big four): 3.34 Non-major bank average: 3.17 The penultimate category this year’s report looks at is communications, training and development, which was ranked as the ninth most important bank service by the brokers who took part. But that’s not to say this isn’t an important issue; brokers gave it a score of 3.74 out of five on the importance scale. After all, mortgage broking is a dynamic profession, and it’s important to stay on top of the latest developments to fuel business growth.

When it came to making the top five for this metric, it was a closely fought battle. Ultimately, Macquarie took the top spot, followed by the big four. NAB/Homeside took second, ANZ third, Westpac fourth and CBA fifth.

BROKERS SPEAK: COMMUNICATIONS, TRAINING AND DEVELOPMENT “Some banks are good at communicating what they’re doing, some not. You choose your lender based on best result for the client.”

“Several lenders encourage communication with credit, and this is great for discussing deals and scenarios and clarifying potential points of contention.”

“There are too many people involved, with varying groups offshore, meaning an altogether breakdown in communication. Consistently, the only way to get information is to call the bank, with online systems not being updated, or using codes that only make sense to the bank.”

“Some lenders seem to look after all of their brokers from a training point of view, no matter what volumes they submit.”

“Train staff better and give them a sense that they are dealing with people and their lives. Customers are not just numbers or ways for the banks to make bigger profits. They are real people with feeling, aspirations and dreams and should be honoured as such.”

“As banks spend so little time on training their staff, there a fewer and fewer good old-fashioned ones around, which means segmenting is the only way I get access to the better staff.”

PRODUCT DIVERSIFICATION OPPORTUNITIES Rank

Bank

Score

1

Westpac

3.45

2

ANZ

3.39

3

CBA

3.38

4

NAB/Homeside

3.27

5

ING DIRECT

3.26

Total industry average: 3.17 Major bank average (big four): 3.37 Non-major bank average: 3.11 Diversification. It’s an issue that’s not going away, and becomes more prominent every year as financial services continue to converge. It would appear, however, that brokers aren’t as enthusiastic about diversification as they are about other issues; It was ranked as least important of the 10 categories the banks were being judged on in the survey.

However, it still scored 3.57 out of five for importance, suggesting that, while it may not be the most important service a bank can provide in brokers’ eyes, it’s still an issue that is being taken seriously.

JULY 2014 | 29

SPECIAL REPORT / BROKERS ON BANKS

When it came to ranking the banks for their product diversification opportunities, Westpac came out on top, followed by ANZ, CBA, NAB/Homeside and ING Direct.

Rank

2013 ranking

2012 ranking

2011 ranking

1

CBA

CBA

n.a.

2

St.George

NAB/ Homeside

n.a.

3

Macquarie

Westpac

n.a.

4

NAB/ Homeside

ANZ

n.a.

5

ANZ

St.George

n.a.

BROKERS SPEAK: DIVERSIFICATION INCENTIVES When we asked brokers what was the most effective incentive program a bank had offered them over the last 12 months, a few respondents mentioned schemes that encouraged referring clients for non-residential products, by rewarding either the broker or their client. Here’s what some of them had to say about their favourites:

“CBA’s Connect program offers the ability for brokers to earn commissions on credit cards, transaction accounts and personal loans through a specific branch relationship.” “$500–$1,500 cash-back offer and $888 mid-autumn offer from Westpac. This is not a refinance rebate; it was cash back if clients took out five products – offset account, eSaver, credit card, loan, home insurance. These were products typical clients were going to use anyway.”

“Credit card and account opening incentives provided by CBA will motivate brokers to sell more bank products to clients.”

“Bonus $5,000 for commercial broker referral to CBA. Increases total remuneration.”

“Last year Westpac offered $888 cash back for loans settled during that period, if clients held five-plus products. There was a noticeable increase in deals submitted to Westpac during this time, and many more client enquiries regarding their eSaver, credit card, and insurance products during the promotion period.”

30 | JULY 2014

BANK OF THE YEAR Rank

Bank

Score

1

NAB/Homeside

3.30

2

CBA

3.28

3

Westpac

3.27

4

Macquarie

3.26

5

ANZ

3.24

Rank

2013 ranking

2012 ranking

2011 ranking

1

CBA

CBA

CBA

2

NAB/ Homeside

NAB/ Homeside

ANZ

3

ANZ

ANZ

Bankwest

4

Macquarie

ING DIRECT

NAB/ Homeside

5

Suncorp

Bankwest

ING DIRECT

Total industry average: 3.18 Major bank average (big four): 3.27 Non-major bank average: 3.16 As is customary practice in MPA’s Brokers on Banks reports, the Bank of the Year was the one that received the highest average score across all of the service metrics on which it was ranked by respondents. And this year we have a new winner.

Once all the numbers were crunched, NAB/ Homeside just edged out CBA to take the top spot and the Bank of the Year title with an average score of 3.3 out of five.

CBA was just 0.02 points behind on 3.28 out of five, closely followed by Westpac (3.27), Macquarie (3.26) and ANZ (3.24). Congratulations to the teams behind all of the banks that made it into this year’s top five.

BROKERS SPEAK: BANK OF THE YEAR “NAB worked very hard to get the client over the line.”

“Banks are rated on how their people service you. Get good people and you have a good bank to deal with. CBA are excellent at this with their enquiries lines.”

“I have good relationship with BDM and clients are satisfied with the services provided by Westpac.”

“Macquarie have been outstanding with their product offerings and service levels. Both client and broker satisfaction levels are top shelf and cannot be faulted.”

“Overall good service from local ANZ branch manager, who is switched on to helping broker clients.”

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PRODUCT OF THE YEAR Rank

Bank

Product

1

Westpac

Rocket Repay

2

NAB/Homeside

Homeplus

3

Bankwest

Premium Select

CBA

Mortgage Advantage Package (MAV)

4

5

ANZ

Breakfree Package

BROKERS SPEAK: PRODUCT OF THE YEAR “Westpac Rocket Repay: Flexible and convenient. Plus short turnaround time.”

“Homeside Homeplus: Quick, low fee, great rate, good structure.”

“Bankwest Premium Select: Price, little channel conflict; credit policy means they get approved.”

“CBA MAV Package: Credit is generally consistent and not just ‘box tickers’. Know the process well.”

“ANZ Breakfree: Easy to work with, simple pricing discretion and upfront valuation service.”

We also asked brokers to name their product of the year, and the clear winner was Westpac’s Rocket Repay. NAB/Homeside’s Homeplus product took out the second spot, followed by Bankwest’s Premium Select, CBA’s Mortgage Adviser Package and ANZ’s Breakfree Package.

JULY 2014 | 31

PROFILE / JAYDEN VECCHIO

CHARGING

AHEAD

Jayden Vecchio settled more than $60m in loans in his first nine months as a mortgage broker. Now 16 months into his new career, MPA finds out how he’s become so successful so quickly

Discovery Finance’s Jayden Vecchio first came to MPA’s attention when he was put forward to take part in this year’s Young Guns feature. During the course of our conversation he revealed that he’d managed to settle more than $60m in loans in his first nine months as a broker. A few months down the line, and with that impressive achievement still 32 | JULY 2014

fresh in our minds, we tracked Jayden down to delve further into how he has managed to build up such a successful business so quickly.

It may come as little surprise that one of the key drivers of Vecchio’s early success has been a solid grounding in the lending business, thanks to several years spent working in the banking industry.

He worked at two of the country’s non-majors, Bankwest and Macquarie, for three to four years each, and he believes the experience he picked up while working at the banks has been invaluable in helping him set up his own brokerage.

“I think they’re a good breeding ground for brokers and people coming into the industry, because they do teach you a lot of the right ways of doing things, and even some of the complexities and intricacies of financials and complicated deals,” Vecchio says.

He adds that he received good in-house training during his time with the banks, and is now making the most of the broker-specific training that lenders offer up to the broking community.

“The banks usually have regular training monthly, and even offsite days, which is something that’s obviously discretionary for brokers, but it’s something that they really believe in, and I believe in as well,” he says.

SETTING THE TONE Vecchio’s disciplined approach to work has helped him hit the ground running. He explains that making sure he had the right structure in place was key to preparing for his initial client meetings as a broker, to set the tone for the months ahead.

And 16 months into the job he’s now in the process of drilling the correct procedures into a new recruit that he’s brought into the business.

“We’ve done some role playing,” he explains.

“It’s just getting the simple things right, being detailed and making sure you get everything the first time.”

To that end, he says it’s standard practice to send the client an email outlining the documents and information that will be required before the first meeting.

“Usually we pretty heavily prequalify people to make sure no one’s wasting anyone’s time,” he says.

Of course, it’s all well and good having a rocksolid client process in place, but if the leads aren’t coming in, then it won’t be used to its full potential.

So, as a new broker, how did Vecchio manage to build up a solid client base off the bat? Once again,

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his banking background came to the fore.

“I think I was fortunate in that when I was at Bankwest they didn’t really give us leads at the time in the mobile lending channel,” he explains. “So I got to understand what works and what didn’t work, and that gives you a different perspective.”

This different perspective saw Vecchio decide to specialise in construction and development finance and seek out referral sources in that area.

“I’m a big believer in having a niche,” he explains.

“I’ve done a fair bit with development clients and working with professionals that are specific to that industry and then generating referrals that way.”

Vecchio cites relationships with developers as a good source of referrals, but he’s also embraced the digital age and looks to provide meaningful content via his website, blogs and social media to build up a following.

“I’ve just had an article published on [property industry commentator] Michael Matusik’s blog,” he says. “So it’s stuff like that, and my own blog, website and Facebook.”

Of the various digital avenues he follows to promote his business, Vecchio says the most important is his website, which he updates every second day to make sure the content is fresh.

“Make sure that you’re giving value, and it’s not just a landing page,” he recommends.

FINDING A NICHE Impressive settlement figures don’t come without a lot of hard work, but Vecchio does explain that working on high-value deals helps to keep volumes healthy without having to do too much running around. Combine that with a solid process, and you begin to see how he hit that $60m-in-ninemonths figure.

“My average deal size is about $2m, and some of the deals I’ve done are $10–$12m commercial deals,” he says.

“And then it’s just doing the small things like having everything up front; not submitting it till it’s finished; having a checklist and process in place so you’re not doubling back and doubling up the work.”

And the large deal sizes certainly help when it comes to maintaining a healthy work-life balance.

“It’s about managing the work, and not letting the work manage you,” he says. “It’s something I learnt at Bankwest: to work smarter and not harder.

And that’s why I do bigger deal sizes, because it’s the same amount of work but more return.”

“It’s about having a specialty, sticking with that, and then people recognise you in that space”

Vecchio believes that, while he was fortunate to have a grounding in commercial lending from his Bankwest days, the potential the commercial sector can offer brokers who are willing to specialise is often overlooked.

“I think it’s about having a specialty, sticking with that, and then people recognise you in that space,” he says. “You’ll pick up more business that way, rather than being a generalist and trying to pick up everything.

“For example, if I was doing a 95% loan it would probably take me more time to work out how to place that and do it, as opposed to a commercial deal for $10m. Because I know who to speak to, who the contacts are, what’s required and how to get it done.”

When it comes to the process of getting commercial deals over the line, Vecchio stresses that it’s important to be transparent when setting client expectations.

For example, he’ll admit that there’s only so much within his control, but when he says he’ll give a client an update by close of business the following day, he follows up on that pledge.

“It’s important setting transparency so people have confidence and know that everything’s going fine and it’s all happening in the background,” he explains.

“Every deal has its complexities, and it’s just a matter of identifying them up front and mitigating them,” he adds.

MOVING ON Vecchio estimates that residential deals only account for around 10–20% of his business, and that he’s referred potential clients to residential specialists in the past in order to make sure they get the best value out of contacting him. But his new recruit is all set to focus on Discovery Finance’s residential arm.

In an interesting twist of fate, Vecchio reveals that his new broker actually got in touch with him having seen his profile in this year’s MPA Young Guns feature.

“He contacted me off the back of that,” Vecchio explains. “He’s a young guy just wanting to work with people that are young, vibrant and want to get the most out of the industry.”

At the moment Vecchio’s new charge is busily building up a residential client base through “persistence, lots of phone calls and doing the work that others won’t to get the deal”.

JULY 2014 | 33

FEATURE / SMSFS SMSF S

SMSF

LENDING

YOUR STEP-BY-STEP GUIDE SMSF lending continues to grow apace.

A MPA catches up with several experts in the SMSF lending sector to offer brokers a guide on how to tap into this expanding market and put a successful SMSF deal together

34 | JULY 2014

re you interested in getting into the SMSF lending market but not quite sure where to start? Over the following pages, MPA speaks to a number of industry leaders to put together a step-by-step guide on how to do an SMSF deal.

From finding SMSF clients and marketing your services to them, right through to post-settlement, our panel of experts offer their essential advice for brokers looking to tap into this growth sector.

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STEP 1: MARKETING YOUR SERVICES How does a broker go about getting SMSF clients to walk through their door? Thinktank director Per Amundsen suggests there are two main sources of SMSF limited recourse borrowing arrangement (LBRA) business.

“The first is where individual brokers have made a conscious effort to generate this new line of activity through further education and professional development on their own part, and then reached out to their existing professional connections,” he says.

The second source of clients, he says, is existing SME business operators who have become aware of this borrowing structure and already have SMSFs set up – or are considering doing so and have then approached their brokers.

JULY 2014 | 35

FEATURE / SMSF S

“Over the past 12 to 18 months there has been a huge focus on the SMSF market” Greg Mitchell, Homeloans

36 | JUNE 2014

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“The advantages for SME owner-occupiers of commercial premises can be really significant,” says Amundsen. “But the real key for brokers is making sure that clients who want to take the opportunity further get the right advice from qualified and licensed experts.”

Homeloans general manager, sales, Greg Mitchell suggests marketing your SMSF lending services in all forms of media – from traditional to social media platforms – to make the most of a growing market.

“Over the past 12 to 18 months there has been a huge focus on the SMSF market, so it’s important for interested brokers to look into the benefits of SMSFs, and, if they deem it a right fit for their business, to then tap into this active sector,” he says.

“The booming property market – in certain states and regions – has certainly seen good increases in this sector, and this, combined with potential clients’ ability to manage their own super­annuation funds, will ensure there will continue to be strong interest.”

La Trobe Financial’s senior vice president, asset and

origination, Paul Wells, adds that, in the first instance, marketing your SMSF lending services is simply a case of including the SMSF option in your general networking and marketing dialogue.

“Typically, brokers will have fertile ground already in their client base, and the work they have done to build this base remains a key strategy. This is particularly the case for clients with more mature profiles or financial capacity,” he says.

“Relationships with accountants, financial planners, investment advisers and lawyers can all also lead to potential client flow.”

He reassures brokers that this is not an overly complicated process.

“Remember, a broker’s core function remains to efficiently and effectively provide the lending solution and to service the client’s process,” he says.

St.George Banking Group mortgage broking general manager Clive Kirkpatrick also points out that forging strong relationships with relevant professionals, such as financial planners and accountants, can be the key to finding SMSF clients.

“It is important for brokers to demonstrate that residential lending within SMSF is a valid and workable option for trustees, and that they can add value to the services these professionals provide,” he says.

“Brokers should invest in their own education and understanding on lending in SMSF and develop a unique value proposition for professional referrers.”

AFM director Iain Forbes adds that there’s also a simple but effective method of finding SMSF clients that can be incorporated into your existing process.

“When a broker interviews a client and completes a statement of assets and liabilities, and notes that the balance in the super fund is, say, $200,000, the immediate response should be: ‘Have you considered buying a property in your own super fund?’ ” he says.

AMP Bank head of sales and marketing Glenn Gibson agrees that simply making it clear to your clients that you’re able to offer SMSF lending options can bring clients out of the woodwork.

“Brokers will have clients who have already set up their own SMSF or are thinking of doing it in the future,” he says. “By letting their clients know that they can assist in arranging the finance for any property purchases within SMSFs, it will set them up as the first point of contact.”

FEATURE / SMSF S

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“SMSFs are not for everyone, and people should think carefully before deciding to set one up” Glenn Gibson, AMP Bank

STEP 2: IDENTIFYING SMSF CLIENTS As has been touched upon in Step 1, it’s likely that your existing client book will already contain clients who may be interested in purchasing property through their super fund.

Forbes points out that, seeing as superannuation payments are compulsory for all PAYG workers, existing clients who have been working for, say, 20 years could have a large enough super fund balance to consider investing in property through an SMSF. Amundsen elaborates on the subject of exploring your existing network to find potential SMSF clients, explaining that brokers should identify customers that fall into the following categories: • Experienced or active real estate investors (residential or commercial) • SME business operators who are owner-occupiers of commercial property, or are renting business premises and may wish to consider buying

He adds that, while there is no set minimum, a reasonable starting super fund balance – and a meaningful level of expected future contributions – are prerequisites when considering which clients would be suitable. He suggests that the costs of setting up and administrating an SMSF start to be outweighed by the benefits once it reaches around the $200,000 mark.

38 | JUNE 2014

When it comes to finding SMSF clients outside of your existing client base, Amundsen recommends trying to connect professional contacts, such as accountants and lawyers, as much as possible. He stresses, however, that it’s important to ensure you’re properly informed and qualified in the SMSF lending space, so that you’re able to provide a high level of service to the client once the referrals start coming in.

“SMSF compliance obligations and regulatory requirements make for a complex environment both in the set-up and in the annual responsibilities of management thereafter,” he says.

“For brokers, there are a variety of formal courses provided by a number of organisations, such as the MFAA, and many lenders will supplement this with their own training and will usually assist introducers with their first few transactions.”

Mitchell agrees that SMSF lending can be a healthy addition to a broker’s business if they have strong affiliations with financial planners, accountants or lawyers. And the referral arrangement can be mutually beneficial in both directions.

“By working collaboratively with such professionals, there may also be opportunities for brokers to identify opportunities within their existing client base – those who have SMSFs and are interested in investing directly in residential property,” he explains.

FEATURE / SMSF S

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Another interesting method brokers can employ is profiling; in other words, using industry data to screen your client base for those customers who are most likely to be interested in the SMSF option.

As Wells explains, “applicants are usually between 35 and 55 years of age, more so the older half, and in a financial position to have made or be making contributions to build enough super to justify an SMSF”. He adds that brokers shouldn’t discount clients who don’t already have a property portfolio under their belts, as setting up an SMSF may give them an opportunity to become property investors for the first time.

STEP 3: THE CLIENT INTERVIEW Once you’ve introduced the SMSF option into the conversation, Gibson cautions that brokers are not able to give advice when it relates to SMSFs, so the questions you ask the client should revolve around what features and benefits the client would like their SMSF loan to have.

“The importance of having a loan with an offset account that the client can use as the cash hub for the SMSF could be one such question,” he says.

“How the client wants to utilise their SMSF loan and associated products is important for a broker to understand so that the right option is offered.”

Amundsen adds that a broker can provide expertise in the arranging of debt, and any advice on setting up an SMSF or establishing investment strategies that may include acquiring property on a leveraged basis requires specific qualifications as determined by ASIC and the ATO. But, while you may not be able to offer advice yourself, he believes it’s important to ask who the client has turned to for counsel. Ideally, they will be receiving professional advice from a financial adviser, accountant and lawyer, but they may need to be nudged in the direction of asking for professional help.

“Administration costs will be in the order of $1,500 to $2,500, excluding investment management fees” Paul Wells, La Trobe Financial “Because SMSFs really are ‘self-managed’, individual trustees or directors of corporate trustees who are the SMSF members don’t have to obtain outside advice,” he explains. “This, however, can be a real pitfall for those that may not have the expertise in property investment or an in-depth knowledge of the regulations governing SMSF LRBAs – which is complex, very detailed in nature and constantly subject to change.”

Once you have established where the client is 40 | JUNE 2014

FEATURE / SMSF S

getting their advice from, Amundsen suggests finding out what exactly their financial planner, accountant and/or lawyer have advised them to do.

“This is essential to support their desire to borrow through their SMSF to acquire a property and hold that property all the way through to the time they reach retirement,” he says.

Other questions to ask, Amundsen says, include ‘What is the market value of the property being considered?’ and ‘What is market rent if it is to be owner-occupied?’ This second question, he explains, is very important, as it must conform to the Superannuation Industry (Supervision) Act (SISA) requirements that govern SMSFs. Wells suggests that the fundamental question

“Brokers will need to know and understand how lending for commercial property is different from residential investments” Per Amundsen, Thinktank clients need to ask themselves is whether purchas­ ing a property in an SMSF meets their investment strategy and any other personal requirements.

Potential considerations the client should bring up with their advice team include diversification, investment horizons, liquidity and potential financial support or guarantor obligations.

He adds that it’s also important to ask the client if they have sufficient assets and income in the SMSF to service the loan, or the personal capacity to make additional contributions if required, for example, when rental income fails.

“All costs and loan repayments must be paid by the SMSF, so borrowers need to ensure there are sufficient funds and cash flow available within the SMSF to service the loan,” he explains.

“Finally and more specifically, once a property is in an SMSF the client loses the ability to obtain any

42 | JULY 2014

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cash out on the property or – if it is a residential property – occupy it. These can be two significant negatives to applicants.”

QUESTIONS TO ASK What are the key questions to ask clients who are interested in borrowing to purchase a property within their SMSF?

Greg Mitchell

• Do they currently operate through an accountant/financial planner?

• What is their understanding of SMSF? • What is their income?

• What are their short- and long-term plans?

Iain Forbes

• Would you like to consider investing in property through your SMSF? • Are you aware that your monthly contributions and the rental from property will go towards paying off the mortgage?

• Did you know that, provided rent and contributions meet the cost of repayments and other outgoings, a borrower may not have to subsidise any shortfall to cover the repayments?

Clive Kirkpatrick

It’s important to have a good understanding of the client’s position and whether the loan amount will be suitable for them. Aside from learning about their current financial position and savings capacity, we also need to know: • How does their super fund operate? Are they the only members and trustees? Does the fund allow for property investment? Have company super assets and ongoing contributions been directed to the fund?

• Is there is a custodian established with a trust deed? If not, do they have a company set up for this purpose?

• Have they received written advice? From a financial planner and legal practitioner.

• Have they found a property yet? If so, have they entered into a sale of contract yet? If not, what are they doing to source a property?

STEP 4: THE SET-UP While brokers aren’t qualified to set up an SMSF on their client’s behalf, this is a process the client will need to follow if they haven’t already got an SMSF in their name.

Kirkpatrick suggests finding a good referral partner who specialises in SMSFs and can help the client with the set-up process. He explains that the cost to the client will vary, depending on the service provider and the complexity of the arrangement.

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FEATURE / SMSF S

“It is important for brokers to demonstrate that residential lending within SMSF is a valid and workable option for trustees” Clive Kirkpatrick, St.George Banking Group

“One of the key benefits potential trustees see in SMSF is that it reduces the overall cost of managing their super relative to the cost of retail super­ annuation funds. People considering an SMSF need to assess the cost of set-up and running the fund against what they are currently paying, to determine its worth,” he says.

On the issue of costs, Gibson explains that the price tag attached to setting up and running an SMSF can vary depending on the fund’s total super balance, their fund’s investment strategy, and how the client chooses to manage their fund.

He also points out that clients will need to go and see someone who is licensed to set up an SMSF, such as a financial adviser or accountant, and this professional’s advice will also help the client to decide if an SMSF is really for them.

“SMSFs are not for everyone, and people should think carefully before deciding to set one up,” Gibson says.

“The client needs to make sure they get the right advice around gearing strategies, specifically around purchasing a property in super as an alternative to a personal investment property. A financial planner can also advise on insurance, including 44 | JULY 2014

income protection and other life insurance.”

He adds that professional administrators can manage the compliance and reporting aspects of an SMSF, such as keeping fund investments and transactions up to date, as well as looking after tax returns and the annual audit.

Wells puts the cost of setting up an SMSF at between $1,200 and $2,500. However, if a corporate trustee is required, then the cost could be increased by up to $1,000. In some cases, though, he explains that the SMSF can be created for free if the client is willing to keep an ongoing relationship with their service provider.

He explains that current practice is trending towards a financial planner or investment adviser packaging the set-up process for the client and procuring the requisite services or documents. This process includes creating the SMSF trust deed, while the trustee will also need to open bank accounts on behalf of the SMSF. It’s crucial to ensure that the SMSF trust deed allows the trustee to borrow to purchase property.

There are also fees attached to the ongoing administration of the SMSF, he explains.

“Ongoing, typically either an accountant will

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undertake tax and reporting compliance, or, increasingly, a full-service administration platform will be managed either by the adviser or planner, or a third-party service,” he says. “Either way, administration costs will be in the order of $1,500 to $2,500, excluding investment management fees.”

Clients who may baulk at the administration costs are technically allowed to administrate the fund themselves, according to rules laid out by the ATO, but Amundsen points out that their website strongly recommends that you “consider appointing a professional to help you”.

He adds that the ATO’s literature lists a variety of options and reasons why the client might choose to work with an accountant, lawyer, tax agent, fund manager and/or a financial adviser.

“The cost varies quite widely from about $1,000 up, depending upon how much advice you seek or require, beyond establishing the trust and trustee arrangements,” he says. “This is one of the reasons why an SMSF does not work particularly well for small amounts of retirement savings.”

STEP 5: DOING THE DEAL When the client has ticked all the advice and compliance boxes and is ready to seek a loan to purchase property within their SMSF, Wells offers some reassurance that the borrowing structure itself isn’t as complicated as you might think.

“It does introduce a separate party who will hold the property – the bare trustee – but otherwise it should be no different from any loan to a trust,” he explains. “Nor should there be any difference to the structure between a residential or commercial property.”

He explains that the key parties in the loan transaction are: • The borrower: This will be the SMSF trustee, and can be a company or individuals. Wells notes that La Trobe Financial will allow individual trustees but some financiers will not.

• Registered proprietor: The bare trustee (also known as custody trustee or property trustee) must be a company, and it holds the property until the loan is repaid.

• Guarantors: The members of the SMSF are usually required to provide personal guarantees for the transaction.

“In terms of property investment, it is worth noting firstly that an SMSF corporate trustee must be incorporated prior to executing a property

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FEATURE / SMSF S

“The immediate response should be: ‘Have you considered buying a property in your own super fund?’ ” Iain Forbes, AFM

46 | JUNE JULY 2014

purchase contract, and secondly that a requirement to have a separate corporate trustee appointed to a bare trust brings with it a potential further incorporation cost of up to $1,000,” Wells explains.

“The bare trust deed can be executed prior to settlement and should come free of charge from a lender’s solicitors.”

Kirkpatrick notes that brokers are able to assist with the loan application and ensure that the customer has had the appropriate independent financial advice from a planner or accountant.

“The broker completes the application and provides supporting documents on behalf of the SMSF,” he says.

“Certified copies of the SMSF trust deed and custodian trust deed are required for the bank’s panel solicitor to review and certify compliance.

On approval, a loan offer document and security documents are produced and sent to customer’s solicitor for execution.”

However, Mitchell warns that lending is just “one piece of the puzzle” and clients will need to get independent financial and legal advice as part of the application process.

“The overall process is very involved, so it’s vital to use the relevant experts for the different components,” he says.

Gibson adds that the structure of an SMSF loan is slightly different to a normal residential loan in that the affordability is based on the super fund and its members.

“The borrower is the trustee to the super fund, while the security is held by the trustee to the bare trust,” he explains.

“Due to the nature of a limited recourse borrowing arrangement a financial planner or accountant will structure the super fund in the appropriate format, allowing the broker to concentrate on the lodgement and subsequent approval of the required loan.”

There are some differences when it comes to SMSF borrowing for commercial property versus residential property, explains Amundsen. He notes that the requirements for an SMSF to invest in residential property are very different from those for commercial property, which qualifies as ‘business real property’ under the SISA regulations.

“When making such an investment on a geared basis using an LRBA, the lender will look at the loan

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ESSENTIAL DOCUMENTS What are the key items of paperwork and supporting documents that are required?

Iain Forbes

• Application form • Identification of directors • Copy of purchase contract • Trust deeds • Documents supporting set-up of super funds • Bank statements of super fund • Statement of monthly contributions • Copy of existing lease

Glenn Gibson

• Application form • Two payslips or two tax returns to show super contributions • Rental income evidence • (In some instances, 12 months’ evidence of contributions, showing current fund balance) • Certified copies of SMSF trust and bare trust • Contract of sale • Normal evidence of identification

Clive Kirkpatrick

• Evidence of ongoing contribution to the fund of which they are a member • Copies of the current SMSF trust deed • Any incorporation certificate for corporate trustees • Audited tax returns and signed auditors’ statement if the fund is existing • A bare trust with a certificate of incorporation

For the security property, customers need to provide: • Copies of relevant pages of contract of sale • Rental opinion letter from a real estate agent or copy of management agreement for serviced apartments • Copy of latest super fund account statement (existing SMSF or rollover funds), showing member’s holdings as evidence of funds to complete

applications differently, and so, if it is a commercial property that is involved, brokers will need to know and understand how lending for commercial property is different from residential investments,” he says.

“On top of that, the regulations with respect to acquiring and disposing of property to related parties are different – they are allowed for commercial and not for residential – and similarly for occupation by related parties.”

However, he adds that, while the regulations vary, the structure is the same in both cases, and properties that are part of an SMSF LRBA must be held in a bare trust for the beneficial ownership of the SMSF. The property must also be a ‘single acquirable asset’.

STEP 6: POST-SETTLEMENT Once the deal has been done and the loan is settled, Forbes suggests that brokers arrange a postsettlement meeting with the client to make sure the loan has been set up in terms of the borrower’s requirements. He notes, however, that this is a matter of general good practice, rather than being something that is SMSF specific.

“This applies to every mortgage, not just SMSF,” he says.

Amundsen agrees that it’s worth staying in touch with the client, if only to make sure you’re front of mind should they need any future mortgage assistance.

“One way to do that is most lenders will want to receive a copy of the SMSF annual return,” he explains.

“From 1 July 2013 the financial statements must be prepared by a registered SMSF auditor, but the broker can be involved in seeing that these are provided to the lender annually, and in that way keep in touch with both the clients and the lending institution.”

Wells echoes Forbes and Amundsen’s sentiments in stating that settlement of the deal should be fairly conclusive and clean, notably so if it is a typical long-term loan.

“From a commercial perspective, perhaps the main issue is to maintain a relationship with the client, potential client network and commercial partners, with further dealings in mind,” he says.

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BUSINESS STRATEGY / LEADERSHIP

& FOLLOWING

LEADING

A leader requires followers. So why is all the focus given over to leadership and leading, with no mention of followers? Dr Hilary Armstrong looks to right the imbalance

Most of us want to be leaders. Leadership is snazzy, even sexy. We hear that Gen Ys want leadership now (or a month after they land a job), and that climbing upwards in an organisation is the only way to be a successful human being.

Our culture spends millions per annum on researching the role of leader, but we spend little effort or money on leadership’s essential role-mate, the follower.

Being a follower is definitely not sexy.

Most agree that leading is a role rather than just a position and that it exists at all levels of an organisation and can be occupied by anyone. But following is also a role and can be occupied by anyone; in fact, it is by the majority of people in an organisation. Yet we do not hear about it.

There is an abundance of leadership ‘role marketing’ in job titles that have sprung up at all levels of an organisation. There are executive leaders, senior leaders, department leaders, people leaders, area leaders and team leaders. The word ‘follower’ does not exist in any job title. However, it is present, and describes everyone else in the organisation (as well as all the people in the leadership roles).

WHY MIGHT THIS MATTER? It matters because it disguises the authority assigned to people when they accept a leadership role, and 48 | JULY 2014

particularly how this authority shapes relationships.

Think of being in the context of an organisational meeting when the CEO comes into a room. The CEO is treated differently to an executive assistant who walks in. This difference (or deference) shapes the conversation practices and outcomes of the meeting.

Likewise, the physical environment shapes the relationship; for example, the C-suite positioned at the top of the building with the view, or open-plan spaces designed carefully around leaders sitting near the window; or a learning environment with the teacher standing at the front of the room. This is neither good nor bad unless we are unaware of it, because without awareness of the authority that a title gives, a leader may perpetuate unproductive relations with people they are meant to lead.

Power, status and authority all shape relation­ ships in organisational contexts, and it is our awareness of the connection between roles, power and relationships that is important.

Many people use their leadership roles and their status for the good of others. They are the effective leaders, the ones who are aware that their success as leaders depends on their followers’ success.

More often people given leadership roles are unconscious of the role difference; of the entitle­ ments that a leadership role gives them. They are the ones who are blind to the reality that their

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Power, status and authority all shape relationships in organisational contexts, and it is our awareness of the connection between roles, power and relationships that is important

success depends on the success of their followers; who are unaware of their status and the privileges that accompany it, who forget the inescapable relation­ship between leader and follower.

They are the ones who are likely to lead cultures of underground conversations, disengagement and disillusionment.

THE ROLE OF A FOLLOWER You may have heard the phrase ‘influencing up’ as a euphemism used by people in a follower role to indicate the presence of a dysfunctional leader.

Many people feel powerless in the face of a dysfunctional leader (in fact, it is one of the main reasons for changing jobs).

They experience themselves, rightly or wrongly, as having no voice. Martin Luther King once said, “The problem of the age is not the strident voices of the bad people but the appalling silence of the good people”. There is a helpless silence that many people feel when they perceive unethical practices being perpetrated by a leader who also has the power over their employment and career.

There is a lot of research into effective leadership.

An effective leader is authentic, inspirational, mindful, relational, strategic, has drive, expertise and is results oriented. So what are the characteristics of an effective follower?

Successful ‘influencing up’ means the courage to speak up in the face of destructive behaviours, taken for granted custom and practice, or a clash of values.

It can also lead to the courage to make personal choices about staying in or leaving a role.

An effective follower requires the wisdom to know when to take a risk or not, when to speak and when to remain silent; the self-discipline to come to work, do the job and feel satisfied at the end of the day, even in the face of difficulties, knowing that one’s identity, value and success are not necessarily shaped by work. Importantly, it involves having the ego strength to not confuse one’s personal value with one’s aspiration and ability to climb the organisational ladder.

We are all leaders and followers and there is much to be gained from recognising the inescapable relationship of these two roles. Loyalty and humility, quiet determination and diligence, as well as acting with grace in the face of others’ seniority, are all characteristics that an ineffective leader might think about next time they are put in the role of follower.

This would give them the much-needed capacity as a leader to walk in their followers’ shoes, to remember that leadership is essentially a role that is in the service of their followers, and that their success ultimately depends on this.

Dr Hilary Armstrong is director of education at the Institute of Executive Coaching. For further information, visit iecoaching.com

JULY 2014 | 49

ADAPT& THRIVE

BUSINESS STRATEGY / COACHING

How can coaching assist us in adapting to change?

Dr Hilary Armstrong provides best practice insights, and outlines how neuroscience has shifted our understanding of brain function “If you’re in a bad situation, don’t worry, it’ll change.

If you’re in a good situation, don’t worry, it’ll change” – John A Simone, Sr. Change is constant and inevitable, or so we are told.

Yet we resist it, especially when the change happens to us, like at work. So in the uncertain climate of organizations today, it becomes more vital that we understand how to assist people and prevent change fatigue from setting in.

As a coach working increasingly with moving roles and restructured landscapes, cognitive and social neuroscience research has enhanced my (and my coachees’) understanding of responses to change.

50 | JULY 2014

Although our brain is built to relentlessly scan our environments for what has changed and then assess this in terms of the danger or delight – will it eat me, or will I eat it? – our brain is more likely to register danger. In other words, we are genetically programmed to avoid change. Research into brain plasticity over the past 10 years has, however, emphasised its capacity for change. In fact, our brains are designed to continually learn, change and adapt.

Scientists once believed the brain was ‘hardwired’ early in life. We now know that the 80-year-old brain has the same ability to make new connections as the eight-year-old brain. Unfortunately, most

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people stop challenging them­selves to learn new things around the age of 30, and when we don’t use it, we lose it!

Working with and adapting to change is one effect of plasticity and how we grow. Working with change responses from a coaching approach that models understandings from neuroscience assists change managers and change participants in many ways. Here are just three:

DEACTIVATE FEAR CIRCUITRY Coaches can explore with coachees their view of the change. Talking through an individual’s responses to change reduces the activation of their brain’s fear circuitry. This is important because arousing the fear circuitry overloads our prefrontal cortex, reducing function and decision-making.

Even mild levels of uncertainty, like gossip or rumours with no evidence, can stimulate fear. We expect the worst, and unless these expectations are understood, underperformance and decreased productivity will set in.

It is the uncertainty itself – not the potential outcome – that generates change in neurotrans­ mitter levels that inhibit thinking. Coaching assists by encouraging expression of concerns and uncertainty. It is a space to acknowledge the coachee’s viewpoint without forcing the change agenda, and it is the process of the coaching conversation itself that reduces the physiological effects of stress, and when this occurs people often move themselves forward. An effective coach sees this non-verbally often before it is spoken, and can gently guide the person towards acceptance.

GROW MINDFULNESS What is missing from many organisational change processes is quantity and quality time to focus on the development of new skills and behaviours as well as people’s ability to do this. Studies on neuroplasticity show that with focused attention new (physical) neural connections are made and stabilised so that people experience the change as ‘normal or automatic’. Mindfulness is the key to this.

Although our brain is built to relentlessly scan our environments for what has changed and then assess this in terms of the danger or delight – will it eat me, or will I eat it? – our brain is more likely to register danger Unless we can mindfully focus our attention, stabilisation of new neural connections cannot occur and people revert to old behaviours. This is amplified by research about our set point in terms of reactions to change being tipped more towards negative emotions (irritability, frustration, etc).

The good news is that this set point can be moved towards more constructive emotions by coaching for mindfulness.

BUILD A ‘POSSIBILITY FOCUS’ What we focus on grows. A focus on problems grows problems. A focus on strengths and possi­ bilities grows neural connections of possibility and strength. A coach is a champion of both the coachee and neural plasticity.

In addition, while our brains chatter along with thousands of unconscious thoughts every day, we do have a small window (seconds) to make conscious choices between automatic reaction and conscious response. The more the focus is on possibility, the more likely we are to make choices that fit these possibilities and strengths. This brings ownership of the change.

So get a coach, or include a coaching approach in your change processes. Then whether you are in a good or bad situation, the change won’t matter.

Dr Hilary Armstrong is director of education for the Institute of Executive Coaching and Leadership. For further information, visit iecoaching.com

JULY 2014 | 51

BUSINESS STRATEGY / AUTHENTICITY

WINNING HEARTS AND MINDS Can leadership authenticity really be a key to capturing the hearts and minds of employees, and can it be developed?

Walter Bellin believes so

52 | JULY 2014

Over the past 25 years I have used the following exercise in my leadership development workshops many times: I ask groups of five or six participants to identify someone from the present or any time in the past who they all agree is (or was) a truly great leader – and then I ask them to come up with the four or five traits or qualities that made them great leaders. There has been an amazing consistency in both the leaders chosen and the qualities or characteristics that made them great.

The most common leaders chosen were leaders of great social movements such as Mahatma Gandhi, Nelson Mandela and US civil rights leader Dr Martin Luther King Jr. The typical characteristics identified as making them great leaders were integrity, courage, a deep commitment to their cause, and a clear and compelling vision of the future they wished to work towards.

WHAT IS AUTHENTICITY? Authenticity implies two basic things when applied to a leader, such as the three identified above.

• Firstly, it implies something about the leader’s qualities as a person, the quality of their values, and the quality of their actions that follow from these values. It implies that they have good motives and intentions, which are broad and inclusive of the welfare of all who they lead and who are affected by their leadership.

• Secondly, authenticity implies that the leader is real, that they are exactly who they claim to be

and exactly how they present themselves. This means, among other things, that what they say they believe in or value is exactly what they believe in or value; that their motives or intentions are exactly what they say they are; that they ‘walk the talk’ and they do (or at least attempt to do) what they say they will do.

A leader who demonstrates this authenticity will earn the trust of the people they lead. The vision of the future that they want others to join them in creating will be both mentally attractive, credible and emotionally compelling. Their authenticity will inspire people and win their loyalty, and people will follow them because they want to.

HOW DO PEOPLE PERCEIVE OUR AUTHENTICITY – OR LACK THEREOF? There are two primary means by which people will perceive our authenticity as a leader. The first is obvious: they will simply watch our actions and – over time – compare these with what we have said.

There is a second subtle but equally powerful factor that affects people’s perception of our authenticity, and does so more quickly than by comparing words with actions. When we speak, in addition to the words we are using, we express non-verbal cues contained in our voice qualities and body language (especially facial movements) that others pick up subconsciously. This occurs

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through our brain’s right hemispheric function, which subconsciously but simultaneously picks up these non-verbal cues, while our conscious mind is listening to the words. According to extensive studies by psychologist Albert Merabian, only 7% of a message’s meaning is conveyed by the words and 93% by non-verbal cues.

When we are speaking, the right brain of our listeners is subconsciously picking up and assessing the congruence of these non-verbal cues with the words they consciously hear. If they are congruent, there is a greater likelihood that the listener will accept and be positively influenced by the message. Conversely, if they are incongruent, the listener will experience a kind of internal ‘dissonance’ and more likely reject the message and (perhaps) become sceptical or cynical about the leader.

I saw this demonstrated once when a wellknown Australian television moderator interviewed two candidates from rival parties (Liberal versus Labor) in a single electorate, with an equal number of supporters for each candidate present. After the interviews, the moderator asked if anyone had changed their mind about who they would support.

For one candidate, no supporters had changed their minds; in fact, some said they were even more committed. For the other candidate, a half-dozen had definitely changed their minds, and a number of others were now unsure. When asked why, they responded that something just didn’t “feel right” (ie the internal ‘dissonance’ of inauthenticity) about their candidate’s communication. In the election several months later, the authentic candidate won what had been a safe seat for the other party for decades!

WHAT YOU CAN DO TO ASSESS, DEVELOP AND DEMONSTRATE YOUR OWN AUTHENTICITY • Make sure that you have set and are working towards personal development goals. Here I am not talking about learning a new management or leadership skill, but rather working towards building the personal character traits of the leaders you most admire. This means, quite literally, cultivating those qualities that make you a better person. Utilising the services of a coach to assist you with this process can be invaluable.

• Keep working on the most fundamental leadership skill of all: good self-management.

This means, especially, managing yourself well in

emotionally challenging and stressful situations, which is when we are most likely to speak or behave in ways that violate our stated values. It is simply impossible to be an effective, authentic leader of others without being effective in managing ourselves.

A leader who demonstrates this authenticity will earn the trust of the people they lead • If you are to successfully undertake the two strategies described above, you will need to cultivate accurate and in-depth self-awareness. To achieve this, the periodic use of a good-quality psychological instrument can be invaluable, provided that the coach or facilitator who debriefs you with the instrument is well qualified and does not use the instrument in a judgmental way.

• In spite of how busy you may be, it is important to do a regular internal audit, at a quiet time and place that is regularly set aside for this, asking yourself: What is really important to me? What are my most important priorities? Do I actually feel, value or fully believe what I am telling the people I lead? Should I be changing my message to make it more congruent with the above? To succeed with this internal audit, you need to be really honest with yourself.

• Do a regular external audit of your daily behaviour. Most people are boss-watchers. They will be constantly comparing your daily behaviour with the messages you are giving them about what is important to you and what you believe and value.

Seek feedback about this from people you trust to be honest with you.

• Finally, as part of this external audit, open your diary and compare the use of your time with your messages to others. Does how you use your time demonstrate commitment to your stated priorities, beliefs and values? If not, reprioritise your time usage to become more congruent with your message.

Such changes will usually take you out of your comfort zone initially, but as a leader the payback to you and your people will be manifold. As your authenticity is increasingly expressed more fully in both words and actions, you will win hearts and minds, creating trust, inspiration and commitment in those you lead.

Walter Bellin is the CEO of Corporate Crossroads and author of the new book Climb a Different Ladder: Self-awareness, Mindfulness and Successful Leadership (Jane Curry Publishing, $29.95). For more information, visit corporatecrossroads. com.au

JULY 2014 | 53

BUSINESS STRATEGY / PROFESSIONALISM

PERSISTENT

PROFESSIONALISM...

Industry trainer

2014

Doren Aldana reveals the path to success

What would you do if you knew you could not fail?

What would you do, what would you have, and who would you become if success was certain?

If you’re anything like me, it’s questions like these that inspire you to rise above your fear of failure and dream bigger than you’ve ever dreamed before. Suddenly, a whole new world of possibil­ ities opens up to you – a world in which you are the star and your greatest passions, dreams and goals are fulfilled. What if your dreams could be more than just wishful thinking? What if they could become your reality?

The truth is, if you harness the power of persistence in your life, your dreams are not only possible but probable.

54 | JULY 2014

WHY PEOPLE FAIL I once heard a statistic that 90% of all failure comes from quitting. Thomas Edison affirmed this when he said, “Many of life’s failures are people who did not realise how close they were to success when they gave up”. If it weren’t for Edison’s dogged determination to keep going after thousands of failed attempts at creating the incandescent light bulb, who knows? We might still be lighting our homes with candles. Perhaps that is why Dale Carnegie, lecturer, writer and developer of self-improvement courses, noted that “most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all”.

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In other words, persistence beats resistance.

Quitters never win and winners never quit. If you want to increase your chances of success, you must have a dream worth fighting for and then resolve to never, ever, ever give up.

3 P’S OF PERSISTENCE So how do we keep on keeping on when the going gets tough? Let me give you my ‘three P’s of Persistence’ to help you become unstoppable:

P P P

PASSION PLAN POSITIVE

#1: Passion To overcome life’s inevitable obstacles you must have an unwavering, deeply rooted desire to make your dream a reality. This is what I call your ‘Magnificent Obsession’ – something so important and meaningful that it’s worth giving your entire life to! It’s not just about getting more stuff: the fancy car, the big house, the fat bank account, etc.

It’s also about who you will become and the legacy you will leave.

Jim Rohn, America’s foremost business philosopher, put it this way: “The major reason for setting a goal is for what it makes of you to accomplish it.

What it makes of you will always be the far greater value than what you get.” Now that’s a passion worth pursuing! #2: Plan As the old saying goes, “people don’t plan to fail; they simply fail to plan”. Without an effective action plan you’re like a blindfolded archer: you know the target is out there somewhere but you just can’t seem to hit it.

If you’d like to bypass all the trouble and struggle of trial and error, then you’ll want to model other people’s success formulas. One of my favourite mottos is “Never invent; always improve!” Why reinvent the wheel when someone

else has already done the dirty work for you? Start off your planning process by asking yourself the following two questions:

As you journey towards success you will be confronted with inevitable problems and obstacles.

How you respond to these challenges will determine your degree of success or failure

a. Who has already accomplished what I want to accomplish? b. How can I model their success formula?

Conduct interviews, read books, attend seminars; do whatever it takes to get your success blueprint mapped out.

Once you have your basic plan in place, the next step is to take your big dream and break it down into smaller bite-sized chunks with annual, quarterly, monthly and weekly milestones or goals.

A goal is simply a dream with a deadline attached.

Regardless of how unrealistic or audacious your dream might seem right now, with consistent persistent action compounded over time you can make the impossible possible. #3: Positive attitude As you journey towards success you will be confronted with inevitable problems and obstacles.

How you respond to these challenges will determine your degree of success or failure.

Successful people throughout the ages have learned to adopt a positive attitude in the face of adversity. They don’t see obstacles; they see stepping stones to become the best they can be.

They don’t see failure; they just see temporary setbacks and an opportunity to start again more intelligently. And thus they forge forward like a­ perpetual motion machine, undeterred by anything in their path.

CONCLUSION With a relentless passion to see your dreams realised, a solid plan and a positive attitude, your success is not only possible but probable!

In closing, let me leave you with a quote from Calvin Coolidge, the 30th president of the United States: “Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent.

Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘Press on’ has solved and always will solve the problems of the human race.”

JULY 2014 | 55

MOTIVATION / SUCCESS

How to achieve success

before it’s too late Still waiting for the right time to start investing or working towards creating the life you want? Time might be running out, as Matthew Michalewicz explains in his book, Life in Half a Second

Everyone knows that life is short – it’s the most overpreached truth on earth. But how short is it, exactly?

Planet Earth is four-and-a-half billion years old.

The species you and I belong to, Homo sapiens, did not emerge until some 200,000 years ago. The oldest known fossils of modern humans are only 160,000 years old, discovered in Herto, Ethiopia. So out of the four-and-a-half billion years that this planet has been floating through the nothingness of space, we’ve been around some .0044% of that time.

Put another way, if our planet was exactly one year old, then modern humans would have only been around for the last 23 minutes. Measured on the same scale, if our planet was a year old, then your entire life would amount to half a second.

That’s all I have left: 15,695 days. And there’s something more meaningful about ‘15,695 days left’ than ‘37 years old’.

I feel a sense of urgency, haste.

There’s a countdown on my life WHAT WOULD YOU DO IF YOU HAD ONE YEAR TO LIVE? We don’t appreciate this as kids. Time seems unlimited and goes by ever so slowly. We’re impatient to grow up, become adults, and enter the 56 | JULY 2014

real world. We imagine all the freedom we’ll have, all the things we’ll get to do.

But when adulthood finally arrives, we discover that we’ll be spending the vast majority of our ‘freedom’ at work, paying bills, surviving, often in jobs we don’t like or don’t care about.

Life is not how we imagined it and disillusionment sets in. We spend our half second doing everything except what we really want, dreaming of the future, of some distant, faraway day when life will be different, better, when we can finally do the things we want. But as we grow older, time begins moving faster and faster, and our long-awaited day never seems to come.

The tragedy of life isn’t that we only have half a second. The tragedy is that we waste it. In my travels across continents, countries, and cultures, first as a serial immigrant and later as a businessman, I met people from every walk of life imaginable. I became obsessed by a single question: What would you do if you only had one year to live?

Why? Because I always received the same answer. With only a year to live, most people would quit work, spend time with family, see the world, and do everything they always dreamed of doing before it’s too late.

Their answers would be thick with emotion – not sadness or regret, but enthusiasm, eagerness. I felt they were about to set sail on some journey they often fantasised about but never actually took. With heat and fervour, eyes flashing, gleeing almost, they spoke of the many things they would do before death claimed them. And after the hundredth question and hundredth answer, I finally thought, Good God! Can we only live when we’re dying?

My impression of the world is that we spend life doing what we ‘have to’ rather than what we ‘want to’. This comes across in many psychology and happiness studies, especially those related to work.

Harvard studies show that worker happiness is at an all-time low, with 74% of employees wanting to find a new line of work.

At heart, we would rather be doing something else.

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sun and swirling clouds, wind blowing, seasons changing, with the raw earth under my fingernails.

From the largeness of the cosmos to the smallness of my little toe, I love life. And knowing that everything is ephemeral, fleeting, here one moment and gone the next, I’m not saving anything for later.

SO WHAT ARE YOU WAITING FOR? If we only had one year to live, our desire to start living – to use what’s left of our half second to the fullest – would become unstoppable and we would finally, finally, take action. But is that what it takes?

Must we be confronted with death to finally do the things we want? Is that what we’re waiting for?

Sadly, it seems so.

Death always seems a long way off, a concept almost, as remote and abstract as the dark side of the moon. We don’t appreciate our mortality or fully comprehend how little time we have, so we defer our desires for another day. It’s not until death becomes more tangible, inevitable, that we realise our time is measured and we spring into action.

We’re relaxed and laid back about the time we have left because we measure our age in ‘years lived’. We know that 50 is older than 40, and 40 is older than 30, but so what? What does that really tell us? Not much. It’s like knowing how many litres a car has used without knowing how many litres are left. The most important information is missing. So what would happen if we measured our age in ‘days left’ rather than ‘years lived’? I bet we wouldn’t be as relaxed and laid back. I bet that death would become less abstract. Let’s try it.

The average life expectancy of the global population in 2011 is 70 years, ranging from 80+ years in countries such as Japan, Australia and France, to less than 60 years in South Africa, Laos and Kenya. Let’s assume you live in one of the 16 countries where life expectancy is more than 80 years, or that you’ll beat the odds and live to be 80.

In either case, subtract your current age from 80 and multiply the result by 365. This is the amount of ‘days left’ you have – assuming all goes well and you don’t find yourself on the wrong end of ‘average’. I’m currently 37 years old, so 80 – 37 = 43, and 43 x 365 = 15,695 days. So that’s it. That’s all I have left: 15,695 days. And there’s something more meaningful about ‘15,695 days left’ than ‘37 years old’. I feel a sense of urgency, haste. There’s a countdown on my life.

I’m in a hurry to live. The world is right there, outside my window, in the blueness of the sky, over the horizon, begging to be discovered, touched, appreciated. It’s all there waiting for me – so what am I waiting for?

“I’m here to live, man, live!” I remind myself each morning.

I want to lie in the grass, underneath the burning

THERE MIGHT NOT BE A ‘LATER’

Do you have a bucket list?

No? Then make one and do it now

Like the great motivators that preach from stadiums and pulpits, I want to live full and die empty.

I’ve skydived, explored the great pyramids, sat next to the Moai on Easter Island, bungee jumped, owned Ferraris, driven 300km/h, rock climbed above Machu Picchu, sailed the Mediterranean, scuba dived on wrecks in the Caribbean, photographed the Nazca Lines from a light plane, touched the giant tortoises on Galapagos Islands, met the Pope, worked with Lech Walesa, and dined with Arnold Schwarzenegger – I’m not waiting for anything. Each morning I tell my wife and kids how much I love them, as if I’ll never see them again – each year I’m living like it’s my last, bucket list and all.

Do you have a bucket list? No? Then make one and do it now, while you still can, while there’s still life and strength in your veins. If you only had one year to live, you’d do it now. Nothing would stop you. No amount of commitments, obligations or responsibilities.

But because you measure time in ‘years lived’ rather than ‘days left’, the future seems unlimited, so you defer and wait. You do everything you ‘have to’ and very little of what you ‘want to’. But what are you waiting for? When you’re old and frail? When your desire has evaporated? When your loved ones are gone?

WHY ARE YOU STILL WAITING, DEFERRING? I see people doing it every day, everywhere I go, in airports, restaurants, factories, offices, classrooms – waiting and deferring.

I see it on their faces, in their eyes. They believe they’ve got all time in the world, so they wait and defer, putting off the things they ‘want to’ for another time, for ‘later’.

And when later comes, they often feel it’s too late – that they’ve waited and deferred for too long. But why continue to wait and defer because you’re older today than you were yesterday?

What sense does that make? You won’t have any

JULY 2014 | 57

MOTIVATION / SUCCESS

Excerpted with permission from the author Matthew Michalewicz. Life in Half a Second is available at all good bookstores and online. Visit www.michalewicz.com.au

58 | JUNE 2014

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more ‘days left’ tomorrow than you do today.

What’s left is what’s left, and you must make the most of it.

Harlan David Sanders certainly made the most of his ‘days left’. After a colourful life that included farming, piloting steamboats, and selling insur­ ance, he founded Kentucky Fried Chicken at the age of 65, immortalising his 11 herbs and spices and becoming a multimillionaire in the process.

Ray Kroc did the same, beginning his legendary transformation of McDonald’s into a global colossus while he was in his 50s.

There are thousands of similar stories, as evidenced by entrepreneurial statistics. Consider that the ‘over 55’ category is responsible for starting 28% of all new businesses in the United States each year. The truth is that it’s only ‘too late’ when you’re dead. That’s the only time when it’s truly ‘too late’. Any time before that, the dice are still in play, the dealer still has cards to deal, you still have time.

NO TIME TO LOSE It’s not over till it’s over. But you don’t have any time to waste, nobody does. If you want more from life than the daily grind of work, routine, retirement and death, you’ve only got half a second to do it.

To achieve success and turn your dreams into reality, the only time you’ll ever have is now.

I don’t know who you are, where you live, or anything about your values or background. But I do know one thing: you’ve only got half a second.

And you might be content to use that half second waiting and deferring, waiting and deferring – never quite knowing why or what for.

But not me. I want to close my eyes knowing I made the most of life – knowing I never waited and I never deferred. If I had more time, I would have done more. But with the time I had, I did all I could.

That’s why I’m in a hurry; that’s why I don’t have a moment to lose. There’s a countdown on my life.

And guess what – there’s a countdown on yours as well.

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THE DATA / KEY STATS

BIG FOUR SHARE PRICES 100

How have the big four banks been performing on the share market this year? Data for the first third of the year suggests that their performances have been relatively steady, with each of the banks following a similar trajectory of peaks and troughs.

Source: Yahoo Finance/ASX, close prices adjusted for dividends and splits

CBA’s share price appears to have received the biggest spike on the back of a period of ASX profit announcements from each of the big four. Its adjusted share price at the close of business busted through the $80 mark for the first time on 14 May.

80

$

60

40

JAN 2014 CBA

60 | JULY 2014

FEB 2014 NAB

WESTPAC

MAR 2014 ANZ

APR 2014

MAY 2014

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DISTRIBUTION MARKET SHARE Which organisations are dominating distribution in the mortgage broker channel? It will perhaps come as little surprise that the country’s largest aggregator, AFG, has the largest slice of the pie (20.5% according to IBISWorld’s Mortgage Brokers in Australia report). Next up, according to IBISWorld’s figures is CBA, which achieves a 13.7% share through its large stake in Aussie/nMB. Third up is Mortgage Choice with 9.3%.

The report also includes estimated market share figures for companies outside of the top three, including Loan Market (4.9%), Connective (4.8%), NAB (4.8%), Vow, which has been the subject of a YBR takeover bid since the figures were published (3.7%), and Smartline (3.2%).

Source: Ibisworld.com.au, includes estimated figures

AFG

20.25%

Other 35.1%

CBA

13.7%

Mortgage Choice 9.3%

Loan Market 4.9%

Connective 4.8%

PRODUCT SEGMENTATION Where is most of the business coming from for mortgage brokers? Data from IBISWorld’s Mortgage Brokers in Australia report suggests that in recent times residential investment loans have accounted for the biggest chunk of broker business at 39%.

This was followed by residential owneroccupier refinancing (32%) and residential owneroccupier loans (15%). Commercial loans and personal loans took 6% and 5.5% respectively.

NAB

Smartline

3.2% 4.8% Vow 3.7%

Source: Ibisworld.com.au

Residential investment loans 39%

Other 2.5%

Personal loans 5.6%

Commercial loans 6%

Residential owner-occupier loans 15%

Residential owner-occupier refinancing 32%

JULY 2014 | 61

THE DATA / KEY STATS

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PROPERTY INVESTOR AGES Given the increase in investor activity suggested by the IBISWorld data, it’s perhaps unsurprising that the proportion of Australians with an investment property loan across different age groups has increased in recent times.

Looking at the data from a recent Roy Morgan’s

Source: Roy Morgan Single Source survey

Research Consumer Single Source survey, only the 18–24-year-old age group saw a decrease in its proportion of property investors between March 2010 and March 2014 (from 0.7% to 0.6%). All other age groups covered in the report saw an increase of between 1.2% and 2.8%.

12 MARCH 10

10 MARCH 14

8

%

6 4 2 0

18-24

25-34

35-49

MORTGAGE BROKING WAGES 10 0 , 0 0 0

$

What do you think is the average wage in the mortgage broking industry? According to IBISWorld’s Mortgage Brokers in Australia report it’s just under $71,000 ($70,684.30, to be precise).

This figure, says the report, uses data for the gross total wages and salaries of all employees in the

50-64

65+ Source: Ibisworld.com.au, includes predicted figures

industry – including benefits and on-costs.

Looking at the statistics, it would appear that the average wage has dropped a considerable amount since its peak of just over $83,000 in 2005/06, but it is predicted to slowly creep up over the next few years.

80,000

60 , 00 0

62 | JUNE 2014

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

2018/19

LIFESTYLE / DAY IN THE LIFE OF

MPAMAGAZINE.COM.AU

Day in the life of...

Stewart Saunders, national manager brokers, ME Bank

be able to share some of the robust discussions held in these forums, but unfortunately this content needs to stay internal!

10:30am: Back at the desk to get stuck into emails and phone calls and review reporting from the week.

5:00am: Snooze. 5:03am: Snooze… 5:06am: Snooze…

11:30am: Meeting on the rollout of our new core 5:10am: I better get up. If I’m late I’ll have 50 burpees punishment! Yep, I’m someone who needs multiple alarms to get me out of bed. But as much as I’d love to jump out of bed and attack the day, it’s a cold, wet and very dark Melbourne morning!

6:00am: CrossFit begins and luckily I am here on time. Over the last 18 months CrossFit has been a great way to keep fit and focused by playing on my very competitive nature, even if I’m only competing against the clock. This morning was yet another humbling workout!

banking system. ME Bank is in its final year of a four-year technology transformation program, including replacing our core banking system. We are at the ‘pointy end’ with planning on the go-live date. The system will enable us to provide some great benefits for customers and brokers with our deposit product portfolio first off the rank in coming months. Home loans and a new origination platform will be later in the year, which we are really excited about. Stay tuned.

Stewart Saunders

12:30pm: Quick lunch at a cafe with a Melbournebased aggregator to discuss progress, get feedback from their brokers and sales team.

2:00pm: Back in the office. Respond to emails and return calls.

3:00pm: Broker sales team teleconference. Discuss results from the last week, challenges, and feedback.

7:15am: Shower and change at the office and grab a

4:00pm: Next on the action list is working on the three-year strategy for broker distribution at ME Bank. It’s an exciting time with the foundations set, thanks to a new robust technology system.

coffee and breakfast before the day really kicks off.

5:00pm: Follow up on some emails and phone calls; 7:30am: Hour of power. My favourite time of the

help out on issues for several brokers.

day in the office is before the phone calls start and meetings kick off, where my goal is to complete three things from my action list, starting with those I’ve been putting off. No emails until this is done!

6:00pm: Quick catch-up with our group exec sales, Angela Middleton, to provide an update on some of our initiatives with brokers.

8:30am: Weekly catch-up with our GM of operations.

6:30pm: Day is over and jump in the car, touching

Meeting goes well, with current SLAs still holding at 48 hours even with strong application volumes.

We work through our outstanding action items and progress on past ‘pain points’.

base on the way home with a number of BDMs around the country to see how things have been going.

9:30am: Pricing committee meeting. I would love to

7:15pm: Survived the traffic and at home for dinner with my beautiful partner Rose, maybe a glass of wine, and if I’m lucky, this week’s Game of Thrones.

JULY 2014 | 63

LIFESTYLE / FAVOURITES

MPAMAGAZINE.COM.AU

Favourite things

Fons Caminiti, senior manager – broker distribution, Adelaide Bank

Fons Caminiti

Vacation spot: Elvis Presley once said, “Man, I really like Vegas”. Can’t wait to go back.

Food: Pineapple is the only banned substance (apologies, Golden Circle), which is not a bad thing I suppose.

Maybe I’m less likely to receive the rough end of one.

Music: I don’t have any particular preference. However, if I had the choice to follow in a music icon’s footsteps, without hesitation it would be Frank Sinatra.

Book: Muhammad Ali: His Life and Times.

“Float like a butterfly, sting like a bee”... They don’t make them like that anymore.

Drink: If you insist... Vodka, fresh lime and soda, please.

Sport: I relish

Movie: The Godfather and The Godfather Part 2 - my favourite line is when Clemenza says, “Leave the gun. Take the cannoli”.

64 | JULY 2014

how most sports bring people from different walks of life together in actions and discussions, which lead to varied and fervent opinions, banter, passion and laughter.

Place to be in Australia: Melbourne – anytime, but particularly during the Spring Racing Carnival.

Friday 17th October 2014 Sydney Town Hall Being recognised as the nation’s Young Gun of the Year is something I can take back to my business and show my clients that they are not only working with a professional brand in Mortgage Choice, but also with one of the elite in the industry.

Nominations

closes Friday 4th July 2014 www.australianmortgageawards.com.au

13th Annual Australian Mortgage Awards