Mortgage Professional Australia issue 15.01

COMMERCIAL LENDING BECOMING A REALISTIC DIVERSIFICATION STRATEGY

MPAMAGAZINE.COM.AU ISSUE 15.1

MPA EXCLUSIVE

LOUIS KOVANIS WHY MEDICAL PROFESSIONALS ARE THE ULTIMATE NICHE HOT LIST 2014 THOSE MAKING WAVES IN THE INDUSTRY

MAJOR BANK ROUNDTABLE

CONTENTS / MPA 15.1

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18

NEWS 4 | News and tips Intelligence and tips for the cutting-edge mortgage professional 10 | News analysis Challenges and opportunities for the new MFAA CEO

WEEKLY INVESTIGATIONS NOW ONLINE 30-second round-up The week’s product updates, every Friday Movers and shakers Arrivals and promotions in the industry, last Monday of every month Lenders wanted Our popular weekly loan scenario returns MPA TV Aggregators roundtable videos and much more mpamagazine.com.au

62 | The data: interest rates Predictions and directions for 2015

COVER STORY 30 | Hot List 2014 Leading professionals making the news and shaping the industry

FEATURES 44 | Louis Kovanis The Top 100’s No. 8 broker on the best niche in Australia

COVER STORY

Major bank roundtable

The biggest names discuss the big questions

BUSINESS STRATEGY 56 | Interviewing potential staff Do’s and don’ts for getting the best candidates 58 | Small business survival Why you should think like a big business

MORTGAGE INSIDERS 14 | Sam Boer Commonwealth Bank is back on the warpath 61 | Day in the life Armed and dangerous with Ray Hair, general manager of sales, Homeloans Ltd

48 FEATURES

64 | Favourite things Bluestone’s Cameron Finnie snags the catch of the day

Commercial lending

Becoming a more realistic option for diversification

JANUARY 2015 | 1

EDITOR’S LETTER / 15.01

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BRIDGING THE GAP Too often the theme of this time of year is looking back. It’s all very well reflecting on hard-earned achievements, but top performers will be looking forward and already getting their new-year plans in motion.

I’ve tried to make this issue of MPA magazine a balance between the two. Out Hot List returns, featuring the individuals who are transforming the industry and recalling the most useful hints and tips from the past year’s issues of MPA. But the highlight of this edition is undoubtedly our exclusive major bank roundtable, in print and online.

We developed questions based on your feedback, and I would urge you not to miss this rare opportunity to see the heads of broker distribution at Australia’s major banks under pressure and talking about the issues that really matter to you. You can also watch video highlights of the roundtable online.

So, ignore the date on your calendar, because in MPA 2015 starts now!

P.S. I’d also like to apologise to David Thomas of Trilogy Funding, who by clerical error missed out on this year’s Top 100 Brokers (David would have been 63rd). While mistakes do occur, I am always mindful of the huge amount of work that top brokers put in, and we’re always striving to make sure that contribution is properly recognised.

Sam Richardson, editor, MPA

2 | DECEMBER 2014

COPY & FEATURES

EDITOR Sam Richardson PRODUCTION EDITORS Roslyn Meredith, Moira Daniels CONTRIBUTORS Sarah Megginson, Sarah Derry, Sharon Zeev Poole, Dan Waldschmidt

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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 Editorial enquiries Sam Richardson +61 2 8437 4787 sam.richardson@keymedia.com.au

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ROUND-UP / NEWS AND TIPS

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ROUND-UP / NEWS AND TIPS

STRESS-TESTING APRA

The regulatory authority has just finished a round of tests on 13 Australian banks, and housing is their target In late October APRA chairman Wayne Byres told the Senate that the Australian Prudential Regulation Authority recently conducted a series of “comprehensive” stress tests of Australia’s largest banks.

However, it wasn’t until November that Byres actually disclosed the broad results of the test, providing some important insights.

Firstly, it’s clear that the housing market is squarely in APRA’s crosshairs.

Noting the increasing proportion of housing loans as a proportion of total assets without a corresponding growth in capital, Byres commented that “banks have de-risked rather than deleveraged... it therefore makes sense that APRA keeps the health of housing portfolios, and the appropriateness of the capital required to support them, under considerable scrutiny”.

APRA tested 13 locally-incorporated banks, accounting for 90% of industry assets. Phase 1 of the test looked at the impact of two scenarios on profitability and capital ratios. Banks predicted losses similar to Australia’s 1990s recession, a 3% loss rate on mortgages, which is significantly lower than the US housing market over recent years (7%). Worryingly, APRA found banks didn’t predict major increases in borrower defaults in the event of rising interest rates, which APRA said “raises the question” of whether banks are “underestimating” potential losses, suggesting their analytical capabilities could be improved in this area.

Phase 2 looked at overall effects.

Banks would survive, APRA found, but “it is unlikely that Australia would have the fully-functioning banking system it would like in such an environment”. Almost all banks would struggle to pay dividends and bonuses, and severely constrained capital

ratios would make it very difficult for them to lend. APRA was also concerned about “optimism in banks’ estimates of the beneficial impact of some mitigating actions” – many assumed cost-cutting and other minor changes would get them out of the slump.

What is missing so far, as you may have guessed, are individual banks’ results.

These APRA refused to publish, and is not likely to do so any time soon, because they “are wary about stress testing results becoming the primary assessment of capital adequacy, given the results can be quite scenario-specific”, according to Byres’ speech. Yet the US, the UK and the EU are far more open about their stress test results, including naming banks that failed.

This is not the first time Australia’s regulators have been suspected of less than vigorous supervision than other developed nations. In 2012 the IMF’s assessment of APRA commented that “there is room for improvement in the authority’s own stress-testing processes”; they argued APRA should put more resources into training, and the RBA should consider macro-prudential training. In its ‘High-priority recommendations’ IMF also argued stress-test results should be publicised in the Financial Stability Inquiry.

Since then APRA has increased investment, and Byres’ speech about the 2014’s stress test is certainly reassuring.

But is APRA’s role merely to reassure the public? It’s patronising to assume that Australians will make a run on the bank at any opportunity, and one might suggest that publishing results – in an appropriately edited form – could help borrowers and brokers make informed, confident decisions.

What is a stress test?

ISposes A STRESS-TEST? A WHAT stress test a fictional situation to test the response and thus the stability of financial institutions. It is usually done in conjunction with the banks themselves, who calculate the effect of certain situations on their balance sheets and asset portfolios, and APRA also provides estimates.

In the most recent round of tests APRA posed two scenarios:

Scenario A A housing market double-dip, prompted by a sharp slowdown in China. Australian GDP growth declines to -4% and then struggles to return to positive territory for a couple of years, unemployment increases to over 13% and house prices fall by almost 40%.

Scenario B A higher interest rate scenario. In the face of strong growth and emerging inflation, the RBA lifts the cash rate significantly. However, global growth subsequently weakens and a sharp drop in commodity prices leads to increased uncertainty and volatility in financial markets.

Banks have de-risked rather than deleveraged… it therefore makes sense that APRA keeps the health of housing portfolios, and the appropriateness of the capital required to support them, under considerable scrutiny 4 | JANUARY 2015

ROUND-UP / NEWS AND TIPS

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ROUND-UP / NEWS AND TIPS

ASKING THE BIG QUESTIONS

The new MFAA CEO’s roadshow is shining a light on issues across the industry As promised, new MFAA CEO Siobhan Hayden has begun a national roadshow in Sydney, named ‘Paving the Road’, asking members for their opinions. And, undoubtedly, this was an event with strong potential to descend into a weary moan-a-thon with the same old squabbles over membership fees, educational requirements and the word ‘credit adviser’. Yet the roadshow has not only got off to a promising start, but seems to have real potential for industry-wide discussion.

If Sydney brokers are anything to go by, there are three themes which could dominate the roadshow: 1. Compliance This was a source of real frustration for many brokers in the room (and it was mainly brokers attending). Though broadly supportive of compliance requirements’ role, brokers were concerned that branch managers and lenders were making the decisions while brokers were doing all the compliance work, and being held responsible for it. What we haven’t heard is how lenders feel about compliance, and compliance may well be a potential source of conflict, given the MFAA claims to represent the entire industry.

2. Consumers and the MFAA brand Surprisingly, brokers seemed less concerned about new entrants into broking and consolidation than headlines would suggest. Real estate groups getting involved in broking, for instance, were only opposed by a minority of

6 | JANUARY 2015

members. However, attendees were worried by nontraditional sources of potential competition – namely the supermarkets – and how brokers could maintain a distinct professional identity in the eyes of consumers.

The MFAA already speaks directly to consumers, through its ‘Mortgage & Finance Help’ website; the question remains whether members will stump up the cash in return for the glossy TV advertising necessary to compete with the big brands.

3. Technology Hayden’s background at Finware appears to have given brokers hope that the MFAA will now really start to engage with their technological requirements. While the association’s clunky website doesn’t give grounds for optimism, Hayden’s knowledge of the sector and of developments in paperless processing in the US made for a lively discussion with members. In fact, technology could form part of the solution for a number of MFAA member demands – easing compliance demands, allowing consumers to deal with brokers entirely online – although they could be years in the making.

The roadshow will keep on going for a number of months, and by late January its conclusions will be crystallised into a ‘Key Learnings’ page, eventually followed by a report to the MFAA board. At this point the Hayden honeymoon period will most definitely be over – and the hard work of managing expectations will begin.

HOW DO YOU VIEW THE

MFAA?

Attendees at the roadshow are being asked to pick words they associate with the industry body from the following list:

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ROUND-UP / NEWS AND TIPS

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ROUND-UP / NEWS AND TIPS

BIG, BIGGER, BIGGEST

In a year of record bank profits – $28.6bn, up from $27bn last year – we look at how the big four compare

CBA PROFIT

UP 12% TO $8.7BN

WESTPAC PROFIT

UP 8% TO $7.6BN

ANZ PROFIT

UP 10% TO $7.1BN

NAB PROFIT

DOWN 9.8% TO $5.2BN

Note: NAB’s profits aren’t particularly reflective of Australian conditions: they dropped primarily because of UK write-downs of over $1bn

8 | JANUARY 2015

NEWS ANALYSIS / NEW MFAA LEADERSHIP

MFAA:

THE OFFICIAL CHANGING OF THE GUARD

Leveraging hard-won expertise from an ageing workforce while trying to attract new brokers to the industry is just one of the key challenges Siobhan Hayden, incoming CEO of the Mortgage & Finance Association of Australia, is preparing to face as she guides the finance industry towards a bright future. Sarah Megginson reports

10 | JANUARY 2015

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MFAA IN 2014 10,469 members 22 employees Average member: age 48/ 9 years’ industry experience

74.6% male

25.4% female

SIOBHAN HAYDEN, THE MFAA’S NEW CEO

For the better part of the last decade, Siobhan Hayden has found herself sitting across from brokers at boardroom tables, kitchen benches and café counters across the country.

She wasn’t a broker herself, but a small business owner, and her endless interactions with brokers helped her to unearth what specific challenges the industry faced.

“I’m really passionate about customers, having run our small business, Finware, with my husband for a number of years. We went and saw hundreds of small businesses to see if we could offer a technical solution in relation to mortgage and finance industry software,” Hayden explains.

Working directly with broker businesses provided Hayden with a solid grounding for her newest role, as the incoming CEO of the MFAA. “I’m trying to put my views and experiences to the side, as it’s more important to focus on what our customers are telling me about what we can do for them,” she says.

So, what does the mortgage space want from its peak industry body?

LOOKING BACK TO LOOK FORWARD During his dozen years at the helm of the MFAA, outgoing CEO Phil Naylor helped to significantly shape the mortgage market by lobbying for a number of initiatives, chiefly designed to lift the reputation and proficiency of the industry at large.

“For a long time, brokers had a reputation that

was undeserved – I spent a lot of my time in the early days arguing with journalists about their assertions that brokers were cowboys and rogues,” Naylor explains.

“The MFAA brought in the diploma and minimum education standards, and there has been an increase in required mandated standards through the National Consumer Credit Protection Act (NCCP), which has helped increase professional standards tremendously. The introduction of the NCCP was done fairly seamlessly and we worked very hard with the government from 2007 onwards to make sure they understood the dynamics of the sector.”

Clearly, the efforts of Naylor and the MFAA have been paying off. Mortgage broker Louise Lucas, managing director of Why Money Matters in Melbourne, is impressed by the branding and reputational results they’ve achieved, to the point where clients will “ask for an MFAA credit advisor, as they recognise the value of qualified advice”.

“We’ve had a 25% increase in the number of applicants for Victorian MFAA membership in this last 12 months compared with 2013, mainly from existing brokers who are realising the importance of having professional standing in the community, as well as existing brokers bringing new brokers into the industry,” Lucas says.

“Phil did a great job in showcasing the industry to Government and has certainly put in the groundwork by putting the industry on the map. If

MFAA devoted 46% of funds to professional standards, including events and professional development More than 1,000 members attended the MFAA National Conference

JANUARY 2015 | 11

NEWS ANALYSIS / NEW MFAA LEADERSHIP

WHAT SHOULD THE MFAA FOCUS ON IN 2015?

Increasing consumer awareness “Siobhan and the MFAA board don’t need my advice as their experience speaks volumes. I’m confident that this leadership team will take the MFAA to the next level and continue to interact with the Federal Government to ensure that the level of regulation governing the industry is commercially appropriate, while broadening the consumer awareness of all mortgage brokers.”

– James Symond, executive director, Aussie Home Loans

it weren’t for his efforts, legislative changes could have been far more onerous,” she adds.

When Naylor began working with the association in 2002, the MFAA boasted just 2,000 members.

Today, the MFAA has more than 10,000 members, which Naylor believes is a nod to the growth and competitiveness of brokers Australia-wide.

“The biggest obvious change [I’ve witnessed] is the size of the mortgage and finance broking channel. Twelve years ago when I started, brokers were writing about 20% of all loans and now they’re writing around 50%,” Naylor says.

This is partly due to Naylor and his efforts to “lift the overall profile of the industry, with the help of its state and federal boards”, says James Symond, executive director, Aussie.

“They have lifted the standard of members while providing necessary disciplines to ensure our industry remains largely self-regulated. The MFAA carries out many unseen and unknown activities on behalf of members and I believe it would be to their benefit to increase the visibility of what they’re doing, and the benefits they continue to provide,” he says.

12 | JANUARY 2015

ENGAGING A DIVERSE AND MULTI-GENERATIONAL WORKFORCE It’s no secret that the mortgage industry is heavily weighted by middle-aged men: even the MFAA concedes that their average member is aged 48, and men outnumber women three to one. This presents both obvious challenges and unique opportunities, according to Hayden.

“I was recently at a mortgage event and I began chatting with a lovely woman after I complimented her on her outfit. She regaled me with the story of how her dress was bought for her by her husband, also her business partner, after she’d had a mastectomy. She was so passionate about the industry and told me about all the initiatives they were working on, like financial workshops about savings and budgeting for their clients,” Hayden explains.

“And she was 71. She was more mature than the average person in the industry, but she was equally

WHAT SHOULD THE MFAA FOCUS ON IN 2015?

Engage with newto-industry brokers “I would like to see the MFAA engage more with new-toindustry brokers to hear the hurdles they have faced, and to try and help them address these in any way possible, as this will help attract new talent. For instance, experienced brokers could engage with younger brokers to train them up so their knowledge remains in the industry and in return, the new broker might help service and protect their loan book, if they would prefer not to sell their trail.”

– Daniel Niederberger, finance broker, Iconic Home Loans

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WHAT SHOULD THE MFAA FOCUS ON IN 2015?

Streamlining LMI and lender policies “I really think the MFAA needs to look at lenders mortgage insurance and lenders’ policy and consider streamlining the two so that they’re not contradictory.

In most cases, loans are impacted by the LMI component and it’s something that I find clients are sometimes not even aware of. Another key area the MFAA should focus on is consumer education – too many of my clients don’t have a solid understanding of why the current measures are in place, and the idea that anyone can casually apply for a loan and that it will be approved, needs to be looked at.”

– Natalie Savic, mortgage broker, HelpMeChoose.com.au as passionate, significantly skilled, and carried with her an enormous amount of intellectual property.

To that end, I’m not too concerned about 60-yearolds still being in the game, as they’ve still got a lot to offer.”

At the other end of the scale are the industry’s newest members, who require greater levels of mentoring and incentives to maintain their mortgage careers.

Case in point is 31-year-old Perth broker Daniel Niederberger from Iconic Home Loans, who with just 16 months’ experience can “relate very strongly to the challenges new-to-industry brokers face”.

“Almost every event or seminar I attend, more than 80% of the attendees are over 40,” Niederberger says.

“In the next 10 years there are going to be a lot of brokers retiring and with this, a lot of experience and information is going out the door. This leaves a

big gap and a massive opportunity for us younger advisors, but my concern is that more [brokers] will be leaving then coming in, so how do we address [that imbalance]?”

Another challenge is getting more females into broking, says mortgage broker Natalie Savic from HelpMeChoose.com.au. “I’ve been to endless corporate events where just one-quarter of the room is made up by women,” she says. “There’s definitely a place for women in this industry – it’s a challenging and professionally rewarding career choice.”

While Hayden says she is aware of the diversity and generational challenges the industry has ahead, she is currently travelling the country to get a deeper understanding of current issues, by personally connecting with MFAA members in a series of two-hour, face-to-face forums.

From there, “my goal is to continue to be out three days per week where possible”, Hayden says.

“I aim to be at industry events and workshops and talking to our clients, to ensure that our strategy isn’t veering off path,” she says, “and to make sure we’re in tune with what our membership wants.”

WHAT SHOULD THE MFAA FOCUS ON IN 2015?

Coping with the cloud “I am particularly delighted we have a techsavvy female heading up the MFAA to bring it forward into the next decade, [as we need to deal with] new technology and safely maintaining clients’ documents in the cloud, as well as during overseas processing. We need to know: how can we protect the privacy of our clients and be sure we are meeting standards whilst maintaining world’s best practice?” – Louise Lucas, mortgage broker and managing director, Why Money Matters

JANUARY 2015 | 13

HEAD TO HEAD / SAM BOER

SAM BOER: BEYOND THE PIPELINE Commonwealth Bank has been lying low in recent months, but now general manager of broker sales Sam Boer is back on the warpath, with commission and turnaround initiatives – and some strong words for the broking community

14 | JANUARY 2015

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“Everyone’s been talking about first-year trail, but we recognise what’s important to brokers is their cash flow” MPA: Why has CBA decided to reintroduce first-year trail commission now?

SAM BOER: We signalled in March we were investing in a whole new commission project. Our current platform was old, and with old software comes risk, so we decided to invest in a whole new platform. We researched with brokers, through forums and structured surveys, and one message came through: brokers wanted choice. A one-size-fits-all commission model may not be the right solution for everyone … we’ve come up with a program we think works for aggregators and brokers alike.

Everyone’s been talking about first-year trail, but we recognise what’s important to brokers is their cash flow. Some brokers are in a start-up mode, higher growth phase, investing phase, so they need money now … other brokers are quite mature and looking to grow the value in their portfolios, so we’ve got a plan for that.

The big difference with the new commission system is that previously we’d hold the head group accountable for the [financial] result. In the new commission system we have the ability to hold the individual accountable for that result. So if you have one broker who has conversion rate issues or quality issues, we may decide to differentiate the upfront rate for that individual, without affecting all the brokers in that head group. We’re not going to pull that lever initially, because we recognise the nature of the market at the moment, but we’re going to report quality metrics, and we’ll make a decision on that in the future, based on quality performance.

We’ve never backed away from quality; in fact that’s the overriding message. We’re very much targeting quality operators writing quality business that’s a win-win for both broker and for us.

MPA: Brokers actually nominated turnaround times as their number one concern with banks, so what are you doing to improve yours?

SB: We’ve invested a significant amount in our processing. Everyone talks about turnaround times, but what does that mean? Instant approvals?

Wouldn’t that be nice? The thing I hear from brokers is they want certainty; they want to be confident that when recommending CBA they’re going to get a decision from us and a consistent process. It’s about

making sure we resource our teams properly. We’re quite unique: we have local credit [teams] in each state, which works with our local market, and our diamond brokers have access to that local credit resource pool, and that’s quite invaluable. They can meet with them; they can talk to them, and share knowledge. It’s a trade-off between efficiency and relationship in credit; we can’t offer that to all brokers, because we wouldn’t be able to provide consistent turnaround, because there are spikes, and I need to share resources around the country.

It would be unrealistic to expect a credit team to turn around a file that’s five inches thick, with credit statements and trust funds, in 24 hours. We need to get better at managing expecta­tions around the complexity of the loan. We do complex deals really well; we do simple deals even better.

We’re kicking off a new [pilot] process in credit, working towards a service turnaround guarantee, for simple transactions, where the broker has provided everything we require to turn that deal around quickly. If you use the checklist, read it, [and] do everything on it, we will turn around the loan quickly.

I think you need to be in the hunt for 24–48 hours; and we do same-day processing today for some deals, and some take a week, and I’m trying to bring consistency to the market that brokers can set their watch by. When brokers recommend CBA, they can say confidently to their customer, “I’m recommending CBA, not just because they have great products and service, but because we will have an outcome for you within 24 hours. That’s a good strong position to be in.

MPA: Have brokers benefited from CBA’s restructuring since Kathy Cummings’ departure?

SB: In terms of the business, it’s gone from strength to strength, and I’ve made a few changes. We’ve invested a lot on the ground in terms of relationship managers and, more importantly, sales support staff who can help the RMs. We’ve invested in CommBroker; we’ve invested in our credit call centre in Melbourne to help resolve issues faster, with a new E-Concierge program; we’ve got Broker Assist for all our scenarios … in addition we’ve invested very heavily in process

SAM’S NO. 1 TIP FOR IMPROVING PRODUCTIVITY Transactional statements ‘‘CBA demands a statement from the last 30 days for the customer’s main transaction account, which they claim helps uncover undisclosed debts under responsible lending.’’

30% of applications lack this document, and so can’t move forward “One thing, if I could wave my magic wand and make things happen, would be for brokers to get that in. Even if they’re dealing with an existing CBA home loans customer, don’t assume that their transaction banking is with CBA. Providing transactional statements in a loan application will lead to a massive improvement in turnaround times and approvals, for all brokers.”

JANUARY 2015 | 15

HEAD TO HEAD / SAM BOER

SAM BOER’S CAREER TIMELINE

improvement, and there are a lot of technology changes coming, which are going to further digitise the whole end-to-end process. We talk about doing things quicker and smarter; my vision is that in 12 months’ time brokers will be able to print the loan docs right there and then, after the initial interview, and have their customers accept the contract.

MPA: How are you helping brokers improve their efficiency?

1988

Begins work as a bank teller in ANZ

1996

Earns BA in Commerce through part-time study at the University of Tasmania

2004

Completes Executive MBA at the Australian Graduate School of Management Joins CBA as state manager for third party banking Vic/Tas

2007–present

General manager of broker sales, service, cross-sell and business productivity improvement

Greatest achievement

“The thing I’ve most proud of is the diversity of experience in my professional career and the relationships I’ve formed with people, very successful people, across all walks of life and within our industry”

SB: Rather than just have an internal efficiency program for our own business, we decided there was a real opportunity to take [the Kaizen program] to the market, and deliver it to our brokers.

The first thing to say is it’s not for everyone. A business who wants to change and wants to improve its processes and productivity, whether it’s a oneperson operation or 20 people plus, where the owners of the business have invested in this program they have had terrific results.

What we often find when you ask a broker, ‘How is your process?’, is they say, ‘My process is great’.

Then you ask, ‘Can you show me your process?’

And they go, ‘Oh, it’s not documented’. If it’s not documented, how do you know if it’s a good process or not? The first thing we do in the productivity program is sit down and work out that process. And more often than not, when you get the staff engaged, they bring stories about things that aren’t working.

By the end of the one-day program, they walk away with a fully documented new process and actions to help them implement it.

MPA: How are you promoting cross-selling?

SB: We’ve run the CONNECT Referral program since 2004, and it’s gone through a number of evolutions to improve it. Most recently we launched Commercial CONNECT for all our residential brokers, to take advantage of the leading features we’ve got in asset finance and commercial finance.

It goes to the heart of the customer experience: the broker’s done a fantastic job recommending Commonwealth Bank, submitting the deal,

THE KAIZEN AND LEAN PROGRAMS

16 | JANUARY 2015

1

DAY

Lean workshops on topics from visual management to the 5S’s of workplace organisation

managing the customer experience; it’s almost malpractice not to talk to them about other needs …

The role of the broker is to have a great relationship with our local branch manager, and we take the responsibility to initiate that … that’s the essence of CONNECT, our cross-sell program: it’s connecting brokers and branches to satisfy the customer’s holistic banking needs. Some brokers will say: hang on, I’m doing financial planning, or hang on, I already do commercial. That’s fine: we will talk the customer about those needs the broker can’t fulfil.

MPA: Is it your job to argue the case for the broker channel within CBA? SB: CBA is a big bank; there are a lot of channels and not a lot of resources. So I’d say yes, I am the voice for the channel internally, in championing the cause, along with my boss, Lyn Cobley.

We recognise the broker channel; we were here through the GFC when others decided not to be.

We’ve been with the channel all the way; we’ve never faltered. Now our strategy isn’t about increasing our market share every month; it’s about a sustainable position, so when brokers deal with us they know if they recommend the client to CBA we’ll do the right thing by the broker and the customer.

We’re developing a propensity model, which predicts the number of customers that are likely to sell their properties in the next few months. We’re sharing that information with our customers so they can reconnect with those customers and fulfil any needs they’ve got coming up in the future. I couldn’t think of anything CBA does that shows commitment to the channel more than that.

MPA: In one sentence: why should brokers go for CBA? SB: Our proposition is to provide market-leading broker partnerships to enhance your reputation as a mortgage finance professional, which gives your customers peace of mind.

3

DAYS

Value propositions, problem solving, standardising customer experience and roles and responsibilities

5

DAYS

Working ‘on the business’, process champion roles, and improving team building

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SPECIAL REPORT / MAJOR BANK ROUNDTABLE

MAJOR ROUND 18 | JANUARY 2015

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BANK TABLE

MPA got the broker channel heads of Australia’s biggest banks in one room to discuss the industry’s biggest issues. From commissions to vertical integration, this is the roundtable you can’t afford to miss JANUARY 2015 | 19

SPECIAL REPORT / MAJOR BANK ROUNDTABLE

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roundtable is, technically speaking, all talk.

This roundtable, however, was a discussion featuring Australia’s largest lenders – the players who really set the agenda – pitted against each other at a pivotal moment for the industry, on the eve of the Financial Systems Inquiry (FSI) report.

ANZ, Commonwealth Bank, NAB Broker, and Westpac: these four organisations account for 78% of owner-occupied mortgages, and a similar share of brokers’ attention. That’s a blessing and a curse; attracting the lion’s share of business also means the lion’s share of criticism, and brokers are always telling us they’re looking for other lending options.

This was the major banks’ chance to fight back, to tell you about their investment in the channel, changing approaches, and how they’re using their considerable resources to drive market-leading technological solutions.

The fact that this roundtable took place at all is also a testament to how far the relationship between the broker channel and Australia’s major banks has come. Never before brought together in an independent setting, these four broker channel chiefs are asking for your support – they want to show you, the broker, how they are responding to your criticism, while giving your business hints and tips for the year ahead. Still not convinced?

Join MPA for the biggest discussion in the industry, and decide for yourself whether the banks are matching talk with action.

STATE OF THE MARKET “2015 will be more of the same,” Westpac’s Tony MacRae began. “Yeah, there’ll be regulatory attention, but I think local investor appetite is still high, and we’ve still got the fundamental in-balance of the market, where demand is still relatively strong but supply hasn’t caught up with it.”

What was intended to be a brief introductory question about the state of the market quickly made apparent the diversity of opinions in the panel.

Discussing the Reserve Bank’s comments about the housing market over recent months, CBA’s Sam Boer noted that “the jawboning has definitely got everyone’s attention”, adding that regulators were “very interventionist”, particularly when it came to concerns in the high-LVR space.

NAB Broker chief Steve Kane also picked up on the role of government in the current market, but approached the topic from a very different angle.

“Those costs and all of the hidden costs in a 20 | JANUARY 2015

THE PANELLISTS

Tony MacRae General manager mortgage broker distribution, Westpac

Steve Kane General manager, NAB Broker

Sam Boer General manager broker sales, Commonwealth Bank

Keiran Evans Head of third party relationship channels, ANZ

development are so astronomical that we need change at a state government level, and that will start to ease the pressure on existing dwellings,” he argued, referring in particular to the heated Sydney market.

What underpinned the panel’s unease at poten­ tial government intervention – and united them – was a belief in the fundamental health of the market. As Boer put it, “From my own point of view and the bank’s point of view, the market has been certainly strong, [but] is it out of control? No, we’re talking about 7–8% yearly growth; the broker channel has done exceptionally well, and that’s why we’re investing in it.”

Kane echoed this point: “The broker market is doing so well it would continue to grow even if the overall pie was to shrink a little bit.”

DIVERSIFICATION OPPORTUNITIES Wider economy aside, it was the broker market that the panel was there to discuss, starting with

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the major – and somewhat thorny – topic of diversification. We asked our panellists what they thought were the biggest opportunities for brokers to diversify their business, and how changes in the market might drive this process.

ANZ’s Evans set the tone for the discussion: “Customers are going to lead the diversification agenda for brokers, and by that I mean particularly the commercial space. So brokers provide great service to customers in home loans, and it’s only a natural next question for customers, asking why can’t you do that for the commercial side as well?”

MacRae agreed. “Customers are looking for strong relationships; they’re looking for a trusted adviser,” he said, pointing out that significant opportunities existed for brokers to assess the clients’ wider risks, particularly when dealing with self-employed clients.

Kane also highlighted the banks’ role in this: “Diversification used to be driven by ‘let’s poke more product opportunities into the broker fraternity and get them to try and sell them’, rather than being customer-driven.”

Surprisingly, given some of the banks’ strategies over recent years, not all panellists agreed that diversification was universally beneficial for brokers. “It’s about the broker’s own business,” intervened CBA’s Boer. “I think it’s sound business to plan for future change in the market, so does that mean diversifying into other revenue streams? It’s your call to do that, but it really does depend on that particular business … it requires good planning and structure to move into other lines of business, and it is not without risk.”

Monoline brokers could be at risk, Boer suggested, if the market shifted, a point of view not shared by Kane, who retorted that “if they’re running successful businesses today, they’ll continue to run successful businesses”. There was, however, broad agreement across the panel on the commercial opportunities highlighted by Evans – particularly smaller sub-$2m deals – and, more crucially, that customers are now in the driving seat when it comes to service offerings.

EDUCATION AND PROFESSIONAL DEVELOPMENT Just as our panellists appeared to have changed their tune on customers driving diversification, they also noted a shift in attitudes towards education. ‘Working on the business’ is now rated as more important than increasing knowledge

“Customers are going to lead the diversification agenda for brokers, and by that I mean particularly the commercial space” Keiran Evans, ANZ JANUARY 2015 | 21

SPECIAL REPORT / MAJOR BANK ROUNDTABLE

“One of the biggest challenges this industry has is how we remain relevant when the transaction of a home loan becomes so simple it’s self-service” Tony MacRae, Westpac

AUSTRALIA’S MAJOR BANKS IN 2014, BY THE NUMBERS ANZ

NAB

A 10% rise in profits to $7.1bn was joined by a 15% rise in home loan sales in the year to September, the fastest growth of any major bank.

Although the bank’s cash profit decreased by 9.8% to $5.2bn, the growth achieved by its broker channel – 13.9% – was double that of the retail channel (6.4%).

Commonwealth Bank CBA set a record profit for any Australian bank, with a profit of $8.7bn, a 12% rise on 2013.

The bank also reintroduced first-year trail commission of 0.15%.

22 | JANUARY 2015

Westpac Australia’s oldest bank recorded an 8% increase in its profit to $7.6bn.

Brokers increased their volume of Westpac business by a staggering 35% to $31.9bn.

within the business, and panellists were forth­ coming in listing education as among their main responsibilities.

“Developing the industry is by being an advocate for the industry,” explained Kane. “It’s by liaising with the regulators, with the bureaucrats, with the politicians; it’s by influencing policy, it’s about influencing the way the market develops, and on the operational side it’s about PD days; it’s conferences and really making sure the content of these things are really designed around developing the businesses.”

Boer was of a similar opinion: “It’s core to the proposition that we provide back to the industry ...

Whenever we put out a series it’s oversubscribed, so the appetite is there, [and] I think we invest more than any other player in terms of what we give back to the industry.”

Similarly, ANZ’s Evans emphasised that brokers’ attendance and appetite at his events was “phenomenal”.

Changes in the delivery of education were brought up by Westpac’s MacRae, who mentioned the bank’s newly launched Broker TV and the technological potential of near-universal smart­ phone ownership. But he also warned about the threats implicit in technological progress. “One of the biggest challenges this industry has is how we remain relevant when the transaction of a home loan becomes so simple it’s self-service,” he said.

Overall, the panellists agreed that education and professionalism went hand in hand, and brokers were equipping themselves with the expertise to stay ahead of technology. “[Broking] started out as a cottage industry, and for many brokers it’s still like that,” Kane said. “But there’s a real shift within the industry to lift professionalism, to understand they’re running a business as opposed to running a transaction shop.”

TURNAROUND TIMES AND PROCESSING Education, technology, customers – so far we had talked about issues that banks like to discuss. The subject of turnaround times, nominated by brokers as their most important priority in MPA’s Brokers on Banks survey, was always likely to be divisive, and sure enough it exposed our panellists’ very different strategies.

ANZ has been working hard on improving its turnaround times, in light of criticism by brokers, and, as Evans was eager to explain, the bank now

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aims for 24-hour turnaround. “The BDMs have a big role to play here,” he said, “because it’s not just about your appetite, [as much as] which customers fit with your bank. So we spend a lot of time talking to the brokers about which customers are actually what we call a ‘blue’ customer.”

Evans’ point certainly provoked a reaction from the other panellists. “ANZ have done a fantastic job with their turnaround times and identifying the blue customer,” replied CBA’s Boer. “We take the rainbow customer, and with all that colour there comes complexity.”

In fact, CBA, NAB and Westpac’s representatives disagreed with the entire premise of the question.

“It’s not about the quickest turnaround time ... it’s about certainty,” argued Kane.

MacRae claimed that priorities had changed.

“Ten years ago we all spent a lot of money in our processing centres, and we just focused on efficiency, production lines, all of those things.”

Now Westpac focuses more on its staff’s attitude, he said: “Technology can take some of the inefficient processes away, but it never replaces that relation­ship, the human interaction, so that’s the key for us … things go wrong sometimes, but what brokers constantly tell us is they recognise that; they want someone to put their hand up, own it, and own the delivery of the solution.”

Organisational restructuring, it seems, is now preferred to straight-up investment. On a similar theme as MacRae, Kane noted NAB’s alignment of back-office processing to front-office repre­senta­ tives, and Boer pointed to CBA’s state-based credit teams, and Evans to ANZ’s BDMs.

“It’s not about the quickest turnaround time. If you talk to any broker, it’s about certainty: we want to be absolutely certain when we put a transaction in your bank that you’ll give us an answer in XYZ time, and this is the experience we’re going to get” Steve Kane, NAB Broker

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JANUARY 2015 | 23

SPECIAL REPORT / MAJOR BANK ROUNDTABLE

“A big challenge for us as an industry and [for] brokers is managing customers, really understanding the value of what we’re providing back to them; it isn’t always about just going for the lowest rate on the day” Sam Boer, CBA

PRODUCTIVITY AND EFFICIENCY In keeping with their willingness to talk about processing reforms, the panellists were also eager to discuss their “partnership” with brokers, as MacRae put it, and its role in improving productivity.

Both banks and brokers, they emphasised, will be increasingly driven by the demands of customers, not the industry.

“Gone are the days where we blame brokers for poor quality,” commented MacRae. “We need to work together and develop better outcomes for the customer. It comes back to that key question of ‘what are we trying to sell here?’ and putting the customer at the centre of what that looks like.”

There is now an “immediate” consumer culture, he warned. “If we don’t keep up with customers’ lifestyles and customers’ demands, we will become irrelevant, and that’s our main challenge.”

The problem is both a paucity and surplus of information, our panel suggested. ”Customers now

24 | JANUARY 2015

no longer just provide everything you ask for,” noted Evans, “so we really need to look at our processes and ask ourselves: do we really need that piece of information?” But the ability of customers to do their own research means brokers have more of a role in managing expectations, explained CBA’s Boer.

All the banks claimed to be working with brokers on responding to this shift. CBA pointed to their Kaizen efficiency program, in which brokerages get advice from a business consultant. ANZ singled out their recently launched broker toolkit software, and NAB explained how they were moving BDMs away from the “coffee/beer-drinking relationship” towards business consultant roles.

However, the main message that banks wanted to convey to brokers in terms of dealing with customers was the danger of trading on price.

“A big challenge for us as an industry and [for] brokers is managing customers, really under­ standing the value of what we’re providing back to them; it isn’t always about just going for the lowest rate on the day,” argued CBA’s Boer.

Kane agreed, noting that “very good brokers are doing a needs analysis, and we say, do that because it will show so many opportunities for you; just don’t sell on price, because if the customer came to you on price, they will leave you on price – it’s as simple as that”.

Westpac’s MacRae saw a threat to the entire sector: “If we as an industry continue to have an obsession with trading on price, then we’re ripe for a disruptor to come in and take a slice of that market.”

COMMISSION AND INCENTIVES Trading on price won’t work for brokers, and it won’t work for banks, our panellists urged. While improved commissions have very much been a theme of 2014, some of the panellists warned that this was unlikely to continue.

“APRA has already put out a statement on this; we know the FSI is about to make an announce­ ment,” reflected CBA’s Boer. “I just get the feeling that [incentives are] going to play less of a role going forward, similar to what happened in the wealth space. So I think the regulators are on to that so I don’t think that’s something we’ll be featuring going forward. “[As for] commissions at a strategic level to drive volume, I’d rather sit down and help a broker write more business, so they can do that efficiently, [which] is going to help their bottom line more than playing on the margins – five points here,

SPECIAL REPORT / MAJOR BANK ROUNDTABLE

“Gone are the days where we blame brokers for poor quality. We need to work together and develop better outcomes for the customer” Tony MacRae, Westpac 10 points there. I just don’t think that’s where the game’s going.”

Boer was not alone in warning against what Kane dubbed an “all-out price war”. “If we just trade on price to the customer or remuneration to the broker,” Westpac’s MacRae cautioned, “that’s a short-term strategy that someone will always beat you on in that space. There’s always someone out there that will be cheaper than you or pay more. And we see that in the market today with other players, and we don’t see a mass exodus of business going to them.”

NAB and ANZ also implied that their incentive offerings this year were not solely responsible for increasing the volume of business. Evans commented that ANZ’s expansion into NSW was “not led by price; it’s led by the value our BDMs are giving to the brokers”. For NAB, the August rebranding of Homeside products back to NAB brought in more 26 | JANUARY 2015

customers than reintroducing trail, claimed Kane, because it made the products easier to sell.

VERTICAL INTEGRATION Bank ownership of distribution networks – vertical integration – is a discussion many in the industry are sick of hearing, not least the banks themselves. But it’s a topic that is only getting more important because of the soon-to-be-released FSI report, and the evident unease with which our panellists awaited the inquiry’s results made vertical integration perhaps the roundtable’s most heated debate.

Westpac’s MacRae was the first to respond, and he pulled no punches on the subject of other banks’ distribution acquisitions. “I think the funda­mental question is what are you buying and why are you buying it? I’d be interested to hear from my colleagues at CBA and NAB, because from the outside in there doesn’t seem to be a huge amount of money in pure aggregation.”

MacRae didn’t stop there: “Brokers exist because of customer choice, and a big part of customer choice is they believe they’re getting independent choice, and I think at worst there’s a blurring of lines when the major bank acquires aggregators.”

When asked about CBA’s large stake in Aussie Home Loans, Boer replied: “I think at the heart of the issue around aggregation is influence. I ran a scenario last week on Aussie software, and we were

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ranked 42nd on their system – 42nd! ... [as for] the guys at FAST, Choice and PLAN, they go out of their way to make sure we’re satisfied with the relationship we’ve got going with them; they are very and fiercely independent in the way they operate, and that’s healthy.”

ANZ’s Evans also claimed that he had a good relationship with the above-mentioned NAB-owned aggregators.

Kane’s response centred on brands. “Westpac may well be the best example of multibank distribution. So they may well be bank brands and not aggregator brands, but they’re still multibrand

“I’d rather sit down and help a broker write more business, so they can do that efficiently, [which] is going to help their bottom line more than playing on the margins – five points here, 10 points there. I just don’t think that’s where the game’s going” Sam Boer, CBA

JANUARY 2015 | 27

SPECIAL REPORT / MAJOR BANK ROUNDTABLE

“The jewel of our crown will continue to be our turnaround times … so we will continue to push on turnaround times” Keiran Evans, ANZ

GROWING ABOVE SYSTEM

All the banks plan to grow ‘above system’ but argue that the broker channel could do even better: “At ANZ we’re really proud for the last 19 consecutive quarters we’ve grown at above system” – Keiran Evans, ANZ “Different channels deliver different results, and the broker channel has consistently, at least in my time in the channel, delivered well above the system” – Tony MacRae, Westpac

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“Above system is certainly what we’re trying to achieve – multiples of that in the broker channel; it’s significantly higher than system growth and has been for a number of years now” – Steve Kane, NAB Broker However, they also sounded a note of caution: “It’s not just growth for growth’s sake; you have to temper that with the risk profile in the book as well. We are pretty much bottom of the rate cycle, and there is talk about upward rate pressure in the next year, and you do worry and wonder about how some households, how they are going to be affected by that” – Sam Boer, CBA

distribution,” he retorted, referring to Westpac’s ownership of RAMS. NAB’s acquisition of FAST, Choice, PLAN and Advantedge was a valid invest­ment in a capitalhungry sector, Kane argued, adding that any attempt by those aggregators to distort the market would result in brokers going elsewhere.

In fact, critics of bank expansion in distribution have ignored the real threat, according to Kane.

“The reality is, I think the game changer will be other institutional investors, whether they be foreign or otherwise, coming in and buying into the distribution channel, because they will see there’s a capital requirement. To run aggregation businesses today requires a lot of capital; you can’t just sit on the same software for extended periods.”

Vertical integration has potential to be a valid concern, admitted CBA’s Boer. “If it was to become an uneven playing field of influence, there would be some real concerns there around impartiality,” he said, “and it would undermine the channel, the essence of the proposition of the channel … that’s the fear with vertical integration. The risk is that could be lost, but at this point as far as I can see it’s as competitive as it’s ever been.”

INVESTMENT IN THE BROKER CHANNEL Finally, MPA asked panellists to disclose their plans to invest in the broker channel. And fittingly, their plans reflected the recurring themes from across the roundtable: the changing role of BDMs, the opportunities presented by technology, and the primacy of customer demands.

“We’re going to continue listening to brokers; we’re going to continue investing in our technology;

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MAJOR BANK ROUNDTABLE: Steve Kane, Sam Boer, Keiran Evans, Tony MacRae, and Adam Smith, editor of ‘Australian Broker’

we’re looking to expand our loan refinance capability,” ANZ’s Evans explained. “BDMs are absolutely the key to our success, so we’re hiring more BDMs and we’re going to train them up. We’ve expanded significantly our premium proposition, and the jewel of our crown will continue to be our turnaround times … so we will continue to push on turnaround times.”

Boer pointed to “innovation on a number of fronts: process, products and the people”. He hinted at a number of processing pilots to reduce turn­ around times, while highlighting the strength of CBA’s digital platform, NetBank, and he also mentioned plans to further leverage its popularity with customers.

Investment is core to NAB’s strategy, Kane said, particularly investment in liaison and technology, BDM training and broker-customer communication.

But the bank is also looking to adapt its loan products to deal with Australia’s growing affordability constraints. “We all know there’s a difficulty buying property, particularly in the Sydney market,” he said, “so how do we come up with products that are going to suit that changing demographic?”

Westpac’s MacRae brought the discussion to a close, pointing to the bank’s partnership with Deakin University to raise the professionalism of its BDMs. He said Westpac also equipped staff with mobile devices to work on the move. The bank’s strategy, he concluded, “is all around partnerships, and partnerships with our brokers and aggregators are particularly important; partnerships with our retail network and private banks and being able to provide brokers with more avenues for revenue through better relationships across the bank”.

“The reality is, I think the game changer will be other institutional investors, whether they be foreign or otherwise, coming in and buying into the distribution channel” Steve Kane, NAB Broker

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n a single calendar year 24 Australian Brokers and 12 MPAs will be published.

In addition, 23 crystal trophies will be handed over at October’s Australian Mortgage Awards, 141 special report certificates distributed to brokers and around 150 MPA e-newsletters sent out.

That’s a lot of industry news, and a lot of industry faces. The Hot List aims to pick out those that really matter, the individuals at the centre of the year’s biggest stories. While you will recognise certain faces that’ve been featured in the Hot List before, simply being well-known is not enough to make the cut.

We look for those who’ve won major awards, whose companies have undergone considerable transformation and those whose hard work has earned them a reputation that transcends the industry.

2014’s astounding numbers – both in terms of bank profits and broker settlements – made picking this year’s Hot List particularly difficult. It is not intended as the definitive list of talented or hard-working professionals involved in the third-party channel. Instead it seeks to recognise those whose achievements and sheer force of character are pushing the entire industry in new directions.

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We list the 27 leading industry professionals who have raised the stakes and raised the temperature

What’s different about this year’s Hot List?

For the first time, this year’s Hot List also integrates MPA’s ‘Year in Review’ section – the orange-topped boxes you’ll see on all the pages.

The Hot List is all about who made the news, so we thought also featuring MPA’s many awards and special reports would help explain who’s hot and who’s not.

Each page includes the highlights of a different issue of MPA, packed with tips and advice you may have missed.

Read on and relive the highlights of an eventful year.

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SPECIAL REPORT / HOT LIST 2015

Glenn Stevens Governor Reserve Bank of Australia Any mention of the RBA will undoubtedly elicit strong words from brokers, often for good reason. But Stevens, in keeping interest rates low and (at the time of writing) holding off from macro-prudential intervention, has played no small part in this year’s buoyant property market. That said, brokers like all other Australians will be hoping 2015 involves a pick-up in the rest of the nation’s economy.

MPA 14.01 SMSF IN 9 STEPS

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Set up an SMSF

The trustee of the SMSF selects a residential investment property to purchase

3

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

4 5

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

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

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

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

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

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Loan funds must only be used for the purchase or refinance of a property and there can be no redraws or further advances (as suggested by Allan Savins of Resimac)

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Tony MacRae General manager, mortgage distribution Westpac Broker Distribution Australia’s oldest bank kicked off 2014 by offering upfront commission incentives, rate cuts, and a new system for referring to brokers existing customers in need of refinance and top-up finance. Their ‘rocket repay’ product was also chosen as brokers’ Product of the Year.

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John Symond Executive chairman Aussie Home Loans Although his nephew James Symond now calls the shots at Aussie, the industry’s leading veteran has been an influential voice on vertical integration, lending standards and negative gearing. Add to that Aussie’s aggressive recruitment drive and it’s been a good year for the Symond clan.

Savanth Sebastian Economist CommSec Sebastian is increasingly the expert face of Commonwealth Bank’s stockbroking division, jovially making even the most dire economic statistics understandable for a wider audience. He runs an excellent CommSec Research blog, which publishes several times a week on the latest statistical releases.

MPA 14.02 THE ‘HIP YOUNG GUNSLINGERS’ OF 2014 Andrew Psalti, Yellow Brick Road, Cronulla NSW Asha Long, Loan Market, Campbelltown NSW Ebony Johnstone, Mortgage Choice, Miami Qld Isma Ahmed, Home Loan Experts, Burwood NSW Steven (Haiyang) Sun, One Stop Loan, MacGregor Qld Sebastian Salek, Salek & Co, Narre Warren South Vic

Jayden Vecchio, Discovery Finance Group, Brisbane Qld Cliff Ferrer, 1st St Home Loans, Rose Bay NSW Cara Quinn, Loan Market, Nundah Qld Marissa Shulze, Rise High Financial Solutions, Prospect SA Eric Cui and Donald Tang, Alliance Mortgage Solutions, Hurstville NSW MPA’s Young Guns 2014 was sponsored by ANZ

JANUARY 2015 | 33

SPECIAL REPORT / HOT LIST 2015

Tony Carn Sales director NextGen.Net Nextgen are behind the pivotal ApplyOnline software, which has been available for a couple of years. However, 2014 saw the roll-out of new improvements for processing supporting documents and ABN/ACN checks. We might not quite have arrived at the paperless application, but it seems we’re closer than ever.

Royden D’Vaz National sales manager Bluestone Mortgages While Peter Wood remains the international lender’s Asia-Pacific COO, D’Vaz is the person whom Aussie brokers will be dealing with and hearing from over the coming months. Appointed in August, D’Vaz has a background at Bluestone, NAB Broker and Challenger Mortgage Manager.

Craig Dunning BDM Westpac A behind-the-scenes veteran, Dunning got the recognition he deserved for 10 years as a BDM and 23 years at Westpac by winning Australian BDM of the Year at the Australian Mortgage Awards.

MPA 14.03 Australia’s top investment suburb: New Farm Qld »» »» »» »» »»

Location: 2km east of Brisbane CBD Median unit price: $493,000 Rental yield: 5% Vacancy rate: 3.3% 12-month price growth: 3%

Demographics »» Population: 11,330 »» Median age: 36 »» Pop growth since ’06: 0.8% »» Average household income (p.w.): $1,620 »» Growth since ’06: 42%

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Key indicators

»» Local economy – 9/10: New Farm benefits from the full employment offering in the Brisbane CBD, which is in a strong expansion phase. »» New infrastructure plans – 8/10: Seven major roadway projects are in the pipeline – some already completed – which will improve links between inner Brisbane and the rest of the city. »» Amenities – 9/10: New Farm has all the services and convenience of being Brisbane’s most densely populated area, and its infrastructure and local services are among the city’s best. »» Supply and demand – 6/10: Two in three New Farm residents are renters, so it’s not surprising that the vacancy rate has edged past 3%. Contradictory as it may seem, the unit market is more on the side of undersupply than oversupply. And this mirrors the Brisbane City market as a whole. Just 0.8% of all units are on the market.

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The average top 10 franchise brokerage: »» turned over $162m in 2013 »» has 6 loan writers »» boasts an 89% conversion rate

1. Mortgage Choice Glenelg East 2. Mortgage Choice Brisbane 3. Mortgage Choice Perth 4. Mortgage Choice Melbourne 5. Choice Home Loans Leederville 6. LJ Hooker Home Loans ACT & Southern NSW 7. Mortgage Choice Cheltenham Mark Bouris Executive chairman Yellow Brick Road

8. Loan Market Manningham

TV fame on The Apprentice has certainly raised Bouris’ profile, but his inclusion on this list owes more to Yellow Brick Road’s $17.6m acquisition of Vow Financial in May this year. That alone wasn’t enough to satisfy YBR’s appetite; in July the franchise group snapped up Resi Mortgage Corporation for a paltry $36m.

10. The Mortgage Gallery Dunsborough

9. LJ Hooker Home Loans Eastern Suburbs

Sam Boer General manager of broker sales Commonwealth Bank CBA’s return of first-year trail income (from January 2015) certainly made waves, and while Lyn Cobley ranks higher in Australia’s largest lender, it’s Sam Boer who is better known to the industry. Boer has long been an advocate of business productivity, and various brokers have applauded the bank’s Kaizen productivity education programs.

JANUARY 2015 | 35

SPECIAL REPORT / HOT LIST 2015

Eric Cui, Cissy Fang, Donald Tang Directors Alliance Mortgage Solutions

This bunch are truly red hot right now: they’re AMA New Brokerage of the Year, with Tang and Cui coming 9th and 6th respectively in MPA’s Top 100 brokers – yet AMS has only been in business for two years. The industry’s elite will be holding their breath to see what AMS manage next year.

Sam White CEO Loan Market

Few industry professionals have spent a night on the streets. Sam White’s sponsored sleep-out helped raise money for homelessness charities and was just one of a number of initiatives for which White was awarded the Australian Mortgage Award for Best Community Engagement. Loan Market also went into financial planning this year, while continuing their move to a full-franchise model.

MPA 14.05 BROKERS ON AGGREGATORS Brokers’ main concerns: 1. Accuracy and timeliness of commission payments 2. Quality of lending panel 3. IT and CRM support

Main reason for leaving your current aggregator

22.10% Poor IT and CRM support 17.1% Poor accuracy and timeliness

of commission payments 14.8% Poor lead generation 11.4% Poor quality of lending panel 10.5% Poor BDM support 5.7% Poor additional income stream offerings 5.5% Poor communication with brokers 5% Poor compliance support 3.4% Poor white label offering 2.7% Poor training and education 1.8% Poor marketing support

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Steven Degetto Head of intermediaries Suncorp Group

Paul Eldridge Managing director Australis College

The ex-Macquarie banker was appointed in January to head Suncorp’s broker sales, and his prospects look bright: the non-major recorded a huge profit of $730m in the 2013/14 financial year, with a 5% increase in home lending, despite a conservative approach to LVRs.

Training provider Australis College, previously named Intellitrain, will be known to many brokers who earned Certificate IVs through them. Eldridge is a vocal critic of what he sees as ‘fast and cheap’ broker training undermining the industry.

The nonmajors are punching well above their weight in terms of what they can offer the broker, and ultimately the end customer Ray Esho, ING DIRECT

MPA 14.06 AN INDUSTRY FIRST:

MPA’s non-major bank roundtable MPA magazine held the industry’s first ever independent roundtable in 2014 – a unique chance to get non-major bank leaders in one room and talk business.

ME Bank, Suncorp Bank, Bankwest, ING Direct, AMP Bank, St.George Banking Group and Adelaide Bank were all represented, and discussed the state of the market, challenging the majors, white-label products, niches, support and processing, aggregators and gave advice to brokers.

Video highlights of the roundtable are still available on our website.

JANUARY 2015 | 37

SPECIAL REPORT / HOT LIST 2015

MPA 14.07 Ray Hair General manager sales Homeloans Ltd

BROKERS ON BANKS SURVEY NAB Broker topped this year’s Bank of the Year, followed by CBA and Westpac Westpac’s Rocket Repay was brokers’ Product of the Year.

Brokers’ main concerns 1. Turnaround times 2. BDM support 3. Service levels

A true veteran of the industry’s top ranks as CEO of ALI Group and PLAN Australia, Hair was chosen to lead Homeloans back in June. The non-bank lender has hired a number of new BDMs to increase their offer to brokers.

Do you believe channel conflict exists?

32% NO

68% YES

Steve Kane General manager, broker distribution NAB Broker NAB’s profits might have taken a beating this year, but inside the broker space everything looks rosy, in no small part down to Kane. Coming top of MPA’s Brokers on Banks survey was followed by dropping the Homeside brand name – a move universally popular with brokers.

Have commission structures improved or worsened over the last year?

24%

WORSENED

76%

IMPROVED

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Steve Sampson Distribution consultant Bank of Sydney Sampson is well known to the industry, having worked at Choice Home Loans, Provident Capital and Citibank; Bank of Sydney is virtually unknown, having only announced its entry to the third-party channel in August. Sampson claims branch managers will help brokers get customers, overturning channel conflict.

Doug Lee Head of sales Macquarie Mortgages Macquarie topped nine of the 10 categories in Australian Broker’s Brokers on Non-majors 2014 survey, and Lee claims it’s down to putting brokers at the centre of his strategy, including looking for broker feedback.

MPA 14.08 BANKS ON BROKERS The heads of the four major banks and Macquarie were given a chance to respond to brokers’ concerns “One year ago I said NAB Broker would lead the market by continuing to invest in the broker channel, and I think the result speaks to our dedication to constantly improve as a lender” Steve Kane, NAB Broker “We have, I believe, an overall service proposition – from lodgement to

settlement – which is sharper than our competitors’ and which we deliver on consistently” Sam Boer, CBA “We have been open and transparent in our approach to being No.1 for overall broker service and value, so from that perspective we are not satisfied with this result” Tony MacRae, Westpac “A lot of our work has been centred on not making significant changes but

looking at where we can make small amendments that make a big difference” Doug Lee, Macquarie “Brokers tell us they expect more from their BDMs, and so we are investing in our team, increasing resource levels and developing the capabilities of our people” Kieran Evans, ANZ

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SPECIAL REPORT / HOT LIST 2015

MPA 14.09 OUR SECOND ROUNDTABLE: THE AGGREGATORS Placed between brokers and lenders, sharply divided on questions of ownership and approach, our aggregators’ roundtable was always going to be vocal.

The heads of PLAN, AFG, FAST, Outsource Financial, Connective, Vow Financial and CHOICE were all present. Topics included diversification, consolidation, education, new brokers, white label products and client advocacy.

John Kolenda Managing director Finsure Aggregator Finsure and its managing director are the talk of the town, being ranked as the 18th fastest-growing company in Australia by BRW magazine in October. Only launched in 2012, Finsure has seen astonishing growth, now having 600 brokers writing $600m a month in mortgages, with a 250-strong financial planning arm.

Murray Cowan CEO Better Mortgage Management Better Mortgage Management’s CEO may have a claim to be the most loved mortgage lender in Australia – non-banks generally are rated higher than banks by brokers, and BMM topped MPA’s Brokers on Non-banks survey this year.

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Diana Liu Director Wealth Connected

To come top of MPA’s Top Commercial Brokers 2014, Liu wrote seven loans totalling $100,832,000.

Liu only entered commercial broking two years ago but has used connections in Australia and China and her financial planning background to get ahead.

Tim Brown President MFAA It’s been an exciting year for the MFAA under Brown, and not just hiring a new CEO: back in August the board announced changes to the body’s constitution, so brokers or mortgage managers will always make up the majority of the board.

MPA 14.10 TOP 10 COMMERCIAL BROKERS OF 2014

Greg Pennells Managing director Wealth Today The financial planning company appointed Pennells in October, but his connection to finance goes much further back, having co-founded Choice Home Loans and Choice Aggregation services alongside Ross Beggley in 1997.

1

Diana Liu

$100,832,000

7

2

Adam SladeJacobson

$93,410,000

3

3

Jayden Vecchio

$87,020,000

24

4

Daniel Green

$86,764,370

132

5

George Karam

$83,511,500

15

6

Marshall Condon

$82,655,000

12

7

Kevin Wheatley

$82,440,000

7

8

Marwan Rahme

$80,529,833

17

9

Daniel Zadnik

$68,600,000

51

10

Jeremy Zadnik

$58,625,000

8

MPA’s Top 10 Commercial Brokers survey was sponsored by Thinktank

JANUARY 2015 | 41

SPECIAL REPORT / HOT LIST 2015

MPA 14.11 B

4

RO 1 KER 20 INNOVATION AND A GE S FLEXIBILITY: the Top 10 Independent Brokerages

Average total settlements 2013/14 FY:

$416,405,669 Average number of brokers:

12

How top independent brokerages contact clients: E-newsletter

Mark Davis Principal The Australian Lending and Investment Centre

Postal newsletter Phone

Davis combines personal success – AMA Finance Broker of the Year – with a memorable year for ALIC, which topped our Top 10 Independent Brokerages list and went on to win the AMA Brokerage of the Year award.

Text Cards Socia l media

0

Mario Rehayem Director, sales and distribution Pepper The non-bank lender topped 1,000 employees this year, with operations in four different countries, yet Rehayem remains a regular attendee at broker events. More recently, Pepper has emerged as the voice of non-conforming lending in the wider media, claiming the term ‘low-doc’ is “misleading and outdated”.

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2

4

6

8

10

“Do your research. Think hard about what it is you are looking to achieve. You can make your business into whatever you want, but it is hard work and more hard work. Surround yourself with the best, get advice and take some risks. Sometimes in our industry you need to check the ego at the door and just be prepared to forget what you think you know and learn from others that do. Life is short and the journey is just as important as the destination. Don’t forget to have fun along the way!”

ALIC, no.1 Independent Brokerage of 2014 MPA’s Top 10 Independent Brokerages survey was sponsored

by NAB Broker

MPAMAGAZINE.COM.AU

OP 100

BR

OK

THE BIG ONE: MPA’s Top 100 Brokers

14

T

MPA 14.12

ERS 20

This year’s Top 100 smashed a number of records: Highest combined settlement total:

$9,907,057,066 No.1 broker settlement total:

$247,200,000 (Raymond Xue)

26,846 loans written by the Top 100 this year – a 25% rise on 2013

Siohban Hayden CEO MFAA Phil Naylor’s 12-year stint at the MFAA left some very big shoes to fill, and speculation surrounding his replacement largely focused on aged industry veterans promising more of the same. Siobhan Hayden’s appointment therefore came as a welcome surprise; known to the industry from her time at Finware, she is also the MFAA’s first female CEO. Her roadshow is a rare opportunity for the entire industry to reassess its priorities.

Raymond Xue Senior manager ACA Home Loan Solution

This year’s top broker – coming no.1 in MPA’s Top 100 and winning the Westpac Australian Broker of the Year at the AMAs – was hardly a dark horse. AFG members will be used to seeing Xue on or near the podium at their various awards. That said, it seems quietly restructuring his processing last year – so a single staff members handles an entire application – paid off with a record residential settlement total this year.

$415,512 the average loan size – a rise of 18% on 2013

CHALLENGES FOR THE INDUSTRY “I am confident I can adapt to any changes, but I hope there are no knee-jerk reactions by regulatory bodies” (Justin Doobov) “As long-term mortgage brokers we are clearly very concerned about the issue of housing affordability and how it is going to affect the mortgage market over time” (Kellie Lam) “Commission payments and banks’ margins will change a lot, which will create competition and banks not knowing how to operate correctly in the investment space” (Mark Davis)

JANUARY 2015 | 43

PROFILE / LOUIS KOVANIS

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THE MORTGAGE DOCTOR Louis Kovanis of Genius Loan Solutions has found and mastered a niche in the market, becoming one of Australia’s top 10 brokers in the process Louis Kovanis’ small office is a somewhat clinical oasis of air-conditioned calm in a sweltering Wolli Creek. Yet its occupant, No. 8 in MPA’s Top 100 Brokers of 2014, is nowhere to be seen. Standing in the empty office, you can’t help but wonder: Did $174,921,276 of residential business really pass through here? And how do you achieve that total with just 133 loans?

These questions are rapidly answered on Kovanis’ return. As you’d expect from a top performer, his phone has a life of its own, constantly buzzing with clients, including one looking to finance a top-end sports car. But it’s not playboys who make up Kovanis’ client base; not even those usual suspects, the wealthy foreign investors. Genius Loan Solutions deals exclusively with Australia’s medical professionals, a niche that is proving to be extraordinarily profitable.

Kovanis himself has no medical experience to speak of; instead, his story is a textbook study of specialisation and diversification in practice, which all brokers should take note of. Coming from Sydney, Kovanis’ education at The Scots College and later at the University of Sydney provided him with useful connections but nothing particularly out of the ordinary; a BA in economics; and an early career at banks including Citibank and HSBC. Nor was switching to broking in the late 1990s particularly unique, Kovanis explains. “Australia was in the midst of a big housing boom,” he says, “and the topic of conversation at dinner parties was ‘what’s your rate?’ John Symond had launched Aussie in ’92, and there were a lot of people entering the industry; the barriers to entry were very low.”

Genius Loan Solutions, founded in 2000, was originally a standard brokerage. “At the time, obviously I took on any type of client,” Kovanis says.

The decision to specialise was not exactly a light-bulb moment, Kovanis jokingly recalls. “I’ve always had that perception … well, obviously I’d been to my dentist and could see what he was charging, so I thought, you know what, these guys are very aggressive with their fees, they’ll probably be big borrowers. And sure enough, they proved me correct.” From dentists Kovanis went on to optome­trists, from optometrists to pharmacists, and so on.

Big money in Australia is inevitably equated with FIFO miners, construction magnates and financiers. Yet, according to Kovanis, medical professionals make truly ideal clients. “They have good job security, very low propensity to default, the assets they have are very good assets, they have very good incomes – and given that in Australia we have a growing ageing population, there’s going to be a bigger demand for the services of these healthcare professionals.”

Crucially, many medical professionals are selfemployed and therefore present many more finance opportunities than other relatively wealthy professionals. Many doctors will want to purchase and renovate their surgeries; radiologists’ CT scanners require many thousands of dollars in asset finance, and plastic surgeons, as Kovanis puts it, need money to “look good”. That’s not to mention the sports cars and new-build mansions that come with professional success.

If it was so easy, everyone would be doing it,

“Given that in Australia we have a growing ageing population, there’s going to be a bigger demand for the services of these healthcare professionals”

JANUARY 2015 | 45

PROFILE / LOUIS KOVANIS

“Obviously I’d been to my dentist and could see what he was charging, so I thought, you know what, these guys are very aggressive with their fees, they’ll probably be big borrowers. And sure enough, they proved me correct” HIRING FOR A BOUTIQUE BROKERAGE: WHAT KOVANIS IS LOOKING FOR

Multiskilling – clients expect a broker to solve any problems with minimum paperwork and back-and-forth communication

Good IT skills – these are required for putting through deals and maintaining databases

Not necessarily salespeople – customers always come through referrals, so staff don’t need to sell themselves; clients just want them to get the job done

46 | JANUARY 2015

the saying goes, and Kovanis’ move into the medical sector has involved a battle against low expectations. This started with reassuring clients who thought mortgage brokers were just for bad borrowers. “I only do full-doc lending,” he’d say. “I deal with the mainstream lenders, so I’m not going to put you with a lender you’ve never heard of.”

It’s still a struggle, Kovanis argues: “If you go to a traditional late-fifties early-sixties surgeon at St Vincent’s, most of those guys won’t talk to brokers; they have their private banker, their status symbol. The mere fact of being told they’re in executive banking makes them feel good.”

Therefore, Kovanis is transforming Genius Loan Solutions into a boutique executive-style operation.

While the brokerage has a slick website, Kovanis feels there is no advantage in advertising. “These people have absolutely no time … I’d attract the intern [ junior doctor] at a hospital, but I’m looking for the specialists … [as for attracting] the established specialist, forget it.”

He’s wary of ‘diluting the portfolio’, and only deals with non-medical clients when referred by existing long-term clients. “I’m not going to be the Aussie John Symond of this world,” Kovanis explains. “It’s a niche little broking business.”

That doesn’t mean Kovanis isn’t interested in expanding. A bigger office and a support team go hand in hand with providing the executive service clients expect, he argues. He’ll still be at the end of the phone but have “a network of people in the business who will manage the portfolio of these clients and give them that executive service”.

The goal is to settle $1.25bn of business over the next five years; with an average residential loan size of $1.3m, that means doing 193 deals a year, a significant increase on the 133 loans of 2013/14 – but of course that’s only counting residential deals.

MPAMAGAZINE.COM.AU

Herein lies the apparent irony of Kovanis’ business: $1.25bn seems a lot to demand from a niche sector. Kovanis doesn’t agree. “The market’s huge; it’s not that small.”

What makes medical professionals a niche area, he suggests, is the skills that dealing with them requires. “It’s a more complicated loan application; you’ve got to have certain skills. People think it’s easy, but it’s not. The doctors, they demand the best interest rates; they are so rate focused.”

Kovanis is convinced that he’s discovered a goldmine, and he’s not keeping quiet about it. In fact he has a message to would-be competitors.

“My point to the new guys out there is good luck if you can get the best rates, because that’s what they want … a fairly large reduction on what they’re paying, otherwise they say, ‘It’s not worth my while pulling my tax returns out’. To you and I, a $3,000 to $4,000 per annum saving is a huge amount. To these guys it’s nothing; it’s a drop in the ocean.”

LENDERS IN THE MEDICAL SPACE Kovanis is not the only one who thinks medical professionals make good customers Specialist lenders for medics – these include Investec, Medfin, MDPF, among others Targeted incentives – many institutions will offer discounted rates, waive LMI, and allow medical professionals to borrow at a higher LVR Commercial loans – lenders are beginning to recognise commercial opportunities in the medical space, with higher LVRs permitted, although Kovanis notes the level of competition is still low

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Visit corelogic.com.au or call 1300 734 318.

JANUARY 2015 | 47

FEATURE / COMMERCIAL LENDING

THINK SMALL Commercial lending is losing its exclusive big-money deals image, as streamlined applications and improved support make it a realistic option for everyday diversification

48 | JANUARY 2015

MPAMAGAZINE.COM.AU

Commercial lending is coming back down to earth. In early 2015 the MFAA will publish a white paper studying the challenges facing commercial brokers, but some lenders already seem to be anticipating its conclusions. Now, in stark contrast to an increasingly frenzied residential sector, with its ever-more dizzying sums and profits, commercial focused lenders are looking to become an integral part of everyday broking, not just the occasional lucrative deal. Large corporates are out; SMEs are in, and an at times offputtingly technical sector is reconnecting with normal brokers.

The cynical among us might suggest that this newfound atmosphere of humility is not entirely unconnected with the calm if not stagnant state of business confidence over 2014. A 16.3% drop in commercial lending in July could be treated as a one-off, but commercial property values certainly appear flat in comparison to residential property.

Yet interest rates continue to remain low – historically low – and commercial lenders insist business owners won’t ignore the opportunities this presents. According to Jonathan Street, CEO of commercial specialist lender Thinktank, “certainty or semi-certainty over interest rates can feed very positively into investment decisions”. The NAB Commercial Property Index is positive for the first time since the first quarter of 2011, and George Sotiros of building society IMB urges brokers that “everything is indicating we really are at a stage where the market is not expecting any significant changes; it’s a good time to consider investment into commercial”.

SMALL DEALS If commercial investment recovers, there’s a good chance it’ll start small. NAB’s SME survey recorded small business conditions rising to above average levels, noting that “conditions facing SMEs are better than those of the broader economy… especially in construction, business services, transport and retail”. FAST chief Brendan Wright puts it rather more forcefully: “there’s 2.8 million small businesses that make up the engine room of the Australian economy and they are screaming out for help and advice around funding their business and also their personal needs being met. That’s the opportunity, and there are just not enough

business bankers among the banks to go around”.

Smaller deals are changing the meaning of commercial lending. They’re easier for brokers, because they’re easier for lenders; deals under $1m are treated by APRA in a similar way to residential deals. Small deals are what Australian First Mortgage director Iain Forbes terms ‘low hanging fruit’; “not complicated, straightforward buildings, not specialised” – single properties secured by bricks and mortar, not business assets. A light industrial property, office or shop already with a tenant, claims Thinktank’s CEO Street, “almost presents in the same fashion as a PAYG investment loan or a self-employed person’s residential loan”.

Simpler applications also mean that deals under $1m are the first area of commercial lending where technology is having an impact.

“The technology opportunity for processing those applications is significant”, Wright argues.

“Some lenders are already into this space, some aggregators are starting to look at it; we are certainly very keen and working with a number of partners to develop our software Podium to process asset finance and commercial deals”.

Antonia Albanese, head of broker & acquisition, Bankwest

WHAT DISTINGUISHES A QUALITY COMMERCIAL BROKER? Antonia Albanese: spend quality time with the client “[Commercial broking] is a series of conversations with the client getting to the heart of what they need...where the experienced brokers do well is knowing to really spend time with the customer and understand what matters to them” George Sotiros: be an expert in the client’s eyes “Even if you don’t know [what to do] , know where to go looking for it. When you’re sitting down with you clients, know what they want to do, so you can make the appropriate calls and actions and from their point of view, they’re leaving it with you”

George Sotiros, senior manager direct & third party channels, IMB

Brendan Wright: present the right information “The ones that step more and more into the complex space understand how to read balance sheets and profit-and-loss statements in more detail, and can tie that to the industry or type of the business, and then package that information up and deliver it to the bank, so they can easily make a decision about that”

JANUARY 2015 | 49

FEATURE / COMMERCIAL LENDING

The same can’t be said for more complicated deals, warns Bankwest’s head of Broker & Acquisition Antonia Albanese; “in verifying income there are quite a lot of sources you need to go to, so we’ll never ever get to that sort of paperless application I don’t think, but we certainly can improve”.

Potential small-deal clients are more likely to evolve from a residential broker’s existing database. More complicated commercial broking requires building a network of referral sources – accountants, conveyancing firms, planners ; although aggregators often introduce brokers to such partners, such as FAST’s Partner Planner. Yet La Trobe’s head of distribution Cory Bannister notes that “too many brokers fail to realise they are sitting on the best commercial lead generating tools without even knowing – the data in their Customer Relationship Management (CRM) systems”. Many residential clients are likely to be SME owners, not to mention the growing proportion of selfemployed borrowers. Furthermore a huge number of residential clients could also be potential SMSF investors, an area Street expects to grow ‘exponentially’ over the next couple of years.

Brendan Wright, CEO, Fast

With such a similarity to residential business, small commercial deals certainly have the potential to reconnect commercial lenders with residential brokers. “Our products are designed to look and feel like standard residential transactions,” says La Trobe’s Bannister. “We use the same application form, serviceability calculator, income verification methods and loan documents, and it’s the same accreditation.”

TAKING IT UP A NOTCH We’ve heard some of this language before: lenders declaring that ‘commercial is the new residential’ without giving brokers the resources or motivation to make commercial more than an occasional indulgence. A gap exists between those spot-and-refer commercial brokers, and those who made it a valued part of their business.

But with more emphasis on BDMs and education in the industry, this gap is becoming easier to bridge.

Bankwest’s Albanese insists good commercial broking still utilises those same broker relationship skills. “The most critical skill you can have [is] the ability to really understand what motivates and matters to people, and that’s relevant whether it’s an individual or

THE STATE OF COMMERCIAL LENDING Advocates of commercial lending will have been disappointed by August’s figures, which showed a significant drop in lending. However, if you look at commercial lending on an annual basis, it fared significantly better in 2014.

COMMERCIAL FINANCE COMMITMENTS

$m

50000 Total commercial finance commitments ($m)

40000

30000

2013 Aug

50 | JANUARY 2015

Sep

Oct

Nov

Dec

2014 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

FEATURE / COMMERCIAL LENDING

A REAL LIFE COMMERCIAL LENDING SCENARIO

From an example submitted by Thinktank, in which a broker was involved, as explained by head of sales & distribution Peter Vala and BDM Paul Burns.

REAL LIFE SCENARIO • The client needed to refinance a $360,000 loan from a major bank

Technical default vs payment default

Lenders can treat clients as defaulters even when they’re keeping up with repayments, but happen to break a covenant in the terms of their deal. As a broker it helps to stay informed about the rules surrounding your clients’ loans, and the date the loans mature.

What the broker needs to know?

According to Burns, “he’s got to have detailed background on what has happened with the existing lender; why a situation arose when they’ve charged penalty rates, and also a good understanding of the actual business itself”. BDMs can help guide you through getting this understanding.

Why lenders differ over the same deal

Thinktank claims their BDMs have the knowledge and experience to dig deeper into a business’ situation, as in this case when normal documents weren’t all available. Different loan terms can also make a huge difference; some lenders offer 15 years, others 25 years.

52 | JANUARY 2015

• Reason for refinance: the client was currently on default / penalty interest rates as the current facility had expired • The existing funder would not extend (roll over) the customer’s existing facilities as their 2014 financial statements were not complete • Most lenders are hesitant to refinance a commercial loan when penalty rates are in play • Matter was introduced to Thinktank from a broker • Through an in-depth discussion with the broker and gaining an understanding of the transaction and customer, Thinktank assessed the transaction based on 2012 and 2013 financial statements • With the broker’s and client’s permission, in order to gain additional comfort, Thinktank spoke with the client’s accountant to gain an understanding of the current performance of the business and check that 2014 will likely demonstrate similar trading results as previous years • Thinktank approved the transaction and settled the matter • The major lost a solid client due to rigid review policies and inability to take a practical approach to the problem at hand

Risk rating

While commercial lenders don’t usually credit score, they do assess risk, often taking into account the business’ management. Thinktank claims they assess risk only on the LVR and interest cover.

Thinktank does everything through the broker – but it does ask for the broker’s permission, explains Vala;

“Our loans are effectively setand-forget transactions without ongoing reporting requirements; we don’t do a spot and refer model... we work with the broker to help you win the transaction and help you write the credit because we want you to maintain an ongoing relationship with the customer and accordingly, be paid an ongoing trail”. This also means they don’t cross-sell.

commercial customer… it often just comes down to confidence, and that’s why we’ve been supporting our brokers by giving them the terminology around the business”.

Traditionally commercial lenders and aggregators have always emphasised their ‘handholding’ of inexperienced brokers, but recently have begun to back this up with more structured (and less patronising) support. Bankwest has a phone line for brokers to get in touch with a commercial analyst; brokers with Thinktank go through the same BDM throughout a loan application. IMB’s Sotiros suggests mentoring as a way to gain commercial expertise: “More and more aggregators understand the idea of diversification, there’s a great depth of experience among their own people who’ve been doing commercial for years, and generally people, if approached the right way, are happy to impart their knowledge and wisdom.”

Yet the daunting requirements of commercial accreditation, often required for deals of more than $1m, SMSF investing and when dealing with the larger banks, remains a problem that BDM support alone can’t solve. Some aggregators help with this; FAST argues for their brokers to be exempted from lenders’ minimum volume requirements; it can do that, explains Wright, because “we are very particular about the brokers we accredit; we have a long history in this space and know what a good commercial broker looks like”.

Commercial education is clearly needed, and lenders and industry bodies are starting to deliver it. The MFAA has taken a much stronger interest in commercial broking of late, and run training courses in conjunction with the Australian Institute of Management. There are three tiers of training available, and brokers can get information about the courses through their aggregators. The MFAA also offers website marketing content for commercial brokers, and they can use its newly-launched broker comparison site.

Lenders like Thinktank are also starting to run workshops. “You wouldn’t have to go back to university,” argues Street. “The best method for breaching that gap is experience and getting deals under your belt.” FAST’s Wright holds a similar opinion, although he says it is likely experienced commercial brokers will have picked up qualifications along the way.

Iain Forbes, director, Australian First Mortgage

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FEATURE / COMMERCIAL LENDING

MASTERING COMMERCIAL BROKING Even the image of elite commercial broking has softened in recent months. Both top brokers and lenders are increasingly pointing to commercial’s place alongside residential business as part of a diversified portfolio. The number one broker in MPA’s recent Top 10 Commercial Brokers, Diana Liu, still writes residential loans, despite settling $100,832,000 worth of commercial business in the last financial year. “It’s good to have a mixed client base, in terms of the income they provide,” she told MPA magazine, arguing the longer trails for residential lending make it more “sustainable”.

Specialised and general lenders offer to established commercial brokers. Thinktank only offers commercial loans through brokers, and claims this gives them flexibility and expertise to look at deals other lenders can’t handle (see the real-life scenario on p52), while avoiding cross-selling. However, Bankwest’s Albanese argues cross-selling is crucial. “When talking to customers, their needs are very diverse; you need to be in contact with a bank like Bankwest that can provide a wide range of services.” The bank offers a commission reward system for commercial brokers who cross sell.

MPA’s Top 10 commercial brokers were also divided on this question of diversified services.

Jayden Vecchio of Discovering Finance group warned against going beyond core expertise, even if this meant turning away clients: “In the beginning you try to be all things to all people, but realise that you’re wasting everyone’s time.”

Niches are undoubtedly important, argued Daniel Green of Green Finance group: “If you’re a general commercial broker, you’re really up against a lot of brokers who can do general commercial lending. Right now, in Australia, I’m the only finance broker who specialises in hotels.”

It’s notable, however, that Green Finance itself offers a much wider range of services, having specialists in healthcare, construction, equipment finance, as well as financial planners and insurance brokers. Moreover a number of full-service brokerages have begun making waves in commercial broking recently: Jeremy Fisher of 1st Street Home Loans made MPA’s top 10 while Mark Davis of the Australian Lending and Investment Centre secured the Australian Mortgage Award for Finance Broker of the Year.

54 | JANUARY 2015

“The most critical skill you can have [is] the ability to really understand what motivates and matters to people” CONCLUSION When even those at the top of the commercial game offer a range of services, it’s obvious the residential-commercial gap is closing. That’s not to suggest the two sectors will ever be the same; in fact the unique nature of commercial business certainly holds its own attractions.

“Commercial lending is the most interesting thing we do,” explains Albanese. “You don’t only get to know people, you get to understand their business and the people who work in their business… you can meet a lot more people through commercial lending.”

Nevertheless for those predominantly residential brokers who are simply looking to diversify their business, the barriers to doing so have been lowered at every level of ability. The streamlining of applications for small deals makes these an obvious starting point, and the support and educational opportunities are improving for those who want to increase their commercial business without a huge expenditure of time and effort. Evidently, it no longer makes sense to describe the non-conforming market as ‘recovering’. That era is over; a number of aggressive and ambitious players have now emerged, no longer content to stay in the nonconforming sphere, proud of their alternative approach. All state their commitment to the third-party channel, but brokers who ignore the sector face pressure from both sides, as rebranding eventually impacts on borrowers’ thinking. As Rehayem concludes, “those brokers who don’t make non-conforming part of their business model should be worried: the best of the best use it, so why don’t they?”

Jonathan Street, CEO, Thinktank

La Trobe Financial’s commercial loan products now extends to:

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25 years

Including Commercial SMSF products with rates from 6.99%

• Offices • Warehouses • Light industrial • Retail shops & mixed use To find out more call our Broker Approval Hotline on 13 80 10 or visit latrobefinancial.com TM

Credit Specialist Fund Manager

Credit • Fixed Interest • Real Estate Finance • Funds Management La Trobe Financial Services Pty Limited – Australian Credit Licence No. 392385. La Trobe Financial Asset Management Pty Limited – Australian Credit Licence No. 222213. Terms, conditions, fees, charges and La Trobe Financial lending criteria apply.

JANUARY 2015 | 55

BUSINESS STRATEGY / INTERVIEWING

WHAT TO ASK WHEN INTERVIEWING STAFF FOR YOUR SMALL BUSINESS

Sarah Derry helps you to increase the chances of selecting the right candidate every time with her tips for small businesses

56 | JANUARY 2015

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Drop the hypothetical questions. The truth is, when you ask a hypothetical question, you get a hypothetical answer There is a big difference between hiring staff for your small business compared to recruiting within a larger organisation. For a start, not only will you be hiring less staff but it is likely that you will be seeking an employee with a wider range of skills, greater flexibility, accountability and commitment. When beginning the recruitment phase, it is important to look for people who will not just suit your needs with regards to skill and expertise, but who also fit into the overall culture of your small business.

Most small business owners wear many hats and don’t have a dedicated human resources department.

They are also often extremely time poor and as a result, do not have much time to spend on the preparation and planning stages of an interview.

However, I would like to stress the importance of ensuring you make the time to prepare some good questions which will ensure that you recruit the right person for the job. In doing this, you may just save yourself a whole heap of time later on if you discover you have not employed the right person for your business.

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WHAT TO ASK? Questions such as “What animal would you be?” or “What is your favourite food?” are not ok. Not only do they tell you very little about the substance of the candidate but it is likely they may be considered discriminatory or inappropriate. Even if you are a solopreneur, it is always good business practice to be 100% professional in an interview. Word of mouth spreads fast and you never know who your interviewee will share their experiences with. Be sure to keep in mind that every time you interview someone you are creating an impression of your business to the outside world.

INTERVIEW DOS AND DON’TS In order to employ the right person for your business, take a few minutes to consider the following prior to your next interview: • Don’t do all the talking. It is fine to tell the candidate a little bit about your business and the role but then get straight into asking some questions. A good place to start is by asking the open questions “Tell me about yourself”. The

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answers you receive to this question can tell you a great deal about this person in the first few minutes.

Think up a fact finding question where you can confirm any information included in the candidate’s resume. This will also help them warm up and relax and assist them to feel more comfortable in responding to the more difficult questions you ask later on in the interview.

Drop the hypothetical questions, such as “If you were in the situation… what would you do?” The truth is, when you ask a hypothetical question, you get a hypothetical answer. These days people are skilled enough to tell you want you want to hear, rather than the truth of what they really did or would do!

Take a leaf out of big business’ book and ask a few behavioural questions such as “Tell me about a time when…” Behaviour-based questions will focus on what a person has done in the past and the success they enjoyed as a result. Not only will this help you work out if the candidate is a ‘good fit’, it will also give you a strong indication of future behaviour.

Make sure you ask questions specific to small business such as initiative, flexibility, problem solving, ability to work on your own, ability to work under pressure and multitasking.

Talk less. Better to ask short follow-up questions like “What happened next?”, “After this?”, “What was the end result?” Let them tell you the whole story in their own words.

To wrap up, make sure you have a closing question such as “If this was your business, why would you hire you?” This is a great opportunity for the candidate to showcase their own unique skills and talent that they may not have had the opportunity to raise during the interview process.

Running a successful small business is often about trust, so make sure you employ someone you have belief in and you feel you can depend on. If you fill your business with staff who are self-motivated then you can be sure your business is on the right track.

To conclude, the culture and success of your small business will be determined by your people. So, next time you are looking at taking on new staff, make sure you do yourself a favour by taking sufficient time to plan your questions, giving consideration to the type of business you run. This will assist you in finding the right person every time.

Sarah Derry is the director of People Reaching Potential, an organisation which focuses on creating opportunities for organisations and individuals to reach their “full potential”.

Sarah has worked extensively in the hospitality and tourism industry and has developed expertise in coaching, learning and development, keynote speaking and recruiting the best.

Prior to founding People Reaching Potential, she was the regional director of Human Resources for a large multi-national company. For more information on Sarah, please see www. peoplereaching potential.om.au

JANUARY 2015 | 57

BUSINESS STRATEGY / SMALL BUSINESS SURVIVAL

PLAYING WITH THE BIG BOYS: WHY YOU SHOULD THINK LIKE A BIG BUSINESS, DESPITE YOUR SIZE Many small businesses are facing an uphill struggle at present. However, PR firm Agent99’s director Sharon Zeev Poole believes that running your business just like the big industry players can produce big results The Australian Chamber of Commerce and Industry (ACCI) found in a recent survey that small businesses are more reluctant than ever to invest or employ. To that end, I believe that now it is increasingly important for small businesses to reevaluate how their businesses are run in order to survive. I believe there is a very strong case for running every business in line with the principles of the big market players.

Yes, smaller organisations have the advantage of being nimble and creative with their fingers firmly on the pulse at all times, but because there is often a lack of funds, staff and other resources, management can be challenging.

Operating like a big business can produce big benefits for smaller companies, including a trustworthy reputation, loyal customers and an increase in efficiency.

So here are my top dos and don’ts to running your business like a successful organisation: 58 | JANUARY 2015

DO:

• Seek to understand everything you can about the big players in your industry Keeping an eye on the influential players is crucial for every small business owner, regardless of the industry you’re in.

Following industry publications and news sites religiously, and following websites and social media channels of industry leaders to stay up to date with their internal news and observe their actions, is essential.

Learning from businesses enjoying success will only lend to your own, so always keep your finger on the pulse.

• Make it easy to work together Effective communication between employees, partners, suppliers and customers is the best way to boost efficiency similar to that of a major player.

How can you update your communication methods or channels to increase efficiency?

Consider integrating regular WIP meetings, monthly reviews and evaluations, ongoing and

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constructive feedback, quantifiable objectives and timelines into your workplace structure.

• Keep brand consistency Cultivating a strong brand with consistent messaging will help your business to secure repeat customers.

The more recognisable your brand and the clearer the philosophies of your business, the more customers will be encouraged to engage with it.

Brand consistency not only increases awareness, it helps to establish a brand as a prominent player in the industry. Small businesses should make it one of their key objectives to implement ongoing strategies that are effective in amplifying brand consistency across all channels, including its website, social media platforms, PR outreach and all other forms of marketing.

• Utilise cloud-based applications.

With all of the technology available today, it’s now possible for small businesses to employ infrastructures that previously could only be afforded by large organisations. Using cloudbased applications, such as email and project management tools, levels the playing field and allows small businesses to operate more proficiently and economically.

CASE STUDY: EVIAN – LIVE YOUNG CAMPAIGN While Agent99 PR is a boutique-sized PR agency, we have always managed our business in line with big business structures, protocols and professionalism. As such, we have attracted some of the world’s largest brands that tend to only work with global agencies. The work we did with evian is just a small sample of what working with big brand mentality can do for your business.

Mission The French water brand famous globally for its roller-skating and dancing babies advertisements wanted to encourage Australians to revisit their youth. evian’s Live Young worldwide campaign was about reasserting the brand’s vision of youth as a positive universal value everyone shares. evian’s brand experiential agency challenged Agent99 to build awareness of the ‘Live Young in the Backyard’ campaign and to drive footfall to a giant Hills Hoist construction that adults could swing off in Sydney’s CBD and iconic Bondi Beach.

DON’T:

• Be mired down by a slow or unsecured company network Small businesses often neglect this measure due to the lack of a dedicated technician.

A secure, reliable network helps your employees access the information and resources they need to keep up with major competition.

Network security is an indispensable constituent for small businesses endeavouring to run like a big business.

• Lose track of payments Whether these are outgoings or incoming, make certain that your payment structures are seamless and timely.

Compromising your business reputation with wavering financial matters is a big no-no.

Always ensure to stay up to date financially, assign an employee to supervise all payments or download user-friendly accounting software from the web.

• Disregard the significance of work-life balance It’s too easy to rack up the hours when you have a smaller workforce, but don’t. Always enforce measures that afford you some quality down time. Balance work and life by prioritising responsibilities, establishing clear business hours and delegating effectively to team members.

Sharon Zeev Poole, agency director, Agent99 Public Relations Having worked all over the world on high profile brands such as Warner Bros. Pictures and Starbucks Coffee, Sharon founded Agent99 Public Relations in 2007.

Today, Agent99 represents lifestyle, consumer and business-tobusiness clients across the food and wine, travel, health, beauty, online and non-for-profit spaces

Approach • Through maintaining awareness of key industry players, Agent99 sought out and appointed three blogger advocates for the campaign and developed a comprehensive content plan that would communicate evian’s message. Dr Adam Fraser, a leading human performance researcher, was also selected as the evian Live Young expert to provide insight into why playing like a child is important for physical and mental health.

• As an inclusive service, Agent99 incorporated a Facebook and Instagram-led photo competition during the campaign that urged Aussies to share a photo of themselves playing in the backyard.

Media coverage pointed to the competition along with the events that audiences could attend. This integrated online and traditional PR campaign was rolled out concurrently to achieve mass publicity amongst the target audience.

Results • Extensive media and blogger coverage achieved across leading target titles, communicating evian’s global Live Young message.

• Mass entries into the evian Live Young Instagram competition secured.

• High level footfall at both events with meaningful brand engagement and word of mouth activated across the desired demographic.

JANUARY 2015 | 59

BUSINESS STRATEGY / OVERCOMING FAILURE

HOW TO OVERCOME EXCUSES 6 TIPS TO GAIN THE EDGE & MEET YOUR GOALS Great people throughout history have often failed, quite miserably, before finally reaching their goals, says international business strategist Dan Waldschmidt “Van Gogh sold only one painting during his lifetime; Winston Churchill lost every public election until becoming prime minister at age 62; Henry Ford went bankrupt five times; Albert Einstein was a terrible student and was expelled from school; Sigmund Freud was booed from a stage,” says Dan Waldschmidt, author of “Edgy Conversations: How Ordinary People Achieve Outrageous Success”.

“Ideas, brilliance, genius – they all mean nothing without the guts, passion and tenacity necessary to make your dream a reality. But often, people fall back on excuses and give up on trying to reach their goals.”

Most of us have dreams, and many of us have big ones, but few of us actually see them through, he says.

He offers six tricks for jumping off the excuse train and forging the path to your goals.

• Avoid the need to blame others for anything Mean, small-minded people know that they suck. That’s why they are so cranky and eager to point out others’ mistakes. They hope that by causing others to feel inadequate, everyone will forget about how woefully off the mark their own performance is. Don’t blame anyone, for any reason, ever. It’s a bad habit.

• Stop working on things that just don’t matter Not everything needs to be done in place of sleep. If you work for a boss, then you owe them solid time. You can’t cut that out. You can, however, cut out television time, meetings and anything else that gets in the way of achieving your goals Replace entertainment with activity towards your goal.

• Refuse to let yourself wallow in self-doubt You’re alive to succeed. Stop comparing your current problems to your last 18 failures. They

60 | JANUARY 2015

“Ideas, brilliance, genius – they all mean nothing without the guts, passion and tenacity necessary to make your dream a reality. But often, people fall back on excuses and give up on trying to reach their goals” are not the same. You are not the same. Here’s something to remember: your entire life has been a training ground for you to capture your destiny right now. Why would you doubt that?

Stop whining. Go conquer.

• Ask yourself, “What can I do better next time?”

And then do it next time If you spend a decade or two earnestly trying to be better, that’s exactly what will happen. The next best thing towards doing something amazing is not doing something stupid. So learn from your mistakes and use the lessons to dominate.

• Proactively take time to do things that fuel your passion Exercise is a great example. Living in the moment requires you to live at peak performance. A huge part of mental fitness is physical fitness. A sparring or running partner is a great way to refresh physical competition.

Physical activity accelerates mental motivation.

• Apologise to yourself and those around you for having a bad attitude Do this once or twice and you’ll snap out of your funk pretty fast. When you start genuinely apologising for being a bad influence on those around you, you learn to stop whining and start winning.

Dan Waldschmidt is the author of “Edgy Conversations: How Ordinary People Achieve Outrageous Success,” (www.

EdgyConversations. com). He is an international business strategist, speaker, author and extreme athlete. His consulting firm solves complex marketing and business strategy problems for savvy companies all over the world.

LIFESTYLE / DAY IN THE LIFE OF

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Day in the life of...

Ray Hair, general manager of sales at Homeloans Ltd and Janelle Packman, and 12 brokers, we are trying our hand at shooting a variety of fire­arms on the Gold Coast range. I was quick to realise some of my team were more skilled in hitting their target than I, but enjoyed the opportunity to try something new, and it helped reduce some frustrations!

It was a great event and everyone walked away knowing each other a little better, as well as unscathed from the experience!

The day also helped us reinforce our focus on ‘Are you on target to make it to Hollywood?’ Hollywood is the destination for our 2015 Sales Retreat – an incentive for brokers settling $6m or more in 2014/15 with Homeloans.

1.00pm: Next stop the Sunshine Coast

Ray Hair

Based on an average Tuesday

with Tom and Janelle, with just a quick stop at a local roadhouse for a sandwich. It provided the opportunity to discuss local results and objectives for our second quarter, as well as assess our shooting prowess from the morning. The lunch break and the drive was also an opportunity to

listen to my voicemails, return calls, and respond to emails.

3.30pm: Check into (another) hotel, check emails and messages and prepare for the exec team teleconference.

4.30pm: The teleconference covers results, initiatives and updates from across the company. With the executive team spread across WA, Vic and NSW, it is a good opportunity to ensure everyone is across the business. Call goes longer than normal as we have several projects on the go.

7.30pm: Dinner with Tom and Janelle.

Wide-ranging discussion, including outline of broker workshop in the morning, and of course our abilities on the shooting range!

9.30pm: An hour’s preparation for an early start on drafting a new business proposal in the morning, and then it’s off to bed before another full day and a return to Melbourne.

6.30am: Wake up and confirm which hotel and state I’m in today. Oh yeah, QT Hotel on the Gold Coast.

7.30am: Breakfast meeting with the Homeloans branded brokers. We are devel­oping a strategy to better engage with branded brokers, and this is a good opportunity to get feedback from local brokers.

9.00am: Invariably, transit to the next meeting, and telephone calls.

9.30am: Broker event at the Gold Coast Pistol Club. Together with the Queensland business development managers, Tom Wells

JANUARY 2015 | 61

THE DATA / INTEREST RATES

INTEREST RATES: DOWN BUT NOT OUT

With a cooling of the property market in late 2014, the current period of interest rate stability looks likely to last far longer than expected.

MPA looks at when and why they might be set to rise again To crudely paraphrase Coles’ TV advert: interest rates are down and staying down. 2.5% has been the RBA’s favourite number since August 2013, and also happens to be the lowest cash rate in 54 years.

Indeed 2.5% is the key number of 2014. The low interest rate has helped fuel a property boom in Sydney and Melbourne, and until August helped property prices rise in other capitals too, and has acted as somewhat of a sword held over the head of the

property market, to be dropped in the case of a bubble.

The fact the interest rates have been held steady for such a long time is not a result of RBA goodwill towards investors, but a reflection of the struggling wider economy, and an easing of house price growth in many areas. However, that won’t stay the same forever, and with 2.5% being such an extremely low rate, a change is coming; the question is when. MPA has drawn on expert opinions to look at likely directions for the interest rate in 2015.

Cash rate

8%

7%

6%

Rates held low for six months

Rates have now been held low for 14 consecutive months

May 2009-Oct 2009

Sept 2013-Nov 2014

5%

4%

3%

2%

Cash rate

OCT 2004

62 | JANUARY 2015

OCT 2012

MPAMAGAZINE.COM.AU

VIEWS FROM THE INDUSTRY John Kolenda, managing director, 1300HomeLoan “Economic conditions would need to improve considerably before any rate increase. If the RBA’s next move is up we hope they don’t fire the starter’s gun too early because any premature increase is likely to have an adverse impact on consumer sentiment: “We have consistently warned about the potential detrimental impact of the RBA lifting its cash rate prematurely in response to factors such as house prices, which are in a two-speed market dominated by Sydney and Melbourne.

“Creating a more confident consumer climate required numerous rate decreases over the past few years and pulling the trigger too early could be disastrous.”

Sam White, chairman, Loan Market “Prices are a combination of supply and demand.

Rather than just attacking the demand side we should

be looking at policies which increase supply: The major concern we’d have by the introduction of macro prudential measures is that they could be brought in too heavy, and that may have unintended consequences to a sector of the economy which is growing and providing job growth.”

Harley Dale, chief economist, Housing Industry Association “That will still leave a large number of aspiring home buyers locked out of the new housing market. There is a lack of titled residential land, excessive planning delays and restrictions, and a plethora of taxes and charges which combine to make new housing one of the most heavily taxed sectors of the Australian economy... Low interest rates don’t fix those constraints, but a lack of policy action to address them robs the Australian economy of a further burst of growth in new housing supply.”

FORECASTS DEC 2014

MAY 2015

JUN 2015

AUG 2015

NOV 2015

JAN 2016

No change likely this month: according to Glenn Stevens “on present indications, the most prudent course is likely to be a period of stability in interest rates”

37% of the CAMA RBA shadow board, a group of economists brought together by the Australian National University, believed the rate would still be 2.5% by this point

Earliest realistic date: 26 economists surveyed by Bloomberg suggested rates would not rise until at least mid-2015

A likely month for rate hikes: at the RBA’s August meeting follows the release of June quarter inflation data. Of 33 financial experts asked to predict a rate increase by comparison site Finder, the average date chosen was for August

By the next Melbourne Cup the RBA is likely to raise interest rates, predict two-thirds of the CAMA board

Rates are likely to have risen by this point: only two of Finder’s 33 experts believed rates would remain unchanged in 2016, and only one predicted a further rate cut

Nov-2014

Dec-2014

Jan-2015

Feb-2015

Mar-2015

Apr-2015

May-2015

Jun-2015

Jul-2015

Aug-2015

Sep-2015

Oct-2015

Nov-2015

Dec-2015

Jan-2016

Feb-2016

JANUARY 2015 | 63

LIFESTYLE / FAVOURITES

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Favourite things

Cameron Finnie, BDM Western Australia, Bluestone Group

Favourite summer pastime: I like taking the boys to the beach for a swim or a fish.

Favourite holiday destination: I Iike to go camping in the Shark Bay area. It is still an unspoilt wilderness area which is quite remote.

Cameron Finnie

Favourite drink: Bourbon and Coke is my favourite, or a nice cold beer on a hot day.

Favourite winter pastime: Watching AFL and participating in sports with my kids. I was team runner for my son’s footy team.

Favourite food: I like Indian curries the most, but then I like most foods ... especially if someone else has cooked it!

64 | JANUARY 2015

Favourite book: I like reading sporting autobiographies.

I am currently reading about Ricky Ponting and have read about Lee Trevino, Brendan Fevola and Don Bradman in the past.

Favourite music: My favourite music, stemming from my university days, is heavy metal like Nirvana, Kiss, ACDC, Aerosmith and Queen.

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