MPAMAGAZINE.COM.AU ISSUE 15.8
SPEAKING UP We had Brokers on Banks – now it’s time for Banks on Brokers
STEPHEN MOORE CHOICE BOSS ON HITTING A MILESTONE
APRA & INVESTORS ANALYSING THE CONSEQUENCES OF THE ‘CRACKDOWN’
WHOLESALE LENDING TOP FUNDERS ON THE STATE OF THE SECTOR
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UPFRONT 04 News and tips
Intelligence and tips for the cuttingedge mortgage professional
08 Hot topic
What credit unions are doing to win over brokers FEATURES
DOORS WIDE OPEN
An in-depth case study of four very different Choice Home Loans brokerages
RAISING THE CURTAIN STEPHEN MOORE
14 Choice Home Loans’ CEO talks about building a national brand
63 The data
A graphic explanation of a cutting-edge sales technique
BUSINESS STRATEGY 54 Improve your influence
Four ways to become more influential Encouraging commercial collaboration
BANKS ON BROKERS
HEAD TO HEAD
What’s the damage? A look at APRA’s attack on investment lending
58 Operating system of the future
Following our Brokers on Banks survey, the five leading banks discuss their results
10 News analysis
From new regulations to whitelabel products, a look at the new landscape of wholesale lending
MORTGAGE INSIDERS 42 Daniel Carini
Moving from head office to the frontline of broking
60 Day in the life
A busy day with Bank of Melbourne’s Christa Malkin
64 Favourite things
Snag a 1.4m mackerel with CoreLogic RP Data’s Tim Lawless
MPAMAGAZINE.COM.AU NOW ONLINE: Sneak previews and magazine extracts in Business Strategy
THE STRATEGIC WAY TO WIN BUSINESS Why it pays to get staff more engaged
Top brokers and brokerages in Leading Mortgage Professionals Aggregator roundtables and MFAA convention coverage on MPA TV Results from our Brokers on Aggregators, Consumers on Brokers and Brokers on Banks surveys
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FEATURE / BROKER EDUCATION
Forever blowing bubbles
ubble is the most definitely the word of the month – possibly of the year. As the Sydney market achieves ever more improbable numbers – auction rates of 86.9% and prices rising 15% year-on year, according to CoreLogic RP Data’s Home Value Index – a common-sense approach would suggest prices are losing touch with wages, even if genuine causation factors – such as housing undersupply and domestic and foreign investors – mean we’re not technically in a bubble. The government’s response has been rather blasé, ruling out a number of changes and telling first home buyers to ‘get a good job’, so it’s been left to regulators to bring prices under control. By the time this magazine goes to print, the consequences of APRA’s tightening of investor lending will become apparent for bank and broker profits alike.
Brokers are the financial professionals who really have their ears close to the ground APRA want to cap investor lending at 10%, yet from 2014–15, many banks beat that figure by considerable margins. In this magazine, you can read MPA journalist Maya Breen’s analysis of the situation, with input from the major banks and top brokers. On an anecdotal level, however, I’ve already seen some of the unfortunate side effects. I was recently talking to a western Sydney broker who specialises in young investors. Surely this sector is exactly what APRA wants to crack down on: lowlevel investors risking it all in an area of very questionable attraction to buyers. However, this broker told me that his clients actually preferred to invest in regional NSW – areas that could really use the money – and APRA was unfairly targeting them. Evidently, brokers are the financial professionals who really have their ears close to the ground. Rather than just looking at bank balance books, perhaps APRA should work with brokers to make sure they’re really bursting bubbles, not wrecking businesses. Sam Richardson, editor, MPA
P.S. For the record, I’m an Arsenal fan, but this headline was too good to resist.
www.mpamagazine.com.au AUGUST 2O15 EDITORIAL Editor Sam Richardson Journalist Maya Breen Production Editors Clare Alexander Moira Daniels Contributors Iain Hopkins Jim Kouzes Barry Posner Michael Bunting Richard Maloney Janine Garner
ART & PRODUCTION Design Manager Daniel Williams Designer Loiza Caguiat
SALES & MARKETING National Sales Manager Rajan Khatak Account Manager Simon Kerslake Marketing and Communications Manager Lisa Narroway Traffic Coordinator Lou Gonzales
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Associate Publisher Rajan Khatak Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
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NEWS AND TIPS INSIGHT
WHAT BORROWERS THINK ABOUT RISING INTEREST RATES A study of more than 1,100 Australaians by major comparison website Finder.com. au shows that even with more than three years of rate cuts and the record low cash rate of 2%, borrowers are still concerned about a rise in interest rates. The last time there was a cash rate hike was in November 2010 – which means 419,566 first home buyers have never experienced what it’s like to pay higher repayments.
of borrowers are concerned about rising interest rates
Buyers are most concerned in:
more than last year
Melbourne Of 34 leading experts and economists on Finder’s panel, opinions vary on when the cash rate might rise: 68% said in 2016
24% said after 2016
A single expert picked October 2015
Source: MFAA/EY, “Observations on the value of mortgage broking,” May 2015
DID YOU KNOW?
HOME LOAN LITERACY
CASH RATE CONFUSION
The percentage of Australians confident in their home loan knowledge was:
42% of respondents didn’t know the current RBA cash rate just days after the last cut
Proportion of consumers with no understanding of the type of home loan: Packaged 58%
of 30- to 49-year-olds
KNOWLEDGE OF HOME LOAN TYPES
of 18- to 29-year-olds
37% of respondents didn’t know if the cash rate affected how much homeowners pay back on their mortgage
Basic variable-rate 41% Standard variable-rate
making for an average figure of only 41% of Australians who felt their home loan knowledge was up to scratch
10% thought it didn’t have any impact at all
28% Source: ME survey conducted via iView Research on more than 1,000 Australian adults
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HOW THE GOVERNMENT COULD SOLVE HOUSING AFFORDABILITY The Housing Industry Association [HIA] has said the real cause of Australia’s housing affordability problems lies in tax and supply. “We wouldn’t be having this conversation if Australia would get the disproportionately high level of taxation off new homes and improve the supply of new housing,” says HIA chief economist Harley Dale. Dale says the problems fuelling housing affordability stem from government – so the government can fix them. “The two biggest taxes on a new home are stamp duty and GST – the latter of which doesn’t apply to existing homes – and when combined with all the other taxes, levies and charges on a new home can be over 40% of the final price. New housing, which provides a necessity of life –shelter – is the second most heavily taxed major sector of the Australian economy.”
He adds that delays in planning and restrictions on land supply have equal impact, preventing new housing from reaching the market and falling behind on demand.
“New housing ... is the second most heavily taxed major sector of the Australian economy”
The HIA’s key points for governments to address include: • Appoint a dedicated Federal Minister for Housing • Phase out stamp duty on new homes to reduce costs and improve labour mobility • Reinvigorate the planning system for faster approvals • Support alternative funding models for residential infrastructure • Don’t increase the GST on new housing
NEW OBSTACLES FOR FIRST HOME INVESTORS First home buyer investors may have bigger household incomes than owner-occupier first home buyers, but they’re losing that edge with fewer grants and tighter lending. “First home buyers are among the lowest levels we’ve ever seen, currently at just over 15% of all home loans financed, and it has been steadily declining for over a year,” says Finder.com.au money expert Michelle Hutchison. “Government grants for first home buyers have declined, while property prices have grown considerably over the past few years. And now, with some lenders pulling back on their attractive rates to investors, first time buyer investors are the worst off.” Hutchinson says this is good news for first home buyer owner-occupiers if it cools of the heat in the property market, which is being fuelled by investors and refinancers.
Investors vs owner-occupiers Gen Y (ages 18–34)
Gen X (ages 35–54) Other
Household income over $200,000 17% 9% Would buy first property in the same city
of first home buyers are investors
79% 91% Likely to buy apartments, townhouses and villas 48% 36% Source: Finder.com.au/Pureprofile survey
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NEWS AND TIPS TERMINOLOGY
WHAT DO YOU CALL YOURSELF?
MEDIAN HOUSE PRICE IN AUSTRALIA NOW OVER $650,000
What you decide your professional title should be as a broker is ultimately a personal choice, but having an officially recognised reference is important, as it unites its members under a common banner across the industry. The industry’s two associations landed on the same page when the MFAA announced they had changed their standard term to describe members from ‘credit advisor’ to ‘finance broker’, matching the term the FBAA was using. MFAA CEO Siobhan Hayden met with 1,000 brokers as she travelled around the country at the start of her tenure, and as she asked each one about changing the term, she found there was a disassociation with the term ‘credit advisor’. “The heavy weight of the feedback was that we’re more than mortgages, we definitely don’t like the term ‘credit’, and we acknowledge that ‘broker’ is still a referencing point from consumers, lenders and the media,” Hayden says.
“Brokers can best adopt the term that they feel best represents them, but we wanted a term we thought better represents our customer”
Which do you identify with? Finance broker
Finance adviser Financial consultant “Interestingly, the FBAA have termed their customers ‘finance brokers’ for a longer period of time, so in knowing that, I thought that was also a good parallel.” Hayden notes the decision to change the term was made based not only on the feedback from brokers, but also working around what the media terms brokers as and what customers refer to them as. “Trying to mitigate all those challenges, ‘finance broker’ was the term that we settled on,” she says. “What we needed was a standard term in our association to reference our customers … brokers can adopt the term that they best feel represents them, but we wanted a term that we thought better represents our customer.” Although ‘finance broker’ is the standard term across both associations, how brokers represent themselves to their customers is a personal choice. Brokers go by all different titles, ranging from ‘finance broker’ or ‘mortgage planner’ to ‘finance strategist’ or ‘financial consultant’. The reasoning behind their title choices also varies; brokers point out that the title they choose to represent themselves with depends on their clients, the market and the services they provide, and also what the consumer is most likely to recognise. “The industry has grown up being known as finance brokers,” a Sydney broker told MPA. “’Credit adviser’ is like calling an esky a ‘food and beverage cooler.” “I believe that there is already a strong marketing connotation/traction in the wider community for ‘mortgage broker’, as people already understand the role of the occupation,” a NSW broker added.
The Real Estate Institute of Australia [REIA] reports that Australia’s housing market continued its growth in the first quarter of 2015
The weighted average capital city median price was up 2.4% for houses and 1.5% for other dwellings
The median house price over the eight capital cities is now at $658,608
Sydney has the highest median house price amongst the Australian capital cities at $929,842 “In 2015 we expect interest rates to stay low and growth in dwelling prices to continue; however, changes to rules around foreign investment in Australian residential real estate may change the dynamic on the market,” said REIA president Neville Sanders. Source: REIA Bendigo Bank/REIA Real Estate Market Facts 2015
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How are credit unions winning mortgage brokers’ support?
Senior manager of partnerships and alliances Gateway Credit Union
General manager of products and marketing CUA
National manager of third-party distribution Teachers Mutual Bank
“Gateway is always looking to leverage its core strengths as a credit union – competitive products and best-in-market customer service – so that brokers and their clients don’t have to compromise when it comes to choosing a lender for their home loan. Gateway’s three-time award-winning package home loan is really popular with brokers right now, and to support that, we’re constantly monitoring our lending processes to stay within SLAs. Gateway believes it’s unacceptable service if a broker recommends a Gateway home loan and then has to wait a week, or even longer, for an answer. Likewise, we’re continually looking to enhance the broker experience; our ‘talk to a real person’ policy means brokers can pick up the phone and talk to the underwriter assessing their deal at any time. The outcome of Gateway’s ‘great products, great service’ philosophy is helping [us] create more and more broker advocates and happy customers each week.”
There are three key areas where mortgage brokers are supported by CUA. The first is our experienced team of business development managers, who work closely with brokers to educate them on all the features of our products. It’s important the brokers understand all the features of our loans – not just the interest rate – as this is often what differentiates us from other lenders. Second, CUA’s competitive suite of home loan products … clearly resonates with brokers, as they can offer customers loan options to suit their needs. Because CUA is customer-owned, we can provide better value products and services back to customers. The CUA Fresh Start variablerate home loan has been particularly popular for broker-originated loans since its launch in July 2014. Finally, we’ve been improving and streamlining our processes and have established a dedicated broker support team to ensure loan applications coming to CUA from brokers are processed quickly, with every application being individually case managed through to the loan being funded.
There are a lot of reasons for brokers to love the mutual sector. We offer highly competitive rates, an excellent customer experience and a refreshing, community-minded approach. Brokers who recommend Teachers Mutual Bank can be assured that their customers will be looked after and will not be treated like a number. In fact, Roy Morgan recently named Teachers Mutual Bank as having the most ‘very satisfied customers’ or brand advocates across all Australian financial institutions. As a mutual, Teachers Mutual Bank’s profits go back into providing better value products for our members. A prime example of this is our 100% offset facility, which is available to all members on all our home loan products, fixed and variable. We are committed to keeping our standard variable rate lower than the big four banks, and since entering the broker channel, Teachers Mutual Bank have maintained a competitive position within the market, particularly in the fixed-rate category.
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APRA AND INVESTMENT LENDING
THE INDUSTRY RESPONDS MPA’s Maya Breen speaks to brokers, lenders and experts about what APRA’s tightening of investment lending could mean for you and your clients down the track
“PUT IT out! Put it out!” That’s one way you could summarise the Australian Prudential Regulation Authority’s urgent call to banks to cool down the overheated investor housing market in Sydney. What set off APRA’s alarm bell was the hike in investor loan growth, which surpassed the 10% limit that the banking regulator had asked financial institutions to remain below late last year.
Banks have since heeded APRA’s warning and tightened their respective policies for investors, including reducing discounts to new investor borrowers and lowering LVRs to 80%. But what does the imminent slowdown of investment lending growth mean for brokers, and what do the lenders have to say about it? MPA turned to the big four banks, as well as a non-major and non-bank, to hear their thoughts.
“I think the hard policy changes are about to come across the different lenders, and we won’t see the impact of that until we start seeing settlements in about three months’ time” Glenn Gibson, AMP Bank A quarterly study by APRA for March 2015 showed loans to investors had increased by 12.4% in the last 12 months, the sharpest rise in investor lending since September 2010. Historically low interest rates only fuelled more investors to head to market, prompting an intervention from the banking regulator to put the brakes on residential property investor lending and, in turn, slow property price gains to reduce risk in the financial system.
What the big four are saying Although changes to the lending environment have brought up speculation as to what the long-term repercussions may be, it’s only good news for brokers, according to Steve Kane, general manager of broker distri bution for NAB Broker. “It’s really the regulator saying that investor credit is growing, and they want to put restrictions on that, which are uniform
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GOING NATIONAL APRA has responded with a national solution to a local problem, says Greville Pabst, CEO of WBP Property Group. “Property is all about confidence, and it is a very fine balancing act. If you ‘kill the goose that laid the golden egg’, the economy may stall,” he says. “The Authority has applied a national policy that impacts all residential property markets, when the main city of concern is Sydney, and to a lesser extent, Melbourne. In all other Australian capital cities, property markets are contracting or remaining stable.” Pabst is concerned the issue won’t be under control until interest or unemployment rates rise, neither of which he expects is likely to happen soon.
across the industry,” Kane says. “This is not reflecting on brokers; it’s reflecting on the mortgage market and investors in particular. We believe that customers will use brokers because of the added complexity, so this will enhance the broker proposition because cus tomers seek advice, as we can tell with over half of the market seeking advice from broking … we think that’s a real positive for broking.”
“I am very concerned about Sydney; I think some of what’s happening is crazy, but we’ve got a national focus to manage as well – that just increases the complexity” Glenn Stevens, RBA On whether upping the ante for investors will impact the broker-bank relationship, Westpac told MPA they don’t expect it will change, but aim to keep transparent communications with brokers going. “We’ll continue to be open and transparent to ensure brokers not only understand the what, but we’ll give some context as to the reason why these things are happening,” says Tony MacRae, general manager for broker distribution. “We’ve always taken the approach that we’d treat both channels equally on this front.” It’s important to remember that the bottom line comes down to the customer, explains Kieran Evans, ANZ’s head of thirdparty relationship channels. “Ultimately, we are all striving for the same outcome – to deliver the customer the best home loan experience possible,” he says. “As the market continues to change and evolve, our focus is to keep our brokers informed as quickly as possible, and of course we’re focused on equipping our BDM team to
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APRA AND INVESTMENT LENDING
OUT OF THE FRYING PAN A study conducted by PIMCO, which compared Australian borrowers to those in other countries, has warned that stronger macro-prudential policies are needed, lest Australia experience a more severe downturn. “We believe macro-prudential measures should be strengthened to address financial stability risk and give the RBA maximum flexibility when setting policy for the aggregate economy,” the study said. It said lower mortgage rates and rising house price appreciation were behind the “herd mentality”, claiming Australian investors are too hasty in borrowing money for purchasing property, needing only two quarters of favourable changes in asset prices and mortgage rates to increase leverage.
help our brokers navigate any hurdles that come their way.” Although Commonwealth Bank is making sure to stay below the 10% cap, general manager of broker sales Sam Boer says he’s keeping an eye on the effect it’ll have on the industry overall. “I think there’s a lot of complexity,” he says, “and I’m a bit concerned about the potential impact it could have on the industry; for example, we saw what happened in 2006, when the NSW state government decided to introduce new taxes on investors, and it pretty much stalled that segment for a good few years. I don’t know how this is going to play out, so all we can do is ride it as it happens and adjust our business accordingly.”
The waiting game Non-major AMP Bank is, in turn, watching what the other lenders are doing, says Glenn Gibson, head of sales and marketing. “From a lender’s perspective, we’ve also got to understand what all the other lenders are doing because our growth could be impacted by the policies of another lender,” he explains. “The most important thing for us is simply a case of ‘wait and see’. Let’s see where everybody lands; let’s see what the market looks like and not be fearful of change – just look at it as another opportunity and understand where we can all grow our business from.” In response to APRA’s actions, AMP has tightened investor lending by changing one of their assessment criteria for assessing repayment from 100% of rental income back to the standard 80%, in line with the majority of other lenders. They’ve also brought back onboard negative gearing. “I think the hard policy changes are about to come across the different lenders, and we won’t see the impact of that until we start seeing settlements in about three months’ time,” Gibson told MPA in early June. “I think it’s going to be similar to pre-GFC. It’s always good to have a very strong blend of both owner-occupied and investor – you want to grow both investor growth and owneroccupied growth strongly for the growth of
your mortgage book. So you tweak your polices and products to match what your blend is going to be, and I think that’s simply where we will end up – our blend will be different.”
Turning to non-banks With APRA exercising its regulatory sway over the banks and other regulated Authorised Deposit-taking Institutions, where do nonbank lenders stand? Although La Trobe Financial sees the situation as a cyclical change only, they are ready for the major banks’ excess investment funding to potentially shift to non-banks. “Our raison d’etre, since we began 63 years ago, is to service those borrowers who are underserved by the banks,” says chief lending officer Randal Williams. “While La Trobe Financial is not changing its policies
“For a mortgage broker, I think this is a wonderful time because this is where you’re really adding value to your clients’ property aspirations” John Manciameli, Hunterwood Solutions with regard to investor borrowers, we have a very broad product range, and we will remain a very flexible option for investor borrowers.” The non-bank hasn’t noticed a significant increase in investment lending as of early June, but they expect investment lending to rise over the next six months as the APRA changes take effect.
Opportunity for brokers MPA spoke to a number of brokers special ising in the investor space about how the banks’ reined-in policies for investment loans
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“The move is a fine balancing act. ... The Authority has applied a national policy that impacts all residential property markets when the main city of concern is Sydney” Greville Pabst, WBP Property Group have impacted their brokerages. Top 100 Broker Peter Gwynne of Choice Home Loans Varsity Lakes thinks the time is ripe to consolidate, given that the industry is experiencing the most significant changes since the GFC. “I want to consolidate, wait for the changes to come in and then look for opportunities” before the window of oppor tunity closes, Gwynne explains. He suspects the changes are temporary. “I think greed will eventually take over like it always does, so there will be changes, but it seems to always float back to where it was before. If it slows it right down, it’s not going to be good for a lot of industries.” John Manciameli, principal of Sydney brokerage Hunterwood Solutions, says he’s noticed clients are exploring areas for invest ment beyond Sydney and recognises the opportunity the crackdown has presented to brokers. “I think this is the time where mortgage
brokers are really going to add value to clients when you think about what they’re experi encing. They are seeing differences in interest rates for starters; there are differences in LVRs; there are differences in discounts being offered to investment property acquisitions. So for a mortgage broker, I think this is a wonderful time because this is where you’re really adding value to your clients’ property aspirations.” But, he adds, it’s baffling as to why the crackdown has extended to the entire coun try. “It’s really just a Sydney story – if you speak to someone in Perth, Adelaide, Darwin, their prices are dropping. They’re paying for all the excesses of Sydney, but it’s not even a big boom like in 2000 to 2004. It’s mindboggling that they’re putting LVR restrictions and borrowing restrictions on the country. We should be looking to our cousins in New Zealand and saying, ‘Why don’t we put LVR restrictions on just Sydney’, like they’re doing in Auckland.”
COOLING DOWN AUCKLAND’S PROPERTY MARKET New Zealand’s largest city also is experiencing a housing boom – Auckland property prices are rising at a rate that has alarmed the Reserve Bank of New Zealand [RBNZ]. RBNZ governor Graeme Wheeler announced a tightening of LVR for property investors looking to borrow. Starting October 1, residential property investors in Auckland will need a 30% deposit instead of 20%; at the same time, a new property tax will take effect, designed to give first home buyers a chance to break into the property market. Auckland property prices jumped almost 17% in March compared to a year earlier (the rest of the country saw only a 3.2% increase), posing a risk to financial stability, reported the Australian Financial Review.
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HEAD TO HEAD
“From a consumer perspective, we are unashamedly focused on online presence”
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REACHING A MILESTONE
A $50bn book, $20m in IT investment, 30% growth – Choice Home Loans’ CEO is not afraid of throwing down the numbers as he shows MPA the franchise’s future-focused direction
MPA: You’ve been at Choice for five years – how do you think you’ve changed the brand’s proposition to consumers and brokers during that time? STEPHEN MOORE: Choice Home Loans is all about tailored advice and a fantastic customer experience. And the Choice value proposition really sums it up, in my view – that is, ‘better advice through better listening’. That applies both at a consumer level, by spending the time to truly understand customers’ needs so Choice Home Loans members can provide the right service, and that applies on the relationship with have with our members, too. By spending the time to understand their individual business needs, we’re in the position to provide tailored support specifically meet those needs. We reinvigorated Choice Home Loans two and a half years ago now, and that proposition has been there since that time. We’re just doing Choice Business Days right now around the country, and we’re using it as a bit of a reflection: What did we say and think was important two years ago, and where are we at today? It’s just absolutely validated the path we’re on, and the feedback from our members is that we’re exactly where we need
to be, so keep going. I’d also say that, given the current environment where the broker industry has far greater spotlight and scrutiny, to me that’s a positive. If we’re seen in a positive light, more consumers will see brokers. But what it does is focus on an absolute need for high-quality advice for customers, which just plays perfectly into the Choice Home Loans proposition as well.
MPA: What are you doing to highlight Choice Home Loans’ point of difference to consumers? SM: From a consumer perspective, we are unashamedly focused on online presence. That’s on the back of broker feedback that digital is an important channel, and their strong desire to engage with customers at a digital level, but also the reality of trends when it comes to the consumer. And that is, more consumers choose to educate themselves about financial matters online, shop around and understand what’s available in the market, but we also know consumers absolutely value advice, so what we do is drive more awareness online and then marry that up with high-quality advice that our brokers provide.
THE $50 BILLION MARK
Choice puts reaching a $50bn loan book down to:
growth in settlements between FY13 and FY14
And also growth in recruitment:
new members in 2013
new members in 2014
new members so far in 2015
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HEAD TO HEAD
STEPHEN MOORE’S CAREER TIMELINE
National product manager for insurer Prudential
Moves to manage insurance at ING
Joins wealth management firm MLC, rising to general manager of platform development
Appointed head of crossmarketing at NAB
Heads up the newly created NAB online lender UBank
Becomes CEO of Choice, which had previously been under the Challenger brand
MPA: CHL recently launched a new online comparison tool to help generate leads – what was the thinking behind this, and doesn’t it undermine your brokers’ traditional role? SM: First and foremost, Choice Home Loans is a future-focused business. We absolutely believe that brokers of the future will be digitally aware. The launch of Choice Com-
“When I talk about NAB’s ownership, I do so with absolute pride … we absolutely would not be able to provide the level of service today if we were still under private ownership” pare was to address the trend in the use of comparison sites online, plus demand from Choice members … to engage consumers online with a more educational flavour. What we know, and what our members know, is that a more informed client is a better client. When we launched Choice Compare, we did so with a little bit of hesitancy; in fact, we were probably more hesitant than our members were. Our members were really embracing it, because we’re absolutely making transparent and open the market and the products. The feedback to date has been fantastic, and rather than see online comparison as a threat, our members see it as a value-add to help educate clients, but married up with high-quality, face-to-face advice, so it’s been a real positive for us.
MPA: Is increasing the number of CHL brokers a part of your strategy for the next 12 months? SM: We’re absolutely in a growth phase. We have met the 30% increase in brokers in Choice Home Loans in the last 12 months, and we’re absolutely focused on continuing on that particular growth path. We’re focused on both new-to-market and existing brokers. New-to-market includes individuals from other unrelated industries,
and what we’re seeing is a number of exbankers in particular looking to move into Choice Home Loans. They’re looking to run their own business, but absolutely looking for high-quality support, practice management and to have a strong brand behind them. What’s caught us by surprise a little, but in a positive way, is the number of existing highperforming brokers moving into Choice
Home Loans. That’s counter-trend; you often see high-performing brokers outgrow a brand, but we’re seeing the opposite. The reason why is a recognition of the value of having more sophisticated practice management support, documenting processes, having a strong brand and having a significant online presence. That’s something all brokers value, not just high-performing brokers.
MPA: How do you reward and support your long-term and particularly successful CHL brokerages? SM: The uniqueness of Choice Home Loans is, in fact, the culture we have within the business. It is such a conducive, collegiate, sharing culture, something that is absolutely valued by brokers. The trend that we’re seeing is high-value brokers looking to move into Choice Home Loans, a polar opposite trend to what we see in more traditional franchise businesses. We simply provide more sophisticated support as needs change. For example, HR becomes more important, such as the best ways to recruit staff, how to embed performance management into a business, etc. We recognise that when groups get to a certain size, their learning styles change also. Last year for the first time, we ran a top group
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HEAD TO HEAD
In February 2015, Choice launched its in-house comparison website, where customers can compare products before being directed to a broker. The site is intended to bring in leads from new types of clients, Stephen Moore notes: “We need to equip brokers with the tools to start conversations with customers who are most comfortable researching and comparing products online.” Fittingly, the website informs visitors that “comparing your options is only the start … talk directly to a local broker who’ll understand your story and the loan you need”.
summit, a learning approach specifically designed for successful businesses that are already groups; we tailor support specifically for them. Back to existing members, we’re performing particularly well: satisfaction of 89%, net promoter score of 29 points. Choice members are highly engaged and so continue to stay with us.
MPA: Recommendation 40 of the Financial System Inquiry recommended brokers disclose their ownership – if implemented, what implications would this have for CHL brokers, given the link with NAB? SM: We absolutely welcome ownership disclosure. And the reason why is that we have a fundamental belief in transparency – where consumers are better informed, it’s a positive. It’s a little bit of a non-event, in that today many Choice members already disclose Choice’s ownership. The reason why is that what NAB brings to the table is strength, stability and security, and those are traits that customers absolutely value. How we position the business is having all of those great traits that come with institutional ownership by NAB, but it’s the tailored advice and personal service that you get with an individual broker – it’s the best of both worlds, if you like. When I talk about NAB’s ownership, I do so with absolute pride. And I say that because I know we absolutely would not be able to provide the level of service today if were still under private ownership. It’s with NAB’s backing that we’re able to provide that fantastic level of support that we do for our members. So it’s a real positive.
to date, and that’s absolutely going to increase as we progress. It’s unashamedly a comprehensive business platform, and our development agenda, first and foremost, is based on member
“The feedback we get on Podium today is that it is absolutely highly rated – arguably the best business platform in the broking industry today” feedback. The feedback we get on Podium today is that it is absolutely highly rated – arguably the best business platform in the broking industry today. We’re not stopping on that; the feedback we’ve had from members is a sign of broker appetite to grow their business. For example, two areas we’re currently focused on enhancing are both CRM and marketing capability – that’s a recognition that there’s strong demand from members to more actively grow their business, and a recognition that the underlying value in their business is their customer base. That’s a real area of focus for us going forward. In Choice Home Loans, we also expand beyond that, and we expand that to online presence as well. We have a website with members present … linked through social media. That’s a big part of the future for us.
MPA: Our Brokers on Aggregators survey showed that IT is highly important in attracting and keeping brokers – what can Choice Aggregation and Choice Home Loan members expect? SM: We’re invested well over $20 million in Podium, our IT platform. That’s $20 million
MPA: Where would you like Choice Home Loans to be 12 months from now?
SM: Our ambition is to continue with our strong growth path. We’re 30% growth in the last 12 months, and I’d like to see that growth trajectory continue in the next 12.
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6/07/2015 1:10:42 PM
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BANKS ON BROKERS
In our Brokers on Banks survey, you told us about individual banks’ performance – or lack thereof. We took your concerns to the five top-performing banks and collected their responses
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LAST MONTH we published what is perhaps the year’s most important survey – a summary of hundreds of brokers’ answers to more than 30 questions about banks. For 12 years, Brokers on Banks has attempted to measure banks’ offers and service, and every year the broker channel has grown, this survey has become more important. However, the survey is only one side of the equation. Your feedback matters most if the banks actually act on it and make clear changes to their policies, based on their performance. In this series of interviews, we’ve given them the chance to announce and explain changes, whilst challenging them to respond to issues that affect all banks, such as channel conflict and APRA’s tightening on investment lending. Bear in mind that these interviews took place before the original Brokers on Banks results had been published. To our knowledge, banks only had access to their own results and rankings, as we wanted them to talk about their own strengths and weaknesses, not disparage others. It is possible that the approaches of the top banks may inspire similar strategies in others, in which case you can likely expect more and better-educated BDMs and app-based technology. We’ll keep you fully informed on how the banks adapt their strategies in MPA and our sister title, Australian Broker.
BROKERS ON BANKS 2015: THE TOP FIVE
Next year’s survey could be very different; after a year of plummeting interest rates and rising commissions, regulator pressure on lenders could make satisfying brokers much harder. The dominance the majors have achieved in recent years is hugely impressive – they’ve led this survey since 2013 and processed 74.7% of AFG loans in April, after losing market share in 2015. However, the risk-weighting changes proposed by the Financial System Inquiry, the rise of white-label products and APRA’s pressure on banks (but not non-bank lenders) will threaten that dominance. So don’t be satisfied with half-promises, vague initiatives and self-congratulation: This is the banks’ big chance to put their message across to brokers, and to show they are taking you seriously. For more about APRA and investor lending, see our News Analysis on page 10.
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BANKS ON BROKERS
1 BANK OF THE YEAR
WESTPAC BANK A vast amount of effort, investment and listening to brokers has finally paid off with Westpac’s first ever Brokers on Banks win, general manager of broker distribution Tony MacRae tells MPA
MPA: This is Westpac’s first time as Bank of the Year; is this year’s result down to strategy over the last 12 months or a longer-term objective? TONY MACRAE: It’s been a journey for us, and it really has been about taking a holistic approach, an end-to-end approach with how we deal with brokers. We went out and asked brokers what made sense to them, what they needed, and listened to that, and then acted on delivering those [things]. We looked at things like they needed more support, so just in the last 12 months, we’ve increased our BDMs by 30%. They wanted better access to credit, so for our top-tier brokers, we’ve given them access to credit. We’ve reduced turnaround time to four hours for those brokers; across the board, we’ve reduced it to 24 hours, so they’ve got great certainty of being able to get answers. Brokers wanted access to better technology; we’ve upgraded our Broker Base, and we’ve introduced an iPad app over the last couple of years to give them better, more reliable access to information. We’ve given our BDMs much better access to information so they can service their brokers in real time. Every one of them is equipped with a tablet today, which links with all the systems they need, so they can answer brokers’ queries on the road, anytime, any where and be able to deliver that service. We’re transforming the way our BDMs interact with brokers, so we’re spending a lot of money investing in their education to ensure that they’re not just transactors; they can actually sit down with brokers and help build their business, so they’re really adding value to
the process. It’s a journey; there’s still more to go, but we’re really proud of the improvements we’ve made, and we’re really proud of the kind recognition that brokers have given us through the rankings in this survey.
that the broker has access to the whole of the Westpac network. And then it’s the back-end service we provide through our processing centre in Adelaide, whether that is our broker processing unit or our WESTPAC’S TOP credit team. RESULTS MPA: How are you going In the branch networks, to transform your we have what we call Bank of the Year 2015 (1st on overall reputation in the wider ‘broker squads’, which performance) broker community, are groups of specialised especially for those Rocket Repay won Product of the Year bankers who job is to deal brokers who used Westpac with brokers and broker 2015 years ago and may have customers; they’ll do the 1st for performance on had a bad experience? sign-up; they’ll do crosscommunications, training & TM: It’s about being more selling of products that development, online platform & transparent and more visi make sense for the cus services, credit policy (joint 1st), ble. That’s why we’ve put tomer, but they also act as overall service to brokers and product more BDMs on – 30% more a backup for our BDMs if diversification opportunities BDMs over the past 12 they’re not available. months. We want them out and about; we MPA: A 10th-place finish on interest rates want them engaging; we want them trans seems out of place in an otherwise parent about what we’re doing and explaining successful year. Do interest rates play less the value proposition to brokers. of a role in Westpac’s value proposition? TM: They’re clearly one component in the MPA: You came first on ‘overall service’; value proposition. I’ve said numerous times what does that label mean to you and your that we’ll never be the cheapest, and we’re team? TM: Overall service for us is the end-to-end not the interest-rate player. We believe our proposition. So it starts with the BDM proposition is a broader end-to-end propo relationship, and how the BDM interacts and sition: the broker squads, opening the communicates with the broker. It then links network and service turnaround times are into how we open up the whole Westpac absolutely critical to brokers. Having the network to brokers, so it’s not just a BDMcertainty as a broker that you’ll get an answer broker relationship. in a certain time is critical, and we spend a lot We’ve opened up our branch network; of time and effort to make sure we deliver we’ve opened up our premium and private that level of service. networks, commercial, small business, so Competing solely on rate is always a
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A WINNING ONLINE PLATFORM Westpac topped performance charts for their online platform, and won 2014’s Australian Mortgage Award for the Most Effective Internet Presence Introducer Net Gives brokers the real-time status of broker-submitted loans Broker Base Information on products and policies for brokers Westpac Live Consumer-facing online banking platform
dangerous proposition, and it always concerns me because industries that have competed solely on rates have left themselves open for innovators to come in and change that. The majority of brokers we deal with look beyond rates … I don’t advocate com peting solely on rate.
MPA: Are you concerned about alienating some brokers or consumers with your Platinum Broker programme? TM: First, we deliver excellent turnaround times for all of our brokers, and then we deliver a step up in turnaround times for our Platinum segment, so all of our customers get access to market-leading turnaround times. To me, segmentation makes sense because it looks after the people who look after you, in the most obvious manner. But if we just said, ‘That’s our segment, and we don’t look any further’, then we’re probably open to some criticism. So we do spend a fair time on our BDMs working with brokers to help them move through the segments; we’ve doubled
the number of brokers we’ve got in our segments over the last 12 months. And it’s not just a volume play; it’s the quality of business they deliver to us, the relationship we have with them, so it’s multifaceted.
takes get made; my view is we’ll always try to do whatever we can do to rectify that and make sure all stakeholders are looked after when a scenario occurs.
MPA: Will APRA’s recent restrictions on MPA: Most brokers in our survey described channel conflict as a ‘minor problem’. Is channel conflict inevitably going to happen, and how do you prevent it becoming a major problem? TM: We spend a lot of time ensuring brokers feel that the branch network is an extension of their operations, and in the same way, we say to our branches that the broker network is an extension of their sales force. One of the key things we did a number of years ago is we moved all the broker loans onto the branch balance sheet, which eliminated any real motivation to try to rewrite those loans. So I think the key to [reducing] channel conflict is really clear lines of communication between brokers and the other channels. Individuals are individuals, and sometimes innocent mis
investor lending change Westpac’s relationship with brokers over the next 12 months? TM: At a fundamental level, I don’t think it’ll change our relationship; our relationship is built on more than one dimension, and it really is about having a strong partnership with our brokers. What we’ve done and will continue to do is be very transparent in the way we commu nicate what we’re doing to react to regulatory change, market change, the factors that are influencing the market at the moment. We’ll continue to be open and transparent to ensure brokers not only understand the what, but we’ll give some context as to the reason why these things are happening. We’ve always taken the approach that we’d treat both channels equally on this front.
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BANKS ON BROKERS
Having come second for a second year running, CBA have reasons for confidence and frustration in equal measure, but Sam Boer, general manager of broker sales, plans on running a steady ship MPA: Brokers clearly highly rate CBA’s
that we have state-based credit teams who are offering; how are you going to reach the very eager and willing to work with brokers on number one spot? the phone … that’s a real differentiator for us. SAM BOER: I think the business and the And we’re still committed to that – we don’t strategy is pretty simple – it’s all about the envisage change in that; we’re not offshoring service we give our brokers, and we’re jobs. We’re committed to keeping our credit continuing to invest in that. The next 12 and processing in Australia and employing months will be exciting; we’ve got quite a few Australians. innovations coming in our MPA: Why do you think processing, around the CBA’S TOP RESULTS CBA was ranked seventh documentation side of the 2nd on overall performance on commission structures, business particularly, as 1st on product range and credit policy despite reintroducing well as new technologies to (joint 1st) first-year trail? help brokers track their SB: It’s quite interesting deals with CBA. So any 2nd on product diversification because if you look at how thing to help make brokers’ opportunities, online platform & jobs easier is where we’ll be services, and communications, training we’ve positioned from a pure ranking point of view, competing next year … a & development we’re actually right in the continuation of what we 4th on turnaround times and overall mix in terms of our did last year, making it service to brokers commission model. We’ve easier for brokers to deal developed a system that with CBA. 7th on BDM support, commission gives a measure of flexibility structure and interest rates MPA: CBA topped the now; we’ve got a couple of rankings on product range and credit different plans that brokers can opt for, and policy. Have you made any changes in we’re working with head groups. these areas over the past 12 months? So that is disappointing to see that brokers SB: I think our market-leading everyday offset view us that way. Last year I did go on record account that we launched last year has made a publicly [saying] that we’re no longer making huge difference to help brokers; that’s been a additional incentive payments to brokers. In long-standing gap in our overall proposition. previous years we ran Diamond incentive The fact that customers can have multiple programs, for example, and we’re no longer offset accounts under that product has been a doing that. It might have put the broker in a real winner for us. I think the introduction and compromising situation or potential conflict of development of the pricing tool has been a real interest. So I think some of the regulators have innovation, one that you can see the rest of the already made comments around that particular market following with that capability. And of issue – remuneration and disclosure. So we felt course, credit has been a long-standing strength we’d pull back on that, and maybe that’s been of ours – not just the policy, but also the fact reflected in that result.
“We have state-based credit teams who are very eager and willing to work with brokers on the phone … that’s a real differentiator for us” MPA: It doesn’t sound like you feel the need for any U-turns on these issues.
SB: No, I’m very comfortable with our current value proposition. Commission is one component, obviously, and I think we’re extremely competitive in where we’ve positioned.
MPA: Are you concerned about public perceptions of CBA’s Diamond Broker program? SB: Look at every business segment, and it’s customer-based and partner-based. Whether they do it above the line or below the line, they do it anyway. What we decided to do was formalise the program, and recognise and reward brokers who are loyal to CBA and give us good volume and quality. That makes good sense for business. I think often brokers look at our Diamond Broker proposition and ask what being a Diamond Broker means, and the answer is usually ‘fast service’. But in actual fact, what we find is that simple deals for all brokers tend to get turned around faster than complex
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transactions. And interestingly, our Diamond segment tend to give us more complex deals, because the real value proposition is they get access to the local credit team, and they get to work with the credit managers on making these complex deals. So I think there’s perhaps the opportunity for us to better promote and understand what the real value proposition is between being a Diamond Broker and being a non-Diamond broker. It’s not just about ‘you’ll get quick service’ or ‘your application will go to the front of the queue’; that’s not necessarily the way the system works. From my point of view, we need a proposition for all brokers who want to support CBA. For those brokers who give us more, we’ll give more back to them, and we do it in many ways, not just service-related.
MPA: Will APRA’s recent restrictions on investor lending change CBA’s relationship with brokers over the next 12 months? SB: I think with the pressure that APRA is putting on CBA and the industry around this that rightly they have a concern, because it’s been a hot market in Sydney and Melbourne. I think there’s a lot of complexity, and I’m a bit concerned about the potential impact it could have on the industry; for example, we saw what happened in 2006, when the NSW state government decided to introduce new taxes on investors, and it pretty much stalled that segment for a good few years. In fact, in some ways, that slowdown is probably why you’re seeing such strong demand in the NSW market over the last 12-18 months. Our team are working with APRA very closely to make sure that we don’t breach that 10% cap, and CBA is in pretty good shape. Already we’ve changed our pricing policy, and I’m pleased to report that already we’ve had a reduction in our investor mix, but we’ve had a corresponding increase in our owner-occupier mix, which is what APRA cares about. I don’t know how this is going to play out, so all we can do is ride it as it happens and adjust our business accordingly. It’s not going to make any difference in terms of CBA’s relation ship with the broker channel … it’s across all channels, whatever changes are made.
THE NEXT 12 MONTHS AT CBA Products Changes will form part of summer campaign Turnaround times Continuing ‘Simple and Easy’ 24-hour turnaround for simple transactions BDMs & credit support Promising extra investment and improving telephone platform Technology Piloting electronic contract exchange in August Training & development Diamond Broker development series in August
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BANKS ON BROKERS
Making the top three, according to head of third party Keiran Evans, is the outcome of strengthening and expanding ANZ’s team
MPA: You’ve jumped two places higher this year – what’s driving this improvement? KEIRAN EVANS: It’s encouraging to hear that our overall performance is continuing to improve. This validates our investments this year – more BDMs who are receiving even more training, more premium brokers, outstanding turnaround times, six-day assessment, eDocs, ANZ Toolkit – to strengthen our team and make banking easier. It’s also a testament to our brokers, who ensure our customers remain at the centre of every decision we make. This focus has driven the decisions in the last year to expand our sales force and significantly improve our turnaround times on credit decisions. We work to ensure our brokers’ needs are met, and I know that by offering a three-way relationship whereby all parties are under stood, we’ll continue to improve our relation ship with brokers and with customers. To me, it’s all about listening; if we under stand what the market is telling us, we can respond with service solutions that are of value to our brokers and customers.
MPA: ANZ was ranked first for turnaround times. Is this simply a result of investment in processing – such as processing on Saturdays? KE: Our improvement in turnaround times is a result of further investment in the processing team, six-day assessment, and additional training and support for our BDMs. We believe there is a lot more to the customer experience than simply approving and settling a loan. We’ve continued to listen to broker feedback, which is why we have made a significant investment by increasing
known for its reliability and outstanding and strengthening our business. The chal overall end-to-end home loan experience for lenge for us is to continue to keep working both the customer and broker. We believe hard with brokers to ensure the home loan these features are key components for experience is a smooth and easy process. Our selecting ANZ as lender of choice, alongside decision to change to six-day assessment has our product offering, including our awardallowed many of our customers to get prewinning Breakfree package. approval on a Saturday morning and head out for a day of auctions, rather than waiting MPA: How do brokers till Monday. This type of fit into your ‘Banking on change makes a difference ANZ’S TOP RESULTS Australia’ campaign? to the customer and broker 3rd on overall performance KE: Brokers are an experience, making it even integral part of this strat more responsive to the 1st on turnaround times egy, contributing close to marketplace and ensuring 3rd on BDM support, product range, half of the new home loans that needs are met. overall service to brokers, credit policy we write. Brokers directly This also includes the and product diversification opportunities benefit from any improve 35% increase in our sales ments we make, such as force, which has allowed making it easier for customers to make our BDMs to work with a smaller number of changes to their existing loan … via a simple, brokers, fostering a stronger relationship and quick online form. Brokers gain efficiency, ultimately building better business. Stream and with a lot of brokers being ANZ lining processes, combined with investment customers, they also directly benefit from our in our BDM team, have enabled ANZ to services. Our overall commitment to reach market-leading turnaround times. enhancing service in the broker space has led While we mark this as an achievement we to the acquisition and retention of even more strive to uphold, we understand that as the customers, and by listening to the challenges market continues to rapidly evolve, sales and opportunities our brokers experience volumes increase, and it is imperative that we and acting on them, we now have even more continue to build upon our strengths and satisfied customers. look for further opportunities.
MPA: It appears brokers don’t believe
MPA: Most brokers described channel
ANZ’s interest rates are competitive, ranking them 13th. Does this undermine your overall value proposition? KE: Interest rates are one of many factors that influence a customer’s decision to choose a particular lender. We believe our rates are competitive; however, it’s important to also highlight that ANZ is
conflict as a ‘minor problem’. Is channel conflict inevitably going to happen, and how do you prevent it becoming a major problem? KE: We believe our branch-broker-customer relationship to be an absolute strength of our value proposition, with all parties working together to meet and exceed customer needs.
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We encourage all of our brokers to forge working relationships with their nearby branches. This relationship, when devel oped, benefits all parties with the branch, ultimately augmenting the ANZ customer experience in tandem with the broker.
MPA: Will APRA’s recent restrictions on investor lending change ANZ’s relationship with brokers over the next 12 months? KE: ANZ shares APRA’s view that invest ment lending for residential property needs to be closely managed across the industry. As the market continues to change and evolve, our focus is to keep our brokers informed as quickly as possible, and of course we’re focused on equipping our BDM team to help our brokers navigate any hurdles that come their way. Ultimately, we are all striving for the same outcome – to deliver the customer the best home loan experience possible. In short, we are going to continue to work closely with our brokers to ensure that their needs are being heard and that we continue to deliver outcomes that exceed their expectations.
MPA: Where are you concentrating investment in the coming 12 months?
KE: We are applying greater focus on training and development for our team, and ensuring our BDMs leverage all of ANZ’s resources for brokers and their customers – from branch to commercial to GoMoney. We are encouraging our BDMs to complete a Diploma of Finance and Mort gage Broking Management recognised by the MFAA, and we provide ongoing support through relationship coaching and product knowledge training. Alongside broker support, our focus is also on technological advancements and ensuring that our processes are streamlined so that we have a memorable customer experience for brokers and customers. We have some major projects underway and hope to reveal these impressive improve ments in the coming months.
THE MOVE TO SATURDAY PROCESSING Part of ANZ’s success with turnaround times can be attributed to the December 2014 move to extend the hours of their assessment team to 8am–8pm, Monday– Saturday. “Everything we do is driven by customer demand, and Saturday is the biggest auction day,” Keiran Evans explains. “What this means is we will have more customers ready to bid at auction with the full confidence of having their facility approved.”
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BANKS ON BROKERS
Head of mortgage sales Doug Lee tells MPA how the only non-major in our top five has maintained its spot and topped a number of performance categories
MPA: This is the Macquarie’s third year
into key broker and aggregator relationships to broaden our footprint. Core to our business in the top four in this survey. Is it time for is continuing to invest in, and grow, our backbrokers to treat Macquarie as just another office support to ensure consistency in service major bank? DOUG LEE: Key to our ongoing success delivery. We have extended our offering to a has been our continued focus on working broader financial services suite, which collaboratively with brokers and putting includes access to business banking and them and their clients at the centre of equipment leasing products. This extended everything we do. With no branch network, financial services offering has been wellthe vast majority of our received in the market. work is in the third-party MACQUARIE’S TOP MPA: Macquarie’s distribution space, so it’s RESULTS BDMs and service hugely important that we provide 4th on overall performance impressed brokers – solutions and support that what makes your BDMs really make a difference to 1st on BDM support different? brokers and their clients. 1st on commission structure DL: The BDM support This year’s ranking ranking reflects the reflects our continued 2nd on overall service to brokers industry’s recognition of investment in our service 3rd on communications, training & our BDM team, which offering, as well as the development continues to be enhanced depth of our relationships through the strategic with our key strategic recruitment of recognised industry-leading groups and their brokers. Through a pro BDMs. Our BDMs pride themselves on their active series of strategy sessions and commitment to their broker relationships, roundtables, we regularly engage with the and our relationship model is based on what leadership teams of our key groups, as well as we call a narrow and deep approach, whereby their state heads, to share views and thoughts we ensure our BDMs have a finite number of relevant to our industry, emerging market broker relationships that they can effectively trends, key challenges and changes to the service and be available for. regulatory landscape. Through proactive action by the business We achieve this in conjunction with our and in conjunction with feedback received broker advisory boards around the country through our broker advisory boards, we made and through adoption of their feedback and subtle changes to our processes in order to ideas, which assists us to shape our business deliver a more consistent service experience to be relevant and significant in a broker’s through all critical stages of the lending process. consideration to meet their clients’ needs. On the broker front, our focus has been on MPA: What role do commission capitalising our investment in our marketstructures play as part of Macquarie’s leading BDM team. We have leveraged proposition to brokers? strategically and customer-focused BDMs
“With no branch network, the vast majority of our work is in the third-party distribution space, so it’s important that we provide solutions and support that really make a difference” DL: In what has been a very competitive environment, our commission structures have not changed; feedback from our brokers has confirmed an appreciation of Macquarie’s simple, consistent and transparent commis sion structure. MPA: After coming first in 2014, Macquarie’s product range ranked just seventh this year. Are you worried by this change? DL: With a strategic desire to maintain a simple-to-understand and easy-to-sell prod uct suite, we have consciously not made any major changes in this area. Our focus has been on what we’re going to deliver in the near term, including investment to support growth, digital capabilities and modernising our technology platform. We’re currently in the process of delivering a Core Banking platform, which will deliver a number of new
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products, including a transactional banking account, while simplifying, streamlining and centralising our product offering and transactional capabilities. It will enable us to offer customers improved functionality and an enhanced client and broker expe rience across all loan products and services.
MPA: Will APRA’s recent restrictions on investor lending change Macquarie’s relationship with brokers over the next 12 months? DL: Macquarie is committed to working with regulators and its distribution partners to help ensure the residential home lending market continues to operate in a responsible and sustainable way. We are supportive of APRA’s approach to ensure there is sustainable and prudent lending in the investor market. We’ve already made some policy changes for investor loans and are continuing to review and make further changes.
MPA: Most brokers described channel conflict as a ‘minor problem’. Is channel conflict inevitably going to happen, and how do you prevent it becoming a major problem? DL: Our model is different to others in that we don’t have a substantial branch network; therefore, intermediaries are cornerstone to Macquarie’s retail strategy. Strategic dis tribution partnerships with recognised, trusted and well-established national retail brands and intermediaries are significant and relevant to our business.
MPA: Where are you concentrating investment in the coming 12 months?
DL: A key focus for the year ahead is the Core Banking transformation program currently underway, which will enhance the broker’s interaction and the way clients choose to work with us. The platform will simplify, streamline and centralise our product offering and enhance the client experience across all products and services. It will enhance our model of supporting our strategic clients and white-label partners.
MACQUARIE AND THE SMSF SPACE In 2014 Macquarie was heavily involved in SMSF lending, an area of focus by the recent Financial System Inquiry. Recommendation 8 of the FSI advised banning the loophole allowing residential investment using SMSFs. We asked Doug Lee how Macquarie is reacting to the recommendation. “Macquarie recognises that SMSF lending is a specialist form and the key role that the regulators play in the industry’s landscape,” he says. “We have established prudent and responsible lending guidelines specific to the SMSF segment.” At the time of writing, the FSI’s recommendations have yet to be turned into policy, but SMSF lending already has been affected by the general tightening on investor lending.
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BANKS ON BROKERS
After winning Brokers on Banks in 2014, NAB Broker has slid down the rankings. After a quiet year, general manager Steve Kane is getting back on the warpath MPA: NAB Broker’s gone from first to fifth; do you think your win last year set high expectations that couldn’t be met? STEVE KANE: We obviously would like to be rated by the brokers who use us as a highly professional organisation, which they have, and in fact, I think we’ll probably find across the various categories we’ve actually improved, but obviously it’s a very competitive market. Clearly we’d like to be number one; we recognise this is an opportunity for us to reassess [following] some of the commentary and feedback we’re going to get from this survey. We’re really going to go and test that with our broker partners so we really understand what we’re going to do. We’ve been growing very strongly and continually above system growth, and we’re growing support in the broker channel.
MPA: Perhaps it’s a result of not being as vocal as the other banks about making improvements? SK: There’s a possibility that that’s correct; we rely on what we do rather than what we say so much, and we focus very much on delivering quality, consistent service. We’re focused on the lifetime of the loan and the customer, through our ramped trail. We’re focused on making sure whatever we do, every decision adds value to the broker channel. We will only live and die by what we do.
MPA: How do you think the rebranding of Homeside to NAB Broker affected your results this year? SK: If anything, the rebranding … was a pos itive result, and in fact, we’ve tracked the application flows, settlement flows and con
nectivity with the broker since rebranding. Our own research around net promoter scores … is all very positive, because that enables the end customer of the broker to understand who they’re dealing with: an iconic brand in the marketplace, what is stands for and the security around that brand.
conflict inevitably going to happen, and how do you prevent it becoming a major problem? SK: There are two issues around channel conflict. Generally speaking, it’s a one-off incident, so it’s someone in one of the other channels of the bank not really understanding the value of the relation NAB BROKER’S MPA: NAB Broker ship we have with our TOP RESULTS scored highly on brokers. commission structure So what we do is have 5th on overall performance and turnaround times. continual communication Are there any other with all our channels to 2nd on commission structure areas of strength that ensure, first, that they 3rd on turnaround times perhaps this survey understand the broker didn’t recognise? channel and why cus 3rd on online platform & service SK: I think consistency of tomers use brokers and service. The priority for most brokers is the the importance of brokers to our business, understanding that if they lodge a transaction, and second, that they put customers at the that transaction is going to be treated in a centre of everything. A lot of channel conflict certain way, within a certain timeframe, is caused by customers going back and forth because of their commitment to their cus between channels, so we ensure that if the tomer. So it’s more about consistency in turn customer was introduced by a broker, that around times; it’s about understanding what takes primacy in the relationship. you’re going to get, and I think we’ve done We’re embarking on some things in the very well in that. new year that’ll drive better relationships for Mortgage services are under [general man brokers and their customers with the retail ager of third-party services] David Berry; I channel. It’s really around ensuring that we liaise with David and his team weekly, but in put the customer at the centre of everything, fact, I get a report daily showing me, right and if the customer is introduced by a broker, from applications to settlements, where our that they can feel confident that they’ll get service levels are at, so we know exactly where the correct service at a NAB retail store, and we are at every stage in the chain. We also the relationship with that store manager and forecast monthly, and we have a very signi the broker is built over time. ficant relationship with them to ensure we MPA: Will APRA’s recent restrictions on operate as an end-to-end business. investor lending change NAB Broker’s MPA: Most brokers described channel relationship with brokers over the next 12 conflict as a ‘minor problem’. Is channel months?
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SK: Not at all; it’s absolutely channel agnostic. This is in relation to the overall market; it’s not specifically for brokerintroduced or retail customers; it’s really the regulator saying that investor credit is growing, and they want to put restrictions on that, which are uniform across the industry. This is not reflecting on brokers; it’s reflecting on the mortgage market and investors in particular, so we don’t see it as a broker-specific. We believe that customers will use brokers because of the added complexity, so this will enhance the broker proposition because customers seek advice, as we can tell with over half of the market seeking advice from broking … we think that’s a real positive for broking. But also there’s been a lot of investor lending; property markets change over time, and as that investor lending cools, then brokers should be looking at other avenues of revenue. Owneroccupied lending will become very compet itive, if it wasn’t already, and I think there are other things like small business and equipment finance that brokers will enter into over time. MPA: Where are you concentrating investment in the coming 12 months?
SK: A couple of things: We’ll be launching … a small business product – sub-$1m – that is residentially secured. Anecdotally, and from what we see, around 22–25% of brokerintroduced customers are self-employed small business operators; this will be another string to their bow. We’ll offer equipment finance capability later on in this calendar year and early next year as well. We’re reorganising our structure in NAB Broker into an account-management style structure, so a broker will know from the moment a deal is lodged, or even before a deal is lodged, right through to settlement, who is accountable. They’ll have access to these people, so it will be run as one business, one account relationship, and that will enable brokers to have complete certainty over who’s handling their customers and their transactions.
FROM HOMESIDE TO NAB BROKER In June 2014, NAB announced that it was dropping its Homeside brand of broker-exclusive products, and rebranding the products NAB Homeplus and NAB Peak Performance. The move was intended to reduce consumer confusion; Steve Kane commented at the time that “this clarifies that position. The customer knows they’re dealing with NAB.” There does remain a conscious distinction between NAB and NAB Broker, which, according to Kane, exists because of NAB Broker’s more extensive product range, although the distinction was a cause of complaint for several survey respondents.
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BANKS ON BROKERS
BANKS ON BROKERS IN DETAIL CHANNEL CONFLICT
Do you believe channel conflict exists? 48%
Not aNot problem a problem
OUR BROKERS on Banks survey showed that channel conflict has not gone away, although is perhaps not the biggest challenge brokers face. Brokers want the issue taken seriously, and several banks are introducing changes, albeit not quite the changes brokers might have imagined. Rather than enforcing separation, the preferred option for some brokers, many banks are pushing closer broker-branch cooperation. Westpac, for instance, have put broker loans onto the branch balance sheet and have branchbased ‘broker squads’ for cross-selling. NAB Broker’s Steve Kane also has hinted at changes to bring branches and brokers closer together in AMA ad for MPA15.08.pdf 2 9/06/2015 10:35:57 AM the coming year, and has already given brokers a clear point of contact for disputes, whilst ANZ’s Keiran Evans believes the “branchbroker-customer relationship” is already at the centre of their value proposition.
BDM AND CREDIT TEAM INVESTMENT Poor quality BDMs were a concern of respondents to our survey, but all the top banks claim they are investing in their BDM network ANZ Six-day processing 35% increase in sales force Encouraging BDMs to complete a broking diploma CBA Committing to keeping credit teams in Australia Investment in telephone platform
Macquarie Developing ‘core banking platform’ to streamline product offerings NAB Adopting an account management style structure for deals in progress
Westpac 30% increase in BDMs All BDMs equipped with tablet computers Partnership with Deakin University to provide BDMs professional education
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AMA GOES TO... AMA 6/07/2015 10:06:20 AM
WHAT BROKERS SAID ABOUT SEGMENTATION
WHAT ABOUT THE OTHER BANKS?
Are you in favour of segmentation strategies? Sam Boer, CBA “Our Diamond segment tend to give us more complex deals, because the real value proposition is they get access to the local credit team” Steve Kane, NAB “There’s nothing officially, but the stronger the relationship, the stronger the relationship; it’s built on a mutual relationship” Tony MacRae, Westpac “To me, segmentation makes sense because it looks after the people who look after you, in the most obvious manner” ANZ and Macquarie were not asked about segmentation strategies, as they’ve never segmented for residential mortgage brokers. NAB Broker dismantled its Star Rating program back in 2012.
As in 2014, Banks on Brokers only covers the banks that came in the top five places for overall performance – a combination of all performance scores. Bankwest, Suncorp, AMP, ME Bank and ING Direct (in no particular order) filled positions 5–10, and Bankwest and ME Bank topped the rankings for performance on interest rates, whilst ING Direct came third in that category. However, with the exception of interest rates, the top three positions for all other performance categories were filled by the five banks interviewed in this feature, hence our decision to focus on them. We did talk to a number of non-majors at our recent roundtable (MPA 15.04), and separately interviewed ING Direct in MPA 15.05, and here’s what they told us about their recent improvements:
AMP • Claim to have spent more on processing in the last 18 months than in the preceding 10 years Bankwest • Desk-based support officer for every state with a BDM • Simplified pre-settlement mailpacks ING Direct • Offering new rewards scheme for mortgage and current account customers • Launched low-cost superannuation service ME Bank • Spending $70m on automating processes • 50 more credit officers appointed Suncorp • Back at the two-day processing mark • Real-time updates for brokers on turnaround performance
BOOK YOUR TABLE NOW FRIDAY 30TH OCTOBER 2015 THE STAR, SYDNEY www.australianmortgageawards.com.au
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CHOICE HOME LOANS
DOORS WIDE OPEN Four leading Choice Home Loans brokers told MPA all about their businesses, from clients to leads to support staff
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A MESSAGE FROM OUR SPONSOR
AS A MAGAZINE for top brokers, we’re always striving to highlight as many of those top brokers as possible. That’s not always so easy; as you probably know too well, finding 30 minutes free in a day of back-to-back client meetings is easier said than done. And of course, you don’t get to the top without a relentless focus on the business. That’s why we teamed up with Choice Home Loans to do a series of brokerage case studies, aiming to really get inside these brokerages and investigate even the smallest of details – who takes calls, how they schedule follow-ups, and the roles and responsibilities of support staff. We’re hugely grateful to Choice Home Loans and those brokers who opened up their businesses to make this article possible. You’ll also find these case studies a little different from our usual profiles. With the exception of our ‘Broker Profile’ section, most of the brokers you usually see in MPA are top performers, as measured by total loan volumes, whether in our Top 100 or various Top 10 special reports. Unfortunately, relying on these numbers means that brokers in regional areas or underperforming markets tend to be overlooked. With four very different brokers from three different states (only one of which is in Sydney), we hope these case studies go some way to restoring the balance. Beyond helping us identify brokers to approach, Choice had no involvement in this feature. The insights into the franchise comes from the brokers themselves – perhaps the most interesting discovery was the way the more senior brokers utilised the business coaching resources available to them. For the other side of the debate, you might want to see our Top 10 Independent Brokerages special report, which is published each spring.
Choice Home Loans offers tailored support to brokers based on their individual goals and needs. Our members come from all walks of life with all sorts of business approaches, so we are pleased that this issue of MPA is profiling four brokers who each do things differently. Whether it’s helping families in the community to buy their first home, advising experienced property investors on how to make the most of their portfolio or working hard for those who are considering refinancing, these brokers are the best in their area at what they do, and they take a lot of pride in their work. That’s why it’s important they have a strong brand behind them, delivering the benefits of a national advertising presence, dedicated lead generation through a centralised online portal and specialist practice development advice to help them take their business where they want to go. It’s this full-service approach that has helped to drive 30% volume growth for Choice Home Loans over the past year. But as you’ll see in this article, our brokers are the real stars of the show. I hope you enjoy reading about some of our most impressive broker businesses and what sets them apart from the crowd. Stephen Moore CEO, Choice Home Loans
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CHOICE HOME LOANS
PEITA DAVIES Choice Home Loans Blue Mountains Having built a multiple-award-winning brokerage, Peita Davies has big plans to expand even further
CHOICE HOME LOANS Blue Mountains are one of the most decorated franchise brokerages in Australia. They’ve won a stack of Australian Mortgage Awards, including Best Customer Service for three consecutive years, and are the current AMA Franchise Brokerage of the Year. And they’ve done it despite being a mum-and-dads brokerage, in a regional area, miles from a town centre. Mostly based in the local area, Peita Davies’ clients are made up owner-occupiers and refinancers in equal measure, with a smaller proportion of investors, although these have been growing. Business tends to grow from the existing loan book, Davies explains, although the brokerage’s prominent location provides 5–10% of clients. For Davies, community involvement is less about reaching out than about maintaining an established relationship. “The clients in the Blue Mountains are different than city folk; we expect them to support our business in terms of coming through the door, so in turn, we like to be in our community and supporting the
community,” she says. Staff members take part in a bewildering range of activities, from the Springwood Fair Day, where they paint faces and parade the Davies family’s pet turtles, to charity fun runs and specialised events for local businesses.
CHL BLUE MOUNTAINS’ TROPHY CABINET 2014 AMA Franchise Brokerage of the Year 2013, 2012, 2011 AMA Best Customer Service from an Individual Office Regional Businesswoman of the Year, Women with Attitude Awards 2014
relates to the staff and personal things gets far more momentum.” Davies has been the sole broker, but there are two new-to-industry brokers in the office, alongside five support staff. Their process is fairly straight forward, with one exception: certain administration and compliance work is outsourced. This frees up Davies and her team, whilst being far more efficient. The offshoring was just one part of a constant process of self-improvement. Davies has extensively used the business coaches provided by Choice to increase the brokerage’s annual settlements (to a total loan book of $250 million) and to train new staff. The brokerage is most definitely in ‘growth mode’, Davies says. Next on the agenda is a opening a new office in Penrith, which could appear as early as mid-2015. The brokerage is beginning to outgrow the Blue Mountains, Davies explains: “There is not potential economic growth in the
“The clients in the Blue Mountains are different than city folk; we expect them to support our business in terms of coming through the door, so in turn, we like to be in our community and supporting the community” This approach also works on social media, Davies says. “We’ve looked at Facebook over the last six months – how we get more activity and engage with social media ... and unfortunately it comes down to us. Where we’ve tried to provide valuable information, it just kind of sits there, but when we post pictures of us, it gets legs … anything that
Blue Mountains; it’s a heritage-listed area and will always remain that, so we have no land development.” Davies also wants to make the brokerage less reliant on her personal brand. She’s working on building her staff ’s confidence and making customers comfortable dealing with them so that she can step back in a few years.
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CHOICE HOME LOANS
ADRIAN BRYERS Choice Home Loans Parramatta New broker Adrian Bryers takes a forward-looking approach to lead generation, whilst keeping face-toface interaction at the centre of his broking
AT JUST 33 years old, Adrian Bryers is very much a modern broker, and Choice Home Loans Parramatta is very much a modern brokerage. Located on the commuter highway of Church St, they’re ideally positioned to pull in their target clients: young professionals looking to build investment portfolios. Getting in touch with this group of clients requires a very different approach to the traditional broker value proposition. First, social media at Bryers’ brokerage is a core area of strategy, not just a marketing add-on. With only two support staff, Bryers made the decision to outsource social media management; a virtual PA based in Penrith meets monthly with him to schedule updates, some of which Bryers writes himself, some of which are provided by referral partners and all of which are approved by Bryers prior to publishing. He also is commissioning a series of short videos for social media, which, like all content he puts out, has to be “short, snappy and relevant”.
Part of the reason for Bryers’ emphasis on social media use is the current limitations of Choice’s website. “Presently the website can’t be changed – it isn’t live-feeding; it’s fairly static,” he says. “In the last few months, we’ve had Twitter, Facebook and LinkedIn in particular keeping content fresh.”
BRYERS’ AMBITIONS FOR CHOICE HOME LOANS PARRAMATTA In FY 2016–17, Bryers wants to hit: $100 million total volume 20–25% revenue from non-mortgage services 3 brokers operating in the brokerage Maximising face-to-face interaction is built into the brokerage’s loan process. Bryers deals with all incoming inquiries – he believes it’s important to have a meaningful initial conversation to examine how he can help; even if he can’t take the loan on, he always tries to help in some way. A six-page interactive PDF is then emailed to the client to gather essential information and also flag up any potential problems or other involved third parties, such as accountants or financial planners. Bryers’ strategy involves doing much more than selling the loan – he partners with accountants and financial professionals to provide advice. He sticks with the old MFAA label of ‘credit adviser’, and is working to diversify the brokerage’s income and possibly increase fee-for-service work “so we can start covering ourselves if commissions start getting reduced for whatever reason – I want to make sure we’re a sustainable business”. For Bryers, Choice have played a crucial role, both during his own early days as a broker, and in training and guiding the two new brokers he’s on-boarding in the office. He’s also
“As much as the digital space is relevant, you can’t get away from the face-to-face stuff. We’re not in the business of writing loans; we’re in the business of providing advice” Don’t be fooled, however: This is no purely digital brokerage. Bryers places an enormous emphasis on face-to-face contact. “As much as the digital space is relevant, you can’t get away from the face-to-face stuff,” he says. “We’re not in the business of writing loans; we’re in the business of providing advice … we want to spend some one-one time.”
a proponent of the Podium and Salesforce CRM services. Bryers is set on growth, and on creating a thoroughly modern brokerage culture. “The money will come,” he says, “because we’re creating an ethos and a culture that is so clientcentric, and this is resonating with a number of clients in my age bracket.”
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PETER GWYNNE Choice Home Loans Varsity Lakes This Top 100 broker, investment specialist and Ironman only recently moved to Choice Home Loans, and he tells us why BUILDING AN independent brokerage is hard work; building a reputation as a leading broker even harder. Peter Gwynne has achieved both: He’s been a regular in our Top 100 since 2012, and his original brokerage, Financing Property, has estab lished an extensive network of property investor clients. He’s also a committed triathlete who draws on his discipline to push him forward in the business. What you might not have noticed is that in 2014, Gwynne joined Choice Home Loans. Whilst his storefront is daubed in green, Gwynne doesn’t seem to have made many changes to what has proved a profitable niche. But underneath the surface, he says, being part of a franchise network is an important step towards his strategic goals. Getting extra leads wasn’t one of these goals – in the current market, brokers like Gwynne don’t need them. “If you’ve got a good referrer, you wouldn’t need to go and market [yourself],” he says. “I don’t really market; I just keep in contact with my current database to let them know we’re here.” At the end of the loan process, he does ask clients if they know anyone in need of a broker’s services, and uses Choice’s Podium CRM system to send email marketing to his database. Simple and efficient processing is crucial to Gwynne’s success, right from the beginning. Although his brokerage has a storefront, walk-in clients are very rare; most inquiries come to his two full-time support staff. Gwynne has the initial consultation with the
“The toughest triathlon in the world and business are similar. You follow those rules and work hard, work hard, work hard – not just one day, but until you reach your goal”
PETER GWYNNE AND MPA’S TOP 100 BROKERS Position: 53rd Total value of loans FY 2013–14: $84,304,851 Total number of loans: 292
client, a meeting he takes a particularly straightforward approach to: “It’s full assets, liabilities and future goals – once you know that, you’re ready to go.” This is where Gwynne’s support staff make the difference. “They can take a loan all the way – they’re probably better than most brokers,” he says. They take the loan from Gwynne, package it up and submit it to the lender, all while updating the clients every second day through personalised emails. But despite his solid referral network, processing system and experienced support staff, Gwynne still finds benefits to being part of a franchise that takes care of all the other parts of the business: the marketing, admin and back-office work, which, he says, constitutes “a whole other job in a business”. He points to web design. “Websites now have to be compliant; if you’ve got a website, you’ve got to spend thousands on it … there are issues with finding reputable people to make it, and ASIC and APRA are really looking at websites now. It’s another stress.” In terms of branding, Gwynne’s personal reputation is still what brings in business, but he believes the Choice brand would help if he decided to step it up a level: “The other business was just me, whereas this is something I could extend out if I wanted one day … you’re not on your own; you’ve got really good support there.” Joining Choice hasn’t changed Gwynne’s belief in hard graft, however. That comes back to triathlons – in particular, completing the infamous Hawaiian Ironman competition. “That’s the toughest triathlon in the world, and the bottom line is, if you can do that well, the business is similar,” he says. “You follow those rules and work hard, work hard, work hard – not just one day, but until you reach your goal … it’s not a hard formula; it’s just how much you want it.”
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CHOICE HOME LOANS
MARK BALLARD Choice Home Loans Bayswater With a new office that complements an oldfashioned personal approach, Perth broker Mark Ballard is set on growing the business
MARK BALLARD is the proud owner of a brand-new Perth office, 260 square metres of gleaming green on Perth’s Walter Road, a huge step up from the 99-square-metre office he previously shared with six others. It’s just another stage in a broking career spanning 15 years, and part of a broking strategy that combines old-fashioned personal service with forward-looking strategy. The client base of Choice Home Loans Bayswater is broad, comprising first home buyers, refinancers and investors from across Perth. And the local community has certainly noticed the new premises. “I’ve been in the new office now for two months; we’ve had four walk-ins during that time, and all of them either have been turned into a deal or will be a deal shortly,” Ballard says. “To put that in perspective, in the previous office, we had about five walk-ins in seven years, and I think only one of them was any good.” Working with only one full-time supporting
staff member means Ballard needs to be a hands-on broker. That means taking calls and, 80% of the time, going to visit clients for the loan consultation, which Ballard believes makes all the difference.
PERTH’S HOUSING MARKET Perth’s housing market has been stagnant for a year now, with housing values increasing + 0.2% in the May quarter + 0.7% year on year In comparison to a national capital city average of + 9% year on year other brokers are doing,” he says, “and they’re doing 30 appointments a week and they’ve got five support staff, and I can’t see how you can really look after a client. I think clients realise at some point in time that if you’re too busy in that regard, they’re just a number.” Change is coming to the brokerage, however; to complement the new premises, Ballard has been using Choice’s business coaches to help him plot the next step. Diversification is an important part of this – Ballard offers insurance and equipment finance, and plans to ramp this up further. “I think that’s one area where the industry will evolve and see how important it is, because people will turn over cars more often than they turn over houses,” he says. “I don’t want my clients going to someone else for any part of their finance.” In time, Ballard wants to be getting enough leads to help other brokers get started. He’s not deterred by Perth’s stagnant housing
“I have the mentality that if you make people come to a branch, you might as well be a bank. You’re taking away that benefit of what you are” “I have the mentality that if you make people come to a branch, you might as well be a bank,” he says. “You’re taking away that benefit of what you are – you’re mobile, you can see them after hours when [a couple] is both there, and they don’t have to take time off work.” For Ballard, being hands-on is an important part of his brand – and the stream of referrals that provide most of his leads – and he’s reluctant to change course. “I listen to what
market, although he admits it’s not ideal. “I certainly think it’s very quiet at the moment … there’s just too many people sitting on the side of the fence at the moment waiting to see what happens with interest rates,” he says. “With rates as low as they are, I’d think people would be falling over themselves to do things, but they’re not.” Meanwhile, he’s hoping that those clients who are in the market will find their way to his door.
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Daniel Carini: CHANGING TRACK TO THE COALFACE Starting out as an independent physiotherapist before embarking on a long and successful career in management, Daniel Carini has come full circle, returning to self-employment as principal and wealth manager of YBR Bondi, he tells Maya Breen
EARLIER THIS year, Daniel Carini tran-
From physio to finance
sitioned from being an employee to becoming his own boss, moving from Yellow Brick Road’s head office to own a branch at Bondi. But this Sydney local and father of three didn’t make the decision on a whim – he split his time across both roles as branch principal and head of sales and distribution at YBR headquarters for the better part of 18 months. The vision to open his own full financial services firm had played on Carini’s mind for a long time. “Financially you need to be pre pared, and you need to have the confidence to back yourself to do it,” he says. “So reaching a point financially where I could do that and where I believed I could make a success of this was just a process, and it took me a while to get the confidence to say, ‘I can do this, and I can do it well.’” But summing up this transition in a brief sentence doesn’t do his professional history justice. Carini has gone on quite a journey through the finance world during his man agerial career – but before all that, he was a practicing physiotherapist.
Carini graduated with a Bachelor of Applied Science in physiotherapy from the University of Sydney in 1992 and worked in his own business for eight years as a physio. “I did have some experience in running a business,” Carini says, reflecting on how it has helped him today. “Business is always about that you need customers and you need to attract customers – it’s just that the specifics of what you do are different.” But being a physio didn’t combine his passion for people with his love of numbers, so he moved to Wizard Home Loans in 1999 and continued to complement his professional experience with education, gaining a Master of Applied Finance and Investment from the Securities Institute of Australia in 2003 and a Diploma of Financial Services in financial planning. “When you finish school, you’re so young,” he says. “It’s hard to tell what you’re going to do for the rest of your life, so you start on a path, and then over time, find it might be worth trying something else.”
EXPANDING WIZARD’S REACH During Daniel Carini’s time at Wizard Home Loans: He grew the NSW sales volume from $1.1bn to $3.5bn from 2001 to 2005 NSW branch numbers grew from 30 to 90+ from 2001 to 2006 He established more than 50 branches in India during a year in New Delhi with the GE Wizard team
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“I love seeing people who are busy in their lives just take a little bit of time to get themselves ahead financially”
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CARINI’S TIPS FOR NEW FRANCHISEES
Promote yourself locally
Don’t get bogged down in processes and lose face-to-face time with clients
Establish referral networks
Track lead generation each week
Be proactive after quiet weeks to improve lead flow
Bring a great team together
Be prepared financially and have confidence in yourself that you can do it
Have a detailed program in place with existing clients to increase client referrals
Carini’s decade-long journey with Wizard would see him quickly progress up the ranks from sales team leader to state manager to head of sales. His management skills and ability to exceed his sales targets speak for themselves as he grew the Wizard New South Wales sales volume from $1.1bn in 2001 to more than $3.5bn in 2005.
decision. “I live in the eastern suburbs, my kids go to school in the eastern suburbs, and a lot of my network’s friends are based in the eastern suburbs – so it was handy that that’s where I live, that’s where my kids go to school, and I get the opportunity to work there.” He also enjoys the challenge of offering full financial services to his clients, noting
“When you finish school, you’re so young. It’s hard to tell what you’re going to do for the rest of your life …” After seven years at Wizard, Carini became head of sales and spent 2006 in New Delhi, India, where he led a team from Wizard and US company GE Money to exceed their targets and establish more than 50 new branches. Upon his return to Australia, he became Wizard’s national sales manager for the next two years, until Aussie acquired Wizard and YBR was established. Carini then transitioned to head of sales and distribution for YBR, a role he spent six years in before opening his own Bondi branch.
Closer to home Carini established the Bondi branch at the start of 2014 and looked forward not only to running his own business within the successful YBR model, but also to enjoying the flexibility of being a broker and spending more time with his family. “Obviously I always had a huge amount of exposure to clients directly through our branches and had a lot of time seeing how branches operate – the good things they do, the bad things they do, the things they do that are successful in generating more clients,” he says. “Over time, I found myself being more and more attracted to that direct relationship with the client, rather than via the branch network as an employee.” As for why he chose Bondi as the location for his branch, Carini says it was an easy
that most clients step through the door with one product or plan in mind rather than a long-term financial roadmap. “I think plenty of clients think that way,” he says. “They want a product, so they come in going, ‘I need a loan’, and they might walk out with more of a broader financial plan.” Carini points out that the loan takes pri ority because that’s why the client came to him, but it’s all about opening up the discussion to show the client their options. “Talking to people who come in just focused on buying a property and that’s it, to suddenly getting those people to think about longer term financial goals like ‘How do I plan for retirement?’ and ‘How do I grow my wealth over the next five years?’ is something we’ve been able to do really well.” Carini says more than half of the branch’s clients, mostly investors, are full-service cli ents who have taken on a loan while also exploring YBR Bondi’s other financial services, including superannuation, insurance, savings and self-managed super funds.
Settling down in self-employment Eighteen months in, Carini says the Bondi branch is humming along, and his transition to full-time branch owner has been a smooth one, thanks to his great team. “Because I was used to managing people, I was able to help build a team that could do a lot without me
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needing to be there all the time,” he says. The branch includes two wealth managers and part owners, Greg Bloom and Zoi Mina, as well as client support manager Louise Everingham, all of whom share an openminded approach toward their clients. “I think we all take the approach that we just talk to clients about what they’re trying to achieve,” Carini says, “and if that’s to buy a property, then the solution is a home loan; if it’s to plan for retirement, then the solution would be very different.” Carini’s young business has already more than doubled its settlements in the last year, and they aim to repeat the achievement again this year. “Probably half our new business now is existing clients referring to us, so we have a very detailed program with our existing cli ents,” he says. “We communicate with them every month, and we try and catch up with them face-to-face every six months. And just by doing that, in their day-to-day, they’ll talk to people and will recommend one of the team. That’s probably the biggest single source of new business now.” But Carini says one of the challenges is not getting caught up in the day-to-day things but rather staying focused on the priorities
within the business and in the industry. “If you want to grow your business and grow in the industry we’re in,” he says, “just take a step back and say, ‘what are the trends that are emerging, how can you stay on top of that and how can you use that to continue to grow your business’, rather than coming in every day, looking at your emails and focusing on the micro things.” He says he aims to keep growing the YBR Bondi team moving forward, adding another two by the end of next year. “Much like how Yellow Brick Road or Wizard grew their networks by having lots of branches, we can grow our business here by having more people who have the same approach in the business,” he says. “There’s no reason why we can’t have five or six advisors working in the business.” Carini’s track record in business growth leaves little doubt that YBR Bondi will reach its target – nor is there any doubt that Carini is enjoying working at the coalface of the industry. “I love seeing people who are busy in their lives just take a little bit of time to get themselves ahead financially,” he says, “and if we can help in that process, that’s a good outcome.”
“Probably half our new business now is existing clients referring to us, so we have a very detailed program with our existing clients”
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RAISING THE CURTAIN ON WHOLESALE LENDING Australiaâ€™s wholesale lenders talk to MPA about the challenges facing their business model, the new opportunities for non-banks, and whether white label is stealing the show
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YEARS AGO, the role of wholesale lenders was simpler. They created innovative and wellpriced products, and sold these to mortgage managers, who delivered them, via the broker, to the end customer. Now the landscape has shifted fundamentally, and wholesale lenders are involved in a number of revenue-generating activities, including white-label partnerships with aggregators. We talked to three wholesale lenders with very different backgrounds: Advantedge, which is backed by NAB, non-major Adelaide Bank and non-bank lender Firstmac. After years of looking back at the GFC and its negative effects on mortgage managers, these lenders are now looking ahead, in particular at the opportunities regulatory changes present to mortgage managers. APRA’s restrictions on investor lending, for example, may push some of this lending away from banks, whilst the Financial System Inquiry – the recommendations of which are yet to be implemented – advised tackling the cost of funding. Yet the FSI also recommended brokers disclose ownership structures, raising fundamental questions about the role of wholesale lenders in the value chain. Either way, wholesale lenders will be in the spotlight like never before. Here’s their chance to tell their story.
MPA: Is white-label lending – rather than mortgage managers – the future of the wholesale lender business model?
DAMIAN PERCY, ADELAIDE BANK: To
WHOLESALE HIGHLIGHTS FROM THE PAST YEAR November Advantedge partners with AFG to launch its white-label product February Adelaide Bank partners with investor-specialist mortgage manager FinancePath April Connective unveils revamped white-label product, partly funded by Advantedge Astute Financial also rolls out white label, again funded by Advantedge May Firstmac completes $1bn RMBS deal, the largest for a non-bank since the GFC June Advantedge joins the major banks in restricting investor lending
be perfectly candid, I’m not sure what we currently call ‘white-label lending’ is wholesale lending. What really has taken off over recent times has been labelled ‘broker propositions’; credit policy, products, pricing and service are pretty well identical across brands. Everybody is just reselling the same stuff at the same price. Now, there’s nothing wrong with that, but I think it runs the risk of absolute commod ification. Once everyone has the same home brand product, what’s the value of a home brand product? To quote Syndrome from The Incredibles, “When everyone’s super, no one will be.” The key to genuinely wholesale offerings has
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WHOLESALE LENDING REINVENTING WHOLESALE AT ADELAIDE BANK We’re spending a fair bit of time and energy on building our new lending system at the moment, which is important for getting to the omni-channel, straight-through processing model we all aspire to. We were the first bank in Australia to go to a paperless mortgage processing model in the late ’90s, but our front end needs a lot of work, hence the project to replace the whole box and dice. The other piece of work is a reinvention of what wholesale is. We think it can be broader and deeper than is the case now, and that’s something we’re well down the track on. Damian Percy, general manager of third-party mortgages
always been the opportunity for the distributor/ managers to create distinct value propositions at various price points. True wholesaling should deliver greater diversity to the market rather than more of the same. It can and will exist alongside badged broker offerings, and both will continue to evolve over time.
KIM CANNON, FIRSTMAC: Larger groups and aggregators will continue to go down the white label route, but that doesn’t mean mortgage managers will be any less relevant in the modern market. They will still have their place, and they have agility in their favour. They have greater capacity to respond to market forces, and as time passes, this should prompt them to evolve their business model. The face of lending is changing, and a sector of the market will find they can’t always do what they’ve always done. They should examine their distribution model and may consider diversifying the way they get their products to market. Mortgage managers are able to be more solutions-based for their clients due to the variety of funding sources available to them. Those options may fluctuate, though, which may again prompt mortgage managers to evolve their lending model. BRETT HALLIWELL, ADVANTEDGE: We have seen phenomenal growth in the white-label market, with brokers operating under all major aggregators embracing the benefits of white label. In addition to our long-standing history working with PLAN, Choice, Smartline, Mortgage Choice and FAST, we are delighted that AFG, Connective, Loan Market and Astute have chosen to become white-label partners with Advantedge this year. The results have been extremely positive with all those brands. On the mortgage management side, there has been a level of consolidation between some of the key mortgage management players, and some funders have adjusted their level of participation. We believe will continue to see mortgage managers occupying a differentiated place in the lending market, while they still enjoy a strong presence on a number of aggregator lending panels.
MPA: Can mortgage managers provide a viable alternative for investor financing now that APRA is constraining bank lending? DP: Mortgage managers have traditionally been a service-based, solution-driven proposition, providing access to multiple funding lines through one process. As APRA nudges, encourages, suggests and fires the odd shot over the bow of various banks, that proposition will, I think, add even more value for borrowers and brokers as navigating funder responses becomes more complex.
KC: Mortgage managers are uniquely placed to provide a niche service to premium investor clients. The macro-prudential approach of regulations has resulted in many and varied responses by lenders. Credit policies from one lender to the next have never been less consistent as each responds to their own portfolio positioning and the requirements of the regulator. This makes the picture for investor borrowers most unclear. The macro-prudential rules are likely to have the most impact on fringe-leveraged investor borrowers, who may be forced out of the market. For good-quality investor clients, doors will remain open. However, it will be for the savvy mortgage manager with an established niche to direct and guide that investor in how best to set up their finances, and which lenders will be the best fit for each client. BH: Mortgage managers have access to a number of different funding sources, including regulated banks such as NAB’s Advantedge subsidiary. Some also access wholesale funding via securitisation. The underlying lenders supporting white-label brands are predominantly bank-funded. We have recently seen that regulators are becoming increasingly mindful of rising property prices in an environment where Australia currently has record-low interest rates. It is appropriate the industry takes a prudent approach to lending with an expectation that interest rates will inevitably increase at some time in the future. As a result, bank lenders are tempering investor lending and the funding available for
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WHOLESALE LENDING FAST-TRACKING CHANGE AT FIRSTMAC Firstmac’s market policies for owner-occupiers and investors alike will remain consistent in a climate of regulatory change. Investors in particular may be looking for capacity and certainty in the market. We are very pleased to be launching our Fast Trax initiative, which will use new indicators to expedite high-quality deals and make the loan process seamless for borrowers. Also, the Broker+ program will continue to gather speed and support brokers in evolving and growing their businesses. There will be ongoing training webinars twice weekly to help brokers to use technology to their advantage to deliver better outcomes for their customers and themselves. There has been exceptional uptake of Broker+ among Firstmac’s broker community, which shows us there is an appetite among the market segment to introduce new avenues of marketing to customers and service them in ways that are most convenient for the customer and most efficient for the broker. Kim Cannon, founder and managing director
investment purposes. We believe white label and mortgage management regulators are likely to keep a watching brief on securitised lending. Both funding sources will continue to be competitive in the new lending landscape.
them to offer competitive retail rates. On the white label side, Advantedge has access to funding through its parent, NAB, and is able to continually monitor the market and set retail rates at competitive levels.
“Once everyone has the same home brand product, what’s the value of a home brand product? To quote Syndrome from The Incredibles, ‘When everyone’s super, no one will be’” MPA: Does the cost of funds remain a
MPA: In the wake of the Financial System
significant competitive disadvantage for the sector? DP: Not really. Funding costs across most lenders aren’t a mile apart, unlike capital requirements.
KC: The cost of funds has reduced but has not reached pre-GFC levels. Mortgage managers are in a good position to stay solutions-focused and provide a superior lending experience for the customers and introducers. White-label providers and mortgage managers should identify niche areas that add value rather than just concentrating on the interest rate. They will maintain their advantage if they choose to do business with funders who have invested in effective back-end systems and who have proven their resilience during tighter economic times, like we saw in the GFC.
Inquiry’s final report, should consumers be more aware of what wholesale lenders do? DP: Depending on how and when the regulators respond, we could see some quite significant and sudden changes to the competitive environment over the short term. The ducking and weaving around higher LVR lending, investor growth, serviceability, and lending to SMSFs and foreign buyers show just how quickly things can change in response to regulatory shifts in emphasis. Add the potential of, say, a floor in risk weights for residential mortgages and the attendant capital impact on the majors and Macquarie, and we could be looking at a pretty volatile and changeable market. Wholesale lenders and their partners tend to do well when adaptability and flexibility are at a premium, and I suspect we’ll all be needing plenty of both in the near future.
BH: Mortgage managers have access to different sources of funding to meet their needs. The costs of funding via securitisation have decreased considerably since post-GFC highs, so those mortgage managers with access to this funding source are continually reviewing their funding mix. Having said that, securitised funding tends to cater to a smaller sector of the market and can be more restrictive. In terms of accessing bank funding, the rates offered by Advantedge to mortgage managers are extremely competitive, which in turn allows
KC: It has always been important for borrowers to stay up to date with all sectors of the mortgage lending market, because it helps them identify trends in lending. That can give savvy investors an edge in building their portfolio and getting their timing right for buying, diversifying or divesting. Since the FSI, investors are probably more likely to monitor the market closely to understand their best options for borrowing. Under these circumstances, mortgage managers, supported by their funders, will do well to continue their campaigns to reinforce their
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WHOLESALE LENDING GETTING THE PRICE RIGHT AT ADVANTEDGE Advantedge will continue to invest significantly in our product range over the next 12 months. Maintaining sharp pricing will be a strong focus going forward – we continually review the market to ensure that our pricing is competitive, and we foresee that the market will become more dynamic and flexible with pricing options over the coming year. Additionally, many of our key investments will continue within the service space to ensure that brokers are having a consistently great service experience and making it as easy as possible for them to deal with us. In a broader market sense, there has been something of a reshaping of the wholesale space in the last year – some of the larger wholesale funders who fund mortgage managers have departed. Off the back of this trend, we see the opportunity to continue to enhance our white-label business to fill the gap left by these funders, while also continuing to support our mortgage manager partners with flexible and competitively priced funding options. Brett Halliwell, general manager
position in the market, which is an important segment and a distinct point of difference.
BH: The Financial Services Inquiry looked at a number of different elements of the mortgage, lending and banking industry more broadly. We continue to express the view that our multi-brand model, which offers whitelabel products to a number of aggregators and also wholesale funding to mortgage managers, continues to be positive for the industry. The ongoing role of both of these categories within the market continues to create alternative options and also enhances competition. Advantedge is well placed, being a fully owned subsidiary of NAB, which offers additional comfort and security to brokers and their customers when they are having a conversation around white-label and mortgage manager products.
MPA: Will the majority of brokers in the future sell their own branded white-label products? DP: I suspect the majority have access now. The bigger question to me is why they should. The traditional driver for white-label products in other industries has been the ability to have input into the design or delivery of the product to better align with your customer’s needs, and/or driving costs down and margin up through the preferential dealing arrangements. White label in the mortgage market seems largely focused on the latter, and I think there’s room to do better on the former.
MPA: Do you tailor your products for a particular section of the market?
DP: Yes. Over the years, we’ve tweaked and customised various elements of our program for specific markets or partners. One of the advantages of a genuinely wholesale model is that you are able to respond to partner initiatives in a flexible way. Now clearly, not everything is possible, and every idea can’t be responded to, but the benefit of not selling a locked-down commodity product is that you can differentiate when you want to.
KC: Firstmac only writes full-doc loans, with no subprime or non-conforming loans. We recently completed a $1bn RMBS transaction, of which approximately 80% of the loans were 80% LVR or lower. We have a reputation as a product innovator, and we will continue to tailor and customise products to meet the market.
BH: Within our white-label market, we work closely with each of our aggregator partners, who tailor the product features based on demand from their brokers. The traditional mortgage management model allows a high degree of flexibility to mortgage managers when it comes to selecting and tailoring product features. Across the board, we have
enjoyed considerable success over recent years in attracting mainstream business within low LVR segments. Our success has been driven on the back of attractively priced products and consistent service.
KC: There is no impetus for the majority of brokers to sell their own white-label products, but the larger groups and aggregators may be prompted to move further into the space. They may see it as a way of diversifying their income and gathering margin while building their brand awareness. BH: A key learning for us has been achieving the right balance between product, price, marketing and service. Advantedge has invested considerably in creating appropriate marketing tools to support sales, giving brokers the confidence to sell and consumers the confidence to buy. A critical element has been developing a range of branded B2B and B2C marketing materials to include point-ofsale, online and post-settlement collateral. Due to the considerable marketing investment required, we think it’s unlikely that white label will ever become so tailored that different brands can be offered at the individual brokerage level. But we certainly believe brokers can enhance their own standing in the market by harnessing the home brands offered by their aggregators, which are powered by strong sales and servicing support, rather than being under their own brand.
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1:42:27 PM 6/07/2015 1:45:42
FOUR WAYS TO IMPROVE YOUR INFLUENCE We are all in the business of influence – but instead of seeing it as manipulation, Dr Tim Baker outlines how influence, when used ethically, can be an essential business tool
INFLUENCE IS the lifeblood of business, especially for brokers, who must influence the many stakeholders they deal with on a daily basis. However, the word influence means many things to many people. To some, it means being cunning, manipulative and tricky. Others see influence as ethical and open. In my view, influence is the power to make other people agree with your opinions or get them to do what you want willingly and ethically. The key words here are ‘willingly’ and ‘ethically’. Sustainable influence is not an exercise in manipulation and trickery. In the context of sales, marketing and professional advice – areas that brokers regularly work in – influence is, more often than not, about persuading others to think and act in ways that benefit themselves and their circumstances. People make up their own minds, but they do so on the basis of how they are influenced. This is why influencing must be done from an ethical standpoint. My new model of influencing, the Influ encing Capabilities Framework, illustrated on the opposite page, identifies four primary ways that leaders can and do influence others. You will notice two styles – push and pull. The push style is more assertive, direct and upfront. The pull style, on the other hand, is more collaborative, indirect and subtle. Both are effective in the right place, at the right time,
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INFLUENCING CAPABILITIES FRAMEWORK PUSH STYLE
with the right people. The two approaches are logical and emotional. The logical approach is based on fact, rationale, structure and clarity, whereas the emotional approach is based on inspiration, possibility and the ‘big picture’. Again, both approaches work in the right circumstances. So we end up with four distinct strategies: investigation, calculation, collaboration and motivation. Which one do you favour?
Investigation As a strategy of influence, investigation basically means gathering the facts and presenting them in a logical and convincing manner. The presentation of a coherent and assertive argument based on well-founded research is a powerful form of persuasion in the right set of circumstances. People usually are not convinced by someone who does not have a sound grasp of the facts, nor are they influenced by someone with wavering conviction or an incoherent presentation of his or her ideas. Then again, even if you are logical, coherent, assertive and well-researched, that doesn’t necessarily guarantee that you will be persuasive. But these attributes are at least a good starting point. Brokers who have a preference for investigating like to search for supporting evidence and, from this data, generate hypotheses or ideas based on a logical, rational argument. Once investigators have prepared a well-founded case, they assert their ideas to others. Being well-prepared, investigators are typically on solid ground to oppose others’ arguments. In other words, an investigator’s influencing ability is reliant on a carefully researched and assertively communicated case. Climate change campaigner and former US vice president Al Gore is an example of an investigator.
Calculation means to influence by clearly articulating the pitfalls of the status quo and demonstrating how those pitfalls can be overcome with a new proposal. Psychologists tell us that we are all motivated by pain and pleasure: We try to avoid painful situations as much as we can,
The strategy of collaboration fundamentally involves influencing through trust-building and sharing the ownership of the leader’s proposal. Clients are more likely to be persuaded by a broker’s suggestion if they feel they have been genuinely consulted about it.
Influence is, more often than not, about persuading others to think and act in ways that benefit themselves and their circumstances such as being late for an important meeting we are chairing. Conversely, we gravitate to pleasurable experiences, such as pleasing our boss by finding the right information in a timely manner. While this should appear obvious, we each have different ideas of what pain and pleasure are, so we interpret the significance of situations in our own way. A potentially painful situation for one person could be viewed as enjoyment by another. Brokers who are calculators are likely to talk up both the advantages and disadvantages of an approach. Former UK prime minister Margaret Thatcher was a calculator.
Motivation The motivation strategy, in essence, means to influence by associating an idea, change or proposal with a clear, compelling and common vision of the future. Brokers who can paint a convincing picture of the future and motivate people with that vision are generally inspirational and influential. Most great leaders have this aptitude. Unfortunately, from my observations, too many people get caught up in the minutiae of what they are doing. Consequently, they often forget to articulate the link between the proposal and the big picture. People in sales don’t always explain the why – why we are recommending this approach or portfolio. ‘How does what we are currently doing contribute to the big picture?’ is the type of question motivators answer. Former civil rights activist Martin Luther King Jr was a motivator.
By collaborating with others, the influencer is inviting the people he or she is influencing to be emotionally engaged and involved in the proposal. Clients feel they have a stake in the change and are subsequently more receptive to its merits. Through authentic collaboration, trust builds and influence increases. Collaborators create positive emotional energy. They are concerned with developing a sense of trust and engagement. Collaborators are consultative in their approach to problemsolving; they actively listen to others and are willing to share ownership of the outcomes through open communication. The influence of collaborators permeates from encouraging input and building higher than normal levels of confidence in colleagues. The late activist Mother Teresa was a collaborator. We each favour one of these strategies over the other three. The problem is that, from time to time, we will doubtlessly use the wrong strategy, either for the person we are trying to influence or the situation we are in. Outstanding persuaders and influencers use all four strategies in the right place and at the right time.
Dr Tim Baker is a thought leader in organisational and leadership development, an international consultant and bestselling author of the book The New Influencing Toolkit: Capabilities for Communicating with Influence. For more information, visit winnersatwork.com.au.
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THE STRATEGIC WAY TO WIN IN BUSINESS
Happy staff and frontline customer service representatives translate into happy customers. Richard Maloney reveals how to boost staff morale to increase referrals and improve the bottom line
AUSTRALIAN BUSINESSES are the life blood of our economy, but with more and more of our industry moving offshore to remain competitive, those that remain face specific, ever-increasing challenges. Without a doubt, one of the greatest of these challenges is the attraction and retention of talent. Intelligent, honest, hardworking staff are critical to an organisation’s ongoing success, but now more than ever, good people are hard to find – and hold on to – and the most prominent influence on employee performance, loyalty (both employee and customer) and return on investment is engagement. In a 2013 Gallup poll, it was revealed that around 70% of people feel disengaged at work, and most disengaged employees would change employers right now for as little as a 5% pay increase. There is no denying that disengaged employees have a direct – and negative – impact on your business’ bottom line. Employee discontent doesn’t stop at the front lines of business, either. Customers sense and respond to unhappy employees. Excellent customer service drives repeat business and brand loyalty. An engaged employee creates new bonds with customers and fosters recurrent business. Their enthusiasm and pride in their work increases customer satisfaction.
At the other end of the scale, disengaged employees put themselves before the customer. They lack the desire to delight customers, and they often lack an under standing of the organisation’s desired customer experience. There are two fundamental requirements
when building a thriving organisation: 1 Quality leadership, engagement and culture, which I call ‘the heart’ of the organisation. 2 Quality systems, processors and game plans, which I call ‘the brain’ of the organisation.
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WHAT MOTIVATES REFERRALS? According to customer research firm Saguity, the top 5 reasons why your customers will refer your business are:
68% Friendly service They are always polite when they speak to us, they greet us with a smile and a friendly hello when we enter, we have built up a strong rapport with the staff here, and they’re happy to chat about both business and other things.
66% Sharing and updating new knowledge They can answer any question we ask them, they give us lots of information, they have first-hand knowledge and experience with the products, and they offer lots of useful advice.
65% Helpful service They’re obliging and always ready to lend a hand, they bend over backwards for us, they can help out in any way we need them to, and nothing is ever a problem for them.
31% Quality product Their products are durable and last for years, we never have any issues using their machines, their products are very reliable, their products never give us any grief and are easy to operate.
30% Efficient and prompt They can get us in and out of the store very quickly, we’re never left standing around waiting for them, they are quick to make orders and receive deliveries, they come up to serve us as soon as we walk through the door, they are fast operators and don’t muck around. heart motivated
It’s clear from the above data that your customers’ behaviours are driven by their hearts and by positive human interaction above all else. It’s also clear that they will only be satisfied to the point of referral when your people transact with them in a heartfelt way. This won’t authentically project onto your customers unless it is a critical part of your internal culture. Your organisation should interact with each other in a heartfelt manner with all dealings. Everyone must live and
breathe this ethos. Once you get that right, it will naturally flow to your customers. So, how do we ensure employee engagement and a positive effect on our customers? It starts from the top. Poor leadership contributes heavily to employee disengagement, and it’s the number one reason why employees leave a business and go elsewhere. It’s up to our leaders to turn their attention to their people, getting them actively engaged regularly through new, innovative and inclusive methods, thus creating shared vision and buy in.
ideas. A dictatorial approach is one of the most effective ways to drive an employee out.
Practice habitual leadership Habitual leadership is ongoing, and it’s all about actions. Trustworthiness does not happen overnight. Leaders earn it over time based on their positive personal attitudes and behaviours towards others. Leaders who are deserving of trust are dependable, reliable, forthright, truthful and ethical. They care for and recognise their
“A dictatorial approach is one of the most effective ways to drive an employee out” Show how much you care To attract and retain the best and brightest, leaders need to embrace their people and take steps to ensure they feel they are their organisation’s most valuable asset. Most leaders know less about their own people than their people know about them. Do you know what your employees are missing? Do you know what they need to feel engaged and happy? What we feel is influenced by what we truly value, and we are all motivated differently. Take the time to learn more about your people’s wants and needs. Take the time to understand who they are and what drives them. By adjusting your approach accordingly, peak performance will follow.
Empower your people The traditional hierarchical structure is not the most effective option for businesses these days. Instead, successful companies are moving to a more flexible organisational structure that empowers, allowing employees to make more of their own decisions and avoid the rigidity of traditional models. Employees thrive when they are given a sense of ownership to accomplish their work with fewer approvals and checkpoints, and with a smaller degree of intervention. Challenge them to take on more responsibility, let them set their own key accountabilities, and hold them accountable for the results. Equality promotes unity and trust, encouraging your employees to share their honest opinions and
people, exhibiting openness and transparency. Employees are drawn to leaders who are genuine and honourable. These managers are valued and admired. Conversely, employees flee when managers are unfair, lie, cheat, offend and deceive.
Introduce a collective engagement strategy The first step towards ensuring collective engagement, group buy-in and a winning culture is to introduce a structured, all-action weekly program that focuses on the growth and development of the individual and the organisation as a whole. It must incorporate activities that trigger the seven neurological motivators that are key when it comes to creating change and achieving rapid success: Pain Self-improvement Pleasure Self-direction Reward Transcendent Recognition purpose For an organisation to accelerate ahead of its competitors, engagement must come first, naturally flowing into leadership development and a power culture. In today’s competitive world, your people are your edge. Richard Maloney is the author of The Minds of Winning Teams: Creating Team Success Through Engagement & Culture. He specialises in the development of high-performance teams, individuals and organisations. To learn more, visit www.engageandgrow.com.au
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THE OPERATING SYSTEM OF THE FUTURE A new methodology of collaboration is necessary to keep pace with the speed of today’s business environment, according to Janine Garner
THE PHENOMENAL speed of change that got us to the 21st century’s technological frenzy is not going to slow down any time soon – and it is creating an uncertain future on a global business level. There is an ongoing war between the need for stability and the need for growth. It is up to each of us to actively listen to the demands of this society and evolve how we operate accordingly so that what we do aligns with – and leads – the new paradigm. We live in a highly connected world. The constant transformations happening on both domestic and global levels are affecting us as we try to maintain balance in our personal lives while striving for our dreams. Business is under pressure – evolution within society demands constant innovation and invention in product design, delivery, communication, marketing and customer service, as well as in business itself, from office layouts to organisational structures, from leadership styles and culture to working hours and communication platforms. Societal evolution is driving a feeling of uncertainty about what the future will hold – especially for Gen X and the Baby Boomers, who have had both financial and philosophical certainties stripped away over the last decade. For these two generations in particular, who make up the majority of the leadership pool
at present, this feeling of the unknown is resulting in business methodology regression. Regression to what? To the comfort of the known, of protecting ‘me’, when what is actually needed is the courage, confidence and bravery to move to the new operating system of ‘we’ – one that will enable leaders to create the solutions needed to future-proof personal, business and team successes. Those who are willing to be a part of a col laborative working environment are doing so because they want to be challenged. They want the opportunity to constantly learn from others, and to share what they’ve learnt. To engage on an intellectually challenging level with like-minded thinkers. To see their
own business benefit from the knowledge of specialists. To be happy knowing that they are on the edge of technological advancement, constantly pushing the ‘what if ’ button – because as a team, they feel secure enough to take risks.
Moving from ‘me’ to ‘we’ The concept of commercial collaboration and the move from the ‘me’ space to the ‘we’ space is not for the faint-hearted. It’s for those who can see the far-reaching benefits of what the ‘we’ space is about — and yes, it is a gradual move, one that involves challenging thinking. But it is not something one has to contemplate in solitude.
THE BENEFITS OF ‘WE’ Leaders who are already operating in the ‘we’ space: Are able to think big
Promote based on merit, irrespective of gender or age
Recognise the need to act as a team
Embrace fears and vulnerabilities
Disrupt the status quo
See the value in helping others see their worth
Lead with a questioning spirit
Actively engage with others
See what commercial collaboration brings to an entrepreneurial mind
Act with bravery
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A COLLABORATIVE ENVIRONMENT This new operating system is one where: Networks of connected individuals, communities and businesses work together to drive success We can bring our skills, strengths and talents to the table, and together amplify and share expertise to create progressive, results-oriented solutions Collective intelligence means we work smarter and quicker together Diversity and difference of opinion is actually the new competitive advantage Commercial collaboration: Creates momentum Drives new thinking Builds resilience and determination to succeed Enables individuals and businesses to explore possibilities and develop strategies to future-proof success Every part of the ‘we’ space has the backing of others. Overcoming fear and facing up to vulnerability are done with full disclosure and honesty, with the knowledge that by sharing your fears, you are empowering not just yourself, but those who work with and for you. You are giving the team the opportunity for empowerment and trust. When you disrupt the status quo, when you disturb the accepted and the everyday, you are forging a new strength and getting rid of the weak and humdrum, which bog down business decisions and keep processes stale and stagnant. In the spirit of openness and full disclosure, you are not moving secretively, but so that those in your team or circle of excellence are aware of your thought processes and why you are taking the actions you are. In this way, you have backup – and trust in your actions.
Understanding the power of your network and using its potential is intrinsic to the ‘we’ mentality. To care about the wellbeing of those who are connected to you through business similarities or ethical focus or a desire to advance the same cause – while expecting nothing in return – creates a fantastic opportunity for collaborative relationships, and also for a true value exchange, where ‘what’s in it for me’ turns into ‘what can I do for you’. The ‘we’ space is not a pipe dream. There are businesses and leaders who are clearly succeeding by operating within this framework. It is the centre of discussion among academics, thought leaders and consulting groups. Those corporations and entrepreneurs who are using the space well, and understand the shift in thinking needed to get there, are seeing procedures streamlined, the bottom line
coming up, and employees happier and more engaged. Their ‘communities’ are becoming actual communities. It is not enough, in the words of Sheryl Sandberg, to ‘lean in’ to future-proof our success, our businesses and our careers. For leaders who are taking teams into an uncertain future, it’s now about leaning out and collaborating with others. Because to lean out means to embrace and engage on an unforeseen aggregated level – where thinking bigger than ever before will bring rewards to a collective commercial mind. Janine Garner is a businesswoman and entrepreneur, and is the author of From Me To We: Why Commercial Collaboration Will Future-proof Business, Leaders and Personal Success. She is the founder and CEO of LBDGroup. For more information, visit www.janinegarner.com.au
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A DAY IN THE LIFE OF…
Christa Malkin, state manager, mortgage broking, Bank of Melbourne
6.30am: Alarm goes off with my best of intentions to go to the gym. Hit the snooze button and spend the next nine minutes convincing myself why I shouldn’t go to the gym. After snoozing another two times, I reach for my phone to check my emails (one eye open). I hop straight to the prior day’s applications report and then to the subsequent emails from each of my team members congratulating one another on a great Bank of Melbourne apps day! I love the fact every one of my BDMs would do anything for a fellow team member – as a leader, I wouldn’t have it any other way. Having a happy team environment is instrumental to productivity and job satisfaction. 7.00am: Crank the Nespresso machine and eat brekkie watching Sky News. Always good to see what’s happening around the world, especially given I’m originally from the UK. 8.30am: Jump in the car to the city, which is only a short drive for me, but enough time to get in a few work calls – hands-free, of course!
10.00am: Complete mid-year reviews with my three of my BDMs. We complete these through May to see how our BDMs are tracking against each of their scorecard measures. It’s also an opportunity to discuss any development needs so that every BDM is at the standard required to deliver exceptional service.
1.00pm: Grab a quick lunch with Roland Girvan, our relationship manager at FMS,
who do our settlements. It’s imperative we work closely with our external partners, and FMS have been instrumental in improving this area of our process.
2.00pm: Dial into a teleconference with our leaders in operations. This is an opportunity to provide feedback around service delivery and gauge an understanding of how our improvements are tracking. We’ve invested significantly in our process over the past few months, and our latest NPS results from the broker market have shown dramatic improvements for Bank of Melbourne.
“After snoozing another two times I reach for my phone to check my emails (one eye open)”
that can be done. We offer an opportunity for a Flame trial. Flame is our top service segment that promises faster turnaround times, direct access to lenders/credit and emailed loan contracts.
5.15pm: Head home and clear out any remaining emails from the day on the iPad.
7.00pm: Early netball game this week, which makes for a nice change – sometimes it’s a 10.20pm game!
8.30pm: Back home and knock up a nutritious dinner of kale salad and roasted sweet potato. My healthy diet declines as the week goes on, so I make the most of sticking to it on exercise nights! Grab an hour of TV, talk to my Mum back home and then head off to bed with a book – currently Fear & Loathing in Las Vegas. Possibly the weirdest book I’ve ever read; probably wouldn’t recommend it. Try to be asleep by 11pm.
3.00pm: Power hour of emails – there’s a mixture in there, including reviewing upcoming market communications, a few deal escalations and some decline reviews. We wouldn’t decline an application without it getting a thorough review from the internal lender and BDM. 4.00pm: Head out on the road with one of my team to see a large opportunity broker group. They have started to write business with us, but we know there is more
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BRING YOUR SALES TECHNIQUE INTO 2015 The ‘hard sell’, the interrogation – forget it all. Research by sales consultancy Rogen Si shows that customers want to be educated and listened to, which is why you should try the ‘insight sell’ WHAT HAVE ROGEN SI FOUND?
The death of formulaic questioning Customers want a conversation and expect you to listen, rather than ‘drill down’ through questioning.
Discipline is the new black Customers increasingly put a premium on credibility, displayed through industry knowledge, which requires more preparation.
WHY SHOULD YOU CHANGE YOUR SALES TECHNIQUE? 1
Top four interpersonal skills demanded by buyers 21%
of buyers disagree that emotion plays a smaller role in their decision
‘Understanding my situation’ is the most important factor in the buying decision, ahead of offering the best solution, chemistry and politics
Listening Communicating value
Most likely reasons buyers are put off 25%
Not listening Lack of subject area knowledge
HOW DO YOU INSIGHT SELL? 1
Teach conversation and listening skills rather than diagnostic skills
Create an ‘evidence bank’ of information to support your case
Avoid contrived drill-down questions, i.e. ‘Tell me about your business’
Rehearse the first five minutes of the conversation and decide how you’d like it to end
Lead with a point of view, and then discuss how it fits into the customer’s circumstance
Develop consistent disciplines pre- and post-meetings – send agendas, follow-up emails and time frames
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SALES ARE your bread and butter, and it’s tempting to treat sales technique as unchanging – you’ve been doing it for years, and it’s natural to assume you’re a better salesperson than ever. However, buyers also change, so it’s vital to keep your sales technique up-to-date. Not doing so risks ending up with a similar reputation (perhaps underserved) to that of used car salesmen. Rogen Si, a sales consultancy involved with the Sydney Olympic bid, produces surveys every three years on what buyers expect, talking to 178 global buyers and sellers. Expectations have shifted considerably, they’ve found: “Buyers are asking sales people to do more, listen more, find out more and be more disciplined in their approach.”
In essence, buyers have more information than ever, yet still expect to be educated, so the seller needs to provide insight rather than just information. Established sales techniques can struggle to produce insight, though, either because you’re deluging the buyer with information they already know, or because by drilling down through formulaic questioning, you cut off avenues for insight. However, selling is not all so scientific – the importance of personal chemistry has recovered, and buyers want to be engaged in a conversation. So how do you combine conversation skills and developing business insight? Rogen Si have suggested four lines of strategy and produced practical tips for implementing them.
Courage and curiosity to shift thinking Customers have enough information; they want in-depth understanding of their needs and insight (hence ‘insight sell’).
Buyers have 60% of the knowledge and do 80% of their decisionmaking before they see you
Linked offering to my needs
‘Linked offering to my needs’ was the most important aspect of a good sales proposal, according to buyers (ahead of ease of reading, clarity and succinctness)
Develop a key insight for your targeted customer segment and back it up with evidence
MAISTER’S FORMULA OF TRUST Becoming a trusted advisor involves more than changing your business card. Rogen Si advise you to follow this formula developed by David Maister in the book The Trusted Advisor, published in 2001.
Credibility + reliability + intimacy Self interest
The real cost of discounting There’s a different between the best price and the price that’s right for you and the customer. You need to think about value rather than price.
Amongst buyers’ top 10 criteria, price has moved from ninth in 2005 to second in 2015
A discount of 5% across the board on a 20% margin means you’ll need to increase sales by 33% to stay at the same profit
Emphasise margin and profit over volume and revenue
Create frameworks (not formulas) for quickly producing customised documents
Educate your team on the competitive alternatives and their value
Make sure the customer’s name appears two times as often as your name in any documents
Develop evidence of your offer’s value (reliability, fast results, reputation)
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FAVOURITE THINGS Tim Lawless, director of research, CoreLogic RP Data
Food: I travel a lot with CoreLogic and try to eat what the locals eat when abroad. For the best cuisine, it’s hard to choose between Japanese sashimi and nigiri or Shanghai dumplings. Sport: Any type of fishing – living at Noosa Heads, I’m spoilt for choice, but try to get offshore as often as possible. The biggest fish I have caught is a 1.4-metre Spanish mackerel on a floating pilchard bait. Music: The kids seem to have taken over the sound system at home, but when I get the chance, I will delve randomly into my music collection, which is mostly stuff from the ’80s and ’90s. Best album ever: AC/ DC’s Back in Black.
Sunday afternoon: Because I’m travelling a lot, we try to make the most of our weekends as a family, which means by Sunday afternoon, we are typically exhausted and ready to relax. The perfect Sunday wind-down is a barbecue at home with the family and friends.
Book : Part of my job is staying up to date, so I’m reading every day, but at home when I feel like reading, I don’t mind relaxing with a crime novel. The best would have to be Mario Puzo’s The Godfather. Holiday destination: The family likes active holidays where we can be outdoors and try new things. Every year we spend the first two weeks of December at Brunswick Heads (just north of Byron on the NSW northern coast), but the best holiday yet has been to Queenstown in New Zealand. If you get bored in Queenstown, there is something wrong!
Drink: Tsingtao beer, bundy and cola (I’m a Queenslander!), or an Australian red wine.
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