Mortgage Professional Australia 15.02

FINANCIAL SYSTEM INQUIRY WHERE NOW FOR THE INDUSTRY?

MPAMAGAZINE.COM.AU ISSUE 15.2

PROFESSIONAL DEVELOPMENT IT’S TIME TO WORK ON THE BUSINESS

GEORGE FARMER RISING FROM THE QUEENSLAND FLOODS

Your client’s home loan is not just another mortgage.

It’s your hard work, your time and your reputation.

This is why we take you, your business and your expectations personally. It’s also why we’ve been recognised nationally for our service, our turn-around times and our smart home loan products.

So if you’d like to experience a more personal approach, let’s talk!

Speak to your BDM or call us on 1300 791 679 brokers.adelaidebank.com.au

Adelaide Bank a Division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL/Australian Credit Licence 237879

CONTENTS / MPA 15.2

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20

NEWS 4 | News and tips Intelligence and tips for the cutting-edge mortgage professional 10 | News analysis The Financial System Inquiry’s recommendations for brokers

WEEKLY INVESTIGATIONS NOW ONLINE Movers and shakers Arrivals and promotions in the industry, on the last Monday of every month Lenders wanted Our popular weekly loan scenario returns MPA TV Major banks’ roundtable videos and much more mpamagazine.com.au

62 | New industry entrants From online lenders to supermarkets: threats and red herrings explained

COVER STORY 20 | Young Guns 2015 Broking stars of the future revealed

FEATURES 32 | Broker education Professional development options across the industry 42 | George Farmer The Australian Mortgage Awards Young Gun of the Year on his extraordinary story

COVER STORY

46 | First home buyers Engaging with the new generation of FHBs

Young Guns 2015

BUSINESS STRATEGY 54 | Social media Aligning with business growth 58 | Downsizing without tears Managing a smooth transition

MORTGAGE INSIDERS 16 | +MFL .MFL?AFCç Liberty Financial’s national sales manager on new frontiers 64 | Favourite things Looking cool: NextGen.net’s Tony Carn

46 FEATURE

First home buyers FEBRUARY 2015 | 1

EDITOR’S LETTER / 15.02

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YOUTH IS A BUSINESS OPPORTUNITY This issue is in many ways the ‘youth issue’, a label which I’m aware won’t appeal to all MPA readers.

This magazine is aimed at experienced industry professionals, not newbies; we want to help you grow your business, and this issue is no exception.

Our Young Guns special report is meant to showcase the young talent out there – talent which could transform your brokerage. Indeed, you may already have it in the ofďŹ ce; almost all our Young Guns were put forward by supportive senior brokers or aggregators .

Support and mentoring were subjects which came up again and again; for all the industry programs and qualiďŹ cations out there, it was a certain senior broker giving extra advice and support which allowed these Young Guns to ourish. Chances are, you’re that individual, and it’s time to start seeing that rookie broker as a business opportunity.

Our First Home Buyer Guide is another chance to reconsider the opportunities already out there. The demographics of ďŹ rst home buyers are changing rapidly, and by talking to brokers with their ears close the ground, we’ve identiďŹ ed a new group of FHBs, all with the ability to be potential clients.

Finally, for opportunities and threats which will arise in 2015, see our feature on professional development, our interview with Liberty Financial’s John Mohnacheff and of course our analysis of the Financial System Inquiry’s ďŹ nal report.

Sam Richardson, editor, MPA

COPY & FEATURES

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ROUND-UP / NEWS AND TIPS

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ROUND-UP / NEWS AND TIPS

THE ‘UNCANNY VALLEY’: WHEN AUTOMATED CUSTOMER RELATIONSHIP MANAGEMENT DRIVES AWAY CUSTOMERS An obscure 1970s Japanese robotics professor helped explain why customers prefer real people instead of lifelike technology Customer relationship management, increasingly, is simply equated with improving technology and automating everything: send newsletters, follow up emails and even send out birthday CARDS WITHOUT US HAVING TO LIFT A Ă NGER More widely, the industry has certainly not lost faith in technology: 84% of lenders surveyed

by Genworth believed sales through online CHANNELS WOULD INCREASE THE à GURE FOR MOBILE DEVICES WAS 7HAT COMPARED TO FOR THE broker channel and a paltry 13% of lenders seeing potential in branches, according to the RECENTLY RELEASED f+OME *ROWNg REPORT Automated systems are undoubtedly great for brokers’ time-management, but let’s not

deceive ourselves: clients aren’t fooled SO EASILY 7HATgS NOT TO SAY THEY always dislike automated customer SERVICE BUT IT MAKES A HUGE DIÊ ERENCE how you present it to them, and that’s where the fUNCANNY VALLEYg COMES IN 7HE UNCANNY VALLEY DESCRIBES THE STAGE AT WHICH ROBOTICS BEGINS TO LOOK fUNCANNILYg HUMAN 0ASAHIRO 0ORI A ROBOTICS PROFESSOR AT THE 7OKYO ,NSTITUTE OF 7ECHNOLOGY COINED THE TERM TO DESCRIBE THE SHIFT FROM Aê NITY TO REVULSION AS robots increasingly took on a life-like APPEARANCE $S 0ORIgS GRAPH SHOWS WE BECOME more familiar with robots up to a point – but BEING TOO SIMILAR TO HUMANS FREAKS US OUT

THE UNCANNY VALLEY As robots become more lifelike (x-axis), we become more familiar with them Y AXIS +OWEVER ROBOTS THAT LOOK LIKE HUMANS CAUSE A SHARP DROP IN FAMILIARITY

Healthy person

FAMILIARITY 025(

UNCANNY VALLEY

Humanoid robot

Bunraku puppet

4RSç CB animal Industrial robot Corpse

Prosthetic hand Zombie

/(66 25

50 HUMAN LIKENESS

75

100%

7HE EXAMPLE 0ORI USES IS THE PROSTHETIC HAND ,T MIGHT LOOK REASONABLY LIKE A HAND 0ORI explains, but “when we realise the hand, which at Ă RST SIGHT LOOKED REAL IS IN FACT ARTIĂ CIAL WE experience an eerie sensationâ€? – the uncanny VALLEY :E HAVE THE TECHNOLOGY TO MAKE A HAND move, but cannot make its skin feel realistic: it is DIĂŞ CULT TO RAISE IT FROM THE UNCANNY VALLEY TO A HUMAN LEVEL 7HE CONCLUSION ACCORDING TO 0ORI IS hTO CREATE A SAFE LEVEL OF AĂŞ NITY BY DELIBERATELY PURSUING A NON HUMAN DESIGNi How could this be relevant to CRM systems? :ELL THE Ă RST STEP MAY BE TO SEPARATE TASKS INTO HUMAN AND COMPUTERISED TASKS (NTERING addresses can be done through an online form, BUT A DISCUSSION OF ONEgS Ă NANCIAL SITUATION IS best suited to a human being, as it demands EMPATHY AND AN ABILITY TO REACT But more generally, Mori’s message has particular relevance to you as a broker; it urges you to emphasise the human element in your VALUE PROPOSITION TO CUSTOMERS $S BANKS retreat into smartphone apps and lifelike automated customer assistance helplines, rather than copy them, you can be that normal trustworthy person who rescues customers from the uncanny valley and provides real EMPATHY AND UNDERSTANDING 7ECHNOLOGY CAN STILL SAVE YOU TIME BUT DONgT FORGET WHY CUSTOMERS COME TO YOU IN THE Ă RST PLACE (VEN AS AUTOMATED SYSTEMS BECOME easier to use, the gulf of the uncanny valley will protect the value of the human element, and BROKERS SHOULD BE PROUD OF THAT 6O NEXT TIME you send out a birthday card, at least remember TO SIGN IT

Source: based on Masahiro Mori ‘The Uncanny Valley’, as translated and adapted by associate professor Kahl F. MacDorman of Indiana University and journalist Norri Kageki for the IEEE Robotics and Automation Magazine

4 | FEBRUARY 2015

ROUND-UP / NEWS AND TIPS

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ROUND-UP / NEWS AND TIPS

PEER-TO-PEER LENDING ARRIVES ON AUSTRALIAN SHORES

WHAT’S IN IT FOR YOU Sunil Aranha, CEO of P2P lender ThinCats, suggests brokers could expect the following returns for getting involved:

Backed by Rupert Murdoch, peer-to-peer lenders are expanding from the UK to Europe, presenting opportunities and headaches for brokers Here’s another piece of jargon to add to your list: P2P lending. December saw UK peer-to-peer lender ThinCats LAUNCH ITS $USTRALIAN WEBSITE OÊERING LOANS TO SMALL BUSINESSES 7HEY JOIN ESTABLISHED à RMS 5ATESETTER A subsidiary of a large European P2P lender, and Society One, an Australian business backed by News Corp and Westpac.

ThinCats allows sophisticated investors to assess loan submissions by small businesses (up to $2m), and then pick an interest rate, typically between 8% and 16%.

The lowest bidder gets to fund the loan, with funds going through ThinCats and the company taking a fee and ongoing cut of the interest.

6OCIETY2NEgS MODEL IS SLIGHTLY DIÊERENT THEY ANALYSE and make decisions about the loan, while investors receive returns from the whole combined portfolio. It’s also marketed at personal borrowers, with loans ranging from $5,000 to $30,000. Ratesetter connects lenders

and borrowers of similar scales, and includes a ‘provision fund’ in case of late payment or default.

With peer-to-peer lending hitting the news, it’s surprising that traditional lenders saw P2P as less of a threat in this year’s Genworth Home Grown survey. In 2013, 14% of lenders thought P2P was the biggest threat to the industry; in 2014 only 2% argued so. It’s worth noting that P2P’s popularity in the UK in part stems from the extremely poor returns for traditional savers – with interest rates of around 1% – while rates in Australia remain slightly higher.

Finally, there remains the fundamental question of brokers’ roles in a system that prides itself on minimal middlemen. While the sites themselves match lenders and borrowers, ThinCats CEO Sunil Aranha suggested brokers could be renumerated for being “introducers� and for taking part in the credit processing work. Whether doing so is worth brokers’ time is open to question.

PEER-TO-PEER LENDING IN THE UK In 2014 there was :

250%

60BPS

For doing part of the credit work and loan submission

$1.40BN $1.02BN in P2P consumer lending

$137,000 $10,200 Business

6 | FEBRUARY 2015

For ‘introducing’ a successful transaction

in P2P commercial lending

P2P lending has grown 250% since 2012

Average loan size:

25BPS upfront

Consumer

1525BPS trail Source: Australian Broker Online

THERE IS NO WAY I WOULD EVER USE THEM AGAIN IT COST MY CLIENT THOUSANDS IN AVOIDABLE FEES

THE WHOLE PROCESS WAS A SHAMBLES

IF ONLY I COULD HAVE FOUND SOMEONE WHO HAD A CLUE WHAT THEY WERE DOING

IT WAS JUST DELAY AFTER DELAY, EACH TIME COSTING MORE

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ROUND-UP / NEWS AND TIPS

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ROUND-UP / NEWS AND TIPS

PROPERTY AND POLITICS: A MATCH MADE IN HELL? A threat by the real estate industry to establish a political party revives a long-running debate

One might suggest that Australian politicians have had enough interest in property – more than enough even – ever since Queensland’s ‘white shoe brigade’ wooed corrupt politicians in the 1980s.

However, the Real Estate Institute of New South Wales (REINSW) evidently doesn’t agree: attendees at their recent industry summit threatened to start a political party if the current government failed to improve industry standards. President Malcolm Gunning declared that “real estate’s place and importance for NSW should not be played down or

8 | FEBRUARY 2015

underestimated. Our profession is critical to the economy and it is time for this to be recognised”.

What REINSW wants is for the NSW government to drive through training regulations proposed back in November, which REINSW claim is important in raising industry standards.

The REINSW commonly lobbies politicians and makes statements about APRA and RBA policies, but actually going into politics would be a new development for the body.

Individuals from the broking industry have entered politics before. Finance broker Maria Rigoni unsuccessfully stood for the Palmer United Party in the recent Victorian elections,

and for the Bank Reform Party in 2013’s federal ELECTIONS )ORMER 9OW &(2 -Eé =ULMAN HAD better luck back in 2012, and now sits as a Councillor for Woollohra in NSW. In a way, mortgage brokers may be ideal politicians: they pride themselves on standing up for individuals against large corporate interests, are great at connecting with strangers and have extensive local business contacts. But there’s no shortage of irony in the comparison between the nowprofessionalised mortgage broking industry and the increasingly grubby state of Australian politics.

NEWS ANALYSIS / FINANCIAL SYSTEM INQUIRY

YOU KNOW YOU’RE INDEPENDENT

– BUT DOES YOUR CUSTOMER? The Murray Inquiry has recommended mortgage brokers should ‘disclose ownership structures’ to clients. But explaining the reality of vertical integration to customers is easier said than done, writes Sam Richardson The publication of the Financial System Inquiry’s ďŹ nal report has been met with rave reviews. “A blueprint for the future of Australia’s ďŹ nancial systemâ€? (ABC), “an important stepâ€? (Australian Bankers’ Association), and ďŹ nally “a paradigm shiftâ€? (David Murray himself ).

To be speciďŹ c, the “paradigm shiftâ€? Murray referred to is a new attitude to ďŹ nancial literacy, he told the Committee for the Economic Development of Australia. “We started looking at other industries where the focus of regulation is to deal with the information imbalance faced by consumers. We decided also that in ďŹ nancial services we would never close the gap fully on ďŹ nancial literacy, and this pushed us down the path of this paradigm shift from the Wallace Inquiry.â€?

Essentially, the report insists producers and distributors of ďŹ nancial products can no longer assume consumers are ďŹ nancially literate. It warns that “the existing framework relies heavily on disclosure, ďŹ nancial advice and ďŹ nancial literacy.

However, disclosure can be ineffective for a number of reasons, including consumer disengagement, complexity of documents and products, behavioural biases, misaligned interest and low ďŹ nancial literacyâ€?.

10 | FEBRUARY 2015

RECOMMENDATION 40 IN DETAIL Rename ‘general advice’ and require advisers and mortgage brokers to disclose ownership structures. “...Often consumers do not understand their Ă NANCIAL ADVISERgS OR MORTGAGE BROKERgS association with product issuers. This association might limit the product range an adviser or broker can recommend from.â€? “...Although stakeholders have provided LITTLE EVIDENCE OF DIĂŠ ERENCES IN THE QUALITY OF advice from independent or aligned and VERTICALLY INTEGRATED Ă RMS THE ,NQUIRY SEES THE value to consumers in making ownership and alignment more transparent. In particular, these disclosures should be broader than Financial Services Guide and Credit Guide rules currently require, and could include branded documents or materials. The Inquiry believes THE BENEĂ TS TO CONSUMERS WOULD OUTWEIGH THE TRANSITIONAL COSTS TO INDUSTRY OF EĂŠ ECTING branding changes.â€?

Source: pp. 271-2 Financial System Inquiry Final Report

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It’s therefore interesting that, of 44 recommendations in the report, the one that’s most directly relevant to brokers, Recommendation 40, calls for “mortgage brokers to disclose ownership structures”. So, how should brokers go about disclosing the industry’s complexity to the (apparently) financially illiterate Australian public?

THE INDUSTRY SUPPORTS DISCLOSURE If Murray meant to shake up the industry with Recommendation 40, he doesn’t appear to have succeeded. Aussie Home Loans’ John Symond told MPA that “it doesn’t worry me, I think it’s fine.

We’re not hiding anything that’s embarrassing or not good, it’s the biggest, strongest bank in the land”. Symond was referring to Commonwealth Bank’s 80% stake in the franchise brokerage, perhaps the most publicised ownership of a franchise brokerage network by a lender, although there are a number of other examples.

Industry bodies appear similarly relaxed; Siobhan Hayden, CEO of the MFAA, called Recommendation 40 “a reasonable request’, albeit one that “would benefit consumers dealing with financial planners more than those currently dealing with mortgage brokers”. FBAA CEO Peter White told MPA that “I can see a lot of brokers getting up in arms about this, but I can see a positive. You can sell this – if you’re owned by a major bank, you’re actually dealing with a firm which is without question of incredible integrity and has major strength behind it”.

Finally, the brokers on the ground MPA talked to also expressed reserved support. Mark Davis of the Australian Lending & Investment Centre told MPA “we don’t see overall ownership of the product manufacture as a major issue”; Justin Doobov of Intelligent Finance noted that, while he didn’t oppose ownership disclosure, it wasn’t something he or the customer often discussed. Broker John Whitten of Individual Home Loans had a similar opinion: “I certainly wouldn’t have a problem with [disclosure] because I really don’t know if customers are concerned.”

HOW DISCLOSURE COULD WORK Given a welcoming reception by the industry, it

I’ve got no qualms whatsoever, you know, it won’t lose us business, it won’t win us business, it’s fine” John Symond, founder and executive chairman, Aussie Home Loans seems that Recommendation 40 might be one of the most likely FSI recommendations to become policy. The danger comes in thrashing out what ‘ownership’ and vertical integration means, what exactly needs to be disclosed, and how.

In its wording, the recommendation suggested disclosure going beyond the existing Credit Guide, disclosure which “could include branded documents or materials”. Symond doesn’t agree: “I can’t see any organisation [doing that]. You take Commonwealth Bank; they might own a hundred subsidiaries; they’re not going to put that on everything; they’d have to have a booklet!”

“You look at Commonwealth Bank’s letterhead, it doesn’t have Bankwest, and Bankwest is a lot bigger than Aussie Home Loans. It’s the same with Westpac.

But there’s nothing wrong with having [ownership disclosure] where you can read it, not just miniscule print at the bottom of a page saying ‘a subsidiary of Westpac or Commonwealth Bank’ – that’s fine”.

Hayden is also unsure about branded documents: “Brokers have their own business model. I think what you will see in quote documents and disclosure documents is that they will say ‘my business is managed or owned or part owned by NAB or Macquarie … there’ll be some sort of disclosure statement, maybe in bold. I think that

FEBRUARY 2015 | 11

NEWS ANALYSIS / FINANCIAL SYSTEM INQUIRY

It’s a reasonable request, and would benefit consumers dealing with financial planners more than those currently dealing with mortgage brokers” Siobhan Hayden, CEO, MFAA

You’ve got to realise the customer is king; if they want to know something you’ve got to give them it” Peter White, CEO, FBAA would be more in line with what we’ll see introduced rather than branded documents which would clash in our industry; it wouldn’t work.”

Recommendation 40 has mainly been driven by issues in the financial planning industry, Hayden explains, where planners generally offer products from a single lender, unlike brokers. In fact the three studies cited in the recommendation all refer primarily to financial planners, despite a large

12 | FEBRUARY 2015

number of broker bodies and aggregators giving submissions to the inquiry. If Recommendation 40 gets turned into regulation – or self-regulation – brokers will demand to be recognised as brokers, rather than another branch of advisors, even as diversification blurs the boundaries.

LENDERS AND AGGREGATORS As well as how to disclose, brokers will want to know what to disclose. It seems any regulation will compel brokerages which might have to disclose bank ownership, but what about those brokerages who use an aggregator owned by a bank?

Here, the problem of low financial literacy again comes to the fore: most consumers don’t know what an aggregator is. Whitten couldn’t recall a single customer asking about aggregators in 30 years of broking, although he said he does already disclose his aggregator when recommending its white label products. And if a customer did enquire further, “I would advise that my aggregator is PLAN Australia, which is owned by National Australia Bank, but that I’m not employed by them: they provide a service to me in providing market intelligence and collecting my commissions”.

What worried Whitten was potential clients seeing aggregators as a controlling influence on brokers rather than a “cost of doing business”, as he puts it. Intelligent Finance’s Doobov deals with enquiries about his aggregator more often, from around one in five clients, he reckons. When asked, “I explain that it gives us buying power.

The benefit of the banks owning mortgage broking businesses and aggregators in the channel, while I understand there are downsides, shows they have a vested interest in the channel being successful, otherwise they wouldn’t be investing so much money in it”.

MPA asked Hayden for her opinion on consumer awareness of aggregators: “I don’t think they understand an aggregator and I don’t think they need to in many ways: an aggregator is there to provide services and support to an individual broking business; that doesn’t impede the broker’s ability to do their job.”

While there’s potential for alarming consumers by disclosing aggregators, it’s up to the broker to reassure them, argues Doobov: “The consumer might start thinking ‘oh, what’s the reason they’re doing this’, but if we show them that’s the right lender and that’s the cheapest interest rate, rather

NEWS ANALYSIS / FINANCIAL SYSTEM INQUIRY

It’ll add a little bit of a selling point to us, being able to say my company is not owned by a bank. It’ll benefit us in the sense we can say we’re more independent than somebody else” Justin Doobov, managing director, Intelligent Finance than commission, all of our clients trust us and are coming to us because of that trust factor.”

VERTICAL INTEGRATION IN BANKING As well as the specific recommendations to disclose brokerage ownership, the Murray Inquiry calls for more transparency in the industry, including with regard to bank ownership of other banks. The brokers we spoke to argued they weren’t hiding bank ownership at all, in fact (and perhaps disappointingly for smaller players) they were using it as a selling point.

“We would explain the positives to vertical integration,” explains ALIC’s Davis, “the economies of scale when you consolidate operations or support functions to provide a higher level of service. You can also have greater capital investment into technology, market and support with companies like CBA over Bankwest or WBC with Bank of Melbourne/St.George etc. You can still have the subsidiaries run competing strategies or even

14 | FEBRUARY 2015

boutique strategies.”

While Doobov uses a similar argument when necessary, he also adds that Intelligent Finance urges the client to look at the loan itself, rather than the lender: “We take a couple of steps back; instead of talking about what they want, let’s talk about what they need, and map out the structure of the loan first, without looking at the lender specifics. The actual lender that we put them with isn’t part of the equation at the start.”

Even if explaining vertical integration doesn’t become mandatory, it is likely to become more important. As NAB Broker head Steve Kane explained at MPA’s Major Bank Roundtable, other players are looking to gain a toehold in third-party mortgages. “I think we’re a bit fixated with banks at the moment because it’s popular with the Murray Inquiry. The reality is I think the gamechanger will be other institutional investors, whether they be foreign or otherwise, coming in and buying into the distribution channel, because they will see there’s a capital requirement.”

WHAT HAPPENS NOW? Clearly Recommendation 40 is just a recommendation. However, it is a difficult recommendation to ignore in the eyes of consumers and the mainstream media, particularly if the financial planning industry is seen to enact changes before brokers do.

If regulation does result from the Financial System Inquiry, it’ll be self-regulation, suggests Hayden, and she believes it’ll be driven by vertically integrated lenders themselves: “I think most lenders who are integrated with aggregators would be comfortable with disclosure; I can’t see why they wouldn’t.” But before that happens the MFAA will collect stakeholders’ opinions to determine the cost of increased disclosure, and present findings to regulators in March, Hayden adds.

Independent brokers and non-major and nonbanks lenders have long been calling for a serious debate on vertical integration, and it seems David Murray’s report certainly provides the impetus for such a debate. The key is to prevent regulators overreacting, maintains Peter White: “You can go too far with these things and [should have] great caution with these things because that’s what happened under the NCCP. We tend to feel that disclosure and education are synonyms; they are not. The more disclosure you have does not mean the person is better educated or informed.”

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HEAD TO HEAD / JOHN MOHNACHEFF

16 | FEBRUARY 2015

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INNOVATION & RELEVANCE: JOHN MOHNACHEFF

The Liberty Financial national sales manager isn’t convinced the Murray Inquiry will break the major banks’ stranglehold, but it won’t stop him storming ahead with NEW INSURANCE AND TECHNOLOGY Oé ERINGS FOR MPA: What’s your reaction to the Financial System Inquiry report – will it break the dominance of the major banks?

-OHN 0OHNACHEé We can only hope that it does, but that sort of change also requires a number of other market factors to occur. That said, the review is a step in the right direction as any reduction in consumer choice is definitely a problem for the industry and consumers in general. The reality is that any change will take some time to pass, and with it will come lobbying, lots of debate and speculation. We will wait and see.

MPA: Could a stronger non-major bank sector present any opportunities for private lenders like Liberty?

-0 Everyone talks about creating a level playing field. There’s no such thing; there’ll never be a level playing field. A company has to carve out their own niche. I quite like the head-to-head battle between majors and non-majors for the mass market; the non-bank sector can still find gaps. The major banks share an obsession with market share, but we stand out by being relevant

to the broker market. Innovation and relevance is core to competing: find products and niches which suit the market. Banks play mass market; nonbanks play in the niche market. Liberty is custom lending for the broker market: low-doc, alt-doc, SMSF, refinancing. We’re going to continue to be about bringing new specialist lending to the broker market.

MPA: What can brokers expect from Liberty in 2015? Are there any new products in the pipeline?

-0 Definitely, yes – we’re launching an insurance arm in conjunction with our sister company LFI insurance, who’s just recently been awarded its insurance licence. We’re going to offer risk products to go with our loans: mortgage insurance but also home and contents insurance, car insurance, life insurance. The days of the home mortgage specialist are dwindling; we need to be finance brokers … There are giant new entrants out there: Coles, Woolworths, Australia Post, with large databases so they know exactly what the customer is doing. Offering insurance helps the

FEBRUARY 2015 | 17

HEAD TO HEAD / JOHN MOHNACHEFF

JOHN MOHNACHEFF’S CAREER TIMELINE 1975 6TARTS à RST JOB AS A TRAINEE IN AN INSURANCE à RM

1981 9ARIOUS ODD JOBS SUCH AS CABINET MAKING WHICH REMAINS ONE OF HIS HOBBIES

1983 :ENT INTO INSURANCE BROKING AT :ESTPAC LATER Ă LLING VARIOUS POSITIONS INCLUDING STATE MANAGER AND GROUP SALES MANAGER

2000 /EFT :ESTPAC TO JOIN /IBERTY )INANCIAL AS NATIONAL SALES MANAGER

EDUCATION 1995 %ACHELOR OF %USINESS AND 0ARKETING LATER CONVERTED TO A MASTERgS DEGREE 8NIVERSITY OF 1EW (NGLAND (AU)

GREATEST ACHIEVEMENT h/EAVING THE SECURITY OF A BANK AND BEING INVOLVED WITH INDIVIDUALS AND A COMPANY THAT PIONEERED A NEW LEVEL OF LENDING IN $USTRALIAi

broker to keep in touch with their customer, by creating multiple touchpoints.

MPA: Is technology still a particular area of interest for Liberty?

JM: Technology is the next horizon. We launched Broker Net in 1999; it was clunky, but it still allowed brokers to enter details online and get a quick response from us 15 years ago, and technology is still an area of focus. Technology enables other entities to come in and play in this space. I mentioned before the likes of Australia Post, Telstra, Coles, Woolworths; technology allows them to watch all the buying and spending patterns of their customers ... the next logical thing is to go in there and offer them ďŹ nancial services. Hey, we can help you with your car insurance, because we see you pay Allianz every month. They can offer loyalty programs ‌ technology should be embraced because it allows the broker to do the same thing; it allows the broker to sit there with the client and walk them through, electronically, all the services they can provide, plus the face-to-face and all the human interaction, and it’s all driven by the system.

MPA: If technology allows consumers to do it all RFCKQCJTCQ RFCL UFCPC BMCQ RFC @PMICP Âż R GL JM: Humans are a gregarious animal – they like to get out; they like to feel and touch; they also want the reassurance that someone’s in their corner giving them choice. So the role of the broker is to demystify all that, say “Here are my recommendations on how I see your loans progressingâ€?. And I’m talking about loans here; we’ve got to stop talking about home loans. We people have to realise a mortgage is a mortgage is a mortgage. Yes, one’s a home mortgage, one’s a car mortgage and one’s a commercial mortgage, but they’re still all a loan. When the broker says, “I can help you with this, this and thisâ€?, they become like a real ďŹ nancial supermarket ‌ whether you’re big or small is irrelevant; it’s how you position yourself in the marketplace.

MPA: How is Liberty using technology in the broker channel?

JM: It is about creating a step-by-step process for the broker – easy to lodge, follow the prompts, ďŹ ll in all the answers; the back channel comes in and says “That’s approvedâ€?. Linked to that are all the

18 | FEBRUARY 2015

MPAMAGAZINE.COM.AU

insurance products. So you’ll be able to select through the Liberty website all the products that you could want for your client. The beauty of it is you won’t have to hop out of one system and into another; when it’s bundled it becomes “Would you like fries with that?� It interacts with [NextGen] Apply Online and we interface with broker systems; that’s what it’s about.

MPA: -G@CPRW MçCPQ ? P?LEC MD NPMBSARQ @SR UFGAF BGTCPQGÂżA?RGML QRP?RCEW F?Q KMQR NMRCLRG?J DMP @PMICPQ JM: It’s the insurance. Look at a home loan: people might turn over their home loan every six years; they might reďŹ nance their home quite often away from the broker. Can you remember someone you had one transaction with six years ago? No. They’ll move on to the latest ad. However, if that broker helped them with insurance, we know that most people turn over their car every three years; most

LIBERTY’S MOVE INTO INSURANCE Liberty Financial Insurance (LFI) received its licence in December 2014 and started working with brokers in January. ,TS CORE OÊERING IS MORTGAGE protection insurance, and insurance to COMPLEMENT ASSET AND CAR à NANCE ARRANGEMENTS WHICH -OHN 0OHNACHEÊ CLAIMS will be easily accessed through Liberty’s own SYSTEM WHEN LODGING A à NANCE APPLICATION /), WILL ALSO OÊER GENERAL INSURANCE IN conjunction with insurer CGU; although branded LFI, customer services will be managed by CGU’s team, according to LFI general manager Dean Cullen.

All LFI mortgage protection customers will be automatically eligible for worldwide medical advice through the ‘Best Doctors’ service, Cullen adds.

“Technology is the next horizon.

We launched Broker Net in 1999; it was clunky, but it still allowed brokers to enter details online and get a quick response from us 15 years ago, and technology is still an area of focusâ€? families have two cars! When a person ďŹ lls out an application form, they are creating the greatest connection of trust that there is outside of a marriage: in that application you disclose everything; it’s the richest source of data you can get, and all you use it for is a home loan?

MPA: *L MLC QCLRCLAC: UFW QFMSJB @PMICPQ EM DMP -G@CPRW 'GL?LAG?J JM: In 1997 Liberty came with an idea and a product to Australia, and we chose the broker market as our source of distribution. Everything that we have ever done, everything we have launched has always been for the broker, even during the GFC. Liberty proudly has never ever taken one step back from our commitment to the broker channel.

FEBRUARY 2015 | 19

SPECIAL REPORT / YOUNG GUNS

Shooting past the career ladder:

MPA’s Young 2015 Meet the future of the industry – the 24 young, keen and hungry brokers who aren’t content to work their way to the top, because they’re already there

20 | FEBRUARY 2015

Guns W

e’re in an ageing industry, whether we like to admit it or not. The average MFAA member is aged 48, and many other industry associations are far older.

While age is to be expected – brokers are small business owners after all – the industry needs young blood, and potential brokers need to know that young talent is being properly rewarded. That’s the thinking behind MPA’s longrunning Young Guns list: to showcase the best young brokers in the industry.

Young Guns are not ranked; while they must fulďŹ l certain criteria, we want to display the broad array of broking excellence among those aged under 35.

We’ve delved deeper into the stories of a few individuals, but all the brokers featured here are extremely talented. Not only are they headed for stellar careers but many are already challenging the industry’s elite.

In order to become a Young Gun, a broker must be under 35 and have worked for no more than two years as an accredited broker – at the time of our survey in November. This year we added a new requirement: Young Guns must have written more than $15m in loans over the past ďŹ nancial year, or the equivalent.

Finally, Young Guns cannot have been in 2014’s list, although we have included ďŹ nalists and a winner from the recent Australian Mortgage Awards.

If you’re a brokerage owner, we hope 2015’s Young Guns demonstrate the talent and raw hunger young brokers can bring to your business. And if you’re a young or potential broker, we hope you’re inspired by our Young Guns and reminded that in mortgage broking there’s no career ladder: if you’re good enough, you’ll shoot to the top.

A MESSAGE FROM OUR SPONSOR At Suncorp, weâ&#x20AC;&#x2122;re committed to being the genuine alternative to the major banks, and as THE Ă FTH LARGEST BANK IN $USTRALIA AND PART OF THE $6; LISTED 6UNCORP *ROUP WE ALREADY DO BUSINESS WITH OF $USTRALIANS 0AINTAINING strong relationships with our broker partners, making it simple to do business with us, and CONTINUING TO OĂŠER A VERY COMPETITIVE LENDING PRODUCT REMAINS OUR CLEAR FOCUS ,NVESTING IN THE FUTURE IS ALSO ESSENTIAL THATgS WHY WE ARE PROUD to support MPAgS <OUNG *UNS FOR :E ARE ALL PART OF A VIBRANT INDUSTRY AND ITgS exciting to see the enthusiasm and positive IMPACT YOUNG BROKERS ARE HAVING CONNECTING with new customer segments and building their SKILLS $T 6UNCORP OUR AIM IS TO DEAL WITH progressive brokers who are customer centric in their approach, because we believe we can TRULY DELIVER VALUE TO THEM :E ASPIRE TO BE THE best challenger bank in our target markets, OĂŠERING THE CUSTOMER CONNECTION OF A SMALL BANK AND THE STRENGTH OF A BIG BANK The MPA <OUNG *UNS FEATURE RECOGNISES TALENT AND EXCELLENCE AMONG THE FUTURE LEADERS OF THE MORTGAGE BROKING INDUSTRY (ACH INDIVIDUAL HAS BEEN NOMINATED BY THEIR AGGREGATOR AND HAS BEEN ACKNOWLEDGED FOR THEIR CUSTOMER SKILLS OUTSTANDING PERFORMANCE AND OVERALL BUSINESS GROWTH 7HERE IS AN ENORMOUS BREADTH AND DEPTH OF TALENT HIGHLIGHTED IN THIS YEARgS MPA <OUNG *UNS AND it gives us great pleasure to celebrate their EXCELLENCE Steven Degetto Head of intermediaries Suncorp Bank

FEBRUARY 2015 | 21

SPECIAL REPORT / YOUNG GUNS

Rebecca Grey Finance365, Wangara, WA Total annual settlements: $19,568,398.98 Age: 29 Aggregator: Finsure “Rebecca has dedicated herself to the broking industry and has perfected the client for life mentality. She always goes the extra mile for her potential clients and has the knack of winning business even if other brokers have sat with her clients. Her belief in the education of her clients is paramount to her success.”

– Alun Vernals, director, Finance365

Sam Gawenda Rising Tide Financial Services, Melbourne, Vic Total annual settlements: $37,000,000 Age: 27 Aggregator: AFG

David Ray Elite Finance Professionals, Bondi Junction, NSW Total annual settlements: $22,000,000 Age: 32 Aggregator: Choice “I started referring my clients to David early last year. He has done a tremendous job assisting my clients with refinancing their loans to a better deal or assisting them to purchase properties. I highly recommend David to everyone and he is now organising my own personal finances.”

– Andrew Crawford, accountant David was also the winner of 2014’s Australian Mortgage Awards Young Gun of the Year – Independent.

22 | FEBRUARY 2015

“Sam Gawenda is a lending specialist at Rising Tide. He specialises in helping our clients in the strategic planning for purchasing property; something he knows a lot about since starting his own property portfolio at the tender age of 21 …

It’s a long way from his first job as a bricklayer but seems something he was born to do! He has also become a leader and mentor within our business; his Rising Tide teammates love how he leads by example and has a true passion for service excellence. It is a privilege to have him in our team and I believe he is the NEXT BIG THING in the Australian mortgage broking industry.”

– Chris Browne, founder and managing director, Rising Tide Financial Services

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Jason Coviello Mortgage Choice, North Perth, WA Total annual settlements: $16,293,880 Age: 33 “Jason is a very professional and proactive franchise manager. He has exceptional business acumen and his customer service is first rate. Since joining Mortgage Choice, Jason has come to the table with a number of innovative marketing ideas which have already started to pay dividends for him. Jason’s tenacity, drive and passion all combine to make him a broker to watch. He is already a great contributor to the network and I believe he will continue to blossom the more experience he gains.”

– Phil Cooper, state manager, Mortgage Choice WA

Luke Gardiner Gardiner Financial Services, North Ryde, NSW Total annual settlements: $24,061,060 Age: 31 Aggregator: FAST “Luke is fast developing into a sound and confident small business owner.

He is well respected in the area and is hungry to grow his business further.

He has a deep knowledge of products and policy and provides a very good level of customer service.”

– Steven Casham, partnership manager NSW, FAST

Jo Patterson Mortgage Choice, Mandurah & Rockingham, WA Total annual settlements: $17,701,795 Age: 34 With a background at Bankwest, Jo Patterson has long enjoyed working in finance, but she likes broking even better. “I love the diversity,” she says. “I love the people I get to meet every day, and the conversations I get to have with them, and the flexibility.”

Franchise owner Andrew Sawyer told MPA that Patterson goes “above and beyond” for her customers.

“Nothing is ever too much trouble, which is perhaps why her clients love her so much.”

Patterson has quickly built up a solid network of contacts and referrals, which she puts down to patience. “I just genuinely care about people and where they’re going and what their goals are,” she says.

“I work with them and I might not be able to do a loan for them for 18 months, but knowing that I care they’ve referred me on to friends and family in the meantime.”

Ultimately, she insists that “writing a loan is not the only thing for me; [it is] caring for people, and getting them there in the end”.

Patterson is also a mother of two young children, and says broking “works so well around my family”, allowing her to take care of her children and spend time with her husband, who’s often away for work. She says she’d recommend the profession to other young mums.

Broking is a relatively easy profession to enter, Patterson reckons, although she notes that “finding a really good mentor”, and a few extra brokers willing to give advice, can make a huge difference. She’s got some no-nonsense advice for other new brokers: “Go out there and get known for you – for what you’re about, for caring – more than going out to make dollars”.

FEBRUARY 2015 | 23

Loans and Deposit products are provided by Suncorp-Metway Ltd ABN 66 010 831 722, Australian Credit Licence 229882 AFSL 229882 (‘Suncorp Bank’). 27826c 09/01/15 A L

Banking Australia

General Insurance Australia

Suncorp Life Australia

Loans and Deposit products are provided by Suncorp-Metway Ltd ABN 66 010 831 722, Australian Credit Licence 229882 AFSL 229882 (â&#x20AC;&#x2DC;Suncorp Bankâ&#x20AC;&#x2122;). Approved applicants only. Fees, charges, terms and conditions apply and are available on request. Various products and services including banking, superannuation and insurance (including life insurance, home and car insurance) are provided by separate companies in the Suncorp Group. Suncorp Bank is only liable for the banking products or services it provides and not the products and services of other companies in the Suncorp Group.

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SPECIAL REPORT / YOUNG GUNS

Jason Zhao Award Mortgage, 4WBLCW /48 Total annual settlements: $78,958,666 Age: 32 Aggregator: Finsure â&#x20AC;&#x153;I consider myself a positive, enthusiastic, and genuine person. I take pride in my ability to multitask as well as my ability and dedication towards ďŹ nding customers the right home loan and ďŹ nalising deals that every party is completely satisďŹ ed with.â&#x20AC;?

Joel Wyld 0VWECL )MKC -M?LQ &BECAJGç /48 Total annual settlements: $52,646,400 Age: 28 Aggregator: AFG 2014 was a satisfying year for Joel Wyld. After four years as relationship manager at AFG, his return to the aggregatorâ&#x20AC;&#x2122;s NSW awards â&#x20AC;&#x201C; not as staff, but as their Young Gun broker â&#x20AC;&#x201C; showed how far he had come.

Wyld left school at 15 and went straight into ďŹ nancial services, although he didnâ&#x20AC;&#x2122;t go into broking

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Martin Lam Australian Credit and 'GL?LAC 4SPPW )GJJQ /48 Total annual settlements: $27,291,966 Age: 28 Aggregator: Connective â&#x20AC;&#x153;Martin has the ability to make the difďŹ cult seem simple; he has a solution-seeking attitude which allows him to resolve any client request or scenario.

With a sharp mind and unbridled knowledge of the ďŹ nance industry, his clients are his greatest advocates.â&#x20AC;? â&#x20AC;&#x201C; Domenic Circosta, Australian Credit and Finance

until years later. However, he believes broking can and should be promoted as a career path at school. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s lucrative: the best broker in Australia will be earning 90% more than doctors and working just as hard,â&#x20AC;? he says.

While Wyld supports the MFAAâ&#x20AC;&#x2122;s mentoring scheme, he suggests matching mentors with new brokers based on age and personality could make it more effective. But he insists that â&#x20AC;&#x153;more emphasis needs to be put on brokers ďŹ nding and hiring staff themselvesâ&#x20AC;?.

An important element of Wyldâ&#x20AC;&#x2122;s strategy is working closely with real estate agents at McGrath (which owns Oxygen Home Loans), including sponsoring their awards and taking top realtors out to dinner. The steady stream of referrals is paying off, with Wyld a ďŹ nalist for this yearâ&#x20AC;&#x2122;s Australian Mortgage Award for Young Gun â&#x20AC;&#x201C; Independent.

According to Oxygen Home Loans chief Allan Hemmings, Wyldâ&#x20AC;&#x2122;s â&#x20AC;&#x153;energy and enthusiasm are infectious â&#x20AC;Ś and will ensure Joelâ&#x20AC;&#x2122;s business continues to growâ&#x20AC;?. Listening to Wyld, this enthusiasm and hunger soon becomes apparent. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s an industry thatâ&#x20AC;&#x2122;s very young,â&#x20AC;? he says, â&#x20AC;&#x153;and you can really stamp your authority [on it] and create your own style â&#x20AC;Ś weâ&#x20AC;&#x2122;re 50% of the industry; we should be at 100%.

Why anyone would use a bank I donâ&#x20AC;&#x2122;t know.â&#x20AC;?

Itâ&#x20AC;&#x2122;s a hunger that is vital for new brokers to succeed, Wyld insists. â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;ve got to work really hard; thereâ&#x20AC;&#x2122;s no secret to being a good broker â&#x20AC;Ś donâ&#x20AC;&#x2122;t get disheartened; donâ&#x20AC;&#x2122;t give up. Make heaps of customer calls; set yourself some goals.â&#x20AC;?

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Mark Collins Aussie, Port Macquarie, NSW Total annual settlements: $15,546,938 Age: 33 “Mark purchased Aussie Port Macquarie from Reg McGlashan on 1/8/2013 and came to Aussie with no prior mortgage broking experience. He did have a sound background in management (Pack & Send) and owned a number of successful companies that required entrepreneurial skills.

His wife Fiona also works in the business as an office manager and has one broker, David Murray.”

– Steve Jones, retail business consultant, Aussie

Loren Adams Smartmove, Neutral Bay, NSW Total annual settlements: $41,517,734 Age: 25 Aggregator: AFG

“Loren is dedicated to helping her clients achieve their dream by sourcing the perfect lending solution.”

– David Bell, director, Smartmove Loren was also a finalist for the 2014 Australian Mortgage Awards Young Gun of the Year – Independent.

Gary Allen Aussie, Morley, WA Total annual settlements: $21,396,507 Age: 33

David Sims “Gary first entered the mortgage broking industry in August 2013, having been a tradesman prior to this. Gary immediately impressed with his strong work ethic. As soon as he was accredited, Gary immersed himself in many prospecting activities.

His pipeline of opportunities built quickly. In his fifth full month in the business, Gary lodged $5.2m, an outstanding achievement for someone with no previous financial services experience.

But the real foundation of Gary’s success has been his customer focus and demonstrated by the regular formal customer commendations that have been received over the past 12 months.”

– Guy Sanders, retail business consultant, Aussie

Mortgage Choice in Belmont, Cloverdale, WA Total annual settlements: $22,565,551 Age: 31 “David Sims is a fantastic broker. He has an exceptional work ethic and constantly goes above and beyond for his customers. He has a passion for helping customers and is determined to put them into the right solution for their needs. Furthermore, his skills in the online space are very good. He has a great understanding of technology, which should bode well for him in the future. Finally, David knows what it takes to be successful, having worked for himself before. Moving forward, I expect David to be a dominant force in mortgage broking.”

– Andrew Sawyer, franchise owner, Mortgage Choice in Belmont

FEBRUARY 2015 | 27

SPECIAL REPORT / YOUNG GUNS

Sebastian Watkins Australian Credit and Finance, Surry Hills, NSW Total settlement volume: $31,314,530 Age: 30 Aggregator: Connective

Gareth Robinson Expert Finance Group, Melbourne, Vic Total annual settlements: $15,685,550 Age: 31 Aggregator: Finsure “Gareth genuinely cares about his clients and it shows in his results.

Clients appreciate his straightforward and ethical nature and respond to the caring approach he takes to them as individuals, not just as another client. He continually strives to improve and upskill himself and thus improve the company as a whole. He has helped redefine the company and value-add to the customer experience. I am proud to work with him, and this nomination is just one form of recognition that I am sure will come his way with the results he is achieving.”

– Joel Lockwood, Expert Finance Group

“The man who will always find the best solution. In terms of product knowledge and lender policies, Sebastian is the best I know. Not only does he work extremely closely with his clients, giving them peace of mind; he will always go the extra mile to make sure that the client’s needs and objectives are fulfilled.”

– Eric Mirzayan, Australian Credit and Finance

Nerissa Moore Thomas Hawley Shore Financial, North Sydney, NSW Total annual settlements: $33,000,000 Age: 26 Aggregator: AFG “Thomas Hawley is one of the brightest rising stars in the industry. He is highly driven, hardworking, and obsessed about delivering the best possible outcome for his clients. He is a team player that is always willing to give time to help others get the job done right. His results speak for themselves.

I would highly recommend Thomas.”

– Alex Nochar, managing director, Shore Financial

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Fortune Finance, Melbourne, Vic Total annual settlements: $17,800,890 Age: 30 Aggregator: Finsure “Nerissa has hit the ground running since joining the industry in mid-2013. Bringing experience in both banking and creative fields, she prides herself on her ability to be innovative and creative in her business philosophy. She is passionate about business growth and has introduced a range of complimentary services, employed a loan writer and built a trusted referral network. After recently establishing her second office in Melbourne and as winner of Finsure’s own ‘Young Gun of the Year’ award for Victoria, she has set her goals high for 2015 and looks forward to exciting times ahead.”

– Simon Bednar, BDM, Finsure

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Holly Bundy Bundy Financial, Melbourne, Vic Total annual settlements: $39,054,044 Age: 31 Aggregator: FAST Working in a branch at Bank of Melbourne, Holly Bundy was faced with a dilemma. “I could sit in the branch for the next 15 years and move up to management level … [but] I love lending, it really is my passion, and I wanted to evolve that.” So she went out and set up her own brokerage, Bundy Financial.

Bundy Financial is now flourishing, mainly offering residential finance but also expanding into commercial and asset lending. FAST relationship manager Natasha Ramantanis told MPA that Bundy was held in “very high regard” at the aggregator. “Integrity, commitment, reliability is why Holly has had such rapid success and will have sustainability in this competitive industry.”

As well as managing the business, Bundy also supports the Heart Kids charity, which supports children with heart defects, and the Royal Children’s Hospital in Melbourne, a decision she took after her nephew became particularly ill.

When it comes to those thinking of going into broking, Bundy comments that “if someone was off the street I wouldn’t always recommend it, because I believe you do have to have that experience, but I love it and it’s my passion”. Talking to those in her previous profession, branch banking, she insists that through broking you can better help people. “When you are working direct with a bank you are limited to one product and limited with how you can help your customer.”

The most difficult part of entering the industry for Bundy was “that initial training in compliance”. She’d certainly recommend one-to-one training, although she’s “not sure how successful” current mentoring programs are.

New brokers, she advises, should “put your customers first with everything you do; it’s certainly what I’ve done at my business and why I’ve been successful over the past 12 months”.

Sam Wong Straight Line Finance, Melbourne, Vic Total annual settlements: $25,330,700 Age: 33 Aggregator: Choice “Sam Wong embodies everything that represents the future of the industry. He understands the value of advice and provides excellence through advice. Sam recognises that, as a finance broker, he plays a critical role in helping customers realise their life goals. Sam is an absolute pleasure to deal with and a credit to this industry. His passion and enthusiasm in helping people is evident to all who deal with him.”

– Chris Vellios, partnership manager, Choice Aggregation Sam was also a finalist for the 2014 Australian Mortgage Awards Young Gun of the Year – Independent.

FEBRUARY 2015 | 29

SPECIAL REPORT / YOUNG GUNS

(PGèL $XGNPG eChoice, Sydney, NSW Total annual settlements: $41,471,993 Age: 26 “What I have learnt and admire about Griffin is that he gets on with the job at hand, drives forward at every opportunity, thinks positively, finds the solution, and delivers, always in the clients’ best interest. Griffin has a natural gift of listening to his clients and uncovering what their needs are, and instills client confidence that the process will be managed with utmost care and clear communication. I enjoy following Griffin’s remarkable achievements and he is deserving of recognition for his outstanding results.”

– Scott McTeare, head of sales, eChoice Griffin was also a finalist for the 2014 Australian Mortgage Awards Young Gun of the Year – Franchise.

Stephen Franklin Aussie, Bull Creek, WA Total annual settlements: $37,755,007 Age: 28 “With six years’ banking experience with CBA and a degree in Commerce and Marketing, Steve entered mortgage broking in June 2013 when he opened (in partnership) Aussie Bull Creek. Steve has a total dedication to customer service and a work ethic second to none, exemplified by what he calls the “Sunset Principle” – you don’t go home until all matters that were committed to be delivered that day are delivered. Steve was leading franchisee loan writer nationally for Aussie in July 2014 (his 13th month in the business) with $12.8m in settlements. His store ranked first in WA and second nationally for settlements ($40.7m) in Q1, FY15.”

– Guy Sanders, retail business consultant, Aussie

30 | FEBRUARY 2015

Luke Abraham Aussie, Wynnum, Qld Total annual settlements: $21,728,763 Age: 28 Luke Abraham has a background in money – of sorts.

For nine years Abraham was a croupier and floor manager at Brisbane’s Treasury Casino until the urge for a lifestyle change made him consider broking. “The missus and myself were both sick of doing night shifts and weekend work … we wanted a normal Monday to Friday – I’d say nine to five but I’m doing more hours than that!”

Aussie retail business consultant Peter Easton highly recommended Abraham to MPA, noting that he had settled a refinance application in his first week on the job. In fact, Abraham recalls, he had “four or five clients come through”, thanks to Aussie’s practice of channelling leads to new brokers, which he thinks definitely helps. “You can’t put a price on the brand recognition Aussie has.”

Guaranteeing leads makes entering the profession easier, he reckons. “Commission-only is a fairly daunting concept, and if there was a way to get around that and make it easier it would definitely help.” He also notes the importance of having a mentor in his office, who is always willing to give advice.

Broking is tough, Abraham warns, but “the flexibility is phenomenal, the ability to earn whatever I want to earn; if I want to do no work and earn $20,000 I can do that; if I want to bust my balls and make six figures I can do that”. And he hugely enjoys helping people. “One of the things I used to hate about the casino was taking cash off people; now I’m helping them get ahead, giving them cash.”

For new brokers hoping to emulate Abraham’s successful first week, he advises them to “work hard, learn as much as you can as quick as you can, and set up good referral partnerships”.

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Andrew Strogylos Positive Financial Services, St Leonards, NSW Total annual settlements: $31,715,610 Age: 33 Aggregator: Connective

â&#x20AC;&#x153;I would like to recommend Andrew Strogylos to be accredited as a broker. I have been working with Andrew through Positive Financial Services for over one year on a daily basis. In my 15 yearsâ&#x20AC;&#x2122; experience I have found Andrew to be one of the most diligent and professional ďŹ nance consultants that I have ever had the pleasure of working with. Andrewâ&#x20AC;&#x2122;s submissions are compliant and clear; we have not had any customer complaints or issues regarding his deals. Please note that this recommendation is not something I take lightly and have previously declined making such recommendations for others in the past. In Andrewâ&#x20AC;&#x2122;s case I have no hesitation in acting as a referee for him.â&#x20AC;? â&#x20AC;&#x201C; Melanie Davis, strategic broker relations manager, AFM Andrew was also a ďŹ nalist for the 2014 Australian Mortgage Awards Young Gun of the Year â&#x20AC;&#x201C; Independent.

Eric Mirzayan Australian Credit and Finance, Surry Hills, NSW Total annual settlements: $19,129,800 Age: 33 Aggregator: Connective â&#x20AC;&#x153;Having no ďŹ nance or banking background or training and being able to settle what he did in his ďŹ rst 12 months is testament to the hard work and â&#x20AC;&#x2DC;never dieâ&#x20AC;&#x2122; mentality he has. This attitude is also evident in his dealings with his customers. He works hard for them and always ensures he gets the best outcome possible for all his clients.â&#x20AC;? â&#x20AC;&#x201C; Sebastian Watkins, Australian Credit and Finance

MPA asked Lynda Harris, general manager of people for Aussie Home Loans, what they look for in new brokers: Make age not matter â&#x20AC;&#x153;They need to be able to build credibility with customers, and if theyâ&#x20AC;&#x2122;re too young and too green the customer sits there and thinks why are they doing my home loan. Good brokers have that maturity to show the customer they know their STUĂŠ THEREFORE THE FACT THAT THEY LOOK 22 is quickly forgotten because theyâ&#x20AC;&#x2122;ve got that gravitas.â&#x20AC;?

Want your own business â&#x20AC;&#x153;They need to be hungry; they need to come on board wanting to build their own business. Sometimes that hunger to build a business doesnâ&#x20AC;&#x2122;t happen at the same pace as building a career.

We are looking for people who have balanced university requirements with part-time work. In other words, knowledge and skills with a strong work ethic. If they have worked in mortgage broking while studying, that is a bonus.â&#x20AC;?

Get what you deserve â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve moved from university graduates to people that have three or four yearsâ&#x20AC;&#x2122; working experience ... those people have reached the point where they are frustrated they arenâ&#x20AC;&#x2122;t getting the REWARDS FOR THEIR EĂŠ ORTS $ CORPORATE CAREER has become less important to them, and what is more important is getting recognition and direct reward for the long hours and commitment they are putting in.â&#x20AC;?

Be prepared for the hours â&#x20AC;&#x153;The hours are a factor for young people. $S A MOBILE BROKER YOUgRE GOING INTO THE customersâ&#x20AC;&#x2122; homes, often at night; the appointment goes from 7.30pm to 9pm, and that could be two, three, four nights a week.

You therefore need to be prepared for the impact this can have on your social life.â&#x20AC;?

FEBRUARY 2015 | 31

FEATURE / BROKER EDUCATION

BROKER EDUCATION

IS GROWING UP 32 | FEBRUARY 2015

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THE EDUCATORS

Professional development is moving beyond chasing CPD hours as lenders, trainers and aggregators pioneer new methods to help brokers work ‘on the business’ Is broker education “manifestly inadequate”?

Those were the words used by the Consumer Credit Service WA in its submission to the Parliamentary Joint Committee on Corporations and Financial Services, complaining about incompetent brokers.

Unsurprisingly, the industry didn’t agree, but more surprisingly, the ensuing debate focused less on the minimum qualification, the Certificate IV, and more on professional development. Peter Sullivan, general manager of Astute, told Australian Broker magazine that “it is more important in broking that there is ongoing education of a high standard”, while Jeremy Fisher of 1st Street Home Loans wanted to see “more cooperation and a more uniform approach between our industry bodies to lift the standards of mentoring and ongoing professional development”.

It’s been just over four years since the MFAA went above government requirements to demand a diploma from its members, a move widely criticised at the time and blamed for an exodus of brokers from the industry. MPA asks: Have attitudes to personal development moved on since then? And what options are there for those brokers who do want to expand their skill set?

Linda Cooper, general manager of human resources, Firstfolio

Mario Rehayem, director of sales and distribution, Pepper

Murray Lees, owner, Connective

Sam Boer, general manager of broker sales, Commonwealth Bank

WHY THE CERTIFICATE IV DOESN’T CUT IT To answer these questions, we first need to go back to basics: the Certificate IV, diplomas and new-broker entry schemes. In a recent article for

Paul Eldridge, joint managing director, Australis College FEBRUARY 2015 | 33

FEATURE / BROKER EDUCATION

Australis College (formerly Intellitrain) founder Paul Eldridge argued that “the industry is being let down by short-term thinking and training providers willing to cater to demands for ‘fast and cheap’ education”.

Eldridge delivered a damning message to brokers: “It seems that the industry places so little value on the quality of education being provided by education providers that qualifications are

IV required to enter. Including a six-week ‘boot camp’ and mentoring and support thereafter, the program “[is] modelled on more traditional university graduate programs that are integrated into the practices of other professions”, says head of HR Linda Cooper. The Certificate IV “provides that foundation of theory; we’re layering something on top of that, a structured program to give you practical skills”.

BUILDING AN APPETITE

[The Certificate IV] provides that foundation of theory; we’re layering something on top of that, a structured program to give you practical skills” viewed as just a piece of paper that has to be purchased prior to getting on with the real work – ie it’s just a ‘ticket to operate’.”

Such attitudes, if they exist, don’t sound reflective of an education-orientated industry.

Short timeframes (as low as three weeks for a Certificate IV) and low costs are undermining the value of the qualification, Eldridge claims, adding that ‘shopping on price’ reflected fundamental doubts about the Certificate IV. “Those who do not know how to really sell themselves or who don’t actually value what they provide will often try to compete for business on price,” he says. “So, we have seen RTOs drop and drop their prices in order to win business.”

A number of recent programs suggest that ‘entry level’ now means far more than a Certificate IV. The FBAA, partnering with Australis College, offers scholarships for potential brokers that include a diploma and much more – an interesting move, given the FBAA still doesn’t demand a diploma from their members. Worth $16,900, the FBAA/ Australis College package includes unlimited oneto-one support, two years of mentoring and a large number of additional professional development workshops on subjects like SMSF. Franchise brokerage eChoice (owned by Firstfolio) recently launched its own newentrants ‘graduate program’ – with a Certificate

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If there is a ‘ticket-to-operate’ mentality, it certainly doesn’t seem to be apparent among established brokers. In fact, the participants in MPA’s recent Major Bank Roundtable believed quite the opposite: ANZ’s Keiran Evans emphasised that brokers’ attendance and appetite at his events was “phenomenal”, while Sam Boer of Commonwealth Bank commented that “whenever we put out a series, it’s oversubscribed, so the appetite is there”.

Professional development has, in past years, been heavily associated with continuing professional development [CPD] hours, 30 of which brokers must accrue every year. However, the aggregators MPA spoke to for this feature argued that demand for CPD hours alone didn’t explain the increasing appetite for education they were seeing.

“There’s been a real shift, from my perspective,” explains Choice CEO Stephen Moore, “from treating professional development as CPD hours, to a recognition that ‘to be successful in business, I need to move beyond just technical skill and continue to tune up my business management skills’.”

Murray Lees of Connective insists the CPD hours system is still effective and respected: “[Brokers say], ‘I want to get these points and I want them to mean something as well’; from our point of view, we want real quality rather than writing something just to get points across the line. I think it’s important that points are a part of it, but not the major part.”

While CPD hours are mandatory, aggregators are looking for genuine engagement from their brokers. Lees argues that Connective’s opt-in business model is particularly effective for this purpose: “They opt into whatever services we provide that they actually want to do … if you prefer to do face-to-face, we can do that, or if you prefer webinars, we can do that as well ... how you deliver education is critical; everyone has their different time constraints and preferences for learning material.”

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FEATURE / BROKER EDUCATION

A shift also has occurred in the content of learning courses. “In our PD days, we absolutely avoid it being too much about loan-to-value ratio, not too much about products and interest rates,” Lees explains. “We get people who have nothing to do with finance talking about how they’ve been successful in their areas, and the broker can take that and apply it to what they’re doing.”

‘Rock solid’ product knowledge is still important, Lees insists, but he suggests that aggregators are perhaps not best positioned to provide it.

“Lenders have certainly ramped it up, working directly with brokers, and are doing that side of it really well,” he says. “Our side is about talking to them as small business owners and how they can improve their small business.”

LENDERS AND E-LEARNING Lenders and aggregators have been co-operating for years to put on informative sessions for brokers. However, lenders are increasingly stepping up to provide formal education and advice themselves, presenting new opportunities for brokers.

Pepper’s Better Business program was launched in early 2013 as an “e-learning hub” offered free to Pepper-accredited brokers. It consists of a series of online videos and questionnaires, arranged into modules, based on various topics. Developed alongside brokers, the MFAA and online course creator SalesDNA.com.

CPD HOURS Brokers need 30 CPD hours a year. Here are some examples of how to earn these:

0.5 hours ‘Being a leader’ A 25-minute online course

4 hours ‘Understanding equipment finance’

How you deliver education is critical; everyone has their different time constraints and preferences for learning material” au, the Better Business program also offers CPD hours to brokers who complete the modules.

With 1,800 of Pepper’s approximately 8,000 brokers having completed modules so far, Mario Rehayem, Pepper’s director of sales and distribution, is confident the material on the Better Business hub is popular with brokers. “There are subjects out there that people do because they have to. These subjects that we’ve chosen really have to do with actual development of your skill set,” he says.

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An online course with an online open-book assessment

13 hours ‘Introduction to SMSF lending’ A one-day program with related online videos and assessments Source: MFAA Pathways

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FEATURE / BROKER EDUCATION

People don’t realise that the hardest part of broker education for a lender, especially someone like Pepper, is you can’t align that with a return on investment” Those subjects include interviewing clients, building relationships, value propositions and business plans. In August 2014, Pepper added a module on specialist lending to the hub, and is planning a number of new additions in 2015, with topics like alternative docs and understanding financials particularly likely to appear.

“The largest Achilles heel of a broker usually is that they’re time poor,” Rehayem explains. “[The Better Business hub is] all video modules. They can pause and come back to them, so they don’t have to watch the whole thing again. So it’s really designed around a mortgage broker’s needs.”

MPA got access to the Better Business hub and found the interface surprisingly similar to services

WEBINARS AND E-LEARNING Webinars (live seminars conducted online) and e-learning (online videos and interactive tests) are becoming an increasingly important part of professional development, according to Connective’s Murray Lees. “There’s not the travel overhead involved, and you can do it in the comfort of your own home and also have the ability to absorb it passively – you can watch a webinar and do some work at the same time,” he says.

Pepper’s Mario Rehayem argues that e-learning can help brokers work around their schedules, especially because they can pause and come back to modules later.

Commonwealth Bank also plans to increase its online content, says Sam Boer. “We know everyone is time poor, and by using technology, we can OéER TRAINING PROGRAMS TO BROKERS WHO CAN LEARN IN their own time. It is particularly relevant for regional brokers.”

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like YouTube or Netflix.

Where is the business logic behind Pepper’s Better Business hub? The lender has been heavily advertising the program, yet its first four modules were not directly related to specialist lending. “It is a very costly exercise,” Rehayem admits.

“People don’t realise that the hardest part of broker education for a lender, especially someone like Pepper, is you can’t align that with a return on investment.”

It comes down to Pepper’s value proposition, he explains: “The way we’ve factored in the education program is, we believe it’s something we’d like to give as a value-add to the broker industry, rather than trying to get business from it. That’s a big call to make.”

PROFESSIONAL DEVELOPMENT FOR EXPERIENCED BROKERS Pepper is not the only lender prepared to make that call. For more experienced brokers, programs like Commonwealth Bank’s Kaizen and Lean workshops offer a mix of learning and business consultancy tailored to their brokerages.

CBA’s workshops are mainly about processing and office management, which attracts more seasoned brokers, notes Sam Boer, CBA’s general manager of broker sales. “Rookie brokers are

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focussing on the home loan sale process, understanding a lender’s products, credit policy and processes … an experienced broker is looking at managing the complexities of their business – recruiting and training staff, managing referral partners and lender relationships while keeping new and existing customers happy.”

Lean workshops are one-day events, and Kaizen workshops take up to five days. Raymond Xue of ACA Mortgage Solution, the number-one broker in MPA’s recent Top 100 Brokers survey, says the Kaizen program encouraged him to make extensive changes to his office. Previously, applications passed through several separate staff members; now each application is handled by a single staff member, which had beneficial consequences for customer relationship management.

CBA’s program reflects the maturing of many broker businesses like Xue’s. “Many small businesses grow from a single operator who then expands by employing more staff,” Boer says. “Staff training is done ‘on the job’, and there are few

An experienced broker is looking at managing the complexities of their business – recruiting and training staff, managing referral partners and lender relationships” documented processes … a Lean workshop such as the Value Stream Map will analyse processes and produce a flow chart of the activities, including the service flow, information flow, and time and quality metrics. This leads to a standard procedure for that activity, which existing and new staff can follow, leading to increased efficiencies.”

The workshops are far from cheap and are targeted at brokerages struggling to handle large

FEBRUARY 2015 | 39

FEATURE / BROKER EDUCATION

The challenge of peer-topeer learning is that it’s only as good as the willingness to get involved” numbers of deals, rather than small brokerages trying to improve their numbers. CBA argues that the fee helps show commitment, and claims that workshops “are so transformational for a business that any costs incurred and the perceived ‘lost time’ of the participants is paid back many times over”. They also point out that the bank runs a standard range of PD activities in addition to the Kaizen and Lean programs.

PEER-TO-PEER LEARNING The gulf between Pepper’s flexible online learning and CBA’s intense consultancy sessions illustrates perhaps the greatest challenge for professional development providers: how to cater to brokers of wildly varied levels of experience at a cost acceptable to all.

One aggregator who believes they have found the answer is Choice Aggregation Services, and their preferred approach is peer-to-peer learning. “[It’s] at the very core of our philosophy,” CEO Stephen Moore explains. “The reason why is that all brokers can benefit from it.”

He claims that through peer-to-peer learning, Choice has combined the benefits of scale with individual tailored advice.

For almost three years, Choice has been running sessions – around 110 a year, Moore estimates – in which brokers can have their businesses assessed by their peers and receive feedback, a process Moore describes as “enormously powerful” for businesspeople. These groups typically include around 10 brokers, usually accompanied by an expert – ideally, an experienced broker within the industry, but occasionally a lender or external advisor.

Choice is not the only industry organisation to promote peer-to-peer learning. Connective runs networking breakfasts and roundtables of elite brokers, for example, which Lees explains have both networking and educational purposes.

“Because it’s an open forum, you get some crosspollination of ideas; brokers are really, really good

40 | FEBRUARY 2015

at sharing what they are doing well,” Lees says.

What’s particularly interesting about Choice is the degree to which they’ve integrated peer-topeer learning into their company culture. It’s a concept that’s instilled from day one, Moore explains. “When we’re talking to members, we ask them to come along to one of our events to have a look ... it’s a core part of when we speak to any new brokers,” he says. Indeed, the very success of the method rests on Choice members helping out. As Moore puts it, “the challenge of peer-to-peer learning is that it’s only as good as the willingness to get involved”.

Therefore, sessions are heavily directed by broker feedback; individuals can suggest topics, and Choice will invite certain brokers to attend.

Through this, and brokers’ own self-selection, groups can be aimed at brokers of certain ability levels. Moore mentions local marketing and social media as popular topics for 2015, but also notes that peer-to-peer co-operation now occurs without his prompting: A closed Choice Facebook group allows members to ask each other for advice.

MATURE EDUCATION FOR A MATURE INDUSTRY In a sense, professional development in the industry has come full circle, from compulsory CPD hours to brokers driving and even conducting their own education. But there’s also been a shift in outlook by some lenders and aggregators, from treating education as a classroom exercise to recognising and respecting increasingly mature and established brokerage businesses.

At their core, all these development methods revolve around flexibility, whether that be fitting learning around business hours with online tools or, conversely, bringing experts into the office.

They also are driving improved standards at the entry level, with some training providers and entry-level employers offering far more than the Certificate IV skills demanded by the government.

Pepper’s Rehayem certainly believes so. “If you compare the industry to five years ago, it’s chalk and cheese,” he says. “It’s in a much better position than it has ever been.”

It’s a natural development, concludes Choice’s Moore: “a real recognition that you need to run your business as a business ... it’s a really exciting time for our industry, as they’re becoming true professionals”.

PROFILE / GEORGE FARMER

REPAIR & REBUILD

GEORGE FARMER

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2014’s Young Gun of the Year George Farmer kept Aussie Bundaberg alive through Queensland’s DEVASTATING ÀOODS %UT REBUILDING A TOWN WAS ONE THING REBUILDING A BROKERAGE WAS QUITE ANOTHER Bad luck does strike twice, Queenslanders know all too well. Seven weeks into his new career as a broker, George Farmer was struggling; neglect by the previous brokerage owner had left a legacy of missing client files and community distrust. So when Cyclone Oswald struck on the afternoon of 26 January 2013, many brokers would have seen it as the final straw. For Farmer, it was just the beginning.

Winning the Australian Mortgage Awards Young Gun of the Year award is testament to the astonishing transformation of Aussie Bundaberg over the two years since those floods. Farmer’s brokerage went from being among the weakest Aussie franchises in the country to one of its fastest growing, through quick reactions, innovative marketing and tireless attention to community opinion.

It helps that Farmer’s connection to Bundaberg runs deep: his father moved to the town after leaving the army and Farmer was raised there.

Leaving school, Farmer went straight into work at the front counter of a finance company and worked his way up; he describes himself as an “old-school banker”. He doesn’t feel a lack of university education held him back and he wouldn’t demand it from new hires: “It’s something I’ve faced but not really had issues with … I’ve seen situations where people have got a job because they had a degree, who weren’t really ready for that role … the street smarts and the life experience is often a lot more valuable than having that degree.”

Instead he credits his 18 years in banking as giving him essential skills. “Whatever business you write there you have to collect it,” he explains, “so you get a really good appreciation really quickly for credit, what’s a good deal, what’s a bad deal … it gives you a very strong grounding in credit essentials.” Broking was not on his mind at that time, but becoming increasingly disillusioned as a senior business manager at NAB, he felt it was time for a change. His wife Sandy hailed from Gladstone,

and so they decided to move back to Bundaberg, buying Aussie Bundaberg in December 2012.

“There are some things I’d probably do a little differently” is how Farmer modestly reflects on the move. “I had an expectation that there would be reasonably robust records around client base and those sorts of things, and to a degree some of that is true and some of that wasn’t.” The brokerage was writing just $7m worth of business a year and was in terrible shape: a third of the client files were missing, and the local community was either unaware of the brokerage or downright hostile towards it. Yet Farmer was able to find a silver lining in the clouds: “I was able to see quite quickly there was opportunity there in terms of doing a good job; conversion rates were very low so straight away there’s opportunity to get more business.”

There were holes in the roads where you could literally park a semitrailer in the hole and fill it with sand; you’d never know it was there” The story of the Queensland floods is well known but still retains its power to shock. Seven thousand people in Bundaberg were made homeless, some for months, and the Burnett River burst its banks, leaving the town under 9.5m of water. Farmer vividly recalls the “major, major devastation … there were holes in the roads where you could literally park a semi-trailer in the hole and fill it with sand;

FEBRUARY 2015 | 43

PROFILE / GEORGE FARMER

THINGS TO LOOK OUT FOR WHEN BUYING A BROKERAGE Client information: Examine the state of RECORDS BEFORE ÁNALISING NEGOTIATIONS k LACKING INFORMATION WILL MAKE IT DIêCULT to retain clients.

Demographics: Look at the local population, and at equivalent brokerages and locations elsewhere, to get an idea of your realistic market share.

Conversion rates: Low conversion rates provide an obvious way to kick-start business using existing channels, while working on attracting new clients.

you’d never know it was there”. With 600 businesses flooded, and water knocking 30–40% off the value of houses, the economic impact was far longer lasting. Displaced residents were caught between mortgage repayments for their ruined homes, short-term accommodation rent and mounting credit card bills, as many were made unemployed.

Everything we do is about how we improve our profile within the local community” In response, Aussie Bundaberg partnered with the local council and Salvation Army to offer advice to residents struggling to deal with banks. “We felt we had the information and the skills to be able to contribute that,” remarks Farmer. “Being part of the community and being good corporate citizens, it was incumbent on us to do that.” The key was interpreting banks’ hardship policies, and helping residents explain their precarious situations.

Farmer doesn’t deny there was a business opportunity in getting involved: “I’d be lying if I said we didn’t sit down and talk about it – here’s a way for us to build credibility and build goodwill in the community very quickly.”

Clearly, the Queensland floods were not a straight business boost to Farmer’s business – the town’s economy was wrecked, and many of the residents who used his advice later used their insurance payments to get rid of their mortgages altogether. Valuations suffered across the state, and only now are house prices beginning to recover (although mainly in Brisbane). But the floods were

44 | FEBRUARY 2015

a great opportunity to show the brokerage was under new management, and this was a first and important step in rebuilding Aussie Bundaberg’s local reputation.

MAKING THE MOST OF RADIO MARKETING With only two main stations in the Bundaberg area, Farmer believes radio is a great way to reach his target audience. +E STARTED Oé BY RUNNING A MAJOR campaign, paying $1,000 a month for a minimum of 50 adverts on local stations.

Now he not only advertises but appears on a football-tipping show, in which he and other guests make bets on results, with the winnings going to a charity chosen by listeners. Listeners are relatively young, and he can further engage with them through Aussie Bundaberg and the radio’s social media platforms. +E URGES OTHER BROKERS TO GO BEYOND JUST ADVERTISING h:EgRE ALWAYS LOOKING FOR DIéERENT ways we can leverage that contact, those networks, as we look for with everything we do.”

“Everything we do is about how we improve our profile within the local community” is how Farmer defines his current approach to running the brokerage. Working alongside his wife Sandy, who is trained as a loan writer, and one supporting staff member, Farmer has ploughed resources into the brokerage. As well as his radio advertising campaign and Facebook page, Aussie Bundaberg’s office and signage underwent considerable renovation, and it now has two branded vehicles and staff uniforms. It’s well located and highly visible, in central Bundaberg, and is rewarded by a large number of walk-in clients. Furthermore, Farmer’s scrupulous attention to customer relationship management is paying off: “One thing that’s very pleasing to me, given from where we’ve come, is the repeat and referral business we’re now getting. That accounts for 30–40% of all the business we write.”

Aussie Bundaberg was writing $7m worth of loans when Farmer arrived; it wrote $22m in the following 12 months, and Farmer is convinced he can double that number. “Doubling our current loan volumes is absolutely achievable,” he argues.

“I have a view that if you have good people in a business with a name that is as respected and trusted as Aussie, then your market share should

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be well and truly above what the natural market share of the franchise is.” He’s also planning to take on another loan writer and run a series of local seminars, something “that typically hasn’t been done in town, or has only been done very sporadically”.

The brokerage is a family affair, being run by Farmer and his wife, whose two children are 15 and seven years old. Farmer is involved in a variety of sports – cricket, fishing and golf, although his handicap (11) has fallen far from its glory days (4).

He’s also a DIY enthusiast: “Next on the agenda is a wood-fired pizza oven at home.”

What can other brokers learn from Farmer’s example? The Queensland floods were a unique and tragic occurrence, but Aussie Bundaberg’s success lies in their aftermath: rebuilding a reputation along with the town’s wider recovery.

Neither happened overnight but required continual effort, Farmer emphasises. “Do what you say you will do, go above and beyond, and do everything to improve your profile.”

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FEBRUARY 2015 | 45

FEATURE / FIRST HOME BUYERS

FIRST HOME BUYERS GUIDE Don’t be alarmed by the headlines - there’s more than one type of ÁRST HOME BUYER OUT there and they’re more LIKELY TO USE A BROKER than ever

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:MS KGEFR RFGLI WMS ILMU UF?R ? Âż PQR FMKC buyer looks like.

The mountains of newspaper print lavished on the subject have produced a stereotype, the â&#x20AC;&#x2DC;basement graduateâ&#x20AC;&#x2122;, who can barely nab a job, let alone scrape together the money to move away from home (and donâ&#x20AC;&#x2122;t even bother trying to live in Sydney). So itâ&#x20AC;&#x2122;s understandable why brokers might see chasing such a client as simply not worth the effort.

We want to introduce you to a different cast of characters: the clued-up young professional, the business-minded rentvestor and the keen young couple with a spotless credit history.

Theyâ&#x20AC;&#x2122;re all ďŹ rst home buyers, but not the type youâ&#x20AC;&#x2122;re likely to read about. And while you might not know about them, theyâ&#x20AC;&#x2122;re more likely to seek a brokerâ&#x20AC;&#x2122;s help than ever before.

Read on for advice from expert brokers and lenders on how you can engage with Australiaâ&#x20AC;&#x2122;s real ďŹ rst home buyer market, and defy the headlines.

" .&44"(& '30. 063 410/403 CommBank has helped more Australians to invest in residential real estate than any other bank. After all, home ownership is the Great Aussie Dream.

But recently this dream seems to have faded for some, and the customer SEGMENT MOST UNDER PRESSURE RIGHT NOW IS THE Ă RST HOME BUYER 6AVING FOR A DEPOSIT IS THE BIGGEST CONCERN FOR MANY Ă RST HOME BUYERS and as property prices push up in metropolitan areas, so too does the size of the deposit needed.

Realising this challenge, CBA has developed innovative solutions to help these customers realise their home buying dreams. Our market leading Guarantors Support policy allows parents to help their children enter the market by mortgaging their own property as additional security for their childrenâ&#x20AC;&#x2122;s new home loan. Guarantor Support assists customers to borrow more funds than what they may have otherwise been eligible for.

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CBA is also helping to enhance the professional reputation of mortgage BROKERS BY INTRODUCING SIMPLIĂ ED PROCESSES FASTER TURNAROUND TIMES Ă&#x20AC; EXIBLE CREDIT POLICIES AND Ă&#x20AC; EXIBLE HOME LOAN PRODUCT SOLUTIONS SUCH AS OUR MARKET LEADING (VERYDAY 2ĂŠ SET 7HESE IMPROVEMENTS WILL ENABLE BROKERS TO SERVE ALL SEGMENTS MORE EĂŞ CIENTLY INCLUDING INVESTORS REĂ NANCERS AND Ă RST HOME BUYERS 4?K #MCP (CLCP?J K?L?ECP @PMICP Q?JCQ 5FGPB 1?PRW #?LIGLE

FEBRUARY 2015 | 47

FEATURE / FIRST HOME BUYERS

AFFORDABILITY First home buyers are undoubtedly in a challenging position at the moment. Rising prices in Sydney and Melbourne in particular and falling government assistance mean first home buyers make up just 11.8% of new loans, according to the ABS. However, this figure is disputed; some banks only identify first home buyers by those that use government grants, thereby ignoring investors, those going for established properties, and those simply not using the grant.

Moreover grants, and affordability, vary hugely by state. First home buyers in Sydney and Victoria may be struggling, but Simon Kahl, general manager of The Loan Company, says that’s not the whole story in Perth: “We’re still above the long-term trend … I think [first home buyers] are relatively well-positioned. I think affordability will always be a factor, in terms of banks changing policies and shying away from the 95% LVR space.” Changes in affordability in WA are generally manifested in shrinking lot sizes, he adds.

At a national level, first home buyers are not immune from the lure of record-low interest rates.

One in five prospective first home buyers intended to buy in 2014, up from one in eight in 2013, according to a survey by RAMS. Sixty-five per cent of respondents said now was a good time to buy, and 70% said rising interest rates would not put them off, although both numbers fell slightly from last year.

“There is a recognition amongst the group that they need to get on that property ladder, they recognise the importance of that first step and making it sooner rather than later,” explains RAMS CEO Martine Jager. “People are waiting later to get into the first home buyers market, but now is the right time.”

CLUED UP YOUNG PROFESSIONALS Waiting for the right time is producing a different type of first home buyer: the cluedup young professional.

Broker Theo Jansen is himself a young professional, but we talked to him about his particular client base at Mortgage Choice Melbourne.

How was the first home buyer market faring in his eyes?

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YOUNG BUYERS ARE MORE LIKELY TO USE A BROKER

28%

42%

of over-45s would use a broker

of under-45s would use a broker

Source: QBE Barometer 2014

“We’ve definitely seen a notable decrease,” Jansen replies. That’s odd, he explains, because “serviceability tends to be one of the strongest out of most of the people we’re dealing with”. The first home buyers Jansen deals with are relatively wellpaid young professionals working in Melbourne’s CBD and usually “have got some sort of deposit”.

Although well paid, deposits remain a struggle; “I’ve seen many clients earning more than $100,000 each and together they can’t get a deposit together because they’re renting.”

In addition to being wealthier, Jansen’s clients are also likely to be older. Those over the age of 36 made up 41% of RAMS’ survey respondents; those under 25 just 18% (a sharp change from last year).

Jansen client’s are “late twenties to early thirties – more later twenties”. As he points out, these clients have worked for seven or eight years and have relatively good incomes. Moreover older clients have affected Jansen’s approach as a broker.

For a start, his clients are generally less naive; in fact “the complete opposite”, Jansen argues. “I’d say first home buyers are pretty well-educated these days as to what they can and can’t do.

Everyone knows how lending works these days – gone are the days where people would come in with

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FEATURE / FIRST HOME BUYERS

$5,000 in the bank account and want to buy something.”

Parental gifts and guarantees – recently touted

by Smartline and others as a way to get on the housing ladder – aren’t so popular among Jansen’s clients. “I find that a lot of first home buyers would rather do it themselves,” he explains. “Maybe it’s just an emotional thing; I have clients whose parents have heaps of cash and equity and so forth, but they say we’d rather put it together ourselves and not get the parents involved.” Therefore he rarely brings up the conversation himself; clients looking at the option usually mention it to him.

“When they really get nervous is once they’ve purchased,” Jansen notes. For him, the handholding which is generally associated with first home buyers is generally required in “the time between getting a finance course and loan approval [which] is a long time mentally for first home buyers”.

Brokers targeting such clients, he adds, need to have patience: “You can’t get every deal … An

DON’T BELIEVE ALL THE NUMBERS YOU READ

There is a recognition amongst [FHBs] that they need to get on that property ladder … people are waiting later to get into the first home buyers market, but now is the right time” hour’s conversation about banks’ products – who cares? At the end of the day the client wants to know where they’ve got to be; how much are their repayments roughly, set a savings goal based on what the repayments are going to be, touch base in 12 months and if they’ve saved they’ve saved; if they haven’t they haven’t.”

RENTVESTORS

First home buyers make up just 11.8% of loan approvals in ABS ¿ESPCQ @SR DMP

3/4 brokers...

...they make up more than 11% of the business Source: Genworth Home Grown Report

50 | FEBRUARY 2015

First home buyers are more clued up than before, and perhaps none more so than the ‘rentvestors’ – a term coined by real estate firm LJ Hooker for those buying their first property to rent out while themselves remaining in central-city rental properties, or in the family home.

“The great Australian dream of home ownership is not fading away, it’s just that the goal posts are changing,” John Kolenda of 1300 Home Loan told Australian Broker magazine. “These Gen Ys enjoy the inner city lifestyle and are happy to rent in those areas or live at home with their parents but they also see the advantages of investing in property in suburbs where they can afford to buy.”

Generation Y, often referred to as millennials, are those born from the 1980s onwards. Fiftyseven per cent of generation Y respondents to Mortgage Choice’s 2014 first home buyers survey wanted “to set myself up financially for the future by getting my foot in the property market door”,

while 54% of prospective buyers in another Mortgage Choice survey felt ‘priced out’ of areas they’d like to live in. So it could make sense to buy an investment property in an affordable suburb, without sacrificing an inner-city lifestyle.

While mainstream media are now beginning to eagerly talk about rentvestors, the brokers we talked to were cautious about the phenomenon.

Jansen says the higher deposit demanded by lenders for investment properties can put the option beyond reach: “Unless you’ve got someone backing you with a gift, buying something as an investment to start off with is a great idea in principle but to actually get the money to it is a whole other saga.”

Similarly Kahl doesn’t encounter many rentvestors in Perth: “I’ve never seen a trend towards a large number of first home buyers buying a property to rent it out.” Bianca Long of Mortgage Choice Glenwood and Blacktown told MPA rentvestors had been a trend earlier in 2014: “A lot of the first home owners were prepared [to use] their First Home Owner Grant for the sake of getting into the market.” However, in recent months “we’ve seen that option soften a lot for first home buyers, and that’s simply based on banking policy” – referring to the stricter LVRs and mortgage insurance demanded of investors by lenders.

KEEN YOUNG COUPLES While rentvestors are a group widely forecasted but perhaps yet to actually materialise, there exists another group which most commentators assumed had disappeared: young couples (aged 25 or under), looking to settle down in a home together.

We were introduced to this group by Bianca Long, whose location in western Sydney means she is at the frontline of shifting first home buyer patterns. She describes the intense construction in her suburbs as ‘phenomenal’, and reckons it’s being driven by first home buyers fleeing central Sydney prices, and chasing first home buyer grants.

What’s really phenomenal about Long’s area is the clients: “We notice they’re coming in younger and younger, we’ve got a lot of them in their early 20s that are coming through who actually have quite substantial deposits.” The appetite of young

GRANTS BY STATE NEW HOMES ESTABLISHED HOMES

$5,000 NEW HOMES

$10,000

WA

$26,000

NEW HOMES

$15,000

NT NEW HOMES

QLD NEW HOMES

$15,000

$15,000

SA NEW HOMES

$10,000

NSW ACT

VIC

NEW OR SUBSTANTIALLY RENOVATED HOMES

NEW HOMES

$10,000

TAS

$12,500

Source: individual state revenue offices, correct at time of writing

people for buying a house, argues Long, “absolutely has not diminished, it is simply a case of reassessing based on affordability, lifestyle and deposits and it means they have to change direction when looking where to put down roots”.

It’d be tempting to assume Long’s clients are at the margins of the market, dependent on particularly lenient lenders willing to overlook problematic details. Not so, Long explains: “I have seen such a huge change in this industry.

When I came in it was about ‘how many credit cards do you have’ [or] ‘how many personal loans do you have’ … it’s not uncommon now for my first home buyers not to have any liabilities against them whatsoever … they don’t even hold a $2,000 credit card. A lot of them are living with mum and dad and injecting everything they’ve got into it.”

Long says her young customers therefore present as “excellent clients”; they often have joint incomes, residential stability from living at home, no dependants and no debts. Crucially, the banks have relaxed their policies on genuine savings, allowing first home buyers to use rental ledgers and other documents. Loan Company’s

FEBRUARY 2015 | 51

FEATURE / FIRST HOME BUYERS

general manager Kahl also praised the attempts of particular banks to adapt to first home buyers’ situations.

Dealing with particularly young couples does mean that Long often deals with parents. A common fear of brokers in this sector is that their conversations could be inaccurately passed on to suspicious parents, who then try to block the Theo Jansen, loan consultant, Mortgage Choice Melbourne

An hour’s conversation about banks’ products – who cares?

At the end of the day the client wants to know where they’ve got to be” process. Long deals with this by finding out early if parents are likely to be involved, and then involving them in actual meetings as much as possible.

Parents can in fact be a valuable referral source, she adds: “Either the parents know the broker or know somebody [that does] and have built up that relationship that way.”

Handholding and patience is necessary in this market, insists Long. “Patience is key … people are often receiving a lot of advice, whether it be truth or not, on the way they should be turning, and it really does confuse the buyer greatly.” This is confounded by borrowers doing their own research online, without understanding the material they’re reading. Long, along with her team in the office, counters this by explaining the buying process in its entirety at her initial meeting with the client.

THE FUTURE FIRST HOME BUYER Evidently the appetite for bricks and mortar, the ‘great Australian dream’, still thrives within young Australians. So what will the first home buyer of the future look like?

52 | FEBRUARY 2015

That will depend, for a start, on the availability and criteria of First Home Owner Grants. These have been pared down substantially across all states, and for some are now available only for new builds. Genworth’s Home Grown survey found the industry highly sceptical of grants’ effectiveness: ME Bank CEO Jamie McPhee was quoted as saying “First Home Owner Grants just get more people chasing the same number of products, and that just pushes up prices. Try to get land released and encourage building of new dwellings”.

However, this is not a universal view. Departing Mortgage Choice CEO Michael Russell told the audience at the franchise’s recent media lunch that he did not believe First Home Owner Grants inflated prices. Furthermore, 2014 saw house prices outpace wages, and although price growth has slowed more recently, this fundamental gap of wages and prices will continue to inspire calls for improved grants.

Stamp duty was another theme raised by a couple of the brokers we talked to. In Western Australia, stamp duty is waived for values of up to $400,000 on vacant land for first home buyers, which Kahl called a significant cost-saving for his clients. Jansen suggested the stamp duty concession threshold was too low in Victoria, and should be raised from its current level of $600,000 to $650,000 or more.

The Real Estate Institute of New South Wales has also called for stamp duty thresholds to be raised. REINSW deputy president John Cunningham commented that “the current incentives for first home buyers are simply not working. By offering grants on new-builds only, they are pitting first home buyers against cashedup investors as well as foreign investors”. He argued that thresholds were based on out-dated figures from 25 years ago.

One suggestion, made by South Australia Senator Nick Xenephon in July 2014, was that first home buyers should be allowed to use their superannuation to fund their first home. The call was backed by Senator Matthew Canavan and also Mortgage Choice, on the grounds that higher deposits would reduce LMI costs.

The inspiration for Xenephon’s plan is Canada and its Home Buyers Plan, where borrowers can access up to $25,000 a year (CAD) from their super, providing they pay the money back over the next 15 years. However, any proposal to further mix SMSF and property will depend on the results of the Financial Systems Inquiry, which at the time of writing was yet to be released.

When I came in it was about â&#x20AC;&#x2DC;how many credit cards do you haveâ&#x20AC;&#x2122; [or] â&#x20AC;&#x2DC;how many personal loans do you haveâ&#x20AC;&#x2122; â&#x20AC;Ś itâ&#x20AC;&#x2122;s not uncommon now for my ďŹ rst home buyers not to have any liabilities against them whatsoeverâ&#x20AC;?

THE ROLE OF THE INDUSTRY While itâ&#x20AC;&#x2122;s generally assumed ďŹ rst home buyers are the governmentâ&#x20AC;&#x2122;s problem, the industry also has an important role to play, lenders in particular.

Specialist lenders have been especially helpful to The Loan Company, Kahl argues. Keystart, a government-owned lender in Western Australia, provides very high LVR loans (including a 98% product) to clients in certain areas and with certain incomes: â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a great government initiative which really does hold up the market,â&#x20AC;? explains Kahl.

Yet specialist lenders account for a tiny fraction of the market, and ďŹ rst home buyers will continue looking at more established lenders. What the brokers featured in this article overwhelmingly told MPA is that lenders need to work harder to recognise ďŹ rst home buyersâ&#x20AC;&#x2122; speciďŹ c situations.

This could involve further relaxation of genuine savings policies, higher LVR loans, or products designed for those with high incomes but low deposit savings.

Of course nothing will change if lenders â&#x20AC;&#x201C; and brokers â&#x20AC;&#x201C; stick with the old stereotypes. So stop lamenting the situation of the basement graduate: the clued-up young professional, the rentvestor and the keen young couple are out there, and looking for your business.

GRANT TAKERS BEWARE Broker Bianca Long argues grants can push buyers into inappropriate purchases: h7HESE Ă RST HOME OWNERS they want to stay within their budget, they donâ&#x20AC;&#x2122;t WANT THE Ă VE BEDROOM house with the theatre room, they do want something thatâ&#x20AC;&#x2122;s established and WITHIN THEIR LIVING REQUIREMENTS h+OWEVER WHEN THEYgRE SITTING across from me Iâ&#x20AC;&#x2122;m going to say â&#x20AC;&#x2DC;Iâ&#x20AC;&#x2122;m SORRY YOUgVE GOT THATgS NOT enough to go purchase a home worth +OWEVER BECAUSE YOUgRE A Ă RST HOME OWNER YOU CAN GO OUT AND buy a brand new home, right here right NOW FOR NO STAMP DUTY GRANT AND YOUgVE GOT ENOUGH DEPOSIT FOR IT â&#x20AC;&#x153;What that is automatically doing is it IS ENCOURAGING Ă RST HOME OWNERS TO PUSH THEMSELVES INTO A HIGHER MARKET than what they were originally looking AT ,F YOU COUPLE THAT WITH A MARKET WHERE THE RATES ARE LOWER THAN THEYgVE been for years, I think it is potentially GOING TO PUSH A LOT OF Ă RST HOME OWNERS INTO A VERY HIGH RISK WHEN MARKET RATES DO START TO MOVE i

Simon Kahl, principal, The Loan Company

Bianca Long, mortgage broker, Mortgage Choice Glenwood

FEBRUARY 2015 | 53

BUSINESS STRATEGY / SOCIAL MEDIA

7 54 | FEBRUARY 2015

TIPS

FOR GROWING YOUR BUSINESS THROUGH SOCIAL MEDIA Everyone else is doing it... and you need to as well!

Love it or hate it, social media is a necessity in this day and age and you need to get your broking business out there and in peopleâ&#x20AC;&#x2122;s consciousness... but most important of all, you need to stand out.

Natasa Denman shows us how

MPAMAGAZINE.COM.AU

Comment on and ‘like’ your fans’ interactions on social media – this way they feel that they are special to you and it is proven that when people like you, they are a lot more likely to do business with you

One of the easiest ways to grow your broking business is via social media. There are those in the industry who love it and there are those that loathe it yet every operator has the opportunity to use social media to expand their business’ reach.

All smart business owners are using social media to engage with their customers where THEY are hanging out. Put simply, if you and your business aren’t on social media, you are already one step behind your competitors, so why not let your business knock your competitors out of the park?

I started using social media for my business over three years ago and focused mainly on the two biggest platforms for small business: Facebook and LinkedIn. I was still building my business the traditional ways with advertising, networking and marketing yet saw the opportunity of reaching a wider audience online.

There were some challenges that I encountered in the early days and I found some things worked and some things didn’t. The more I learned through experience and the more I researched social media and implemented a few strategies, the better the results became. In fact, the results were so good I started having other business owners I knew asking me how I did it.

I have spoken to many professional service business owners and they tell me that they don’t use social media as it is their expertise, not themselves, that people buy. I agree with that to a point and that is why I encourage them to talk about their experience and educate their potential leads online through social media.

I have helped many professional service business owners to grow their profile online and increase their customer numbers over their industry average. It doesn’t need to be tacky, or time consuming; you just need to follow the recipe.

Rather than dip your toe in the water and then get out as the water’s too cold, just jump in and announce yourself to the world.

Here are my top seven ways to grow your business through social media.

TIP 1. Don’t spread yourself too thin Take some time understanding where your potential customers and clients spend their time on social media and then make sure you go there. Just about every business’ customers are on Facebook and then you can choose between Pinterest (for visual medium), LinkedIn, (for business connections), Twitter or Google+. I advise you to choose the platforms that you will focus on and make them the priority rather than just do a little bit everywhere. LinkedIn has been proven to have the

FEBRUARY 2015 | 55

BUSINESS STRATEGY / SOCIAL MEDIA

Share videos you have made via social media. And donâ&#x20AC;&#x2122;t delete bloopers. They endear you even more to your target audience through your genuineness most afďŹ&#x201A;uent members on their platform so make sure that you are fully engaged there.

TIP 2. Be consistent In the beginning you can often feel like you are talking to yourself as your Facebook business page or status updates resemble a ghost town. Attracting a tribe or community is not an easy thing to do unless you turn up every day and show that you are serious about being on social media. Letâ&#x20AC;&#x2122;s use Facebook as an example: comment on and â&#x20AC;&#x2DC;likeâ&#x20AC;&#x2122; your fansâ&#x20AC;&#x2122; interactions â&#x20AC;&#x201C; this way they feel that they are special to you and it is proven that when people like you, they are a lot more likely to do business with you.

Natasa Denman is a skilled executive coach, author of four best-selling books, and founder of The Ultimate 48 Hour Author. Within her mentoring program she guides time-poor entrepreneurs and business owners through the publishing process so that they can have their own story in print. Natasa is also A Ă NALIST IN THE PRESTIGIOUS AusMumpreneur Awards 2014. For more information visit www. ultimate48hourauthor.com.

AU AND THE Ă RST TWO PEOPLE to email Natasa at book@ ultimate48hourauthor.com. au will also receive a free copy of her book

56 | FEBRUARY 2015

TIP 3. Add value Social media is not the place to go to try to sell, which is where many people trip up.

For many, it is like when people knock on your door at home and try to sell to you. If you go about it this way, it is a sure ďŹ re way to lose the engagement with your audience and you can actually do a tremendous amount of damage to your brand. Instead, just add value. Post relevant information that will make your audienceâ&#x20AC;&#x2122;s lives better and increase their interest in your industry or offerings. Solve their problem through your expertise and share stories or case studies that back up your information.

TIP 4. Follow up This is a pertinent tip for LinkedIn, however it is just as important on other platforms. If someone connects with you, make sure you have a follow up system in place. Reply in a personal way and say how happy you are that they have connected with you. Ask what it was that made them choose to connect with you and offer to be available to help them if needed. This is another way of being social and building relationships; as we know, people buy from people that they like and trust.

TIP 5. Be the positive authority ďŹ gure No-one wants to hear about your â&#x20AC;&#x2DC;woe is meâ&#x20AC;&#x2122; problems on

social media or about clients that have just left you. If you are having challenges, wait until you have overcome them and then share them as a learning experience for your audience on how they too can overcome their challenges rather than using social media as a place to vent. Never post negative comments about any customers or competitors. Be the expert and authority ďŹ gure that leads by example and show the best side of you all of the time.

TIP 6. Get involved in videos These days, videos are the most popular way for people to make a connection with their intended audience. People trust video a lot more than written copy, especially when they appear unscripted and genuine. I know being on video for many people can be scarier than death but so is having your business fail. To be successful, sometimes you have to do what others wonâ&#x20AC;&#x2122;t do and video is one of these things. Using an iPhone for ďŹ lming is perfect as it isnâ&#x20AC;&#x2122;t a large, distracting video camera and the video can be directly uploaded to YouTube for you to share on your other social media platforms or your website.

Make some funny ones as well as educational ones and donâ&#x20AC;&#x2122;t delete bloopers. They endear you even more to your target audience through your genuineness.

TIP 7. Target advertise on Facebook and LinkedIn Facebook and LinkedIn have this rather cool ability to advertise a promotion or your business to people in an exact geographical location which is great when you are boundary restrained. Not only can you choose the area you are going to advertise to, you can also choose their age, sex, occupation and anything else you know about your businessâ&#x20AC;&#x2122;s avatar (ideal client). By really targeting your exact area and client, your dollar spend is signiďŹ cantly lower than an expensive marketing campaign which can be very hit and miss. Your advertisement will then be shown to your exact audience when they are on Facebook and LinkedIn. Now, setting this up can take a bit of time and effort so either make the investment in paying someone to manage this for you or follow the step-by-step instructions on Facebook tutorial, LinkedIn tutorial or even YouTube.

Make sure that you keep your personality and realness and you will have that never-ending stream of clients you always wanted without even touching on referral-based business, which is a huge part of the industry.

Read Mortgage Professional Australia anywhere, anytime

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BUSINESS STRATEGY / DOWNSIZING

LETTING GO WELL

MINIMISING THE IMPACT OF DOWNSIZING Making redundancies during a time of DOWNSIZING CAN BE TRAUMATIC FOR THE STAé involved – for the people being let go, as well as the managers having to make the tough decisions. Karen Gately explains how to smooth this transition and help ensure the survival of the business

58 | FEBRUARY 2015

MPAMAGAZINE.COM.AU

Unfortunately, large-scale job losses continue to feature all too frequently in our news headlines.

Tough economic conditions, rapidly changing industries and competitive markets are commonly reported reasons for corporate downsizing. Qantas, Channel 10 and the ABC are just a few of the highprofile organisations currently faced with the challenging task of dramatically reducing the size of their workforces.

While staffing cuts are typically made with the intention of strengthening an organisation’s future, how the process is managed will impact the extent to which benefits are realised. Lost productivity, diminished quality of products and services, and inflated employment costs due to high staff turnover are just a few of the challenges organisations face when downsizing isn’t managed well.

While there is nothing anyone can do to entirely avoid the pain inherent in downsizing, a planned and compassionate approach will go some way to minimising adverse impacts on people and ensuring the organisation’s spirit and capabilities are protected for the future. For any team to move forward with strength to a better and brighter future, trust in and respect for the organisation’s leadership team is essential. The approach to leading change will have a powerful impact on trust and respect.

LAY FOUNDATIONS OF TRUST Minimising the impacts of downsizing should begin long before it becomes necessary to make redundancy decisions. Making substantial changes to your workforce while maintaining engagement from the rest of your team is only possible when people trust and feel loyalty toward the organisation. Trust is at the core of any strong relationship; nothing has as great an influence on the success of a team, especially when faced with difficult circumstances.

When times are tough, people who trust their manager and leadership team are more likely to

accept decisions made to protect the viability of the business. When trust in the character and competence of leaders is low, resistance and conflicts typically escalate. Without trust, a leader will struggle to inspire people to strive at the best of times, let alone when they are facing a future of uncertainty or little hope of success.

LOOK AHEAD It is sometimes challenging to forecast conditions and circumstances that will lead to downsizing.

However, adopting a planned and considered approach to running your business will go some way to ensuring you see challenges coming before they arrive. Forecasting what is likely puts you in the driver’s seat, enabling you to be ready for and proactively manage change.

A structured and disciplined approach to change planning and implementation is key to ensuring people are treated with the fairness and respect they deserve. Identifying roles that are no longer required, redeployment opportunities and ultimately redundancies that will occur demand that full and careful consideration are given to both options and their consequences.

Think about what the future looks like before deciding to expand your team or hire new people.

Maintain an optimal level of resourcing in your business by questioning the need for every role as the need to recruit arises. Before going to market to fill a vacancy, consider the likelihood the business will require that position in the foreseeable future.

Do what’s needed – no more and no less. Think very carefully about the extent of the job cuts you make. Consider the immediate future and the roles and capacity the organisation will need to drive forward post-implementation of redundancies.

While a harsh and deep cut of your resources may achieve short-term financial objectives, capabilities and energy are essential to achieving the turnaround or improvement objectives of your business.

FEBRUARY 2015 | 59

BUSINESS STRATEGY / DOWNSIZING

Some organisations underestimate the stress felt by HR staff and the leaders driving change. These people often find themselves having to work long hours, many of which are spent engaged in emotionally charged conversations, making decisions with life changing consequences for people they know and in many instances like BE RESPECTFUL, FAIR AND COMPASSIONATE

Karen Gately is a leadership and people-management specialist and a founder of Ryan Gately, a specialist HR consultancy practice. She is also the author of The People Manager’s Toolkit: A Practical guide to getting the best from people and The Corporate Dojo: Driving extraordinary results through spirited people.

For more information visit www.karengately.com.au or contact info@ karengately.com.au

60 | FEBRUARY 2015

People impacted by downsizing typically want to know that every decision reached was made with fair and reasonable consideration given to all of your options and the consequences. It’s essential that you demonstrate you care and are doing everything you can to avoid unnecessary impacts to staff and their families. Help people to feel personally valued and that the loss of their job is sincerely regrettable.

At every step along the way, choose to behave in ways that have a positive impact on the spirit of your team. Behaving with respect, fairness and compassion is likely to serve you well and earn the respect of most reasonable people. Focus on each person and strive to understand their circumstances and how they will be impacted by change.

Appreciate who people are and how their lives are impacted by your decisions. Never step back from the decisions you need to make, but get the insights you need to minimise adverse impact on people.

COMMUNICATE WELL Being authentic and honestly sharing insights are important elements of treating people fairly. Give your team the opportunity to understand reality while protecting commercially sensitive information.

Reasonable people understand that there are some things you can’t say and will trust you to be the judge of what you can and can’t. Every manager should be

coached to communicate decisions clearly, provide facts accurately and deliver news with sensitivity.

Often when people complain about being lied to and misled, the issue is the approach taken not the intentions of their employer. It’s common for organisations to fear providing information too early and risk undesirable staff turnover or disclosure of information. However, where there is a void of information people will typically make assumptions and draw their own conclusions.

Proactively manage the awareness and perceptions of your team. Be upfront with people about how and when redundancy decisions will be made.

Maintain communication with the team well beyond the last day that employees made redundant left the business. After job cuts have been implemented people often spend a lot of time talking about what has happened and worrying about what might happen in the future. Keep communicating with your team about why you have confidence in the future and the role you need them to play to make it happen.

If the truth is that further redundancies are likely, help the team understand what needs to change to avoid those circumstances. Irrespective of how hard the fight might be to avoid that reality, you are better off focusing your team on what they can do rather than simply leaving them to wallow in the reality that further job losses are looming.

LOOK OUT FOR EVERYONE INVOLVED Never underestimate how stressful downsizing can be for everyone involved. It’s logical to assume that the people faced with the possibility or reality of losing their job may be stressed. Some organisations, however, underestimate the stress felt by HR staff and the leaders driving change. These people often find themselves having to work long hours, many of which are spent engaged in emotionally charged conversations, making decisions with life changing consequences for people they know and in many instances like.

Check in with these people and encourage them to seek the support they may need. While managers and HR need to avoid getting caught up in emotions that undermine their ability to drive the process with objectivity and professionalism, this can be easier said than done. Understand that while maintaining high standards of conduct is essential, there will be times when people immersed in the process of downsizing will struggle to have the strength they need to maintain composure and resilience.

THE DATA / YOUR MORTGAGE TRENDS

MPAMAGAZINE.COM.AU

BUYER TRENDS Key stats from borrowers making enquiries at Yourmortgage.com.au AVERAGE LOAN SIZE REQUIRED $430,000 Average loan amount

$420,000 $410,000 $400,000 $390,000 Jan

Feb

Mar

Apr

May

Jun Jul 2014

Aug

Sep

Oct

Nov

Dec

HOW SOON MORTGAGE IS REQUIRED 60 50

Not immediately

40

In the next few months

30

Right now! Hurry!

20 10 0

Jan

Feb

Mar

Apr

May

Jun Jul 2014

Aug

Sep

Oct

Nov

Dec

PURPOSE OF MORTGAGE First home buyer

64.8%

Move home

10.8%

3C多L?LAC RM ECR a better deal

22.4%

Give my home a makeover

0.1%

To buy an investment property 1.7% I want some spending money 0.1% Visit www.mpamagazine.com.au/consumer-borrowing-data for all the latest borrower trends FEBRUARY 2015 | 61

THE DATA / NEW INDUSTRY PLAYERS

POTENTIAL NEW ENTRANTS TO THE INDUSTRY IN 2015:

A PUNTER’S GUIDE The recent Genworth Home Grown report shone a light on changing competition and new players in the industry: MPA separates the favourites from the donkeys

Worried about online lenders? You are so 2013, according to Genworth’s recent ‘Home Grown report’. Among many other things, the annual survey of brokers, consumers and industry leaders looked at potential new entrants to the mortgage space, and it seems the ground has shifted substantially over the past 12 months.

To celebrate the new year, MPA has put together a ‘punter’s guide’ of data and opinions so you can rise above the gossip and pick out the most likely new entrants for 2015.

WHAT ABOUT COMPETITION AMONGST EXISTING PLAYERS?

18%

Consumers

28%

20%

Mortgage brokers

10%

Non-bank lenders

21%

Bank lenders

19% 9% 0%

8%

Disagree (0-4)

62 | FEBRUARY 2015

28%

42%

7%

32%

17%

55%

25%

15% 10%

20%

21%

44%

16%

Mutual lenders

All lenders

33%

56%

28% 30%

Neutral (5)

40%

48% 50%

60%

70%

Somewhat agree (6-7)

80%

90%

100%

Strongly agree (8-10)

MPAMAGAZINE.COM.AU

SURE FAVOURITE: SUPERMARKETS

34% OF BROKERS

37%

of lenders

37% of lenders and 34% of brokers see supermarkets will have the biggest impact on the mortgage market 83 from 10% and 31% respectively in 2013)

Colesâ&#x20AC;&#x2122; move into insurance and credit cards has certainly not gone unnoticed

BY THE MORTGAGE INDUSTRY )IVE PER CENT OF $USTRALIANS NOW HOLD A &OLES CREDIT card, according to RFi research, and the supermarket giant has a 3% market SHARE IN HOME AND CONTENTS INSURANCE /OYALTY SCHEMES CERTAINLY GIVE BOTH &OLES AND :OOLWORTHS AN INCREDIBLE COMPETITIVE ADVANTAGE SHOULD THEY CHOOSE TO FOLLOW Ă RMS LIKE 7ESCO IN THE 8. AND GO INTO MORTGAGE LENDING

FADING FAST: ONLINE LENDERS

17% OF BROKERS

23% of lenders

23% of lenders and 17% of brokers picked online lenders (DOWN from 31% and 24% respectively)

New online players arenâ&#x20AC;&#x2122;t attracting the attention they used to, perhaps for GOOD REASON UNDER S ARE MORE LIKELY TO USE A BROKER THAN OLDER BORROWERS AS OPPOSED TO ACCORDING TO THE 4%( %AROMETER $NDREW Banks, executive manager strategy & pricing at Bankwest, told the Genworth REPORT THAT THE DIGITAL CHANNEL h IS NEGLIGIBLE TODAY LITERALLY NEGLIGIBLE 6OME BANKS HAVE A PURELY ONLINE HOME LOAN BUT ITgS NOT REALLY ONLINE EITHER <OU STILL HAVE TO SIGN DOCUMENTS AND BRING THEM BACK %UT THERE IS OPPORTUNITY FOR SIGNIĂ CANT GROWTHi

THE DARK HORSE: SUPERANNUATION FUNDS

17% of lenders

22% OF BROKERS

17% of lenders and 22% of brokers nominated superannuation funds as a threat (DOWN from 24% FOR BOTH

While much depends on the recommendations of the Financial System ,NQUIRY YOU SHOULDNgT WRITE OĂŠ SUPERANNUATION FUNDS JUST YET h7HEY WILL come at a time when they can get an edge,â&#x20AC;? says John Symond, executive CHAIRMAN AT $USSIE +OME /OANS hWHEN MONEY BECOMES TIGHTER THEY WILL HAVE A ROLE TO PLAY i

Over 40 years, Iâ&#x20AC;&#x2122;ve never SEEN COMPETITION LIKE IT IS All of the smaller players ARE COMING IN BECAUSE THEY ARE tapping the securitisation market at very low rates, while none of the BANKS HAVE BEEN DROPPING CREDIT STANDARDS $USTRALIAN CONSUMERS ARE MUCH BETTER OĂŠ THAN ELSEWHERE $USTRALIANS ARE SPOILED for choice and competitionâ&#x20AC;? â&#x20AC;&#x201C; John Symond, executive chairman at Aussie Home Loans <ES , THINK THE MORTGAGE MARKET IS COMPETITIVE BUT itâ&#x20AC;&#x2122;s the most concentrated market in the world, and when you get a highly concentrated market, over time, YOU GET A REDUCTION IN COMPETITION ,TgS IN THE CONSUMERgS BEST INTEREST to have competition and not concentrationâ&#x20AC;? â&#x20AC;&#x201C; Jamie McPhee, CEO at ME Bank 7HE BANKING SECTOR IS COMPETITIVE ALBEIT CONCENTRATED 7HE application of capital requirements IS NOT COMPETITIVELY NEUTRAL %ANKS THAT USE INTERNAL RATINGS BASED (IRB) risk weights have lower risk weights for mortgage lending than smaller authorised deposit-taking institutions (ADIs) that use standardised risk weights, giving THE ,5% BANKS A COST ADVANTAGEi â&#x20AC;&#x201C; FSI Interim Report

Sources (unless noted otherwise): Genworth Home Grown Report 2014

FEBRUARY 2015 | 63

LIFESTYLE / FAVOURITES

MPAMAGAZINE.COM.AU

Favourite things Tony Carn, sales director, NextGen.net

Tony Carn

TV show: Rake â&#x20AC;&#x201C; Focuses on barrister Cleaver Greene and his alcohol AND INĂ DELITY PROBLEMS AND EVERYTHING THATgS GOOD AND BAD ABOUT Sydney and the political and legal fraternity in general. Hilarious.

Music: Always hard to go past the favourites like Chisels, David Gray, Johnny Cash or Springers.

Currently listening to Panama, Sahara Beck, Yo La Tengo and other band varieties that I pick up from JJJ using Shazam. Also, part of a feeble attempt to look cool and use new technologies.

Movie: So I Married an Axe Murderer.

Book: Dedicated most of 2014 to Graeme Greene â&#x20AC;&#x201C; son of a brewer and ex-MI6 employee, and one of the greatest writers of the 20th century.

Currently reading Stamboul Train.

Drink: I enjoy a number of DIĂŠ ERENT BEERS AND REDS , LIKE a good Cab Merlot with bias to wines from SA and Orange in NSW. Food: Anything my wife makes, to the point that when I make a COMPARISON AT RESTAURANTS ,gM often disappointed. There is the downside, though, that the kitchen ends up like two grenades were rolled in and I get to do the washing up.

64 | FEBRUARY 2015

Vacation destination: Looking forward to a summer break in Culburra, on the NSW South Coast. Also a good location to spot some incognito industry heavyweights from time to time.

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