Mortgage Professional Australia issue 16.08

MPAMAGAZINE.COM.AU ISSUE 16.8

BROKING 3.0 The 10 independent brokerages reinventing the industry

INFRASTRUCTURE Some things politicians can’t promise

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BRETT HALLIWELL How Advantedge is challenging the banks

SMSF LENDING Assessing the state of the sector

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AUGUST 2016

CONNECT WITH US

CONTENTS

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

UPFRONT 04 Update

First home buyers and the affordability challenge

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06 Head to head

SMSF LENDING

A broad view of lending changes, from cars to farms to property

FEATURES

08 Statistics

Lenders explain the changes in the sector and how they’ll affect brokers

10 Opinion

Insights, tips and opinions from the nation’s most cutting-edge brokerages

Infrastructure promises – a red herring for brokers?

40 FEATURES

THE BIG INTERVIEW

BRETT HALLIWELL

16 Advantedge boss on using white label to take on the banks

My Local Broker CEO Jaci Smith on what goes into new broking technology

12 News analysis

FEATURES

TOP 10 INDEPENDENT BROKERAGES

Three award-winning brokers on the biggest change they’ve made to their brokerages

WHOLESALE FUNDING

The rising tension between mortgage managers and white label products

MORTGAGE INSIDERS 54 Tommy Lim

SF Capital’s award-winning rising star on his journey into broking

63 Ren Wong

N1 Holdings boss talks MPA through his career path and the N1 brand

64 Liz Wilson

Broking’s very own Dr Dolittle on her work supporting animal shelters

FEATURES 58 Understanding China

What the world’s biggest nation thinks about property, brokers and more

38 FEATURES

HEALTHCARE & EDUCATION

Niche areas with an acute and multifaceted demand for brokers

MPAMAGAZINE.COM.AU NOW ONLINE: Advice and expertise from MPA’s High Performance Business Summit Highlights from our Non-major Banks Roundtable Top brokers and brokerages in Leading Mortgage Professionals

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FEATURE / BROKER EDUCATION

EDITOR’S LETTER www.mpamagazine.com.au AUG 2O16

TRUE BLUE

W

ith ASIC revealing the Final Scope for its Remuneration Review, the countdown has begun, and with it the predictions of what could happen.

Amid countless reassurances that nothing will change, one speech really stands out – that by former NAB broker chief Steve Weston at the FBAA’s conference, comparing brokers in Australia with their counterparts in the UK. It’s certainly an uncomfortable read. Australia is one of the last nations on earth to pay upfront and trail commission, Weston said, which “is something we should be concerned about with ASIC because regulators will speak to their international counterparts”. The UK has much lower upfront commission – 35 to 40 basis points – and no trail, observed Weston, who previously headed up mortgages at Barclays Bank, one of the UK’s biggest lenders.

So how much do Australia’s regulators look for inspiration abroad? A great deal, judging by the actions of APRA. Rising capital requirements for banks and interest rates for clients have resulted in part from APRA’s determination

Australia is one of the last nations on earth to pay upfront and trail commission to not only meet but exceed rising international standards. If we apply that logic to broker commissions, the future looks grim.

That said, capital requirements and broker commissions are simply not the same. The former relates to fundamental questions arising from the GFC over international financial stability, while ASIC’s review is in many ways an obvious response to the rapid growth of the broker channel in recent years. There is no Basel Committee for mortgage broking, and ASIC will note that the effect of removing trail in the UK has been far from harmless.

As Weston has pointed out, Australia’s financial system does not exist in isolation. The situation of brokers abroad certainly merits investigation – which you will see in forthcoming issues of MPA – but the balance of international pressure and established interests suggests that ASIC will struggle to bring foreign rules to these shores.

Sam Richardson, editor, MPA

EDITORIAL Editor Sam Richardson Journalist Maya Breen Production Editor Roslyn Meredith

ART & PRODUCTION Design Manager Daniel Williams Designer Loiza Caguiat Traffic Coordinator Lou Gonzales

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

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UPFRONT

FIRST HOME BUYERS NEWS BRIEFS Wage growth slowest since 1998 The ABS figures for March, showing wage growth is now just 2% per annum, have refocused attention on the gap between wages and deposits facing first home buyers. In fact cumulative wage growth since 2008 (23.4%) has been less than half the level of cumulative property price growth in the same period (51.7%), according to CoreLogic. Inflation (CPI) lagged behind house price growth at 17.1%.

CoreLogic research analyst Cameron Kusher said the finding “provides little comfort for first home buyers in the two largest cities [Sydney and Melbourne] who struggle to compete with those that already own homes”. House price growth could be attributed to first home owner grants and aggressive house price discounts, Kusher said, noting his figures also factored in wages during the mining boom.

‘Increasingly difficult’ for parents to help FHBs A recent survey by ME and RFi Group has found parents and grandparents are struggling to help first home buyers get on to the property ladder. Twenty-six per cent of first home buyers received family assistance to buy their first home, the survey found, with the average gift rising to $42,000. Of those family members supporting FHBs, 28% said their retirement had been affected by their generosity, up from 21% “more than five years ago”.

ME director of home loans Patrick Nolan put the increasing strain down to rising house prices, warning: “It’s becoming increasingly difficult for parents and grandparents to help family members buy a first home while protecting their own retirement plans.”

Genworth’s Streets Ahead report on homebuyers found that while the proportion of FHBs receiving family assistance had risen between 2011 and 2014 – the years first home owner grants hit their peak – it was roughly similar to the proportion receiving financial assistance

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prior to 2010. However, property prices across the combined capitals grew 51.7% since 2008, CoreLogic reported in May.

Improvement in housing affordability Housing affordability was up in the March quarter of 2016, but first home buyers continued to decline, Adelaide Bank/REIA’s Housing Affordability Report has found. The proportion of income required to meet mortgage repayments fell by 2.4% to 30.0%, with affordability improving in every state except the NT. However, the number of first home buyers fell 16% over the quarter, meaning they now make up 14.6% of the owner-occupier market, lower than the long-term average of 19.7% and at a similar level to 2004. Adelaide Bank general manager of third party mortgages Damian Percy said the decline of FHBs was of “more concern” than the improvement in affordability. “Any tentative discussion around initiatives that might slow house price inflation … is reduced entirely to whether it has the potential to slow or reduce the returns to existing homeowners,” Percy said.

“First home buyers are both literally and figuratively poorer for it and it should stop.”

South Australia relaxes stamp duty The SA State Government has announced a stamp duty concession of $15,500 for buyers of new apartments. The discount, previously available only for properties in inner Adelaide, will now apply across the state and be available until 30 June 2017.

“The stamp duty concession for off-the-plan apartments has been an extremely effective and targeted mechanism for stimulating growth and jobs in the economy,” said SA treasurer Tom Koutsantonis. “We want to maintain that stimulus to support the construction industry and expand it to renew housing stock and create jobs right across the state.”

NOT A ZEROSUM GAME Cutbacks on lending to foreign investors will not solve Australia’s first home buyer problem What do foreign buyers and first home buyers have in common? Not much, obviously – they vary wildly in terms of wealth and appetite – but they’re now both members of Australia’s home lending underclass. Over the last three months the majors and some non-majors have backed away from foreign self-employed borrowers and foreign currency income, with AMP simply branding non-residents as an ‘unacceptable borrower type’.

If foreign investors back away, as the argument goes, first home buyers will benefit.

Years of mainstream media scapegoating have taught Australians that foreign investors single-handedly raised the prices of housing in Sydney and Melbourne to such an extent that first home buyers are now at a 12-year low, as CoreLogic reported in May. Yet this argument assumes that foreign investors and first home buyers are competing for similar properties in similar areas, which is far from obvious. And it ignores the real beneficiaries of foreign investors pulling back: Australian investors.

Martin North, principal at Digital Finance Analytics (DFA), takes the view that “the real competitors to first-time buyers are from [Australian] investors. In some cases, if foreign buyers were to withdraw it would be mainly in the inner urban apartment blocks – investor fodder”.

DFA recently surveyed first home buyers and found their main priority is not desirable inner-city suburbs but instead simply getting on the ladder, for which “nationally, the suburban house remains the most attractive option, though more are now having to settle for a suburban unit (20%)”. The RBA also commented in its April Financial Stability Review that “a substantial reduction in Chinese

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demand would likely weigh most heavily on the apartment markets of inner-city Melbourne and parts of Sydney”.

Australian investors were 2015’s undesirable borrowers, but banks are gradually loosening restrictions on them. Westpac is reported to be raising investor LVRs to 90%, and in late May several banks announced rate cuts on investor loans.

“We’re now getting back to the days early last year where the investor market share was back at 64% in NSW,” said Domain’s chief economist Andrew Wilson. “Investors are back in the market, but that’s pushed first home

“If foreign buyers were to withdraw it would be mainly in the inner urban apartment blocks – investor fodder” buyer numbers back down to record low levels.” Wilson predicts growth will rise above APRA’s 10% limit by the end of the year.

If you can’t beat them, join them, the saying goes, and many first home buyers are doing just that: DFA estimates that one third of prospective FHBs will end up as ‘rentvestors’.

Q&A

FIRST HOME BUYERS Lino Pelaccia General manager broker sales ME

Fast fact The average home loan across Australia was for $361,500 in April, up 4.6% on a year ago, according to the ABS

How can ME help first home buyers overcome the deposit gap?

Research from ME shows one in 10 Australians are saving to buy a home. That’s a lot of people working towards the same goal.

And it can be done.

One of the best ways to close the deposit gap is by following a budget. As well as helping you save for your purchase deposit, your budget will let you see how well your finances will stand up to home ownership.

First home buyers can also boost their deposit by improving the return their money earns. If your savings account is paying a ho-hum interest rate, consider transferring your stash to a bank offering a better deal. Be sure to look for an account paying a consistently strong rate without fees attached.

Has the profile of an average first home buyer changed in the last five years?

The average age of Australians buying their first home has shot up over the last decade. Many first home buyers are now predominantly in their 30s or even 40s.

“We’re finding that our basic home loan − our no-nonsense loan without all the bells and whistles – is popular with first home buyers” What features of home loans are first home buyers looking for?

We’re finding that our basic home loan − our no-nonsense loan without all the bells and whistles – is popular with first home buyers. It offers a competitive variable rate, redraw when you need it, but no application or account-keeping fees.

Should brokers get parents involved in the first home buying process?

A home loan should be strictly assessed on the first home buyer’s ability to repay a loan, not their parents’.

ME research has revealed that loans and gifts are common to enable first home buyers to scrape their deposit together.

However, any loan with or without interest should be declared as a liability on the application, and any financial gift promised, which is not yet in their bank account, should be clearly outlined in a letter signed by their parents.

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UPFRONT

HEAD TO HEAD

What’s the biggest change you’ve made in your brokerage in the last 12 months?

Alan Hemmings

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General manager Oxygen Home Loans

Jeremy Fisher

Director 1st Street Home Loans

Katrina Rowlands

It’s about incentivising brokers. We have various commission splits depending on where the customer comes from, but if the broker hits a certain level we’ll pay them a bit more; if their book size gets to a certain point we’ll pay them a bit more.

We’ve introduced – and this sounds really simple – a top broker lunch every quarter. We take the top three brokers, based on volume, to a nice restaurant here in Sydney with the senior management of McGrath, so they get access to the head of franchise, the chief operating officer, the head of people. We’re now at the point where the brokers are ringing me at the end of each quarter going ‘Who won, who won?’, and it’s driving them to write more business.

It sounds simple. Most brokers who are on commission only are competitive by nature; you’re out there writing that business because you want the income to come in. So if you get that within your team, it’ll drive the whole team.

I think like everyone we’re constantly changing and learning and making mistakes. Our processes, to some extent to a consumer, will seem like they’re down pat, but in the office we’re working on new initiatives, changes to processes, changing ways to do things.

I think obviously, with new people joining the office as well, that brings additional discussion, but I think for our office it’s continually learning, managing systems and CRMs, and changes. It’s constant changing, and I think we adapt well, our office, to these changes, and it’s ongoing.

Next year marks 20 years for me in mortgage broking. That’s a long time to think you’ve got it right. I love the fact I have new fresh staff with fresh attitudes that recently joined me, so I’ve started going right through the basic procedures.

With my newest staff member, who’s only been there for four weeks, I’ve asked her that every time she’s taught a process, to record the process in her own words. We do have a process and procedure manual – our scheduled way of doing things – and I’ve found it really interesting, even though that manual is reviewed every couple of years, to see the differences already and to hear it from a fresh point of view … I’m noticing some really silly inefficiencies and ways we can do it better.

The new staff members feel like they have an incredible value proposition; it’s opened the floor for people, both old and new, to talk really openly and freely and add benefit.

Principal Mortgage Success

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STATISTICS

LENDING TRENDS

WHERE THE MONEY GOES

FINANCE FOR PROPERTY RBA rate cuts, APRA’s move against investors, and the short-sightedness of those who predicted the decline of the housing market earlier this year have been exposed by the ABS housing finance statistics for April 2016:

Figures released by the ABS provide a complete view of lending – from residential to commercial to car finance and beyond

WHAT HAPPENED TO COMMERCIAL FINANCE? The ABS stats show that new commercial finance fell 3.3% in seasonally adjusted terms, with business lending experiencing a 14.4% fall, since April 2014.

Brokers may find this surprising given the vast amount of marketing and attention focused by lenders on commercial lending opportunities. This may have more to do with lenders turning their attention away from residential lending, in light of restrictions; the RBA’s Financial Stability Review in April noted that “competition among lenders for non-residential property investment loans … appears to have intensified: banks report that margins narrowed further over the second half of 2015”.

That competition, however, was mainly focused on commercial property lending.

Competition for business lending had “stabilised” after increasing for a number of years, said the RBA, adding that “margins on large business loans remain at historic lows”.

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RBA cuts the cash rate in February and May $2,000,000

(ie April to April) may be most appropriate.

Now that brokers offer far more than housing finance, it’s vital to look at a wider range of lending figures. Here we discuss commercial lending, car finance and rural lending, but the ABS reports on a number of surprisingly specialised categories, such as finance for motorbikes. Diversified brokers can find these statistics on the ABS website.

Most of all, considering a range of lending statistics helps cut through the ‘good news/ bad news’ hype, which assumes all brokers across the country experience economic changes in the same way. As always, the economic picture is mixed, with different consequences for different brokerages.

$1,500,000

$1,000,000

$500,000

$0 JAN 2015

FEB 2015

MAR 2015

WHICH LENDERS ARE WINNING The ABS splits up housing finance data by types of lenders. Using this data and comparing it to the ‘overall’ figure, we can see which sectors are growing above and below system growth. Bear in mind that banks, which provide the vast majority of housing finance, therefore largely determine system growth, which is an average.

Increase in housing finance April 2015–April 2016

ONCE A month, our inboxes fill up with the same old headlines: ‘Housing finance jumps 10%’, ‘Commercial finance stabilises’, etc.

And while a large jump – or even better a large fall – can get our attention, it doesn’t necessarily give a great view of the directions the housing market and Australian economy are moving in.

You need to take a longer-term view and a much wider view. Figures from the ABS provide exactly that. Some of its series run from the 1970s onwards; a five-year view can show long-term growth, as it does for car finance, for example (see graph, opposite page). For other measures, a 12-month view with comparison between the same months

$2,500,000

14%

15%

Overall

Banks

18%

19%

Wholesale lenders

Other lenders

-30% Permanent building societies

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Housing finance – Total Investment housing – Purchase for rent/resale by individuals Owner-occupation (secured finance) – Refinancing of established dwellings

Major banks increase interest rates for new and existing customers in response to capital requirements

APRA and the banks attempt to bring investor lending down to 10% ‘speed limit’

APR 2015

MAY 2015

JUN 2015

JUL 2015

AUG 2015

SEP 2015

OCT 2015

NOV 2015

DEC 2015

THE LONG ROAD FOR CAR FINANCE April lending figures from the ABS suggest car finance has experienced long-term growth over the last five years, despite a number of single-month peaks. $1,400,000

Total car vehicle finance

$1,300,000 $1,200,000 $1,100,000 $1,000,000 $900,000 $800,000 $700,000 APR 2016

NOV 2015

JUN 2015

JAN 2015

AUG 2014

MAR 2014

OCT 2013

MAY 2013

DEC 2012

JUL 2012

FEB 2012

SEP 2011

APR 2011

$600,000

JAN 2016

FEB 2016

MAR 2016

APR 2016

GRASS IS GREENER IN RURAL AUSTRALIA If you’re disappointed by the prospects for commercial lending, it may be time to get out of your office and escape to the country: loans to agriculture, forestry and fishing reached a 6.5-year high. Totalling $23.3bn, finance in the sector in the year to April 2016 was just below the all-time record of $23.5bn.

CommSec’s Economic Insights report noted that “keen global interest in Australia’s food and beverage products are driving interest in the farm sector”. Rural brokers have also been doing relatively well of late.

Robinson Sewell Partners not only picked up the regional trophy at the MFAA’s NSW Excellence Awards but were also recognised as the state’s best brokerage with two to five writers, and won another award for customer service.

Source: ABS, Lending Finance Australia, April 2016/CommSec

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UPFRONT

OPINION

BUILDING TOMORROW’S BROKING TODAY My Local Broker CEO Jaci Smith talks through the challenges of developing new sales and application software for the third-party channel

I WRITE this from San Francisco, where every year I take a group of my staff to the annual Forecast conference run by our business partners Base CRM. The theme of this conference is around technology sale science – how sales and post-sales are now driven by new-age technology.

One of the earliest decisions I made in the scoping of the Chief software, My Local Broker’s new CRM system, was to create a foundation that was nimble enough to grow and support the business through API integrations [tools that allow the building of software and apps] which would continue to give our business the flexibility to support updates and enhancements.

Our development team, headed by Rodney Greenfield, has 17 developers, including iOS and Android developers. We are expanding continually to ensure we have the hands to work on our future enhancements and innovations. We have an Innovations team, led by Tyler Smith, which consists of developers who work with our integration partners, such as DocuSign, NextGen and CoreLogic, to name a few.

From my point of view, it is vital to demonstrate to brokers our commitment to innovation and future enhancements. The industry has been promised a lot over the years, and for us we won’t be placed in that

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company. We are committed to building better software for the future, not just for today.

Our industry is full of older broker CRM systems. These systems were built pre-API evolvement and before mobile and tablet

Google API in its many forms is a mecca for innovation and application in new-age mortgage broking.

Data dropout is one of the major pain points the industry feels. A broker friend of mine who is currently on a competitor system made a comment about having to restart an application from scratch because there needed to be a change of lender. Due to the data cloning tool not being efficient, he had to start the input all over again. So, for this deal, the work on just resubmitting the data was in excess of six hours. Chief ’s cloning tool is 100% efficient, so that all the data fields from the original application, including supporting documentation, will be engineered to the new lender’s format, without needing to do anything else, let alone submit the data all over again.

Furthermore, the NCCP documentation will be populated with the new lender’s details, including the preliminary assessment that has all the cost fields automatically populated, but, more importantly, the customer is informed in real time and can view all the updates as they happen. The enablement of back-channel messaging is

Our industry is full of older broker CRM systems … 10 years ago no one could predict the impact of evolving API and the mobile/tablet scene devices, and this is simply where the first sets of issues arise. But, in fairness, 10 years ago no one could predict the impact of evolving API and the mobile/tablet scene.

What comes with the merging mobile/ tablet environment is legacy CRM systems that were built before the mobile. CRMs assist us in managing the customer during and after the settlement process. Google has been the biggest hitter when it comes to CRM integrations – smart technologies like email exchanges replacing the old Microsoft exchange; algorithms that can sense the tone in your clients’ emails; automatic sifting of emails and attaching them to client profiles, Google Hangouts and Maps. The

another key aspect – brokers can turn this on, which allows their clients to be updated on the progress of their applications in real time.

Our team has just hit 62 staff and is growing. The future is bright. The journey for us is just starting; our foundations and expertise will stand us in good stead.

Jaci Smith is founder and CEO of sub-aggregator My Local Broker, which aims to use technology to improve and enhance the customer and broker experience. My Local Broker is presently showcasing Chief, its new broker CRM system.

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NEWS ANALYSIS

INFRASTRUCTURE AND HOUSING

THE PORK BARREL ROLLS ON The election cycle has seen countless promises of infrastructure and housing development, but brokers shouldn’t get caught up in the hype

AS WITH every federal election, there’s been no shortage of ‘pork barrel politics’. This useful term has nothing to do with Australia’s meat industry; rather it refers to politicians promising lavish infrastructure spending to win voters – spending that, if implemented, will have a far bigger effect on house prices, and therefore brokers, than many of the debates dominating this election cycle.

There have been a vast number of infrastructure promises made this year, many at the AFR’s recent National Infrastructure Summit in Sydney. This featured – among several leading politicians – NSW premier Mike Baird, whose presentation included glossy videos and gleaming skyscrapers, managing to drown out protesters against his WestConnex road project.

Then came the minister for resources, energy and Northern Australia, Josh Frydenberg, who trumpeted the Melbourne– Brisbane Inland Rail Link, ‘beef roads’, and light rail in the Gold Coast and beyond. He was followed by Labor’s Anthony Albanese, who claimed that every dollar of spending announced by the Coalition had already been pledged by Labor, while hinting at possible investment in high-speed rail.

Most relevantly, the speakers connected infrastructure to housing. “You can see the numbers,” Baird told the audience. “In 2010

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we had just over 20,000 private housing approvals, and now we’re on 70,000. It’s a big leap, and part of that is connected to transport and investment in other infrastructure.”

Knowing when an area is going to take off Politicians may talk about the huge sums invested in infrastructure, but what does it look like from a broker’s point of view? MPA talked to three brokers whose businesses

“I know governments are excited about what’s going on, but the exact opposite is actually happening on the ground at the moment” George Karam, Byblos Finance are currently being affected by major infrastructure projects: Byblos Finance’s George Karam, currently Australian Mortgage Awards Finance Broker of the Year; Gerard Tiffen, of Top 10 Independent Brokerage Tiffen & Co; and Mortgage Choice Glenelg’s Bianca Long, a Top 100 broker.

In some cases, the impact of infrastructure improvements on brokers is straightforward.

One example is Canberra’s airport, which has just gone international. In September 2016

Singapore Airlines will begin flying direct to Australia’s capital from Singapore. Further­ more, the airport, which has no night curfew, is looking to scale up its freight operations.

Speaking to MPA for our Top 10 Independent Brokerages report, Tiffen described how the airport’s transformation will “change the game forever” in Canberra.

“It’s creating a lot of interest and pumping the market up on the residential side … based on what’s going to happen over the next four to

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INFRASTRUCTURE IN THE PIPELINE Infrastructure Australia (IA), the independent body that evaluates infrastructure proposals, has a list of the projects currently under construction. We’ve picked out some of the biggest:

WestConnex (NSW – Sydney) Proposes to join the M4 and M5 via a tunnel in Western Sydney. Stages 1 and 2 are currently under construction but have encountered local opposition and uncertainty over details

NorthConnex (NSW) A tolled motorway to link the M1 at Wahroonga with the M2 at West Pennant Hills. Anticipated to be completed in 2019 and will cost $3.1bn

five years they reckon we’ll get to 420,000 people,” Tiffen said. “That’s what Canberra needs; that’s what has been lacking.”

Keeping an ear to the ground The development of other regions has been more gradual, as was the case in Parramatta in NSW. Byblos Finance works extensively with developers and took the decision, in 2011, to begin expanding its operations. There were government changes at the time, such as the rezoning of land to allow for higher-density housing, and the releasing of more land for development. There was also a “gradual loosening” of credit policy by lenders, which gave developers more leverage.

For Karam, however, the most valuable information emerged from his constant discussions with developers themselves.

Byblos Finance was a founding member of the Developers Forum, which brings together developers, builders and financiers. It has not only brought in clients but given Byblos Finance advance warning of oncoming changes. “By being in a room with that many people, we’re listening to what concerns them on the day … we can start to prepare for it; find a funder that’s got that appetite,” Karam says.

“Keeping an ear to the ground”, as Karam puts it, paid off. “You could start seeing the trading of land; the positioning of players within this particular marketplace; their finances. They were gearing themselves up to put their foot on the gas with investments … they were about to invest in a very significant way.”

The area did indeed see huge growth, much of it centred around Parramatta Square, and

Gateway Motorway North (Qld) Widening the motorway north of Brisbane Airport to ease congestion. Being implemented between 2014 and 2017 and will cost $1.16bn

Mitchell Freeway Extension (WA – Perth) Will extend freeway by 6km to address congestion. Construction commenced in 2015 and is anticipated to be completed in 2017 and will cost $261.4m Not on IA’s list: Sydney Metro An expansion of the $8.3bn North West Rail Link; currently under construction and due to open in 2019. The Metro will run through the CBD and the full project is anticipated to be completed in 2024.

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FEATURE / BROKER EDUCATION NEWS ANALYSIS

INFRASTRUCTURE AND HOUSING Byblos Finance subsequently took off, with Karam coming number one in MPA’s 2015 Top 10 Commercial Brokers report and winning an AMA. The brokerage took on four extra staff and at the time of writing was about to move into a new office, in response to the growth in demand from investors.

Infrastructure and finance In certain instances the connection between infrastructure and housing construction can be far more complicated. Bianca Long has run Mortgage Choice Glenwood, in Sydney’s far northwest, since 2007, long before it became popular. Even then various infrastructure projects were in the pipeline.

“The train stations were planned 10 years ago, although it might even be longer ago than that … look at companies like Woolworths in the northwest; they intentionally went into the area, knowing that public transport was going to increase in that area,” Long says.

Those train stations are due to open in 2017, but the housing boom has already happened, and it happened in 2014. This gap of three years can be explained by the interplay between infrastructure, land being released, and, crucially, the effect of stamp duty and first home buyer grants. In 2014, a block of land in the northwest could be had for under $350,000, meaning buyers didn’t have to pay stamp duty on it. Furthermore, first home buyers could only get grants for new properties, so had an incentive to construct new houses. The resulting influx of first home buyers, Long recalls, “made a massive, massive difference to construction in the area”.

With a large number of new clients, Long found her brokerage struggling to maintain high standards. “The reason we’ve grown like we have is attention to detail, quick turnaround, and always getting back to clients,” she says. “As the business then grows, that falls away, and we found ourselves in a position where it was taking too long to get back to clients, and we were just paper-pushing.”

The brokerage desperately needed staff, but rather than simply expand the existing office Long decided to establish an extra franchise in neighbouring Kellyville. “I sat down and had a holistic view of it, not just in terms of locations but in terms of markets

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VALUE CAPTURE As governments look to fund infrastructure in new ways, the ‘value capture’ strategy has attracted more attention. Prime Minister Malcolm Turnbull proposed value capture as a way to pay for high-speed rail on Australia’s east coast, noting that “it is not actually a radical new plan at all; it is actually a sensible old plan that’s been forgotten”.

Value capture matters to brokers because it relates to valuations. According to Prosper Australia, a government organisation, value capture works in the following way:

1

Government bonds finance the infrastructure project

2 Infrastructure proposal announced =

windfall gains for nearby landowners

3 Yearly land valuations quantify the windfall gain

4 Land value capture (a subset of land taxes or, alternatively, council rates) ensures the public receive a share of the increase

5 Over 20 years this higher government

income repays the government bonds

coming up, and that’s when I saw a gap in Kellyville; when I saw the demographics and the construction in the area.”

As well as additional admin staff, Long took on an extra broker to specialise in first home buyers and refinancers, leaving her to specialise in more complicated cases and referrals. She’s planning to take on another broker to cover evening appointments, although she admits that her increased management responsibilities have been challenging.

When the dust settles Just as the combination of infrastructure, credit and incentives can drive development, it can also kill it. Premier Baird may have bragged about Sydney’s ‘crane index’ and cited huge numbers of housing approvals, but out west (and beyond NSW) brokers are seeing something quite different taking place.

“I know governments are excited about what’s going on,” says Byblos Finance’s Karam, “but the exact opposite is actually happening on the ground at the moment ... there’s record approvals for housing, but less and less of that is actually being delivered.”

Both Karam in Parramatta and Long in Glenwood are currently seeing major declines in property development, despite substantial and ongoing improvements in infrastructure.

According to Karam, the recent restrictions on foreign investors are “having a really big impact on developer confidence … that is a conversation that’s happening daily at the moment; that’s the topic of the day”. He’s finding developers are dividing into two camps: those who are now reluctant to move forward, and those who see the slowdown as a buying opportunity.

Another problem has been the changing requirements of banks, particularly regarding investors. Karam believes these have not been properly articulated to the market.

“You’ve had many examples of where loans have been awaiting approvals for months, and they don’t come through, and people don’t understand why.”

In the case of Long, the first home buyers that had previously flooded Glenwood have now found their financial loophole has been closed. It’s all connected to stamp duty concessions, Long explains. “With the increase in prices, you had stamp duty concessions up to $350,000, but a block of land has skyrocketed to $550,000. Now we’re back to the same position as we were with established properties … they’re back to square one.”

Infrastructure, it seems, is yet another area in which politicians often promise more than they can deliver, even when their infrastructure promises become reality. “The infrastructure is wonderful,” explains Karam, “but it’s not going to be the cause of additional activity on a macro level; it just determines where the spending is going to go, but the bigger issue right now is availability of credit.”

So, while brokers need to take notice of what’s planned for their areas, the prevailing credit environment will continue to be the main factor determining a brokerage’s direction.

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THE BIG INTERVIEW

BRETT HALLIWELL

“I think it’s been one of the greatest stories in the industry in recent times that a lender can step into the market and win substantial market share”

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BRETT HALLIWELL: AT THE TOP TABLE Not only is white label here to stay, but it’s challenging Australia’s majors and non-majors, the general manager of Advantedge tells MPA

MPA: Many brokers know about Advantedge’s white label products, but why should non-PLAN/Choice/FAST brokers care?

BRETT HALLIWELL: 2015 was really a watershed year for Advantedge. We launched our partner private label products outside of PLAN, Choice and FAST, taking the proportion of brokers who could access our products from 35% to 85%.

It’s been, to my mind, nothing short of phenomenal. There’s been really good take in brands such as AFG, Loan Market, Astute and LJ Hooker, and we’re finding that within a very short space of time we’ve managed to win a fairly substantial market share. How we do that is important: we recognise that Australia is blessed with a competitive home lending market, with lots of lenders that are very good at what they do. Our philosophy with PLAN, Choice and FAST and also partner private label is to recognise we have to win the business based on the right products for our customers, based on prices, but probably most importantly it’s about delivering great service to brokers and our customers, but also relationships.

Putting that all together, I think it’s been one of the greatest stories in the industry in recent times that a lender can step into the market and win substantial market share by delivering what brokers are wanting and asking for.

MPA: What types of clients is Advantedge targeting? Is this all about the ‘mum and dad’ clients?

BH: Certainly what we aim to be is [serving]

core mum-and-dad investors and owneroccupiers, so absolutely heartland Australia.

We tend to be very strong in that and meet the vast majority of needs. At the same time, though, we do have a strong track record of more complex lending: we’ve settled loans well in excess of $5m and we cater for large loan sizes and complex structures – trust structures, corporate borrowers and that type of thing.

We try to be reasonably clear in the market about the niches we don’t play in. We don’t play in foreign borrowers, NRAS and self-managed superannuation funds. The benefit of us being very clear and very targeted in what we do enables us to offer very good rates and very good services. It’s not trying to be all things to all people; it’s about being targeted and being very good at what we do.

MPA: Many brokers still see Advantedge as a non-bank, but who are Advantedge’s main competitors in the market?

BH: The Australian banking market has really evolved over the last decade or so.

There’s certainly been a concentration of lending on the four majors, so we absolutely see them as major competitors, but sitting below that there’s been the emergence of a group of non-major bank lenders. While we are very eager and compete aggressively across the big four, we also compete across the non-majors as well, and typically we do find ourselves coming up against the nonmajors. That’s in terms of prices, in terms of product and also, very importantly, the

THE STEADY EXPANSION OF WHITE LABEL

April 2015 Astute Financial launches its first white label product, the Astute Simplicity home loan, funded by Advantedge

May 2015 Connective launches its white label Connective Home Loans brand, funded by Macquarie and Advantedge

September 2015 AFG launches its AFG Home Loans ICON range, funded by Macquarie Bank

January 2016 FAST announces it is pioneering a white label asset finance product.

Real estate network LJ Hooker partners with Advantedge to launch the LJ Hooker Home Loans Connect white label product

April 2016 New aggregator My Local Broker launches the Footy Home Loans white label product for Melbourne Storm fans

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THE BIG INTERVIEW

BRETT HALLIWELL BRETT HALLIWELL’S CAREER TIMELINE

1986 Begins career in auditing at Ernst & Young

1990 Joins Credit Suisse, beginning in auditing and rising to chief financial officer of the fixed income division

1995 Spends five years at Westpac, heading the bank’s NSW business lending unit as financial controller and centralising operations in NSW

2000 Becomes head of passenger revenue accounting at Qantas

2003 Moves to Challenger, the non-bank lender which acquired PLAN, Choice and FAST. In 2009 Challenger was itself bought

by NAB

2009 In his present role as general manager of Advantedge, Halliwell has overseen Advantedge’s push into the white label space and its continuing relationship with mortgage managers

Education Bachelor of Commerce, University of Melbourne, 1985 Diploma of Financial Services, Finance/Mortgage Broking Management, Intellitrain, 2012 MBA, Australian Graduate School of Management, 2003

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service offerings in the market. So our natural competitor base tends to be the nonmajors, but also the big four as well.

MPA: Does putting more focus into white label lending mean your mortgage manager partners will lose out?

BH: The heritage of Advantedge’s business is mortgage managers, and it continues to be a very important customer base and channel for us, but the mortgage manager industry has morphed and changed over time, and there’s been a number of consolidations within that sector, both with the mortgage managers and their wholesale funders as well. We don’t see the two [white label and mortgage management] as being mutually exclusive at all; we see them as being complementary. We continue to be committed to the mortgage manager channel, but we see the greater growth opportunities for our business have been very much within the white label space.

space it’s a new category for them. That’s where brokers come into play: brokers can get a great advantage in terms of offering white label to their customers. Their customers are aware of what white label is, but not necessarily from a mortgage perspective, so when their brokers explain to them that a mortgage white label is available, consumers tend to be very receptive of it, because they understand the benefits they’re going to receive.

From the broker’s perspective, there are great advantages in offering a product that’s available exclusively and only from brokers.

What does that mean? Customers can by and large choose to source their mortgages from other channels from other lenders; direct through bank branches, online or over the phone. The advantage of Advantedge’s white label products is that they are only available through brokers, so I think that sets up a fantastic conversation through brokers that validates their value proposition

“We see the greater growth opportunities for our business have been very much within the white label space” If you think about it, it’s like our pie has been growing very rapidly, and the majority of that growth has come from white label; we’ll continue to pursue that aggressively, whilst still being committed to mortgage managers and the wholesale funding model.

MPA: Is Advantedge looking for more awareness of what you do among brokers, and also among consumers?

BH: The interesting thing about white label is that consumers are increasingly familiar with white label through interactions in other areas, and the most commonly quoted example on that front is supermarkets, where typically white label products might occupy up to 30% of supermarket space.

What consumers have learnt from that is that these products are high quality, well priced, and certainly meet their needs.

The consumer appetite and demand for white label is high; however, in the mortgage

to customers; that ‘I can give you a fantastic product that meets your needs and is good value, and it’s only available through me, the broker, and it’s not available for you to source from other channels directly’.

All of that stacks up to be a great proposition for both the customer and the broker.

MPA: Do you think Advantedge and white label more generally are particularly at risk from ASIC and other regulators, given the ownership structure of Advantedge?

BH: From an NAB perspective we have been working really closely with the ASIC review, both in terms of ongoing conversations and providing information as it’s requested. We certainly understand that vertical integration is something that is on the mind of the regulator.

Our position in relation to white label is

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effectively that our aggregators operate as aggregators. They have a very large representation of different lenders: banks and nonbanks across the market.

How Advantedge competes with its white label products on all aggregation platforms comes down to the absolute basics of lending.

What that means is the right products, the right price and the right relationships, and competing against all of the other lenders on the panel.

I have said very publicly many times, when we do product launches, etc, that Advantedge will respectfully try and win business from brokers by competing on that basis. There is absolutely no expectation that brokers must use white label products; our commissions are broadly comparable with those of other lenders within the market. So to my mind the vertical integration debate doesn’t play out in terms of expectations; it just plays out in terms of

“To my mind the vertical integration debate doesn’t play out in terms of expectations; it just plays out in terms of a highly competitive market” a highly competitive market and highly competitive landscape where white label needs to compete on the same basis as other lenders. And fundamentally this is what has driven our great success: the fact that we compete as a quality lender within the marketplace.

MPA: How would you like brokers to view Advantedge and white label lending 12 months from now?

BH: I see brokers continuing to adopt and use Advantedge white label as a primary tool in their arsenal. I believe white label

will be an increasing share of the market, and it will be increasingly mainstream, and I think that’s driven largely by consumers who will understand it and enjoy the benefits.

Brokers will feel increasingly comfortable with recommending the product, but more importantly enjoy the service and features that Advantedge offers to them. So broadly I think it’s around increased share of market, which is won and fought hard for, to deliver a much better product which is absolutely mainstream and embedded as one of the major parts of the Australian third-party channel.

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SPECIAL REPORT

TOP 10 INDEPENDENT BROKERAGES

TOP 10 INDEPENDENT BROKERAGES You’ll find these brokerages at the industry’s cutting edge, pioneering new approaches to lead generation, management and nurturing talent

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SPONSORED BY

FOR ONCE, don’t look at the numbers. The brokerages in this list have accumulated huge loan books and incredible settlement totals over the last 12 months, but these figures – and these brokerages’ presence in the Top 10 – are simply an outcome. The reasons for their success are 10 exceptional and innovative business models that have survived the lending upheavals of the past year.

Note that we’re talking about 10 different business models: this is not a survey which lends itself to generalisations. Some of the brokerages in this list serve all clients; others specialise in construction finance, property investors, foreign buyers and commercial finance. Some concentrate on certain cities, others look at states, and some want to be known nationwide. Their processing and structures are also markedly different.

The way to read these surveys, and learn from these brokerages, is to look at their individual contexts. Why, for example, do Trilogy Funding and The Australian Lending & Investment Centre, both brokerages specialising in property investors, continue to prosper despite huge changes in this sector? How can Iconic Home Loans succeed in construction finance despite WA’s faltering economic climate, or Tiffen & Co continue to compete despite focusing on tiny Canberra? We hope this report goes some way towards answering all these questions and more.

Applications for MPA’s Top 10 Independent Brokerages report were open, online, to all independent brokerages with more than two loan writers. As in our Top 10 Franchise Brokerages report, brokerages were ranked by a combination of four metrics: total loan book size; settlements over a 12-month period; settlements over that 12-month period per loan writer; and conversion rate. Each brokerage was ranked in each category and the rankings combined for a final ranking, meaning each metric is of equal importance, although, in the event of a tie, settlements over the most recent 12 months are prioritised.

This year saw a very high number of applications, including from a number of brokerages we hadn’t heard about before. While not everyone can be recognised in this list, we’d like to thank all those brokerages that applied, whether or not they’re featured here.

A MESSAGE FROM OUR SPONSOR Suncorp Bank is proud to support the MPA special report on the Top 10 Independent Brokerages in Australia. We congratulate the successful brokers and acknowledge their achievements and efforts.

At Suncorp Bank, we see our service as an extension of our broker partners, with our aim to deliver an exceptional experience to customers. We are committed to building strong and sustainable relationships with brokers, by delivering transparency, consistency and dedicated local support.

Our integrated approach to the mortgage value chain means that customers benefit from a seamless onboarding process. Likewise, our commitment to becoming easier to do business with extends from back office to sales support, with resources dedicated to making a real difference to our brokers’ business.

Our proposition is simple and clear – we stand with our broker partners to support and add value to the broker–customer relationship. This report identifies and rewards brokers who have excelled at developing this relationship, through their hard work, commitment and innovation.

Congratulations again to all who have been recognised in this year’s Top 10 Independent Brokerages in Australia. It’s a significant accolade, one which you should all be proud of achieving.

Steven Degetto Head of bank intermediaries, Suncorp Bank

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SPECIAL REPORT

TOP 10 INDEPENDENT BROKERAGES

10

RIGHT ANGLE GROUP This up-and-coming commercial brokerage is taking its focus on continual service to new areas of lending

Total loan book

$354,928,703

Total settlements 1 April 2015–31 March 2016

$338,313,255

Number of brokers/loan writers

6

Average annual volume per broker

$56,385,543

Conversion rate

90%

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Not only is Right Angle Group one of the youngest brokerages in this list, it’s one of a new breed of explicitly commercial brokerages that are now spreading their wings. Set up four years ago by five commercial brokers, the brokerage has diversified this year – into residential lending.

The challenge Right Angle Group faced, explains director Guy Hewartson, is that “we probably weren’t very good at [residential lending]”. While they had experts in childcare, construction and medical finance, residential was still a blind spot. “We made the decision that we had to get someone in our business who knew what they were doing, which we did, and it has been hugely successful.”

This year is the first time the brokerage has appeared in MPA’s Top 10, and this success has been built on a clientele of self-employed clients, property investors and developers, and high-net-worth property owners, explains Hewartson. “Most of our deals are split into construction or term investment for commercial and investment properties,” he says. These clients come to the brokerage through a referral network of accountants, property professionals, valuers and lawyers, built up over the years.

Being commercial specialists means that Right Angle Group approaches client contact in a different way. It doesn’t depend on schedules or templates, which

Hewartson believes are a “commoditised way of dealing with people”, more relevant to the residential space. Most of the brokerage’s clients are continually building businesses and thus are continually in contact. Right Angle Group sends out an e-newsletter detailing deals it has recently done so clients get a practical example of what’s happening in the market. It also runs information sessions in various formats, notes Hewartson.

When it comes to managing costs, Hewartson concentrates on keeping the brokers doing what they do best – negotiating and delivering solutions. To this end they have six support staff who manage admin and submission. “We like to think of them as our ‘professional naggers’,” Hewartson jokes. Their strategy is about getting the right people working on the right things, he adds. “It’s not a numbers game.”

Balancing broker and brand reputations is less of a challenge for Right Angle Group, given the level of trust between its directors, Hewartson explains.

“We’ve all known each other for more than 10 years, whilst we’ve only been in business for four.” It’s all about having the right people on board, he concludes.

“The fundamental question at the moment is ‘why do people use brokers?’ … and the bottom line is the banks are rubbish! People want service, and if you don’t have people who can provide that service and solutions, you’ll fail with the business.”

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SPONSORED BY

ALLIANCE MORTGAGE SOLUTIONS

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In response to bank restrictions on investors and overseas clients, this brokerage is diversifying and reasserting its expertise in the market

Total loan book

$984,880,120

Established in 2012, Alliance Mortgage Solutions has been on an upward trajectory over the past few years, from receiving the Australian Mortgage Award for best new brokerage to achieving Top 100 spots and successive appearances in MPA’s Top 10. Yet there are signs the honeymoon has come to an end, with APRA’s restrictions on investment lending and, more recently, banks reducing or in some cases pulling out of lending to foreign investors. It’s the end of the beginning for Alliance, and the start of a new phase for the brokerage.

Overseas lending restrictions have had a number of immediate effects on the brokerage, explains co-founder and head of partnership development Donald Tang. His planned trip to six Chinese cities, in conjunction with an Australian property developer, has been postponed. Additionally, Tang explains, “we’re suffering a 20–30% decrease in our volume because of overseas investor policy tightening up”.

More locally, their fortunes have been mixed, observes Tang. “We were suffering a little bit of a decrease in the volume of investment lending, but home loan lending has increased so we’re fine.” Changing lender policies have also impacted on their conversion rate slightly.

Alliance is, however, weathering the storm, unlike some of its competitors. Tang therefore believes the disruption in the market presents a good opportunity.

“During that hard time, a lot of clients have a clearer

vision; they can see which brokers are professional and which brokers are not. More people are trusting us, which is another reason we are receiving more enquiries from the market.”

Consequently, the brokerage is expanding, says Tang. “We’re still recruiting people; we’ve got five new guys coming on board – they’re doing their accreditation right now.”

Tang is also looking to diversify the brokerage. “In the next year we’ll do more on the commercial side … we are promoting our commercial products and also equipment loans.” Alliance is already writing commercial deals for existing clients, although Tang believes eventually 60% of commercial business will come through new clients and is promoting the brokerage’s commercial lending presence to local clients. While being careful with budgets, says Tang, the brokerage looks to expand. “We believe the best way to control costs is to make more profit! We don’t mind spending money, but we don’t want to waste money.”

Embarking on a marketing drive has also meant a renewed focus on the Alliance Mortgage Solutions brand. “No matter the individual’s reputation, if the group’s reputation is bad people will never trust us,” observes Tang. “In the marketing materials we always put the company’s name and logo on it instead of the individual person; that’s our first priority.”

Total settlements 1 April 2015–31 March 2016

$655,032,476

Number of brokers/loan writers

15

Average annual volume per broker

$43,668,832

Conversion rate

80%

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SPECIAL REPORT

TOP 10 INDEPENDENT BROKERAGES

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ICONIC HOME LOANS Growing rapidly despite WA’s faltering economy, James Pibworth’s brokerage is dominating the state’s construction finance sector

Total loan book

$1,065,328,624

Total settlements 1 April 2015–31 March 2016

$252,872,966

Number of brokers/loan writers

8

Average annual volume per broker

$31,609,121

Conversion rate

93%

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Unlike investor lending, construction finance has had a relatively low profile in recent years. But not for much longer, it seems: construction finance is at the core of Iconic Home Loans, one of the most exciting up-and-coming brokerages in this year’s list, which took on nine brokers in the several weeks prior to speaking to MPA. James Pibworth founded Iconic after moving to WA from the UK. “I came over here, went to a brokerage that was part of a building group, left after six months and went to another building group to do it on my own, which I did,” Pibworth recalls. From there, it was a matter of building relationships: “We managed to get an agreement with the second-largest building group in WA, which we still have, and they have five companies and around 80 sales reps.”

Last year saw them take on the largest building group in the state – which approached Iconic – and this reflected the brokerage’s established reputation in the sector. Those building companies wanted a specialist, observes Pibworth. “Construction finance is a lot harder than normal finance; it takes a lot longer to go through. It’s a lot harder to attract brokers initially, because it takes a lot longer to get paid: almost 12 months back then, because of the land titles.”

Construction finance also necessitates a large supporting team, given it may take three to four months

for the borrower to just accumulate the deposit. “The support staff work on the deal after lodgement and coordinate the builder, the client, the land developer, the settlement agent and the lender,” Pibworth explains.

“They’re coordinating between five parties for a long, long time.” They also spend a lot of time on aftersettlement service. “We have office brokers now; retention brokers that go through the list and call them all. We’ve got a billion-dollar loan book now, because we’ve been so busy on the front end initially.”

Growing rapidly and hiring new-to-industry brokers in a sector with such a large lag time makes managing costs “very difficult”, notes Pibworth. “I’m bringing in a lot of brokers and many are on salaries or a retainer … now the turnaround time is a lot quicker, six to eight months, but it’s still a long time for me to pay all those wages before the money comes in; we’re talking about an extra $900,000 in wages.”

Difficult it may be, but for a brokerage to grow so fast in WA’s faltering housing market is no small achievement. Iconic is diversifying its income base through first home buyers, and Pibworth is confident it can continue to grow. “We’re well known, we have got a lot of leads, and we’re a young, likeable company … the team plays together very well, and we’re quite cautious in terms of our culture and who we bring in.”

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SPONSORED BY

GREEN FINANCE GROUP

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Expanding and diversifying, Daniel Green’s brokerage is blazing a trail for commercial brokers to challenge the big players Lenders can (and do) endlessly talk up the potential for commercial lending: the ‘unmet needs’, the diversification potential, and of course the commission.

Perhaps they’d convince more brokers simply by pointing to Green Finance Group, a brokerage that started in commercial and is now firmly established as one of Australia’s best brokerages full stop.

The last 12 months for Green Finance have been about expansion, including opening a second office in Pyrmont, Sydney. “We have such a large commercial client base in NSW and Vic,” explains director Daniel Green, “[that] it was the right time to set up a permanent southern presence.” Green also hints at further expansion beyond the brokerage headquarters in Brisbane.

Green Finance has also expanded its portfolio of services. “Pubs and clubs are similar beasts when it comes to finance, although clubs are generally refurbishing on a much more regular basis,” explains Green, who started the brokerage himself in the pub finance space. “It’s a vibrant space to be in and has certainly become a core specialty.”

The degree of diversification at Green Finance has to be seen to be believed. On its website there are four headings, for commercial finance, equipment finance, home finance and financial planning. Each heading has at least four subheadings, ending up with around 25 services, including areas such as ‘petrol station finance’ and ‘poker and gaming machine finance’.

Diversification is built into the mindset of the brokerage, Green explains. “Green Finance Group aims to provide all-round financial services solutions, rather than limit ourselves to lending alone, and we will continue to do so.” That diversity means that recent lending changes have had very little effect upon the brokerage.

A willingness to offer new services is matched by careful cost management. “Return on investment is a critical measure at Green Finance Group and ensures the sustainability of our business,” notes Green, pointing to processes which track the work

Total loan book

$685,464,765

Total settlements 1 April 2015–31 March 2016

“Return on investment is a critical measure at Green Finance Group and ensures the sustainability of our business” and rework required to meet milestones in the loan process.

“This creates a clear line of sight of colleague productivity that we review on a regular basis, allowing us to maintain focus and mandate clients appropriately.”

Green looks to hire brokers who are already experts in their fields, and promotes their expertise to clients. When it comes to the question of brand versus broker reputation, he says he doesn’t see any separation. “We are a team of individuals, so yes, we work with our own goals and targets in mind, but it’s a team approach and we are committed to the brand and to each other, so individual ‘wins’ are something we share and feel proud of as a team.”

$390,347,954

Number of brokers/loan writers

9

Average annual volume per broker

$43,371,995

Conversion rate

95%

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SPECIAL REPORT

TOP 10 INDEPENDENT BROKERAGES

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TRILOGY FUNDING Emerging from a tough year in investment lending, Trilogy is set to benefit from pent-up demand

Total loan book

$1,114,627,679

Total settlements 1 April 2015–31 March 2016

$272,623,799

Number of brokers/loan writers

5

Average annual volume per broker

$54,524,760

Conversion rate

94%

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For Trilogy Funding, 2015 was a tough year, so tough that director David Thomas is slightly surprised to have moved up a place in MPA’s Top 10, having come seventh last year. A property investment specialist, Trilogy was very much caught in the eye of the storm when APRA and the banks decided to cut down on investor lending last year. Tougher serviceability criteria and LVRs have hit potential clients, Thomas explains. “[They’re] the ones that respond to our advertisements and marketing activities, who can do a transaction straight away.”

Nevertheless, Trilogy has moved up a place and is planning to add three brokers to its team of five.

Thomas believes the brokerage needs to adapt its approach, but he can see light at the end of the tunnel.

“We need to take a more advisory role, and help clients understand what needs to be in place to make that next property purchase,” he says. “Maybe that means that we can’t write a loan right now, but we work with that client for 12–24 months in order to get that loan approved.”

Trilogy has been one of the hardest-hit brokerages in this list, but is also among the best positioned. At the time of writing, several banks have just loosened their criteria for property investment, recognising, like Thomas, the level of pent-up demand from investors.

“We’ve been taking names, phone numbers and email addresses of people that were just out of reach

from a servicing and structuring perspective, and with these changes, and more changes to come, all of those people who we’ve got the details of, they’ll be able to make a purchase between the next 12–24 months,” Thomas says.

Trilogy has therefore put in extra effort to market its property investment expertise: it has a bi-monthly newsletter and has adapted its Facebook promotions, explains Thomas. “We are trying to communicate more frequently, and on the level that potential clients want to be communicated with.” The number of subscribers to Trilogy’s newsletter – and the number of enquiries about consultations – has increased by 60–70% since APRA’s clampdown, Thomas estimates.

Thomas manages costs through offshoring seven out of the 10 support staff in the brokerage. “They are our staff members and they only do our work,” he notes. “Unlike brokers that use Exsource, we have built our own offshore processing centre.” Thomas keeps detailed and real-time statistics on the performance of individuals and the brokerage as a whole.

With a number of increasingly well-known Top 100 brokers on staff, Thomas has to do a balancing act.

“The overall message has to be that Trilogy is that source of all knowledge,” he concludes. “The broker forms part of that larger organisation, and it’s that larger organisation the client does business with.”

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4/07/2016 3:15:57 PM

SPONSORED BY

WHAT AN ELITE INDEPENDENT BROKERAGE LOOKS LIKE IN 2016 CONFIDENCE

HOW DO YOU BALANCE TOP BROKERS’ REPUTATIONS WITH YOUR BROKERAGE BRAND?

10 out of 10 brokerages are planning to hire staff over the next 12 months

“I make them shareholders; I bring them in … they learn; they sit on the board meetings. I think it’s a great opportunity for them to grow as people, learn more, and gives them confidence in the marketplace to say, ‘I’m not just a broker; you’re dealing with someone who owns part of the business.”

Gerard Tiffen,, Tiffen & Co

SUPPORT STAFF 25

Support staff

The Australian Lending & Investment Centre

15

Iconic Home Loans Trilogy Funding

10

Tiffen & Co Right Angle Group

5 0

Alliance Mortgage Solutions

Smartmove

20

“We aim to create a high-performing culture across the business, but the key to our business is working together as a team. If someone’s busy, they’re more than happy to pass that lead on to the next person, because at the end of the day we want the customer to get that Smartmove experience.”

Darren Little, Smartmove

Green Finance Group

Mortgage Choice Glenelg (No.1 Franchise Brokerage)

0

Acceptance Finance

1st Street Home Loans

5

10 Active loan writers

15

Brokerage structures There’s a great deal of difference between brokerage structures: at one end of the spectrum is 1st Street Finance’s broker-centric structure; at the other end are Smartmove and Iconic Home Loans, who need many support staff to assist with after-settlement service and complicated loan scenarios.

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“We recognise all the business models within the business are different. When I bring new brokers on, and we’re talking about the business model, we talk about the business culture as an entity, but we then speak about the individual models within them. I would never tell anyone to replicate Mark [Davis]’s model; it’s a very difficult thing.”

Jason Back, The Australian Lending & Investment Centre

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4/07/2016 3:20:08 PM

SPECIAL REPORT

TOP 10 INDEPENDENT BROKERAGES

5

ACCEPTANCE FINANCE Daniel Di Conza and his team have combined a referral-centric model with careful hiring and an excellent work-life balance

Total loan book

$1,130,000,000

Total settlements 1 April 2015–31 March 2016

$277,992,961

Number of brokers/loan writers

12

Average annual volume per broker

$23,166,080

Conversion rate

95%

32

Acceptance Finance is a brokerage that prides itself on hours worked – but not in the way you’d expect. In an industry with the maxim ‘Work hard, play hard’, and top brokers boasting of late nights at the office, the brokers of Acceptance Finance work a 40-hour week, nine to five, Monday to Friday. Nevertheless, this bunch of slackers (relatively speaking of course) wrote $277,992,961 worth of business last year. So how do they manage it?

Understanding Acceptance’s attitude to working smart is key to understanding its success. “Our focus is work-life balance and a family-friendly environment; we don’t do weekends or nights,” explains CEO Daniel Di Conza. With a young family himself, he’s taken on like-minded people. “We’ve found we’ve attracted people who are family-orientated, professional; they want to work, but they want to have a life as well … I guess someone who wants to work 60 hours a week wouldn’t work here because they’d be very lonely for 20 of them.”

Acceptance only hires very occasionally – perhaps one person a year – and doesn’t rush out to do so, Di Conza explains. “When we recruit we don’t usually go out looking for somebody; it’s when the right person comes along. If the right person arrives, we’ll find a role for them.” Potential team members then meet their would-be colleagues as well as their bosses.

Careful hiring keeps turnover low, Di Conza believes.

“We’re very careful with who we bring in, and that’s one of the reasons people stay,” he says.

Although the brokerage has a wide range of clients, these are entirely based on referrals from clients and from a network of accountants, financial planners and property groups. Dealing with other professionals, and setting clear expectations, helps Acceptance’s brokers go home at five, Di Conza notes. “There are not many accountants who do evening appointments. We’ve accustomed our network to expect us to work during professional hours.”

When it comes to investor clients, changes to investor lending over the past 12 months have “certainly made it more difficult”, says Di Conza, but have also pushed clients towards brokers with a deeper understanding of lenders and policies. “It’s not a onesize-fits-all proposition any more. You’ve really got to do your research to get solutions for your clients; you spend more time on each transaction now.”

Acceptance has a big team – as well as 12 brokers it has eight support staff – and Di Conza’s aim to is to build a team mentality. “Although we’ve got individual brokers here, they support each other like a team would. We encourage individual success, but what we’re really looking for as a group is business success, because that helps all of us. One superstar is not going to make a team.”

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SMARTMOVE Innovation and a focus on the ‘Smartmove experience’ has helped this brokerage continue to stand out from the crowd

4

Total loan book

$1,536,320,393

After a few years’ absence, Smartmove is back in the Top 10, with a vengeance. Its brokers are already serial high achievers, with several finalists for 2015’s AMAs, and broker Simon Orbell rising 49 places in MPA’s Top 100 report. They’re also trailblazers, as evidenced by general manager Darren Little calling in from the company’s Manila office to talk to MPA about the brokerage’s business model.

“As a business we’re very referral-based; we don’t advertise at all,” Little explains. With a broad client base in Sydney’s prosperous northern suburbs, Smartmove has been expanding rapidly, which is why Little is visiting Manila.

“We’ve been in the Philippines now for four years, but over the last 12 months we’ve built a purpose-built facility out there which has given us a lot more capacity to support our client base and brokers here in Sydney.”

Rather than outsource, Smartmove has offshored – it has its own facility and its own staff. It is encouraging links between the Manila and Sydney offices by bringing the former’s staff to Australia for two- to three-month stints.

“We want staff for the long term, making sure we recruit the right people,” says Little. The objective is to “control the culture … we want those people working the Smartmove way, because if they’re working the

Smartmove way they’ll treat the customers well, work with the customers, and we’ll have delighted customers.”

While this model is working well, Smartmove’s brokers have had to react to lending changes over the past year, namely by APRA. “We’ve really taken it as an opportunity to learn a lot more, look at a lot more banks and variety,” says Little. “We’ve been doing a lot more work with service, structuring and credit proposals. So we’re seeing it as quite an opportunity; maybe customers are going to a bank they’ve always gone to and they can’t go there now, or a mortgage broker who doesn’t look at a wide variety of lenders.”

He’s also bringing lenders into the office to run educational workshops for his staff.

Little is confident about the future because he believes Smartmove has developed a culture and corresponding hiring model to make sure new recruits fit. At the centre of that culture is the ‘Smartmove experience’ of excellent customer service, he explains. “We aim to create a highperforming culture across the business, but the key to our business is working together as a team. If someone’s busy, they’re more than happy to pass that lead on to the next person, because at the end of the day we want the customer to get that Smartmove experience.”

Total settlements 1 April 2015–31 March 2016

$611,425,370

Number of brokers/loan writers

13

Average annual volume per broker

$47,032,721

Conversion rate

82%

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SPECIAL REPORT

TOP 10 INDEPENDENT BROKERAGES

3

TIFFEN & CO Maintaining a local focus has positioned Gerard Tiffen’s brokerage to benefit from Canberra’s changing fortunes

Total loan book

$1,850,963,498

Total settlements 1 April 2015–31 March 2016

$401,352,577

Number of brokers/loan writers

6

Average annual volume per broker

$66,892,096

Conversion rate

93%

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Thanks to technology, broking is becoming more and more delocalised; there are brokerages in Sydney that are increasingly dependent on the Melbourne housing market, and vice versa. This doesn’t apply to all, however: while Tiffen & Co has the odd client outside Canberra, it remains a fascinating example of a localised brokerage competing at the top level.

Take the past 12 months as an example. Most brokerages have been struggling with lender changes, but for Tiffen & Co it’s been an excellent year, thanks in large part to changes in Australia’s capital.

“Canberra has been dragged along by a few unfortunate incidents, one of them being Mr Fluffy,” explains managing director Gerard Tiffen. The Mr Fluffy asbestos scandal forced the government to buy back around 1,200 properties, in order to demolish them, and those blocks are now back in play. “People are buying the blocks, and builders are developing them now, and it’s still creating a bit of interest in the market,” Tiffen says.

More positively, Canberra’s airport is about to go international, with Singapore Airlines beginning direct flights there in September. “That’s a bit of a game changer for this town,” exclaims Tiffen. “It’s creating a lot of interest and pumping the market up on the residential side.” Tiffen himself has done loans for several Singapore Airlines staff in the past week, and

says the mood in Canberra is optimistic. “Canberra’s population is only the size of Wollongong, but based on what’s going to happen over the next four to five years they reckon we’ll get to 420,000 people. That’s what Canberra needs; that’s what has been lacking … it’s the most positive thing to happen to this town in years.”

What enables Tiffen to place such an emphasis on one city is the high profile his brokerage commands.

Tiffen and Co sponsors a cycling team and a children’s rugby club, and participates extensively in local charitable initiatives. It focuses on its existing clients, targeting them with information specific to Canberra.

This approach is working well, Tiffen argues. “We keep hitting our database, keep marketing to our database, keep things community-based; that’s always been our strategy and will probably remain so going forward.”

Tiffen & Co has also benefited from low staff turnover, although a recent spate of pregnancies means Tiffen will have to look for new staff members. The brokerage has kept its staff through above-market pay, and by offering shareholder positions to its top-performing brokers.

This offers more than just remuneration, Tiffen explains.

“They learn; they sit on the board meetings. I think it’s a great opportunity for them to grow as people, learn more, and gives them confidence in the marketplace to say, ‘I’m not just a broker; you’re dealing with someone who owns part of the business.”

www.mpamagazine.com.au

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4/07/2016 3:20:25 PM

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1ST STREET HOME LOANS

2

Rather than sitting on their laurels, Jeremy Fisher and his award-winning team are taking full advantage of recent upheavals in the market

Total loan book

$3,878,795,000

The 1st Street Home Loans team are the definition of industry royalty, with multiple AMAs and Top 100 accolades, but they’re not above changes in lending.

There was a “complete shift” in investor lending in 2015–16, observes director Jeremy Fisher. “The whole proposition of what a mortgage broker does has been heightened further in terms of the benefits to the consumer because of these changes; it’s like a minefield now for a consumer to work out what rate and product they’re going to get.” 1st Street has been taking on additional brokers, both in Sydney and interstate, to keep up with the level of demand.

While there’s more work out there, 1st Street’s brokers have to work hard to keep up with the sheer volume of lending changes. They’ve adopted a surprisingly low-tech solution: a large whiteboard in the middle of the office, where the latest lender policies are detailed. They also have a team email, and if brokers notice any changes, these get communicated to the entire team, explains Fisher.

“We have a very open communication structure, so if one person knows it, everyone knows it. That’s how we’ve always wanted to be; we’ve just developed it a bit further now.”

The key point here, notes Fisher, is that clients are coming back to 1st Street with their uncertainty and questions, rather than going elsewhere. The brokerage’s

biggest focus has always been on the retention of customers, he explains, and it has invested accordingly.

“We’ve got a marketing and PR person who works here two days a week who works purely on the retention side of the business, staying front of mind with clients.”

Having a staff member focused purely on retention is quite a departure for 1st Street, which has a highly minimalist structure. It has one staff member to assist brokers, as well as an office manager.

“We run a very different model compared to others out there, where one broker has three support staff,” says Fisher. “The brokers here start and finish the process with the client and are across the deal the entire way.” Having few support staff is not a costcutting measure, Fisher insists, but a way of ensuring the broker gets maximum time to develop a good relationship with a client.

In addition to Fisher himself, 1st Street has a number of other big-name brokers and award winners, including Mardee Thomas.

While wanting to encourage a team atmosphere, and a level of trust, Fisher also wants his individual brokers to flourish. “I’m a big advocate for wanting the brokers here to get as much exposure as they can in the local market they work in. It’s the broker that has the brand, not 1st Street or any other organisation; it’s the broker the client is calling.”

Total settlements 1 April 2015–31 March 2016

$702,724,468

Number of brokers/loan writers

8

Average annual volume per broker

$87,840,559

Conversion rate

95%

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SPECIAL REPORT

TOP 10 INDEPENDENT BROKERAGES

THE AUSTRALIAN LENDING & INVESTMENT CENTRE ALIC has held the top spot through constant innovation, careful expansion, and a balance of individual brilliance and brokerage culture

Total loan book

$2,495,000,000

Total settlements 1 April 2015–31 March 2016

$715,191,546

Number of brokers/loan writers

9

Average annual volume per broker

$79,465,727

Conversion rate

98%

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This year’s No. 1 brokerage is not only different from any other in Australia; it’s different to the brokerage it was last year. For the third year in a row, The Australian Lending & Investment Centre (ALIC) has topped MPA’s list with its unique business model and continuing innovations.

“Each year we have a theme,” explains managing director Jason Back. “Last year was about efficiency, and the client relationship road map; this year is actually about people.” ALIC has brought in a consultant, at great expense, in order to understand what motivates its staff. Back’s objective is a company culture “that understands you as an individual and how that works in a team environment … it’s quite a complex piece of work but we need it because we’re not hiring technical expertise, we’re hiring personalities.”

ALIC’s approach to broking has already paid off with three Top 10 wins, an AMA for Brokerage of the Year, and regular Top 100 places for star brokers Mark Davis and Kevin Agent. It revolves around a network of referral partners – such as buyers’ agents – focused on high-net-worth property investors who are building portfolios.

However, ALIC’s approach to investment is anything but flashy, explains Back. “We buy 600–800sqm blocks, established houses with three to four bedrooms and two bathrooms, with rents at 4–5% odd yield, 2–6km outside of Brisbane, Adelaide and Melbourne. It’s consistently boring, and that’s what the investor wants.”

Back says customers expect a certain level of advice from ALIC and its partners. “[They expect that] the quality of advice they’re going to get from our buyers’ advocates and people like Mark and Kevin is going to be sound, solid and reliable: there’s no ‘get rich quick’ game.”

This is why recent changes to investor lending have had little impact on ALIC. “Our clients are generally equity-based lenders,” explains Back. “They’ve got good established, less-than-80% LVRs; they’ve got equity available and they’re affluent clients.”

The brokerage has also avoided SMSF lending and foreign investors for good reason, Back argues. “We’ve all been around for 20-plus years and we’ve all seen these fads and we all know there are challenges in these markets…”

With a vastly improved approach to processing, anyone at ALIC can now pick up any file, which is becoming essential with a loan book that continues to grow. They can also track a range of metrics, says Back: “how long a file has been at a certain status, what the next step is, when the next task is set for, who is going to contact that client … it’s working really well”. ALIC has nine loan writers and 16 support staff but continues to be on the lookout for more.

This presents one of Back’s biggest challenges: how to train new brokers and build a company culture in a brokerage with not one but two Top 100 brokers.

They’re building an academy to instruct new recruits, and Back insists there are a number of different business models at work within ALIC. “I would never tell anyone to replicate Mark [Davis]’s model; it’s a very difficult thing: he’s 110% committed, with massive hours, massive volume and massive client load, because that’s the commitment he’s given himself and his business.”

Instead Back looks to support each of his brokers to operate in their own way. “It’s all tailored depending on their business models … we want to make sure they have the resources to support the outcomes they wish to drive.”

“Last year was about efficiency and the client relationship road map; this year is actually about people”

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SPONSORED BY

Kevin Agent (centre left), principal at The Australian Lending & Investment Centre, is presented with the trophy by Ben Whitnall, Suncorp state manager intermediaries for Vic/Tas/SA (centre right). Accompanying: Mark Davis (left) and Jason Back (right)

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FEATURES

HEALTHCARE & EDUCATION

BROKING IN HEALTHCARE AND EDUCATION MPA has partnered with Westpac to shine a light on two expanding industries with a long-term need for brokers, both residential and commercial

ALTHOUGH THIS is the first time we’ve covered healthcare and education in MPA, a select group of brokers have long been reaping the benefits of these industries, including three of Australia’s Top 10 Commercial Brokers and the current No. 10 broker in our Top 100.

Not only are healthcare and education expanding but they’re doing so through brokers. These are fragmented industries, with small operators having considerable funding needs for acquiring businesses and infrastructure. In Australia’s slow-moving economy, it is difficult to find an industry with a 3.3% forecast annual growth rate, as is the case for healthcare; and for education it is higher, at 6.1%.

Be under no allusions: private bankers are currently working very hard to engage with these industries. However, many have realised that they can’t do without brokers and the long-term trust and relationships they engender. MPA has talked to Westpac’s experts in healthcare and education to explore how brokers can play a crucial part in the development of these industries.

As clients If you’ve encountered clients in healthcare, it’s likely been through your residential database. Doctors make for excellent borrowers, explains Leon Berkovich, national head of healthcare, commercial banking at Westpac. “Pretty much as soon as they’re

graduating from university they’re earning quite a lot more. They’re the higher end of the salary band, and that just accelerates throughout their career.”

With wealth come additional opportunities in property investment, creating another need for a broker. “Doctors love that longevity of relationship,” adds Berkovich. “What we recognise and really respect is the longevity of relationship that brokers have with clients.”

In education – which includes childcare – many business owners will be accustomed to getting expert guidance when it comes to their finances, according to Sharon Watkins, Westpac’s national head of education and

social sector. “With childcare, a lot of the owner-operators have either had a really strong relationship with their bank or a really strong relationship with their accountant, so they’ve had that trusted adviser.”

Daniel Green has been working with childcare providers for years at his Top 10 Independent Brokerage Green Finance Group and finds these pre-existing relationships set expectations. “I think everyone has high expectations of finance brokers these days!

And so they should – brokers are finance professionals just like your accountant, and they need to be able to deliver quality results to you, on time.”

SIZE OF THE OPPORTUNITY Healthcare

100,481

$116.2bn

businesses

revenue

4.1%

3.3%

FY11–FY16 annual growth

projected FY16–FY21 annual growth

Education

10,059

$10.6bn

businesses

revenue

11.7%

6.1%

FY11–FY16 annual growth

projected FY16–FY21 annual growth Source: IBISWorld Industry Report, March 2016/Westpac

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Brokers in turn shouldn’t underestimate their clients, warns Westpac’s Berkovich.

“They’re very smart, so they also want to be across all the detail, so don’t take ‘time-poor’ for ‘I’m going to miss detail’; time-poor means they want you to do a lot of the heavy lifting for them, but they’ll still be across the detail.”

As industries In education, childcare centres are morphing into early learning centres, and mid-level players are acquiring smaller businesses. Both processes require funding. The importance of upgrading facilities in this industry should not be underestimated, says Green. “Outdated play equipment and facilities that are beginning to show the passage of time will quickly see parents turn away from your centre.”

Education is a collaborative industry, insists Westpac’s Watkins, which brokers can use to access clients. “I’d always advise a broker trying to get into an industry to look at those peak bodies first and understand how they can leverage those bodies to build a brand and profile, particularly in the education space.” The main organisation is the Australian Childcare Alliance, which has state-based subsidiaries.

Conferences are equally important in the healthcare industry. “Doctors look up to their key opinion leaders,” explains Berkovich. They make good referral partners for brokers, so attending these conferences is essential. “For most conferences you can

Dealing with lenders Banks are targeting healthcare and education with special policies for commercial and residential clients, meaning brokers need to do a balancing act. Both Berkovich and Watkins head divisions of dedicated expert

“I’d always advise a broker trying to get into an industry to look at those peak bodies first” Sharon Watkins, Westpac be an attendee or set up small booths to promote your products and services.” The Australian Medical Association caters to doctors, but of course there are many other areas of healthcare.

Growth in the healthcare sector is better explained on an individual level.

Berkovich suggests brokers talk to medical professionals about their business plans, whether it’s a doctor acquiring a new practice, or one who needs to purchase new equipment. These costs can be enormous: an MRI scanner typically costs between $1m and $2m; starting up a radiology clinic can come to $4m.

business bankers who can provide advice and should be contacted early on. This can, as Green notes, help an application get a far quicker turnaround.

Many banks will try to integrate these clients into their private banking structures, and so as a broker it’s vital to continually reinforce your value proposition. This proposition is about guidance and expertise, Green explains. “Knowing which bank and which banker to approach, and how to mitigate any perceived shortcomings in the bank’s eyes, is key to getting your transaction approved. That’s where the services of an experienced finance broker come in.”

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4/07/2016 3:22:17 PM

FEATURES

WHOLESALE FUNDING

WHOLESALE FUNDING: ALL CHANGE HERE Departing funders and white label and regulatory developments mean wholesale funders are going their separate ways, writes MPA editor Sam Richardson

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NOVEMBER 2015 saw a major upheaval in the usually unremarkable world of wholesale funding: the departure of Firstmac.

Kim Cannon’s non-bank lender had its own reasons of course – the expansion of its directto-broker and direct-to-consumer arms – but Cannon cast doubt on the entire wholesale funder–mortgage manager business model.

Low margins and fierce competition meant there was no space for “another mouth to feed”, Cannon warned. “I think the nonbank mortgage manager space has had its day, unless ... you’re doing something specialised like subprime lending or you’ve got either a retail offering or a unique connection with somebody who is referring business to you.”

It’d be easy to dismiss Cannon’s comments as bluster – a cover for Firstmac’s changing business model. Yet those comments reflected a very real tension that has been building for years in the wholesale funding sector, between traditional mortgage management and the development of white label products. This tension has now come to the surface and, combined with regulatory changes, means that the wholesale funding space is changing faster than at any point since the GFC. MPA talked to four wholesale funders about whether traditional mortgage management is on the way out; how they’re navigating regulation; and what the sector will look like 12 months from now.

Solutions-based mortgage management Clearly, mortgage managers presently play a major role in the industry. Deloitte’s 2016 Australian Mortgage Report noted that “the largest non-bank lenders in Australia continue to have strong support from ADIs, with healthy warehouse capacity and a proven track record of delivering on their issuances, including calling all deals on time”.

However, the report added that “for nonbank lenders, while still largely reliant on wholesale markets, the opportunity continues to be in the near prime rather than prime sector, where a premium can be priced-in, due to less competition from the banks”.

RESIMAC Financial Services is an example of a wholesale funder prospering in this space.

Mortgage managers are “still a very important distribution channel for us”, says Daniel Carde, director of product, marketing and strategic partnerships. “When you partner with several of them it allows you to reach the panels of all the aggregators.”

RESIMAC aims to fund a comprehensive range of products, from prime to specialist to SMSF, in order to harness changing appetites, explains Carde. “Not all mortgage managers used to embrace specialist lending; they have now, and that continues to grow.”

In this environment, says Carde, funding is about creating solutions. “We actively seek them [mortgage managers] out, and they actively seek us out to fill a product gap.”

Mortgage managers who can create solutions are those who are best placed moving forward, believes Adelaide Bank’s general manager of third party mortgages, Damian Percy. “Partners who are able to transform the products we create and align it to customers have always had a good business and will continue to do so.”

WHO FUNDS THE FUNDERS? MPA asked our wholesale funders where they’re getting their funds from: Adelaide Bank 80% retail depositors Listed on the ASX Securitisation Advantedge 100% funded by NAB Pepper Funded by CBA, NAB and Westpac banks Listed on the ASX Securitisation – in May 2016 Pepper completed the largest non-conforming RMBS deal in its history, and the largest in Australia since 2006 RESIMAC Warehouse lending: RESIMAC borrows funds from CBA, NAB and Westpac, which it uses to create its products. The funds are repaid when RESIMAC securitises the loans

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FEATURES

WHOLESALE FUNDING BROKER DEMAND FOR NON-BANKS In our Brokers on Non-Banks survey – which you can read the results of in MPA 16.9 – we asked brokers how much of their business they’d like to put through non-bank lenders: Ideally, what percentage of your business would you like to put through the non-bank lenders?

0–20%

21–40%

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26%

31%

41–60%

19%

61–80%

12%

81–100%

12%

Basic resellers, however, are “an additional mouth to feed”, says Percy, who argues that these resellers will be at risk long term. He also notes that the mortgage managers currently thriving in the market are adding value, despite being disadvantaged by the current economic climate. “When rates have been so low for so long, and prices have been driven so low, it’s difficult to offer a premium service proposition, but these things are cyclical,” Percy says.

Wholesale funders’ need for control Mortgage managers are not of course the only subject on wholesale funders’ minds; they need to consider a range of develop­

when any mortgage manager has autonomy to increase or decrease a borrower’s rate on a case-by-case basis”. The funding appetites of Adelaide Bank and Advantedge, which is wholly funded by NAB, were both directly affected by APRA’s limits on investors (and the banks’ continuing distaste for specialist lending), while RESIMAC and Pepper say they also try to follow APRA’s directives.

Ultimately, there are two forces at work in mortgage management: the economic climate, which pushes mortgage managers towards specialist lending; and the strategies of wholesale funders. For Brett Halliwell, general manager of Advantedge, this is why mortgage managers, despite continuing to be

“We actively seek them [mortgage managers] out, and they actively seek us out to fill a product gap” Daniel Carde, RESIMAC Financial ments. MPA spoke to Pepper’s Mario Rehayem, director of sales and distribution.

Rehayem believes there will “always be a place” for traditional mortgage managers with their own customer service, collection and credit infrastructure, due to broker and customer loyalty.

That said, Pepper now does all the underwriting on its loans, and doesn’t give out any delegated lending authorities (DLAs) to mortgage managers, which means Pepper’s products are closer to white label products.

While a double-up of credit teams improves quality, it may not be sustainable, explains Rehayem. Mortgage managers “will be challenged, and the reason they’ll be challenged is purely on the cost-effectiveness and the minimal margins associated with carrying such infrastructure, when most lenders feel more comfortable holding their own DLAs than giving them away”.

This is the challenge mortgage managers face: continued performance won’t entirely protect them as wholesale funders look to exert more control and consider new strategies. In Pepper’s case, this control has given them additional confidence as ASIC reviews remuneration, notes Rehayem. He says “Pepper has never been in the market

important and a “heritage of the business”, are declining as a proportion of Advantedge’s lending. “They’ve been tending to work with lenders in the market who may be tending towards the specialist space … to an extent we’ve gone the other way and become more about core lending to the mainstream mum and dads, backed by strong rates,” Halliwell says.

White label’s ‘coming of age’ All the wholesale funders MPA talked to have white label brands, so it’s important to not only consider what might be pushing them away from mortgage managers but what’s pulling them towards white label lending. Two conclusions of Deloitte’s mortgage report stand out here. Deloitte’s panel of industry experts flagged “broadening value chain capture”, a category that includes white label, as the biggest opportunity for brokers in the next three years. Secondly, when asked what features would guide consumers’ selection of mortgage products, ‘brand of provider’ was the panel’s least popular answer.

The last 12 months have certainly seen an upsurge in the availability of white label products. Advantedge alone created five new brands, partnering with AFG, Connective,

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FEATURES

WHOLESALE FUNDING WHY BROKERS USE NON-BANK FUNDING In our next issue we reveal the results of our Brokers on Non-Banks survey. As part of the survey we asked brokers why they used non-bank lenders instead of a bank. The results give an insight into the direction of mortgage management – towards specialist lending and personalised service: What is the main reason you would pick a non-bank lender over a bank?

More competitive rates

12%

More personalised services

21%

Recent regulatory changes have prevented client from going to the bank (ie investors)

18%

Takes a wider view than customer’s credit score

33%

The client lacks standard documentation (ie payslips)

6%

Other

10%

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Astute, Loan Market and LJ Hooker. This, says Halliwell, represented an important move beyond their historic base of NABowned aggregators PLAN, Choice and FAST, and a new stage for the lender. Advantedge claims the proportion of brokers with access to its products has increased from 40% to 80%; correspondingly, NAB’s lending through the broker channel grew 12%, driven by a 14% increase in white label settlements.

AFG’s white label home loans division played an important role in AFG’s increased halfyear profits, announced in March.

Advantedge boss Halliwell is enthusiastic about white label’s expansion. “Advantedge really has become a mainstream lender in its own right; white label has become a popular and well-accepted feature of the broker landscape … it’s really come of age to the point where we are a second-tier lender in our own right.”

Diversity (or lack thereof) in the white label space Whether or not you agree with Halliwell, if wholesale lenders do want to promote their products as second-tier competitors, they face a number of challenges. The first relates to the range of white label products and their ability to fill niches.

“With most of these models the pricing’s identical, the service proposition’s identical,” says Adelaide Bank’s Percy.

At last year’s MPA Aggregator Roundtable, aggregator chiefs talked about features rather than just competitiveness. Connective’s Mark Haron said they were looking at “stronger, more unique products … as opposed to the standard banking offerings”.

Rehayem believes Pepper’s white label products have the diversity brokers are looking for. The same cascading product application form is used for both Pepper-branded and white label products, so borrowers who aren’t eligible for prime products are automatically transferred to near-prime and specialist options without having to reapply. “It gives comfort to both the borrower and broker,” Rehayem argues, “that this application will maximise their chances of getting a conversion, rather than going into a monoline policy with other funders.”

Pepper and RESIMAC have the ability to lend in the specialist space, but creating diversified products is more difficult for a funder like Advantedge, which is bound by NAB’s lending parameters. Yet Halliwell claims Advantedge offers – and has always offered – more than mum-and-dad loans.

“Something which is possibly not so well known in the market is we have a personalised lending team [PLT], and they regularly do very large, complex transactions,” he says.

The PLT deal with applications from $1m to $5m and above, involving multiple trusts, companies and securities.

The challenge is to convince brokers that Advantedge can handle these types of loans, Halliwell explains. “The journey for a lot of brokers tends to be they start to use us with the more basic mum-and-dad loans; they get to know us, they get to understand us and are increasingly confident and aware of what we do. We then have a conversation: ‘You know what? Our offering can certainly go a lot wider with that’.”

The key to creating unique white label products could come from the experience of mortgage management. In August Adelaide Bank will trial a new range of white label products, Percy says. “We’re working with a number of partners around migrating to a mortgage manager type model to a white label type model, and that’ll be a test of the economics and whether they work.”

These products will allow more customisation by brokers and aggregators. “We’re hoping to keep some of the characteristics of mortgage management,” Percy says. “Partners can bring some of their own brand and style and differentiation to the private label type model.”

White label and remuneration One group that appears to agree with Halliwell’s ‘coming of age’ prediction is the regulators. The Final Scope of ASIC’s remuneration review was published in May and announced the inclusion of white label within the review. ASIC will also consider ownership structures and non-monetary benefits: all concerns for lenders and aggregators who are trying to raise awareness of white label products.

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FEATURES

WHOLESALE FUNDING AGGREGATORS’ VIEWS ON WHITE LABEL At our 2015 Aggregator Roundtable, we asked the aggregator heads how they viewed white label products: “Having the revenue off the back of our white label solutions means we’re able to, in a sustained way, continue to invest substantially in the business, which means continue to help members grow their businesses in turn” Stephen Moore, CEO, Choice Aggregation “[White label] creates that brand affiliation as well, which in some respects we probably underestimated originally” Phil Quin-Conroy, CEO, PLAN Australia “We don’t have a white label and we won’t go down that path, and that links back, to us, to not muddying the waters or having any grey areas … our membership has no interest in the white label concept” Tanya Sale, CEO, Outsource Financial “Some brokers in the past have been able to have their own white label offerings themselves. By doing it via an aggregator, they can get considerable cost savings and maintain commissions because of the scale we can offer” Mark Haron, director, Connective “We’re not doing it just around increased commissions; it still has to be a competitive product with the ability to have niche components … that’s why we haven’t got one funder of our product, we’ve got three, and are potentially expanding that to four over time” Tim Brown, CEO, Vow Financial

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However, the wholesale funders MPA talked to did not appear concerned. “The broker commission we pay is equivalent to other lenders in the market,” explained Advantedge’s Halliwell. “The way we compete is offering great service, turnaround times, commerciality in our underwriting and the relationships with BDMs.” He added that Advantedge “never push or expect brokers to write white label because they happen to be affiliated with an aggregator”. Pepper’s Rehayem and Adelaide Bank’s Percy also don’t believe ASIC will find reasons to make changes to brokers’ remuneration.

Looking in different directions For wholesale funders, the challenge of the next few years will be about allocation of resources. Not only do they need to balance mortgage managers and white label funding, but they’ll also need to consider their directto-broker and direct-to-consumer brands.

“There’s still a lot of space for white label,” insists RESIMAC boss Carde. What RESIMAC is currently doing is customising RESIMAC-branded products for different aggregator panels.

Where white label products are near identical to a lender’s branded products, a different perspective is required. When it comes to Pepper’s branded and white label options, Rehayem believes that brokers “will vote with their feet”. “If they want to use a Pepper brand they can, or if they want to use a brand that’s more familiar to them or fits with their branding strategy they can go down the white label route.”

Halliwell emphasises the role of white label in branding strategy: “The lack of a well-known consumer brand is a way to enhance a broker’s own brand … if the consumer receives a great product and experience, that validates their decision to go see the broker in the first place because they’re getting something the consumer couldn’t have gotten themselves.”

For futurists in the industry, including Deloitte’s industry report, attention to branding has a logical conclusion: brokerages could potentially offer their own white label products. Indeed some national franchises already do, including Aussie, Mortgage

Choice, LJ Hooker and Loan Market.

However, the wholesale funders MPA talked to were divided on the prospect.

Adelaide Bank’s Percy believes individual white label products could happen, but may take a while. “Branding is costly,” he says, “and like most things these days the cost can come

“Partners who are able to transform the products we create and align it to customers have always had a good business and will continue to do so” Damian Percy, Adelaide Bank down as technology improves. It’s not impossible to imagine a world where most of the correspondence and branding is electronic and might enable individual loan writers not so much to have the product customised but the visuals and the branding, but it’s probably a fair way off.”

Advantedge is warier on the subject.

Halliwell says individual white label is “not something we’re particularly keen on pursuing. We invest a lot of time, effort and money to get the consumer and broker experience right”, such as by producing highquality marketing materials. “Doing that at the individual broker level would mean we’d be unable to make that investment.”

For once the analogy applies: wholesale funding really is at a crossroads, because wholesale funders have a choice of several business models, many of which can be combined. Mortgage managers continue to offer solutions in specialist and custom lending, but an increasing acceptance by brokers of white label, as well as the branded products of wholesale funders, demands attention, suggesting that the upheaval in wholesale funding won’t be ending any time soon.

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FEATURES

SMSF LENDING

SMSF LENDING: CHARTING A NEW LANDSCAPE Following 12 months of upheaval, leading lenders in the SMSF sector tell MPA what this specialised field now offers brokers

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SINCE 2014’S Financial System Inquiry (Murray Inquiry), SMSF lending has been saddled with an image problem. The inquiry criticised SMSF investment in residential property, and while the government has not taken any action on this front, this did not stop many lenders pulling out of the space. SMSF lending was also hit by APRA’s crackdown on investment lending in 2015.

Despite all that, SMSF lending continues to roll forward. Australia’s SMSFs continue to grow, hitting a record $594.6bn in the December 2015 quarter and representing 30% of the entire superannuation pool. And while the regulatory focus has been on investment in residential property, many lenders say brokers should be looking at the commercial opportunities in SMSF lending, which can allow self-employed clients to acquire commercial premises. MPA has run plenty of articles on self-employed clients recently, and for good reason: these clients require a mix of commercial and residential finance and can become loyal repeat clients for brokers.

There is another reason to look at SMSF lending in the long term. Australia’s population is ageing: by 2030 one in five Australians will be aged over 65, according to Commonwealth Bank. The brokers who will service that market will have started doing so today, explains Darren Moffat, director of brokerage Seniors First. He told MPA sister title Australian Broker: “[What] brokers should look at, as a precursor to [the over-65 market], is to get into SMSF lending. SMSF lending is a good way to tap into the pre-65 market, so getting into the 50-plus market. If you get these clients early, then you can build a relationship and you have got them later on down the track.”

In this article Australia’s leading SMSF lenders explain the changes in the space and how brokers should approach SMSF lending today. Clearly, SMSF lending is not easy, nor is it a ‘quick buck’ – which is why our lenders talk in-depth about referral partnerships and client types, and spell out their lending conditions in the accompanying sidebars, although you should always check these conditions with the lenders directly.

SMSFS BY THE NUMBERS

566,735 Number of SMSF funds in Australia as of December 2015

$594.6bn Value of those SMSF funds

30% SMSF’s proportion of superannuation savings

2/3 SMSF’s proportion of superannuation savings by those with more than $1m in super

49 The average age of those establishing SMSFs in the five years to June 2015, down from 54

Source: ATO

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FEATURES

SMSF LENDING

What’s changed in the SMSF lending market over the past 12 months?

Thinktank A year ago, there were more lenders scaling back their involvement in SMSF lending than escalating or coming into the market, which in large part was being driven by the Murray Inquiry recommendation to reintroduce a prohibition on such lending.

Notwithstanding the subsequent green light from the federal government, 12 months on and the trend of lenders reducing their offering or exiting the market entirely remains much the same. The situation has not been aided by recent budget measures impacting on the operation of SMSFs; these have only further clouded matters in an already-complex area of finance. For SMSF lenders such as Thinktank … volume levels are only continuing to increase.

AMP There have been a number of changes over the past 12 months, partially driven by uncertainty over potential legislative changes as well as by the regulators’ focus on investment lending.

While there hasn’t been any legislative change recently, there have been amendments to lending criteria – for example, maximum LVRs are now around 80%, and SMSFs need to have a starting fund balance above $150,000 to enable borrowing. The reduction in investment lending did reduce interest in property within SMSFs at the back end of 2015, but this year we are seeing a steady increase in SMSF lending enquiries.

Iden Group There remains some uncertainty in this space due to some lenders’ cautiousness about the credit risk and that the policy by government may be modified. So far they have not made any changes, but funders remain cautious.

What has changed: the federal budget proposed superannuation tax changes for those with over $1.6m proposed to be taxed

instead of tax-free, albeit still only at 0.15%.

Will that be enough to make those with more than $1.6m use some or all of the funds to buy a property in their SMSF, and perhaps borrow some of the purchase price?

We are yet to see any great influx of SMSFs going out and buying up big, but this change may prompt a few more to consider direct property.

La Trobe Financial A number of lenders withdrew from the SMSF space entirely, which in part can relate to the product’s ‘investment’ status causing issues for ADIs due to APRA’s speed-limiting of investment lending growth being capped at 10%, to which SMSF lending clearly contributes.

The other aspect to this uncertainty

“Whilst there hasn’t been any legislative change recently, there have been amendments to lending criteria” RESIMAC Financial Services With SMSF lending secured by residential property obviously falling under the umbrella of residential investment lending, in early 2015 we saw some lenders alter SMSF policy and/or pricing and in some cases suspend the sale of SMSF loans completely, in order to slow their overall investment lending growth.

RESIMAC [has been able to] continue lending in the SMSF space without the need to adjust lending policy or pricing.

was the Financial System Inquiry’s recommendations regarding changes to SMSF borrowings.

The government has subsequently ruled out these changes and SMSF can continue to borrow under an appropriate structure from a third-party lender. Much of the uncertainty around the product has now cleared, and we see the product continuing well into the future as part of an SMSF investment strategy.

OUR CONDITIONS FOR SMSF LENDING: Barrie Gaubert, CEO, Iden Group Up to 70% LVR is considered for residential; typically 60% for commercial.

Set-up costs vary but allow for more expenses than a normal residential loan. Legal fees are higher, and often there are settlement risk fees payable from the loan established.

Serviceability is based on proven income from the SMSF but can be supported by beneficiaries. We have several funders, so each case is on its own merits.

We don’t insist on a stated financial position at settlement in reserve, but again it is case by case.

Please note these criteria are not exhaustive, and are correct at time of writing (June).

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How can brokers find SMSF clients?

Iden Group You need to know your client, and your client’s friends. Survey your customers, or ask them if they know anyone that has their own SMSF. It is about segmenting your customer database. Those with an SMSF are most likely to know others in a similar situation, plus you need to get to know their accountant or planner who set it up for them. Firstly, you need to make sure their accountant is not in sync with another broker – a risk.

AMP While traditionally the majority of SMSF trustees are over the age of 55, for funds established in the March 2016 quarter 75.1% of trustees were under the age of 55 and, interestingly, 42.6% were under the age of 45. Eighty-two per cent of all established SMSFs in the same quarter had a salary under $150,000 per annum, with more than 50% having an annual salary under $80,000 per annum. So, while it’s a very broad range, understanding the typical SMSF demographics and statistics available via the ATO would enable brokers to target both their

existing database and new customers for new business opportunities.

La Trobe Financial In terms of lead generation, a finance broker’s existing database should be their first port of call, mining their CRM to firstly identify clients who are self-employed and renting their business premises, as it can often make good commercial sense for small business owners to purchase their business premises.

They can use cash flows from their business to pay their mortgage, as opposed to paying someone else’s by way of rent.

For new clients, brokers should contact their network of accountants and financial planners for leads in this space, as they are best qualified and often the source of recommending and establishing SMSFs.

RESIMAC Financial Services Mining an existing client database in search of SMSF lending may not necessarily be the best strategy for a broker wanting to expand into SMSF lending. Instead, brokers should consider partnering with a trusted financial planner to whom they can refer clients as

part of the overall financial needs assessment.

If, as part of that needs assessment, the financial planner determines that an SMSF with investment in property is an appropriate strategy, the client will be referred back to the broker to complete the SMSF lending.

Thinktank With existing clients, when conducting a review of their financial position or arranging new facilities for them, ask the question about their superannuation to find out if they have an SMSF or are thinking about setting one up.

A focus on self-employed connections will most likely yield the best results, especially those owning or renting commercial premises.

Beyond current client lists, we recommend regular dialogue with accountants, solicitors and financial advisers, who will all have their own client networks who will be in need of various forms of finance from time to time.

Reviewing asset and liability positions, perusing recent financial statements, and asking questions around property and wealth management plans are all good places to bring out useful information and pursue opportunities from there.

OUR CONDITIONS FOR SMSF LENDING: Jonathan Street, CEO, Thinktank At Thinktank we extend SMSF finance for the acquisition of commercial, industrial, and retail property (non-residential, non-rural), as well as the refinance of existing SMSF loans, which is becoming increasingly common.

We lend up to 75% LVR on the personal guarantees of the members, with the option of a non-recourse available where the LVR is below 50%. Standard loan terms are 25 years, with the availability of 30 years upon request. Our serviceability assessment is a true, unstressed Interest Cover Ratio calculation with a minimum of 1.50x based upon existing SMSF net income plus annual member contributions and 80% of gross rental income produced by the property. A Statement of Advice from the fund’s financial adviser is generally sought, although we will accept alternative approaches

where the underlying borrowers are sophisticated investors or the adviser will sign a certification.

We ideally prefer to see a minimum net asset position of $250,000 in the fund at settlement, and do not enforce any sort of liquidity ratio requirement.

[There’s a single] establishment fee which includes the cost of a commercial valuation and legal fees up to our published scales, along with all other associated costs, such as title insurance and settlement fee.

Please note these criteria are not exhaustive, and are correct at time of writing (June).

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FEATURES

SMSF LENDING

Who should brokers partner with for SMSF lending?

La Trobe Financial Accountants and financial planners are by far the best form of referral source for brokers, as brokers can take comfort in knowing that the clients have been qualified and deemed appropriate to undertake borrowings via this structure.

Developers and builders referring clients (purchasers) directly should be handled with caution as there can often be a conflict of interest. We would suggest brokers tread carefully with these and insist on evidence of financial advice before proceeding.

RESIMAC Financial Services SMSF lending is not typically a loan product that is ‘offered’ to clients in the normal course of business. Clients seeking an SMSF loan have, in most cases, received advice from their financial planner or accountant

suggesting they consider entering the SMSF market and consider property as part of the investment strategy within that SMSF. The client will then approach their broker for assistance with their SMSF financing needs.

AMP Understanding all the parties involved in an SMSF lending transaction highlights the best business partnering opportunities. Accountants and financial advisers specialising in SMSF advice, establishment and administration are a great starting point. In a lot of instances accountants and financial advisers are happy to pass on the sourcing of the lending requirements of their SMSF clients to mortgage specialists.

Iden Group Certainly regarding the compliance of advice stipulations, but also to be seen to be offering

a holistic wider service to your customers, you need to be linked with planners and accountants.

I’ve come across many brokers who have excellent long-term associations that work both ways. Most do this on a business basis with disclosed incentives involved.

Thinktank There is an enormous amount of potential in brokers looking to develop affiliations with other professionals, including financial advisers, accountants, auditors, solicitors and property conveyancers. The quickest and easiest place to start is with those relationships already servicing existing clients, just by asking for an introduction or picking up the contact details from information already to hand and, with consent, introducing yourself.

OUR CONDITIONS FOR SMSF LENDING: Daniel Carde, director product, marketing and strategic partnerships, RESIMAC Financial Services Loan parameters: Maximum loan amount $500,000; maximum LVR 80% (LMI required when LVR exceeds 70%).

Loan purpose: Purchase of an investment property plus costs; refinance of an existing SMSF loan plus costs (no cash out or consolidation).

Security: Residential properties must be completed homes or units over 12 months old, and cannot be purchased from a developer.

Properties off the plan, serviced apartments, studio apartments and units less than 40sqm are not acceptable. Residential apartments which have a car space or storage area on a separate title that can be sold individually are not acceptable.

Serviceability: Two serviceability tests are applied, with the lesser of the two results taken: serviceability ‘inside’ the fund, where only the income and expenditure of the fund is considered; serviceability ‘outside’ the fund, where the income and expenditure of the

guarantors/fund members is considered, including the rental income and proposed repayment associated with the SMSF property purchase.

Additional requirements: The SMSF must hold minimum net tangible assets of $150,000 or more prior to the loan transaction; OR evidence that such assets exist in a standard/industry super fund will be accepted subject to the transfer of the assets to the SMSF prior to settlement. The SMSF must also have a minimum liquid asset (interest/ dividend-earning assets) balance of 10% of the total debts of the SMSF (including the proposed new loan) after the loan transaction is complete.

Please note these criteria are not exhaustive, and are correct at time of writing (June).

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How can brokers make SMSF lending a regular part of their business?

RESIMAC Financial Services SMSF lending is not typically a loan product that is ‘offered’ to clients in the normal course of business. Clients seeking an SMSF loan have most likely received advice from their financial planner or accountant to consider heading down the SMSF path. The best way for a broker to ensure ongoing SMSF lending business is to partner with these professionals and form a mutually beneficial business relationship where the referral process exists as a ‘two-way street’.

For brokers wanting to enter the SMSF lending space, it is strongly recommended that they undertake one of the many SMSF lending courses that are available in the market today.

La Trobe Financial Importantly, SMSF lending is a niche area and should only be carried out by brokers looking to deal regularly in this space. It is not suited to brokers who only want to process one or two loans each year. So, for those serious about making this a regular part of their business, we believe there is significant opportunity for

them, which will continue to grow over time.

We would suggest brokers partner with a trusted referral source such as an accountant or financial planner to establish a steady supply of regular quality leads.

Iden Group Get to know about how it all works: it is a different type of lending. A non-recourse loan at, say, 60% to a fully documented SMSF with mature investors behind the SMSF means you are dealing with higher-net-worth, savvy customers and their accountants and planners.

ment thinking and plans. Organising to meet them in conjunction with their accountant and/or financial adviser on specific issues can also bring opportunities to the fore.

Stay on top of what is happening in the SMSF industry, commit to the professional development programs conducted by the MFAA/FBAA and aggregator, and keep in touch with professionals in the SMSF space.

Being well informed and maintaining an objective outlook is the best way to impress clients and provide them with value.

AMP Thinktank Every time a broker takes on a new finance application for a client, they should make a point of noting down what opportunities may exist both now and in the future, even up to five years away. Diarising to meet with clients on a yearly basis is a great idea as part of updating their current position regarding income, assets, business and consumer finance, superannuation and wealth manage-

While brokers are unable to give advice to customers, a working knowledge of SMSFs will certainly give them an edge with potential business referral partners. Above all, brokers should let people know that SMSF lending is something they know well. A lot of SMSF trustees like to know that the person they are dealing with has a strong understanding of something they themselves are sometimes only just learning about.

OUR CONDITIONS FOR SMSF LENDING: Glenn Gibson, head of sales and marketing, AMP Bank Regarding the property itself (talk to AMP for conditions related to the vendor, servicing, security and the SMSF): • Must be an investment (ie it cannot be owner-occupied).

• Must be constructed and have its own separate title details (ie no construction loans) and established for more than six months prior to application. (no off-the-plan purchases).

• Must be zoned residential or rural residential (ie no part-residential, part-commercial is allowed).

• Must be fully serviced by power, water, electricity and sewerage and have road access.

• No company title, serviced apartments or display homes.

• No more than two residential units on one title.

• For strata title properties with more than one title and where registration of the transfer of the strata unit requires transfer of both titles, both titles can be used as security.

• The maximum land area is 2.2ha (5 acres).

• We lend up to a maximum of 70% of the value of the residential investment property.

• An AMP SuperEdge loan can be used to refinance an existing SMSF loan with another financial institution, on a dollar-for-dollar basis only.

• An AMP SuperEdge loan cannot be used for renovations.

• We take a registered first mortgage over the residential investment property. No second mortgage or other kind of charge over the residential investment property is ever permitted.

Please note these criteria are not exhaustive, and are correct at time of writing (June).

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PROFILE

TOMMY LIM

TOMMY LIM: NEW TO THE GAME AND WINNING Award-winning newcomer and founder of SF Capital Tommy Lim tells Maya Breen about his strategy of wealth-building for young professionals

“TWO ROADS diverged in a wood and I–, I took the one less traveled by, and that has made all the difference.” The words by American poet Robert Frost come to mind as Tommy Lim tells his story.

For many years he was on the well-known track of getting good grades in school, then a university degree, and establishing his career working as an employee. Then he realised that the entrepreneurial pull was too strong and went on to found his own brokerage, SF Capital, in 2013.

“It takes a while to break away from that conventional career path,” says Lim. “But I wanted to create something of value myself – essentially build the business that I saw in my mind.” And there is good reason why fewer people choose to take this path – it’s the riskier, uncertain one.

“Those first couple of years are extremely hard work. It’s like a plant or a child – you need to nourish it, watch over it and protect it.”

But his perseverance has paid off as Lim was recently named state winner of the NAB Newcomer Award for NSW at the MFAA Excellence Awards, just as he turned 30.

“It was a good milestone – to hit 30 and win that award,” says Lim. “It was a very proud moment for myself and the firm.

When we won that award, it was a signal to the market that this is a firm that should be watched. It was a proud achievement.

You can only really be newcomer once, if

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you think about it. I can’t be a newcomer again. It’s a real stepping stone to other achievements.”

The entrepreneurial call Lim’s professional background leaves him well equipped to tackle the challenges of being a managing director and business owner. Armed with a Bachelor of Commerce

he’d actually encountered very early on.

“The first job that I got where I had to be interviewed properly and wear a suit and tie was with a mortgage broking firm,” Lim says. “That’s where I learnt about the industry and got my initial exposure to mortgage broking. Then finally when I was a consultant I mainly consulted to banks and other financial services companies. Despite

“I wanted to create something of value myself – essentially build the business that I saw in my mind” (Finance) and Bachelor of Laws (Honours) from UNSW, his previous experience includes management consulting, capital advisory and start-ups.

At global consulting firm Booz and Co, Lim was a consultant to the senior management of large companies and government organisa­ tions and he also co-founded Oneflare, which connects consumers to specific businesses.

Although within consulting you are surrounded by smart people, Lim explains, often the teams and clients are imposed upon you – and Lim wanted career freedom and business flexibility to build what he saw as a successful company and to be able to pick his business and networking partners. That business was mortgage broking, an industry

that very textbook career path, I really felt more like a business owner/entrepreneur at heart.”

So his plans shifted to change tracks and establish a business that would connect his lifelong interest in personal wealth and property with his professional experiences.

“I thought, I want to build a company specialising in financial services and looking after people’s wealth, and a good way to start would actually be to build a mortgage broking firm first.”

Starting up SF Capital Lim has built up SF Capital from scratch.

The brokerage was founded in 2013 and Lim spent the first year networking and

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“It takes a while to break away from that conventional career path. I really felt more like a business owner/entrepreneur at heart”

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PROFILE

TOMMY LIM SF CAPITAL’S CLIENTS SF Capital focuses on two client groups, says founder Tommy Lim: young professionals finding a start in property, and, at the other end of the spectrum, “very sophisticated clients, whether it be investors with a portfolio or business owners where their financials really need a more in-depth understanding before presentation to the bank”. He names a few examples: Different business owners, eg doctors who recently started a new business, have achieved a medical specialisation, and so income has increased Wealthy high-net individuals with multiple trusts who receive most of their income from existing investments Business owners who have successfully exited their businesses and are looking to upgrade their homes

KEEPING FIT OUTSIDE BROKING Tommy Lim also likes to keep fit and is an Oxfam Trailwalker after completing 100km from Hawkesbury River to Mosman in 34 hours and raising over $6,000 for Oxfam Australia.

He’s brought his fitness mentality to the business, making sure to keep his team active as together they will participate in City to Surf this year.

He’s also keen to challenge himself with a full marathon in the future. “If you’re fit, you could possibly wake up and do a half marathon and just finish it by sheer mental willpower. But the full marathon needs a lot of training, and that’s what I like about it – you can’t wing a full marathon; you need to be fit.”

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building the business while he worked parttime as a finance and legal manager, and in May 2014 it went fully operational.

“A large part of it was administrative as well as relationship-driven,” says Lim. “Getting accredited, finding your aggregator, meeting with each bank” – as well as building a website and gaining MFAA membership.

Building a brand and client base takes a great deal of time. To establish his client base he connected with old friends and family; he also had a friend who had started a real estate agency not long before SF

It is essentially about “attracting likeminded leaders and achievers who are growing in their careers, in their lives and in their businesses”.

As a director and broker, Lim has to juggle two hats and is focused on plans for future growth. “It’s my responsibility to make sure that myself and my team are delivering against certain milestones to take the firm to where it wants to go and to achieve its vision.”

Looking ahead, although it is still a boutique establishment at the moment, Lim

“It was a good milestone – to hit 30 and win that award” Capital launched, so it became a source of leads which he then reciprocated with referrals as the business grew. The client base of the brokerage strikes a balance between two groups: young professionals finding a start in property; and sophisticated, high-net-worth individuals with investment portfolios, or business owners.

SF Capital’s mantra is “foundations for wealth”, which Lim explains stems from the idea that they lay the financial foundations for their clients to pursue their personal and professional goals, starting with finance broking as their cornerstone offering.

“People think about lending first, and that’s why it’s the cornerstone,” says Lim as he names four pillars – savings, loans, superannuation and insurance.

“If you look at what are the big trigger points or transactions in someone’s life, when someone buys a property or their home, that is the biggest transaction that they’re going to make – it’s where they have the most capital and take on the most debt. If anything, someone’s going to protect their home more than any other asset they own,” says Lim. “So for our clients, if they’re young professionals, the home loan is the first sophisticated financial product that they’re going to be exposed to.

“To be the financial partner to Australia’s leaders and achievers in the pursuit of their personal, professional and business goals” is the bold vision of the company, Lim explains.

aims to grow SF Capital into a sustainable firm with scale to consistently deliver an experience for its clients that goes above and beyond expectations.

“I’m sure that’s a challenge for every broking firm and every bank, but I want to have a consistent level of excellence and way of doing business that is built into the firm, and the team is such that we’re very well resourced to handle the client flow that we have, as well as keep it profitable.

“From there, young professionals are still a core market for us, so it’s really about capturing that market and making ourselves known in that marketplace.”

With a small but growing young, energetic and hard-working team, SF Capital looks to be in good hands to achieve this. Lim is currently training two staff to be brokers and is in the process of hiring a third. “I like to think that everyone in my team has something to bring that is unique and different – either a unique circle of relationships or some creative or marketing mindset, and different diverse interests, be it food, exercise or travel.”

Although growing a business is rewarding, it’s the clients that make it all worth it. “Having a tough client problem and solving it and being able to learn their loan is formally approved and they can now just relax – that’s probably the best part,” says Lim. “As a business owner, it’s just seeing results and seeing the firm grow.”

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FEATURES

CHINESE INVESTORS

THE BILLION-CLIENT QUESTION Despite being constantly in the news, mainland Chinese property investors continue to be widely misunderstood. MPA editor Sam Richardson looks at attitudes to property, brokers and business in the world’s biggest nation

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FOREIGN INVESTORS are the revenue stream brokers keep locked up in the attic.

Foreign investors – and here we mean investors from mainland China – have been blamed for the lack of affordable housing, and criticised as an unsustainable strategy for banks and brokers. Indeed, at the time of writing a number of banks have clamped down on foreign investors, restricting the use of foreign currency income and lowering maximum LVRs to 70% and below, while the state of Victoria has also raised stamp duty for foreign investors.

During the 2014/15 financial year, 36,841 sales of residential real estate worth $60.75bn were approved for purchase by foreign buyers, according to the federal government’s Foreign Investment Review Board (FIRB). Investors from mainland China have made up one quarter of foreign real estate investment since 2012. Even if the government does bring them down, these figures suggest that mainland Chinese investors will present a long-term client base for a number of brokers – and this article is intended for brokers seeking to enter that market.

Three recent developments will help ensure that mainland Chinese clients continue to be interested in Australia: the launch of Juwai. com in 2011, which helps real estate agents reach Chinese buyers; the China-Australia Free Trade Agreement, which came into force in December 2015; and the launch of the first Mandarin-language loan comparison site, Chengdai.com.au, in March 2015.

Whether or not you speak Mandarin or Cantonese, understanding culture and business in China goes a long way towards helping brokers deal with mainland Chinese clients.

MPA has talked to Top 100 broker Ren Wong, founder of Chengdai and N1 Finance; Eric Cui from award-winning Alliance Mortgage Solutions; and Brian Knight, CEO of Kaplan Professional, which has just launched an online training program for businesses looking to engage with Chinese consumers.

NAMES TO KNOW WeChat A phone messaging app with 650 million active users, WeChat has been used by Top 100 brokers Raymond Xue and the team at Alliance Mortgage Solutions. Eric Cui at Alliance says it’s most useful for staying in contact with existing clients and getting personal referrals.

Sina Weibo China’s biggest social network, Weibo is akin to a hybrid of Twitter and Facebook, both of which are banned in mainland China.

Kaplan’s China Ready course says 76% of Weibo users are open to advertising through microblogging on the site.

Juwai.com An international property site for Chinese buyers, Juwai.com features property listings from 58 countries. It also translates English listings to Mandarin, converts currencies, and produces various reports on the Chinese foreign investor market.

Union Pay This is the only domestic bank card in mainland China; Visa and MasterCard have limited acceptance. It is extensively used by Chinese tourists as it enables them to spend beyond the usual overseas limit.

Baidu An equivalent to Google in China, Baidu also runs an equivalent of Wikipedia and, like Google, it sells advertising.

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FEATURES

CHINESE INVESTORS Only the beginning Kaplan’s ‘China Ready’ program is designed for Australian businesses serving mainland Chinese consumers. There is a need for such a course, insists CEO Knight, and a corresponding pay-off: he says “welcoming and servicing Chinese customers isn’t easy, whatever people say, but if you can do it well you can increase your advocacy and repeat business ... we’ve been engaging with China for a while, but this course says you can do it

have been given a great advantage: Australian real estate firms have been operating in China since the mid-2000s. Launched in 2011, Juwai.com acts as a portal for real estate groups to target mainland Chinese buyers, and partners with LJ Hooker, Ray White and Raine and Horne, among others. Brokers from both Alliance and N1 Finance regularly fly to China (N1 Finance has several offices there), in order to run investment and finance workshops, more often than not targeted

“Even purely overseas investors always have connections with Australia through these companies, so it’s easy for us” Eric Cui, Alliance Mortgage Solutions a lot better. With the free trade agreement last year and with increasing investment, there’s never been a better opportunity”.

MPA completed the China Ready program, and we’ve used it to add insights to this article.

While many Australians see a flood of foreign investors, brokers’ business engagement with mainland China is only just beginning.

Take Chengdai, N1 Finance’s comparison site.

When it was launched in March, many saw it as targeting foreign investors. In fact, explains N1 Finance boss Wong, “Chengdai still focuses on the local Australian Chinese-speaking community, with over 90% web enquiries coming from the Australian market – as we didn’t do any advertising of Chengdai in China, Malaysia, Singapore, etc, although it’s our plan to roll out internationally.”

Similarly, while Alliance Mortgage Solutions’ founders are Chinese, it’s only recently that they’ve started seriously looking for mainland (as opposed to Australian) Chinese clients, explains Cui. “We didn’t do much marketing with purely overseas investors. Now we’ve started to cooperate with overseas real estate agents and project management companies to get some referrals for purely mainland Chinese investors.”

Finding mainland Chinese clients Brokerages looking to get into mainland China

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at real estate agents and financial planners rather than borrowers themselves. As Cui puts it, “even purely overseas investors always have connections with Australia through these companies, so it’s easy for us”.

Leveraging off established connections is about much more than making a broker’s life easier, however. At a cultural level, connections are particularly important to mainland Chinese ) describes the web of clients: guanxi ( personal connections and trust built up over generations – these are not connections that can be built on a single business trip. On a practical level, Chinese looking to invest in Australia face major challenges in dealing with financiers thousands of miles away, Cui notes.

Even if they do fly over, language barriers could still be an issue. “They don’t have many resources or knowledge about the Australian property market, so they’d prefer to get a referral from real estate agents or solicitors, to build up and establish trust,” Cui says.

Mainland Chinese clients who can afford to invest in Australia are generally highnet-worth clients and tend to have existing connections with financial planners or private bankers. Wong from N1 Finance also sees professional referrals as the most important element of lead generation, but not the only element. “I don’t downplay advertising or marketing, because referral partners look

at these things to gauge a brokerage firm’s reliability. If a brokerage couldn’t afford advertising in China, it means the firm doesn’t have a strong presence and experience in China dealing with their clients.”

N1 Finance maintains a visible presence in China through its offices; its own magazine, Australian Smart Investment, published in Shanghai; and a series of books on the topic written by Wong himself. And personal referrals and repeat business are of course important: Cui from Alliance reckons these make up 70% of the brokerage’s business. “We put a lot of effort into our existing clients; it’s a lot easier to get business from existing clients than new clients,” he says.

Understanding borrowers Oddly enough, explaining the role of a broker to mainland Chinese is much simpler than you might think. While mortgage brokers aren’t part of the Chinese financial system, after years of education – much of it by the two above-mentioned brokerages – most clients do understand what a broker is. “In fact they prefer broker service,” explains Wong, “as they’re busy enough at their work, and investing overseas they need reliable professionals to assist them throughout the process. Brokers play an independent role in the whole investment process, unlike real estate agents.”

Cui adds that brokers have an extra selling point in their mobility: “If [Chinese clients] want to deal with a bank they have to fly to Australia, but as brokers we can fly to mainland China, or do workshops, or seminars and cooperate with real estate agents.”

Understanding the goals of mainland Chinese clients can be more complicated.

Kaplan’s course talks about the “investment mindset” in China, which combined with the effects of the one-child policy (now being phased out) has meant that children have become the focus of a family’s spending: 25% of all family expenditure to be exact. That money often goes towards sending children abroad to study and buying them properties to live in during their studies.

Cui says “many [high-net-worth clients] already have the deposit to buy off the plan, making the repayments similar to paying

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rent”. Owning one’s own home might be the Australian dream, but it’s also the Chinese dream. “All Chinese people prefer to have a home, whether they’re going overseas or staying in China,” Cui explains. “If they have a property they feel like they have a home.”

Investing in property is also a way to pass on wealth to future generations, says N1 Finance’s Wong, and this has a direct effect on investment appetites. “That’s why they look beyond the three to 10 years horizon when they make purchase decisions.”

For many mainland Chinese investors, buying property is part of a wider wealth management approach. “It’s part of their risk diversification strategy,” says Wong, “by not investing in only one type of asset class in one single currency.”

The Chinese stock market suffered considerable shocks last year and the Chinese property market is also sliding: in July 2015 the ABC reported that only one city in 70 surveyed had seen an increase in house prices

face in Chinese culture is more intense and has greater personal, family and community ramifications”.

Kaplan CEO Knight argues that “face is at the heart of Chinese culture” and is “critical” for doing business with Chinese clients.

However, our brokers disagree. Face may have been important years ago, explains N1 Finance’s Wong, “but we don’t experience any element of ‘face’ in the whole process. I think this is a common misconception about doing business in China; times have changed and things are very different nowadays”.

Clients will respect a broker’s professional reputation, says Wong. “Asset allocation overseas can be complicated, and they’re at a very early stage hence still going through a steep learning curve. Clients are very well aware of our role to ensure they have no foreseeable significant change of financial situation.”

Similarly, Cui doesn’t find seniority a challenge, despite Alliance’s team being relatively young. “The clients only care about

“They prefer broker service as they’re busy enough at their work, and investing overseas they need reliable professionals to assist them” Ren Wong, N1 Finance over the preceding year. Foreign property has for both pragmatic and cultural reasons become a favoured asset class, Cui explains.

“Most people in China prefer to invest in what we call real assets; they can touch it, not like shares … even if the market value has decreased, they can still see the property.”

Working with mainland Chinese clients The actual process of working with mainland Chinese clients is a topic of some debate, most of all the concept of ‘face’. In Chinese culture, ‘face’ is similar to reputation, and in order for your client not to lose face, seniority should be respected and direct confrontation should be avoided. Loss of face is more serious than just a social embarrassment, notes Kaplan’s China Ready course: “The loss of

whether you are professional or not; if you have a lot of knowledge of mortgages and the financial industry they will trust you.”

Cui says it helps to build up this professional reputation before the broker’s age becomes apparent, ie through phone calls before a face-to-face interview.

There are subjects you need to be careful about approaching in interviews, but many are the same as in Australia. For example, asking about incomes and assets is still a “very private question”, says Cui. He finds clients can be reluctant to disclose all their assets. “Sometimes they’ll give you the basic information – such as their income – but beyond that they may not tell you how many properties they have in China.”

You may want to take into account regional differences when dealing with Chinese clients.

RULES FOR FOREIGN INVESTORS New and established properties Foreign investors are only allowed to acquire new dwellings, and must get approval from the Foreign Investment Review Board (FIRB) to do so. The maximum criminal penalty for acquiring an established property is $135,000 or three years’ imprisonment. For third parties who help buyers break the rules, the maximum civil penalty is $45,000 for individuals or $225,000 for companies. $5,000+ fees Announced in February 2015, the government has introduced fees for foreign buyers starting at $5,000 for properties under $1m and increasing by increments of $10,000 per extra million.

MPA spoke to Top 100 broker Raymond Xue, who said, “I don’t think these changes will have any major impact” given the small size of the fee.

Stamp duty In April 2016 the Victorian State Government announced that the state’s 2016/17 Budget would raise the stamp duty surcharge for foreign buyers from 3% to 7%, beginning in July 2016, and the surcharge for absentee foreign owners from 0.5% to 1.5%, for the 2017 land tax year. Gavin Norris, head of Australia for Juwai.com, told Your Investment Property magazine: “The immediate result of this halfbillion-dollar tax will be a rush of foreign buyers to close their deals before it kicks in on July 1, then we expect a slowdown in transactions in the second half of the year.”

You can find more details on the FIRB’s website: firb.gov.au/ resources/faq/

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FEATURES

CHINESE INVESTORS TAKING ACTION IN YOUR BROKERAGE Look at your existing referral partners, particularly in the real estate space. Have they expanded to China, or do they have good links there that you could leverage?

Look at your existing client base for Chinese clients in Australia. Building a client base in Australia’s Chinese community is a good way to build trust and get personal referrals and thus leads from the mainland.

Consider marketing in Mandarin and Cantonese in Australia and China. You may want to take on a staff member to deal with enquiries in these languages.

“China and its regions are so diverse that companies ought to treat it as a collection of ‘separate countries’,” declared a 2012 report from consultancy McKinsey, titled Meet the Chinese Consumer of 2020. Knight from Kaplan advises businesses to “understand what part of China, what region [their clients are] from; they have very different ways they want to do business”. However, Wong says that as Chinese buying overseas property are still a niche market, there’s no need to differentiate by region.

All about the long game For brokerages targeting clients in mainland China, all factors point towards a long-term relationship. Leveraging existing Australian– Chinese real estate contacts can hugely reduce costs, but referral partners will expect a long-term commitment, as will clients.

“Relationships take time with the Chinese,

and that’s really a core concept,” says Knight.

“You’re not going to rush a relationship.”

That said, it is important brokers don’t overestimate the difficulties of entering this market. There are many reasons, both cultural and practical, for Chinese consumers to be interested in Australian property and building a portfolio. The concept of professional advisers, and specifically of brokers, is increasingly understood and respected.

Finally, don’t underestimate how much China and the Chinese consumer have opened up to the world in the last decade. As Cui concludes, “mainland investors know more about the Australian financial and mortgage markets, so it’s much easier for us to deal with these clients compared to three or five years ago”.

MPA would like to thank Kaplan for enabling us to complete its China Ready and Accredited program.

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PEOPLE

CAREER PATH

BUILDING AN EMPIRE CEO of N1 Holdings Ren Wong has transformed what started as a humble mortgage firm into a far-reaching, multifaceted and pioneering brand

2007

ENTREPRENEURSHIP

Before Ren Wong entered the mortgage industry he founded nine different businesses as one led to the establishment of another.

His courier and packaging venture Pack & Send specialised in custom packing and worldwide delivery of artwork, antiques and IT equipment, which led to the printing business Copiko Office & Print, which provided digital printing and graphic design services to SMEs. “It was all because of complementary business opportunities,” Wong recalls. “In the end I did digital printing to serve the same client base.”

2014

TOP 100 BROKERS

Wong was ranked 7th in MPA’s Top 100, and launched a new entity, N1 Accounting, in May. N1 Finance launched a financial planning arm, and in October a separate business brokerage firm, N1 Venture, was created solely for business loans. “I do a lot of business loans. I get in touch with a lot of business owners who want to buy or sell their businesses.”

2009

FINANCIAL CRISIS As a result of the GFC, Wong had to sell all the businesses, along with four properties. Although it was a difficult time, six months later he decided to pursue broking and has never looked back.

2011

N1 FINANCE Wong established N1 Finance and gained his accreditation as a broker.

N1 Finance was named an Australian Mortgage Awards finalist two years later in 2013.

“Towards October/November [2011], that’s when I really got into the market as a mortgage broker” 2015

EXPANDING THE BUSINESS

2016

LISTING ON THE ASX N1 Holdings received its IPO in March and is now listed on the ASX. In May, N1 Loans released an online mortgage calculator and comparison tool, LoanRobot, and expanded into general insurance, including content, building and landlord insurance, via a white label relationship with Ensurance Ltd. As of 1 July, N1 Realty is set to start trading under N1 Holdings.

N1 Finance was included in MPA’s Top 10 Independent Brokerages report and expanded into commercial loans and vehicle finance. In April the brokerage launched industry-first Chinese mortgage comparison website Chengdai and, in October, N1 Migration. In December 2015, N1 Loans and N1 Migration became subsidiaries of N1 Holdings and Wong also published a book in Chinese on property investing in Australia, which is selling in bookstores in China and through major online retailers.

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B

PEOPLE

OTHER LIFE Pets of the month

Wilson Financial says: “Bruce is a handsome male black and tan kelpie x American Staffordshire terrier. Bruce is a very happy and affectionate boy who has a lot of love to give.”

Wilson Financial says: “Handsome Mr Jasper has come to the shelter with all his vet work completed. He is a playful cat who can tend to forget his size. Loves a bit of rough and tumble.”

GIVING BACK TO OUR FURRY FRIENDS In the midst of diversifying, Wilson Financial director and multi-award winner Liz Wilson still finds time to support those who don’t have a voice – shelter dogs and cats THERE’S NO doubt that the team at Wilson Financial are animal lovers. Each month the NSW brokerage co-sponsors a different dog and cat waiting to be adopted into a new home.

Wilson took the initiative and approached the Friends of the Wingecarribee Animal Shelter and got a very keen response.

“They wrote to us and said we’ve been very good luck for them. They’ve had record numbers of adoptions, so it seems to be working,” she says.

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Wilson Financial also sponsors the Wilson Wildcats soccer team and hosts an annual breakfast for clients of the brokerage.

“It’s important to be philanthropic in everything we do. It’s team building as well.

There’s that side benefit, and it entrenches into the business’s culture,” Wilson says.

“We’re not just a financial firm that does all these things for clients – we’ve got a heart. It’s important to have that heart in the business and give back a bit.”

Wilson has managed to find the time to give back and get among the community, while also working on diversifying her broking business. It has paid off as Wilson Financial recently won the MFAA 2016 Diversified Business Award in NSW. “It was such a great feeling because diversifying has been absolutely epic for the past two years. It has taken everything to diversify. It’s been incredible but challenging.”

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