Australian Broker 13.14

NEWS Cash rate on hold Still steady at 1.75%, but for how long?

P8

ANALYSIS Foreign investment fallout What lenders’ tightened credit and new state government tax surcharges mean for the property market P10

BUSINESS STRATEGY The habits of high-performing teams Five critical moves to drive performance P16

JULY 2016 ISSUE 13.14

INDUSTRY SPOTLIGHT Sealing the deal

Six non-banks on using specialist loans to solve client dilemmas P18

BUSINESS PROFILE Supporting success

Home Loan Connexion’s Tracy Kearey on the importance of company culture P22

REN WONG n1 Loans’ CEO on adding a real estate arm to his ‘one-stop shop’, and why brokers should embrace technology P14

MARKET TALK Property equals profit

One third of homes were sold for more than double their purchase price in the March quarter P28

BORROWER SNAPSHOT 2

NEWS

ASSOCIATIONS

REGULATION

LENDERS

The MFAA meets with the AFR P4

ASIC reprimands brokerages

ApplyOnline launches asset finance service P8

P6

v $250,000FUNDS - $699,999 HELD BY MEMBERS SHOW MAJOR SKEW TO TOP END SUPER

BROKERNEWS.COM.AU EDITORIAL

Share of superannuation funds vs share of members, 6 months to April 2016 60%

Base: Australians 14+ with superannuation

49.6%

50% Percentage of total funds/Total members

Editor Madelin Tomelty News Editor Julia Corderoy Journalist Maya Breen Production Editor Roslyn Meredith

40%

37.4%

ART & PRODUCTION Design Manager Daniel Williams

28.3%

30%

Designer Martin Cosme

22.9% 20%

10%

0%

16.5%

17.6%

14.7%

Sales Manager Simon Kerslake Account Manager Rajan Khatak Marketing and Communications Manager Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Publisher Simon Kerslake Chief Information Officer Colin Chan

9.7% 3.2%

0.2% Under $5,000

Traffic Coordinator Lou Gonzales

SALES & MARKETING

Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

$5,000–$99,999

$100,000–$249,999

$250,000–$699,999

$700,000+

Amount in superannuation Share of superannuation members

Share of superannuation funds

SUBSCRIPTION ENQUIRIES

Source: Roy Morgan Single Source (Australia)

“As property prices climb and people wait longer to get onto the property ladder, it’s not a surprise that people are holding their home loan debt later in life. However, proper planning is critical to make sure that this debt doesn’t cause stress in later years and people can enjoy the retirement they have worked hard for.”

According to the recently released ING DIRECT Autumn Buyer’s Guide, the average capital city residential property has increased in value by 32% since June 2012, with growth of 7.6% in the past 12 months alone. The average age of a homebuyer has also risen in recent years to 38.

Woolnough said brokers were in a position to assist clients by

tel: +61 2 8O11 4992 fax: +61 2 9439 4599 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES

RETIREES HOLDING MORE PROPERTY DEBT ING DIRECT has revealed that the number of people over the age of 65 who are still holding a mortgage has risen by 28% in the past three years. The lender’s data suggests that Australians are increasingly taking property debt into their retirement years, with 26% holding investor loans and 74% holding owner-occupier loans. The average debt they are holding is $158,000, according to ING DIRECT. Mark Woolnough, head of third party distribution at ING DIRECT, stated that although this news wasn’t surprising given the high property prices in the market, it did suggest that people needed to start planning for their financial future earlier in life.

Madelin Tomelty +61 2 8437 4792 Madelin.Tomelty@keymedia.com.au

offering financial options to better set them up for retirement.

To this end, last year ING DIRECT added the Living Super superannuation product to its Broker Referral Program.

“We talk about superannuation and property as the barbells of a person’s financial life cycle – in most cases they are the two biggest investments that a person will ever make,” he said.

“Research has shown us that people are very open to discussing broader financial needs when they are sourcing a mortgage, such as their superannuation, and brokers are in a great position to encourage and support their clients to consider and sort their super in light of this growing property debt trend.”

Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Rajan Khatak +61 2 8437 4772 rajan.khatak@keymedia.com.au Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss. Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008. The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.

ASSOCIATION HAPPENINGS 4

DATES TO WATCH

THE MFAA EDUCATES THE AFR Following an announcement at the Sydney leg of AFG’s recent Masterclass series, the MFAA has met with the Australian Financial Review journalist who penned the article, ‘Mortgage broker salad days are numbered’.

The article published by the AFR claimed: “Brokers live in fear that commissions will be outlawed”.

It also claimed the standards of the mortgage broking industry “continue to lag” those imposed on other sectors, namely financial planning.

The MFAA stated that its primary objective for the meeting with AFR, held at Fairfax Media in Sydney on 27 June, was to identify key issues involved in educating the media sector about the positive aspects of the broker profession.

“We were pleased that we could follow up on our commitment to the industry to meet with this journalist to discuss the basis of the article. He was willing to sit down with the MFAA to find out more about the data that supports our consumer advantages.

He admitted that he was not fully across the operations of the industry and was willing to engage to get a better grasp of it,” the MFAA commented.

The MFAA said it provided data reports to the AFR showing the continuous growth of consumer market share over five years, along with its Industry Intelligence Service report that showed broker numbers and revenues to assist the journalist in gathering a more realistic view of the industry.

According to the MFAA, the journalist has agreed to keep lines of communication open on other stories, and to consult with the association prior to further publications.

“The industry has to improve its ability to get this message across to media so that the consumer benefits of a broker’s interaction are more clearly understood.

[The journalist] was impressed that we could produce real [MFAA] data to support these claims rather than random opinions that are not generally respected by the media.

“He said that he had a different view, thinking that our industry was primarily a referral-driven operation, and noted that these growth figures showed that we are delivering a better option for consumers,” stated Stephen Halem, head of marketing at the MFAA.

JULY

20-21 What: FSC Leaders Summit 2016 Where: Melbourne Convention Centre, Vic Details: The Financial Services Council’s annual conference will attract up to 700 delegates, including over 100 CEOs from the financial services sector. The program covers a range of industry sectors and offers a chance to hear distinguished local and international speakers on themes that impact and influence the financial services industry.

JULY

WHAT THEY SAID...

Blake Buchanan “What we do need to remember is that the impact of rising levels of foreign investment have already had significant time to play out – and will take just as much time to address” P10

A rundown of the next fortnight’s events

Royden D’Vaz “Self-employed borrowers have specific needs, and there’s a real opportunity to inform and educate this underserviced segment so they are aware of the funding solutions that are available to them” P18

Tracy Kearey “I think we’re so fortunate in that we get to sit in front of someone and they tell us everything.

It’s a privilege” P22

22 What: 2016 FPA National Roadshow Where: Chifley Hotel, Wollongong, NSW Details: The Financial Planning Association’s roadshow will update attendees on the latest legislative developments, and provide guests with practical strategies in the area of further advice and retirement income.

JULY

27 What: MFAA SA Member Focus Group Where: The Hackney Hotel, Hackney, SA Details: This event is an opportunity for SA members to have a voice and to participate in the ongoing development of the association.

All members – brokers, aggregators and lenders – are invited to attend, share, network and problem-solve among industry peers.

REGULATORY ROUNDUP 6

WORLD NEWS

UNITED KINGDOM THE IMPACT OF BREXIT Private banking company Pimco has said the decision

by UK voters to leave the European Union has increased the likelihood of a low-inflation/stagnation (‘stagflation’) scenario over the medium term, according to Digital Finance Analytics.

Pimco global economic adviser Joachim Fels said in a note to investors entitled “From Brexit to Stagflation” that investors faced a “higher chance of stagflationary outcomes” over the next three to five years.

“This would likely come to pass if current or future governments turn more protectionist by erecting barriers to trade and migration, and take up or intensify the battle against inequality by redistributing income from capital to labour,” he stated.

Following the UK’s decision to leave the European Union, the pound reached a 30-year record low, suggesting Brexit has already had severe consequences for both UK and global markets.

The ASX lost 3.2% on the day the referendum outcome was announced, and AMP Capital’s head of Australian fundamental equities, Michael Price, noted that the financial and resources sectors were being hit hardest.

Price added that whether investors treated Australia as a safe haven or a vulnerable economy was yet to be seen, with lower growth and bond yields likely to result in resurgent yield trading.

“The Australian market has rallied for three years without earnings growth and could be considered expensive and vulnerable to a loss of global confidence,” he said.

In the UK, according to JP Morgan, growth will continue to slow down, with a reduction in annualised pace from 1.6% to 0.6% in the second half of 2016. JP Morgan’s chief market strategist for the UK, Stephanie Flanders, said inflation was likely to jump to 3.0% or 4.0% by the end of 2017, a significant increase on previous forecasts of 1.7%.

NEGATIVE GEARING REPERCUSSIONS

$2,900 Average saving per year attributed to negative gearing by the 1.2 million people who claim it

$310 The amount negative gearing’s impact on the budget costs the remaining taxpayers each year

Source: RBA, TAI

ASIC REPRIMANDS BROKERAGES Four mortgage broking firms have been reprimanded by ASIC for misleading advertising targeting Chinese-speaking homebuyers.

The mortgage broking firms involved include Ace Mortgage Market in Parramatta, NSW; Aus Realty Group in Hurstville, NSW; Apex Finance & Mortgage in Burwood, NSW; and Trans Australia Mortgage Finance in Burwood and Chatswood, NSW. The concerns contained in the advertisements targeting Chinese-speaking homebuyers included representations in Chinese such as “lowest fixed rate” and “no proof of income”.

According to ASIC, these can be classified as false and misleading statements, or indicate a breach of the responsible lending obligations.

The advertisements also included heavy reliance on disclaimers that did not explain qualifying terms and conditions in the same advertising.

In addition, the broking firms advertised benefits in the Chinese language but stated the disclaimers and qualifications in English, despite the advertising being aimed at non-English-speaking consumers.

ASIC also discovered there was a failure to disclose the required comparison rate when quoting an annual percentage interest rate in the advertising, a failure to disclose the required warning about the accuracy of the comparison rates, and a failure to regularly review the advertisements to ensure accuracy and compliance with the law.

ASIC deputy chair Peter Kell said: “The Australian Consumer Law applies to all advertising, including advertising in foreign languages. Consumers who are unable to understand written English are likely to be more reliant on advertising in their native language when in need of a financial product.

“Promoters should ensure that their advertising is up to date and complies with the law. If the majority of the advertising is in a foreign language, the warnings, disclaimers or qualifications should be prominently disclosed in the same advertising and explained in that same language.

“ASIC will continue to monitor all forms of advertising, including advertising targeted at non-English speaking consumers.”

LENDER UPDATE 8

ANZ FIRST ON BOARD APPLYONLINE’S ASSET FINANCE SERVICE

CASH RATE HOLDS STEADY The Reserve Bank of Australia has left the official cash rate on hold at 1.75% for the second consecutive month.

Leading up to the announcement, economists and analysts almost unanimously expected the cash rate to remain steady, according to Finder.com.au’s monthly Reserve Bank survey, with 97% of those surveyed forecasting the cash rate would remain on ice.

Despite a volatile couple of weeks leading up to this announcement, Mortgage Choice CEO John Flavell said the Reserve Bank wouldn’t have wanted to add to the uncertainty.

“The UK’s decision to leave the European Union, combined with ongoing uncertainty around Australia’s next government, provided the board with the incentive they needed to leave the cash rate untouched at 1.75%,” he said.

“I believe the board will wait to see what impact these recent events have on consumer sentiment and the broader Australian economy before

making any changes to the official cash rate.”

However, there is speculation that the impact of the Brexit vote may spark another monetary policy easing cycle as early as August. “… Brexit might have an impact on the interest rates in the near future if US Federal Reserve delay the rate hike, which would keep the Australian dollar higher than the RBA would like,” the founder and CIO of HashChing, Atul Narang, said in his response to the Finder.com.au survey.

“This might force RBA to cut interest rates again to stimulate the economy and to lower the Australian dollar.”

Others are suggesting that the cash rate could drop to 1.5% next month pending the inflation figures which are due out at the end of July.

“The central bank will wait until the CPI data release to assess inflation pressures,” Emily Dabbs, economist at Moody’s Analytics, said in response to the Finder.com.au survey.

ApplyOnline now gives brokers the ability to lodge asset and equipment finance loans through ANZ Commercial, the first lender to get on board the new service by NextGen.Net. Connective and LoanKit are the first broker groups to go live.

The new service supports brokers offering a wider range of product types, and enables lending for a range of asset classes, such as industrial machinery, motor vehicles, boats and farm equipment.

‘ApplyOnline Asset Finance’ pre-populates data from the broker CRM system, provides real-time quotations, acceptance and conversion to application and submission.

Tony Carn, sales director at NextGen.Net, says this is an exciting development for the digital platform.

“To date, the bulk of Australian broking groups have invested considerable resources into efficient CRM systems that integrate with ApplyOnline,” Carn said. “This now enables ANZ to establish ‘plug and play’ distribution access with the Australian broker market, and better position broker groups to support them with a diversified and deeply integrated electronic ecosystem.

“Our new ApplyOnline UI [user interface] for Asset Finance is not only impressive, it offers a streamlined quote and submission capability, making it really easy for the broker to use,” Carn said.

“For us this is a key strategic initiative to continue to support our broker partners in enabling diversification of their income and broadening of their value proposition via technology solutions.”

ApplyOnline Asset Finance is the first of its kind in the Australian market.

HOUSING LENDING LIFTS BY $7.5BN

In May 2016, housing lending overall lifted by $7.5bn, of which $6.5bn was for owner-occupier and $0.9bn for investor loans.

Total housing loans are now worth $1.56trn, another record, and comprise 61% of all loans outstanding.

12

ANNUAL GROWTH RATE

10 8 6 4 2 0 Jul 2012

Jan 2013

Jul 2013

Jan 2014

Jul 2014

Jan 2015

Jul 2015

Jan 2015

May 2016

-2 -4 Credit; owner-occupier housing; 12-month ended growth Credit; other personal; 12-month ended growth

Credit; investor housing; 12-month ended growth Credit; business; 12-month ended growth

Source: Digital Finance Analytics

10

ANALYSIS FOREIGN INVESTMENT FALLOUT Lenders have tightened credit conditions for foreign buyers, and state governments have introduced tax surcharges. Will this lead to economic and property suicide?

Australian Broker investigates

RESIDENTIAL VS COMMERCIAL

$ $ 60.54 BILLION

Total foreign investment in residential real estate in FY2015

36.15

BILLION

Total foreign investment in commercial real estate in FY2015

75% 9% Annual increase in foreign residential investment

Annual decrease in foreign commercial investment Source: Foreign Investment Review Board

IT IS NOT a good time to be a foreign investor eyeing Australian real estate. Long regarded as a ‘safe haven’ for property investors, the local property market has historically allowed investors to enjoy positive long-term returns, political stability and financial system transparency. And while Australia also loves foreign investors – foreign investment in Australian residential real estate surged by 75% in FY2015, according to the Foreign Investment Review Board (FIRB) – it is about to get a lot harder for foreign buyers to invest on Australian shores.

The first of the challenges is the increased difficulty buyers will face when seeking to access credit. Over the past few months, several local lenders have announced a myriad of tightened lending conditions for foreign buyers, amid concerns of fraud and money laundering. All four major banks have gone so far as to shut the door to foreign investors who do not have existing Australian income.

On top of restricted access to credit, foreign buyers have higher taxes to look forward to following announcements by the Victorian, NSW and Queensland state governments.

As a part of their 2016/17 budgets, each state

government will be implementing additional taxes on overseas buyers in a bid to raise money for the maintenance of government services and infrastructure.

As a result, foreign buyers in Victoria will now have to pay 7% stamp duty tax, up from the previous 3%. Victorian Treasurer Tim Pallas also tripled the surcharge on ‘absentee landholders’ to 1.5% from 0.5%.

In NSW, Treasurer Gladys Berejiklian confirmed a 4% stamp duty surcharge and a 0.75% land tax surcharge on residential property purchased and owned in the state.

Queensland Treasurer Curtis Pitt announced that foreign buyers in his state would face an additional 3% stamp duty surcharge.

It is also worth noting that these three states are also the most popular for foreign investors eyeing Australian shores. According to data from the FIRB, Victoria is the most popular destination, with $26bn of approved investment in real estate in FY2015. This is followed by NSW ($20bn) and Queensland ($10bn).

Australia may be considered a safe haven for overseas property investors, but this sense of security will now come at a hefty price. Here, Australian Broker investigates what impact this

11

John Soluti ons TOP Manciameli, COUNTRIESHunterwood FOR CHINESE BUYERS

3

4 9 10 5 7

8 1

1 2 3 4 5

United States Australia Canada United Kingdom Thailand

New Zealand Spain 8 Singapore 9 Germany 10 Japan

2 6

6 7

will have on foreign investor confidence and, in turn, the Australian property markets in its two biggest real estate markets.

An important pillar Foreign investors are indisputably important to the Australian economy. Money injected into the economy through overseas investment drives development, innovation and competition.

Specifically, money injected into the Australian property market by overseas buyers has substantially boosted the market’s overall value, undoubtedly contributing to the record national property resale gains of 37.3% over the growth cycle to date, according to CoreLogic.

Gavin Norris, head of Australia at Juwai.com, a leading international property portal for overseas Chinese buyers, tells Australian Broker that foreign investment in Australian real estate is vital to growing Australia’s economy.

“Chinese buyers bring great benefits, such as new housing supply, construction jobs, an economic boost and spending in retail and education. Without foreign buyers there would be fewer jobs, fewer new homes, higher prices and a slower economy,” Norris says.

Chinese buyers specifically account for a

Source: Juwai.com, Q1 2016

quarter of all residential real estate approvals through the FIRB. This is almost 3.5 times the approvals of purchases by US investors, the second biggest source of foreign investment, which accounts for 7% of FIRB approvals.

And while some would argue that foreign investment locks out local buyers, Norris says fewer foreign buyers could, in reality, mean higher property prices for everyone.

“The Property Council [of Australia] has found that each foreign buyer makes four homes available for locals,” he says. “Because they are more willing to buy off the plan, offshore buyers can give developers the presales they need to get financing to start building.”

It is extremely important that Australia keeps these foreign buyers, according to Norris, especially given the competitiveness of the international property investment market.

“These new taxes are a more negative policy than you see in the US, New Zealand, the UK or Canada – all of which are in direct competition for foreign investment,” he says.

Shifting sentiment However, there is still hope, Norris says. The lender clampdown and “negative” tax surcharges

won’t dull the shine of the Australian property market for foreign investors just yet; it might just shift their sentiment.

“In May, consumer property buying enquiries made via Juwai.com in Australia were 16.3% higher than in April and hit their secondhighest peak of the past two years. The question now is, how many of these enquiries will shift from east coast destinations, particularly gateway cities of Melbourne, Sydney and Brisbane, to places that don’t see as much offshore investment?

“Will Chinese buyers leave Sydney, Melbourne and Brisbane in favour of Hobart, Adelaide and Perth? That’s the question the next six months will tell us.”

Blake Buchanan, general manager of aggregation at eChoice, also doesn’t believe there will be any devastating impact on foreign investor confidence. He tells Australian Broker the surcharges will have little effect on a market that is already well and truly booming.

“In relation to what immediate effects may occur, what we do need to remember is that the impact of rising levels of foreign investment has already had significant time to play out – and will take just as much time to address,” he says.

12

ANALYSIS “Some commentators, for example, are suggesting that the introduction of these new surcharges will have little impact as the measures have been introduced way too late in the cycle.”

Property market suicide?

But the question is, what impact will the crackdown on foreign property investment have on Australia’s beloved property market, particularly in its premier eastern seaboard states? The CEO of buyers’ agency iBuyNew, Mark Mendel, says “greedy” state governments have gone “too far” and the consequences will be dire.

“Foreigners buying property in Australia should be paying some tax, but the measures that have been announced by three state governments are over the top and could prove counterproductive for the domestic economy,” Mendel says.

“The roll-on effect could be an economic disaster for Australia, with fewer international students, slower population growth and higher unemployment.”

Mendel isn’t the only one labelling the moves a “cash grab”. The Property Council of Australia has argued that the surcharges will “do nothing” to fix housing supply or improve affordability.

“Let’s call this for what it is – a cash grab from states prepared to play to the crowd on foreign investment and put at risk Australia’s reputation on the global stage,” Glenn Byres, the Property Council’s chief of policy and housing said in a statement recently.

“We are already seeing signs that tighter lending conditions are having an effect on the market, and the trend is that approvals and commencements have passed the peak.”

According to Byres, offshore investors account for about 15–20% of presales in our capital cities, which help switch projects from concept to construction.

“This helps maintain a supply pipeline crucial to close the demand gap; lifts affordability; and every new home constructed supports up to 40 jobs.”

Buchanan, on the other hand, recognises affordability issues in our capital cities; however, he believes it is not necessarily mutually exclusive with foreign investment – meaning these changes are unlikely to make much of a difference to the property market.

It has more to do, he says, with riding out the natural “ebb and flow” of a natural economic cycle at home and abroad.

“Ultimately it all comes down to supply and demand, and the impact at the coalface will still be largely influenced by the particular economics, infrastructure and demographics at play in each area.

“At the core of this is that affordability and supply will remain ongoing issues for any property market and will continue to ebb and flow as part of its cyclical nature, so levels of foreign investment will still be subject to economic conditions, both in Australia and their own country.”

But not everyone is as cautious. In fact, Norris appears optimistic about the property market.

“We know that half of the buyers from China that come to Juwai.com start searching for international property before they have even settled on a specific country,” he tells Australian Broker.

“That suggests a material percentage of those considering investment in Australia will be open to investment in South Australia, likewise Tasmania and Western Australia.”

However, it does depend on how the market – including brokers – responds to these changes.

It is better to embrace the changes than resist them, he says.

“Agents and developers in locations outside of the east coast states have a chance to tell buyers that they can get similar lifestyle and educational opportunities without the higher prices, higher taxes and red tape.

“For at least some buyers, that will be a

compelling argument,” Norris says.

“In the east coast capitals, the property marketers have to counter that message. They have to persuade buyers that they still offer the best value, despite the higher prices and taxes.”

Buchanan agrees that as long as brokers shift their approach in line with shifting sentiment, they will continue to flourish.

“For brokers that have had an international investor client strategy, this will of course have an impact on their business plans. If the market contracts and has a flow-on effect to property values, we will also see the refinance market impacted negatively,” he says.

“However, most brokers embrace strategies that allow them to manage market cycles and changing environments well. Adapting business plans in line with change is how new opportunities present and businesses develop and grow; and in that regard, this cycle is no different to any other.”

TOP 10 AUSTRALIAN DESTINATIONS FOR CHINESE BUYERS

1

3

Melbourne

Brisbane

2

4

5 City of Gold Coast

6

7

8

9

Canberra

St Kilda

10

Sydney

Adelaide

Perth

Cairns

Gold Coast

Source: Juwai.com, Q1 2016

14

COVER STORY DOING IT ALL The CEO of n1 Loans tells Australian Broker why a ‘one-stop shop’ strategy is the way forward, and why brokers shouldn’t hold back when it comes to embracing new technology

IT’S NO SECRET that ASX-listed n1 Loans is a brokerage that is embracing, and some might say pioneering, the movement to diversify in the mortgage industry. With offices in Sydney, Melbourne and Brisbane, CEO and founder Ren Wong is on a mission to create the ultimate one-stop shop with his multiservice business proposition. n1 currently offers clients services spanning home loans, commercial loans, car loans, financial planning, personal insurance (life insurance, income protection, etc.), and general insurance (landlord, building and content insurance). Just to add to his bag of tricks, Wong will also be adding a real estate arm to n1’s financial services portfolio in the next few months, further expanding and solidifying the reach the brokerage has already achieved in the marketplace.

“We want to use technology to encourage human communication. We use fintech to connect to people, not machines. Unlike social media that makes people speak less, we want to make people speak up” Wong tells Australian Broker that the realtor will be co-headed by experienced real estate agent Attlee Hsu, and Jacqueline Wan, a top Young Gun broker who’s been with n1 for over four years.

“We want to be able to create synergy between n1 Realty and n1 Loans, therefore Jacqueline is … taking the responsibility of making the

cross-referrals happen,” he says.

Diversification is clearly something that n1 takes seriously, and Wong has adopted a strong stance on the business strategy from the beginning, in contrast to other brokerages that have erred on the side of caution and stuck with what they know – residential mortgages.

15

Wong, however, is of the mindset that diversifying is not only important for brokers, it’s essential – and his reasoning is simple.

“It all comes down to two reasons,” he says. “A) Maximising revenue with a fixed cost of customer acquisition – that way we improve revenue without additional costs, [and] that’s pretty much improving your return on investment on marketing activities.

B) Maximising retention possibilities because clients speak to brokers for more than one need.”

“I know some brokers [who] prefer to just focus on what they’re good at. It’s a rapid[ly] changing world out here; the drawback with revolutionising technology is we all have to adapt to [an] ever … changing business landscape. Brokers need to be able to offer more products, otherwise risk having clients ‘leak’ through bank branches because they can offer bundled products that probably give customers bigger bargaining power over pricing and features.”

N1 innovation Statements like these convey Wong’s forward-thinking mentality, and hint at his support of advancements in technology in the mortgage industry. Late last year, he launched the mortgage calculator website LoanRobot.com.au after the success of his first online project targeted at Chinesespeaking investors, Chengdai.com.au.

Currently, Chengdai.com.au compares 35 lenders with over 350 home loan products.

The site attracts more than 4,000 unique visitors a month, 99% of whom are visitors are from the local Chinese-speaking community.

Wong has also published a book written in Chinese about investing in Australian property, which aims to inform Chinese investors on the different financing options and various foreign borrowing policies followed by Australian banks. It also offers tips to help foreign investors leverage the internet, which ties in with Chengdai.com.au.

As for LoanRobot, the introduction of an English language mortgage calculator site was a natural progression, given over 30% of n1’s clientele come from non-Asian backgrounds. And while another online mortgage calculator doesn’t sound particularly unique at first, Wong believes his new site has a distinctive edge.

“LoanRobot.com.au is more than just an ordinary high-accuracy mortgage calculator; it doubles up as a home loan rates comparison website that gives borrowers [the ability] to refinance, purchase and obtain pre-approvals, with the options of major banks, second-tier banks and non-bank lenders,” he says.

Wong believes both LoanRobot.com. au and Chengdai.com.au are not just for consumers but actually function as powerful lead generation tools for n1’s brokers too.

“Both these websites are pretty much lead generation tools for n1 brokers, and allow borrowers to do a little bit of self-education, hence making it easier for brokers to set realistic expectations and

communicate with borrowers.”

Wong adds that the way in which LoanRobot sets these “realistic expectations” begins with clearly showing borrowers what their borrowing capacity is.

“It also lets borrowers know … what options are out there beyond the big banks.

Chengdai.com.au, on the other hand, conveys complicated home loan product information, rates, features and fees to clients via the website, saving brokers a lot of time to present borrowers with product options,” says Wong.

Embracing digital Wong makes no secret of the fact that n1 has established a reputation for being techfriendly, and this is indicative of his view of technology not as a ‘disruptor’ but rather a complementary tool that brokers can, and should, embrace to facilitate loan writing.

“Today there is too much hype in the fintech space, with plenty of broken … promises. Fintech is here to disrupt the mortgage market, but it has to be a hybrid model. Online tools don’t take out the human elements completely. I think a lot of fintech players need to view fintech as a … complement [to] human interactions, instead of a replacement,” he says.

Wong says there is a need for the industry to recognise that there must be a balance between digital and the human element.

“At n1 we place a lot of importance on fintech, but we also place equal importance [on the] traditional way of servicing clients, [and] I believe retail still has its place in the market. The future is fintech and retail, which is where we are heading towards from n1’s perspective.

“The challenge is to find a model that creates synergy between fintech and the very traditional retail way of running the business,” says Wong.

“If you look at social media, it’s making people talk to their phones more than talking to the person next to them. We want to use technology to encourage human communication. We use fintech to connect to people, not machines. Unlike social media that makes people speak less, we want to make people speak up.”

Wong says brokers need to stop buying into the scare tactics surrounding digital disruption and embrace the opportunities that technology provides.

“Brokers need to embrace fintech, seeing it as a tool to better service their clients, or streamline their work to improve productivity.”

Wong’s business smarts can’t be denied when taking in the full breadth of what he has achieved with n1 in only five years. And so, naturally, he is definitive when asked where he thinks the biggest opportunities for brokers currently lie.

“Retention and diversify. Focus on [your] existing client base to generate more business out of the same client, or generate referrals or word-of-mouth leads by making existing clients your walking ambassadors.”

HOME LOANS

16

BUSINESS STRATEGY THE HABITS OF HIGHPERFORMING TEAMS Juliet Bourke on the dynamics of conversation, and which five critical moves can drive high performance in teams and redefine leadership WHAT DEFINES high-performing teams?

It’s a given that teams must execute the tasks they have been assigned both efficiently and ably, but really, that’s just performance. Following this logic, high performance could be defined as ‘extreme levels of efficiency and faultless execution’.

But could high performance refer to something qualitatively different?

A precise definition is elusive, but there’s something in the mix of a team’s commitment, energy and output that makes high performance different. I call this ‘focused buzz that delivers extra’ and it is particularly potent when the team comprises people who think differently from each other.

If you have ever worked in a high-performing team, you’ll know what I mean. Not only are these teams more creative and able to solve the complex problems that elude others, they are also fun. We all want to work in these teams because they bring out the best in us as individuals. And that effect is measurable – in fact one of the questions we use at Deloitte to assess people’s experience of working in a high-performing team is the degree to which a person agrees with the statement, “I am inspired to do my best work”.

And of course if everyone, or even most of the team, agrees that they are inspired to do their best work, you can be sure that in these teams there is buzz, focus, delivery and ‘extra’. I’m interested in what creates these effects. I have been intrigued by our research that shows how inspiration and speaking up – especially in a diverse-thinking team – play an important role. In particular, when people strongly agree that they are inspired to do their best work, they also are likely to agree with the statement, “I feel confident to speak up, even if I have a view that differs from the majority”.

There’s something going on in these highperforming teams in which people perform at their individual and collective best.

members exploring issues and elaborating on each others’ points of view, or is the conversational flow lopsided, truncated or perhaps almost non-existent?

Alex ‘Sandy’ Pentland and his team at MIT’s Human Dynamics Laboratory have taken an innovative approach to measuring conversational flow. As a result, they have helped identify the hallmark behaviours of a highly collaborative team – and to quantify the impact on high performance.

Indeed, so confident are they about their measures that they can now “foretell which teams will win a business plan contest” just by looking at conversational flow data.

Behaviours that lead to success The innovative measurement tool used is sociometric badges that capture not only who is talking and for how long, but also their physical movements. People in a high-performing team make five critical moves when talking to others: 1

2

Best performance Along with many others, we’ve been researching four potential drivers, from the composition of the team to the dynamics and content of the team’s conversation, the way the team is led, and whether social and information biases are actively mitigated.

Regarding the dynamics of the team’s conversation, the fundamental question is whether the conversation is collaborative – that is, are the team

They share talk time

There is a lot more turn-taking and a lot less speech-giving.

They actively talk and actively listen

When someone is talking they are animated and use hand gestures – so people know they are fully engaged in sharing. When someone is listening they face the person directly, watch the person’s face and visibly respond.

3

They speak to each other directly

Team members talk to each other across the circle, and not just to the leader.

4

They speak to each other in side conversations

Not all of the talking is done in group meetings, and sidebar conversations promote and deepen connections.

5

They talk to others outside the team

Exploring information and ideas with people outside the team helps test thinking and introduce new ideas.

Inclusive leadership These moves suggest a very different model of leadership from one based on hierarchy or command and control. A more modern model is to think of a leader as an architect – designing the team environment, creating scaffolding, building bridges, and integrating diverse voices. We call this ‘inclusive leadership’, and it also has signature traits (commitment, courage, cognisance of bias, curiosity, cultural intelligence and collaboration), each of which are very measurable.

This is an exciting time to be (re)thinking what defines high-performing teams. We intuitively recognise the buzz created by being part of such a group. And now that we can measure performance outcomes, we know that optimal performance is more a matter of science than luck.

Juliet Bourke Juliet Bourke is partner, human capital, at Deloitte.

She works with global executive teams to design and deliver leadership programs.

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INDUSTRY SPOTLIGHT

SEALING THE DEAL

It has been found that one in every six people rejected for a loan in Australia is in fact eligible for a specialist or non-conformist product. Six non-banks explain how they managed to find a finance solution for those clients who didn’t ‘fit the mould’

INCREASINGLY COMING to the rescue of the growing number of self-employed and small business owners across the nation, non-banks are having their time in the sun. They can operate in niche markets, target common yet often-deemed less desirable customer segments, and they are an attractive alternative to the banks with their changing lending appetites and 10% investment loan speed limit.

With this in mind, there has never been a better time for brokers to expand their product portfolios to include specialist products. With the banks’ strict stability indicators and lending criteria, there is a

growing demand for specialist loan products among borrowers, and significant opportunity for brokers to provide this segment with access to these products.

With booming property prices, for example, brokers can help self-employed and SME homeowners access the equity in their homes and investment properties to fund their businesses through capital expansion and refinancing of other expensive debts.

Rather than compete with mainstream lenders, each of the non-banks featured here offers an alternative lending solution that brokers can consider when servicing the non-conforming borrower.

19

LIBERTY FINANCIAL The scenario Carly, a single mother from Victoria, not only looked after her child without any support but also juggled working part-time to help make ends meet. In the last few years she’d found her high-interest credit card debt and the regular repayments stretching her beyond her means.

Carly wanted to refinance her credit card debt and home loan through the same provider. She only wanted the one payment coming out of her account each month and, at the same time, she was searching for a better interest rate to reduce her repayments. Unfortunately she had been struggling to find a lender that would consider her application. Not only was there a credit card default on her credit file, but she didn’t earn a regular income. Also, because she received the Family Tax Benefit as well as child support payments to prop up her earnings, many lenders had shut the door.

The solution Carly turned to a broker who presented the scenario to Liberty. Liberty looked at Carly’s full story, which meant assessing every form of income and the fact that she owned a large portion of her house. Liberty was then able to find a solution for her with their flexible home loan product, Star. Carly refinanced her home and credit card debt through Liberty and she now has just the one manageable monthly repayment.

The takeaway No doubt many brokers have found themselves in a similar situation.

Lots of clients don’t fit the rigid lending criteria of traditional lenders, so brokers have to find a more flexible solution. At a time when brokers are looking to diversify their businesses and grow new revenue streams, being able to satisfy both prime and custom clients is crucial. The most important thing is to engage with a free-thinking speciality lender early on so the client can get an optimal solution quickly.

John Mohnacheff, national sales manager, Liberty Financial

LA TROBE FINANCIAL The scenario A previously self-employed couple, who took up PAYG positions six months prior to application, were looking to refinance their existing mortgage of $660,000 secured against their owner-occupied residential property (valued at $1m) in order to finalise outstanding obligations related to a recently failed business venture.

The outstanding obligations included a tax debt of $80,000 and various business creditors totalling $50,000. The applicants also had two unpaid utility service defaults listed on their credit file, also related to their failed business.

The solution We were able to refinance the couple’s existing mortgage and release $140,000 in equity. This allowed the applicants to finalise their outstanding business obligations, preventing further action being taken against them by creditors that could potentially damage their future credit rating, as well as saving them considerable interest charges being levied by the ATO. As the outstanding debts to the ATO and the various creditors were not yet listed on the applicants’ credit file, we were able to approve this loan at 80% LVR under our prime residential loan product.

The takeaway Clients with outstanding ATO and business debts don’t have to seek ‘credit repair’ loan products. By dealing with a specialist lender like La Trobe Financial your clients can still access prime products, providing we can resolve the issue early enough before they hit their credit report. We expect to see many more scenarios like this one over the coming months as people finalise their tax returns following the end of another financial year, and this is where brokers can benefit. We suggest brokers commence making enquiries with their clients (particularly the self-employed) about whether they have any outstanding tax obligations that need to be addressed. Not only does this allow them to rectify the issue earlier, possibly saving them interest charges, but it allows the broker to demonstrate that they are looking out for their clients on an ongoing basis, and in this case, before they even ask. This level of proactive service can lock away clients for life.

Cory Bannister, VP chief lending officer, La Trobe Financial

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INDUSTRY SPOTLIGHT HOMELOANS The scenario A client wanted to make an owner-occupier purchase on a residence with a purchase price of $660,000 at an LVR of 85%. Unfortunately, the applicant had been discharged from bankruptcy just six months earlier, and furthermore his credit report featured one default on a credit card. To further compromise the applicant’s situation, he was self-employed in equipment sales, having had an ABN for just 18 months. However, he was earning $340 per week rental income on an investment property financed by another financial institution.

The solution Most discharged bankrupts need to wait three years and need a 20% deposit – and that’s for a fully verified loan. Homeloans was able to satisfy the borrower’s needs with only 15% deposit, and just six months after discharge of bankruptcy, with an Accelerate Red LoDoc loan. Homeloans’ credit team considered the client’s circumstances on their merits and secured the loan at an interest rate of 6.99% per annum with a 1.05% risk. Specifically designed for borrowers who sit outside typical lending and mortgage insurance guidelines, the Accelerate range of loans offers a choice of solutions based on the borrower’s situation. We will lend up to 95% LVR for full doc and up to 85% LVR for low doc, with generous income verification options, and we will consider unlimited adverse credit (paid or unpaid). It is available for refinance, including non-conforming, private and solicitor loans, and there is no limit to the number of debts that can be consolidated.

The takeaway The takeaway is to never assume a deal can’t be done. From our diverse range of products we can provide solutions for an amazingly wide range of scenarios. Whether the borrower has a slight blemish on their credit report or is a discharged bankrupt, we don’t take a ‘one size fits all’ approach, but rather look at the individual circumstances and come up with an appropriate option. This not only enables us to provide the solution, but to do so at the best possible rate for the borrower’s situation.

Ray Hair, general manager, Homeloans

RESIMAC The scenario Mr and Mrs Smith contacted a broker to seek assistance with a consolidation loan.

They had already been turned down by their bank. Twelve months earlier, Mrs Smith had left her full-time employment so that she could complete her teaching degree on a full-time basis. Despite planning ahead and completing a budget, the financial impact of the reduction in family income resulted in an increase in the couple’s consumer debt as they used credit cards to meet some of their monthly bills. In addition to the increased consumer debt, the couple had also fallen behind on their property rates. Mr Smith was self-employed; however, he had not yet completed his most recent taxation returns. Mr Smith was looking to selfdeclare his income and was able to provide the most recent three months’ worth of business bank statements in support of his declaration. Although Mrs Smith was still studying, she had recently secured part-time employment. The couple believed that, based on their estimate of the value of their property, a loan with an LVR of 80% would be required.

The solution Following a complete needs analysis, the broker determined that although the couple’s income was insufficient to meet all current commitments, consolidating the debts into one monthly repayment would be manageable and would even produce a noticeable monthly surplus. In addition, after reviewing the repayment history on the existing home loan and credit cards, the broker could see that Mr and Mrs Smith were already maintaining total repayments in excess of the repayment on the proposed consolidation loan. The broker submitted an application for a Specialist Clear Alt Doc loan, and despite the valuation on Mr and Mrs Smith’s property coming in lower than expected, the loan was approved with an LVR of 85%.

The takeaway The major takeaway from this scenario is ‘never judge a book by its cover’. Although Mr and Mrs Smith gave the appearance that they were ‘living on credit’, the background story gave the full picture as to why they were in the position they were in, and what they had done to try to rectify the situation in the short term (ie gaining part-time employment and continuing to pay as much as possible across the existing debts). Understanding the story is one of the most important aspects of a specialist scenario. Another consideration for these types of applications is the ‘client for life’ philosophy. Mr Smith will eventually complete his tax returns and Mrs Smith will most likely complete her studies and return to full-time work.

This opens up opportunities for the broker to provide further assistance into the future.

Daniel Carde, director of product, marketing and strategic partnerships, RESIMAC

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BLUESTONE The scenario Tim is a plumber who wanted to buy a home. He had his own business, but it had only been operating for four months. He had spent all his savings setting up the business, but he had enough to put down a deposit on a house due to a generous relative who had gifted him some money. Tim had a clear credit history, but he was finding it tough to obtain finance due to his limited savings history and inability to provide financial records.

The solution Bluestone’s Business Easy loan was Tim’s solution for buying a home.

Designed to help borrowers who are starting up a new business, the Business Easy loan provides a financial solution for either buying a home, refinancing existing business debts at high rates, or funding the growth of a new business.

With this loan, Bluestone can provide finance to borrowers even if they have had an ABN for less than three months, verifying these borrowers’ income by using their business bank statements, an accountant’s letter or BAS, and personal bank statements.

The takeaway Brokers should never leave any deals ‘on the table’. There are financial solutions for all borrowers. If they don’t help these borrowers, someone else will, and when these borrowers clear their rating and qualify for a mainstream loan, brokers will have lost the opportunity for another deal. Borrowers will seek out your expert advice as they struggle to source working capital or pay out expensive business debts or overdraft facilities. Self-employed borrowers have specific needs and there’s a real opportunity to inform and educate this underserviced segment so they are aware of the funding solutions that are available to them.

Royden D’Vaz, national head of sales and distribution, Bluestone

PEPPER MONEY The scenario A married couple with four young children under 12 years old required a debt consolidation loan. Two years earlier, the husband had contracted a protracted illness which saw him take several months off work to recover. In order to pay for the extra medical expenses, the couple had applied for several credit cards. They were now unable to keep on top of outgoings and the multiple credit cards which were either at or over their limits, so they approached their broker to find a solution. With the husband off work, the couple was reliant on Family Tax Benefit Parts A and B payments to assist with the servicing of their mortgage.

The solution As the lending criteria of most mainstream lenders do not allow for missed payments and credit cards being over their limits, the couple’s broker suggested Pepper Money. After reviewing their situation, Pepper Money was able to assist the family with a Pepper Easy product (Near Prime) which allows for unlimited debt consolidation, credit cards being over their limits, and also no age limit for Family Tax Benefit Parts A and B payments.

The takeaway Pepper Money can help brokers assist a wider range of clients by always looking at the bigger picture. We take a client’s individual circumstances into account and in many cases can accept common scenarios that many traditional lenders decline. Whatever the circumstances, if an application doesn’t meet traditional lending criteria, Pepper Money can provide a second opinion. We get that unexpected life events can happen. That’s why Pepper Money likes to look at a wide range of factors when assessing a home loan application.

They do not simply tick boxes as many other lenders do; instead Pepper Money will get a more detailed and informed understanding before it starts making decisions. Pepper Money is designed to provide a solution for the broker to assist their clients.

Mario Rehayem, director of sales and distribution, Pepper Money

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BUSINESS PROFILE SUPPORTING SUCCESS

Brisbane’s Tracy Kearey tells Australian Broker why it’s so important to support the brokers in your business, and how Home Loan Connexion is making a difference in the mortgage market

SPONSOR’S MESSAGE

Mark Woolnough, head of third party distribution, ING DIRECT

ING DIRECT is known for its simple and straightforward loans, and exceptional customer experience. Being an online bank, brokers are our ‘shopfront’ and an integral part of our business. While the broker market represents 53% of the home loans written in Australia, over 90% of ING DIRECT home loans are sourced via third parties. This is testament to the shared commitment and mutually beneficial relationship that exists between ING DIRECT and our third-party partners.

Australian property buyers are faced with more choice than ever before and they will increasingly turn towards brokers to help them efficiently and effectively navigate the wealth of information they receive as part of this process.

At ING DIRECT, we believe brokers are critical to a healthy and competitive mortgage market.

They are true advocates for choice, helping people navigate the journey to securing a loan and, more importantly, securing a home.

Our industry may be facing challenges, but we see huge opportunities, particularly for brokers. While technology plays an increasingly important role in our industry, the power of a face-to-face relationship remains key, with 80% of Generation X and Generation Y preferring personal interaction when it comes to financial matters, according to recent ING DIRECT research.

We look forward to continuing to support brokers at ING DIRECT and helping more Australians achieve their property dreams.

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IN 1998, a friend of Tracy Kearey’s who was working at an Aussie branch in Brisbane made the comment that Kearey would make a good mortgage broker. Shortly thereafter, with no prior experience working in finance, Kearey began working at Aussie, marking the start of a career in the mortgage industry that has only soared in the 18 years since.

From humble beginnings as a mother of a three-year-old, when she was looking for new opportunities and a way to pay her mortgage, Kearey is now three years into a business partnership with Ian Cain, her co-director at Home Loan Connexion.

When Cain and his original business partner started Home Loan Connexion in 2001, the business consisted of the two of them, Kearey and a couple of other brokers.

Today, it comprises 34 brokers. Cain and Kearey have recently onboarded brokers in both Sydney and Melbourne, and the brand has taken out multiple awards over the years with aggregator AFG. Home Loan Connexion is considered one of Queensland’s best brokerages, but the pair have their sights set on an even bigger picture.

“We’d like to grow the business into the other states,” Kearey tells Australian Broker.

“But for me it’s also about my brokers being successful; to see them grow and build their own businesses within our business.”

Giving support Kearey’s passion for supporting brokers in growing their businesses is perhaps a result of her own successful mentor–mentee relationship with Cain when she started as a broker. “[Having a mentor] was great because I guess, for me, [Cain] had a lot of contacts; he had already experienced what the industry was like then, and … he was very good at what he did. He was the number one Australia-wide for Aussie Home Loans, so I was fortunate to work with him and we just formed a really good friendship. ... we’ve been on a very big journey over 18 years,” she says.

Consequently, there was no hesitation on Kearey’s part as to whether or not she should follow Cain when he left Aussie to launch Home Loan Connexion. The years that followed saw Kearey rapidly progress in her career, and in 2013 she bought out Cain’s business partner and hasn’t looked back.

After close to two decades in the industry, Kearey is in a position to pass pearls of wisdom on to the next generation of Home Loan Connexion brokers, and supporting them to build their businesses is one of her own, and the brand’s, biggest priorities.

“Recently, we’ve taken on a model where I’m mentoring new-to-industry brokers. So now we’ve got a lot of new brokers that have never been in finance before, which is really interesting because that was my background,” she says.

Kearey is undoubtedly proud of the business she and Cain have built together, but aside from the success that can be measured by awards and loan values (EOFY $221,928,143,

to be precise), she and Cain are passionate about creating and adhering to a collaborative and nurturing culture at Home Loan Connexion. To this end, they hold monthly meetings with lenders to educate brokers on new products and policies, as well as to encourage sharing situations and insights with each other. This is particularly important for the new brokers, according to Kearey.

“I think that’s very important. Even though we’ve got a lot of experienced brokers, it’s great for our newer guys because they need that extra support. I’ve also recently started

encouraging some of our BDMs coming in and just doing little workshops with some of the new guys, because I do remember when I was new to the industry and I knew nothing! … I felt very intimidated because there were people that knew everything. ... so they’ll come in and do training just with the newer people, and we’ll work on particular scenarios and maybe what they’re coming up against and how we can find a solution for them.”

In addition to workshops and case studies like this, Kearey says, “Ian and I are also always available on the phone if one of our

24

BUSINESS PROFILE we’ve got some brokers that have been with us brokers needs some assistance, because we from conception. both still actively write home loans. So for me “I think what makes us a bit different is we’ve I believe we need to do that to understand what got experience, but we’ve also got diversity. the challenges are as a broker [currently].”

We’ve got young people, we’ve got different To encourage more brokers into the industry cultures, we’ve got women as well as men, all and into the Home Loan Connexion brand, different ages, and we attract all different styles Kearey says she and Cain are “aggressively of people. What might be my sort of client onboarding new-to-industry brokers, which may not be one of my colleague’s clients. So we I’m extremely passionate about. I don’t can offer a lot of different styles of people, and have any formal training, but with all the people are what make people want to use your experience I have, mentoring somebody and service,” Kearey tells Australian Broker. watching them succeed is just such a great privilege. And Ian backs me. I’m fortunate that my business partner backs THE YEAR OF RECOGNITION – 2016 the decisions I’ve made.

Bringing new people to the industry, men and women, it’s just great to watch them succeed”.

A winning model Home Loan Connexion’s model is particularly unique.

Although there are multiple offices, the brand does not operate as a franchise model; in Kearey’s words it is “more like a co-op”.

“You can operate under the Home Loan Connexion brand, or you can be your own brand, but you’re a part of our group. So you are self-employed, it’s up to you, but we will also give you the tools and wherever you need support to help you grow your business,” she says.

Kearey elaborates that rather than just having individual silos of brokers aggregating under a group, from the beginning Cain could see the benefit of pooling their talent under a broader business umbrella.

“They thought, why don’t we leverage and have a group of [brokers], and [Home Loan Connexion] would be the master agency?”

Kearey is a big believer in this model, having achieved outstanding success as a broker herself within the brand, while still operating her own business before she became a co-director.

“I had my own business within their business; I had an office in Cleveland [and] my own staff. I was their number one broker; I had achieved success, I guess, myself.”

Keary and Cain seem to pride themselves on the calibre and experience of Home Loan Connexion’s brokers, and Kearey believes this is a point of difference in the competitive mortgage market.

“We have a lot of experienced brokers …

MFAA Excellence Awards Finalist in Finance Broker Business category Brendan Turnbull (Front Row Financial Management, under Home Loan Connexion) – MFAA Excellence Awards Finalist for Young Professional Award

Number 1 group with AFG for Qld

with a financial dilemma.

“We’ve got a guy, Brendan Turnbull, who’s a finalist for MFAA as a young gun and he specialises in commercial business. So the great thing about our group as well is we have someone that specialises in commercial transactions … he is fantastic at commercial and complex structures.”

In addition to its residential and commercial loan proposition, Home Loan Connexion also has a financial planning arm, and brokers who specialise in equipment and self-managed super funds.

“We pretty much assist anyone with any type of different finance structure.

“I think that’s what’s great about a group. Because sometimes when you’re on your own, if you only know residential mortgages you might be missing out on opportunities, whereas when you know that you could ring somebody else or contact someone else in the group … you can look after your client and give them a solution.”

This model means that while the original broker retains their client, they also know that there’s somebody that can look after their client’s other needs.

“We’re also aggressively looking for partners to refer to our brokers to build referral relationships … and we work with them to grow their business and look at how their model would work – if they want to work with accountants or planners.

We develop their business around that model for them,” adds Kearey.

Adding a mobile service option is another small but effective strategy Home Loan Connexion uses to earn the trust and loyalty of clients.

“I believe that in this industry you do have to be giving something different; you need to be available, within reason, for your client – maybe after or during hours, at a time and place that maybe works for them and for you. And being f lexible can obviously help you grow your business.

“One of our brokers recently just f lew to Newcastle on the weekend to meet a client, so … it depends what you’re prepared to do,” Kearey says.

“If you only know residential mortgages, you might be missing out on opportunities, whereas when you know that you could ring somebody else or contact someone else in the group ... you can look after your client and give them a solution” “And we have a lot of fun. We’re all about being ourselves, having fun, and wanting to come up with a solution for the client, and understanding the client’s needs.”

Another standout thing about Home Loan Connexion is that the business has brokers who specialise in particular areas, which means no stone is left unturned when a client approaches a Home Loan Connexion broker

The lucky country For all Home Loan Connexion’s success, Cain and Kearey’s humbleness and gratitude is

25

palpable, as is their passion for the industry as a whole.

“I think we’re so fortunate in that we get to sit in front of someone and they tell us everything. It’s a privilege. And I think sometimes [brokers] take that for granted. So when I’m working with my new brokers I’m really passionate about them and understand this is about the client. Walk a day in their shoes. As much as it can be frustrating, and sometimes very difficult, to come up with a solution for a client and to help them out of either a financial situation or a negative situation, or to get them to their first home, it’s just an amazing feeling … I think we sometimes lose sight of that. So for me it’s really important that we understand exactly what role we’re playing in creating the wealth for our clients,” says Kearey.

“You know what? It is about seeing men and women, young people, coming into the industry and just being successful.”

While Queenslanders have enjoyed dedication and enthusiasm like this for 15 years, the rest of Australia has this to look forward to when Home Loan Connexion further expands its footprint. In the meantime, Cain and Kearey are along for the ride and enjoying every minute.

HOME LOAN CONNEXION: FAST FACTS

2000

2010 2001 Home Loan Connexion launches

2016 2013 Tracy Kearey becomes co-director with Ian Cain

$221,928,143

34

Value of loans Home Loan Connexion settled in EOFY 2015

Number of brokers across all offices

26

PEOPLE WOMEN WITH CENTS Sova Financial founder and director Natasha Janssens tells Australian Broker about her new financial education platform for women, Women with Cents, and why money management should be taught in schools AS AN accountant, mortgage broker and financial planner, Canberra-based Natasha Janssens is somewhat of a triple threat in the financial services industry. And yet she hasn’t finished adding to her portfolio, having recently launched a new initiative, Women with Cents. A platform aiming to help women successfully manage their money, Women with Cents has grown rapidly since it was created in January this year, and now has a 400-strong Facebook community with around 3,000 page likes.

The Women with Cents website will launch at the end of July, and 1,400 women are already on the waiting list to be notified when the site is live.

Janssens says there is also a 12-week program to look forward to.

“The biggest attraction I think will be our 12-week program,” says Janssens. “It’s really teaching them the basics of everything that they need to know in order to manage their money.”

The program comes after the success of a series of workshops that Janssens held last year.

The workshops were so popular that she will be making the program available online for purchase when the Women with Cents website launches, giving women all over the country access to her teachings.

The three-month Web-based money program will give people the education, support and tools to take control of their finances, Janssen explains.

“So we’re going to walk them through understanding the psychology around money … and their budgeting – looking at areas in which they can save and walk them through their mortgage, or if they don’t have a mortgage, starting to plan for what they’re after.”

As the mother of a two-year-old, Janssens came up with the idea when she noticed fellow mums who were connecting online via Facebook mothers’ groups posting financial advice questions.

“There wasn’t really anything that was focused around money,” says Janssens, and so she set up a group purely dedicated to financial education.

A survey she then conducted that received responses in the hundreds showed that an incredible 75% of women said they had never tried anything to help with their finances. Janssens concluded that perhaps financial education needed to start at a younger age, specifically in schools.

“I think we definitely do need more of that in our schools,” says Janssens. “It’s not an easy answer and that’s why I’ve decided to do something. We’ve got plans for helping parents engage with their kids and for how they can teach their children about money, as well as for equipping teenagers and those who are just graduating from uni with having the skills.”

Janssens is also reaching out to brokers who are interested in becoming involved in the new initiative.

“Going through the program, people are going to be walked through each week what they need to do, and they’ll see the need to engage with a financial adviser for their insurances, or a mortgage broker to sort out their mortgage,” she says.

She plans to offer brokers the opportunity to purchase a membership subscription so they can advertise in online forums and participate and answer questions within the Facebook group community.

“So when people say, ‘Look, I need the help of a mortgage broker’, we just go, ‘Here’s a list we’ve got in our database’ … they can then go and engage with them. “You’re going to have people who understand what their needs are – they’re going to understand the service that you provide and they’re going to come to you ready to do business,” says Janssens. “If they want to express interest in it and if they want to come and join us, absolutely the doors are open.”

Down the track, she hopes to branch Women with Cents out to reach all Australians looking to become more financially savvy. In the meantime, Janssens’ schedule is jam-packed with a young family, Women with Cents and running her own finance business.

“I think it’s [an] example of just how much you can accomplish when you’re focused and determined to do it.”

Event partner 26 July 2016 | The Langham Hotel, Melbourne

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MARKET WRAP INFOGRAPHIC

$

12.9 billion

$239,855

Total profit value of housing resales in March quarter 2016

Average gross profit of property resales in March quarter 2016

Source: CoreLogic

MARKET TALK

PROPERTY EQUALS PROFIT CoreLogic’s latest property report has revealed that in the March 2016 quarter around one third of homes were sold for more than double their purchase prices CORELOGIC HAS released its latest Pain and Gain Property Report, which measures the profits and losses made by sellers by comparing the most recent property sale price against the previous sale price. It has been found that 31.9% of homes were resold for more than double their previous purchase price in the March 2016 quarter.

Less than one in 10 homes (9.2%) that were resold recorded a gross loss when compared to their previous purchase price, which is an increase from 8.3% at the end of 2015 and 8.8% in the March 2015 quarter. The total value of losses in the first three months of this year was $362m, with an average loss of $66,073 per dwelling.

By contrast, 90.8% of properties resold over the quarter did so at a profit, with the total value of this profit coming in at $12.9bn. The average gross profit for the properties sold was $239,855.

According to CoreLogic, the findings of the report indicate that “ownership of property, whether for investment or owner occupier purposes, should be seen as a long-term investment”, with the homes that sold for more than double their previous purchase price having been owned for an average of 17.5 years. The homes that resold at a loss, on the other hand, had an average length of ownership of 6.2 years.

The capital city housing markets continue to record a lower proportion of loss-making resales than regional areas of the country; however, those regional areas linked to tourism and lifestyle are trending at a lower loss.

Despite the high percentage of profit-making resales across the nation, overall the house and unit loss-making resales have trended higher over the past quarter – 7.9% of house resales and 12.4% of

unit resales were at a price lower than the previous purchase price. The data shows that, historically, houses are much more likely to resell for a profit than units. In fact, the report states that there has been no period over which the proportion of loss-making resales was higher for houses than it was for units.

Over the March 2016 quarter, nearly one in five units in regional areas sold at a loss, compared to only around one in 10 (11.2%) of combined regional market houses.

This relatively higher proportion of loss-making resales for units is reflective of the fact that units are much more likely to be owned by investors than owner-occupiers, and that investor housing stock is generally less appealing than owner-occupied housing stock to potential buyers.

Over the first quarter of 2016, 8.0% of owneroccupiers and 11.8% of investors that resold their properties did so at a loss. Sydney and Darwin were the only two regions in which the proportion of loss-making resales by investors was lower than those by owner-occupiers.

CoreLogic suggests that transacting at a gross loss is easier for an investor than an owneroccupier to accept, as the loss can be offset against future capital gains. However, investors are not necessarily without risk.

“The recent heightened level of investment purchasing … poses risks in the event of a housing market downturn as investors may be willing to sell their investment, but they may find it increasingly difficult to find willing purchasers,” the report states.

The nation’s most heated property market, Sydney, recorded near-record lows of only 2.2% of houses and 1.9% of units resold at a loss over the first quarter of 2016. The Botany Bay, Hunters Hill and Mosman Council areas recorded no resales at a loss whatsoever over the quarter. Even those council areas that recorded the highest proportion of loss-making resales – Strathfield (4.9%), Burwood and Bankstown and North Sydney (4.0%) – recorded less than one in 20 resales at a loss over the quarter.

29

FINANCIAL SERVICES

BACK TO THE CLASSROOM

MORE PROFESSIONALISM, PLEASE The majority of financial planners want a more professional industry underpinned by real and credible qualifications, according to a recent survey PRIVATE EDUCATION provider Mentor Education has revealed the results of a study that surveyed a broad cross section of advice specialists, including 400 financial planners, 86 accountants and 54 mortgage brokers.

The survey found that 55% of respondents felt a university degree would increase professionalism in the industry, while almost none thought it would increase the cost of advice. In addition, 75% of financial advisers supported the introduction of a bachelor of financial planning, while nearly the same number also believed that a full 24-subject bachelor’s degree covering a broad scope of financial planning topics would be the most effective at ‘professionalising’ the financial planning profession.

The survey, conducted in April and May this year, comes following the government’s proposal in 2015 to legislate new education and training standards for providers of financial advice and services.

Mentor Education chief executive Mark Sinclair said given that most other professions in Australia have their own bachelor’s degree, it only makes sense to legislate a bachelor of financial planning.

“Every other profession in Australia … has their own 24-subject bachelor degree and the proposed legislation needs to specify a bachelor of financial planning rather than the nebulous reference in the legislation to a ‘degree alternative’ or an unrelated bachelor’s degree, such as a bachelor of commerce with a small number of financial planning electives.”

80%

of those surveyed support the requirement for financial advisers to complete a bachelor’s degree or an equivalent qualification, or a national exam Source: Mentor Education

‘BEING ETHICAL, ACTING WITH INTEGRITY IN INTELLECTUAL, PROFESSIONAL AND COMMUNITY PURSUITS’ IS THE MOST IMPORTANT ATTRIBUTE OF A FINANCIAL ADVISER OF THE FUTURE

Source: Mentor Education

At a press conference revealing the survey’s findings, Sinclair added that “there is a sense of urgency” and “a need to improve the image of the industry”.

“Mentor is concerned there hasn’t been a robust argument about financial planning education,” he told the audience at the conference.

Mentor Education chairman Jim Taggart, OAM, agreed that lifting the professionalism of the industry across the board was paramount for the financial services industry.

“Most financial advisers want the industry and their peers to lift their game through more rigorous educational standards, exams and bettertargeted CPD. The post-election government should heed these results and ensure any new

legislation to raise the standards of financial planners takes into account this irrefutable evidence,” he said.

David Lamond, chair of Mentor Education’s Academic Board, said: “The results of this robust analysis clearly indicate the majority of financial planners support the introduction of a bachelor of financial planning degree in Australia as a key mechanism in professionalising the financial planning industry.”

Of the mortgage brokers surveyed, less than half were aware of the potential developments outlined by the Corporations Amendment (Professional Standards of Financial Advisers) Act 2015. Any new legislation passed this year won’t take effect until 2023.

30

PEOPLE CAUGHT ON CAMERA Australian Broker recently attended the launch of Loanapp, Simpology’s new electronic lodgement tool that connects brokers and lenders in real time. At the Star Room in Darling Harbour, Sydney, guests were treated to a presentation by athlete and author John Maclean, who spoke to the audience about the journey of his life and the importance of resilience and determination. Simpology co-founders Kate Gubbins and Mark Hanson took the opportunity to thank business partners and early adopters of Simpology’s ‘electronic guidebooks’ approach to online applications, while also offering a sneak peek into future product offerings.

31

HOT SEAT

LEAH BUSBY

Director and broker Leah Busby of Blackfish Finance in Adelaide reveals her post-settlement service secrets and what she would do if she won $1m

Who or what inspired you to become a broker?

It was the timing of an opportunity to get into the industry, and I then enjoyed helping clients, finding solutions, and the joy of seeing A people settling on their homes.

That led me to then start up Blackfish and start my own little business on Hutt Street in Adelaide. I love the challenge and flexibility of being self-employed and always having to think outside the square for a solution.

Q

What is your most memorable client experience?

When I was waddling into hospital last year at 40 weeks pregnant, I was told by a nurse to turn my phone off and rest to get ready for the A next few hours. She then mentioned that she was putting an offer in on a property that day. Ten minutes later she was a Blackfish client and it was action stations getting her first home loan approved and settled.

Most of all I love that my business and I myself as a broker have developed and grown with so many of my clients. I was with them to help buy their first property, I was with them to help buy their car, and I was with them to help buy their family home when they started having children. Now I’m with them to help buy the family car! I love receiving photos from clients for our Facebook page!

Q

What makes your post-settlement service different?

How do you make your trail commission count?

I do have a full post-settlement process to ensure the loan, A accounts and repayments are all set up and working correctly for my clients.

I have four personal touchpoints within the first 12 months – these are Blackfish postcards saying “we miss you”, as well as phone calls.

We make sure they know to call us for any changes and variations so they don’t have to call the bank. I also have a CRM program that keeps clients up to date with a quarterly newsletter, a monthly RBA announcement, and other emails throughout the year.

In addition, I have a ‘Blackfish wine club’ with branded wine that we thank clients with for referrals and congratulate them on purchases. It is a little token of thanks for support – even to our BDMs when they’re running around picking up documents for us!

Q

If you were the head of the MFAA or FBAA, what would be your first priority?

I have been a member of the MFAA since I joined the A industry and have been a state counsellor here in SA for the past few years.

I think they do a great job and have improved the industry’s reputation, and continue to improve the systems and channel conflict to help the industry become more streamlined and professional. If I became head, I would continue to grow the brand with consumers, as well as focus on merging the broker systems and support with the lenders.

Q

If you won $1m, how would you spend your winnings?

A holiday with all the extended family! I would A probably book a nice long cruise and surprise everyone with a getaway to relax for a little while.

Then, of course, I would come back and jump straight back into business, develop some property, and push my business into the next phase.

Q

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