Australian Broker magazine Issue 7.5

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ISSUE 7.05 March 2010

MFAA to chart new course  New professional

Your company’s most valuable resource is its people, so keeping you and your staff inspired is of the utmost importance

framework outlined for members As ASIC prepares to assume the role of industry regulator, the MFAA will look to chart a new course based around an “enhanced professional framework” with members transitioning to ‘Professional Credit Advisers’.

“We have already consulted with state councils and our national committees as well as Treasury and ASIC,” said CEO Phil Naylor, following release of its consultation paper ‘Focus on the Future’ on 22 February.

Naylor said all members had been e-mailed to ask for their input on the new framework and designation.

They will be given more information about the ‘Focus on Future’ initiatives during a series of national road shows taking place this month.

When AB spoke to Naylor he had just given a presentation to around 300 members in Sydney and said there was no disagreement about the “general thrust” of what is being proposed. “People need to go away and think about the details,” he said.

A decision on implementing the new framework would be made by the MFAA board near the end of March.

Top ten tips to motivate staff

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Database marketing When it comes to marketing to your database, what information do you need and how do you organise it most efficiently? Get the most out of your client base Page 24

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Phil Naylor

Front and centre of the new framework will be the launch of the trademarked ‘Professional Credit Advisers’ designation.

This will be backed by an ‘Education Pathway’ leading to all members being required to obtain a diploma as the minimum competency standard.

It also includes a “Code of Professional Conduct which sets

and enforces the professional obligations, practice standards and ethical foundations for members”.

The aim of the new framework, Naylor said, was to continue to build greater confidence in the advice that consumers receive from MFAA members.

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Brokers caught on camera The National Mortgage Brokers conference was held recently in Queensland, closing with a ‘babes and bogans’ themed dinner Page 30

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nMB targeting growth on two fronts Gerald Foley

Aggregator National Mortgage Brokers (nMB) is looking to increase its ratio of loan writers per agreement holder as it looks to expand its member base.

Delivering an update to delegates at its national conference, managing director Gerald Foley said the aggregator now had 117 principle broker agreements

and 233 loan writers. Foley said two writers per agreement holder was a “good measure” but said he would love to see that ratio increase to three, as brokers bring on loan writers. “Our growth comes from two areas, firstly, we are bringing on more agreement holders … but secondly, people who are already with us are developing their businesses to a stage where someone came come on underneath them,” he said.

As part of his update, Foley said nMB was on track for $2.2bn in settlements this financial year, with a loan book of $6.7bn. nMB also manages the loan book of WA-based franchise, The Mortgage Gallery, giving the

Firstfolio focused on scale and distribution On the back of strong interim results, listed mortgage provider and aggregator Firstfolio will look to leverage its recent acquisitions and corporate agreements to accelerate growth.

Results for the six months to 31 December 2009 revealed both strong earnings (up 30%) and revenue growth (up 32%) for the business, with its loan book more than doubling following the purchase of three mortgage managed books. On the distribution front, Firstfolio will

look to leverage its boutique aggregator Firstfolio One and its distribution agreements with real estate group AVJennings and health insurer Medibank Private, both of which operate off its eChoice distribution platform.

CEO Mark Forsyth described the first-half result as “pleasing” in the face of “difficult market conditions”. He said cost synergies, economies of scale and technology benefits had been realised from 2008 acquisitions of eChoice and mortgage

aggregator a combined loan book approaching $12bn.

Not surprisingly, the major banks continue to dominate the nMB loan book with 74% of business. This increases to 92% when major bank subsidiaries are included.

As part of the update, Foley revealed continued uptake of its affiliate marketing program, which provides brokers with a platform to sign up business partners who then generate leads under a revenue-sharing scheme.

The conference also saw the official launch of nMB’s badged loan (nMB direct) funded by the Rock Building Society, designed to provide competition to the major bank products. manager, Domain Financial Services, and were evident in the first half result.

The acquisition of mortgage assets from First Chartered Capital and Loan Services Australia helped boost the Firstfolio loan book to $18bn.

Forsyth said he expected to add more partners to the distribution network over the coming year.

On the back of an “encouraging outlook”, he said the business was “well on track to hit the upper end of full-year guidance of underlying EBITDA in the range of $10m to $11m”.

Further investments in eChoice are also planned.

www.brokernews.com.au Publishing director.... Justin Kennedy Managing editor.....George Walmsley Editor............................... Luke Cornish Journalist.............................Tim Neary Production editors......Jennifer Cross ...........................................Carolin Wun Design manager..... Jacqui Alexander Designer...................Jonathan Phillips HR manager.................. Julia Bookallil Marketing coordinator...Anna Keane Traffic manager............. Stacey Rudd Advertising sales Simon Kerslake t: 02 8437 4786 f: 02 9439 4599 simon.kerslake@keymedia.com.au Rajan Khatak t: 02 8437 4772 f: 02 9439 4599 rajan.khatak@keymedia.com.au Editorial enquiries Luke Cornish t: 02 8437 4773 f: 02 9439 4599 luke.cornish@keymedia.com.au Distribution Australian Broker is available by subscription. E-mail all subscriptions and mailing enquiries to: subscriptions@keymedia.com.au t: 02 8437 4731 f: 02 8437 4753

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Wide Bay to attract new brokers Queensland-based building society Wide Bay will increase its use of brokers this year, in a move to build distribution in areas where it does not currently have a strong retail presence.

After a lift in net profit by more than 21% in the December half of 2009, Wide Bay is looking to further diversify its market by strengthening relationships with brokers both existing and new, said Dale Hancock, manager of structured finance and interstate operations, Wide Bay. “Wide Bay currently has 44 retail branches, 42 of which are in Queensland. We are actively looking to strengthen third party distribution outside of Queensland to increase our geographical spread,” he said.

Sarah Eifermann from SFE Loans believes that the move may indicate an increase in available

funding. “As with any lender, if they’re driving for market share they need to be able to service that market share. By focusing on the broker market it leads me to think there’s more funding becoming available than before,” she said.

Offering an electronic loans system that allows for a quick turnaround time, Hancock said that Wide Bay provides brokers with “competitive products and a high level of service”.

“We are committed to building strong relationships,” said Hancock. “Brokers are very happy with the service standard Wide Bay is currently offering”.

David Johnston, director of Property Planning Australia, said this was great news for the broker proposition. “It’s good to see building societies, who tend to have a good reputation within the community, choosing to use

Mark Duggan

brokers. They’ve obviously done their numbers and think it’s a profitable channel,” he said.

Eifermann agreed. “We’re cheaper than TV advertising,” she said.

Without a public presence in each state, Eifermann argues that

building societies such as Wide Bay need brokers to bring in the business. “For internet-based clients, lenders such Wide Bay are good. But the client needs to remember that there’s no branch service,” she said.

However, the lack of branch service may be an impediment to clients, said Mark Duggan from Affordable Home Loans and Conveyancing.

“Building societies are very regional. While clients may not want to deal with lenders directly, if something goes wrong they like to walk in a door and bang on a counter,” he said.

But Johnston believes that from a broker perspective, it’s all positive.

“It’s providing consumers with more choice. We as brokers are better placed to give impartial advice, so if the client qualifies for a loan from a building society, and it suits their circumstances, then we’ll use them,” he said.

More acquisitive growth on cards for LJ Hooker LJ Hooker Financial Services will explore other opportunities to expand its mortgage broking franchise network following the successful commercial partnership struck up with the Southern Cross Broker Network (SCBN).

The agreement will see SCBN brokers signing franchise agreements with LJ Hooker and adopting the LJ Hooker Financial Services brand in Western Australia and Victoria.

Together the two organisations will “provide, manage and expand mortgage broking franchising services” to 30 offices in WA and 60 in Victoria.

General manager for LJ Hooker Financial Services, Peter Bromley, said the opportunity to work with SCBN meant it could put a broker in every office in WA and Victoria.

“It’s all about growth. Time is of the essence – it’s critical we have solid growth. Organic growth (the recruitment of new brokers) is a slower process,” he told AB, adding that such initiatives had the support of the new LJ Hooker board.

“We’re now in a situation where we are looking at all opportunities going forward,” he said.

Key points  Southern Cross Broker Network brokers to adopt LJ Hooker brand  Will take on franchises in WA and Victoria  Deal will provide brokers in every LJ Hooker office in these states  Looking at further opportunities to expand

At the time of the announcement, the two companies were still working out how many brokers would move across. However, Bromley said existing LJ Hooker brokers would not be affected.

Bromley said the synergy within the partnership would be paramount to its success. “We are both established businesses using the same systems and the same platform. Southern Cross’ established management, recruitment, training and support systems fit hand in glove with LJ Hooker’s financial services division,” he said.

“The partnership will mean increased support for our existing teams and for new brokers joining us. LJHFS and SCBN will be working together to find improved processes, ensuring that best practice ultimately benefits our

Peter Bromley

clients,” he added.

The new partnership with SCBN is part of a rollout of initiatives under the company’s new ownership, led by Janusz Hooker, who in October took over the running of the business, following its buyback by the Hooker family from Suncorp.

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Prepare for the next housing boom

Brokers should prepare themselves for the next great Australian upswing, according to long-term forecasts released

by BIS Shrapnel. In its ‘Long Term Forecasts’ February 2010 report, the economic forecaster and industry analyst said the Australian economy was on the threshold of a major cyclical upswing with growth set to pick up over the next two years and boom later in the decade.

According to the report, the economy currently has enough spare capacity and slack in the labour markets to cater for the initial phase of the upswing without exciting either demand or cost-side pressures.

However, the forecaster warned problems would occur in three to four years’ time when all the major construction cycles synchronise and inflationary pressures re-emerge, leading to higher interest rates.

The overall rosy outlook came as Australia’s economy showed signs of picking up steam. Official figures revealed that the economy recorded strong expansion in economic activity in the final quarter of 2009 with real GDP growing by 0.9%.

This was the strongest quarterly growth seen in the past seven quarters and a marked

acceleration on the September quarter’s 0.3% growth rate.

Bob Cunneen, senior economist at AMP Capital Investors, called this an “impressive result” and said it confirmed that Australia only endured a mild downturn in 2009 compared to the deep recessions in some of Australia’s major trading partners (the US economy contracted by -2.4%, Europe by -4.0%, and Japan by -5.1 %). “Essentially the impact of the GFC proved to be ‘just a flesh wound’ on Australia’s national activity terms…” Cunneen said.

This positive sentiment was reflected in comments made by BIS Shrapnel alongside its equally positive long-term outlook. “We are now well and truly into recovery from what turned out to be a modest downturn – and not a recession as other forecasters predicted at this time last year,”

Brokers and estate agents should not mix: UK watchdog A new report issued by the UK’s Office of Fair Trading (OFT) has called on the UK government to ban mortgage brokers from paying referral fees to estate agents.

The OFT wants additional rules on fees received by estate agents for referring buyers to providers of ancillary services such as mortgage advice, surveys and conveyancing, Mortgage Strategy reported.

The OFT report said “the prospect of additional income may give estate agents a financial incentive to prefer some buyers over others.

“We recommend that, as part of its work on the future of estate agency regulation, the government

considers further whether the potential for conflicts of interest should be removed, including a ban on such payments.”

A report in Mortgage Strategy on the proposal highlighted concerns that some estate agents were forcing buyers to go to a particular broker, and then use the information the broker gathers to assess the borrower’s affordability and push up a property’s asking price.

In Australia, ties between brokers and real estate agents are strong, with a number of real estate groups operating affiliated loan writing businesses.

Asked about the danger of a conflict of interest when brokers and real estate agents work

together, Peter Bromley, general manager of LJ Hooker Financial Services, said the group had strong standards and a code of conduct and would not tolerate such behaviour.

“We weed out those sorts of people,” he said. “We are one company, brokers are part of the proposition … it’s not about the commission, it’s about helping customers,” he said.

In an interview with AB in 2008, John McGrath, CEO of McGrath Estate Agents and Oxygen Home Loans, said “we are very strict around ‘Chinese walls’, so once a referral is made, the communication back [between broker and real estate agent] is very limited and very generic.”

said BIS Shrapnel report author and senior economist, Richard Robinson. He said investment, and particularly the construction side of it, was the primary driver of growth in the economy.

“From 2010, housing construction will take over from waning public spending as the key driver of growth. Initially spurred on by a combination of first home owner/builder grants and low interest rates, this upswing will gather momentum into a boom by 2012. Despite lingering affordability problems, healthy consumer confidence, high rents, a chronic undersupply and rising immigration will continue to boost first homeowner, investor and upgrader demand,” he said.

The question remains though: how long will the housing boom continue in the face of rising interest rates?

The MFAA also supports the use of ‘Chinese walls’ in the brokerestate agent relationship.

Brokers who commented on Brokernews though were supportive of the UK initiative.

‘Michael’ wrote: “Great idea, Oz govt should look at it as well. I’ve always been concerned about referral fees being paid. I think it undermines the integrity and independence of both professions.”

“Not only is that a great idea but I have always been concerned about the possibility of a conflict of interest when the broker and the estate agent are commercially tied to each other more formally. Each needs to be not only independent, but also seen to be so,” wrote another.

For more commentary and to have your say, go to: http://www.brokernews.com.au/ forum/uk-govt-urged-to-cut-tiesbetween-brokers-and-estateagents/40436

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High praise for Australian LMI sector Australia’s privatised lenders mortgage insurance (LMI) sector has received high praise by a Canadian policy think tank, which has urged the Canadian government to follow suit.

In a report on mortgage finance reform, The Fraser Institute recommended that the Canadian federal government follow Australia’s example by opening its lenders mortgage insurance market to full competition, including the privatisation of the federally-owned Canada

Mortgage and Housing Corporation (CMHC).

QBE LMI CEO Ian Graham said Australian LMI providers had “held up very well” since the Australian government exited the market in 1997. He described CMHC’s market position in Canada as “overwhelmingly dominant”, a dominance which has grown even greater in the wake of the GFC. “Government intervention does not help competition,” he said. “Prior to the GFC, a

”We helped lenders keep lending” Ian Graham told AB one of the most important roles QBE LMI played during the GFC was to give lenders the confidence to continue to lend to creditworthy borrowers. “In other countries LVRs went down to under 70%, but in Australia, we were happy to write 95% loans,” he said. Furthermore, Graham said QBE LMI showed a willingness and the ability to pay claims.

There was higher unemployment in the GFC, but fortunately not as high as expected. This, combined with uncertainty around property prices, resulted in slower growth and higher claims, Graham explained.

“QBE LMI has an outstanding track record in meeting all valid claims,” he added.

number of American LMI providers were considering entering the Canadian market, but there was reduced incentive for them in competing with CMHC.” Asked what the benefits were of a privatised LMI sector, Graham said they included a sector that is generally more innovative with the ability to develop alternative products to meet a wider range of needs. “We have always been able to invest in technology to provide better linkages with customers,” he added.

He said QBE LMI was always looking for ways to grow the market in line with “every major market development in the last 20 years”. As an example, he said the recent big push into the first homebuyers’ market would not have been achieved without LMI. “It was dependent on LMI providers being prepared to underwrite mortgages for people who had very modest deposits, and were reliant on the first home owner grant,” he said. “Our role is

to expand homeownership.”

The Fraser Institute report examined the mortgage finance models in use in Australia and Canada, as well as the European covered bond model, focusing on the question of how to minimise risk to taxpayers while still achieving the housing objectives espoused by government policymakers.

The report found that Australian homeownership rates in the period following the privatisation of both securitisation and LMI showed no adverse effects from the lack of government involvement. In fact, the proportion of Australian homeowners relying on mortgage finance increased and housing quality improved.

Dr Brett Skinner, Fraser Institute director of insurance policy research, said the Australian experience showed that a market for mortgage insurance can operate effectively without any form of government guarantee.

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Westpac partners with AMA 2010 Debtor finance set for growth

Westpac has confirmed it will be the ‘official event partner’ for the mortgage industry’s night of nights, the Australian Mortgage Awards 2010.

The event partnership will again see the bank lend its support to the sell-out night, dubbed the ‘highlight of the mortgage industry calendar’, which brings together more than 750 brokers and industry leaders for a night to remember.

AMA is proud to have Westpac onboard to celebrate and recognise key players and achievers in the mortgage industry who continue to strengthen their business and customer relationships successfully and expertly.

“As a bank committed to supporting professionalism in the mortgage industry, Westpac is delighted to once again be the official event partner of the Australian Mortgage

Awards 2010”, Westpac’s general manager of mortgage broker distribution, Huw Bough, said. “This is one of the key events in the mortgage calendar as it recognises the very best in achievement and performance from stakeholders across the industry.”

Now in its ninth year, AMA is the largest and most respected event in the country that recognises excellence and rewards leadership in the mortgage industry. This year’s awards will be the industry’s most entertaining night of the year, where the ‘who’s who’ of the mortgage industry gather to recognise the year’s greatest achievers.

The Australian Mortgage Awards 2010 are being held on 24 September 2010 at The Westin Sydney.

Award nominations open on 1 April 2010.

Expected growth in the demand for debtor finance could give brokers another diversification option.

According to a recent report by the Institute for Factors and Discounters (IFD), the debtor finance industry has enjoyed consistent growth over the last decade, rising from a $10bn total turnover in December 2000 to $63bn in December 2009.

While total turnover for the industry was down 3.2% for the 12 months to December 2009 Steven Davies, director of operations at Bibby Financial Services, indicated the industry remained strong.

“The decline in growth rates experienced last year was really just a blip. We’re expecting significant growth over the next 12 months,” Davies said.

Outperforming the industry and growing its market share considerably, Bibby Financial Services increased its factoring turnover by 24% in 2009.

“Major banking institutions have tightened their credit and as a result there has been a bit less support for the SME market,” said Davies. “This has provided us with some good opportunities to pick up on those transactions that major banks are ignoring.”

Brokers AB spoke to appear to be showing an increasing interest in the industry. Scott

Key points  Debtor finance has risen from a $10bn total in 2000 to be worth $63bn in 2009  Brokers are showing an increasing interest in the industry, picking up transactions the major banks are ignoring  Decline in growth rates in 2009 defies the industry’s strong interest Beattie, business development manager at Cube Home Loans, said that, like most brokers, he was looking to diversify his income stream.

“Debtor financing is not part of our core business, however it is a service we are looking to grow in the future,” he said. “It’s a point of difference. It provides us with an opportunity to offer clients a full-service model that helps us retain the client and get better referrals,” said Beattie.

“It’s a very low touch product but it’s cream, not bread and butter,” he said.

Bradley Stubbs of Stubbs Finance believes debt factoring is something that brokers need to focus on now more than ever.

“A lot of SMEs are doing it tough. Clients are struggling with cash-flow issues as debtors take up to 90 days to pay. Their ability to grow their business is being affected,” said Stubbs.

“It’s a great product for clients who have been cut off from traditional commercial finance streams.”

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Brokers cannot be ‘mere referrers’

A lawyer specialising in the new consumer credit rules has warned brokers they cannot circumvent the new registration and licensing requirements by calling themselves “mere referrers”. Under the new National Consumer Credit Act, “mere referrers” are included in a list of people who do not need to register and obtain a credit licence.

Richard Williams, a partner at law firm MacGillivrays, told brokers at the National Mortgage Brokers conference there was “a lot of scuttlebutt going around” saying that brokers do not have to be licensed because they can just be a mere referrer, someone

who “just moves things along”.

Williams said the Australian Securities and Investments Commission would view the ‘mere referrer’ tag applying to someone like an accountant who has a client looking to buy a house and who needs finance.

The client may then ask their accountant “where should I go for finance? ” “The mere referrer is designed to allow an accountant to hand over the broker’s business card and say: ‘Look I traditionally dealt with this broker, they look after me well, go and have a chat with them’,” Williams explained.

But even using the above example, if the accountant acts

as a ‘mere referrer’, they have to tell their client that if the loan goes ahead, they will be paid a commission of ‘x’ dollars.

“This ‘mere referrer’ exemption is not designed for the person in the business of sourcing home loans,” Williams said.

Williams advised anyone in doubt about whether they needed to register to do so anyway.

“The registration process is free of charge; if you are in doubt about whether one of your companies needs to be registered or get a license, register them at this stage, because come 1 July if you do need to register and you haven’t you will have to cease trading,” he said.

Williams reminded brokers that they needed to lodge their application by 18 June. “Even though you officially have until 30 June, ASIC is saying they cannot guarantee they can process your application by that date if you don’t lodge it by 18 June.

“ASIC does not want to have the situation where come 1 July, you have lodged your application

Who is exempt from getting a credit licence?*  Point-of-sale retailers  Financial counselling agencies  Third parties who transport property of a borrower on behalf of a lender  Securitisation entity  Lawyers acting as lawyers  Registered tax agents  Corporate and personal insolvency practitioners  People who pass on factual information in response to a request  People who merely pass on prepared documents  Clerks and cashiers  Mere referrers  Debt collectors registered under state laws (until 1/4/2011)  Directors or employees of a licensee Source: MacGillivrays Lawyers *This list is not exhaustive

the night before, and you then have to stop trading. To stress the point, he added: “It is that serious; if you are not registered or appoint a credit rep by 1 July you have to stop trading until such time as you are appointed a credit representative by someone else or actually be granted a license.”

He urged brokers to make their decisions about registration and licensing early.

Liberty covering all lending basis On the back of a number of credit relaxing initiatives, non-bank lender Liberty Financial is looking to provide competition to the major banks with brokers being its key distribution channel.

James Boyle, Liberty’s chief operations officer, said the lender was 100% dedicated to the third party channel and had, for a long time, maintained a strong and loyal relationship with brokers.

Boyle described the current

Driving competition: Liberty initiatives  Since 1 March, offering “significantly sharpened rates”  Still offering mortgages at 95% LVR  Increased LVRs for non-prime borrowers  Increased the maximum LVR for prime full-doc business loan to 80%

state of the market as being a “bit of ‘deja vu’ ”.

“We are going forward by returning to where we all started. Brokers and non-banks started life together and offered great value to consumers. This is still the case moving forward,” he said.

Having secured AOFM funding for its prime mortgages, AB asked Boyle if Liberty was moving away from its specialist lending roots. “We are there for any type of customer, and have always had those arrows in our quiver. We have been in the prime space for the last five years and have always had the broadest market offering,” was his response.

Boyle added that Liberty was positioning itself as the lending alternative to the major banks, who he said were on a “contracting credit tack.”

“We are here for customers who may struggle to get service from the banks, and we have

sharp pricing. We are here for customers looking for an alternative,” he said.

Liberty revealed its own greenshoots, in two press releases put out within days of each other at the end of February.

James Boyle

In the first it announced “sweeping enhancements to its commercial lending products” including increasing the maximum LVR for its prime full doc business loan to 80%.

Bob Turnbull, group sales manager – commercial for Liberty Financial, said the lender was intent on helping the small business sector by providing vital support while stimulating competition in the broker channel.

In its second announcement, Liberty revealed significantly sharpened rates for prime residential business and reminded brokers that it still offered one of the industry’s highest LVR limits at 95%. It also announced increased LVRs for non-prime borrowers.

While taking note of the ‘greenshoots’ Boyle said he did not think Australia was out of the woods yet. “We think the next 12 to 24 months will be slow but positive,” he said.

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Panel insurance provider working on closer ties Competition for risk insurance business from mortgage brokers is heating up as more providers look to establish themselves in the third party space.

Hot on the heels of Australian Life Insurance (ALI) considering legal action against competitor Mortgage Shield over an e-mail campaign which called it products “inferior”, panel insurance provider Lifebroker is ramping up its efforts in the third-party space. Lifebroker, which has arrangements with 13 insurance companies, piloted a referral program with a group of Mortgage Choice franchise owners last year.

Key points  More competition emerging in third party risk insurance space  Lifebroker providing panel insurance offering via brokers  Program already piloted with a number of aggregators

With a “strong alliance” with the franchise group now in place, Hugh Peck, national manager at Lifebroker, said the insurance provider has since commenced pilot programs with a number of other aggregator groups.

Peck told AB that feedback from brokers was that they are “screaming out for a comprehensive and competitive offering of personal risk products”.

“Many brokers only have one product or one company’s products to offer,” he said.

According to Peck, the strength of the Lifebroker model is that brokers are not bound to one product and hence provide a greater duty of care to their clients.

Lifebroker follows a referral model. Brokers are provided with training and scripts to “warm up clients” before being contacted by the insurance provider.

“We get in contact with their clients and find out what they are

looking for … our view is that brokers are experts in mortgages and we are experts in life insurance, and we try and keep it that way,” Peck said.

With trails “freezing up” and brokers looking for additional income streams, Peck said life insurance was a potential goldmine. “It goes hand-in-hand with the mortgage industry,” he said.

Peck described the Lifebroker commission structure as competitive. Brokers are remunerated on completed policies and there is also a rewards program offering trips

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Hugh Peck

away, dinners, TVs, and iPods.

Brokers are also encouraged to refer clients with existing insurance policies to see if there may be a more suitable product available for them.

BDM transfer season As the battle for broker minds continues, it appears that Lifebroker has been successful in recruiting business development managers from rival insurance provider, Australian Life Insurance (ALI).

Since the start of the year at least four former ALI BDMs have joined Lifebroker. Among those moving across has been Helen Triplett, who Lifebroker said was “the top BDM at Australian Life Insurance for the last three and a half years”.

Triplett was appointed BDM for Victoria, charged with the role of helping to broaden the aggregator channel in the state.

“Spending four years previously with Australian Life Insurance, she built her market above and beyond her peers,” was how Lifebroker described Triplett’s experience.

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“Muffins for tea” not enough to get referrals

According to Hunter, the problem is that the average broker is not proactive enough.

“They will go to the real estate office with some muffins for morning tea and leave a bunch of business cards and 99% of the time that is the last the real estate agent will see of them,” Hunter said.

On the flipside, the “handful” of brokers that do get great business are “totally interactive and become part of the real estate agent’s life”.

“Never let agents forget that you are an interactive part of their success – don’t just sit around waiting for the phone to

ring,” he said. “Try to understand their vision, goals and purpose – and it’s amazing how much business they will refer you,” Hunter added, saying that it was all about “top of mind awareness”.

“Talk to real estate agents about securing their dreams.

Agents love to be recognised; they love to be told how good they are,” he said.

“Agents move companies because the person round the corner is stroking them, coming to their open home, congratulating them on a good ad, continually tell them how good they are. It’s got nothing to do with the commission split.”

Ross Hunter’s tips to get more real estate referrals

A box of muffins for morning tea and a stack of business cards will not get brokers more referrals from real estate agents, according to Ross Hunter, the CEO of New Zealand-based Harveys Real Estate.

Speaking at the National Mortgage Brokers conference on the Gold Coast, the one-time

outback mechanic turned real estate king said that in his 20 years in real estate, one of the things that had always surprised him was how the broking industry pulled up short on really delivering to real estate agents “…because real estate agents by nature are really quite slack,” Hunter said.

1. Use SMS to communicate on a daily basis. Ask the agent the question ‘who do you know today I can speak to who is considering buying a house?’

2. Send them encouraging notes. Cut out ads in the local papers and send them to the agent. One of the most significant things you can do for a real estate agent is acknowledge an ad they put in the paper 3. Use the phone. Call them on a regular basis 4. Use pop-ins. Go to open homes. Make it your business to pop into open homes – that’s where agents get lonely 5. Ask the agent if you can get a copy of their open home list. Most agents do nothing with that information, but there is business in that list 6. Create a PR machine back to sales people about the deals you have done. Use the statistics you have and pump them back to agents on a regular basis

Numbers looking good for Aussie Celebrating 18 years in the game, figures released by Aussie Home Loans reveal that the franchise and broker group has enjoyed strong growth in both broker numbers and loan settlements.

Chief executive officer of Aussie Home Loans Stephen Porges said 2009 had seen the number of brokers doubling to more than 850 and the number of

Aussie stores climbing from 20 to more than 150.

In the six months to December 2009, Aussie recorded a 90% jump in home loan settlements against June-December 2008.

Over the six months from July to December, Aussie’s monthly home loan volume has increased by 44% over the last year, with more than $1bn in average monthly settlements. The

Symond going back to his roots Aussie Home Loans is going back to its roots with a plan to ramp up the sale of its own home loans backed by securitisation.

The move is the latest positive sign for the RMBS market, which is on the comeback after virtually suffering a shutdown when the GFC hit in 2008.

Aussie’s founder and executive chairman John Symond said in an interview with the Australian Financial Review that he wanted to write “billions of dollars” of loans originated by Aussie and packaged for sale as RMBS. “We are going back on the attack and putting out home loans and instead of 95% of our loans being brokered it will fall to 75%,” he said.

Aussie John said the strategy had already kicked off with the assistance of the CBA, which owns a third of the company.

average loan size has also increased 12% year-on-year.

Porges said the Wizard acquisition was now bedded down, a statement borne out by the latest BRW ‘Fast Franchise’ list, where Aussie ranked 7th fastest-growing. “Our mortgage brokers are now undertaking close to 10,000 appointments every month with customers, and our team is performing strongly, despite the generally subdued conditions in the housing market and the economy,” he said.

Aussie’s non-mortgage products are now contributing more than 10% to company profit.

And besides offering its breadand-butter mortgages, Aussie has branched out into car and personal loans, credit cards, life, funeral and mortgage protection insurance.

Later this year, it will also add financial planning to its service proposition.

Aussie founder John Symond said the planned attack on the wealth market and an expansion

Stephen Porges

of Aussie’s insurance offering was an important step for the company.

Aussie also plans to re-launch its badged home loan product this year.

www.brokernews.com.au

15

industry NEWS IN BRIEF Free financial counselling for North Shore residents

Brokers operating on Sydney’s North Shore can refer clients struggling with mortgage repayments to an enhanced free community service, following the Northern Area Tenants Service receiving an additional $180,000 until June 2011 for two new part-time financial counsellors, on top of $200,000 it received in June last year for a new full-time financial counselling position over the next two years. The Northern Area Tenants Service has reported an increase in the number of people in their early forties to early fifties, particularly men, who have recently lost their jobs or have been out of work for the last 6-12 months. They have also reported an increase in people on the verge of homelessness and intense financial difficulty in the area.

Bankruptcy laws support small businesses – COSBOA

The Council of Small Business of Australia (COSBOA) has backed the proposed changes to Australia’s bankruptcy laws on the eve of the Senate debate around the Bankruptcy Legislation Amendment Bill 2009.

It affirmed its support for the bill on the view that it would “ultimately improve the position for many small businesses that experience difficulties recovering small consumer debts”. COSBOA CEO Jaye Radisich said that an overhaul of the Bankruptcy Act was long overdue.

“The priority for small business is the ability to efficiently and effectively collect money that is legitimately owed.

To that extent, proposed reforms increasing thresholds and providing a greater opportunity to negotiate the repayment of debts, is likely to result in better outcomes for Australian small business.”

Westpac leading processing pack

An AFG memo has revealed problems with NAB processing times, but also which of the major lenders is offering the quickest turnarounds. The memo, obtained

by BusinessDaily, advised brokers to consider other lenders such as ANZ and St.George because of the processing delays at NAB. It also included estimates of how long it took banks to process loan applications via brokers, with Westpac leading the pack with the fastest turnaround time at 24 hours. St.George was next best at up to two working days, followed by CBA (up to three days) and ANZ (four days). AFG chief operating officer Mark Hewitt told BusinessDaily NAB had been very open and transparent about processing problems, while a NAB spokeswoman said more staff had been hired to help ease the extra workloads caused by higher demand from brokers.

RMBS delinquencies outlook good

Concerns about mortgage delinquencies rising in 2010 have been put to rest following the latest report by Moody’s Investor Services. In its Q4 2009 Australian RMBS Review, Moody’s reported that the performance of the Australian mortgage market was stable in the last three months of 2009, with delinquency levels remaining within long-term average ranges for both prime and nonconforming RMBS transactions.

The report said stable collateral performance was expected to continue in 2010 in light of the improved forecast for interest rates and the labour market. Prime RMBS’ ‘30 days past due’ delinquencies fell marginally from the last quarter, by four basis points to 1.10%, down from a historical high of 1.63% in January 2009, while non-conforming RMBS’ 30 days past due delinquencies rose marginally, by 66bps to 12.13%. ‘90 days past due’ delinquencies hit a 23-month low.

GFC: Australia warned against complacency

An international regulator has warned that difficult economic times are unavoidable for Australia, despite its sound economic management and close proximity to Asia. Hans Hoogervorst is chairman of Dutch securities regulator the Netherlands Authority for the Financial Markets (the Dutch equivalent or ASIC and APRA).

Speaking at ASIC’s Summer School conference in Melbourne, he warned us not to ‘become complacent’, and took aim at the Basel II banking rules governing capital requirements calling them “grossly inadequate”.

He praised Australia’s regulatory oversight system.

16 www.brokernews.com.au

News

Read the latest issue of Australian Broker online www.brokernews.com.au

Homeloans prepares for new opportunities Listed mortgage manager Homeloans Ltd has recorded a net profit of $4.6m for the half year ending 31 December 2009, up 75% on the previous corresponding period.

Homeloans executive chairman Tim Holmes believes the news demonstrates that the group has successfully navigated its way through a challenging marketplace, developing more

Mark Duggan

effective distribution channels and product offerings in the process.

“I can’t think of another time in which there were opportunities as good as there are in the present time,” Holmes said. “The marketplace is much less cluttered now. A lot of funders outside the banking industry have dropped by the wayside or have been absorbed, creating more opportunities for us,” he added.

Those opportunities include increasing Homeloans market share across Australia to capture customers who want a better relationship with their lender.

“A stable relationship with the funder is important for customer retention,” said Holmes.

“Brokers are adopting us more and more as we provide the opportunity to make sure their customers get a satisfactory outcome in the shortest possible period of time,” he said.

According to Scott Beattie of Cube Home Loans, mortgage managers such as Homeloans

Ltd have traditionally been more solutions-based providers but are now “becoming more competitive”. Holmes thinks so too. “We can access very good funding lines and have a service ethos that allows us to deliver answers to brokers in a competitive timeframe,” he said.

Mark Duggan from Affordable Home Loans sees non-banks as providing much-needed competition in the market.

“Having a huge market share is affecting the service of some lenders and their relationships with brokers,” said Duggan. “A bit of a shake-up is good. As banks lose some of their dominance and reduce their volume, service will improve.”

Sarah Eifermann, from SFE Loans agreed. “I use non-bank lenders where possible. It’s good that they are making a comeback; it means competition is returning to the marketplace,” she said.

“Major banks will have to work harder to maintain their clients.

I personally would like to see

Tim Holmes

more brokers using non-bank lenders to try and get rid of the quality metrics banks are demanding from brokers to maintain their accreditation,” Eifermann said.

For Homeloans, satisfying brokers is integral to their strategy for the year ahead.

“Brokers are an essential part of our strategic objective. They give us all the distribution we need across the country,” Holmes said.

“Providing a satisfactory business experience for brokers is important. We’ve got the go-to people for brokers that are hard to find in a bank so we can and do get things done.”

Count: finconnect well placed Count Financial’s wholesale aggregator, finconnect, has received favourable mention as the listed financial planning and accounting group released strong interim results.

On the back of reporting net profit after tax of $13.76m for the half-year ended 31 December 2009 (up 136% on the previous corresponding period) Count Financial said finconnect had continued to experience growth in its loan book. “The membership model maintains its focus on

Andrew Gale

providing accounting and financial planning firms with solutions for their clients’ lending needs. “finconnect is well placed to implement the introduction of the new national credit law reforms and licensing and will provide guidance to its mortgage brokers with respect to both the registration process and future licensing requirements,” the report read.

In briefing material, Count revealed that a significant chunk

(20%) of its revenue came from residential and commercial lending. The finconnect business, which offers both a referral service and direct loan writing, was set up in 2007 by former Lawfund national sales manager Tanya Sales, who has since moved on to set up her own aggregator.

In this time it has picked up a number of industry awards, including wholesale aggregator of the year at last year’s MFAA awards.

Count’s trail commission earning loan book now stands at $3.69bn. This includes residential lending which grew over the last 12 months, but also investment loans (margin and protected lending) which reduced over the period.

Count also has a 17.3% stake in Mortgage Choice and has made one unsuccessful takeover bid for the franchise business. Count said this holding contributed a profit of $3.69m.

Comments in the report suggested further investments

or a fresh takeover may be considered. “Since first purchasing a stake in MOC, general economic and market conditions for mortgage broking have deteriorated. Count expects to see increased rationalisation of all sectors of the financial services industry and will consider opportunities as they arise in the light of future prospects,” the firm said.

On 16 February, the directors of Count Financial announced the appointment of Andrew Gale, a Deloitte partner, as chief executive officer and managing director of the company.

Key points  Finconnect loan book growing  Residential lending contributing 20% of revenue to Count  Mortgage Choice stake adds $3.69m to profits  Further investments possible depending on market

www.brokernews.com.au

China the saviour

Australia’s ability to grow its exports to China during the height of the GFC is what saved it from sliding into recession with the rest of the developed world.

This was the view of BT Financial chief economist Chris Caton, delivered as part of an address to brokers at the annual National Mortgage Brokers (nMB) conference.

“When Lehman Brothers collapsed there was only one

developed country that managed to increase the volume of its exports – that was Australia,” Caton said.

Though the question was: who on earth did Australia find to sell more exports to when the whole world was plunging into recession?

“We know the answer to that – China. In the middle of last year we sold twice as many resources to China as we did two years ago.

“There is no doubt about it; China was a big story in keeping us out of recession last year,” Caton said.

So successful was Australia in selling its resources to China that a landmark was reached last year.

“You may have thought this true for years, but it was not true until last year, that China became our biggest single export market,” Caton said.

Up until then, he said Australia’s biggest export market had been Japan, which had held top spot for the last 43 years.

“It is entirely likely that China will hold that spot for the next

43 years,” Caton said. “This is a huge story and has a fair way to run. It’s a great story for Australia, though it does have some complications. Chinese growth won’t be smooth for that whole time, and even if it is, what we know about commodity prices is that they go up and they go down.” During his presentation,

17

Caton also explained that in the wake of the collapse of Lehman Brothers, the thing that dragged Asia into the GFC was the collapse of exports, not that it was due to its financial sector.

“Japan lost 28% of its exports, China lost 22%, and lots of other countries lost huge quantities of their exports,” he said.

Opposition has it very wrong on debt BT Financial chief economist Chris Caton has slammed the opposition for suggesting the RBA has been forced to raise interest rates because of Australia’s soaring public debt.

“This is the biggest economic furphy perpetrated on the Australian public in my memory,” Caton said.

“How many times are we told we are in debt, and it will have to be repaid, that our kids will have to repay it, that we will be borrowing from our children?” he asked before replying tongue-in-cheek, “just out of interest has anyone tried borrowing from their children? It does not work.”

Caton said while it may be true that the government has racked up $150bn worth of public debt, he questioned if this was a big number.

“We have a debt-to-GDP ratio of 10%. When you compare it with other countries, you will see that we don’t have a problem, we have never had a problem,” he said.

He warned that Australia risked becoming a nation of “debt-fetishists” because of what politicians were saying, something which would not serve the country well.

“If we are scared of public debt, then one day we will be underinvested in public infrastructure.”.

18 www.brokernews.com.au

News

Broker guilty of running ponzi scheme A Melbourne-based mortgage broker has pleaded guilty to running an investment scam, similar to the one used by notorious New York businessman Bernie Madoff.

On 1 March, Hazel Bernice Bucello pleaded guilty in the Melbourne County Court to six counts of deception, following an investigation by ASIC. According to ASIC, Bucello was the sole director of loan and mortgage broking business Victorian Finance Broking Services Pty Ltd (VFBS), which was based in Kew, Victoria.

She pleaded guilty to five counts of obtaining property by deception; and one count of obtaining a financial advantage by deception.

The six counts of deception involve a sum of $2,531,139 that was invested by five investors between 2004 and 2006. The investors were told that their money would be used to provide bridging finance to other clients of VFBS. The investors were

promised between 4% and 5% interest per month on their invested capital.

An investigation by ASIC found that investors were in fact being repaid their own money, as is typical of a ponzi scheme, and the scheme was reliant on new funds being invested to meet the promised interest payments.

Those who invested at the very beginning fared much better

than the last investor, who received no interest payments.

While some of the victims received interest payments, the capital invested was not repaid. Some of the victims did receive regular monthly interest payments.

Bucello used the remaining monies for her own purposes and some was used to meet the financial obligations of VFBS. Bucello’s bail was extended to 4 May when she will reappear at the Melbourne County Court for a plea hearing and sentencing.

The matter was prosecuted by the Commonwealth Director of Public Prosecutions.

Broker’s profile on LinkedIn: A search across business networking site LinkedIn reveals a profile for a “Hazel Bucello” owner of “Victorian Finance Broking Services”.

Her summary reads: “Having been in this industry now for six years I have seen many changes in the industry, which have been for the better. I ran this business as a one-person home-based business up until October 2004, I then relocated to an office in Kew where my two sons joined the company along with another consultant. I was in the pharmacy industry before this and find the change very challenging, also very rewarding helping people to obtain their dream home and setting up their financial security for the future.”

She listed as her specialties “obtaining home loans for people who have had credit problems, are discharged bankrupts or do not fit in with the normal banking requirements. We have 106% loans for people who fit the criteria.”

Underinsured Australians at risk New research has pointed to the growing need for brokers to offer their clients some form of risk insurance when arranging their mortgage.

Research from the National Centre for Social and Economic Modelling (NATSEM) at the University of Canberra has found that the underinsurance of families with dependent children and a mortgage is prevalent in

Paul Davies

Australia, with over one in five families suffering the death or disability of a working parent.

The report shows that based on current average levels of insurance, the typical Australian family’s weekly income will be cut to about $600 if a main breadwinner becomes temporarily ill or injured and unable to work.

Director of Mortgage Shield Australia Paul Davies sees it every day. “It’s one of those things people don’t want to think about,” he said. “But in the litigious society we live in it’s only a matter of time before it comes back to bite a broker that hasn’t offered quality advice,” he said.

Chris Eade, chief executive of Lifebroker, said by simply telling a prospective homebuyer that life insurance products are as important as home and car insurance, brokers can start to raise awareness of the risks of injury, illness and premature death.

“We found people had a profound lack of awareness and understanding of the risks posed

by illnesses and injury,” said Eade. “If you look at Australians’ attitudes to insurance in general you see they are quite prepared to buy insurance when they realise a risk exists which is worth protecting,” he said.

However, Davies has found that the number of brokers looking to offer more comprehensive advice is on the increase.

“The majority of our business comes from mortgage brokers, those with a bit of vision who want to provide a good service and expand their business,” said Davies.

“In the past four months there has been a huge increase in brokers who want to write themselves or refer to a professional that will look after their client,” he said.

Sarah Eifermann, a mortgage planner at SFE Loans, said brokers had a legal duty of care to advise a client that they may need to increase their level of insurance if they are increasing their level of debt.

“Having a close network or reliable, qualified industry

Sarah Eifermann

experts in the marketplace helps brokers ensure their client is getting the right advice,” said Eifermann. “It’s all very well to have mortgage protection insurance, but if a spouse dies, what are you going to eat with? ” David Johnston, director of Property Planning Australia, agreed. “It’s an often neglected area of people’s financial circumstances,” said Johnston.

“It’s something we talk about with every client. Taking out a mortgage potentially puts a client at considerable financial risk, so understanding and protecting against that risk is vitally important,” he said.

www.brokernews.com.au

19

Schlesinger

A sense of déjà vu  When I first started

writing about the mortgage broking industry the nonbank sector was thriving, banks dared not cut commissions and the market abounded with innovation…

T

hat was four years ago when I first started writing about mortgage managers, non-conforming lenders, aggregators and third party distribution channels.

I must confess: while I have had this feeling of déjà vu for some time now, it was James Boyle from Liberty Financial who picked the phrase when we were discussing the ‘greenshoots’ of recovery now happening in the non-bank space.

Boyle said it was like the market was “going forward by returning to where we all started”, and that is exactly how I have felt recently

as all the announcements have started coming in about new non-bank product launches, mortgage managers cutting rates and a generally upbeat mood present at industry events.

A time long, long ago…

Casting my mind back to 2006, I remember a marketplace awash with innovative products funded via buoyant securitisation markets and plenty of wholesale funding to go around. Brokers were well serviced by a non-bank sector eager to promote their products via the third party space; while at the same time the major banks held firm on commissions and volume requirements were virtually unheard of.

It is fair to say that no one saw the gathering storm clouds ahead, and when they did, it was already too late because the rain and hail was already bucketing down.

This of course resulted in a wave of market withdrawals (GE Money, Macquarie, Virgin Money to name just a few) and consolidations in all sectors of lending, some of which would never have happened were it not for securitisation

markets shutting up shop and banks around the world imploding.

Thankfully, Australia’s banking system remained unaffected, though the knock-on effect was devastating for many who had found their funding via the wholesale channel or direct from securitisation.

Of course the major banks tried their darndest to sell the idea that the meltdown hurt them too, but record profits, near total market dominance and an ability to almost do as they pleased suggested this was not the case.

For brokers, the industry rumours of commission cuts became a reality as did tighter lending criteria and volume hurdles, etc. If you’ve survived up until now you know the rest of this story Survivors. The great thing is though that a new chapter is being written. It’s similar to the one circa 2006, but with a much stronger story line (think regulation, professional industry) and battle-hardened brokers, many of whom now have a better customer proposition via a diversified holistic offering.

Those that have survived are set to thrive; if the GFC didn’t sweep out all the bottom-feeders, the new

licensing regime is certain to do the trick.

As for the lending space, as Gerald Foley told me recently, when someone abuses their dominant market position, it eventually creates opportunities for others to step in. And this is exactly what is happening right now. As the economy rights itself, as securitisation markets thaw out further, the ability for the major banks to do as they please with impunity will no longer be possible.

Never mind that licensing will make it very hard for banks to justify their volume-based accreditation requirements, a greater range of products on brokers’ shelves should help restore the balance power.

All in all, it was a thriving industry when I first began writing about it and it’s going to be an even stronger one in future years. As this is my last issue as editor of Australian Broker, I’d like to thank all those people who have helped me along the way by providing comments, support, ideas and feedback. There are too many of you to mention in this space. It has been a real pleasure writing about such a colourful and dynamic industry!

20 www.brokernews.com.au

Conference wrap

Of greens and greenshoots

B

economy would grind to a halt over rumours the Chinese government plans to slow down its rate of lending.

“There’s not a single sign of a slow-down in China … its going faster than a Prius,” Caton said, adding a joke about Prius drivers in Australia receiving notes from Toyota asking them to return their cars “as slowly as possible” to the car dealership.

Not many brokers would have known all that much about Ross Hunter, but they would certainly have been inspired by his story – from outback mechanic working 14-hour days in Western Australia fixing mining trucks to CEO and co-owner of one of New Zealand’s biggest real estate groups.

A real economic recovery Caton, who proved that talking about the economy did not have to be dry or boring, said that when he spoke last year, economists’ forecasts were “down, down, down”, but this year they were “creeping up steadily”.

“What this means is that for all the negativity … all this talk about ‘W’ shaped recessions and ‘square roots’ … in fact what the forecasters have been doing month by month is raising their sights.

“The forecast I gave you last time (a year ago)… it turns out that things are doing a bit better than that.

The economic recovery is not imagined,” he said.

Furthermore, Caton dispelled concerns that the Chinese

Crystal-clear vision Hunter said for people to reach their potential the first thing they needed to have was a “crystal-clear vision” – something which “goes beyond just a picture”. So passionately does Hunter believe in this concept, that he showed a photograph of his car (which happened to be a Porsche), bearing the number plate ‘CCV’.

Whenever someone asked him what the letters stood for, Hunter would be reminded of the things he wanted to achieve in life. Furthermore, in being constantly asked to explain this strange acronym at the bottom of his car, Hunter said he had stumbled across this truism: “The more I tell people what my vision is the more they want to help me. If you have that clarity, if you have that vision you will be quite surprised how many people want to help you.”

Another important message he put across was that of setting goals because “you don’t have to know the ‘how’ you only have to know the ‘what’. When you have the goal you are focusing in on the ‘what’; the ‘how’ takes care of itself,” he said, “it’s something I tell myself every single day.”

More inspiration would follow later, on day two of the conference, most notably the keynote address delivered by former Olympic coach Laurie Lawrence, who succeeded in getting everyone up on their feet singing the Sydney Olympic theme song ‘Rise up’ and then drew tears to many people’s eyes with the story of his campaign to save children from drowning in swimming pools.

In between all the positive messages, the talk about germinating greenshoots and diversification and new products and preparation for licensing (courtesy of Richard Williams from law firm MacGillivrays), there was still plenty of time for brokers to enjoy a competitive round of golf, or hurtle down a rollercoaster. As brokers prepared to don their golf shoes, nMB’s sales and marketing director Sal Cinque reminded them: “If it’s a par three and you haven’t got the ball off the tee in five shots, pick it up and move on.”

Perhaps not intended as a motivational message, but full of wisdom nonetheless.

 While 2009 was all about seeking opportunities in a

crisis, the 2010 National Mortgage Brokers conference was all about opportunities for brokers in a resurgent market. Larry Schlesinger reports from the Gold Coast efore delegates headed off to do battle on the lush fairways of the Royal Pines Golf course (or head off to Movieworld for an accelerated adrenalin rush) on day one of the nMB annual conference, managing director Gerald Foley provided some thoughts on where the market may be heading and the opportunities out there.

“We came through an interesting year, last year”, was how Foley began his opening address.

“I absolutely believe that we are coming through it very well. In the mortgage space there are a lot of greenshoots emerging … signs that we are on the way back … a lot of positive signs for all of us,” he added.

Besides providing an nMB’s update (strong growth in the loan book, broker numbers up, platform performing well), the undoubted highlight of Foley’s address was the launch of nMB’s badged mortgage product – nMB Direct. Foley provided details of the funding behind the product and why he had chosen to go with The Rock Building Society.

“We felt very strongly that we did want to see competition come back. If we are going to launch our own product, it has to be real competition … not major bank funding dressed up as something else,” he said.

Foley said the benefits for brokers – besides offering a quality alternative product to the major banks – were no accreditation restrictions (though there will still be an accreditation process) and the ability to deal with The Rock in a very direct, hands-on basis.

Following this upbeat outlook, brokers were given a largely positive snapshot of the economy moving forward from Chris Caton, chief economist for BT Financial Group, and some inspiration from Ross Hunter, an entrepreneur and founder of the New Zealand-based Harveys Real Estate group.

The more I tell people what my vision is the more they want to help me

September 24, 2010 The Westin Hotel, Sydney

Official event partner

Online nominations open in April 2010

www.australianmortgageawards.com.au

22

www.brokernews.com.au Sharon Williams is the founder and managing director of boutique PR, marketing and creative agency Taurus Marketing in Sydney, Australia (www.taurusmarketing.com.au)

top ten tips Tip 5: Keep in contact with your staff and colleagues Taking the time to make personal contact with your staff and colleagues shows that you consider them important. If possible, dedicate one-onone time to staff on a regular basis to discuss any problems or issues they may be having or to track personal goals. This will motivate your staff by showing that you are not just concerned about what they can do for your business but, rather, are considering what your business can do for them. If having personal contact with your staff is not practical, then think about starting up a company newsletter.

…to motivate you and your staff Your company’s most valuable resource is its people, so keeping you and your staff inspired is of utmost importance Tip 1: Get yourself motivated You can’t expect your staff and colleagues to employ optimistic thinking if you are the office sloth. It’s time to lift your game in the effort to inspire those around you.

One of the keys to motivation is setting manageable goals. Pull out your business plan and write down three things that you would like your business to achieve in the next three, six and 12 months. Set the wheels in motion by breaking each goal into manageable daily tasks and stick to them until completion.

Tip 2: Listen to their wants and needs One of the best ways to increase motivation is to give your staff a voice.

Since people should not just be hired for their skills offering but, rather, for their brain power, asking for their input will not only empower them to induce change, but will also increase your business’ efficiency. Don’t be afraid to ask your colleagues how they would do things differently and don’t just limit your enquiries to the most senior employees.

Tip 3: Encourage a good work-life balance Even though work forms a substantial part of your life, it pays to remember that keeping a balance is the key to staying motivated. Giving staff flexibility in ways such as flexi-time and working from home shows them that you are prepared to trust them and are committed to their wellbeing. In turn, not only will they come to work more refreshed, but they will also work more efficiently.

Tip 4: Educate and train yourself and your staff With the average work life spanning over 30 years, it’s important that you and your staff are not professionally stagnant. Ask yourself and your staff, ‘Are there any skills that would allow you to complete your job better?’

If so, research possible education or training courses that will equip you and your staff with such skills.

cont. from cover

>>

Dean Rushton, Loan Market’s COO, did not have any concerns with the ‘Professional Credit Advisers’ title as it stands, but said it would be important that it “fits with the licensing structure and doesn’t become confusing for the consumer”.

Scott Beattie, BDM at Cube Home Loans, said he was in favour of the designation if the MFAA “planned to use the hundreds of thousands of dollars of membership funds to promote MFAA members in a way similar to that of the CPA”.

“Should it just be another

term or ‘shake up’ that keeps the MFAA in the media – I am not in favour of it,” he said.

One of the key initiatives included in the consultation paper will be to ensure that consumers are aware of the benefits of dealing with an MFAA Professional Credit Adviser. Naylor said it would be the MFAA’s job to better promote its members to consumers, lenders and regulators. “There will be a lot more focus on marketing,” he added.

Comments on Brokernews suggested there was a fair deal of scepticism about the new designation and framework,

Tip 6: Provide individual incentives Companies tend to be good at marketing to their customers, but are less successful at marketing their business proposition to their own staff. Your unique selling point should not just be about your attraction to customers, but should also include your attraction to current and future employees.

What incentives do you offer your staff? Are they tailored to suit each individual? Everyone is not motivated by the same things.

Tip 7: Reward good work Often, good work is just expected and goes unrewarded. Taking the time out to acknowledge exceptional work is just one of the ways you can inspire others to achieve. It doesn’t have to be a huge ‘song and dance’, but there are plenty of ways to acknowledge the achievements of others.

There are a plethora of professional awards available, so nominating a colleague may be a good way to show your appreciation.

Tip 8: Work together to create goals If there is a difference between your aims for your employees and their own ambitions, you’re doing something wrong. Mutual goals should not only be looked at as key performance indicators, but should also be things that your staff actually want to achieve. Start by asking people where they would like to be in one year from now. How can you help them achieve this goal? It is a well-known fact that high staff turnover can be attributed to the inability of managers to work with staff to create simultaneous objectives. Without goals, staff can feel unfulfilled.

Tip 9: Provide job descriptions and review them regularly Many job descriptions sit within the depths of office drawers, never likely to see the light of day – if they exist in the first place. Job descriptions should not be seen as performance limiters but rather as the foundations of employment, creating a mutual understanding between a company and your team. Job descriptions should not just be a one-way document, so don’t be afraid to discuss them with staff.

Tip 10: Encourage fun Don’t limit social interaction amongst your staff to the annual Christmas party. Creating a social environment in the office will have great benefits.

A silent office is not always a good thing either. Within reason, make allowances for staff conversation about things other than work as this will build stronger relationships between people and make the office a place where people will actually want to work and enjoy coming to every day.

while a senior industry player told AB “it would be a hard sell”.

The future role of the MFAA was also raised at the recent National Mortgage Brokers conference, during a discussion on licensing, when a delegate questioned whether it would be necessary to remain a member once ASIC took over.

Asked whether the MFAA would remain as relevant once legislation came in, Rushton said: “The legislation will bring in minimum standards, but there will be a lot of brokerages wanting to establish a structure above these levels.

“We’ve already seen with the

Certificate IV requirements that ASIC may set the bar below where we want to be as an industry. In terms of the roles of industry lobbier and promoter, ASIC is not going to fulfil these functions.”

Beattie reiterated his earlier point that for the MFAA to remain relevant it would need to promote its members in a way the CPA does accountants: “I don’t think the MFAA should be worrying about websites such as the Essentials of Borrowing. Let us as brokers focus on what we do; let the MFAA worry about letting people know what an MFAA member is and means.”

www.brokernews.com.au

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off the cuff Tony Pennells

managing director, Wealth Today What was the last book you read?

Blue Ocean Strategy by W Chan Kim and Renee Mauborgne.

If you did not live in Australia, where would you like to live?

Vancouver, Canada – had the chance to spend a couple of weeks there 15 years ago. Loved the place, and the people, and also loved the close proximity to travel in and around the US. If you could sit down to lunch with anyone you like, who would it be?

Apple CEO, Steve Jobs. I admire not only his incredible resilience and adaptability, but also the way that he sees an industry not as it is, but as it can become. He has been the leading influence of late in defining the IT industry.

What was the first job you ever had?

I worked building wooden pallets between high school and university.

From there I learned what it was to really work, and also what I did not want to do with my future!

What do you do to unwind?

I love spending time with my wife and two beautiful boys… especially on holidays overseas. I also practice kung fu a couple of times a week.

What’s the most extravagant gift you ever bought yourself?

A cruiser motorbike – mainly to join my brother and mates on the road.

What CD is currently playing in your car stereo?

‘Seven habits of highly effective people’ by Stephen Covey.

If you could give anyone starting out in business one piece of advice, what would it be?

Have a purpose to your business beyond profit, surround yourself with people better than you, take the time to develop a solid business plan, but prepare to be adaptable to changing circumstances… then execute your plan.

If I was not working in the mortgage industry, I would like to be…?

On a social level – a travelling gypsy, probably learning to surf with my family in Hawaii with dreadlocks! Corporately – my fellow directors and senior managers are not just my business partners, but also my friends. We would brain storm what we were passionate about, and where we could make a difference, and together follow that path.

Where was the last place you went on holiday?

China – I recently toured through China with my eldest son, as part of his 13th birthday gift.

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www.brokernews.com.au

Marketing

Database by design You already know that one of the best ways to build your business is through clients you’ve already assisted – and satisfied. But, when it comes to marketing to your database, what information do you keep and how do you organise it most efficiently? Bill Nugent and Gary Meger offer some insight to get the most out of your client base by generating more referrals

S

ince the mortgage business is primarily about people – and keeping your name in front of them on a consistent basis – it’s understandable that your database can be one of the mainstays of a successful operation.

What many brokers fail to understand, however, is that without an effective communication strategy wrapped around your database to transform it into a relationship-building tool, and the right infrastructure in place to help you execute meaningful client communications and campaigns, your database will never move beyond being a static contact management tool.

Quite simply, database marketing is the use of client data to generate personalised communications to promote your business. You can use any medium to communicate your message – direct mail, letters, e-mail or even phone calls. And it consists not only of existing clients, but also referral sources, lawyers, lenders, appraisers and many other key participants in the mortgage origination business.

For mortgage brokers, database marketing helps you build and cultivate relationships, keeping you top of mind with your key clients and partners to ensure a steady stream of new clients and renewals.

Building a centralised system

Bill Nugent

Before you can define a marketing strategy around your database, you may need to do an internal audit of all your sources of client and partner data, ensuring you have the right tools in place to execute your campaign.

In our partnership, we saw a great opportunity for some new efficiencies with our combined database. We began by commissioning a new program specifically designed for our business – a customer relationship management (CRM) software solution. The layout of this new system has been customised for our office, incorporating more than 600 fields specifically requested by our team.

Additionally, the programmer has made it possible for us to export most of the information found in our existing database directly into the client records in our CRM system. Plus, we can update records daily. That means less duplication of work, so we see a very valuable savings of the time required to create and maintain each client file.

The key benefit to this type of organisation is that, by keeping track of all communication on a file in one centralised system, anyone in the office is able to pick up a file, schedule a task, commence an activity series and assist a client, should the primary contact person not be available. This ensures consistently high levels of responsiveness to our clients – something they will remember when renewing or recommending a mortgage broker to a friend.

Reinforcing important touch points

With the foundation of a solid and complete database in place, the next step is to identify meaningful client ‘touch points’ you would like to reinforce throughout their experience with you. Simply put, a touch point represents an opportunity for you to make contact with a client.

A touch point can be triggered by many occasions and events. During the process of securing a mortgage for your client, for example, a touch point occurs when you receive a commitment from the lender. Once your client has purchased a home, a touch point can be their move-in date or notification of a community event you are supporting.

Also, keep in mind that ‘life triggers’ such as birthdays, anniversaries or the arrival of a new baby also represent opportunities for you to reach out to your customers.

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Another type of touch point can be established when reports are published that could be of interest to potential first-time homebuyers, such as renters, or prospects seeking vacation properties. Changes in market trends can also create an opportunity to get in touch with clients.

Each of the above occurrences opens up a new opportunity to reinforce your existing relationships, build new ones and demonstrate the ongoing value you provide as a mortgage broker.

Keeping it personal

After we have taken the initial mortgage application from the client, gathered all the information that we need to understand what the client is looking for and entered this information into our database, we generate a thank-you letter for that client. We thank them for taking the time to talk with us and giving us the opportunity to assist them.

The client information, once entered into our database, is seamlessly imported into our CRM system and, from there, we can generate customised mail merge letters for each consultant or assistant.

We keep the dialogue going with our clients by sending another communication once we receive our commitment from the lender. At this point, our process branches out between pre-approvals and approvals. In both situations, we contact the client via their preferred method of contact (telephone or e-mail) to advise them of their approval and any lender requirements.

For pre-approvals, we then easily generate a client letter from our CRM system, reiterating the approval and any requirements from the lender, and ask to be kept updated on their house hunt. We then schedule a series of follow-ups with the client in our calendar to ensure we keep their information up-to-date.

The process is a little different for approvals. We set up an appointment for the client to come in to review and sign the documents, and advise them about the paperwork they will need to gather for the lender.

Once we have had the client in to review and sign the documents, we then e-mail, fax or call the real estate agent – informing them that the client has signed the commitment.

We keep everyone in the loop, documentation goes back to the appropriate lender and a copy goes to the solicitor so that preparations can be started on that end.

All this correspondence – with the client, or any other party involved with the file – is recorded directly in the client file in our CRM system, either by entering notes into the file or by direct attachment (as is the case with e-mail or other electronic files). Any follow-up for outstanding conditions is scheduled using our CRM system as a centralised tool.

After the file has been completed and we verify that it has closed, a thank-you letter is sent to the client. All ongoing communications with our clients are, once again, simplified and automated through our database and CRM tool.

A touch point we always use to promote ongoing communication includes sending an anniversary letter reminding the client to take advantage of any prepayment privileges their lender may offer.

Alternatively, at the anniversary date, we often invite the client to sit down with us to complete a mortgage ‘check-up’ to ensure that they have the best mortgage for their unique needs.

Staying top of mind

To support ongoing dialogue with our clients, we also produce a quarterly newsletter – with tips and strategies for improving cash flow, paying down a mortgage more quickly and any other items we think our clients would find useful.

We’re also in the habit of doing some bulk drops of our printed newsletters in our respective market areas – a great strategy for making some new contacts and building up that database!

At the end of the day, our best referral source is our pool of satisfied clients. And the best way of ensuring that we keep in touch with our clients on an ongoing basis is by having an up-to-date and accurate database.

A good database is a treasure trove once you’ve figured out how to make it work for you.

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Gary Meger

A good database is a treasure trove once you’ve figured out how to make it work for you

Bill Nugent, based in Ontario, and his business partner, Gary Meger, are both consultants with Canadian mortgage broker Mortgage Intelligence.

Q&A: Affiliate marketing Marketing to your existing database is not the only way to generate referrals and increase sales. National Mortgage Brokers has developed an affiliate marketing program specifically Sal Cinque for its brokers to generate leads, referrals and sales. Director of sales and marketing, Sal Cinque provides some answers as to how the concept works: How can an affiliate system help brokers generate business?

In simple terms, affiliate marketing is about engaging third parties to actively promote a broker’s service. It’s a variable cost method of marketing that provides brokers with a means to increase their brand presence and expand into new markets without high advertising costs.

Affiliate marketing is predominately an e-commerce business model and can be used to complement traditional referral relationships. It was pioneered by amazon.com and has become one of the most successful methods to increase sales via e-commerce channels.

What are the benefits of an affiliate model?

It is important that the affiliate relationship is mutually beneficial to brokers and their affiliates.

The benefits to the broker are:  provides a scalable solution to enter new markets and channels  helps secure new customers  variable-cost method of distribution  builds brand equity The benefits to the affiliate are:  no-cost diversification business model  cross-sell vehicle  value-add service  client retention strategy  gives purpose to re-contact clients  additional revenue stream Who can affiliate partners be?

The great thing about the nMB affiliate marketing system is that it is e-commerce based. Brokers may have an infinite number of affiliates in any industry. All it requires is a website that attracts traffic and can promote the broker’s service in exchange for a fee on the successful outcome.

Of course it can be used for the usual prospects such as accountants, financial planners, real estate groups, etc, but our brokers are finding success in other areas, such as

sporting groups, charitable organisations, webbased shopping portals, removalists, schools and childcare centres, hospitals, etc.

One of our brokers has implemented the nMB affiliate technology as the basis of a causerelated-marketing strategy.

How warm are the leads generated by your system?

The quality of leads generated by an affiliate marketing model is equal to that of any form of advertising. The major difference is that affiliate marketing is a pay-for-performance business model as apposed to traditional advertising, where you pay-in-advance and hope for an outcome.

How should brokers approach clients generated by such a system?

Within our training program, we provide brokers with a documented sales system to ensure the service delivery is consistent, the affiliate is acknowledged as the source of the enquiry and the FBC (finance broker contract) discloses any marketing fees paid to the affiliates.

For more info on nMB’s affiliate program go to: http://www.nmb.com.au/nmb/affiliate_model.html

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www.brokernews.com.au

Feature

One year on What a difference 12 months can make … or maybe not.

Australian Broker reflects on the stories that made headlines in the magazine one year ago

of late, adding a large number of brokers to its franchise operations via the agreement with the Southern Cross Broker Network (SCBN).

With SCBN brokers providing services to up to 90 LJ Hooker real estate offices in WA and Victoria, it looks like its financial services arm has exceeded recruitment expectations via one successful commercial agreement. And according to general manager Peter Bromley, additional agreements such as the one struck with SCBN could be on the cards this year should the opportunity arise, boosting franchise numbers even further. Seems the ‘dream’ has become a reality after all.

Headline: “Homeloans back on acquisition trail” (page 18) What we reported: Releasing its 2009 interim results, Homeloans Ltd revealed that it would be back on the acquisition trail, having last done so when it bought Sydney-based broker Auspak Financial Services in November 2007. In the interim report Homeloans Ltd said it would “seek opportunities for strategic acquisitions that will add value to the business”. In its results it reported net profit after tax of $2.61m to 31 December 2008, an increase of 15% in a year of “challenging and volatile market conditions”.

ISSUE 6.5 March 2009

$4.95 POST APPROVED

PP255003/0

Effective crisis management page 30

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channel, use of the brokerly aggressive increased their George, had and ANZ taking a particular n of with the CBA view the contractio 38% share of brokers may to the industry, stance.

While many retained a steady of business Choice as a major blow While brokers and increased their share to 42.1% at n the lending market broking franchise Mortgage listed Westpac’s book, at NAB and from 41.7% at the CBA the broker propositio according to 23% ion has made from 22% to most notable increases were industry consolidatever. results St.George, the stronger than at the company’s interim concerns while by 4% to 39% dispelled Speaking and ANZ. surged Lahiff Paul third channel from 36% of the briefing, CEO CBA’s broker – an 8% rise, ng relevance biggest gain over the diminishi n channel. Lahiff the ANZ saw the g testament to party distributiolatest Fujitsu Consultin Lahiff, were were “still to 44%. according to pointed to the placed broker-originated The figures, in particular the majors, as a way of adding report, which channel [and] fact that lenders, stable 38–40%, as a very critical consistent business at a seeing brokers was broadly mortgage business”.the situation was going that the data getting new did not expect with major banks. concentration Lahiff said he shorter term. fare well.

“Notwithstanding in the continued to major banks the change to brokers front, competition of most lenders, brokers in a very contraction, On the consumer despite market proposition are clearly using he said.

Lahiff said that, “I don’t think the broker 34 substantive way,” Lahiff, four of the Page still strong. valid.” to was less s] is any According banks – [among consumer five biggest Australian NAB and St. the CBA, ANZ, Paul Lahiff

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Bank s Macquarie n space Australia, one aggregatio from South d d and three approache rs project – one s Lender s involved in theAustralia, one from Queenslan the aggregator boutique aggregato the broker ago from Western source added that, while announcement appearing in claiming six months The may again be rs believed s, an players from NSW. ality agreement was due shortly. s Six aggregato up Macquarie Bank respected industry n space. several n to have signed had signed confidenti the movement into the market, with to dabble in the aggregatio personal ’s aggregatio e’s move and the bank regarding s Macquarie in the it is preparing d several from person heading Macquari exited the mortgage model to run that of to be Tim Brown, believed The to The bank, which is believed to have approache n. similar way It is also space is believed r 2008, e propositio to aggregation Macquarie Mortgages. former aggregato loans space in arrangement of s with a cooperativ parties, e Mosaic former head cooperativ the involved under a similar run Financial boutique aggregator binds of will of silence Financial Services that the projectcooperative aggregator Mosaic AB on the condition While a code who spoke with for interested that of former 34 several people that a meeting One Services. Page six months ago. to be anonymit y confirmed Sydney in held believed parties had beenthat six aggregators were source told AB

16/03/2009

3:42:26 PM

Issue: Australian Broker issue 6.5

01.indd 1

Headline: “Macquarie looking to enter aggregation space” (cover page) What we reported: A year ago AB was the very first industry publication (or any publication, for that matter) to report on Macquarie’s plans to enter the aggregation space. On the condition of anonymity, a number of people linked to parties involved in the discussions said a meeting of interested parties had been held six months prior (in late 2007) with six aggregators believed to be involved in the project – one from South Australia, one from Western Australia, one from Queensland and three from NSW. At the time we reported that an announcement was expected shortly.

What has happened since?

After nearly a year of rumours, whispers of deals being struck and a project name of ‘Wonderland’ making it into the public domain (via Mortgage Choice CEO Michael Russell), Macquarie’s venture finally became a reality when VOW Financial launched in February. Joining the party were three NSW-based aggregators – The Brokerage, The Mortgage Professionals and National Brokers Group, with Macquarie taking a 20% equity stake and also providing the CEO in the form of Jeff Zulman. With a loan book of $16bn and 900 brokers on board, VOW is now among the biggest aggregation groups in Australia. The challenge ahead will be, as Zulman articulated recently, to bed down and integrate the businesses.

Headline: “LJ Hooker: ‘dreaming’ of new recruits” (page 10) What we reported: LJ Hooker Financial Services defended its goal of adding 100 new brokers in 2009 saying it was not a pipe dream. The ambitious recruitment target came under fire from the likes of Stewart Noble of Australian Mortgage Brokers, who mimicked the famous line from The Castle, saying LJ Hooker was “dreaming”.

Noble claimed getting 100 top quality recruits was near impossible. “Of course, if you hire each and every one, you could have 100

[with] a project name of ‘Wonderland’ Macquarie’s venture finally became a reality when VOW Financial launched in February brokers hired in 2009, but I’d expect over 50% to leave in 2010,” he said.

LJ Hooker analyst David Maher said at the time that the franchise business was experiencing its highest level of lodgment activity in two years, and was confident of reaching the target using its “multi-pronged” recruitment strategy.

What has happened since?

As you can read in this issue, LJ Hooker has been quite successful in the recruitment game

What has happened since?

The acquisition trail did not light up for Homeloans Ltd in 2009 – though it was involved in a change in part-ownership itself, following NAB buying Challenger Mortgage Management and acquiring a 17.5% stake in the non-bank lender. At the time of going to press, Homeloans Ltd was still in discussions with NAB about the bank upping its stake in the business to 41%.

While it did not make any acquisitions of its own, Homeloans Ltd reported that in the second half of 2009 it “leveraged off these positive signals in the market by launching an improved product offering which generated increased origination activity”. On the results front, profitability continued to improve at Homeloans Ltd with the lender announcing a statutory net profit after tax of $4.6m for the half year ended 31 December 2009, up 75% on the December 2008 result.

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movers & shakers Name: Ben Hall From: Bean Bar To: Zobel Finance Title: CEO Hall earned his stripes in Adelaide as founder and eventual CEO of Bean Bar, a BRW Top 10 Fastest Growing Franchise. He then honed his skills in various consulting and management roles across a range of businesses in the franchise industry. Hall joined Zobel after consulting for the franchise for 12 months before joining the company as CEO. Besides his franchising expertise, Hall is also a commercial solicitor. His role will be to harness that talent and lead the business to new heights.

Name: Albert Achanfuo-Yeboah From: Private Consultancy To: Oasis Home Loans Title: Southern Highlands Franchisee For a period, Achanfuo-Yeboah worked for industry coach Darrell Weeks at Success Broker Coaching, where amongst other things he was providing a mentoring service for finance brokers. He went off to complete Certificate IV in Financial Services (Finance and Mortgage Broking) while providing a consultancy service to a number of small businesses. Achanfuo-Yeboah commenced as franchisee with Oasis Home Loans in the Southern Highlands, NSW.

Abacus: government must focus on competition The industry body representing credit unions and building societies has written to the federal government urging it to make restoring competition in lending a key Budget priority.

In its Budget submission, Abacus said the smaller banking institutions – in particular, the mutual banking sector – could help keep the major banks honest, and called for improved access to funding for smaller institutions.

It also urged the government to make a statement about competition in retail banking in the Budget.

Head of public affairs at Abacus, Mark Degotardi, told Australian Broker there was a need for more government help to support smaller lenders outside of the major banks.

“We are encouraging the government to act decisively to stimulate competition, which is very much linked to the problem of inability to access affordable funding.

“The state of competition in the retail banking market demands further public policy action,” he added.

Despite the imbalance between the major banks and smaller lenders, Degotardi said mutuals were “already competing”.

“We have highly competitive interest rates on both loans and deposits, our members tell us we have the best service in the market and we have more than 4.5 million members,” he said.

Furthermore, he said mutual ADIs have high levels of capital, strong liquidity and much lower non-performing loan ratios than either the regional or major banks.

“We are responsible lenders that are able to put our members first because our customers are our shareholders. So our prognosis is extremely good,” he added.

According to Degotardi, mutuals continue to do well in the retail deposits market, a key source of funding for the sector.

“We don’t have a funding problem if we simply want to maintain market share and let the major banks continue to dominate the market and make extraordinary profits from their customers.

“However, mutual ADIs do not think that this is a good outcome for Australian consumers and therefore we want to provide better choices for consumers. To fund market share growth, we need more diverse sources of funding.”

Pro-competitive policy measures the government should adopt:  Maintaining and improving access to funding by smaller banking institutions  Fairer taxation of deposits held

by ADIs  Removing structural inequities in the application of the GST-reduced input tax credits (RITCs) to mutual ADIs  Promotion of the prudential regulatory framework and the capacity of consumers to exercise choice Source: Abacus – Australian Mutuals 2010-11 Budget Submission

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Insider

Got any juicy gossip, or a funny story that you’d like to share with Insider?

Drop us a line at insider@ausbroker.com

An entertaining economist

H

ands up who has ever sat through a talk by an economist at a conference and either started nodding off, doodled furiously or begun composing an epic text message?

Well, Insider would like to congratulate Chris Caton, chief economist for BT Financial Group, who delivered by far the most entertaining and interesting presentation on all matters monetary and fiscal (plus a few extra subjects) heard for years.

Insider suggests that other economists adopt Caton’s style (on show at the National Mortgage Brokers conference on the Gold Coast) which calls for an easygoing manner, an avoidance of complicated terminology and plenty of humorous interjections (mostly concerning ex-wives).

For instance, when talking about the prospects for unemployment in the US and the impact of the GFC, Caton told two hilarious stories. On the former, he recalled how when in Maui on a family holiday, his partner was

unable to buy two bottles of champagne at a local supermarket because the cashier’s “function times two button was broken” on her cash register.

“We left with one bottle of champagne,” Caton recalled, “… as I said, unemployment in the US is not high enough”.

On the latter, Caton made mention of another GFC of a far more personal nature: “I think I am the only person who has had their wealth hit by two GFCs … in her case (referring to his ex-wife) the ‘G’ stood for ‘greedy’.

He let the audience figure out for themselves what the ‘FC’ might stand for.

up the franchising charts, (helped, of course, by a little Wizardry along the way).

However, news of its success in the survey was not the only thing Aussie promoted in the press release. The mortgage broker also appeared to be doing its best to help push up sales at the business magazine.

Included at the bottom of the press release was the line “the Fast Franchises issue of the magazine is on sale today at the cover price of $7.95, at your local newsagent.”

While we’re sure BRW must be delighted at the publicity, Insider surmises that anyone looking to get their hands on the article for free merely pays a visit to their nearest Aussie store, where copies of the aforementioned issue, no doubt, will be on display prominently on Aussie reception tables across the nation.

Of babes, bogans… and Socceroos

I

nsider reckons members of the Socceroos are used to people pointing and staring at them, particularly as the 2010 World Cup in South Africa draws near.

However it was the Socceroos themselves who were doing the

Aussie’s latest promotion

C

ongratulations to Aussie Home Loans for being named as one of the country’s top 10 fastest growing franchises in BRW Magazine’s annual Fast Franchises list.

How does Insider know this?

Aussie duly sent out a press release promoting its rapid rise

staring when brokers attending the National Mortgage Brokers conference at Royal Pines (where the players were based for a

training camp) paraded past them sporting blonde and pink mullets, VB t-shirts, fake tattoos, footie jumpers and lots of bling.

The brokers of course were doing their best impersonations of ‘babes and bogans’, the theme for the conference-ending nMB dinner party.

Insider had to laugh as the lanky soccer players emerged from their meeting, eyes as wide as saucers, to gawk at the dishevelled lot gathered before them; surely to wonder if they’d just stumbled into the inaugural combined Collingwood/ Canterbury Bulldogs’ supporters club meeting (direct from Parramatta).

The look of shock though didn’t stop some brokers from sauntering up to the Socceroos to have their photos taken with their favourite players!

Breaking out of the mould

S

outh Australian franchise group Zobel has made a name for itself doing things slightly differently, as anyone who has seen its wacky ZobelTube videos or playing its superhero game Zobel Guy will attest.

Now the company appears to be following through on its alternative approach to all things finance, with the appointment of Ben Hall, founder of franchise business Bean Bar, as its new CEO. For those who don’t hail from down south, a quick search on Google reveals that Bean Bar is a chain of Adelaide coffee shops offering premium flat whites, cappuccinos and lattes.

And while Zobel has hired Hall for his franchising acumen, Insider reckons his coffee-making experience could also come in handy. After all what better way to get customers into your store and somewhat excitable, than to offer them a delicious caffeine drink!

www.brokernews.com.au

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Roger La Salle is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on innovation, opportunity and business development. Matrix Thinking is now used in more than 26 countries. www.matrixthinking.com

Marketing guru

Plotting the opportunity Looking for an edge in your business? Roger La Salle provides a system to identify viable market opportunities based on observing the level and span of frustration experienced Products and services generally exist because they meet a need. Most often this need is real and tangible and can be readily enunciated.

In some cases, of course, the need may be ‘constructed’ with clever advertising and brand positioning. For example, who really needs a Louis Vuitton handbag, compared with the $20 Chinese look-a-like?

Putting aside the ‘created needs’, one of the major sources of real opportunity is a widespread activity combined with an observed frustration, very often expressed as a curse.

Listen for the curse Inventors, entrepreneurs and innovators are very good at spotting opportunities, perhaps listening for frustrations or for a curse, and even solving the underlying problem.

However, the one essential ingredient that underpins a successful opportunity that many people fail to understand is its span or ‘widespread-ness’.

There is little point in solving a problem for a single person involved in a lone occupation. What is needed is an occupation that is widespread. That – of course – is where widespread opportunities exist.

Plotting the opportunity With this in mind we can create an opportunity matrix that comprises a rectangular grid with the fundamentals that underpin an opportunity on the vertical axis, and use a number of thought-provoking ‘catalysts’ arranged on the horizontal axis, with one of these being ‘frustration’.

The result is a simple and structured way to identify an opportunity.

Track a widespread activity Using just the above two elements, ‘widespread-ness’ and ‘frustration’ of the opportunity matrix, one need now only identify any activity that is undertaken on a widespread basis and literally track the people

undertaking that activity and listen for and document the incidences of frustration, or the curses. This is easy to do; is rigorous and almost foolproof in the outcomes it produces.

Once the frustration data is collected, now simply plot a scatter graph with the number of curses or incidences of observed frustration on the vertical axis and the reason for the frustration on the horizontal axis.

The resultant graph will highlight the major frustrations experienced by this activity that is being undertaken on a widespread basis.

Real life example An example of this technique was recently presented at a conference where electricians installing overhead downlights were literally tracked to observe the frustrations they encountered in undertaking this task.

It was expected that the task of cutting the correct sized-holes in the ceiling and actually wiring the lights in awkward overhead positions would be the problem, but nonetheless the tracking activity was undertaken in order to gain a complete understanding of the issues.

To the surprise of all involved, the real problem observed in tracking a number of contractors was in calculating and marking the exact positions of where to cut the ceiling holes. Once these positions were known it was a simple and relatively short-term task for the contractors to actually cut the holes and fit the lights.

The outcome was the opportunity for a new set of measuring instruments to facilitate the easy measurement and calculation of the hole positions. This was quite unexpected – but with the advent of the new measuring technique some 40% of the total installation time was removed from this common and widespread task.

Structure your opportunity search The simple point is to identify any widespread activity and to track people involved and capture and plot the frustrations.

Indeed, you can do this with your staff, with people using your products or services or with customers and people in general.

This is just one way of implementing a structured opportunity search.

… one of the major sources of real opportunity is a widespread activity combined with an observed frustration, very often expressed as a curse

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Caught on camera At the National Mortgage Brokers conference held recently at the Royal Pines, broker participants dressed up as ‘babes and bogans’ for the themed dinner party closing the conference

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Photo 1: (L–R) Floyd Nangreave (Cherry Solutions), Suzanne Fitzsimmons (Fitzsimmons Home Loans) Photo 2: (L–R) Graeme Vimpani (AlphaLoan), Robert Trewin, Kylie Trewin (both from Robert Trewin Mortgage Broking), Adam Brink (ANZ), Kon Avramidis (nMB) Photo 3: (L–R) Sean Farley (Farley Financial), Scott Porter (Brad Teal Financial), Adam Brink (ANZ), Matthew McCarthy (Well Placed Home Loans) Photo 4: (L–R) Gerald Foley (nMB), Neil Russell (Loan Heroes), Sal Cinque (nMB), Kon Avramidis (nMB)

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Photo 5: Gerald Foley (nMB) Photo 6: (L–R) Samara Tree (The Rock Building Society), Jodie Hainey (nMB), Kate Jeremiah (nMB), Bianca Dodd (Brown & Bird Finance) Photo 7: (L–R) Gerard Tiffen (Tiffen & Co), Stephanie Brennan (Tiffen & Co) Photo 8: (L–R) Warren Darnill (The Rock Building Society), Sal Cinque (nMB), Jeremy Fisher (1st Street) Photo 9: (L–R, front to back) Mark Mellick (Auspak Financial Services), John Kennedy (Auspak Financial Services), Lino Abruzzese (Auspak Financial Services), David Newham (Core Mortgage Brokers), Wayne Keating (CBA), Peter Wotherspoon (Core Mortgage Brokers), Brad Parkes (Core Mortgage Brokers)

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Photo 10: (L–R) John Karipidis (Money Saver Finance), Frank D’Alessandro (Required Finance)

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AGGREGATOR / WHOLESALE BROKER PLAN Australia 1300 78 78 14 www.planaustralia.com.au mail@planaustralia.com.au page 5

Banks Adelaide Bank 1300 791 679 www.brokers.adalaidebank.com.au page 32

LENDER Homeloans Ltd 1300 787 866 www.homeloans.com.au page 19 MKM Capital 1300 762 151 www.mkmcapital.com.au page 8

RAMS Homeloans 1300 130 769 www.ramsbroker.com.au page 3

Interim Finance 02 9971 6650 www.interimfinance.com.au page 6

MORTGAGE MANAGER / NON-BANK Mango Media 02 9555 7073 www.mangomedia.com.au page 1

NCF Financial Services Pty Ltd 1300 550 707 www.ncf1.com.au page 13

NON-CONFORMING Liberty Financial 13 11 80 www.liberty.com.au page 7

COMMERCIAL Banksia Financial Group 1800 333 114 www.banksiagroup.com.au page 11

Debtor finance Oxford Funding Pty Ltd 1800 850 509 www.oxfordfunding.com.au info@oxfordfunding.com.au page 15

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www.residex.com.au The House Price Information People

OTHER SERVICES Residex 1300 139 775 www.residex.com.au page 23 RP Data www.rpdata.com page 27 Trailerhomes 0417 392 132 page 28

SHORT TERM LENDER Crown & Gleeson 1800 735 626 www.crownandgleeson.com.au page 2

Prime Finance Pty Ltd 1300 130 538 www.primefinance.com.au page 10 Rapid Capital 07 5562 2485 www.rapidcapital.com.au page 4 SOFTWARE / IT Stargate Group 1300 723 613 www.stargategroup.com.au Symmetrycrm@stargategroup.com.au page 9

Wholesale Resimac 1300 764 447 www.resimac.com.au newbusiness@resimac.com.au page 17

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