Australian Broker 13.05

NEWS Associations take on AFR MFAA and FBAA stand up for brokers’ reputations P4

OPINION Attracting millennial talent Why traditional recruitment won’t cut it with Gen Y P10

ANALYSIS Partners or competitors?

How P2P lenders and banks can work together P12

MARCH 2016 ISSUE 13.5

BEST PRACTICE All in the family Running a family business without ruining your family P18

MARKET TALK SMSF safe as houses Renewed calls to open SMSF for housing deposits P22

THEO CHAMBERS The award-winning broker steers his business to new heights P16

FINANCIAL SERVICES When ASIC takes on the boss How companies can weather an ASIC investigation P24

BORROWER SNAPSHOT 2

NEWS

ASSOCIATIONS

REGULATION

LENDERS

Brokers take on the AFR P4

SMSF social media ads raise concern P6

Google’s mortgage play fizzles P8

BROKERNEWS.COM.AU

BUILDING A BUFFER

The amount Australians have in savings

31%

Sales Manager Simon Kerslake

Journalist Maya Breen Production Editor Roslyn Meredith

$1,000–$10,000

19%

SALES & MARKETING

Editor Adam Smith News Editor Julia Corderoy

Less than $1,000

26%

EDITORIAL

ART & PRODUCTION Design Manager Daniel Williams

$10,001–$30,000

5%

Designer Lea Valenzuela

$30,001–$50,000

9%

Traffic Coordinator Lou Gonzales

Account Manager Rajan Khatak Marketing and Communications Manager Lisa Narroway

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

$50,001–$100,000

Human Resources Manager Julia Bookallil

12%

$100,001–$500,000

3%

EDITORIAL ENQUIRIES

Adam Smith +61 2 8437 4792 adam.smith@keymedia.com.au

More than $500,000

SUBSCRIPTION ENQUIRIES

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

ADVERTISING ENQUIRIES

Source: ME Bank

Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia

RECORD REFIS FOR AUSSIE HOUSEHOLDS Mortgage refinancing in Australia has hit record levels according to new analysis of consumer data.

Analysis by Finder.com.au of lending figures compiled by the ABS showed that nearly 22,000 Australians refinanced their home loans during December 2015.

In the 12 months to December 2015, the number of home loans refinanced in Australia increased by 20%.

Finder’s analysis showed that, based on a 30-year home loan for an average of $354,614, refinanced from the current 5.11% standard variable rate (SVR) to the average three-year fixed rate at 4.59% (which

Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Rajan Khatak +61 2 8437 4772 rajan.khatak@keymedia.com.au

returns to the current SVR after three years), the 21,896 Australians who refinanced their home loans over December collectively saved about $148m in interest payments by fixing their mortgage.

“That’s an impressive $6,771 saving per homeowner over the fixed period of the loan,” Finder consumer advocate Bessie Hassan said.

Hassan said the willingness to refinance showed that borrowers were not being negligent regarding their financial security.

“This indicates that low interest rates and money savings are top of mind for borrowers – which is the way it should be,” she said.

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

ASSOCIATION HAPPENINGS 4

DATES TO WATCH

ASSOCIATIONS UNITED IN AFR PUNCH-UP The MFAA and FBAA have presented a united front in taking on the Australian Financial Review over an article that linked mortgage brokers to shonky sales practices.

The AFR recently ran a couple of pieces taking aim at brokers. In the first, a hedge fund manager and economist posing as a low-income couple claimed mortgage brokers in the western suburbs of Sydney had encouraged them to lie on loan application documents. The second piece called mortgage broking “one of the last bastions of unethical sales practices�.

The MFAA and FBAA both sounded off about the articles, with MFAA chief Siobhan Hayden saying the AFR had disregarded the facts in its take-down of brokers. “It is very disappointing to see personal opinion pieces, which are not supported by evidence and directly admonish a profession, being published by a reputable publication.�

FBAA CEO Peter White also took the publication to task. “For Boyd to label mortgage broking as ‘one of the last bastions of unethical sales practices’ shows his lack of credibility in this area. Finance brokers were brought under the NCCP in 2010, which dramatically changed the landscape in a positive way.�

A rundown of the next fortnight’s events

MARCH

15-16 What: AFR Business Summit Where: Grand Hyatt, Melbourne The particulars: This high-level business summit will explore the shifting geopolitical and economic landscape, and its impact on Australian business.

WHAT THEY SAID...

Noah Breslow “Our goal is to provide an alternative lending solution for small businesses, and we believe these partnerships will help us reach and serve them� P14

Martin Barrett “When you look at entrepreneurial flair and you look at the capability that fits in the fintech space, it makes a very sound logic to actually partner with fintech players� P14

Tomas Chamorro-Premuzic “Thirty years ago IQ was critical; then came EQ. Now leaders also need CQ – high curiosity quotient� P20

MARCH

16 What: NSW Build a Referral Business in 100 Days Where: Iden Loan Services offices, Parramatta The particulars: This FBAA-endorsed event aims to teach brokers how to build a sustainable referral business.

MARCH

18 What: Tasmania Golf Day Where: Tasmania Golf Club, Cambridge The particulars: The MFAA’s annual Tasmania Golf Day will offer prizes for male and female participants, as well as competition holes and activities.

AN IMPORTANT

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REGULATORY ROUNDUP 6

WORLD NEWS

CREDIT ON THE RISE

Financial aggregates for January 2016

Housing credit

Personal credit

Monthly change: 0.5% Yearly change: 7.3%

Monthly change: -0.2% Yearly change: -0.2%

Business credit

Total credit

Monthly change: 0.6% Yearly change: 6.2%

Monthly change: 0.5% Yearly change: 6.5%

UNITED STATES OF AMERICA GROUP CALLS FOR INVESTIGATION OF ASSOCIATION HEAD A watchdog group is asking the federal government to investigate the head of the US Mortgage Bankers Association (MBA), according to a new report.

The National Legal and Policy Center (NLPC), a group that promotes ethics in public life, announced last month that it had made requests for both the US Attorney for the District of Columbia and the Inspector General of the Department of Housing and Urban Development to investigate David H. Stevens, president and CEO of the MBA. The NLPC alleges that Stevens may have violated a statutory one-year ban on having contact with the government agency at which he formerly worked – the Federal Housing Administration – as well as a lifetime ban on having contact with officials on matters on which he worked while employed by the government.

“At issue is Stevens’ apparent quarterbacking of a campaign by the big banks to win mortgage lending business from Fannie Mae and Freddie Mac in the wake of the financial crisis, and the placement of the two Government Sponsored Enterprises (GSEs) in conservatorship,” stated a post on the NPLC website.

The NLPC requests for investigation allege that there may be more than 25 instances in which Stevens violated the law.

Source: RBA

SOCIAL MEDIA SMSF ADS DRAW ASIC CONCERN A number of companies have taken steps to remove or amend social media advertising of SMSFs following concerns raised by ASIC. ASIC reported concerns regarding SMSF advertising on social media by Urban Seed Project Marketing Pty Ltd (Urban Seed), Skybridge Portfolios (Skybridge) Pty Ltd and Tatnell DLS (Tatnell) Pty Ltd. Skybridge advertised on its Facebook page with representations such as “Get yourself a SMSF for your Super – from $99, fully advised.

No industry fund can compete with this” and “Want your Super Fund to replace your current income from work? You need to look at a SMSF – highest account balances out of all Super Funds”.

Tatnell, meanwhile, ran YouTube videos, including representations that favourably compared SMSFs with other super funds, without explaining or referencing a range of factors that impact on SMSF performance.

Finally, Urban Seed ran YouTube videos linked to a promotional website, including representations about “SMSF qualified” and “SMSF friendly” properties for sale.

All three companies have removed the relevant posts and have ensured that future marketing will undergo an appropriate review and approvals process. All three fully cooperated in responding to ASIC’s concerns, the regulator said.

LENDER UPDATE 8

wwTHE NUMBERS BY

FAST FACT

$114 bn

90%

Size of AFG’s loan book, according to the aggregator’s half-year results

Non-major lender MyState recently said 90% of its 6.6% first-half loan book growth came from brokers. The lender’s home loan book reached $3.8bn in December 2015 after settlements rose 32% from the previous corresponding period GOOGLE ENDS SEARCH FOR FINTECH DOMINANCE Rumblings of challenger lenders in the Australian mortgage market are nothing new. We’ve heard for years that supermarket giants Woolworths and Coles are on the precipice of challenging the banks for home loan dominance, and global tech companies have long been rumoured to be the next source of competition. You can write the obituary for one potential challenger, though, as Google has shut down its finance comparison site before it even got out of the gate.

Last November, Google launched Google Compare for mortgages, an online tool that allowed home buyers to find and compare home loans. The product was initially available only in California, and joined other Google Compare products that allowed consumers to find and compare credit cards and various types of insurance. The tech company also took the step of registering itself as a mortgage broker. But according to the Wall Street Journal, Google struggled to sell ads on Compare – and the largest lenders and insurers simply declined to come on board.

In an email acquired by the website Search Engine Land, Google informed its partners that all Compare products – mortgage, insurance and credit card – would begin winding down immediately and shut down for good on March 23.

Source: MyState

Source: AFG

BUSINESS RATES HEADING UP In spite of the Reserve Bank’s long hiatus on cash rate moves, major banks are lifting rates in response to higher capital requirements.

Business customers are the latest to feel the pinch, with three of the four majors raising rates on their business loans.

NAB was the first lender to announce rate rises when it increased interest rates by 0.29 of a percentage point in early February.

ANZ then announced business rate rises of 21bps, while it increased rates on lines of credit by 27bps.

Westpac became the third bank to move on business rates. The changes will mean rates set in reference to a bill margin, which are commonly used by commercial customers, will increase by 23bps.

Rates on various other types of business loans that are often used by smaller businesses, including overdrafts, will lift by 0.19%.

In addition, the lender is also increasing interest rates by 0.3% on a range of business loans that it no longer offers to new customers.

10

OPINION THE KEY TO ATTRACTING MILLENNIAL TALENT Ruth Postle outlines why the ‘tried and true’ methods of recruitment simply will not cut it for the millennial workforce

THE MILLENNIAL generation has changed the face of recruitment. Millennials now make up more than half of the workforce, and by 2025 this number will have grown to 75%, according to Deloitte. For recruiters, attracting millennials presents a significant challenge, because the way they approach the job hunt and a long-term career is different to previous generations. Despite this, many companies are still using the same old strategies they’ve always used – they wait until a

The latest generation of workers is always online, looking to be engaged. To get the attention of the best and brightest millennial candidates, you need to proactively interact with them across the social media platforms they’re using daily.

Recruitment and review site Glassdoor has found that 86% of people are using social media for job searches in the first 10 years of their career. Yet nearly three in four people say that their employer doesn’t promote the company on

You should be sharing engaging content and openly celebrating the achievements of your employees position opens up, publish job ads, and wait for applications. In doing so, they usually have to wade through hundreds of unsuitable candidates who haven’t even read the job description. Social media has changed the way candidates search and apply for jobs.

This won’t cut it when it comes to attracting millennials. Social media has changed the way candidates search and apply for jobs. It’s crucial to rethink your recruitment strategies as well.

social media. This means that a huge majority of businesses are missing out on a powerful opportunity to engage candidates who might be the perfect fit for their companies.

Changing priorities Millennials also represent a significant shift in the way today’s employees approach their careers. Simply advertising salary packages and job perks isn’t enough. According to Glassdoor,

Ruth Postle is Oracle Cloud HCM practice lead at Presence of IT

nearly 80% of millennials see cultural fit as a top priority, followed by career potential. Embracing this change is critical if your business is to gain a competitive edge. Social media presents a great opportunity to build a brand personality and highlight company culture. You should be sharing engaging content and openly celebrating the achievements of your employees.

This online community is powerful, because even when they have a job, millennials are always on the lookout for new opportunities. Deloitte says the average millennial will have 17 employers spanning five careers in their lifetime. The notion of a defined career trajectory is foreign to this age group, who are comfortable bouncing between roles and testing out their skills in different areas.

It’s important to engage potential candidates long before you have an opening. You need to be proactive, not reactive.

With social media, you can build an online community of prospective employees who are interested in your brand. By continuing to share valuable content and relevant information about the business, you’ll have a pool of potential candidates next time you have an open role. But it’s not enough to just have a social media page.

Almost half of all millennials say a prospective employer’s online reputation is just as important as the job on offer, according to Spherion Staffing Services. You need to actively foster a positive community and get current employees involved in showcasing your culture.

Targeting millennials The social channel you choose will depend on your business and the types of roles you’re hiring for. LinkedIn is best for senior corporate roles, while Facebook is great for reaching graduates. If you’re looking for writers or designers, there are whole networking websites dedicated to creatives.

Review sites like Glassdoor get your employees on board and develop a positive online reputation.

Whatever channel you use, the key is to develop tailored, relevant content for your target audience. If you’re hiring for technical roles, like programmers, you need to use different messaging than you would for sales professionals or arts graduates. Remember that social media shouldn’t be all about you either. Create and share great content for the millennial market that helps them in their job searches and positions your brand in a positive light. Your content could be focused on company culture, the best things about working in your industry, or the characteristics of leaders in today’s business world. This will help keep your brand top of mind, whether they’re actively looking for a role or would be a good fit for your business in the future.

Conclusion Ignoring the millennial generation is detrimental.

And so is a reactive strategy, because the majority of the workforce is now made up of digital natives who are applying for jobs online. They want to work for companies that provide professional development and the right cultural fit. They’re less interested in traditional salary packages and career arcs, so you need to find new ways of attracting (and retaining) them. Social sourcing is the best way to attract the talent your business needs today and into the future.

12

ANALYSIS AUSWIDE BANK PARTNERS WITH MONEYPLACE A deal struck between non-major lender Auswide Bank and P2P lender MoneyPlace in December 2015 has seen Auswide take a 20% equity stake in the fintech company as well as sign a five-year funding agreement whereby the non-major will fund up to $60m to assist MoneyPlace in growing its consumer lending.

MoneyPlace CEO Stuart Stoyan said the relationship was a critical milestone for P2P lending globally and demonstrated how banks could work with P2P lenders to provide fairer, better rates for all customers.

“This is an exciting development for both companies and is an example of the type of collaboration we believe enables traditional lenders to tap into the innovative business models that alternative lenders like MoneyPlace bring to the market,” Stoyan said.

“In Auswide Bank we have a partner who is keen to take advantage of our low-cost distribution channel to grow their consumer lending business and support their expansion into Melbourne and Sydney.”

Auswide Bank managing director Martin Barrett said the deal was crucial in helping the non-major grow and diversify its services nationally.

“We’ve been impressed with the platform, skills and capability of MoneyPlace and are excited by the opportunities that will flow from this relationship. By taking a 20% equity stake, as well as using the MoneyPlace platform to invest funds for consumer finance, both organisations benefit and, most importantly, those customers requiring consumer finance benefit.

“It represents the ability for us to accelerate our consumer finance ambitions nationally. Technology is changing the market and we, through the right innovative partners, are keen to take advantage of the opportunities for growth it presents.”

BANKS VS FINTECHS: COMPETITORS OR PARTNERS?

Fintech companies are innovating the financial services sector globally, but do traditional lenders see them as competitors or partners?

A GLOBAL digital revolution has begun. According to research conducted by global professional services company Accenture, global investment in fintech ventures tripled to $12.21bn in 2014. This translates to annual growth of 201% in the sector globally in 2014, compared to 63% growth in overall venture capital investments.

By offering genuine and efficient alternative forms of finance to traditional banks

through the leveraging of technology, the rise of the fintech is changing the way consumers bank in an impactful way – and Australian banks are certainly not immune.

Since launching in August 2015, Sydney’s independent fintech hub Stone & Chalk has grown to 178 permanent residents and now has 58 permanent companies working out of its offices. By the end of 2015, over $12m in capital had

already been raised by its fintech start-ups since August.

While we have heard many times before what the fintech sector thinks of the traditional banking sector – that fintechs can offer a more competitive product and a more efficient service – what do the banks think of their fintech counterparts?

Speaking on a panel at the AltiFi Australasia Summit recently held in Sydney, three of the country’s leading lenders

13

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spoke about what they thought of the fintech revolution and whether they viewed fintech companies as their competitors or their partners.

Better the devil you know In December 2015, Australia’s largest lender, Commonwealth Bank, partnered with fintech company and online small business lender OnDeck Australia. Speaking on the panel, CBA’s head of partnership and fintech, Toby Norton-Smith, said partnering with a fintech company wasn’t so much about

choice as it was about survival.

“I think everyone in the room is probably familiar with the broad, shifting language concerning the relationship between banks and fintechs. I think the latest is this terminology around fintech carnivores and herbivores – which I love as an analogy because it is the first time a bank is not classed as a dinosaur in the story.

“If I was to work with that analogy – or torture it a little bit – I think it is fairly clear that as a bank what we don’t see [the fintech sector as] is a

meteorite approaching. What we do see – and what we [CBA] see as our objective – is that the pace of evolution has increased and it will continue to increase.

“When you think about the banks who are going to survive in that environment, they need to be digital leaders and they need to be incredibly nimble – and we think partnerships are one of the tools that allow us to be nimble, and in a couple of ways.”

According to Norton-Smith, the ways in which fintechs allow banks to be nimble are through access to capital, access to talent and breadth of opportunity. “… the talent that is associated with [fintechs] is an incredible pool of innovation for banks to tap into.

“If I turn to our partners themselves, OnDeck have raised over $200m of equity capital in the US, which is focusing on a very specific problem in the funnel.”

That’s not say, however, that partnerships with fintechs will take the place of the banks doing innovations themselves.

Norton-Smith explains that CBA’s partnership with OnDeck is complementing its own innovations.

“For us, I do not think it is an either/or. If you think about the small business space, particularly that sort of micro-small business space – less than $1m turnover space – this is a great area for CBA to innovate in.

“We actually recognise the tremendous amount we need to do. Our share of small business customers in that space is around 20–25% of the market, and our share of lending is significantly lower than that.

“I think there is a big

BY THE NUMBERS

$12.21 bn

global investment in fintech ventures in 2014

201% annual growth in global fintech investment in 2014

Source: The Future of Fintech and Banking: Digitally disrupted or reimagined? – Accenture

14

ANALYSIS CBA SIGNS PARTNERSHIP WITH ONDECK Australia’s biggest lender, Commonwealth Bank, entered an exclusive banking referral partnership with online small business lender OnDeck Australia in December 2015.

CBA executive general manager, small business, retail banking services, Clive van Horen said the partnership was about meeting its customers’ needs.

“In the spirit of innovation and meeting more of our small business customers’ needs, we are working with OnDeck to identify customers that may be suitable for OnDeck loans.

“CBA has made a significant investment in small business and has a range of products to meet the needs of our small business customers. The partnership with OnDeck provides an opportunity to meet more of our small business customer needs.”

The CEO of OnDeck, Noah Breslow, said the partnership was a “great synergy” in terms of innovation, technology and customer experience.

“The partnership will leverage OnDeck’s sophisticated credit platform, which has been tried and tested in the US market for eight-plus years, to provide qualifying clients with funding in as fast as one business day.

“Our goal is to provide an alternative lending solution for small businesses, and we believe these partnerships will help us reach and serve them. This vision mirrors that in the US, where OnDeck recently announced a planned strategic partnership with the largest US bank, JP Morgan Chase.

Ultimately, we look forward to helping Australian small businesses access the financing they need to grow.”

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opportunity, and that is reflected and risk retention. He pointed in both structural changes out that many fintech companies that have occurred … and the originate and make the risk partnership with OnDeck.” assessment on loans but then sell Conversely, Martin Barrett, them off completely. managing director of Auswide “Lending Club, for example, Bank – which also announced in has been spectacularly successful December an equity and funding in their originations, but they deal with peer-to-peer lender philosophically don’t believe that MoneyPlace – says partnerships they should or will hold any of with fintech companies make the loans that they originate. more sense for smaller lenders “We look at that and it troubles than for big players like CBA. us because I think what you see “I do think that in the bigger as a countervail trend globally ADIs there is a general conflict is regulators insisting more or tension that exists with this and more on risk retention, particular industry, but I don’t especially when it comes to the see that conflict in the smaller securitisation markets …

ADI space.

“You see different models in “When you look across Australia, and I won’t comment building societies, credit unions on whether those models are and small banks like ourselves, right or wrong, but I think you are limited generally in terms of your investment capability, you are limited in terms of your entrepreneurial flair within the organisation, and you are looking really to achieve that aspiration of growth.

“When you look at entrepreneurial flair and you look at the capability that fits in the fintech space, it makes, to my mind, a very sound logic to actually Ben Perham, Macquarie Bank partner with fintech players.”

to predict, but certainly when we talk to them they are not interested in being a regulated financial services business.”

Perham admits they are “incredibly active” in the payments space in terms of disruption, but it is only at the “level of customer interface rather than at the level of the rails that actually run the payments system”.

He said he would be “very, very surprised” if the biggest banks in Australia couldn’t maintain their status in the future.

“I think the focus will be a lot on partnering and ways that loans can be originated in more efficient ways, but I would be very, very surprised if the largest

Time will tell While banks are supporters of the fintech revolution at large, the sector still has many lenders erring on the side of caution.

Macquarie Bank’s executive director and head of corporate development and strategy, Ben Perham, says there is a risk of capital expanding too quickly.

“We are cautious about a couple of things … The first is I think the jury is still out on whether we are seeing a systemic-wide expansion of capital or whether we are seeing a more efficient system of allocating of capital.

“That story will probably play out for over a decade or more, so no one can know the answer today. But we pause and reflect on whether what we are seeing is a more efficient allocation of capital or a systemic, economy-wide expansion of capital.”

Perham also expressed concern over loan origination

five banks in Australia weren’t still the largest five banks in Australia in 20 years’ time.”

However, Martin Barrett, managing director of Auswide Bank, was not so steadfast about the future. He said banks would need to continue to innovate if they didn’t want to perish.

“I think the biggest risk for the banks generally is confusing apathy or loyalty. If we are lousy at the customer experience and we treat our customers with a level of content, if we are not focusing our efforts in terms of our customer experience, then ultimately we will perish. It is inevitable.

“But if we get those pieces right and we have a focus on a meaningful relationship with those particular customers, and if we can match what we lack with what’s on offer in the marketplace from new entrepreneurs, then I see no reason why we wouldn’t be around for some time.”

“I think the focus will be a lot on partnering and ways that loans can be originated in more efficient ways, but I would be very, very surprised if the largest five banks in Australia weren’t still the largest five banks in Australia in 20 years’ time” we should pause and reflect on whether it is right that the originator of the loan is going to be completely risk-off once they have sold their loan down.”

Traditional banks here to stay While still in its infancy, the fintech sector also benefits from partnering with big traditional lenders. However, as the sector gains traction and builds equity, does it have the potential to replace banks altogether? According to Perham, traditional banks will not be toppled by disruption from fintech players.

Discussing tech juggernauts, Apple and Google and their foray into financial services, Perham said fintech companies were certainly driving innovation but would never compete as full financial services businesses.

“The ambitions of Apple and Google and so forth are hard

16

COVER STORY TAKING THE REINS Theo Chambers, co-founder of Shore Financial, was recently appointed to the newly created role of CEO as the small Sydney-based brokerage transitions to a large interstate financial services organisation.

Chambers, who co-founded Shore Financial with Alex Nochar in 2013, said the decision to create a CEO role was a strategic one to help the business capitalise on its impressive growth over the last three years.

“The problem previously was that Alex and I were both trying to manage the business whilst both also still broking. In the first couple of years this was a necessity for the business to stay profitable because Alex and my volume was bringing in revenue for the business to enable us to expand.”

“It was also important that Alex and I, as founders of the business, were representing the business in terms of broking. But it came to the point where we decided to take myself off as being the number one loan writer to then actually teach other people all the ways of integrating our services into real estate which I learnt myself.

“Long term we are trying to move from a small brokerage culture to a large organisational structure.”

Nochar will remain as managing director and senior loan writer, focusing on the day-to-day business and technical aspects of mortgage broking, such as policy and products, freeing up Chambers in his new role to focus on strategy, culture and growth. His main focus this year will be to deepen Shore’s referral relationships with real estate agents and improve business infrastructure and processes.

BACK TO BASICS Shore Financial’s newly appointed CEO, Theo Chambers, talks about the importance of going back to the basics of broking in 2016 AMID AN ever-changing and increasingly complex mortgage market, the newly appointed chief executive officer of Shore Financial, Theo Chambers, says mortgage brokers should go back to the basics in 2016, letting go of the 2015 whirlwind and focusing on good old-fashioned customer service and relationship building.

“I feel brokers need to almost let go of past experiences they might have had with banks and their policies. With the APRA changes, if you did a scenario of servicing for a client 12 months ago where you ran their borrowing capacity among 10 banks, and you did that same scenario among the same 10 banks today, the bank which works out to be someone’s best option might be far different to where it was 12 months ago,” Chambers told Australian Broker.

“I feel some brokers have developed bad habits in thinking certain banks are the ‘go-to’ for certain clients or situations, and that has completely changed.

“Brokers need to go back to the basics of when they first learnt broking and actually learn and practise by rerunning scenarios and rerunning servicing with every bank again. A bank which previously might have been the worst for that scenario might now be the most accommodating.”

about property prices. Just like real estate agents, [brokers] are not directly related to the effect of high prices or low prices – what directly affects us is activity,” Chambers said.

“If you look back at the GFC, some brokers had their biggest year in terms of volume purely on the back of the amount of activity which happened in the GFC. The government tried to stimulate the economy with increasing first home owner benefits. People got more concerned about watching their finances, and attention was drawn to their actual interest rate and mortgage.

“Any economic shift should be adopted in a positive way – it is an excuse to reconnect and educate clients …

If rates start going back up or the property market

“Brokers need to go back to the basics of when they first learnt broking and actually learn and practise by rerunning scenarios and rerunning servicing with every bank again”

A challenge and an opportunity Letting go of past complacency and past biases will be a challenge for brokers, says Chambers – probably one of the biggest personal challenges brokers will face in 2016.

However, he also says learning to let go will provide the biggest benefits to broker businesses this year.

Much like 2015, 2016 is set to be characterised by further change and complexity – most notably for mortgage brokers a slowdown in the residential real estate market is expected.

According to a report by CoreLogic RP Data and Moody’s Analytics, the slow growth of incomes, a transitioning national economy and increased housing supply are expected to lead to a slowdown in capital growth across Australian real estate in 2016. The Australian Forecast Home Value Index predicts Australia’s housing market will see a national rate of growth of 3.66% over 2016, and that no individual market’s capital growth will hit double figures. Nationally, housing values increased by 9.12% over 2015.

Chambers says brokers should be wary, and ready to adapt to this, but they should also let go of the negativity and not let talk of a slowdown concern them.

“I feel that people need to steer away from concerns

slows, then it is another excuse to catch up and keep that relationship moving forward with your clients. For example, we used the recent APRA changes to reconnect with our clients and educate our referral partners.”

A ‘no-brainer’ On top of a slowing property market, regulatory scrutiny is going to characterise much of the mortgage broking sector in 2016 – in particular the forthcoming ASIC review into broker commissions.

Like many other industry leaders have expressed, Chambers agrees that brokers shouldn’t expect any far-reaching revelations or recommendations.

“I don’t think ASIC is going to be silly enough to change our remuneration.

That will really affect our industry in a significant way.

“ASIC are also all about the consumer, and by making our service ‘fee-for-service’ it is taking something away from the consumer. Right now it is free for consumers, and corporations – or banks – are paying. By making it fee-for-service, [ASIC] will

17

negatively impact the consumer.”

To highlight this point, Chambers is encouraging brokers to continue to speak up about the value of the mortgage broker offering. However, he admits he would like to see lenders play a more active role in supporting their thirdparty channels – which, according to recent research commissioned by the MFAA, accounted for 51.8% of all new residential home loans in 2015.

“I think aggregators and brokers are speaking up, but unfortunately some banks are not being as supportive as they should be. I think some of the banks are to blame for this conversation coming about. There are some banks who love the broking industry and there are some banks who hate it. I feel that some banks treat brokers as competitors when we should be treated as the same team – I know that from working within a bank …

“But going back and looking through the eyes of a consumer, is it better to walk into a branch at Commonwealth Bank or Westpac and be offered one loan or product, or walk into a broker’s office and be offered all the various banks and products, including banks which might not even have a branch?

“Once again, I think if ASIC looks through the eyes of a consumer, it is a no-brainer.”

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BEST PRACTICE A FAMILY AFFAIR Aussie Warwick broker Phil Barton on the challenges he and wife Natalie Duong face in running their business as a family: “While husband and wife businesses face many of the same issues as other small enterprises, it’s important for spouses to have opportunities to debrief about the business with someone other than their business partner. Close family and friends are essential to have as outlets and sometimes mediators to share concerns and successes. We are fortunate to have both – without this it can certainly be lonely in a small business.

“Importantly, I believe that couples who operate a business together unite, develop and share the same visions for the enterprise. A united team enables longevity both personally and professionally, but it does sometimes come at a cost and requires an understanding of the need for dedication of personal time to grow the business.

“Family business owners often have a very long view of their business; both Natalie and I have a vision of having our children one day take over and run the business in the future. Is this a possibility?

Maybe. But what it does mean is that we are sharing that long-term goal together.”

KEEPING IT IN THE FAMILY

KEEPING YOUR FAMILY BUSINESS ALIVE WITHOUT THE FAMILY Lack of succession plans means many small firms may die with their owners. Some industry-specific associations could also see their members drop to 10% of previous levels, warns one business consultancy, as members retire without replacement.

Family Business Consultants Network (FBCN) chair John Kenfield warns that family SMEs will suffer disproportionally due to ageing: “Surveys, experience and industry reports estimate that the average age of Australia’s SME owners and leaders is 60 plus, and that an alarming 76% don’t have formal succession plans or transition strategies in place to ensure business continuity. And this is despite the fact that most owners need to transition profitably out of their businesses to fund their retirements – whether through family succession, sale to management and staff, or some other form of disposal.”

Owners often feel that their children are either unwilling to take on the running of their businesses, or are unable to buy the business and thus provide a nest egg, FBCN claims. Owners often reduce their investments into the business, to get cash while they can, causing good employees to leave and creating a domino effect.

Even when the next generation is prepared to take on the business there are a number of potential obstacles, notes Kenfield. “Another serious complication occurs when owners don’t have well-structured asset ownership, a problem that’s often matched with little or no wills and estate planning. In an increasingly litigious society, the old joke has become a sad fact: that ‘where there’s a will there’s a relative!’ – and all too many families are finding themselves drawn into protracted, costly and destructive disputes that rarely produce any real winners.”

FBCN works with industry associations to run programs for exit planning, including bringing in those who have successfully handed down businesses as mentors.

The key ingredients for success in a family-run business AT THE office, Alex Sutherland calls his boss by his first name, Ken. After business hours, he calls him ‘Dad’.

“I have two relationships with him, and it’s important

(www.lifeplangroup.com), an independent Registered Investment Advisory firm.

“Sometimes I do slip up and call him Dad at work.

I think the clients kind of like that, though.”

among those who work in family businesses. It’s easy to allow the personal to seep into the business and to allow business issues to creep into what should be private time.

One major issue family businesses face is preparing to pass leadership duties on to a successor to have some separation between when I am in my role as his employee and when I am in my role as his son,” says Alex, a wealth adviser at LifePlan Group

It’s not at all unusual for mortgage broking businesses to be family businesses. The difficulty of trying to manage a dual relationship is common

But there also are advantages.

“Having a father-son relationship in the business is extremely powerful when working with clients,” Alex

19

will be frustrations,” Ken says. “Talk it out.

But make sure you do it behind closed doors and not in front of other members of your staff.”

• Celebrate successes together The Sutherlands say it’s easy to become bogged down in what each person in the relationship isn’t doing or could do better.

They say it’s important to stay focused on the big picture and to celebrate your accomplishments.

“Remember that it’s a privilege to work and build a business with a family member,” Alex says.

“Approach it that way.”

says. “They get a feel for who we are and they want to know why we teamed up. It’s important to share that story because I think it creates a closer bond between us and the clients.”

The Sutherlands say they have found ways to address the thorny issues that arise when family and business mix: • Separate personal from professional In any business, challenges and disagreements will happen. “It’s important that each person understands that these are business feelings, not personal ones,” Alex says. “For example, when I make a mistake at the office and am coached on

how to improve, I know that Ken is discussing who I am as an employee, not as a son.”

• Keep communication open In any venture, communication is critical, even without family issues. Adding the family dynamic emphasises the need for communication even more. “Ken and I are constantly talking about each of our goals and aspirations so we are on the same page and there are no surprises or unknown motivations,” Alex says.

• Talk honestly about frustrations “Not everything is going to go smoothly, and there

One major issue family businesses face is preparing to pass leadership duties on to a successor, which is not something they all do well.

A PricewaterhouseCoopers survey revealed that 40% of family business leaders are reluctant to pass the baton to the next generation, and 73% of family businesses have no succession plan.

Ken is determined to avoid any hitches with LifePlan’s succession plan.

He has been grooming Alex to take over since the younger Sutherland joined the business in 2012. Alex learned backoffice procedures, sits in on most of Ken’s meetings, and joins Ken for public workshop presentations where they try to attract new clients.

These days it is Alex, not Ken, who holds an initial meeting with prospective clients. Alex has also taken the lead in managing the firm’s technology, “bringing us very much into the digital-marketing age,” Ken says.

“Even with our existing clients, we are training them to understand that we are both available to meet their needs,” Ken says.

“I find that our older clients appreciate having a younger adviser available to them. And I think they like that he will be there for them for many years to come.”

20

BUSINESS INTELLIGENC HUNGRY MINDS: ALL ABOUT CQ In his Harvard Business Review article, ‘Curiosity Is as Important as Intelligence’, Tomas Chamorro-Premuzic outlined CQ: “CQ stands for curiosity quotient and concerns having a hungry mind. People with higher CQ are more inquisitive and open to new experiences. They find novelty exciting and are quickly bored with routine.

They tend to generate many original ideas and are counter-conformist. It has not been as deeply studied as EQ and IQ, but there’s some evidence to suggest it is just as important when it comes to managing complexity in two major ways. First, individuals with higher CQ are generally more tolerant of ambiguity. This nuanced, sophisticated, subtle thinking style defines the very essence of complexity. Second, CQ leads to higher levels of intellectual investment and knowledge acquisition over time, especially in formal domains of education, such as science and art (note: this is of course different from IQ’s measurement of raw intellectual horsepower).

“Knowledge and expertise, much like experience, translate complex situations into familiar ones, so CQ is the ultimate tool to produce simple solutions for complex problems. Although IQ is hard to coach, EQ and CQ can be developed.”

DERAILERS AT A GLANCE What are derailers?

Derailers are personality characteristics that are strengths under normal circumstances.

However, under stress or pressure, these characteristics can become crippling career obstacles.

Why is it important to identify derailers?

The most common cause of failed leadership is flawed interpersonal behaviour that hinders individuals’ ability to form and maintain a functional team.

When should you identify derailers?

Individuals’ derailers have the potential to affect them throughout their careers. Early intervention is ideal to ensure individuals’ ability to mitigate destructive behaviours before they become a problem.

What are the benefits to the individual of identifying derailers?

Identifying individuals’ derailers provides them with the strategic self-awareness to develop their leadership skills and improve their performance throughout their careers.

What are the benefits for organisations?

Organisations can use information about individuals’ derailers to help guide their careers, provide support, and match leaders’ abilities to the future needs of the company.

THE MIND OF A LEADER

From developing your ‘CQ’ to identifying your ‘derailers’ and busting myths about charisma, a look at what’s in store for leadership development in 2016 TOMAS CHAMORRO-PREMUZIC, CEO of

high-performing teams is a must. Our 360 research Hogan Assessment Systems, is perhaps correctly indicates that key opportunities for leaders are to sceptical about the trends to look out for at the start be less operational, challenge poor performance of every new year. Just like anyone who has been effectively, and engage their workforces through around to see peaks and troughs, and flavours of motivational and inspirational leadership. We see the month come and go, he says trends are usually this as being particularly relevant in times of change “new names for old things and often turn out to be and in promoting a climate of innovation.” just shiny new objects or HR fads”. It’s therefore However, it’s a third ‘trend’ that has really appropriate that what Chamorro-Premuzic is hearing sparked Chamorro-Premuzic’s interest: “I think about from business leaders globally appears to be the emphasis on positive attributes will decrease, more than passing fads.

Top of the list, he says, is engagement, which will continue to grow in importance for business leaders. So, too, will new technologies and innovations around talent identification and ‘analytics’, Tomas Chamorro-Premuzic “if we define it broadly as a growing concern for evidence-based management”, he says. while interest for negative qualities or attributes, Closer to home, Peter Berry, managing director notably derailers or dark-side personality traits, will of Peter Berry Consultancy (PBC), notes the same continue to increase,” he says. leadership issues are at play – especially strategy He is, of course, referring to the psychology of and engagement. He suggests businesses need to leadership – a fascinating lens through which to shift from short-term planning to medium- and view current and future challenges and trends. longer-term planning.

Take, for example, the rapid rate of change in “Strategy needs to be supported by having a business and the uncertainty over ‘what’s next’. A robust planning cycle with quarterly reviews and leader’s personality type will play a critical role in increased accountability,” Berry says. “Building whether they thrive (or wither) in this environment.

“Thirty years ago IQ was critical; then came EQ. Now leaders also need CQ – high curiosity quotient”

21

CE

Peter Berry Consultancy (PBC) is a multidisciplinary consulting firm that specialises in leadership solutions and assessments. For more information, call PBC on +61 28918 0888

some degree unpredictable world requires leaders who are entrepreneurial, globally minded and adaptable, rather than rigid,” Chamorro-Premuzic says. “My view is that 30 years ago IQ was critical; then came EQ. Now leaders also need CQ – high curiosity quotient.”

“The essence of leadership will always be the same; namely, can you turn a bunch of individuals into a high-performing unit – and that applies as much to small teams as to large organisations,” suggests Chamorro-Premuzic. “In line with this, the core attributes of leadership will mostly remain the same: people with better judgment, integrity, self-awareness and vision are always going to be better leaders.”

However, certain circumstances call for different competencies or qualities, in addition to these generic leadership competencies.

“I think that a more complex, rapid, global, and to

How self-aware are you?

Self-awareness is crucial for leaders. Peter Berry Consultancy’s experience shows that the most successful leaders are those with greater selfawareness. This is especially true for understanding their derailers and the impact these may have on the leaders reaching their career goals, as well as the impact on their relationships with others.

“The best way of testing self-awareness is through a 360 assessment,” says Berry. “When combined with personality assessments, the leader gains insight not only into how their behaviour is perceived by others but why they may be behaving in that manner.

“The biggest challenge in coaching is to uncover the manager’s motivation to improve. If the motivation is non-existent or unclear, improvement is unlikely. The most common leadership derailers are lack of resilience – moodiness/temper – and poor people skills. Managers need to be both likeable and capable.”

Given their importance to leadership success, PBC has undertaken extensive research into ‘leadership derailers’ – those personality traits that can send a leader off course.

Charisma – a blessing and a curse?

One need look no further than the upcoming US presidential election to see Berry’s aforementioned “likeable and capable” balance in action. Can corporate leaders take anything from this political showdown? They might want to concentrate on charisma as a starting point. Many observers might automatically assume charisma, that illusive personality trait that draws people to you, is a positive trait. However, is this always the case?

Chamorro-Premuzic believes the US election

provides a fresh opportunity to demonstrate the toxic effects of charisma. “Look at most of the Republican nominees and you’ll see two things: firstly, positive correlation between charisma and popularity – charisma helps you emerge as a leader and get noticed; and secondly, a negative correlation between charisma and competence.”

In simple terms, he adds, the more confident these leaders seem, the less competent they actually are. On the other hand, more experienced leaders like Jeb Bush have been almost discarded from the race for not being charismatic enough. “It’s a sad reminder that in the US, presidential politics have been equated to a reality TV contest. It’s also a sad reminder of how toxic popular leadership criteria or conceptions are,” says Chamorro-Premuzic.

Future leaders Psychology can also help with that most persistent of HR challenges – one that will not be going away in 2016: identifying future leaders.

“People have started to understand the value of evidence-based talent identification and pay a great deal of attention to data now – more than they ever have,” says Chamorro-Premuzic.

He adds that psychometrics is a branch of scientific psychology that has pioneered these efforts for the past 100 years. It is based on solid theory and robust science (the science of personality, which is big data plus theory).

“When it comes to identifying potential or predicting performance, you only have to answer two questions: what should I measure and how,” he says. “Psychometrics – and particularly personality assessment – provides the best answer to both questions. There is more scientific evidence on the predictive power of personality – vis-à-vis leadership outcomes – than any other individual attribute, and well-designed personality assessments predict leadership performance better than anything else.”

While the future is not set, one thing is clear: amidst local, regional and global uncertainty, any helping hand to predict future success should be welcomed by all business leaders.

22

MARKET WRAP

BY THE NUMBERS

MARKET TALK

OPEN SMSF FOR HOUSING, SAYS TRIGUBOFF An SMSF head has hit out at suggestions from a famed developer that super be opened up for housing purchases THE HEAD of a self-managed super fund advisory firm has hit out at renewed calls for allowing people to use super to buy owner-occupier housing.

According to the Australian Financial Review, Harry Triguboff, head of apartment developer Meriton, used his recent speech at the SMSF Members Association’s National Conference in Sydney to call for changes to SMSF regulations to allow for the purchase of owner-occupier housing.

“I am not fighting for people to buy a home and lease to others; I am fighting for people to have a home,” Triguboff reportedly said.

“If they wait to save enough money, they are losing all the time – when they collect a bit of money, prices go up. So we must make it easier for them to buy a home,” he said.

Triguboff believes the change would alleviate the pressures of decreasing affordability, but Justin Beeton, managing director of The SMSF Club, is staunch in his opposition to any such plan.

“That’s something that I’m completely against,” Beeton said.

“The idea of superannuation is for people to build wealth for retirement, and we’re already at the point where people don’t have enough money in their super when they reach retirement age,” he said.

Triguboff is not alone in calling for expanded access to super before retirement; former treasurer Joe Hockey floated a similar idea in early 2015. But Beeton believes policymakers will make what he believes is the right decision.

“The idea of superannuation is for us to overcome the reliance on the aged pension, and I don’t think allowing people to take money out of super to use for something like buying their home is going to help us overcome relying on the pension.

“I don’t think we’re likely to see that change made for decades at least, though. If we get to the point in, say, 20 years where people aren’t so reliant on the pension, then maybe it will happen, but it’s not going to be anytime soon.”

While Beeton doesn’t foresee SMSF use being expanded to owner-occupier housing in the near term, he does believe there will be an increase in people using super funds as an avenue for property investing.

“I think this year we’re going to see the idea of people using SMSFs to invest become more popular now that there’s a bit more certainty around the borrowing rules and regulations.

“The Murray Inquiry in 2014 handed down 47 recommendations, which included a ban on SMSF lending for property purchases. The government last year adopted 46 of those, but didn’t impose the ban.

“Before that there was some real uncertainty in general about the laws, but now people have the confidence that there are not going to be any changes for a few years at least, and that’s going to help.”

Beeton also believes changes that will come into effect from 1 July banning accountants from providing SMSF advice without a financial services licence will be a positive.

“It’s a good opportunity to make sure people are getting the right advice when it comes to investing through an SMSF. “People looking to invest in property through an SMSF should be getting advice from somebody who specialises in that area. Just putting the wrong name or not getting dates in the right order on the paperwork can have some very serious and expensive repercussions.”

23.5% The proportion of Chinese buyers looking for residential properties that come with land has increased 23.5% from fourth quarter 2014 to 2015 Source: Juwai

NO FRIDGE EQUALS NO HOUSE Global credit card giant MasterCard believes a recent downturn in expenditure by Australians on household goods is a prime indicator of what will happen to the country’s real estate market in 2016.

According to a Fairfax report, MasterCard’s latest SpendPulse analysis claims a slowdown in expenditure on hardware, furnishings and appliances signifies further softening of the real estate market in Australia.

According to the analysis, household goods sales have dropped below the three-month moving average for five out the last six months, with the slowdown predicted to increase.

“We are seeing a pronounced slowdown, and it’s deepening each month,” MasterCard analyst Sarah Quinlan told Fairfax.

“Therefore we fully expect real estate will weaken further,” Quinlan said.

While it may not be a traditional method of tracking the performance of real estate markets, Quinlan told Fairfax the data had been accurate in the past.

“It’s the same correlation in the United States,” she said.

“We saw a drop in appliance sales for eight months, and sure enough we saw the housing recovery basically slow to a crawl – it’s a very correlative indicator.”

MasterCard may not be a leading voice on the Australian real estate market, but its predictions aren’t dissimilar to those made recently by some who are.

Moody’s Analytics and CoreLogic RP Data have released new research that predicts house price growth will slow to 3.66% this year and fall below 3% in 2017.

“On the outlook for the housing market nationally, we expect house price appreciation to slow in 2016. Our forecast reflects lower income growth as the Australian economy transitions away from mining-related investment, as well as the strong build-up of housing supply over the past two years,” Moody’s Analytics economist Alistair Chan said.

23

HOUSING GROWTH TO SLOW

% change yr ago National

Australian Capital Territory

Adelaide

Brisbane

Darwin

Hobart

Melbourne

Perth

Sydney

Rest of New South Wales

14.91

Rest of Queensland

Rest of South Australia

Rest of Victoria

Rest of Western Australia

10.61 9.88 9.12 8.42 7.58

7.47

6.70

7.78

6.69 6.76

7.16

6.61 5.27 4.43 3.43

3.83

4.16

2.85

2.77

2.91

2.86

2.35

1.90

6.07

5.56

5.08

4.88

3.66

6.40

6.15

5.85

5.48

2.24 1.03

0.90

1.31

2.19

2.10

1.80 1.67

1.63

1.47 1.56

0.90

0.30

0.16 -0.05 -0.95 -1.68 -2.49 -3.32

-2.56

-2.70

-6.94 -7.44

2016 Q1

2015

2016

2017

Source: Moody’s Analytics/CoreLogic

24

MARKET WRAP WOMAN APPEARS IN COURT OVER SMSF DEALS FINANCIAL SERVICES

WHEN ASIC FLAGS THE BOSS How to keep a company steady when the boss is under ASIC investigation HR professionals are no strangers to workplace investigations – in fact they are usually the people in charge of these proceedings.

But when your boss or a company director is under the spotlight of an ASIC investigation, HR professionals should also consider commencing an internal investigation into the workings of their organisation, says Andrew Jewell, principal lawyer at McDonald Murholme.

“If a manager of an organisation is under investigation from ASIC it may be prudent to conduct an internal investigation regarding the same subject matter,” Jewell says.

While the decision to commence an internal investigation will be one for the company’s management, HR professionals may have a key role to play as investigators, he says.

“In doing so the HR employees must work closely with communications managers, especially those with high conflict dispute resolution skills,” he says.

With the business’s leadership under question, HR will need to step up and do their part to ensure the company’s smooth sailing through these uncertain waters, especially if heads do roll.

“Do not assume that the ASIC investigation is to be quickly finalised and then business as usual,” Jewell warns.

He says HR professionals should take steps to understand how ASIC investigations proceed in order to best prepare themselves and ensure any investigation will run smoothly and with as little disruption to the business as possible.

ASIC’s role as the corporate regulator is to monitor, investigate, prosecute and stamp out dubious market behaviour and white-collar crime.

While company directors are responsible for managing the financial affairs of their companies, many fall foul of the law and face significant consequences, including being disqualified from managing a corporation for up to five years.

The decision to support a leader who is personally under ASIC investigation will be up to the management of the organisation, as that individual may have engaged in damaging conduct, Jewell says.

“However, if that decision is made, assistance can be provided in the form of assistance with the ASIC investigation, career advice or personal support in the way of leave,” he says.

And when a company leader is removed, HR needs to address the issue and manage the situation within the workplace to maintain employee morale and productivity, Jewell says.

“The absence cannot be ignored,” Jewell says.

He says the effect on the workplace should be acknowledged and changes to structure should be announced to avoid uncertainty, which may include updating titles or appointing employees to acting roles.

HR professionals may also need to call upon outside support to ensure their company remains on target.

Jewell advises HR professionals to step up and swiftly make any required organisational changes that meet the challenges created by an ongoing ASIC investigation.

“External help is often the best way of keeping a ‘steady as she goes’ approach to ongoing business,” Jewell says.

Morale is best upheld by those employees who are the most confident that they know the business and have coped with earlier challenges.

He says open communication with all stakeholders and ensuring employees are kept informed of the company’s progress and direction also helps maintain morale.

“Established businesses will usually have some experienced employees who will want to stay on and step up to the challenges,” Jewell says.

“They need to be encouraged to do so and ASIC may be impressed by what they can do.”

A NSW woman has appeared in court on charges related to SMSF property purchases.

Sarah Jane Busteed was charged with three counts of dishonestly obtaining a financial advantage by deception, along with one count of dealing with the proceeds of a crime, following an ASIC investigation that alleged she had dishonestly obtained monies from SMSFs undertaking property purchases.

Busteed is also alleged to have dealt with monies obtained from an SMSF which are believed to be proceeds of a crime.

The investigation into Busteed’s conduct was carried out by ASIC’s SMSF Taskforce, which was established in 2012 in response to the growing popularity of SMSFs.

WHY AUSSIES FAIL TO ACHIEVE THEIR FINANCE GOALS

3%

15% Other

34% Failure to budget

Buying new cars

7%

Credit card debt

7%

Laziness

17%

Fear of seeing the reality of their financial situation

17% Apathy

Source: Yellow Brick Road

COMPANY’S AFSL SUSPENDED FOR FAILURE TO LODGE STATEMENTS ASIC has suspended a company’s AFSL after it failed to lodge financial statements.

Traders4Traders Pty Ltd had its licence suspended by ASIC after it failed to lodge financial statements, auditor reports and auditor opinions over consecutive years. ASIC said the company had also failed to advise it in writing within 10 business days of becoming aware of the breach.

The company’s licence is suspended until 21 April this year. ASIC said that if the company did not lodge the required documents by this date, it would consider whether to cancel the company’s licence.

“Licensees are required to lodge financial statements with ASIC to demonstrate their capacity to provide financial services. Failure to comply with reporting obligations can be an indicator of a poor compliance culture. ASIC won’t hesitate to act against licensees who do not meet these important requirements,” ASIC deputy chair Peter Kell said.

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26

SPOTLIGHT VIDEO SPOTLIGHT

ONE YEAR ON

SHOULD SUPER BE OPENED TO HOME BUYERS? Calls to allow home buyers to use superannuation for housing deposits are nothing new

Doug Daniel

65% 16 MARCH 2015

Stockland CEO Mark Steinert claims allowing first home buyers to access their superannuation for property purchases could be dangerous

24 AUGUST 2015

The government assures home buyers that it has no plans to crack down on SMSF investment property borrowing

2 MARCH 2016

Meriton head Harry Triguboff renews calls for allowing the purchase of owner-occupier housing through SMSFs

24 MARCH 2015

Research by HomeStart Finance finds more than 65% of South Australian first home buyers would be willing to dip into their superannuation savings to help fund a home deposit

3 SEPTEMBER 2015

REIA backs calls for first home buyers to be allowed to use their super for property purchases

FINDING THE RIGHT BALANCE FOR BROKERS When it comes to choosing a model under which to operate, brokers are faced with two very different value propositions.

Franchise models offer lead generation and name recognition but can be costly and limit brokers’ independence. Wholesale aggregators give brokers their independence but can be limited in the support they offer.

Origin Finance chief executive Doug Daniell recently told Australian Broker TV that the company was trying to bridge the gap between these value propositions.

“Most people who join the industry don’t have the finance ability to buy a franchise and then also see themselves through maybe six months without a reasonable income.

Aggregators can’t afford really to give the full-service model to a broker either,” he said.

But Daniell said Origin Finance could fit into the gap between franchises and wholesale aggregators.

“Because we’re a training organisation and have a network and infrastructure sitting in the office and around the country, we can bring somebody new in and mentor people in groups. Therefore they have the ability to network with other people in the group and have the experience of our guys to workshop loans, to help them with marketing and to put it all together. Our offering in the middle there is halfway between the franchise and wholesale aggregation.”

27

BEST COMMENT ONLINE FORUM

THE AFR’S BROKER BEAT-UP Industry associations have come together in defence of brokers A RECENT AFR report, titled Uncovering the big Aussie short, claims mortgage brokers in the western suburbs of Sydney encouraged an undercover hedge fund manager and economist posing as a low-income couple to lie on loan application documents about the deposit for a house and about their income. Jonathan Tepper, economist and founder of Variant Perception, wrote in his report, “we asked if the bank would call our employer, and both reputable and disreputable brokers said banks rarely verified payslips”.

John Hempton, Bronte Capital’s chief investment officer, added that they were also told the checking of documents was sometimes done by Indian call centres.

Both the MFAA and FBAA have rubbished the AFR report, and brokers were scathing in their own critique.

One commenter, Broker, said the story was indicative of the state of Australian journalism.

“This ‘story’ really just demonstrates the standard of trash journalism in Australia these days.”

Another one, Veteran, said he wouldn’t have been fooled by the undercover operatives.

“What utter ignorance. Love to have been interviewed. Would have sniffed it out a mile away.”

Anonymous said the story was suspicious in its lack of detail.

“Are the reporters suggesting that the broker would also doctor payslips, group certificates and bank statements that would confirm what was written on the application to what a credit team will confirm? More rubbish journalism. Name names if they feel the allegations are warranted.”

Another broker also called for naming and shaming if the allegations were true.

“Why not use this source material as the genesis for a potential story which might include exposing, naming and shaming this apparent hotbed of rogues and fraudsters. By the way, did you hear the one about the deal that had the same property valued 20 times in the same year and the Ponzi scheme with only one investor?”

And Spencer Murray referred to a 60 Minutes report he said let banks off the hook.

“The 60 minutes report was total grubby journalism. Yet on Sunday night’s 60 Minutes program it stated that the CBA was willing to negotiate with the parties whose stories were told the previous week. How pathetic. Why didn’t they tell the story of CBA who this week smashed down Suzi Burge’s home’s door in Tasmania with the help of the local Sheriff and police? Suzi’s loan application forms were altered by CBA bank staff, yet the pollies and police fail to do anything about this criminal activity.”

ASIC LOOKING TOWARDS FEE-FOR-SERVICE? As ASIC looks to commence its review into broker remuneration, FBAA chief Peter White has reassured brokers that the regulator has no “preconceived bias” about commissions. eChoice general manager Blake Buchanan agreed and said commission structures in mortgage broking were fairly equal across the board anyway. However, he did say it was possible the review might look to set parameters for maximum commissions for brokers, inclusive of any incentives. He also added that a fee-for-service option might also be high on the agenda for discussion.

“Fee for service? So a client can go to a bank for free but a broker will have to charge. So that will mean broker share of business may dramatically reduce which I guess is good for banks. ASIC, keep out of our lives, you are not needed. Try running a business and working 100 hours a week to be told your income is about to be smashed by those that know little about it.”

Annoyed Broker on 3 March at 8:59AM THE MORE THINGS CHANGE A new fintech company which has created an online marketplace for home loans says it offers brokers strong lead generation opportunities.

“The more things change the more things stay the same! Twelve years ago we had more than one site offering leads to brokers at a price from $5 to $50 depending on age and request. it was a great way to get started and I still have clients I ‘purchased’ through the electronic lead generation sites. I am not sure that we come full circle as the information out there is more widespread and bidding on rate without knowing a client’s circumstances would be outside NCCP requirements.”

Ken on 4 March at 10:20AM

POLL

19% No

Is it time for the NCCP to be reviewed?

81% Yes

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PEOPLE

A BROKER GOING ABOVE AND BEYOND YBR branch principal Fabian Restaino is creating charity fundraisers, bringing the community together, and educating school kids towards a better financial future FABIAN RESTAINO is branch principal at Yellow Brick Road Robina/Varsity Lakes on the Gold Coast in Queensland. He went

now it is a multi-award-winning branch.

He has recently become the 12th member of YBR’s elite Chairman’s Club, which recognises his

“One of the biggest things I’m a fan of is getting out into the local community” straight into establishing the branch as a new-to-industry broker over five years ago and

consistently high-performing branch and his role as a leader within the branch network.

But Restaino has taken his passion for educating people about finance beyond his brokerage, getting out into the local community and initiating charity fundraisers and school presentations that have skyrocketed in popularity.

“One of the biggest things I’m a fan of is getting out into the local community,” he says.

Four years ago Restaino started a charity event – a ‘Family Fun Day’ – which was first held by his branch at a restaurant and raised $1,000. The event has grown since then to become known as the Varsity Lakes Winter Festival, spanning four weeks of events raising over $32,500 for charity with 23,000 people in attendance. Twenty-seven local businesses, as well as Bond University, were involved in different parts of the festival.

“To me that was just awesome,” says Restaino. “It was also helping other businesses in the area, especially new businesses.”

He has also won the 2015 Better Business Social and Community Service award for Queensland and been approached by several local councils on the Gold Coast who would like him to help them replicate the event in their communities.

Three years ago, Restaino had the idea to approach the local high school to give free presentations to Year 10, 11 and 12 students on financial things they should think about or do to begin planning for their future.

“In my particular branch we specialise a lot with first home buyers. So I see the younger generation coming in, struggling to buy their first home because they can’t save a deposit; struggling to rent and pay their bills.

“It was one of those spur-of-the-minute ideas – I had a chat with the local school to see if they would be interested, and they welcomed it with open arms. In one class I had 460 students in front of me, so that was fun!

After the first year, they made it part of their curriculum.

“I teach them basically what they need to know when they go out into the workforce and out into the real world – learning how to budget, learning how to save, learning what to look for on their payslips when it comes to tax, and making sure they set their supers up early and properly first time round.

“I expected the kids to just yawn and bluff me off, but we got such a great response from them that I’ve approached a couple of other high schools and it’s been really good.”

He’s also in the process of potentially doing similar presentations at the local Bond University.

So, how does he juggle all the commitments outside his business while still winning the YBR Queensland Branch 2015 award for most revenue and best customer service?

He is also currently travelling all over Australia – from Gladstone to Tasmania – as part of a specific program his branch offers for first home buyers.

“I don’t sleep!” he laughs. “I do love it. I’ve got two young kids myself, so the way I look at it is I’d like to see my kids have the sort of education that I try to put out there as well.”

29

CAUGHT ON CAMERA Classic Finance Group partnered with the Human Kind Project to host a charity ball on 20 November at Dockside Cockle Bay, where the group pledged to raise $50,000. The Human Kind Project, through its Double the Love campaign, matched the $50,000 donation to make a $100,000 contribution to the charity foundation.

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PEOPLE HOT SEAT

PEITA DAVIES Choice Home Loans Blue Mountains’ Peita Davies on the importance of backing yourself and knowing when to say no What has been the biggest lesson you have learnt in your career as a mortgage broker?

Some of the standout lessons would be to A back yourself and remember that it is OK to say no sometimes. I also think the greatest asset to your broking business is your database.

Look after your clients and in turn they will look after you, and finally, don’t try and do it all.

Focus on one thing and then just make sure you are very, very good at it.

Q

What has been your most rewarding client experience?

Just knowing that we make such a A difference in people’s lives gives me the passion to keep going year on year. Let’s face it: your home is almost always your biggest asset, so to be involved in this journey and provide guidance to our clients is really cool. Over the years I have had too many client experiences to single out just one, as each and every client is as important to me as the next client...

Q

What will be the biggest opportunity for brokers in 2016?

Joining my team as we expand out in A Western Sydney! No, seriously, I think 2016 poses many opportunities for brokers.

What we have seen over the past few months is how changes to lending policies – in particular with regard to investment lending – have brought uncertainty and confusion to consumers, and this is always a great time for people to lean on the experience and knowledge that brokers provide.

Q

What is your biggest fear?

My biggest fear in life is around failure A and letting people down. Each and every day I strive to be a good person and deliver good to those around me. If I ever lost that focus and had a different driver in life really scares me.

Q

If you could have dinner with any three people (dead or alive), who would they be and why?

First would be my Uncle John just because A I miss him. Second would be Peter Sterling because, outside of my dad, he is my biggest hero. Third would be Oprah Winfrey. I just love what makes that woman’s mind tick.

Q

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