Mortgage Professional Australia magazine Issue 13.05 by Key Media

COMMERCIAL LENDING AN OPPORTUNITY THAT’S RIGHT UNDER YOUR NOSE NEW CREDIT REPORTING REGIME WHAT DOES IT MEAN FOR YOU AND YOUR CLIENTS?

MPAMAGAZINE.COM.AU ISSUE 13.5

SOCIAL MEDIA 9 TIPS TO TURBOCHARGE YOUR ONLINE LEADS

BROKERS ON AGGREGATORS

BROKERS ON

AGGREGATORS WHAT THE BROKERS REALLY THINK

CONTENTS / ISSUE 13.5

Head to head CUA’s products & marketing GM, Jason Murray, talks about expanding further into the broker market

WEEKLY INVESTIGATIONS NOW ONLINE:

COVER STORY 28 | Brokers on Aggregators Is the aggregators’ service proposition up to scratch? MPA’s 2013 Brokers on Aggregators survey reveals all…

Commercial lending Why it may be worth your while taking a look into this market

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How to get the best out of your team Broker branding mistakes to avoid » mpamagazine.com.au

CONTENTS / ISSUE 13.5

NEWS & VIEWS 6 | Round-up The latest market intelligence from the world of property, economics and mortgages 12 | On line The best from MPA Online and Australian Broker Online 14 | News analysis What will the new credit reporting regime mean to you and your clients?

SMART BUSINESS 18 | Social media Nine tips for turbocharging online lead generation 58 | Networking Most people have been taught the wrong way to network – read how to get it right 62 | So they say you’re too old… Seven strategies you can use to shut up the colleagues who think you’re past it

PROFILE 42 | AMA award winner Josh Bartlett went from personal trainer to broking superstar

STATS 64 | Your Mortgage Index The latest mortgage hunter trends from our sister website

LIFESTYLE 61 | My favourite things ... Mark De Martino, Loan Market

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CONTENTS / EDITOR’S LETTER COPY & FEATURES

WE NEED TO TALK

EDITOR Robin Christie CONTRIBUTORS Julia Palmer, Cindy Tonkin PRODUCTION EDITORS Carolin Wun, Moira Daniels

It’s always fascinating to receive feedback from brokers about the issues that are affecting the running of their day-to-day businesses. Here at MPA we await the results of the Brokers on Aggregators survey each year with baited breath, and in this issue we reveal this year’s compelling results. Based on the overwhelming number of responses to the sixth annual Brokers on Aggregators survey, not only have we been able to rank the key aggregator services in terms of their level of importance in brokers’ eyes, we’ve also revealed how brokers rate the aggregators’ performance in each of these categories. From accuracy of commission payments to marketing and IT support, the results make for a truly intriguing read. Do the findings reflect your personal experiences? Turn to p28 to find out. Elsewhere, we’ve thrown into the mix our usual selection of news, interviews, analysis, profiles and business strategy – including an exploration of the current health of the commercial lending division (p44). Here we’ve quizzed some of the sector’s leading lights, and discovered that the keys to diversifying into this potentially lucrative market could already lie within your client list.

ART DIRECTOR Jonathan Phillips SENIOR DESIGNER Rebecca Downing

Robin Christie, editor, MPA

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ART & PRODUCTION

CONNECT

Contact the editor: robin. christie@ keymedia. com.au

SALES & MARKETING NATIONAL SALES MANAGER Rajan Khatak ACCOUNT MANAGER Simon Kerslake MARKETING EXECUTIVE Anna Farah TRAFFIC MANAGER Abby Cayanan

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley MANAGING DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Robin Christie tel: +61 2 8437 4787 robin.christie@keymedia.com.au Advertising enquiries Sales Manager Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Account Manager Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au

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NEWS / ROUND-UP

BROKERNEWS.COM.AU | 5

NEWS / ROUND-UP DIVERSITY

COMPETITION

CBA’S AUSSIE TAKEOVER CREATES ‘FALSE IMPRESSION’

MFAA JOINS FORCES WITH AFA WOMEN’S INITIATIVE The MFAA has announced that it is keen to join financial advice counterpart the Association of Financial Advisers (AFA) in supporting women across the ‘full spectrum’ of the financial services industry. AFA CEO Brad Fox said the organisation’s move targets women in all facets of financial services, not just financial planners, and MFAA CEO Phil Naylor has added that there might be ‘mutual networking benefits’ in the two associations running certain events together. MFAA head of marketing and communications Kriti Colless said the MFAA’s Women in Mortgage Broking Network (WIMBN), which holds social and educational seminars, has received feedback showing female brokers would appreciate networking opportunities within the wider financial services community. “Topics [at the events] range from marketing workshops for business owners and panels featuring inspiring women and high-performing brokers like Wendy Higgins,” she said. Events held in conjunction with the AFA will offer increased networking, exchange of ideas and experiences to both memberships within the financial service sector, said Colless. Female brokers represent a growing segment of the broking industry, with women accounting for around 35-45% of new entrants.

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STATS

78.8% The level of consumer satisfaction with the big four banks Source: Roy Morgan Consumer Banking in Australia Customer Satisfaction Report, Feb 2013

The ACCC announcement that it would not oppose CBA’s proposed acquisition of the remaining 67% of the issued capital in Aussie Home Loans has one lender’s CEO claiming the outcome underlines a major lack of transparency in the banking sector. Heritage Bank CEO John Minz said the decision perpetuates the confusion caused by the big banks’ multi-branding strategy – which he describes as setting up or acquiring smaller brands that then give the impression of being independent. “This strategy is creating a false impression among customers that there is a high level of competition in the marketplace, but in reality a number of these so-called competitors are actually part of the big banks themselves.” However, the ACCC concluded that this would not give rise to a “substantial” lessening of competition, arguing that Aussie brokers make up just 6% of Australia’s mortgage brokers and that “there are many other distribution channels through which lenders can access brokers and borrowers”.

NEWS / ROUND-UP

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NEWS / ROUND-UP LENDING

INFOGRAPHIC

Stock on the market

Pepper announces $250m Citibank deal Pepper has announced the acquisition of a $250m small balance commercial mortgage portfolio from Citigroup Pty Limited (Citibank), which the non-bank lender says is part of its strategic growth plans to extend its specialised lending services beyond residential home loan products. The deal represents Pepper’s first domestic acquisition of 2013, but comes on the back of an 18-month period that has seen the company acquire several whole loan portfolios and financial services businesses in Australia and Europe, facilitating its expansion into new asset classes and markets. The small balance commercial loan portfolio acquired by Pepper includes loans to approximately 730 customer relationships with an average balance of circa $345,000. The vast bulk of the loan book is secured by residential and commercial properties located in New South Wales and Victoria, with some exposures in Queensland, Western Australia, South Australia and Tasmania. Pepper group MD and CEO Patrick Tuttle said this latest acquisition enables the lender to further diversify its business into the commercial real estate space, while retaining its position as a specialist lender to self-employed and small business owners. Tuttle said he’s confident that the acquisition will be accretive to the group’s earnings and will provide a sound basis from which it can better assess the feasibility of commencing new Pepper-branded originations in the small balance commercial space in the near term. “A small balance commercial mortgage offering would complement our existing range of specialist residential mortgages which have traditionally focused on providing competitive access to credit for self-employed and small business owners. The small business sector has largely been forgotten in the wake of the GFC, so Pepper is keen to expand its product offerings to this sector,” he said.

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Sydney

28,000

Melbourne

42,000

Brisbane

26,000

Adelaide

12,000

Perth Canberra Gold Coast

21,000 1,800 11,000 Source: APM Housing Market Report, Feb 2013

INFOGRAPHIC

Big four consumer satisfaction

STATS

49% The

percentage of first homebuyers who feel that now is a good time to buy Source: Genworth Homebuyer Confidence Index, March 2013

80.4%

CBA

79.2%

NAB

77.7%

Westpac

76.2%

ANZ Source: Roy Morgan Consumer Banking in Australia Customer Satisfaction Report, Feb 2013

NEWS / PRODUCT ROUND-UP

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NEWS / ROUND-UP ASSOCIATIONS

INFOGRAPHIC

Broker sackings to create FBAA ‘influx’ FBAA CEO Peter White has claimed that the MFAA “did the right thing” by cancelling 1,100 broker memberships but the idea that brokers should be forced to undertake the diploma is “ridiculous”. “I think the MFAA acted in accordance with what they said they were going to do and that’s the right thing. They kept pushing the date back and at some point they have to draw a line in the sand and obviously they’ve done that. I think it’s appropriate.” However, this is where White’s support of the MFAA’s policy ends. “To me, the diploma is a joke. You speak to anyone that goes to university – they’ll say it takes two to three years to get a diploma, not three to five days. Requiring brokers to take the diploma is garbage as far as I’m concerned,” said White, who added that the FBAA has seen a “tremendous influx” of membership applications as brokers break away from the MFAA. He said the FBAA, which doesn’t require its broker members to complete the course, feels the diploma isn’t well suited to new brokers in particular. “It’s predominantly focused on business running, not on consumer lending; 75% of the course is not related to home loans. If you want to do the diploma because you think it will be beneficial to you, we support you 100%. We’re not against the diploma – I’m just against enforcing it … If you have been lending for 5-10 years and you do that course, I think it’s good value. But if you’ve never done any lending in your life, it’s ridiculous. “We comply to the law that ASIC has set forth and around half have already done the diploma – they just don’t want to be told what they can and can’t do.”

Vendor asking prices: 12 month change

UNITS

Canberra

-4.5%

-3.1%

Sydney

3.4%

4.8%

Darwin

12.0%

20.3%

Brisbane

-1.3%

1.0%

Adelaide

-1.4%

-1.2%

Hobart

-3.9%

8.6%

Melbourne

-1.7%

-0.5%

Perth

4.0%

6.0%

Capital city average

2.0%

1.9%

STATS

27% The

percentage of borrowers who expect to experience mortgage stress over the next 12 months Source: Genworth Homebuyer Confidence Index, March 2013

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HOUSES

Source: SQM Research, March quarter 2013

NEWS / PRODUCT ROUND-UP

PRODUCT NEWS

Your bite-sized guide to the industry’s newest products and initiatives

Who: Homeloans What: FlexiChoice NonGen 95 Key features: • 95% LVR non-genuine savings loan. • Caters to borrowers who have little deposit, do not have 5% genuine savings, or have an equity contribution that may be a gift, FHOG or debt. • Variable or fixed interest rate. • For owner-occupied property only. • Borrowers must have a clear credit history and be in their current employment for a minimum of 12 months – or 24 months continuous employment within the same industry. They say: “Homeloans is one of few lenders that can offer a 95% non-genuine savings product. Our focus is on providing solutions which benefit both brokers and borrowers.” – Homeloans GM, sales, Greg Mitchell. We say: A bold play for the first homebuyer market. Be aware that applicants must disclose the source of funds and provide appropriate evidence.

Who: WealthMaker Financial Services What: Aspire

Who: FAST What: Launch of a new and improved offering KEY FEATURES • Performance-based fee structure matching the needs and requirements of the individual broker. • Two-tiered support through FAST’s partnership managers and partnership support officers. • Diversified income stream through FAST’s commercial, asset finance and residential offerings. • Re-launch includes new visual branding and reflects FAST’s focus on adapting to the needs of both up-and-coming and experienced brokers.

They say: “Our aim is to help brokers innovate and seize new opportunities for growth, even if they fall outside of their usual sector or area of expertise.” – FAST CEO Brendan Wright.

We say: A focus on performance-based fees and encouraging diversification backs up FAST’s claim to be the aggregator for business-minded brokers.

Key features: • Three components: home loan, investment and gap protection. • The loan is the same as a standard variable P&I loan, so the repayments are the same. • The investment is an S&P/ASX300 indexed managed fund. • Each month a portion of the customer’s repayment is diverted into an S&P/ASX300 index managed fund, so they are investing while paying off their loan. Distributions from the investment are directed to paying down the loan. • Gap protection covers any shortfall at loan maturity between the outstanding loan balance and investment value. The customer will always own their property at the end of the loan term. They say: “Rather than putting all the principal component of the instalment toward the loan, we divert 30% of that and put it in an investment. It allows the customer to invest while paying down their loan.” – WealthMaker Financial Services MD Michael McAlary. We say: Should the market perform at historical averages, McAlary claims the investment balance will outstrip the outstanding loan balance by year 22. Partner with a financial planner for this one.

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NEWS / MULTIMEDIA

ONLINE The latest highlights from MPA online and Australian Broker Online

such as The Universal Hierarchy of Motivation Professional Report.

External factors

To get the best performance from your employees, it is critical that you provide the structures and systems (including pay systems) that will help to motivate them at higher levels. Once you have set up the environment in your organisation that achieves this, only then is it worth investing time and money in training your employees. Otherwise you risk your trained-up employees leaving the organisation, and someone else will benefit from your spend.

SAY WHAT? THE BIGGEST QUOTES FROM THE MONTH

In motion The latest from Broker News and MPA TV

HOW YOUR VOTE WILL AFFECT YOUR BUSINESS Shadow Financial Services Minister Mathias Cormann talks about what the Coalition’s policies will mean for the mortgage industry.

LENDERS DO BATTLE FOR YOUR BUSINESS St.George’s Clive Kirkpatrick says competition among the banks is fierce and that’s good news for brokers.

MACQUARIE’S ROAD TO REDEMPTION James Casey tells Australian Broker TV the bank is rebuilding its relationship with brokers over time.

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GET THE BEST OUT OF YOUR MORTGAGE BROKING TEAM Mark Oliver, managing director of MarkTwo Consulting, asks: How is it best to develop the motivations and capabilities of employees? To get the right answer to the question above you need to ask the right question: how do we get our employees to perform better? If someone has the capability but not the motivation to do something required to perform, then the necessary behaviour is very unlikely to arise and they will not perform; similarly, if someone has the motivation but not the capability. You need both motivation and capability for performance. The second question then is: which is most important with regard to performance – motivation or capability? At first it would seem that capability is more important and there is often a great emphasis on training to enhance that. The appropriate training is important and, after all, motivation is not trainable, so one might wonder what is the use in focusing on human motivation? But motivation is much more important than capability in the wider context of both professional and personal life. In short this is because motivation determines what you do; in many ways it determines the path you take at work (and in life). If you do not have the motivation then your capability becomes largely irrelevant. Not surprisingly then, motivation precedes capability and often leads to capability. Given all this, the third question is: what can we do to increase motivation? You can split the factors affecting motivation into two parts: internal and external to the individual.

Internal factors

These include a person’s personality (values and beliefs etc). An important time to look at this is when recruiting individuals and it is wise to use good psychometric instruments to help,

“At some point you have to draw a line in the sand and say you’re going to fight for your rights” – IFBF head Stephen Dinte challenges aggregators on the transfer of trails

“The media is forgetting that the vast majority of brokers did complete their diploma as required by the MFAA and by aggregators” – Loan Market national director of sales Mark De Martino on reports of the MFAA cancelling 1,100 broker memberships

“There has been emergence of myriad of self-serving suppliers of CPD determined to portray their particular version or method of providing CPD as the most ‘correct’” – The FBAA warns that education providers are peddling CPD point myths

To find out more on all of these stories, as well as latest business strategy advice, special reports, profiles, news, views and analysis, visit mpamagazine.com.au

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NEWS ANALYSIS / CREDIT REPORTING

CREDIT REPORTING:

A CHANGING LANDSCAPE

The new credit reporting regime comes into effect in under a year’s time, yet many brokers are still in the dark as to how it will affect their clients going forward. Should you be concerned?

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pproved changes to the Privacy Act will come into effect in March 2014 and, along with it, a significant increase in the information permitted to be listed on a client’s credit report. The major concern for brokers is how lenders will adjust their lending criteria based on the new information they will have at their disposal. “It is safe to say that comprehensive credit reporting will differ from the existing negative credit reporting system as it will reveal more about an individual’s payment habits. We now know that ‘repayment history information’ will be included in a credit report in addition to the current information, however exactly what this will consist of is still being negotiated between the Office of the Information Commissioner and the credit reporting agencies,” says Credit Repair Australia CEO Richard Symes.

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NEWS ANALYSIS / CREDIT REPORTING

Case studies

An individual who has no defaults on their credit report, but is a consistent late payer (inside 60 days and hence avoiding default) is likely to be declined finance under the new credit reporting regime. This individual could be approved under the current reporting system.

An individual who has a default on their credit report but has been paying their bills on time for the past two years may have a higher chance of being approved for finance due to positive ‘repayment history information’, whereas previously they may have been immediately declined.

‘Repayment history information’ is defined by the Act as “…information about the individual; whether or not the individual has met an obligation to make a monthly payment that is due and payable in relation to the consumer’s credit”, however, Symes speculates that it will consist of:

ACCOUNT TYPE (which will allow for differentiation between accounts) ACCOUNT AGE (which will allow a lender to see how old an account is compared to the others that an individual may have) DATE ACCOUNT CLOSED (this will allow lender to differentiate between currently active and closed accounts) ACCOUNT LIMIT (help determine serviceability) REPAYMENT HISTORY FOR THE LAST 24 MONTHS (to see any trends)

The current credit reporting system does not provide enough information for lenders to determine whether an enquiry proceeded to an account being opened or if the borrower declined to proceed with the finance, forcing the lenders to view all credit enquiries as

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negative. In that regard, the addition of ‘repayment history information’ could prove to be a positive move for brokers, as it would allow lenders to make more informed decisions about individuals with a number of enquiries on their credit report. The new information will further assist in determining the credit worthiness of an individual – credit providers will have a better insight into someone’s ability to repay a loan. “Creditors will have more information at their disposal in order to identify undisclosed debts, late payers and repeat offenders, in addition to a reasonable idea of how much other debt the borrower has – allowing the lender to more accurately assess serviceability. We are yet to confirm whether the credit reporting agencies will increase fees in exchange for the additional information, however we consider it a possibility” says Symes. The way ‘repayment history information’ is likely to be recorded is in three categories: paid on time or before; paid shortly after; and paid well after the due date. This will cause a shift in those who may and may not be able to obtain finance. Symes believes that there are four possible outcomes under the new regime: • Whether an individual’s application is accepted or declined will remain indifferent to comprehensive credit reporting. • Individuals who have been previously declined may be accepted under the comprehensive credit reporting. • Most worrying for brokers, individuals that would normally be accepted may be declined under comprehensive credit reporting. • An individual who would have been previously approved may be charged a higher interest rate based on negative ‘repayment history information’.

ENTERING THE UNKNOWN Whilst Symes believes there is no cause for immediate alarm, he suggests “brokers who are concerned about the new credit reporting system and have pending applications should process them before March 2014, as we are entering into unknown territory. Therefore, no one can say for certain the effect that the new credit reporting system will have. We can only speculate, and like with any changes there will be an adjustment period. It is also uncertain if ‘repayment history information’ will be backdated to December 2012 or if the data will begin to be recorded as of March 2014. “Although there is evidence to suggest that the credit reporting agencies will adopt March 2014 as the date in which they will begin to record the ‘repayment

history information’. If this is correct it will take a further six to 12 months after implementation for lenders to get their hands on enough usable data and for us to experience the full effects of comprehensive credit reporting. “What we do know is, not every credit provider may participate in providing ‘repayment history information’ and therefore we cannot clearly determine how lenders will react to the new information. Brokers will be faced with new challenges as the current way of operating will be shifted. Individuals may no longer fit into the traditional models used by brokers for assessing credit worthiness, for example first tier lenders may accept an application that in the past would have only been approved by a second-tier lender.” The implementation of comprehensive credit reporting will bring Australia in line with other G20 countries, and the general consensus is that comprehensive credit reporting is a positive move – as it will provide a better indication of a borrower’s ability to maintain repayments. However, this is yet to be seen.

“Brokers will be faced with new challenges as the current way of operating will be shifted”

– RICHARD SYMES

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09 TIPS 18 | MPAMAGAZINE.COM.AU

FOR SELLING THROUGH SOCIAL MEDIA

With social media changing how companies sell, social media consultancy Social Centered Selling unveils how to monetise the phenomena

BUSINESS STRATEGY / SOCIAL MEDIA

THE SALES LANDSCAPE HAS CHANGED

Right now, your prospects are reading about your products and services on blogs and in forums. They are scanning YouTube videos, your LinkedIn profile, Focus forums, Tweets and searching on Google for information about what they want to buy and from whom; they are ignoring the text on your website. Now that social media has arrived on the scene, the classic formula of selling has been disrupted. Buyer 2.0 does not need you to educate them. Using the web and social tools, they are well educated on the features, functionality and pricing of available solutions long before they have their first conversation with sales.

CONSIDER THESE FACTS:

Studies by Experian Marketing Services indicate that social networking now accounts for 15% of internet visits

1 BILLION USERS

150 MILLION USERS

100 MILLION USERS

65 MILLION USERS

WHAT BUYERS WANT YOU TO KNOW

For sales organisations to succeed in today’s social business environment, they must first accept that buyer behaviour has changed! Buyer 2.0 is web savvy, informed and probably knows more about you than you know about them. In this new world, buyers start the sales process without you, which means that sellers must shift from a transactional approach to the sales process to a solution-oriented, value-focused, and sociallyconnected approach. These days, most buying decisions start, move forward, and are very often closed online or over the phone without a single face-toface meeting. That’s a frightening thought for the sales professional who has long believed that the only way to “close a deal” is to be sitting across the table from the prospect. Salespeople must demonstrate that they are social media savvy and have strong business acumen. In Selling to the C-Suite, authors Stephen J Bistritz, Ed.D and Nicholas AC Read conducted

extensive research on what buyers want salespeople to know. The question posed was: What has to happen in meetings with salespeople for the executive to feel it was effective? THE ANSWER: DEMONSTRATED RESPONSIBILITY

UNDERSTOOD MY BUSINESS GOALS

LISTENED BEFORE PROPOSING A SOLUTION

DISPLAYED KNOWLEDGE OF MY INDUSTRY

Your prospect expects you to understand their business and with social networking tools like LinkedIn and Twitter, and business intelligence tools like InsideView, there is just no excuse for not doing your homework. The days of walking in the door blind to your prospect’s issues are over. During the meeting is not the time to ask questions that you should already know the answers to. Preparation for meetings is not optional.

BUSINESS STRATEGY / SOCIAL MEDIA

UNDERSTAND THE TECHNOLOGY

There is often confusion about the difference between LinkedIn, Twitter and Facebook and how each applies to the sales process. In a nutshell, here is how these platforms fit.

LinkedIn is your business networking tool and aids salespeople on the front-end of the sales cycle. Networking, lead generation, opportunity qualification, securing referrals and establishing business credibility in your field are just a few of the ways that you can use LinkedIn to your advantage.

THE SOCIAL SELLING APPROACH

Social selling has risks, but sitting on the sidelines is the greatest risk of all! You have been selling successfully for some time, so you may be asking, why do I need to worry about social media? The answer should be obvious. Your prospects are there! They are checking out what you offer and what your competitors offer. Who do you want them to choose? Einstein said the definition of insanity is doing the same thing over and over again expecting a different result. Sales approaches that worked five or 10 years ago are just not effective any more; it is time to let them go. Yes, it will take a little upfront work to establish your foundation, but it is not as complicated as you may think. Positioning yourself to succeed in a social selling world includes these elements:

HAVING A PLAN Facebook is more conversational and personal in nature. For business, a Facebook fan page is often used by marketers to create customer loyalty and retention on the back-end of the sales cycle. By cultivating fans, marketing helps to ensure that your company remains front and centre in peopleâ&#x20AC;&#x2122;s minds.

PICKING THE RIGHT TOOLS DEFINING YOUR AUDIENCE IMPLEMENTING ACTIONABLE TACTICS CRAFTING YOUR MESSAGE MEASURING AND TRACKING

Twitter is a micro-blogging tool and the realtime nature of the information being shared is a gold mine of business intelligence. You can follow your competitors to see what kinds of messages they are sending out. Or, follow the company that your prospect works for and stay on top of what kind of information they are sharing, what questions they are asking and the vendors they may be recommending.

AND INVESTING IN TRAINING!

TRAITS OF A SOCIAL SALESPERSON

In addition to being relationship-oriented and committed to serving the customer, the social salesperson is, well… social. They understand that a give-first-before-expecting-an-immediate-return mindset is what sets them apart from the majority of their competitors. People still buy from people and they need to trust you. Trust takes time. Just because you have connected with someone on LinkedIn does not mean that you have earned trust in their eyes. Creating a perception of trust does not have to be difficult thanks to social media. By using LinkedIn or Twitter you can share content that has value, such as white papers, case studies, presentations, industry information and more. Social salespeople listen before engaging. Their goal is to help to solve problems rather than pitching what they have to sell. Impatient salespeople have found out the hard way what happens when they use social media to sell. For example, you connect with someone on LinkedIn and then turn right around and send them a sales spam email. In the mildest of repercussions, you are merely removed as a connection. But annoy the wrong person and you just might find that ill-conceived sales spam is blasted to the online world for everyone to see.

COMMITTED ENGAGING

LISTENS TRUSTING

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BUSINESS STRATEGY / SOCIAL MEDIA

YOUR ONLINE PRESENCE MUST ROCK!

Remember that buyers are doing their homework and looking for solutions to their business problems. They search Google, LinkedIn, Twitter, Facebook and anything else that they can find. If your ideal buyer lands on your LinkedIn page, you need to stand out. Your profile must be compelling enough for your prospect to want to know more. Make the time to clean up your profile and then commit to keeping it fresh with content that you update on a regular basis. You may have only one shot at capturing the attention of your prospect, so make the content on your profile count.

THE ROI: MAKE IT MATTER

Use social media to research, target, and connect with your ideal (pre-qualified, most likely to buy) prospects. Then track social interactions along with phone and email. Using social media in conjunction with phone and email can increase sales cycle conversion metrics such as the critical connect rate. Busy people (a category that almost unanimously includes every business executive) are less likely to engage with salespeople than ever before. Create a target list of the right companies and the right prospects for you. Know which companies and titles your offering is most likely to entice, and then connect with them through personal, customised, and relevant messages rather than generic scripts. ACCORDING TO INSIDEVIEW,

92%

INTELLIGENCE IS KEY

As we use tools like LinkedIn, Facebook and Twitter, the number of people that we maintain some degree of one-to-one contact and connection with via-peer networks and groups has dramatically increased in the past few years. Social salespeople will use these tools to become more adept at what you know about successfully navigating the first few critical phases of the sales process: investigate and early qualify. Better information leads to better qualification of sales opportunities. And, used effectively, social networking shrinks the physical time it takes to move the opportunity to close. Social selling is about recognising that the buying process is controlled by a better-informed and more connected customer. While sales remains relationship-driven business, the power of ‘who you know’ is trumped by ‘what you know about who you know’. The new social customer is demanding relevance from salespeople, expecting them to know about them, their companies, and their needs before engaging. Before you decide to engage with your prospect, do your homework and leverage the information in a way that leads to building rapport. How you do this makes the difference between being perceived as someone who is paying attention and one who is stalking people.

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OF EXECUTIVES SAID THEY WOULD NOT RESPOND TO A COLD CALL OR EMAIL FROM SOMEONE THAT THEY DID NOT KNOW

MANAGING TIME

There are lots of tools available for managing your social networks but HootSuite is our favourite! With HootSuite you can monitor and post to multiple social networks, including Facebook, Twitter and LinkedIn, from a single dashboard. You can also schedule messages to reach your followers when they're most likely to be logged in.

Social Centered Selling is a consultancy focused on bringing sales and social media capabilities to sales organisations. Its website is: scs-connect.com

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HEAD TO HEAD / JASON MURRAY

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UNION

MAN

CUA general manager, products and marketing Jason Murray, talks to MPA about the lenderâ&#x20AC;&#x2122;s plans to expand its presence in the broker market MPA: How do you expect 2013 to pan out in terms of property and mortgage demand? Jason Murray: While there have been signs of an

MPA: Where do you see the mortgage industry heading over the next few years? JM: The broker channel is likely to become increasingly

increase in demand for housing lending, this needs to be set against the current context of record low growth for housing lending. It remains to be seen whether the RBA rate cuts will stimulate demand, but overall we expect to see a fairly benign year in terms of demand for housing borrowing, but stronger than 2012.

important to both borrowers and lenders. They currently look after around 40% of the market today and there are signs that this is growing. That is one reason why CUA is increasing its commitment to the broker market right now.

MPA: Are there any regions or demographics that are exhibiting an especially strong demand for mortgages at the moment? JM: We are not seeing any strong positive trends unique to any particular market, however over the last 12 months we have seen some encouraging signs of customers being prepared to look outside of the major banks. On the downside, the first homebuyer market appears to be struggling. This could be influenced by the changes to the NSW and Queensland first homebuyer assistance packages.

MPA: What are the biggest challenges that the mortgage industry faces at present? JM: Housing loan growth is at an historic record low post-GFC, and all lenders are having to adjust to an environment with lower demand for the foreseeable future. A concentrated market with limited competition also continues to be a challenge for lenders and borrowers. The big four banks have well over 90% market share for residential owner-occupier and residential investor lending and have steadily grown that share over the course of the GFC. Also, entry into the market by first homebuyers is likely to become

MPAMAGAZINE.COM.AU | 25â&#x20AC;&#x201A;â&#x20AC;&#x201A;

HEAD TO HEAD / JASON MURRAY

“The broker channel is likely to become increasingly important to both borrowers and lenders” – JASON MURRAY

banks. We are also continuing to invest in transforming our customer channels to be more relevant in the way customers want to deal with us. We have implemented home loan specialists across our network, reconfigured and started to refresh our branch network to be more modern, fresh and retail focused, increasing our mobile bankers and continually developing our online, direct and mobile banking platforms. We also aim to continue to expand our presence in the broker market to widen our distribution footprint as more and more people choose to deal with a mortgage broker.

increasingly more difficult if and when interest rates and house prices start to rise once again.

MPA: Where do credit unions fit in the mortgage market? Is there scope for their share of the market to increase? JM: Over the course of the GFC, the big four banks have actually grown their market share at the expense of other lenders, credit unions included. While credit unions continue to come under pressure, CUA is actually performing very strongly. We have grown our housing lending issue significantly above the market over the past 12 months and currently are the largest financial services mutual in Australia’s history – and we continue to grow.

MPA: What are your aims for CUA in terms of its participation in the mortgage market? JM: We aim to provide Australians with an innovative alternative based on value and service to the major

26 | MPAMAGAZINE.COM.AU

MPA: How do you rate CUA’s relationship with mortgage brokers and how can it be improved? JM: We currently have strong relationships with three broker groups: Mortgage Choice, Smartline and LoanKit – all of these have been ongoing for a number of years. We value these relationships and are actively working to enhance our service proposition to make it easier for brokers to deal with us and improve their overall experience. This includes: building a broker sales team, including appointing a new national manager of broker sales and a team of six state-based business development managers who are tasked with building and maintaining local relationships; building a dedicated, internal broker support team; and increasing participation and presence at relevant industry groups and forums.

MPA: What is CUA’s key value proposition for mortgage brokers? JM: We are a genuine alternative to the big four banks with a great product and service proposition supported by a dedicated broker sales and support team.

HEAD TO HEAD / JASON MURRAY

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BROKERS ON AGGREGATORS

BROKERS ON

AGGREGAT WHAT THE BROKERS REALLY THINK

28 | MPAMAGAZINE.COM.AU

SPECIAL REPORT / BROKERS ON AGGREGATORS

Is the aggregators’ service proposition up to scratch? MPA’s 2013 Brokers on Aggregators survey reveals all…

elcome to the 2013 MPA Brokers on Aggregators survey. This is the sixth year that the nationwide survey has taken place, and the biggest response from the broking community to date. As was the case last year, the proportion of responses that came from each aggregator’s stable of brokers more or less tallied up with their market share. Some aggregators’ brokers did not take part in the survey, hence there will be some aggregator names that are absent in this year’s report. Once again, we’ve quizzed our respondents on the elements of service that are most important to them in order to provide a fascinating insight into what today’s broker is looking for from their aggregator. Eleven metrics were provided, ranging from quality of lending panel, and accuracy and timeliness of commission payments to white label offering and lead generation. Respondents ranked each of the 11 categories for importance from one to five, and the average scores for each are presented in this report.

T ORS

For those aggregators that received a significant number of broker respondents we have also included summaries throughout the report of the importance with which their brokers ranked each of the 11 categories, and where they ranked each one when it came to provision of that service by their aggregator. While readers will no doubt be interested to see which areas of the aggregator service proposition top the bill in terms of importance, this survey is also about giving brokers the opportunity to rate the aggregation community on its provision of these services. Each respondent, therefore, was asked to also give their aggregator a score – once again between one and five – for their aggregator’s performance in each of the 11 metrics. How do these scores tally up to the importance that brokers gave to each category? You’ll have to read on to find out how the aggregators shaped up in the eyes of this year’s respondents. We also asked several key one-off questions to help gauge broker satisfaction, which included asking our respondents to rate how likely they were to leave their aggregator. The main reasons for wanting to leave, as well as the main barriers to leaving, were also sought. So, where are the aggregators passing with flying colours, and in which areas of service do they need to up their game? Turn the page for this year’s results.

OVERALL RANKINGS RATE FOR IMPORTANCE Rank

RATE FOR AGGREGATOR SERVICE

Category

Score

Accurate and on time commission payments

4.71

Quality of lending panel

4.61

Communication with brokers

Category

Score

Quality of lending panel

4.43

Accurate and on time commission payments

4.33

4.51

Communication with brokers

4.15

IT and CRM support

4.46

Compliance support

4.04

Compliance support

4.33

IT and CRM support

Training and education

4.15

Training and education

3.93

BDM support

4.13

BDM support

3.87

Marketing support

3.64

Additional income streams

3.53

Additional income streams

3.4

Marketing support

3.35

White label offering

3.14

White label offering

3.29

2.86

Lead generation

2.29

Lead generation

Rank

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SPECIAL REPORT / BROKERS ON AGGREGATORS

Brokers speak: Commissions

ACCURACY AND TIMELINESS OF COMMISSION PAYMENTS

AVERAGE SCORE FOR IMPORTANCE: 4.71 AVERAGE RATING FOR AGGREGATOR SERVICE: 4.33 (2ND)

his year respondents were given the option to rate the importance of the accuracy and timeliness of commission payments, and this is an issue that has immediately taken the top spot on the importance scale. Perhaps unsurprisingly, brokers are extremely keen to be with an aggregator that pays the right amount of commission in a timely fashion, giving the issue an average score of 4.71 out of five for importance. When it came to rating the aggregators for their performance on this key issue, their average score of 4.43 out of five shows that brokers are largely satisfied with the accuracy and STAR RS timeliness of their remuneration from the E M R O F R E aggregators. However, this wasn’t the P ge Brokers a g rt o M l a category in which aggregators picked up • Nation ve • Connecti their highest average score. First place ancial • VOW Fin went to quality of lending panel, with an • PLAN average score of 4.43, narrowly beating rket L • oan Ma accuracy and timeliness of commission payments into second place.

There is limited transparency of returns being earned by aggregators and how they reinvest in their income producers – their broker base. Like the banks, aggregators tend to cut services or increase costs/ decrease commissions to balance for cyclical effects rather than invest for the long term. - Firstfolio broker My commission split is through the entity I work under contract to, which is Century 21 Home Loans, and is not controlled by my aggregator. The commission split is excellent. - AFG broker Very happy with all aspects of AFG except maybe a reduction to 15% commission take. - AFG broker I am very happy with the flat fee model which allows us to keep 100% upfront commission and trail commission. I wasted three years with an aggregator paying 20% of my commission, and am glad that a few years ago I made the move to Connective. - Connective broker On time commissions – fair and transparent commissions with excellent response time to errors or queries. Good brand who leaves me to promote myself and them as I wish. - Aussie broker

RESPONDENT BREAKDOWN

Age

21-34 35-44 45-54 55-64 65+

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12% 28% 35% 21% 4%

Income

Volume

$0-50,000 14% $50,001-75,000 16% $75,001-100,000 22% $100,001-150,000 25% $150,000+ 23%

$0-10m 30% $10,000,001-$20m 32% $20,000,001-$40m 24% $40,000,001-$60m 8% $60m+ 6%

QUALITY OF LENDING PANEL

COMMUNICATION WITH BROKERS

AVERAGE SCORE FOR IMPORTANCE: 4.61 AVERAGE RATING FOR AGGREGATOR SERVICE: 4.43 (1ST)

AVERAGE SCORE FOR IMPORTANCE: 4.51 AVERAGE RATING FOR AGGREGATOR SERVICE: 4.15 (3RD)

his is the first time since the MPA Brokers on Aggregators survey was launched six years ago that quality of lending panel has failed to take top spot on the importance list. It’s worth mentioning though, that this category would have taken the top spot for the sixth year running had accuracy and timeliness of commission payments not been included as a new category this year. Brokers appear to be largely happy with the quality of the lending panels on offer, with survey respondents giving the aggregators an average score of 4.43 for this issue. This was the highest average score given to the aggregators for any of the 11 given categories.

STAR RS E PERFORM ancial • VOW Fin ortgage M l a • Nation Brokers ve • Connecti

Brokers speak: Lending panel Changing aggregation with the lending panel, new ID etc. takes months. - Finsure broker The biggest issue in changing aggregators is becoming re-accredited with all the banks. This is a big impediment to changing aggregators. Being an MFAA member should automatically qualify accreditation with every bank and non-bank on the panel. - nMB broker

ommunication: It’s a vital element of any professional relationship, and it would appear that it’s one that’s front of mind for brokers when assessing what S PERFOTAR they want from their aggregator. RMERS • Natio nal Mor Communication with brokers took the tgage B ro • VOW third spot in the importance list in this Financia kers l • C o n year’s survey with an average score of nective 4.51 out of five. When it came to the how aggregators are performing on the communication front, their average score of 4.15 out of five also took the third spot in the list – neatly tying up with the third spot given to this category in the importance list.

Brokers speak: Communication Firstfolio really need to lift their game, particularly with their communication. I never hear from them and if you have an enquiry, you have to email it and they send you an automated email saying that they will come back to you within 72 hours. Simply not good enough. - Firstfolio broker Having recently moved to LoanKit, we have found them to be very supportive and regular open communication. - LoanKit broker I genuinely believe Outsource is the best aggregation in Australia. I have constant contact with not only the BDM, but also the CEO. This makes you really feel like you are a part of something bigger. - Outsource Financial broker Very happy with nMB’s overall support and they are always willing to listen and accommodate, promoting what i think is the biggest benefit you’re missing in your questions – a peer network. It’s great to be able to pick up a phone and chat to a successful broker in another state that may be able to help. nMB bring this together extremely well. - nMB broker

The aggregators must stay relevant in the industry so the lenders don’t find ways of passing them and dealing directly with the brokers. - Connective broker

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SPECIAL REPORT / BROKERS ON AGGREGATORS

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SPECIAL REPORT / BROKERS ON AGGREGATORS

4. IT AND CRM SUPPORT

IN FOCUS AFG RANK FOR IMPORTANCE

RANK FOR SERVICE

Rank

Category

Accurate and on time commission payments

Quality of lending panel

IT and CRM support

Accurate and on time commission payments

Communication with brokers

Compliance support

BDM support

Training and education

Marketing support

Additional income streams

White label offering

Lead generation

IN FOCUS CHOICE RANK FOR IMPORTANCE

RANK FOR SERVICE

Rank

Category

Quality of lending panel

Accurate and on time commission payments

Communication with brokers

IT and CRM support

White label offering

Compliance support

Communication with brokers

Training and education

Compliance support

BDM support

Training and education

White label offering

BDM support

Additional income streams

Marketing support

Lead generation

AVERAGE SCORE FOR IMPORTANCE: 4.46 AVERAGE RATING FOR AGGREGATOR SERVICE: 4 (5TH)

T and CRM support (last year labelled as IT and broker systems) rose one spot in the importance list this year, jumping up from fifth to fourth place. Perhaps more stark though is the 0.7 point rise in its average importance score to 4.46 – having ranked only 3.79 out of five for importance amongst last year’s respondents. STAR The placing for the aggregators’ PERFORM ERS provision of this service almost • AFG • National matches its placing on the importance Mortgage Brokers scale. In this case, the average score • Connecti ve given to aggregators for their IT and CRM support of four out of five puts it in fifth spot – narrowly behind compliance support.

Brokers speak: IT and CRM support Being almost four years in the industry, I have been at three aggregators. To me, there is nothing more important than the IT/software. Finding the most suitable lender for the clients using the software available, and then lodging and tracking that deal, are the most important items to me, and one that aggregators can miss and not see the importance of. - PLAN broker Their IT/CRM is clunky making compliance more difficult than necessary and lead generation for me has been non-existent for six-plus months, although they are working to implement a new program to overcome this. - Loan Market broker IT and CRM must be the best available. - VOW Financial broker Choice’s Podium has a very poor CRM; if you were to look at different models you wouldn’t switch to them. - Choice Aggregation broker Connective has one of the most appealing aggregation models, has fantastic BDM and back office support and probably the best IT model and CRM. - Connective broker We changed from Vow to FAST some 18 months ago because of IT and curtain instability issues. - FAST broker

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COMPLIANCE SUPPORT

TRAINING AND EDUCATION

AVERAGE SCORE FOR IMPORTANCE: 4.33 AVERAGE RATING FOR AGGREGATOR SERVICE: 4.04 (4TH)

AVERAGE SCORE FOR IMPORTANCE: 4.15 AVERAGE RATING FOR AGGREGATOR SERVICE: 3.93 (6TH)

udging by this year’s results, the compliance issue appears to have taken something of a back seat to other broker concerns in recent months. When last year’s survey results were collated, compliance support (labelled last year as licensing/ NCCP support) took second spot on the importance list, whereas this year it takes a mid-table fifth spot. However, when the average scores are compared side by side this year’s importance score for compliance support of 4.33 out of five is significantly higher than last year’s average of 4.03 out of five. Aggregators were scored well for their provision of compliance support, with their average score of 4.04 out of five putting this area of the aggregator service proposition in fourth place on the quality of service list.

STAR PERFOR MERS • Lo

an Market • National Mortgage Brokers • VOW Fin ancial • Connecti ve

Brokers speak: Compliance Connective go the extra mile, particularly with compliance. They don’t get in my way and dictate but offer huge support where nothing is too much trouble. - Connective broker This aggregator represents a small part of my business, however the level of compliance and licensing requirements are the biggest concerns. - AFG broker Individual credit licence holders should receive a larger split of commission as they are not of any burden on the compliance of the aggregator. - AFG broker

he results for the training and education category tell a similar tale to those for the compliance support issue. In terms of importance, training and education may have dropped a few places on the overall list from third in last year’s survey to sixth this year, but its average score of 4.15 is still well above last year’s average of 3.86. The score given to aggregators for their broker training and education services was 3.93, indicating that some improvement could be made to reach peak performance in the eyes of brokers. That said, this average score put training and education at sixth place out of 11 when it came to ranking each element of the services that aggregators were judged upon. This neatly matched its importance ranking of sixth.

STAR PERFOR ME

• National

Mortgage Brokers • VOW Fin ancial • Connecti ve

Brokers speak: Training and education Aggregators should run training on how to be a better broker rather than a lender. - AFG broker Aggregator is based in Sydney, consequently face to face training and support is difficult as I am based in WA. - Firstfolio broker I think we just need more training to be comfortable with the system. - VOW Financial broker

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SPECIAL REPORT / BROKERS ON AGGREGATORS

IN FOCUS FAST RANK FOR IMPORTANCE

RANK FOR SERVICE

Rank

Category

Accurate and on time commission payments

Communication with brokers

Accurate and on time commission payments

IT and CRM support

Quality of lending panel

IT and CRM support

Compliance support

Training and education

Communication with brokers

Compliance support

BDM support

Marketing support

BDM support

Additional income streams

Lead generation

=10

Lead generation

Additional income streams

=10

White label offering

BDM support

IN FOCUS LOAN MARKET RANK FOR IMPORTANCE

RANK FOR SERVICE

Rank

Category

Accurate and on time commission payments

Communication with brokers

Accurate and on time commission payments

IT and CRM support

Quality of lending panel

IT and CRM support

Compliance support

Training and education

Communication with brokers

AVERAGE SCORE FOR IMPORTANCE: 4.12 AVERAGE RATING FOR AGGREGATOR SERVICE: 3.87 (7TH)

DMs may perform a vital intermediary role in the aggregator-broker relationship, but BDM support was only judged by brokers to be the seventh most important element of the 11 aggregator services ranked in the survey. That said, the average score of 4.12 out of five given by respondents for the importance of BDM support suggests that it’s still considered to be highly important – albeit less so than accuracy and timeliness of commission payments or quality of lending panel for example. BDM support took joint sixth spot when it came to how well the aggregators are performing in this area, suggesting that they’re tracking well enough on this service area STAR compared to the importance that PERFORM E R brokers give to it. However, the S • Finsure average score given to the • AFG aggregators for BDM support of 3.87 • National Mortgage is shy of the fours – so this is perhaps Brokers one area in which aggregators could look to up their game.

Brokers speak: BDM support

Compliance support

BDM support

Marketing support

BDM support

Additional income streams

Lead generation

=10

Lead generation

Additional income streams

=10

White label offering

BDM support

36 | MPAMAGAZINE.COM.AU

BDM SUPPORT

ALCo have been very supportive when I moved aggregators and returned from maternity leave. The BDM support is phenomenal. - ALCo broker My BDM support of has been good since the appointment of my current BDM. - Loan Market broker They are a perfect match for my business model and the BDM provides 100% support when called upon to do so. - PLAN broker Aggregator has a broker academy to develop new brokers as well as great BDM support right up to national level. You’re a name not a number. - Loan Market broker I don’t even know who my BDM is. They have never called me and I have been with AFG for nearly 10 years. - AFG broker

MARKETING SUPPORT

ADDITIONAL INCOME STREAMS

AVERAGE SCORE FOR IMPORTANCE: 3.62 AVERAGE RATING FOR AGGREGATOR SERVICE: 3.35 (9TH)

AVERAGE SCORE FOR IMPORTANCE: 3.52 AVERAGE RATING FOR AGGREGATOR SERVICE: 3.4 (8TH)

arketing support has managed t seems that assistance with diversification is not to stymie its run of last places in an issue that’s top of mind with brokers at the STAR PERFOR the Brokers on Aggregators moment when it comes to the services that they MERS • VOW Fin importance list. In fact, this is the expect from their aggregator, with additional income ancial • Loan Ma first year that marketing support streams only coming ninth out of 11 on the rket • National Mortgage hasn’t come in dead last. This importance list – with an average score of 3.52 out Brokers improved performance is reflected in of five. this year’s average score of 3.62 – a The average score given to aggregators for service 0.41 point increase on 2011’s score in the additional income streams category of 3.4 put of 3.21. it in eighth place on the selected list of services. Is the service that aggregators are providing matching up to the increased importance that brokers are placing on marketing support? According to this year’s respondents, the aggregators STAR RS are averaging 3.3 out of five when it comes to their E F PER OFRinM performance in this category. This could be one area cial n a • VOW that warrants more focus in future. e Brokers g a g rt o M • National • Finsure

Brokers speak: Marketing support More marketing materials and industry updates would be helpful to relay to clients and educate them on the industry. - Choice Aggregation broker I find Connective by far the best aggregator I have worked with, for overall support, marketing, commission structure and the best CRM system. - Connective broker I am part of a franchise that aggregates through Astute so I don’t need all of the services, such as marketing support, from my aggregator. - Astute broker Aggregator model works very well, excellent commission structure and support but comes at a cost of very limited marketing, but worth it if you are strong enough to build your own business. - Choice Aggregation broker Aggregators do not advertise their member broker services enough. - PLAN broker

Brokers speak: Additional income streams The product and income stream diversification that VOW offers is great. You are able to speak to the Secretary or even the CEO himself, you have full transparency when dealing with any member of VOW and I feel that, as a boutique aggregator, the bigger models have a lot that they can learn from VOW. - VOW Financial broker I’m very happy with VOW, my aggregator. They provide a lot of support. They also provide additional services to supplement my income. - VOW Financial broker Astute are very pro-active in providing with access to other income streams and providing the support for these services. - Astute broker

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SPECIAL REPORT / BROKERS ON AGGREGATORS

10.

WHITE LABEL OFFERING

AVERAGE SCORE FOR IMPORTANCE: 3.12 AVERAGE RATING FOR AGGREGATOR SERVICE: 3.29 (10TH)

11.

LEAD GENERATION

AVERAGE SCORE FOR IMPORTANCE: 2.86 AVERAGE RATING FOR AGGREGATOR SERVICE: 2.29 (11TH)

STAR PERFOR ME

• FAST • Choice A ggregation • National Mortgage Brokers

hite labelling took the second to last spot for importance amongst this year’s survey respondents, with an average score of just 3.12 out of five, suggesting that brokers are still far more interested in the quality of their aggregator’s existing lending panel than its white label offerings. This category also took the penultimate spot in the list of specified categories in this year’s survey when it came to the aggregators’ average rating for their provision of this service – scoring an average of 3.29 out of five with respondents.

Brokers speak: White label offering Outsource Financial does not have a white label and it doesn’t matter. - Outsource Financial broker I am very happy with my aggregator. Commission split excellent, podium 2 excellent eventually, and Fastlend exceptional white label product. No reason to leave. - FAST broker White label product is not what we require nor seek. - Outsource Financial broker

ead generation was the only service out of this year’s 11 options that received an average score of less than three out of five for importance – putting it solidly in dead last position. Its average score for importance of 2.86 out of five was a good 0.26 points behind the 10th placed white label offering category. The average rating for aggregator service in the lead generation category also put it in last position when it came to rating the aggregators’ performance in this area. This may suggest that aggregators have got their priorities right in terms of the resources that they devote to lead generation, but the average score that they received in this area of just 2.29 out of five is by far the lowest average rating to the aggregators in any of the 11 chosen categories specified in this year’s survey. In fact, the 10th placed white label offering category still received an average score that was a whole point better than the average STAR RS E given to lead F PER OnRMM et rk a generation. • Loa re su in •F • Firstfolio

Brokers speak: Lead generation Even though lead generation is not part of their offering, from time to time they pass on some inquiries to brokers that the head office receives. - nMB broker Lead generation is poor and system support very poor. System is too complicated and difficult to use. It does give me freedom and flexibility. - LoanKit broker Greater numbers of online lead generation via AFG websites etc. would be a great advantage to my business. - AFG broker

38 | MPAMAGAZINE.COM.AU

CHANGING AGGREGATORS

ne of the hot topics of the MPA Brokers on Aggregators survey is this issue of switching aggregators. This year’s report set out to discover how likely our respondents were to leave their current aggregator, why they would choose to leave, and what the barriers to leaving were. The good news is that brokers appear to be a largely satisfied bunch, with the average score for likeliness to leave their aggregator within the next 12 months coming in at just 1.75 out of five. Given that a score of one out of five was categorised as ‘extremely unlikely’ and it was impossible to give a score of less than one, this is a real result for the aggregators. Some of the plus points revealed in the survey included:

I have absolutely no intention of leaving Choice. They have been supportive of me and my business for years. The grass is not always greener!!! They could only improve by giving me an extra 5% on my commission split, but I’m not grumbling at all. - Choice broker

76%

were their happy w fee/c aggrega ith omm t issio or’s n spl it

tor aggrega quately m ade kept the rmed of info issues industry

Are you concerned about the sustainability of your aggregator’s business model?

Yes 13% No 87%

Very happy with my current aggregator. Very unlikely to leave. - AFG broker

Have always been very happy with PLAN for past nine years. Have no reason to leave! - PLAN broker

ppy with were ha ability of ain the sust regator’s g g their a s model e in bus s

AGGREGATOR SATISFACTION

I have no issues with my aggregator and have no reason to leave them. - VOW Financial broker

Very happy with Finsure, no reason I can see of leaving them. - Finsure broker

7po% 8 ndents s e of r

% 4 8 their t felt tha

Brokers speak: Changing aggregators

I would like to say that at the moment leaving Smartline is not an option at all. They would have to do something really stupid for me to leave them. They are brilliant and offer fantastic support. - Smartline broker Connective is a great aggregator but I am considering taking up a role with a group that uses another aggregator. This is the only reason I would change as the new aggregator’s software is inferior to that offered by Connective. - Connective broker We pay a huge annual fee to our aggregator and don’t feel we receive much in return. The flat fee aggregator models appear to be winning new business. Will be looking to change as unsatisfied in service for the fees we are charged. - AFG broker

Are you happy with the fee/ commission split?

Yes 76% No 24%

Does your aggregator keep you well informed around industry wide issues?

Yes 84% No 16%

Very happy with current aggregator. Do not see any need in wanting to change at present. Their systems, software and website are excellent. - nMB broker

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SPECIAL REPORT / BROKERS ON AGGREGATORS

BARRIERS TO LEAVING

IN FOCUS

National Mortgage Brokers RANK FOR IMPORTANCE

RANK FOR SERVICE

Rank

Category

Rank

Category

Accurate and on time commission payments

Quality of lending panel

Communication with brokers

Quality of lending panel

IT and CRM support

BDM support

Compliance support

IT and CRM support

BDM support

Training and education

Compliance support

White label offering

Additional income streams

Marketing support

Lead generation

IN FOCUS PLAN RANK FOR IMPORTANCE

RANK FOR SERVICE

Rank

Category

Rank

Category

Quality of lending panel

Accurate and on time commission payments

Quality of lending panel

Communication with brokers

IT and CRM support

BDM support

Compliance support

BDM support

IT and CRM support

Training and education

Marketing support

White label offering

Additional income streams

Marketing support

Lead generation

hile very few of this year’s respondents expected to leave their aggregator anytime soon, a small number of comments suggested that certain respondents were unlikely to leave not because they were happy with the service received but because the barriers to leaving were too great. So what’s stopping them? When asked the question ‘if you were to change aggregators today, what would be the biggest obstacle to you leaving?’, the top three responses by quite a margin were data migration/IT issues (30.5% of responses), contractual obligations (24.5%) and clawbacks/trail issues (20%). Interestingly, a few comments suggested that one option that was not provided as part of this year’s survey – difficulties in gaining reaccreditation with a new aggregator’s lending panel – was also proving to be a significant barrier to switching.

MAIN BARRIER TO LEAVING Clawbacks/trail issues

20%

Contractual obligations

24.5%

20%

Data migration/IT issues 30.5%

3.5%

Licensing issues

8.5%

Loss of back-office services

Loss of marketing services

Upfront commission issues 3.5%

7% 8.5%

30.5%

Brokers speak: Barriers to leaving You cannot take your trail with you. Once it gets to a certain level you are ‘stuck’. The majority I speak to are in the same boat. Most would leave in a flash if they could take their trail with them. - Aussie broker I have had the same aggregator for 10 years and their model has not changed. If I could leave I would but the handcuff on income is too great. - Specialist Mortgage broker Actually the biggest hurdle to changing aggregators is the change in lender accreditations. - Finsure broker

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24%

REASONS FOR LEAVING

arriers aside, when it came to the main reason for wanting to leave an aggregator, the range of responses given by our respondents this year was quite diverse. Brokers were given the option of choosing poor performance in one of the 11 service categories that aggregators were ranked upon earlier in the survey as their main reason for wanting to leave. Poor IT and CRM support was the most chosen reason for wanting to leave, accounting for 20% of all respondents, but poor lead generation was hot on its heels with 18%. Poor accuracy and timeliness of commission payments and poor quality of lending panel followed up with 15% and 12% respectively. Another reason to leave that cropped up in broker comments was the amount of commission being paid out – rather than the accuracy and timeliness of payments.

Brokers speak: Reasons for leaving

MAIN REASON FOR LEAVING YOUR CURRENT AGGREGATOR 3%

Poor accuracy and timeliness of commission payments 15% Poor additional income stream offerings Poor BDM support Poor communication with brokers

Poor compliance support

Poor IT and CRM support

20%

Poor lead generation

18%

Poor marketing support

15%

12%

4% 9.5%

15% 0.5%

9.5% 18%

8% 4%

20%

Poor quality of lending panel 12% Poor training and education

Poor white label offering

No reason given

0.5%

If I was to leave it would be more about commission splits not commission payments. - AFG broker Commission would be the main reason to leave. - PLAN broker I recently changed from FAST to Finsure and the aggregators are becoming extremely competitive for our business. - Finsure broker We have 25 brokers and have changed aggregators in the last six months from Choice to Connective. The primary reason was the poor software offered from Choice/Advantedge. The Podium system was costing our brokers sales and money. - Connective broker We just changed aggregators to LoanKit. It took LoanKit less than a month to provide more genuine support, and complete more in office visits, than out previous aggregator managed in five years. That’s why I’m not changing aggregators again. - LoanKit broker Connective is a great aggregator but I am considering taking up a role with a group that uses another aggregator. This is the only reason I would change as the new aggregator’s software is inferior to that offered by Connective. - Connective broker We pay a huge annual fee to our aggregator and don’t feel we receive much in return. The flat fee aggregator models appear to be winning new business. We’ll be looking to change as we are unsatisfied in service for the fees we are charged. - AFG broker

BROKERS ON AGGREGATORS

PROFILE / JOSH BARTLETT

Q. You owned a couple of gyms before moving into mortgage broking. Why did you decide to change careers?

A: I completed a business degree at university many moons ago! I had been running the gyms for nearly 11 years and I was at the stage where I wanted a new challenge. After being in the business for so long I was on autopilot, I knew I needed a new challenge. I went to a Young Professionals in Real Estate event one night, and whilst there I saw a broker speak. The next day I put in motion the sale of my gyms. I always loved real estate, my parents had made me purchase my first home when I was 17, so I also had all the foundations in place from investing from an early age. I knew from that evening that broking was my new move.

Q.What lessons and transferable skills have you taken from your time as a gym owner and fitness instructor into mortgage broking? A: Work ethic, passion, drive and – most of all –

people skills. I spent many years talking and training many different types and ages; this is the most transferable skill. And adapting is a key ingredient.

Q.You won two AMA Young Gun awards last year. What do you think has been the key to your early success?

A: Being self employed, I knew right from the start that the only person that was going to be the key driver in my business was myself. My plan was to make as many phone calls as I could to every possible potential referrer, every lead, every day. Everybody in this industry comes in with a different background, with a

YOUNG,TALENTED

AND DRIVEN Josh Bartlett took an unconventional route into mortgage broking, having first set himself up as a gym owner and personal trainer. Two Australian Mortgage Awards (AMAs) later, and he’s well and truly got his mortgage broking career underway

42 | MPAMAGAZINE.COM.AU

PROFILE / JOSH BARTLETT

different possible lead source and a different existing database. I believe the only thing you can do is work the data 100% to the best of your ability every day.

Q.How long have you been working in the mortgage broking industry for?

A: After accreditations were complete, I took my first deal May 2011, so I am now close to the two-year mark.

Q.Would you have moved into broking if you didn’t have the capital from selling your business behind you? If so, do you think you might have entered as an employee, rather than starting your own practice from scratch? A: I was lucky enough to have sold a business and

have cash flow, however I did have enough equity to keep going for a few of years if that was necessary. I had been self employed for 11 years, so my plan at that stage of my life was to continue in this direction. However, for new entrants into broking I see this [the employee route] as a huge possibility and believe it could be a great strategy for others. By having this available we could bring great new talent into the industry that otherwise may never have entered.

Q. What have been the biggest challenges that you’ve experienced in moving into broking?

A: The one thing that I was challenged with initially was not having the instant cash flow for services rendered! You can do a lot of work for a client and you may not get paid for six months. Once the pipeline is built, the business can start building due to forecast cash flow. On another note, a major challenge was credit policy and understanding every bank’s procedures. I believe it is vitally important to understand a large number of banks’ procedures – not just one or two that you feel comfortable with.

Q. Have you been able to take more staff on board recently? If so, what effect has this had on your business’s productivity? A: I have hired a loan writer recently; we have a

full-time mortgage processor in the business. We have employed a full-time prospector, and a client care manager. The business is now five staff strong. We need a bigger office! Now we have managed to increase our activity. Last month we were able to do 49 appointments and take $13.7m, and next month we will be settling $13.4m.

Q. What are your goals going forward?

A: Our goals are to consolidate the business with the

“I went to a Young Professionals in Real Estate event one night, and whilst there I saw a broker speak. The next day I put in motion the sale of my gyms” – JOSH BARTLETT current staff, and continue to work on procedures. Our lodgement goals are now to start hitting the $20m mark, which I believe is achievable.

Q. How have you built up your referral base?

A: I have built some amazing relationships with real estate agents. We have put in place all the right tools so that our business relationships will continue to grow in the future.

Q. What are your tips for gaining and retaining clients?

A: Do what you say you are going to do: deliver a great service, be articulate in your explanation, leave no stone unturned – then ask for a referral! We now survey every customer 48 hours after their experience to ensure they received everything they needed out of the appointment.

Q. What keeps you motivated?

A: I love having an impact on the future of brokers in Australia. I believe we are still underutilised in the community. I am motivated to keep showing everyone that we are skilled and very good at what we do. I am a very competitive person also, so I like to continually beat my PBs.

Q. What do you most enjoy about mortgage broking?

A: The challenge, the constant change, the skillset required and the education that you can give to your clients.

Q. What do you think is the biggest challenge facing mortgage brokers at the moment? A: I believe the market is changing for the better. I think I jumped into the business in a hard market; this made me work hard for every lead.

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FEATURE / COMMERCIAL LENDING

COMMERCIAL LENDING:

TIME TO BUILD? Thereâ&#x20AC;&#x2122;s a high probability that you already have selfemployed clients on your books who are in need of commercial property finance. But how is this sector of the credit market faring, and how can you tap into the market?

44 | MPAMAGAZINE.COM.AU

hereâ&#x20AC;&#x2122;s an air of cautious optimism surrounding the commercial property finance market. The market may not have been booming in recent months but the opportunities are still there for enterprising brokers to tap into the non-residential sector. Additionally, as the SMSF sector continues its march as the fastest growing area within the superannuation industry, more and more business owners and property investors are looking to add a commercial property to their investment portfolio. While commercial lending may offer its challenges, lenders are encouraging brokers to harness their existing skillset and client base to make headway into the sector. MPA speaks to several commercial lenders for advice on how to go about making the move into commercial lending.

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FEATURE / COMMERCIAL LENDING

from SMEs for the funding of commercial property finance, in particular within the small to medium commercial property sector.

What would you say to mortgage brokers who are interested in writing commercial loans but don’t know where to start? A: By reconnecting with their existing customer base brokers may find it relatively easy to source potential clients in the commercial space, as many of their existing clients may be SMEs with commercial lending requirements. There is also potential for opportunities from their existing referral partners.

Mark Woolnough

MARK WOOLNOUGH

What are the key skills a broker needs in order to be successful as a commercial broker? A: A broker offering commercial lending in addition

How has the commercial market fared over the past 12 months? A: Slower credit growth and static consumer

to their current suite of services is a relatively easy transition. However, it is crucial that brokers have the education and experience required that will instil that further confidence with their clients. By diversifying into commercial lending it can allow a broker to meet more of their clients’ needs, firmly cementing that relationship. Although commercial lending can be

HEAD OF BROKER DISTRIBUTION, ING DIRECT

sentiment has impacted both residential and commercial borrowing. Throughout 2012, ING DIRECT increased its interest in the commercial sector with a renewed focus on our Priority Commercial Mortgage offer. Brokers who are new to the sector found our product offering to be a great way to enter the market – given we have aligned much of our commercial documentation with our residential offering. As a result, we have seen significant growth in our commercial lending portfolio throughout 2012; we expect this to continue in 2013 as we continue to deliver a number of enhancements to our commercial offering

“A rebound in residential property this year is expected to flow on to the commercial sector”

year is expected to flow on to the commercial sector. Historically with low interest rates, a return in buyer confidence will drive economic growth, stimulate the market and therefore energise the commercial sector. Economic conditions are looking solid for long-term commercial property investment and low interest rates make yields an attractive proposition for investors.

more complex than residential lending, ING DIRECT endeavours to make its commercial offering easily accessible for those brokers new to the sector. We also do not conduct annual reviews on commercial loans up to $2m that are performing well. For those brokers new to the commercial market, ING DIRECT’s experienced team of BDMs are readily available to support and educate brokers to understand ING DIRECT’s range of commercial products, policy and process and the various aspects of writing a commercial loan.

What sectors within commercial finance have strong growth potential for the future? A: The commercial property sector is expected to

What types of commercial finance would you recommend mortgage brokers start with? A: The ING DIRECT commercial offering is targeted

enjoy moderate growth. With the yields derived from commercial property becoming increasingly attractive, we believe there will be increased demand

at smaller commercial borrowers and investors, eg, loan amounts up to $3m, and for securities such as factories, warehouses, retail shops and office suites.

How do you expect it to perform this year? A: A rebound in the residential property market this

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FEATURE / COMMERCIAL LENDING

GEORGE SOTIROS

SENIOR MANAGER DIRECT & THIRD-PARTY CHANNELS, IMB LIMITED How has the commercial market fared over the past 12 months? A: It’s been a slower market in the last 12 months with a slow return in the last few, with some developments that had been on the back burner being completed and some new stock on the market. Credit demand has been subdued with demand still slow for new purchases and lots of negotiating on price. With the reduction in interest rates there has been more focus on retiring or reducing debt/increasing savings, rather than new borrowings.

How do you expect it to perform this year? A: As rates of return have come down for cash, opportunities exist for commercial finance and purchases in the small to medium sub-$1m category. There should be a movement from cash to other investment strategies – some into shares and some diversification into other investments, including residential and commercial property.

What particular sectors within commercial finance have strong growth potential for the future? A: Good quality industrial and small commercial holdings will appeal to the astute investor/owneroccupier. Leasing opportunities for equipment and motor vehicles. SMSF purchases in small commercial assets are another opportunity.

What would you say to mortgage brokers who are interested in writing commercial loans but don’t know where to start? A: Align yourself with another broker and/or lender who can assist you in putting the transaction together. Talk to your aggregator as they will have a number of experienced brokers who can mentor you and show you what to do. Remember everyone knows someone who is a small businessperson who needs finance. You need an ability to seek referrals and always ask for new

“Mortgage brokers should start with simple leases and small property purchases” 48 | MPAMAGAZINE.COM.AU

George Sotiros

business. At IMB we spend a lot of time with brokers helping them put the deal together assisting with their training and accreditation, as well as providing direct access to our underwriters once the loan is lodged to assist in converting to approval. This means that once you have the deal ready to go there is a good chance it will go all the way through to approval and settlement – and thus payment for brokers.

What do you consider to be the key skills a broker needs in order to be successful as a commercial broker? A: You need an understanding of the business – the ability to read financials and put together a good explanation and summary of what the business does, how it is trending and what the benefits to the business is in this transaction. You need patience as the loan may take some time to get across the line, but once you have a satisfied business customer the opportunity for future business is substantially better than the one-off consumer residential transaction.

What types of commercial finance would you recommend mortgage brokers start with? A: Start with simple leases and small property purchases. With lower interest rates it could be an ideal opportunity for an owner-operator to purchase the premises they are renting. If they own the premises, check who they are with, what is the conduct of the account, what terms and conditions – including rates, etc – and see what benefit you can provide as an overall solution. A restructure and/or refinance solution could be an option. Remember to look for the long term, not just the single transaction.

BRIAN STEELE

HEAD OF BROKER & ACQUISITION BANKWEST How has the commercial market fared over the past 12 months? A: The commercial market has been stable and highly competitive.

How do you expect it to perform this year? A: I am quietly confident that FY14 will offer stronger growth opportunities for brokers and lenders than we've seen in recent years.

What particular sectors within commercial finance have strong growth potential for the future? A: There is growth potential in any sector in which established businesses have survived the worst of the downturn and are seeking to grow again. Assetintensive businesses providing services to the infrastructure and resource industries are a good example of this.

What would you say to mortgage brokers who are interested in writing commercial loans but donâ&#x20AC;&#x2122;t know where to start? A: Fundamental to writing all loans is an understanding of your customers' needs.

What do you consider to be the key skills a broker needs to have in order to be successful as a commercial broker? A: The key is not to focus on developing commercial product knowledge, but instead focus on developing analysis skills to assess customer needs.

What types of commercial finance would you recommend mortgage brokers start with? A: I would recommend starting with products such as asset finance share as they have many similarities with retail products, such as online lodgment and speed of deal processing. From a product perspective, this is a good place to start for mortgage brokers new to the sector.

Brian Steele

FEATURE / COMMERCIAL LENDING

PHIL FOWERAKER

NATIONAL BUSINESS DEVELOPMENT MANAGER – SMSF AND CUSTOM LENDING, NATIONAL FINANCE CLUB How has the commercial market fared over the past 12 months? A: Over the past 12 months the commercial market (sub-$5m) has remained relatively stable, with increasing signs of activity in late 2012 which has continued into the first part of 2013. This has translated into a greater number of potential purchasers entering the market.

How do you expect it to perform this year? A: We believe there will be strong growth, especially in the SME market, and we are bringing to market new products which will assist SMEs acquire new commercial assets as well as help bring competition back into the market.

What particular sectors within commercial finance have strong growth potential for the future? A: Commercial property finance has been slower to recover than other sectors of the commercial market, and with improving general market conditions this sector is at a low ebb price-wise and is ready for those small businesses that are looking to purchase their own premises to make the leap whilst the market is still affordable.

What would you say to mortgage brokers who are interested in writing commercial loans but don’t know where to start? A: ‘Bring It!’ Commercial loans are almost the same as home loans, but are outside the code of NCCP. Today's brokers are well trained and should not be put off from writing commercial loans. The difference is the asset being used as security. With the support from our BDMs we can assist and train brokers in diversifying product offerings to clients.

What do you consider to be the key skills a broker needs to have in order to be successful as a commercial broker? A: ‘Cross sell’. Most brokers will have commercial clients on their books. This is an opportunity to go back to assist their existing clientele. As with a home loan, get an understanding of the client’s needs and financial position and ensure this is passed on in a clear fashion to the financier.

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Phil Foweraker

“We believe there will be strong growth, especially in the SME market, and are bringing to market new products to assist them” What types of commercial finance would you recommend mortgage brokers start with? A: I think brokers can start with any type. The broker can start with their own book looking for existing opportunities to assist clients and grow their own business. This also gives a controlled environment for the broker to build experience in commercial products before they go out to market with a new set of skills and product range on offer.

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FEATURE / COMMERCIAL LENDING

STEVE LAWRENCE JOINT HEAD OF ASSET ORIGINATION – CREDIT, LA TROBE FINANCIAL

How has the commercial market fared over the past 12 months? A: Our own figures, and anecdotal evidence sourced from aggregator groups, indicate that brokers’ volume of commercial loans has risen over the last 12 months. Our activity in this space has been very busy with the solid flows for our traditional solution-based lending as well as some portfolio assumption work. We have noticed a significant increase in development finance in the up to $2m loan size, which indicates to us that our product remains strong and flexible in this space, with the added bonus that we are able to complete the take out or completed dwelling finance on the other side.

How do you expect it to perform this year? A: Credit formation running at circa 3.8% annualised is not really saying much about the strength of underlying demand for finance in Australia right now. Most borrowers have over the past four years been paying off debt during this low rate environment and this Steve Lawrence is a good thing overall. The industry is yet to see what will happen now that some smaller non-bank commercial lenders have dropped out of the market or pulled back their appetite for some specialised commercial transactions. However, we have targeted to increase our penetration volume in the quality under-$2m commercial lending space. We also anticipate a highly contested market for origination of quality commercial business loans, and lenders who can offer a flexible solution will gain an advantage.

“We don’t see any difference between simple commercialtype transactions and residential lending” 52 | MPAMAGAZINE.COM.AU

What particular sectors within commercial finance have strong growth potential for the future? A: We are looking at the lease doc space as an opportunity for growth as investors position themselves in income generating assets. This particularly suits borrowers who don’t want all their business with one provider. Other traditional sections of the market such as development finance have been subdued recently and any movement here will depend on re-engagement of risk appetite by the major banks.

What would you say to mortgage brokers who are interested in writing commercial loans but don’t know where to start? A: Most aggregator groups now have referral arrangements with established commercial brokers who offer assistance for inexperienced brokers and we have found that this works well for all parties. We also find good support from our aggregator support BDMs in each state and territory. In reality only a few phone calls need to be made to assess the likelihood of a scenario going forward.

What do you consider to be the key skills a broker needs in order to be successful as a commercial broker? A: We don’t see any difference between simple commercial-type transactions and residential lending. Most brokers are self-employed and understand commercial dynamics underlying these loans. However, for more complicated transactions they will require a deeper knowledge of products and the ability to correctly package and analyse the financials of the underlying proposal. This is where a close working relationship with a supportive and solutions-based lender becomes imperative.

What types of commercial finance would you recommend mortgage brokers start with? A: If a broker was able to choose their first commercial transaction it would be best to start small, for example, a circa $750,000 family business borrowing similar to a residential loan with only the security type changing.

IAIN FORBES

DIRECTOR, AUSTRALIAN FIRST MORTGAGE How has the commercial market fared over the past 12 months? A: The commercial market has been somewhat quiet over the past 12 months. We have seen some lenders disappear, whilst the likes of Adelaide Bank have been competitive and offer good rates and service.

How do you expect it to perform this year? A: So far, 2013 has seen more activity. Hopefully this will continue as we approach an election later this year.

What particular sectors within commercial finance have strong growth potential for the future? A: The full-doc sector does have potential for growth, as Australian First Mortgage (AFM) are in a position to offer an LVR up to 75% of the purchase price/valuation, whereas most majors offer closer to 65%. This additional 10% is of great assistance to borrowers.

What do you consider to be the key skills a broker needs in order to be successful as a commercial broker? A: There is nothing that special about commercial lending. You ask most of the questions that you would on residential lending, with a few more specifics – such as rental income, duration of lease, etc. The most important factor is the serviceability of the loan. And finally, use common sense.

Iain Forbes

What types of commercial finance would you recommend mortgage brokers start with? A: Start with the smaller deals: Properties under a million dollars, and loans from $200,000 up to $750,000, for example. These could be for investment purposes, or as owner-occupiers.

How competitive are commissions on commercial lending? A: AFM pays brokers attractive upfront commission, as well as trailing commission. AFM offers full-doc, low-doc, lease doc commercial loans – and SMSF loans – to 65% LVR on a fixed or variable interest rate basis.

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FEATURE / COMMERCIAL LENDING

What do you consider to be the key skills a broker needs to have in order to be successful as a commercial broker? A: I think the key skill for a broker looking to diversify into commercial is awareness. Almost one in five Australians are self-employed or run a small business, so odds are if you’re a mortgage broker, a large segment of your client list could be made up of individuals who have commercial finance needs.

What types of commercial finance would you recommend mortgage brokers start with? A: A good starting place for brokers interested in Suresh Pillai

SURESH PILLAI

GENERAL MANAGER OF COMMERCIAL FINANCE, LIBERTY FINANCIAL

commercial finance is lease doc loans that are designed for commercial property investors, where servicing is based solely on a stand-alone lease rather than requiring traditional verification such as financial statements. It’s a streamlined process and a potential good first step for a mortgage broker moving into commercial lending.

How has the commercial market fared over the past 12 months? A: We’ve seen really strong growth in the commercial loan space over the past 12 months. It could be because small businesses have not been getting a fair go from their banks. Regardless, we’ve found those same small business owners are pretty good at finding alternatives and that’s meant growth for them and for us.

How do you expect it to perform this year? A: We’d expect the recent growth we’ve seen to continue well into the next 12 months.

What sectors within commercial finance have strong growth potential for the future? A: Small businesses in particular are finding themselves cash strapped which makes cash flow management a key consideration. We’re seeing emerging demand from self-employed business owners looking to release funds for working capital, consolidate debts and even meet ATO demands. The other big area of growth potential is investors and business owners looking to acquire commercial property via SMSF.

What would you say to mortgage brokers who are interested in writing commercial loans but don’t know where to start? A: Most lenders, like Liberty, recognise that some mortgage brokers may not have a wealth of experience in commercial lending. That’s why we provide training and deal-by-deal support. We have a dedicated team to assist brokers who are new to commercial lending.

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PURPOSE OF COMMERCIAL FINANCE COMMITMENTS

4% 24% 43%

12% 9%

Construction finance 4% Purchase of real property 43% Wholesale finance 7% Purchase of plant and equipment 9% Refinancing 12% Other 24% Source: ABS Lending Finance, Australia, Jan 2013

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FEATURE / COMMERCIAL LENDING

JONATHAN STREET

CEO, THINK TANK COMMERCIAL PROPERTY FINANCE Jonathan Street

How has the commercial market fared over the past 12 months? A: The market can at best be described as subdued over the past 12â&#x20AC;&#x201C;18 months with activity levels well below normal trends. There has been a combination of factors involved and different parts of the market have tended to behave in divergent ways. While office, professional suites and medium to long stay accommodation have generally held up reasonably well, light industrial and retail have experienced a difficult time. Some pockets are still struggling to find a stable floor with price declines of around 30% and in some cases more. Owner-occupiers have been more active than investors on the whole in picking up some good bargains, with still a significant percentage of properties for sale being attributable to mortgagee in possession actions and distressed sellers needing to de-leverage.

How do you expect it to perform this year? A: We have already seen some positive signs of increased activity in the first quarter with a lot more refinancing taking place, owner-occupiers stepping up and even investors now coming out and becoming more comfortable with existing tenants remaining in place and the ability to attract new tenants on reasonable terms. Low interest rates have contributed to a better environment and with a calmer outlook in the global financial hot spots compared to 2012; improved business and consumer sentiment appears to be playing a positive role as well. Barring further major adverse developments out of Europe, Asia or North America, we believe the interest rate cycle has bottomed out and the cash rate could begin to move in the other direction by the end of the year, which would signal a warming economy and a property market moving with it.

complexes near established transport corridors are typically in good demand, well maintained offices close to transport and other services such as government and health providers offer good value and attractive yields, while anything well positioned and maintained in that grouping of professional suites, medical centres, childcare and medium to long stay accommodation are among the most resilient.

What would you say to mortgage brokers who are interested in writing commercial loans but donâ&#x20AC;&#x2122;t know where to start? A: There are several ways to easily step into commercial lending. Many aggregators have dedicated commercial areas with experienced people who can help bring a deal together and place it with the most appropriate lender. Another way is via one of many specialist commercial broker groups and there are several in each state that we would recommend who are well equipped to get the deal set in return for sharing the commission. Then there is the direct route with a lender who will work with the broker although there are only a limited number of finance providers like Think Tank that readily offer that complete level of service and accessibility.

What do you consider to be the key skills a broker needs to have in order to be successful as a commercial broker? A: A successful residential broker will be able to transition into commercial lending particularly when dealing amongst their existing client base. Where loan sizes increase above $1m or deals become more complex with multiple business entities involved, developing skills in interpreting financial statements, understanding the primary drivers of different commercial property values, and being able to put together supporting credit submissions are definitely achievable through training courses, working with mentors and partnering with other experienced commercial brokers.

What sectors within commercial finance have strong growth potential for the future? A: It is still very much a market for the wary and the

What types of commercial finance would you recommend mortgage brokers start with? A: Start with loan sizes in proximity to home loans.

well informed. There are bound to be many areas and specific properties offering great opportunities for growth but at this stage where there are still downside risks very much in play, it is not possible to confidently project strong near-term growth outcomes across whole sectors. However, for the medium to longer term, well located retail precincts adjacent to vibrant residential areas with good access and low vacancy rates should do consistently well, modern light industrial strata

Once you get a loan over about $2m, there is typically more work involved in the submission, a call on technical knowledge and often a process of detailed Q&A with the lenderâ&#x20AC;&#x2122;s credit team if there are any complexities involved with the property or the parties to the loan. For most commercial loans under $1m, there are more similarities with residential lending than differences and the lender should be able to provide any assistance as required to get the deal across the line.

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BUSINESS STRATEGY / NETWORKING

WHAT TYPE OF

NETWORKER ARE YOU? Networking is a vital part of building up a mortgage broking business, but most people have been taught the wrong way to network, argues Julia Palmer

58 | MPAMAGAZINE.COM.AU

early every job title I have trained to network over the years has shared the sentiment that they dislike networking. There is no escaping the fact that the word ‘networking’ has a dirty connotation in business. In my opinion, this is because most people have been taught the wrong way to network or not been taught at all! It is an expectation of each role in some capacity or another but unfortunately most people fear, dread, or simply avoid it. Worse still are those who feel forced to network and put on a different persona to help them cope, making them quite awkward and sometimes even fake versions of themselves – which is never nice to meet! The financial services industry is one of the most networked but the last few years have seen the gaps widen and the pressure increase. Having worked closely with some of the market’s biggest banks, insurers, mortgage brokers and financial planners, I know only too well how vital relationships are to success. The good news is, by taking a look at how you network and making changes to be more strategic, you can increase your influence and operate in stronger networks. There is no doubt that the GFC permanently altered the business environment that we work in and the rate of change in organisations is only going to increase in the next 18 months. With this in mind, I hope to help shine some positive light on networking and the consequent networks we produce, with the view to helping individuals and organisations to get better returns from both. Apply your networking strategy to all your relationships: organisational, industry, suppliers, stakeholders, clients, community and, of course, personal.

MODERN DAY NETWORKING DEFINED Networking as an activity has a somewhat negative connotation in Australia, mostly due to how it has been undertaken. This view is changing as people realise the power that lies in having strategic connections that align with their business and personal goals. Let’s start to define strategic networking by outlining what it’s not: • It’s not just having 500+ friends on a social networking site • It’s not getting as many business cards as you can at a social or business gathering • It’s not about knowing lots of people and wanting

“Most people have been taught the wrong way to network or not been taught at all!”

– JULIA PALMER

to have coffee with all of them • It’s not simply wining and dining clients or prospects through expensive hospitality It is about: • Planning and establishing key connections • Knowing the right people – and knowing them well • Building a set of quality two-way relationships – not simply collecting a large quantity of connections • Becoming a trusted ally of your connections and becoming a hub – the ‘go to’ person in a network.

ARE YOU AND YOUR ORGANISATION RELATIONSHIP FOCUSED? The highest performing companies worldwide are differentiated by their ability to attract, leverage and retain relationships. Networks are more than just customers; attention must also be given to shareholders, partners, industry, the community, and employees. However, according to research conducted by the Business Networking Academy, 75% of business people admit that their existing networks do not support the results they need and 99% state they would like specific training on networking and network management. The questions to consider are: • Is there a gap between your intention and how you are perceived in your relationships? • How conscious or deliberate are you at creating a network that is aligned to your role? • How conscious or deliberate are you at managing a network so that it benefits you and those in it? Networks are powerful and relationships are important. Combine these two things with thought to the future and you have strategic networks – a strong set of relationships, which can deliver mutual value to those involved. Built and maintained with care, strategic networks can then go to the next level, allowing you to potentially leverage the power of other people’s networks.

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BUSINESS STRATEGY / NETWORKING

NE TW OR K

STRATEGIC: This group is the rare few who have invested in two-way reciprocal relationships. Influence, visibility and communication are strong.

INVOLVED: This group is active and often has quite big networks. They can lack focus, which impacts the quality and outcomes from their network.

FR OM

STRATEGIC

INVOLVED

RE TU RN

TY PE OF NE TW OR KIN GB YB EH AV IOU RA ND AC TIV ITY

TYPES OF NETWORKING VERSUS RETURN FROM YOUR NETWORK

ACCIDENTAL: This group doesn’t really think too much about networking but may be in the right place at the right time so get occasional rewards from it.

ACCIDENTAL

MISGUIDED: This group exhibits incorrect skills and often they are detrimental to relationship building eg, pronounced card collectors

MISGUIDED Source: Business Networking Academy 2013

WHAT TYPE OF NETWORKER ARE YOU? Given that we all network in some capacity, it pays to look at how you do this and if it is working. Unfortunately, many people have been taught the wrong skills and may spend a considerable amount of time and effort with no return. On the flip side, we all know someone who is a ‘born’ networker as well. Start by identifying where you fit (see diagram above) and then look at the steps you can take to improve.

BENEFITS OF A STRATEGIC NETWORK There is a growing body of research that correlates the importance of relationships with business outcomes.

“Every time you interact with someone (potentially new or existing to your network) you can either build or lose credibility” 60 | MPAMAGAZINE.COM.AU

Let’s face it, every time you interact with someone (potentially new or existing to your network) you can either build or lose credibility. The approach you take directly impacts the quality of the networks at your disposal. A strategic network will give you access to people with knowledge and authority. As you build relationships with these people you will build your own knowledge and also gain authority by association. A strategic network will deliver you introductions, referrals and endorsements which will lift you above the commodity debate. But you’ll need to deliver real value. A strategic network will help build your personal brand and allow you to be introduced as an authority, someone who delivers on commitments, as someone worthy of doing business with. In today’s ever-changing world, this is the best insurance against the winds of change any individual can invest in. Your very livelihood depends not only on what you know – but who you know, who knows you, and even more importantly, who is promoting you. Julia Palmer is a respected networking strategist and CEO of the Business Networking Academy, providing training to create and manage networks that work. To learn more visit juliapalmer.com or businessnetworkingacademy.com.au

LIFESTYLE / FAVOURITES

❤

Favourite things... Mark De Martino

national director of sales, Loan Market Place to be in Australia:

Vacation spot: Las Vegas

Tasmanian East Coast

Book:

Music:

Passion Capital by Paul Alofs

Rodriquez (see the movie Searching for Sugarman)

Drink: Vegetable juice

Hobby: Cooking and camping weekends away

Sport: AFL (Carlton), cricket (Aussies), football (Manchester United) and ice hockey (Calgary Flames)

Movie: The entire Lord of the Rings trilogy

Food: Yum Cha MPAMAGAZINE.COM.AU | 61

MOTIVATION / AGE DISCRIMINATION

So they say you’re too old… So colleagues or managers say you’re too old and not moving with the times? It’s probably not true. But if there’s a grain of truth to it, here are seven strategies you can use to shut them up and get ahead out what it is 01|Work you’re doing

Sometimes ‘old’ is a code for something else, like being grumpy, negative, low-energy or slow. Sometimes it just means old-fashioned. Sometimes it just refers to clothes and grooming, or technology, or how you do your job. Work out what behaviour is sending the message.

02|Stop acting old

Taking on new technology is what young people do. If you carry a paper diary, keep your client records on index cards, and never surf the web on your phone, you may need to upgrade. If you were 25 and doing this, people would see you as being behind the times. If you are acting old in these kinds of ways, and you want to change, enrol in a webinar or two, spend some time on YouTube learning to use social media, cloud-based software, imagesharing, Gmail and the latest apps. You may need to enlist the help of some young person who can explain all this. Just make sure it is someone who doesn’t work with you.

03|Stop looking old Cindy Tonkin is Australia’s office politics expert. Find out more at cindytonkin.com

Maybe you just look old. Or at least old-fashioned. Check when you last upgraded your glasses, your phone and your work clothes. If you are wearing an outfit that’s more than three years old, change it. Find a professional image consultant and get an image makeover. Get rid of your grey hairs. Trim or dye

62 | MPAMAGAZINE.COM.AU

“Taking on new technology is what young it’s true, make it people do” 04|Ifa selling point

your eyebrows and treat any errant ear hair. Get contact lenses. Never peer over the lenses of your glasses. And if you’re carrying a few extra pounds, losing them can shed quite a few years.

Maybe you’re old, you look it, and you don’t want to change. Fair enough. Consider turning this perceived weakness into a selling point for a demographic. Brand yourself for older clientele, the big batch of Baby Boomers, new retirees or about-to-retirees.

“Being older than those around you adds an air of authority”

on the authority 05|Play that comes with age

Being older than those around you adds an air of authority. Authority is one of Robert Cialdini’s six influence principles which allow you to persuade people more easily. Authority is why we display our certificates on our office walls, and why we pay more attention to the words of a person in uniform. Having authority tells clients that we know what we are doing. By being ‘older’ you have that kind of authority and credibility regardless of your ability. Use it.

06|Find a place it matters

No matter how young you make yourself look, you are still your age. Find a young and vibrant company in need of some gravitas. Lend them your wisdom. Be their figurehead. In this case having grey hair and furry ears is an upside.

out some 07|Cut experience

Finally, if recruiters in interviews consider you too old, take some

experience out of your CV. Mention your degrees but not the year you got the first one. Start your history 10 years later (no lying, just omitting). Combine this with an image makeover and you may be in business.

MPAMAGAZINE.COM.AU | 63

THE DATA / YOUR MORTGAGE INDEX

BUYER TRENDS Data from yourmortgage.com.au shows the borrower breakdown for the past months ANNUAL HOUSEHOLD INCOME 30 25

28%

25%

20 15

19%

15%

$300,000500,000

$500,0011m

0 $050,0000

$50,00170,000

$70,001100,000

$100,001150,000

ARE YOU BUYING THIS HOUSE WITH A PARTNER? 57% YES

$150,001200,000

$200,001300,000

LOAN PURPOSE

43% NO

DO YOU HAVE A GOOD CREDIT HISTORY?

65%

First homebuyer

20%

Property investment

15%

Refinance

HOW SOON DO YOU WANT A MORTGAGE? 18% NO

82% YES

48%

HOW MANY DEPENDENTS DO YOU HAVE?

In the next few months

19%

Not immediately

33% Right now! Hurry!

WHICH REPAYMENT METHOD DO YOU REQUIRE?

58% 18% None One 64 | MPAMAGAZINE.COM.AU

16% Two

6% Three

2% Four

11%

Interest only

89%

Principal & Interest