Mortgage Professional Australia magazine Issue 13.04 by Key Media

mpamagazine.com.au issue 13.4

DEBTOR FINANCE How to tap into this fast-growing SME market BUILD YOUR BROKING BRAND Gain recognition and boost business LEADERSHIP How to inspire and drive superb business performance

contents / issue 13.04

Debtor finance How brokers can get a foothold in the market for this SME finance solution

Weekly investigations Now online: cover story 30 | Top 10 Franchise Brokerages MPA’s rundown of the most successful broker businesses that have gone down the franchise route

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Mortgage professional salaries revealed How to stand out from the crowd » mpamagazine.com.au

contents / issue 13.04 NEWS & VIEWS 8 | 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 How to get ahead as a mortgage broker in a low credit growth environment

SMART BUSINESS 18 | Build your broking brand How every mortgage broker can build their brand and boost their business

27 | Dealing with bad bosses Nine coping strategies to get you through the day

54 | Leadership tips How to inspire and drive superb business performance

PROFILES 44 | James Chatfield talks service and diversification 62 | A-League star Daniel McBreen on making the move from football to broking

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

LIFESTYLE 28 | My favourite things ... Darrin Northey, CUA 58 | A day in the life of… Tracy Smith, Westpac

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News / round-up

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contents / editor’s letter

Onwards and upwards These are interesting times for the mortgage broking community. Demand for credit is down on historical averages, but mortgage brokers are expected to increase their share of the mortgage market as homebuyers and refinancers become ever-more savvy and discerning (p14). Given the nation’s current subdued credit appetite, you may be considering adding more strings to your bow in order to keep your business on the up. The fast-growing debtor finance market, for example, is one that industry insiders claim mortgage brokers are able to tap into with relative ease (p46). Deposit Power’s Keith Levy adds his voice to the cause by explaining how asking one simple question could help brokers to boost their revenue streams going forward (p24), while James Chatfield believes that the broker’s role has evolved from being ‘just a broker’ to one of educating clients on how to build their wealth (p44). Meanwhile, we explore how the nation’s franchisees are performing in this year’s MPA Top 10 Franchise Brokerages report (p30). The teams behind our Top 10 this year are putting some impressive numbers under their belts, and diversification is certainly one of the common themes behind the success of these businesses, but our winners provided plenty more diverse insights into how to run a successful broking business in the 21st century. Their stories certainly make for an inspirational read. Robin Christie, editor, MPA

connect

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

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COPY & FEATURES Editor Robin Christie contributors Nikki Heald, Walter Bellin, Cindy Tonkin production editorS Carolin Wun, Moira Daniels

ART & PRODUCTION Art director Jonathan Phillips senior designer Rebecca Downing designer Ginni Leonard

SALES & MARKETING NATIONAL SALES MANager Rajan Khatak account MANager Simon Kerslake marketing executive Anna Keane 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 Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Auckland, Toronto mpamagazine.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as MPA magazine can accept no responsibility for loss

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News / round-up

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News / round-up commerical

Lenders

Major banks not 'screwing borrowers'

Commercial boom on the way for brokers Resources projects should deliver a boom in commercial and equipment finance to brokers, it has been claimed. MFAA CEO Phil Naylor has predicted that brokers in resources rich states are set to see a surge in equipment and commercial finance. Naylor said growth in personal and home loan enquiries in NT and WA could foreshadow an influx of commercial and equipment deals as major resources projects get underway. Naylor cited the recent Veda Quarterly Credit Demand Index. The index showed NT and WA had strong growth in personal loan demand – up 14.3% and 13%, respectively – as well as leading the country in mortgage enquiries growth, with NT up 12.6% and WA up 11.1%. He said lower interest rates should “provide a boost” to commercial brokers in the months ahead. In spite of the predicted influx of demand, Naylor said many consumers were unaware of the role of commercial brokers. “There are many examples of where our members have delivered large savings for commercial customers … It’s a challenge to communicate the fact that our 2,500 [equipment and finance broker] members can deliver great savings for commercial clients,” he said.

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stats

25% The percentage of Australians who are concerned about the total amount they have to pay off debts each month Source: BT Australian Financial Health Index

Former RBA governor Bernie Fraser has lambasted the major banks, saying they’re putting shareholder interests above those of their customers. But one economist says the real story is not quite so simple. In a Fairfax interview Fraser said that, despite lenders claiming they’re striking the right balance when it comes to serving investors, savers and borrowers, when it comes to mortgage-holders, the majors are putting profits first. However, Macrobusiness economist, Leith van Onselen, believes that the major banks are not solely to blame. “I’m sure there’s an element of proof in [Fraser’s comments] – but the RBA bases interest rates on what borrowers actually pay and had banks actually passed on the cuts in full, they wouldn’t have dropped it.” Van Onselen argues that the RBA doesn’t set the rate independently and agrees with earlier comments made by current governor Glenn Stevens. “Glenn Stevens has been explicit on that point – we set the cash rate at what borrowers actually pay.”

News / round-up

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News / round-up succession

infographic

Brokers uncomfortable with succession plans, says CEO

Proportion of family income needed to meet loan repayments (%)

As more and more brokers hit retirement age, many are neglecting to arrange on-going support for their clients, says Choice CEO Stephen Moore, but being proactive on succession planning can reap big rewards. “It’s crucial for brokers to develop and actively implement a succession plan. Understandably, a number of Australian business owners don’t feel comfortable with facing the reality of discussing death or illness - and succession planning falls in the same category. However, given the ageing broker population, this is not something businesses can afford to shy away from.” Research shows clients tend to opt for brokers who are roughly the same age or slightly older than themselves, which can mean that brokers end up retiring around the same time as many of their clients. Geoff Rimmer, head of private wealth services at Equity Trustees, says that when advisers take over a retired colleague’s client list, they don’t always have the same loyalty or empathy towards the client as someone who has developed a relationship over time. Brokers need to establish or reinforce relationships with the next generation of the client’s family, says Rimmer. If this process is handled well, positive service during retirement can add a new generation of clients through enhanced family relationships. Moore says his aggregation business aims to ‘marry up’ brokers looking to exit their business with a broker who has similar philosophies and business acumen. “We do occasionally see extreme age gaps that may not resonate. For instance, if a client is in their 60’s and is working with a broker in their 20’s, then this relationship may need more work from the broker, however this is not a strict rule of thumb.” While Moore says it’s encouraging to see so many people retire as experienced brokers, he’s also worried the industry isn’t attracting a younger demographic to take over and says aggregators ultimately need to ensure their brokers have the right succession plan in place.

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Dec qtr 2012 Sep qtr 2012 Dec qtr 2011

35 30 25 20 15 10 NSW

VIC

QLD

TAS

Source: Adelaide Bank/REIA Housing Affordability Report

Recruitment

Aggregator's recruitment results surprising

stats

26% The

percentage of first homebuyers who say they will speak to a mortgage broker Source: RFi

Last July, Vow Financial began ‘aggressively’ targeting recruits around the country in an effort to expand its broker network – and the response has been surprising, said CEO Tim Brown. “In February 2013, a campaign began promoting our industryfirst three different commission models: flat fee, percentage and transaction, which has seen a surge in enquiry into the Vow Financial Group. Added to this, Vow’s diversification offer makes the overall offer truly unique. The

surprising results are that the enquiry for brokers has been much higher than we thought.” Prior to the campaign, Brown says Vow was expecting a 10% open rate to the email sent to industry professionals, but the actual figure ended up being over 25%. “We also saw a spike in the website page views from new visitors at over 3,000 for the 24 hours after the campaign, indicating market awareness of our new offerings,” said Brown.

News / Product round-up

product news

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

Who: Moneytribe What: Lead generation tool

Key features: • The site provides a platform for clients to anonymously ask sellers to ‘bid’ for their business by starting personalised competition requesting the best home loan product to suit their needs. • Lenders and brokers then post tailored product offers and advice, and the consumer can choose to buy from the offer that most appeals. • Anyone can explore and respond to active competitions via the Moneytribe website, and competitions can be shared to social media. They say: “As you know, leads are king in mortgage businesses. Moneytribe is nothing more than a lead generation business – albeit a lead generation business that uses social media engagement. Brokers are tapping into a new source of leads not generated by expensive TV ads... It’s free for brokers to use and they only pay if someone who receives an offer says they’re interested.” – Moneytribe director David Urpani. We say: Combining social media with lead generation is an innovative idea, but will brokers jump on board?

Who: ME Bank What: Commission bonus

Who: Pepper What: The Brand Hand campaign key features • An offer of marketing and branding help designed to directly support broker businesses • Brokers will be offered points for settling loans with Pepper, which can be redeemed for business and marketing tools • Points will also be awarded to brokers who show best practice standards when submitting applications • Marketing tools on offer to brokers include advertising, industry subscriptions and professional training courses

They say: “We are really proud of how we’ve built the Pepper brand and we want to support the brokers that support us, by helping them grow their brands. This year we are putting our money where our mouth is.” – Pepper director of sales and distribution Mario Rehayem.

We say: This is the first of several initiatives throughout the year designed to support business development for brokers. Watch this space for national seminars and workshops later in the year.

Key features: • 10bps bonus for settlements from $1m to $1,999,999 • 20bps bonus for settlements from $2m to $2,999,999 • 30bps bonus for settlements of $3m and above They say: “We’re hoping to create a buzz in the industry, highlighting how fairer banking resonates with customers and can help brokers win more business.” – ME Bank national manager of brokers Stewart Saunders. We say: The commission bonus, offered to brokers with settlements greater than $1m accumulated between 1 March and 30 June, is a bold way of increasing the profile of this non-major lender.

Who: NextGen.Net What: Roll out of ApplyOnline technology to Firstfolio

They say: "There's quite a bit of noise around the expectation for productivity. There's really no two sides to productivity nirvana. It's about building the right tools to allow all lenders and all brokers to work collaboratively to get the right outcome. The goal we have is to streamline the application process and to dramatically reduce the time and cost across all elements of lodgement through the supply chain.” – NextGen.Net sales director Tony Carn. We say: The drive for efficiency and faster turnaround times should prick up brokers’ ears. mpamagazine.com.au | 11

news analysis / Credit demand

the drive for

growth Credit demand is expected to remain flat for the rest of the year, so how can brokers go about growing their businesses?

rokers may be sick and tired of hearing that consumer confidence is the missing ingredient that’s keeping property market growth and credit demand in check, but this is a situation that’s unlikely to change this year. According to NAB Broker general manager of distribution John Flavell, the economic fundamentals that sit behind the property market suggest that capital growth should be forthcoming: Housing starts are at historical lows, population growth is strong, residential vacancy rates in the capitals are low and credit is available. However, it’s the demand for this credit that appears to be steadfastly refusing to budge, and Flavell describes NAB’s projections for the property market’s performance this year to be “sideways at best”. “Our models suggest there might be capital appreciation in property somewhere around the three, four or 5% range,” he explains. “Expansion is fuelled by people being willing to leverage themselves up and borrow – whether it’s consumer or corporate. And you can see that, as a nation, we’re still transfixed with stocking it away,

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which means that we’re not quite over the fear that the world may implode.” With the proportion of discretionary household saving sitting at record highs and deleveraging continuing to be the trend across most sectors, Flavell expects credit growth in the housing sector to sit at around 5% this year, which he describes as being well off historical averages.

"Expansion is fuelled by people being willing to leverage themselves up and borrow – whether it’s consumer or corporate” – john flavell

80% The

percentage of Australians who thought now was a good time to be buying a dwelling. Source: RP Data/Nine Rewards, February 2013

news analysis / Credit demand

what is the most important factor when purchasing a property?

19.8% Prospects for capital growth

11.7% Interest rates

52.2%

3.8%

Personal financial situation

Government incentives

9.4% Job security

1.1%

2.1%

Other

The level of housing supply

Source: RP Data/Nine Rewards, February 2013

Broker channel to grow

"I would really want to understand where the activity is stirring up at a more granular level” – craig mackenzie 16 | mpamagazine.com.au

33% The percentage

of Australians who thought now was a good time to be selling a dwelling. Source: RP Data/Nine Rewards, February 2013

But it’s not all doom and gloom for brokers. With the broker channel already accounting for 40% of all mortgages written, Flavell sees this figure increasing despite the overarching low credit growth environment. “The [economic] conditions are uncertain, but uncertainty creates opportunity. The system is still growing, and we believe brokers can continue to aggressively grow their share. That’s certainly our plan. We’re not going to back off at all. We think that there’s a real change afoot in terms of the channels that consumers will access to gain access to retail banking products.” So how can brokers make the most of this trend? Flavell suggests that there’s an opportunity for brokers to engage digital marketing and embed it as part of the way that they attract, retain and service customers.

“Don’t see it as competition, see it as something that you can use to complement your business – and continue to disproportionately grow your business,” he says. He adds that, while the store network, brokers and digital channels will all “compete for every customer they can get”, the theme of collaboration is one that would be well worth pursuing. “If you’re a large lending institution as we are then you can turn around and say that there’s a degree to which I can shape the market and there’s a degree to which I’m going to need to embrace the market,” he says. “As far as the strength of the [broker] market, it’s absolutely irrefutable. So you can swim against the tide and exhaust yourself or you can get on it and just do it. “People are voting, and it’s not surprising why: They’re voting for brokers, they’re voting for digital, and that’s how you link it all together to get the best outcome for the group.”

Sophisticated targeting RP Data head of corporate affairs Craig Mackenzie agrees that the demand for credit is going to be fairly flat over the course of 2013, but suggests that brokers can still use the data available to target those parts of the market where there is mortgage demand in their area. “People have been saving more than they have for a long time,” he says. “And so I think it’s about brokers becoming smarter and more sophisticated in terms of understanding where the demand is and where the hot spots are in terms of market activity – and where they need to be focusing their efforts.” “I would really want to understand where the activity is stirring up at a more granular level – so it’s understanding where property is being listed and who needs loans to buy that property. “It’s just understanding at a more macro level how much is for sale, what the rental yields are like, how long is it taking to sell and what sort of buyers are attracted to that market – and therefore what kind of demand for finance is there?” Using the information at hand, such as vendor discounting, listing numbers and rental yields, Mackenzie suggests that brokers can get a feel for the type of buyer who is going to be active in any given suburb, and target real estate referral arrangements accordingly.

business strategy / branding

build your

broking

brand

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Corporate trainer, author and businesswoman NIKKI HEALD of Corptraining unveils how every mortgage broker can build their brand and boost their business

usiness is not business – business is personal and people do business with people they like, trust and perceive as being credible. The mortgage broking profession is based on relationships so we need to consider how we can maintain this in today’s digital market. Each day we are confronted with a mass of technology, and there are certainly many benefits to working in a digital world – streamlined processes, ability to work remotely, increased speed and a multitude of choices. However, in a digital environment

one of the greatest competitors to mortgage brokers is the direct market. Unfortunately, there seems to be the perception of ease and accessibility around applying for mortgages online. Additionally, people think that it’s not only quicker to jump online to apply for their mortgage, but more cost effective. So, how does this impact on brokers when selling mortgages? Well, it now provides an opportunity for brokers to promote their value and the benefits of dealing with one individual. Something the direct market cannot offer, nor compete with.

VALUE OF THE BROKER The value of retaining a broker ensures personalised attention and this enables clients to build a genuine relationship with one point of contact at the brokerage. There is also the advantage that brokers are experts in mortgages and can carry out comparisons, saving time for their client. Additionally, brokers have knowledge of a client’s history and experience, so are in a prime position to ensure the correct mortgage is selected. Of course, the value certainly comes into play at the time of application, when clients have direct access to their broker who can provide support and guidance.

PERSONAL BRANDING Another way of promoting your value is to increase your professional visibility, and you can do this through personal branding.

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business strategy / branding

Personal branding relates to the way that you market yourself to the outside world and what message you project. It relates to how others see you and thankfully, you do have some influence over it. As we know, perception can be a powerful persuader and your personal packaging speaks volumes. Personal branding incorporates: • What you are – values, morals, ethics • Who you are – history, skills, qualifications • How others see you – reputation, credibility, trustworthiness • Authenticity – promoting a genuine and honest brand Perhaps you have not thought about your personal

“…the way in which you are perceived can influence a client’s purchasing decision”

brand, however, research has demonstrated that the way in which you are perceived can influence a client’s purchasing decision. Getting your personal branding right may be the difference between making or breaking a potential business opportunity.

‘NO FRILLS’ OR ‘QUALITY’? Additionally, personal branding has a profound impact on career progression. If you are an emerging leader intending to progress within the mortgage profession, ensure you promote your brand both internally (for promotions, opportunities, etc.) and externally to clients and colleagues. Your current personal brand will influence whether you are perceived as ‘no frills’ or ‘quality’. People like to be associated with quality so it’s worth striving towards developing a credible and authentic brand proposition. So, you may be thinking what is the value of developing my brand? Well, you may know how fantastic and wonderful you are, but other people may not be so aware! What we do know is that some brands are simply more credible than others. When you think of Mark Bouris, Lisa Wilkinson or even Lara Bingle you will think of a series of terms which you identify with their particular brand or profile. Interestingly, the perceptions we have of those brands will have a huge impact on whether you want to do business with them – your clients are no different. Consider your current personal brand – grab a piece of paper and write down a few terms which describe you. These could include:

Most Valuable Australian Banking Brands World rank

Australia rank

39 44 45 53 83 108 205 220 222 296 300 320 424 469

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Brand

Brand value

Brand rating

ANZ Commonwealth Bank of Australia NAB Westpac Macquarie St.George MLC Colonial First State Bankwest BT Financial Group Suncorp Bendigo Bank Bank of Queensland IOOF

US$5,832m US$5,296m US$4,982m US$4,108m US$2,273m US$1,603m US$575m US$535m US$529m US$322m US$316m US$277m US$196m US$161m

AA+ AA+ AA+ AA+ AA AA+ AAAA AAAA+ AAAAAA A+

Source: The Banker/BrandFinance Banking 500 Report 2013

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business strategy / branding

enthusiastic; the go-to-person; solutions-based; creative; dynamic; passionate; and knowledgeable.

FIRST IMPRESSIONS COUNT First impressions are powerful and are also an important component of your personal brand. We never get a second chance to create a great first impression, so it’s essential we get it right every time. Statistics show that impressions are formed within 3–30 seconds, so we need to maximise that small window of opportunity. During the first impression, people are assessing three major factors relating to the other person. Those factors, and the weighting of their importance initially, are shown in the graphic below:

Presentation

Speech

7% 55%

Body language

38%

So, during the first 3–30 seconds, 93% of the first impression we form about others is based on the visual, and we either like what we see or we don’t. Prospective clients are no different.

WAYS TO BROADCAST YOUR BRAND So after investing time, energy and commitment into developing your brand, it’s essential you consider ways to broadcast it. This is certainly not the time to be shy. One way is through networking and hosting events. You don’t have to host a huge event, you could simply invite colleagues and clients together for a morning tea. And ensure you network within your target or niche market, otherwise you are simply wasting time. Getting published is a fantastic way to get your brand out there. Writing articles, newsletters or even books is great for your profile. You can also sit on a broking advisory board and make sure that this is included in your bio. Your bio is a way of promoting you. It should outline

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GETTING THE DETAILS RIGHT… BUSINESS CARDS Make sure they are clean, crisp and in good condition. WEBSITE You need to have a presentable and professional website. LETTERHEAD A unified letterhead will present the right message to clients every time. BIO List your achievements and attributes and include your bio in all marketing material. LINKEDIN This is an excellent way to display your experience and skills online. Make sure you have a professional photo attached. ONLINE VISIBILITY Write for online websites and have your profile and opinions online as much as possible.

who you are, what you’ve achieved and your brand proposition. Be sure to include it in any marketing material that is distributed. Other ways of promoting your brand include chairing meetings, taking on community service, volunteering for high profile projects and delivering presentations.

GROW YOUR BRAND Continually work on your personal brand and challenge yourself to take it to the next level. Regularly review your brand and ask others for their feedback. Again, business is not business – business is personal and that’s why people do business with people they like. Your personal brand increases your visibility and influences clients’ purchasing decisions. And, what is said of you ultimately determines the quality of your brand. Nikki Heald is a corporate trainer, presenter, businesswoman, founder of Corptraining and coauthor of Views On The Way To The Top. Head to corptraining.com.au for more information.

Head to Head / Keith Levy

Power l a y Deposit Power national manager KEITH LEVY explains how asking one simple question could help brokers to boost their revenue streams going forward

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MPA: How did you progress through the finance industry to take the top job at Deposit Power? Keith Levy: I started off working with Westpac back in 1983, and was with them for about 10 years. I left the bank to join what was Royal and Sun Alliance at that time in the Deposit Power business in 1994. When I started I was one of four employees there. Then as the business grew I worked my way into the business development area, and in 2000 I relocated to Melbourne for two years to develop the Melbourne market for Deposit Power. I moved back two years later when the head office for our division relocated back to Sydney as the head of the business development team. In 2003 I was appointed the national manager for Deposit Power – a position I’ve basically held until late last year when the business was sold to CBL Insurance.

MPA: What changes did the business sale involve? KL: With the sale came not only a change of owner but also a change in guarantor for the Deposit Power product. Vero has exited the deposit guarantee market and no longer issues new guarantees – although they are continuing to manage the run-off of the existing portfolio. The purchase was finalised in December 2012. It was purchased by a New Zealand-based insurance company – CBL Insurance Ltd. I stayed with Suncorp to manage the run-off and the transition of the business until the end of last year – and then in early January, I commenced my new appointment as general manager of Deposit Power with CBL.

MPA: Will the change of ownership affect Deposit Power’s goals going forward? KL: As it is at the moment, it’s business as usual. However, the plan is to certainly increase the awareness and grow

the deposit guarantee portfolio here in Australia. The benefits of CBL as an owner are that they understand the business that we’re in – as they’re a surety and insurance specialist. And they’re as passionate about the Deposit Power business as we are. So, with them comes new enthusiasm to continue to grow the product.

MPA: Where do brokers and aggregators fit into the increasing awareness plan? KL: The brokers are a huge part of our business. They account for around two-thirds of our total business. We have some great relationships with the aggregators and their networks. What we want to do with all of our customers, but particularly the brokers, is just make the whole process easier and more streamlined. And really for us it’s all about service. We’ve got an industry-leading service model, but we are looking for ways to improve it further. Probably one thing that some brokers won’t know is that we offer a full delegated authority to brokers who have a proven track record and experience in the industry. So, essentially, the approval process can be instantaneous. And, for any applications that are not within the normal box in terms of the information provided, we have a service where most applications are looked at and responded to within four hours. We’re constantly looking at ways to streamline and improve the service, which obviously in turn will help the aggregators, brokers and their customers.

MPA: Are you looking for broker feedback on how to streamline the service? KL: We get a lot of feedback through the helpline, and also in talking to the aggregators and through our business development people. But we’re always looking for more feedback.

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Head to Head / Keith Levy

“Brokers are a huge part of our business. They account for around two-thirds of our total business” – Keith Levy

– has not increased in nearly a decade. So we’ve been able to maintain the fee structure, pay commissions to our intermediaries and be successful that way through the support of our intermediaries.

MPA: Have you noticed any trends in terms of the type of borrower coming to Deposit Power now? KL: The product is suitable for anyone buying residential

what the product is and how it can help their customers. But essentially we want them to treat it more as a service to their clients rather than a cross-sale opportunity. We find that people use the product because they genuinely need it – because generally they don’t have other options of paying the cash deposit. So what we would simply ask brokers to do is ask the purchasers how they are going to pay the deposit. We’re finding that more and more people are saying ‘I haven’t got it, what do I do?’ This is a great lead for brokers to offer an additional service to the client. The main game of the broker is obviously to secure a home loan, and we think that the Deposit Guarantee product is a great way of helping brokers to do that.

property, and it’s basically in three typical scenarios: first homebuyers, upgraders and investors. Depending on the various government first homebuyer incentives, and what’s happening in the share market and so forth, the balance does fluctuate between first homebuyers, investors and upgraders. But there’s always a very strong demand from upgraders, and that’s what we’re seeing at the moment. The product is particularly useful for those people because, whilst they have assets, they typically don’t have the 10% cash lying around. So that’s where deposit guarantees typically come to the fore. At the moment, apart from upgraders being the key market, the outlying areas of the capital cities and, in particular, the regional areas are the strongest. The average deposit that we issue is around the $45,000-mark, so that would indicate that the purchasers that use our product are in the mid-range demographic. We issue around 30–40,000 guarantees per year, which is a reasonable percentage of the total real estate sales market nationally.

MPA: How do you help brokers who want to get the deal over the line using a deposit guarantee? KL: We offer training. We have various methods of

MPA: Is the guarantee secured against the client’s equity? KL: The guarantees are essentially an unsecured

training, from face-to-face, via a disk or telephonebased. The training that we do is also accredited with the MFAA through their professional development program, so brokers can earn PD points by doing the training. But we suggest to anyone who’s looking to put an application in – if they’re unsure about anything – to call the 1800 helpline and our specialists will be able to give them the right information and the best way of getting the deal through as quickly as possible.

product. So we’re not taking security at all apart from a counter indemnity that is signed by all purchasers. What we do is assess the purchaser’s ability to complete. So, in the situation where they’re selling and buying, the purchaser will need to have sold, or simultaneously sign contacts for the sale and purchase, or have finance in place to cover the purchase price. So it’s unsecured, and because of that our assessment criteria is simply to ensure that the purchasers have the ability to complete the purchase. And if they can demonstrate that through the various scenarios, we’re happy to give them the deposit guarantee. It’s pretty simple.

MPA: Are there any features of Deposit Power that brokers may not be aware of? KL: We’re in our 24th year, so brokers should be aware of

MPA: How are brokers remunerated for selling Deposit Power products? KL: With any of our intermediaries – whether they’re going through an accredited aggregator, or even direct – we pay commissions. Those commissions are quite a high percentage of the fee. In saying that, we don’t believe or promote commission as the biggest incentive for brokers to sell Deposit Power. The biggest incentive for brokers should always be to secure the home loan sale and provide a great experience for their customers. The fee for our short-term product – up to six months

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MPA: What other assets do customers typically provide to satisfy the criteria? KL: The typical scenario might be that they have some equity in their home. Or a share portfolio that they don’t want to disturb, or want to retain because the sale proceeds of the house are coming through. Other types of acceptable assets include investments such as term deposits or cash held with a financial institution.

motivation / difficult bosses

Bad bosses

9 coping strategies to get you through the day Bad bosses: we’ve all had one. Whether they’re micromanagers, tantrum-prone or preoccupied, here are nine ideas for how to cope with a difficult manager out what 01|Work pleases them

Bosses are people. Just like you do with clients, parents and spouses, find out what they want and give it to them. It’s no surprise; they will like you better. A gift could be something tangible like chocolate or diamonds, but it’s more lasting to find out what they value: Tim loves to be loved. Tell him you love him (literally). Brad likes to know things are under control: say “everything’s under control” and show him a plan. Sandra likes to be informed. Start every email with “just so you’re informed”. Discover what value is important to your boss and work out how to satisfy it every day.

02|Speak their language Cindy Tonkin is the author of ‘The Australian Consultant’s Guide – setting up your consultancy business profitably and painlessly’ and ‘Consulting Mastery: being good is not enough’. She is Australia’s office politics expert. Find out more at politicalacumen. com.au

Andrea loves to see pictures, graphs and colour: Update her with something she can see. Anthony needs to hear good (or bad) news: Make sure either is delivered in your most pleasant sounding voice. He’ll love it if you read to him as well. Susan wants to experience your successes: Walk her through them, let her meet your prospects for a minute. Give her a moment to really get what you’re on about. Your boss has a preferred language (visual, auditory or kinesthetic are the names for the languages). Speak it.

03|

Read their mind

This may seem impossible, but what most impresses your boss is when you anticipate what they want. This means completing a task and

answering the next question before they ask it. Let’s say you’ve created a Facebook page that brings 20 new leads. Don’t just report back on the new leads. Read your boss’ mind: uncover where the leads come from, identify the segment and evaluate the value of Facebook as a lead generation tool. Ask yourself ‘what next?’, and be ready to answer it if they ask.

they’re picky, give 04|Ifthem half

Some bosses just don’t seem to be able to keep their hands off your work. So don’t give them the completed thing to pick holes in, use their brains to help you get the job done. Don’t go in with a fully formed strategy for improving the back-office processing; go in with a newborn strategy. People feel better about a strategy when they feel they have created it themselves. Allow your boss to have that illusion of control. And stop frustrating yourself.

05|Stay out of the way

One short-term strategy for managing a bad boss is the simplest. Just stay out of their way. Keep your nose clean and stay under the radar.

out how they 06|Work judge you

Anne is not a morning person. She found out her boss judged her on how early she got to work. She managed her boss more effectively when she arrived at the office at 7am. Her boss felt Anne

was working harder, even though she spent the same number of hours at the office. You may have formal performance indicators like deals completed or dollars billed, but check out if your boss has a hidden measuring system, too. They may measure you by the quality of your relationships in the office, the sound of your voice, how stressed you seem, or what time you get to the office in the morning.

an 07|Crowd-source answer

Don’t reinvent the wheel: other people have worked for this person before. Some of them have succeeded well. Take them for a drink and ask for tips.

how you 08|Reframe see them

When Rosie pictures her difficult boss as a four-year-old in nappies she can’t help but smile. Smiling changes how you interact with the world. When you suppress negative emotions your blood pressure increases. People see this. Try picturing them with nappies and a dummy, and see if that changes how you interact with them. And never tell anyone what you’re doing.

09|Make plans

Finally, if you have tried all there is to try, then make plans to move on. If you can’t get on with this boss, work out how you can get away from

them. Soon.

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lifestyle / favourites

❤

Favourite things... Darrin Northey group general manager – distribution, CUA

Vacation spot: Relaxing on the beach and exploring all there is to be seen in Bali

Sport: An absolute rugby union die-hard – the Brumbies are looking good this year

Movie: Tough to split between The Shawshank Redemption and Scent of a Woman. More recently, Argo is simply outstanding

Music: One of the most talented artists on the planet, Mike Rosenburg, known as Passenger. Could listen to his music all day

28 | mpamagazine.com.au

Drink: Not much better than a cold Stone & Wood Pacific Ale on a hot summer’s day

Place to be in Australia: No question at all, one of the most incredible places on earth – Byron Bay

Book: Still to this day, I haven't found one better than The Celestine Prophecy by James Redfield. I'll also settle right in to any Harlan Coben or Michael Connelly story as well

Hobby: Apart from keeping fit, I'll take all the spare time I can to jump in the car and just explore… anywhere

Special Report / Top 10 franchise brokerages

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Top 10 Franchise Brokerages 2013 Doug Lee ...

e truly r a s e g a r oke These br e most of having h making t ise system firmly h the franc m. What’s the e behind th heir success? t secret to

he franchise model is a tried and tested route to running a brokerage that has its obvious appeal: it’s a business model that provides established systems and back office support, as well as the consumer appeal that a nationally recognised brand provides. Sure, it’s not for everyone, but numerous brokers nationwide are thriving under the franchise system. And, judging by the quality of submissions to MPA’s Top 10 Franchise Brokerages report this year, there are clearly opportunities to build up a solid business under the wing of a franchisor. Once again, we have approached Australia’s franchisors – large and small – and ranked their top-performing brokerages to discover who has reached the top of the pile in terms of loan book, annual volume and customer service. As was the case last year, we have used a broad brush when using the term ‘franchise’ so that all of the nation’s top mortgage broking brands are represented. While a large number of the companies approached operate a franchise model in its truest sense, others offer a more flexible variation on the franchise theme. The ‘branded aggregator’ model, for example, is represented – which includes groups that require or license brokers to use a national brand.

Macquarie is proud to support the MPA special report on the Top 10 Franchise Brokerages in Australia. We congratulate the successful brokers and acknowledge their achievements and efforts. Macquarie has always been, and will continue to be, a strong advocate for brokers. We have a single minded vision that our brokers are central to everything we do. We recognise the important role that they play in the industry and we continually strive to provide solutions which empower engagement between them and their clients. Our mortgage offering is a key part of our business and we value the support we receive from the intermediaries who work closely with us to continually identify innovations that fit with their business model and provide tailored solutions for their clients. With this in mind, we recently launched a media campaign that put the broker at the centre of our value proposition both in our call to action but also by providing a local broker search function on our campaign website. Continually building on and exploring new areas to enhance brokers’ practices in both the short and long term is integral to Macquarie. It’s a pleasure to be associated with a Report that identifies and rewards excellence, commitment and innovation. Congratulations again to all who have been recognised in this year’s Top 10 Franchise Brokerages in Australia. It’s a significant accolade and one you should all be very proud of. Doug Lee Head of Sales – Mortgages, Macquarie Bank Limited

Methodology All of Australia’s major franchise groups and branded aggregators were approached and asked to nominate up to five brokerages to take part in the report. All of the nominees were then ranked according to the following four criteria:  Total loan book value  Settlements for the 2012 calendar year  Average volume per broker/loan writer  Conversion rate The idea of ranking each brokerage using these four varied metrics is to create a level playing field where size – while an element of the scoring system – doesn’t override all other considerations. Once its scores for all four categories were totted up, each brokerage came out with an overall score which was then used to determine its rank. The nominees who amassed the top 10 scores overall made it into the report.

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Special Report / Top 10 franchise brokerages

Aussie Parramatta

Total loan book:

Location: Parramatta, NSW

Total settlements 2012:

A new entrant to the Top 10 Franchise Brokerages line-up this year, Aussie Parramatta has stormed into 10th place with a solid performance in each of the given categories. Franchisee Ross Le Quesne reveals more.

borrower breakdown

$398,000,000 Refinancers:

$142,000,000

25%

Number of brokers: 4 Average annual volume per broker:

$35,500,000 Conversion rate: 82%

Other (including first homebuyers): 50%

What is the secret to a successful brokerage? The secret to a successful brokerage is providing an outstanding customer experience right from initial contact. I try to have a thorough understanding of the client’s needs and their wealth journey. I have maintained relationships with a number of business partners and customers, which leads to some great referrals that grow my business. Throughout it all though, I really focus on what we can do for the customer and add value to their priorities.

What are the advantages of being part of a franchise? The strength of the brand is powerful in attracting customers. Aussie is a brand they trust, and we have access to Aussie’s marketing leading systems and processes – as well as functions like marketing and IT support .

What trends are you noticing this year so far? I am seeing many first homebuyers are presenting as investors, and that most of our clients come to us very well informed. There is also a lot more activity in the property investment market with good yields and low rates. With recent changes to superannuation I have also seen more interest in SMSF lending.

What are your goals for the year?

Scott Le Quesne

Ross Le Quesne

How important are referrals to you, and what is your strategy for increasing referral business? Referrals are critical to our success, and to generate those I always ensure Aussie Parramatta embraces our systematic sales process. I also think it is crucial that you always do what you say you are going to do. I really have a ‘give your best to your best’ mentality when it comes to referral business, and this keeps the referrals coming in.

Have you diversified into other income streams? If so, what is your strategy for diversification?

I have set myself a target of 15% growth settling $160m a year and portfolio growth of 25%. I would also like to see my two new brokers hit the ground running and settle $3m a month .

No, we focus on being the best at what we do and partner with other likeminded professionals.

How do you market your business and generate leads?

Be flexible to change and look for opportunities; become a passionate learner about lending, property, business and investment; and align yourself with likeminded professionals who have the sort of success that you wish to achieve.

Business alliance partners, database marketing, existing customer referrals and shopfront presence in a high foot traffic location.

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Investors:

What’s the most important thing a broker can do to grow their business?

Loan Market Oakleigh

Total loan book:

Location: Oakleigh, VIC

Total settlements 2012:

Another new entrant in this year’s Top 10, Alex Shumsky’s Loan Market Oakleigh outfit is writing some tidy business for a threebroker team. Shumsky explains to MPA that a bit of good old fashioned hard work goes a long way.

What is the secret to a successful brokerage? Like any business, success is built upon a foundation of hard work, dedication and structures. It’s also incredibly important to have the right staff and brokers working with you. Without the support of my team our brokerage wouldn’t be able to provide the great service that it does.

What are the advantages of being part of a branded aggregator? Loan Market offers my business several resources and advantages that allow me to focus on writing loans while knowing my brokerage is supported by a strong brand that’s heavily marketed in the right way. In the past year alone we’ve had a national television commercial expose our brand on a national level. We also have some of the best editorial publicity in the country.

What trends are you noticing this year so far? This year is all about the return of confidence into the economy and housing market. Auction clearance rates are up, sales are up and there’s a strong feeling of optimism about the housing market. We’re at or near the bottom of the interest rate cycle which is helping encourage many buyers get into the market. While the RBA is unlikely to drop rates much further this year that does indicate our economy is strong and that consumers aren’t going to need lower rates to start spending again. To start the year I’ve seen an uplift in enquiries from first homebuyers.

What are your goals for the year? I’d like to grow my volumes by 25% and continue my strong relationships with my referral partners. With the market always evolving I want to make sure my referral partners know how I can help their clients achieve their financial goals. I’m also highly dedicated to helping the other brokers in my business achieve success and am going to work hard to ensure they all increase their volumes.

borrower breakdown

$390,000,000 Refinancers:

$110,000,000

50%

Number of brokers: 3 Average annual volume per broker:

Investors:

$36,666,667

15%

Conversion rate: 85%

Other: 5%

First homebuyers:

30%

How do you market your business and generate leads? Besides the marketing initiatives taken by Loan Market at a national level, I market myself through the Ray White offices I’m in partnership with. I generate the majority of my leads through referrals from past clients and their family and friends.

How important are referrals to you, and what is your strategy for increasing referral business?

Alex Shumsky The word-of-mouth referrals will always be an important part of my business, but I find they’re even more important for the newer brokers in my team who are working hard to grow their businesses. Having the right systems and procedures in place for my team to properly service the referrals has been the key to making sure our referrals are always coming in.

Have you diversified into other income streams? If so, what is your strategy for diversification? This year I’ve begun to offer financial planning and risk product sales. I think it’s important we continue to find ways to add value to our clients and make sure that we’re offering them the best service we can.

What’s the most important thing a broker can do to grow their business? The most important things an office can do to grow include: having a clear structure in the office that highlights the strengths of individual team members; having a strong work ethic and the expertise to be able to fully understand your clients’ financial situation and what loan product will be right for their personal circumstances.

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JOINT

Special Report / Top 10 franchise brokerages

Club Financial Services Gippsland

Total loan book:

$330,251,042 Total settlements 2012:

$84,378,053

Location: Traralgon, VIC

Coming in equal seventh, new entrant Club Financial Services Gippsland has been bringing in some phenomenal figures for a regional outfit. No doubt Rob Egan and his team’s customer focus has played no small part in their success.

Number of brokers:

Average annual volume per broker:

$42,189,027 Conversion rate: 92%

Rob Egan

What is the secret to a successful brokerage? There is no secret to a successful brokerage or any successful business for that matter without the customer being the prime focus. We pride ourselves on being able to cater to our customers’ needs. Finding the right lender and product is paramount. Partnerships with our third-party lenders are also built on mutual respect. And last, but certainly not least, having a great team is essential – and I am extremely lucky to be surrounded by a very loyal and dedicated team.

What are the advantages of being part of a franchise? A good franchisor actively promotes themselves to help build the brand and provide the right tools for you to work with. By being part of a group we can measure ourselves against other franchisees and look at ways in which to improve and share information. The franchisor also assists with staff development and training and ensures you meet regulatory requirements.

What trends are you noticing this year so far? We have seen a decline in first homebuyers and construction loans, but an increase in property investment and refinancing. We have embraced the trend for diversification into more financial products to better serve our clients, but without losing focus of our core business.

What are your goals for the year? Streamline our office procedures by utilising as much electronic means as possible. Specifically target our database to generate cross-sell opportunities for vehicle and equipment finance, as well as insurance and wealth creation with our in-house financial planner.

How do you market your business & generate leads? Almost all of our business comes from our existing clients who are either buying, selling, refinancing or referring

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their family, friends and work colleagues to us. We have also built respectful relationships with likeminded businesspeople – many of whom are our clients also. We keep ourselves in the public eye by placing a weekly ad in the local paper, and on occasions run radio campaigns targeting a specific audience – ie first homebuyers, etc. We sponsor numerous sporting clubs where we get exposure from our signage all year round, where we attend as many games and events as possible. We send out a quarterly newsletter, birthday cards, Christmas cards, yearly calendars and milestone event cards also.

How important are referrals to you, and what is your strategy for increasing referral business? Referrals are most important to any business, word of mouth referrals best of all. A happy client is the best source of referral because they continue to refer their family, friends and colleagues. We don’t receive, nor have we ever paid referral fees to anyone. All our referrals are above reproach and we are respected for this attitude. We are also in the early stages of trying to get a BNI (Business Network International) up and running in our town.

Have you diversified into other income streams? If so, what is your strategy for diversification? Diversifying income sources has become very important in our business, largely due to the reduction of commissions in recent years. We have started a financial planning business and have commenced providing vehicle finance, which we hope will evolve into equipment finance as well. We also have a general insurance referral arrangement in place. All of these new ventures are providing our clients with more choice; they have embraced these services and are providing us with a new revenue stream without a lot of effort or cost. My strategy is to get our clients, new and existing, to always think of us first for all their financial needs.

JOINT

Loan Market Earlwood

Total loan book:

Location: Earlwood, NSW

Total settlements 2012:

Jason Basseal has made an impressive entry into this year’s Top 10 with some solid numbers and a near perfect conversion rate. He tells MPA why every successful broker needs to have a quality team by their side.

What is the secret to a successful brokerage? Communication with your clients is a key aspect of any successful brokerage. Successful offices make sure that their clients are fully informed through the whole process and that they’re also confident in the product they’ve chosen. Strong partnership with lenders is also a critical part of being able to provide a service level above other options a customer has, when looking at a home loan. However, the biggest secret comes down to the team you work with. Without the dedication, support and excellent customer service of the staff in my office, we wouldn’t be achieving the results we are. Each steps of the home loan process is delegated to someone in my office who has the expertise to confidently guide the client through their journey.

What are the advantages of being part of a branded aggregator? Being part of an aggregator that offers the right marketing support is a huge advantage for my business. Loan Market puts a significant amount of effort in to

borrower breakdown

$202,000,000 Refinancers:

Investors:

35%

40%

$71,000,000

First homebuyers:

Other:

Conversion rate: 97%

15%

$71,000,000 Number of brokers: 1 Average annual volume per broker:

10%

make sure our brokers are well represented on television, in newspapers and on the internet. Being part of a well-known brand gives me the confidence to focus on the areas of my business that I specialise in while knowing I’m being supported by the marketing efforts of my aggregator.

What are your goals for the year? Last year was a huge year for my business – we increased our volumes by 110%. This year I’m aiming to maintain consistency from last year’s results but still achieve areas of growth with certain types of borrowers and properties. I also want to continue to mentor my team and help them achieve their professional and personal goals. The success of my business largely depends on supporting and encouraging them to be the best they can be.

How do you market your business and generate leads? I generate leads through my existing database and client referrals. We have a very organised back-end process. I rely heavily on Loan Market to support me in marketing myself online. I have a webpage which is fully optimised for my local area and the key words I am going after. I’m finding many of my referral clients will look at my website before contacting me so it’s been incredibly important to have this great tool.

How important are referrals to you, and what is your strategy for increasing referral business?

Jason Basseal

Referrals are extremely important to my business. My strategy to increase the number of referrals starts with being in systematic contact with my database and providing valuable insights and considerations for their home finance needs. From there it’s all about making sure I’m at the top of my client’s mind whenever they – or anyone they know – are considering their home loan options.

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Special Report / Top 10 franchise brokerages

Mortgage Choice North and West Brisbane (and others) Location: North Brisbane, West Brisbane, Townsville, Mt Gravatt (all QLD)

borrower breakdown

Total loan book:

$1,090,297,961 Refinancers: Total settlements 2012:

$227,199,496

What is the secret to a successful brokerage? The secret to success comes down to hard work, great staff and a culture based around being the best we can be.

“We assist with meeting our clients’ full needs, whether it is by sourcing commercial finance or by putting them in contact with a quality financial planner”

45%

First homebuyers:

Other:

Number of brokers: 7 Average annual volume per broker:

$32,457,071 Conversion rate: 72%

Chris and Letitia Vitale have established a strong foothold in the Queensland market, with a franchise spanning three offices in the Brisbane vicinity and one in Townsville. The seven-broker team has now built up a total loan book of more than $1bn, and shows no signs of stopping there.

Investors:

16%

17%

22%

What are the advantages of being part of a franchise? The support of the franchisor team and the credibility that comes with the brand.

What trends are you noticing this year so far? From what we are experiencing, the market is looking up. There are more client enquiries coming through with people investigating fixed interest rates and investment property purchases.

What are your goals for the year? The overarching goal is to see our business write $300m in settlements this year.

How do you market your business and generate leads? In addition to traditional marketing activities, we are very focused on building strong relationships with our referral partners.

How important are referrals to you, and what is your strategy for increasing referral business? Referrals are a very importance aspect of our business. In fact, 70% of our business comes from referrals. We foster our referral relationships with open dialogue and 24/7 availability.

Have you diversified into other income streams? If so, what is your strategy for diversification? We assist with meeting our clients’ full needs, whether it is by sourcing commercial finance or by putting them in contact with a quality financial planner.

What’s the most important thing a broker can do to grow their business? Letitia Vitale

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Chris Vitale

Meet with every lead you receive and build rapport with them from day one.

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Special Report / Top 10 franchise brokerages

Mortgage Choice Cheltenham

borrower breakdown

Total loan book:

$724,205,965 Total settlements 2012:

Location: Cheltenham, VIC

What is the secret to a successful brokerage? It’s like the ‘secret’ to weight loss: eat less and move more. Everybody knows what they need to do, but it’s the doing part that is the hardest. It’s much easier to try and find a miracle solution. Broking is the same; there are no magic bullets (well I haven’t found one yet). We all know what we need to do to be better. For many, it’s striving to maintain the discipline that is the greatest challenge.

$148,537,955

Other:

Investors:

34%

30%

Number of brokers: 6 Average annual volume per broker:

$24,756,326 Refinancers: Conversion rate: 90%

22%

First homebuyers:

14%

What are the advantages of being part of a franchise? The backing of the brand and support of the team.

What trends are you noticing this year so far? The property market seems stronger particularly in Perth, Brisbane and Melbourne. First homebuyers are beginning to re-emerge and the fixed loans price war has resulted in an increased number of customers choosing to fix their loans.

What are your goals for the year? We have 10 business goals that we focus on all year ranging from financial and sales targets, to staff retention, training and community contribution. They are reviewed and tracked every week by the team.

How do you market your business and generate leads? We have a strong online presence, which leverages off the Mortgage Choice brand. This generates our new flow of business. The rest of the marketing budget is spent on our client retention program to gain referrals and earn the repeat business.

How important are referrals to you, and what is your strategy for increasing referral business? All well-established broking businesses need a constant stream of referrals. Our strategy is simple: provide excellent lending solutions that are backed by good customer service and maintain contact with clients. The repeats and referrals flow from that.

Have you diversified into other income streams? If so, what is your strategy for diversification? 38 | mpamagazine.com.au

“The secret to a successful brokerage is like the ‘secret’ to weight loss: eat less and move more. Everybody knows what they need to do, but it’s the doing part that is the hardest. It’s much easier to try and find a miracle solution” We support Mortgage Choice’s move from a mortgage broker to a full financial services provider. It is what is required to be successful in the future. Our strategy has been to implement the offering of the diversified range of products into our normal process, rather than offering them as an afterthought.

What’s the most important thing a broker can do to grow their business? It’s pretty simple really; provide good service, offer excellent lending solutions and stay in touch with your database. This will result in repeat business and, the lifeline of all service businesses, lots of referrals.

Mortgage Choice CBD Adelaide (and others)

Location: Adelaide, Prospect and Blackwood (SA), Central Northern WA, CBD and South East Metro Perth, North Suburbs WA, Miranda, Cronulla and Sutherland (NSW)

borrower breakdown

Total loan book:

$1,120,167,895 Other: Total settlements 2012:

$199,091,155

First homebuyers:

38%

17%

Number of brokers: 10 Average annual volume per broker:

$19,909,116 Conversion rate: 83%

Refinancers:

Investors:

21%

23%

This multi-state Mortgage Choice franchise has leapt up the ranks to jump from eighth spot last year to fourth place in this year’s Top 10, thanks in part to its $1.1bn loan book and 2012 settlements of almost $200m. Franchise owners Richard Crommelin, Michelle Towner and Dennis Aplin talk MPA though their business plan.

What is the secret to a successful brokerage? The secret to success is having documented procedures for lead and application management. This ensures the customer experience is of a consistently high standard. It is also having a good team of brokers and support staff who are well trained, engaged with the business and focused on the company’s direction. Your team should be attentive to customers’ needs and maintain constant communication with customers through all stages of the application process, through to settlement and beyond.

What are the advantages of being part of a franchise? The advantages to being part of a franchise are the benefits of being associated with a corporate brand that has a strong, positive image. The network of franchisees operating under the brand provides the ability to benchmark yourself against other similar businesses and to share and learn from the group. There is also the full suite of business component support that the franchisor offers, which may not be accessible to SMEs. These support services include marketing and public relations support, IT assistance and operational guidance and development. The franchisor is often an objective observer and counsellor to your business and its performance.

Dennis Aplin

Michelle Towner

Richard Crommelin

process, meaning there is a longer gestation period of a lead before it turns into an application.

What are your goals for the year? Our business goals for the year are to improve productivity and grow our business, successfully integrate the purchase of our Mortgage Choice Financial Planning business into our mortgage broking business, and to refine our process and structure to give brokers more time to do what they are best at – sitting in front of customers, telling our story.

How do you market your business & generate leads? Following on from Mortgage Choice television, radio and web-based advertising, we do database calling to our customers on a regular basis, actively seek regular advice about website optimisation, ask for customer referrals and reward our customers for providing referrals, and we work closely with our business alliance partners to promote our services.

What trends are you noticing this year so far?

Have you diversified into other income streams?

Property buyers who are dissatisfied with dealing direct with lenders appear more willing to engage brokers. In terms of lending, we are seeing an increase in owner-occupied purchases and a return of land and construction purchases, especially in WA. Clients are talking to us much earlier in the home loan thought

We have diversified into other income streams. We do insurance, commercial and vehicle finance. Our strategy is to educate our brokers and our clients about the diversified products we offer. We are standardising the process for how these leads are identified so we can maximise on all opportunities with our existing and new clients.

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JOINT

Special Report / Top 10 franchise brokerages

The Mortgage Gallery Joondalup Location: Joondalup, WA

What is the secret to a successful brokerage? People and systems are two key elements that are vital to success. The existence of the business and its associated success lies within having the right people and processes in place. Getting the right people is difficult but you learn as you go. In those instances where people have not stayed with us, it’s generally been because their main focus (largely money) was not a key principle of our business and did not support our value of ‘focus on the right activities and the results will look after themselves’. Systems are vital so that everyone is clear on what needs to be done. This is how we work in The Mortgage Gallery Joondalup – the client experience is at the forefront of all we do. I have the personal view that if McDonald’s can train a 14-year-old to follow a system and cross-sell and up-sell, there is absolutely no reason why we can’t do the same. For the above to occur there need to be founding principles of why you exist, with a clearly articulated mission and vision statement with key values aligned to these to support everyday actions. The Joondalup team went through the process of creating the above with the use of an external facilitator which has resulted in a common consensus of why we exist, the values we hold dear to our heart and

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$600,000,000 Refinancers: Total settlements 2012:

New to the Top 10 Franchise Brokerages report this year, The Mortgage Gallery Joondalup has benefitted from being part of a large franchise, the Smartline group, says Dave Urquart.

Dave Urquhart

borrower breakdown

Total loan book:

$169,000,000

20%

First homebuyers:

20%

Number of brokers: 5 Average annual volume per broker:

$33,800,000

Investors:

Conversion rate: 100%

20%

Repeat clients upsizing or buying:

40%

what the client can expect from each and every one of us. Finally, there needs to be a layer of trust between management and employees to ensure that communication is open at all times – this takes time and cannot occur overnight. Communication in all areas of the business is vital. As in a personal relationship, the minute communication falters, issues start to arise.

What are the advantages of being part of a franchise? There are many advantages being part of the Smartline group. We have ongoing support with IT, marketing, systems and compliance, which allows us to focus on the client experience and marketing the business. This support is vital and I know as a business owner I can email or call on support at any time and receive assistance when required. The ability to speak to other franchise owners within the group is also a strength. It gives you an opportunity to learn and understand what is working for them and the associated moral support is always appreciated. The fact that Smartline deals with our business partners (the banks) regarding agreements, commissions, etc is also a real bonus.

What trends are you noticing this year so far? There has been a lot of interest from clients in fixed rates due to the banks lowering their interest rates which has led to a percentage of people switching internally to these products. The interest rate cuts have encouraged investors and first homebuyers back into the market which has seen an increase in enquiry and applications. The top end of the market ($1m-plus) is still struggling with turnover in sales, as has been the case for over 12 months. Fly-in fly-out workers from the mines are starting to buy property utilising the surplus cash from their large annual incomes. The increase in enquiry and application is reflected in our office’s volume of applications in February – we submitted $38m for the month. This was the highest since we opened the office eight years ago and is also a Smartline record.

2 JOINT

Choice Home Loans Leederville

Total loan book:

$871,023,434 Total settlements 2012:

Location: Leederville, WA

Last year’s first placed brokerage, Choice Home Loans Leederville, has just been pushed into joint second place this year. But that’s hardly symptomatic of a business on the wane, as last year’s settlement figure of $205,141,368 is hardly a poor effort for the WA-based brokerage. Director Marco Meloni explains all.

$205,141,368 Number of brokers: 11 Average annual volume per broker:

$18,649,215 Conversion rate: 95%

What is the secret to a successful brokerage? We believe the secret lies in keeping it simple. The business model involves three key elements: continually looking to improve, being dedicated and working extremely hard, and always putting your client first.

What are the advantages of being part of a franchise? Having the strength of the Choice Home Loans brand behind us is a great advantage. Choice also provides our business with industry and client expertise, professionalism and support through a number of different channels. As a Choice franchise, we know we are a valued team member and feel part of the broader Choice family.

What trends are you noticing this year so far? For the first time in a while, there is a positive energy; both the market and the economy are looking healthy. Consumers are regaining confidence and as our clients start to focus on restructuring and rebuilding their investments we will be there to provide advice and support.

What are your goals for the year? We prefer to take a much more holistic approach in which we focus on our three key elements for a successful brokerage. We continually use our simple yet effective business model that works year on year. We are always looking to improve, we work hard and we always put our clients first.

How do you market your business & generate leads? We like to generate most of our leads through word of mouth referrals from our existing clients. As a business if you are doing a good job and looking after your clients, then leads will generate themselves.

Marco Meloni

How important are referrals to you, and what is your strategy for increasing referral business? In our business, it is all about referrals, that is what we live and breathe. Word of mouth referrals from existing clients is the biggest compliment any business can receive. I am proud to say that we rely mainly on referrals from our existing clients as opposed to advertising or marketing.

Have you diversified into other income streams? If so, what is your strategy for diversification? We are supporting the ALI insurance model for life and income protection insurance and offering our clients a wide range of services through our trusted lender partners. Diversifying income streams is becoming an increasingly important part of our business.

What’s the most important thing a broker can do to grow their business? Keep it simple and focus on the key relationships in your business. The first is with your clients, brokers must love their clients just like their own family. The second relationship is the one with your partners: aggregators, lenders and BDMs. Our Choice partners provide extensive advice, training and education, expertise and support. Fostering these relationships is the most important thing.

mpamagazine.com.au | 41

Special Report / Top 10 franchise brokerages

Mortgage Choice Glenelg

borrower breakdown

Total loan book:

$1,059,371,332 Investors: Total settlements 2012:

Location: Glenelg, SA

A well-known name in mortgage broking circles, the indefatigable Wendy Higgins and her team at Mortgage Choice Glenelg have managed to take the top spot in this year’s Top 10 Franchise Brokerages report, having been squeezed into second place last year. Higgins speaks about her big plans for the future.

What is the secret to a successful brokerage? The four p’s: passion, people, persistence and profit.

What are the advantages of being part of a franchise? There are numerous advantages of being part of a franchise. Most of these relate to the abundance of support provided, including marketing and public relations, IT, compliance and loan accounting and of course, with Mortgage Choice we receive the support of the brand, which results in group office leads, networking opportunities and a support system of likeminded business owners.

What trends are you noticing this year so far? There is a lot more property market activity and from what we are seeing, word of mouth referrals are on the rise. My team and I are being sought after more and more because of our expertise and solid 15-year reputation.

$198,888,703

Other:

37%

36%

Number of brokers: 5 Average annual volume per broker:

$39,777,741

Refinancers:

Conversion rate: 92%

First homebuyers:

16%

11%

What are your goals for the year? Goals for this year are to settle $20m per month, reach a loan book size of $1.1bn and to purchase and build our Mortgage Choice Financial Planning franchise.

How do you market your business and generate leads? Word of mouth is the best form of local marketing. We add to this by maintaining a very close and strong referral relationship with a real estate office close by and sponsoring and being actively involved with eight sporting clubs. Other ways we market the business are by doing local newspaper wraparounds and engaging local journalists, having six branded cars out on the road, building on our online presence by maintaining our mini-site and social media profiles, conducting free local seminars, getting involved with charity work and by being out and about in our local community.

How important are referrals to you, and what is your strategy for increasing referral business? Referrals are gold. We thank our referrers straight away and treat the lead with the utmost respect by acting immediately. We reward our best referral sources with lunches, race days, after hours get-togethers and just a simple thank you works wonders.

Have you diversified into other income streams? We have diversified our income stream. We are able to offer our clients personal loans, SMSF loans, commercial lending and general insurance. We are currently focusing on ramping up the building and contents insurance and are in the process of setting up new Mortgage Choice Financial Planning franchise.

What’s the most important thing a broker can do to grow their business? Look after every client by being professional and very personal, getting to know them, caring about their situation and then getting the job done as you promised.

42 | mpamagazine.com.au

mpamagazine.com.au | 43â&#x20AC;&#x201A;â&#x20AC;&#x201A;

Profile / James Chatfield

Steaming

ahead

Chatfield Consulting’s JAMES CHATFIELD may have fallen into mortgage broking by chance, but with annual settlement figures of close to $70m after just three years in the industry, he’s off to a flying start – and has big diversification plans

Q. What were you doing before you moved into mortgage broking? A: Professional student, studying finance and law at the

of investing. Our roles have evolved so much from ‘just a broker’, that I spend most of my time educating clients on how to build wealth. It does take a lot more time and energy, however you will build a client for life. I have built my business model on this and love where it is taking me.

my early childhood experience working in – and then later managing – the family business. The daily grind and laborious pressure of the business deterred me away from wanting to follow in father’s and brother’s footsteps, hence looking to other industry areas to expand into. I wasn’t particularly focused on entering the mortgage brokering industry as I was running my own business in bookkeeping whilst managing the family business. By accident I was given an opportunity to utilise more of my skills in this area through an association with another family business. I wanted to create opportunities for the everyday person to maximise their financial situation by educating them on how to look at other options of wealth creation – not just a simple home loan. From this I have built a company that encompasses all of my skillsets in law, finance and financial planning and assists people to create wealth through specialised investment structures.

Q. Where did you initially see your finance and law studies taking you? A: My decision to study law and finance was born out of

Q. What are the main challenges that you face in implementing a diversified business model?

University of Western Australia.

Q. What made you choose mortgage broking? A: I fell into the role. I basically entered the broking space the week before the GFC and wondered what the hell I was doing! My family owns an engineering and architecture company next door to my first broking employer, one thing led to another and here we are today.

Q. Do you have any best/worst experiences from your pre-broking jobs? A: Working in the family’s plastic factory completing the same mundane role over and over for nine hours a day. It really makes me appreciate what I have now created. Now I work 70 hours a week, so someone please explain that.

Q. What are your career goals? A: To help clients understand the basics and methodology

44 | mpamagazine.com.au

A: In the early stages of the business my biggest challenge was compliance. As compliance is constantly changing (especially with the new NCCP) it is virtually impossible to make heads or tails of it. For example, contact with my previous aggregator, industry body and ASIC resulted in three different answers. However, first and foremost my greatest challenge is finance structures. When I meet a client I understand what they want to achieve, then design a structure to meet their goals. The biggest challenge I face with this unique product that I have designed is training and coaching another person to duplicate what I offer. It requires a particular understanding which I feel is based around my financial planning knowledge to create these structure. Sometimes it is difficult to find a person that has the motivation and care that is needed when looking after the clients. Q. How is the work divided in your diversified business? Do you advise on financial planning and mortgages, or do you have a planner that works with you? A: I cover most of the services required and outsource the remaining to reputable specialists. I am a qualified financial planner, however this is not my core business, so I use experienced people that are reliable and who I can trust. I have a planner that works with me who assesses

risk insurance and, if required by clients, planning models as well. We work in conjunction with each other to ensure the client is well looked after. Down the track I hope to have all services in one location – mainly for the client's benefit.

Q. What tips would you offer to other brokers who are looking into diversifying into wealth management? A: If you are not fully qualified, employ a dedicated person to fill this role. You can’t be everything and do it well. Select the area that you have strength in then hire a team of experts to take care of the services you are unable to.

Q. Where do you see the industry heading? A: From the first day that I entered the industry it was drummed into all of the protégés to be different and to diversify your product offering, as the broking industry is so highly saturated. I believe that the role of a broker will be pushed further towards that of financial planning – either because of compliance or diversification.

Q. What have you learned so far about how to be a successful broker? A: Take the time and energy to make sure that your clients understand what they are getting into.

mpamagazine.com.au | 45

feature / Debtor finance

Debtor finance:

Your chance to diversify?

Debtor finance can be a vital tool for small to medium businesses that need to keep their cash flow situation in check. MPA canvasses some of the sectorâ&#x20AC;&#x2122;s leaders to find out how brokers can get a foothold in the market 46 | mpamagazine.com.au

feature / Debtor finance

he debtor finance sector is a fast-growing area of SME finance that’s going through a continued coming of age in Australia. That’s the message from its representative body, the Institute for Factors and Discounters of Australia and New Zealand (IFD). But what exactly is it? According to the IFD, debtor finance continues to stamp its mark as a legitimate funding alternative, providing an increasing number of Australian SMEs with a means to convert their unpaid and outstanding invoices to cash. With 62% of business payments being made late and Australian businesses waiting more than 52 days for payment during the December 2012 quarter, according to the latest figures from Dun & Bradstreet, there certainly appears to be a market to provide cash flow solutions for businesses who are sitting on unpaid invoices. But just how can you go about locating those potential clients whose businesses are in need of a cash flow boost? MPA speaks to a panel of debtor finance experts for the lowdown on how brokers can add debtor finance to their product arsenal.

Payment times • 62% of business payments are made late, with Australian businesses waiting more than 52 days for payment during the December 2012 quarter. • Payment times are flat compared to the same time last year and have decreased by half a day from the September quarter. • The national average for payment times has remained above the 52-day mark since the June 2009 quarter. • The forestry and mining industries are the nation’s slowest to pay their bills, with a national average of 55 days. Businesses operating in the transportation sector are paying their bills nearly one week faster, at an average of 49 days. • Companies with between 50 and 199 employees were the fastest payers in the December quarter, taking an average of 47 days; an improvement of two days compared to the previous year. Source: Dun & Bradstreet Trade Payments Analysis, December quarter 2012

mpamagazine.com.au | 47

feature / Debtor finance

Lee Clarke, Chairman, Institute for Factors and Discounters of Australia and New Zealand (IFD) Lee Clarke

How has the debtor finance market grown in recent years? A: The latest figures released by the IFD show

that more than $63bn worth of debtor finance was provided to businesses in the 12 months to December 2012. To put this figure into perspective, total debtor finance provided to businesses was $10bn at the turn of the millennium. This growth is being fuelled in part by the need for Australian businesses to assess alternative funding arrangements, as credit through traditional lines remains constricted following the GFC.

How does debtor finance work?

A: There has been an element of confusion surrounding what debtor finance is and how it works. This stems partly from the fact that debtor finance goes by a number of names, including receivables finance, invoice financing, cash-flow finance… the list goes on. All these terms are correct. Regardless of the name ascribed, debtor finance is a simple and straightforward finance facility. Factoring and discounting are two options for businesses to improve their cash flow. Both of these financial arrangements are primarily secured against the unpaid invoices of a business. Under both facilities the client sells the unpaid invoices for immediate access to cash, but under the factoring arrangement the provider additionally manages the client's sales ledger and collection of accounts. Therefore, under a factoring arrangement, the debtor makes payments directly to the provider. With a discounting arrangement, the debtor makes payments to the company, as per usual, but as the debt is owned by the provider, the company manages the collection process and then passes the revenue collected to the provider. Generally, a discounting arrangement would be used by larger organisations as they have the in-house resources to manage collections and the sales ledger. Smaller organisations often prefer a factoring arrangement as they are alleviated of the responsibility of managing collections. One of the attractions of both arrangements is that they are self-liquidating facilities, meaning the company isn’t taking on additional debt per se, but taking an advance on money that is already owed to it.

48 | mpamagazine.com.au

The goods or services have already been provided and, while the facility needs to be repaid, this should take care of itself as a matter of course as the company’s debtors settle their invoices.

What are the benefits of debtor finance?

A: Many SMEs lament that they are profitable on paper but suffer from poor cash flow positions. Debtor finance provides a solution to this problem. While it’s true that debtor finance is at times viewed as a tool to merely overcome short-term cash flow constraints, there are a growing number of Australian businesses engaging it more strategically to grow their business. The enhanced cash flow position of a company can be used to employ more staff, for capital expenditure (plant and equipment), or to take advantage of acquisition opportunities. According to research undertaken by the IFD, Australian businesses recognised the three key benefits of debtor finance to be: • The freeing up of cash within 48 hours (usually varying between 75 and 90% of the value of an invoice), allowing the business to accelerate growth.

Many SMEs lament that they are profitable on paper but suffer from poor cash flow positions. Debtor finance is a solution • The ability to use the improved cash flow position to obtain early settlement discounts from suppliers/ creditors (up to 5%). • A reduction in management time spent on chasing slow payers (through a factoring arrangement), allowing managers of the business to concentrate on areas more appropriate to their responsibilities, such as driving new business. The fact that debtor finance generally doesn’t require real estate security is another particularly attractive feature, especially in an environment of stagnating or reducing real estate valuations that can adversely impact traditional overdraft facilities.

Mark Harper, executive manager business lending, Suncorp Bank What are the key features of debtor finance that brokers should be aware of?

A: The debtor finance industry developed in Australia in the 1980s and has grown significantly since, particularly over the last 10 years. The industry exists to assist growing businesses leverage the otherwise hidden collateral on their balance sheets. Debtor financing is primarily utilised by SMEs to improve their cash flow position.

Is it a growing market in Australia?

A: Along with the broader business lending market, growth in debtor finance has been benign over the past couple of years, but is expected to return to historical growth rates of 8–10% pa over the medium term, particularly as more and more business owners elect to not have fixed assets on their balance sheet.

Who are the typical clients for debtor finance? A: The debtor finance industry in Australia is

largely dominated by clients in manufacturing, wholesale, labour hire, transport and storage, and engineering/trade services industries. Businesses typically are in growth mode, and lack traditional forms of credit collateral such as real property or plant and equipment.

Do you have any advice for brokers in terms of generating debtor finance leads? A: Surprisingly, many businesses forgo growth opportunities because they can’t fund them.

Some business owners leverage up the family home. In recent periods, many business owners have had to reduce debt due to lower property valuations. All of these signal opportunities for mortgage brokers to discuss debtor finance and other working capital solutions.

What level of debtor finance knowledge and education do brokers require? Do you provide training?

A: Suncorp has a dedicated team of working capital specialists that can tailor a package to encompass all of the working capital needs of a mortgage broker’s client, ensuring that the broker is educated along the way. Suncorp recognises that brokers cannot be an expert in every product, and we will work with them to help meet the needs of their clients, as well as ensuring that the broker can capitalise on all revenue opportunities within their client base.

Mark Harper

Are there any further cross-selling opportunities that brokers can leverage off once they have secured a debtor finance client?

A: Once a client has established a debtor finance facility, there are naturally opportunities for equipment finance and trade finance limits, along with considering a client’s personal banking needs.

mpamagazine.com.au | 49

feature / Debtor finance

Wayne Smith, Queensland general manager, Scottish Pacific Debtor Finance Wayne Smith

What are the key features of debtor finance that brokers should be aware of?

A: A line of credit linked to the value of the receivables ledger (typically 80%). As sales grow, so does the amount of finance available. No real estate required (in the vast majority of cases). It’s suitable for businesses that sell to other businesses on standard trade credit terms, and raise invoices either when goods have been delivered or services have been completed.

Who are the typical clients for debtor finance? A: It works particularly well for temporary labour hire

businesses, transport companies, manufacturers and wholesalers/distributors – typically growing businesses. But it can be used for bank refinances, turnaround situations, mergers and acquisitions, and start-ups.

What are the key features of your debtor finance products?

A: Clients can access 80% of the value of invoices raised within 24 hours, and the balance (less fees) when the invoice is paid. The arrangements can be disclosed (ie, our client’s customers would be aware of our involvement) or confidential. With our range of disclosed products there is an option for us to perform the credit control function for our clients – making calls, sending reminder letters and issuing month-end statements, etc. Many of the smaller businesses really like that service as it enables them to get on with running the business and making sales.

Do you have any advice for brokers in terms of generating debtor finance leads?

The advantages of debtor finance • Why wait 30, 45 or 60 days to get paid? • Unlock up to 80% of the value of your debtor book immediately. • Why use your home to secure business borrowings? Let the business support itself and use the equity in the home for something else. • If your business is growing there will come a point where traditional overdraft facilities are capped by the value of the real estate security available, but the business needs more. A debtor finance facility grows in line with turnover – more sales equals more credit.

50 | mpamagazine.com.au

A: Look at the sectors their business clients operate in. If they are in the preferred industries mentioned earlier then debtor finance is a good option for them. Other industries are also suitable, but have a conversation with a debtor finance provider before jumping in.

What level of debtor finance knowledge and education do brokers require? Do you provide training in this area? Most debtor finance providers would not expect the broker to fill in an application/submission. At Scottish Pacific, we are more than happy to run with a name and contact number, and will still pay full upfront and trail commissions for the introduction. The trick is in identifying the opportunities, and most debtor finance providers will invest time in educating a broker who is keen to look for opportunities. We will also attend and present at PD days etc. Ongoing help and guidance is certainly available for brokers who are interested in sourcing and placing debtor finance opportunities. Our BDMs are only a phone call away and are always happy to chat through potential cases.

How competitive is remuneration for brokers who provide debtor finance?

A: The combination of upfront and trail makes it very lucrative and, whilst there are standard arrangements, it is possible to vary them in specific cases.

How long do debtor finance arrangements typically last for?

A: Most standard agreements run for 12 months plus three months’ notice. At Scottish Pacific the average client life is circa five years, which we believe is actually longer than the average mortgage, and the trail is paid for the life of the deal.

Are there any further cross-selling opportunities that brokers can leverage off once they have secured a debtor finance client?

A: Some of the favoured sectors for debtor finance also provide good opportunities for asset finance – transport and manufacturing as examples. If debtor finance has been used to remove the family home from the security equation it is then possible to use the home for other purposes – leveraging up and getting into an investment property as an example. At Scottish Pacific we also have trade finance products which can be a great cross-sell for the broker if the client is an importer.

Chris Charleson, head of business finance sales, Bendigo Bank What are the key features of debtor finance that brokers should be aware of?

A: Sales invoices are converted into cash immediately –

Chris Charleson

clients receive up to 80% of your invoice value within 24 hours. No real estate security is usually required, and this allows the separation of personal and business assets. As sales grow, (ie, the more invoices issued for work completed), so does a business’ access to finance. This is a significant advantage for an entrepreneurial business. Clients avoid offering expensive settlement discounts to their debtors and can negotiate discounts with suppliers on early payment.

Is it a growing market in Australia?

A: Yes. Debtor finance is still growing steadily despite two of the big banks pulling out of the market in recent years. Debtor finance is an effective cash flow tool, and the demand is going to grow inevitably as cash becomes less easy to access for working capital. You only need to look to the matured markets in the UK and US to get a vision of the potential that debtor finance can bring to businesses and brokers. In these finance markets, debtor finance is a mainstream finance solution. Oxford Funding started as an independent specialist debtor finance provider in 1994. By the turn of the century, year-on-year sales were racing ahead at over 20% with no signs of slowing down. To keep up with the unwavering demand, in May 2005, Oxford Funding became a wholly-owned subsidiary of Bendigo Bank, who wished to provide its own debtor finance solutions to their SME customers. We were operating under the Oxford Funding brand until April 2013, and have just rebadged under the Bendigo Bank brand – but we are essentially the same experienced debtor finance provider.

How can brokers explain to clients the advantages of debtor finance?

A: The main benefit to most businesses would be access to quick and flexible cash flow. As sales grow, (ie, the more invoices issued for work completed), so does a business’ access to finance. This scalability is a significant advantage for an entrepreneurial business. With a bank loan, the amount you borrow is fixed, and a small increase request will usually require approval. Another common driver for businesses to take up debtor finance is that it is secured by the value of their receivables, rather than by property assets which may not have sufficient equity for their borrowing needs.

Typical clients Debtor finance is designed for businesses that sell to other businesses on credit terms, but lack property as security to sufficiently increase their current banking facilities for working capital and other growth purposes. They usually fall in the following industries: • recruitment and labour hire • wholesale trade • manufacturing • transport • smash repairers and panel shops • printing • a number of service industries

feature / Debtor finance

Gary Green, National Sales Director, Bibby Financial Services Is debtor finance a growing market in Australia?

Gary Green

A: This is one of the few financial sectors that has grown strongly since the GFC. Sales volume is growing at 6% a year, while Bibby’s business has grown in recent years at 20% pa. The penetration of debtor finance is relatively low in Australia compared with the UK, where a higher percentage of SMEs use debtor finance and it is considered a mainstream working capital product. So there is further scope for market growth here.

What are the key features of your debtor finance products?

A: Brokers and their clients have access to local decision makers, fast turnaround on applications and queries, and communication throughout the application process. No formal accreditation required, though it’s recommended, and we offer on-site seminars. Bibby offers 24-hour release of cash against eligible receivables, 24-hour release of the balance of the advance (retention), a dedicated account manager authorised to make fast decisions, and the ability to advance against other assets, eg, property and machinery. Bibby is a stable non-bank lender with a proven track record over 25 years, and over 6,500 clients in 15 countries worldwide; backed by the Bibby Line Group, with a trading history of over 200 years. The group still operates as a family-owned business, giving it unique flexibility – it's a fast-moving and flexible lender with a ‘can do’ attitude.

Do you have any advice for brokers in terms of generating debtor finance leads?

A: Sourcing potential clients is as easy as asking the right questions of clients. How well is your cash flowing? Are slow debtor payments impacting on the business? Does the business have sufficient working capital to grow and take advantage of opportunities? Is your funding keeping pace with your growth? Is too much time and resources being spent managing debtors? Close relationships brokers have with their own business-to-business clients are the key referral relationships required for spotting debtor finance opportunities, but working closely with accountants, bankers, bookkeepers, insurance brokers and solicitors will also be valuable. Other ways to spot opportunities are to pay close attention to clients that may have rapid sales growth, putting pressure on the business; slow payments by debtors; difficulties meeting statutory liabilities or paying creditors; declining property values 52 | mpamagazine.com.au

reducing funding limits; business shocks such as losing a key customer; being put on cash-on-delivery terms with suppliers; insolvency of a large supplier or customer; inability to take on additional business due to inadequate working capital; or bank funding withdrawn, reduced or turned down.

What level of debtor finance knowledge and education do brokers require? Do you provide training in this area?

A: Debtor finance deals are more complex than vanilla residential loans to arrange, however brokers may choose the extent to which they are involved. In most cases, the broker need only pass on the potential client’s contact details to the debtor finance provider. Some lenders, including Bibby, offer free educational seminars for individuals and groups, and training materials.

How competitive is remuneration for brokers who provide debtor finance?

A: Bibby offers generous upfront and trailing commissions for the life of the deal in addition to other incentives, and we have a simple commission structure with fewer restrictions. Our application process is straightforward and unlike many lenders we provide flexibility for the broker to be as involved in the process to the extent desired without impacting on commissions.

Costs: Debtor finance vs traditional funding Invoice financing is widely considered a more expensive form of funding. However, in comparing the two, the equation has to include the benefit of a lower level of security for debtor finance, the significantly faster speed of approval, the flexibility of the funding limits being linked to sales and, in the case of a ‘full service’ facility, the additional collection and credit control services provided. In some cases, the benefits of faster, more reliable cash flow can partially or even fully offset the cost of debtor finance. In the case of a ‘full service’ facility, the outsourced credit control can also overcome the need for a full-time accounts receivable resource, making it a cost effective option for smaller businesses. By freeing up valuable time to pursue growth opportunities and focus on strategy and development, rather than day-to-day management, it can make the difference between an average and a high performance business. However, if the business is well-capitalised with good cash flow management controls and a stable debtor book with predictable sales volumes, then other lower-cost forms of funding are often more appropriate.

mpamagazine.com.au | 53â&#x20AC;&#x201A;â&#x20AC;&#x201A;

Business strategy / leadership

Leadership How to inspire and drive superb business performance

Do you aspire to run your own team of mortgage brokers? Or are you already doing so? Corporate Crossroads founder WALTER BELLIN explains the essential qualities of an authentic and successful business leader 54 | mpamagazine.com.auâ&#x20AC;&#x201A;

ince the early 1990s, researchers have gathered a huge amount of statistical evidence that an organisation’s culture is the single most important factor in its long-term success. Thus, culture building is a critically important leadership responsibility.

Leadership, self-awareness and culture building Through communicating and utilising an organisation’s vision and values, there are a number of specific

culture-building leadership activities managers or executives can undertake. However, to undertake these activities successfully they must begin by working on themselves. For example, it is important that the organisation’s leaders devote time – through training, being coached, using psychological instruments and self reflection – to learn to be highly self-aware. This should include awareness of their strengths as well as their current limitations or ‘Achilles’ heel’ – that is, habits or patterns of communication or behaviour that work against the quality of workplace relationships and culture they wish to create. It is this kind of self-awareness that enables leaders to manage themselves well – the first essential step in being able to lead others effectively. This ability empowers leaders to communicate and interact with people in ways that foster mutual trust and respect and good workplace relationships throughout the organisation. It enables them to contribute to creating a workplace without fear – and one which encourages employee engagement, commitment and innovation; it assists them in creating effective communication and teamwork within teams and between different teams; and such leaders will be more effective at coaching, mentoring and developing the people they lead! Along with self-awareness and good selfmanagement, there are two other essential ingredients that enable leaders to undertake these types of culturebuilding activities successfully. The first is a great deal of face-to-face communication when attempting to influence people. During the late 1970s and early 1980s, psychologist Albert Mehrabian conducted a meticulously designed study of the factors that impact and influence people

Business strategy / leadership

Six things leaders must learn to be aware of every day

1 2

Effective listening by leaders is at least as important as communicating well

In depth, accurate understanding of yourself is the key to understanding and working with those whom you lead

You need to communicate clearly what must be done – but it is even more important to explain why it should be done

Leadership is not a position – rather it is skill in influencing the thinking and behaviour of those in the team you lead

Trust and respect for you – the true currency of leadership – must be earned by people witnessing your behaviour over time

In the end, your character as a person will impact the effectiveness of your leadership more than any specific skill

when someone communicates general messages about things such as vision and values. He found that only 7% of the impact was due to the actual words chosen – hence the ineffectiveness of written documents for this purpose. His study showed that 38% of the impact of the communication came from voice qualities (volume, pitch, resonance, rhythm, tempo) and 55% from body language (especially facial expressions). Thus, 93% of a leader’s ability to influence people requires much face-to-face communication. However, there is a second factor that determines people’s responsiveness to a leader’s attempts to influence them – their authenticity!

Leadership and Authenticity More than anything else, a leader’s ability to influence, engage with and win the commitment of the people they lead is determined by how well the leader’s words match their actions. Generally people are much more influenced by watching the day-to-day behaviour of a leader than by hearing their words. They want to know:  Does the leader really believe in and hold the values that they claim to believe in and hold?  Are the leader’s daily actions consistent with the priorities and objectives they espouse?  Do they, in fact, really walk the talk? It is these things that determine whether a leader is seen to be authentic – and this will affect people more powerfully than anything the leader says.

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“People are much more influenced by watching the day-to-day behaviour of a leader than by hearing their words” Clearly, it is the leadership role – when undertaken by authentic and inspiring leaders – that breathes life and spirit into a company or firm. The management role, of course, is still very important – a business can flounder just as badly when its activities are poorly managed as when it is poorly led. Yet a well-managed organisation in which managers and executives lack real leadership skills will not win the engagement, loyalty and commitment of its people. It is fostering these human characteristics among the organisation’s people that creates high-performance cultures. Over the past 25 years in consulting with over 200 companies and professional firms, I have noticed that many managers and executives spend much more time managing than leading. Partly, I think this is due to many managers feeling more comfortable managing than leading, since many have not taken the time to develop the self-awareness, self-management and people skills that are essential. Partly, I believe it is because they do not realise how greater emphasis on leadership will improve the performance of their business. Invariably, when managers and executives focus much more on developing and using their leadership capabilities, the organisations they are leading experience two interrelated results: there is a major improvement in business performance – and employee morale and retention is much higher!

Walter Bellin has been a consultant to private sector companies, professional firms and federal government agencies in leadership development and organisational culture change for 25 years. He is the CEO of consulting firm Corporate Crossroads and author of new book Climb a Different Ladder: Self-awareness, Mindfulness and Successful Leadership. For more information, visit corporatecrossroads.com.au

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lifestyle / A Day In The Life Of

A day in the life of… Tracy Smith, WA State Manager, Westpac Mortgage Broker Distribution 9.30am:

Checking in on the BDM team who are into their emails and calls. Reminds me to do the same – I have brokers to congratulate on new settlements and I’ll catch up on some new entrants to see how they’re tracking since their accreditation.

10.30am:

Weekly Westpac Way team meeting, BDMs prepared to discuss results from last week, this week, some best practice ideas in WA and some new marketing ideas.

6.00am:

The alarm goes off. Don’t hit the snooze button, and am now up reading the breaking news on my iPad. Quick BlackBerry checks and I respond to emails sent from my colleagues over in the east coast who are well and truly into their day. Numbers are in – another great week!

6.30am:

I prefer the few extra minutes of sleep. I don’t eat breakfast, quickly jump in the shower… I’m dressed… more emails over a good cup of coffee.

7.30am:

Driving on the way to work. Touch base with our team assistant in Melbourne – make sure I’m hands free! Grab a take away coffee on my way in to the office.

8.15am:

Arrive at the office and check my calendar and mail. Mondays mean the WA team are all together in the office.

8.30am:

First meeting of the day: our Australian Financial Services One Team meeting – all the state leaders from Westpac’s key WA business units – retail, broker, commercial, premium, private, wealth and insurance.

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12.00pm:

Teleconference meeting with Westpac’s national mortgage broker leadership team – a full rundown of results and figures, speak about new initiatives for brokers and the BDMs, and provide detailed planning on our state based broker road shows – WA first cab off the rank! Look at local area marketing activities and ideas for new campaigns.

1.00pm:

Skype with national manager of strategic partnerships (Paul Bakker) for a market update on aggregators both nationally and in WA.

1:30pm:

Skype with national manager of strategy and marketing (Neville Anitelea) for quick rundown on WA team marketing plans for next six months, evolution strategy of WA broker squads, new Net Promoter

Score research and the rollout of many ‘FY13 Quarter 2’ events for team.

2.00pm:

Grab some lunch before WA broker squad meeting with Westpac Retail practice manager (Sandra Nesci) – discussing next phase.

3.00pm:

Make more broker calls, hoped to complete 10 – nearly there, eight done.

4.00pm:

Hold BDM one-on-ones.

6.00pm:

More emails to return, and return more calls.

7.30pm:

Head to mum’s for dinner (I avoid cooking at all costs) and get a kiss and cuddle from my 20 month old nephew whose big smile can turn any challenging day into the brightest. Respond to emails on my BlackBerry that have just come in – careful that my family don’t see me. They think I’m glued to it!

9.30pm:

Home at last. I will say a very productive day, though not at its end yet as more emails have come in… I’ll attend to these while watching TV.

12.00am:

Get to bed; watch more TV, thinking about tomorrow and the week ahead. Last look at the clock – 2.00am!

“I have brokers to congratulate on new settlements and I’ll catch up on some new entrants to see how they’re tracking since accreditation”

column / credit rating

Assessing your client’s credit report:

10 top tips 01

Something as innocuous as making a late payment for a gas or phone bill can place a black mark on your client’s credit report. This, in turn, can hinder their ability to obtain a home loan. Credit Repair Australia CEO Richard Symes outlines the top 10 aspects of credit reporting that brokers should be aware of

Adver s

When lo e listings o t here ar king at a credit listings e report three th and the at will affect y significant adv , ir credit erse our clie n (default r s), Cour ating. They are ts’ credit repor t t Action writs an overdue s d the mos summons) an (eg default jud accounts d t g include likely to arise bankruptcies. ments, are defa s late or Of thes e, ults, wh missing bills. W ic h p other n ilst most peop ayments to ho h le eg u the case ative items ca assume that d sehold nnot be efaults . There and remove are seve having d, un ra unverifi fair, disputab l avenues that this is not le a c Even in ble adverse lis , contestable o an lead to r tings co formatio m be liste n that m pletely d co remove ay d. comple rrectly may be appear on fac e tely rem incorre oved. W ct and value to comple hilst x, it can be done the process ca n be success fully.

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Timeframe for adverse listings

Even if an adverse listing is paid it will remain on your client’s credit report for five to seven years, and may still negatively affect your client’s ability to be approved for finance for several years. Furthermore, while individuals may be able to challenge black marks on their credit reports, it can typically take much longer for an individual to have these removed. Obviously this presents its own challenges when your client has already identified their dream home, and is unlikely to want to risk it still being on the market months later. In these instances, it is often better to refer them to a credit repair company to expedite the process.

EnquirIes

In certain circumstances, too many credit applications can lead to a ‘busy’ credit report and can be detrimental to a client’s credit rating. Mortgage brokers should keep this in mind when applying for loans on behalf of their clients. If the client has applied for a loan recently and been declined then this should require further investigation by the mortgage broker: was the application declined due to their inability to meet repayments, or was it due to the financial institution perceiving the applicant as risky given their credit history?

Age of credit report

A credit report that is deemed to be ‘young’ can negatively impact an individual’s ability to obtain finance. ‘New to bureau’ credit reports may cause suspicion in credit providers because there may be a ‘floating’ credit report or the individual may not have had finance before.

Possible matches and cross references

A possible match refers to a credit report which has two or less common identifiers and is believed to belong to the same person but there is no certainty. A cross reference refers to a credit report that has common identifiers which make it almost certain that it belongs to the same person. Most married women will have a cross reference as they have used their maiden name in the past to apply for finance. Most men shouldn’t have a cross reference. Possible matches and/ or cross references are common and the identity data stays live for the life of the credit report (credit data stays for five years after the last activity). They also make creditors question why there is more than one credit report and they may suspect possible fraud.

Personal information

Mortgage brokers need to be careful when entering clients’ details in the process of applying for a loan. If the information has been entered incorrectly the first time, this may cause an individual’s application to be declined as it will create possible matches and cross references. For example, an individual who has changed state and has a new driver’s licence number could result in a declined application.

07 08

Address and dates

Having too many addresses in a short period may be viewed as unstable and will hinder an individual’s application for finance.

Payday lender enquiries

Payday lender enquiries may be viewed as a sign that a borrower is having trouble meeting their current financial commitments. Some enquiries including payday lender enquiries which may

"Having too many addresses in a short period may be viewed as unstable and will hinder an individual’s application for finance" – richard symes

repair a client’s credit rating may be removed. Mortgage brokers should refer their clients to a credit repairer who will be able to determine which enquiries can be removed.

Employer information

A client’s ability to obtain finance may be affected if there is a great disparity between the employment start date on the application compared to the credit report. This could be caused by a misspelled employer name or if there has been no application for finance since the beginning of their new employment.

Directorships and commercial information

If you have an individual’s credit report and the report comes up with a business current directorship, you should check the company’s credit report. Some declined applications may be due to the information that appears on the company/commercial credit report – and not just the consumer credit report. Also be sure to check the status of the company. If it is under administration or strike off action then further investigation from the broker could be required. Credit Repair Australia provides a free assessment of individual’s credit reports and ratings. Visit www.creditrepairaustralia.com.

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Profile / Daniel McBreen

game

on 60 | mpamagazine.com.au

Central Coast Mariners striker DANIEL MCBREEN is flying high as one of the A-League’s top scorers. But life must go on after football, and he has been busily taking strides towards following in his father’s footsteps and taking on the family business. Tragically, his father was struck down with cancer last year, but McBreen is determined to carry on with his father’s legacy while seeing out his footballing career. He talks to MPA about life, sport, family and broking.

How did you get into mortgage broking? A: It’s quite simple really. My old man was a mortgage broker in his day and over time it was sort of unspoken that I’d take over from him one day. So I started to do my studies and eventually I got my qualifications and, unfortunately for me, dad passed away last year – he got ill with cancer – so it brought on taking over the business a bit quicker than we expected. But getting into the mortgage business was through dad really. I’d always been around him working, and had a bit of an interest in it, and that’s the way it went.

Have you taken on his client book? A: His partner has got his clients, and I’m going to go through and take on his book and make sure that they’re alright, and go from there.

photo: John Dewberry

How do you divide your time between football and mortgage broking? A: At the moment, football takes priority. Obviously, it’s my full-time profession, and takes a lot of my time. But it’s a good profession where – although I’m away a lot – we do train at home and it still gives me the afternoons free. So I generally spend the mornings up until lunchtime training with the team and then after that, if I’ve got business to do, I’ll go into the office and work in the afternoons. But at the moment, between the two, football takes priority. But I’ve got plenty of spare time, and I’ve got the evenings free as well, so mortgage broking is quite a handy job to do when you’ve got another one [football] to do as well.

I think a big problem for me is time management at the moment. It's about trying to find a time to go and see clients, or do that extra study that needs to be done. You need to become pretty adept at time management.

Are there any lessons or skills that you can take from your football career into mortgage broking? A: I think it’s just like any job or profession you’re in. You just need to work hard to get to the top, and to be successful, and that’s what I’m trying to do. Every spare moment I get away from football – and I’ve got two young kids as well that take up a lot of time – I try and put towards doing what I need to do to get this [business] up and running. I’m hoping to play football for another couple of years and if that comes off I’d like the mortgage side of the business to be up and running – and to be in a position where, when I do finish playing football, I can move seamlessly into full-time [broking] work and have the work there to keep me going on strong.

Do you think your profile as a footballer for the Mariners will help with building up your mortgage broking business? A: I hope so. I get a lot of people telling me to try and work off of this, and I have been – and will do so even more as I get further into it. It helps in any business to try and use the profile that you have to get out and see a broader audience. So any contacts that I’ve made by playing football I’m definitely going to try to use to get me ahead in the mortgage side of things.

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The data / Your Mortgage Index

stat attack Data from yourmortgage.com.au shows the borrower breakdown for the past months How much deposit do you have? $0–10,000 $10,001–20,000 $20,001–30,000 $30,001–50,000 $50,001–100,000 $100,001–200,000 $200,001-plus

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How much do you want to borrow?

16%

5% 26%

17% 16%

$0–200,000

65%

$200,001–500,000

13%

$500,001–700,000

$700,001–1 million

Over $1m