Mortgage Professional Australia magazine Issue 14.02

MPAMAGAZINE.COM.AU ISSUE 14.2

e g a g t r o m f o e ds r n u a t h u T f d e o FROSFIRST h G o t E R g R G RLD’S ROKE O B Why ing is in W R E A TH -DOLL IAL N C k N o A N ILLIO I T B F H br G E I OB E'S BR A TR R S ATOR? G E R U GG ER A T FOR YO G N E H L G CHAL THEY RI E AR

L UTU ERS THE F OR BROK F

CONTENTS / 14.2

20 YoungGunsCoverimage.indd All Pages

COVER STORY

Young Guns MPA speaks to some of the industry’s brightest new stars

12/12/2013 9:51:26 AM

NEWS

4 | Round-up The latest market intelligence from the world of property, economics and mortgages 10 | News analysis Do housing affordability issues spell trouble for brokers?

FEATURES 40 | Challenger aggregators What they can offer to the broking community

BUSINESS STRATEGY 58 | Branding Why branding strategies fail – and how to get yours right

WEEKLY INVESTIGATIONS NOW ONLINE: Make your broking team shine Top 10 productivity killers mpamagazine.com.au

62 | Motivation How to get that all-important X factor

MORTGAGE INSIDERS 36 | Hank Hong Why specialising in difficult loan scenarios pays dividends

14

MORTGAGE INSIDER

La Trobe Financial

Chris Andrews and Daryl Hill explain why the future’s bright for brokers

54

BUSINESS STRATEGY

Survival How to innovate and avoid becoming obsolete

50 | Greg Frost Lessons from the US guru known as the first ‘billion-dollar broker’

FEBRUARY 2014 | 1

EDITOR’S LETTER / 14.2

THE NEXT GENERATION As 2014 cranks into gear, and the festive season starts to become something of a distant memory, we’ve decided to take a look at what the future holds for the mortgage broking profession.

That’s right, it’s MPA Young Guns time again, and this year we have profiled a crop of extremely talented and driven newcomers to the broking game who are stepping up to the plate with gusto.

Looking at this year’s Young Guns, it’s clear that these new brokers are generating a palpable sense of enthusiasm for the profession, and we hope that reading their stories will help to invigorate you for the year ahead.

On the aggregation front, our challenger aggregators feature certainly provides some food for thought. There’s no doubt that the large, established aggregators are providing a fine service to their brokers, but competition breeds innovation and it’s certainly interesting to hear what the boutique and challenger operations have to say.

Their comments on the state of aggregation, what they bring to the table, and the type of broker they aim to entice into their family are well worth a read.

Robin Christie, managing editor, MPA

2 | FEBRUARY 2014

COPY & FEATURES

EDITOR Robin Christie JOURNALISTS John Hilton, Sarah Megginson PRODUCTION EDITOR Roslyn Meredith CONTRIBUTORS Michael McQueen, Jean-Luc Ambrosi, Cindy Tonkin

ART & PRODUCTION

DESIGNER Red Redrico DESIGN MANAGER Daniel Williams

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

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil

CONNECT

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

Printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

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 Auckland, Singapore, Manila, Toronto, Denver 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

HOUSING

NEW HOME BUILDING ON THE UP

ATO

60%

The percentage of the nearly $18bn in unrecovered debt that the ATO is looking to recoup from small businesses

The latest ABS housing data shows the strongest growth in new home building in almost a decade.

HIA chief economist Harley Dale said the figures point to an ongoing new home building recovery.

“There was a 2% decline in the September 2013 quarter, but over the 12 months to September there were 163,250 homes commenced,” said Dale. “Looking past the spike in activity due to the GFC-related stimulus, that is the strongest level recorded since 2004.”

NSW and WA are still the drivers of the overall recovery in new dwelling commencements that’s been seen since figures reached a trough in March 2012, explained Dale, but he added that Queensland is showing clear signs of improvement.

“The recovery is also being driven primarily by other dwellings [multi-units] rather than detached housing. Both segments are growing, but annual commencements for detached houses are 9% below their 20-year average while commencements of multi-units are running 35% above their 20-year average.

“This compositional change has an influence on the extent of the boost that domestic manufacturers and retailers will experience from the new home building recovery.

“Overall, the upward trajectory in new dwelling commencements is still clearly a positive factor for the broader domestic economy.”

HOME BUILDING

NSW +8.6%

Source: ATO

-8.5%

+2.4%

NT

+1.9%

VIC

-5.4% TAS -32.7% ACT

4 | FEBRUARY 2014

41.77%

The increase in settlements recorded

by Vow Financial in November 2013 compared to November 2012 Source: Vow Financial 2013 financial results

WA +4% SA

SETTLEMENTS

Source: ABS

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FEBRUARY 2014 | 5

NEWS / ROUND-UP

TRAINING

MFAA MEMBER AGES

BROKER YOUTH SHORTAGE TACKLED

Where are all the new young brokers? One training provider is hoping to answer that question and tackle the issue of funding for new-to-industry brokers while raising awareness of broking as a viable profession.

Training provider Intellitrain recently rebranded itself as Australis College, and with the rebrand has launched a new pilot program that aims to attract new brokers to the ageing profession.

Australis CEO Paul Eldridge said the college had actively been out in Australian communities running career nights and information booths in local shopping centres to promote broking as a career path.

“That’s something the industry needs to be better at doing, promoting the fact that it exists and that it is a career opportunity.”

The MFAA has previously warned of a youth shortage in the broker profession, with figures showing membership under the age of 30 is down to just 6%.

Australis College’s new entrant program is designed to give new brokers their Cert IV qualifications and then place them in work experience with partner organisations including RAMS, Choice and Loan Market.

For the next two years the brokers will receive mentoring, CPD training and eventually their Diploma in Finance and Mortgage Broking Management.

“One of the biggest problems with new entrants is the question of who is going to provide that ongoing mentoring and training. Typically, brokers are too busy keeping up with their own business and generating their own income to devote the time and effort needed to support new entrants. So this gives them the ability to be able to say ‘OK, I can take on a new entrant now’; all of that stuff is taken care of by Australis,” Eldridge said.

A further issue that has often deterred new entrants to the industry is the requirement to fund your own costs for an initial period of six months to one year while receiving little or no income. Being an approved VET FEE-HELP program means Australis’s program can help to mitigate these costs.

“It means they have no education expenses for the first two years; it’s all absorbed

by VET FEE-HELP. So it’s been a bit of a game-changer and has meant we can actually give people some real quality training in their first two years and people can defer the payment to pay back through their taxes.”

Four of the initial group of 10 students from the pilot program have already been placed in full-time work in the industry, Eldridge said.

The group plans to have three intakes for the course throughout the year in Sydney, Melbourne and Brisbane, with around 20 new students per intake per city.

57%

37% Over 50

30–50

6% Under 30

Source: MFAA

EXPENSES

$246,490.99

The total travel cost for ASIC chairman Greg Medcraft and his staff between January and November 2013 Source: ASIC

The leading magazine for the mortgage broking industry Mortgage Professional Australia continues to be the key resource that mortgage brokers and industry professionals turn to for in-depth industry issues, market trends, business analyses and intelligence.

Each issue is packed with updated relevant information such as all the latest mortgage products, diversification strategies, sales and marketing tools, career education and training, regulation & legislation updates.

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6 | FEBRUARY 2014

HOW TO SMS GET DEA FS LS OVER THE LINE

MPAM AGAZ INE.CO ISSUE M.AU 14.01

ANTHON NAB’S Y WALDRON BIG PLA THE BRO NS KER MAR FOR KET YEA MPA LOO R IN REVIEW THE YEA KS BACK ON R THAT WAS

The mov er waves s and shaker sw in the m ortgag ho have mad e indust e ry

20/01/2014 9:09:00 AM

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FIRST HOME BUYERS

FIRST HOME BUYER LEVELS BOTTOM OUT

The bottom rung of the property ladder is looking worryingly empty, with the number of first home buyers in Australia reaching record lows.

According to the latest ABS data, the proportion of first home buyers fell to just 12.3% in November – the lowest figure since records began in July 1991, and well below the long-run average of 19.9%.

The continued fall in first home buyers is despite overall growth in total lending in response to interest rate cuts and a positive outlook for much of the country, said the REIA. In light of the figures, REIA president Peter Bushby has called for urgent action.

“With the number of first home buyers at historically low levels, it’s time for all governments to review support to first home buyers,” he said.

CONFIDENCE

FIRST HOME BUYER PERCENTAGES

33%

12.6%

12.3% Nov -13

14.7% Jul -13

Oct -13

15.1% Jun -13

12.5%

14.6% May -13

Sep -13

14.3% Apr -13

13.7%

14.2% Mar -13

Aug -13

14.4%

18.7% Oct -12

Feb -13

19.3% Sep -12

15%

18.6% Aug -12

Jan -13

19.2% Jul -12

14.9%

18.5% Jun -12

15.8%

18.1% May -12

Dec -12

17% Apr -12

Nov -12

16.6% Mar -12

17.4% Feb -12

0%

Jan -12

20.6%

25%

Source: ABS

The percentage of Australians who say they are better off financially than they were this time last year Source: Roy Morgan Consumer Confidence survey

FEBRUARY 2014 | 7

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NEWS / ROUND-UP

UNEMPLOYMENT

5.8%

Australia’s seasonally adjusted unemployment rate Source: ABS

CONSUMER CONFIDENCE

PERSONAL FINANCE

BRIGHTER OUTLOOK FOR HOUSEHOLD FINANCES

FAST FACTS: CONSUMER CONFIDENCE

Good news. Australian householders are becoming increasingly confident about their financial situation.

The Roy Morgan Consumer Confidence survey saw two straight weeks of increases, with household confidence rising by 1.1% over the course of one week in January.

Young adults between the ages of 25 and 34 were the most confident about their finances, while 18- to 24-year-olds saw the biggest increase in confidence.

Looking ahead, Australians are still confident about their personal finances over the next 12 months, with 42% of Australians expecting to be ‘better off’ financially this time next year, compared to only 13% that expect their family to be ‘worse off’ financially.

33%

24% REGULATIONS

The percentage of Australians who say they are better off financially compared to this time last year

The percentage of Australians who say they are worse off financially compared to this time last year

32%

31%

The percentage of Australians who expect ‘good times’ for the Australian economy over the next 12 months

The percentage of Australians who expect ‘bad times’ for the Australian economy over the next 12 months

42% The percentage of Australians who expect to be ‘better off’ financially this time next year

13% The percentage of Australians who expect to be ‘worse off’ financially this time next year Source: Roy Morgan

8 | FEBRUARY 2014

54.3%

The percentage of businesses indicating that regulatory requirements have prevented them from growing their business Source: Australian Chamber of Commerce and Industry survey

NEWS ANALYSIS / AFFORDABILITY

Affordabi A ticking time bomb?

Affordability issues have been dogging the Australian property market for years, but the issue has reared its head with gusto in recent months. Should brokers be worried about the future?

These are interesting times for professionals with an interest in the Australian property market. Just as low interest rates were enticing buyers back into the market after a long and drawn-out post-GFC lull, numerous commentators are claiming that, with the capital appreciation certain markets have begun to experience on the back of the buying frenzy, affordability issues are now turning home ownership into a mere dream for the next generation of Aussie buyers.

10 | FEBRUARY 2014

But it’s not just the mainstream press that are whipping Australians into believing we have an affordability crisis on our hands. Genworth’s annual study of the Australian mortgage industry has shown that almost half (45%) of the brokers surveyed believed that helping Australians to overcome the lack of access to affordable housing will be one of the biggest challenges facing the mortgage industry over the next five years.

That’s not to say that the mortgage broking community believes it is dealing with a crisis of epic proportions. The Home Grown survey of 356 brokers, lenders and industry leaders frames the issue in a relatively broad context, ie that survey respondents believe housing affordability will be a bigger issue in the next five years than it has been in the last five.

That said, affordability and dwindling first home buyer numbers are issues many in the industry will continue to keep a keen eye on.

“The recent resurgence of growth in property prices has likely led to a situation where mortgage industry participants are concerned about how housing affordability will affect certain segments of their customer base,” says Genworth Australia chief commercial officer Bridget Sakr.

“Around one in two brokers surveyed wrote fewer loans to first home buyers

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ility over the previous 12 months when compared with the preceding 12-month period.

“This suggests that prospective first home buyers continue to experience difficulty in entering the property market and this issue is negatively affecting the amount of business brokers are writing for this group.”

HAS THIS BEEN A CHALLENGE FOR THE MORTGAGE INDUSTRY OVER THE LAST FIVE YEARS? BROKERS

LENDERS

REGULATION

62%

56%

FLUCTUATING PROPERTY MARKET

49%

34%

WEAK ECONOMY

45%

50%

AFFORDABILITY

43%

35%

SLOW CREDIT DEMAND

33%

33%

SEEKING SOLUTIONS So what can be done to ease affordability pressures and help the vital first home buyer segment of the property market stay afloat?

According to the Genworth report, affordability issues will combine with weak economic growth, regulatory impacts and slow credit demand to challenge the mortgage industry over the next five years.

With this challenging economic backdrop in mind, the report notes that industry experts believe that lenders will need to become more innovative if they are going to meet these ongoing challenges head-on and continue to bring in home loan customers in an increasingly competitive environment.

Interestingly, however, the report says survey respondents expect there will be more innovation in products for self-employed borrowers than for first home buyers over the coming years.

A third of broker respondents (33%) believed that, over the next five years, we are most likely to see more innovation or development in products for self-employed borrowers. This was 7% higher than the figure for first home buyers (26%).

However, this trend was reversed for lender respondents, with 27% predicting more innovation for first home buyer products and only 19% opting for products for self-employed borrowers.

Source for all infographics: Genworth Home Grown survey

Lender initiatives and innovations aside, an often-suggested solution to Australia’s housing

“Mortgage industry participants are concerned about how housing affordability will affect certain segments of their customer base” Bridget Sakr, Genworth affordability woes is that state governments should intervene by reducing or removing stamp duties. But if the results of the Home Grown report are anything to go by, this is a proposal that is failing to gain the backing of the majority of mortgage industry participants.

FEBRUARY 2014 | 11

NEWS ANALYSIS / AFFORDABILITY

WILL THIS BE A CHALLENGE FOR THE MORTGAGE INDUSTRY OVER THE NEXT FIVE YEARS? BROKERS

LENDERS

REGULATION

34%

37%

WEAK ECONOMY

26%

43%

AFFORDABILITY

45%

37%

CHANGE IN CREDIT REPORTING

39%

18%

THREATS FROM NEW ENTRANTS

22%

24%

Four out of 10 lenders who took part in the survey (41%), for example, agreed that removing or reducing stamp duties would be the one government change that would benefit the mortgage market, while just 30% of surveyed brokers agreed with this assertion.

“Many participants also argued that removing or reducing stamp duties would only drive up prices and impact housing affordability further,” says Sakr. “The sector is clearly very concerned about the issue of housing affordability and how it is going to affect the mortgage market moving forward.”

MUDDIED WATERS One of the factors that is often brought into the affordability conversation is the shortage of new housing coming on to the market. Developers have struggled to gain funding or stay afloat in the postGFC environment, and many state governments have offered them a helping hand by altering their 12 | FEBRUARY 2014

First Home Owner Grant (FHOG) schemes so that the grant is only available to purchasers of new properties.

However, some within the industry claim that the elimination of the FHOG for purchasers of existing properties has muddied the waters in terms of evaluating how serious the drop-off in first home buyer numbers really is.

According to the Home Grown report, ABS data shows that first home buyer loans as a proportion of all new loans fell from 19.3% in September 2012 to 13.7% in August 2013 in the wake of the removal of FHOGs for established houses in NSW and Queensland.

However, the report goes on to say that several industry experts question whether ABS data reflects only first home buyers who have applied for the grant. If this is the case, then it can be argued that ABS figures understate the number of first home buyers entering the market, as those buyers who are purchasing established properties despite the absence of the FHOG aren’t included in the data.

The report’s authors also point to the HIA-CBA Housing Affordability Index, which has shown some encouraging signs. They note that affordability continued to improve over the June 2013 quarter, for example, with the proportion of income needed to meet mortgage repayments falling by 1.2% to 28.7%.

For the September quarter, the index recorded a further improvement in affordability of 3.2%, a

“Around one in two brokers surveyed wrote fewer loans to first home buyers over the previous 12 months” Bridget Sakr, Genworth result that the HIA claims is largely thanks to reduced interest rates and increased earnings.

“Despite widely publicised dwelling price increases in some markets in recent months, affordability has continued to improve as a result of reduced interest rates,” says HIA senior economist Shane Garrett.

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“Since late 2011, the RBA has cut rates by a total of 225 basis points, including reductions in both May and August. As a result, the discounted variable interest rate for mortgages has declined from 7.05% to 5.18% over the same period.

“Affordability has been further enhanced by continued increases in weekly earnings over the past year.”

However, as the Home Grown report’s authors discuss, due to the impact that interest rate cuts have had on affordability in recent times, any improvement may be short-lived once rates begin to head north.

“Affordability has increased mostly because of the falling interest rate environment, which means it is likely to decrease when the interest rate easing cycle ends,” says the report.

In addition, Garrett claims that infrastructure funding models need to be reviewed by policymakers “so as to ensure that the affordability improvements of recent years prevail over the long term”.

A HELPING HAND Whatever the longer-term affordability outlook, few would argue that first home buyers aren’t in need of some sort of assistance to get into the market. From the lender perspective, innovation in the savings space was cited as one of the key areas in which product innovation for first home buyers is likely to take place.

The two initiatives that are most likely to be on the cards, says the report, are changes to genuine savings requirements, or products to assist with saving – such as savings plans with incentives to buy property.

On the broker front, the report notes that there appears to be support for a mortgage scheme that gives first home buyers access to lower interest rates and is run in a similar fashion to Higher Education Contribution Scheme loans. Other alternatives suggested by brokers in the report include a return to 100% LVR loans, and an increase in shared equity products. The report’s authors note, however, that any resurgence in the shared equity product market would possibly be short-lived.

“Some industry experts believe that while shared equity products tend to be popular when house prices surge, it is unlikely that they will be popular when prices fall to normal levels of growth,” says the report.

FEBRUARY 2014 | 13

HEAD TO HEAD / LA TROBE FINANCIAL

MERCURY

RISING La Trobe Financial head of funds management Chris Andrews and head of major clients Daryl Hill explain why the future is bright for mortgage brokers What do you think are the main issues that brokers will face in the year ahead?

At one level the broker community now has distinct similarities with the distribution side of the financial planning community.

Like the financial planning community where advice is given to Australians regarding investment of their savings, brokers give recommendations regarding which loan would best suit a client’s requirements and objectives – all under the regulatory parameters of responsible lending to ensure the loan recommended is not unsuitable.

The broker industry has just settled in ‘regulatory round one’ from government in regard to increased 14 | FEBRUARY 2014

[ACL] licence requirements, external dispute resolution [EDR] scheme membership, insurance required to operate, and is now open to regular surveillance by ASIC. Interestingly, ASIC, at the time of this interview, is conducting individual targeted broker surveillances on 90 separate broker groups.

Where may this activity lead?

We need look no further than recent Senate Enquiry submissions about the role of ASIC, where both ASIC and COSL state that the majority of NCCP non-compliance is from the broker sector. Additionally, both COSL’s and FOS’s annual reports show brokers are the greatest cause of borrower complaints to the EDR body.

With well over 10,000 brokers practising across Australia, we are not sure if this comment is helpful in any way, and may merely be a reflection that most of the brokers perform their tasks and jobs extremely well. However, it may not be long before ASIC is ‘media directed’ to implement ‘regulatory round two’ because of the perception of repeated noncompliance and consumer complaints.

Regulatory round two could result in a fullfrontal attack on mortgage broker trail commissions, as has been the case for financial planners under FoFA, where trail commissions have been banned

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and the ‘fee for service’ model is now the only acceptable model.

We say this merely as a weather alert for mortgage brokers, as commission-based selling has been historically problematic for regulators.

Regulators will always see trail commissions and high upfront inducement payments as potentially conflicting with any recommendation. The rebate model may have to make a comeback.

How are brokers perceived at present?

The broker brand in the mind of the public is currently at a peak because brokers are perceived by the public as impartial. That is, independent from the seller or manufacturer of the underlying product, and – in the case of mortgage brokers – independent from the banks. This independence and positive image is something to protect, as it has been hard earned over many years by thousands of hard-working, ethical brokers across the country.

The reality about independence, however, is changing – and will change further as banks seek to further control the distribution channel of the $1.2trn home loan market.

Early in 2013 bankmecu acting CEO Robert Allen said: “There is growing concern that the major banks are creating a veneer of competition through their ownership of various sub-brands”. La Trobe Financial does not subscribe to this view, because we know how contested the marketplace for home loans really is. However, we do believe this remains a potentially vexing matter for the public.

Are there any other issues of concern to brokers?

Other macro issues facing the mortgage broker community at this time include: •• •• •• ••

a shrinking revenue base; competition from direct channels; competition from ‘best rate online 24/7’ sites; growing the business ‘as a business’, and integration to broader financial services life cycle; •• conflicted remuneration within white label products, where brokers can influence the price a consumer pays; and •• transferability of clients from aggregators – the industry must become like the financial planning industry where, for the past 10 years, planners have, with a client authority, been able to move their clients and trail to a new provider.

Notwithstanding these issues, we still see great opportunities for brokers – particularly in crosspollination between financial planning and broking business models.

How do you think the property market will fare in 2014?

The housing market, subject to a steady RBA hand, is set to accelerate further in 2014 and will mainly be led by a minor housing price boom for approximately eight months in Sydney, where prices are expected to rise between 15–20%.

With interest rates at 50-year lows, improvements in sentiment towards the economy, job prospects holding firm, and continued strong net migration of circa 280,000 new arrivals annually, we anticipate continued buyer interest – so no collapse anytime soon in the housing market.

Notwithstanding the recent HIA-Commonwealth Bank Housing Affordability Index showing decadehigh levels of housing affordability, the major pressure point in the market over the coming decade will be affordability for new entrants – and in particular first home buyers who are competing with investors and existing upgraders to buy into a market with ever-increasing median house prices.

This house price pressure is due primarily to an artificially restricted and undersupply of housing stock. This is an issue that needs addressing by industry, and all brokers should become very vocal about this issue. In our view the MFAA could become a vocal advocate for increasing supply of housing stock to relieve this unwarranted price pressure in the market.

“Brokers must continue to move to a ‘trusted adviser’ role for their customers”

Are there any key skills that brokers need to boost their business?

Brokers must continue to move to a ‘trusted adviser’ role for their customers. Brokers must grow their business past a single transaction product into more products and more services, which will assist greater client relationships, client retention, and client profitability.

Many brokers will be faced with increased 24/7 loan approval technology encroaching on their patch as banks implement direct-to-consumer technology platforms in early 2014. Brokers need to maintain a compelling reason why consumers come to them for convenience under this future scenario, and ‘independence’ is the key brand proposition.

One area brokers could consider reviewing is their ability to deal with clients who require

FEBRUARY 2014 | 15

HEAD TO HEAD / LA TROBE FINANCIAL

CHRIS ANDREWS’ CAREER TIMELINE

2000 Completes Bachelor of Laws and Bachelor of Commerce

2000–2006 Litigation and corporate advice lawyer – Minter Ellison

2006–2009 Joined La Trobe Financial as a senior legal counsel

2009–2013 Appointed head of funds management – La Trobe Financial

2013 Appointed vice president and head of funds management – La Trobe Financial

La Trobe Financial committee member Origination and credit; pricing and liquidity (deputy chair); audit and risk

16 | FEBRUARY 2014

specialist lending alternative products, and placement of small – less than $5m – commercial loan transactions as an addendum to their present service offerings.

Where do you stand on diversification?

This convergence is simply irresistible over time and is already supported through the two separate but similar legislations covering both sides. Brokers, if they can partner with the correct counterparty, will augment their businesses long term and transform into a deeply valuable source of advice for consumers, and enhance the valuation of their business.

As one of Australia’s leading bank independent, credit specialist fund managers, we have been a proven and trusted investment partner for institutional and retail investors alike – covering in excess of $10bn and 120,000 customers – and have proved both sides do work together well.

What are your key strengths as a lender?

As a credit specialist we give brokers flexibility and access to markets that the major banks generally don’t provide. La Trobe Financial has one of the broadest product suites available in our market, catering for a wide variety of applicants and scenarios, such as SMSF loans, commercial loans, construction loans, minor credit impairment loans, and our trademark self-employed ‘Lite-Doc’ loans.

We continue to assist many Australians with an opportunity to realise their borrowing dreams. We have seen many credit-worthy consumers frozen out by credit-scoring models because they have experienced an unforeseen life event such as redundancy or divorce, which temporarily affected their ability to service their obligations.

We are approachable and reasonable, and approve mortgages for any reasonable purposes, including helping people with debt consolidation.

So, if borrowers need a mortgage from as little as $50,000 up to $5m, or simply need to get their debts under control, we can help.

Our investment services, through our awardwinning retail mortgage fund, provide brokers with a speedy opportunity to build long-term relationships with clients on both the lending and investment side – and customers can make extra repayments and have a free redraw service.

In using our unique credit-solutions approach

we provide a way to demonstrate our willingness and ability to help brokers gain and maintain future business as their client’s situation changes or improves over time.

What’s your approach to forging relationships with brokers?

Our approach has been built up over many years and is constantly improved by continuing to listen to their needs, refining our products and processes, and reviewing technology to ensure we remain easy to deal with.

Over recent months we have made significant changes by introducing new products, reducing pricing and streamlining processes, all with the view of adopting what brokers want. The main outcomes of the review have been: •• Speed of approval: We can tell brokers or borrower clients on the spot whether the application for a mortgage can be accepted with an indicative approval.

•• Dedicated national broker hot desk: You won’t be talking to an answering machine. With representatives across Australia, you will be personally assisted with your loan application from start to finish; a simple call and no need for an appointment.

•• Experienced credit-authorised BDMs: Local state-based BDMs who can visit your office and our senior BDMs in each state hold delegated lending approval authority.

We deal almost exclusively with brokers to originate our loans, and work very closely with them. We truly understand their needs and can tailor our products and services appropriately. We have led the industry on never introducing a clawback policy, never charging a risk fee, and now we have one rate for over 90% of all broker specialist loans – all designed to provide maximum benefit for brokers and their clients.

What kind of feedback have you been receiving from brokers?

The mercury is rising and in the right direction. Excellent feedback has been received as brokers are able to speak directly with our creditdelegated BDM or credit analyst about any loan.

Our speed of getting things done from the loan application until the final stages of settlement has impressed many of our broker clients and exceeded their expectations.

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We frequently receive comments and emails that our knowledge of commercial and specialist credit, expertise, experience and our service delivery are exceptional and second to none. They love our independence and say we are different to a bank and that really suits them down to the ground.

In focusing on investment-grade credit assets, typically clients underserved by traditional retail banks, brokers tell us these loan approvals are an important source of additional business. However, such loans would ordinarily fail the automated lending processes of retail banks due to minor – but often paid – impairments in credit criteria, alternate modes of income verification, older-thanusual accepted age or past minor-default history due to missed bills; so it’s a win-win for them and their client.

What are your plans for 2014?

We’ll be announcing more new products early this year and further competitive improvements which will mean brokers will be

logging on to our electronic loan-closing system, making loan settlement faster and easier. It’s our intention in the next 12 months to make further enhancements to our broker servicing to both enhance approval and settlement times.

Finally, we are expanding our footprint in the Sydney market following a recent upgrade to a

“We still see great opportunities for brokers, particularly in cross-pollination between financial planning and broking business models” larger Sydney premises to accommodate more staff, which will include significant expansion of our sales force on the ground, growing to 20 by the year’s end.

FEBRUARY 2014 | 17

HEAD TO HEAD / LA TROBE FINANCIAL

DARYL HILL’S CAREER TIMELINE

1970–1976 Commercial Banking Company of Sydney

1976 Joined La Trobe Financial as an accounts manager

1980 Appointed BDM – La Trobe Financial

1990 Appointed national relationship manager – La Trobe Financial

2000 Appointed national relationship manager for asset origination and funds management divisions – La Trobe Financial

2004 Appointed Justice of the Peace

2010 Achieves La Trobe Financial Distinguished Service Medal

2013 Appointed vice president and head of major clients – La Trobe Financial

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MPAMAGAZINE.COM.AU

How can the non-majors challenge the big four for a larger slice of the mortgage market?

Innovation and product features. But actually they don’t have to, or really want to, compete on price alone as the market itself is composed of different segments and it depends very much on which segment each non-major wishes to focus on. The reality is non-majors aren’t challenging the big four at all, and that’s likely to continue.

However, a bigger potential elephant in the room is how aggregator white label programs are growing.

Rather than sending all their business to their referral banks, brokers are now beginning to retain loan deal flow for their own in-house loan-book operations. These growing internal books are essentially funded by the major banks to challenge deal flow to other non-major lenders. Such in-house white label programs – funded by the majority bank owner – constitute the fourth largest lender each month for such brokers.

Another way forward to perhaps maintain competitive tension in the market could be to seek government legislation, through APRA, to require all banks prominently to disclose ownership of wholly-owned subsidiary subbrands or their subsidiary or controlled entity in advertising. All loan advertising would then make it clear to consumers the party they are dealing with is, as an example only, “majority owned by the XYZ bank”.

This would better enable consumers to make informed decisions about their banking and other services being offered. This is another simple step government can take to deliver on its promise to ensure that there is greater competition in the Australian finance market, and another advocacy challenge for the MFAA.

You’ve launched an SMSF product recently. How important is the SMSF market?

More than half a million SMSFs are now in operation, according to statistics released by APRA in May 2013. The average balance of an SMSF is stampeding towards $1m, with the average fund balance now around $986,000. Individuals running SMSFs control nearly a third ($492.2bn) of the $1.58trn invested via Australian superannuation funds. Ten years ago, SMSFs represented 10% of all superannuation money, and SMSFs are projected to grow to $2.23trn by 2033.

What’s the message you’d like to pass on to brokers about the issue of risk fees?

Well, the message is La Trobe Financial doesn’t charge them at all.

The second message is why charge clients a risk fee if another lender doesn’t charge them? It’s a really simple but important proposition.

A broker needs to ask just one question: “Am I putting my clients’ interest first in referring them to this particular lender?” This is very important now for all loans up to 80% of valuation, as La Trobe Financial can assist in the first instance and we do not charge risk fees at all.

Our reasoning to raise the issue is that borrowers can benefit when no risk fee is charged.

Moreover, because of the positive image of brokers as the ‘impartial advocate for the borrowers’, we did not want regulators to draw any conclusion that brokers could be potentially conflicted by the existence of such risk or equalisation fees – because it appears payment of these fees, which

“Regulatory round two could result in a full-frontal attack on mortgage broker trail commissions” run into thousands of dollars, assists risk-feebased lenders to pay higher upfront commissions to brokers.

Remember that a fundamental principle of the NCCP was to ensure borrowers could easily compare loans, make informed choice, and be represented independently and impartially by their broker as their agent. In fact, a broker’s independence, in our view, is the cornerstone of the business case for using a broker rather than consumers dealing direct with the lender.

Risk fees really don’t provide any benefit unless you are borrowing above 80% of valuation, and even in such instances the fee should always be refundable if the loan is repaid in full – without default – during the first two years following loan settlement.

SPECIAL REPORT / YOUNG GUNS

20 | FEBRUARY 2014

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f the o e o somt new t s k spea brightes hy A P M y’s covers w r t s u ind and dis age g t r o stars ture of m d hands the fu g is in goo n broki

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or new entrants into the mortgage broking game, it can be a tough industry to crack. It takes real drive, enthusiasm and the right mix of personal and professional skills to bring in leads, convert them into satisfied clients and start to generate the kind of settlement volumes that suggest all the hard work is paying off.

However, if the opinions of this year’s Young Guns are anything to go by, it’s a truly rewarding profession to move into. And, judging by this year’s crop of young talent, there are a number of new recruits coming into the industry who embody everything it takes to make a go of life as a modern mortgage broker – and drive the industry as a whole to greater heights.

In order to get a feel for the kind of young talent that’s entering the mortgage broking profession, we approached aggregators and asked them to put forward their young stars based on three key selection criteria: they had to be no older than 35, have spent no more than two years working as a mortgage broker, and could not have appeared in last year’s Young Guns special report.

Based on these criteria, we spoke to a number of new entrants to the broking world. Their interviews are presented throughout this report, and provide a fascinating insight into the kind of person the industry is now attracting, the challenges they face, the rewards of the job – and why the industry looks to be in good hands.

WE ARE BACKING YOU FROM DAY ONE At ANZ, we’ve always treated brokers as valued business partners and appreciate their success underpins our own. That’s why we’ve set about backing our brokers from day one with training and accreditation to set them on the path towards becoming a Young Gun. The MPA Young Guns feature recognises awesome talent and excellence among our mortgage broker future leaders. Each individual represented has been nominated by their aggregator and has been acknowledged for their customer skills, outstanding performance and overall business growth.

There is an enormous breadth and depth of talent highlighted in the MPA Young Guns feature this year and it gives us great pleasure to celebrate their excellence.

Being the best you can be extends far beyond being a loan-writing machine. At ANZ, we value relationships, professionalism, consistency, and business ethics. We see ongoing education as paramount to a successful career. We value true industry leaders who are focused on building sustainable businesses for the long term.

As you read on, you will learn about some exceptional people chosen from thousands of nominees who are ‘the ones to watch’ shape our future in a rapidly changing world.

It’s for this reason the MPA Young Guns feature is an honour roll all young brokers should aspire to achieving. We’ve been backing you from the start and we’ll be there cheering you on and backing you every step of the way.

Keiran Evans, head of third party relationship channels, ANZ FEBRUARY 2014 | 21

SPECIAL REPORT / YOUNG GUNS

MPAMAGAZINE.COM.AU

ANDREW PSALTI

Yellow Brick Road, Cronulla, NSW Why did you move into mortgage broking?

Finance has always been my preferred profession, and my time at ANZ was enjoyable both professionally and personally. But I really enjoyed the amount of time I spent working in the construction/facility management sector where I got to interact with clients, business owners and contractors on a daily basis, assisting them drive to success.

So when the opportunity came to combine both my finance skills and my newly honed client service skills and run my own business, it was an opportunity I just couldn’t pass up. Assisting everyday Australians grow wealth or empowering them with knowledge was the key driver.

“Our mandate is to make sure that we have exceeded the client’s expectations”

What are the biggest lessons you’ve learnt on the job so far?

The value of a relationship. As a branch, our mandate is to make sure that we have exceeded the client’s expectations every time that they interact with any team member for any reason.

This way the client will hopefully be happy with our service and recommend us to their social and professional circle.

What has been your biggest challenge?

Balancing all the different quirks and requirements that every lender has. It can be a challenge, but we have a documented process differentiating all the major players in the market.

Being self-employed comes with its challenges, but every day in business is a new milestone. I now ensure we focus on a good work-life balance.

What are the key strengths a person needs to make a go of mortgage broking?

Empathy, understanding and good communication skills are paramount in this industry. We constantly place ourselves in the shoes of our clients when we dummy-run a new process – and ask ourselves that, if we were not from a finance background, would we understand what is going on? If not, we change our tack.

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What advice would you offer to others who are considering moving into mortgage broking?

If you live for a fast-paced job and you enjoy interaction with customers and helping people from every walk of life achieve their dream, whether their first home or just a plan for future investments, this is a rewarding job. Yes, it can be stressful at times, but when that approval from the bank is confirmed or when you receive glowing testimonials from clients or referrals from happy clients, it makes it all worthwhile.

How do you go about generating leads and turning them into satisfied customers?

My business partner and I have segregated the business into two parts: sales and operations. Sam’s role is business development and it’s his job to keep the pipeline full and maintain the relationship through the wealth creation process. If the client comes to us for advice, he will set the appointment so the client can meet with Carl; and, conversely, if the client would like finance, the meeting is set with me as the main driver. But at all times wealth creation is the hero. It can start as easy as a budget.

MPAMAGAZINE.COM.AU

DECEMBER 2013 | 23

SPECIAL REPORT / YOUNG GUNS

may have questions but not have the time to call you to clarify. I try to call all my clients weekly during the loan submission stage to ensure they are updated on the status and know what’s going on. I’ve had great feedback from clients on this, as it means they don’t need to worry about what’s happening.

What has been your biggest challenge?

The biggest challenge was getting a good client database. Being new to the industry I didn’t have an existing database, so utilised social media to let everyone know of my new business.

Word-of-mouth referrals then spread and I’ve found that these are the best leads, as you have been recommended by someone the clients trust.

What has been your biggest achievement?

ASHA LONG

Loan Market, Campbelltown, NSW Why did you move into mortgage broking?

I’ve always wanted to have my own business, and coming from an accounting/finance background my friends and family were always asking for my help on their finances. After building my house and purchasing an investment property, I understood the process and enjoyed helping others with it – so this was the perfect opportunity.

What were you doing before moving into mortgage broking?

I have a degree in business, majoring in accounting and management, and spent the last 10 years working in finance across a number of roles at Woolworths Ltd. My most recent role prior to commencing my business was as a senior finance analyst for the Liquor Group (Dan Murphy’s, BWS and supermarkets).

What are the biggest lessons you’ve learnt on the job so far?

You need to follow your clients up because everyone is busy, and sometimes the clients 24 | FEBRUARY 2014

Setting up the company and exceeding my expectations of settlements in the first six months! When I decided to change careers, I knew that the first 12 months would be difficult and income would not be consistent. Getting through that initial stage and seeing my business grow above budget has been my biggest achievement.

What are the key strengths a person needs to make a go of mortgage broking?

They need to be able to manage their time well and set their own goals. As you work on your own, you don’t have someone pushing you to achieve anything, so you need to have the drive and motivation to do that.

What advice would you offer to others who are considering moving into mortgage broking?

Have a plan and stick to it! You need to treat the job as if you were getting up and going to work for someone else every day. I set myself daily targets the night before, so I know what I am working on for the day.

How do you go about generating leads and turning them into satisfied customers?

I use a variety of marketing tools, my most regular being social media (Facebook and LinkedIn), referrals from existing clients and referrals from local businesses.

MPAMAGAZINE.COM.AU

EBONY JOHNSTONE

Mortgage Choice, Miami, Qld Why did you move into mortgage broking?

My boss, James Hasselle, had approached me years ago to come and join his team at Mortgage Choice in Miami, but I resisted because I was planning to start a family and I had been at my previous employer, ANZ, my whole financial career. Before returning to work after having my boys, I caught up with James and the team for Christmas drinks, which is when he finally convinced me to give mortgage broking a go with Mortgage Choice – and I’ve never looked back!

How has the job compared to your preconceptions?

Initially I was concerned about my networking skills and that fact that I would have to generate my own leads rather than having them walk in my front door daily (as they had with ANZ), with no effort on my behalf. It genuinely panicked me. However, it turned out that I had just underestimated how capable I was. With the great team at Mortgage Choice in Miami to back me up, it was certainly not as difficult as I had anticipated. Plus, the fact that I now have a larger number and variety of loan products to offer my customers is truly liberating.

What are the biggest lessons you’ve learnt on the job so far?

I’ve learnt that it is often a good idea to look into a customer’s credit file in the first appointment. It will save a lot of wasted hours.

What has been your biggest challenge?

My biggest challenge has been finding the right work-life balance; I’d say it’s the thing on the tip of every working mother’s lips. Like most mortgage brokers, I could spend days and hours doing this job, but it’s recognising when to call it a day that can sometimes be the difficult part.

What has been your biggest achievement?

One of my biggest achievements has been finally hitting the $5m submission mark earlier this year. That and becoming a BNI chapter president – who said I couldn’t network?!

How do you go about generating leads and turning them into satisfied customers?

I attend many networking groups like BNI, Mums in Business, Business Chicks, and so forth. I find that it is great to get out and meet with these groups, and develop complementary relationships with people who have the same business ethics as you.

Our office is quite established so we do get a lot of return clients or referrals, which means there is always enough business to fill in the time.

I always strive to ensure that my customers receive the best service and experience possible.

I explain, I listen and I make sure that they have all the information they need to make good loan decisions. Coming from a banking background, I understand everything from basic telling transactions through to more complex loan scenarios, so I can help my customers outside of just the home loan process, making it a more holistic experience.

FEBRUARY 2014 | 25

SPECIAL REPORT / YOUNG GUNS

ISMA AHMED

Home Loan Experts, Burwood, NSW Why did you move into mortgage broking?

I was at a crossroads in careers and was given an opportunity of a lifetime by a now good friend, Otto Dargan. He was looking for ex-credit with banking experience to join his broking team. I wanted a challenge as well as something where I can make a difference. I was sceptical about how well women could do in a male-dominant industry, so I was determined to make a difference and prove a point – women can certainly succeed in this industry!

What were you doing before moving into mortgage broking?

I have 10 years’ experience in the industry, working in credit for some of the majors.

I also worked in the development academy for NAB as a performance coach, which included training and implementing credit policy to production staff.

Most recently before becoming a broker, I was a full-time mum.

How has the job compared to your preconceptions?

“I didn’t think it would be possible to be a woman, a mum and mortgage broker all at the same time”

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Broking has its challenges – there’s no denying that. But the rewards completely outweigh them. Making people’s dreams a reality, and making such a significant difference to a person’s life, is inexplicable. I didn’t think it would be possible to be a woman, a mum and mortgage broker all at the same time. However, I love making a statement!

What are the biggest lessons you’ve learnt on the job so far?

To really learn to delegate. I’m a control freak, and want to do everything on my own. I’ve learnt that this is not possible – and I’m still learning to let go and trust my team more.

What has been your biggest challenge?

I take every single application personally, and this really takes a toll on me. There are times where you just can’t help someone, and I find this hard.

What are the key strengths a person needs to make a go of mortgage broking?

Being open to always learning more; and just being genuine.

What are your plans and ambitions for the year ahead?

I turn 30 on the first of January, so new year, new age: my goal is to try all new things – I can’t say no to anything!

What advice would you offer to others who are considering moving into mortgage broking?

Don’t give up. If things are tough, stay determined.

What’s the best part of the job?

Getting customers into their own home, or growing their investment portfolio.

There’s nothing better than helping people.

What’s the worst part of the job?

When you can’t help someone. Crushing someone’s dream is tough. The best you can do is offer some advice on what can lead them to a better position.

How do you go about generating leads and turning them into satisfied customers?

Underpromise, overdeliver – works like a charm.

MPAMAGAZINE.COM.AU

STEVEN (HAIYANG) SUN

One Stop Loan, MacGregor, Qld

What are the biggest lessons you’ve learnt on the job so far?

The hardest part of this job is probably the first year when you start. During that time you will not have had a lot of experience and probably not many clients will go to you directly. So you need to have some money to keep going. Also, you need to be able to handle responsibility.

What has been your biggest challenge?

I think time management is very important. When you get experience and a stable client base, then you need good time management. That is very important, especially for me. I have a lot of Chinese clients and overseas clients, and you need to keep sending documents overseas and keep track of them. So you need good time management to keep the clients informed.

How do you go about generating leads and turning them into satisfied customers?

Why did you move into mortgage broking?

I did my Masters of Banking Finance.

When I started, I wanted to get into a bank, but because at the time the economy was not very good, I didn’t get a good job at a bank. I found mortgage broking interesting, so I started this job.

How has the job compared to your preconceptions?

I think the job is wonderful. When I started doing the job, I was actually selling property as a real estate agent and was a casual mortgage broker at the same time. But if you want to be an agent you need to spend a lot of time on the road.

But when you become an experienced mortgage broker you just need to wait in the office for the phone call and probably out of two of the deals you will get one at least.

When you start this job you need to know what you are doing and get lots of experience. Otherwise the client will ask you something that you don’t know and it’s going to be a problem. People will probably try to find someone else. You need to work with accountants and real estate agents to generate more leads. But after a while, when you get stable clients, I think it’s all about word of mouth. I like to do the best job I can for each client and they will generate the leads for me.

Another reason for my success is my background.

At the moment there are a lot of overseas buyers. So it’s also another reason why I’m successful, because I speak Cantonese and Mandarin. I have been in Australia more than 10 years. I used to work for real estate agents so I know how real estate works, and I have a lot of friends who are accountants and that helps me a lot. So you probably can’t just know about mortgage broking; you need to know something else as well.

“The hardest part of this job is probably the first year when you start”

FEBRUARY 2014 | 27

SPECIAL REPORT / YOUNG GUNS

28 | FEBRUARY 2014

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FEBRUARY 2014 | 29

SPECIAL REPORT / YOUNG GUNS

SEBASTIAN SALEK

Salek & Co, Narre Warren South, Vic

What are the biggest lessons you’ve learnt on the job so far?

Within an ever-growing and changing industry, there is always more to learn. Products are continually changing, and in order to offer clients a great service I need to understand and be across all of the options available.

What has been your biggest challenge?

Stepping away from the tax advice and investing further time in the mortgage broking, then establishing my own independent broking practice and growing it into a thriving business. We are now at the stage where we are getting referrals from our referred clients and hearing about how pleased they are with the service they received.

What are the key strengths a person needs to make a go of mortgage broking?

Drive: I find that one needs the energy and drive to go that extra mile to help their clients, whether this is over the weekend or after hours. Clients appreciate the extra hard work and will stay a client for life.

Communication: If you can keep your clients and the lending institutions all on the same page throughout the entire loan application, then you will have very happy clients sending you referrals very quickly and meeting everyone’s expectations.

Why did you move into mortgage broking?

I gained interest in the area of mortgage broking whilst working as a tax agent in my own tax practice. I recognised a need in the market from my clients and it has now become my main focus and core business. Combining my own passion for property and talking with people, I find it a very rewarding career and knowing that I can help clients financially make their own dreams.

How has the job compared to your preconceptions?

Already working in the financial sector, I had a good understanding of working with professional clients and delivering a great service.

I have found that the mortgage broking industry is continually growing and changing, so there is a lot to know and a lot to learn. This has allowed me to continually be challenged, which I enjoy.

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What advice would you offer to others who are considering moving into mortgage broking?

I would advise to do thorough research on the industry and set up a support network where you can have a mentor to help along the journey. Having someone who you can bounce ideas from is a major advantage, and partnering with the right aggregator who provides the right model for their business.

How do you go about generating leads and turning them into satisfied customers?

Generating leads is about performing your job to the best of your ability and exceeding your client’s expectations. If you do this, then the leads will follow very soon after. Additionally, it is important to maintain regular follow-ups.

MPAMAGAZINE.COM.AU

JAYDEN VECCHIO

Discovery Finance Group, Brisbane, Qld Why did you move into mortgage broking?

Coming from a family of small-business owners, I have always wanted to go into business for myself and create/build a brand. Mortgage broking offers the opportunity to do this.

What were you doing before moving into mortgage broking?

I’ve been in banking and finance since I left university, so it always seemed like the natural progression to move to mortgage broking.

How has the job compared to your preconceptions?

Much better than I had ever anticipated!

What kind of training did you undergo before becoming a broker, and what ongoing training have you received?

I had completed my Cert IV in mortgage broking, RG146/Diploma of Financial Services and a double Bachelor’s degree in IT/Business. But I think ongoing training is the key to staying ahead, so I am always looking out for supplementary courses and training, including PD days, etc.

What are the biggest lessons you’ve learnt on the job so far?

There are no limits in what you can achieve as a mortgage broker.

What advice would you offer to others who are considering moving into mortgage broking?

Don’t wait until tomorrow; there is no better time than right now.

What’s the best part of the job?

What has been your biggest achievement?

Hitting my personal target of settling over $60m within the first 9 months.

What are the key strengths a person needs to make a go of mortgage broking?

A desire to help people, and passion in wanting to be the best in the industry.

What are your plans and ambitions for the year ahead?

Expanding and diversifying the business.

The flexibility to work anywhere.

How do you go about generating leads and turning them into satisfied customers?

Setting expectations up front, and always delivering on my promises.

Where do you see the mortgage broking industry heading over the next few years?

More automated processes; moving online. But there will always be a space for specialists to help clients that don’t fit the cookie-cutter model.

FEBRUARY 2014 | 31

SPECIAL REPORT / YOUNG GUNS

CLIFF FERRER

1st Street Home Loans, Rose Bay, NSW Why did you move into mortgage broking?

I liked the idea of being able to assist people to purchase a home to live in (and investment).

What were you doing before moving into mortgage broking?

I was previously working at Westpac in business banking for two years.

How has the job compared to your preconceptions?

“Putting the client at the centre of everything you do is important”

I am actually enjoying it more than I had thought. I also am putting in much longer hours than I had originally expected.

What has been your biggest challenge?

My biggest challenge has been to build up some consistency regarding lead generation and referral partners. During the first six to nine months I seemed to be either extremely busy or extremely quiet. This has started to improve over the last six months and will hopefully continue over 2014.

What has been your biggest achievement?

Being a finalist for the Young Gun of the Year in the 2013 AMA Awards.

What are the key strengths a person needs to make a go of mortgage broking?

I think putting the client at the centre of everything you do is important.

What are your plans and ambitions for the year ahead?

The plan for the year ahead is to build on what I have already achieved with my existing clients and focus on quality relationships with my referral partners.

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What advice would you offer to others who are considering moving into mortgage broking?

Become an expert in terms of your knowledge, and always follow through on commitments that you make to clients.

What’s the best part of the job?

The part of the job I like the most is meeting with clients, and being able to take away some of the stresses and worries that may be associated with purchasing a property.

What’s the worst part of the job?

I actually enjoy most aspects of the job. Probably the least enjoyable aspect would be the administrative desk tasks.

How do you go about generating leads and turning them into satisfied customers?

I believe it is important to generate leads from various sources and not just rely on an accountant or real estate office. I am always thinking up new marketing ideas. Some of them work better than others, so I attempt to replicate the ones that work.

I turn them into satisfied customers by being responsive, ensuring they have realistic expectations and then go about attempting to exceed these expectations.

Where do you see the mortgage broking industry heading over the next few years?

I think it will continue to grow and gain market share over the other mortgage channels.

MPAMAGAZINE.COM.AU

CARA QUINN

Loan Market, Nundah, Qld

Why did you move into mortgage broking?

I had a poor experience with a broker during the purchase of my last property, and thought that I could do a better job. I’ve always been interested in property and finance so it seemed like a perfect fit.

What were you doing before moving into mortgage broking?

I was working as a legal secretary for Minter Ellison Lawyers in Brisbane.

How has the job compared to your preconceptions?

My perception of what the job entails tends to change each month! I initially thought it would be primarily administrative. However, as my business grows I spend far more time face-toface with customers and referrers, preferring to outsource the paperwork.

What are the biggest lessons you’ve learnt on the job so far?

I’ve learnt the importance of managing customer expectations. Many customers’ last purchase experience was pre-GFC, and lending criteria have certainly changed since then.

What has been your biggest achievement?

Settling that first loan! I think I drove the lender crazy with that one!

What are the key strengths a person needs to make a go of mortgage broking?

You need to enjoy dealing with people and have thick skin. Particularly when it comes to referral sources, you will get a lot of no’s and will often doubt yourself, so it’s important to brush it off and get on with the job.

What are your plans and ambitions for the year ahead?

Now that I have a steady pipeline of

work, this coming year I will focus on strengthening my relationships with new and existing referral partners and streamlining how each file is administered to ensure my database maintains its value.

What advice would you offer to others who are considering moving into mortgage broking?

Especially at the onset, you will work long hours for little reward, so it’s important to have family and friends who will support you and provide morale, money and referrals!

What’s the best part of the job?

Calling a customer to tell them their loan is approved; especially first home buyers. It always makes my day to hear their excitement!

How do you go about generating leads and turning them into satisfied customers?

Network, network, network. You never know where your next lead will come from. I keep customers informed every step of the way, which goes a long way when it comes to repeat business and referrals.

Where do you see the mortgage broking industry heading over the next few years?

Every month we see upgrades to aggregator and lender websites, software and mobile apps. I can see some great opportunities for brokers who embrace this technology, especially as our customers become more and more tech savvy and time poor.

FEBRUARY 2014 | 33

SPECIAL REPORT / YOUNG GUNS

MARISSA SCHULZE

Rise High Financial Solutions, Prospect, SA

What has been your biggest challenge?

I started working for a Refund Home Loans franchise. I was only there for a few months before Refund went into administration. At that point I had to decide what I was going to do moving forward. I was probably a little bit frightened to join another franchise model after that, so I decided to take the leap and start my own business with my husband. That was a huge challenge. I basically had to do everything from scratch: build a brand, find an aggregator, set up the office.

What has been your biggest achievement?

We’ve built a business that we’re really proud of. In a short period of time it’s been really successful and we’ve built a really strong and loyal client base – and a brand that’s quickly gaining recognition in the local market.

And we have been really fortunate to win a few awards. There’s the AMA award [Quality Young Gun of the Year – Independent], and I also won the MFAA Excellence Achievement Award in 2013. And in our first year of operation in 2012 we won AFG’s Best New Business and Rising Star Award in SA. We were also finalists in the AMA award for New Brokerage of the Year.

Why did you move into mortgage broking?

I started broking just after I’d had my first child and decided that I wanted to have a flexible career that could still give me job satisfaction, intellectual stimulation, people interaction, but would give me flexible working hours so that I could manage it around my family commitments.

What were you doing before moving into mortgage broking?

I did a Bachelor of Law and Accounting at Adelaide University. I decided I didn’t want to be a lawyer or an accountant, so I got into banking.

I worked for BankSA and then moved to Westpac.

I was a senior relationship manager at Westpac in commercial banking before I left to have my first child.

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What are the key strengths a person needs to make a go of mortgage broking?

You definitely have to be passionate about what you do. You have to have an underlying desire to help people to improve their lives. There is a lot of hard work that goes into it, so you have to be dedicated and persistent. And you have to be the sort of person that loves meeting people and networking.

How do you go about generating leads and turning them into satisfied customers?

Adelaide’s one of those markets where word of mouth is pretty powerful, so it really was a matter of getting out there and telling people what we’re doing. Most of our business comes from client referrals; and trying to build relationships with real estate agents, property managers and buyers’ agents – basically going to lots of networking events.

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ERIC CUI AND DONALD TANG

Alliance Mortgage Solutions, Hurstville, NSW Why did you move into mortgage broking?

Donald Tang: Mortgage broking requires a combination of skills in sales, customer service, professionalism, and accuracy. This is my dream career.

Eric Cui: My background is in finance and banking, so I could utilise my professional knowledge in this area. But mortgage broking is not purely sales – it’s more like consulting and providing a financial service to clients.

What were you doing before moving into mortgage broking?

DT: I have a Bachelor’s degree of Finance from overseas, and four years’ sales experience in the hotel industry.

EC: I did a Bachelor of Commerce and Master of Financial Analysis at Sydney University and UNSW, respectively. After that, I was doing hospitality for two years.

What are the biggest lessons you’ve learnt on the job so far?

DT: Attention to detail is key. Small mistakes can lead to big damage.

EC: The client’s interests must come first.

What has been your biggest challenge?

DT: Time management: when work is too busy and I need some sleep, time management becomes the most important thing in my life.

EC: Work-life balance.

What are the key strengths a person needs to make a go of mortgage broking?

DT: As a middle person between clients and lenders, the mortgage broker needs to mitigate the risk on behalf of lenders, and maximise the benefit on behalf of clients.

EC: This is a business-within-business model. You must treat this career as your own business, rather than a job, then you have to think and work on it.

What are your plans and ambitions for the year ahead?

DT: To make Alliance Mortgage Solutions the top broker group in the Australian Asian community, and have several franchise shops around NSW.

What advice would you offer to others who are considering moving into mortgage broking?

DT: Once you are on board, stay on board.

This is not a job that can make you quick money, but this is a valuable career for your whole life. Be patient, be professional, be smart, and walk away from illegal behaviours.

EC: Be patient, professional and hard-working.

Eric Cui

What’s the best part of the job?

DT: A simple ‘thank you’ from clients after settlements.

What’s the worst part of the job?

DT: Continuous overtime, and nonstop being on the road every single day.

How do you go about generating leads and turning them into satisfied customers?

DT: Be professional in interviews; be humorous in chatting. Be a doctor for clients’ mortgage health conditions.

EC: Client interests must come first. Be friends with clients and provide a professional service.

Donald Tang

Where do you see the mortgage broking industry heading over the next few years?

DT: Rapid development due to the hot property market and clients’ investment demands.

EC: It will be more and more professional, increasing the standard for new entrants.

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PROFILE / HANK HONG

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Hank (Hoa) Hong prides himself on taking on tough loan scenarios – often picking up clients who have been rejected by other brokers. It’s an approach that he believes will help him win a spot on the MPA Top 100 list this year.

John Hilton reports MPA: Why did you decide to become a mortgage broker?

Hank Hong: I was always going to broker.

I turned 29 this year but have been in the industry for 11 years now. I was invited to join a mortgage company in my second year of university when I was 18, and started cold calling and learning about the mortgage industry. I was there for three years, cold calling, learning sales, meeting with new clients and learning to be an amazing salesperson. I also spent three years in a non-bank, creating their credit team and leading the distribution for their franchise and broker network.

When I could not find a challenge anymore, I joined Home Loan Experts, which gave me the tools to become an excellent broker.

FAST FACTS NAME

Hank (Hoa) Hong COMPANY

Home Loan Experts LOCATION

Burwood, NSW BACKGROUND

Has worked in the residential and commercial lending industry since 2002 SPECIALITIES

Challenging loan scenarios, such as first home buyers, investors, including international/ non-residents, trusts, guarantor loans, construction and development loans

MPA: How do you keep your education up to date?

HH: We believe in constant education and upgrading of our knowledge in the office. We have broken the market into what can be done with each lender, and train on these subjects once a week.

We also have a weekly quiz on the latest updates, and we’re constantly reading industry magazines like MPA magazine.

The other big thing is catching up with bank BDMs every week, and also older brokers who have been in the industry for a long time. We learn from older brokers who have approved certain application structures which are not part of the norm.

MPA: What’s your strategy for maximising referrals?

HH: Each time I contact a client I will speak to the real estate agent, legal team and accountant. Maximising referrals from their accountants is one of my main sources of clients, as I understand financials and get hard deals through.

Having my clients on my personal Facebook account is a massive strong point, as it takes the relationship to a higher level. Facebook is a very strong marketing tool and clients have been referred just by being tagged in a conversation.

MPA: You enjoy taking on tougher loans, often from people who have been rejected by other brokers. What’s your secret?

HH: Every year there are a large number of brokers entering the market; not many make it through. The

FEBRUARY 2014 | 37

PROFILE / HANK HONG

key is education and knowing all the banks, not just the select few.

A broker who does not deal with all the banks would only know a restricted amount of policies. So when a client is not able to be approved through another broker I take great pride in knowing what went wrong and giving them the option that helps them out. By being able to assist the client and making the process easy, they will refer more clients to me.

MPA: How do you position yourself as an expert, rather than a salesperson?

HH: I do not stop learning and going over the basics.

I pride myself on being the mechanic rather than the salesperson. I know how the car was put together and how it can be fixed, rather than being the person that only knows how fast it can drive.

Being from an ex-credit background, I understand how the approving party thinks.

MPA: What advice can you offer to new brokers?

HH: Don’t be scared of trying new lenders and dealing with non-conforming lenders like Pepper and Liberty. There are many clients who do not fit into the normal banks’ criteria due to blemishes on their credit reports.

The rates may be higher, but the client gets into a home now rather than having to rent for a few more years, and the difference is that they won’t have a property purchase which has gone up 10% two years down the track. This means they will keep chasing the dream.

Dealing with a company like Pepper means you can get someone who will want to approve your loan, rather than a computer.

Be humble and keep learning from brokers that have been there and been successful. If they are successful they have done everything right, so if you are lucky enough to find someone that will impart knowledge, give them the respect they deserve.

MPA: You enjoy taking first home buyers through the buying process. What are your tips for success in this area?

HH: Reply to an email in 30 minutes, and reply to a call inside one hour. Give them timeframes of what they can expect. Three days in broker world can feel

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HANK’S MARKETING STRATEGY • Facebook connection with clients • Conversations and meetings with accountants and real estate agents • By just providing a great service, clients refer their family and friends.

There have been clients who could not work with me at that time, and they still referred their friends • We send birthday presents and messages and make an annual call on the anniversary of the client’s loan • Our aggregator, Connective, has a My Marketing product, which personalises an email to the client on a monthly basis with information regarding the market and rates • We also have a 21-touchpoint system, which means we need to have some kind of contact 21 times a year: calls, monthly newsletters, SMS, messages and calls

like two years to a client who is waiting for that answer. I try to reply to a client instantly, which makes them feel at ease.

MPA: How do you manage the more complex demands of investors?

HH: By showing them that you understand the structures completely and also giving them some other ideas that they can do effectively.

I have at the moment about six trusts, which are a mixture of all types. For an investor, they want to know you understand their situation, and to proceed with a lender that can make the process easy rather than ask for more documents. Also, speak to them about their five-year plan, which you can work out for them.

MPA: What advice would you offer to brokers who are looking to diversify into construction, development, and commercial lending?

HH: Take a dive into the deep end; you are only going to learn from doing these applications. You will learn more by trying to find the answers for these applications, rather than someone teaching you.

Speak to the credit teams of the banks; reach out to other brokers. These types of products are where the money is, because they are more complicated.

Every deal can be done one way or another. There might be a product or rate that the client likes, but beggars can’t be choosers.

Developers are some of my best referrers as well.

Helping them fund their projects, their personal lending, means they can refer all the purchases to you.

MPA: How do you achieve a work-life balance?

HH: After four years I am slowly being able to have a balance. When I started this life I gave up two years of my life working seven days a week, working to 11pm at night to cement myself. I now have two phones: the work one is switched off from 11am Saturday and turned on at 3pm Sunday. I also now have two PAs to run my game. Still trying to achieve it!

What are your plans for the future?

Become a Top 100 Broker, which I will next year. Help train new brokers into the market.

FEATURE / CHALLENGER AGGREGATORS

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There’s a band of aggregators who believe they offer something different to the larger operators. MPA catches up with some of the key challengers in this market for their thoughts on the state of aggregation, industry consolidation and what they can offer to the broking community

T

Brendan O’Donnell

Managing director, Liberty Network Services

here’s no doubt that the large, established aggregators are performing a valuable service for mortgage brokers. They have the size, scale and service proposition to match. Plus, with several of the larger players having been acquired in part or in whole by banks who are hungry to take a slice of the distribution pie, the resources on offer to these aggregators are increasing.

But speak to representatives of Australia’s band of challenger and boutique aggregators and the

message coming from these quarters is loud and clear: competition in the aggregation industry is not dead, and the challengers in this market are providing compelling and innovative solutions to brokers who are interested in looking beyond the big boys.

MPA caught up with representatives from several challenger aggregators to get their take on the state of the market – and present their case for the challenger proposition.

Frank Paratore

Gerald Foley

CEO, Ballast

Tanya Sale

CEO, Outsource Financial

Managing director, nMB

Peter Andronicos

General manager, eChoice

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FEATURE / CHALLENGER AGGREGATORS

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What do challenger aggregators offer in points of difference from the larger operators?

Tanya Sale One word springs to mind – and that is ‘independence’. Boutique aggregators have the ability to quickly respond to industry change, and realise opportunities. Members have accessibility to senior staff, more personal relationships, and more resources per quota. We can, and do, work to manage things swiftly.

Gerald Foley We all see value in dealing with any business that has a boutique or ‘smaller’ feel. The issue then becomes, do I need to pay more to receive the boutique service? With nMB it is the best of both worlds. We have built a strong reputation for consistency in service and for being the home to many quality and successful brokers. Now being part of a larger, stronger group through our Aussie (and ultimately CBA) ownership adds another dimension to our value proposition.

Frank Paratore We provide a structured service and business advice-type model, which is more interactive where we work quite closely with a lot of our members. We’re very much relationship focused, not transaction focused.

Brendan O’Donnell

IN FOCUS: OUTSOURCE FINANCIAL MPA: What are your strengths?

Tanya Sale: Outsource has always positioned itself in acting as a true business partner to all of its members. We find we are able to also achieve more because we actually have a relationship with every one of our members and know what they want, thereby being able to go out and create tools/processes/systems to meet their needs. Outsource is very robust in lead generation from our referral sector. We are so strong in this area we have been able to help loan writers that are good at what they do but don’t necessarily have the business savvy to grow and prosper.

MPA: What type of broker would you encourage to join your ranks?

Peter Andronicos

TS: This is twofold with Outsource Financial: as we have a large number of financial planners/accountants who are adding lending to their core business and are wanting to do this in-house, we find we have a lot of new entrants in this space – thereby we have had to create and build a mentoring program to cater for the ‘newbies’. This has been a huge success as we do not charge for it and we have the relevant people who work with them ongoing. The other type of brokers are quality individuals/groups that are serious about lending as a profession, and want to work with us in assisting them in building a multifaceted business.

Not everyone can compete on price, and our business model is not a price model. Challenger brands need to focus on boutique services and boutique support propositions. The bigger you get, the less margin is made and the more people are required to support those networks. So I think one of the other big things is being treated as a business, and as a broker, not as a number and a settlement volume.

TS: We will keep on doing what we do best and focus on strategies that have been put in place for the next 12 months. Outsource continues to grow, and we will ensure that growth will include a greater focus on training and education for our members and writers to assist them in their growth and strategy patterns. Growth, whilst it will also be in numbers, will not be the sole indicator but also a facility to what we provide our members and writers.

We’ve got these large aggregators just looking to build scale, and because of that they tend to lose sight of what brokers ultimately want. Whereas you’ve got emerging, new, challenger or boutique players out there who recognise what they’re looking for. And if they’ve got a differentiator in their proposition, they tend to do exceptionally well.

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MPA: What are your plans for the year ahead?

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FEATURE / CHALLENGER AGGREGATORS

What do you think of major banks buying into aggregation?

Brendan O’Donnell Almost one in two Australians use a broker.

The banks can’t ignore this and therefore need to look at strategic ways in which to benefit from broker success. By owning or having a significant share in any particular aggregator, they are able to influence outcomes to benefit their ROI and equally own market share.

Tanya Sale I have never been a big supporter of this for the sole reason that the mortgage broking industry was created by people who were attempting to lead the way into a landscape that was competitive, fair and gave the consumer a choice – thereby aggregation was born. When the lenders say, “Oh we do not interfere”, if someone is paying millions for a slice of or the whole of an aggregation group do you honestly believe they would not have a big role in the way that business is run?

Gerald Foley Banks buying into aggregators is a clear validation that the broker channel is here to stay. Aggregator ownership doesn’t influence where a broker directs their clients’ business. It just provides greater comfort that, as the broker’s business grows, their loan book and the trail commission that it generates is more secure.

Peter Andronicos I think it’s fantastic because the banks see value in the aggregators, and they’re now starting to see the fact that the aggregator can offer distribution and product sales. I think it’s becoming increasingly competitive, and we have probably two to four lenders a week that come to us and push us for more volume. At the end of the day, eChoice is trying to maintain an agnostic approach when it comes to lenders. It’s about what’s right for the consumer.

IN FOCUS: nMB MPA: What are your strengths?

Gerald Foley: For over a decade, nMB has provided mortgage brokers all the help they need to succeed and excel. Our basic proposition is that we are singularly focused on providing aggregator services to mortgage professionals who want to build a solid mortgage broking business and understand the value in dealing with a strong, focused business partner.

MPA: What type of broker would you encourage to join your ranks?

GF: Whilst able to support individual brokers, the nMB business model best suits the person looking to build a full mortgage broking business – with multiple loan writers, support staff and referrers – and sees value in their aggregator’s systems, support and strength.

MPA: What are your plans for the year ahead?

Frank Paratore They’re seeing aggregation as a viable channel.

And what it’s also doing for them, rightly or wrongly, is shoring up distribution. We get approaches [from buyers]. But we’re running our own independent race. We’re not interested in selling. If anything, we’re looking to make sure that we go the other way to make sure that there are some independents that remain in the market as independents.

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GF: To continue our growth trajectory whilst maintaining the high level of business support to our brokers.

MPA: How do you support brokers to grow their business? nMB is always responsive to our brokers’ needs and requirements. All senior management are available to assist with whatever is required: whether it’s some strategic planning, goal setting, helping design a marketing plan or even just creating a Facebook page.

Through access to a number of suppliers, we are able to offer our brokers affordable websites to assist in the marketing of their business. We also have an iPhone app that can be branded to the broker’s business needs. Along with the nMB software, this is constantly evolving to meet our brokers’ needs.

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How do you see challenger aggregators evolving over the next year?

Frank Paratore I don’t know that we need to do anything really significantly different. From an evolving perspective I’d be turning around and saying that we are probably the most evolved aggregator in the marketplace – call it boutique or major.

Brendan O’Donnell Some may merge/join larger aggregator groups, while others that are able to invest in their business will continue to carve out a healthy network and be successful. Key to success is the ability to be able to invest in technology, effective processes and effective marketing. Boutique offerings are in many cases more attractive and competitive, and are able to harness the benefits of belonging to a small yet effective network of like-minded individuals.

Peter Andronicos A lot of the challenger brands are starting to move towards a franchise model, and they’re trying to evolve into a brand. In an effort to minimise broker losses, they’ll provide more and more services to retain that business. The issues with that, though, are that not everyone can be a good marketer, not everyone can drive leads, not everyone can provide the tools and systems that a broker wants as part of a franchise offering.

Tanya Sale We will see those who have strong models go from strength to strength, with more lending professionals looking for a true independent offering – then they will look no further than the boutique!

IN FOCUS: BALLAST MPA: What are your strengths as an aggregator?

Frank Paratore: Full integration of services – we understand that. We actually partner with our members to grow their business, which means that we know what it’s like to talk about income and spreading risk, because we’ve done it ourselves.

We’re helping our members build their own revenue streams. We’re viewing their business in the same way we’d view our business. And what we’re starting to do is work more with business owners.

The more integrated a financial services offering, the stickier your customer is. A lot of the market is still transactional focused. They haven’t cottoned on to the integration of financial services, which would drive a higher multiple for their business. They’re still seeing themselves as a transactional broker; they’re still not valuing what their true business proposition is.

We want to work with individuals and deliver better quality and more services to them. And what they’re going to get is a bigger multiple when they eventually sell their business.

MPA: What are your plans for the year ahead?

FP: We’re going to continue to go down our path and consolidate our model. There are still plans for us to look at acquiring for the right sort of options. But certainly there’s no intention to sell. We want to encourage more independents into the market and continue our growth.

Gerald Foley The challenges being faced by boutiques are similar to larger aggregators. It is all about getting more productive brokers on board at a sustainable commission-sharing model. Boutique aggregators are more often available to get a closer understanding of their brokers’ businesses and provide tailored business support.

MPA: Are a lot of your brokers looking at following an integrated model?

FP: They are, because we’re making it easy for them. It’s not a situation where everyone has to be a master of all. We offer a structure where people can either refer via our customer-connect lead management platform – and then one of our in-house people will take care of it for them – or they can build it into their own business model.

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FEATURE / CHALLENGER AGGREGATORS

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What are the key challenges that challenger aggregators face?

Peter Andronicos Probably the biggest one’s going to be margin, and then profit. It seems aggregators are chasing volume and then hoping that the profit will follow somehow – or hoping that by chasing volume they’ll be able to start flogging other services to the brokers, like marketing campaigns and lead buying.

IN FOCUS: LIBERTY NETWORK SERVICES

Gerald Foley There are pressures building on all aggregators to provide a broader range of services to their broker business partners. If there are any pressures on the larger aggregators then maybe these are more widely obvious to the marketplace. The true impact on the challenger brands is hard to see from the outside. I sense some smaller aggregators are struggling to hold on under increasing pressures to broaden services, increase payout rates and maintain lender relevance.

Tanya Sale Opportunities will come and the challenge will be how that aggregator can deal with the challenge of it – ie resources, systems, processes – ensuring that they keep to the mantra that got people to join them. The challenge will be not to lose focus on their initial strategy that made them successful; focus will be the key component.

MPA: What are your strengths as an aggregator?

Brendan O’Donnell: We have five key strengths where we differentiate against what the market offers:

Technology We won the innovation of the year award at the end of the year due to our technology platform, Spark.

There’s no one else yet that I know of that do what we do. You can run your entire broking business off the iPad – it’s an end-to-end system.

Marketing We have a very strong central team which drives a lot of digital marketing for advisers at a local level. We do a lot of local branding that’s localised, as opposed to national. So we really do deliver on that.

Frank Paratore

Diversification

Consolidation is still going to be a challenge or a threat, but an opportunity for us to certainly still grow because of the way that our model is predicated. We don’t have a ‘bums on seats’ type mentality. Ours is more of a structured approach with regard to who actually fits our model, who makes sense to our model, and who can we work with to help them grow their business.

Our advisers obviously offer traditional residential mortgages, but beyond that we have a very strong motor proposition. On the commercial side, our advisers have progressed into SME business. They’ve also progressed into SMSF business. And then through the course of next year we’re looking to launch our insurance range of products.

Brendan O’Donnell One of the key challenges is having the ongoing capital to be able to invest and grow the business.

Building a broking business is not a short-term initiative; it takes time, focus, patience and a sound value proposition to succeed. As larger groups focus more on scale, volume and top-performing brokers, they often lose sight of the average broker writing $1m per month. These brokers are part of the reason the industry is where it is today.

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Support When you’re smaller you can have high touch. It’s important for our advisers to succeed, because if they don’t we don’t. Because we’ve got less people, we tend to make sure that everyone’s going to be successful.

Economics If you’re part of a franchise business or branded business, they take a significant proportion of your commission, and they claim to then put that back into marketing your business. So you’ve got to write two or three times as much as you would anywhere else. We wanted to avoid that. Equally we recognised that aggregators offer very sharp pricing at the other end. I’ve got no doubt our economics is the sharpest in the market when it comes to a branded proposition.

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What type of broker is suited to challenger aggregators?

Frank Paratore

Brendan O’Donnell

Certainly the more experienced broker – somebody looking at integration for their business model; somebody looking at growth of their own model.

And certainly someone that’s relationship focused, not transaction focused.

As larger groups focus more on scale, volume and top-performing brokers, they often lose sight of the average broker writing $1m per month. They are the ones that require the support and high touch in order for them to increase their performance and also sustain their business for a longer period.

Boutique aggregators are well positioned to provide this.

Tanya Sale Complete professionals who have adapted to the new landscape and are taking the role as mortgage professional to another level.

Gerald Foley A boutique aggregation model, such as nMB, suits the person looking to build a full mortgage broking business and sees value in their aggregator’s systems, support and strength.

Peter Andronicos For eChoice it’s about the broker who wants to be settling $3m–$5m per month. It’s a broker that wants help in becoming their own franchise, or in their own brand, or part of eChoice. And they need tools, mentoring and support that they don’t currently have. It’s brokers looking for assistance and support to grow beyond the norm.

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FEATURE / CHALLENGER AGGREGATORS

What do challenger aggregators need to do to remain viable?

Gerald Foley All businesses, irrespective of size, to remain viable have to be able to show that they can offer a strong business proposition at competitive remuneration levels – including receipts from lenders and payout rates – whilst being able to reinvest in and grow their business.

Brendan O’Donnell There is a new emerging model – a hybrid between aggregation and retail branded model – where you get the best of both worlds, ie where the economics are as good as what an aggregator offers, but so is the support you would get in a branded franchise model. This is what LNS offers.

Tanya Sale It doesn’t matter if you are boutique or large; it will come down to the model: how it is managed, focusing on your core business. I often use the analogy of ‘sticking to your knitting’ – looking at your overall business and making decisions that are going to be viable. Don’t fall in the trap of watching what your competitor is doing – if you do this you will lose focus on what your own goals are. And remain independent!

Peter Andronicos You’ve got to price it right. Not everyone can offer 100/100 [commission split]. If you want 100/100 then expect a level of service, support and quality that comes with that. We’re a business that’s about building and supporting, helping you become a success and actually putting in place a path to help you get there.

Frank Paratore The banks operate on a situation of multiple services or products per customer type mentality – we’re no different in approach. I do believe that we need to have independence in the marketplace in order to provide a true broker proposition which leads to real impartiality where there’s no structured bank ownership. Everyone’s fighting for business at this point in time, and it’s coming down to who’s going to provide the cheapest aggregation fee. For me, we don’t play the cheapest aggregation space; it’s more about what our value proposition is.

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IN FOCUS: eCHOICE MPA: What are your strengths as an aggregator?

Peter Andronicos: Our strengths are in our service, our support and the flexibility in our business model.

If you’re having a slow month, you can turn on leads for a month, take 20 appointments, show us that you can convert those appointments, and then we’ll help you work those appointments into building a selfgeneration business.

MPA: Which type of broker would you encourage to join your ranks?

PA: eChoice looks for the broker that wants to take their business to the next level. If you want to settle $4m-plus per month, we’ll get you there. On top of that, we’re looking for graduates that want to break into the industry and need quality mentoring, support and training – as well as a guaranteed path where brokers are given leads and appointments, and how to leverage those into self-generation where they get higher commissions.

MPA: What are your plans for the year ahead?

PA: We want to push hard into the market as a quality aggregation and direct-to-consumer brand. We are aggressively recruiting new brokers now who are looking for a career or assistance to grow. We really want to be positioning eChoice as the modern brand for the modern broker, servicing a modern market.

MPA: How do you support brokers to grow their business?

PA: We provide constant mentoring and support. We provide marketing and retention tools that are plug and play – branded as eChoice, or white labelled as their own brand, or a hybrid of both. We also do quarterly product development days. And very intense one-on-one training on self-generation, conversion and best practices. Those sessions are held and managed by existing and recent brokers – and those brokers were settling $4m–$6m a month each themselves.

PROFILE / GREG FROST

THE

BILLION -DOLLAR BROKER American broker Greg Frost’s career was set to take him on a different path, with a college scholarship laying the groundwork for a life in the sporting spotlight. But it wasn’t meant to be, which, as it turns out, wasn’t such a bad thing: dubbed the first billion-dollar ‘mega originator’ in the mortgage business, Greg is one of the most successful innovators in the industry today. Sarah Megginson discovers the lessons Aussie brokers can learn from his story MPA: How did your career in the mortgage industry begin?

Greg Frost: I got out of college and had an opportunity to try out for a pro football team. I didn’t make the club, so I came back to Albuquerque and found a job with Savings and Loan Association, a financial institution that took in savings accounts and used that money to generate residential mortgage loans. The president knew me by association with sport and gave me a chance as a management trainee. At the time, he was the only male employee, 50 | FEBRUARY 2014

and they had a huge, 75-foot flagpole out the front of the building; it was quite cumbersome and heavy and I still wonder to this day if the main reason he hired me was to pull that flag up and down!

MPA: So it was your sporting reputation and contacts that led to you getting your first job in the industry?

GF: Yes – at that time, it was not a very aggressive industry; it was actually quite passive, and I was an athlete. My boss wanted me to fully understand

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what a bad loan looked like before I began originating new loans, so I started by collecting on delinquent loans.

My objective from day one was to accomplish my goal and eliminate them all, so I would come in early, make calls at 6am, then come back to the office late at night to reach people after supper.

I was able to reach all of them eventually and persuade them to make up their repayments, so within six months I’d eliminated all of the delinquent loans in the company. I worked myself out of a job.

MPA: That’s an impressive result!

GF: Well, by repairing that situation so quickly, I caught the attention of the board. I then began working as a loan officer trainee, and within about 12 months I was promoted to branch manager. I was in my twenties and kept being promoted, as my approach was very aggressive and stood out. I was noted as being the youngest branch manager in New Mexico, then the youngest assistant vice president, and when I was 28 I was appointed the president and CEO of the Sante Fe branch.

MPA: You went on to start your own mortgage company, where you became the first billion-dollar ‘mega originator’. What do you think made you so successful so early on in your career?

GF: I just understood what was important to realtors, and they’re our primary referral source. I applied the Zig Ziglar principle: in his words, “You can have everything you want in life, if you’ll just help as many people as you can, get what they want in life”.

I determined that what realtors wanted was someone to be honest and communicative with them, and to be able to meet their closing deadlines. So I managed my business with honesty. I would not take a file that I didn’t think I could close – and I’d explain to them why not, and provide a written action plan of what the client could do to improve their circumstance, in order for me to approve their loan.

I went that extra step.

As a result, I closed more than 10,000 loans in 15 years, and most of

“I managed my business with honesty.

I would not take a file that I didn’t think I could close – and I’d explain to them why not”

FEBRUARY 2014 | 51

PROFILE / GREG FROST

MPAMAGAZINE.COM.AU

FAST FACTS

GREG FROST’S TOP 3 TIPS FOR SUCCESS

1

1. Lead by example “I usually put in about 60 hours a week. I believe in leading by example, so I like my car to be one of the first in the car park in the morning and one of the last to leave.”

2. Communicate clearly, honestly and frequently “You have to understand that loan applicants are very nervous about their ability to qualify for the mortgage. The entire transaction affects several people, several families – including realtors, buyers and seller – and the outcome all depends on your ability to approve finance. That’s a lot of people depending on your professionalism. You need to communicate your process so everyone is at ease and understands what it will take to achieve a successful transaction.”

3. Never miss a closing date – ever “I’m a Catholic and I use the terminology that missing a closing date is a mortal sin.”

Greg’s ranking as a residential mortgage lender in his home state of New Mexico

28

The number of years Greg has held the number one ranking

$80m* The value of loans Greg personally wrote as his career was building in 1993

$92k*

The average loan amount he wrote that year

3.3

The average number of loans Greg closed per day to achieve that goal

10,000

The number of loans Greg closed in 10 years *US dollars

52 | FEBRUARY 2014

the loans that contributed to that billion-dollar total were less than US$100,000.

MPA: You’ve been in the industry for many years and you’ve seen it evolve significantly.

In your view, how is the mortgage market changing now, and what does it mean for brokers?

GF: Mortgages are far more stable than they have been, so I don’t see people refinancing to pull equity out. People who have refinanced over the past five years, when rates were so low, are not going to be willing to refinance their whole loan at a higher rate. So I see the emergence of a very regulated second mortgage industry that will create second mortgage papers that can be easily securitised.

MPA: What other trends do you see emerging over the next five years?

GF: By virtue of the economic collapse that has been attributed to the mortgage industry, we’ve been overregulated and hamstrung by government intervention, and it has swung too far to the conservative side. Statistical analysis is starting to show bureaucrats and politicians that the industry has righted itself, so, going forward, I don’t think they will feel the need to proliferate our industry with abusive and restrictive regulations. They think

another two or three forms for the borrower to sign will make the industry better—but the reality is borrowers hardly read them.

A dramatic increase of paperwork and processes is not where the problem lies; it lies in the creation of faulty mortgage instruments that undermined credit analysis. It threw credit analysis out the window for a short period, but it was done to us, not by us, in the industry. I see a levelling, and possibly the pendulum swinging towards the liberalisation of that.

MPA: Finally, what is the golden rule you live by to keep your business growing and your career moving forward?

GF: Plan your work and work your plan. Time is our most valuable asset, and you need to make good use of it every day. When you make certain you’re doing the things you need to do on a consistent basis – daily, weekly, monthly, quarterly – you will enjoy a successful year.

The beauty of this is you don’t need to be the smartest or the best communicator, or the best looking, or in the best market – all you need to do is consistently work your plan, every single day. If you can make as many minutes as you have in the day count as possible, you will overcome any personal shortcomings you have with your effort.

BUSINESS STRATEGY / SURVIVAL

BUSINES

SURVIVAL: THE BATTLE FOR RELEVANCE

Even some of the greatest brands are becoming obsolete, but it is possible to avoid their fate. Michael McQueen outlines the 10 keys to winning the battle for relevance in the years ahead

54 | FEBRUARY 2014

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SS

Recent years have seen scores of iconic businesses and brands fall by the wayside. The demise of Kodak, SAAB, Borders and Blockbuster leaves us with little doubt – a shift is happening and no organisation or brand is immune to extinction.

As once-lucrative revenue models increasingly come under siege and distribution channels that have been stable for decades crumble before our eyes, it is becoming apparent that the rules of business have changed; the goalposts have been moved.

In the financial services sector, a raft of shifts are disrupting the status quo in profound and fundamental ways. These include: Technological shifts

As consumers have greater power and access to information than ever before, the role of the gatekeeper is more threatened. Simply providing a transaction interface as a broker, agent or adviser is no longer enough.

Market shifts

As the financial services sector becomes increasingly crowded with non-traditional players (for example, big grocery brands), incumbents must adapt to the new competitive environment rather than assuming their historical success will guarantee future survival.

Demographic shifts

As a new generation of consumers and clients known as Gen Y make their presence known, it is critical that businesses and brands take steps to understand and engage this group. After all, they are a massive cohort (5.5 million in Australia) who are buying different things in different ways and for different reasons than older generations.

Legislative shifts

The final major shift disrupting the financial services industry is that of regulatory change. While governments continue to move the goalposts as they have in recent years, financial services brands and organisations have little choice but to respond.

Amid these disruptive headwinds, the words of Charles Darwin ring true: “It is not the strongest that survive, nor the most intelligent. Rather, it is those who are most responsive to change”.

The challenge for every financial services business today is to evolve in the face of rapid and widespread change. Simply relying on conventional wisdom or assumptions that have held true in the past will set any brand or organisation on a collision course with obsolescence.

Below are 10 keys to winning the battle for relevance in the years ahead:

1

Change before you are forced to Most businesses wait to innovate until their hand is forced. As Steve Jobs once observed, if you are not willing to cannibalise your own business, someone will do it for you.

Consider how Blackberry and Nokia have done just this in recent years. Rather than recognising the seismic shifts afoot in their industries, both of these tech giants essentially relied on their historical size and market positioning until the writing on the wall was too dire to ignore.

In contrast, look at how Encyclopaedia Britannica started preparing for the post-print age as far back as the mid-1990s and therefore had shifted entirely away from their reliance on paper-based products by the late 2000s.

2

Become clear about the business you are actually in Many businesses fall into the trap of defining themselves by the products they sell or the markets they are operating in – all the while losing sight of who they are and why they exist.

Consider how Kodak did this and veered off track in the 1970s and 1980s. Rather that remaining focused on their core DNA as a memory preservation company, Kodak started to see themselves as a film company – a paradigm that left them unwilling and unable to embrace the post-film world.

In the financial services sector, a raft of shifts are disrupting the status quo

3

Prune dead wood Any gardener knows that restoring vitality to a garden requires pruning away the old in order to make way for the new. It is the same in business. Consider how global scientific company

FEBRUARY 2014 | 55

BUSINESS STRATEGY / SURVIVAL

The old marketing adage is true: it is better to be different than better

DuPont have consistently stayed ahead of the curve by being willing to prune away even their most successful past cash cows, such as Nylon, Lycra and Teflon.

Sony have also recognised the importance of this in turning around their flagging fortunes. The end of their decade-long marriage with Ericsson and the spinning off of entire business units is an attempt to restore the tech giant’s agility and innovative flair.

4

Question everything The moment any business or leader thinks they have made it, they have passed it. Never fall into the trap of feeling that you are too big to fail or that what has worked in the past will work in the future. Question everything and spare no sacred cows.

Consider how IBM did this in the early 1990s and saw one of the most dramatic turnarounds in recent corporate history.

5

Re-engineer outdated systems and processes There is a big difference between being in a groove and being in a rut. Many businesses need to evaluate their internal systems and processes honestly. Which of them is outdated, inefficient or simply the ‘way things have always been done around here’?

Harley Davidson realised the importance of this in 2009 amid a severe sales slump and set about re-engineering their internal systems. This exercise saved them $275m in annual running costs and resulted in the business regaining its nimble responsiveness.

Michael McQueen is the author of the newly launched book, Winning the Battle for Relevance.

He is a leading social commentator and three-time bestselling author.

Winning the Battle for Relevance is available in bookstores across the country and through Michael McQueen’s website: www.

MichaelMcQueen.net

56 | FEBRUARY 2014

6

Beware of biting off more than you can chew While adopting new products and services is a key way of regaining relevance in a flagging business, beware of trying to change too much too quickly. Consider how Billabong fell into this trap in the late 2000s by acquiring a long list of other brands in the marketplace – a fateful step that has played a key role in their loss of focus.

7

Become ruthlessly customer-centric It is critical that you stay focused on how the needs, desires and preferences of consumers are changing. Your strategy can never be a ‘set and forget’ one.

Geoff Bezos has a novel way of doing this at Amazon. At every board meeting he leaves an

MPAMAGAZINE.COM.AU

empty chair, which represents Amazon’s customer.

No decision is made without the active consideration of how it will impact on the person in that empty chair.

8

Look to ‘imovate’ The term coined by leading business thinker Oded Shenkar highlights the values of innovating through imitation. He suggests that others may be doing things you can learn from.

What practices and ideas are competitors using that you could incorporate and do differently or better?

Consider how Lego did this in embracing video games; how Samsung did it in the development of their smartphone range; and how even Apple did it by not inventing the MP3 player but rather making it sexy.

9

Encourage dissension within the team/organisation The most valuable source of innovation in any time is the individual who has fresh eyes or a dissenting view. Are you allowing and encouraging those views to be heard? IKEA did and the whole basis of their flat-pack business model came about as a result.

10

Seek a point of difference The old marketing adage is true: it is better to be different than better. Rather than trying to outdo the competition in your market, how can you pursue a new market in a new way?

Consider how Cirque du Soleil did just this and managed to build a flourishing business in a dying circus industry.

EYES ON THE HORIZON Setting up a brand or organisation for enduring relevance involves a principle every experienced surfer understands well. In order to catch the perfect wave, a good surfer knows the importance of keeping their eyes firmly on the horizon.

While a wave is still forming a long way off in the distance, surfers know that this is the time to move – to paddle out and get in position. Move too late or not at all and you’ll simply get washed up as the wave crashes over you.

In much the same way, winning the battle for relevance is about anticipating, preparing for and embracing change, no matter how uncomfortable or confronting it may be.

Read Mortgage Professional Australia anywhere, anytime

SMSFS HOW TO GET DEALS OVER THE LINE ANTHONY WALDRON NAB’S BIG PLANS FOR THE BROKER MARKET

MPAMAGAZINE.COM.AU ISSUE 14.01

BUS INE

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MPA TO P

/ MPA TOP 100

100 (10 0–75)

Rank Name 100 Neil Surname 99 Alana Massingh 98 Michelle Company Massigna am Shire First Trevor Towner ni Growing Mortgages Location Tom Equi Ryan Mortgage ty Gymea Andrew State Mewing Choice Total valu Aussie Runaway Richard Home Loan NSW Baker e of loan Bay Aussie Perth s s FY 2012 Joshua Hom QLD Hoenig $54,414,9 /13 Port Finan e Loans Sunshine Matthew WA Durrant ce Grou 91 $54,615,4 83 Arleon Kenmore Coast p Paul Capital QLD Rose 90 $54,716,7 85 Choi Melbourn ce Capi Kevin QLD Wright tal 89 $54,809 07 Aussie Bondi Junce Alex ,000 Home Loan VIC Lee tion 88 $55,029, Choi Albe s ce Hom Aaron rt Park NSW Shumsky $55,303, 000 87 Smartline e Loans Adelaide Bridget 203 VIC Grofski $55,304, 86 Loan Mark Wollongo Serge 182 SA Headland et $55,307, 85 Aussie Pennant ng Max 040 Home Loan NSW Scekic Hills $55,499,0 84 Aussie Oakleigh s Stephen 00 Hom NSW Ivanoff e Loan $55,561,2 83 Aussie Morley s James Hom VIC Lemm $55,900 09 82 Mortgage e Loans Darwin Dennis ,908 WA Hasselle $56,327,9 81 Mortgage Fair Balgowla Sewa NT Mrljak $56,344, 89 80 Mortgage Choice Elsternwi h Paul 000 NSW Singh $56,553,0 79 Smartline Choice Neutral ck Scott VIC Prindiville Bay $56,661,5 00 78 Reliance Miami Scott NSW Home Loan Le Ques $56,680 13 77 Blackbur Parramatt ne s Pamela ,760 QLD ne Mon Cameron $57,042, 76 Aussie ey Parramatt a Darin 882 Home Loan NSW Mangafa a $57, 75 LJ 193,9 Wes s Hook s Patrick t Pert NSW er Hom Yacopetti $57,242,1879 e Loan Aussie Parramatt h s Hom WA Bouquiau $57,242, 1 Able Finan e Loans Tuggeran a x 752 NSW STA TS $57,635, Tiffen & ce Narellan ong 266 ACT Co $57,990 Perth ,000 NSW $58,000 Kingston ,000 WA $58,306, 000 ACT $58,818,8 $58,860 61 Similar ,516 to

KET ING

YEAR IN REVIEW 9697 MPA LOOKS BACK ON 9495 THE YEAR THAT WAS 9293

58 | DEC

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The movers and shakers who have made waves in the mortgage industry 18 | DEC

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FREE

DOWNLOAD YOUR APP FROM THE iTUNES STORE TODAY om inlab.c

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BUSINESS STRATEGY / BRANDING

WHY BRA

STRAT FAIL Far too often a company’s shiny new branding strategy fails to live up to hopes and expectations.

Jean-Luc Ambrosi explains the common reasons for failure, and what companies can do to get their branding strategy right 58 | FEBRUARY 2014

MPAMAGAZINE.COM.AU

ANDING

TEGIES It finally happened: the new brand strategy was launched with pride and with the hope that it would reinvigorate the organisation’s image. But a few months went by and the hopes didn’t materialise.

It all looked like a waste of money and effort.

It’s not uncommon for brand strategies to not deliver – or to be perceived as not delivering – concrete outcomes. The reasons for this can be varied, with the usual suspects being poor strategy or poor implementation. But there is more to it than that, and often it comes down to the root cause of how brands are managed within the organisation.

No matter how big or small your organisation, whether you are a large financial services provider or a boutique firm, one of the most fundamental reasons for success or failure is the fact that branding is often considered separately to the business.

Brand strategies and their implementation should not be confined to the ability of the brand manager, the executive sponsor or the founding partner. Brand strategy is holistic by nature; it includes all areas of the organisation, from communication to products and service delivery.

And this is the crucial point. Brand strategy does not sit on its own, in some remote corner office, nor does its implementation. It is required to be worked on throughout the organisation and at all levels.

DIFFERENTIATION

The brand strategy is what allows your organisation as a whole to differentiate itself from the others: what you stand for, how you deliver value-add to your customers, what makes you special, and how you go about delivering it today, tomorrow and the day after.

So how do you build a successful brand strategy?

There are five key elements to consider:

1. A clear definition of vision and purpose.

2. A leadership and culture that promotes the vision and purpose.

3. A structure that supports the delivery of the vision.

4. The integration of business intelligence to support the decision-making process.

5. An image and communication strategy and

implementation that truly reflects the brand difference and speaks the language of customers.

These five points cover how the brand is managed internally and how it is expressed to customers. It starts by defining a clear vision, a reason for being; defining what difference and value proposition the brand is bringing. It must be set in concrete terms, understood by everyone involved, unambiguous and achievable. This not about a mission statement; this

Most branding strategies fail … because they tend to be treated like a beauty treatment FEBRUARY 2014 | 59

BUSINESS STRATEGY / BRANDING

Jean-Luc Ambrosi is an award-winning marketer and recognised expert in branding and customer relationship management. He is the author of the new book, Branding to Differ: A Strategic and Practical Guide on How to Build and Manage a Successful Brand. Visit www. brandingtodiffer.com.

60 | FEBRUARY 2014

MPAMAGAZINE.COM.AU

is about being clear about who you are (and are not), and where you are going.

The leaders of the organisation must then share this vision, embody its value concretely and ensure that their teams are fully on board, irrespective of the size of the team. This really means that the first aspect of branding communication is about internal communication, to create internal buy-in.

But this alone does not suffice. For the message to work right throughout the organisation, the structure must be supportive. People’s roles must be aligned to the brand promise; training and support must be provided in key areas, and effort allocation clearly defined. For example, if your value proposition is to provide the best-quality products and services in your category, your client services team must not be driven by the objective of closing all calls within three minutes!

as big or small as it may be, and expresses it in a language and format adapted to your audience.

EXECUTION

Brand strategy is holistic by nature; it includes all areas of the organisation

OK, but where is the branding execution in all this, you may ask? Where is the new logo, the advertising campaign, the new collateral? To be able to embark on the communication aspect, you must not only be clear about your own vision and road map but you also need to understand your customers.

This is where insights and business intelligence play a role: the more you understand your customers the more you can appeal to them.

In a boutique environment you are likely to have a clear idea of how customers come to you and why. In larger organisations, market research and customer behaviour analysis will help frame a vision of who your customers are, where they come from and why they buy from you.

Once you are able to build an image of your customers, understand their purchase behaviours and understand their attitudes, you are able to shape your go-to-market strategy. This allows you to build a communication plan that both reflects your brand promise and is relevant and appealing to your prospects and customers.

This is the other point to remember: branding strategies must be relevant to your customers. It’s about them, not about you.

The communication aspect is the last component.

The clearer the vision, the more aligned the organisation, the greater the understanding of prospects and customers and the greater the ability to build an effective communication strategy.

So the communication strategy is about creating a clear message that reflects your entire organisation

HOLISTIC FOUNDATIONS Many organisations consider branding strategy to be a communication exercise and leave it to the marketing department or advertising agency to come up with the goods. While you should rightfully leave the communication techniques to the experts, the foundation, as we have discussed, must be comprehensive and holistic.

This leads me to one conclusion: the reason most branding strategies fail is that they tend to be treated like a beauty treatment. A change of name, a change of logo, a change of look and feel, a change of tagline – their effects are only skin deep and therefore do not last. These components are only the visual representation of what the brand stands for.

This leads to disjointed messages, with your advertising and website saying one thing, your sales people another, and the customer experience following yet another path. The result is a lack of consistency, a disparity between promise and delivery, and the negative impact this can create.

As brands are fundamentally a promise, the delivery of this promise must follow through to engender customer satisfaction, repeat purchases and word-of-mouth recommendations.

Customers have never had more options to choose between different brands and products than they do today. Therefore they have the ability to switch brands faster than ever before. So if your brand promise tells one story and your delivery another, your branding exercise is nothing more than a short-term sales effort and your brand will suffer over the medium to long term.

To succeed, branding must be viewed holistically throughout the organisation and not as an isolated communication exercise. It needs to be embraced at every level, from top management to clientfacing staff, and, most importantly, the strategy must be based on a thorough understanding of what the brand stands for and how it impacts customers.

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+INSIDE + NEWS

REVERSE MORTGAGES TAP INTO THIS GAP IN THE BABY BOOMER MARKET

A look at what’s been making headlines P4

+ SPECIAL REPORT

DAMIEN MUIR:

MORE THAN JUST A PRODUCT PROVIDER The Best Bank BDM of the Year on why he has to know brokers’ businesses inside and out

B

usiness development managers can have a tough gig. Long hours, lots of travel and a huge number of brokers with whom to build relationships can all take their toll. And depending upon the broker, they can either feel neglected by a BDM who doesn’t visit enough or harried by one who’s around too much. But Commonwealth Bank’s Damien Muir has embraced the difficult role.

FULL STORY PAGE 20

ON THE FRONT LINES: BDMs

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ISSUE 2.5

HARD MONEY DEMAND FOR PRIVATELY FUNDED LOANS IS RISING GREG FROST THE COUNTRY'S FIRST BILLION DOLLAR ORIGINATOR

+ AXE TO GRIND THE TIDE AGAINST CREDIT REPAIR

John Dickinson argues not all credit repair is ‘evil P16

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What aggregators can and can’t do with your trail P22

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ON BUSINESS How to turn your business into an empire the Virgin way

Australia’s best-performing brokerages revealed

INDUSTRY LEADERS INTERVIEWED ROBERT KELLY AND DALLAS BOOTH SPEAK

TROUBLE AT SEA THE LATEST ON MARINE INSURANCE

SMALL IS BEAUTIFUL THE BIG LIABILITIES FOR

SMALL COMPANIES CRACKING THE CODE CYBER INSURANCE – THE NEXT BIG THING?

WIRED WORLD INSURING AGAINST CYBER RISKS

FIRE ALARMS HOW PRODUCERS REBUILT A STRICKEN COMMUNITY

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MOTIVATION / THE X FACTOR

MPAMAGAZINE.COM.AU

X

Getting the People say you are an all-rounder.

You don’t have the X factor.

Whether it’s true or not, if you deal with this perception you can win the day

Cindy Tonkin is the Consultants’ Consultant. She is the author of seven books, including the AIM bestseller The Australian Consultant’s Guide: Setting Up Your Consultancy Business Profitably and Painlessly. Sign up for her newsletter at consultantsconsultant. com.au.

62 | FEBRUARY 2014

1

factor

Look for patterns It is the nature of humans that when we get 97% in a test we wonder what the 3% was that we didn’t get right, instead of celebrating that 97%.

Like the 3%, if one person describes you as an all-rounder, then park it in your brain, but don’t act on it yet. You need to look for and act on patterns of feedback, not single pieces of feedback.

On the other hand, if this is one-off feedback from someone important, who could make or break your career – a boss, a major strategic partner or a client who brings in a lot of business – you may need at least to be seen to be dealing with it.

2

How is it true?

So, if it requires action, the next step is to decide what it means. Ask for examples of what you are doing or not doing, if you can.

Maybe your training doesn’t come from the same institutions that theirs does. In that case, can you do a short qualification at the institution? Perhaps they believe the best mortgage brokers have economics, finance or business degrees and you have an arts degree, engineering or chemistry degree. Maybe you don’t have a degree at all. In that case, what reading, seminar-going, or blogging can you do to overcome their bias?

Perhaps they think you’re an all-rounder because you do the administration and paperwork that they neglect (or because you never do it). This isn’t necessarily a bad thing. Pay attention: if you are spending too much time doing administration and not enough time selling, they may be using ‘all-rounder’ as code for ‘get out and sell more’.

Examine your stats.

Lacking in X factor could also mean not being energetic enough, being too energetic, lacking in focus or ‘stick-to-itness’, wanting to be liked too much, or not caring enough about what people think.

When you know what causes them to think you are an all-rounder, then you can either change the perception or work with it.

3

Manage the perception If you are comfortable with being an allrounder, whatever that means, you can make it an upside. Sell your ability to your clients, your colleagues and your boss.

For example, research shows that clients will perceive you as a specialist if you are introduced to them as a specialist. Choose a speciality, and have the receptionist answer every call with: “I’ll just put you through to John, who is a specialist in [insert specialty here]”. A speciality is in a single field or demographic, not 12 fields, but you can have different specialities based on which client is asking.

Managing the go-getter perception with your colleagues or boss may be trickier. Common ways that people establish a reputation include displaying textbooks, manuals or certificates from courses, and by dressing the part. Look like a go-getter and people will perceive you as one. You also get brownie points for responding to feedback swiftly.

4

Do something, don’t just whinge If you’ve been pigeonholed and you don’t like it, do something to change it. Recent research shows that whinging kills cells in your brain. It also kills cells in the brains of those who listen to you.

So don’t just stand there, do something. Upgrade your qualifications if that’s the problem. Stop doing the paperwork, or start doing it. Get some education in something that will help you to counter the problem: psychology, influence or self-confidence.

5

It’s perception People make judgments about who you are and how good you are within 10 seconds of meeting you. From then on we confirm our prejudices, whether positive or negative. We rarely change our opinion of who you are and how good you are.

If you have been typecast in any way, and those who are typecasting you have influence over your destiny, then it may be wise to consider moving to another place to fulfil your destiny.

You’re only an all-rounder in comparison to others. To whom are people comparing you? Find out and make a new niche. If everyone in your practice is a specialist and you are not, consider whether ‘all-rounder’ means ‘you’re not like us’.

And if so, look for a niche somewhere else.

THE DATA

MPAMAGAZINE.COM.AU

GLOBAL COST OF LIVING Do your clients complain about the cost of living in their area and that it’s hard to meet mortgage repayments when grocery bills alone eat into a large chunk of their disposable income? Spare a thought for the residents of Tokyo where, according to the Economist Intelligence Unit’s Worldwide Cost of Living 2013 report, the cost of living is 52% higher than in New York, a city that’s hardly renowned for its affordability.

10 MOST EXPENSIVE CITIES

At the other end of the scale, Mumbai, India, and Karachi, Pakistan, have a cost of living that’s just 44% of New York’s.

Demonstrating the sheer scale of living costs worldwide, the statistics below give an indication of the average cost of everyday products in each of the world’s 10 most and 10 least expensive cities. According to the report, a loaf of bread will cost over $9 in Tokyo, for example, while in Mumbai it will sell for just 86 cents.

Tokyo, Japan

Osaka, Japan

Sydney, Australia

Oslo, Norway

1

1

1

4

4

6

7

8

9

10

Cost of living compared to New York

152%

146%

137%

136%

136%

135%

131%

128%

126%

124%

Loaf of bread

$9.06

$7.94

$5.03

$6.31

$4.87

$3.25

$6.08

$8.95

$9.40

$5.63

Bottle of wine

$15.95

$17.55

$25.38

$17.58

$25.03

$25.65

$16.74

$9.45

$18.14

$8.19

20 cigarettes

$5.57

$5.57

$15.48

$15.24

$15.72

$9.76

$8.32

$8.10

$7.30

$8.32

1 litre of unleaded gasoline

$1.97

$1.96

$1.50

$2.61

$1.49

$1.74

$2.01

$2.38

$0.02

$2.04

Tehran, Iran

Jeddah, Saudi Arabia

Panama City, Panama

Colombo, Sri Lanka

Bucharest, Romania

Algiers, Algeria

Mumbai, India

Karachi, Pakistan

Rank

122

123

124

125

126

126

128

129

130

130

Cost of living compared to New York

58%

57%

56%

55%

54%

54%

50%

48%

44%

44%

Loaf of bread

$1.55

$1.33

$3.34

$2.27

$1.92

$1.89

$1.21

$1.11

$0.86

$1.76

Bottle of wine

n.a.

n.a.

$6.92

$12.35

$3.77

$11.28

$21.33

$21.38

$23.82

$14.79

20 cigarettes

$2.53

$2.40

$4.08

$3.78

$3.59

$5.01

$1.69

$2.08

$1.79

$1.73

1 litre of unleaded gasoline

$0.53

$0.13

$1.15

$1.17

$1.71

$0.28

$1.41

$1.24

$1.38

$1.23

Rank

10 LEAST EXPENSIVE CITIES

Melbourne, Zurich, Singapore Australia Switzerland

Paris, France

Kathmandu, New Delhi, Nepal India

Caracas, Geneva, Venezuela Switzerland

Source: Economist Intelligence Unit. All prices in US dollars.

FEBRUARY 2014 | 63

MPAMAGAZINE.COM.AU

THE DATA / YOUR MORTGAGE INDEX

BUYER TRENDS

Key stats from borrowers making enquiries at Yourmortgage.com.au

$415,020

PURPOSE OF MORTGAGE

LOAN AMOUNT THE AVERAGE MORTGAGE $430,000 SIZE REQUIRED Average loan amount

16.1%

$415,000

To buy an investment property

53.86%

$400,000

The percentage of enquiries from first home buyers

$370,000 Nov

54%

$385,000 Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

First home buyer

TYPE OF MORTGAGE

13%

40%

34.03%

Move home

30% 20%

1.2%

10% The percentage of borrowers looking for a standard variable rate product

0%

Give my home a makeover

Nov

Dec

Jan

INTRODUCTORY

Feb

Mar

Apr

STANDARD VARIABLE

May

Jun

Jul

BASIC VARIABLE

Aug

Sep

Oct

FIXED INTEREST

Visit www.mpamagazine.com.au/consumer-borrowing-data for all the latest borrower trends

64 | FEBRUARY 2014

15.2%

Refinance to get a better deal

0.2%

I want some spending money