Mortgage Professional Australia 18.01 by Key Media

MPAMAGAZINE.COM.AU ISSUE 18.01

THE NEXT GENERATION We reveal brokingâ&#x20AC;&#x2122;s Young Guns for 2018

Brokers & real estate The most productive of partnerships

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Ian Rakhit Back at Bankwest with big plans

Commissions Combined Industry Forum proposals

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JANUARY 2017

CONNECT WITH US

CONTENTS

Got a story or suggestion, or just want to find out some more information? twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU

UPFRONT 04 Statistics

Key points from the MFAA’s latest Industry Intelligence Service report

SPECIAL REPORT

30 FEATURES

HIGH-SPEED BUSINESS LENDING The new market leaders

THE BIG INTERVIEW

IAN RAKHIT

12 Bankwest’s newly returned broker chief on technology, agile working and diversification

Three brokers discuss their goals for 2018 and how they set targets

08 News analysis

Commissions: What the Combined Industry Forum proposals mean for your business

10 Opinion

AFG’s David Bailey on why comprehensive credit reporting won’t change what a broker does

FEATURES 42 Power positioning

YOUNG GUNS 2018

30 up-and-coming brokers who are shaking up an increasingly competitive industry

06 Head to head

Highlights and marketing tips from Connective’s 2017 Conference

FEATURES

BROKING AND REAL ESTATE

How to maximise referral relationships with real estate agents

46 New Year’s resolutions

Three resolutions to take your business to a better place

48 Marketing

Do you really know your point of difference?

50 Value pricing

If you’re working fee-for-service, know how to charge for it

PEOPLE 52 Brokerage insight

The director of veteran Perth brokerage IFG Home Loans on two decades of change

54 Career path

Life before, during and after Pepper, as told by the ex-CEO himself

FEATURES

56 Other life

A guide to an essential – but often underutilised – source of support and advice

MPAMAGAZINE.COM.AU

PARTNERSHIP MANAGERS

Triple-AMA winner on a near-death experience at 8,000m

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UPFRONT

EDITOR’S LETTER

Bring your holiday home

oming back from holiday is inevitably grim. After spending time off with family, seeing friends and, for many, simply sleeping, re-entering any office would be difficult. For brokers, the challenge is even worse. Competition for clients is getting tougher: in many states the number of brokers is growing faster than the amount of lending. Lender changes over the past year have added extra hours to a broker’s schedule, which is already long as a result of the need to see clients in their own time. As the manager of one elite brokerage told me, broking has become “25% harder and 25% less fun”. For some brokers, these trends end in burnout and mental illness. 27% of years lost in Australia are due to mental illness, and one in five Australians will experience mental illness in a year. Men, who make up the majority of brokers, are less likely than women to seek help; and getting support is more difficult, as 39% of brokers are the only loan writer in their office.

It’s not just attitudes to mental health that need to change, it’s attitudes to work At an industry-wide level, awareness of mental health issues is growing. The FBAA devoted its 2017 conference to mental health, and individual aggregators have included wellness speakers in their conferences. As an industry, we are taking this issue seriously. But what about individually? It’s not just attitudes to mental health that need to change, it’s attitudes to work. Broking can be a flexible, family-friendly vocation, but too many ambitious brokers pride themselves on burning the candle at both ends. Writing award-winning volumes almost always requires work days that stretch late into the night, as many top brokers will openly admit. The problem arises when working late, day in day out, becomes the only path to success. Encouragingly, attitudes are beginning to change. In this year’s MPA Top 100 Brokers report, several brokers told me that they had slowed down, taken on assistants, or even had career breaks to improve their lifestyle. Despite – or perhaps because of – these changes, those brokers were writing hundreds of millions of dollars in loans. Good mental health begins at home, but it continues in your office.

www.mpamagazine.com.au JANUARY 2018 EDITORIAL Editor Sam Richardson Journalist Maya Breen Contributors David Bailey Stephen Barnes Sascha Moore Jeremy Streten Production Editor Roslyn Meredith

ART & PRODUCTION Designer Loiza Caguiat Traffic Coordinator Freya Demegilio

SALES & MARKETING Publisher Rajan Khatak Account Manager Simon Kerslake Marketing and Communications Manager Lisa Narroway Marketing Executive Emma Kemmery

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

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Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL

Sam Richardson, editor, MPA

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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 the magazine can accept no responsibility for loss.

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UPFRONT

STATISTICS

Shrinking slices

A SNAPSHOT OF INDUSTRY CHANGE Average remuneration amounts fell, the number of loans settled dipped, and commercial broker numbers rose, according to the MFAA’s latest Industry Intelligence Service report.

The MFAA’s latest IIS report looks at how the industry has changed over six months

THE FOURTH edition of the MFAA’s Industry Intelligence Service (IIS) report has revealed that broker numbers are rising faster than the growth in new lending. The growth in the net population of brokers (3.3%) in Australia has outpaced growth in new lending by brokers (up 0.1% to $94.61bn). “It is not a sustainable trend to have broker

numbers continually rising faster than the value of new business written, and could be part of the reason why the report shows the average income for brokers is down 6% nationally,” says MFAA CEO Mike Felton. “When the pie stays the same size and there are more mouths to feed, the slices inevitably get smaller.”

2.5% drop

53.6%

of all mortgages written in Australia are facilitated by brokers

3.3%

growth in number of brokers from October 2016 to March 2017

16, 000+

brokers are currently active in Australia

in number of home loans settled (Sept 2016 to March 2017)

500

new brokers joined the industry from October 2016 to March 2017

Source: MFAA Industry Intelligence Service report, October 2016–March 2017

BENCHMARK YOUR BROKERAGE If your numbers have topped the following figures over the six months from October 2016 to March 2017, you’re broking above the national average.

TOUGHEST STATES FOR BROKERS The report found that Qld, WA and SA have a more competitive environment for brokers as the percentage of brokers deployed in these states exceeded the value of new loans settled. Value of new loans settled vs % of brokers deployed in each state, October 2016–March 2017 20%

$37.7m residential book $5.9m in new home loan settlements

15% 14.4%

20 new loan applications lodged

10%

$76,800 in annual gross upfront remuneration (before costs)

$56,600 in annual gross trail (before costs)

Source: MFAA Industry Intelligence Service report, October 2016–March 2017

Value of new loans settled

Brokers deployed

15.7% 12.7% 9.8% 6.2%

5.2% QLD

SA Source: MFAA Industry Intelligence Service report, October 2016–March 2017

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$38m average value of a broker’s portfolio

$142,500 down to $133,500 change in average remuneration total (before costs) per annum, from the previous report

11.5% rise in number of brokers writing commercial loans Source: MFAA Industry Intelligence Service report, October 2016–March 2017

NEW LOAN VALUES Tasmania saw the highest growth in the home loan market, in contrast to Western Australia, which has continued to shrink.

-1.0% Northern Territory 0.2% Queensland

-10.5% Western Australia

1.2% New South Wales 1.2% Australian Capital Territory

Growth rate (%) of new loans settled by brokers High growth Low growth

-8.1% South Australia 4.1% Victoria 7.4% Tasmania

Source: MFAA Industry Intelligence Service report, October 2016–March 2017

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UPFRONT

HEAD TO HEAD

How do you set targets for the year? Three brokers describe how they prepare to achieve maximum success in the new year

Chris Mushan

Holly Bundy

Kelly Cameron

Director ChapterTwo

Director Bundy Financial Services

Finance and property strategist/Director Get Real Finance

Being a relatively new business, our current target strategy is based on realising two fundamental goals: incremental and strategic growth. This is achieved by setting SMART targets (Specific, Measurable, Achievable, Realistic and Time-bound). Each employee has a clearly defined role, which helps to identify individual targets that are measured via performance and quality. Importantly, targets are also designed to be achievable, which in turn motivates our employees to hit their targets and drive the company forward. We also believe in the importance of incentivising our staff, so when our targets are met an end-of-month lunch is held, helping to cultivate an office culture that rewards success.

We look historically at the previous year’s settlements and review the processes within our business to help improve and uplift the loans settled in the next financial year. We find that reviewing our processes and resources helps us in setting the next year’s target. By changing how we process our loans and the staff within our business, this has allowed us a 35% uplift in settlements for the 2017/18 financial year. Staffing and putting the right resources in place now has a great deal to do with what targets we put in place and being able to meet those targets in the year ahead.

I work out what I would like to achieve, and I make my own plan and work out how much we need to settle. We know how many clients to see each week to produce the settlement figures that we would like to achieve. It is a numbers game. But I don’t believe in incentivising staff with bonuses or other rewards to achieve sales figures. We are here for service … not sales. That is what sets us apart. We achieve sales as a result of service, and people refer to us because we are for the client. So sales targets are a guide, nothing more.

AVERAGE BROKER SETTLEMENTS IN AUSTRALIA The MFAA’s latest Industry Intelligence Service report looked at the average value and number of settled loans written by brokers in Australia. Nationally, the average broker wrote just under $14m per annum over 40 loans. However, values were higher in NSW/ACT ($16m) and Victoria ($14.3m). The most productive brokers in the nation were in South Australia (46) and Queensland (42).

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ANZ BDM I DO ANZ BDMs make great partners. We will be there for you in residential and in commercial. For fixed loans and for variable loans. For your easy customers and for your complex customers. On the phone and in person, from this day forth. Call your BDM to help you help your customers. 1800 812 785

anz.com/broker ANZâ&#x20AC;&#x2122;s colour blue is a trade mark of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. Australian Credit Licence Number 234527. ANB1170/BDM/MPA

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UPFRONT

NEWS ANALYSIS

The hardest balancing act The Combined Industry Forum has released its recommendations on commissions, attempting to satisfy the Government, ASIC, consumers and brokers BY SIMPLY making any recommendations at all, the Combined Industry Forum (CIF) can be considered a triumph. The industry has come a long way since 2016, when brokers and banks turned on each other over commissions, much to the delight of critics of the third party channel. Less than two years later, broker associations, bankers, consumer advocates and others have come together to reply to ASIC, whose Review of Mortgage Broker Remuneration began this whole process. As the CIF made clear, its recommendations will be implemented. Commissions will change, whatever ASIC or the Treasury says. Yet the CIF’s recommendations still need to achieve their primary goal of preventing regulatory intervention in the sector. That’s alongside

that encourage consumers to borrow more than they need or will use”. Worryingly for brokers, the CIF has gone against recommendations made by the MFAA, the FBAA and aggregators in their initial responses to ASIC earlier this year. The MFAA dubbed the drawdown net of offset arrange ment as “unlikely to be suitable”, noting that the “unintended consequence could be to not pay commission on funds placed in offset for a renovation or deposit on investment property or any other legitimate imminent use”. Talking to MPA after the CIF published its recommendations, MFAA CEO Mike Felton said the commission-model debate “was without doubt the most difficult [issue] to solve”, but that offset had been called out as a “non-negotiable” by both the ASIC and

“There has been so much change in responsible lending I don’t think it’s going to make that much difference to [brokers’] current behaviours” Mike Felton, MFAA avoiding putting brokers and banks out of business, while protecting consumers. But is this balancing act even possible?

Commission changes The headline reform proposed by the CIF is to base remuneration on drawdown net of offset. The CIF wants to “avoid financial incentives

Sedgwick reports and thus “had to be addressed”. FBAA executive director Peter White said the new arrangements were “commercially fair” to lenders. In an online poll of brokers by MPA, with several hundred respondents, 63% said they were against basing commissions on facility drawdown net of offset, and 25% were in

favour. Offset balances are not a niche issue: they represent 16% of outstanding loan balances. Yet the CIF’s reforms fall well short of ASIC’s suggested changes, such as tying remuneration to LVR. It’s not yet clear whether the Treasury will be prepared to compromise.

Good customer outcomes In the long term, the greatest legacy left by the CIF may be around compliance. For the first time in mortgage broking history, a ‘good customer outcome’ has been defined by the industry. The CIF defines a good customer outcome as when “the customer has obtained a loan which is appropriate (in terms of size and structure), is affordable, applied for in a compliant manner and meets the customer’s set of objectives at the time of seeking the loan”. Additionally, lenders will report back to aggregators on ‘key risk indicators’ of individual brokers. These include the percentage of the portfolio in interest-only, 60-plus-days arrears, switching in the first 12 months of settlement, an elevated level of customer complaints,

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WHEN YOU’LL SEE CHANGES The Combined Industry Forum has attached timelines to its various commitments: BY END 2017 Addressing bonus commissions and volume bonus based payments BY MID-2018 Commencing work on an industry code BY END 2018 Changes to commissions structures BY END 2018 Implementing changes to tiered service models and eligibility of non-monetary benefits BY END 2018 Implementing the new ownership disclosure and public reporting framework BY END 2020 Completion of governance frameworks Source: Improving Customer Outcomes: The Combined Industry Forum response to ASIC Report 516: Review of Mortgage Broker Remuneration, December 2017

or poor post-settlement survey results. MFAA CEO Felton downplayed the impact of the change, noting that “there has been so much change in responsible lending I don’t think it’s going to make that much difference to their current behaviours”. While consumer advocates such as CHOICE wanted brokers to be held to the same standards as financial advisers – to act in the customer’s best interests – brokers will not be legally bound to good customer outcomes, although an industry code will apply. While the prospect of brokers in court over (not so) good customer outcomes is no doubt unappetising, the introduction of the standard is essentially a fait accompli. Prior to the CIF’s recommendations, ANZ and CBA introduced new interview guides and tools aimed at ensuring customers could afford and understand the loans they were seeking. APRA has also signalled a renewed focus on living expenses, which will dominate broking news in 2018.

Data-driven governance To use a phrase beloved of industry leaders, the

CIF’s recommendations do indeed represent a ‘new era of professionalism for the industry’. Or, at least, a new era of monitoring. Individual brokers will be issued with a unique identifier number that stays with them throughout their career. Felton told MPA that being able to track individual brokers would help make governance ‘data-driven’; insights from file monitoring could drive remedial training and professional development. In fact Felton describes the governance framework as “the centrepiece, the absolute glue, in the reform package”. Furthermore, brokers will have to disclose information on their spread of lenders, as will aggregators. Lenders will have to disclose average pricing across different distribution channels. The new era of professionalism is already upon us, as any recent visitor to a straightlaced broker conference can attest. Lender spending will be limited to $350 per broker, outside educational content, and locations “must be business appropriate and not likely to cause reputational harm to the industry”.

More regulation, not less By presenting a series of significant changes with clear deadlines, the CIF may succeed in preventing the Treasury and ASIC from introducing more serious changes. Yet as FBAA boss White has noted, the industry can “never truly self-regulate”; even with the development of an industry code, ASIC will still be responsible for licensing brokers, and APRA for supervising banks. “The industry can have input and offer guidance on possible measures and outcomes,” White explains, “but the decision is made by the minister.” In fact, far from ensuring business as usual, the CIF may have made it easier for regulators to intervene. With a huge amount of data readily available, ASIC will not have to repeat the vast investment required for the Review of Mortgage Broker Remuneration. Instead of set-piece reports and debates, regulation will be constant and, hopefully for brokers, in the background. Then brokers can get on with running their businesses.

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email sam.richardson@keymedia.com.au

Why CCR won’t change broking Comprehensive credit reporting offers brokers plenty of advantages, but a broker’s job will remain the same, says AFG CEO David Bailey

THE OPEN Banking/Comprehensive Credit Reporting (CCR) regime has arrived – and if you are one of the big four you might say it has arrived with a bang. Its planned implementation is another example of the government staying true to its promise that “if you don’t jump, you will be pushed”. There has been much discussion about similar arrangements in other countries around the world, which suggests that the government will assess what works and what doesn’t in those markets. Hopefully it will also assess how relevant the comparison is to the Australian market. There must of course be appropriate precautions taken in terms of access and privacy considerations, and this is sure to be high on the agenda of lenders and regulators as they examine the logistics of the rollout. Uniformity will certainly help provide lenders with better information. The next step will likely be a link through to government entities such as the ATO and the Department of Social Services. This will provide a clear picture of a consumer’s background and should result in better validation of data to support lending. Under the new regime lenders will have the capacity to more accurately price credit relative to the risk profile of the borrower. Smaller lenders will be able to get a better picture of a borrower’s background, and this may open doors for some. On the downside, there is the risk of a more regimented lending outcome, which

isn’t necessarily a good thing. Ideally it will lead to more product innovation by lenders as they tailor products to suit individuals. At the individual level, an informed consumer is an empowered consumer. The government and all entities involved in lending need to ensure consumers are aware that this regime exists and the impact that a negative credit history can have on their ability to borrow. The role of a mortgage broker has always been to help improve the financial literacy of their clients. The new regime won’t change that fact.

through AFG’s software. That number now sits at more than 3,400. The changing nature of lenders’ appetites makes it very difficult for a consumer to be across all options. The opportunity exists for brokers to highlight the fact that shopping around for credit, resulting in multiple credit enquiries, will negatively impact on a client’s credit score. The fact that a credit-impaired consumer will be equipped with enough information to be able to make an informed plan to repair their credit history can only be a good thing. Simple strategies like paying bills on time and closing any credit cards that are not needed can be employed if a consumer knows this needs to be done. CCR should also make it easier for a consumer to show they have recovered after a default. Another positive outcome will be that credit scores will not be significantly impacted by a single event such as a missed payment. A pattern of missed payments will need to be evident to negatively impact an individual’s credit rating. The ability of a lender to truly price for risk should deliver positive results, as a lender will have more data to assess a consumer’s ability to repay a loan. This will be a good thing for the economy and a good thing for those with a positive financial

The government and all entities involved in lending need to ensure consumers are aware that this regime exists A comprehensive view of a client’s financial situation and patterns of behaviour is key to responsible lending, and something that mortgage brokers strive to achieve every day. It’s not in anyone’s best interest – whether client, lender or broker – for a client to be placed in an unaffordable mortgage. An increasingly challenging lending environment means the role of a broker is even more important for consumers. In April 2015 more than 1,450 individual products were available for comparison

record. Those at the other end of the financial spectrum will, however, likely pay more. Is this better for those individuals than not being able to access credit at all? Time, and the data, will tell.

David Bailey is CEO of the aggregator AFG. He has been with AFG since 2004 and is a chartered accountant and a member of the Financial Services Institute of Australia.

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PEOPLE

BIG INTERVIEW

IAN RAKHIT: STEP BY STEP Returning to his role leading third party at Bankwest, Ian Rakhit has turned to technology, and a new style of management, to give the non-major an edge

OVER A 32-year career in lending, two years can pass in a blip – unless, that is, you work in Australia’s mortgage industry. Brokers will know Ian Rakhit from his time leading Bankwest’s broker operation between 2010 and 2015, when Stewart Saunders took over the role. Saunders has now become general manager of strategy, risk and governance, and Rakhit has returned – as general manager third party – to a role and a bank that have changed substantially. Previously managing just one team, Rakhit is now managing four. He is responsible for business not only with residential brokers but also commercial, asset finance and corporate partners. “We’ve brought together the parts of the bank that deal with third party, very much with the intention of ‘how do we meet more broker needs?’ and ‘how do we help more broker clients hit their goals?’” Rakhit has also returned to a changed playing field. With ASIC looking at broker incentives and APRA raising capital requirements – and thus interest rates – many of the old tools for an ambitious non-major to increase business are gone. Nor can Rakhit expect much help from Bankwest’s owners at Commonwealth Bank, which has had a torrid year in which its share of broker-originated loans fell for the first time in five years.

Bankwest cannot afford a similar trend: outside of Western Australia, brokers are far more important than the bank’s direct channel. It’s up to Rakhit to come up with a solution.

Self-service broker technology Rakhit’s solution is technology. In November, Bankwest launched its redesigned broker website, intended to be a ‘one-stop shop’ for brokers. The website brings together four practical tools for brokers. Rakhit is particularly enthusiastic about the home loan portal. “We believe this is quite a game changer,” he says, “as it gives the broker visibility of all their home loan customers with Bankwest.” Brokers can see details such as clients with expiring

order upfront valuations. Rakhit is conscious of catering to a mixed audience. “A lot of brokers like to self-service, and this is about giving them the tools to do that. But if the broker needs specific feedback, there are three options,” he says. These include broker support managers, who assist BDMs; the bank’s mortgage support team; and Bankwest’s online Broker Chat function.

Agile in action As interesting as Bankwest’s new website is the way it was made. “Rather than bring out one all-encompassing new platform after two years of behind-the-scenes development, we’ve been bringing out new developments every few months,” Rakhit tells MPA.

“We’ve embarked on a new way of working, an agile methodology, which is very much around listening to your customers” fixed rates, for instance, and that visibility extends to the home loan origination process through the website’s live application tracker. Much of the website automates what previously required a phone call, such as Bankwest’s pricing tool and the ability to

Little of Bankwest’s new website is completely new; it is a combination of tools that were gradually released and tested with small groups of brokers. “We’ve embarked on a new way of working, an agile methodology, which is very much

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PROFILE Name: Ian Rakhit Title: General manager third party Company: Bankwest Years in the industry: 32 Career highlight: “For a number of years between 2010 and 2015, we were the largest bank in broker share outside of the big four … for a bank of our size that was a huge personal career achievement.” Career lowlight: “I left Bankwest in 2015 and I actually shouldn’t have done.”

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PEOPLE

BIG INTERVIEW

around listening to your customers,” Rakhit explains. “Everything we’ve built on the Bankwest website is based upon broker feedback – working through an agile methodology that allows you to then create quickly, test quickly and implement quickly.” Agile management emerged from the tech sector, in which developers would rush to complete small projects, yet Bankwest has applied the methodology just as well offline. This has manifested itself as straightforward, practical improvements. To improve turnaround times, Rakhit says “we adopted around 18 months ago a very different way of processing home loans to what I believe others do”. Bankwest has introduced a single case owner model in response to broker concerns about files being handed between different staff members. “That’s led to a massive improvement in our turnaround times, because the broker feels he’s working in partnership with the processor in order to make sure we get the

event that Bankwest’s appetite changes. Nor can agile management alone improve conditions for first home buyers, a target market for Bankwest. Nevertheless, Rakhit is determined to make it easier for first home buyers to deal with brokers, including brokers who don’t operate face-to-face. Bankwest is considering introducing digital approaches to identification of clients, valuations and conveyancing, in order to remove the need for wet signatures. Rakhit’s big push, however, is into commercial lending, making the most of his newly diversified team. “In only my first two weeks in the role, every aggregator and every broker state manager I’ve talked to has talked about diversification,” he says. “Having a single BDM looking after the broker’s clients’ needs, we believe, will give us a real advantage.” Allowing brokers to deal with the same BDM for residential, commercial and asset finance business is ambitious, but not yet

“In only my first two weeks in the role, every aggregator and every broker state manager I’ve talked to has talked about diversification” right outcome,” Rakhit says. Consequently, Bankwest ranked in the top three for turnaround times in MPA’s 2017 Brokers on Banks report.

Rakhit’s challenge The agility Bankwest is bringing to broking has been well received by its existing brokers, but the real test will be whether Rakhit can encourage more brokers to choose the bank. Agile management will not, for example, remove APRA’s restrictions on investor lending, although Rakhit insists “we’re absolutely open for business with investors” and vows to update the market in the

reality. Rakhit does, however, intended to implement it by February of this year. “I see it as a real opportunity, and it’s driven by the brokers’ desire to diversify income.” Above all, agile management will not help Bankwest escape a fiercely competitive lending landscape, a fact that Rakhit is mindful of. “As a bank that is significantly third party focused, we naturally need to play in those areas and those markets where price may be a factor,” he says. But with Rakhit and his team rolling out a steady stream of practical, broker-centred improvements, Bankwest is becoming a fierce competitor.

BROKERS ON BANKWEST In 2017’s Brokers on Banks report, Bankwest ranked fifth overall, making it the second-highest-ranked non-major bank. Bankwest’s top results: 3rd Turnaround times 3rd BDM support 3rd Interest rates

How brokers view branch networks: They help my business

47% 63%

They’re a hindrance

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SPECIAL REPORT

YOUNG GUNS 2018

2018

YOUNG GUNS Meet brokingâ&#x20AC;&#x2122;s next generation: 30 up-and-coming professionals who are redefining a fast-changing industry

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15/01/2018 2:40:53 PM

SPONSORED BY

BROKING IS bigger than it’s ever been, and it’s continuing to grow. With the number of brokers growing by over a thousand a year, there are now over 16,000 brokers in Australia, one for every 1,500 Australians. You can’t understand today’s industry without understanding all those new entrants, and that’s what MPA’s Young Guns report is all about. The challenges facing new entrants today are quite different to what they used to be, as are the advantages. Borrowers are far more likely to understand what a broker is, and more able to choose between multiple brokers. Many of the brokers in this list will never need to run a shopfront, but their digital-first approach also puts them on the front line in dealing with fintechdriven disruptors. In an encouraging sign for the industry, this year’s Young Guns come from a variety of backgrounds. Some are ex-bankers, and many have spent time in bank branches but also have experience in recruitment, hospitality and financial planning. In contrast to previous years’ Young Guns, this cohort includes brokers in their early 20s, many of whom started broking while they were at university or even straight out of high school. Where this diversity ends is in the low number of female brokers on this list – just five out of 30. While MPA’s Young Guns report has a limited survey size, the MFAA’s much larger report found the proportion of new brokers who are women has actually fallen to 28% of new entrants, and men still comprise 73% of established brokers. How do we pick MPA’s Young Guns? We start with the entry criteria: Young Guns must be aged under 35 as of February 2018, must have written more than $15m in loans over the previous 12 months, and must have commenced working as accredited brokers after March 2016. We then look at recommendations from peers and at each broker’s volume of loans to pick the final 30. We don’t rank Young Guns, and there is no ‘winner’; all of these brokers are fine examples to new entrants and established brokers alike. We’d like to thank all the brokers who applied for this year’s Young Guns, whether or not they feature in this list. We’d also like to thank our sponsor, Suncorp Bank; all those who gave recommendations; and the aggregators and franchises that supported Young Guns in applying.

A MESSAGE FROM OUR SPONSOR Suncorp is incredibly proud to continue to sponsor and support MPA’s Young Guns report in 2018. We are Australia’s fifth-largest bank and part of the top 20 ASX-listed companies, which includes one of Australia’s largest general insurance businesses. Our business is built on strong partnerships with brokers, customers and the community, and we place great value on supporting the young talent in the industry. The broking industry is facing some challenges in the year ahead, with growth in broker numbers continuing to outpace growth in new lending in most states. With the industry still in a growth phase, new brokers are facing a more competitive market; however, with the exceptional talent among our future leaders, I have no doubt the future remains bright. The Young Guns recognised in this report have been nominated by industry professionals and acknowledged for their outstanding skills and excellent performance, and have demonstrated the best qualities of the industry. It takes commitment, dedication and focused determination to become a star broker, and these individuals thrive on delighting their customers with the highest service standards. It gives me great pleasure to celebrate the success of the MPA Young Guns in 2018 and to recognise their hard work and professionalism. Congratulations to all the nominees! Mark Vilo Head of intermediaries, Suncorp Bank

$36,066,187 Average total annual settlements of our Young Guns

29 Average age of our Young Guns

www.mpamagazine.com.au

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15/01/2018 2:41:04 PM

SPECIAL REPORT

YOUNG GUNS 2018

OZ UNAL, 33 Imperative Finance Carnegie, Vic / AFG $45,000,000

FENG (TOBY) WANG, 33 Option Finance Australia Sydney, NSW / Astute Financial

PETER VASSILIS, 32 Black and White Finance Rose Bay, NSW / Connective $29,851,386

$26,000,000

“So far, in his first year of brokering Oz has made significant progress as a young broker. Each BDM has been appraising the quality of his loan submissions, attention to detail, and most of all keeping compliance as a first priority. Hence some of the bank application submission results have been 100% clean files and AFG compliance has been over 85%, which is phenomenal for a new-to-industry broker. I totally support Oz in this nomination as a Young Gun 2018 as he will make a positive impact not only on the customers’ finance but also on the broker industry.” – Scott McDonald, business development manager, AFG

“Toby is a professional, enthusiastic, responsive and trustworthy credit adviser and he always provides efficient and outstanding service with the utmost integrity and confidentiality to his clients. Toby is good at providing the best loan structure on complex transactions to maximise the benefits for the client. His professionalism and problemsolving skills are the key to his success. Given above facts and his years in the industry, I would highly recommend Toby Wang for your consideration as one of 2017 Australia’s best young brokers.” – Oliver Li, head of sales and training at Option Finance Australia

“Peter is one of our most successful young brokers and one we at Connective see as a young leader in our industry. The unique digital content he has curated and delivered consistently throughout the year has established for himself and the brand a very sophisticated and professional reputation. His community involvement and ability to work with local businesses has been paramount to his success, and to my understanding he has already planned to do a lot more of this in 2018. Well done to you, Peter, a young gun of our industry.” – Rahul Yadav, aggregator BDM, Connective

ZARCO JOKIC’S TIPS FOR NEW INDEPENDENT BROKERS As the MFAA’s BDM for NSW and the ACT, Zarco Jokic has worked with numerous new brokers, including those setting up their own businesses. He gave MPA his top tips for new independent brokers: MPA: What are the main challenges facing new entrants to broking? Zarco Jokic: Starting out as a broker is no easy task. The main challenge is that it can take more than a year to be earning enough from broking to support your family. MPA: What would be your advice for a new broker looking to run their own independent business?

ZJ: New brokers should try to build an ‘ecosystem’ around them of known and trusted service providers who your clients need as part of the transaction you are helping them with – for example, lawyers, real estate agents, accountants and financial advisers. You should aim to become a trusted adviser for your clients. Setting up an effective website and social media sites to complement your marketing strategy is critical. MPA: What’s your one tip to help new brokers thrive? ZJ: Identify what is important to you. What does that look like and what do you need to achieve that? Once these things have been defined, make sure you have accountability in your practices to realise the end goal. A whiteboard helps with this.

www.mpamagazine.com.au

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15/01/2018 2:41:03 PM

SPONSORED BY

JINKAI (RYAN) ZHANG, 29

ABBEY REGGARDO, 26

JONATHAN PRESTON, 31

Option Finance Australia Sydney, NSW / Astute Financial Australia

My Mortgage Freedom South Melbourne, Vic / Finsure

Home Loan Experts Rhodes, NSW / Connective

$36,651,875

“Ryan Zhang has a driven, ambitious and assertive nature and is a good team player with a strong customer service ethic. His hard-working, customer-service-oriented attitude and settlement numbers are good support to evidence his eligibility for being named as a Young Gun in today’s industry. He is always ready to put all his energy and time to get things done on time. Ryan also has strong communication skills to work closely with our business partners and referrers.” – Oliver Li, head of sales and training, Option Finance Australia

$19,875,000

“Abbey has brought a refreshing energy to our business. Abbey has always provided exceptional service to her clients and referrers, which helps her organic growth month-on-month. Beyond that, Abbey has fortified relationships with key referrers and has not only been dedicated to developing her personal brand but also to investing her time to build the skill sets of our junior staff and help them reach their goals of becoming brokers. A very versatile operator.” – Anthony Alabakov, CEO, My Mortgage Freedom

$47,045,217

“As one of our hardest-working mortgage brokers, Jonathan is well-deserving of MPA’s Young Gun award. He approaches each of his customers with the same solutions-focused attitude, which is essential as a specialist mortgage broker … Jonathan is a shining example of educating himself on lending policies and identifying the exceptions that can get his clients approved with a loan that helps them achieve their long-term goals … I expect that Jonathan will reach the top 100 in the country in the near future.” – Otto Dargan, managing director, Home Loan Experts

TAJINDER SINGH, 28 First Home Buyers Australia Baulkham Hills, NSW / Mortgage Australia Group $27,414,873

Tajinder Singh has been widely featured in the Australian media – in the Daily Telegraph as well as on Channel 7, Channel 10 and the SBS (giving advice in Punjabi). He has become a leading advocate for first home buyers, and it’s paying off. “When we started a couple of years ago, I found no one was focusing on the first home buyers,” Singh says. Then the business had a stroke of luck when a list of demands on housing affordability that Singh and his business partner, Daniel Cohen, put to the NSW State Government was picked up by a local newspaper. “That’s when we really got heard by other journalists and the general public, who were very interested in what we’re doing and how we help first home buyers.” FHBA has now set its sights on growth, Singh says. “There are 100,000 first home buyers per year, and we do want to get 10% within the next couple of years”.

www.mpamagazine.com.au

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15/01/2018 2:41:09 PM

SPECIAL REPORT

YOUNG GUNS 2018

DANIEL GOLD, 33 The Australian Lending & Investment Centre Melbourne, Vic / Connective $22,480,550

WILLIAM TREMAYNE, 31 Centric Lending Services Sydney NSW / PLAN

MISA HUYNH, 32 Smartmove Home Loans Neutral Bay, NSW / AFG $65,035,038

$39,508,690

“It’s hard to believe that Daniel Gold has only been broking since March 2017. A dynamic, enthusiastic and intelligent young man, Dan has thrived under the mentorship of Mark Davis (ALIC), completing a demanding internship for 18 months to learn from the best before embarking on his own career in mortgage broking. Dan has grown into a confident, professional, hard-working and dedicated broker in his own right, and his positive, can-do attitude is simply infectious. Dan’s work ethic, incredible attention to detail and his resourceful nature have seen him hit the ground running, and he is truly one of the rising stars of the industry.” – Natalie Sheehan, head of relationship management, Better Choice Home Loans

“William regularly receives praise from clients, new and existing; bank BDMs for the way in which he puts up a deal; and referral partners for his work and the way in which he conducts himself. He is known to turn over every stone to find the right solution for a client, a great collaborator with impressive commercial lending knowledge which sees him regularly dealing with transactions that range from agri-business lending, commercial, equipment to home and investment loans. He is seen as a future leader and comes highly recommended to clients from his key referral partners and existing clients.” – Daniel Lanna, senior partner – lending, Centric Wealth

“We have been introducing many clients to Misa because she is honest, professional, very active, and always tries to help as much as she can. Some clients went with other brokers who were unable to assist them in time to meet the cooling-off period, and they came to us asking for help. Every time we referred them to Misa, and she has always done amazing work and always delivers approvals within a quick timeframe to seal the deal. There’s not a single client that we referred to Misa that was not happy with her service. LJ Hooker Cabramatta’s office would refer Misa to every one of our clients.” – Kelvin Ngo, development and marketing manager, LJ Hooker Cabramatta

PETER KOUTSOURADIS, 32 Impress Financial Solutions Rouse Hill, NSW / FAST $24,539,306

“What separates Peter from the other Young Gun nominees is that Peter didn’t come from a previous financial background/role; he was in the hospitality industry working as an operations manager for McDonald’s. He was an active property investor who is extremely passionate about property and finance, and his personal broker at the time saw what passion Peter had and asked if he had considered getting into the industry. The rest is now history, and in under two years Peter has really left his mark on the industry and shown others without a financial background that it is possible to follow your dreams and be successful.” – Paul Saba, partnership manager, FAST

www.mpamagazine.com.au

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15/01/2018 2:41:23 PM

SPONSORED BY

LUKE HARBORNE, 24 IFA Mortgages & Finance Bondi Junction, NSW / FAST $70,057,785

Saying that Luke Harborne comes highly recommended would be an understatement. “Bringing Luke on as a full-time broker has been a godsend this year,” Harborne’s boss, broker Anthony O’Flynn, told MPA. “What he envelopes is a youthful exuberance which I hadn’t even noticed was missing from the business until I saw it in him. Personally, it has motivated me to be a better broker and has re-energised me to continue to expand our up-and-coming business.” Harborne started at the brokerage while at university, in a support role, and his success at IFA demonstrates the benefits of going back to the database. Harborne has introduced new systems and developed his own relationships with O’Flynn’s extensive database. “When it came to the point where that client needed new money, it was a pretty smooth transition to take that client on board,” he explains. One method for impressing clients was getting their existing bank to discount their home loan, Harborne says. “Even if it is 0.1% or 0.15%, that reflects greatly on you because you’ve put in the legwork to improve the client’s interest rate and they’ve had to do nothing.” From there he asks if he can help clients with other services, including investment properties, guarantor arrangements for FHBs, car loans, credit cards and more. “There’s a few things you learn just by doing them yourself,” Harborne says. “He [O’Flynn] has thrown me in the deep end and it’s kind of worked out, I guess.”

www.mpamagazine.com.au

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15/01/2018 2:41:28 PM

SPECIAL REPORT

YOUNG GUNS 2018

SPONSORED BY

YOUNG GUNS 2018

MICHAEL GAVAN, 27

WILL BURKE, 30

Innovative Home & Business Finance Hamilton, NSW / Connective

MATTHEW OUGHTRED, 25

GreenSpace Finance Brookwater, Qld / AFG

$31,082,345

Francis Rose Finance Ultimo, NSW / eChoice Home Loans

$39,091,348

$25,882,005

“Michael has worked closely with a number of our clients. He has always been professional, diligent and provided highly structured and valuable advice to our mutual clients. You can always hear how passionate Michael is about helping customers in all the dealings we have with him. He is prepared to work with clients, especially our mutual business clients, outside of standard business hours, and our customers have always expressed the high level of detail and competence Michael possesses. He stands out as someone who will continue to grow not only as a broker but as a business owner in Newcastle.” – Ben Demery, manager, H & M Accountants Newcastle

“With a team of two, Will is a director and sole broker. Since inception Will has established himself in the local area as a construction expert. He has quickly built a strong reputation with a number of developers and builders, who look to him to guide their mutual customers through complex construction finance. His portfolio has grown quickly in a region where the average loan size is under $400k and it can take up to 18 months for applications to settle. Underpinning Will’s reputation is the fact he does not pay referral fees but provides outstanding service to both customers and referrers alike.” – Dan Crowther, BDM, AFG

“Matt is a gun. From the moment he ventured out into the world of lending, he has not slowed down. He came from humble beginnings, qualifying leads in our call centre. A team he then took over to run and grow. Following this, he implemented a network of internal brokers, driving revenue back to the business. His team was inspired by him every day and many have gone on to become successful brokers. … He is disciplined, focused and extremely passionate about broking. With passion and determination engrained in his DNA, he will undoubtedly become one of the strongest brokers in the industry.” – Kon Shizas, general manager, eChoice

AN INCREASINGLY COMPETITIVE INDUSTRY Today’s new brokers face a very different challenge to their predecessors. According to the MFAA, the number of brokers is growing much faster than the rate of lending in all states but Victoria and Tasmania. Number of brokers New loans settled

Growth in net number of brokers vs new loans settled (by $ value) – Oct 2016–Mar 2017 7.4% 8 6 4 2

3.7% 4.1%

2.9% 1.2%

3.9%

3.7%

0.2%

3.3%

1.2% -1.0%

0.1%

-2 -4

-5.1%

-6 -8.1%

-8 -10.5%

-10 -12

-8.2%

NSW & ACT

VIC

QLD

TAS

Total nationally

Source: MFAA Industry Intelligence Service report, Oct 2016-Mar 2017

www.mpamagazine.com.au

16-29_Young Guns_SUBBED.indd 22

15/01/2018 2:41:32 PM

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10/1/18 10:46 am 15/01/2018 2:41:30 PM

SPECIAL REPORT

YOUNG GUNS 2018

CHRISTOS APOSTOLAKIS, 30 LendPoint Oakleigh, Vic / FAST

ANGELINE HE, 30 Xin Mortgage North Sydney, NSW / Vow Financial $30,970,000

$46,443,705

“Transitioning from employee to business owner is extremely exciting, especially when fulfilling a dream to build a brand; however, it isn’t as easy as that. In a small period of time, Christos has moved out of ‘banking’, embarked on a steep learning curve of 40-plus lenders’ products and procedures, secured impressive referrers while at the same time settling an impressive $46-plus million across residential, commercial and leasing transactions … FAST is extremely proud to be part of Christos’s journey and looks forward to working closely with him into 2018, while assisting in any capacity to support him and his business in further excelling.” – Maree Maditianos, partnership manager, FAST

SHEHAN WIJAYASINGHE, 32 Elephant Financial Malvern East, Vic / Vow Financial $32,000,000

“I would like to recommend Angeline He for the MPA Young Gun Award 2018. Her great success is a tribute to her endeavours to learn and educate herself in an increasingly competitive and compliance-driven market. She understands the importance of having a great support network and has built strong relationships with her referral partners and lender partners. Above all, her dedication to her clients is her strongest trait, and this has been demonstrated through great feedback from her customers through recent customer surveys. She is definitely a rising star amongst the Vow network and very deserving to be nominated for this award.” – Daniel Kairouz, BDM NSW/Vic, Vow Financial

“As state manager of Vow Financial – Vic/ Tas, I hereby recommend Shehan to be nominated for the MPA Young Gun awards. Since meeting Shehan, he has shown tremendous drive and passion towards the industry, always looking for new ways to improve himself and Elephant Financial. We see him continually growing and are proud to call him a part of the Vow family. His hard work and dedication has translated into excellent loan volumes of the highest quality and has driven the growth of his brand in the marketplace, and I fully recommend Shehan as a worthy recipient of this nomination.” – Leith Wickstein, state manager Vic/Tas, Vow Financial

DANIEL BERTI, 25 Berti Financial Ultimo, NSW / eChoice $41,900,000

“Daniel is recognised as eChoice’s emerging elite, business builder, and high-volume writer. Daniel is professional, empathetic and driven. Nothing can stop him from achieving his goals. Being his mentor, I have watched Daniel develop and grow into a successful broker. Surpassing many others that began their career at the same time, Daniel has successfully built a strong brand presence through a savvy social media strategy and the ability to connect and educate respected clients from works of life. Daniel is already writing some serious volume and is definitely one to watch out for in the coming years.” – Nick Dalamagas, development manager, eChoice

www.mpamagazine.com.au

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15/01/2018 2:41:39 PM

SPONSORED BY

MADDISON PURDUE, 28 Resolve Finance Osborne Park, WA / Specialist Finance Group $25,584,700

Increasingly, the gap between what brokers do and what their support staff do is narrowing. As Maddison Purdue explains, “I was essentially doing everything bar sourcing loans, and I was pretty rapt that I could be hands-on with the client. The brokers typically interview, lodge, and once they’re approved they’re handed on to support.” Yet making the leap to sourcing your own customers remains a daunting prospect for many. Purdue has managed it

and written $25.6m in loans in the process. Purdue has two advantages: a background in finance – at Bankwest and then Citibank – and working at Resolve Finance. Originally established by construction giant ABN Group, Resolve specialises in construction finance and has flourished in WA’s first home buyer, construction-friendly climate. However, Purdue believes flexibility is vital. “Just because you wear the tag of ‘first home

buyer’ doesn’t mean you’re in your second year of university, or in your first job. You could be in your 40s with a family, but you’ve been renting your whole life. So you do need to diversify your skill set and ability to adapt to clients to be able to relate to them.” Purdue encourages new brokers to be relentless, and she practises what she preaches. “If anyone breathes the words ‘help’, ‘home loan’ or ‘I’m in the rent trap’, I offer my services.”

www.mpamagazine.com.au

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15/01/2018 2:41:44 PM

SPECIAL REPORT

YOUNG GUNS 2018

SPONSORED BY

YOUNG GUNS 2018

NOBEEL KHAN, 33

MATTHEW GUY, 31

Aussie Blacktown Blacktown NSW / Aussie

Prosperity Finance Advisers Sydney NSW / AFG

$49,160,000

$35,024,510

SAMUEL CHARLES. 29 eChoice Home Loans Ultimo, NSW $41,301,611

“Nobeel, as a new-to-industry broker, has made a significant impact on the Aussie business since opening the Aussie Blacktown store. He’s grown a strong, dedicated team around him, who all share his same vision and values … This has been effective, as evidenced by being awarded the ‘Notable Achievement’ award at the recent Aussie Quarterly Business Forum … I’ve been impressed with Nobeel’s thoroughness in knowing his pipeline and where his business will finish for the month, and it’s this drive to grow his business while providing supreme customer service that demonstrates he has what it takes to be a successful mortgage broker and an MPA Young Gun.” – Eleanor Blewden, state manager NSW/ACT, Aussie

“In his 18 months at Prosperity, Matthew has been extremely enthusiastic and proactive in engaging with clients about their needs and assisting them with financing solutions. Our clients range from small to medium business owners to passive investors and executives in professional and medical services. Regardless of industry or client type, Matthew has always been professional and committed to generating positive outcomes for any client he is referred … Every client that Matthew has worked with always provides a positive comment about their experience of working with him. I am delighted to support Matthew for this recognition as I believe it is very much deserved.” – Siobhan Sellick, director, Prosperity Advisers Group

“Sam Charles is the hardest-working young mortgage broker that I have come across in my 20 years in the Australian mortgage industry. He has earnt great respect from the eChoice Management Team, his peers and lender BDMs across the industry … He has been internally nominated and progressed as a finalist in our aggregator young gun awards for the last two years, and this year took away the gong for the Highest Converting Home Loan Manager across the country. Sam’s work ethic, enthusiasm and drive cannot be compared. I think his results thus far are a testament to this and a major milestone for any young start-up mortgage broker.” – Kon Shizas, general manager, eChoice

BELINDA CAESAR, 28 Buyers Choice Home Loan Advisory Service Scoresby, Vic / PLAN $16,255,347

“When Belinda first joined Buyers Choice, we (the management team) were impressed with her extensive lending/credit knowledge, well-developed business plan and dedication to providing a great client experience. Belinda, like many new entrants, has had no easy instant success, no referral partners or lead sources. She has built her expanding business through extensive networking, developing her product and lender knowledge, and being seen as a problem-solver by her clients and referral partners … Belinda has also diversified her service offering to include commercial property, developments, vehicle and equipment finance ... Finally, I must say that Belinda shows wisdom and innovation far beyond her age and experience.” – Mick McClure, managing director, Buyers Choice

www.mpamagazine.com.au

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15/01/2018 2:41:54 PM

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12/01/2018 15/01/2018 10:49:05 2:41:52 AM PM

SPECIAL REPORT

YOUNG GUNS 2018

DYLAN BERTOVIC, 20

DEAN MANGION, 29

The Lending Institute Ultimo, NSW / eChoice Home Loans

Aussie Southbank, Vic / Aussie

$21,802,000

$31,770,000

THOMAS JIYUN TANG, 26 AUSUN Finance Hawthorn, Vic / FAST $52,639,602

“I have known Dylan professionally for more than 18 months as a broker/brokerage under eChoice aggregation. In this time Dylan has proven himself to be professional, knowledgeable, and willing to assist others in their pursuit of success. Dylan’s professional demeanour with every client interaction and focused attention to detail are second to none. Dylan takes a holistic approach to every client’s situation and truly focuses on delivering the best client outcome possible. I have never seen a 20-year-old broker who is as professional and as knowledgeable as Dylan.” – Jayden Cheers, BDM NSW/ACT, eChoice

“Dean has transitioned from a commercial electrician to mortgage broker with gusto. He has demonstrated an ability to gather information and process it with little guidance while showing genuine interest in finding solutions for his customers to see them succeed in their goals. In his first year of broking, Dean won State and National Rookie Broker of the Year, which is testament to his tenacity and personal drive to succeed. Dean is an out-of-the-box thinker and has used social media as a lead generator. I am impressed with his ingenuity and resourcefulness in setting himself apart.” – Glenn Edwards, state manager Vic/Tas, Aussie

“I have known Thomas since he was a lending manager in the bank in 2015. It took guts to quit his job as a top banker. Curiosity about knowledge, and putting customers’ best interests at heart, has been driving him since then. He is the most passionate mortgage broker I have seen. ‘Trust leads transaction’ is what I have seen in him. He shows a real understanding of real estate investment, providing his clients with all the know-how to make an informed decision that actively transforms his clients’ financial wellbeing.” – Lei Feng, founder and director, Preer Development

WHAT AUSSIE LOOKS FOR IN PROSPECTIVE BROKERS Lynda Harris, general manager for people and culture at Aussie, told MPA what the franchise network looks at when assessing prospective brokers: “In my 20 years in mortgage broking I have seen a lot of change. But there are some key attributes that we look for in an Aussie broker, and these haven’t changed despite the swirling distractions of changing regulation, compliance, competition, technology and product complexity, to name a few. “Tenacity and determination are critical to broker success. We want people who want progression. We want true business owners who can leverage the various business opportunities Aussie can give them, from mobile broker to senior Aussie broker

to becoming a franchisee or even a multi-franchisee. “The broker marketplace is becoming more digital, but we can’t lose the human difference. The ability to build, maintain and nurture relationships is critical to any broker’s success. “This is something a new, out-of-industry rookie broker can do from day one. You start building your loan book and customer portfolio by doing the right thing by your customers, converting them and then keeping in contact with them over the years that follow. “Having the right technology to help nurture customers, from enquiry through to their final loan payment and beyond, is critical, and Aussie provides those tools and helps our brokers look after their customers in a compliant way.”

www.mpamagazine.com.au

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15/01/2018 2:42:02 PM

SPONSORED BY

THOMAS DE FEGELY, 25

CORY IRELAND PALAZZOLO, 23

CLEMENS (NAICHAO) ZHANG, 32

Rising Tide Financial Services Docklands, Vic / AFG

Investloan Nerang, Qld / AFG

Ayers Home Loans Sydney NSW / Vow Financial

$32,272,413

$28,000,000

“I have seen Tom grow from a freshfaced kid straight out of university into a confident, competent, caring and hard-working person. He is an integral part of our team and future plans at Rising Tide Financial Services. Tom is always pushing us as a business to take our professionalism to the next level via new technologies (including assisting RT to go paperless) and ever-increasing customer service standards … Tom is very deserving of recognition as a future leader of this great industry.” – Sam Gawenda, director, Rising Tide Financial Services

$47,346,305

“I have worked as Cory Palazzolo’s manager for the last 12 months, and in this time I cannot express how constantly impressed I am with his work and attitude. Cory’s privacy and product knowledge is incredible. If this is paired with his incredibly hard-working attitude, it will be impossible to find a better employee. The willingness to learn, his ability to adjust, and his incredible professionalism with clients can’t be matched ... A recommendation for Cory to be considered as the MPA Young Gun for 2018 is one of the easiest tasks that I could ever complete.” – Adam Kerr, national manager, Investloan

“In the past 18 months as a BDM of CommBank I have been working closely with broker Clemens Zhang. Throughout our business dealings I have found Clemens always takes great pride in serving and supporting his clients. He listens to the needs of borrowers, carefully guides them through complicated transactions with open and transparent communication. He works around the clock to ensure every promise. It has been a great pleasure working with a talented and dedicated young professional with positive personality traits.” – Claudia Ni, relationship manager NSW/ACT, CommBank

MPA TOP 100 BROKERS: WHAT’S NEXT FOR YOUNG GUNS The 2017 Top 100 Brokers report included 13 brokers aged 35 or under, many of whom had been featured in an MPA Young Guns list or won Australian Mortgage Awards. The Top 100 ranks top brokers by volume of residential loans over 12 months and is traditionally dominated by established brokers with large networks. Therefore, for these young brokers (listed here), making the Top 100 was a huge achievement.

RANK 8 13 23 26 28 30 33 40 41 50 51 67 81

NAME

COMPANY

STATE

TOTAL VALUE OF RESIDENTIAL LOANS FY2016/17

Jason Guo Graeme Holm Damien Roylance Josh Egan Darren Liu Rachelle Eyndhoven Jacky Yu Gu Deanna Ezzy Simon Orbell Holly Bundy Jarred Spurr Balpreet Bal Redom Syed

Centum Mortgage Group Infinity Group Finance Entourage Astute Melbourne City South/Gippsland My Home Loan Sphere Finance Linfield Finance Trilogy Investment Property Funding Smartmove Bundy Financial Services Sphere Finance Loan Market Confidence Finance

VIC NSW VIC VIC NSW NSW NSW ACT NSW VIC NSW WA NSW

$162,296,228 $136,000,000 $111,497,090 $104,946,000 $104,234,513 $100,670,330 $100,000,000 $96,273,936 $94,867,711 $84,211,546 $84,022,440 $78,160,431 $72,860,980

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FEATURES

HIGH-SPEED BUSINESS LENDING

Time is money Offering speed and agility, innovative online business lenders are gaining ground, delivering funding to SMEs while saving them time, Maya Breen reports

FINTECH IN Australia has gained momentum in 2017, especially through online business lenders focused on small and medium-sized enterprises. Business owners are finding that they have more choice and faster access to funding because innovative lenders like Spotcap, Prospa and OnDeck are focused on delivering at speed, and with flexibility and ease. And as more SMEs discover what these fintechs can offer them, the faster this type of lending is growing. Speaking with these three lenders, MPA explores the growth in this type of lending and the part brokers play, the challenges for SME owners, the changing patterns of work, and how fintechs are connecting with the millennial generation of entrepreneurs.

Aussies choosing alternatives Australia has become the second-largest market for alternative finance (behind China) in the Asia-Pacific region. A recent report by KMPG found that Australia’s $811m alternative finance market, including peerto-peer lending and crowdfunding, grew by 53% in the past year. Lachlan Heussler, managing director of Spotcap Australia and New Zealand, explains that the demand for lending to small businesses is only going up. “SME lending as a part of the alternative finance sector is probably the biggest in Australia and is still growing extremely fast, and within

that framework the role of third parties, especially brokers, as conduits to that growth is substantial.” Heussler says Spotcap spends a great deal of time cultivating local partner networks. “Our Australian broker origination channel is by far the biggest for our business in Australia.” In fact, demand is so great he is looking to expand his partner management team, and fast. “My team that deals with brokers, I’m looking to double that immediately.” American online small business lender OnDeck expanded to Australia in 2015 and started working with the broker channel here in mid-2017, managed by its head of sales, Michael Burke. He says the response has been very strong from traditional residential brokers looking to expand their

value proposition beyond home loans. Many are discovering that their database of residential mortgage clients consists of 20–25% small business owners. “So there’s a huge opportunity to offer a broader product beyond just that residential mortgage,” Burke says. Prospa’s joint CEO, Beau Bertoli, says online lending to small businesses is growing at a rapid rate. The company has provided more than half a billion dollars in loans to over 12,000 small business owners to date, and brokers have played a crucial part in this, Bertoli says. “Prospa is a channel business that has operated a distribution model since day one, and this has been the key to our growth.”

Making lending easier Bertoli says customer expectations have changed as a result of the fintechs that have emerged in the online business lending space. “Until a few years ago, people hadn’t experienced the same technical innovation from banks that they had benefited from everywhere else in their lives. They certainly could not access fast, easy capital from the comfort of their own workplace,” he says. “The banks didn’t have comprehensive solutions in place for small business owners, and any options that they did offer required collateral. Prospa doesn’t require property

MORE BROKERS TURNING TO COMMERCIAL LOANS The MFAA’s latest Industry Intelligence Service report has found the number of brokers writing commercial loans is on the rise.

2,650 brokers wrote a commercial loan during the six months to March 2017

The number of brokers writing commercial loans rose by 10% on the previous year

Brokers originated $7.9bn in new commercial loans during the six months to March 2017 Source: MFAA Industry Intelligence Service report, October 2016–March 2017

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security to access up to $100,000. The average amount our customers borrow is $25,000, and they typically need the money to manage cash flow, buy stock, hire staff, or expand operations – we simply don’t see the need to put your house on the line for a loan of this size.” These online lenders are making funding accessible and an easy process for business owners, and Spotcap has plans to make it even more manageable. It developed its credit risk algorithm in-house, and Heussler says the company is preparing to release a new development early next year. “We’re working on the next generation of our underwriting system – our algorithmicpowered credit decision engine – and we’re very hopeful of being able to introduce completely automated underwriting in

“Our Australian broker origination channel is by far the biggest for our business in Australia” Lachlan Heussler, Spotcap the first quarter of next year.” Burke says OnDeck prides itself on its fast turnaround times, with 10-minute applications and funding access within 24–48 hours. “When we actually speak to a broker or speak to a customer, our requirements are a one-page application and only three months’ worth of bank statements for loans up to $150,000, and out to a maximum term of 24 months. And from the broker or customer perspective,

where that works well for them is it allows them to move very quickly and take advantage of opportunities that may present themselves so that they are very nimble and agile in the market.”

The struggles for small businesses Bertoli says feedback from Prospa’s small business customers reveals that their three top challenges are finding and keeping customers as well as employees, and accessing

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FEATURES

HIGH-SPEED BUSINESS LENDING

“Two thirds of millennials prefer to receive financial advice via a digital platform. It is this group that has tipped fintech into the mainstream, because they trust you until they have a reason not to” Beau Bertoli, Prospa working capital. “The small business market has long been starved of the ability to access unsecured funding,” he explains. “Research by ASIC also shows the biggest problem for small business owners is access to finance – either to seize an opportunity or manage cash flow. Around 80% of the two million small businesses in Australia have problems accessing capital.” Apart from SMEs needing to access capital for their businesses, Spotcap’s Heussler points out that there is also an awareness issue, in that these business owners don’t know what other options are out there for them beyond the traditional banking channel. “So the

WHAT SMEs NEED FINANCE FOR NAB’s Moments That Matter white paper surveyed 808 SME businesses on what they had invested in over the previous 12 months. The top five responses included: winning new customers

cost reduction new equipment/ machinery/premises

struggle for the SME and what we face as an industry, and the headwinds for us, is just a complete lack of awareness.”

A changing working world Technology has changed how we work in many ways, but it has also given us the freedom to become more mobile, such as through home-based businesses or working remotely and on the move. “Accessibility and technology are two of the key areas that have shown a lot of progress and change,” Burke says. “If you think about working patterns, whether it’s freelance or working from home, ultimately they can complete a finance application on mobile or tablet – they can be anywhere; they can be going to see a customer.” Increased mobility brings with it flexibility in how we work, especially for entrepreneurs. “A competitive workforce with limited job prospects has triggered a wave of entrepreneurs that sidestep traditional pathways and create a completely new way of working. As such, the idea of what a small business looks like has changed dramatically,” Bertoli says. He explains that, as a result, new challenges arise when these entrepreneurs start looking for financing, but this is what fintechs such as Prospa are catering to. “While traditional institutions have rigid frameworks, we can take a more flexible approach in considering a business and its associated risk. Just because a company is run from a coffee shop or even a beach, it can be hugely successful and profitable.”

Engaging millennial entrepreneurs

hiring new staff increasing marketing 0%

10%

15%

20%

25%

30%

35%

When it comes to entrepreneurs, Spotcap is seeing high interest from millennial entrepreneurs, because its product offering works particularly well for this type of borrower, Heussler says. “Millennial entrepreneurs are very attuned to current business conditions and strategies in order

Source: NAB white paper, Moments That Matter, June 2017

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FEATURES

HIGH-SPEED BUSINESS LENDING

SPOTCAP CUSTOMER SNAPSHOT The latest figures from Spotcap found that, of their customers: 50% have been in business for 10-plus years 60% have a turnover of over $2m per year 30% use funding to manage cash flow, 29% to purchase inventory, 27% to bridge receivables 25% do business in services, 18% in wholesale, 17% in manufacturing Source: Spotcap 2017

PROSPA JOINS YBR LENDING PANEL Prospa recently surpassed the milestone of half a billion dollars in small business loans to over 12,000 small businesses across Australia. The partnership between the fintech and wealth management company Yellow Brick Road will diversify YBR’s offering for small businesses. “A large number of our clients are small business owners,” says Mark Bouris, executive chairman of YBR. “We understand that the financial needs of a small business are unique, and it makes sense to offer new ways to fund their growth.”

to grow businesses,” he explains. “We see a lot of businesses coming through here spending significant amounts of money on things like Facebook advertising, and targeting not only national audiences but often international audiences with their products.” Heussler says Spotcap’s product was designed with millennial entrepreneurs in mind as these younger borrowers often lack the hard assets, such as property, that are required for security against a loan from traditional channels. “So we work specifically with their businesses to understand what

over 400 data points when assessing the creditworthiness of a business. Mandatory CCR means we will have access to even more data about small businesses and should be able to improve our credit decision process.” He says being able to access positive information on a client should lead to more application approvals and more funding for small business owners. “It also means customers with good credit histories will have access to better rates because they can prove they are lower-risk.” Looking back at this year’s budget, Heussler

“Accessibility and technology are two of the key areas that have shown a lot of progress and change” Michael Burke, OnDeck the cash flow generation capabilities of those businesses are and how we can offer growth net capital solutions to help fund the growth of these businesses.” Not only is there demand from the millennial crowd – 22% of Prospa’s customers are millennials – but expectations too, Bertoli says. “Millennials are the first generation to expect 24/7 access to services, including money. They have little loyalty towards the traditional banks and are quick to adopt innovative digital solutions like Prospa,” he says. “In fact, two thirds of millennials prefer to receive financial advice via a digital platform. It is this group that has tipped fintech into the mainstream because they trust you until they have a reason not to.”

Looking ahead Comprehensive credit reporting (CCR) is to be mandated by July 2018 in Australia, and Bertoli says this is positive news for fintech lenders. “Prospa already looks at

says the most relevant announcement was that the federal government would commit to embracing open banking. “We’re very hopeful that this will allow businesses like Spotcap to safely and easily access client account data from organisations like the big four banks. That will enable us to really turbocharge our algorithms and scale up our lending aspirations as a result.” On the broader picture for small businesses, Burke says: “I think the federal government’s decision to extend the accelerated depreciation rule was certainly a big win for small businesses. That certainly encourages investment and job creation and has worked well historically. “We feel very confident that that’s going to continue to drive good growth within the SME sector. It’s favourable for cash flow; it helps small businesses reinvest in their businesses and also upgrade any assets that need upgrading within their businesses. So we were very pleased and supportive to see that continue on.”

Source: Prospa, 2017

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FEATURES

BROKING AND REAL ESTATE

Gaining an agent edge As first home buyers surge back into the market, now is the time to establish and strengthen real estate agent partnerships, writes Maya Breen

BY THE nature of their respective roles, brokers and real estate agents can offer each other many mutual benefits. As more brokers enter the arena and competition increases, a strong partnership with agents can provide a valuable stream of leads. This article looks at how brokers can establish and get the most out of a brokerreal estate agent referral relationship. MPA hears from Elders, Oxygen, LJ Hooker and Loan Market on how real estate networks are assisting brokers, and two top brokers share their insights gained from working extensively with agents.

Build, protect and maximise Whether you have yet to form a referral relationship with a real estate agent or have established one already, there are a variety of approaches to creating and maintaining a long-lasting partnership that benefits both agent and broker. When it comes to building a partnership, Loan Market’s state director of Victoria and Tasmania, Andrea McNaughton, suggests looking for common values and making expectations clear. “That includes things like whether you’ll attend open homes, whether you will be available after hours and on weekends, and establishing a process for getting buyers preapproved for auction,” she explains. “Showing that you understand the urgent nature of the real estate business and the pressure the agent is under to generate offers and bidders for their vendor is key to building strong foundations.” Paul O’Regan, CEO of LJ Hooker Home Loans, says a big misconception is that the partnership is all about referral commission. “That’s not it, and in fact the monetary incentive is a low driver of real estate office engagement. It’s about providing value back to the real estate office from day one – either by demonstrating a service proposition that stands out, or by providing appraisal or

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management opportunities back to the office.” Once you have a well-established relationship with an agent, it’s important to protect it. Be available, says head of Elders Home Loans John Rolfe. “If they call, be there. Respond to them immediately – it is a pressure situation in a lot of cases.” Keeping them updated is crucial too. Oxygen Home Loans general manager Alan Hemmings says consistency is key as the relationship grows. “The general feedback from many agents is the broker starts with enthusiasm but then disappears. If you get a lead, keep the agent updated. Provide the agent with information about what is happening on the finance side so they can have meaningful conversations at open-forinspections or with vendors.” To ensure you’re getting the most out of the partnership, always seize the opportunity to refer, says Rolfe. “If they’re doing a review for one of their clients and they’re thinking about purchasing an investment property, they can point them in that direction, or, similarly, if they’ve got investment properties they can move them towards them from a property management perspective.” Hemmings says this is the stage when, in a strong relationship, leads will flow. “We have brokers who have close relationships with the

real estate agents and as a result have access to prospects they have nurtured over the last five years. We have brokers who are working with the property management teams within

the agency’s offices, aside from branding, is the ability to gain a rich understanding of the local market, which can be invaluable to your clients. She says there is a “shared knowledge

“With the resurgence of first home buyers in the market, agents are often time-poor, and at those times brokers can be a great support to the customer” Andrea McNaughton, Loan Market their offices to assist landlords or tenants. Like agents, for brokers it is about having conversations. Working closely with a real estate business can mean a steady stream of leads. How the broker chooses to maximise the opportunity is up to them.”

The broker’s perspective Two brokers at Elders and LJ Hooker who have a broker-agent partnership in action share their experiences. Katrina Parrington is the director of Elders Home Loans Northern Territory. Based in Darwin, she works within Elders’ largest agent office. She says an advantage of being a broker situated within

and a positive crossflow of business based on strong and respectful relationships. Educate your agents to understand the benefits and the pros of your business, and the rewards a trusted partnership can provide”. Parrington explains that keeping the agent in the loop every step of the way is key. “With the clients’ consent we keep the agent informed from application to funding, which in turn enables the agents to keep their clients informed, improving client relationships all round.” She says the agents see the value a broker can offer and appreciate their efficiency and that they are available when needed. “At the

PROPERTY INVESTORS WANT YOUR ADVICE Property Investment Professionals of Australia asked 742 property investors where they get investment advice from. Mortgage brokers ranked far higher than real estate agents. Where investors go for advice:

60%

57%

54%

46%

28%

Buyer’s agent

Property investment adviser

Mortgage broker

Accountant

Property manager

28%

Property educator/coach

26%

17%

10%

Financial planner

Real estate sales agent

Family/friends Source: PIPA, Annual Investor Sentiment Survey, November 2017

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FEATURES

BROKING AND REAL ESTATE

FHB SHARE HITS FIVE-YEAR HIGH First home buyers have made their biggest comeback since November 2012, with the latest Housing Industry Association figures showing that, for the month of October 2017: FHBs had a 17.6% share of owner-occupier housing loans 10,061 housing loans were made to FHBs, up 37.8% from a year ago FHBs’ share of owneroccupier home loans was highest in the Northern Territory and lowest in South Australia Source: HIA media release, December 2017; ABS

DEPOSITS DEMAND A STRUGGLE First home buyers are taking longer and longer to save for a deposit, according to the 2017 Bankwest First Time Buyer Report. FHB couples save for an average of 4.6 years to reach the $111,080 required for a 20% house deposit on a median-priced home, three months longer than last year Only FHBs in Perth and Darwin have seen saving times fall year-on-year Units offer FHBs a faster step into home ownership, taking five months’ less time to save for than a house

end of the day we are a part of the real estate team, all working for the shared greater good.” Phil McLaughlin is a franchise owner of LJ Hooker Home Loans Gold Coast Central and says there are two main factors in consistent engagement and establishing trust with real estate agents. “Firstly, you need to spend time with the individuals within the offices. They’re people, so you need understand how they think, and

are seeing first-hand that there are fewer buyers and fewer bidders making offers,” says Loan Market’s McNaughton. “A broker can be a key factor in helping to generate more offers for agents to take to their vendors, by ensuring every buyer has the opportunity to see what they can afford to pay when they have a range of lending options to choose from.” This benefits the agent because they are able to demonstrate to their vendors that

“Like agents, for brokers it is about having conversations; working closely with a real estate business can mean a steady stream of leads” Alan Hemmings, Oxygen Home Loans what value they need from you. Once you understand what the individual needs, you can deliver the right value,” he says. “Secondly, be in their face. It’s hard work, but if you maintain regular personal contact, you become part of the team and opportunities will flow. It’s still a people business. Once you build up relationships with a few real estate people, they become your advocates, and others will start looking for the same opportunities, or will start to take steps towards trusting you.” In McLaughlin’s experience, many real estate agents are not just fixated on sales, which may be the stereotypical perception. “There is a shift to professional, customer-experience-focused operators who understand the value of connecting their customers to additional services, and who are keen to be trained on how to do so.”

An eye on brokers The real estate side is also doing more to assist brokers to integrate with their business model. “With the shift in the market, agents

they are doing everything they can to give them the best offer. Oxygen boss Hemmings says it is integral that the broker feels they are part of the real estate team. “We have the brokers sit in the real estate offices, attend sales meetings and generally interact with the agents and other team members on a daily basis. Every new broker who joins Oxygen attends ‘McGrath Way’ as an introduction to the McGrath business.” They also run combined training sessions for brokers and agents. “Our coaching and business planning program is closely aligned to that of the agents, drilling down from what the broker wants to earn to how many leads do they need to be generating a month.” The real estate industry is going through considerable change due to digital disruption, and so the agent’s perception of brokers is changing with it, as they realise they need to offer more value, explains LJ Hooker’s O’Regan. “That’s why you see most real estate brands offering connection services,

Source: Bankwest First Time Buyer Report, November 2017

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FEATURES

BROKING AND REAL ESTATE

insurance, etc. Home Loans is a natural extension to the real estate offering – lending executes the property transaction, given 80% of all real estate transactions require finance.”

“At the end of the day we are a part of the real estate team all working for the shared greater good” Katrina Parrington, Elders Home Loans Northern Territory First home buyers on the rise Those looking to buy their first home have made a resurgence over the past year, and Elders’ Rolfe points out that they are looking for brokers. “There’s a very high percentage of them actually utilising the services of a mortgage broker because they really don’t know what to do, how to go about it,” he

TOP 10 SPOTS FOR TIME-STRAPPED SAVERS The Bankwest First Time Buyer Report uncovered the top 10 locations in the country that required the least time to save for a house deposit – between 0.7 and 1.3 years. East Pilbara, WA

Ashburton, WA

Paroo, QLD

Isaac, QLD

Bogan, NSW Southern Mallee, SA

Coolgardie, WA Central Highlands, TAS Dundas, WA

West Coast, TAS

says. “And quite often they’re referred to the mortgage broker by their parents or their peers. So certainly we’ve found that first home buyers tend to be more likely to at least seek out the services of a broker to help them through the maze and particularly get them off the rental roundabout and into home ownership.” O’Regan says the fact that FHBs are seeking out brokers, and that these borrowers are on the rise, puts the broker in a prime position to add value to their real estate partners. “The great thing for the mortgage industry is that most first home buyers seek out a home loan pre-approval first,” he explains. “It’s an opportunity where we have the customer connection first. However, the next step is crucial. It’s powerful when you can refer a customer back to a real estate partner for an opportunity to showcase properties they have on offer, especially when they may also be marketing new unit and housing estate developments.” On the flip side, if the buyer approaches the agent first, brokers can offer invaluable support in educating the client and saving the agent a lot of time, McNaughton says. “It’s a tough job trying to secure your first property, and there’s a lot of information a first-time buyer needs throughout the process. With the resurgence of first home buyers in the market, agents are often timepoor, and at those times brokers can be a great support to the customer.” Brokers can talk their clients through grant options, owning versus renting, and the details around securing finance. “Getting first home buyers pre-approved helps the buyer and the agent search for suitable properties and ensure they are more confident and excited about the buying process.” Ultimately, the broker and the agent can be a great support to one another if the time is taken by both involved to foster and maintain a strong, trusting partnership in which each recognises the value of the other.

Source: Bankwest First Time Buyer Report, November 2017

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12/01/2018 2:46:07 8:39:05 PM AM 15/01/2018

FEATURES

CONNECTIVE CONFERENCE

Why pick you? MPA attended Connective’s 2017 Conference to learn about the latest approaches to broker marketing, from ‘power positioning’ to cutting-edge software YOU KNOW brokers are doing it tough when a broker conference starts with a wellness talk. Speaking at Connective’s 2017 NSW Conference in a sunbathed Hunter Valley, life coaches Shannah Kennedy and Lyndall Mitchell talked about dealing with burntout professionals whose work-related stress had cost them their families and careers. For many brokers, a year of regulation, compliance demands and the challenge of finding leads has had a similar effect. With the act of placing and processing a loan becoming ever harder, marketing will be the last thing on many brokers’ minds. Yet the danger of being internally focused is missing out on a major marketing opportunity, Connective CEO Glenn Lees warned. “It’s your customers’ upheaval too – remember that.”

Power positioning What brokers need, according to marketing experts Kieran Flanagan and Dan Gregory, is ‘power positioning’. Essentially, you need to be able to define what you do – and why you do it better – on a T-shirt. The rewards of positioning are simple, Flanagan explained. “When you have positioning in your business, the exhaustion of finding the next customer begins to shift.” Positioning means defining a target customer. That target customer is not simply the next customer that walks through your door, Flanagan said.

Gregory added that brokers need a client group they can “love better than anyone”. Many brokers in the audience already had such a group: one broker from nearby Maitland specialised in coal miners; another from northwest Sydney catered to LGBTQ clients struggling in Sydney’s ‘bible belt’. While still dealing with local clients, these brokers were more than just local brokers. “Your geography can be very limiting when you don’t stand with anyone,” Flanagan warned the audience. Gregory took a different approach, urging brokers to consider what their target clients

“Don’t wait for the lull; when you’re busy is the best time to develop a new marketing strategy” Jeremy Fisher, 1st Street Home Loans wanted: “No one gives a shit about your why; they care about their why.”

Success at 1st Street Perhaps the ultimate success story of marketing is Jeremy Fisher and his brokerage, 1st Street. Fisher has won AMAs, topped MPA’s Top 100 Brokers list, but to the casual observer appears to do no marketing whatsoever. Ninety-five percent of 1st Street’s business comes from client referrals,

compared to an industry average of 71%; this impressive figure is the result of a long process of trial and error, he told conference attendees. Back in 2002, when Fisher started the business, he was no marketing expert. 1st Street’s logo, for instance, has an interesting backstory. “My mate went and found the Sesame Street logo and slapped 1st Street on it,” Fisher said. The brokerage tried billboard advertising, which didn’t work, he believes,

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Sponsored by

it’s important for brokers to know that they do not need to face them alone. “So many businesses, especially established ones, think, and rightfully so as they’ve built successful businesses: ‘I won’t bother someone, I can sort this out myself ’. But they’ve got to understand that our role is to support them – that is why we’re here. So the most important thing is for them to understand to reach out.” For new brokers starting out, partnership managers can support them in lodging deals, learning to use software, managing compliance and doing their NCCP, and by introducing them to key stakeholders and lender BDMs. As brokers move into the growth phase and get busier, they may need help with time management, increasing capacity and making sure they are still balancing work and home life in a healthy way. Then once the business matures, it becomes more about increasing efficiency and adding support, such as administrative assistants, or bringing on their first loan writer. “How do we support you to earn the same money you’re earning, write the same volume you’re writing, but do it in half a day less?” Schneider says. “And it’s all around efficiency.” He adds that a particular challenge for established businesses is to continue to make time to work on the business as opposed to in the business. Finally, when a broker is exiting the industry they may be looking for advice on how to sell their business and to whom. But they may also be well established and simply want to cut down on workload. “Some of them don’t want to grow any more. In fact some of them want to start writing 10% less every year, and that’s fine too,” Schneider says. “And if that’s the case, we just work with our brokers to run their businesses the best way, the most efficient way, so that way they’re achieving their goals, because not every broker’s goal is financial – a lot of brokers come in with the goal of lifestyle.”

CASE STUDY: BOOSTING CAPACITY Choice Aggregation partnership manager Tim Schneider recalls a story of a broker who went from a one-man band to leading a team of 10 loan writers. Although this commercial broker was well established, with expansive networks and writing $50m per year, he found he had hit his capacity in volume and was unable to write more on his own. So he sought out help from his partnership manager. Schneider could see that this broker’s own brand name was limiting him, and so he suggested moving into another brand and leveraging it to recruit brokers. Within 18 months he had doubled his volume. This story exemplifies that brokers can seek useful help from a partnership manager at any point in their business life cycle.

Maximising the partnership The most successful aggregators act as business partners to brokers, Moore believes. “Our partnership managers are specialist business coaches who drive collaboration and shared learning across our network.” For brokers to get the most from their partnership, Schneider says, it’s important to set aside time for meeting their partnership manager instead of contact being reactive. “It’s really important for the broker and the aggregator to work together and have a plan,” he says, but it’s up to the broker to make it happen. “If the broker doesn’t set aside the time, whether it’s once

a week, once a month, once a fortnight, even if it is for a call just to check in or for a two-hour business plan quarterly, then it won’t happen. “To get the most out of your aggregator, be open to participation when it comes to business development days and peer-to-peer sessions,” he says. “Be open to attending, open to providing your experiences, and open to listening and learning – that one is critical to our business model and our culture.” You can view Choice Aggregation’s online series on Partnership Managers with MPA at: http://www.mpamagazine.com.au/

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FEATURES

NEW YEAR

What to change about your business in 2018 Management consultant Stephen Barnes proposes three New Year’s resolutions you should make for your business

THERE IS a Latin phrase, omne trium perfectum, meaning everything that comes in threes is perfect, or every set of three is complete. It is a principle known as the ‘Rule of Three’ that can be applied to business too and suggests that events or characters introduced in threes are more humorous, satisfying, or effective in executing a story and engaging the audience. The audience is also more likely to remember the information conveyed. This is because having three entities combines both brevity and rhythm with having the smallest amount of information to create a pattern. It makes the author or speaker appear knowledgeable, while being both simple and catchy. So, to help you get back into gear after the Christmas and New Year holiday period, here are my Business Rules of Three – things to change about your business in 2018.

Move from practitioner to business owner

Plumbers, electricians and builders go to trade school and undertake both practical and theoretical lessons as part of their training. Software developers, chefs, lawyers, hairdressers and doctors – they all learn the skills to do their jobs both capably and competently.

Then they finish their education or apprenticeship and get their first job and discover that they know less than they thought. So they continue learning. After a few years they’re an expert. However, throughout this period they are only learning to become an effective practitioner and not a successful business owner.

Running a business is a separate job and a skill too, and therefore it requires time and investment to learn and develop business skills to become capable and competent to do that job well. Unfortunately, business skills are not part of a plumbing, hairdressing or electrical apprenticeship, or part of the curriculum for lawyers, doctors or

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accountants. (No, that’s not a typo; contrary to popular belief, accounting courses do not equip you with the skills to run a business.) If you look at most business start-ups, they either evolve from what was once the business owner’s hobby, or they are a result of someone wanting to work for themselves. Think of all the tradies, web designers, bookkeepers, etc. These people are experts in their fields and have skills, but this is what often happens when they go out on their own ill-prepared: they work hard and build up a customer and client base, then they get even busier, and later you hear that they’ve either gone out of business and/or their family life or relationships have broken down. Were these people incompetent or unskilled at what they did? No. Their mistake was that they did not work on their businesses. It’s human nature to spend more time doing what you enjoy and what you do best. So, our self-employed small business owners gravitate to what they like doing, rather than mastering the business skills they lack. The result is that they spend way too much energy in their business and not on their business. You’re running a business now, not just working. Stop being a worker and start being a director. You need to skill up and learn how to run a successful business.

Remember – every business is a family business

One of the nice things about working for yourself is the flexibility it gives you with regard to the hours you work. This reason alone is why lots of people head off and start their own businesses – myself included. “I’ll be able to take the kids to basketball practice”, or “I can have the whole summer holidays off and we’ll head off camping”. Sound familiar? As the business grows, you start working harder – before the family wakes and after they have gone to bed. You take work calls while you’re driving to basketball practice.

Your family are supportive as they hope you are living your dream. Father’s Day breakfast comes along, and you go to school with your children. (You can do this because you run your own business, right?) After the breakfast, you are invited to see the children’s work in their classroom. Your eldest daughter has written a poem about Dad, and one verse goes: “Daddy – talk, talk, talk on the phone all day”.

busy to have a holiday, or they couldn’t leave their business to others to run while they were away, or it wouldn’t be a holiday as they would be tethered via technology to their emails and phone calls and disengaged from their families, you’d be able to go on holiday (or stay on holiday) and still make money. How do you overcome this? Systemise your business. Systemising is the process of documenting everything you do in your

Our self-employed small business owners gravitate to what they like doing, rather than mastering the business skills that they lack You’ve got the message. And isn’t this the complete opposite of what you wanted when you started your own business? You have been isolating yourself from your family and not engaging with your family. Before you know it, you’re not running a business, the business is running you. Business can destroy your family life and your family. If you have your own business and you have a family, then it’s their business too. You might be happy to work 24/7, but they won’t be. Every business is a family business, but it is only a business and not your entire life. A business can have a profoundly negative impact on your life if you let it. It can also serve you and your family well as long as you start working on your business, and work more on the strategy and less on the tactical aspects of the business. If you have a family and you work for yourself, then you have a family business – so you must be fair on your family and make time for them away from your business.

Systemise your business

If you had a dollar for every time you’ve heard people say they were either too

business – from answering the phone and opening the mail, to pricing work and after-care service. Without putting systems and processes in place, your business will become all-absorbing, with endless tasks to complete – like painting the Sydney Harbour Bridge. Systems and processes allow others to share the load. These people then become what a studio recording is to Taylor Swift. A Taylor Swift song can be played by millions of people all at the same time. It sounds the same every time it is played, and Taylor Swift collects a royalty every time the recording is played. Create a recording – a system – of your business, your talents, your way of doing something, and then, like a song, replicate it, market it, distribute it and manage the revenue. Stephen Barnes is the principal of management consultancy Byronvale Advisors. He has spent more than 20 years advising clients, from new business start-ups to publicly listed companies and across a wide array of industries. He is also the author of Run Your Business Better – Essential Information Every Business Owner Should Know and Use. To find out how Stephen can help you run your business better, visit www.byronvaleadvisors.com.

www.mpamagazine.com.au

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FEATURES

MARKETING

The point of a point of difference Marketing expert Sascha Moore explains how brokers can get a competitive edge by defining their point of difference

IN A time of ever-increasing competition and a marketplace where being exceptional is becoming the norm, it’s never been more critical to determine a point of difference (ie what you do specifically that differentiates you from your competitors). And it’s a musthave for optimising your business. However, prioritising your point of difference is typically trumped by doing business, particularly in the SME space. What’s possibly not understood well enough is why defining a point of difference is so powerful, and how it can directly correlate with generating more sales. The reason for this is simple: if people understand what you do, why it’s different and how it can benefit them, they’re more likely to do business with you. The good news is that you don’t need to invest any money in this process, just a bit of time. Similarly, determining your point of difference shouldn’t take countless hours, but you will need to be committed to thinking it through. On the upside, this can be done at any time of the day – for example when you’re commuting or in transit to/from meetings. And the post-Christmas hiatus is the perfect time of year to take time to think about it.

by many variables, but before we get into semantics, it would be timely to address some common myths. Service is not a point of difference. Being trustworthy, personable and easily contactable is not a point of difference. Being faster, having access to multiple lenders, making the process easier, and having appropriate technology are not points of difference. These are all expectations, which

If people understand what you do, why it’s different and how it can benefit them, they’re more likely to do business with you can make life rather difficult when you’re trying to stand out from the crowd. Another challenge for brokers is that price isn’t a common point of difference due to access to common lenders and, typically, preset rates. As a place to start, ask yourself:

A point of difference can be determined

found themselves in a place of bad credit, are an SME, could benefit from asset finance, require a bridging loan, etc). To take this further, consider: Are you a pure-play residential mortgage provider?

What do you do?

What are your areas of diversification?

What demand does it fulfil?

Is your diversification concentrated on a specific area (ie asset finance), or are you across multiple lending solutions?

Why is it different?

So that’s all well and good, but how do you work it out?

question, as it seems simple but the answer is critical. The linear response to this question would typically be: “I’m a mortgage broker”. While this is most likely correct, you might be selling yourself short if you don’t answer the question in context. “I’m a mortgage broker” is fine if a client needs a straightforward mortgage, but this answer might limit your potential to provide a financial solution that reflects their circumstances (such as if they’ve

As part of this process, it’s worth fleshing out your response to the ‘What do you do?’

Which geographical area is your target market? (Don’t say ‘national’…)

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The next step is to match your product/ service features and benefits with the demand they fulfil for your end user. Without this, your point of difference is only halfbaked. Rather than saying “I’m a mortgage broker”, consider quantifying the statement and adding in an end-user benefit, such as: “I’m a specialist residential mortgage provider in the Northern Beaches”, which means “I understand where you’re coming from and what type of loan would best suit your requirements”. “I’m a mortgage broker who also specialises in asset finance”, which means “I can help you with your home loan as

well as sorting out the financing of your personal and commercial assets”. “I provide financial solutions”, which means “I can help you get a mortgage, and help you sort out finance for any challenges or opportunities, whether that’s business or personal”. These examples are by no means exhaustive but hopefully illustrate the point. You should also take into account that your ‘pitch’ needs to be delivered in a sentence, not a soliloquy. The reason it’s so important to be succinct in your offering is that we’re bombarded with information 24/7, and as humans we naturally want to

quickly categorise a product or service. This is coupled with an increasing addiction to information (which conversely can have the polar effect on absorption), meaning very, very short attention spans. The upshot: you don’t have long to get your market on board. To increase traction, make every word count, and deliver it from their perspective. The proof is in the pudding. Put into place measures to determine the success of your point of difference to make sure it’s on point. These should include both soft and hard KPIs. Examples of soft KPIs are increased customer loyalty (demonstrated by retention) and increased referrals. Hard KPIs should relate to an increase in business (ie sales/turnover). It’s recommended to assess these quarterly. Lastly, identifying your ideal client as part of the point-of-difference process would be really worthwhile. You will probably know most of this already, but it’s a valuable exercise to take a really good look at your transactions and work out the common patterns in your book. It’s worth assessing this based on year-on-year sales, to include the types of loans, postcodes, circumstances (ie self-employed, first home buyers, bad credit, etc), as well as age, gender and income. This will clarify who your market actually is, what they’re interested in, and where there’s scope to grow. Keep in mind that the more targeted you can be, the more traction you’ll get (read ‘sales’). And therein lies the opportunity: your audience is more likely to engage with you instead of your competitors if your offering is easy to comprehend and, most importantly, aligned with their circumstances and requirements from the outset.

Sascha Moore is the director of Create Design & Marketing and specialises in providing communications solutions to the financial services and legal industries. Learn more at createdesign.com.au.

www.mpamagazine.com.au

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FEATURES

VALUE PRICING

Know what you’re worth If you’re doing fee-for-service work, value pricing provides a simple way to justify your costs to clients and yourself, argues lawyer Jeremy Streten HAVE YOU ever had a client who was shocked at how much time you spent on their file? Have you ever felt that dread when you had to send your client a bill, knowing that you would have to discuss each and every thing that you did? Have you ever thought that there must be a better way? For professional knowledge workers, like accountants, lawyers, financial planners and other consultants, charging clients based on the time spent doing that work is oldfashioned and is being revisited. Building lifelong relationships In any business it is cheaper to keep an existing client than to find a new one. Your goal needs to be to build lifelong relationships with your clients. Doing this is not easy; building any long-lasting relationship requires sacrifices to be made on both sides to build trust and confidence. I have seen this trust damaged or destroyed time and time again when a timesheet is attached to a bill. It is human nature to underestimate how much time it takes to undertake a task. How many times have you had a client dispute whether you did spend so much time making a telephone call or drafting a document? After all, it was only a simple matter. Value pricing gets around

these problems by providing a set fee for the work that was performed, so there is no need or ability to question how much time you spend on your work.

The inefficiencies of charging for time The concept of charging for knowledge work based on the time that a person spends doing the work is inefficient for a number of reasons: We all have the same amount of time in the day to do our work. Time billing places an upper limit on the amount you can charge in a day. As you become more experienced in your chosen profession you will find that you are able to do your work faster. For instance, a new lawyer may take a day to draft their first business sale contract, but by the time they are at their fourth attempt they can do the work in an hour. As you become more efficient the amount you can bill for time actually decreases. You may be thinking, “Well, the solution to both of these problems is to just increase my hourly rate”. If you do that you will find that your clients do not see the increased efficiency and will question the increased rate.

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WHO WOULD PAY FOR BROKERS? Quite a few people, it turns out. Commercial lenders routinely charge fees for their services, even if this practice is rare in residential lending. MPA surveyed hundreds of consumers for our Consumers on Brokers report in 2016, producing interesting results: Would you ever pay for a broker’s services?

Why would you pay for a broker’s services?

financial advice included Yes

30%

lowest interest rate 25% 47%

priority turnaround time 21% 53%

to stop my broker being affected by commission payments 16%

Who will benefit from value pricing? The benefits of value pricing for clients are there to be seen, but it is knowledge workers who will truly benefit. All professionals who currently charge for time – such as lawyers, accountants, financial planners and other consultants – will benefit from a change to value pricing as they will be better able to do their work and keep their clients satisfied, while not having an argument over the time they spent doing that work.

You need to be smart Clients want to know what they are getting for their money. When knowledge-based workers are charging for time they will often expect their clients to trust them, and will provide an estimate for their work. The matter becomes more complicated, and all of a sudden the client is left with a bill that is sometimes 40–50% more than they expected. Value

other 7%

pricing forces knowledge workers to become better advisers to their clients. It forces them to define what work they will actually be doing and put a price on the work. Rather than estimating their price based on how long the work will take to do, knowledge-based workers need to look at the value the client will be receiving and set a price accordingly. I know from experience that shifting from time costing to value pricing for knowledge work is difficult for knowledgebased workers, but your clients will appreciate it and will leave you to do your work. Jeremy Streten is a lawyer and author of the Amazon bestseller The Business Legal Lifecycle (www.businesslegallifecycle.com), which is designed to help business owners understand what they are doing in their business from a legal perspective and give them a plan for the future.

www.mpamagazine.com.au

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PEOPLE

BROKERAGE INSIGHT

Two decades and going strong Phillip Nguyen, director of Perth brokerage IFG Home Loans and an MPA Top 100 Broker, reflects on two decades of industry change MPA: What are the biggest changes you’ve seen as a broker in the past 20 years? Phillip Nguyen: The mortgage industry has undergone incredible change since brokers first started offering their services two decades ago. The biggest changes, in my opinion, are in competition, technology, regulation and the housing market. Competition: There are more and more players in the market. Brokers have to identify themselves from the crowd by continuing to improve their knowledge of the lender’s products and processes, and to work for the best interests of the client. Technology: We now have a lot of systems to assist broker businesses, such as valuation systems, loan submission and tracking systems, CRM systems, and ID verification processess. Technology changes so quickly, and brokers always need to learn how to utilise the systems to gain competitive advantage. Regulations: With the introduction of the Anti-Money Laundering (AML)/CounterTerrorism Financing (CTF) Act in 2006 and changes to Foreign Investment Review Board and tax regulations recently, they all play a part in forming the profession.

Housing market: The housing market used to be a hot topic to discuss when there was a major increase from 2001 to 2007, thanks to the resources boom during this period. It created a significant increase in brokerage needs during that time and we were flooded with applications and had limited time for finance as everyone rushed into buying properties. The market became stable after that.

MPA: How has the brokerage changed and adapted during this time? PN: The brokerage has come a long way over the last 20 years. Technology does play an important role in improving the brokerage business. Brokers used to complete the application form manually and get it signed by the client and sent to the lenders by fax. Now we can submit electronically, meaning one system for multiple lenders and documents can be emailed or uploaded directly to the assessors. Though it takes some time to learn and get

used to a new system, the process becomes more streamlined and consistent once the broker becomes familiar with it. Thanks to the automatic valuation model, we can now have a quicker and more accurate estimation on the housing market to support the application. I hope that technology can become more and more advanced to assist the broker’s decisionmaking as well as improve the exchange of information between lenders and brokers. Besides, brokers have to continually learn new products as lenders’ policies change, depending on the state of the economy. A good broker is always thirsty for knowledge and willing to learn and act in the client’s best interests to achieve their financial needs while meeting all industry regulations and requirements. In terms of regulations, it is an ongoing learning curve for each broker, so they have to pay a lot more attention to every detail and spend more time on each application, from customer identification to

IS PERTH A FIRST HOME BUYER’S PARADISE? While the decline in house prices in Western Australia has been interpreted as bad news, it has made the state far more attractive to first home buyers, new data from Bankwest shows: 21.7% of purchases made by first home buyers – the highest in the country 3.6 years to save for a 20% deposit, a decrease on last year 4.5% decline in house prices and a 1.5% increase in wages Source: Bankwest First Time Buyer Report, November 2017

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FAST FACTS Year founded 1997

personal loans, equipment finance, SMSF loans, development loans

Team IFG Home Loans Headquarters Malaga, Perth

Retail premises Malaga, Applecross, Spearwood, Mandurah

Owner Phillip Nguyen Services offered Home loans, investment loans, business and commercial loans, car and

Income FY2016/17 total settled volume: $76m

moment, and we are noticing declines in some areas. It makes properties more affordable for homebuyers and small investors. I reckon the WA market is more stable and not as much of a bubble as other eastern states, plus the WA state government has started some multimillion-dollar projects to sustain the growth of the market, so hopefully prices will recover in the next few months. The weakness, however, is the reliance on mining and the overall economy. Overall, the WA housing market still has a lot of potential to grow and fit into the pocket of a lot of homebuyers. anti-money laundering, since the AML/CTF Act was introduced in 2006.

MPA: Why specialise in loans to nonAustralian residents looking to invest in or move to Australia? PN: We are glad we have a great clientele, and the majority of our clients are from the community who want to migrate to Australia, or WA in particular, under a temporary working visa. They contribute greatly to the WA economy

and help resolve the skills shortage. Therefore we are endeavouring to assist them in getting a place of residence. With changes in foreign investment requirements and banksâ&#x20AC;&#x2122; policies, there are both challenges and opportunities for us to become experts in this niche market.

MPA: What are the strengths and weaknesses of the WA property market currently? PN: The property market is quite flat at the

MPA: What are IFGâ&#x20AC;&#x2122;s plans to grow further in 2018? PN: We would like to thank all of our customers and business partners who have supported us in creating a successful year. In the new financial year 2018, we plan to achieve at least a 10% increase in our settlement volume, as well as focus on improving our business efficiency with the help of technology, in terms of improving our business processes, reducing turnaround time and eliminating rework.

www.mpamagazine.com.au

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PEOPLE

CAREER PATH

DRIVEN TO BUILD AND LEAD Patrick Tuttle, executive director of Specialty Mortgage Consulting and former co-group CEO of Pepper Group, looks back on his career in leadership Patrick Tuttle’s career started earlier than most, when he was selected as an 11th grader to join Price Waterhouse as an undergraduate accountant once he had graduated high school. “As I was struggling with my career choice, my father had strongly encouraged me to become a chartered accountant.”

1984

ACCOUNTANCY

1986 1994

LONDON TRANSFER In 1992 he married Nicole, who also worked at Price Waterhouse, and they transferred to London for the next three years. An incorrect posting to the wrong business group within the company turned into a stroke of luck, giving Tuttle significant exposure to its mergers and acquisitions practice. “This was a fantastic opportunity and very lucky, given that I was meant to be specialising in financial services audit.”

2001

JOINING PEPPER In late 2001, Tuttle joined Pepper Australia as finance director and treasurer. Pepper was then in its start-up phase, with fewer than 10 staff. After a number of years as finance director, he was offered the role of CEO in November 2007. “This was at precisely the time that Australia – and the rest of the world – was entering the global financial crisis. As you can imagine, I wasn’t sure that my tenure as CEO would last very long!”

2017

TIME FOR A CHANGE Tuttle left Pepper in March 2017 as the company was set to return to private ownership.

“I’m extremely proud of leading [Pepper] during the GFC, when many non-bank lenders in Australia and offshore did not survive” 54

PRICE WATERHOUSE DAYS Tuttle studied part-time for a bachelor of economics at Macquarie University. He switched to full-time study for the remaining two years after receiving a financial scholarship from Price Waterhouse. After graduating, he returned to the company as a senior accountant and became a full member of the Institute of Chartered Accountants in Australia in 1991. “That was an important milestone.”

•

1997

BACK TO OZ On his return to Sydney, Tuttle joined PW’s Sydney Entertainment Media and Communications practice before moving to Macquarie Bank in 1998. “I became the divisional finance director for a range of the bank’s key operating divisions, including Project Structured Finance, the Banking and Property Group, Macquarie Capital, Corporate Advisory Services, and Direct Investments. I reported directly to the bank’s CFO, Greg Ward.”

•W •

2007

CEO AND EXPANSION As CEO, Tuttle guided Pepper through some challenging times and built and led what is today a global financial services business. He diversified the business into third party loan servicing and was at the forefront of a management buyout of Pepper. “The real game changer for Pepper was when we bought the $5.2bn GE Home Lending business in Australia and New Zealand in August 2011. This transaction set Pepper Group on a path of unprecedented domestic and global expansion.”

Bre

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10/01/2018 2:54:21 1:11:23 PM 15/01/2018

PEOPLE

OTHER LIFE

TELL US WHAT YOU GET UP TO Email sam.richardson@keymedia.com.au

8,188m

height of Cho Oyu, the sixth-highest mountain in the world

16,093km

160km

distance travelled overland distance traversed through from northern Canada to Greenland in minus Chile, South America 20-degree temperatures

PURE ADVENTURE Ian Robinson, triple-AMA winner and founding director of Robinson Sewell Partners, has reached the pinnacle – not just of broking IAN ROBINSON is a true adventurer. His travels have taken him from Africa to the Middle East to Greenland. Along the way, he has lived with tribal groups and trekked up some of the world’s highest peaks. Robinson is pictured here on his climb up Cho Oyu mountain on the ChinaNepal border, with jet-stream winds lashing the mountainside high above

him. His oxygen supply depleted right near the summit, above the Death Zone at the 8,000-metre mark. “So I was in that territory where getting off the mountain was of the most primal importance at that point in time in terms of self-preservation.” He was forced to turn back and a slow extraction off the mountain ensued, as he

would black out briefly every few steps before regaining consciousness and moving forward again. “I was only 48 metres from the summit, so less than the length of a swimming pool.” Robinson says climbing isn’t about conquering but creating rich memories – the richest ones often from those peaks that remain unclimbed.

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