MPAMAGAZINE.COM.AU ISSUE 14.4
TOP 10 FRANCHISE BROKERAGES DEBTOR FINANCE PETER WOOD UNLOCK THIS GROWING WHY BLUESTONE IS OPPORTUNITY ISSUING MORTGAGES AGAIN
BUSINESS PERFORMANCE HOW TO SET THE BENCHMARK FOR SUCCESS
CONTENTS / 14.4
0 1 P O T HISE
C N A FROKERAGES BR 20 COVER STORY
Top 10 Franchise Brokerages
Their top business tips uncovered
NEWS 4 | Round-up The latest market intelligence from the world of property, economics and mortgages 10 | News analysis Is a mortgage revolution underway?
WEEKLY INVESTIGATIONS NOW ONLINE: Trail book buying How expert brokers achieve mpamagazine.com.au
BUSINESS STRATEGY
MORTGAGE INSIDERS 14 | Peter Wood Why Bluestone is back in the mortgage issuing game 34 | Brad Quilty The AMA winner talks mixing family with business
52 | Change management Understanding your team’s thought processes
44 | George Collings Why broking is a labour of love
56 | Leadership Lessons from one of the world’s harshest working environments
60 | Day in the life Kim de Bonde, business development manager Vic/Tas/SA, nMB
36 48
FEATURE
Debtor finance
How to unlock this growing opportunity
BUSINESS STRATEGY
Performance
Your guide to measuring business performance
APRIL 2014 | 1
EDITOR’S LETTER / 14.4
TAKING STOCK
As the first quarter of the year draws to a close and business people around the country have well and truly settled into the swing of things after the festive season, many will be taking stock of how 2014 is progressing compared to this time last year. Here at MPA HQ it feels like it was only yesterday when the office was bustling with activity as last year’s MPA Top 10 Franchise Brokerages report was taking shape. And here we are again, profiling 2014’s crop of inspirational franchise broking teams. The franchise route may not be for everyone, but the numbers that our top 10 businesses are writing speak for themselves, and the comments from our winning teams on how they’ve become so successful should be of interest to franchisees and independent operators alike. Speaking of taking stock, you may be unaware of the number of clients in your book who are currently looking at the cash flow situation within their own businesses and searching for solutions. Our feature on debtor finance highlights this potentially rich vein of business that may already be under your nose. And if you’re thinking about how to push on through the next three quarters of 2014 and boost business, flick through to our back section, which includes our usual mix of essential business advice. Robin Christie, managing editor, MPA
2 | APRIL 2014
COPY & FEATURES
EDITOR Robin Christie JOURNALIST John Hilton PRODUCTION EDITORS Roslyn Meredith, Moira Daniels CONTRIBUTORS Michael Quinn, Sonia McDonald, Rachael Robertson
ART & PRODUCTION
DESIGNER Red Redrico DESIGN MANAGER Daniel Williams
SALES & MARKETING NATIONAL SALES MANAGER Rajan Khatak ACCOUNT MANAGER Simon Kerslake MARKETING EXECUTIVE Alex Carr TRAFFIC MANAGER Abby Cayanan
CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Robin Christie tel: +61 2 8437 4787 robin.christie@keymedia.com.au
CONNECT
Contact the editor: robin.christie@ keymedia.com.au
Printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry
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NEWS / ROUND-UP
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MARKET
FIRST HOME BUYERS STAYING AWAY IN DROVES
Nearly a third of median weekly family income is now required to meet home loan repayments, new research shows. The latest Adelaide Bank and Real Estate Institute of Australia housing affordability report shows the proportion of income required to meet loan repayments increased one percentage point over the December quarter of last year, to 30.8%. The number of first home buyers was the lowest since the ABS started to collect data and is also persistently low compared to the long-run average, despite eight interest rate cuts since November 2011, the report said. First home buyers made up only 12.5% of the owner-occupier market, compared to 13.6% in the previous quarter. Adelaide Bank general manager Damian Percy said owner-occupier first home buyers were staying away from the property market “in droves” and this should concern policy-makers. “In spite of a benign interest rate environment, on current statistics, a historically low number of Australians do not seem to feel they are in a position to step onto the first rung of the property ladder. With a view to the future, I can’t see this playing out well. “Unless we can reverse this trend, the most obvious outcome will be that there will be lot of people renting right up until they are of pensionable age. The rents they may be able to afford on the aged pension in the private market at that point in time – in 40 to 50 years – are likely to be in areas well away from health-care and the other services they will require as ageing Australians.” Percy noted the decline in first home buyer activity appeared to have been offset to an extent by the latest RBA investor housing loan aggregates, which grew by 0.8% in January and by 7.4% for the 12 months to January. “So there could also be other behavioural forces at work here,” he said.
4 | APRIL 2014
DIVERSIFICATION FINANCE
18%
The percentage of businesses that intend to seek finance or new credit in the quarter ahead to help their businesses grow Source: Dun & Bradstreet Business Expectations Survey
$123bn
The volume of mortgages written by brokers last year Source: MFAA
DIVERSIFY TO SURVIVE
Brokers will have to become full-suite advisers giving debt, planning, wealth and insurance advice in order to keep up with the market over the next five years, according to a group of lender and aggregate heads. Increasingly, consumers want cross-channel integration across their financial advice, concluded the 15 mortgage and financial industry key players taking part in a recent Deloitte roundtable discussion. NAB Broker general manager Steve Kane said brokers had the capability to offer advice across a range of areas. “We have moved away from the order-takers in the market who simply filled in an application and sent it to the bank that they thought would give them the highest commission, or the easiest approval. “Now brokers are conducting proper investigations with the customer, identifying their needs – and it should naturally follow that they will seek to meet all those needs.” But brokers have not yet taken advantage of the opportunity, ING Direct distribution executive director Lisa Claes said. “Brokers are there the first time a customer seriously starts thinking about finances, when they buy a home, which usually happens before they insure, invest or retire. It’s a great opportunity to put in the groundwork for further and fuller financial advice throughout the customer’s entire financial life cycle.” Matt Lawler, CEO of Yellow Brick Road, said that when customers come in asking for a mortgage they often do not realise they need financial advice as well. “But when someone suggests it to them or advises them on it and gives them good reasons that they should do it they say, ‘yeah you’re right, I have never thought about that’.” The best way to capture the market is offer packages that include products like insurance as well, Lawler suggested.
NEWS / ROUND-UP
MARKETING
REBRANDING IN THE SPOTLIGHT
CREDIT
62%
The percentage of Australians who support the new credit reporting system Source: Australian Retail Credit Association (ARCA) Survey
47.3%
The home loan market share held by mortgage brokers Source: MFAA, Dec 2013 quarter
6 | APRIL 2014
There are seven key steps every brokerage should follow when it comes to rebranding, it has been claimed. And the consequences of executing the exercise poorly can be drastic. According to the CEO of Miller Ingenuity, Steve Blue, executing a rebrand must be extraordinarily strategic; not violate the company’s cultural roots; be relevant and consistently supported; and place the customer benefit front and centre at all times. It’s all about them. Here are the steps he believes brokers should take to rejuvenate their brand successfully: 1. Get clear on what a brand is. A brand is not just your logo. A brand is the sum total of the messages, interactions, and experiences a customer has with your product, services, and people. To a customer, a brand is the promise of an experience. It’s a valuable asset to nurture over time. 2. Maintain control of the rebranding process. Use a third-party guide because it is easy for a renaming effort to deteriorate into likes/dislikes or what your spouse thinks. Ground your brand in a strategy that recognises not only the brand’s origins but also its ultimate destination in the current and future marketplace. Keep an open mind. Small ideas can get bigger, and seemingly big ideas can diminish over time. Also, identify those equities that cannot change. 3. Understand that a brand has two owners: The marketer owns 50%; the customer owns 100% – yes, that’s 150% in total. The marketer produces messages, products and services. Your customer experiences the brand, and in the digital age they are in ultimate control of the messages they receive. Therefore, check in with customers and, at the very least, include those internal players who have the most customer contact. The worst thing you can do is to decide all branding issues at the top level and dictate to customers and to your brokers who must deliver the brand experience. You risk a loss of relevancy and buy-in. 4. Your logo, tagline, typography and design should tell a single-minded story. Every brand is heroic in some way. Its look, feel, and message should tell one story. Think about what your brand fights for and against what odds. Consider what is at stake for customers in terms of their problems and how you solve those for them. By becoming a hero to your customers, you, in turn, make heroes out of them. That’s truly adding value. 5. Never forget that a brand should always remain fluid. Some will warn you that changing your brand is a major risk. If it fails, it can be expensive and disruptive. Note Coca-Cola’s experience with ‘New Coke’. However, if you do not violate a brand’s established equities and values, you can still add flexibility into a brand that allows it to not lose relevance. For example, Tide detergent is built on consumers’ trust that it gets clothes clean, yet the brand has found multiple fresh expressions of that proposition over the years, even adding benefits to fend off competitors. Therefore, create a brand positioning that is broad enough to be as relevant today as yesterday and flexible enough to be relevant in the future. 6. Never stop supporting and promoting your brand. Successful brands are a living presence in the marketplace with a tangible relationship with their customers. It’s easy to support a brand in boom times, but much tougher in down times. However, study after study has shown that brands that are consistently supported during a down cycle gain greater sales and share when the economy turns up – compared to those that cut support activities. 7. Be a brand champion. Having gone through the discipline of crafting or refreshing your brand, appoint a key leader, typically in marketing, to be a brand champion. Set up brand guidelines and procedures to make sure the identity you have carefully created presents a consistent image and message in marketing communications, from business cards to digital media, in sales presentations, in signage, at events and trade shows – wherever the customer will engage with your brand.
BANKING
MORTGAGE CUSTOMER SATISFACTION
78.2% ANZ
78.3% CBA
78.6% NAB
78.7% WESTPAC
Source: Roy Morgan Research, Aug 2013–Jan 2014
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PRODUCTS
BREAKDOWN
VARIABLE RATES FLAVOUR OF THE MONTH
Variable rate home loans are becoming increasingly popular, while fixed rate loan numbers are among the lowest levels in the past year – at least according to one major broking franchise. According to the latest home loan approval figures from Mortgage Choice, variable rates accounted for 73.92% of all home loans written in February – up from 72.57% the month before. Mortgage Choice spokesperson Jessica Darnbrough said while demand for fixed rates is still high, it is clear borrowers are less inclined to fix their mortgage in the current rate environment. The RBA team is on the record as saying that if the economy evolved in line with expectations then the most prudent course would likely be a period of stability in interest rates. With the threat of imminent rate rises now receding, it is unsurprising to see an increasing number of mortgagors taking out variable rate home loans,” Darnbrough said.
66.87% QLD
80.53% WA
72.36% SA
74.02% NSW
VARIABLE RATE DEMAND
82.53% VIC
APRIL 2014 | 7
NEWS / ROUND-UP
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CREDIT
LEGAL
CREDIT BLACKLIST COULD SWELL
DO’S AND DON’TS OF BUYING TRAIL BOOKS
The number of Aussies blacklisted by credit reporting bodies will increase exponentially due to changes to the Privacy Act allowing credit bodies to share data on borrowers among themselves, according to a national finance company. Under the Privacy Amendment Act 2012 (Part IIIA), credit reporting bodies can disclose a borrower’s repayment history information (RHI), along with other credit-related personal information, to licensed credit providers. Since December 2012 everyone’s RHI has been recorded in full. Safe Financial managing director Rafer Hart says this means anyone who has failed to make a payment on time since December 2012 could be blacklisted. “Repayment history information shows your repayment behaviour, including late repayments or missed payments,” he said. “Something as little as one late repayment could now have far worse consequences for Australians who may face being blacklisted. “This alarming new amendment is going to hit Aussies hardest when they’re ready to apply for a car or home loan and learn that they’ve got defaults against their name.” Having your credit file blacklisted because of one simple error can place a borrower’s life and financial position in limbo, Hart said. “There will be far more people seeking out alternatives to credit cards and bank loans and looking for more compassionate financing options.” PERSONAL FINANCE
CONSUMER CONFIDENCE
Are you are more or less optimistic about the economy than you were a year ago?
2.9% 18.5% 41.7% Much more
More
About the same
1.8% 7.9% 27.2% Don’t know
Much less
Less
Source: Aussie survey, Mar 2014
EXPECTATIONS
BUSINESS GROWTH BARRIERS
8.6%
Access/shortage of skilled labour
3.8% 23.2%
Access/shortage of funding
Slow growth in demand for products
4.8%
Unpaid invoices
10.3% 31.9% Don’t know
Don’t see any major barrier
6.7%
Utilities and operating costs
10.7%
Online selling by competitors Source: Dun & Bradstreet Business Expectations Survey
8 | APRIL 2014
Thinking of buying a trail book? Be cautious, says a legal expert. According to Jon Denovan of Gadens Lawyers, there are a few key do’s and don’ts that brokers should follow. Speaking to MPA TV, he offered four key tips: Do your due diligence Brokers must do their due diligence on the seller’s book. However, despite brokers doing all their homework, there is still no gaurantee of a positive outcome, he says. “One thing I have learnt is that it doesn’t matter how much due diligence you do, the lousy deal can always be stuck in the bottom drawer and can come out and wipe out the whole trail income because of one deal.” Furthermore, Denovan says there is no way to protect against this sort of deal, labelling this as the major risk in buying books. “It’s not because the seller’s a crook,” he adds. “The seller doesn’t know that the dud deal is there either. Because we know that there are borrowers who have sometimes stretched the truth just a little bit – but the broker gets blamed.” Do take into account taxation aspects There are all sorts of numbers thrown around the market about how much money to fork out for the book, but a lot of brokers forget about the tax aspect, says Denovan. “When you buy the book, it’s capital expense. So if I spend $100,000 to buy the book, I effectively have to get $200,000 worth of income to break even, because as I get that $200,000 worth of income I pay 50 cents on the dollar, let’s say for ease of calculation, so I have now ended up with $100,000.” Don’t assume you’re covered by a PI policy The vendor’s run-off policy only protects the vendor against losses the vendor has incurred. Consequently, if the vendor has sold the book, they incur no loss. Moreover, the purchaser’s insurance policy usually only covers defaults by the purchaser. “So it’s covered by neither PI policy,” he says. “So if you’re buying a book, you have to get an extension to your PI policy so that the buyer’s PI policy will extend to breaches that were made by the seller.” Don’t buy from a party you don’t trust One concern that unites both vendors and purchasers is clawbacks, says Denovan. “The vendor worries that the purchaser may churn all the book, and therefore clawbacks are triggered. And the purchaser is worried that the vendor might churn the book,” he says. “And so the trail income they got sort of disappeared one night while they were at a party and their book got repaid.” The way to protect against that sort of churning is to know and trust the broker you’re dealing with, adds Denovan. “If the person has any doubts, just don’t do it.”
MPAMAGAZINE.COM.AU
DECEMBER 2013 | 9
NEWS ANALYSIS / MORTGAGE TRENDS
revolut
Talking about a The $1.3trn Australian mortgage market is on the cusp of exciting change led by a digital and data revolution, says the latest report from Deloitte. MPA investigates
10 | APRIL 2014
The word is out. A consumer-led revolution in mortgages is underway in Australia. At least that’s the message coming from experts at Deloitte in their Australian Mortgage Report 2014. The report, subtitled The digital & data revolution, considers the insights gained at the Deloitte Australian Residential Lending Industry Roundtable. Representatives from Australia’s major, non-major and non-bank lenders, and heads of mortgage groups put their heads together to discuss the state of the mortgage landscape, and the issues that
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ion warranted discussion included: • The impact of the impending consumer-led digital revolution on mortgages • Structural challenges the Financial Systems Inquiry has the opportunity to address, such as the nexus between mortgages and superannuation, and the influence of funding and regulation on competition and innovation in the mortgage marketplace • How to get the balance of these challenges right going forward
BOUNCING BACK First up, the good news is that mortgage settlement growth is back and competition will intensify, says the report. It notes that, as 2013 came to a close, annualised settlement growth of greater than 20% drove a record number of housing commitment applications across the market. “Settlements across Australia on a monthly basis in 2013 reached more than $28bn,” says Deloitte banking partner James Hickey, who was a primary author of the report. “That is the highest single monthly settlement rate on record, and a clear jump since the onset of the GFC, when they struggled to reach $20bn,” he adds. “Confidence among borrowers is high. Investors have made a comeback and funding pressures are easing, promising a vibrant and competitive mortgage market this year and through to 2017.”
“For consumers, lenders and brokers, the digital and data revolution is producing significant change in how they are accessing and delivering the mortgage of the future” Deloitte banking partner James Hickey The report makes the distinction, however, between the rate of ‘new’ flow in the market, which is reflected in growth in settlement figures, and the overall total mortgage market of outstanding loans, which was more subdued. In fact, according to the report, the $1.3trn total market for outstanding loans experienced only modest growth of 5% throughout 2013, which has
APRIL 2014 | 11
NEWS ANALYSIS / MORTGAGE TRENDS
THE FINANCIAL SYSTEMS INQUIRY According to the report, while the inquiry will explore many areas of financial services, those with particular importance to the mortgage sector will be: • Integration How the superannuation system and the mortgage lending sector can better integrate and support each other • Housing affordability It remains a challenge for first home buyers to enter the market. At the other end of the age spectrum, there is a growing longevity challenge, with many retirees living the traditional ‘asset rich, cash poor’ lifestyle and having little incentive (in many cases disincentives) to downsize from the family home • Regulation (and competition) Especially the ‘level playing field’, or potential lack thereof, which regulation in the mortgage sector can create • Competition and technology Future new competitors in the mortgage lending market will likely leverage significantly from technology-led innovations Source: Deloitte Australian Mortgage Report 2014
several consequences “on the dynamics in the market”: • It implies that the majority of ‘new’ settlements coming into the market are from existing borrowers (owner-occupiers and investors). It is not reflecting first home buyers coming into the market. • Given their weighting in the overall system, the major banks are facing the pressure of their portfolios only growing by 5%, while having to compete for ‘new’ settlements with increased discounts and commission bonuses to brokers. This will continue to place pressure on interest margins at the major banks. • Non-major lenders, and non-bank lenders that have access to funding, will be able to compete more aggressively with major banks to gain market share in 2014.
TURNING TO THE FUTURE Hickey notes that the consensus from the roundtable was that digital and data would be the main game for mortgages over the next three years. “For consumers, lenders and brokers, the digital and data revolution is producing significant change in how they are accessing and delivering the mortgage of the future,” he says. “Much of this change will be consumer-led and driven by the need
12 | APRIL 2014
for both simplicity and advice from customers as to how best to manage their finances.” What this means, says Hickey, is that the organisational winners will be those that can make the best scientific interpretation of the masses of ‘big data’ that financial institutions and others continue to accumulate – and use this to facilitate successful proactive and valuable interactions for the consumer. “Digital will be a critical enabler of that,” he says. But the big challenge at hand isn’t the technology itself, claims Deloitte Digital partner Katherine Milesi; it’s how it’s all stitched together. “There are 23 million Australians, and we have 32 million mobile devices, which will grow to 100 million in five years’ time,” she says. “So digital is not just about laptop, it’s about mobile – smartphones, tablets and phablets – as well as social media, and how all of these can come together to assist consumers with simplicity and assisted self-serve.” She believes that a key challenge is to bring the technology pieces of the puzzle together in a way that makes customers feel like they’re interacting with the same brand, “and getting support across all touch points and through all channels”. According to the report, “those lenders and brokers that can successfully marry data capture, with proactive and valuable interactions with customers, will surge ahead. Customers expect digital, and they also expect that our banks know us and our preferences”. But what does this all mean in practical terms? Milesi believes that customers want their banks to make life easier for them by using the unique data they have to help them better manage their money. She cites the example of being able to save an incomplete online application form and then call a sales assistant who can expedite completion. “Being able to switch from one channel to another, without losing data or context, is exactly what omni-channel banking will deliver,” she says. In terms of how the mortgage industry is handling data at the moment, the report notes that the mortgage origination process is seeing some of the pieces come together for data and digital, with positive credit scoring and electronic conveyancing taking shape in 2014. However, it adds that this is just the tip of the iceberg, and that the big banks – with their depth of customer data – have the clear advantage at this point. “Others will have to make smart choices about
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how to position themselves to be ready for the future opportunities,” says the report.
THE BIG INQUIRY Also on the minds of mortgage executives is the Financial Systems Inquiry. “The two largest engines in Australian financial services are mortgage lending ($1.3trn) and superannuation ($1.5trn). The Inquiry needs to explore how these two significant systems can better interact at a macro (systems-wide) and a micro (household) level,” says Deloitte Banking partner Graham Mott. “There is a really exciting opportunity for the Inquiry to assist financial services be more integrated. To paraphrase Yellow Brick Road CEO Matt Lawler at the Deloitte roundtable: ‘There is no longer one great Australian dream, there are two dreams running in parallel – to own your own home and to retire comfortably’.” Mott also notes that competition will continue to ramp up as both new online lenders and nonfinancial services players seek to enter the mortgage market. He observes that, while newly originated loans are still delivering healthy results for the
“Banks have had to deepen their discounts to customers and increase their commissions to brokers to compete for new flows in the market” Deloitte Banking partner Graham Mott majors, “banks have had to deepen their discounts to customers and increase their commissions to brokers to compete for new flows in the market”. “And while some heat has come out of the deposit war, any equities market rally could put upwards pressure again on deposit rates for banks,” he adds. “As Australia leads the world to position for growth and the nation looks to the financial services sector to finance its future, the need for Australia’s $1.3trn mortgage market to have the agility to deliver earnings in a volatile market, is paramount.”
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www.trailbookbuyers.com.au APRIL 2014 | 13
HEAD TO HEAD / PETER WOOD
14 | APRIL 2014
MPAMAGAZINE.COM.AU
THE
COMEBACK
KID
Bluestone stepped away from issuing loans during the GFC, but the specialist lender is now back offering competitive non-conforming products. Peter Wood, general manager of Bluestone Asset Management Australasia, explains the company’s commitment to the third-party channel
APRIL 2014 | 15
HEAD TO HEAD / PETER WOOD
MPA: How do you think the mortgage market has changed post-GFC?
MPA: What do you think are the main challenges brokers face at present?
Peter Wood: The non-conforming mortgage market has been significantly affected by the GFC and introduction of the NCCP. Corresponding changes in licensing, lending criteria, and associated practices mean brokers can be assured of writing compliant loans within the sector. We’re seeing an associated increase in brokers’ confidence within the nonconforming space. This in turn relates to opportunity, as direct access to an expanding market estimated to be worth $3bn–$5bn is enabled through sectorspecific products. We actively encourage brokers to embrace this lucrative audience, and to become more familiar with the products available and how this expands their offering, and client base.
PW: Understanding and embracing specific niches in the market is still a challenge for a number of brokers. We encourage brokers to embrace the nonconforming sector and capitalise on its potential. Being governed by NCCP regulations, there should be no hesitancy in writing non-conforming loans. This is an established sector that has continued to demonstrate growth, and therefore opportunity, for over 15 years.
MPA: Where do non-bank lenders like Bluestone fit into the picture? PW: An estimated one in four people have had an event in their life which has impacted their ability to meet their financial commitment. As a leading non-bank lender, Bluestone provides a suite of purpose-specific, quality products that provide solutions to, and directly resonate with, this sector. This enables a wide range of borrowers to now obtain mortgage finance that previously hasn’t been attainable through a traditional lender.
MPA: What are your thoughts on where the market is heading, and what brokers should expect this year? PW: The outlook for the non-conforming market is positive. The non-conforming sector has been in existence for 15-plus years and is an integral part of the mortgage market. Considerable market growth in specialist lending is expected as brokers realise the potential of broadening the depth of their customer base, increasing referral sources and driving revenue growth through diversification. To sustain this growth, Bluestone is committed to proactively evolving its product offering, continuously improving its service proposition, and providing quality solutions. We encourage brokers to plan for the impact of positive credit reporting and how this can benefit their business. In addition, brokers should continue to embrace the use of technology to improve the efficiency of their businesses and expand opportunities.
16 | APRIL 2014
A DIVERSE OPERATION Peter Wood explains where lending fits into Bluestone’s company strategy Bluestone’s operations are split into two channels:
1
Capital management Accountable for treasury functions, including funding and balance sheet investment
2
Asset management Responsible for all new origination and servicing of existing portfolios
Lending has always been a core focus of the business. Bluestone is delighted to continue to provide alternative solutions and enable access to a lucrative, and growing, market sector.
MPA: Why did Bluestone decide to stop issuing loans, and why have you decided to start again? PW: Like many other financial institutions, Bluestone stopped issuing loans during the GFC due to funding restrictions. This also presented a prime opportunity to focus on asset acquirement/diversification. This refocus enabled the business as a whole to diversify and develop exponentially, which has been exciting and positive. Bluestone is committed to the market long term, and it has always been the company’s intention to re-enter the market once funding permitted. Following extensive due diligence and discussion with a number of aggregation groups and brokers, we felt that the timing for re-entry was right, and that the market would directly benefit from Bluestone’s broad solutions to extend the current product offering available.
MPA: How were brokers who had already written Bluestone loans serviced during the period in which you weren’t issuing new loans? PW: Bluestone continued to manage its relationships, service its portfolio and pay broker trail commission seamlessly throughout this period.
MPA: Which type of loan does Bluestone specialise in? PW: Bluestone’s flagship products target borrowers who are self-employed/PAYG and/or have past or present credit defaults, judgments or mortgage arrears. This represents a substantial group, who for some time now have not been catered to. It is important that brokers understand the borrower’s needs and provide a solution that enables them to achieve their goals, which is particularly pertinent if the borrower fits outside the traditional lending criteria.
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MPA: What’s the reaction been from brokers and aggregators to Bluestone deciding to issue loans again? PW: Bluestone’s entry back into the market has been extremely positive, with brokers and aggregators welcoming the opportunity to broaden their offering, and providing some much-needed competition. In particular, we’ve received very good feedback on the flexibility and quality of our products and corresponding service levels.
MPA: Which aggregators are you working with at present? Do you plan to expand your offering to more aggregators? PW: We have relationships with a number of major and boutique aggregation groups. We’re focused on actively consolidating relationships and will continue to broaden our reach.
MPA: What’s your message to brokers who have yet to give Bluestone a try? PW: Bluestone accommodates an extensive range of credit issues and caters for a wide range of borrowers who are unable to obtain mortgage finance from a traditional lender. Writing nonconforming loans enables brokers to significantly broaden the depth of their customer base, increase referral sources and drive revenue growth through diversification. We encourage brokers to tap into this lucrative market with our purpose-specific solutions, and realise the potential of this expanding sector.
Bluestone is committed to streamlining and simplifying the loan process. This is supported through: • superior technology and processing systems
CAREER TIMELINE
• efficient/streamlined processes • highly skilled industry experts who fuse the role of BDM and credit assessors • a flexible/solution-oriented approach
MPA: What’s your approach to forging strong relationships with brokers? PW: Developing strong relationships with brokers is a key strategy and an area that we have been consistently committed to and demonstrated as a core business practice. A testament to the strength of our relationships has been our ability to positively re-engage with brokers and aggregators since Bluestone’s return to the market.
MPA: What are Bluestone’s short- and long-term goals within the third-party channel? PW: Bluestone is committed to the third-party channel. This will be sustained in both the short and long term by proactively evolving Bluestone’s product offering, identifying and developing niche markets, continuously offering a high level of service, and providing quality technology solutions. This will be done in collaboration with our network relationships with the objective of broadening the customer base and driving revenue growth.
2002 Successfully started Bluestone’s business in NZ
2006 Returned to Australia to establish commercial origination business
2010 Spent three years away from the business
2013 Re-engaged with Bluestone
APRIL 2014 | 17
PROFILE / BRAD QUILTY
18 | APRIL 2014
MPAMAGAZINE.COM.AU
APRIL 2014 | 19
SPECIAL REPORT / TOP FRANCHISE BROKERAGES
E T P O T C H IS
N A FR KERAG O R B d l r o w e s i h c n a r f e h s t s f e o c c m u s a The cre eir top tips for h t l a e v re
20 | APRIL 2014
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rom McDonald’s and KFC to Hilton Hotels
and H&R Block, the franchise system has been tried and tested in various sectors of the business arena. And mortgage broking is no exception, with some of the industry’s most recognisable brands being those of the nation’s major franchise organisations. In recognition of the role that franchises play within the world of Australian mortgage broking, MPA has once again compiled its annual list of the country’s Top 10 Franchise Brokerages. While the franchise route isn’t for everyone, this year’s crop of outstanding franchise brokerages have truly made the most of the branding and back office support that their parent group offers. To compile this year’s hall of fame, Australian mortgage broking franchise operators were invited to nominate their top performers to be ranked and scored on several key criteria – explained in the methodology box. The competition was open to both franchise operations and organisations that would be better described as ‘branded aggregators’ who require or license brokers to use a national brand but are more flexible in approach than ‘true’ franchise models. The idea was to make sure that all of the Australia’s most recognisable national mortgage brands were given the opportunity to nominate their star performers. You may or may not have taken the franchise or branded aggregator route yourself, but the achievements of this year’s crop of talented broking operators speak for themselves – and the insights that can be gained from 2014’s high flyers should provide inspiration for franchise and independent brokers alike.
ES
Brokerage
Total loan book
2013 settlements
METHODOLOGY MPA approached Australia’s franchise groups and branded aggregators and offered them the chance to nominate up to five brokerages to take part in the Top 10 and be ranked according to the following criteria: • Total loan book value • 2013 settlements • Average volume per broker/loan writer • Conversion rate As in previous Top 10 reports, the theory behind ranking each nominee using the above criteria was to ensure that settlement and loan book size – while important – didn’t override all other elements when putting the Top 10 together. Each brokerage was given a score for each of the four criteria according to its rank. For example, the lowest ranking brokerage in any given category gained the lowest score of one point, the second lowest ranking brokerage in any category gained the second lowest score of two, and so on. Consequently, the highest ranking brokerage in any category was awarded the highest number of points for that category. Once this ranking and scoring process was carried out for each of the four criteria, the overall scores for each brokerage were added up to create the total score for each of this year’s nominees. The brokerages were then ranked according to their total scores, with the businesses that took the top 10 spots appearing in the report.
Number of brokers/writers
Average volume per broker/writer
Conversion rate
1
Mortgage Choice Glenelg East
$1,132,484,394
$236,233,434
4
$59,058,359
96%
2
Mortgage Choice Brisbane
$1,162,606,401
$236,977,564
5
$47,395,513
89.1%
3
Mortgage Choice Perth
$1,108,941,131
$222,292,155
8
$27,786,519
92%
4
Mortgage Choice Melbourne
$733,053,942
$194,340,880
6
$32,390,147
88%
5
Choice Home Loans Leederville
$814,917,618
$158,297,704
12
$13,191,475
95%
6
LJ Hooker Home Loans ACT & Southern NSW
$500,000,000
$160,000,000
10
$16,000,000
88%
7
Mortgage Choice Cheltenham
$756,788,798
$156,422,469
7
$22,346,067
94.23%
8
Loan Market Manningham
$354,000,000
$97,000,000
2
$48,500,000
93%
9
LJ Hooker Home Loans Eastern Suburbs
$190,000,000
$116,000,000
2
$58,000,000
68%
=10
The Mortgage Gallery Dunsborough
$243,000,000
$104,500,000
2
$52,250,000
90%
=10
Loan Market Oakleigh
$325,000,000
$108,000,000
3
$36,000,000
85%
APRIL 2014 | 21
SPECIAL REPORT / TOP FRANCHISE BROKERAGES
10 JOINT
LOAN MARKET OAKLEIGH Loan Market Oakleigh has followed up on last year’s top 10 appearance with another strong result. Alex Shumsky talks MPA through his operation What’s your approach to customer service? I strive to be proactive with my clients’ needs and always provide them prompt updates on where their loan is every step of the way. At the pre-approval stage I provide unlimited property research reports to assist clients making offers or bidding at auctions; at the post-approval stage I have a process in place to notify customers of new lender products and fixed rates. Part of providing quality customer service is to ensure the client is always aware of all competitive deals; it’s simply part of working in the best interest of your clients.
Total loan book: $325,000,000
Total settlements 2013: $108,000,000
Number of brokers/writers: 3
Location: Oakleigh, Vic Are you particularly active within any area of the market? I do lots of work with first home buyers and have a very good understanding of their needs. I completely understand how overwhelming a first property purchase can be. To ensure the smoothest possible purchase, I work closely with them to identify the costs involved, establishing their borrowing capacity with several different lenders and finding the loan package that best suits their personal situation. I make sure they understand the advantages and disadvantages of certain loan products.
What goals have you set for the year ahead? My biggest goal for the year is simply to continue with the provision of outstanding customer service – in other words, to help my customers get the right loan, with a minimum of fuss.
Average annual volume per broker/writer: $36,000,000
THE MORTGAGE GALLERY DUNSBOROUGH New to the Top 10 Franchise Brokerages report this year, The Mortgage Gallery in Dunsborough has some impressive numbers under its belt. Rod Holt reveals his secrets to success What would you say is your business philosophy? Work hard and do everything a client requires. It doesn’t matter whether the work required to assist a client is going to generate any income or not, we simply do it. Doing so generates a level of customer respect and rapport that encourages them to refer my business and team to their family and friends, which in turn at some point allows revenue to be generated and our customer database to grow.
What is the secret to a successful brokerage? Having a physical office presence is essential in
Total loan book: $243,000,000
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Total settlements 2013: $104,500,000
Number of brokers/writers: 2
Conversion rate:
85%
Location: Dunsborough, WA
making prospective clients feel they are dealing with a professional brokerage. Having great back office staff to complete the non-credit critical and marketing tasks frees up the brokers to complete the most critical role – finding a financial solution for the client.
What are the advantages of being part of a franchise? Being a part of a franchise means being part of a professional brand and team that is well regarded in the community. It means strength when negotiating with external bodies (such as lenders) to produce a better result for all franchise offices than we could negotiate alone. Our head office support in terms of compliance, marketing and branding, IT systems which collate the infinite amount of lender information available, and straight-through processing of commissions is awesome.
Average annual volume per broker/writer: $52,250,000
Conversion rate:
90%
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9 Total loan book: $190,000,000
LJ HOOKER HOME LOANS EASTERN SUBURBS
BORROWER BREAKDOWN
10%
The first of a couple of LJ Hooker Home Loans brokerages represented this year, the franchise’s Eastern Suburbs team of two brokers has achieved some impressive results. Alex Lambros answers MPA’s questions What would you say is your business philosophy?
Total settlements 2013: $116,000,000
Number of brokers/ writers: 2
Average annual volume per broker/writer: $58,000,000
68%
38% Others
First home buyers
2%
Commercial
30% Investors
20%
Refinancers
To constantly assess and ensure that we are providing market leading service. Especially in the key areas of on-time delivery and expertise. This is not something that can be set in stone. The bar is always being set higher, and that is a great thing for the industry. You have to continually assess where you and the market is at, and improve your efforts to rise with and above the market.
What is the secret to a successful brokerage? Deliver on your promises. For our industry to grow we all have to set our standard high, and deliver on any commitments made. You have to know your craft and not sit behind lenders or anyone else. That is what builds trust. The brand can only do so much. You have to build personal trust.
What are the advantages of being part of a franchise like LJ Hooker Home Loans? Brand awareness – especially with LJ Hooker. It is one of the most well-known and trusted brands in Australia. It also brings you in as part of a team that allows you to network, learn and build your business based on the success around you.
How do you generate leads and referrals?
Conversion rate:
Location: Sydney, NSW
By building trust via strong service and expertise. We let our clients know that referrals are a big part of our business. If they trust and respect what you do, and understand that, referrals will flow. We also work closely with our real estate referral partners. They’re growing businesses to. By understanding what is happening in their world, it helps us work closely together for the mutual benefit of our businesses, and our clients.
What’s the most important thing a broker can do to grow their business? Over-deliver on expectations. To do that you have to know what process will eventuate, and stay in front of the game. Deliver on commitments – that is a must. Put your clients’ interests first, before your cash flow – that will look after itself if you do the right thing. Think about where your business is going, and don’t be transactional. You have to have goals, and a plan on how you are going to get there.
What goals have you set yourself for the year ahead? Settle 20-30% more than last year; grow our broker team by three per year to facilitate our growth expectations; grow our support team by one this year – it is important to support your sales team as they grow; improve our systems and processes – use technology and allow more time for service and income generating activities; be the national top LJ Hooker Home Loans broker.
APRIL 2014 | 23
SPECIAL REPORT / TOP FRANCHISE BROKERAGES
8 Total loan book: $354,000,000
Total settlements 2013: $97,000,000
Number of brokers/ writers: 2
LOAN MARKET MANNINGHAM
Location: Manningham, Vic
BORROWER BREAKDOWN
The second of two Loan Market operations in this year’s Top 10, Loan Market Manningham has achieved a lot for a team of two. Daniel Esposito explains their business plans What is the secret to a successful brokerage? You’ve got to get the job done and communicate with your clients and referrers at all times. Keeping everybody in the loop is important. If we get a lead from a referrer, we call the client straight away, not in two or three hours but straight away. When we’re doing finance for clients, we inform them at every point along the way. I also try to be honest initially if the deal can’t be done. If we know the bank’s not going to do the deal, we tell them.
5%
45% Investors
Others
20%
30% Refinancers
First home buyers
Have you noticed any trends among your clients this year? It’s pretty steady this year – a mix of investors and upgraders, and people reviewing their rates or consolidating. If they’ve been with their lender for three or four years, I’m finding they are re-evaluating their rates.
How do you generate leads and referrals?
Average annual volume per broker/writer: $48,500,000
Conversion rate:
93%
I find the work speaks for itself, but having said that, we also try to get new referrers. I explain to them what we’ve achieved over the years and how we operate to make them comfortable. But in the end it comes down to personality and relationships. If you do a good job with a client or referrer, the leads will come to you. People will want to refer and deal with you. One client two weeks ago has referred me to four different people already. I’m a diamond broker with all the majors, so I can get an approval done in 24 hours, whereas a lot of other brokers might take up to a week.
What’s the most important thing a broker can do to grow their business? Never take no as an answer, but don’t be too pushy – it’s about getting the balance right to build the relationship. It’s all about relationship. If they
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don’t like you it doesn’t matter what knowledge you’ve got.
What goals have you set yourself for the year ahead? Just to continue to do what I do and achieve the targets I’ve set for myself to get a ticket to the Loan Market international conference in Las Vegas this year.
How do you achieve work-life balance? That’s hard in this business. You know what, as long as you’ve got a supportive other half you can do whatever you like. You can’t say you’re not going to see a client because you have to check with your wife. If you’ve got a deal happening, you’ve got to get it done. It’s difficult to balance in this industry but you can always work around clients.
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7 Total loan book: $756,788,798
Total settlements 2013: $156,422,469
MORTGAGE CHOICE CHELTENHAM
The first of five Mortgage Choice brokerages to feature in this year’s Top 10, Mortgage Choice Cheltenham has put in a solid performance. Anthony Smith talks us through his keys to success What would you say is your business philosophy? Make the office a fun place to be. The team spends a large amount of their week in the office and if it is an enjoyable place to work in, then the quality of work will be good, staff turnover will be low and the clients will be happy – which should encourage them to offer us repeat and referral business, thus creating a successful and profitable business.
What is the secret to a successful brokerage?
Number of brokers/ writers: 7
Average annual volume per broker/writer: $22,346,067
Conversion rate:
94.23%
Location: Cheltenham, Vic
The secret is there are no secrets. Everyone knows what is required to be successful (hard work, dedication, passion and knowledge) – it’s just a matter of being prepared to do it.
and the better you treat them, the more likely you are to win repeat and referral business from them. I make it my mission to never ask for referrals and repeat business opportunities, but rather earn them.
What’s the most important thing a broker can do to grow their business? Stop competing on price and instead improve service and knowledge of suitable long-term solutions for clients.
What are the advantages of being part of a franchise?
What are your thoughts on diversifying outside of mortgage broking?
A well know brand obviously helps, but the main benefits are comradeship and sharing knowledge and skills amongst the network. The Mortgage Choice network is filled with high achieving inspirational people who we can all learn a lot from.
I believe it is essential for survival. These days, your clients want more than a home loan from you. They want and need you to meet all of their financial needs. And, if you are not doing it, someone else will.
Have you noticed any trends amongst your clients this year? Investors are back in the market in a big way. At present, a large portion of my business comes from investor clients. On the flip side, we have seen a drop off in first home buyers.
What goals have you set yourself for the year ahead? My goals, personal and business, are always the same. I want the business to remain healthy and I want my staff, my family and myself to remain healthy and happy.
How do you generate leads and referrals?
How do you go about achieving work-life balance?
There are a couple of ways to generate leads. Firstly, you have to have an internet presence. Your clients are doing their research online these days, so if you are not online, you are not in the game. Secondly, it is important to mine and care for your existing database. Your clients are your lifeblood
There is no denying it is hard. To be a good and successful broker, you have to be willing to put in the long hours. Of course, it is always important to take time out for yourself and for your family. Spending some time out of the business gives you the chance to re-energise and reengage with work.
APRIL 2014 | 25
SPECIAL REPORT / TOP FRANCHISE BROKERAGES
6 Total loan book: $500,000,000
LJ HOOKER HOME LOANS ACT & SOUTHERN NSW
Number of brokers/ writers: 10
Average annual volume per broker/writer: $16,000,000
Conversion rate:
88%
Location: Greenway, ACT
BORROWER BREAKDOWN
Representing the nation’s capital, LJ Hooker Home Loans ACT & Southern NSW has had a strong year. Scott Cameron and Warren Urquhart offer their advice on how to put together a successful brokerage What would you say is your business philosophy?
Total settlements 2013: $160,000,000
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35% Investors
5%
Commercial
20% Refinancers 25% First home
15% Others
buyers
Our goal is to make the finance transaction as easy as possible for our clients and to create a great workplace environment for our staff.
What is the secret to a successful brokerage? Customer service – collate all the client’s information and requirements first before making any recommendations. And remember, the best rate is not always the best deal for the client. Be honest with your clients and yourself. Working as a part of a team and the wealth of knowledge in that team is a benefit to our clients.
What are the advantages of being part of a franchise? Being a part of a strong household brand name. Lead generation from the real estate network.
will look after the business.
Have you noticed any trends amongst your clients this year?
What are your thoughts on diversifying outside of mortgage broking?
Less first home buyers in the market, but more buyers are upgrading and moving to a bigger home.
We believe in partnering with experts in other fields to look after our clients’ other needs, and we stick to what we know best – brokering home loans.
How do you generate leads and referrals? By having a great relationship with our real estate referral network, as well as satisfied clients who refer their family, friends and work colleagues to us.
What goals have you set for the year ahead? Keep growing with volume and staff – and have fun!
How do you achieve work-life balance? What’s the most important thing a broker can do to grow their business? Look after their customers and their staff and they
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While you are at work give 100% commitment to your work; while you are at home give 100% to your family.
SPECIAL REPORT / TOP FRANCHISE BROKERAGES
5
CHOICE HOME LOANS LEEDERVILLE
BORROWER BREAKDOWN
30%
Investors
Choice Home Loans was represented well this year by its Leederville franchise. Dennis Timms talks to MPA about how his team operates Total loan book: $814,917,618
Total settlements 2013: $158,297,704
Number of brokers/ writers: 12
Average annual volume per broker/writer: $13,191,475
Conversion rate:
95%
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Location: Leederville, WA
55% Refinancers
What would you say is your business philosophy?
15%
We don’t really have a business philosophy. All I can really say is that we try to treat our clients well. We don’t have any goals or objectives. But that’s the truth of the matter. We’ve never sat down, my two partners and I, and gone through a business plan or objectives. We want to write as much business as we can. Our consultants operate from the office here, and we just try to keep them happy, motivated and comfortable. Five have been with us for over eight years, so I think it’s a pretty good working environment.
First home buyers
How do you generate leads? It’s just referrals from our existing customer base. A couple of people have got referral sources – real estate agents and/or builders – but I’d say 90% of our business comes from referrals from existing customers.
How do you find working under the Choice Home Loans franchise model? We’ve been under Choice for the whole time. Initially it was owned by two individuals that I used to cycle with, so it was just a friendly basis. Over the years they sold out to Westpac and then Challenger and now NAB. But we’re happy with that situation and don’t have any consideration to leave and look for someone else.
How do you achieve work-life balance? I think everyone here – because everyone’s been working so long – I think they’re all pretty comfortably off financially. My two partners have been in the game longer than I have, and they both have two PAs at the moment, so you’d have to say they don’t work long hours. They’ve both got
relatively young families. My family’s a bit older – I’ve got grandchildren now as well as children. We’re able to take holidays whenever we want; we’ve got backup in the office and consultants who are experienced and can do the work. We’re quite comfortable in handing over the phone and the office to one of our consultants when we go away.
How long have you been operating for? Since 2000. We started in December 2000.
Have you diversified into non-home loans? No, it’s basically residential.
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MORTGAGE CHOICE MELBOURNE
Location: Melbourne, Vic
Ashley Koenig reflects on what has been a highly successful year for the Mortgage Choice Melbourne team Total loan book: $733,053,942
Total settlements 2013: $194,340,880
What would you say is your business philosophy? Each day is an opportunity to learn something new – you don’t know what you don’t know. Secondly, I like to live by the philosophy: always step up when an opportunity presents itself.
What is the secret to a successful brokerage? You need to be constantly marketing your team and your business and when a lead is generated, conversion is the key.
What are the advantages of being part of a franchise?
Number of brokers/ writers: 6
Average annual volume per broker/writer: $32,390,147
There are a lot of advantages that are associated with being part of a franchise. In the first instance, you receive a lot of support from the franchisor, which is invaluable, especially when you are first starting out. In addition, the Mortgage Choice franchise offers me a well-known brand, support with my compliance and additional mentoring and training. Finally, as a franchisee that is part of a branded business, I am constantly learning new things from my fellow franchisees. Together we can share experiences and talk about things that have worked and things that haven’t.
Have you noticed any trends amongst your clients this year?
Conversion rate:
88%
Our franchise has a maturing and trusted client base of 10 plus years. Their experience with the property market means I am starting to see a greater willingness from them to grow their property portfolio and invest both inside and outside of their SMSF.
How do you generate leads and referrals? We communicate regularly to our existing client base through social media platforms. In addition, we
have strategic alliances with a couple of financial services firms.
What’s the most important thing a broker can do to grow their business? Set your team’s long term goal, be honest and understand your strengths and play to them. Outsource tasks you aren’t the best at to others who are better than you. Indeed, if you want your business to be successful, it is important to surround yourself with people who are better than you.
What are your thoughts on diversifying outside of mortgage broking? It’s definitely a long term key to business sustainability. Outside of the standard referrals, we have established a buyer’s advocacy and property management business in both Melbourne and Brisbane to assist our mortgage clients make informed decisions when buying.
What goals have you set yourself for the year ahead? We have recently purchased an existing franchise with one of our proven loans consultants to provide a career path for him. We want to support and mentor him to be able to turn around an underperforming business into a successful respected franchise.
APRIL 2014 | 29
3 Total loan book: $1,108,941,131
Total settlements 2013: $222,292,155
SPECIAL REPORT / TOP FRANCHISE BROKERAGES
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MORTGAGE CHOICE PERTH
Location: Perth, WA
The Mortgage Choice Perth team has a $1bn-plus loan book under its belt, and shows no sign of slowing down. Richard Crommelin explains his team’s strengths What is the secret to a successful brokerage? To be a successful brokerage, you have to have a vision of where you want to go and an action plan of what you need to do to get there. Once you have created the vision, you must communicate it to all involved. As such, it is important to have a great team that understands what the vision is and is happy to work together to achieve this. It is also vital that, in broking, your processes ensure the customer is the focus.
What are the advantages of being part of a franchise?
Number of brokers/ writers: 8
Average annual volume per broker/writer: $27,786,519
Conversion rate:
92%
Being in a franchise assists us by supplementing our knowledge with a wider level of support. We don’t have to know everything about marketing, IT, human resources, business planning, etc, as there is state and national support to provide advice and guidance in areas that you need support in. Mortgage Choice also supports us with national advertising and brand awareness, and has a call centre that distributes leads flowing from their marketing.
What’s the most important thing a broker can do to grow their business? Plan for it. Consistent growth doesn’t just happen, but comes as a result of setting a stretch target, and then planning what you would need to do to get there. This may be a combination of getting more leads, analysing and improving conversions, increasing marketing in areas where your return is best, and maybe investing in admin support or another broker to help you get there.
What are your thoughts on diversifying outside of mortgage broking? We are very committed to diversification of income. It forms a part of our ‘trusted financial partner’ vision, and we see it as essential in turning us from a
30 | APRIL 2014
transaction based broker, to a business that looks after all of our customers’ financial needs. Currently we do car finance, car and general insurance, commercial finance for property, and business finance where our customers have wanted to move their facilities for a better deal, or to buy a business. We have recently started a Mortgage Choice Financial Planning franchise to make greater inroads into looking after our customers, and to ensure that we are able to offer a seamless experience.
What goals have you set yourself for the year ahead? We are working hard to improve productivity in our business by strengthening our processes to ensure that our brokers can spend more time in front of, and working with, customers. Our goal is to add an extra two settlements a month to each of our brokers’ results. We are also working on achieving a more systematic approach to diversified income. We are planning on increasing our leads by 25%.
SPECIAL REPORT / TOP FRANCHISE BROKERAGES
2 Total loan book: $1,162,606,401
MORTGAGE CHOICE BRISBANE
Location: Brisbane, QLD
Another billion-dollar brokerage, the Mortgage Choice Brisbane team is flying high this year. MPA catches up with Matt Cunliffe to gain his business insights What would you say is your business philosophy? To service all clients equally by providing an exceptional customer experience that drives repeat and referral based business.
Total settlements 2013: $236,977,564
Number of brokers/ writers: 5
Average annual volume per broker/writer: $47,395,513
Conversion rate:
89.1%
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What is the secret to a successful brokerage? Acknowledging your weak points and understanding your strong points. By analysing where your business performs well and where it lacks, you can implement procedures and processes to overcome the weaknesses and continue to grow.
What are the advantages of being part of a franchise? Mortgage Choice provides a great brand. It is a household name for many and instils confidence in clients that we do business with. The brand awareness that the franchise brings with it provides a good platform for us to perform from.
Have you noticed any trends amongst your clients this year? We are starting to see a lot more first home buyers and buyers that sold and are renting coming into the market. With interest rates at historical lows and repayments being very similar to rent figures here in Queensland, it is providing a lot of confidence to buyers to get out into the market.
How do you generate leads and referrals? Our leads and referrals are generated through great customer service along with the known performance of our office in the industries that we operate. We receive a good portion of business from referral partners involved in property sales and their experience with us drives them to recommend their peers, customers and other aligned parties to utilise our services. We are always looking to meet with
new partners and discuss the benefits of utilising our firm to provide finance solutions to their customers.
What’s the most important thing a broker can do to grow their business? Adapt to the ever changing market and be open to diversification. We need to approach clients with a holistic approach to be able to nurture their needs and grow them into a stable and ever loyal customer. By being able to provide multiple streams of solutions, it ensures our clients’ needs are continually met without the risk of losing them to a competitor doing something extra that we aren’t.
What are your thoughts on diversifying outside of mortgage broking? We completely support the idea and necessity of diversifying outside of mortgage broking to provide a client with a holistic solution to their finance and related requirements.
What goals have you set yourself for the year ahead? We would like to increase our settlement volumes by 20% on last year’s figures and continue to improve our individual broker’s performance by way of additional training and support.
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1 Total loan book: $1,132,484,394
Total settlements 2013: $236,233,434
MORTGAGE CHOICE GLENELG EAST
Location: Glenelg East, SA
Wendy Higgins’ Mortgage Choice team in Glenelg East has held onto the top spot after taking first place last year. Higgins reflects on her operation’s ongoing success What would you say is your business philosophy? Go beyond and above expectations. If you have been referred a client, get onto them immediately, set up an appointment and keep in contact with them during the process. If you are always exceeding expectations, you will always have business coming through the front door.
What is the secret to a successful brokerage?
Number of brokers/ writers: 4
Average annual volume per broker/writer: $59,058,359
Conversion rate:
96%
At Mortgage Choice in Glenelg East, we believe the secret to a successful brokerage is a combination of referrals from existing happy clients, a sense of urgency, and a great team.
What are the advantages of being part of a franchise? There are many advantages associated with being part of a franchise like Mortgage Choice. Firstly, there is a lot of brand recognition that comes from being affiliated with the brokerage. Secondly, Mortgage Choice has excellent systems in place – systems that can help you with your compliance, client communication, loan administration and submissions. I truly believe if you use these systems and stick to them, you provide yourself with every chance of success.
Have you noticed any trends amongst your clients this year? I am definitely seeing an increasing number of clients seeking financial advice. More than ever before, Australians are beginning to see value in obtaining financial advice. To cater to this growing trend, we recently hired a financial adviser under the new Mortgage Choice Financial Planning franchise model and the results have been fantastic.
How do you generate leads and referrals? There are many techniques you can use to generate repeat and referral business. At Mortgage Choice Glenelg East, we believe in word of mouth from clients, sponsorships with clubs, setting up alliances with related businesses and achieving results for them.
What’s the most important thing a broker can do to grow their business? If you look after every client and consistently go above and beyond their expectations you will undoubtedly create a fan as well as an excellent referral source. Thank people straight away for the referral. Leads are GOLD!!
What are your thoughts on diversifying outside of mortgage broking? You have to. Today, clients want information and advice on insurances, SMSFs, car and equipment finance, commercial referrals and financial planning. If they want it, you should deliver it.
What goals have you set yourself for the year ahead? Get myself fit again, buy a 4WD and take myself off on at least a three week holiday in the bush.
APRIL 2014 | 33
PROFILE / BRAD QUILTY
A FAMILY
AFFAIR
Tungsten Home Loans director Brad Quilty and his team took out the award for New Brokerage of the Year at last year’s AMAs. He talks family business, how to get a new brokerage off the ground, and working from home in his PJs, with MPA reporter John Hilton Tungsten Home Loans may be a relatively new operation, but its director, Brad Quilty, had several years of grounding working for major mortgage broking operations under his belt before deciding to go it alone. “I started in July 2009,” he explains. “I was with Aussie for 16 months, then Elders Home Loans for a further 18 months before starting my own brokerage, Tungsten Home Loans, with my fiancée, Micarla.” It’s a decision that has proven to be a fruitful one, with Tungsten going on to win the AMA for New Brokerage of the Year at the 2013 AMAs. Behind this success, says Quilty, is a people-focused business philosophy. “Right from day one it was more about helping people than about finance. So when a client calls up to say thanks, that is what keeps me passionate. It’s a good feeling,” he says. Given this ethos, when asked what he’d be doing for a living if he wasn’t a mortgage broker, Quilty elects for financial planner – as he likes the idea of helping people into a better position. “Although the amount of 34 | APRIL 2014
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compliance paperwork those poor guys have to do is a bit crazy,” he adds. In terms of training, Quilty underwent a twoweek Cert IV training course with Aussie in Sydney, followed by completing the full diploma. Other than that, he conducts his own industry research and praises professional development days held by his aggregator, PLAN.
WORK-LIFE BALANCE While Quilty doesn’t feel like he has a good worklife balance, he has managed to plan his time so that nowadays he doesn’t work weekends – apart from the occasional phone call or email. “During the week, Monday through
“I’m trying to streamline my processes to give myself more time to deal with clients and phone calls and emails that just continue to stack up if I am in a client meeting. I’m sure it [the next challenge] will be something different once that is sorted out.”
WHY DID YOU DECIDE TO BECOME A BROKER? Quilty explains the two reasons why he headed down the mortgage broking route
1 Friday – including Monday to Thursday nights – I’m working. My clients take priority because I like to be there ASAP when they need a loan to get underway, especially purchases,” he explains. Plus, working from home allows him to spend time with his children and partner, which, Quilty adds, feels a lot better than being sat in an office. That said, Quilty concedes that anything that he labels as ‘life important’ needs to be in the diary, or he could end up booking a work-related appointment over the top of it. While working from home and spending time with family may sound idyllic, Quilty has had to overcome significant challenges during his mortgage broking career. “When I began, in the middle of the GFC, nearly every single deal was LMI declined, so that was pretty challenging,” he says, adding that developing a client base to send referrals his way was paramount. Nowadays, however, the challenge is time management.
I was beginning a journey down the property investing path and decided I needed to understand how financing worked, so as to maximise my ability to invest. Becoming a finance broker seemed to make sense as I would understand how to buy property under different entities and structures.
2
I had purchased a property that was a 100% borrow/ cross securitised with an existing property, and come settlement day there was a shortfall of $20,000 due to the stamp duty not being accounted for. So I decided that I could do it (arrange finance) and do a better job. Now I’m hooked!
CUSTOMER SERVICE When it comes to lead generation, Quilty estimates that 90% of Tungsten’s leads come from referrals, with existing clients passing on the company’s details to friends, colleagues and family. “We find that as long as we provide a thorough service, with plenty of touchpoints and communication, that keeps the clients happy with us, and they continue to tell others about us,” he says. And the best part of the job? For Quilty it’s settlement time, when he can ring the client to congratulate them and experience first-hand how happy they are with his company’s service. “When we see repeat clients and it’s like catching up with an old friend, that’s always great too,” he says. Aside from the satisfaction that comes with developing lasting relationships with happy clients, Quilty cheekily adds that being able to work from home in his PJs is also something of a job highlight.
LOOKING AHEAD Now that he’s well established within the industry, Quilty’s looking to use his experience to guide new brokers into the profession. To this end, he’s signed up to take the MFAA Certified Mentor course this year. “We are looking to get a few more brokers under the Tungsten brand, and may even open up offices in other cities,” he says. In terms of who he looks to for inspiration on his professional journey, he admits that, while he admires others for what they have achieved, he doesn’t really look to anyone else for inspiration. “I am happy competing with myself and outdoing my own achievements,” he says, adding that, in the end, his ongoing goal is my family’s prosperity, and that’s what inspires him to keep going – even if they do sometimes prevent him from enjoying nonbroking pursuits. “I love boating and fishing,” he explains when asked what he gets up to away from work, “but with three kids – three and under – it’s a challenge to do anything too involved on the weekend”.
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FEATURE / DEBTOR FINANCE
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WING OPPORTUNITY You may be surprised at the number of clients in your book who could benefit from a debtor finance solution. MPA explores how debtor finance can benefit your customers, and boost your bottom line In business parlance, we talk about the ‘working capital gap’. But did you know this could be the key to unlocking a whole new branch of products you could offer your clients, and another revenue stream for your business? In layman’s terms, the working capital gap is the time lapse between when a business has to pay its suppliers and when it receives payment from its customers. And this is something business owners within your client book may well be familiar with. “Let’s say we’ve got a wholesaler in office products,” says Clarke. “He’ll buy that product in and he’ll get credit terms from that supplier typically of anywhere between 30 and 90 days to pay from when he receives the goods. They might sit in his warehouse for a week or two in terms of stock – maybe more – and then he’ll find a buyer for it and on-sell it to a retailer, for example, and he too will give 30–60 days’ credit before the retailer has to pay him. “So what you can find, and what we find with most of the clients that use our facility, is what I
would call a ‘working capital gap’ between when they have to pay their supplier and when they get paid by their customer.” And this is where debtor finance comes in. The wholesaler at this stage will have unpaid invoices from their buyer that they can use as assets to raise funds with a debtor financier to help pay their supplier and keep the business ticking over. “It’s a working capital facility similar to an overdraft,” adds Scottish Pacific CEO Peter Langham. “But instead of being secured against the business owner’s home or property, it’s secured against the trade debts or trade receivables. Basically, it’s like having an overdraft geared to 80% of your receivables.” To put this into mortgage terms, the client will have a borrowing facility secured by unpaid invoices rather than property, which has an LVR of up to 80% of the value of those unpaid invoices. “We’ll advance typically up to 80% of the value of that invoice prior to its payment. And then when the
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FEATURE / DEBTOR FINANCE
FINDING DEBTOR FINANCE CLIENTS Bibby Financial Services managing director Mark Cleaver explains that brokers can uncover debtor finance opportunities in their book in three ways: • Target clients with businesses that may require funding or cash flow support: common triggers for debtor finance include fast growth that outstrips available funding, late customer payments, creditor pressure or trading difficulties, and poor support from mainstream banking sources • Target individuals looking to acquire or merge with other businesses, or individuals seeking to buy into a business • Identify whether any refinancing scenarios involve businesses and real estate security
payment is received from the customer, ultimately the balance of the money goes back to our client,” says Clarke. As Bibby Financial Services managing director Mark Cleaver explains, the fact that debtor finance does not usually require real estate security makes it “a uniquely flexible way of funding a business and often a way of releasing security for other purposes”. He adds that in some cases debtor finance typically allows an SME to convert up to 85% of the value of each sales invoice into immediate cash, “usually within 24 hours of an application being received from a broker”. “Debtor finance is one of the most accessible and flexible forms of commercial finance,” Cleaver says. “The broker need only provide a name and number on an application and it can quickly be progressed from there. Debtor finance also offers brokers an additional revenue stream, allowing them to diversify away from existing products. Bibby, for example, offers one of the most innovative and generous commission schemes available in Australia today, offering healthy upfront and trailing commissions, plus a range of other incentives.”
PRODUCTS AND FEES Debtor finance can be categorised as either a factoring or an invoice discounting facility. As Clarke explains, the essential difference between the two is that with factoring the financial institution also undertakes the collection activity for those invoices. 38 | APRIL 2014
“Factoring tends to be more expensive because there is that service element to it as well. And it tends to appeal to younger and typically smaller businesses that don’t have the sophistication in their collection routines, and therefore can outsource it to a factoring company and it would be maybe more cost-effective than employing somebody full-time to do it for them,” he says. When it comes to fees, he adds that there are typically two ongoing fees associated with a debtor finance facility: • A service fee, which is higher for factoring than discounting • A percentage value of the invoices the debtor financier purchases, charged at the time when they buy the invoices In addition, the client pays interest on the amount borrowed, in the same way that they would on a conventional overdraft facility. Debtor financiers generally charge a rate that’s comparable with that of conventional unsecured overdraft products, says Clarke.
BROKER REMUNERATION As well as providing an extra value-added service to SME clients, offering debtor finance options creates an additional revenue stream for brokers. This comes in the form of an upfront fee for referring the client to the debtor financier, as well as an ongoing trailing commission. “Usually they get an upfront payment, which can be anything from $500 to $5,000, depending on the size of the transaction,” says Langham. “But then they get a trailing commission for the duration of the facility. We’ve got brokers who have been receiving commission from us every month for 15 years, because their client’s still with us.” Along with generous commission schemes offering healthy upfront and trailing commissions, Cleaver adds that organisations such as Bibby offer a range of other incentives and broker support services. In terms of how long a broker can expect to keep earning their debtor finance trailing commissions, Clarke suggests that, while debtor finance agreements tend to be ongoing rather fixed-term arrangements, they last for around three years on average. “That is a generalisation,” he concedes, “but the types of businesses that come to us are either looking to grow quite aggressively and need access to more working capital, or there’s a specific event.
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“With my example of the office supplier, he could find a supplier in China, which means he could buy cheaper – but he has to buy more. So his working capital need increases above what his overdraft is with the bank at the moment, and that’s why he comes to us.
“We’ve got brokers who have been receiving commission from us every month for 15 years, because their client’s still with us” Scottish Pacific CEO Peter Langham “So it’s what I would call event-driven finance. And therefore, as that event proceeds through to completion and he overcomes growth issues and matures into a more stable market, he might well replace our facility over time and go back to an overdraft.” Cleaver suggests that, while debtor finance facilities vary in length depending on the specific application for which they are used, client facilities generally last for between two and five years.
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FEATURE / DEBTOR FINANCE
“Debtor finance has plenty of upside in terms of market penetration. This presents significant opportunities for smart brokers willing to diversify” Bibby Financial Services managing director Mark Cleaver
“As most debtor financiers provide an accounts receivable and reporting service which requires some setting up, it is generally not suited for shortterm use,” he says.
EDUCATION AND COMPLIANCE When it comes to the education hurdles that brokers must clear in order to provide the debtor finance option to their clients, Cleaver explains that a broker does need to develop a certain amount of knowledge, but fortunately the hurdles are not high. “Bibby Financial Services is able to run educational seminars to educate brokers about the many benefits of debtor finance compared to traditional forms of bank funding,” he explains, adding that, while formal accreditation is not required, it is recommended. 40 | APRIL 2014
TYPICAL DEBTOR FINANCE CLIENTS Bibby Financial Services managing director Mark Cleaver outlines some of the usual debtor finance avenues There is a profile of clients best suited to debtor finance, but it is a very versatile solution. According to statistics from the Debtor and Invoice Finance Association (DIFA), Australian industries making the most use of debtor finance in the December 2013 quarter included:
31%
17%
LABOUR HIRE
WHOLESALE TRADE
14%
12%
TRANSPORT AND STORAGE
MANUFACTURING BUSINESSES
Debtor finance is also commonly used in the textiles industry. But it is a viable solution for many other SMEs requiring working capital to grow their businesses quickly and trade out of cash flow difficulties. Debtor finance is also a suitable option to assist in mergers and acquisitions, succession planning, management buyouts and even divorce scenarios in which property has been used as the primary security for business funding. Debtor finance clients generally have a sales turnover of $200,000 to $80m, with lines from $100,000 to $20m available. Debtor finance is also able to assist in situations where the company has a short trading history or weak profitability, and this is possible because the funding is offered more on the basis of the quality of the company’s debtor sales and relationships than on the balance sheet and historical profit and loss. In other words, it is a more forward-looking type of funding.
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Langham says that, because the product is so specialised, the broker merely enters into a referral arrangement with the debtor financiers, who then take on all the due diligence responsibilities. “But it really is important that the mortgage broker gets educated on the product,” he adds, “and all the debtor finance companies are more than happy to work with brokers and educate them on the products.” This education, says Clarke, allows brokers to have an initial conversation with their clients about debtor finance, in order to gauge interest before referring them to the specialists.
IDENTIFYING CLIENTS Potential clients for debtor finance obviously need to have some sort of business operation under their belts. Clarke suggests this plays right into brokers’ hands, given that brokers are already likely to have a number of business owners in their books who have decided to seek their advice on how to get a mortgage over the line as non-PAYE employees.
Get your customers moving
“Certainly, in my experience of them, mortgage brokers come into their own where their client isn’t a conventional employee where he can just walk into his bank and get a mortgage off the shelf. So, to that point, the self-employed or small business owner that becomes that mortgage broker’s client – absolutely we see the opportunity here as a [debtor finance] cross-sell for the mortgage broker. “If he’s got that relationship on the home loan, but the guy has a business behind it, then this can often be a lead product to get a broader relationship.” Langham adds that, while the specialist nature of debtor finance means brokers are unlikely to uncover debtor finance clients every month, when a debtor finance deal does come up it can lead to further opportunities with that client. “They may have business funding that is secured by their home and they would like to release that security because they want to make another investment. So you can release that security by leveraging other business assets – and receivables are an asset,” he explains.
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TOP 10 TIPS FOR BROKERS The Australian debtor finance market is growing, and the outlook is for further growth as the market matures and more business owners become aware of the different funding options available to them. Scottish Pacific offers 10 tips to help brokers make the most of this growing opportunity
1
View debtor finance as more than a short-term tool to ease cash flow pressures for clients: it is a smart way to help clients grow their business. As they grow, the facility (unlike a typical business overdraft) automatically grows with them.
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Ask if your clients are turning away orders and forgoing growth opportunities because they can’t fund them: debtor finance is a great option in these situations. Not every business is suitable for debtor finance: it works best for businesses selling goods or services to other businesses on standard trade credit terms (for example, labour hire or transport). Once it has been identified that the business is suitable, the key is to ask good qualifying questions about their situation: Do they have cash flow issues? How much impact does slow debtor payment have on their business? Have they experienced rapid sales growth, or difficulty paying creditors or the ATO?
4
Be aware of different business life cycle phases your clients may be going through: debtor finance is an ideal option for turnaround, merger and acquisition, bank refinancing and start-up situations.
5
When comparing the costs associated with more traditional funding options, make sure your client understands the opportunity cost of turning orders away and also the different features of a debtor finance facility, including the
Once they’ve freed up their home, they may choose to leverage that personal asset to buy an investment property, for example, meaning more potential business for their mortgage broker. “The owner might decide to buy a boat, a piece of new machinery or another investment property,” Langham says. “So, by having the cash flow of the business rolled through debtor finance, the broker finds more opportunities with that customer.” Equipment finance clients, too, may be interested in debtor finance, adds Clarke. “The client goes to a
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lower level of security required (real estate is not normally taken), faster approval times, and the flexibility of an overall funding limit that will grow in line with turnover. There is no requirement for the annual reviews or covenants typically associated with bank overdraft facilities.
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Your clients may prefer the facility to be undisclosed to their customers, or they may prefer the debtor financier to take on their collections as part of the service. Help them work out which option best suits their business.
7
Choose the extent to which you would like to be involved in the deal: you might meet the debtor financier with your client, or prefer just to make a referral. Most debtor financiers are comfortable to work with a contact name and number and will pay upfront and trailing commissions to referring brokers.
8
If your client is using debtor finance, there may be additional opportunities for you: for example, if the family home has been removed from the security equation, they may be able to use it to leverage an investment property.
9
Larger specialist debtor financiers tend to have the widest range of options: this enables them to tailor solutions to a business’s circumstances. It is worth investing the time to understand the differences between the various debtor financiers.
10
Some debtor financiers (including Scottish Pacific) also offer trade finance: this is an ideal cash flow accelerator for importers, assisting them in meeting the costs of bringing product into the country. Trade finance can be used in tandem with debtor finance to provide a complete cash flow solution from initial order through to final payment.
broker to finance a car or a vehicle for the business, or a piece of plant or equipment, and the cross-sell is broadening out into their working capital facilities, ie debtor finance,” he says.
A GROWING MARKET While Langham concedes that debtor finance opportunities are unlikely to crop up on a monthly basis, he explains that Australia’s debtor finance market is still quite young in comparison to this market in other developed economies.
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“In Australia there are about 4,500 businesses that use debtor finance,” he says. “But Australia’s quite immature compared to somewhere like the UK, where there are 42,000 businesses using it.” Given that the UK’s population is less than three times that of Australia but its number of debtor finance clients outstrip our own by more than nine times, it would seem that this is a market with plenty of room for growth. Cleaver further clarifies this point by talking in terms of GDP. “Currently, debtor finance only finances around 5% of Australia’s GDP. In the UK, however, this figure is closer to 16%, meaning debtor finance has plenty of upside in terms of market penetration. This presents significant opportunities for smart brokers willing to diversify,” he says. “Total debtor finance turnover across all Australian states increased 1.3% to $16.7bn in the December 2013 quarter from the previous quarter, according to data released from DIFA [the Debtor and Invoice Finance Association]. Total debtor
finance turnover for the 12 months to the end of December 2013 was $63.3bn. “The biggest markets were New South Wales ($6.5bn), Victoria ($4.5bn) and Queensland ($2.6bn) in total debtor financing turnover for the December 2013 quarter.”
STARTING THE CONVERSATION So how can brokers explain debtor finance to their clients in layman’s terms? Clarke says that, in his 20 years of debtor finance experience he’s seen various needlessly complicated explanations, but there is a very simple way of explaining the concept and gauging a client’s interest. “It’s simply if you have a gap between when you’re paying your suppliers and you’re getting paid by your customers, debtor finance can typically bridge that gap for you,” he says. And to hammer home the advantage to businessminded clients, Langham adds that the phrase to use is “leverage your business assets before you leverage your personal assets”.
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PROFILE / GEORGE COLLINGS
LOV LABOUR OF
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George Collings was a mediator in the Family Court before he became a broker. He now loves the profession so much that he considers his work-life balance a total failure and wants to keep broking for as long as he can. John Hilton reports George Collings has been broking for at least 15 years now, but he hasn’t always been in the mortgage game. In fact, he didn’t have a banking background before heading down the mortgage broking route. “My position before that was as a mediator in the Family Court, and I had a background in human services. I used to give lectures on separation as part of the job within the Family Court,” he explains. “One member of the audience one day was a financial planner who asked me a few questions, and over time I got to know him. Then later he offered me a chance to come and work with him.” When his new business partner got married and moved overseas, the pair sold the business and Collings decided to go it alone – partnering with likeminded individuals to form a new company, Charles Knight. And four years down the line there’s no turning back. While Collings admits that he works long hours, he enjoys having more control over his life as a mortgage broker than he had while working for the Family Court. “At the Family Court the hours were long and it was high pressure. And I was looking for the opportunity as I became more mature to be able to have more control over my own hours,” he explains.
E
“I’m still working long hours, but at least I can say yes or no and I can take holidays at times when I decide rather than be dictated to by external factors. So it’s more about that. And I also had an interest in investment, and I always had an interest in property too, so it was a natural sort of progression.”
GUILTY AS CHARGED When it comes to work-life balance, Collings says that he’s quite guilty of focusing more on work than his social life and not seeing friends for up to 12 months at a time. “I mainly only keep in contact with my friends because they contact me, so I wouldn’t say I’m a great example of work-life balance at all. I am a failure in that regard, totally,” he says. But all that focus on work has allowed Collings to streamline his lead generation process. He explains that Charles Knight has key performance indicators and has put together a form that brokers use after each interview to ask customers for referrals. “So there’s an expectation that for every new customer we generate about three other referrals from that customer,” he says. “Apart from that, the other thing is we have a lead generation team. We don’t put any money into advertising as such, but we do put a lot of money into lead generation through phone marketing. And we do put a lot of money into presenting to other customers, like accountants and financial planners with whom we think we can develop a strategic relationship.” He adds that it’s important not to rely on any one source for lead generation or new customers. “But you need to have a range of options and a range of methodologies, not all of which will work at the same time. But hopefully that’s something which can be done,” he says. When it comes to common issues that he encounters with clients, Collings explains that being a property investor specialist comes with its own set of challenges. “Most of the investor clients we have would be earning in the higher income bracket. They are
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PROFILE / GEORGE COLLINGS
mostly professional and they are time poor. And many of them have moved into senior positions and haven’t really – whilst they may have kept up with their professional associations and qualifications and expertise – quite had the time to keep abreast of the latest developments in terms of implications for financial change and legislation; therefore they are not always doing what they could be doing or should be doing. There is a fair degree of lack of information,” he explains.
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FAST FACTS
CAUTIOUS WORDS Being an investor specialist, Collings has been keeping a keen eye on the SMSF market, but has his misgivings about the way in which some SMSF trustees go about incorporating property into their portfolio. “There are a lot of comments being made now about people investing into certain properties and self-managed super funds, and you wonder whether the recommendations were made by the associates with the people they are working with because of commissions or because they can see genuine investment opportunity and investment growth – and I think that’s always an issue too,” he says. “I see so many units in Australia go into selfmanaged super funds and you have to say to yourself, ‘Well, are any of these going to achieve in the next 10 years any capital growth, given the fact that in Sydney and Melbourne and Brisbane there is change in the legislation with local government to height restrictions?’ ” He gives the example of a recent trip to Como in South Yarra, where he saw a number of tall apartment blocks under construction. “You can say, whatever they paid for those units, in 10 years’ time if you look at the inflation rate of around the mid-two’s, you’re not going to see any capital growth in those properties, I wouldn’t think,” he says. “A lot of those will go into self-managed super funds.”
JUST KEEP WORKING When asked about his future plans, Collings says that, being in the enviable situation of enjoying his work, he intends to keep working as long as possible. “I think a lot of people look forward to working less, but I would certainly look forward to doing what I’m doing now for a lot longer because I enjoy what I do,” he says. “I don’t feel exhausted by the work. I find the work interesting. I find the changes that are happening within the Australian financial 46 | APRIL 2014
Name
GEORGE COLLINGS Company
CHARLES KNIGHT FINANCE
industry and the world in general quite fascinating.” Speaking about the exciting changes that the industry is experiencing, Collings harks back to the introduction of electronic loan processing – and how far the industry has come in the age of smart phones and tablets. “I travelled overseas recently and all I took was my iPad. Once upon a time that would have been unheard of. I would say there would be further changes in technology in the next five years that may not be considered now,” he says. Collings sees keeping up with new technology, and anticipating new technology as two of the main challenges that brokers will need to meet in terms of how they store data, how they access records, and how to run a cost-effective business. “People are impatient about waiting a long time for results. Once they were quite happy if a cheque arrived in the mail in three or four days; now in half an hour to an hour they want funds transferred,” he says.
CREDIT CRUNCH Location
NEW FARM, QLD Background
Has worked at Charles Knight Finance for four years but has been a broker for 15 years Specialties
Advice on risk insurance, residential and commercial lending, income protection, strategies for wealth creation and tax minimisation
Changes to the credit assessment system, too, will impact brokers, Collings believes. “That’s going to require some education of customers as to financial conduct – not just in terms of home loans but in terms of a whole range of financial instruments. Whereas credit scoring was seen to be very different with a new paradigm coming in, late payments and a whole lot of factors are going to impact on credit assessment,” he says. “So that is something we have to come to grips with very quickly and educate our clients about. And it’s not just about having information yourself; it’s how you communicate that to your client base and also to others. And it’s not just for each individual office or small business, but how the lenders do. That’s going to be a challenge coming up in the next six months.” In addition, he sees, the country’s ageing population as an industry issue, with succession planning being vital. “I guess in the industry, as a lot of people look to move out of the industry, which will be happening in the next five years, I don’t think small businesses in this country are very good at succession planning and I think succession planning is key in terms of retention of skill,” he says. “I think there will be a merge of a lot of small businesses. I think they will be absorbed into larger business, so I think that will be an issue.”
BUSINESS STRATEGY / PERFORMANCE
MEASU BUSINESS
PERFORMANCE How do we measure business performance, and how do we select what to measure? Michael Quinn reveals all
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RING We all understand that profit margins and revenue are vital to a company’s success. There are, however, so many other factors that determine the success of a business. For any company to improve and grow, having performance management systems can be an important way to keep track of the progress of the business. Not only do they give you information about what’s happening now, but they also provide a starting point for setting goals and implementing strategies for growth, and examine triggers for any changes in performance. However, as organisations continue to increase in complexity, it becomes more and more complicated to identify the key drivers of organisational effectiveness. So how do we measure business performance and how do we select what to measure? The key is to focus on quantifiable factors that are clearly linked to the drivers of success in your business and your sector. These are your key performance indicators (KPIs). KPIs will vary from sector to sector and from business to business. KPIs are at the heart of any system of performance and target setting, and when used correctly they are one of the most powerful tools available for growing businesses. Ask yourself: what is it that drives success for my business? Be sure to tailor measurements to your specific circumstances and objectives. Consider the following when setting goals and targets for your business:
1
Define your goals Determine your measures for success. Your goals should be SMART – specific, measurable, achievable, realistic and time-bound. What is it you want to achieve? Do you want to increase customer
retention, improve market share, penetrate a new market segment, change a perception, generate more enquiries, or reduce customer complaints? Using KPIs, ensure that your targets will meet the specific and measurable part of the SMART goal system. You need to set challenging targets to motivate yourself as well as your employees, but remember that if you set unattainable targets you may discourage your employees. Look over the performance data for the past couple of years to get a sense of what kind of performance boosts you’ve seen before, and this will help you determine what is feasible. Achievable goal setting flows on to realistic goals and targets. To be realistic, a goal must represent an objective towards which both parties are able to work. A goal can be both high and realistic. Finally, a goal should be grounded within a timeframe. With no timeframe, there will be no sense of urgency.
2
Determine the metrics to measure your company’s performance Once you have identified your key goals and targets, compile a list of factors that are important to achieve success in your industry. These may include but will certainly not be limited to: • Admin
The level of employee turnover and the age of the facilities
• Marketing
Product quality, inventory levels, advertising budget and effectiveness, sales growth, market share
• Management
Experience of staff, level of effectiveness of communication systems, access to information
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BUSINESS STRATEGY / PERFORMANCE
Once you have identified your key business drivers, find a way to measure them. For example, if customer service is a priority for your business, then you should start measuring this. However, there are many ways to do so, such as: • • • •
conversion rate of lead to customer time it takes to complete an order/job/service number of dissatisfied customers percentage of returning customers
Customer service priorities vary from one industry to another. One is not necessarily more important than the other – the challenge is to find which specific measure enables you to improve your business.
Certain industry benchmarks are available on the ATO website, and MPA’s range of annual surveys and reports also provide valuable snapshots of the mortgage broking industry
3
Michael Quinn is an experienced chartered accountant and lawyer, and co-founder and director of the Quinn Group. He has spent years advising industry leaders and business owners about their financial situations and decisions, assisting them in maximising their potential and their opportunities. Visit www.quinns. com.au for more information
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Identify and understand your strengths and weaknesses A SWOT analysis is a useful tool for analysing your organisation’s strengths and weaknesses, and the opportunities and threats you face. It helps you to focus on your strengths, minimise threats, and take the greatest possible advantage of opportunities available to you. Decide on the objective of your SWOT analysis, then research your business, industry and market, and list your business’s strengths and weaknesses, and any potential opportunities and threats to your business. By looking at your company against your competitors, using the SWOT framework, you can create a strategy that helps you to distinguish yourself from your competitors and gain that invaluable competitive advantage.
4
Compare against benchmarks Benchmarking is a valuable way of improving your understanding of your business performance and potential by making comparisons with other
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businesses in the same sector. Certain industry benchmarks are available on the ATO website, and MPA’s range of annual surveys and reports also provide valuable snapshots of the mortgage broking industry. You can also measure the change in your business performance against a previous period or against a budget you have prepared.
5
Focus on customer retention Finding and retaining clients is a crucial task for every business. When you’re looking for areas of your business to measure and analyse, ask yourself how much you know about your clientele. Getting a new customer is five times more expensive than retaining a current one, so you can understand the importance of customer feedback. Work on the core product and service attributes for building customer loyalty. Businesses must focus on such issues as instilling a helpful-staff attitude, delivering on advertising promises, and providing accurate product information. Try viewing your business from your customers’ perspective – this will keep you on track as you consider options for growth.
6
Use ratios to interpret the results Using ratios will give you a great insight into how your business is performing. Rather than reviewing the gross profit as a dollar value, track the profit as a percentage. Using a ratio makes it much easier to spot trends and compare against benchmarks. You can use ratios to track all income and expenses. It may also be worthwhile to track your debtor days as a percentage (how long it takes your customers to pay you), or your creditor days (how long it takes you to pay your suppliers).
7
Take action on your results Report on trends that emerge from your findings on a regular basis – your results will help you decide what you want to do differently to change your results in the future. Did you achieve all the targets you had set for the business? If not, use the data you have collected to see what needs to be altered in order for these targets to be achieved. Hitting your targets is unlikely to be a cost-free process, so be prepared to make certain resources available when needed. Also, undertaking regular reviews will help with motivation and making changes if the progress result is not as expected.
BUSINESS STRATEGY / CHANGE MANAGEMENT
CHANGE MANAGEMENT REWIRING THE BRAIN FOR CHANGE
In business it’s vital to change with the times. But team members often find change hard, or resist it, even when it might be good for them. Why? The answers can be found in the brain itself, and Sonia McDonald reveals that it is possible to teach an old dog new tricks 52 | APRIL 2014
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As leaders, we are constantly driving and facilitating change, yet research in this area has demonstrated that 70% of change initiatives fail. Why? How can we make change easier and more successful? The neuroscience of change, and understanding how our brain functions, is vital to managing and coping with change.
BRAINS ARE WIRED FOR SURVIVAL Our brain functions as a survival tool by helping us avoid danger. A part of the brain called the ‘amygdala’ helps monitor our responses and tells us when to run from danger or towards safety. It also tells us when to step towards a benefit or away from a threat. When change is happening around us in our society, relationships and workplaces, we can feel threatened, and that activates our amygdala. We feel outside our comfort zone, triggering fear and anxiety.
Understanding how our brain functions is vital to managing and coping with change While this is good for our safety, it does come at a cost. When our brain is in safety mode, protecting us from a perceived threat, it cannot function well as a problem solver or creativity generator. In the workplace, the fear of change causes people to rely on tried and true routines, rather than create new strategies to move forward. In effect, the brain shuts down the part that is really needed at that time. Basically, the amygdala of your brain has been hijacked, and this is not the best time to make an important decision. Now you see why 70% of change initiatives fail. By understanding how the brain works we can manage change resistance and develop strategies to maximise change potential. Additionally, it gives us insights into how people learn, engage and remember, as well as manage emotions.
BRAINS ARE LAZY Considering that the brain weighs around 1.5kg and absorbs around 20% of the body’s energy, the brain is not particularly energy efficient and is actually pretty lazy. The brain prefers comfy habits, as these require a lot less energy. It doesn’t really like to learn new habits or ways of doing things, as this takes effort. The design of the brain is not always helpful. The part of the brain that is responsible for thinking and high-order processing (the prefrontal cortex) requires a lot more energy to function than the part of the brain that deals with emotion (the limbic system). That means it’s a lot harder for us to cope with change than to return to our tried and true habits. How can we break habits and form new ones? In his book The Brain That Changes Itself, Dr Norman Doidge tells us that the brain can be changed by our thoughts and actions. They physically alter the structure of the brain itself, which in turn changes the way it functions. This is the most important breakthrough in neuroscience in four centuries. This ability of the brain to change and make new connections, rewire itself and even grow new brain cells as a result of experience is called ‘neuroplasticity’. Change is about forming new wiring, habits and behaviours. Yes, we can teach an old dog new tricks! How can we harness neuroplasticity of change? By tapping into the emotions…
Often our behaviour is controlled by emotion rather than common sense
BRAINS ARE AFFECTED BY EMOTION We know that often our behaviour is controlled by emotion rather than common sense. What that tells us is that the limbic system in the brain has some control over the information that is passed onto the cortex, which controls our decision-making system. In other words, our thoughts and actions are coloured or skewed by the emotion we are feeling. You’ve heard of rose-coloured glasses, the phenomenon that makes certain things look better than they really are? That’s an example of the limbic system influencing our beliefs and perceptions. When people are afraid, as they usually are at the thought of change, our limbic systems colour our perceptions with threat and fear. People only see the negative side of change because that is all their brain permits. If the change is brought about for positive
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BUSINESS STRATEGY / CHANGE MANAGEMENT
reasons, then people will accept it and be ready to involve themselves in making change happen.
Change is about forming new wiring, habits and behaviours
Sonia McDonald is the director of LeadershipHQ. Visit www.leadershiphq. com.au or, to contact Sonia directly, email sonia@leadershiphq. com.au
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MAKING THE BRAIN WORK FOR YOU So we know that our brains are wired for survival, that they are lazy and will take the easiest thought out of there, and that every thought is coloured by emotion. We also know that actions and thoughts can change the physical structure of the brain. How can we use that knowledge to make the brain lead us towards supporting change rather than running away from it? There are two key solutions. First, you can use neuroplasticity to your advantage and provide opportunities for people to develop new thoughts and practise new actions and behaviours, thereby rewiring the brain. Second, you can make the limbic system work for you by creating positives around change, especially to reinforce behaviour and thought changes. We need to build organisational change systems that capture the important role of emotions in determining behaviour, particularly in the contexts of engagement, resistance, cooperation, and commitment. What that means in the workplace
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is that every small step forward needs to be acknowledged. Change leaders are essentially helping people to develop new connections within their brains. Our role should involve creating opportunities and interventions that give people the chance to trial new behaviours in a safe environment. We should allow them to take the ‘risk’ of doing something uncomfortably new and succeeding at it. The more fun we can build into the experience, the more people will become involved in it. Positive reinforcement is essential to help embed the new thoughts and behaviours and to show the limbic system that this change is nothing to fear. The more often we can encourage people to repeat the new actions, the more comfortable their brains will allow them to feel. When people are comfortable, their high-order thought processes resume functioning and their creativity and decision-making skills start firing again. If you are leading change in your organisation, you can create the right atmosphere for change by building a safe and positive environment for your team and identifying ways to acknowledge and reward new actions or behaviours.
BUSINESS STRATEGY / LEADERSHIP
LEADI Photo Credit: Peter Nink
Strange as it may seem, there are correlations between leading a team of 18 strangers into the wilderness of Antarctica for a year and heading a successful business. Rachael Robertson reveals the leadership lessons she’s taking to the business community
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Antarctica is just like any other workplace in the world, except we lived together around the clock for a year. So the interpersonal pressure was intense. We had a very diverse team from various backgrounds – engineers, scientists, IT, trades – and my job was to shape these individuals into a highperforming team because our lives depended on our teamwork. I didn’t recruit the team; in fact I first met them in pre-departure training. Because of the incredible diversity of this expedition and the enormous pressure of living together for so long in such extreme conditions, it was unrealistic to think we’d live in perfect harmony. I didn’t expect everyone to love each other, or for that matter to even necessarily like all 17 other people, but I did expect they’d show respect towards each other. Respect trumps harmony. We treated each other with the utmost professionalism, acknowledged very honestly and publicly that we were all different, and showed respect – for
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NG ON THIN ICE professional ability, personal space, individual opinions and idiosyncrasies. In high-pressure environments that rely on collaboration, you need a strong foundation of mutual respect. Harmony will follow. Like most workplaces we also had business cycles. Summer [November to February] was a time of extraordinary activity, with 120 people living on station delivering 22 science projects and a comprehensive construction and maintenance program. Project reporting, risk management and compliance were front of mind. When things are frenetic and major goals are achieved it usually means working long hours, but it’s easier for people to stay energised and motivated. When things quieten down it’s a lot more challenging for leaders to inspire. From February to November, the 18 of us were on our own, with no sense of urgency or burning platform, but we still had work to do. Every workplace has small, seemingly irrelevant issues that impact on morale and productivity. In Antarctica it was a ‘Bacon War’ – should it be cooked soft or crispy? In some offices it’s dirty tea rooms, or people arriving late for meetings, or texting while someone is presenting. They appear to be small things, but they are nearly always a sign of a deeper issue around respect. Managers need to deal with these behaviours expediently. Our bacon war turned out to be a dispute between two teams whose relationship had broken down due to a lack of respect being shown; it manifested itself in the bacon war. Take care of the little things.
CRISIS MANAGEMENT
In early December we had a plane crash. The landing gear failed and it stranded four of my people 500km away, with no way to fly the plane home. I had 116 people back on station watching me, worrying about the safety of their colleagues and picking up cues about the issue from my reaction and my behaviour. I knew my immediate priority was to ‘manage’ the search and rescue of these four people. But I also needed to ‘lead’. I had to ensure the other 116 people were informed, confident and optimistic and that we continued to deliver our works program. There were four important rules I followed to lead through this crisis:
1 2 3 4
Visibility I had to be seen about the place so people could ask me questions and be confident about our emergency response. My initial reaction was to hole up in my office and manage the search and rescue, but I realised it wasn’t enough to be leading; I needed to be seen to be leading. Composure My body language needed to build confidence and optimism. I had to be calm and poised.
Choose your words I spoke about a retrieval not a rescue; an incident not an accident. I had concerns but I wasn’t worried. Concern and worry are different words and they create a very different response. Communicate I sent out regular updates, every few hours, to inform people about the situation. If you don’t provide regular information during a crisis or a change, then people fill in the gaps themselves. Often these gap fillers are worse than the reality.
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BUSINESS STRATEGY / LEADERSHIP
TRUE LEADERSHIP True leadership is about creating more leaders, not more followers. It’s about inspiring people to take up a challenge, to keep going when things are tough and to know exactly how they contribute to business outcomes. I’ve worked with many incredible leaders, but most recently one person who really inspired me was Guy Russo, CEO at Kmart. Guy has a great strategic mind but importantly he can articulate and communicate the steps needed to implement the strategy. It’s no good coming up with the best action plan in the world if you can’t engender support for it and your people don’t understand it. At the start of the Kmart turnaround I watched Guy address 400 store managers and tell them ‘this is who we are; this is who we are not’. His clarity around the brand was very strong, and it showed courage to address these key staff, in person, and tell them, very clearly with no ambiguity, ‘this is the future of Kmart’. Tough decisions were made to delete certain product lines, but Guy stood front and centre and explained the rationale very simply and professionally.
what time I left the party, even when I chose to wear a hairclip because my hair was hanging in my eyes – no hairdressers for a year! It was all noticed. It came home to me that as leaders our behaviour is often interpreted in ways we cannot imagine. I was very conscious of this and relied on my selfawareness to monitor and manage my own behaviour at all times. I also made sure my decisionmaking was consistent and transparent. I would also never deride or ridicule the staff at head office, my peers at the other stations or other members of our expedition team, as this type of contempt is unprofessional and breeds dysfunction. Any organisation that has silos needs to take a long hard look at the behaviour of their senior management. I’ve seen contagion in teams where one person spreads their negativity and dysfunction to the rest of the team. These people can be demoralising and
SETTING THE EXAMPLE
Photo Credit: Peter Nink
Leading in Antarctica was a stark reminder of the scrutiny of leadership. We are being watched the whole time and everything a leader says carries extra volume and gravitas by virtue of their authority. For an entire year I was under intense scrutiny – where I sat for meals, who I greeted in the morning,
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YOUR OWN ANTARCTIC WINTER Every business has periods of time when work is just work. Capital expenditure is curtailed; there are no big exciting projects on the horizon – it’s all just business as usual. This is the Antarctic winter. Similarly, many projects have long lead times – years and years. The launch is exciting, the project completion or product launch is fantastic, but often the time in between is plain hard work with incremental progress. Just like Antarctica, the leaders need to keep people inspired through this period. I used three simple tools to keep us motivated, connected and effective:
1
The rule of no triangles The practice of only having direct conversations built respect within my team and resulted in very high performance. We had a simple rule that went: ‘I don’t speak to you about him, or you don’t speak to me about her’. No triangles: go direct to the source. It’s a powerful tool that reduces conflict and clarifies accountability. It also shuts down ‘answer shopping’; that is, people who keep asking the same question and go over people’s heads, or around people, until they get the answer they want. During the Antarctic winter, when interpersonal pressure increases and the focus turns from the work to the people, it’s even more crucial to have no triangles. Personal conflicts are magnified in quieter periods, unlike the heady times where we often overlook or put aside another person’s annoying behaviour. During these times open and direct conversations are even more critical. Go direct to the source.
2
Find a reason to celebrate Recognise milestones and important moments. If you don’t have one readily apparent, then create one. Find a reason. In Antarctica we celebrated big events but also the smaller successes, such as a month without a power blackout, significant scientific data collection or uninterrupted internet access with a fully functioning
exhausting. But the most important thing a leader can do is manage this behaviour before it spreads. These people try to gather numbers, and you ignore this behaviour at your peril.
EXPERIENTIAL LEARNING People have told me this expedition was like 20 years of CEO experience truncated into 12 months. I dealt with every issue you could imagine, and some you can’t, but the difference was I had no choice. I simply couldn’t ignore emerging issues, or delegate to someone else, or even take the weekend to consider my options. The buck stopped with me and I had to find ways to deal with things. Sometimes I got it right; other times I got it wrong. The value of experiential learning comes in the reflection; that is, what did I learn there? What worked? What didn’t? Because I had no one to talk to or discuss options
server. Usually it was just a notice on the whiteboard in the dining hall, but it was important to find the time to stop and celebrate, because these moments create momentum. They give a sense of progress, moving forward and getting closer to our outcomes. During long projects, or even times when it’s business as usual, an inspiring leader will find a reason to stop and salute even small accomplishments. Whether it’s with an event, a reward or a simple thank you, the acknowledgement and recognition will reaffirm their purpose and demonstrate progress, two of the most important motivational domains.
3
Check in on people As you receive reports and updates on projects, take a moment to check in on people and ask, “Are you OK?” Not the project, not the tasks, but you – the person. People respond with commitment and loyalty when they know that they and their contribution are valued. To show people they are valued, check how they are travelling. Make it spontaneous and often. These moments will create momentum. As Maya Angelou put it so succinctly, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel”.
with, I decided to keep a journal. The journal became the best leadership development I’ve ever had. As each new challenge presented itself I’d capture my thoughts and ideas and decide what to do. Afterwards, I’d go back to the journal and reflect on how things panned out. The discipline of reflecting on your performance and behaviour as the leader builds self-awareness. It’s like standing on a balcony looking down and watching yourself. The best way leaders can develop their ability is to honestly and critically evaluate themselves and their performance, every single day. We learn by doing new things. New experiences – secondments, higher duties, relocations – are opportunities to learn and add new skills to your leadership toolbox. I’d take on almost any opportunity to develop my leadership, even if it didn’t turn out, because I would rather regret what I did do than regret what I didn’t.
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LIFESTYLE / DAY IN THE LIFE OF
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Day in the life of...
Kim de Bonde, business development manager Vic/Tas/SA, nMB 6.00am: Alarm goes off and straight into the shower. 6.30am: Jump into the car to meet nMB managing director Gerald Foley at the office. I am joining Gerald and a broker for a breakfast meeting. As it’s an early start today, a great run down the freeway in the CBD.
7.30am: Arrive at the office; head off to our 8am breakfast meeting. I know the broker from my time with Interstar, so it’s a bit of a catch-up too.
9.00am: After a very productive meeting we head back into the office. It’s a much slower trip back to the office as we have hit peak-hour traffic.
9.30am: Quickly check my emails and voicemail
Kim de Bonde
messages. Return as many as I can in the time provided.
9.45am: I’m in the office this morning to attend one of our New to Industry Broker Support (NIBS) training sessions. NIBS was recently launched to provide in-house support and training for people with financial services experience but not broking experience. NIBS is targeted at small-to-medium financial services businesses looking to introduce a mortgage offering to their client base. We have two finance professionals undertaking the current course, which consists of 12 three-hour sessions.
12.45pm: Duck outside for a quick bite while I have the chance.
1.00pm: On the phone calling some of my new brokers to introduce myself and make some appointments to meet more of the brokers face-toface. It’s still early days since I started with nMB, so I’m making sure I meet as many brokers as I can as soon as possible.
2.00pm: Appointment with Laurie Duffus, head of sales, to meet with the key Aussie Home Loans staff that I will be dealing with. Always nice to see familiar faces and meet many new ones. 60 | APRIL 2014
It’s still early days since I started with nMB, so I’m making sure I meet as many brokers as I can as soon as possible
3.30pm: Meeting with a prospective broker. Discussed their current business and future goals but, more importantly, I was able to explain the nMB offering in more detail than is possible over the phone. 4.30pm: Back in the car heading out to deliver a volume report as requested at a recent broker meeting. At our recent professional development events we launched a simple business plan format for use by our brokers, and we are also offering whatever support is required with their business planning. I take the opportunity to offer this broker help with his own on my next visit. Drop in to another broker in the area to check out the new office and make an appointment for a joint visit with Laurie.
6.00pm: Arrive home and have a quick dip in the pool before heading off to cricket training for a bat and a bit of a runaround doing fielding practice.
9.00pm: Arrive home for a late dinner; chat with my wife about her day, and watch a bit of TV.
10.30pm: Little bit of reading (Jack of Diamonds by Bryce Courtenay), then lights out!
NEWS ANALYSIS / THE DATA
GLOBAL HOUSING AFFORDABILITY Rockford, IL US Decatur, IL US Springfield, IL US Vancouver, BC Canada
WORLD RANKING: =4 MEDIAN HOUSE PRICE: $91,000 MEDIAN HOUSHOLD INCOME: $45,400
WORLD RANKING: =9 MEDIAN HOUSE PRICE: $120,600 MEDIAN HOUSHOLD INCOME: $56,700
Utica, NY US WORLD RANKING: =1 MEDIAN HOUSE PRICE: $80,000 MEDIAN HOUSHOLD INCOME: $47,500
WORLD RANKING: 356 MEDIAN HOUSE PRICE: $638,900 MEDIAN HOUSHOLD INCOME: $69,000
Toledo, OH US Santa Cruz, CA US WORLD RANKING: =354 MEDIAN HOUSE PRICE: $621,200 MEDIAN HOUSHOLD INCOME: $69,000
San Jose, CA US WORLD RANKING: =353 MEDIAN HOUSE PRICE: $805,000 MEDIAN HOUSHOLD INCOME: $92,400
Santa Barbara, CA US
WORLD RANKING: 358 MEDIAN HOUSE PRICE: $679,800 MEDIAN HOUSHOLD INCOME: $72,700
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WORLD RANKING: =4 MEDIAN HOUSE PRICE: $124,600 MEDIAN HOUSHOLD INCOME: $61,300
WORLD RANKING: =4 MEDIAN HOUSE PRICE: $100,000 MEDIAN HOUSHOLD INCOME: $49,500
San FranciscoOakland, CA US
10 MOST AFFORDABLE CITIES
Appleton, WI US
Lansing, MI US
WORLD RANKING: 359 MEDIAN HOUSE PRICE: $599,450 MEDIAN HOUSHOLD INCOME: $58,130
Honolulu, HI US
WORLD RANKING: =1 MEDIAN HOUSE PRICE: $88,900 MEDIAN HOUSHOLD INCOME: $51,600
WORLD RANKING: 357 MEDIAN HOUSE PRICE: $638,900 MEDIAN HOUSHOLD INCOME: $69,000
10 LEAST AFFORDABLE CITIES
All figures are in US$.
WORLD RANKING: =4 MEDIAN HOUSE PRICE: $87,500 MEDIAN HOUSHOLD INCOME: $44,100
Youngstown, OH-PA US WORLD RANKING: =9 MEDIAN HOUSE PRICE: $85,000 MEDIAN HOUSHOLD INCOME: $41,400
Warner Robbins, GA US WORLD RANKING: 3 MEDIAN HOUSE PRICE: $103,900 MEDIAN HOUSHOLD INCOME: $55,500
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Source: 10th Annual Demographia International Housing Affordability Survey: 2014
Another year, another International Housing Affordability Survey from Demographia. So how did Australia fare in this year’s rundown of the developed world’s most and least affordable property markets? A total of 360 metropolitan markets were compared from nine countries (Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the UK and the US), with two Australian cities making the top 10 least affordable list.
Sydney was found to be the joint sixth least affordable city, along with Santa Cruz in California, while Melbourne was judged to be the 10th least affordable city. Hong Kong took the title of most unaffordable city, followed by Vancouver and Honolulu. At the other end of the scale, the US took out nine of the 10 most affordable city spots, with Rockford, Illinois, and Utica, New York taking joint first place.
Waterford Ireland WORLD RANKING: =4 MEDIAN HOUSE PRICE: $126,300 MEDIAN HOUSHOLD INCOME: $64,000
Bournemouth & Dorset UK
Hong Kong China SAR WORLD RANKING: 360 MEDIAN HOUSE PRICE: $518,120 MEDIAN HOUSHOLD INCOME: $34,765
WORLD RANKING: 352 MEDIAN HOUSE PRICE: $369,250 MEDIAN HOUSHOLD INCOME: $42,720
Sydney, NSW Australia
Melbourne, Vic Australia
WORLD RANKING: =354 MEDIAN HOUSE PRICE: $631,110 MEDIAN HOUSHOLD INCOME: $70,300
WORLD RANKING: 351 MEDIAN HOUSE PRICE: $520,030 MEDIAN HOUSHOLD INCOME: $61,830
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THE DATA / YOUR MORTGAGE INDEX
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BUYER TRENDS
Key stats from borrowers making enquiries at Yourmortgage.com.au
$399,720
PURPOSE OF MORTGAGE
LOAN AMOUNT THE AVERAGE MORTGAGE $414,000 SIZE REQUIRED Average loan amount
15.4% To buy an
$403,000
55.33%
$392,000
The percentage of enquiries from first home buyers
$370,000
investment property
$381,000 Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
55.3% First home buyer
TYPE OF MORTGAGE
13.3%
40%
33.68%
Move home
30% 20%
1.3%
10% The percentage of borrowers looking for a standard variable rate product
0%
Give my home a makeover
Feb
Mar
Apr
INTRODUCTORY
May
Jun
Jul
STANDARD VARIABLE
Aug
Sep
Oct
BASIC VARIABLE
Nov
Dec
Jan
FIXED INTEREST
Visit www.mpamagazine.com.au/consumer-borrowing-data for all the latest borrower trends
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14.2%
Refinance to get a better deal
0.4%
I want some spending money
Nominations Opening soon
save the date Friday 17th October 2014 Sydney Town Hall
www.austr alianmortgageawards.com.au