MPAMAGAZINE.COM.AU ISSUE 15.5
2015
BROKERS ON AGGREGATORS What you told us about your aggregators, from commissions to communication and more
FOREIGN INVESTORS THE GOVERNMENT’S ‘CRACKDOWN’ EXPLAINED
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SMSF LENDING UNCERTAINTY ISN’T STOPPING INNOVATION
PAPERLESS APPLICATIONS NO LONGER WAITING ON TECHNOLOGY
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CONNECT WITH US
CONTENTS 10
Got a story, suggestion, or just want to find out some more information? twitter.com/MPA_Australia www.facebook.com/ MortgageProfessionalAU
UPFRONT 04 News and tips
Intelligence and tips for the cutting-edge mortgage professional
62 Housing affordability
A shared Australian experience we’d rather avoid NEWS
BUSINESS STRATEGY
The government’s ‘crackdown’ on foreign investors
54 Big vs small business
NEWS ANALYSIS
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56 Client service excellence
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COVER STORY
BROKERS ON AGGREGATORS 2015 SMSF LENDING
14 ING Direct’s brokerdriven growth strategy
58 Power of the tribe
Building your own business network
MORTGAGE INSIDERS Firstmac boss and industry legend Kim Cannon’s daily routine
FEATURES
LISA CLAES
The costs of poor service and the rewards of going the extra mile
61 Day in the life
Industry insights and individual scores
MORTGAGE INSIDERS
Why strategy should be determined by size
Lenders on innovation and uncertainty
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64 Favourite things
Chris Slater of AFG Home Loans on beating his daughter at PlayStation
MPAMAGAZINE.COM.AU NOW ONLINE: A different business strategy focus each week Brokers on Banks survey NEW MPA rankings pages
FEATURES
MPA TV: Major bank roundtable videos and much more
A new generation of systems is emerging
… and tips and highlights from the latest magazine
ELECTRONIC PROCESSING
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FEATURE / BROKER EDUCATION
EDITOR’S LETTER
MPAMAGAZINE.COM.AU
Contact the editor: sam.richardson@keymedia.com.au
Prove it!
COPY & FEATURES
verybody in this industry talks the talk – they all have the best offers, the slimmest fees, and the most powerful systems. And while, technically, we can’t all be the best, there’s no reason the operators in this industry can’t all provide excellent service. But first, they need to prove it. This issue of MPA contains the first of 2015’s broker surveys: Brokers on Aggregators. Hundreds of you went online to tell us what you expect from your aggregators and how they’re performing. I’m confident that aggregator service levels can be fairly compared, and outstanding operators can be recognised, providing one accounts for the differences between aggregators, and between brokers. Diversity does not make comparison impossible; what we aim to measure is the quality of the services provided, as measured by those brokers who hold these services as highly important. Given the current vogue for customer-centric approaches, we shouldn’t forget that brokers are customers too. What I’m not saying is that Brokers on Aggregators is the definitive guide to the sector. It’s intended to start a debate; one of the few debates in this industry where brokers set the agenda. We’ve also got Brokers on Banks, Brokers on Non-Banks, and a brand new survey about brokers themselves coming up this year, and we urge you to get involved by going to our website. Of course numbers don’t tell the whole story; in this issue you’ll also find Top 10 broker Ren Wong, analysis of the government’s foreign investor ‘crackdown’, our guide to SMSF lending, and much, much more.
GRAPHIC DESIGNER Loiza Caguiat DESIGN MANAGER Daniel Williams
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Sam Richardson, editor, MPA
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EDITOR Sam Richardson JOURNALIST Maya Breen PRODUCTION EDITOR Roslyn Meredith CONTRIBUTORS Janine Garner, Eric J Gregory, Nikki Heald
ART & PRODUCTION
SALES & MARKETING
NATIONAL SALES MANAGER Rajan Khatak ACCOUNT MANAGER Simon Kerslake MARKETING & COMMUNICATIONS MANAGER Lisa Narroway TRAFFIC COORDINATOR Lou Gonzales
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 Sam Richardson +61 2 8437 4787 sam.richardson@keymedia.com.au Advertising enquiries Sales Manager Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Account Manager Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au Subscriptions tel: +61 2 8011 4992 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 Offices in Sydney, Auckland, Denver, Toronto, Manila mpamagazine.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as MPA magazine can accept no responsibility for loss.
^Not Zeala
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ROUND-UP
NEWS AND TIPS
Going from broker to broking business National Mortgage Brokers’ Gold Coast conference kicked off a year of moving away from the one-man band THE GLEAMING and salubrious pools of the Gold Coast’s Sheraton Mirage may not seem the typical setting for a year of ‘getting serious’, but that was exactly the message of challenger aggregator National Mortgage Brokers’ (nMB’s) 2015 conference. “Last year we were talking about reaching the 50% market share mark,” remarked nMB chief Gerald Foley in his opening speech. “[Now] a two-thirds broker share is not beyond capability.” In order to reach it, Foley argued,
OUTSOURCING TIPS FROM TIM REID Tim Reid hosts Australia’s number one marketing podcast, The Small Business Big Marketing show. He gave conference attendees some tips for getting their promotional material made cheaply, through online-based outsourcing. 99 Designs Put a design brief (ie design a logo) on 99 Designs and designers will compete to produce designs – you pick the winner. You pay the website, which then pays the designer. For smaller tasks – updating business cards or editing a single photograph – the 99 Design Tasks section of the website will get the job done in less than an hour for $19. Elance Hire freelancers across the globe – Reid, for example, has part-time staff in Serbia, the UK and Brisbane. The service is now well established, and used by Microsoft, Cisco and others.
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the industry needed to mature, beginning with brokers evolving away from the one-man band. “We’re working with brokers who are on that journey from being a broker to establishing a fully-fledged broker business, and the business model we’re saying is principal plus one at least, work from retail office premises, have structured processes within your business, and have an established referral network.” The official program will begin later in the year, following trials in Melbourne, Foley added. The conference itself mixed the theme of business development with the inspiration and interaction you would associate with conferences. Speakers ranged from Macquarie Bank’s wealth management director Martin Lakos, through to sporting and local hero Steven Bradbury and ex-policeman Allan Sparkes. They were MC’d by crowd favourite Floyd Nangreave, managing director of recruiter Cherry Solutions. Oddly enough, the theme of development was best encapsulated by two musicians – INXS’ Ciarn Gribbin and Kiwi opera star Geoffrey Knight. Both have reached national renown despite tough beginnings; Gribbin in war-ravaged Northern Ireland and Knight from a background in bikie gangs. Both performed, much to the delight of brokers, but it was their often-emotional retellings of their life stories that really captivated the audience. There were also practical tips on offer, from small business marketing expert Tim Reid, and a ‘roundtable’ consisting of Doug Lee, head of sales at Macquarie Bank; Troy Phillips of MASfunder; and Pepper’s director of sales and distribution Mario Rehayem. The panel discussed the challenges facing challenger
Opera star Geoffrey Knight performs at the Friday 13th themed awards dinner
nMB’s Gerald Foley and Margaret Chapman, with INXS musician Ciarn Gribbin (centre)
brands and the third-party channel generally, with brokers being advised to dissect their trail book, develop their personal brands into business brands, and put social media development ahead of websites. Fittingly, the conference concluded by showing the rewards for broker businesses, with nMB’s annual awards ceremony at the Movie World theme park. The aggregators’ ‘First XI’ – whose members receive a special diamond-studded ring – comprises some of Australia’s top brokers, including Jeremy Fisher of 1st Street Home Loans and Gerard Tiffen of Tiffen & Co. nMB will certainly be hoping that 2015 sees a number of new broker businesses joining the squad.
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What exactly makes finance ‘ethical’? Consumers are increasingly concerned about where their money’s going, and you should be too NO DOUBT most readers of this magazine would dub themselves ‘ethical’; we do our jobs properly and put the interests of the customer first. But ethical finance means something quite different – it’s about really noticing where your clients’ repayments are ending up. Supporting charities
DECIDING WHO’S ETHICAL The Ethisphere Institute provides one way to ‘measure’ how ethical a lender is. The institute produces an annual list of the world’s most ethical companies, which this year included both National Australia Bank and Teachers Mutual Bank. They use the following criteria: Governance
15%
Lenders and brokers getting involved in good causes is nothing new. Homeloans Ltd recently announced support for the ‘Buying Time’ breast cancer campaign, and a number of the large banks pledged sums for disaster relief in cyclone-hit Vanuatu. But proving consistent charitable aims over the lifetime of a loan – which could be decades – is more difficult in a charitable environment of constantly changing fashions. Perhaps ethical finance lies in ownership and corporate governance, rather than charitable initiatives. Credit unions would argue they’ve been doing ‘ethical finance’ at a local level for years, and furthermore, because they’re owned by their members, they need to appear responsive, unlike larger companies dealing with anonymous profit-focused shareholders. Of course, credit unions still finance a tiny fraction of loans and thus have limited influence.
In the UK the Guardian newspaper, which also operates in Australia, has called for two major charitable foundations to pull their money out of fossil-fuel companies, and the Bank of England has warned about the dangers that “investments in fossil fuels … may take a huge hit” because of regulations. Back in Australia, the University of Sydney declared in February that fossil fuel divestment would play a role in reducing its carbon footprint.
Divestment
Lenders and brokers
‘Divestment’, ie ending investment in certain companies, is becoming a “global trend”, according to Shane Oliver, head of investment strategy at AMP Capital Market. He told the ABC that divestment was “a choice, and the choice is along the lines that fossil fuel is dangerous to the environment, causing global warming in the longer term”.
Some lenders have proactively changed their investment criteria. Bendigo and Adelaide Bank doesn’t lend to companies that focus on exploration, mining, manufacture or export of thermal coal or coal seam gas, according to third party general manager Damian Percy. “We have found over recent times that our position on environmental sustainability
Culture of ethics
Corporate citizenship and responsibility
20%
Leadership, innovation and reputation
10%
35%
Ethics and compliance program
20% Source: Reproduced with the permission of the Ethisphere Institute
resonates with many customers and, unsurprisingly, brokers themselves. That is, they are concerned about the environment and are looking to take practical steps to minimise the harm they do or might indirectly facilitate.” Some brokers have already integrated their ethical views into their business model. Future Home Loans, set up in March by Simon Sheikh and Adam Verwey, is a brokerage that uses only products from ‘fossil-free lenders’. The brokerage aims to show the major banks that their investments are losing them valuable business – and claim $15m has already been moved away from these institutions, in their three-month pilot. Evidently, brokers are well positioned to guide clients towards ethical options. What has yet to be proved is whether ethical finance can provide a profitable niche for those brokers who put in the extra work to follow it.
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ROUND-UP
NEWS AND TIPS
All the small things For two leading brokers, continually tweaking the business made all the difference
WHAT TAKES you from good broker to leading broker? Work ethic, excellent contacts and a passion for the job all certainly matter, but sometimes it’s the small and somewhat eccentric brokerage practices – the staff trips and banana smoothies – that can make all the difference but, sadly, are rarely talked about. MPA was invited to Choice Aggregation Services’ Business Development Day, which brought leading brokers and Australian Mortgage Award winners Paul Wright and Justin Doobov together to talk about their individual business tips. Choice CEO Stephen Moore interviewed the two separately, as part of the aggregator’s commitment to peer-topeer development of its brokers. Starting out Wright’s brokerage, Choice Home Loans Wollongong, and Doobov’s brokerage, Intelligent Finance, both started as typical one-man operations. Wright used his contacts at Commonwealth Bank, and Doobov left a partnership brokerage to go solo. Wright quickly realised how a small extra investment of time could pay off, in building a
reputation and getting leads. “One of the key things I identified early was that a lot of the brokers – and I think there’s a lot doing it today – do the application with the client, and that’s the only time they see them. But I, from day one, did the loan signing,” he says.
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As you’d expect from two brokers at the top of their game, Wright and Doobov are supported by teams around them, although they’re organised in quite a different way. Intelligent Finance concentrates on ‘stripping out admin’;
“Stay in touch with your clients … it’s got to be meaningful; it’s got to be worthwhile … something that they’re going to get a benefit from” Paul Wright, Choice Home Loans Doobov had to contend with working, for the first few months, from his parents’ garage. He found that a corporate approach to branding and correspondence reassured customers, but the real step-up came in getting an office, and using an unusual incentive to bring clients there. “I used to make a really good banana story … we created a drinks menu and said ‘come to the office’ – it was the middle of summer – ‘I’ve got the best banana smoothie and you must try it’.”
DIVERSIFICATION: DO YOU WANT FRIES WITH THAT? Where these two brokers differ is in offering clients additional services. Paul Wright maintains you should raise the issue during initial meetings, which gives the client a reason to come back even if their loan doesn’t progress. However, Justin Doobov is worried that too many options at an early stage can confuse the client and slow the application process; he prefers the ‘do you want fries with that’ postsettlement approach.
Efficiency
Doobov wants himself and his staff doing only what they’re best at, and will hire extra staff if necessary to do the more menial jobs. The brokerage saves further time by using preformatted forms, and file storage that reflects the specific stage of the application. Doobov also encourages staff to ‘master’ their jobs and teach their replacements as they’re promoted up the chain. “Now we’ve got three or four levels through which the information gets passed down,” he says. “It’s like a tribal sort of thing … I’ve forgotten how to do things, I’m so far removed from them.” Wright, on the other hand, has an office where staff can share the workload. While he doesn’t need to man the phones any more, he’ll fix the photocopier if that’s what needs to be done. He keeps his staff incentivised through annual trips and monthly drinks, and particularly emphasises the importance of paying attention to staff members’ partners. His brokerage has developed a niche of sorts – property-portfolio building – and maintains it through close relationships with real estate agents, monthly and annual checkups, as well as having an in-house financial planner. He advises brokers to have a referral relationship with a planner, to build trust, before inviting them into the brokerage.
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THE DATA
YOUR MORTGAGE TRENDS
BUYER TRENDS Key stats from borrowers making enquiries at Yourmortgage.com.au AVERAGE LOAN SIZE REQUIRED $424,000 Average loan amount $418,000 $412,000 $406,000 $400,000 MAR 2014
APR 2014
MAY 2014
JUN 2014
JUL 2014
AUG 2014
SEP 2014
OCT 2014
NOV 2014
DEC 2014
JAN 2015
FEB 2015
MAR 2015
HOW SOON MORTGAGE IS REQUIRED Not immediately
60
In the next few months
Right now! Hurry!
50 40 30 20 10 0
MAR 2014
APR 2014
MAY 2014
JUN 2014
JUL 2014
AUG 2014
SEP 2014
OCT 2014
NOV 2014
DEC 2014
JAN 2015
FEB 2015
MAR 2015
PURPOSE OF MORTGAGE First home buyer
Move home
56.9%
11.7%
Refinance to get a better deal
27%
To buy an investment property
3.7%
Give my home a makeover
0.6%
Other
0.1%
Visit www.mpamagazine.com.au/consumer-borrowing-data for all the latest borrower trends
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FEATURE / BROKER EDUCATION NEWS ANALYSIS
FOREIGN BUYERS
FOREIGN BUYERS:
ARE WE STILL ‘OPEN FOR BUSINESS’?
After years of inaction, the government wants to strengthen rules on foreign buyers, and introduce new fees. MPA’s Sam Richardson reports on whether the measure is political theatre, or a genuine threat to brokers
CALL IT a publicity stunt if you will. When
Context: The options paper
Australia’s Treasurer effectively evicts China’s 15th richest man from his Point Piper palace, and then brags about it in Parliament, you can’t help but pay attention. Hui Ka Yan broke the rules, of course, by buying the established property through a string of companies, flouting the Foreign Investment Review Board’s regulations. But perhaps it was Joe Hockey’s overenthusiastic response that led Yellow Brick Road chairman Mark Bouris to label the entire episode “a diversion”, when talking to News Corp journalists. “That is just one buyer. That $39m doesn’t distort the market … there are not too many of those floating around.” Undoubtedly, not many of us can fork out the $39m asked for the property in the current 90-day ‘fire sale’. Yet there are two ways of seeing Hockey’s move: as a diversion, or as a U-turn. With a host of new charges and strong rhetoric on ‘cracking down’, we may be seeing the end of a decade of government tolerance of foreign buyers, with widereaching consequences for brokers.
More important than the entire mansion incident was the government’s options paper, released just a few days earlier in February. Titled Strengthening Australia’s Foreign
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“I think they need to decide the rationale behind the fees; from looking into it, it looks like they’re just trying to recoup the administration costs” Justin Doobov, Intelligent Finance Investment Framework, it starts by assuring readers that foreign investment “plays an important and beneficial role in the Australian economy” but acknowledges the “growing community concern” at residential and agricultural investment. The Treasury report also considers creating a dedicated investigative unit within the ATO for regulating foreign real estate investment. For those who break the rules, a number of new penalties are suggested, including up to
two years’ imprisonment for third parties who assist individuals in breaking the law, or a $85,000 fine. However, a previous inquiry into the issue by the House Economics Committee found that no one had actually been prosecuted since 2006. Foreign buyers who stick to the rules were also mentioned in the report. Item 42 of the report states that “the Government is considering charging a fee on all foreign investment applications to fund screening,
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PROPOSED PENALTIES As taken from page 11 of the Treasury’s Strengthening Australia’s Foreign Investment Framework, published February 2015 THIRD PARTY ASSISTS FOREIGN INVESTOR TO BREACH RULES There is currently no civil pecuniary penalty under the Act for this breach. CIVIL PENALTY Specific offence to be included in the Foreign Acquisitions and Takeovers Act 1975. Pursue court action to impose a civil penalty. The maximum civil penalty would be: 250 penalty units ($42,500) for individuals. Corporations subject to multiplier of five. CRIMINAL PENALTY Knowingly assisting another person to commit a criminal offence is an offence under Section 11.2 of the Criminal Code (maximum penalty is 500 penalty units ($85,000), imprisonment of two years, or both).
compliance and enforcement activities and improved data collection around foreign investment”. These fees would start from $5,000 for properties under $1m, and increase by increments of $10,000 per extra million.
Effect on foreign buyer appetite While $5,000 is a lot, it’s not quite enough to financially hurt buyers, according to the leading brokers MPA consulted. ACA Mortgage Solution’s Raymond Xue, MPA Top 100’s number one broker, deals with a large number of mainland Chinese clients, and is not concerned. “The impact will be minimal … if people want to buy a property, they will have sufficient money to buy the property. I think $5,000–$10,000 is really a small portion for them,” he says. Both Xue and MPA’s number one
commercial broker, Diana Liu, note that the recent fall in the value of the dollar would make the fees near-irrelevant. “Australian currency is at a historic low,” Liu explains. “It has decreased by 20–25% against the renimbi. So if you’re buying a property, and the price is $500,000, you’ve already saved a greater amount in terms of the currency, so I don’t think the $5,000 is going to impact a lot until the time when the
Australian dollar comes back.” Justin Doobov of top independent brokerage Intelligent Finance says the objective of the fees remains unclear. “I think they need to decide the rationale behind the fees; from looking into it, it looks like they’re just trying to recoup the administration costs. Either way, I don’t think that’s going to hinder someone buying a property.” Indeed, Sydney’s Eastern Suburbs, Doobov’s local area, boast prices that dwarf the proposed
“At this stage I don’t think these changes will have any major impact. They’re tightening the rules a bit with more regulation, but definitely not turning them away” Raymond Xue, ACA Mortgage Solution FEBRUARY 2015 | 11 www.mpamagazine.com.au 11
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FEATURE / BROKER EDUCATION NEWS ANALYSIS
FOREIGN BUYERS new fees. A $600,000 property would usually require a deposit of $150,000 for most foreign investors, he points out.
Effect on affordability With limited effect on foreign buyer appetite,
STAYING SAFE LEGALLY
MPA asked Gadens partner and financial services expert Jon Donovan whether new regulations could be a threat to brokers. Here is the summary of his response: “The Foreign Investment Review Board attack will be primarily aimed at real estate agents and lawyers and conveyancers who ignore the law or assist people to circumvent the law. It is uncertain how hard FIRB will go in investigating these practices.” “… Brokers who are involved in assisting getting around FIRB could be prosecuted and could lose their licence to act as brokers. This is because brokers are expected to act ‘efficiently, honestly, and fairly’ – a condition on all credit licences. Brokers who do not know of an FIRB breach should not be in trouble, but it is appropriate to make reasonable enquiries to determine whether foreign buyers have approval if it is needed.”
it’s therefore questionable whether the proposed fees would have any effect on housing affordability. Affordability is at the heart of public fears surrounding foreign investors, who are blamed for raising average house prices in certain areas. Our brokers have different views on this issue. Doobov believes the fees would simply cause investors to bring over more money, and price inflation would continue unabated in Sydney. Conversely, Xue believes fees could
established home purchased by a temporary resident is over the $1M mark at $1.064M while the average price of an off-the-plan development acquired by a foreign investor is $647k”. MFAA CEO Siobhan Hayden told MPA that improving affordability would also mean improving the supply of homes relative to demand. “Only following an independent review would it be sensible to suggest further provisions regarding foreign investment,” she
“I think government bringing out this kind of rule is positive in terms of politics, and the government should be balancing the economy with the need to not be taken over by foreigners” Diana Liu, Wealth Connected Pty help restore affordability, but only if they’re 10 times higher. Fees will work, he claims, “if they make the effort; if they’re going to build more housing, and if more regulation comes out for investors. Maybe they should increase the fees from $5,000 to $50,000”. Indeed the link between foreign buyer appetite and rising house prices is itself questioned. REIA president Neville Sanders’ introduction to Adelaide Bank/REIA’s recent Housing Affordability Report states that “foreign buyers predominantly buy property at a much higher price than Australian first home buyers, who nationally have an average loan of only $308,444. The average price of an
said. “Of critical concern within Sydney especially is our ability to increase the supply of property relative to demand.”
Brokers’ take on government intervention in the sector While the proposed fees won’t break the bank, could they be sending a negative message to all foreigners? Hockey told Parliament that the government “welcomes” foreign investment, “but it is vitally important that every Australian knows that the rules relating to foreign investment are going to be enforced”. However, the chief executive of Chinese language real estate website Juwai dubbed the crackdown
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“racist”, and Yellow Brick Road’s Bouris and others have suggested that buyers with Chinese names are being confused with foreigners. However, the broker and industry associations MPA spoke to have a variety of views on the issue. “I don’t think they’re looking to turn away foreigners,” ACA Mortgage Solution’s Xue says. “$5,000 or $10,000 is reasonable for the administration cost. Maybe if it was too much they’d be saying they don’t want foreign investors … but at this stage I don’t think it’ll have any major impact. They’re tightening it a bit, with more regulation, but definitely not turning them away.” Donald Tang, of up-and-coming brokerage Alliance Mortgage Solutions, notes that “property investment regulation has been formed way back before the foreign buyers’/ investors’ market was booming … our government is working hard to reform the regulation that will minimise the small percentage of black sheep to ruin the brokerage market and create unfairness for the group of people who follow the rules”. The regulations to which Tang refers have not been updated since 2001. Government action is a “good thing”, according to Diana Liu. “You don’t want all the Australian policy purchased by foreigners. So I think government bringing out this kind of rule is positive in terms of politics, and [the government] should be balancing the economy with the need to not be [taken over] by foreigners.” Industry associations also saw the regulation as feasible. Peter White, president of the FBAA,
“The regulation reforms are actually helping the brokers to have a fair competition and a better working environment … by stopping the black sheep [who] continue ruining the market and spreading out negative messages” Donald Tang, Alliance Mortgage Solutions says, “Such fees are not uncommon around the world. I don’t see these as unreasonable and/or stifling incoming investors.” The government’s proposed fees are similar to those in New Zealand, and lower than those in Singapore and Hong Kong.
Where brokers fit in Evidently, the government’s newfound interest in foreign buyers won’t do much to deter those buyers themselves. However, brokers should take heed of the precedent the proposed fees have set, and of the message that the government is willing to take action in response to breaches of the law. At Intelligent Finance, the fact that affordability is not likely to improve soon has led to a new approach to pre-approved clients. “In the last couple of months we’ve noticed our clients are a lot more successful at auction; these strategies we give them, the way we get their approval done, allows them to be more successful at auction.”
Alliance Mortgage Solutions’ Tang argues that tougher penalties for rule-breaking will actually benefit top brokers dealing with foreign clients, by “stopping the black sheep [who] continue ruining the market and spreading out negative messages. So when this group of people get caught, the good prospects are likely to get back on track with the good brokers”. Similarly, MFAA CEO Williams suggests the high-profile Point Piper case should remind brokers of the importance of knowing the regulations governing foreign investment. “Any businesses that currently specialise in foreign investing would ideally be well versed on their client’s obligation to make their purchase contracts conditional on foreign investment approval when they are buying residential real estate in Australia. The media coverage of this forced sale will ideally elevate to any business that does not normally work with foreign investors the need for additional considerations for these purchases.”
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HEAD TO HEAD
LISA CLAES “The more products that we have, the more products the broker has. For us it’s share of wallet; for brokers it’s retention and tenure and more commission”
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Lisa Claes: CHANGING THE BANKING LANDSCAPE ING Direct’s executive director of distribution tells MPA why she’s putting brokers at the centre of the bank’s growth strategy for the coming year
MPA: What is ING Direct’s reaction to the recommendations of the Financial System Inquiry Final Report? LISA CLAES: I support the [risk-weighting] recommendation in the sense that, particularly working for a global organisation, the recommendation is really a mirror of what the global banking community, the Basel III community, are trying to do. This is not just in Australia; there are moves afoot, particularly in Europe, to reduce risk rates and protect banks’ deposit holders from unforeseen volatility in the market. Ultimately, these sorts of measures are in the best interests of the customers. I certainly don’t object … it’s a sound recommendation; we ourselves are very high on Tier One Capital (a ratio of more than 13%); we’re already there, so to speak. MPA: Is ING Direct’s strategy for this year about diversification? We’ve seen some moves in the commercial space, as well as promoting of your low-cost superannuation management through brokers. LC: I’ll start at the core of the strategy, which is to grow primary bank customers; to have
more customers – and we have 1.5 million – see ING Direct as their main financial institution. If that’s our strategy, which it is, we can’t do that alone on savings and mortgages. You need to offer a more diversified product range that meets the basic financial needs of customers. The transaction account is at the heart of that … but also part of that is our superannuation product, and we’re proud to present what we believe is an industry-leading product in that category. One plank of our strategy is our rewards scheme [explained below]; another is the diversification of our asset base. We definitely want growth in retail mortgage lending, but we’re also equally focused on growing priority commercial mortgages and our infrastructure finance offering. The third plank of the strategy is building out the primary bank proposition. We’re exploring plays in the wealth management area, and we’re wrapping all that up with what we aspire to: continuing the marketleading experience.
ING DIRECT’S FY2014 FINANCIAL RESULTS
ING-branded mortgages
up 7.8%
Total mortgages
stable at $38.8bn Personal savings
up 6.5% to $1.3bn www.mpamagazine.com.au
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HEAD TO HEAD
LISA CLAES
LISA CLAES’ CAREER TIMELINE
1992
Appointed general counsel of Mercantile Merchant Group, a subsidiary of ING Direct
2005
Appointed executive director, sales and operations, ING Direct
2007
Moves to position of executive director, direct business
2009
First role in mortgages as executive director of mortgages
2011
Becomes ING Direct’s executive director of distribution
Greatest achievement “Changing the banking landscape by spearheading the introduction of electronic verification in Australia … that saved the banking industry billions of dollars”
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“The new back-office systems will cut our turnaround time by at least 30% and give us a scale so, if there’s volatility in customer appetite or brokers sending the business to us, it won’t matter” MPA: You’ve just announced a new rewards scheme for your customers. Why should brokers recommend it to their clients? LC: If we go back to our strategic intent being to grow the primary bank customer – and we believe that brokers and the mortgage is at the heart of the financial journey of the customer – I talk about the barbells of financial services being mortgages and superannuation. Brokers are in the box seat, in that they get in early in the financial life cycle, and we try to help brokers diversify their own income by not only paying commission as we do for retail mortgages but also rewarding them for referring our broader proposition. So at the moment the program encompasses the transaction account and the superannuation product. The more products that we have, the more products the broker has. For us it’s share of wallet; for brokers it’s retention and tenure and more commission. The rewards scheme is designed to reward existing customers … every customer on the books will begin to earn 1% cash back on the repayments they make on their loan. The condition is you have to have an Orange Advantage transaction account and the loan, and you need to be contributing into that product, or savings, $1,000 a month … the mathematics are quite simple; it’s about encouraging retention, which is important for financial services providers but is also great for brokers [in order] to avoid having their customer churned away.
MPA: Does ING Direct have a more conservative risk appetite than other banks? LC: We play within the retail footprint within Australia; SMSF lending is an exception. I don’t believe that our risk appetite is conservative; I’d like to describe it more as responsible and sustainable. I’m quite proud of the fact that our arrears are lower than the industry average. ING Direct takes no pleasure in putting people out of their homes; we want people to stay in their homes, pay off their mortgage, and hopefully buy some more ING products. Having an appetite that we believe will encapsulate the customer for all their borrowing life is certainly front and centre of our thinking. Also, we want to be consistent too. Consistency is very important … people don’t want us loosening the gates of the risk appetite and then shutting them up … if you look at some of the pronouncements from APRA about creating a stable banking system, it’s around what ING Direct has been doing and hopes to continue to do. MPA: Could you give us some concrete examples of ING Direct’s investment in technology in the broker space? LC: We have had two major technology projects in the past two years; one was called ‘Bank in the Box’ and the other ‘Zero Touch’. They’re now complete, and they’ve enabled us to slim down our infrastructure into a tight, neat, strong, responsive base, such that, whenever we want to change or build any customer applications – such as
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HEAD TO HEAD
LISA CLAES “I don’t believe that our risk appetite is conservative; I’d like to describe it more as responsible and sustainable”
back-office automation – we can do that more efficiently and quickly, rather than having to navigate a sprawling, ageing and dense system infrastructure base. So how does that benefit the customer? Brokers will see the benefits of that in a number of ways. Most directly they’ll see the automation of the back office, which is happening now and we’ll be releasing for variations in Q3 and new business in Q4. The new back-office systems will cut our turnaround time by at least 30% and give us a scale so, if there’s volatility in customer appetite or brokers sending the business to us, it won’t matter, because we’ll have the scale and we’ll be ready to take it. The other benefit is it gives us much more regular and intuitive back-channel messaging, so we hope it’ll be a much nicer experience; they’ll be able to service themselves autonomously rather than having to ring, if that is their preference. The other thing is we’re redoing our customer website … it looks better and it gives us much more intelligent data and analytics capability; campaign management, personal financial management and intelligence. All of these aren’t desires; they’re projects and are all coming to a head. And we’re able to do all of these things simultaneously because of the big
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infrastructure projects we were doing over the years, where not a lot came out at the front, because we were having investment underpinning the house. So as someone at the front line, I’m very much excited.
MPA: 2014 saw ING Direct beat majors and non-majors alike in the various customer satisfaction surveys. What about ING Direct contributes to such high satisfaction? LC: At ING Direct, the customer is at the heart of everything we do … we bring the customer into the organisation, quite literally, on any major initiative we undertake. Whether it’s designing a product, building a product, building a mobile app, our new superannuation portal for advisers, we have focus groups; we have customers playing and using them. Also, we’ve got the benefit of a very tight global network … If we agree something is the best of the best it often gets implemented abroad … so, for example, the new customer interface, that’s a cookiecut from Spain. We have customised it
slightly for Australia, and we’ve saved so much time and money, and have had IT specialists from Poland, Spain and the Netherlands come in and help us put this platform here. And I think the main thing that drives it is our culture. We have outstanding employee engagement; across the bank I think it’s 82% ... in customer delivery it’s 90%. They are so passionate about serving the customer, and that’s a result of recruiting and managing accordingly. It’s more art than science, but that’s what I think are the core attributes there, and we’ve got to keep earning it and not get complacent, that’s for sure.
MPA: Where do you want ING Direct’s relationship with the third-party channel to be 12 months from now? LC: I would like them to be solid partners with us, in terms of supporting our drive to be Australia’s favourite place for money, and the primary bank for all Australians. And the other side of that is we’ll be rewarding that partnership through these various referral programs we have.
DEVELOPMENTS ABROAD: THE SPANISH ‘EASY MORTGAGE’ ING Direct has outlets worldwide, and part of Claes’ job involves bringing good practice back to Australia. One innovation she’s particularly interested in is the Spanish ‘easy mortgage’. It’s a mortgage for ING Direct current account customers. “They use the data from those customers to offer them a mortgage,” Claes says. “They know, based on your income into that transaction account and expenses, [whether] they are able to offer credit which then needs to be secured by real property.” This cuts out the need for a whole range of documentation. ING Direct isn’t currently offering this type of mortgage in Australia, but Claes is confident that, if implemented, it could cut down turnaround times and make it far easier for brokers to recommend ING to clients. “We’ll roll this out one of these days, I promise you,” Claes says.
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FEATURES
BROKERS ON AGGREGATORS WHAT YOU’RE SAYING 30 WHAT BROKERS WANT 22
BROKERS ON AGGREGATORS
2015 20
Are aggregators matching talk with action? We surveyed hundreds of brokers to get their opinions on what they want from their aggregators, and whether aggregators are delivering
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24 OVERALL AGGREGATOR PERFORMANCE 27 INDUSTRY ISSUES
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EVERYONE KNOWS what a bank is, and almost everyone now knows what a broker is. Yet very few – both outside and arguably inside the industry – know exactly what being an aggregator means in 2015. Of course aggregators still channel deals and commissions, but over the years they have taken on a large number of extra responsibilities, many of which simply didn’t exist when broking was born. MPA’s Brokers on Aggregators survey is at heart an attempt to answer two questions: what services aggregators should be providing, and how well they’re delivering them. Aggregators are always keen to explain their value propositions, but brokers remain the customer and thus are best placed to judge service offering and delivery. That’s why we’d like to thank the hundreds of brokers who took the time to fill in our survey. We’re fully aware that, in this industry, time is money. However, we believe that surveys like this are one of the best ways an industry still largely comprised of small businesses
can keep larger stakeholders in check. We also refute the suggestion that only dissatisfied brokers fill in surveys. The responses to this survey were overwhelmingly positive, as were the comments. These comments suggest that a number of brokers decided to take the survey in order to recognise outstanding aggregator performance, including celebrating individual BDMs. The survey included a number of auxiliary questions related to age, volume, income, etc. The reason we ask for such details is to analyse our results better; what older brokers want can be quite different from what younger brokers want, and brokers writing $60m plus often run very different businesses to those writing under $10m. We never use this information to make judgments about individual respondents, and it’s kept strictly confidential. We hope you enjoy this report, and that even more brokers respond to our survey next year so its messages become more powerful than ever. For now, read on to see how aggregators are performing in 2015.
INDIVIDUAL AGGREGATOR PERFORMANCE
OUR COMMITMENT TO FAIRNESS It’s often been claimed that you can’t fairly compare aggregators; their service propositions are so different that you aren’t ‘comparing apples to apples’. We deal with this problem by judging aggregators by what their members think is important. If members of aggregator ABC say factor X is critically important to them, we’ll look at ABC’s performance score for X rather than looking at the score for Y, which members don’t care about. While these aggregators may provide different services, we want to measure their commitment to excellent service – something everyone in the industry should aspire to.
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FEATURES
BROKERS ON AGGREGATORS
WHAT DO BROKERS WANT? Everything … but IT and CRM support is emerging as a make-or-break offering for aggregators IT’S AN AGE-OLD question, and one that our Brokers on Aggregators survey engaged directly with, asking respondents to rank 11 categories of services between 1 (least important) and 5 (most important). We’ve been able to subdivide the results by age, aggregator, volume and more, producing a range of interesting insights.
services and lender panels are the ‘bread and butter’ services that are expected but not necessarily rewarded with broker loyalty.
Value-adds While the above services are essentials, a number of other services had an average importance rating above 4, both this year and in 2014. They are, in order, communication
Essentials You won’t be surprised by the top three most important categories for brokers: accuracy and timeliness of commission payments, quality of lending panel, and IT and CRM support. With average importance ratings of 4.44 and above, it’s clear that brokers won’t compromise on these services, whatever other ‘bells and whistles’ might be on offer. Furthermore, these same categories were also the top three in 2014, and there are no substantial age- or volume-related differences with regard to the importance of these categories; our survey suggests they’re important to all sorts of brokers. However, our 1–5 ratings aren’t the only way to assess what’s important. We asked brokers which aggregator they’d join if they could leave their current aggregator, and why. The three most popular aggregators were all chosen for the same reason: IT and CRM support. And – guess what – the most popular reason for leaving one’s current aggregator was also poor IT and CRM support (24.5%). Evidently, IT and CRM have the power to make or break aggregators, while commission
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OUR TYPICAL RESPONDENT
Aged 45–54 Earns $101,000–150,000 a year Has an annual volume of $10–20m with brokers, BDM support, compliance support, and training and education. With very similar scores to last year, it’s obvious these categories remain important to brokers. BDM support occupies a particularly interesting role: other than poor IT support and poor commission payments, it is the third most likely reason to leave one’s aggregator, and the hope for better BDM support is also the third most likely reason for picking another aggregator to switch to. What does this tell us? One possibility is that the BDM is a ‘front’ for the aggregator; when other things go badly this affects perceptions of BDMs. Training and education is often perceived to
be an issue for new brokers, but our results suggest otherwise. In fact, its perceived importance actually increases across the age categories – from 3.94 for those aged 21–34 and over to 4.33 for those 65 and over. The 55–64 bracket did present an exception, with the lowest rating of 3.76. Nevertheless, aggregators who specialise in training and professional development may want to widen the spectrum of brokers they’re marketing to. If a 3 rating indicates ambivalence, then it seems brokers are ambivalent about marketing support, additional income streams and white label offerings. The same was true last year, the likely reason being that many brokerages
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still manage their own marketing support and diversification strategies. The discussion surrounding white label is more complicated; evidently it has established some sort of importance but remains an option for aggregators, rather than an imperative. There are also both age- and volume-related dimensions to perceptions of additional income streams. Relatively young brokers
(54 and under) rate it substantially higher (3.54) than those aged 55 and above (3.14). Interestingly, the top-earning brokers, with an annual volume of $60m plus, rated additional income streams as most important, and importance generally increased with volume. Perhaps these brokers are looking to grow diversified businesses rather than their home loan books.
At the bottom of the pile is lead generation, with an average score of 2.62 – a score of 2 equates to ‘less important’. Here there are important divisions between aggregators – members of certain aggregators and franchise groups rate lead generation highly (4 and above). Unsurprisingly, the importance of lead generation decreases steadily with increasing annual volume, although not with age.
AGGREGATOR SERVICES, RANKED BY IMPORTANCE Accurate and on-time commission payments
4.60 Quality of lending panel
4.49 IT and CRM support
4.44 Communication with brokers
“Good commission splits [matter] and the most crucial is IT platforms that are friendly for those on the road. Mobility is key as we are in the face of clients” FAST broker
4.39 BDM support
4.27 Compliance support
4.19 Training and education
4.03 Marketing support
“Great service, great communication and great training and marketing support. The changing nature of the industry means it is imperative we keep up to date so we need an aggregator that keeps us up to date!” AFG broker
3.75 Additional income streams
3.48 White label offering
3.11 Lead generation
2.82
“Aggregators are only as good as the staff (BDM’s) they employ. A BDM who is knowledgeable & cares about my business is absolute gold” PLAN broker
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FEATURES
BROKERS ON AGGREGATORS
WHAT’S GOING WELL, AND WHAT ISN’T Aggregators are doing the basics well but could step up their lead generation support WE KNOW what brokers want, but are aggregators actually delivering? We asked respondents to rate their aggregators’ performance over the same 11 categories described above, going from 1 (very poor) to 5 (very good). We also asked respondents to state how likely they were to change aggregators over the next 12 months, from 1 (very unlikely) to 5 (very likely). The results
2014 AVERAGE SCORE
2015 AVERAGE SCORE
Average of Quality of lending panel
4.46
4.44
Average of Accurate and on-time commission payments
4.34
4.30
Average of Communication with brokers
4.1
4.12
Average of IT and CRM support
3.99
4.12
Average of Compliance support
4.06
4.03
Average of BDM support
3.84
3.95
Average of Training and education
3.91
3.92
Average of Marketing support
3.47
3.53
Average of White label offering
3.12
3.45
Average of Additional income streams
3.23
3.45
Average of Lead generation
2.35
2.39
NAME
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are encouraging for aggregators, with a number of exceptions. Good news first: aggregators’ performance is rated as good (a score of 4 or more) on the essential services we described above. Quality of lending panel is the highest-rated category, at 4.44, followed by commission payments (4.30) and communication with brokers and IT and CRM support, both at 4.12. These
results were very similar to those in 2014. Brokers are also as unlikely to imminently leave their aggregator as they were in 2014 – the average of the replies was 1.61. There was little age- and volume-related differentiation here; brokers aged 21–34 were the most loyal,
LIKELIHOOD OF CHANGING AGGREGATOR IN NEXT 12 MONTHS
Very unlikely
74%
Unlikely
10% 5% 6% 6%
Possibly Likely Very likely
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FEATURES
BROKERS ON AGGREGATORS
REASONS FOR LEAVING Poor IT and CRM support Poor accuracy and timeliness of commission payments Poor BDM support Poor lead generation Poor quality of lending panel Poor communication with brokers Poor marketing support Poor additional income stream offerings Poor compliance support Poor training and education Poor white label offering 0%
“What makes a great aggregator is the BDM and the proactive support they offer. Natasha at FAST is fabulous and she keeps me up to date with things happening and keeps me in mind with anything I need to know” FAST broker
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5%
10%
15%
20%
25%
“AFG has always been great as an aggregator. Sometimes there are delays however it is understandable only because you are not the only member they look after. There has to be a level of understanding from both the aggregator and members” AFG broker
with an average of 1.31, although the least loyal group, 55–64s, were still unlikely to leave their aggregator, with an average of 1.86. Unsurprisingly, the likelihood of leaving decreases steadily with volume, with the noted exception of those writing $60m plus; perhaps brokers at that level feel they can ‘shop around’. The only category that did poorly was lead generation, with an average of 2.39 (poor). Now you may recall that lead generation is still the least important category for brokers (importance score 2.82), so it’s easy to write this result off as inconsequential. However, there’s a very wide distribution on lead generation scores – some major aggregators have particularly poor scores (2 or lower), while one challenger aggregator has a score of 4.13. Lead generation was also the fourth most picked reason for leaving one’s aggregator. Perhaps challenger aggregators seeking a niche might want to take lead generation more seriously. There’s not a huge amount of variation by age, volume or state with regard to performance. The least satisfied brokers are those aged 55–64, or/and have an annual volume of under $10m, or/and work in Tasmania. (Note: that doesn’t necessarily mean all middle-aged Tasmanian brokers are necessarily unhappy!)
“Smartline provides all of the above aspects to a high standard. Additionally it’s the supportive, encouraging, collegial environment and the organisational culture that I really appreciate!” Smartline broker
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INDUSTRY ISSUES While a lot of attention has been rightly focused on restrictive trail clauses, we shouldn’t forget about the role IT plays
OUR BROKERS on Aggregators survey also gives us a chance to look at industry issues, namely obstacles to switching aggregators, as well as questions about sustainability, fees and commission splits. In the reports of MPA and our sister title Australian Broker magazine, restrictions on transferring trail have been a source of deep dissatisfaction for brokers over the past year, and a major reason for not leaving their aggregators. When we asked brokers what was the main obstacle to leaving their current aggregator, ‘clawbacks/trail issues’ and ‘contractual obligations’ figured highly, comprising 28% and 20% of answers respectively. These categories are obviously very similar, and with a combined score of 48% should be a major cause of concern: almost half of all brokers feel restricted by these
issues. Indeed, for those brokers who are likely or very likely to leave their aggregators this year, contractual issues are the chief obstacle to them actually leaving. These numbers should encourage industry associations to push harder for standards for broker-aggregator contracts. However, there was another obstacle that figured highly – ‘data migration/IT issues’. This was the single most nominated obstacle by brokers, comprising 30% of replies. However, data migration/IT issues should be seen less as an obstacle and more as a powerful deterrent to brokers switching; for those brokers unlikely or very unlikely to leave their aggregators in the next 12 months (the vast majority of respondents), data migration/IT issues were seen as the chief obstacle to leaving. This is not a new issue – last year’s survey
saw data migration/IT issues picked by 31% of respondents. But it is likely to become more important, as more and more of brokers’ work depends on and is hosted on aggregators’ IT systems. Indeed, as aggregators look to impress brokers with ever-more-powerful IT systems, the ability of brokers to switch to them may be paradoxically reduced. Perhaps industry associations should set out a common language for aggregators’ IT systems, in order to make broker data more interchangeable. With regard to other industry issues – sustainability, fees and keeping brokers informed – there’s been little change: brokers are largely satisfied with their aggregators, as they were last year. There has been a slight decrease in satisfaction with fees, from 84.6% to 78.2%, but this change is relatively minor.
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FEATURES
BROKERS ON AGGREGATORS
OBSTACLES TO LEAVING
Upfront commission issues
Loss of back-office services
Loss of marketing services Data migration/ IT issues
4%
5%
30%
Licensing issues
7%
“Inability to transfer trailers … is a major issue in this industry, particularly when considered again in comparison to financial planning” Connective broker
7% “Change of business brand would see a decrease in local awareness” Finsure broker
20% 28% Clawbacks/ trail issues Contractual obligations
“Time and mucking around to [switch aggregators]. It is not an easy process no matter which aggregator you are going to or from” Custom Equity Group broker
THE BIG QUESTIONS
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NO 87.5%
YES 78.2%
YES 81.7%
Are you concerned about the sustainability of your aggregator’s business model?
Are you happy with the fee/commission split?
Does your aggregator keep you well informed around industry-wide issues?
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FEATURES
BROKERS ON AGGREGATORS
WHAT YOU’RE SAYING Numbers only go so far, and many brokers gave insightful comments on what they want from their aggregators
BROKERS ON Aggregators also gave respondents a chance to put written comments in response to several questions. For example, brokers who selected ‘Other’ for the options ‘If you were to change aggregators today, what would be the biggest obstacle to you leaving?’ and ‘Why would you choose to change to this aggregator?’ were invited to elaborate on their answers. And, of course, all brokers were asked to tell us, in 25 words or less, what makes a great aggregator. The results are fascinating, and relevant. It’s usually assumed that commentators are unusually motivated – often in a negative sense – to express their views, but we found that the vast majority of comments were well reasoned and very often positive.
Most comments echoed the importance of numeric scores discussed earlier, with many brokers helpfully explaining how certain services were crucial to their business. Contractual restrictions on brokers leaving was the main topic of negative comments, while BDMs tended to feature in the most positive comments. Commentators also raised a number of issues that the survey’s numeric questions failed to take into account. For example, several commentators identified the special needs of regional brokers and the disparities they experience in terms of levels of service. We’ll be adapting 2016’s survey to get numeric data and further explore regional brokers’ experience.
DECONSTRUCTING COMMENTS Word analysis is not a perfect science, but this list of the top five most popular technical terms used in comments gives some idea of what gets brokers talking
BDM
IT
Commission
CRM
Training
RESPECT FOR INDIVIDUALS “Tell it like it is. Support brokers. Treat them equal to yourself. Start it from your contracts” Connective broker “Open/honest communication. Need to acknowledge ‘one person’ operators that have a highly profitable model without all the fancy boardrooms! i.e. Regional Brokers” AFG broker “When you are small fry but the team make you feel like you are their top broker” VOW Financial broker “[What makes a great aggregator…] communication and supporting your brokers, regardless of their monthly settlement volume. Sometimes someone starts out small can grow very fast, without aggregator support why stay with them?” Connective broker DO WE EVEN NEED AGGREGATORS?
13%
30
11%
9%
6%
5%
“[What makes a great aggregator…] For a truly capable and licenced credit adviser, nothing. Aggregators are an anomaly in the industry and there is no reason for banks not to deal direct with brokers. At the very least, when a broker chooses to change aggregators and is issued a new Introducer Number, all existing loans ought to be transferred” Connective broker
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STRONG WORDS “Business models in this industry are largely cash flow models – the ‘plan’ all too often is to generate monthly automatic payments for ‘service’. This view or plan, is related to knowledge of trail books we have built up and grabbing some of that – regularly. Trouble is – the service stays the same or gets worse from cost cutting while the monthly charge creeps up in line with the ‘business plan’. So if we see ourselves paying more for less – that would be enough to change aggregator. PLAN could do this, but are not at present” PLAN Australia
STANDOUT BDMS “AFG was not a good representative of my business and the model of fees is too high. Too many people in high positions boasting about numbers and sales and no one to look after the broker who is doing all the work and making the aggregator what they are today” Loan Kit broker “[What makes a great aggregator…] an aggregator that has enough faith in their own ability to retain brokers with-out needing to force them to stay via contractual arrangements” Aussie broker
“I would NOT leave unless my BDM (Michael Regan – who is brilliant) was not there to support me” AFG broker “[What makes a great aggregator…] Dawn [Inali], NSW State Manager BDM. Just watch her!!” VOW Financial broker “[What makes a great aggregator…] A fabulous BDM and for us we have the wonderful Cougar – Leanne Evans – gotta love that :)” AFG broker
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FEATURES
BROKERS ON AGGREGATORS
INDIVIDUAL AGGREGATOR PERFORMANCE See how your aggregator performed and find out who might better suit your style of business
WE KNOW that the performance of individual aggregators is perhaps the most interesting part of this survey but also the most sensitive. In keeping with our commitment to fair comparison (see the introduction), we’re showing aggregator scores for those categories named most important by their members, so you can see how well aggregators do what they do best. Remember that scoring is between 1 (very poor) and 5 (very good), and note that we’ve listed these aggregators in purely alphabetical order. We’ve also made the decision to exclude certain aggregators from this round-up, because the number of their members who responded was too low to be representative. We chose a cut-off point for the mainstream aggregators based on the average number of respondents per aggregator. We then reduced this cut-off slightly for challenger aggregators, in recognition of their smaller average size. This year you’ll also see a variety of ‘editor’s comments’, noting statistical highlights for particular aggregators. These are for guidance only – we suggest you first look at the scoring data to see whether said aggregator suits you.
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OTHER AGGREGATORS WHO WERE REPRESENTED Members of the following aggregators did take the survey, but unfortunately not in high enough numbers for these aggregators to be fairly represented. We hope to hear from more of you next year! ALCo Australian Mortgage Brokers Ballast Finance Buyers Choice Home Loans Advisory Services Finconnect LJ Hooker Loan Kit Loan Market Mortgage Choice Mortgage House Outsource Financial Smartline Specialist Financial Group
INDIVIDUAL AGGREGATOR PERFORMANCE AFG
Accurate and on-time commission payments 4.38 IT and CRM support 4.36 Quality of lending panel 4.55 Editor’s note: AFG was the strongest-represented aggregator in this year’s survey in terms of number of respondents.
ASTUTE
IT and CRM support 3.67 Communication with brokers 4.33 Additional income streams 4.33
AUSSIE
Quality of lending panel 4.27 Accurate and on-time commission payments 4.00 Compliance support 4.50 Editor’s note: Although franchise brokerage members are welcome to complete our survey, Aussie was the only one with enough replies to be fairly represented.
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INDIVIDUAL AGGREGATOR PERFORMANCE CHOICE AGGREGATION SERVICES
Compliance support 4.00 Accurate and on-time commission payments 4.13 BDM support 3.70
FINSURE
Quality of lending panel 4.53 BDM support 4.16 Accurate and on-time commission payments 3.74
CONNECTIVE
LIBERTY NETWORK SERVICES
Accurate and on-time commission payments 4.54 IT and CRM support 4.47 Communication with brokers 4.39 Editor’s note: Connective was the most popular aggregator chosen for the question “If you were to change aggregators, which aggregator would you choose?”
Accurate and on-time commission payments 4.74 BDM support 4.53 IT and CRM support 4.53 Editor’s note: Considering Liberty Network Services wasn’t even in last year’s survey, their number of respondents and scoring has been surprisingly high.
CUSTOM EQUITY GROUP
NATIONAL MORTGAGE BROKERS
Accurate and on-time commission payments 4.50 Quality of lending panel 4.00 Communication with brokers 3.67
ECHOICE
IT and CRM support 4.63 Accurate and on-time commission payments 4.75 BDM support 3.25 Editor’s note: eChoice’s members take lead generation far more seriously than the average broker (importance score of 4.38 compared to 2.82).
Quality of lending panel 4.88 Accurate and on-time commission payments 4.88 Communication with brokers 4.88 Editor’s note: nMB is the only aggregator this year with its top three categories actually scoring higher on performance than importance, an impressive result.
PLAN AUSTRALIA
Accurate and on-time commission payments 4.26 Quality of lending panel 4.34 IT and CRM support 4.13
FAST
Accurate and on-time commission payments 3.96 Quality of lending panel 4.22 BDM support 3.87
VOW FINANCIAL
Accurate and on-time commission payments 4.27 Communication with brokers 4.21 BDM support 3.70
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FEATURES
ELECTRONIC PROCESSING
THE PAPERLESS APPLICATION IS CLOSER THAN EVER Thanks to e-docs, the industry is experiencing its biggest shift since e-processing was introduced a decade ago. What are the benefits for your business?
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MEET THE INNOVATORS
Tony Carn, sales director, NextGen.Net
THE TRULY paperless application is the mortgage industry’s desert mirage, a glimmering goal that always appears just over the next hill. Unlike a mirage, however, the paperless application is reachable, and rapidly evolving technology is making paperless applications a realistic prospect for hard-pressed brokers. In this feature, MPA explores the breakthroughs of the past 12 months, the changing face of regulation, and prospects for the coming year. We also question how brokers can survive and indeed be empowered by the confluence of regulation and technology.
Phil Quin-Conroy, CEO, PLAN Australia
The future is here Typically, e-processing has moved forward through a drip-drip-drip of minor technical updates. But developments over the past two years would be better described as ‘breakthroughs’, and there are a few options to choose from. The first shift concerns the introduction of cloud-based systems. For brokers, the cloud may be an even more important development than apps: while apps need to be adapted for different devices, cloudbased software can be accessed on most platforms via a web browser (ie Internet Explorer). That’s why PLAN’s Podium software is cloud-based, explains CEO Phil Quin-Conroy. “What we’re trying to do is make sure [apps] integrate back into the
Dan Huggins, general manager of home loans, Commonwealth Bank
Sean Simmons, director, ZipID
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FEATURES
ELECTRONIC PROCESSING PAPERLESS EXCHANGE IN PRACTICE: THE PEXA SYSTEM E-conveyancing provides some hints as to how the truly paperless mortgage application could work. Under PEXA: Buyer’s solicitor/conveyancer sets up an online ‘workspace’ and invites all parties to join. The PEXA system manages the process, prompting parties to respond where appropriate. All forms are created and digitally signed by all parties online. At settlement time PEXA executes the transactions and lodges forms with Land Registry. PEXA triggers RBA to release funds, which arrive in accounts in seconds.
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core platform we deliver to brokers. So when they stand alone they achieve a small efficiency; you might achieve two steps forward, one step back, if they’re not integrated into the other components of the lending application process.” In late 2013, NextGen.Net rolled out its Apply Online Supporting Documents Service,
and visible to all parties, including brokers. PEXA is relevant to brokers for a number of reasons. The first is the precedent it sets; this is a system in which the only physical exchange required is the one that customers care about: handing over the keys. The result of several years of development and negotiation with state authorities, it shows
“The return on that investment [on time] is enormous … if we asked brokers how much time they spend on reworks, I’d be amazed if they spent less than 25%, if not 50% of their time” a function within the Apply Online platform to upload supporting documents into a single package to go to lenders. The software identifies the documents required by each lender and then provides a checklist for brokers to work through, at the point of sale, thus vastly reducing the amount of rework required, NextGen.Net sales director Tony Carn claims. Other functions, such as identifying and giving brokers the option to remove tax file numbers, and Apply Online’s ABN/ACN checks for loan applications, help make the Supporting Documents Service a very different proposition than the current practice of emailing supporting documents to lenders. Wider-reaching still, if not specific to the broker space, has been the rollout of the PEXA (Property Exchange Australia) system, presently in NSW and Victoria and expanding to Queensland and WA in May. PEXA is about entirely digitising the process of e-conveyancing, currently a messy exchange of documents between lawyers, agents and lenders. Like Supporting Docs, the system combines online document hosting and exchange with smart software; the PEXA system itself interacts with states’ land registries and even allocates funds at the agreed times. Documents are electronically signed, and the entire process is recorded
the obstacles that stand in the way of the paperless mortgage applications – but also the possibility that these can be overcome.
Don’t be left behind Not only have the last two years seen a rush of technological developments, but brokers and lenders are implementing them more quickly than ever. Indeed it seems the first generation of e-processing changes, when faxes were dropped in favour of emails, has made it easier to adapt to future change. NextGen.Net’s Tony Carn recalls the challenges surrounding Apply Online’s of over a decade ago. “I don’t want to call out the negatives, but you had the odd broker that said, ‘Oh, I’ll never do a loan electronically’. So those guys are almost all retired now, or they changed. And we now see 99% of loans processed electronically … with Supporting Documents, that same challenge is there; it’s not a bigger challenge because people have seen the benefits that electronic applications have delivered. So moving into having documents online is a natural evolution.” The numbers bear out Carn’s claim: e-lodgement took three years to get to a 30% usage rate, whereas the Supporting Documents Service has reached that level in just a year. PEXA is mid-rollout, and so
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“There is a paradox, that to create efficiency and safety on the internet we need to use an offline handshake as the first step to establishing trust”
numbers are more difficult to ascertain, although PEXA CEO Marcus Price told MPA that it already had more than 800 subscribers. Undoubtedly, one reason for the fast take-up of new e-processing options is improvements in training, helped by a change in mentality by technology providers themselves. “I have a pretty firm view on this,” argues PLAN’s Quin-Conroy. “It’s not an issue with brokers; it’s an issue for those supporting brokers to support them with change management. When we rolled out Podium we looked to provide extensive support to help brokers utilise the new technology in Podium … we looked to provide classroom training, online manuals, and we do this right across the board … we regularly run webinars on small topics.” NextGen.Net’s Carn pointed out that learning to use the Supporting Docs service took “less than an hour”, through webinars and online training, and added that NextGen. Net saw larger broking groups as natural early adopters. “Working with them, that’s where we’re seeing recognition of the value of Supporting Docs straight away. They’re like light bulbs; they look at Supporting Docs and go, ‘Why aren’t we using it? We now need to embed this into our processes’.”
aren’t the problem, then the natural step is to blame regulation for the inefficiencies in Australian mortgage transactions. It’d be wrong, however, to claim regulation hasn’t moved with the times – ING Direct previously lobbied to make identification requirements to help online and branchless banks, and the recent Financial System Inquiry contains a specific recommendation to make regulation more ‘technology neutral’. Dan Huggins, general manager of home loans at Commonwealth Bank, explains the limits imposed by regulation: “If the customer prefers, most key loan documentation can now be delivered and accepted electronically, apart from the mortgage document. Current legislation states that the mortgage document is required to be executed with a ‘wet [pen] signature’ method and witnessed by another party. We are working with government authorities on how we can digitise the mortgage document.”
The regulation roadblock If technology isn’t the problem, and brokers
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FEATURES
ELECTRONIC PROCESSING HOW THE FSI ADDRESSED TECHNOLOGY The Financial System Inquiry made a number of recommendations involving technology, which could remove barriers in the way of paperless applications: Recommendation 39 Identify, in consultation with the financial sector, and amend priority areas of regulation to be technology neutral. This could lead to changes in requirements for ‘wet signatures’ and in-person identity checks, allowing applications to become more digitised. Recommendation 15 Develop a national strategy for a federated-style model of trusted digital identities. Having a mutually accepted method of online identification could reduce the reliance on traditional paper-based IDs (ie passports) for internet transactions.
Moreover, regulations – specifically concerning identification – seem to have taken a major step back in one sense, introducing a requirement for face-to-face identity checks. As part of the Council of Australian Governments’ reform of conveyancing, so-called ‘safe harbour’ mortgages require face-to-face verification of a customer’s identifying documents (VOI), and current methods of electronic verification don’t count. That’s where ZipID steps in. ZipID was started in March 2013, and aims to provide solutions to the new VOI requirements. Director Sean Simmons claims the company is “responding to a regulatory change which is sweeping through the finance and property law industries [but] as we’ve developed we’ve seen there’s a lot of pre-existing activity for verification services – the best evidence of that is Australia Post did 4.7 million verifications over the counter last year”. ZipID currently provides a VOI service, carried out by delivery service Toll, but is also in the process of launching an app that could allow brokers to perform the identity verification themselves. “Brokers are the natural fit to perform mobilised identity verification,” Simmons argues. “This [app] utilises not only the fact that brokers are with the customer, but brokers have the tablet technology available to them to perform a paperless verification.” Brokers and lenders should buy into the new service because face-to-face VOI requirements are here to stay, explains Simmons. “The problem is, as we try and create more trust online, we need to find safer, more streamlined offline methods of identifying people. There is a paradox, that to create efficiency and safety on the internet we need to use an offline handshake as the first step to establishing trust.”
When e-docs meet big data Evidently, while applications may still be approaching a paperless stage, regulation will insist on face-to-face interaction with the customer – an obvious advantage for
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“Approximately 75% of customers applying online have opted to receive their home loan documents electronically … we’ve found many customers are opening electronic documents within a day of receiving them” brokers. Yet the involvement required from customers in their applications may soon see major reductions, as lenders combine the ease of electronic documentation with increased opportunities for sharing data. Comprehensive credit reporting (CCR) encourages the sharing of data between lenders. ME Bank’s Stewart Saunders recently told MPA’s non-major bank roundtable that with CCR “we’ll be able to price more appropriately for risk [and] will look at different ways to be able to gear offers for consumers”. While not all lenders have yet adopted CCR, the FSI Final Report recommended CCR be made mandatory if these lenders continued to resist it. For existing banks’ existing customers, e-documentation is making applications simpler than ever. “For simple mortgages,” explains CBA chief Huggins, “existing or new-to-bank customers can apply online, get an automated conditional credit decision, receive their contract digitally, and digitally sign it if the customer wants to. The settlement could also be completed digitally if it meets the existing rules for PEXA current eligibility (eg single standalone mortgages).”
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FEATURES
ELECTRONIC PROCESSING “Technology absolutely empowers the broker. They want to control interaction with the client, the majority of brokers, and that’s the value they bring to the table”
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While the take-up of ‘apply online’ mortgages is modest, those customers do seem even more willing than brokers to embrace electronic documentation, Huggins claims. “Approximately 75% of customers applying online have opted to receive their home loan documents electronically … we’ve found many customers are opening electronic documents within a day of receiving them in their NetBank account, and feedback we’ve received so far indicates they enjoy the convenience and functionality that allows them to review the documents at any time.”
Time to get busy If electronic documents and data exchange make loan applications easier than ever, what does that mean for brokers? When lenders can offer a broker a personalised rate based on credit history, and have them fill out all documents online, today’s broker proposition seems increasingly redundant. However, the experts MPA talked to argued that technology can empower brokers, providing they can keep pace with it. Firstly, building in e-documentation to brokers’ processes and lender and aggregator software has an obvious time-saving benefit, claims NextGen’s Carn. “The return on that investment [on time] is enormous … if we asked brokers how much time they spend on reworks, I’d be amazed if they spent less than 25%, if not 50% of their time.” He compares e-processing to going from the horse and cart to the car: you won’t look back. While turnaround times benefit brokers and lenders, CBA’s Huggins notes that saving time on processing will allow brokers to spend more time on value-add activities. “For brokers, digitising mortgage documents will reduce the administrative burden, which will allow them to spend more time providing valuable advice. This technology will streamline the mortgage application process, reduce errors and improve transparency, which is ultimately good for the industry.” One advantage of having everything online is transparency. On the PEXA system, for example, brokers will be able to see where
documents are and who exactly is responsible for any delays. That’s why PLAN chief QuinConroy argues that technology “absolutely empowers the broker; they want to control interaction with the client, the majority of brokers, and that’s the value they bring to the table. It’s not just the initial introduction to the lender; it’s actually helping project manage the whole process on behalf of the client. And I think the majority of brokers are looking for that empowerment”. Having the ability to ‘project manage’ applications will only benefit brokers if they actually take advantage of new technology, however. Indeed, electronic documentation, which Quin-Conroy expects to become mandatory, may involve a renegotiation of responsibilities between lender and broker. Brokers may find themselves with more
“This technology will streamline the mortgage application process, reduce errors and improve transparency, which is ultimately good for the industry” responsibilities at the front end – identifying clients using ZipID, for instance – and more at the end of the process, including management of the conveyancing process. The truly paperless application is getting “closer and closer all the time”, concludes Quin-Conroy. Its arrival puts brokers in a paradoxical situation, with more time to spare but more work needed to prove their value to customers. Brokers need to recognise and exploit their enviable position at the confluence of regulatory requirements and transparent processing and, ironically, use technology to remind customers of the value of the human element.
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PROFILE
REN WONG
THE FINANCIAL WIZARD BEHIND N1 FINANCE Ren Wong went from entrepreneur to managing director of his own multi-award-winning financial services firm of 20 staff. Now this versatile Top 100 broker is laying new tracks in training to give upcoming brokers the best shot in a relentlessly competitive industry, he tells Maya Breen
CAN THE managing director/mortgage broker of N1 Finance conjure time out of thin air? Hearing his story, you can’t help but wonder how he manages to juggle everything. He has accomplished so much in such a short time, it would be easier to ask ‘what hasn’t Ren Wong done?’ Leading at the helm of a very busy financial services firm that he built from the ground up, Wong still gives up time on weekends for his clients while keeping one eye on the future wellbeing of the industry with a broker training program in the pipeline this year. He also speaks four languages, is a published author and Premium Partner of Save the Children Australia, and has already flown to China four times in the last six months to meet with foreign clients. Wong only started broking in late 2010; he sold his eight business start-ups, gained his Certificate IV qualification, and founded a brokerage half a year later, landing on the name N1 Finance. The name N1 was a suggestion by a friend after he told him he wanted to be a mortgage broker, Wong says. “He said, ‘You want to be
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number one? Just pick N1’. So I thought, ‘Why not?’” Starting out as a one-man operation with an average settlement of less than $2m per month only from home loans, Wong has morphed the Sydney-based company into a comprehensive financial services firm covering everything from first home buyer loans to commercial purchase hire to financial planning and SMSF strategy, to name a few. It seems the only thing they don’t do is general insurance, which Wong says is referred to banks. As an experienced mortgage broker in both complicated residential and commercial lending, Wong has chosen a very different track since graduating in mechanical engineering from the University of NSW. He recalls one of his more complicated loans, which involved a self-employed accountant who held multiple trusts holding multiple properties. “Getting all the trust tax returns, you just can’t imagine how thick the documents are!” Wong says. “It took about two months just to collect the documents, because they were so busy with their business.”
N1 COLLECTS TOP AWARDS AND RECOGNITION
Ranked 7th in MPA’s Top 100 Brokers for 2014
Finalist, Independent AMA Brokerage of the Year 2013
Finsure Australian Brokerage of the Year 2014
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“[Writing a book] benefited me as well in the way that it actually helped me to reflect on what lessons I’ve learnt”
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PROFILE
REN WONG WHAT DOES N1 FINANCE OFFER? First home buyers home loans Investment loans Business and commercial property loans Refinance Debt consolidation Commercial purchase hire Car and personal loans Equipment finance Financial planning and SMSF strategy Risks & protection, such as income protection and life insurance
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Wong is also a published author, having written his entrepreneurial experiences down in My Stories Running Eight Small Business Startups (2012). A mentor had suggested he record the story of his start-up businesses. “I think it benefited me as well in the way that it actually helped me to reflect on what lessons I’ve learnt,” Wong says. “If I didn’t write it down, I wouldn’t know what I’ve gone through. When you write it down it’s organised and structured, and it was more self-reflective than a commercial activity, to be honest.”
Multilingualism: a potent tool for brokers Born in Malaysia, with a Chinese ethnic background, Wong is also fluent in Malay, Mandarin and Cantonese. The latter two come in useful when communicating with foreign and local clients. “The local Asian community currently makes up close to 70% of our settlements. Most have a heritage from Southeast Asian countries like Malaysia, Singapore and Indonesia.” Wong says they have recently seen an increase in clients from mainland China. “Mainland Chinese are the fastest-growing market for us – for N1 Finance, this market segment was almost non-existent two years ago!” However, he points out that N1 didn’t actively seek out the foreign buyers’ market but vice versa, because of market changes, and now it makes up 20% of the brokerage’s monthly settlements. The growth of N1 in the last three years alone has expanded the original one-man band to a powerhouse team of 20 permanent full-time staff, with eight accredited brokers servicing home loan clients. “Home loans still represent our core business, where we are settling $35 to $45m a month,” Wong says. But he also puts the success down to just good timing. “To be honest, I think most of it is luck,” he laughs. “I didn’t do anything different from my previous businesses. I’m just doing the same thing, but then luck strikes because of good timing – the market is booming; we just have to do the right thing and then things will come.”
“Mainland Chinese are the fastestgrowing market for us – for N1 Finance, this market segment was almost non-existent two years ago” Expanding into insurance, wealth and beyond “We want our clients to think of N1 Finance as a one-stop shop,” says Wong, explaining that they only delved into insurance and wealth and business finance about 12 months ago after having the necessary traction to expand. But as time-efficient as he is, Wong can’t do everything at once. “I can’t be both financial planner and mortgage broker at the same time, so I recruited an in-house financial planner.” He also recently brought on board a new team player with a banking background to lead their commercial lending division. “We believe there is huge growth potential in commercial lending, and it also offers a great cross-sell opportunity to existing clients.” But the biggest challenge, he says, is competing with the banks and their very low rates. Although N1’s exceptional customer service gives them an edge, Wong says sometimes that’s not enough. “Clients can ring me at 6pm on Sunday … but sometimes clients just want a better rate and don’t care about service.” But Wong has plenty of referrals to supply his dedicated team, allowing him to cut back on writing loans himself and focus on his passion to create a structured training program for brokers trying to break into the industry. “What I did was pass on the leads to all my other brokers. We have eight brokers in the office, and the thing is, they’re on salary; it’s not commission-based – I have the number of leads which is sufficient to keep them busy.”
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Bringing new talent onto the playing field The reasoning behind Wong’s commitment to training for young brokers is that commissiononly arrangements are stopping a lot of young people from entering the industry. He says often graduates will go without an income for six to nine months before they settle their first loan and collect the commission. “Commission-only is deterring a lot of people from coming into the industry and is not good for sustainable development within the industry,” says Wong. “Also, broking is a long-term relationship game. I have seen a lot of brokers looking to make quick profits at the expense of the client. It is not sustainable and also reflects badly on the profession.” He says the industry needs new entrants, which is why it’s good to create an advantage
for new brokers. “If you have less and less people coming into this industry, then you have less among the community. I hope the [training] will help a little bit.” The training program is still in the initial stages, but Wong envisions that new brokers will be recruited, most likely university graduates, and then go through a structured training program for two or three months, in a similar vein to probation. The content will cover more than mortgage broking and will be tailored to fit N1 Finance’s strategy. Committed candidates will then work through their compulsory mortgage-broking qualifications. “It is in a preliminary stage, but we would love to work together with a bank and different universities to introduce students into the mortgage broking industry and offer them valuable work experience.”
12th ANNUAL
N1 PIONEERS CHINESE LANGUAGE MORTGAGE COMPARISON SITE
On 31 March 2015, N1Finance launched the first website in Chinese to compare mortgages in Australia, with rate comparisons for more than 30 lenders:
www.chengdai.com.au
2015
RATE THE BANKS! Tell the banks what you think about their service and performance by taking part in MPA’s Brokers on Banks survey. Don’t miss the opportunity to have your say on lender performance – you could WIN a LG 2.1Ch Sound Bar (RRP $399).
WIN
Survey closes Friday 8 May. The results of the survey will be published in MPA issue 15.07 on desks in June.
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FEATURES
SMSF
SMSF LENDING:
BUSINESS AS NORMAL ... BUT FOR HOW LONG 46
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With repercussions from the Financial System Inquiry in full swing, the superannuation sector is waiting to find out whether SMSF lending will remain in the game. Maya Breen spoke to five leading lenders to hear their thoughts on where SMSFs are heading and whether there is still room for innovation in selfmanaged super products
THE PANELLISTS
Martine Jager, CEO, RAMS, and general manager, mortgage broking, St.George Banking Group
Suresh Pillai, general manager, Liberty
ALTHOUGH SMSFS are still one of the fastest-growing slices of the superannuation sector, the future of SMSF lending is in question as a result of the Financial System Inquiry (FSI) Recommendation 8, calling for a stop to direct borrowing by SMSFs using limited recourse borrowing arrangements (LRBA). The government will by now be considering the feedback submitted by industry players, but what will be the implications if the FSI recommendation goes ahead? Is it likely and should brokers be concerned and preparing for potential changes? “I do not believe the FSI’s recommendation should be cause for concern,” says Suresh Pillai, general manager of non-bank lender Liberty Financial. “It is important to remember that the government is still consulting with stakeholders about the FSI’s recommendations, and it is possible that we will end up with an optimal and balanced outcome where SMSFs are still able to borrow but with additional conditions in place. Let’s also not forget that if the recommendation is implemented in its current form, it could deprive Australians of a viable investment choice and may just end up moving gearing into more risky investment areas.”
Per Amundsen, director, Thinktank
Sinclair Taylor, head of self-managed superannuation funds, Westpac
Cory Bannister, vice president and head of distribution, La Trobe
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FEATURES
SMSF A SNAPSHOT OF THE SMSF SECTOR In Dec 2014
545,334
self-managed super funds
1,034,497 members
In 2012–13, % of SMSF funds run by
1: 22.6% 2: 69.5% 3: 3.9% 4: 4.1% Age of SMSF members in June 2014
56.1%
were between 45 and 64 years old
Source: ATO SMSF Quarterly Report, Dec 2014
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Per Amundsen, director of specialist lender Thinktank, also doesn’t believe there will be a complete ban, but more likely only adjustments to specific issues. “I think all of us involved in the sector have to be very aware that there may be changes that we will have to adjust to, but the consensus seems to be that a return to a total prohibition will not result from the FSI recommendation,” Amundsen says.
will be a sudden influx of people rushing to get an SMSF loan in case they go, but we haven’t seen that.”
Why does the FSI want to stop direct borrowing by SMSFs? The MFAA will submit a joint submission to government in defence of SMSF borrowing, and on how it will impact on its members if
“St.George will continue to work with the broker community to help them get the best out of our current SMSF product” Martine Jager, CEO, RAMS, and general manager, mortgage broking, St.George Banking Group Some lenders see an upside to the current controversy, with La Trobe vice president and head of distribution Cory Bannister pointing out: “In the short term, it is business as usual; in fact, the uncertainty around the product’s future has encouraged more activity in this space, so opportunities for brokers have currently increased.” But the non-bank does warn brokers who specialise solely in SMSF loans to start looking to diversify, as a precaution. “We believe all brokerage businesses should ensure they have a diverse product offering, not relying too heavily on any one borrower or asset class – this is something we advocate when speaking with our clients; simply don’t put all of your eggs in one basket,” Bannister says. “We would be surprised if SMSF lending is prohibited entirely as we genuinely feel it is a positive mechanism for consumers to accumulate wealth for their retirement; however, we expect limitations to be placed on the product’s terms, which if appropriate will ensure the expansion into SMSF will continue to pay dividends for brokers for some time.” Westpac is waiting for the decision from the government, but Sinclair Taylor, head of self-managed superannuation funds, says it is still legal today to make a loan to an SMSF. “It’s definitely a wait-and-see environment. We haven’t seen a significant increase; there’s certainly been some speculation that there
the recommendation goes ahead, but what are the reasons behind the FSI’s concerns? According to the FSI Final Report, the two objectives supporting its recommendation were to prevent the accumulation of risk in the super system and financial system, and to steer the use of superannuation back towards a “savings vehicle for retirement income, rather than a broader wealth management vehicle”. However, whether these reasons will bring the recommendation to fruition is another matter. Like the MFAA, the SMSF Professionals’ Association of Australia (SPAA) doesn’t agree with the report, announcing that they do not support the recommendation as “there is little evidence that borrowing in superannuation is causing a build of excessive risk or systemic risk in superannuation”. The SPAA believes that, to reduce any risk from borrowing in superannuation, other alternative solutions such as licensing advice on LRBAs and limiting the role of personal guarantees in LRBAs could be implemented. Some lenders, like St.George and AMP, which are heavily involved in the superannuation space, have preferred to wait for the outcome from the government before commenting on how the superannuation sector may change, but others don’t agree with Recommendation 8 for a number of reasons. Thinktank’s Amundsen says the objectives “relate mainly to a possible system risk in the
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FEATURES
SMSF “We believe it is more likely that there will be some particular adjustments that address specific issues, rather than a complete ban” Per Amundsen, director, Thinktank
FINANCIAL SYSTEM INQUIRY (FSI) RECOMMENDATION 8 Direct borrowing by superannuation funds: “Remove the exception to the general prohibition on direct borrowing for limited recourse borrowing arrangements by superannuation funds” Source: FSI Final Report, p86
In 24 September 2007, superannuation laws were amended to allow an SMSF to purchase an investment asset through a limited recourse borrowing arrangement Source: ATO
WESTPAC SMSF SURVEY: HOW DIFFICULT IS SMSF? Out of 1,000 SMSF trustees: of respondents said it was as demanding as they thought it was going to be of respondents said it was harder than they had anticipated
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event of a major downturn in property markets, and an impression that gearing was being used more as a tool of speculative investment rather than for long-term retirement savings as SMSFs were intended. “We don’t wholly agree with those impressions and so don’t come to the same conclusion as the inquiry. There are certainly some things that could be improved, and we think it would be more productive to focus on what those are and then address them individually rather than take the very broad approach that has been recommended.” Pillai of Liberty says that perspective has its benefits. “I can see how people have concerns about geared property investment in light of some of the recent growth in property prices. So of course, if you are pessimistic about property you will have concerns about the build-up of risk due to geared property investment by SMSFs. However, if you have a longer-term perspective, an investment in a quality residential or commercial property could yield both a healthy rental stream and capital appreciation.” La Trobe’s Bannister points out it’s not the borrowing by SMSFs that is the issue but the strategy. “Borrowing via SMSFs is not a bad thing, if it is coupled with an appropriate ‘managed’ investment strategy. The problem lies when borrowers are ill-advised or do not have an appropriate strategy to manage their SMSF investment.” Westpac believes it is important to remember that most Australians are not interested in SMSF. “We are of the view that SMSF is not right for most Australians,” says Taylor. “We currently have, if you look at the market data, 8% of Australians who have super have an SMSF – hence 92% of Australians don’t have one. So a small number of people who really know what they’re doing should be in this space, and we want to help
those individuals make good decisions but acknowledging of course that they themselves have to make those decisions, and that is the challenge of running your own super fund: you are in the driver’s seat.” However, Thinktank finds that the report has misinterpreted the facts on both of its objective points, “starting with an overestimation of how significant direct property – and that which is geared – will become as a percentage of total SMSF assets,” says Amundsen. “The assumptions by the FSI are well beyond what seems to be reasonable, and so is the suggestion that geared direct property cannot be a savings vehicle for retirement.”
“I do not believe that the FSI’s recommendation should be cause for concern” Suresh Pillai, general manager, Liberty Waiting game On whether there is still room for innovation in SMSF products in light of a potential regulatory change, there are mixed responses from our lender panel. Despite the uncertain climate, St.George says it will continue to move SMSF products forward. “As well as innovation, there will also be a focus on education,” says mortgage broking general manager Martine Jager. “It is a big commitment for someone to head down the road of an SMSF, and given the trend appears to be that an increasing number of people are choosing this option, we believe education will be crucial.” But Liberty says that in the current climate it’s more about improvement than innovation. “I think SMSF lending products are at an inflexion point where prudent and sensible refinements can cement SMSF loans as a valuable and responsible proposition for brokers and borrowers,” Pillai explains. “These
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FEATURES
SMSF NOT ALL SMSFS ARE AFTER RESIDENTIAL INVESTMENT “There’s certainly a perception, and this is often media-led, that every SMSF is rushing out and buying residential property, which is just simply not true,” says Sinclair Taylor of Westpac. Taylor says the level of assets inside SMSFs devoted to residential property is $21bn. “That is only 4% of all of the assets inside self-managed super, so 4% of the pie; and it has been 4% for several years now.” A very small number of SMSFs are using a property-gearing strategy. ATO statistics show that, at the end of the June 2013 financial year, only 2.7% of all SMSFs had a loan in place. “The market commentary would suggest that everyone setting up an SMSF is doing so almost for the sole purpose of buying a residential property; it just simply isn’t the case,” Taylor says. SMSF is still Australia’s largest and fastest-growing superannuation segment, but not all trustees are including property gearing, which is what the FSI is addressing.
refinements could include things such as a more holistic servicing approach and consistent approaches across the industry to professional advice requirements.” Thinktank also believes the focus for the future lies more in the realm of professional advice than innovation. “It is perhaps less of a question of innovation than one of having a very good understanding of what can and cannot be done within the regulations,” says Amundsen. “When borrowers have good professional advice this is a big help, but you also have to be very aware yourselves of what those regulations are. Knowing when you can do something that may be out of the ordinary but still within those regulations can be very helpful in allowing you to work effectively with the borrower’s professional team.” La Trobe’s Bannister says: “As a lender known for innovation, we would like to think there are always opportunities to improve products. However, innovation in the SMSF lending space is likely to have been placed on hold until the government responds to the FSI recommendations, which have the potential to directly impact on the availability and terms of this product.” Westpac has recently removed its requirement for borrowers to present a financial advice certificate. “What we’ve done is replace it with a trustee acknowledgement,
“There is a degree of uncertainty as to whether gearing will continue and how the government may respond to that recommendation, but the sector is well managed” Sinclair Taylor, head of self-managed superannuation funds, Westpac absolutely recommend that people get it.” So for the time being, until the SMSF sector hears what conclusion the government has reached, SMSF lending is a little in limbo as to where it will end up. But one thing is for sure, the FSI report has created a strong debate within the industry on SMSFs. Thinktank’s Amundsen concludes: “We are very hopeful of a well-informed and unemotional debate on the subject that results in any changes being for the good and
“In the short term, it is business as usual; in fact, the uncertainty around the product’s future has encouraged more activity in this space, so opportunities for brokers have currently increased” Cory Bannister, vice president and head of distribution, La Trobe where the trustees themselves are making comment or an undertaking to the bank that they’ve thought about all the issues that a planner would typically talk to them about and before they enter into the transaction,” Taylor says. “But we’re not diminishing the importance of financial advice; we still
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addressing specific issues rather than a kneejerk reaction. Our particular involvement in the SME sector leaves us believing that SMSF LRBAs are an excellent vehicle for building retirement savings and actually encourage SME owner-operators to focus on providing for their financial needs in retirement.”
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BUSINESS STRATEGY
SMALL VS BIG BUSINESS
ALL BUSINESSES GREAT AND SMALL The importance of your employees being clear on the differences between working in a small business and in a large organisation shouldn’t be underestimated. Eric J Gregory explains the key differences and why it is vital for everyone to realise who their employer is, and what they can do to contribute to the success of the business
IF YOU look at the Australian business economy, you will discover that the following statistics have remained fairly static over the past few years: • There are approximately two million registered business entities in Australia • Large businesses are classified as $250m plus in annual sales • Mid-sized businesses are classified as $10m to $250m in annual sales • Small businesses are classified as up to $10m in annual sales • Micro businesses would typically be ABN holders and the self-employed Now for the surprising part: • Large represents approximately 0.1% of all businesses … only 2,000 • Mid-sized, approximately 1.4% of all businesses … only 28,000 • Small and micro, approximately 98.5% of all businesses … a massive 1,970,000 Finally, the mix of employees across companies is: • One in four people work for a large business • One in four work for a mid-sized business • Two in four people work for a small/micro business So, why does this matter and what does this story tell us? On average, the micro and small
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business sector contributes roughly half of the annual total sales of all businesses, and employs roughly half of all people in the country. However, the disturbing fact is that the vast majority of those businesses (over a fiveto 10-year period) will either fail, plod along with no real return on investment, or the owner will shut their business down. However, the micro/small business sector as a whole stays viable due to the large amount
of people who have a dream to own a business.
Let’s ask some tougher questions ... Why is it that a staggering 98.5% of businesses can’t seem to grow past the size of a micro/small business? Why is the failure rate in this sector so high? Why do so many fail to reach desired, predictable and sustainable profit levels?
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Let’s start by identifying some of the key differences between small and large businesses. These are as follows:
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Capital: Far too many small businesses
start with a shortage of capital. For those who do have capital, it is very often self-funded.
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Entrepreneurial/leadership skill sets:
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Reasons for starting a business/overall strategy: Many small business owners
The majority of small business owners are unfortunately lacking in the required skills to run a business. Many are experts in their chosen profession but have very little actual entrepreneurial experience. However, in large and in many mid-sized businesses, leadership talent is either recruited or already exists within the executive team.
start a business for emotional reasons and fail to do sufficient planning, preparation and market investigation. In comparison, most large companies have very solid strategic launch plans in place, which is a key driver for success.
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Business model: Many small business
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Systems, technology and software:
owners start a business around a model that either relies far too heavily on themselves or on highly skilled employees. This puts the business at the mercy of those employees and the owner. Larger businesses, however, have the resources to deal with these issues in order to keep the business growing.
Large businesses will usually invest in thorough and robust IT systems and processes, which ensures increased productivity and efficiency. However, most small businesses are mired in a sea of unclear systems and ‘boltedtogether’ technology and software, which may impede efficiency and growth.
Helping your team understand these differences
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Acknowledgement
and
TEAM TAKEAWAY: Simple awareness and acknowledgement is powerful.
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Treat your business as a separate entity: Every business, regardless of its
size, has the same requirements, outcomes and needs: • Strategy – A clear and profitable destination with a plan and set of tactics to get there. • Marketing – The right number and right types of leads; how many of the potential borrowers who contact you will be the right type of potential customer? • Sales – Converting the right number and right types of leads into customers. How many will actually turn into customers? How many will you find a lender for? • Delivery – Be consistently brilliant at delivering what your customers have purchased in line with expectations and within budgeted margins. For example, the delivery of your final product is completed by a third-party lender, so your qualification process and diagnosis process that get them presented to the right lender are critical. • Finance – Complete control and visibility of all key financial aspects of the business. • Admin – Support across key functional areas of the business. • Systems – Processes and repeatable workflows that allow the business to run the way it needs to; eg a workflow for finding potential leads (borrowers), qualifying those leads, starting them on the sales process (understanding their situation and matching them with the right lenders), and converting them into customers (the right lenders approving their loans) are all critical, along with having an annual P&L in place that considers individual commissions on loans as well as ongoing annuity with correct margins and fixed expenses. TEAM TAKEAWAY: In reality, every business has the same basic needs regardless of resources available.
awareness:
Simply being aware of the above differences between small and large businesses is a major first step. When every team member understands the challenges they face in a small business, half the battle has already been won.
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Org chart, functional area outcomes, and wearing multiple hats
• Divide your business into five key functional areas of marketing, sales, delivery, finance and admin.
• Be clear on ‘accountable outcomes’ for each of those areas. • Create positions within each of those five areas, eg sales manager, sales representative, bookkeeper, marketing manager, etc. • Allocate those position descriptions to your team members. The key is to get everyone crystal clear on which roles they are responsible for and how those roles contribute to the accountable outcomes within each of the functional areas. • Understanding capacity is absolutely vital. For example, what is the maximum number of loans you can write with the team you have? How specialised are each of these areas and can certain functions be performed by lower-skilled team members? TEAM TAKEAWAY: You won’t have the luxury or resources (yet) to have one person performing just one role. Therefore, be prepared to multitask across multiple roles while treating each of those roles as separate.
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More with less, and a sense of urgency
• Acknowledging that the technology, software and systems will be far from ideal while not allowing that to be an excuse for poor performance is critical. • As a business, there will be very little wiggle room in terms of sustaining any kinds of ‘stressors’ to the company’s cash flow, profits or capital base. • The sense of urgency needed is essential to success; team members need to move quickly and with a great sense of purpose. • An environment of open, honest and transparent communication is essential. TEAM TAKEAWAY: Committing to doing more
with less is mandatory. Speed, a sense of urgency, and laser-like focus on results are equally important … every team member needs to think like they have skin in the game … as if they were the owner of the business. Eric J Gregory is the author of Would You Like Profits With That? and the founder of Gregory Business & Trades Coaching, which specialises in working with business owners/entrepreneurs and their team members to create ‘Quality Lifestyles’ through ‘Business Success’. For more information, visit www.gregorytradescoaching.com.
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BUSINESS STRATEGY
CLIENT SERVICE
CLIENT SERVICE EXCELLENCE – WITH MORE THAN A SMILE Clients are more demanding – and more fickle – than ever before. One false move on your part, and they’re gone. Nikki Heald reveals how to keep them happy, and keep them on your books!
SO, YOU think you’re a great service provider? You always make sure you smile and have a pleasant demeanour. A friendly disposition and a smile are certainly important; however, in today’s competitive market a smile is just not enough. The way we treat our clients is emerging as a critical differentiator for brokers and can provide a competitive advantage. Today’s clients are savvy, less loyal and more demanding. They realise they have a choice and that you are not the only broker to choose from. Additionally, client awareness around service standards has also increased. Good, ordinary and average is simply not good enough. It’s about providing an experience for your client that makes them want to come back, as opposed to being forced or compelled to come back. So, what is service excellence? Exceptional client service is about going beyond what is realistically expected. It’s about surprising – and often delighting – your clients; turning
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them into enthusiastic referral sources who disappointment. From a client’s perspective, will stick with you not only because you do it’s the little promises you keep that matter great work but because of the value you bring. most. Returning a phone call, providing As brokers, imagine if you could get existing information, or simply getting to know them clients to tell others about the on a personal basis can value you offer? The beauty of DID YOU KNOW? significantly impact on the word-of-mouth referrals is that relationship. they save on marketing costs, Providing great service is cold-calling and the time taken really about consistency, and to network. realistically, that’s not too 68% of clients will walk due to difficult for you or your team Great service is not just rude or discourteous service, to achieve. For leaders, it is doing your job but establishing without any prior warning. vital to clearly communicate an emotional connection with It’s not safe to work on the to your employees the service your clients. It’s about valuepremise that no news is behaviours that are expected adding and finding ways to good news. be unique. It’s about getting with both internal and to know them and being external clients. Explain to heartfelt. Research suggests your team why service that emotion influences excellence matters, not only purchasing decisions six times for the company or client as much as rationale. So, if but also for the personal It costs five times as much to satisfaction experienced in something or someone makes win a new client as to retain making others feel valued. us feel good, we are more an existing one. Remember to inclined to buy. Remember, So, what are some simple nurture these alliances too. people do business with things you can do to enhance people they like. service excellence? Unfortunately, many businesses believe Be responsive that delivering exceptional service will cost Speed is everything, so try to reply to your them too much in staff time, training clients as soon as you can and keep them in the or developing service standards and loop and informed. Procrastination doesn’t procedures. These in-focused organisations help anyone, and you’re going to have to are only concerned with company profit and respond sooner or later. May as well do it now! cutting costs, and little thought is given to how to keep clients happy. Additionally, in Take time to listen these organisations staff recognition and Avoid speaking, and really listen to what retention is low, which significantly impacts they’re saying. It’s important you understand on growth and profit. Training yourself or what your clients are communicating to you. your team on how to deliver standout service That way, you will be able to successfully meet is an investment that will reap significant their needs and provide the right solution. personal satisfaction and reward. Realistically, bad service is actually more Do what you say you’re going to do costly to your brokerage than the time taken One of the biggest gripes in business today is to provide great service. Poor service that people simply don’t do what they say influences more than just a negative customer they’re going to do. If you say you’re going experience – it reduces revenue and drives to do something, then do it! It enhances up costs. It damages public perception, your professionalism and personal brand, credibility and market reputation. As we all and demonstrates you value your client. know, a dissatisfied client is more likely to spread the word about a poor service Know your stuff experience than a positive one. Nowadays, Your client’s perception is that you are the unhappy clients will take to social media paid expert. That’s why they’ve come to you platforms to spread the word about their
Today’s clients are savvy, less loyal, and more demanding. They realise they have a choice and that you are not the only broker to choose from to handle their financial affairs. So be sure to keep your skills up to date, and be on top of the game in your profession. Unfortunately, if you convey a lack of knowledge, then you risk ruining your credibility.
Give a little If a client asks you to do something that really won’t cost you a lot in time or money, then treat it as an opportunity to go the extra mile. By doing so, you not only have a contented and indebted client but someone who is more than happy to refer to you. Finally, within the financial services profession brokers really should view their book of clients as their most valuable asset and develop a plan around taking good care of them. Most importantly, develop long-lasting personal relationships by keeping in touch regularly, both in good times and in bad. As brokers, you’re not just selling a product but providing expert advice that can significantly impact on people’s livelihood and circumstances. So, if you haven’t given much thought to your service levels, then perhaps it’s time to conduct an audit. Remember, if you don’t bother to make the client feel valued, respected and important, then you can be sure your competitors will!
Nikki Heald is the managing director of Corptraining. Visit www.corptraining.com.au.
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BUSINESS STRATEGY
NETWORKING
THE POWER OF THE TRIBE: RECOGNISING AND REALISING THE VALUE OF BUSINESS NETWORKS In this incredibly fast-paced business and economic landscape we can no longer do it alone – realistically, we never could; we just thought we could. Janine Garner shows us how to harness networking and collaboration to future-proof our success
BUILDING A powerful and diverse network, your own personal tribe, is a critical ‘must have’ within the new operating system of commercial collaboration. Moving from the isolated ‘Me’ space to the collaborative ‘We’ space will future-proof careers, leadership and your own personal success. A powerful and diverse network drives your success. It: creates new opportunity for growth stretches, pushes, drives and inspires you enables you to contribute and influence more and leverage your position further This ‘We’ space of commercial collaboration requires courage, confidence and bravery and is one in which: networks of connected individuals, communities and businesses work together to drive success
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we can bring our skills, strengths and talents to the table and together amplify and share expertise to create progressive, results-oriented solutions collective intelligence means we work smarter and quicker together diversity and difference of opinion is actually the new competitive advantage Networking, connecting, meeting, doing coffee, lunch dates and even speed connecting – all these terms are synonymous with meeting others to drive skill sets, contacts and ongoing business and personal growth. And however much you might want to hide under the white tablecloths of a corporate breakfast, powerful and effective networking has evolved and is now a business must for all who want to forge ahead. It’s not simply about building up a Rolodex of business
cards (or, more accurately, a smartphone full of virtual ones), a mass of LinkedIn contacts or a significant number of social media followers. It’s about a true meeting of minds and skill sets, and skilfully parlaying said meetings into long-range successful relationships. Networking is a must-have for successful collaboration, and diversity of that network is the tipping point between average connections and those that collaborate to create magic. The cross-fertilisation of connections, skills and brainpower, and the ideas that are openly discussed and shared through network creation, in their turn create new opportunities, innovation and new solutions to existing problems. It’s a domino effect – the way your initial networks
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Networking, connecting, meeting, doing coffee, lunch dates and even speed connecting – all these terms are synonymous with meeting others to drive skill sets interact provides a guideline for the subsequent or flow-on networks that spring up from these collaborations. They will only benefit from your experience and way of working together.
Success through collaboration The most innovative businesses and organisations are finding that collaboration and effective and powerful networking are
giving them an edge. So, how do you find, build and manage a diverse network? How do you gain entry to a true circle of excellence that will work with you and not against you? Because, let’s face it, there are still ladderkickers out there. The critical element of a powerful network that can become your lifeline, and is an absolute must-have for successful collaboration, is diversity.
Building an effective and powerful network is so much more than finding a safe, like-minded tribe. It requires: diversity a width and breadth of contacts a willingness to embrace the opportunity that exists in differences an understanding that you may not always agree with or understand certain points of view, but that through the connection you build awareness and knowledge An effective network is a diverse network that consists of people with differing levels of: expertise age gender experience
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BUSINESS STRATEGY
NETWORKING Powerful networks are those that are cross-functional and cross-industry. Think about it. A like-minded network limits the breadth of conversation. Lawyers sit in a room with lawyers sharing their legal experience from the industry of law. CEOs play golf with CEOs; fashion industry PR experts mingle with other fashion industry PR experts. Imagine the colour of the conversation if instead you had lawyers, accountants, creatives, athletes, marketers and business owners discussing the various solutions to a problem. Imagine the different perspectives shared, the varying insights, the depth of conversation that would stretch thinking and push perspective wider. Diverse connections: challenge thinking drive further questions push boundaries increase awareness open our eyes to another way bring to the forefront opportunities that were not previously in the direct line of vision present solutions that were not previously on the radar create innovations that were once not thought possible Who do you need to surround yourself with to inspire you and your business to achieve more? As Jim Rohn said, ‘You are the average of the five people you spend the most time with’. A powerful network is one that consists of people who: have similar mindsets but diverse experience will stretch thinking and push boundaries realise the power of sharing ideas and of coming together value-add to each other’s businesses through the power of plural perspectives Those who are willing to be a part of a collaborative working environment are doing so because they want to be challenged. They want the opportunity to constantly learn from others, and to share what they’ve learnt; to engage on an intellectually challenging
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level with like-minded thinkers; to see their own business benefit from the knowledge of specialists; to be happy knowing that they are on the edge of technological advancement, constantly pushing the ‘what if ’ button — because, as a team, they feel secure enough to take risks.
needed to get there. They are seeing procedures streamlined, the bottom line coming up, and employees more engaged and happier. Their ‘communities’ are becoming communities without the inverted commas. It is not enough, in the words of the amazing Sheryl Sandberg, to ‘lean in’ for
Powerful networks are those that are cross-functional and cross-industry. Think about it. A like-minded network limits the breadth of conversation. Lawyers sit in a room with lawyers sharing their legal experience from the industry of law. CEOs play golf with CEOs, etc The concept of commercial collaboration and the move from the ‘Me’ space to the ‘We’ space and way of thinking is not something for the faint-hearted. It’s for those who can see the far-reaching benefits of what the ‘We’ space is about – and yes, it is a gradual move, which involves challenging thinking. But it is not something that one has to contemplate in solitude. Understanding the power of your network and using its potential is intrinsic to the ‘We’ mentality. To care about the wellbeing of those who are connected to you through business similarities, or ethical focus, or a desire to advance the same cause – and expecting nothing in return – creates a fantastic opportunity for collaborative relationships, and also for a true value exchange, where ‘what’s in it for Me’ turns into ‘what can I do for you’.
The ‘We’ space The ‘We’ space is not a pipe dream. There are businesses and leaders who are clearly succeeding by operating within this framework. It is the centre of discussion among academics, thought leaders and consulting groups. Those corporations and entrepreneurs who are using the space well, and understanding the shift in thinking,
future-proofing our success, our businesses and our careers. As leaders who are taking teams into an uncertain future, it’s now about leaning out and collaborating with others. Because to lean out means to embrace and engage on an unforeseen aggregated level – where thinking bigger than ever before will bring rewards to a collective commercial mind. The barriers between genders, between generations, between cultures, between the inventors and the investors, between the change makers, the visionaries and those that make it happen – these all have to be broken down. This is all part of the evolution of Me to We. This is all a part of collaborative business. Commercial collaboration is the key to future-proofing business, leadership, careers and success. This is not about a revolution; it’s about evolution. Janine Garner is a businesswoman and entrepreneur, and is the author of From Me To We – Why Commercial Collaboration will Future-proof Business, Leaders and Personal Success, published by Wiley. She is the founder and CEO of LBDGroup and works with senior leaders to build high-performing teams. For more information, visit www.janinegarner.com.au.
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FEATURE / BROKER EDUCATION LIFESTYLE
DAY IN THE LIFE OF…
Kim Cannon, managing director, Firstmac
4.50am: The weather is promising to let Brisbane know it’s alive again today, and I’m out of bed to get a head start on the working day. A quick few emails tells me who’s already up and at ’em, and we get some runs on the board while most of this part of the world is still yawning. 5.30am: Head to Kangaroo Point Cliffs for a PT session on the stairs. My trainer is there, cheery as ever, because he knows he’s the one who will make me earn the pie and beers I enjoy at the footy.
6.50am: A shower and a coffee have me feeling brand new, and I get my teeth into the outline for our new Broker+ program. The collateral looks great and I’m pretty excited. I don’t get to watch the webinars right through, but I get the gist. It’s what I had in mind. 7.05am: Put in a call to Trevor Scott, Firstmac’s head of mortgage management, for an update on some product innovations he has in the pipeline. It’s the first call of a long morning on the phone.
400 Queen Street, officially named The Firstmac Centre but which is known as ‘The Factory’ because it’s where the ‘real’ work gets done. And it’s not as pretty as the Riverside Centre office.
11.30am: Meet with the head of third party to make sure his team are on board with Broker+ and to make sure I’m across the latest developments in the channel as the BDMs see them. They are the closest to the coalface, and I always pick up a lot from them.
1.50pm: The executives meeting takes a big
11.52am: Interrupt the meeting to take a
3.50pm: Sit in with the development team to get my head around the ones and zeros of an IT challenge we are having. I come away knowing more than I knew before and confident they’ve got the thing licked so it won’t cause us any growing pains.
call from my grandson. Phone conversations with an almost-two-year-old are always new. Right … where were we? Back to channel updates and the wish list for the MFAA conference.
across the Story Bridge into the office at Riverside for a meeting with the CFO to discuss the schedule for the next series of RMBS issuances, and compare notes on our read of local versus international investor interest.
with marketing for an update on planning for the after-party. I don’t have an assistant, which is a drawback when it comes to booking travel and other admin-heavy jobs, but a big plus for staying hands-on in the business.
1.30pm: I have a Reuben sandwich sent up 10.45am-ish: Walk across the street to
chunk out of the afternoon to get through a very full agenda. All the teams have set ambitious targets, and I’m happy to see their strategies to achieve them are equally bold. Somehow two hours have gone by.
“I interrupt the meeting to take a call from my grandson. Phone conversations with an almost-two-year-old are always new” 12.10pm: That reminds me to check back
9.30am: Make the eight-minute drive
the daily summary while I eat my sandwich. (It’s delicious: hot corned beef, Swiss cheese, sauerkraut, and dressing.)
from downstairs and find myself a desk. Read
6.10pm: Put Pink Floyd on my car stereo and start on my gruelling commute home. I get two and a half tracks out of the trip. 7.30pm: Quick shower and into the glad rags. Out the door again for a Brisbane Broncos function. This is when work and play collide, but it won’t be too much of a late one. Those stairs up Kangaroo Point Cliffs will be waiting for me in the morning.
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THE DATA
HOUSING AFFORDABILITY
(NOT) KEEPING UP WITH THE JONESES Housing affordability is worsening nationwide, regardless of the number of foreign buyers or the low interest rates
AUSTRALIANS ARE being left behind by their own housing boom, the recent December quarter Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report suggests. Housing affordability – measured as the proportion of family income required to meet repayments – is falling in every state. The sharpest fall occurred in Tasmania, where the proportion of income required to meet repayments rose 1.5%. The report also adds fuel to the raging debate surrounding first home buyers. It does take into account the ABS revisions of FHB
seen rental affordability improve – a figure that includes the boom towns of Sydney and Melbourne. Whether this has had any effect on the Australian love of home ownership is yet to be seen, but savvy property investors will surely take note. Ultimately, housing affordability is a story of much more than just houses, reflecting stagnant wage and unemployment figures. And it’s a measure the RBA, APRA and the government will keep a keen eye on as they weigh up stimulating the economy against the risk of the housing market overheating.
numbers, and reports a 1.6% rise in the number of FHBs over the quarter, to 14.6% of the total owner-occupier market, still lower than the long-term average of 19.8%. In some states (NSW, Victoria, NT, ACT) FHBs’ finance commitments are rising; yet confusingly, in the more affordable states (WA, SA, Tasmania) commitments seem to be falling. Strikingly, the report also shows that the affordability of owning and renting is going in two different directions. In fact, all territories bar Tasmania and the ACT have
OWNING VS RENTING The December quarter saw the affordability of owning and renting going in two very different directions, the Housing Affordability Report suggests: 40%
35%
30%
25%
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JUN 12
MAR 12
DEC 11
SEP 11
JUN 11
MAR 11
DEC 10
SEP 10
JUN 10
MAR 10
DEC 09
SEP 09
JUN 09
MAR 09
DEC 08
SEP 08
JUN 08
MAR 08
DEC 07
SEP 07
JUN 07
20%
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REPAYMENTS BASED ON DATA FOR NEW BORROWERS Median weekly family income Proportion of family income required to pay loan
$1,915
28.1%
$1,588
NT
28.4%
QLD
$1,911
WA $1,462
26.1%
27.8%
SA
$1,598
NSW
36.2%
$1,546 33.4%
Proportion of family income required to meet average loan repayments – Australia
VIC
Proportion of median weekly family income spent on rent
$1,295 25.9% AUSTRALIA-WIDE
TAS
ACT
$2,508
DEC 14
SEP 14
JUN 14
MAR 14
DEC 13
SEP 13
JUN 13
MAR 13
DEC 12
SEP 12
$1,608 31.5%
20.4%
Source: Adelaide Bank/REIA Housing Affordability Report, December Quarter 2014. The full report is available to brokers who are accredited with Adelaide Bank.
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LIFESTYLE
FAVOURITES
FAVOURITE THINGS Chris Slater, general manager, AFG Home Loans
Sport: We are a bit sports crazy at the Slaters. My seven-year-old son and I love the Socceroos, Manchester United and the Roar in the A-League. We also love Collingwood in the AFL and are very partial to the V8 Supercars. The Clipsal 500 and Bathurst 1000 are two events we never miss watching. We’ve even taking to battling it out on the Playstation 4. My four-year-old daughter has no chance. Drink: I love my Sauvignon blanc and have taken to making cocktails on holidays lately. I discovered Caprioskas on a trip to Greece a few years ago and have a lot of fun making them.
Things to do: Hanging with my wife and two kids on weekends is still my favourite thing. We do ‘fish-and-chip Fridays’ and home-movie nights on Saturdays, and I think I love it more than the kids.
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Music: My good friends laugh at the music on my iPhone. I love Frank Sinatra and am prone to a rendition of Cold Chisel’s Khe Sanh at karaoke. With a father who played the drums in a jazz band and both parents in the theatre, I like quite a bit of different music. The Bose Bluetooth portable speaker is essential packing for my travels.
Photo of Frank Sinatra from the William P. Gottlieb Collection (Library of Congress)
Holiday destination: My wife and I spent some time in Capri, Italy, a few years back and had the time of our lives. What a place! We’ll go back one day. In Australia we love Bunker Bay at Margaret River in WA, and you can’t go past some of the great beaches in Queensland.
Books: Anything written by John Grisham – I reckon I’ve read all of his books. The Firm and A Time to Kill are two of my all-time favourites.
Event P
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“Being recognised as one of the industry’s best is a massive honour. I come from a relatively small regional centre where volume and loan size aren’t what they are in metro areas so it just goes to show that if you work hard and keep your client at the heart of everything you do then anything is possible. Winning the Australian Young Gun of the Year award has provided some outstanding publicity and has really improved the profile of my business.” George Farmer, Aussie Bundaberg, Australian Young Gun of the Year
Friday 30th October 2015 The Star Sydney Event Partner
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