Mortgage Professional Australia issue 16.01

MPAMAGAZINE.COM.AU ISSUE 16.01

HOT LIST

2015

Presenting the kings and queens of the mortgage industry

GLOBAL CLIENTS Look beyond Australia for your next client

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LENDING CONTENDERS New competition within the banking sector

STEVEN DEGETTO Leveraging the strength of the Suncorp Group

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JANUARY 2O16

CONNECT WITH US

CONTENTS 28

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

UPFRONT 04 News and tips

A brand-new update on specialist lending

08 Hot topic

Do Australians still want fixed rate mortgages?

10 News analysis FEATURES

18 COVER STORY

BROKING BEYOND BORDERS MPA talks to three leading brokers specialising in clients based overseas

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HOT LIST 2015

The regulatory and market trends that will define 2016

62 The data

QBE’s Housing Outlook report for 2015–18

BUSINESS STRATEGY 54 Marketing videos

Six types of marketing videos to drive leads and sales

56 Understanding performance Matching personalities to positions

Picking out the bold and the brave in the third-party channel

58 Monotasking

Why multitasking is wrecking your concentration FEATURES HEAD TO HEAD

STEVEN DEGETTO

14 Suncorp’s head of intermediaries on leveraging the Suncorp Group’s resources

THE NEW CONTENDERS

Meet the lenders who have something to prove, and the offers to prove it

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MORTGAGE INSIDERS 34 Darren Sambrooks

Mortgage Choice accountant-turnedbroker on adapting and social media

60 Day in the life

Settle down to storytime with Pepper’s Mario Rehayem

64 Favourite things

Experience a New York Christmas with Aussie’s James Symond

MPAMAGAZINE.COM.AU FEATURES

FUTURE LEADERSHIP

How to develop your employees into leaders – and who’s worth the effort

NOW ONLINE: Sneak previews and magazine extracts in Business Strategy Top brokers and brokerages in Leading Mortgage Professionals Our free Business Education Webinar Series

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FEATURE / BROKER EDUCATION

EDITOR’S LETTER

Hail the middleman

B

y the time you read this the bright lights of the Australian Mortgage Awards may have faded slightly, but as I write they’re still very much fresh in the mind. Undoubtedly the highlight for me was presenting the Australian BDM of the Year award towards the end of the night (congratulations again to Choice’s Timothy Schneider).

I’ve heard business development managers recently described as the “unsung heroes of our industry”, a sentiment I can certainly agree with. We’re trying to increase our coverage of BDMs in this magazine, highlighting those individuals positively named by brokers in our lender reports and our weekly ‘BDM in the Spotlight’ feature online, and we’ll be taking a closer look at the broker-BDMlender relationship in 2016.

This relationship is particularly important in niche areas of lending. In this issue we’ve talked to brokers who deal with clients based abroad, an area where out of 35 banks on a broker’s panel just four could have suitable products.

“Just as brokers can improve their businesses, BDMs can also improve how they work with brokers” Having a BDM who understands the tax arrangements in clients’ home countries, or is prepared to communicate on Skype across time zones, is a huge advantage for the lenders, brokers and clients involved in this often-difficult process.

This issue of MPA is traditionally the ‘bridging issue’ between one year and the next, and so we’ve also got our news analysis on 2016’s regulatory and market developments, and the return of our industry Hot List. So don’t wait for the holidays to end; you can start planning your 2016 strategy now.

Finally, from everyone at MPA, we wish you a merry Christmas and a happy new year!

P.S. This year we made the application system for MPA’s Top 100 Brokers report all-electronic. This made it easier than ever to apply, and we’re happy to report the number of applications increased substantially. However, as with new systems there were technical problems, which caused Peter Gwynne to miss out on this year’s Top 100 (Peter would have been 47th). We’re therefore going to adapt our application process to ensure that quality brokers get recognised, not only in the Top 100 but in all our reports.

Sam Richardson, editor, MPA

www.mpamagazine.com.au JANUARY 2O16 EDITORIAL Editor Sam Richardson Journalist Maya Breen Production Editors Roslyn Meredith Moira Daniels Carolin Wun Contributors Warren Kennaugh Jenny Brockis Marcus Seeger Iain Hopkins

ART & PRODUCTION Design Manager Daniel Williams Designer Loiza Caguiat

SALES & MARKETING National Sales Manager Rajan Khatak Account Manager Simon Kerslake Marketing and 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

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Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss

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ROUND-UP

NEWS AND TIPS – SPECIALIST LENDING UPDATE NEWS BRIEFS Hiring drive by specialist lender Specialist lender La Trobe has taken on 25 extra staff in its Melbourne head office.

The new intake includes 14 experienced credit analysts, BDMs and administrative support staff. Taking on new staff is part of La Trobe’s wider strategy, vice president and head of distribution Cory Bannister explained: “With additional new funding lines for future growth secured, our growing retail Credit Fund paying 5.20% per annum for a 12-month term investment, and a further RMBS issue due to market shortly, our capacity to continue to grow is now all in place, giving us the most flexibility in Australia.”

Low-doc lending recovering A report by comparison site Canstar claims that low-doc lending is “thriving”, after a period of unpopularity following the GFC. Sixty low-doc products are now available, from around 20 lenders; back in 2000 low-doc loans made up just 1% of the products available. Regulators are also satisfied that lenders have “lifted their game”, the report added, and found the rate of an average low-doc product to be 0.53% more than a full-doc equivalent.

60% of nonconforming borrowers could be missing out

Six out of 10 non-conforming clients could be missing out on getting a home loan, according to non-bank lender Pepper. While 34% apply to a traditional lender and are knocked back, 24% don’t apply for finance at all, fearing rejection. Pepper estimates the specialist lending market in Australia could be worth 10–12% of the total – now worth $1.4trn – and Pepper director of sales and distribution Mario Rehayem believes non-conforming clients should make

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up 5–15% of a broker’s total business.

The research was revealed as part of the Pepper Insights Roadshow.

Homeloans targeting brokers for growth In their Annual Report for the 2015 financial year, non-bank lender Homeloans recorded a 23.7% increase in branded loan settlements – 50.6% in NSW – which it partly attributes to increased engagement with the broker channel. CEO Scott McWilliam wrote that “one of our key areas of focus during the year was to grow and deepen the relationships within the third party market. This involved optimising relationships with our top supporting and high potential brokers”.

Homeloans did this by increasing the number of front-line staff and reviewing its onboarding procedures.

McWilliam said, “It is our view that this sector will continue to grow, and it therefore remains of key importance to Homeloans’ distribution strategy.”

New BMM calculator for alt-doc products Non-bank lender Better Mortgage Management have just released their new alt-doc calculator, which they claim will help brokers and their customers negotiate the confusing fees that can accompany specialist products. It was brokers who gave BMM the idea, explained owner Murray Cowan: “We started noticing that some brokers were putting together their own Excel spreadsheets, and when asked why they were doing that, the brokers’ explanation was that they wanted to show the customer the true cost over the expected life of the loan, and that it was necessary to show that research had been conducted into available products for compliance purposes.” The calculator is available on BMM’s website, with an accompanying YouTube tutorial video.

SEIZING THE MOMENT With banks pushed by capital requirements and investor lending restrictions to raise rates, non-banks have been given a valuable opportunity When we’ve talked about non-banks, the story has been one of steady recovery in the years since the GFC. However, 2015 saw two developments that could significantly shift the balance between non-banks and authorised deposit institutions (ADIs): APRA’s crackdown on investment lending, and the raising of capital requirements for banks, which have made it both more difficult and more expensive for ADIs to lend.

Some non-banks are already benefiting.

Liberty Financial’s national sales manager John Mohnacheff told Australian Broker the non-bank had seen an “unprecedented influx” of new business: “We’re delighted to say that the volume of applications over the last two months has doubled … to handle this unprecedented influx; we’ve employed an army of new people to meet the demand.”

To reduce investor numbers, many banks have raised serviceability levels, which Liberty has not done, making the non-bank lender a natural destination for investors who have been caught out. But it’s not only investment loans that have been flooding in; new applications have come from “across the whole credit spectrum”, and out-of-cycle rate increases for owner-occupiers since Mohnacheff talked to Australian Broker may have intensified this trend.

However, it may not be about cost or assessment. An increasing number of non-bank lenders now have wide product

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ranges catering to all parts of the market, including prime products, which mean they are better positioned to capitalise on the banks’ difficulties. A quality relationship with brokers is also important. Liberty won MPA’s Brokers on Non-Banks survey this year, with particular acclaim for its BDMs. Mohnacheff told MPA the non-bank would be “proactively going into the consumer market” to raise awareness of its brand.

Of course, non-banks still need to protect their balance books, and aggressive expansion into the investment market could prove a risky route to increasing market share. Some non-banks have already identified problematic areas: Firstmac pulled back on lending to foreign investors in October because of

“We’re delighted to say that the volume of applications over the last two months has doubled” the predominance of vertically integrated off-the-plan schemes. CFO James Austin told Australian Broker, “With funding being restricted across the industry, to investment particularly, I think that off-the-plan could become a very dangerous area. I think that there is a lot of development going on – both in Melbourne and in Brisbane – and I think that when they come to deliver, it may be not a good place to be.”

Q&A

Royden D’Vaz

SELF-EMPLOYED CLIENTS

Position BLUESTONE

Fast fact Freelancing is growing in popularity in Australia, increasing to 4.1 million workers in October, according to a News. com.au article. The growth has been driven by millennials, 42% of whom are freelancing, mainly in web, mobile and software.

What’s the size of the self-employed borrower market in Australia and why should brokers care?

With more than two million small- to medium-sized businesses in Australia, there’s a great opportunity for brokers to expand and grow their own businesses by offering real lending solutions to SMEs. A total of 2.4 million Australians are self-employed: 1.4 million of these are sole traders; the remaining one million employ about six million people! ...

In fact, of all businesses in Australia, 97% have less than 20 FTE staff.

These figures suggest that the most prominent and most powerful economic voice in Australia comes from self-employed people and small businesses. Small businesses are looking for funding solutions to operate and grow, with many of them resorting to high interest rate personal and business loans, credit cards and/or overdraft facilities.

Small business owners have specific needs that have largely been left unaddressed until now, and there’s a real opportunity to inform and educate this underserved segment so they are aware of the funding solutions that are available to them.

Which types of referral partners and marketing strategies are effective in reaching out to self-employed clients?

Great referral partners to reach the self-employed market are accountants, solicitors, real estate agents, invoice funders and collection agencies, to name a few, but any trusted adviser to a small business is a good start.

Self-employed borrowers will find you too! They will often need expert advice due to their situation, so if you can develop a value proposition and be known for helping clients when others have not been able to, then they will seek you out.

Are there common problems that brokers should be aware of when dealing with self-employed borrowers?

We haven’t come across any problems specific to self-employed borrowers; however, like other clients, the most common issue is requiring a little more documentation. The process is exactly the same.

The best way of avoiding problems later on in the process is to supply all the relevant information and documentation as early as possible …

However, deals do fall over for various reasons, with the most common reason being ‘lower than expected valuations’ ... We suggest leaving a bit of wiggle room in any serviceability and/or affordability calculations to accommodate this so that the borrower’s expectations are met.

What features of Bluestone’s products make them appropriate for self-employed borrowers’ situations?

One important feature is the way in which we assess the application and the documentation we require. Our products allow for self-employed people with a business that’s as young as three months old to obtain funding ... For borrowers with clear credit histories we have the Crystal Blue product; for clear and credit-impaired owners of new businesses the Business Easy product; and for borrowers struggling to access prime finance, the Lite Blue product.

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ROUND-UP

NEWS AND TIPS

BROKERS STILL VALUED BY INVESTORS Latest figures from PIPA show investors hold mortgage brokers in high esteem, and PIPA chair Ben Kingsley says he sees the strong use of mortgage brokers by investors to secure finance only increasing Australian property investors are maintaining a positive outlook in spite of tightened lending by banks, and housing bubble warnings, according to Property Investment Professionals of Australia’s (PIPA’s) 2015 Property Investor Sentiment Survey.

Although the survey showed that APRA’s crackdown on residential investment lending has had an impact, with 32% of respondents saying changes to lenders’ policies have impacted on them, 60% of all investors are still looking to buy a property in the next six to 12 months and only 20% said concerns over a property bubble had caused them to put their plans on hold.

Sixty-three per cent are confident that it’s still a good time to invest in property, and investor sentiment clearly shows that mortgage

brokers are a vital source of finance for investors, with two-thirds (66%) of respondents saying they had worked with mortgage brokers to fund their last deal and nearly three-quarters saying they were likely use the services of mortgage brokers to fund their next deal.

PIPA chair Ben Kingsley told MPA the survey participants were a “sophisticated, advanced audience” who knew their preferred investment strategy, with over 67% of survey respondents having a multiple-property portfolio.

Kingsley says brokers are so valued by investors because they are not trying to sell a product, which is more the realm of the direct lenders.

“I think it’s because a broker has enough time to spend with [the investor] and is asking the right questions as a trusted adviser should

– around getting the strategy and the structuring of the lending right that’s appropriate,” he says.

“I think the proposition of the broker is significantly stronger than that of the direct lending channel.”

But he says for brokers thinking of expanding into an investment offering, investor clients are a big undertaking, and if brokers approach it as generalists, they are likely to be outpointed by sector specialist brokers already playing in the space.

“We’re a big believer that if you want to be in the investor space you’ve got to do the right thing by the client – so you need to be an investor-savvy mortgage broker in our view.

You need to understand the strategy and structuring required; servicing calculators and multiple lender options.”

But although the majority of investors remain unperturbed about the long-term investment outlook, Kingsley says APRA’s restrictions have had an impact.

“The survey indicates that there is no doubt that the regulatory changes that have taken place have impacted those with an existing portfolio because they’re saying it’s getting harder for them to borrow money; so make no mistake, APRA’s changes have made an impact.

“But I call on the regulators to be very careful in making further clampdowns, because the reality is we’re starting to see the fruits of their decisions now, and that’s going to slow down those who may be keen to buy.”

RECENT TRENDS IN RENTAL YIELDS

Australia 8 capitals Canberra Darwin Hobart Perth Adelaide Brisbane Melbourne Sydney

UNITS

HOUSES

Rental yields have plummeted throughout the year to October 2015. CoreLogic RP Data’s statistics for the three months to October 2015 show the current state of rental yields.

0%

1%

2%

3%

4%

5%

6%

Australia 8 capitals Canberra Darwin Hobart Perth Adelaide Brisbane Melbourne Sydney 0%

1%

2% 3% 4%

5%

6% 7% 8%

Source: CoreLogic RP Data Hedonic Home Value Index, October 2015 results

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UPFRONT

HOT TOPIC

Do Australians still want fixed rate mortgages?

With out-of-cycle rate rises by the majors, we ask if fixed rate loans will be making a comeback any time soon

Peita Davies

Tom Hawley Shore Financial Sydney

Mortgage Choice Brisbane CBD and Paddington

I think a fixed rate mortgage suits certain clients in specific stages of their life cycle.

For instance, if you have a young growing family and potentially stand to see some changes to household income … a fixed rate mortgage or even a split facility can give you certainty around home loan repayments for a period of time, that can be very beneficial when trying to budget. On the other hand, whilst interest rates are at record lows and you have investment properties that you have as part of a long-term wealth strategy, it is a great time to consider fixing or to maybe even consider a fixed rate loan with P&I repayments (as these loans are cheaper than interest-only currently); this way you are also increasing your capital wealth. I think what Australians want most is education around options, and this is where brokers have a great opportunity for growing their clientele by providing exactly that.

Yes. I think Australians still want fixed rate mortgages. Almost all of my clients will proceed with some portion of their loan fixed in. I think most people look at fixing in completely the wrong way – they are trying to assess what is going to be cheaper over the fixed period out of fixed and variable, but it is not really about that. Fixing is about reducing uncertainty, and as with anything in life, reducing uncertainty will generally cost you. I think it is far more important to consider the client’s personal situation and assess whether a fixed portion of their loan is the right option as a form of risk management for their cash flow.

On average, though, I definitely find that clients are still interested in fixed loans.

It depends on the client, which is probably similar to most of the other states, I imagine. First home buyers are the most likely to do it, or investors. First home buyers, we find, may look to lock in 50–80% of their mortgage. It’s more peace of mind. I say to all my clients, ‘Don’t fix if you think you’ll save money over variable, because usually you won’t ... It’s normally about the direction that most perceived rates are moving. So, if the media are talking about rate hikes, everyone is keen on locking in rates without realising the majors have already increased their fixed rates regardless.

When Westpac increased their standard variable rate and the others started to follow, a lot of borrowers, particularly first home buyers, saw that as rates were about to start climbing … saying that, we’d be lucky to see 25% of borrowers fixing anything; any part of the loan.

Choice Home Loans Blue Mountains

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Adam Bourke

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NEWS ANALYSIS

THE YEAR AHEAD

2016: NO CRYSTAL BALL REQUIRED 2015’s key regulatory and market developments will also characterise the year ahead. MPA editor Sam Richardson explains why brokers should start planning now

2015 HAS been a year of surprises; APRA’s restrictions on investment lending, out-ofcycle rate rises and China’s economic slowdown. 2016 will be equally as volatile; the difference is that we are already aware of many of the developments that will take place. If anything, brokers have too much information about the year ahead, with daily reports on house prices and regulator interference. This is MPA’s attempt to separate the wheat from the chaff, asking the industry’s leaders what’s relevant for you and your business over the next 12 months.

Lukewarm cooling Take the housing market itself. In Sydney and Melbourne, the current discourse centres on a coming ‘correction of house prices’; i.e. that prices will fall in these cities, mainly based on week-by-week clearance rates and other short-term data.

A better measure is QBE’s Housing Outlook report, released in October, which suggests that in 2016, growth will simply slow in these cities; from 22.3% YOY in Sydney to 7.3%; and from 15.7% to 4.9% in Melbourne. Corrections won’t occur until 2017 and 2018. Similarly, prices in Perth and Darwin will continue to fall, as they’ve done this year, and Adelaide and Hobart’s prices

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will remain relatively stagnant. The only unusual development in 2016 will be an upturn in Brisbane’s house prices, from a growth of 2.9% to 5.4% next year.

Therefore, when it comes to the housing market, 2016 will be a ‘relatively robust year’, as Mortgage Choice John Flavell told MPA. Clear trends allow brokers to plan ahead, whether based in Perth or Sydney and as Flavell points out, “the majority of Australians still believe now is a great time to buy and own property.” For Aussie Home Loans’ CEO James Symond, the slowing of

“The likely competitor to one mortgage broker is now another mortgage broker.

And that’s something we haven’t really seen materially before” James Symond, CEO, Aussie Home Loans growth on the east coast “is a good and important thing and necessary for the sustainability of property affordability, especially in areas like Sydney and Melbourne where they got a little out of hand, in my opinion.” He doesn’t see any imminent correction of prices, but rather the market becoming more sustainable.

The joker in the pack here is interest rate rises and falls; however, the RBA’s monthly proclamations have lost much of the lustre they held in 2014. Saddled with a stagnant economy, the RBA has essentially subcontracted management of the exuberant housing market to APRA, who has succeeded in slowing investor demand. As we suggest in

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KEY PREDICTIONS FOR 2016

DOWN

Cash rate DOWN

Standard variable rate STEADY

Unemployment UP

GDP growth UP

Consumer Price Index growth

our 2015 Hotlist, APRA chairman Wayne Byres may have more influence than Glenn Stevens over the direction in which lenders’ interest rates move in the year ahead.

March of the regulators Indeed, the major developments which will shape 2016 will be spearheaded by organisations whose names start with the letter ‘a’. APRA and ASIC have been steadily handed more responsibility by the RBA and federal government; most prominently in the government’s response to the Financial System Inquiry. You might not recall the FSI, which issued its final report in late 2014, but the coming year will see it move from a state

of recommendation to one of implementation, so it’s worth reacquainting yourself with the key points.

Most relevant to brokers is a planned review of mortgage brokers’ remuneration structures, which ASIC will conduct in late 2016. According to the Treasury, this review will help with “reducing and improving the disclosure of conflicted remuneration in life insurance, stockbroking and mortgage broking.” For MFAA CEO Siobhan Hayden, the review “really is an opportunity for us to educate APRA, the Treasury, and lobbyists”, and tackle public and regulator ignorance which was evident several times in 2015. “I don’t think it’s going to go anywhere,” she said.

FBAA CEO Peter White told MPA “the transparency under the NCCP, especially with the latest out from the FSI; I don’t see that there’s any reasonable call to change the way things are.” The industry is open to feefor-service models, he added.

A second development, which will directly eat into brokers’ pockets, are discussions over a user-pays model for the regulators; in practical terms, the cost of an Australian Credit Licence could significantly increase, in order to pay for ASIC and APRA. “At the moment, the way they’re proposing the pricing model doesn’t fly at all,” MFAA’s Hayden argued. “They’ve done the easiest cut, based on volume. The licensing amount

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NEWS ANALYSIS

THE YEAR AHEAD MFAA 2016: THE END OF AN ERA 2016 will see us bid goodbye to a beloved mortgage industry institution, or, if you prefer, a tired old booze-up well past its sell-by-date, the MFAA National Convention.

Whilst plans are still being finalised, Siobhan Hayden told MPA that the three-day national convention would be replaced by state-based one-day events. These will have a buy-in, buy-out structure with a breakfast for referral partners and events for supporting staff members. They will be rounded off with state-based awards, with a national awards ceremony later in the year.

“We need to be really clear about delivering content that’s meaningful, makes a difference, changes behaviour, underpins a cause, or is just fun,” Hayden explained. “Having three days for someone to down their tools and fly to another state to receive content – those days are gone.”

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would be about $500 for a broker, but if you go to $20 million in lodged loans, it increases to $26,000.”

The MFAA and FBAA are opposing this approach, and so discussions will likely extend through most of 2016, and Hayden

preparing plans for lobbyists in Canberra.

Of course, lobbying isn’t cheap, nor is it guaranteed to sway a result; and brokers will be expecting those results as regulation begins to bite. With aggregators providing training and banks no longer requiring

“We’re constantly in front of regulators and federal ministers; it’s my job and it’s what I do, and it occupies 70% or more of my time” Peter White, CEO, FBAA added: “seeing [user-pays] happen in a 12-month window would be ambitious… if they do come out of further discussions, it would be in 2017.” Part of the reason for this is it will have to go through a parliamentary process, White noted. “We can’t completely stop it,” he concluded. “What we can do is make it fairer for the majority.”

More still could emerge from the FSI. The recommendation that originally captured brokers’ attention – that they disclose ownership structures to clients – is already being implemented by some broking groups and requires, according to Hayden, “a simple inclusion to a credit guide or similar”.

Another change, highlighted by Flavell, was ASIC’s increased powers to ban harmful financial products, which he broadly supported by saying: “so long as ASIC’s intervention does not stifle innovation, then we support the idea. ASIC is, after all, the industry watchdog and they should be given the necessary powers to govern this industry appropriately.”

Evidently, regulators are changing and becoming more powerful. It’s possible that could rub off on mortgage broking’s industry bodies, as negotiating new regulations gives them a sense of purpose they’ve not had in years. “Our engagement with regulators keeps on increasing,” White told MPA. “We’re constantly in front of regulators and federal ministers; it’s my job and it’s what I do, and it occupies 70% or more of my time.” When MPA talked to the MFAA, they were already

MFAA or FBAA membership, brokers have been questioning the value of industry bodies for years. Depending on the concessions they can extract from regulators, 2016 could be a turning point in the relationships between brokers and their representatives.

Broker vs broker When predicting changes within the industry, it’s traditional to pick out a particularly huge corporation and claim they are planning a move into broking; this time last year it was supermarkets, and recent suggestions have involved accountants and even Google. The reality is slightly less exotic, if nevertheless still relevant; whilst they’ll be fewer new players in the market, there’ll be more brokers fighting for business.

Existing groups will grow, of course. Mark Bouris’ Yellow Brick Road group had an active year and further acquisitions in 2016 are not out of the question. Connective’s new iConnect Financial retail aggregation model will officially launch in April but will still be relatively small: Connective’s Steven Heavey told MPA that they were aiming for 100 brokers by September. Aussie is planning a major recruitment drive, aiming for 25 more purpose-built stores by July and 300 extra loan writers, bringing their total to 1,500.

We may see more lenders enter the channel; a number of former mutual banks entered the channel this year, such as Bank Australia, although their small size will limit their impact. With regard to accountants

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entering broking, MPA investigated the trend back in its issue 15.10 and found it was limited to individuals; although CPA Australia has applied for an ACL it was more directed at financial planning. In fact, mortgage broking organisations are the ones who are conquering new territories, with the MFAA reportedly considering expanding into New Zealand.

Brokers are faced with two choices, illustrated by the strategies of the Mortgage Choice and Aussie franchises. At their annual general meeting, Mortgage Choice’s Flavell identified the main challenge as “our ability to keep pace with market growth… we couldn’t keep pace with a market that was growing 12–14%.” Interestingly, MPA’s Top 100 Brokers also struggled to keep pace with rising house prices, despite their combined loans total increasing 7% from last year.

Mortgage Choice has made diversification top priority, aiming to better integrate and increase the return from the franchise’s financial planning arm, noted in both their

stores being planned were primarily focused on home loans.

Instead, Aussie would try and distinguish themselves through improved customer service, beginning with bringing their call centre not just in-house but into their Sydney head office, “literally 20m from the CEO’s office”, Symond boasts. He believes customer service has become far more important in recent years. “With mortgage brokers being in excess of 50% of mortgage flows in Australia, the likely competitor to one mortgage broker is another mortgage broker.

And that’s something we haven’t really seen materially before.”

With similar lender panels, pricing and credit criteria, a broker’s service proposition becomes the key differentiating factor, Symond explained, even more so than the Aussie brand: “the brand does a stunning job in making the phones ring… however, once the broker speaks to the customer, it’s then up to them; they become the brand. It’s their

“Seeing [user-pays] happen in a 12-month window would be ambitious… if they do come out of further discussions, it would be in 2017” Siobhan Hayden, MFAA 2016 plan and their 2020 long-term strategy.

“Customers are increasingly looking to deal with professionals who can handle all of their financial needs,” Flavell told MPA. “They don’t want to share their private financial information with various different companies; they want to deal with a onestop shop.”

MPA asked Aussie CEO Symond if he was also planning to offer more diversified services. Aussie had previously tried all types of diversification, he noted, even including selling alarm systems, but “we’ve found that home loans are certainly the heart of what we do; it’s the river that runs through it.” Cross-selling was not off the menu, Symond explained; Aussie also sells insurance and personal loans, but the new

service, it’s their skill, it’s their care which ensures the customer makes it to the finish line.” He also added that follow-up service fell into this category: “if they don’t have an existing customer management plan, someone else will.”

Mortgage Choice and Aussie’s strategies are not incompatible, of course; many consider a full-spectrum diversified proposition as the best way to service and keep a customer. The key point is that brokers, not branches, supermarkets, or overzealous regulators, will be your main competitors over the year ahead; the traditional broker proposition is still attractive, but no longer distinguishes you from the competition. Therefore, successfully reinventing that proposition will be the key challenge for brokers in 2016 and beyond.

KEEP YOUR EYE ON The US Federal Reserve Not only do US interest rates affect the Australian dollar, if the US Fed takes the plunge and raises interest rates, it could inspire the RBA to do the same (as central bankers regularly communicate).

Stock market IPOs After aggregator AFG and non-bank lender Pepper listed on the ASX this year, many nominated Connective as the next in line.

Whether or not this happens, note that listing isn’t necessarily a sign of strength in a company, but instead a method of raising funds.

Chinese economic growth As China consumers 1/3 of Australia’s exports, expected falling economic growth in China spells bad news for many Australian industry sectors. Similarly, Chinese government policy could affect the number of foreign investors moving money out of the country.

Positive credit reporting Will this be the year that Australia makes positive credit reporting mandatory? Probably not, but pressure is certainly growing on the majors to share more client details, which could allow their competitors to better tailor offers and pricing for individuals.

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HEAD TO HEAD

STEVEN DEGETTO “We’re able to leverage the group’s technological capability to benefit the bank, which we wouldn’t be able to do if the bank was on its own”

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STEVEN DEGETTO: A SEAT AT THE TABLE Suncorp’s head of intermediaries tells MPA how he’s leveraging the might of the Suncorp Group to keep the bank at the front of brokers’ minds MPA: Suncorp chose to raise interest rates in line with the majors. Does this mean you don’t see it as an opportunity to increase your market share?

STEVEN DEGETTO: If you look at interest rate changes there’s a whole bunch of things that we have to take into consideration: a highly competitive industry; regulatory costs increasing; we’ve got to balance customers and shareholders. Whilst we have raised rates … we’ve got some really competitive offers out there as well. Whilst we have increased variable rates by 0.16% we’re still in a really, really competitive position; the standard variable rate is now a benchmark rate, and what a customer is actually paying is different.

MPA: Does this mean an end to interest rate discounts on Suncorp’s owner-occupier products?

SD: Absolutely not. We’re really committed to helping customers achieve their financial goals.

We’re about being the bank for aspiring Australians; you can absolutely count on us to continue delivering competitive offers to brokers who are open to trying lenders other than the majors, and who really look after their customers. We’ve got a track record of competitive offers to customers, and of giving brokers access to offers that they can present to their customers that they wouldn’t usually find.

MPA: Suncorp temporarily increased commissions on home loans to 0.75%.

Should brokers get used to this level of commission?

SD: I think that commissions are continuing

to come under scrutiny; you’ve seen in the life insurance industry that upfront commissions and sales commission have been capped, but interestingly they’ve been brought more in line with what is in the mortgage broking market now. In life insurance you had 110 basis points commissions, and now they’re being brought back to the levels in mortgage broking.

I think there’s a balancing act with regulation. We’ve been a self-regulating industry from the start, and I think we need to stay conscious around commission levels. I think the key thing is putting customers’ best interests first, and most brokers absolutely do put customers’ best interests first.

Commissions are secondary or even an afterthought for most mortgage brokers.

Certainly we don’t have any plans to permanently increase commissions, but last year we increased trail commission in year four, which was mainly to reward value. I think in the future you’ll see more lenders rewarding value and brokers who give us not just volume but value in their customers.

THE IGNITE PLATFORM Suncorp are about to launch their new banking platform, Ignite. Scheduled to be completed in July 2016, it has involved decommissioning 12 legacy systems and re-engineering 580 business processes to improve capability and eliminate duplication as well as rationalising the bank’s product set, all at a cost of $2m, according to Steven Degetto. He claims that, when completed, Ignite will be “a great platform for us to be more agile in what we do for both brokers and customers”.

MPA: APRA has been pushing banks to control investment lending; how will Suncorp achieve this without alienating brokers?

SD: We’ve traditionally been focused more on owner-occupier lending, if you think about us helping people get ahead and being the bank for aspiring Australians. Our owneroccupier customer base is significantly larger than our investor customer base. Having said that, people who are buying homes and wanting to get ahead often have investment

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23/11/2015 11:09:48 AM

HEAD TO HEAD

STEVEN DEGETTO STEVEN DEGETTO’S CAREER TIMELINE

1994

Worked in personal and business banking in Queensland and Tasmania

2000

Appointed as CBA’s state sales manager third party banking Vic/Tas

2003

Moves to Lawfund Australia as state manager Vic/Tas

2006

Joins Macquarie Bank as state sales manager Vic/Tas

2012

Arrives at Suncorp as state manager intermediaries Vic/Tas/SA/WA

2013

Begins current role as head of intermediaries, Suncorp Bank

properties, so for us it’s about being a responsible lender in that space and growing sustainably, being mindful of the regulators’ requirements. We’ll continue to manage our pricing in the market so we get the right mix, type and growth of lending mix.

or second investment property. It’s those people in the middle – we’re not about high risk and we don’t play at the fringes; we’re really about your everyday Australians who are looking to build a better future for themselves and their family.

MPA: In practical terms how has Suncorp

MPA: Are brokers more willing to give

invested in processing and improving turnaround times over the past year?

SD: In addition to the Ignite platform, we’ve recently rolled out a small business and commercial intermediaries team, within my team, and what we want to do is be the bank for small family businesses. Many aspiring Australians are self-employed, and we believe we can fill a void for those customers.

non-majors a go than they were three years ago?

SD: I think it depends upon the broker, their own mindset, their experiences and where they might be in the cycle of their business.

We find that there’s a whole bunch of brokers who are open to change … I certainly think we’ve built capability, we’ve built credibility; there’s a whole bunch of really great brokers

“We’re not about high risk and we don’t play at the fringes; we’re really about your everyday Australians” We’re working on two projects that you’ll see rolled out in 2016: there’s a new reward and recognition program for brokers; you’ll hear more about that in early 2016. We’re also working to further streamline our loan processing.

We’re Australia’s fifth-largest bank, and we’re one of Australia’s top insurers and Queensland’s largest company. We actually brought all of our insurance businesses under one project, and the same person who ran our insurance project is now running our banking project, so we’re able to leverage the group’s technological capability to benefit the bank, which we wouldn’t be able to do if the bank was on its own.

MPA: Who are Suncorp’s target clients, and has this profile changed in recent years?

SD: It has changed certainly. Over the last two years we’ve focused more on lower LVR and high-quality business. If you think about what aspiring Australians look like, it can be people buying their first home or looking to upgrade to their second home; people who might be renovating their property or expanding their business or buying their first

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out there who still are reluctant to go outside of their three or four key lenders. We’ve continued to lift the bar on our service levels, our competitiveness, our people, and we still need to continue lifting the bar on what our products look like.

We’ve got a highly rewarded Home Package Plus product; we’ve waived the annual package fee on that for the life of the loan, and we’re really rewarding customers for bringing their whole banking to us. I think there’s still a bunch of brokers who don’t know what we’re about – and our job, and my team’s job, is to make sure we can have a seat at their table, so when they’re sitting across from their customer, we’re in consideration.

The broker value proposition is about choice, service and giving customers access to competitive offers and fantastic service. We believe we can deliver on that and we’d love for brokers to give us a chance to delight their customers.

MPA: How would you like Suncorp to be perceived 12 months from now?

SD: We want to be the standout genuine alternative for brokers and customers.

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23/11/2015 11:10:59 AM

SPECIAL REPORT

HOT LIST 2015

HOT LIST

2015

Meet 30 industry professionals you need to know

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23/11/2015 12:50:01 PM

LUCKILY FOR MPA, there’s no shortage of news in this industry. Indeed, since last year’s Hot List 12 MPAs have gone to print, alongside 24 Australian Brokers, and around 400 MPA e-newsletters have been distributed.

That’s not to mention 155 MPA awards for high performers and 26 glittering trophies at this year’s Australian Mortgage Awards.

Our Hot List cuts through the numbers.

Those featured here aren’t just high up corporate ladders, or exceptionally wellremunerated – they’re actually changing the industry for the long term. From regulators making waves well beyond mortgages, to bankers building corporate empires and of course leading brokers, this is the definitive list of trendsetters.

Who’s in and who’s out of this year’s Hot List reflects the shifts in power over 2015.

This was the year the RBA effectively gave up trying to control the housing market, preferring to cut rates and task APRA with slowing down lending growth; therefore APRA’s Wayne Byres is in, and Glenn Stevens is out. That doesn’t mean Stevens isn’t important of course; it’s just he hasn’t shaped 2015 in the way cash rate cuts defined 2014.

When it comes to lenders, we’ve focused on the new appointments and rising stars revitalising banks rather than a tired list of the major players, many of whom have now been in their positions for several years.

However, you’ll see plenty of familiar faces who have successfully steered their

organisations through IPOs or won awards for the quality of their work.

Deciding which brokers should go on this list is by far the most difficult decision. This is not the definitive list of talented brokers – instead, we’ve concentrated on those making an impact. Some are building powerful business networks, others have smashed long-standing records, and some are starting conversations about whether we really are approaching broking in the right way.

The Hot List is not an award; this list is compiled for your business’ benefit. Clearly there’s a lot to be learnt from the talented brokers featured here, but it also gives a number of clues to which lenders, brokers and regulators could be making the news in 2016.

HOW THE INDUSTRY EXPERIENCED 2015 DECEMBER APRA writes to lenders warning against sharp increases in investor lending, and setting the 10% figure – a number which would help define the year ahead MAY MPA publishes its first ever ‘Consumers on Brokers’ survey, with important insights into why consumers use brokers and how they pick a broker. AFG lists on the ASX. JANUARY

MARCH

APRIL

FEBRUARY The RBA cuts rates by 25bp to 2.25%, unleashing a wave of rate cuts and heating the Sydney and Melbourne housing markets

JUNE

OCTOBER Westpac is the first major to increase variable rates in response to capital requirements, whilst the government responds to 2014’s Financial System Inquiry

AUGUST SEPTEMBER

NOVEMBER

JULY The major banks begin raising interest rates on investment loans, following APRA’s warnings about unsustainable growth.

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23/11/2015 11:14:18 AM

SPECIAL REPORT

HOT LIST 2015

WAYNE BYRES CHAIRMAN APRA

SHAYNE ELLIOT CEO ANZ Although he won’t officially start until January, ANZ’s new chief has already announced the bank will seek to increase its Australian home loan lending, bemoaning that “we used to joke we were the number five bank of four in NSW”. Whether ANZ use the third-party channel to achieve this goal, and how they balance it with APRA regulations, remains to be seen.

If you rank this list by impact – as opposed to whether you like them or not – Wayne Byres has got to be 2015’s hottest property (excuse the pun). APRA’s move to limit lending to investors and its 10% benchmark on lending growth has affected almost all brokers, because most lenders have taken it as an opportunity to increase interest rates, even for existing investor clients. Byres has also sparked controversy by telling lenders that broker-originated loans were higher risk, although he also endorsed the channel in the same speech, back in August. With the Reserve Bank’s cash rate changes losing their ability to impact a sluggish economy, we expect to see even more from APRA in 2016.

MARIO REHAYEM DIRECTOR, SALES AND DISTRIBUTION PEPPER

2015 has been a huge year for Pepper; the non-bank lender listed on the ASX in July and has performed strongly. As with other non-bank lenders, Pepper will be hoping to take advantage of property investors fleeing major lenders who have been raising rates and tightening serviceability, following APRA’s lead.

JASON BACK, MARK DAVIS, KEVIN AGENT MANAGING DIRECTOR AND PRINCIPALS AUSTRALIAN LENDING CENTRE This is the second year running that the Australian Lending and Investment Centre topped MPA’s Top 10 Independent Brokerages report, with good reason. The Melbourne-based brokerage’s success reflects a dedicated focus on investor clients, efficient processing and individual talent; both Davis and Agent ranked highly in our Top 100 Brokers report. ALIC stands out in that they ask the client to make a commitment, in writing, to a long term relationship, and then work closely with their extensive referral network. They’re also experimenting with processing strategies and developing an ‘educational academy’ within the brokerage. Still not convinced? Check out their numbers: they have a total loan book of almost $2bn, with Davis alone writing 1,071 loans over the 2014-15 financial year – an industry record.

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JOHN MOHNACHEFF NATIONAL SALES MANAGER LIBERTY FINANCIAL MPA’s Brokers on Non-Banks survey this year saw Liberty win brokers’ hearts and rank first overall for performance, with particular acclaim for their BDMs. Mohnacheff told MPA that the non-bank lender is planning to “proactively go into the consumer market” to educate them and raise brand awareness.

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23/11/2015 12:56:54 PM

JAYDEN VECCHIO

DANIEL GREEN

LINO PELACCIA

DIRECTOR DISCOVERY FINANCE GROUP

DIRECTOR GREEN FINANCE GROUP

GENERAL MANAGER OF BROKER SALES ME

Brisbane commercial broker Jayden Vecchio has been doing many things this year – running his advice website Top Broker and co-authoring an e-book for new brokers, the Top Broker Handbook, but this didn’t stop him coming second in our Top 10 Commercial Brokers 2015 report, after just two years in the sector.

Green has made several appearances in MPA this year, appearing in both MPA’s Top 10 Commercial Brokers 2015 and Top 10 Independent Brokerages 2015 reports. Indeed, this year has been one of major expansion for a brokerage that started out in Green’s own house, with three different divisions and an office opening in Sydney’s Pyrmont.

In April non-major ME created a new position, general manager of broker sales, and it was filled by Lino Pelaccia, who has 25 years of experience at various lenders. He’s presided over rebranding (ME was previously ME Bank) and simplified the bank’s home loan offerings.

SIOBHAN HAYDEN CEO MFAA Siobhan Hayden’s appointment last year certainly made waves and it appears she is delivering on the promise of change at the MFAA. Some of this has admittedly been superficial: they dropped the confusing term ‘credit adviser’ at this year’s MFAA Convention, although they also announced a $1m consumer marketing campaign at the same conference. Behind the scenes, the MFAA also successfully fought for brokers to be included as suitable witnesses in new verification of identity rules announced later in the year and have relaunched their Women in Mortgage Broking Network.

Whilst there’s much work yet to be done, Hayden appears to be listening and responding to brokers’ concerns.

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23/11/2015 1:54:03 PM

SPECIAL REPORT

HOT LIST 2015

STEWART SAUNDERS

CYNTHIA GRISBROOK

GEORGE KARAM

GENERAL MANAGER BROKER SALES BANKWEST

CHAIRMAN MFAA

DIRECTOR BYBLOS FINANCE

In an industry relatively starved of gossip (which is probably a good thing), Stewart Saunders’ destination following his departure from ME was a highlight for the speculators out there. He’s replaced Ian Rakhit as general manager of broker sales at Bankwest, an impressive move for the young and wellrespected executive.

After two years with Tim Brown at the helm, the MFAA has a new chairman, Cynthia Grisbrook, who started in November.

Grisbrook has 15 years’ experience in the industry, founding her own brokerage DLV Solutions in 2000. She has spent time on the MFAA’s board of directors and as a deputy chairman.

Australia’s top commercial broker for 2015 nearly doubled his settlement total, from $83m to $169m, and is taking full advantage of the hectic construction taking place in Sydney’s western suburbs. He’s hired four extra staff and believes the coming year will see a further increase in construction and thus benefits for his business.

STEVEN HEAVEY GENERAL MANAGER OF STRATEGY, DISTRIBUTION AND DIGITAL CONNECTIVE Connective is moving into retail aggregation with its iConnect Financial brand, and Steven Heavey is leading the charge. Although the national rollout won’t happen until April 2016, brokers are already coming under the brand, where they’ll be provided leads by four different comparison and consumer education websites and digital marketing. Whilst their branding is undoubtedly slick, it’s a hugely ambitious project; the goodwill Connective has built up amongst the broker community means nothing to consumers. However, Heavey talked exclusively to MPA about the level of investment Connective is pouring into the project, with several high-profile hires, and insisted that the same flexibility which has attracted brokers to the wholesale aggregation business will extend to their retail aggregation arm.

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STEPHEN MOORE CEO CHOICE AGGREGATION & HOME LOANS With the average Australian house now selling for just over half a million dollars, how many houses can you get for $50bn?

That’s the value of Choice’s loan book, after hitting the milestone mid-way through this year. They’ve also recruited more brokers and launched an in-house comparison website, Choice Compare.

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23/11/2015 11:15:00 AM

JEREMY FISHER DIRECTOR 1ST STREET HOME LOANS Our Top 100 Brokers winner this year smashed the $300m mark, writing an astonishing $318,746,358 in residential loans over the 2014-15 financial year. Fisher is of course no stranger to MPA or national awards, but after coming fifth in last year’s Top 100 he has evidently capitalised on Sydney’s property market, pushing 1st Street into MPA’s Top 10 Independent Brokerages 2015. Fisher attributes his success to a gradual development of his client book, from which he gets most of his business through referrals. He’d do the same if he was starting 1st Street today, he told MPA: “You see some smaller businesses that are bucking the trend and doing ridiculous numbers in their first year, but the majority of brokers that I know who are writing good volumes have been doing it for a while… it’s time in the game and being consistent and persistent.”

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23/11/2015 1:53:50 PM

SPECIAL REPORT

HOT LIST 2015

LISA CLAES

ALLAN SAVINS

LEE HATTON

EXECUTIVE DIRECTOR DISTRIBUTION ING DIRECT

CHIEF COMMERCIAL OFFICER RESIMAC

CEO UBANK

Non-bank lender RESIMAC celebrated its 30th birthday this year, with subsidiaries Finsure and State Custodians winning awards from BRW and Money Magazine respectively. Savins told Australian Broker in May that “Resimac Group is an active acquirer themselves, and continues to look for strategic acquisition opportunities”.

Whilst it might be odd to feature the head of an online lender in this list, Hatton is emerging as a darling of the retail banking world, radically simplifying UBank’s cumbersome application process, since arriving in February. She already sits on NAB’s products and markets team, and we’re sure we’ll be seeing more of her at the bank in the year ahead.

Lisa Claes has emerged as an advocate for women as both providers and consumers of finance, with her ‘Women & Finance’ report, which was released in September, forecasting women would be the beneficiaries of a “massive intergenerational transfer of wealth”. ING Direct also launched a loyalty rewards scheme for borrowers back in May.

JAMES SYMOND CEO AUSSIE HOME LOANS There’s a new Symond at the top of Aussie Home Loans; in March James Symond was appointed the new CEO. Whilst the appointment was met with the familiar ‘the King is dead, long live the King!’ quips, the younger Symond has the advantage of already being a well-respected industry veteran, and has started quickly. Aussie has been on a recruitment drive; their 1,000th broker joined in June and Symond told Australian Broker that they plan to increase their loan writer numbers by a further 25% and retail store fronts by 15%.

They’ve also on-shored their call-centre and announced a new HQ, and their annual conference in Melbourne was attended by record numbers. Read his exclusive interview with MPA in issue 15.9.

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23/11/2015 11:15:14 AM

PETER WHITE CEO FBAA

JOHN FLAVELL CEO MORTGAGE CHOICE With 20 years in the industry, including as NAB’s head of broker distribution, John Flavell was an obvious choice for the Mortgage Choice top job when Michael Russell announced his departure. The news has so far been good, with total settlement volumes growing 10.6% over the past financial year, profits from financial planning almost doubling, and an increased number of brokers. He has also acted decisively to shut down the franchise’s struggling comparison website Help Me Choose in what is an increasingly crowded market, although the halting of Mortgage Choice’s IT development program might be a cause of concern for brokers. 2015 was also a milestone moment for Mortgage Choice as their loan book hit the $50bn mark.

The FBAA has been impressively active this year. Admittedly, some of this activity has been aimed at their MFAA rivals, including announcing a two-year freeze on their membership fees, and taking opposing viewpoints on several regulatory matters. However, the FBAA has also embarked on an extensive rebranding, which has involved a number of new partnerships with service providers in order to benefit brokers, the highest profile being with credit reporting company VEDA, announced in September. Looking beyond the industry, they’re also offering $17,000 scholarships for students considering mortgage broking. Most importantly, considering the year ahead, they’ve been more involved with regulators than ever, and White told MPA that this now consumes 70% of his time

STEVE DOVER

MALCOLM TURNBULL

JOHN KOLENDA

GROUP CHIEF EXECUTIVE OFFICER NATIONAL MORTGAGE COMPANY

PRIME MINISTER

MANAGING DIRECTOR FINSURE

Following Iain Forbes’ retirement in March, Australian First Mortgage was acquired by NMC. While AFM will keep its name, Dover has already unveiled a new logo for the non-bank lender and promises further initiatives to better integrate it into the NMC Group.

While one might argue Australians are mainly happy about kicking Tony Abbott out, Turnbull’s record as a businessman, and his own extensive property portfolio, suggest the Federal Government could work better with the industry next year. However, brokers should wait until 2016’s Budget before giving their verdict.

This was the second year Finsure was named in BRW’s 100 Fast Starters list, and they moved up the charts to second place, recording a 90% increase in revenue over the 2014-15 financial year. The aggregator, founded in 2011, hired its 800th broker this year and aims to hit the 1,000 mark in 2016.

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23/11/2015 12:58:03 PM

SPECIAL REPORT

HOT LIST 2015

CHRIS SLATER

MALCOLM WATKINS

JANINE COPELIN

GENERAL MANAGER AFG HOME LOANS

DIRECTOR AFG

HEAD OF SALES AND DISTRIBUTION CITI

Marching up the AFG corporate ladder, Chris Slater was promoted in March from head of sales to general manager of AFG’s white label lending division, having joined the company back in 2007 as national account manager.

Since arriving, Slater has introduced a new product range, AFG Home Loans ICON, in cooperation with Advantedge.

AFG has had a big year, listing on the ASX in May, but this was also a big year for Watkins, who was appointed as a member of the MFAA’s board of directors, starting in November. AFG also relaunched its white label lending suite back in May, and has recorded a number of lending records for individual months.

After being near-invisible in the third party channel for 12 months, Citi is finally re-engaging brokers, with gusto.

Copelin championed younger brokers in this year’s Australian Mortgage Awards, and is targeting the ‘globally minded affluent consumer’. Read her interview in MPA 15.12.

MARK BOURIS CHAIRMAN YELLOW BRICK ROAD

HONOURABLE MENTION: IAIN FORBES DIRECTOR AUSTRALIAN FIRST MORTGAGE (RETIRED) 2015 was the end of an era, as industry legend and AFM founder Iain Forbes retired from the business after half a century in the industry. With AFM shortly after being acquired by National Mortgage Company, Forbes should be guaranteed a comfortable and well-deserved retirement.

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The Yellow Brick Road family – which also includes Vow Aggregation and Resi Mortgage Corporation – is becoming a major player in the third-party channel.

Vow Aggregation announced its 1,000th broker in October and is pushing to be the country’s third largest aggregator. In June Resi branches began formally rebranding to Yellow Brick Road, whilst YBR itself will treble its marketing spend and Bouris will be returning to his TV role on Celebrity Apprentice Australia. There have been several rumours of further acquisitions – although none have yet led to anything – involving non-bank lenders Homeloans and RESIMAC. The challenge for Bouris and the Yellow Brick Road family will be turning this investment into return, and attracting and developing top brokers to rival Aussie and Mortgage Choice.

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23/11/2015 11:15:37 AM

TONY MACRAE GENERAL MANAGER OF THIRD PARTY DISTRIBUTION WESTPAC AND ST.GEORGE BANKING GROUP Tony MacRae’s title might be a bit of a mouthful, but represents an important step upward for MacRae, who until July was head of Westpac’s broker distribution arm.

It was certainly a well-deserved promotion, given MacRae led Westpac to their first ever triumph in MPA’s Brokers on Banks survey after several years in the doldrums. Their Rocket Repay product and Platinum Brokers segment have been particularly popular, but there’s also been serious investment at the major bank, with 30% more BDMs coming on board in the past 12 months. Westpac suffered in the mainstream press for being the first major to raise rates in response to increased capital requirements, but the real challenge for MacRae in 2016 will be balancing the interests of Westpac and subsidiaries St. George, Bank of Melbourne and Bank SA and maintaining good relationships with the third party channel.

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23/11/2015 1:00:37 PM

FEATURES

OVERSEAS CLIENTS

BROKING BEYOND BORDERS Challenging but rewarding, dealing with overseas clients is becoming increasingly important. MPA’s Sam Richardson talks to three specialist brokers to find out how it’s done

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23/11/2015 11:20:37 AM

IN THE likely event that you don’t follow international diplomacy, you might have missed the events of 17 June 2015. That was the day the China-Australia Free Trade Agreement was signed, the culmination of 10 years of negotiation between the two governments. Among a number of important clauses – such as the removal of tariffs for 95% of Australian exports – it’s the 5,000 working visas that will be handed to Chinese workers which has captured public attention. It should capture the attention of brokers too – those are thousands of extra workers who’ll all need a place to live, and finance to afford it.

Overseas clients already play a role in Australia’s property market. Take a walk through the beachside suburbs of Sydney or Perth and you’ll certainly encounter British and European expatriates (disclosure: this author is one of them). Conversely, many Australians living abroad are determined not to miss out on Australia’s property market, and are buying down under. These two groups need a broker more than most; if the mortgage process wasn’t complicated enough for Australians, the myriad bank and government policies regarding overseas clients make the broker proposition more valuable than ever.

To explain this specialised area of lending, MPA has brought together three leaders in the field, dealing with different types of overseas clients. Addison Tay, who was 9th on MPA’s Top 100 Brokers list, works for Ausin Group, catering to mainland Chinese looking to buy in Australia, some as overseas investors and some as migrants. Craig Vaughan of MAP Home Loans is an AFG Excellence Awards winner and specialises in migrants from Europe, Asia and the Middle East who need finance in Australia. Finally, Otto Dargan of Home Loan Experts – one of MPA’s Top 10 Independent Brokerages in 2014 – deals with Australians living abroad who need finance to buy down under.

GLOBAL AUSTRALIA

212,695 net migration into Australia, 2013–14

372,200 number leaving Australia for the long term, 2012

75% of skilled Australian expats return within two years Sources: ABS, Advance, Productivity Commission, Department of Immigration and Citizenship

FEBRUARY 2015 | 29 www.mpamagazine.com.au

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23/11/2015 11:20:43 AM

FEATURES

OVERSEAS CLIENTS DOES YOUR CLIENT NEED TO VISIT A CONSULATE? As part of verification of identity rules, some clients need to sign documents in the presence of Australian consular staff. This varies by state: WA

QLD

NT

stipulate that an Australian consular officer must witness the documents being signed NSW

ACT VIC

TAS SA

call for an “independent adult witness” but don’t stipulate a consular officer. However, Addison Tay of Ausin Group says his company encourages all clients to sign the document at an Australian consulate Source: Gadens’ AML, VOI and witnessing documents, September 2015

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Products for non-residents In essence, non-residents can buy and get finance in Australia, providing they’re newbuild properties and get approval from the Foreign Investment Review Board (FIRB).

According to the FIRB, temporary residents living in Australia for more than 12 months – such as those on the 457 skilled worker visa – are also able to buy established properties, providing they sell them before leaving the

will now only offer up to 70% for nonresidents. This is further complicated in the case of Australians married to nonAustralians, Dargan notes. Some banks will limit the LVR to 80% for non-resident Australians with a foreign spouse. There are still good offers out there, he adds. “I wouldn’t say 95% is easy for someone in Sydney these days! It really is a case-by-case; certainly it is available.”

“They’re top-quality clients earning good money; they’re professional. They’re good clients and generally good long-term clients” country. And of course Australians living abroad don’t need approval (although who they’re married to matters – see below).

Problems arise in the bank policies that intentionally or unintentionally discriminate against overseas borrowers, and the broker needs to understand this. For Tay, working in this area means it’s essential “to have the knowledge of which banks are willing to do non-resident loans”. Dargan argues that there are products available: “In most cases they’re able to get the standard home loans and great discounts; the challenge is around potentially reduced LVRs or restrictive policies.”

It’s because of these restrictions, Vaughan explains, that most products aren’t suitable.

“We might have 35 banks on the panel, but out of those only four or five are suitable for non-residents, due to their policies.”

Furthermore, certain specialised lenders and products, such as those catering to nonconforming and low-doc clients, aren’t on offer to non-residents, which can make it very difficult for the self-employed to get finance.

Most obviously problematic are the reduced LVRs applied to overseas borrowers.

As banks follow APRA’s directive to slow investment lending, non-residents are an easy target for policy changes and have been particularly hard hit. While LVRs of up to 95% were until recently on offer, some banks

Navigating the paperwork All three of the brokers we spoke to have horror stories about documentation; indeed this can be a dead end for many lenders, Tay explains. “The assessor will refuse to receive the documents as they can’t read them … we need to know whether they’ll consider it before we submit the deal.” As well as the time spent posting and receiving documents, brokers need to consider whether banks will recognise foreign payslips and tax returns.

Language matters here: if your client’s documents aren’t in English you may have to get them translated by a qualified professional, which can be a major problem for clients, recalls MAP Home Loans’ Vaughan. “I had one quote recently where it’s going to cost the client about $2,000 to get their documents translated. You can’t get an approval – even in principle – without those documents. The bank may pick up on something and they’ve just wasted $2,000 and not got the loan.”

Identifying clients can also be complicated.

Verification of identity rules – which differ by state – require some clients to have documents checked at an Australian consulate. This can cause huge inconvenience to clients that brokers should account for, Vaughan warns. “I have clients having to fly from Scotland to London to be identified, and having to catch a train from Chinese regional cities to Beijing; people in the

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Middle East, like Oman or Jordan, having to fly to Abu Dhabi, at considerable cost and effort. I think a lot of brokers would get caught up on that, because you wouldn’t know to think of that.”

Even once you’ve got the proper documentation organised, banks may interpret the information in very different ways, applying Australian standards to nonAustralian systems. Take clients with foreign mortgages: “Say someone in the US has a loan of $1m at an interest rate of 2%; the lenders will assess that at 7%,” notes Home Loan Experts’ Dargan. “It isn’t really fair,” he says. “In the US an owner-occupier home loan is often tax deductible.” Therefore being aware of such differences is vital. “If you don’t understand how that country works it’s very hard to accurately assess those applications and give a good case to a lender.”

To add even more confusion to the mix, lenders simply won’t recognise income in certain currencies, complains Vaughan.

“Banks tend to limit who they lend to not by location but by the currency they earn. You could be living in the dodgiest country in the world, but if you’re paid US dollars or pound sterling – prime currencies – the bank will still lend to you.” For example, borrowers in the United Arab Emirates are paid in Emirati dirhams, a currency pegged to the US dollar but nevertheless not recognised by certain lenders.

With so many potential obstacles to getting a deal through, it’s vital that brokers in this area build excellent relationships with banks. As Dargan points out, many banks approach non-resident applications on a case-by-case basis, so it may be possible to get exemptions and explain contentious documentation. For Vaughan, a productive lender relationship has three parts: “You need a bank that, one, has good policies, and two, has staff that know the policies themselves, and finally a BDM that can jump in and sort problems out.”

DO YOU NEED TO SEE THE CLIENT? In short, yes: to be compliant you need to interview the client. Beyond that, there are several approaches you can take to communication with clients based overseas:

Proudly sponsored by

“Certainly knowing what times you can call the customer helps, and in particular having set times to call them. Book in a phone appointment rather than trying to call them ad hoc, which doesn’t really work.”

Otto Dargan, Home Loan Experts

“We have a Skype system and we actually have a dedicated conferencing system as well, that links to all our offices in China. Prior to travelling to China we use email to correspond; we do interviews through video conferencing.

I fly to China every two months to interview clients, and I will have a list I have to see.”

Addison Tay, Ausin Group

IN THE

NEXT

ISSUE

“We do Skype, email, and documents by post … generally speaking you’d do one call via Skype, at a time convenient for both parties, and then the rest of the transaction would be via email.”

Craig Vaughan, MAP Home Loans

Managing expectations As well as managing banks, you’ll need to manage customer expectations, and it’s

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FEATURE / BROKER EDUCATION FEATURES

OVERSEAS CLIENTS KEEPING IN CONTACT There’s more than Skype out there – software is making it easier than ever to deal with overseas clients: FaceTime – Apple devices only WhatsApp – allows voice calls and messaging WeChat – a social network used by leading Chinese brokers Transferring documents: Dropbox WeTransfer FileInvite – cloud-based software specifically designed for brokers to collect essential documents Adobe Document Cloud – allows for e-signing of documents

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important to note that these expectations can be surprisingly different. Despite dealing with Australians based abroad, Dargan warns that “what to them is normal is not just normal to us”. For many clients living in the UK, “they’ve been living there for a long time, and they’ve often forgotten that our banks take a lot longer than UK banks”. (In the UK mortgages can be settled in as little as one to two weeks.) Dargan also mentions that his Australian expat clients tend to be looking to refinance loans on properties back in Australia.

Ausin Group broker Tay also encounters high expectations among clients: as busy highnet-worth individuals they expect similar performance from lenders. Time zones can be a particular source of frustration, notes Vaughan, such as “the people at the banks who only work nine to five, who won’t reply via email; but I haven’t had issues with expectations around turnaround times”. He

Both Dargan and Vaughan also maintain they lack the time to offer many additional services personally; instead they refer clients to accountants, solicitors, buyers’ agents, money transfer services and migration agents.

Why they’re worth your time Clearly, dealing with non-residents is not an area for every broker. Given the need for good lender relationships and technical knowledge of other countries’ tax systems, newer brokers in particular may struggle. The brokers featured here have all had extensive experience in broking, often complemented by time spent abroad.

However, just as these brokers were willing to talk about the challenges of non-resident broking, they were also eager to discuss the rewards. “I think the rewards are that the customers are not too price-sensitive, like here; they are more loyal and will stick with

“If you don’t understand how that country works it’s very hard to accurately assess those applications and give a good case to a lender” generally builds in a buffer when predicting turnaround times so clients are pleasantly surprised when the approvals come back.

In fact it is the broker who may end up being frustrated by the time taken to complete a transaction for an overseas client, Vaughan adds. “The main issue, dealing with expats from a broker’s perspective, is that they’ll get pre-approved and won’t convert that … they’re less motivated. They’re living overseas, they’re not looking for a place to live, they’re not here ... it might take them a year or two to find a property; they can’t just pop out on a weekend and go looking.”

Although much of the process is outside brokers’ control, being able to offer extra services to clients can help speed it up. The Ausin Group encompasses a large number of different divisions, including migration assistance, a real estate arm, and property management – a “full spectrum approach”, as Tay puts it, which helps him stay specialised.

you,” explains Tay. “Non-residents only have a few choices when it comes to banks; the price is not all. As long as they can get a good LVR and a good service, that’s more important to the customer.”

Expats – whether they are Australians abroad or foreigners coming here – are often high fliers with considerable resources, Tay notes. “I think the delinquency rates are lower, and certain banks can see this.”

Many of these clients intend to build property portfolios, and their loyalty is part of what makes them good clients, Vaughan says.

“They’re top-quality clients earning good money; they’re professional. They’re good clients and generally good long-term clients.”

Finally, for Dargan the difficulties involved in broking for non-residents are part of the attraction. “They tend to be very loyal; they tend to have referral networks of other expats … and to be honest, for me I just love the challenge!”

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PROFILE

DARREN SAMBROOKS

DARREN SAMBROOKS: A HEAD FOR NUMBERS The Mortgage Choice rising star is one of a new generation of accountants moving into broking, and alongside his wife Renae, he’s bringing a new approach to the business

IN CAREER terms, broking and banking used to be pretty synonymous; indeed, almost all of the industry’s top performers worked for lenders for several years before branching out on their own. That’s no longer the case, as the success of the mortgage broker model – and its 52% market share – is attracting other financial professionals to try their hand at mortgages, with implications for brokers.

Darren Sambrooks is Mortgage Choice’s broker for Fremantle and a number of other Perth suburbs, and won the franchise’s WA Rising Star of the Year award back in July. But his background is actually in accounting; not as a personal accountant, as many brokers are accustomed to dealing with, but in corporate and public accounting, at organisations including AGL Energy and ConocoPhillips in the UK. It’s been quite a journey getting to mortgage broking, and to Fremantle. Darren is from Geelong in Victoria, and later spent time in Brisbane and Royal Leamington Spa in the UK. It was his wife Renae, rather than broking, that brought the couple to Fremantle, and to mortgage broking, Darren explains. “We did about all of our life changes within three months: moved home, moved state, had a baby, changed jobs … it was pretty full on!”

Accountants in broking The surge, real or imagined, of accountants into broking is big news this year. Back in June, Certified Public Accountants Australia applied

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for an Australian Credit Licence, which could allow them to sell mortgages. And Darren’s approach to broking suggests accountants who make the move could prosper. From day one it’s helped him submit loans, he reflects: “I think my analytical thinking helps me to put the numbers together in the right spots and come up with scenarios for clients.”

Worryingly for traditional brokers, Darren believes the link with accounting helps his marketing. “I think clients have a higher level

mortgage broking and accounting, I feel.”

Apart from specific technical skills, Darren has brought the corporate accountant’s longterm strategic approach to an industry that has traditionally been focused on getting the best deal on a single transaction, the home loan. “I’ve had quite a lot of multi-clients,” he explains, “where they’ve wanted to refinance their home and cash out to buy an investment property, or are refinancing multiple investment properties.”

“I think clients have a higher level of trust in me because I do promote my CPA membership” of trust in me because I do promote my CPA membership and it helps from that perspective.” With accountancy being taught as a university degree and the Cert IV for mortgage broking being taught in as little as three weeks, it’s generally a one-way flow between the professions.

While he advises clients to consult their own accountants, Darren is finding that his technical skills are a value-add for certain clients. “When I see self-employed clients and companies I can read their financials instantly and even give them general advice on things they could do a bit better.

So there’s definitely a connection between

What is bringing these clients back isn’t follow-up calls, or database marketing. Inspired by their initial conversations with Darren, clients have gone out and got those investment properties themselves. It all springs from that initial interview. “I try and make clients realise they can see me for everything; that they’re a client for life, and I’m going to set up everything now to help them in the future … at least have that conversation with them, as it might trigger things that they might want to do.”

Staying relevant online While Darren brings his accountancy skills to the business, it’s his wife Renae who runs

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“I try and make clients realise they can see me for everything; that they’re a client for life and I’m going to set up everything now to help them in the future”

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PROFILE

DARREN SAMBROOKS their extensive digital presence. Mortgage people look for a mortgage broker and Choice Fremantle is on Facebook, LinkedIn, someone recommends Darren to them, they’ll Instagram, Gumtree, Twitter and YouTube, go and look at different platforms, and really while Darren is an active blogger on Mortgage the reason why we do the social media is just Choice’s website. However, it’s not just about to validate Darren, so they feel comfortable, scale; the Sambrooks take the same strategic and there’s something about Darren they approach to digital marketing as they do to like,” she says. clients’ loan structures. For a start, Renae It’s vital that Darren does appear in potential utilises the various social clients’ Google searches.

RENAE media platforms in different Even the name Mortgage SAMBROOKS’ ways. “Digital assets each Choice Fremantle was SOCIAL MEDIA TIPS picked because it was a have a different tone, and audiences interact with more obvious search term them in different ways. for clients – the brokerage Instagram is probably a bit actually covers a much more playful and they’re not wider geographical area. really interested in business Being attentive to Only start up one social media as such.”

Google’s rules also guides account at a time – get comfortable For example, the day the content they post. While before using another one before MPA talked to the many brokers use articles Sambrooks, they posted a prepared by their franchise picture of Darren with his or aggregator, Renae warns daughter at the beach. The that Google penalises picture has nothing to do duplicated content.

Ask happy clients to write you a with mortgage broking – She says maintaining a review on Facebook instead, Renae explains, “it digital presence doesn’t take shows we’re in Fremantle, too much time out of her we’re local, we have a family”. day: “You’re on those sites (“We have a life!” Darren anyway, incidentally, so I jokingly adds.) often schedule the posts, Post pictures and videos, as they Conversely, Darren’s and if I see an interesting rank higher on Facebook newsfeeds LinkedIn page is highly news story come up I will go professional, featuring a and post it, although I’m bullet point list of the services aware of which times in the he provides, a line on the day will get the most hits; 3pm on Wednesday, Thursday and WA Rising Star award, a I wouldn’t post something Friday is the best time to post on video and then the usual on Facebook on Monday Facebook career history, accompanied morning at 9am.” by recommendations. The Renae and Darren brokerage’s Facebook page approach social media is almost a mix between the through the prism of other two platforms: there branding, rather than lead Use software like Hootsuite or are charming photos, articles generation. “We’ve had TweetDeck to make multiple posts on celebrities’ houses, but some leads come directly at once also information on from Facebook and professional events the Facebook messaging, but Sambrooks will be attending and links to they usually come direct and say we’ve seen Darren’s blogs. your profile and we really like it … we think it Renae says having a digital presence isn’t really enhances the brand in a way.” all about direct lead generation. “I find when Given that mindset, they’re not overly

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concerned about the quantity of their posts, Renae adds. “Social media is not about bombarding people with ‘get the best home loan’; it’s about keeping yourselves relevant.”

Moving beyond mobile broking After just two years in broking, Darren explains that while mobile broking has been good for their young family, they have ambitions to grow the business. “Renae was doing a couple of days’ consulting a week, and I could look after the baby while she was consulting, and then I could do work at nights, the mornings and weekends. The flexibility is brilliant, but I think it’ll get to the point where you can’t grow by working from home, so our plan is to get an office, hopefully in the next financial year, because we can see there’s a point where we’ll need it to get to where we want to get to.”

Darren believes a new office would allow him to take his volumes to the next level. “I think you get to a certain point as a mobile broker where you can’t grow it much further … you can write x amount of loans per month and then you can’t handle any more without support staff, and you can’t really have support staff coming into your home.” They also hope to have a financial planner in the office one day a week.

In the meantime, the Sambrooks will continue to work as a team, Renae explains.

“Between Darren and I we have different strengths, and that’s quite a positive: I’m interested in the digital side, and I deal with accountants and solicitors.” Although Darren has a head for the numbers, he’s by his own admission “not great at networking”. With Renae covering the marketing side the two of them are growing the business much faster than Darren would as a lone broker, he says.

“If you’re doing broking by yourself you just can’t do it.”

And of course they’ll continue to take a long-term approach, both for themselves and with clients. “That’s where I think a mortgage broker can differentiate themselves,” Darren says. “They can talk more about the strategy, goals and things that clients want to do in the future.”

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FEATURE

NEW LENDERS

AUSTRALIAN LENDING’S NEW CONTENDERS When it comes to lenders, brokers have got used to the same old faces – but not for much longer. MPA meets the lenders who are transforming the third-party lending landscape

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‘COMPETITIVE’ IS perhaps the most misused word in this industry. You generally find it prefixing the terms ‘competitive rates’ or ‘competitive salary’, when the writer wants to disguise the actual figures, which are generally consigned to the small print, if printed at all.

The lenders you see here are actually competitive, in the proper meaning of the word. They have disparate backgrounds; some are mutuals, some are regional banks; all are mindful that as relatively new players they need to impress brokers. That starts with rates – sub-4% variable rates are not unusual in this sector – but also applies to turnaround times and in some cases LVRs. In this feature we’ve gone to three lenders we doubt you’ve dealt with before; Auswide Bank (formerly Wide Bay), Bank Australia (formerly Bankmecu) and Gateway Credit Union. The former two banks underwent rebranding this year and it was also Bank Australia’s first entry into the third party channel. Gateway has been steadily increasing their engagement with the broker channel over the last five years.

However, it’s not simply being new which makes these lenders competitive, but the transformation of the lending environment around them. Wednesday 14th October was a watershed moment in this respect, as Westpac raised their owner-occupier variable interest rates out of cycle. The three other majors followed Westpac’s lead, for the same reasons: increased capital requirements. More surprisingly, so did many of Australia’s nonmajor banks, preferring increased returns to increased market share.

Two out of the three lenders here are banks, and thus still regulated by APRA, but have gone in a very different direction: holding rates or launching deliberately targeted counter-offers. They know they have a unique opportunity to take market share and here they explain to you, the broker, why they’re the real competition.

LENDER TIMELINES Auswide Bank Formed in 1966, it was originally named Wide Bay Building Society, and comprised of a number of building societies. The board decided to acquire bank status in 2013 and officially changed its name to Auswide Bank on 1st April 2015.

Bank Australia Bankmecu, as it was formerly known, was created in 2003 by the merger of several credit unions, and was the first mutual to become a bank, in 2011. It changed its name to Bank Australia and entered the broker market in 2015.

Gateway Credit Union Gateway began life in 1955 as a lender for the employees of Commonwealth Bank, who were then barred from borrowing from their employer. It became a credit union in 1955 and acquired its current name in 1998.

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FEATURE

NEW LENDERS

FOCUS ON TURNAROUND TIMES We asked lenders what sort of turnaround times they could offer to brokers: Gateway: 48 hours to conditional approval Bank Australia: 24-48 hours for a pre-approval Auswide Bank: SLA of five days to unconditional status All three lenders note that these timeframes can struggle during high-demand campaigns, but insist they are working to increase their processing capacity and avoid a backlog building up. Also Bank Australia notes that they’re integrating their system with NextGen’s Apply Online software.

Why are you increasing your engagement with the third party channel now?

Bank Australia: Up until this point, we had a purely retail distribution model. We have had considerable appetite from brokers wanting access to our competitive suite of home loan products. We are very focused on ensuring that we enter the broker channel in a considered way, as we understand that service and consistency are extremely important.

Gateway: Gateway has been a strong supporter of the third party channel for over five years now.

Instead of taking a big bang approach which comes with some obvious risks, we’ve adopted a progressive growth plan, partnering initially with Yellow Brick Road, bringing on Mortgage Choice in 2012, then Connective in 2013.

In this way we’ve been able to better control growth, volumes and ultimately deliver a more consistent level of service to our partners. It has also given Gateway the opportunity to better understand brokers’ needs. This has allowed us to refine and develop our processes, policies and products to ensure quality of experience and needs satisfaction. There’s a steep learning curve for any lender who is new to the third party channel and we did not want to learn at the expense of our partners. Rather we rolled out partnerships in a controlled way where we could handle the volume and allow our partners to contribute to that knowledge development.

Auswide Bank: This is the third year of our renewed strategy to create and deliver a market leading third party value proposition to brokers throughout Australia. Over this period Auswide Bank has achieved much in this respect. The product set is fully featured and market leading; pricing is consistently at the value end of market and brokers have more resources to

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call on to assist them through the loan process. Our staffing model provides them with a dedicated relationship manager and once a loan is lodged they deal with a dedicated assessor.

Furthermore the brand has been refreshed due to the conversion from Wide Bay Australia to Auswide Bank. Auswide Bank provides extensive engagement points for customers nationally. Additionally, our loan documentation has been slimmed down for convenience to the customer and our broker loan processes have been simplified. This means that we are ready for the next threeyear phase of our strategic plan.

Are you able to service brokers nationwide?

Auswide Bank: We are a national business. We have broker relationship managers (BRMs) on the ground in Queensland and New South Wales. Very shortly, we will have on-ground presence in Victoria. We cover the rest of the country with an outbound relationship telephone program (and other means of electronic communications). Our BRM force will continue to grow over the short term as our objective is to deepen our broker partnerships.

Bank Australia: Yes, we are committed to having an Australiawide distribution footprint and our relationships with brokers are imperative to achieving this outcome. We are in the process of recruiting relationship managers in each state to support brokers on the ground. We are also committed to having a 100% owned Australian operation – with our dedicated assessment team based in regional Victoria.

We want brokers to have access to our teams to support quick decision making.

Gateway: Gateway is nationwide and have three highly experienced BDMs on the ground in New

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FEATURE

NEW LENDERS

OUR YEAR AHEAD: PAUL THOMAS, CEO, GATEWAY In the past year Gateway recorded another solid performance. In a year when rates fell and competition rose, we navigated through the challenges posed by an ever-changing marketplace and ended the year on a high. Our plans for the year ahead are to build on this success to achieve a number of best practice outcomes.

We have a compelling strategy, vision and our newly defined purpose ‘to help people financially achieve their hopes and dreams’ is well on its way.

We’re as committed as ever to the broker channel so will continue to review our pricing, processes and suppliers as well as our policy niches to make sure we remain relevant and a competitive mutual option for brokers.

Over the coming months we’ll continue to ramp up our media presence and advertising to build our brand and roll-out our broker value proposition.

In terms of growth, we’re in consultation with a number of potential new partners to find a mutually beneficial arrangement.

Technology will continue to be a focus and will shape our financial business model, so of course we’ll be keeping abreast of FinTech developments and the new breed of hyper-competitive players that are challenging conventions.

South Wales, Victoria and Queensland. Our back office team is based in New South Wales.

Gateway:

Which aggregators’ panels are you currently on and do you have plans to expand?

Bank Australia: We are currently working primarily with AFG, who have been exceptional support to our entry into the broker market. We continue to have discussions with other aggregators with the intention of partnering with another 1-2 over the next 12 months.

Demand from brokers who are on other aggregator panels has been high, especially with our attractive interest rates – currently

We don’t single out any specific competitors on pricing but as a mutual we exist for the sole benefit of our members, not shareholders, so we’re able to pass back profit and reward members with product that is typically better priced than lenders with different ownership models. This is something we’ve done for 60 years and is at the core of our DNA as a member-owned, member-focused business.

Auswide Bank: Not only do we compete, we actually blow most of this opposition out of the park. If

“Not only do we compete, we actually blow most of this opposition out of the park” 3.98% for our basic home loan product and with no LVR restrictions.

Auswide Bank: We are proud to partner with brokers from a very wide range of aggregator panels. These include AFG, Connective, Choice, PLAN, FAST, eChoice, Finsure, Vow, Centrepoint Outsource, Smartline, Custom Equity, Specialist, Ballast. Our focus is very much on growing our connection within each aggregator network. I do anticipate that we will also enter into partnership with further aggregators over 2016.

Gateway: We’re currently on the panels of Yellow Brick Road, Mortgage Choice and Connective. We are looking to grow in a managed way and are in discussion with a number of potential partners. We regularly scan and evaluate new opportunities for mutual fit and where we believe we can add significant value to a partner.

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Do you compete on rate with major and non-major banks?

you compare our pricing over the last couple of years, you’ll notice that we are always in there with a special offer seeking to provide value to customers. An example is our fixed rate with 100% offset. If a customer opts for an average loan of say $400,000, we will offer them a very competitive retail rate.

However, consider the savings that are available to them once the offset balance is deducted from the principal loan amount in order to determine the monthly interest charge. Now convert that to the true interest rate that the customer bears and it demonstrates that we are streets ahead in providing true value!

The basis of our competitive positioning is that we extensively raise retail deposits through our branches and retail offerings.

Accordingly our funding base is deep and stable. We are not overly exposed to wholesale funding. This is a major advantage for us, relative to non-ADI competitors, and a significant source of peace of mind for our brokers and customers.

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FEATURE

NEW LENDERS

OUR YEAR AHEAD: CHARLTON NEVIS, GENERAL MANAGER THIRD PARTY, AUSWIDE BANK I will grow our relationship management force over the coming months. We will put more people on the ground so that brokers can have even greater access to personalised service when they need to explore scenarios and find product solutions.

This year, our fastest growing market has been NSW and I don’t see that changing for the next 12 months.

I envisage that our market share in Victoria will rise strongly. I will support this growing market with dedicated on-ground Broker Relationship Manager presence. WA, SA, NT and TAS represent real growth opportunities for us… so we will devote effort to unlocking more flow from those brokers.

We will challenge our competitors even more this year. I have no doubt the major banks will seek to increase their net interest margins during the course of the year.

We would like all brokers to know that they can reach out to us for a ‘fairer go’ and we will provide options for their disaffected customers (that are currently banking with the major banks).

Bank Australia: Yes, we are currently very competitive. Our basic home loan for owner-occupied customers is arguably the best in the market at 3.98% (3.99% comparison rate). There are no LVR restrictions to access our rates, which is unique in a market which seems very focused on risk-based pricing.

Who are your target clients, and what are the products you can offer them?

Auswide: Auswide targets the key customer segments of owner-occupiers, investors, first home owners and upgraders, and professionals.

Auswide’s target geographies are nationwide.

Auswide uses only a premium product suite that is fully featured. Our fixed rate loans with 100% offset have already been discussed. We are also specialists at funding construction loans, and we even apply the fixed rate at the first construction draw as this gives the customers certainty from the outset. We do use these features to stand out from the competition. For first home owners we cap the full LMI to the loan hence we are one of a few that offer 95%+ full cap LMI.

Bank Australia: We are currently focused on owner-occupied customers and not offering investment loans on their own. Therefore, the majority of the business we have been doing has been refinances and first home owners. Given our competitive rates, we have had significant interest from brokers looking to get a better deal for their customers, especially in an environment where the major banks are increasing rates.

Gateway: We target a number of segments from first time home buyers to seasoned investors. The key for us is to provide products with the flexibility to cater to borrower needs as they

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change over time. For example, we offer up to four free variable or fixed rate splits on our package product and can link multiple offset accounts to these, which makes it easier to manage multiple debt and saving strategies from the one loan facility.

Another thing we do differently to most is the fact we don’t credit score; we individually assess each application on its merits and the broker can talk to and work with the assessor to get a deal over the line.

How can brokers deal with limited consumer awareness of your brands?

Bank Australia: Bank Australia has been in operation for 50+ years and is the result of 60+ mergers of credit unions, building societies and customer owned banks. I am not sure I share the sentiment that Bank Australia is not well known. Whilst it is a new brand, it is not a new bank. Bank Australia is customer owned and the mutual structure resonates with customers of brokers – as the concept of doing the best thing by the customers is a shared vision.

Auswide Bank: Over the years, brokers have been great at helping customers to become comfortable with brands that are not necessarily market dominant (in terms of advertising voice in the market). Our brand is a simple proposition to sell… we’re a Bank… we are listed on the ASX… we are Australian (every aspect of the Bank’s operation is national).

The further details that I would like to push out to the broker networks are as follows: Our current customer base is spread nationally and these customers use one of the largest ATM networks for free. They utilise our very extensive Internet Banking platform and our mobile banking Apps. They can deposit cheques and cash at post offices and agencies. They can reach out to our contact centre for assistance and service.

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FEATURE

NEW LENDERS

OUR YEAR AHEAD: RICHARD IRVING, HEAD OF THIRD PARTY DISTRIBUTION, BANK AUSTRALIA Bank Australia will continue to be aggressive in positioning itself as a genuine alternative to the major banks in the next 12 months. This will include remaining at the leading edge of competitive interest rates for owner-occupied home loans, further investment into our relationship management team across Australia and extensive investment into the integration of systems to ensure service levels remain at the sharp end.

2016 will also see Bank Australia expand onto other aggregation panels to enable more brokers across Australia to access our competitive offering. We will work very hard over the next 12 months to build a strong level of trust with brokers to deliver on our vision of providing the best service of all customer owned banks in the third party space.

Our customer satisfaction rate is very strong as a result of a very strong service ethos delivered by Auswide Bank service representatives. This is critical as brokers can feel very confident that the customers they introduce will enjoy the service environment.

Gateway: Gateway feels that clients of brokers seek out a broker because they are implicitly open to a better outcome for them, whether that is with a name-brand lender or a lesser known brand.

Understanding this, we tackle the opportunity on two levels – firstly we need to get the building blocks right, we’ve got to make sure we have competitive, flexible, feature rich product at the right price. Next we make sure we provide the highest service standards to our brokers and make sure their interactions with us are as simple and easy as possible. In our experience, when we get that right, brokers believe in us and have no problem overcoming any brand awareness objections.

Having said that, in the past few months we’ve vastly increased our media presence, plus our broker and consumer online advertising i.e.

Domain.com.au and RealEstate.com.au. We’re working to build our brand and get our name visible to consumers, and brokers are feeding back to us that it’s working. They’ve told us that when they now sit in front of their clients and talk about Gateway, it’s a brand that is recognised and trusted.

Why else should clients consider you before major banks?

Gateway: In terms of why a client should consider Gateway, our mutual structure is really important here – being customer owned makes for a model where there’s no conflict between customers and shareholders.

Ultimately this means a superior outcome for the customer; first-class value product and exceptional levels of service.

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Our smaller size is actually a big advantage.

As a broker with Gateway, you can contact our loan assessors directly and you can talk to the person who is assessing your deal all the way through the process. They’ll even call a broker if their application is declined and discuss the reason behind that decision.

“Clients of brokers seek out a broker because they are implicitly open to a better outcome for them, whether that is with a namebrand lender or a lesser known brand” Bank Australia: Bank Australia is owned by its customers, so there is only one master who are also our shareholders – our customers. This is important in making decisions, as there are no conflicts – we only focus on what is the overall best interests of our customers. This can be illustrated at the moment, with the major banks increasing interest rates, which provide a positive outcome for shareholders, but negatively impact their existing home loan customers.

Auswide Bank: I strongly believe that retail banking consumers want to give the ‘small guys’ a go.

Most recognise the pitfalls of a market that is dominated by only a few players. Such pitfalls are evident in a number of essential industries and services that people use every day.

Auswide Bank represents the organisation that is taking the fight to the Big 4. It has for the past 50 years and will do so for the next 50 years.

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8:13:23 AM 24/11/2015 8:16:09

LEADERSHIP

FUTURE LEADERS

FUTURE LEADERS: WHO HAS THE RIGHT STUFF? Making the leap from manager to leader has always been challenging. Iain Hopkins explores what the leaders of tomorrow will be up against, and how you can identify and develop them

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LEADERS TODAY are faced with challenges that have not been witnessed before, and these challenges will only escalate in the next 10–20 years.

DDI groups these challenges into four key categories: VUCA. • Volatility – anticipating and reacting to the nature and speed of change • Uncertainty – acting decisively without 100% clear direction and certainty • Complexity – navigating through complexity, chaos, and confusion • Ambiguity – maintaining effectiveness despite constant surprises and a lack of predictability Less than two-thirds of leaders around the globe said they were either ‘highly confident’ or ‘very confident’ in their ability to meet the four VUCA challenges. The result for Australian leaders was in line with their global counterparts.

To succeed, leaders of today and tomorrow will need a diverse mix of soft skills and technical business skills. In Development Beyond Learning’s latest book, The Leader’s Edge, these skills are summarised under the acronym SMART: Situational understanding. A leader begins by assessing where their company is as an organisation and then where they need to move to in three main areas: people, purpose and performance. “It’s understanding the current situation and where you personally fit into that, and how the rest of your team sits in relation to those elements,” explains Gary Lear, chairman and co-founder, Development Beyond Learning.

S

PREPARING FOR VUCA CHALLENGES Percentage of HR professionals who report that leaders are incapable of meeting the challenges of…

40% Volatility

32% Uncertainty

36% Complexity

31% Ambiguity Source: Global Leadership Forecast, 2014/15, DDI/The Conference Board

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LEADERSHIP

FUTURE LEADERS

IDENTIFYING FUTURE LEADERS Although there are countless assessments on the market to assess personality and aptitude for leadership roles, Gary Lear of Development Beyond Learning suggests there are 10 questions to ask in order to identify potential future leaders: Have they got a proven track record of accomplishing impressive results?

Do they take charge and make things happen?

Do they inspire with confidence?

Can they lead with persuasion and influence?

Do other people trust them?

Does this person have an understanding of how to separate the ‘what’ from the ‘how’?

Do they have a global perspective?

Do obstacles stop this person or are they able to push through?

How does this person deal with multitasking?

Do unexpected changes affect this person’s performance?

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Motivating. “With all the challenges

M that are placed on a leader’s head, one

of the most important factors is the ability to motivate themselves and then motivating others to create a high performing team,” Lear explains.

Advancing goals. “Taking a business forward is not just about behavioural leadership but how you set a great strategy.

Setting a great strategy and vision is important for the organisation, and advancing goals is based on that strategy and vision,” says Lear.

A

Reviewing actions. “The leader must be able to place things in context in their org and within their global focus. They must then be able to move people and their people structures forward to adapt to any upcoming changes,” says Lear.

R

Tracking progress. “This means consistently reviewing your own leadership and your organisation’s progress,” says Lear. “One of the biggest problems we get into is almost like a treadmill of doing the same thing every day and expecting a different result. Leaders need to start looking at tracking progress so they can bring about change quickly within their organisation.”

T

Are we prepared?

If these external challenges are daunting, it’s nothing compared to what organisations are up against internally. Over the last five years, Lear has seen a contraction of focus on leadership development within organisations.

This, he notes, is a ripple effect of the GFC, which focused most CEOs on the bottom line rather than on people development.

“The challenge we’ve got right now is getting the CEO’s eyes off the bottom line and onto their people. One of the problems is they don’t realise that their people are their organisation. They are creating a leadership capability gap which is going to be hard to fill,” he says.

Part of the problem is a failure to map out explicit career opportunities and paths to

upcoming leaders. In the past, individuals could enter an organisation and conformably spend the next 20 years working their way through a relatively static and defined career path. In today’s VUCA world, this is tough.

Organisations are constantly changing and reshaping their structures. This can make it challenging to map out well-defined career paths over a long period of time.

However, research shows that career paths remain important and contribute to employee engagement and retention. So, what can organisations and leaders do to manage this need in a very different business context?

Dan Musson, chief executive of the Australian Institute of Management (AIM), suggests some of this comes down to changes in organisational hierarchies. Where once there were deep hierarchical structures, with a career path seemingly for each individual, this no longer applies in 2015. At the same time, career development has been handed over to the individuals themselves to manage.

“Managers are out of practice in looking for and developing the capability within their company. They’re focused on their job, and developing future leaders is kind of a secondary thing, or an HR thing,” he says.

This concept of the ‘free agent’ has taken flight among younger workers. Employees are free to move between companies and industries, and they have capabilities that extend across multiple areas. Yet this does not mean employers can take a hands-off stance. Employees still need clarity or direction, even in a flat organisation.

“You can’t just say, ‘Let us know what development you want to do and we’ll let you know if we’ll fund it’,” Musson says.

“That’s too ad hoc. People get lost in that.

They will understand that lateral movements are just as valuable as moves up the hierarchy because there are fewer opportunities upwards – but they need a very deliberate direction.”

He suggests that managers must take an active role, either as mentor or coach. “That has to be part of the leader’s job now. How

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much am I spending developing capability as part of my day?” he says.

Mark Busine, managing director of DDI, suggests: “One of the first things leaders can do is to ensure that individuals (right across the leadership pipeline) have development plans in place.

“In the absence of clearly defined career paths, leaders need to work with their team members to ensure they are receiving the opportunities that facilitate growth and development. This includes looking out for the roles, experiences and opportunities that will facilitate growth and support engagement.”

Sadly, only 36% of a sample of more than 13,000 leaders reported having an up-todate development plan.

PREFERRED TRAINING/ DEVELOPMENT OPPORTUNITIES FOR MILLENNIALS Working with strong coaches and mentors 28% Changes/rotations of role to gain experience 21% Support for further academic training 19% Collaborating with inspiring colleagues on key projects 18% Formal classroom training 6% E-learning 5% Source: Millennials at Work, PwC

Leadership development for millennials By 2025, millennials (those born 1981–1997) will represent 75% of the workforce. DDI’s Global Leadership Forecast research found the engagement level of this group can be raised by providing them with a greater understanding of their career path as leaders.

The challenge is how you do this in a business context that is frequently changing.

“Providing Millennials an awareness of a range of possible paths that may be ahead of them – not a single route from point A to point B as on a map – is the key, and managers need to know how to tap into these motivators and opportunities,” suggests Busine. He adds that this can be achieved by having career conversations: what do millennials want and what do they expect?

Importantly, millennials want leadership modelling right now.

“They want to have leadership that they can see and use as a model for the future,” says Lear. “They’re asking for leadership.”

The most successful organisations, he adds, already have managers who model leadership for their millennials. These managers are also clear on the purpose of an organisation (‘why are we doing this?’), which is a critical element for millennial engagement.

“We’re working closely with the managers of Millennials, to engage them in developing their teams,” says Lear, who adds that ‘engagement dynamics’ is one way to build this bond. Engagement dynamics brings together both parties in scenario-based learning to develop the manager as well as the young professional.

Development Beyond Learning also offers ‘action learning periods’. “Our programs are not just two days face-to-face and then out of the room. We carry that through a period of six months, which brings about a change in behaviour. You learn a behavior over a long period of time; you won’t bring about change in that behavior in a period of two days,” Lear says.

And of course, for this always-connected generation, access to learning 24/7 is critical.

Gamified apps and integrating social learning

“In the absence of clearly defined career paths, leaders need to work with their team members to ensure they are receiving the opportunities that facilitate growth and development” Mark Busine, DDI

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LEADERSHIP

FUTURE LEADERS into development programs – via virtual learning platforms – are also important.

Musson suggests that not only have millennials been exposed to learning and generally want more of it, but there has been growth in what he calls just-in-time learning.

Facilitated by technology, just-in-time learning will occur when an individual wants to undertake just a small chunk of learning just in time for a new career step – whether that’s from manager to leader – or just in time for a change of industry or job. “We’re no longer seeing education and learning as something where you tick off three courses and as soon as that’s done you’ve got the foundation and you can move on. Today it’s more fluid. It’s up to us as a supplier to say, ‘OK, which short courses are people going to want? How will they get it delivered?’”

For example, AIM has just rolled out its MBA program in an online format because Musson says that even with formal education people are looking for the flexibility that technology provides.

“The challenge for us is not just how we take a face-to-face environment and put it online, but it’s about how do we compete with the latest movie or latest game,” Musson says.

“This generation is referred to as the digital natives for a reason. It’s how they communicate with each other, how they seek and gather information.”

One thing is clear: leadership development is not solved by a single solution or one-sizefits-all approach. The concept of the 70:20:10 development model (see box below) suggests that a good development experience will involve a variety of different learning and development methods and approaches – yet Busine suggests that too much emphasis has been placed on the ratio, and this was never the intention of the original developers of the concept.

“Most people can readily identify people who have been great coaches or mentors throughout their careers. Unfortunately they can’t always identify multiple people, and more often than not their examples don’t include their own managers from across their career,” he says.

Musson agrees, and says it’s only through the application of theory that the student and the company will get a return on the investment of training. “I’m also a fan of the coaching component that sits in and around that model,” he says. “It embeds the learning.

LEADERS THIRST FOR MORE STRUCTURED DEVELOPMENT AND LEARNING FROM OTHERS

100%

On-the-job training

70% 20% 10%

The theory The 70:20:10 model suggests that 70% of a leader’s time should be spent on on-the-job learning, 20% on learning from others and 10% on formal learning

Learning from others

Formal learning

55%

52%

25%

27%

20%

21%

The actual time spent Survey respondents indicated that in fact 55% of time is spent on on-the-job learning, 25% on learning from others and 20% on formal learning

What’s best for leader development?

Survey respondents had their own views on what learning mode produces the highest-quality leadership development, as shown above Source: Global Leadership Forecast 2014/15, DDI/The Conference Board

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It’s not now HR’s job or it’s not AIM’s job to deliver it. It’s embedded in the company.”

A first step is to turn leaders and managers into better coaches and ensure they have the skills to effectively coach their team members (formally and informally); secondly, (and driven by a particular need and/or development goal), to provide individuals with access to other coaches and mentors both inside and outside the organisation.

Echoing Lear’s view that millennials want to learn from their own managers, DDI’s Global Leadership Forecast indicates that 71% of leaders surveyed would like to spend more time learning from others. This compares with just 26% who indicated they would like to spend more time learning on the job. Interestingly, 76% indicated they would like to spend more time in formal learning.

“It’s amazing to watch how people develop using their own learning style, their own processes, but doing it themselves with the support of some good books, some online assessments, some videos and audios. They can choose which way they want to learn.

Some people learn through watching; others learn through doing,” says Lear.

LEADERSHIP TRAITS Gary Lear believes there are eight characteristics that a person with leadership potential should have: Self-understanding and the ability to modify their behaviours to the situation

A focus on results

Strategic direction and clarity on three areas: people, purpose and profit

The ability to collaborate with other individuals and team workers

The ability to inspire and motivate others (and themselves) to high performance

Being a champion of change

The ability to identify problems but also develop solutions

Being a powerful communicator

1300 130 538

primefinance.com.au loans@primefinance.com.au

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BUSINESS STRATEGY

VIDEOS

6 POWERFUL MARKETING VIDEOS TO GROW YOUR BUSINESS If a picture tells a thousand words then video is… priceless! Marcus Seeger presents six of the most powerful and effective marketing videos that have been proven to create a steady stream of leads and profitable sales for businesses just like yours

1

Promotional video

The promotional video is the most common and powerful video and is typically on the homepage of your website. If you only make one video then this is the one that most people will make. A promotional video is a fantastic opportunity to present your unique selling proposition/position, commonly referred to as your USP. Often, the first contact a customer has with your business is your website’s homepage. Ninety per cent of customers who land on your site will prefer to watch your video rather than read text.

The key to making your promotional video successful is to engage your audience and this can be done with a story. Let them know who you are, and how you best serve your customers.

Consider this message as coming from a customer’s perspective and avoid the words,

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me, mine, I and we – it’s not about you! By simply focusing on how your customers benefit from your product or service, you will increase your promotional video’s effectiveness. The

Your customers are far more likely to believe video testimonials and see them as valued sources of information and positively impact on their buying decision promotional video can be quite broad and gives your customers a general overview.

2

Products and service video

In this video, it is important to start to drill down and provide greater specific information about the benefits of your product and service.

The success of this video is largely determined by how well you can communicate the ‘what’s in it for me’ (WIIFM) information. Again, approach this video from your customer’s perspective. It is very common for us, as experts in our field, to over-complicate information. Keep your video as simple as possible and focus on the

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going to be extremely powerful for you. Your customers are far more likely to believe these testimonials and see them as valued sources of information, and they will positively impact on their buying decision.

5

Social video

6

Video email

Have you noticed a steady increase in video content on popular social media sites? 2015 is considered by many to be the year of social video, so it’s a good time to take advantage of this trend.

For example, Facebook is rapidly growing its video capabilities. “Since June 2014, there has been an average of more than 1 billion video views on Facebook every day.” [Source: newsroom.fb.com] With the auto play feature, videos are now even more engaging. You could consider posting Facebook video ads, publishing videos to engage your fans or perhaps even generating user generated content by running online competitions.

benefits rather than what your products or services are.

3

competitors are doing this then you are in luck and I encourage you to start working on your ‘about us’ video right away!

About us (actually about YOU)

The ‘about us’ video is actually not ‘about us’ at all but is about YOU, the customer! The trick with a successful ‘about us’ video is to focus 100% on reinforcing and clearly demonstrating your USP. It is important to move as far away as possible from talking about yourself and focus instead on the benefits your valued customers receive when they do business with you.

Typically, a website will have an ‘about us’ page that is full of text and only talks about themselves – what a waste of time! If your

4

Testimonial video

We all know that testimonials are valuable and they do help potential buyers arrive at the decision that you’re a safe, reliable and trusted business.

However, what we’ve seen to date is mainly text-based testimonials, sometimes with a photograph, which makes them a little bit more believable, but most people these days are quite sceptical about the authenticity of these testimonials. If you replace these with live people video testimonials, then it’s

The statistics around video emails are compelling. For example, simply using the word ‘video’ in an email subject line can boost open rates by 18.5%, click through rates by 65%, and reduce unsubscribes by 26%.

Instead of sending a lengthy sales email in response to an inquiry, you can send a single video or a series of informative videos that add value and position yourself as somebody your new lead would like to do business with.

It is quite likely that very few of your competitors are investing in video emails, and by doing so yourself, you will stand out from the crowd and your customers will see you as being innovative.

Of course, I would encourage you to apply all six videos for accelerated results.

Marcus Seeger is the #1 Amazon bestselling author of Video Marketing for Profit: 14 Proven Strategies for Accelerated Business Growth. Marcus is managing director of video marketing and production agency, Video Experts.

Visit www.videomarketingforprofit.com.au.

For free video marketing training that will help you grow your business to the next level, visit www.videoexperts.com.au/blog

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BUSINESS STRATEGY

PERFORMANCE

UNDERSTANDING PERSONALITY AND ITS ROLE IN PERFORMANCE When it comes to performance – a topic that is constantly on the agenda of most modern businesses – there are a number of different approaches, explains behavioural strategist Warren Kennaugh

THE FIRST approach is to focus on the talent – we are told that if we are serious about improving performance, we need to find and keep talented individuals who will somehow elevate everyone else around them. As a strategy, however, this is not very effective. Enron is an example of a company that took the talent solution to heart, and look what happened to them. Plus, this approach is expensive, time consuming and divisive.

It puts a huge amount of pressure on the individual who is supposed to single handedly turn things around and at the same time alienates the rest of the workforce who are clearly viewed as second class citizens.

The alternative approach is to focus on team performance on the understanding that if everyone lifts their game just a little then, collectively, performance improvements will materialise. Teams may even be sent on teambuilding or training programs to help facilitate this outcome.

Polarities not problems What we first need to appreciate is that individual performance and team performance are not separate problems to

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be solved but, according to consultant Barry Johnson, they are polarities to be managed.

Polarities are ongoing, chronic issues that are unavoidable and unsolvable. And often, attempting to address them with traditional problem-solving skills only makes things worse. Team versus individual performance is a classic example of a polarity.

When faced with performance problems, most business leaders will plump for one type of intervention over the other – hire more talent or invest in teambuilding. The reality, however, is that elevated performance is dependent on individual contribution and collective effort, not one or the other. Too much focus on individual performance may drive greater individual initiative, creativity as well as fewer and shorter meetings but it may also simultaneously activate the down side of individual focus - operating in silos, increased internal competition and no shared goals or synergy. Too much focus on team performance may create more cohesive units, but at the same time decrease innovation, increase conformity and slow down decision-making.

By seeing team and individual performance as two separate problems, we engage in the ‘polarity two step’ – we recruit expensive, talented individuals to solve the individual performance issue, only to inadvertently impair team performance by doing so.

And when we ‘solve’ team performance by facilitating greater cooperation and cohesion, we can inadvertently stifle the high performers in the team.

This endless swing from individual to collective focus and back again is time consuming and costly. And perhaps most importantly, it continues to ignore the importance of personality on performance.

Personality and performance When we look at individuals, we see a seemingly infinite array of complex and unpredictable thoughts, emotions and behaviours. This apparent randomness is often so daunting and confusing that personality is considered fodder for the ‘too hard basket’. So it’s little wonder that everyone sticks with performance improvement theories that are based around individual or collective behaviour.

However, behaviour is massively influenced by personality. Sure, if you want to get people to do different things or get them to do those things better, you can occasionally alter that behaviour through rewards, incentives or threats but it’s usually unsustainable. When no one is looking or the bonus cheque has been banked, they will revert to type and go back to doing what comes naturally to them based on their own unique personality.

When we uncover specific personality markers, namely ‘inside’, ‘bright side’ and ‘dark side’, we give ourselves the power to orchestrate fit. Fit is the key to elevated consistent performance. The more our

what their bespoke behaviours are, or simply deploys them innately at the right time and in the right place most of the time. Whereas an average or inconsistent performer is not aware of exactly what those behaviours are so they are either deployed inconsistently or deployed in a role or environment that doesn’t need or value those particular behaviours.

As a result, performance is often down to chance or which way the wind is blowing. This is why sport is so littered with superstitions. In the absence of any real insight into what makes the player good or bad, they fall back on their lucky socks and quirky pre-match routines.

“Elevated performance is dependent on individual contribution and collective effort, not one or the other” natural strengths, characteristics, skill set and values fit with what is required in the role and fit with the culture and organisation itself, the higher the performance will be.

‘Inside’ personality characteristics help to identify what naturally motivates and inspires us. Clearly, if what we are required to do in our role is something we are already motivated by or value, then incentives or threats are unnecessary. ‘Bright side’ personality characteristics describe us on our best days. These are our natural strengths and dispositions that can indicate behavioural strengths. And our ‘dark side’ characteristics are the behaviours that show up when we are under pressure or stressed and they can easily derail our career unless you know about them and take steps to mitigate their impact.

What I’ve found across over 3,000 profiles of elite performers and by working in this area for over 23 years, is that everyone has four or five behaviours that evolve as a result of their unique personality. These patterns of behaviours are the way we have learned to ‘get along’, ‘get ahead’ and ‘make meaning’ in the world and we will then use those same four or five behaviours consistently. The only difference between a high performer and everyone else is that a high performer knows

What we so often fail to appreciate is that behaviour is behaviour and it rarely changes.

Whether that behaviour manifests as a valueadding asset or a career limiting liability largely depends on how and where it’s used and therefore whether we achieve fit or not.

High performance is not so much about what you do, it’s about how you do what you do, why you do what you do and where you do what you do. In fact, the only important consideration regarding what you do is what you do to screw things up.

We don’t need performance coaches to foster talent in every separate area of our life.

What we need is a genuine awareness and understanding of our ‘inside’, ‘bright side’ and ‘dark side’ so we can match the best of who we already are to a role and environment that already values that contribution. When we do that, the result is consistent, repeatable high performance.

Warren Kennaugh is a Behavioural Strategist who works with elite corporate leaders, gifted professional athletes and world leading teams. He is a speaker, researcher and consultant who is the author of FIT: When Talent and Intelligence Just Won’t Cut It (Wiley). See why the elite work with him at www.warrenkennaugh.com or contact him at wk@warrenkennaugh.com

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BUSINESS STRATEGY

MONOTASKING

WHY MONOTASKING IS THE NEW BLACK Forget multitasking; we need to narrow our focus to become more efficient and stay mentally fit, according to brain expert Dr Jenny Brockis

SURVIVING IN the crazy, busy modern workplace has resulted in our adoption of some new strategies designed to save us time. The problem is that no one appears to have done the necessary checks to see that these actually work. The one strategy most widely adopted has turned out to be the worst performance enhancing strategy ever, because it requires us to use our brain in the way it wasn’t designed for.

Yes, multitasking is the biggest new brain myth on the block. It’s time to get rid of it and replace it with a far more efficient method of getting more done – monotasking.

Multitasking is trying to focus on more than one thing at a time. Sure, you can drink a coffee while walking along and talking to a colleague, crossing the road and taking a selfie, but you‘re not paying focused attention to any one of those things, including your colleague.

One of the reasons multitasking has become so pervasive is because everyone’s doing it, and ticking off items on our to-do lists makes us feel good – which adds to the delusion. We know using our mobile phones while driving is dangerous, yet over 70% of us admit to doing it. We ignore the risk because multitasking has become the ‘norm’; it’s considered a basic work requirement. We even post job adverts stating multitasking skills are desired.

Multitasking fragments our attention – a quick email response here, a two-minute conversation there, we skim information and only grab the headlines. The outcome?

The cognitive cost includes poorer memory, mental fatigue, and reduced efficiency, effectiveness and innovation. We make more mistakes and we miss opportunities.

Overall, multitasking puts us at increased risk of burnout, damaged relationships and

WHY MULTITASKING FAILS When we attempt to multitask, our obliging brain attempts to help by giving one task to each hemisphere. The trouble is, the brain can still only pay attention to one at a time, so the brain task switches very, very fast, giving us the illusion that we are paying attention to two things simultaneously. This can be made more obvious when we look at optical illusions.

What do you see in this picture, an Indian chief or an Inuit?

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poorer performance. Hardly the time and energy saving solution we thought it might be.

What’s going on in the brain when we multitask?

One of our brain’s primary functions is to keep us safe; we scan our environment every 1/5th of a second on the look out for a change.

The brain loves patterns and what is familiar because the implication is that this is a safe place. Our selective focus has developed so we pay attention to what is most important to us at any given moment while being alert to other things happening on the periphery.

When we direct our focused attention, we use part of our prefrontal cortex, the highly specialised part of our frontal lobes used for our higher order executive thoughts such as planning, organising and regulating emotion.

This area has what can only be considered a couple of design flaws; it’s small, highly energy demanding and can only handle a small amount of information at any one time. That’s why the number of thoughts we can hold ‘front of mind’ at any given time is around seven. As the ideas get more complex, the space available reduces. When it comes to focused attention, there is only room for one.

Multitasking is the one brain function that the more we practice, the worse we get! It has been shown that chronic media multitaskers fragment their attention so much that they perform worse even when trying to monotask.

It has been estimated multitasking causes us to make up to 50% more mistakes and take 50% longer to complete our work, equivalent

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to roughly a 25% drop in individual productivity over the course of the day. That innocuous two-minute interruption – ‘have you got a moment?’ can translate into 24 minutes before you get back to where you were before your train of thought was broken.

No wonder some days we can feel we’ve got nothing done yet are exhausted.

Multitasking in an organisation reduces performance further, for example, when we are kept waiting for a piece of work by a multitasking colleague or need a decision to be made to move forwards on a new project, so we end up starting something else.

We cannot multitask even if we are young, if we are female, if we are Clark Kent, or if we like wearing our underpants over our trousers. Multitasking is multi-failing unless you happen to be one of the 2% on the planet who are supertaskers and whose performance gets better the more they multitask. By the way – if you haven’t undergone the cognitive tests to prove it, your belief in your ability to multitask is delusional and research has shown those who believe they are really good at multitasking perform the worst overall (just saying!). The way to get rid of multitasking is to stop doing it. But just like giving up any habit such as smoking, it’s not always easy,

especially if we are under pressure and the temptation for the brain is to default to the survival route it thinks works best.

1

Introducing monotasking into the workplace.

While we can all try to limit our multitasking tendencies individually, the need is to reduce organisational multitasking, which has to come from the top. Making monotasking the preferred way of doing, gives everyone permission to follow suit.

2

Prioritise your priorities.

3

Communicate your priorities.

Take 10 minutes at the end of the working day to determine your top three most important and urgent tasks for the next day and list them in order of priority. Shove everything else into a holding pen – those items can wait. Next day, start on your top priority first and don’t move to the second item until the first is completed.

In the office, make sure everyone is on the same page and knows which priorities have been agreed on so that there is no temptation to start on something else – this will boost completion rates.

4

Practice monotasking.

Choose one activity, close the office door, switch the mobile to silent, avoid all interruptions and work on just that one activity for a specified amount of time, say 20 minutes.

Monotasking leads to more work being completed more quickly, to a higher standard and consumes less energy. Completing our work well feels rewarding, resulting in the brain secreting more dopamine, making us feel good and motivating us to repeat that rewarding activity.

Emotions are contagious, so when we are feeling good, others will too, and the working atmosphere becomes more positive and vibrant. Being in a more positive mood opens our mind to more innovative and creative thinking – making it easier to solve more problems and make good decisions. Working with our brain in the way it was intended is not just a better way of working; it leads towards creating a high performance workplace. That’s why monotasking is the new black.

Dr Jenny Brockis is a medical practitioner, specialist in the science of high performance thinking and author of Future Brain: The 12 Keys to Create Your High-Performance Brain (Wiley).

Visit www.drjennybrockis.com

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23/11/2015 11:37:30 AM

LIFESTYLE

A DAY IN THE LIFE OF…

Mario Rehayem, director sales and distribution, Pepper

5:00am: Wake up and stroll across to all the kids’ bedrooms to give them a quick cover-up because they have a tendency to kick their blankets off during the night. Alexander, my youngest, is up already playing with his action figure toys. He’s definitely like his dad – doesn’t need much sleep! I prepare for the day ahead and go through emails that have come in overnight, before leaving the house.

6:00am: Jump in the car and drive to work.

I listen to voicemails on my way to the North Sydney office and call Lee Prior, our national sales manager for the retail brand. He’s also an early riser. We discuss on-the-ground action

8:30am: I send out performance reports to the wider team and make time to have one-on-one conversations with the broker support team. By doing so, I am provided with good insight into the activity that occurred the day before, particularly from the scenarios team.

9:30am: White label national sales manager Vasé Marcevska and I discuss over coffee our results for the week, month and quarter to date. We also discuss some of the great opportunities on our accounts and the outstanding month we’ve had with one of our partners in this area.

“Alexander, my youngest, is up already playing with his action figure toys. He’s definitely like his dad – doesn’t need much sleep!” orders for the week ahead, the performance of each region across Australia, and where our focus needs to be. I am well and truly in work mode as I walk into the office.

6:30am: Taking in the view of stunning Sydney harbour, I familiarise myself with the day ahead. My wonderful PA, Naomi, manages my diary and I don’t know what I would do without her support. I prepare for all my scheduled meetings for the day, taking in key reports and updating my to-do list.

I am in back-to-backs from 9:30 to 4:30 and I like to be up to date on all conversations and across the latest news in our business.

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12:30pm: The marketing team and I discuss our Western Sydney Wanderers A-League sponsorship opportunities and responsibilities over lunch. As we eat, the team chats about ways to best leverage the sponsorship through our broker network and our messaging to include in our eDM send-out.

We’re looking forward to a fantastic season.

2:00pm: David Holmes, our COO, and Gavin Smith, our head of operations for sales, meet in my office to discuss

how to better refine and become more efficient in our organisational processes. We discuss the ways we can always ensure our customer-centric approach, even if it applies to our internal processes.

3:00pm: Call Kevin Delmar to discuss our evolving product landscape; activities in the marketplace regarding products, price and features. Our discussion centres around constantly evolving our value proposition to the broker market to ensure that we remain on top of the ladder.

4:30pm: Being in meetings all day has kept me away from my desk, so I now have some 380 emails to read, digest and respond to.

7:00pm: Home time. There is little traffic, which is a calming end to the day. That means it’s straight home to the kids and my wife, where I receive a rundown on the day in the life of my family. I spend the time listening to their stories and then reading to the kids as they get ready for bed.

8:00pm: Dinner time is now here.

This is one of the most important aspects of my day and a time I don’t need to have diarised.

My wife and I enjoy spending this time together every day, after we’ve put the kids to bed.

On the menu tonight is a yummy stir-fry, one of my favourite ways to end the day.

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20/11/2015 11:39:02 8:58:35 AM 23/11/2015

THE DATA

QBE AUSTRALIAN HOUSING OUTLOOK

COLD COMFORT FOR HOUSE PRICES QBE’s Housing Outlook 2015–18 report, prepared by BIS Shrapnel, gives an unprecedented insight into the cooling of Australia’s housing market

Sydney

Melbourne

2.8% 2% WE’RE ALWAYS being pushed to take a long-term view, but practically preparing your business for the future is impossible without reliable forecasts for the years ahead. QBE/BIS Shrapnel’s annual Housing Outlook report should therefore be essential reading for brokers, with key statistics not only outlining what the housing market will do in 2015–18 but also giving suggestions for the reasons why.

The key message of the report is that price growth will slow over the next three years – with corrections in certain areas – although it

THE INVESTOR LENDING PEAK 2014–15’s housing market was all about investors, according to QBE/BIS Shrapnel. Investors accounted for more than 50% of total residential finance in 2015, and more than 60% in NSW. Finance to owner-occupiers has declined, not just as a proportion of total, but also in terms of the value of loans (-3% for first home buyers and a minimal 0.3% rise for other buyers). BIS Shrapnel managing director Rob Mellor did note that “there are signs we’re moving towards a peak in investor demand”, towards 2017. A combination of APRA’s intervention, overbuilding of multi-unit properties and bank restrictions of finance to foreigners would cool the investor demand, the report suggested.

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doesn’t take the view that investor lending has already peaked. Furthermore, the report doesn’t forecast catastrophic declines in Sydney, thanks to its strong economy, although brokers in Perth, Darwin and Canberra may have cause for concern.

Many of the most interesting findings of the report relate to construction; the pace of construction over the last 12 months means most states will soon have more housing than demand, and this could affect house prices far more than interest rate changes, for example.

-1.5%

-4.9%

TURNING POINTS FOR THE BIG FOUR CAPITAL CITIES Using QBE/BIS Shrapnel’s median house price forecasts, and their individual capital city forecasts, it’s possible to suggest turning points for Australia’s biggest capital cities.

Turning point

Brisbane

2016 Relatively good affordability will raise migration to SE Queensland, and prices from 2.9% to 5.4% growth

Perth

2018 With the mining boom at an end, Perth’s house prices are already falling and will go through a period of correction, stabilising by 2018

Sydney

2017 RBA cash rate increases will put pressure on investors, transforming house price growth of 7.3% to a decline of -2.7%

Melbourne

2017 Monetary policy, reduced migration and a struggling manufacturing sector will halt price rises (0.0%)

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13.2%

HOW ‘OFF THE CHART’ UNIT DEVELOPMENT WILL AFFECT PRICES IN 2015–18 Forecast price growth 2015–18 (%) Houses

Brisbane

Adelaide

Perth

Hobart

Units

Canberra

Darwin

4.9% 3.4% 2.3% 0.8%

-0.8% -2.2%

-2.4%

-5%

-2.7%

-2.5%

-5.2% Source: APM PriceFinder, Real Estate Institute of Australia, Forecasts: BIS Shrapnel

DROWNING IN HOUSING With the prominent exception of Sydney, the current rates of construction will mean most states will have more houses than demand, particularly the ACT. Deficiency of stock as a % of underlying demand 200%

NSW

VIC

QLD

WA

SA

TAS

NT

ACT

100% 0% -100% -200% -300% -400%

2015

2016

2017

2018

Note that a positive percentage represents a dwelling deficiency and a negative percentage represents a surplus

-500%

DON’T EXPECT A FIRST HOME BUYER COMEBACK The decline of first home buyers won’t be reversed and in fact could result in “permanent change” for Sydney’s patterns of home ownership, according to Rob Mellor, managing director of BIS Shrapnel. “Until we get to flat price growth or small declines, or income growth gets to 3–4%, we won’t see an increase in first home buyer activity,” Mellor told the audience at the Housing Outlook’s launch.

With a struggling economy unlikely to grow incomes at such a rate, it may take government action to help FHBs recover, Mellor explained to MPA. This depends on whether they’re concerned that the fall in home ownership among the younger generation could become a problem as they get older.

Source: ABS, BIS Shrapnel. Forecasts: BIS Shrapnel

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LIFESTYLE

FAVOURITES

FAVOURITE THINGS James Symond, CEO, Aussie Home Loans

Holiday destination: South of France for summer and New York at Christmas is always is a good idea.

PR

Food: Anything my mum makes. However, a simple schnitzel or lamb roast are top of the list.

D Sport: Ha! Not usually but I will give tennis a go.

Drink: If it's a grape from Bordeaux, I'm generally in!

TV series: I’m pretty hooked on Suits at the moment.

Weekends: Breakfast with the same friends for almost 20 years every Saturday morning to start. A catch-up coffee and grocery shopping with my folks, and then head out on Sydney Harbour with a good Cuban and plenty of newspapers at hand.

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E

Music: The old crooners like Sinatra, Dean Martin and others. I used to listen to my dad playing them a lot as a kid, and whilst I cringed then, I find that today their tone makes me feel great.

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