Mortgage Professional Australia issue 16.04 by Key Media

CHALLENGER AGGREGATORS Comprehensive round up MPAMAGAZINE.COM.AU ISSUE 16.4

NEW BROKERAGES Setting up for success MATT LAWLER & TIM BROWN On YBR’s big restructure

BROKERS ON BANKS Time’s up for the banks as we reveal the industry’s biggest results

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APRIL 2O16

CONNECT WITH US

CONTENTS

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UPFRONT 04 Update

The resurgent investor market

06 Head to head

Three brokers on whether they’d use workers based overseas

08 Statistics FEATURES

STARTING AN INDEPENDENT BROKERAGE

COVER STORY

BROKERS ON BANKS

MATT LAWLER AND TIM BROWN

YBR chiefs on the Group’s restructuring, VOW’s prospects and diversification

Meet your average broker – how do you compare?

10 Opinion

Jason Back from award-winning brokerage ALIC on his year ahead

Advice and guidance from three early stage brokers and Australia’s top BDM

12 News Analysis

MORTGAGE INSIDERS

It’s back for 2016, with new insights on APRA as well as the all-important rankings

THE BIG INTERVIEW

Got a story or suggestion, or just want to find out some more information?

Why the digital mortgage has yet to arrive in Australia

52 Marshall Condon

Award-winning commercial broker on his brand new brokerage

62 Josh Bartlett

Loan Market great talks about his gym empire in our new section ‘Career Path’ FEATURES

64 Glenn Gibson

CHALLENGER AGGREGATORS

Keep up with the AMP chief and avid marathon runner as he talks through his ‘Other Life’

The biggest challengers discuss the biggest issues in a comprehensive Q&A

BUSINESS STRATEGY

56 Teamwork

How technology is changing how we cooperate

60 Feedback

Improving your employees’ performance through structured feedback

MPAMAGAZINE.COM.AU BUSINESS STRATEGY

RECRUITMENT

How to balance data with gut instincts when deciding who to hire

NOW ONLINE: Top brokers and brokerages in Leading Mortgage Professionals Our free Business Education Webinar Series

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FEATURE / BROKER EDUCATION

EDITOR’S LETTER

BRAVE NEW THINKING

his issue of MPA is all about you – specifically, what you think about Australia’s banks, as our Brokers on Banks survey returns for its 13th year in succession. Whilst different banks have risen and fallen down the rankings, for a number of years brokers’ priorities have changed little. However, there’s good reason to think that’s about to change. Recently the MFAA held their Young Professionals Advisory Panel, to which I was invited. It’s a small group drawn from across Australia, including several MPA Young Guns and an AMA award winner, which gives the MFAA younger brokers’ views on the issues of the day – in this case, increasing regulation and the effects of digitisation upon the industry. These brokers didn’t hold back in expressing frustration; with regulators who never consulted them, with banks that deliberately undercut them and the sub-par brokers undermining their profession’s reputation. These aren’t

“What we don’t tend to hear are solutions, still less solutions which overturn long established industry practices” issues restricted to young brokers, and at MPA we hear them almost every day. What we don’t tend to hear are solutions, still less solutions which overturn long established industry practices. Take remuneration, for example. The panel was concerned that ASIC, who are on the lookout for inappropriate incentives, would mistakenly see commission as solely directing a broker’s choice of lender. They suggested a number of responses – standardising commission, eliminating freebies, limiting spot-and-refer commission payments – which whether or not they were workable in practice, were certainly examples of brave new thinking. It’s easy to put forward radical ideas if you don’t have a seat at the table. However, many of these brokers were members of banks’ elite segments, some ran powerful brokerages; they’d be losing out on the bonus commission and luxurious conferences too. Yet they felt the industry needed to go on the offensive to remind regulators and consumers why you should use a broker. A brainstorming session is a long way from policy changes, of course. What is evident is that a new generation of brokers are thinking about challenges like regulation and competition in a very different way and coming up with radically different solutions.

www.mpamagazine.com.au APRIL 2O16 EDITORIAL Editor Sam Richardson Journalist Maya Breen Production Editors Roslyn Meredith Moira Daniels Contributors Graham Winter Anthony Howard Georgia Murch Christine Khor

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

EDITORIAL ENQUIRIES

tel: +61 2 8437 4787 sam.richardson@keymedia.com.au

SUBSCRIPTION ENQUIRIES

tel: +61 2 8011 4992 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES

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Key Media Regional head office Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, Toronto, Manila

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL vernon.jones@kmimedia.ca T +1 416 644 8740

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

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UPFRONT

INVESTOR LENDING NEWS BRIEFS Queensland set to lead capital growth NAB’s Residential Property Survey for the fourth quarter of 2015 has tipped Queensland to be the best state for capital growth over the next two years, with prices increasing by 2.7%. This was well ahead of Victoria (1% over two years), whilst growth in NSW was expected to be flat. NAB blames the slowdown on credit restrictions on investors, worsening affordability and a large pipeline of residential construction, with chief economist Alan Oster commenting that “weakening fundamentals have already seen the market starting to cool, suggesting the best of the price gains are probably behind us”.

Banks still exceeding APRA 10% limit More than a year since APRA placed a limit of 10% on the growth of investor lending per annum, several banks, including NAB and Macquarie, are yet to comply. Whilst the rate of growth sector-wide fell below 10% in October, Macquarie grew its book by 40% in the 12 months to December. NAB remained just above the limit, with investor loans growing by 10.73% in the same time period. Macquarie’s growth has relatively little effect on industry averages, given the non-major bank still accounts for just 1.9% of $1.3trn Australian mortgage market.

Fall in demand for investment property The proportion of those looking to buy investment properties fell between June 2015 and January 2016,

according to ME bank’s Property Buying Intentions Report. In June 2015 38% of buyers were looking for an investment property; this fell to 33% in January. Conversely, the proportion of buyers looking for a property to live in increased over the same time period, from 45% to 50%. The report also found that Gen X are the most likely to be saving for an investment property, whilst Gen Y are the most likely to be looking for a property to live in.

Foreign buyers less active nationally Foreign buyer activity fell in every state except Queensland in the fourth quarter of 2015, according to NAB’s Residential Property Survey. Across Australia foreign buyers accounted for 14.4% of new property sales, down from 15.7% in the third quarter, with Victoria experiencing the sharpest fall, from 25.2% in Q3 to 16.4% in Q4. Foreign buyers’ share of new property purchases in Queensland increased, from 17.7% to 20.9%, with Brisbane predicted by many to become the new target for foreign buyers priced out of Sydney and Melbourne.

Negative gearing – on the way out? At the time of writing, the debate over the negative gearing was far from settled, with Labor sticking by their proposal to restrict it to new properties if elected. Whilst critical of the opposition’s approach, Prime Minister Malcolm Turnbull had yet to rule out changes to negative gearing as he considers ways to reform Australia’s tax system.

JUST TOO GOOD TO RESIST Two-tiered pricing for investment loans isn’t going away, but banks’ appetites are returning and with them competitive offers Investor lending has had an awful summer. NAB reported that in the fourth quarter of 2015 Australian property investors’ share of total demand fell from 25.2% to 19.2%; foreign buyers’ share also fell. AFG and Aussie Home Loans also noted declines in investor lending for the December quarter. Investor lending has certainly taken a dip; however, a growing number now believe it is set for a recovery. 2015 was dominated by APRA’s 10% limit on investor lending growth; in order to bring growth rates banks returned to a two-tier system, with higher rates and lower LVRs for investors, compared to owner-occupiers. With some prominent exceptions, such as Macquarie, most banks are now below this limit, and free to re-examine how they can complete in the investor space. Bankwest’s Stewart Saunders told MPA he believes this could lead to their appetite returning: “As banks manage to lower their growth rates to that required by the regulator, banks’ individual appetites will increase and I’d expect to see some greater competition in investor lending in the year ahead.” A few examples of this are already evident. Bankwest increased their maximum LVR for investment loans from 80% to 90% in November, the same month that AMP re-entered the market after a temporary withdrawal. In February a number of the major banks unveiled aggressive offers, and whilst most of these related to owner occupied

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loans, CBA promised to beat any one to five year fixed interest rate on investor loans offered by Westpac, ANZ or St George. The banks know they need to be competitive in the investment space, not only because non-bank rivals are grabbing market share, but because the core demand is still there. ME bank’s Property Buying Intentions Report found that the proportion of buyers intending to buy an investment property had fallen between June 2015 and January 2016, but still remained at a very substantial 33% of those actively in the property market. Finally, there is a possibility of regulators relaxing their attitudes to investment lending. The possibility of housing markets overheating was one of the RBA’s main concerns in 2015;

“Banks’ individual appetites will increase and I’d expect to see some greater competition in investor lending in the year ahead” the recent cooling of price growth in these cities did not go unnoticed in their February cash rate statement. Although APRA’s 10% limit remains in place – and with it the two-tiered system – investor lending will continue to play a major role in 2016.

Q&A

INVESTOR LENDING John Mohnacheff National sales manager LIBERTY FINANCIAL

Fast fact $11.6bn was lent to property investors in December 2015 – down 13.6% from December the year before

Did Liberty see a significant increase in investor lending over 2015? Liberty finished 2015 incredibly well. In some parts of our business we more than doubled market share and investor loans were certainly one of the contributors to that growth. We didn’t just see an increase in our investor lending, however; almost all of our products grew significantly. Liberty is the only lender to provide the full spectrum of lending including prime, motor, SMSF, commercial and custom loans. So, the more brokers engage with us, the more they realise how many different ways we can empower them to assist their customers. From that perspective, I think the significant gain in market share by non-banks in 2015 is further evidence of the increasing importance and popularity of mainstream specialty lenders like Liberty. Have APRA’s actions made property investors more likely to consider non-major and non-bank lenders? Definitely. With the banks restricting their appetite for investment lending in response to regulatory changes imposed by APRA, flexible lenders such as Liberty have become the first choice for many brokers. We’ve welcomed the change because it’s resulted in more brokers using Liberty for more customer solutions than ever before. We’ve also been raising Liberty awareness in the public space which also helps because customers are recognising Liberty more often when engaging with their broker.

“In some parts of our business we more than doubled market share and investor loans were certainly one of the contributors to that growth” Are property investors just looking for the product with the lowest interest rate? Interest rates are obviously important and Liberty is certainly competitive – but they’re not always the deciding factor. Some borrowers are looking for a flexible lender that isn’t held back by rigid criteria when assessing their eligibility for a loan, others want to buy at a higher LVR, or have a loan with lower fees. Not everyone is the same and the unique thing about Liberty is we have a broad range of products that cover the entire lending spectrum – so we can say yes more often. Would you recommend any particular marketing strategies for brokers targeting investor clients? Despite murmurings that other lenders are easing conditions for investors, it’s still a tough market. And for investors, buying at the right LVR is still hugely important. So we’re encouraging brokers to get out there as much as possible and let investors know there are flexible lenders that can still lend at LVRs up to 95%-plus cap.

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UPFRONT

HEAD TO HEAD

Do you offshore any part of your business?

Owun Taylor

Otto Dargan

Joel Wyld

Owner/Partner Mortgage Choice Newtown

Managing director Home Loan Experts

Director Peasy – Property, Easy

The short answer is no, not at the moment, and nothing in the near future. With my business hat on I can see the cost reasons why the bigger lenders look at these options (sometimes good, sometimes not so). Five years ago we did use a loans admin service based in Queensland (not quite offshore, until State of Origin time that is). They had a connection to the Mortgage Choice network so there was a good understanding of the systems. We do prefer for ease of management to keep it in-house. We have designed the business for the personal touch and when every client walks through our door they meet the entire team so as to put a face to the name. We have one phone number and no one needs to “select 1 for sales or 2 for accounts”. We find this important so that our clients can connect with us at any time and feel comfortable throughout the entire process – creating a sense of trust and discretion.

Since commissions were reduced during the GFC it just isn’t viable to have support for brokers in Australia unless the brokers are settling huge volumes. Technology has advanced to the point where offshoring is feasible for most businesses, and we had learned how to manage an offshore team. So from a strategic point of view we could offer an unprecedented level of support for a much lower cost. We’ve been able to hire proactively ready to grow, so we don’t experience any delays for our brokers as our volumes increase. We’ve also been able to get the brokers to focus just on working with customers. We’re not 100% there yet but our goal is to have brokers check the support team’s data entry, click submit, and forget about the file. Lastly, we’ve been able to offer a higher level of service. We have a threeperson team who help our customers after settlement. That means our brokers don’t have to worry about variations or construction progress payments.

I personally am not a fan of offshoring. I do understand the benefits, and why other brokers use it; however, my business model encourages brokers learning from the ground up. Having those admin roles within our office enables us to train new entrants into the industry from the beginning of the process – lodging and preparing applications – up to relationship management and being involved in the advice piece. I also think there are parts of Australia with low levels of employment which would make a better destination for processing, both through assisting the local economy and getting a better customer experience. We recently advertised an administration role and had over 30 résumés sent in on the first day. However, a more experienced or upskilled role we advertised didn’t have this many in 30 days. If you read into this you could probably say that there are not enough entry-level positions available for people in Australia at the moment. I certainly wouldn’t want to be compounding this by sending any of our jobs overseas in the near future.

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STATISTICS

STATE OF BROKING

MEET YOUR AVERAGE BROKER Brokers have always wondered where they stand in comparison to their peers, and a new report by the MFAA could finally give them the answer A NEW MFAA report on brokers is almost the dictionary definition of ‘a long time coming’. Over recent years the lack of concrete data on the broking sector as a whole has become almost absurd in what claims to be a fully professionalised industry. Without basic data – like the number of brokers, the amount they earn and the value of loans they write – dubious claims about brokers have been allowed to flourish, both within the industry and among sceptical outsiders. Essentially, the MFAA Industry Intelligence Service (IIS) report is a response to two trends:

LIMITATIONS OF THE REPORT What makes the MFAA’s Industry Intelligence Service (IIS) data particularly valuable is that it doesn’t just include MFAA members; it also draws data from 16 aggregators. The MFAA claims the study therefore represents 90% of the industry (although the FBAA has publicly disputed this figure). Whether or not the IIS represents the entire marketplace, with 13,841 brokers represented, this survey is large enough to be representative. If there are limitations, they come from the time period to which this survey refers – just six months between March and September 2015. However, as the IIS plans to publish reports twice a year, this shouldn’t be a major problem. Finally, the data related to commercial lending is held back by a lower response rate from the industry: 60% of respondents reported their commercial loan values to the MFAA.

firstly, the move towards benchmarking, as an increasing number of aggregators allow brokers to compare their numbers with those of their peers; and secondly, this data is also important to the MFAA as it looks to engage with regulators and the mainstream press. With a review of broker remuneration on the way, having a figure for the average broker’s upfront commission ($89,000 per annum) will be particularly useful for the industry. Most importantly, however, the IIS report is a wake-up call for those brokers who are falling behind. Having state-specific figures

for commission is especially valuable, given the huge price differences between Sydney, Melbourne and the rest of the country. There are other useful findings in the report, such as figures on average portfolio size and average value of settled loans per month. Finally, the continuing predominance of men in the industry (72% of existing brokers and 66% of new recruits) raises questions over how industry associations and brokerages can attract more women into the industry.

A GROWING INDUSTRY The IIS data suggests that broking is growing in most states, with Tasmania being the prominent exception. 12 10 8 6 4 2 0

National

NSW

VIC

QLD

-2 -4 -6 -8

Net growth in number of brokers over 6 months Broker turnover over 6 months TAS

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TODAY’S TYPICAL BROKER:

(Just 28% of existing brokers and 34% of new recruits are women)

Is probably a man

Is one of 13,841 brokers nationally

Settles $1,149,293 in loans per month

Has a portfolio worth $40.4m Earns $89,000 pa in upfront commission

WHAT’S IN YOUR WALLET?

THE GROWING BROKER DIVIDE

While Sydney and Melbourne compete for the title of Australia’s hottest (and, some say, most overpriced) housing markets, it seems NSW brokers are comfortably ahead when it comes to upfront commission earnings.

One particularly interesting finding of the IIS relates to the value of loans ‘active brokers’ wrote in the study period: 45% of brokers originated more than $5m over the six months, while 20% originated less than $1m over the same period, with another 11% writing between $1m and $2m. While these statistics are intended to categorise brokers into high and low performers, they also raise the question why the sub-$1m group is so large. It’s possible that within this group a number of established brokers write few new loans but receive substantial amounts of trail income, or that despite the NCCP a number of part-time brokers still remain in the industry.

Upfront commission per annum National

$89,000

NSW

$108,000 $83,000

VIC QLD

$79,000 $66,000

$85,000

WA $56,000

TAS NT

$43,000

45%

more than $5m over 6 months less than $1m over 6 months between $1m and $2m

Value of loans ‘active brokers’ wrote in the study period

11%

20%

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UPFRONT

OPINION

RESPONDING TO A CHALLENGING MARKET Brokers will need to work harder as the market changes in 2016, says Jason Back of AMA Brokerage of the Year, The Australian Lending & Investment Centre

Ongoing foreign investment With the Australian dollar at just over US$0.70, our market continues to be attractive to foreign investors. This has led many banking institutions to review their lending policies with regards non-resident borrowers. Brokers need to ensure their foreign investment clients are compliant with the new ownership regulations (bank as well as government) and that they have additional documentation on hand to confirm their income and their ability to manage their mortgages.

Oversupply of investment property looms Oversupply is set to be a major issue in coming years. Those mostly affected will be investors and home owners buying off-the-plan properties who will begin feeling the impact of their poor investment decisions in late 2016 and through 2017. Coupled with ASIC and APRA changes, this will place enormous pressure on rental yields as well as valuation prices, with buyers needing to kick in additional money or equity at settlement. This is especially the case in markets like Melbourne and Brisbane where oversupply of investment property is a major problem. Brokers will need to ensure their clients have strong cash reserves and/or existing

equity in their portfolios, as this will put them in a better position to cope with a market increasingly under valuation pressure at settlement.

Impact of APRA/ASIC regulatory changes Major regulatory changes, such as changes to servicing sensitisation and the introduction

Tiered interest rates The move last year by banks to a two-tiered interest rate structure saw many investor borrowers paying interest rates between 0.27 and 0.6 percentage points higher than those charged to owner-occupiers. This is a great opportunity for brokers to review their clients’ structures and ensure the debt purpose is still the same as it can change over time.

Negative gearing This will remain on the agenda as the Federal Government looks for pools of revenue to fund its $44bn deficit. What the Federal Government will discover is there are few people on the top marginal tax rate in a position to truly benefit from this property strategy. Also, 70% of all investment property owners own just one investment property! Changes to the negative gearing laws could have a harmful and far reaching effect on the entire property market – from buyers to sellers, developers and even those that rent. We could see the knock on effect in the ancillary industries that supply the construction industry, resulting in the devaluation of the property market and a reduction in net wealth. As a trusted adviser for our clients and in the face of these mounting challenges, the

“2016 will not just be about educating the client; the best brokers will be learning and adapting to change and in the process becoming specialist problem solvers” of tiered interest rates, will have a knock-on effect well into 2016. While ALIC will always support a safer environment for Australians to both invest and lend in, the changes will mean it is tougher for new and existing investors to expand their property portfolios. Brokers will need to be across all lending options available in the market as well as those which best meet their clients’ needs. 2016 will not just be about educating the client – the best brokers will be learning and adapting to change and in the process becoming specialist problem solvers.

broking industry now, more than ever, needs to demonstrate its real value by providing our clients with much greater choice, a more efficient service and the best possible advice. After all, we are the custodians of their wealth! Jason Back is managing director for awardwinning financial brokerage, The Australian Lending & Investment Centre (ALIC). He has over 24 years’ experience in the finance sector, and has been instrumental in taking ALIC to the forefront of the mortgage brokering industry.

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NEWS ANALYSIS

DIGITAL MORTGAGES

DIGITAL MORTGAGES: STILL LOADING The technology is ready, the lenders are ready – but the Australian consumer isn’t, argued delegates at the recent Australian Mortgage Innovation Summit. MPA editor Sam Richardson reports THE 2016 Australian Mortgage Innovation Summit, hosted by RFi Group, certainly lived up to the name – a coming together of ambitious, sharply suited bankers and brokers to discuss the bright future of the humble home loan. Yet belying the positive mission statement, a note of frustration was also evident at this year’s summit – frustration with the slow pace of change. During a panel discussion among top bankers, as the talk inevitably drifted towards digital mortgages, a weary delegate raised his hand to ask the question: “We’ve been talking about this for six years ... why hasn’t it happened yet?” The banks’ answer was to point towards the Australian consumer. Or, to be specific, the reality that getting a mortgage continues to be a very emotional process for borrowers, as NAB’s general manager of home lending, Meg Bonnington, pointed out in her response: “Buying a property is such an emotional thing – it’s very different to getting a credit card ... I think that’s where there’s the fallback to some sort of face-to-face.” Bridging that gap was the challenge, the panellists agreed. “If someone gets the end-toend process right they’ll drive a train through my back book,” observed Westpac Group’s head of home ownership, Nathan McMullen. These major bank representatives weren’t the only speakers at the summit to cast doubt

on the appeal of the digital mortgage. Pepper CEO Patrick Tuttle took an unexpected course in his opening talk on innovation: “I think the true digital online mortgage is aspirational ... it’s how you marry that with face-to-face.” Dealing with non-vanilla mortgages added a further hurdle for Pepper, he added, concluding that a hybrid model was the future, involving both digital application portals and face-to-face advice. Tuttle’s conclusion was surprising, to say the least, for a conference largely focused on digital innovation. It also begged the question: after years of eagerly anticipating the fully

models to make digital mortgages viable did exist. One company looms large in lenders’ minds here: Quicken Loans in the US, whose Rocket Mortgage product can be applied for

“I think the true digital online mortgage is aspirational ... it’s how you marry that with face-to-face” Patrick Tuttle, Pepper digitised mortgage, why had lenders suddenly cooled on the idea? And – the elephant in the room – will brokers have a place in the worlds of either hybrid or complete digital mortgages? MPA set out to find the answers.

The technology is here One thing made very clear across the summit was that both the technology and the business

on a mobile app, as its glossy advert during the recent Super Bowl made clear, with its message of ‘push a button, get a mortgage’. Tuttle picked out Quicken as an innovator, as did ING Direct’s Lisa Claes in her talk on marketing in the digital age. Quicken is a huge player, and one of the biggest mortgage originators in the US, but brokers should also be aware of the numerous

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THE DIGITAL CONSUMER RFi Advisory managing director Alan Shields talked delegates through the characteristics of the most digitally engaged consumers, and what they expect:

32% of all consumers classify themselves as ‘highly digitally engaged’ and are willing to use smartphones for most transactions

23% of this group have their mortgage with their main bank (more than for other consumers)

17% of this group say they’re likely to switch banks (more than for other consumers) Highly digitally engaged customers have a much higher net promoter score than other groups

smaller fintech companies jumping ahead of established Australian lenders in developing digital lending tools. For example, start-up Hip Pocket, which doesn’t yet operate in Australia, uses social media to compare your mortgage repayments with those of similar people in your area, with exciting prospects for refinancing, explained Claes. Encouragingly, brokers themselves are also pushing the boundaries of digital lending. In a panel discussing white label and third-party branding, Connective director Mark Haron noted that one of the aggregator’s biggest brokerages had actually developed a fully digitised application procedure but none of the banks had signed up to it. Nevertheless, Haron added, he couldn’t see any major changes in the consumer psyche over the next two years – a message delegates heard again and again across the two-day summit.

Consumers and the digital mortgage Lenders, it seems, don’t believe the consumer demand exists yet. “Every time we go into a focus group with a customer, you’re sitting there, waiting for them to say, ‘I’d just love it if I could do the whole thing digitally’,” noted Westpac’s McMullen. “Unfortunately there isn’t many of them.” The bankers were echoing a point made by RFi Advisory managing director Alan Shields, who reported that 68% of surveyed consumers said they wouldn’t do any part of their mortgage application online. It’s not Australia’s pensioners holding back the fully digital mortgage, speakers suggested; the demand for face-to-face support actually came from highly digitally literate younger borrowers. Shields said buyers under the age of 30 were prepared to sacrifice a couple of basis points in exchange for better support, telling delegates that “digital engagement

and price sensitivity is not binary”. Furthermore, when MPA asked Shields if younger, more digitally engaged buyers were likely to use a broker, he replied that first home buyers were still more likely to use a broker to help them with the application. Conversely, this could mean older upgraders and refinancers could be the first adopters of digital mortgages as they’re more comfortable with the transaction, explained Brad Gravell, general manager of home loans and pricing at ANZ. “We will get to a point where the systems are capable of self-serve,” Gravell explained. “But I think the main game over the next few years will be assisted self-service.” Assisted self-service (or as Tuttle called it, a hybrid mortgage) – with a banker or broker on hand to assist – was a running theme of the summit. Even UBank, the NAB-owned online mortgage pioneer, was moving towards what head of digital Jeremy Hubbard called “digital mainly”, allowing customers to opt in and opt out of the online process in an omnichannel approach.

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NEWS ANALYSIS

DIGITAL MORTGAGES INNOVATORS IN THE MORTGAGE SPACE Both RFi Advisory’s Alan Shields and Lisa Claes of ING Direct highlighted a number of fintechs and innovative lenders abroad that mortgage professionals should be aware of. These include:

Quicken Loans – US-based non-bank lender that emerged from a technology company

Nationwide – UK lender that excels in keeping customers updated

Kabbage – US-based unsecured SME lending based on broad data analysis

Hip Pocket – Compares your interest rate with others in your area

Brokers and the digital mortgage By its very definition, the end-to-end digital mortgage seems to spell bad news for brokers. The assisted self-service mortgage, on the other hand, could be a considerable opportunity for brokers, speakers at the summit explained. “It seems to me in the discussions today that the importance of personal service has been discarded,” commented Randall Williams, senior vice president at La Trobe Financial. In common with other non-bank

provide brokers with another advantage, he added: “The customer ultimately feels they’re getting better value from the broker.” Beyond traditional relationship manage ment, brokers could play a crucial role in satisfying millennial consumers’ growing expectations. In her talk on changing demands, ING Direct’s Claes suggested lenders should “become this butler in your customer’s life to provide for their broader needs”. And brokers may need to move in a similar direction, speakers noted. YBR Wealth

“We’re talking about changing 150 years of ‘this is the way it’s done’… [but] the heavy lifting has been done” Mike Cameron, PEXA lenders at the conference, Williams explained the importance of brokers in dealing with specialist borrowers whose applications could not easily be replicated online. Mark Hewitt, AFG’s general manager, suggested that the proliferation of online mortgage options had actually driven more confused customers to brokers for a simple explanation. When MPA asked him what this meant for brokers’ marketing strategies, Hewitt did, however, warn that brokers couldn’t just sit back and wait for these confused customers to arrive. As for lenders, he added, they should look at the relatively low conversion rate of online-generated leads compared to those that come through brokers – as he put it, “the best conversion is still from the customer you looked after”. In practical terms, assisted digitisation that includes brokers has a number of advantages, lenders told the summit. Electronic verification of identity alone saved ING Direct a ‘double-digit percentage’ in back-office costs, recalled customer delivery executive Claes. Improvements in the broker and digital channels can intersect, argued John Arnott, ING Direct’s executive director of customers. “It’s around turnaround times; how you get a faster yes or a faster no,” he said. Giving brokers the digital tools to easily show customers their different options could

Management CEO Matt Lawler warned brokers that “we’ve got to make sure our proposition to the client is more than helping them with their mortgage transaction; we’ve got to help them to a better financial future”.

Will brokers be left out in the cold? While speakers believed the assisted digital mortgage could work for brokers, this depends on whether brokers are being written into, or out of, that process. Digital pioneers like UBank don’t use the broker channel, instead providing their own support, and lenders – perhaps understandably – are prioritising their organic channels for digitisation before their broker channel. MPA asked Samantha Hellen, head of strategy and service quality, home ownership, at Westpac Group, whether the group’s banks were coordinating the development of digital channels with its third-party distribution. “We’re in pretty early days; we’re a big beast across many brands,” she replied, noting that St.George was perhaps furthest ahead in combining the two. As for the major bank, “[a] Westpac brand [digital application] for brokers is absolutely on the cards and absolutely on the to-do list in the near future, but we haven’t embarked on that process yet”. The final conference of the day – on business innovation in the third-party channel

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– largely affirmed the ongoing role of brokers, with Home Loan Experts’ managing director Otto Dargan telling delegates about how his brokerage was responding to digitisation. A note of warning was sounded, however, by Miki Lee, founder of broker comparison site Flongle. She predicted “the intermediary sector will come under increasing margin pressure” because digitisation of customer data would enable competitors to challenge the broker proposition. Sites like Flongle also offered assisted digital mortgages through their own staff, she explained, but unlike brokers did so at a much lower cost, thanks to digitised processes. Furthermore, their fee-for-service model meant that all commission payments could be handed on to consumers as discounts. With an average LVR of 68% and loan size of $700,000, Lee insisted that this model of comparison site was finding favour with prime borrowers. Digital mortgages would force change in the broker channel, she concluded: “That’s the more important question: ‘what is the broker?’ rather than ‘will the broker survive?’”

The state of play So, how far are we from the digital mortgage? By the end of the two-day Australian Mortgage Innovation Summit, hundreds of delegates and over 20 talks and panels had pondered this question and produced a number of predictions. Clearly, the fully digital mortgage for vanilla loans is technically possible, as it is already being done abroad – not only by Quicken in the US but also in Europe, particularly Spain. “The tools are on our fingertips,” noted ING Direct’s Claes. While this process has been delayed by legislation in Australia, the role of paper and wet signatures in the application process is gradually being reduced, argued Mike Cameron, group executive of operations at PEXA. “We’re talking about changing 150 years of ‘this is the way it’s done’… [but] the heavy lifting has been done,” he said. Despite these considerable advances, the Australian consumer remains unwilling to

part with the human element of what continues to be an emotional transaction, almost all lenders present agreed. Counterintuitively, it appears those younger buyers who are most digitally engaged are also less

“We’ve got to make sure our proposition to the client is more than helping them with their mortgage transaction; we’ve got to help them to a better financial future” Matt Lawler, Yellow Brick Road comfortable with the mortgage transaction, making brokers – or at least some model of adviser – a continuing necessity, and indeed these consumers appear to be prepared to pay extra for more support. Many speakers suggested that brokers could provide this support, but of course whether banks will involve them in the assisted self-serve mortgage application process remains open to question. Of all the points made by speakers during the summit, one of the most surprising was not about technology at all. The digital mortgage, argued RFi Advisory’s Shields, should not just be a digitised version of the current mortgage application, a confusing process for borrowers which has only got more complicated with increasing regulation, playing a part in the rise of the broker channel with its proposition of impartial advice. Instead, the digital mortgage should use data to reduce the amount of information the customer needs to provide, argued Shields: “Imagine if you had a friend for 10 years and every time you met they asked your name; it wouldn’t be a good experience.” Perhaps, as Shields suggests, when it comes to digital mortgages consumers’ problems are less with the ‘digital’ part and more with the mortgage itself.

MPA would like to thank RFi Group for enabling us to attend 2016 Australian Mortgage Innovation Summit.

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THE BIG INTERVIEW

MATT LAWLER AND TIM BROWN

“Wealth is going to be a really important blend into what we’re doing in mortgages”

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MATT LAWLER AND TIM BROWN: DIVIDE AND CONQUER Yellow Brick Road Holdings is going through a major restructuring, and its new heads of wealth management and lending claim brokers at both YBR and Vow will benefit

MPA: How will this restructuring improve the Yellow Brick Road Group for the brokers and financial planners on the ground? MATT LAWLER: Last year we bought a couple of companies and we’ve been spending a long time integrating them. Integration takes a long time, because you’ve not only got to integrate the functional areas but also the cultures and people. That’s what last year was really focused on. Last year the mortgage market was really firing, so we were also concentrated on mortgages. What we did do was we didn’t give wealth as much focus as we needed to. Going forward, the wealth strategy is really critical across both YBR and Vow as well, because wealth is going to be a really important blend into what we’re doing in mortgages. Mortgages still need to grow; we’ve got new brokers coming on in Vow and new branches in YBR, so we’ve still got an aggressive agenda to build mortgages, but we also want to grow wealth. Tim [Brown] has a long and successful background in mortgages; I’ve had a long history in wealth as well, so it’s really about reorganising the resources or the skill bases to really concentrate and go deep on some of the things we need to do. Tim’s job is to grow mortgages across both YBR and Vow, refocus on wealth, and make sure that the wealth

business is growing, not just at market but exponentially.

TIM BROWN: It’s also playing to each other’s strengths; it’s what we’re good at, and we’ve proven that consistently. MPA: Does this process of pushing wealth mean resources will be allocated away from the broking side?

need more infrastructure; we just need a lot more revenue in both sides of the business. We can grow exponentially without putting on a lot more resources.

MPA: By making diversified brokerages – those offering broking and financial planning – now report to two different managers, aren’t you increasing their workload?

“We don’t imagine we’ll be ‘robbing Peter to pay Paul’ … [we’ll] be working out where additional resources need to come in to grow the business” ML: It’s not about cost-cutting or anything

ML: The important thing is how me and Tim

like that; it’s about growth, and Tim’s team is all in place and continues to be in place. However, the wealth team is all about focusing and growing. We don’t imagine we’ll be ‘robbing Peter to pay Paul’, but what we will be doing is working out where additional resources need to come in to grow the business overall.

work together, and we have no intention of creating two separate silos in wealth and lending. When we talk to the broker, when we talk to the branches, we’re talking as the YBR group, we’re talking as one organisation, and we’re going to be very coordinated in how we do that. There is a simple fact that if you’re doing two different things with clients there are two different sets of requirements, but our job is to actually make complex things simple. An example of that would be integrating a lot of

TB: A good analogy is we’re like a five-yearold sitting in pyjamas meant for a seven-yearold. So we’ve got room for growth. We don’t

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THE BIG INTERVIEW

MATT LAWLER AND TIM BROWN YBR’S RESTRUCTURING YBR Holdings to be split into wealth and lending divisions Matt Lawler is new CEO wealth management; Tim Brown is CEO lending Lending oversees both YBR and Vow brokers, although brands will remain separate Scott Graham remains as chief commercial officer

MATT LAWLER’S CAREER TIMELINE

2003

Appointed executive manager of MLC’s financial planning and third party arm

2007

Moves to head up NAB Broker as executive general manager

2011

Joins Yellow Brick Road as CEO

what we do on the wealth side into the technology brokers are already using. We’ve done that with a couple of products we’ve launched recently, particularly our Loan Protect product, which is a life insurance product. It’s been integrated into the

but it’s about using the infrastructure we’ve got up top, especially in the wealth area … so it’s giving Vow brokers more support, in improving their wealth offers, and helping train and develop brokers who want that in their business.

“My mandate is to continue the growth; it’s not to slow it down, change it, do anything other than keeping it growing at the current rate” brokerage software Vow are using; it’s been integrated into the broker platform that YBR branches have used. In doing that, we figure out how we allow the broker branches to do wealth without overburdening them with the paperwork and the complexities that could exist. Tim’s going to be pushing wealth and I’m going to be pushing mortgages in the same conversation. None of us walk away from what we’re doing with the business overall; we’re actually aligned in that.

TB: This isn’t a new structure; a lot of the banks have a similar type of structure and it seems to work well for them. I’m not using them as a benchmark; I think we can always do better because we’re more flexible, we’re more coordinated, and we’ve got less of the legacy systems that’ll hold us back. For those reasons we can make it efficient and simple, and they will utilise it.

But we’re not saying to Vow brokers, “You must take up wealth”. That’s not why they joined Vow ... we’ve been saying in Vow for a long time, since when I took over the leadership, that it’s about improving the annuity incomes from their business – and this plays perfectly into that strategy – and supporting them to get greater value and diversification into their business to make it recession-proof. But also, when the time comes to settle, they’ll get a bigger margin on their business because they’ve got more forms of income coming in.

ML: I don’t think there’s any argument that this isn’t the right thing for the clients. The average home loan is $400,000, and that’s a huge debt to take on if something goes wrong. It’s not necessarily about full financial planning but about ensuring that they’re at least covered to meet that risk they’re taking on. MPA: Last year Vow significantly

MPA: This seems to be a huge step in combining YBR and Vow. Tim, how will you reassure Vow brokers that you’ll remain a separate proposition? TB: Those brands will stay. The wholesale offer and the retail offer are still very separated, and we’re not looking to change those at all. You come to YBR because you want a brand and structured support to help you build your business. At Vow it’s more about helping them with systems, compliance, commissions, efficiency, and giving them small templated marketing support … we’re not intending to blend those,

increased its numbers – will this level of recruitment continue, given the push on the wealth side of the YBR group? TB: My mandate is to continue the growth; it’s not to slow it down, change it, do anything other than keeping it growing at the current rate. And I don’t see anything in the foreseeable future that’s going to change that ... Our numbers haven’t dropped off over the last quarter; they’re as strong as ever, and YBR’s numbers are growing more strongly.

MPA: What role are YBR’s white label products going to play in your consumer

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marketing over the coming year? TB: Rate is one part of the equation, but so is value, and so is delivery. It’s important we give the best offer in the market. There’s a lot of discounted rates as you know, which we call honeymoon rates; ours is not one of those. The second component is loading it with fees and hiding the true comparison rate; and again, I think YBR has been strong in making sure the comparison rate is the same as the interest rate. We use the four majors as a benchmark, and when we come up with a white label rate we want to make sure it’s always under the majors, and that won’t change. We’ll continue to deliver all the features and benefits the four majors offer in terms of delivery. The good thing for us is

about to start next week, and we’ll bring on 10 each corner.

MPA: Matt, where do you want the wealth side of the business to be 12 months from now? ML: I think getting momentum in the wealth space is really the focus; it’s getting a certain percentage of conversion for the Yellow Brick Road business, because YBR has been on this journey for quite a while. We already have people doing it; it’s about getting that universally used within the business – that’s really my focus with YBR. Vow will have the introductory products, like Loan Protect, which is the life insurance which attaches to the mortgage; that’s where

“We’re not saying to Vow brokers, ‘You must take up wealth’. That’s not why they joined Vow” that banks continue to do a bad job when delivering, and continue to hide fees. We won’t; we’re very upfront about that. I think as long as we continue to do that we’ll continue to advance.

MPA: Why did Vow develop a mentoring program, and will it be available to YBR brokers? TB: The mentoring program was developed because we realised there were a lot of people who wanted to join the industry, and there are a lot of mentoring programs out there, and some are priced at a point people can’t commit to. We were concerned that there was an opportunity to take those people on at a greater margin to Vow and potentially take someone on who would take that on as a fulltime role. So we appointed Adam Flint, who used to be the national trainer for Loan Market, and his job is to mentor new brokers to industry for two years as they move into the industry … we’re going to offer that program to YBR, but we’re just going to finalise what that looks like and how we’ll cover our costs; it will be offered to YBR. In Vow it’s fully operational. We’ve got our first 10 through; we’ve got another 10 that are

we’ll be concentrating. However, there are some large brokerages within Vow that have been approaching us and saying, “We really want to introduce financial planning to our business, but we don’t know how. Can you help us out?” So I imagine by the end of the year we’ll also have a number of Vow businesses that also have financial planning that’s been integrated into their businesses, and we’ve been helping them project manage that.

TIM BROWN’S CAREER TIMELINE

1999

Joins Suncorp as general manager of the broker channel

2003

Moves to LJ Hooker as master franchisee owner home loans

2005

Appointed by Macquarie Bank as head of mortgage sales and distribution

2011

Becomes Vow’s CEO; Vow was acquired by YBR in 2014

2013

Selected as president of the MFAA, a role he holds until 2015

MPA: Tim, where do you want the lending side of the business to be 12 months from now? TB: I think obviously continuing the current growth rate, which will probably be more challenging this year than last year. That’s for two reasons: obviously the property market has begun to show signs of slowing, and I think also ASIC’s going to give us a lot more scrutiny; and add to that, who knows what APRA will do over the next 12 months in terms of lending? So, all those challenges will make that difficult, but in saying that, we don’t see anything changing; we’ll continue the growth rates where they are.

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SPECIAL REPORT

BROKERS ON BANKS

BROKERS ON BANKS 2016 Time’s up – the banks have had 12 months to impress. Now we reveal who topped the rankings, and what brokers think about APRA’s changes, and commission, channel conflict and more

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THE BANK-BROKER relationship status is undoubtedly ‘complicated’. Banks want to attract brokers, but brokers have few of the benefits of being a customer; years after clawback was outlawed for customers, it continues to apply to brokers, for example. Conversely, banks now have to distribute more than 50% of home loans through salespeople who are not salaried employees, and whose value proposition revolves in part around the banks’ failings. It’s also a relationship that both parties take incredibly seriously, and that’s why, for the past 13 years, MPA has charted its course in our Brokers on Banks report. Using an online survey we have collected brokers’ views on all the banks – not just the majors – providing what we believe to be the most comprehensive picture of bank activity in the broker channel. We also cover topical issues, with APRA’s lending changes very much on the agenda of 2016’s survey. We’ve made a number of changes to this year’s Brokers on Banks report. In order to attract more respondents, we made questions far more specific, and cut out a number of questions we believed were vague or no longer relevant, such as the category ‘Overall service’. Encouragingly, the number of brokers taking this survey more than doubled from last year, producing a more accurate reflection of the broking channel’s views. What have we found? For a start, brokers are more critical of banks than they were last year, particularly about the way banks responded to APRA’s rulings on investor lending and capital requirements. Channel conflict remains a problem for the majority of brokers, with essentially unchanging statistics suggesting banks overall haven’t made any progress in this area. Nevertheless, a handful of banks – including a growing contingent of non-majors – continue to drive improvement in service levels, and brokers have recognised their efforts in the rankings. This year’s top bank – and indeed all of those in the top five – doesn’t just excel in one category; it delivers across all. As for the rest … well, as one of our respondents put it, it’s time for ‘less talk, and more action’.

OUR TYPICAL RESPONDENT Is aged between 36 and 45 Has an annual volume of $20m–$40m Has been a broker for 8 years Is most likely to work in NSW (40% chance)

WHAT DO BROKERS WANT? 1 = not important, 5 = most important Turnaround times 4.74 BDM support 4.73 Credit policy 4.68 Interest rates 4.51 Online platform & services 4.13 Product range 4.13 Commission structure 3.99 Communications, training & development 3.85 Product diversification opportunities 3.56 Note: There have been no changes in importance rankings from 2015

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SPECIAL REPORT

BROKERS ON BANKS

PRODUCTS AND PRICING Products continue to improve, but brokers aren’t happy with how the banks responded to APRA’s interventions over the past year IF ANY year was likely to feature a rapid deterioration in products and pricing, 2015 would be it. With APRA forcing banks to limit investor lending growth to 10%, and then pushing them to raise capital requirements, we saw not one but two out-of-cycle rate rises. Although the RBA looks likely to further reduce the cash rate, the move to a two-tier system – with investors paying more than owner-occupiers – may well be permanent. It’s therefore impressive that the majority of brokers still think banks’ products and pricing have improved. That’s down from last year’s result, when 95% saw improvement, to 65% of brokers this year, but still a positive net result. This year also saw a new top product, Suncorp’s Home Package Plus, and comments suggest the non-major managed to genuinely impress brokers despite the interest rate rises. What Suncorp and other successful banks this year have done is move the conversation away from rate. Suncorp waived its $400 per

annum fee for the entire lifespan of the Home Package Plus product, and this move was mentioned by brokers again and again. “Interest rates are great,” wrote one respondent, “but when the customer feels they are receiving the benefits of the package without the attached fees the product is a winner … I am disappointed I could not offer it to all my clients.” All of 2016’s top products were package products. As several brokers pointed out, the addition of multiple offset accounts and offer features positioned the broker as a holistic adviser rather than a salesperson, an increasingly important distinction in today’s crowded market. When it came to APRA’s changes, however, brokers were less than impressed by the banks: 65% of respondents thought banks hadn’t dealt with the changes in a fair way for new and existing clients. Going further, we asked respondents whether APRA was solely to

HAVE PRODUCT RANGES AND PRICING IMPROVED OR WORSENED OVER THE LAST YEAR?

Improved

65%

Worsened

35%

PRODUCT OF THE YEAR: SUNCORP HOME PACKAGE PLUS

Suncorp’s Home Package Plus includes special offers on interest rates, a current account, and a variety of optional add-ons. However, it was Suncorp’s offer to waive fees for the lifetime of the loan that helped Home Package Plus unseat Westpac’s Rocket Repay as 2016’s top product. What respondents said about Home Package Plus: “Interest rates are great but when the customer feels they are receiving the benefits of the package without the attached fees the product is a winner. An awesome campaign and I am disappointed I could not offer it to all my clients.”

“Fully featured discounted SVR with no annual fee and up to 9 off-set accounts ... assisted me to position myself as a lending adviser rather than just a product seller – assists with money management budgeting and funds security.”

“Waiving of the stupid annual fee when in reality if they have a happy client they will obtain more money and products without the fee anyway!”

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blame for changes in product and pricing. While most brokers understood APRA’s role, a very large number of comments accused the banks of taking advantage of the situation. “Not entirely,” one broker answered. “APRA have played a large part in product and pricing changes but it was the banks’ reaction to the requirements that has impacted on the market.”

concerned that serviceability changes were making it harder than ever for first home buyers to get into the property market. Indeed the extent of this dissatisfaction has the potential to threaten banks’ market share. Respondents were asked whether they were now more willing to consider non-bank lenders and alternatives, and two-thirds said they were. Non-banks haven’t been restricted

DO YOU THINK BANKS DEALT WITH APRA’S RAISING OF CAPITAL REQUIREMENTS IN A FAIR WAY FOR NEW AND EXISTING CUSTOMERS?

“APRA have played a large part in product and pricing changes but it was the banks’ reaction to the requirements that has impacted on the market” Comments addressed a number of specific points. There was a suspicion that banks had known about APRA’s intentions well in advance but had only made changes at the last moment, causing confusion for clients. Other respondents questioned the logic of raising rates for existing investor clients, if the intention was to reduce the number of new investor loans. Finally, some brokers were

by APRA’s rulings and so are able to offer more flexible serviceability and increasingly competitive rates. However, a number of brokers said they remained reluctant. One respondent explained that they would “where the client is happy to use a non-bank lender yes however most clients whilst happy to not use the Big 4 want an offset account with all the features which restricts using the

YES

35%

65%

non-bank lenders to a large degree.” Perhaps it’s reasons like this that explain why this year’s rankings weren’t all that different, with non-majors excelling on interest rates and the Westpac/CBA/ANZ trio dominating product range, diversification and credit policy. Banks should be on high alert, however, to prevent their broker partners from looking elsewhere for finance.

HIGHLIGHTS: PRODUCTS AND PRICING

Interest rates

Product range

Credit policy

Product diversification opportunities

1st

Bankwest

Westpac

ANZ

Westpac

2nd

Suncorp

CBA

3rd

Westpac

Bank of Melbourne

Westpac

ANZ

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SPECIAL REPORT

BROKERS ON BANKS

INCENTIVISING BROKERS Commission has improved, but it’s segmentation strategies that are emerging as a powerful way to incentivise brokers BY ANY measure, competition based on commission rates should be going out of fashion. Banks told us in 2015 that commission would play less of a role going forward; and ASIC’s inquiry into broker remuneration – which reports later this year – has put the topic in the public spotlight like never before. Fee-for-service arrangements are again being considered by brokers as a way to reassure distrustful consumers. Yet despite all this, brokers told MPA that commission levels were improving. Survey results for 2016 mirrored 2015, with commission being brokers’ seventh most important priority (ie not so important).

HAVE COMMISSION STRUCTURES IMPROVED OR WORSENED OVER THE LAST YEAR?

Nevertheless, brokers have noticed changes, with 66% of respondents saying commission levels had improved since last year. NAB Broker has been the beneficiary of this, with Suncorp and Westpac also performing strongly. The category of ‘Communications, training and development’ was again topped by Westpac, accompanied by Suncorp and CBA. What’s become particularly apparent this year is the impact of segmentation strategies. Last year we asked survey respondents simply whether they were in favour of banks’ elite streams – such as Westpac’s Platinum Brokers or CBA’s Diamond Brokers. This year we asked them if they were a member of such a stream,

ARE YOU A MEMBER OF A BANK’S ELITE SEGMENT?

YES

65%

Improved

66% 35%

Worsened

34%

and if so, which one. Astonishingly, 65% of respondents were members of an elite stream, with Westpac’s and CBA’s segments being strongly represented. It’s tempting to jump to the conclusion that because of these brokers certain banks performed strongly in overall rankings. That would be premature – no single bank’s elitestream brokers made up a sizeable percentage of overall respondents, and it doesn’t explain why some non-majors excelled this year. Nevertheless, it seems that elite-stream brokers are formidable brand advocates, and perhaps that’s for good reason. Being part of elite segments offers various benefits. The three that were mentioned by almost all respondents were improved turnaround times, free upfront valuations, and access to credit assessors. Some of these turnaround times were extremely competitive – including same-day and 48-hour offers – and had the biggest impact on brokers, given turnaround times have for several years been brokers’ top priority when picking a bank. Overall, respondents said being part of an elite stream ‘makes me look good’. Given that the majority of Brokers on Banks respondents were part of elite streams, some being members of several, this raises the question of whether such benefits will be regarded as the ‘new normal’ for brokers – a question discussed in the ‘Technology, turnaround and service’ section of this report (p26). On the other side of the coin, channel conflict and clawbacks remain sources of dissatisfaction for brokers. The results for both were relatively similar to last year, with 77% of brokers saying channel conflict was

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a problem; 2015’s figure was also 77%. Evidently, banks have done little to deal with this problem, with branches continuing to undercut brokers. Indeed a number of recent stories in the national press have focused on the ease of getting finance from branches, including accusations of poorly educated staff, lax assessments and fraudulent documents – and commentators in this survey mentioned all these factors. Where banks were named, they were mainly major banks. Clawback remains a problem but for a minority, with around seven out of 10 brokers saying it wasn’t a problem. The FBAA made clawbacks a topic of furious debate in 2015 and these results suggest many brokers don’t take this view, with numerous commentators condemning churning. However, many brokers believed some banks were ‘cut-throat’ and deliberately opportunistic in claiming clawbacks, making no allowances for special cases. This leaves banks facing a dilemma – make money off clawbacks or use the opportunity to curry favour with brokers. Brokers’ comments suggest that different banks have adopted different responses.

DO YOU BELIEVE CHANNEL CONFLICT EXISTS?

23%

57%

20%

Not a problem

Minor problem

Major problem

HIGHLIGHTS: INCENTIVISING BROKERS

Commission structure

Communications, training & development

1st

NAB Broker

Westpac

2nd

Suncorp

3rd

Westpac

CBA

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SPECIAL REPORT

BROKERS ON BANKS

TECHNOLOGY, TURNAROUND AND SERVICE Turnaround times continue to improve, and BDMs continue to impress; indeed excelling in both categories is integral to securing a broker’s business IF YOU’RE a bank, turnaround times and BDM support simply cannot be ignored if you want to deal with brokers. It’s been that way for quite a while; turnaround times and BDM support were brokers’ first and second priorities again this year (we removed the category ‘Overall service’, believing it to be too vague). It’s no coincidence that the bank that topped both of these rankings went on to win ‘Bank of the Year’. Turnaround times have continued to improve; 56% of brokers thought so, and

Online uploading of documents – as opposed to sending hard copies in – was the most noted improvement, and being able to easily order upfront valuations was also popular. Yet being dependent on technology could be a problem. “CBA is more automated now,” commented one respondent, “but that just slows everything up because nobody can make a decision and files continually get stuck in the system”. According to our respondents, when technology breaks down, BDMs play a crucial

“Applications are dependent on humans to keep the work flow going” 16% believed they’d got worse, with the remainder seeing no change. These results were almost identical to last year’s, reflecting the vast amount of investment by certain banks into staff and processing. It’s noticeable that in the rankings the banks that dominated turnaround times also dominated BDM support. Indeed Westpac and ANZ made this a priority in 2015; Westpac’s Tony MacRae told MPA after last year’s survey that the bank had increased its BDM numbers by 30% in a year. To an extent, these results imply that maintaining excellent turnaround times is dependent on quality BDMs. We asked brokers whether new technology had improved turnaround times, and many confirmed it had.

role in getting the process moving again. See comments on this year’s standout BDMs in the ‘What you’re saying’ section of this report (p28); suffice to say these BDMs earned brokers’ trust by escalating deals, including taking them right to the top if necessary. Unfortunately the efforts of these excellent BDMs were often undermined by incompetent BDMs or credit staff, creating problems that technology could only go some way to fix. “Applications are dependent on humans to keep the work flow going,” noted one broker, complimenting Macquarie, where “vanilla deals will be instantly approved so no waiting in the queue for an assessor to pick up”. Indeed, undereducated and uncommuni cative credit staff were among the biggest

HAVE TURNAROUND TIMES IMPROVED OR WORSENED OVER THE LAST YEAR?

Improved significantly

16%

Improved

40%

Worsened

14%

Worsened significantly

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sources of dissatisfaction for brokers. Overall, our broker respondents wanted a single person to contact who had the ability to solve problems quickly. Finally, a comment on segmentation strategies. In the ‘Incentivising brokers’ section of this report (p24), we noted that many respondents to the survey were members of elite streams (eg CBA’s Diamond Brokers), and that they had told MPA this status confirmed important benefits in terms of turnaround time and credit support. In Westpac’s case, the bank’s strong contingent of elite-stream brokers appeared to receive excellent service, as reflected in its rankings. However, other banks with similar schemes – such as CBA and St.George – didn’t perform quite as well in service categories. That suggests two things: firstly, that a glossy elite broker proposition doesn’t raise service levels by itself; and secondly, that investment in those schemes could be depriving other brokers of the good service they could be receiving. Both should be of concern to banks.

TOP SERVICE INNOVATIONS

Uploading supporting documentation “The (slow) implementation of documents online has improved ability to load up documents for the banks and not have to break up documents has made life easier. If they could extend this to remove the tax file numbers think how great this would be!” Ordering upfront valuations “Those banks that do allow brokers to order valuations upfront improve turnaround as the valuation can be being done while the file is still in the queue to be assessed. CBA & Bank of Melbourne to be specific” Pricing tools “CBA’s pricing tool is a good example of a rapid feedback loop that can really assist customers in making fast and informed decisions” Online chat support “Bankwest broker chat has helped out back end team massively”

HIGHLIGHTS: TECHNOLOGY, TURNAROUND AND SERVICE

Turnaround times

BDM support

Online platform & services

1st

Westpac

2nd

ANZ

CBA

3rd

Macquarie

ANZ

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SPECIAL REPORT

BROKERS ON BANKS

WHAT YOU’RE SAYING Numbers go a long way, but if you really want to understand brokers, you need to read their comments

BDM ROLL OF HONOUR Casey Keating ......................................................................... CBA Craig Dunning ................................................................ Westpac Dee Taylor ......................................................................... Westpac Domenic Cuzzupi .................................................. Macquarie Emma Hancock* .......................................................... Suncorp Gerard Rolfs ................................................................................ CBA Grant Rice* ...................................................................... Westpac James Higgs ............................................................................... ANZ June Liu* ............................................................................ Westpac Kelly Teijen ................................................................. NAB Broker Kymberly Mulona ....................................................... Suncorp Lilian Parle ....................................................................... Westpac Lisa Wong ...................................................................................... CBA Luisa Cammarere ................................................................ AMP Mark Sieler ................................................................................. CBA Michael Abboud ..................................................... Macquarie Rob Brownlow ............................................................... Suncorp Rodney Cottam ........................................................................ CBA Ron Galvan ................................................................................... CBA Sam Tang ............................................................................ Westpac Shannon Gibbons ...................................................... Westpac Theodore Tekedis ....................................................... Westpac Warren Walsh*.............................................................. Westpac

THIS IS the second year we’ve included a section dedicated to comments, and they continue to provide important insights that numbers alone can’t provide. Using comments requires care, because of course they are individual views, in a survey of many hundreds of brokers. There is also a perception that commenters are invariably negative; the MFAA’s CEO, Siobhan Hayden, recently warned brokers to be careful about what they post in online comment forums as they risk damaging the industry’s reputation. For this report, however, we received a good balance of positive and negative comments. Most importantly, these comments were specific, explaining why the respondent had come to their particular conclusion on an issue or view of a particular bank. Where specific banks were mentioned, we’ve decided to leave these in; you should of course look at the individual rankings to get an idea if the comment reflects the experience of most brokers. A number of BDMs were also named – all for positive reasons – and so we’ve celebrated them in our ‘BDM Roll of Honour’. This section does not attempt a complete

analysis of every comment in the survey, but instead highlights a few comments that we thought were particularly reflective of the survey and/or insightful. Our ‘Star Comment’ went further, placing what we regard as internal industry issues in a new light. We would like to thank all those who took the time to provide meaningful comments in this year’s Brokers on Banks survey.

DECONSTRUCTING COMMENTS We asked brokers how banks could win their business, and counted the top technical terms that came up. Word analysis doesn’t give you the context a word was used in, but it gives you a good idea of what gets brokers talking. Turnaround [times] BDM Credit policy Support Interest [rates]

STAR COMMENT One Victorian broker will be flaunting a new Apple Watch after coming up with this year’s Star Comment. While it’s a little cheesy, the comment touches on that essential truth that clients aren’t buying a mortgage, they’re buying a home – and buying into the great Australian dream. Q: Tell us in 25 words or less: How can banks win more of your business in 2016?

“My job is to make my clients dreams come true, I need the banks help to make this happen! Support in this is crucial!”

*Mentioned twice

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BANKS GOING ABOVE AND BEYOND “My BDM worked hard with me to ensure a client who’s purchaser looks like rescinding which meant there would be a terrible chain reaction Has now set up a bridging loan that was approved as an exception. Client had been distraught and not sleeping then was extremely relieved at the outcome.” “Provided formal approval within 24 hours to enable client to purchase a property on a Friday afternoon prior to auction with additional pricing discount AND annual fee waiver for life of loan.” “Westpac, ANZ and Bankwest all promoted my status to their elite broker programs and this has made a big difference for clients. Turnaround times escalations, free upfront valuations, client satisfaction back end support, pricing discretion etc.” “My BDM Sam Tang went out of his way to seek for a file review by head of credit. This action reversed the decision on the deal and the client was able to refinance and save $20k in interest each year.” “Helped on a personal level. Had a complicated deal and BDM as well as state lending manager and state credit manager got personally involved to complete the deal in a timely manner and even went out and saw the customer at his place of business. Gave customer extra reassurance.”

BANKS FALLING WELL SHORT OF TARGET “Despite multiple messages left by the client’s family and myself I could not get a call back from the ‘Distress/Hardship’ team. The client had an acute health issue family had the presence of mind to communicate to the lender and myself. I contacted Bankwest on their behalf to ensure that Bankwest were aware and in receipt of relevant medical evidence etc... No return of call. Awful.” “Changed a loan over to them by a customer going into a branch to deposit cash with the teller asking them they could get a better rate simply by talking to a lending manager.” “Very poor service by their valuation panel. Took over 5 days for a valuer to contact one of my customers. When he did book appointment [the] valuer was over an hour late. Valuation over $100000 under recent comparable sales. Unable to get application approved. Had it approved with CBA 3 days later.” “Sent the letters out advising of changes faster than any other bank announcement – re investment rate changes. Clients were very shocked and didn’t even have a chance to contact them.” “Terrible turnaround times delayed numerous of our settlements. Unable to reach BDM unable to reach settlement team unable to reach credit officer. Only contact is mortgage central which they know nothing and each time it’s a different person.” “Branch has undercut brokers’ business by offering 3.99% variable for owner occupied loan and higher cash incentives. This has happened twice.”

FRESH THINKING Subject: Channel conflict “It’s slowly getting better but generally it’s uneducated staff that cause issues. Lenders need to better train and educate their staff on the role of the broker especially as our market share continues to increase.” Subject: Elite broker streams “Gives me access to upfront valuations which can speed up applications and give customers an answer quicker. This improves the customer experience and makes me look good!” Subject: Clawbacks “The threat is concerning however all loans under threat have been reviewed and altered/switched for the most competitive options. It’s a good chance to get in touch with clients.” Subject: Service levels “Provide BDM support and same time turnarounds regardless of how much business we put your way. Our clients are about to become your clients, and they are embarking on some of the biggest, most complex financial transaction of their life. Give them an amazing experience and they will be advocates.” Subject: Regulatory changes “Be a leader in communicating to clients how regulatory changes will impact on product pricing by creating YouTube videos, articles on their website. Educate customers.” Subject: BDM support “BDM support is imperative. Being based in Tassie, we aren’t provided with as many PD Days etc. A strong, reliable point of contact is far more important than 10bps of bonus commission.”

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SPECIAL REPORT

BROKERS ON BANKS

FINAL RESULTS We reveal 2016’s Bank of the Year and present a bank-by-bank analysis of the top 10 performers WESTPAC

4th

SUNCORP

Position in 2015: 1st

Position in 2015: 2nd

Position in 2015: 8th

For the second year running Westpac has

Commonwealth Bank is the runner-up again this year, with very strong performance rankings for its product range, credit policy, product diversification opportunities, communications, training and development and online platform. What’s keeping CBA off the top spot is its disappointing results in two key categories, turnaround times and BDM support, in which it failed to make the top five (it also performed poorly in the category of interest rates). If it can plug these gaps, CBA looks well placed to be 2017’s Bank of the Year.

Suncorp has shot up the charts to earn the title of 2016’s top non-major. It has excelled in traditional non-major areas of strength like interest rates, while competing with the majors in key areas such as turnaround times and BDM support. Waiving the fees on its Home Package Plus product appears to have garnered a large amount of goodwill from brokers. However, staying in the top five will be a challenge: to do so Suncorp needs to keep putting out competitive offers.

claimed the Bank of the Year title, and its results are at least as impressive as last year’s. The key seems to be consistency: Westpac is among the top five banks in every individual category, and topped the crucial turnaround time and BDM categories. It was also number one for communications, training and development, online platform and services, product range, and product diversification opportunities. What’s evident is that Westpac has a large number of loyal brokers, many of whom are part of their Platinum Broker segment. In numerous comments these brokers noted the excellent service they’d received, not only in terms of turnaround times but also when BDMs and other credit staff stepped in when deals looked like they might go wrong. Following last year’s survey, Tony MacRae told MPA the bank had doubled the number of brokers in its elite segments in 12 months, explaining that “it’s not just a volume play: it’s the quality of business they deliver to us, the relationship we have with them, so it’s multifaceted.” The danger for Westpac may well lie in the consequences of its success with segmentation. Brokers who aren’t members of these streams may avoid Westpac because they’re worried about being discriminated against when it comes to allocating BDMs and prioritising deals.

CBA

ANZ

5th

MACQUARIE

Position in 2015: 3rd

Position in 2015: 4th

ANZ’s place in the overall top five appears increasingly unassailable, with consistent top five performance across almost all categories and a win in the credit policy category. Additional hiring and training of BDMs, as well as Saturday processing, has clearly paid off in a big way for ANZ. To further improve, ANZ needs to improve brokers’ perceptions of its commission structure and interest rates. Its results for both were deeply disappointing this year (the lowest score of all banks for interest rates).

Macquarie has long competed with the majors in our Brokers on Banks survey, and this year was no exception. Most importantly, it has continued to excel in the areas most important to brokers: turnaround times and BDM support. What’s preventing Macquarie from rising higher are results outside the top five for online platform and service, interest rates, product range and product diversification opportunities. Macquarie needs to look beyond its traditional strengths to these other areas, and invest accordingly.

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OVERALL RESULTS

6th

NAB BROKER

8th

BANKWEST

Position in 2015: 5th

Position in 2015: 6th

NAB Broker will surely be disappointed in this result; after all, they were first in 2014’s Brokers on Banks survey. To add insult to injury, this result came despite ranking first for commission structure this year, with top five results for BDM support and turnaround times. Clearly, NAB Broker has reason for concern and should also consider channel conflict – a number of complaints specifically referred to NAB branches.

A slight fall in the rankings for Bankwest was balanced by winning in the interest rates category, and a top five finish for its product range. Bankwest’s online broker chat function, which we highlighted in last year’s report, continued to be positively mentioned in broker comments.

7th

BANK OF MELBOURNE

Position in 2015: 11th Rising up the rankings, Bank of Melbourne secured top five results for online platform and services, interest rates, product range and product diversification opportunities, a good scoop for a non-major. It also outperformed other banks in the St.George Group. Securing top five places in other areas – and thus a better overall result – will be BOM’s target for next year. Credit policy might be an area to focus on, with BOM narrowly missing out on the top five this year.

9th

To come up with the overall result, we took an average of every other category combined. This means every category had an equal impact on the final result. We would advise you to also look at the importance ranking at the start of this report to see which categories matter most to brokers.

Bank

Overall score

Westpac

3.864

CBA

3.636

ANZ

3.571

4th

Suncorp

3.568

5th

Macquarie

3.474

NAB Broker

3.426

ST.GEORGE

Position in 2015: 15th St.George has seen a considerable improvement in its rankings from last year, aided by solid results across all categories. However, in no category has it made the top five, suggesting brokers don’t see this non-major excelling in any particular area.

CBA 6th

Position in 2015: 2nd

10th

ING DIRECT

Position in 2015: 7th ING Direct achieved a top five result for interest rates, but a slight slide down the rankings will come as a disappointment for the non-major bank. It has been brought down by poor results in the credit policy and online platform and service categories.

Commonwealth Bank are the runner-up again this year, strong performance 7th withBankvery of Melbourne 3.412 rankings for their product range, credit policy, product diversification opportunities, 8th Bankwest& development 3.372 and communications, training online platform. What’s keeping them off the top spot is their 9th St.George 3.260 disappointing results in the two key categories: turnaround times and BDM support, where they failed to make the top five (they also 10th ING Direct 3.229 performed poorly in interest rates). If they can plug these gaps, CBA looks well placed to be Note: Scores go from 1 (very bad) to 5 (very good) 2017’s Bank of the Year.

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BUSINESS STRATEGY

HUMAN-CENTRED LEADERSHIP

PUTTING THE ‘HUMAN’ BACK INTO LEADERSHIP Paul Polman, global CEO of Unilever, knows it. So, too, do other leading CEOs: the key to their success is putting people first. Anthony Howard outlines how a human-centred approach to leadership does not need to be ‘fluffy’ or risk averse

“WE FACE an existential challenge,” said ‘Ian’ some years ago as we discussed his key challenges. As CEO of one of the country’s largest organisations he was unsure whether the business would survive the impact of a major natural disaster and was deeply concerned about how that would impact on its people. The crisis created an opportunity to review the entire business model and change the way the firm operated. Under Ian’s leadership the firm shifted from a linear, evidencebased model to a purpose-driven firm that

cares deeply about its people and customers. They have broken down silo mentalities and created a collaborative environment spanning functions, borders, industry and government. The firm is deeply engaged in the community of which they are a part. Although you may not be facing a natural disaster, you are facing a seismic shift in the way business operates. You are in a moment of great change, which requires a new approach to business and leadership. While many commentators look from a geopolitical,

economic or strategic perspective, I look through a human lens and note two key challenges that depersonalise people and require a human response.

Economic framework Thinking about business and management has been built on an economic perspective that believes the purpose of business is to create shareholder value. In an economic world we measure, predict, make rules, and use systems and processes to deliver against

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KPIs, results and outcomes. This approach leads to one of the great management myths: people are our greatest asset. In reality, we treat people as units of economic production, whose function is to deliver results as quickly and as cheaply as possible. In an economic world it is easy to treat people not as an asset but as a liability.

The threat of artificial intelligence In the early 1960s Peter Drucker wrote an article called ‘The manager and the moron’, which talked about a new ‘dumb’ machine that would do all the low-end processing work and be available at all hours to do whatever you asked whenever you asked it. That computer has morphed into IBM’s Watson, which has the cognitional capability of a human brain and can process vast amounts of data at hyper speed. It is used, for example, by the Mayo Clinic to do medical diagnoses. In this world, the human person can become a mere object to Watson, a tool for completing a task. Recent reports suggest 5,000,000 jobs will disappear in Australia over the next generation because of artificial intelligence. Watson and his descendants will do anything that may be automated – and that is almost everything, except for human-touch jobs – and they will do it in a non-emotional and probably morally neutral manner. The changes being wrought by technology, and a number of other forces, give rise to two important questions:

What kind of organisation do you need to create to succeed in this environment? Building on what made you successful in the past, you need to create an organisation that does four things well: It needs to be purpose-driven. A purpose endures over time and across generations. It is something like the North Star or a lighthouse sought by navigators to give them guidance towards their destination. It explains why the organisation exists and gives meaning to your colleagues and clients.

You need to create a caring organisation in which people are more important

than performance, and you recognise human beings and do whatever you can to contribute to their growth, development and wellbeing. It is a collaborative organisation, rather than primarily a competitive organisation. Collaboration arises from an abundance mentality that believes there is sufficient for everyone, rather than a scarcity mentality that believes in limited opportunity and resources.

abusive, bullying behaviour that cowed all those around the table, and encouraged Arjay to seek employment elsewhere. Arjay said the same scenario had unfolded during Ian’s executive meeting when one of the team advised they were unlikely to deliver their numbers. Arjay silently leant back and braced for an explosion. To his great surprise Ian paused and looked around the table. “Bob is not alone in this,” he said. “We have a shared problem. What do we need to do to

Rather than viewing progress or change through the eyes of technology, economics or politics, you can gain a much richer perspective by looking at the people in your organisation Successful organisations will be firmly anchored in society. This is demonstrated by Paul Polman, global CEO of Unilever, who is at the forefront of a movement that recognises business cannot prosper in a community that fails. He points out that businesses have to know what they are doing to contribute to solving the world’s problems.

Secondly, what kind of leader do you need to be to lead in the new world? Future-fit organisations need humancentred leaders who put people first, who integrate the moral and technical dimensions of leadership, and who create an environment in which people can flourish. Leadership is firstly a relationship between two or more people. If there is no relationship, there is no leadership because you don’t have a follower. And because leadership involves people and decision-making, it has a moral dimension. Leadership involves supporting and choosing what is proper, not just what is permissible – ie doing what is morally right, not just legally right. ‘Arjay’ had recently joined Ian’s executive team and related a story that demonstrated human-centred leadership. At his previous firm a colleague had reported on unforeseen events that meant their division would miss the forecast numbers. The CEO exploded with

find a shared solution?” Ian is a human-centred leader, building a human-centred organisation. Rather than viewing progress or change through the eyes of technology, economics or politics, you can gain a much richer perspective by looking at the people in your organisation. The human person is the starting point for leadership, for activity, for proper outcomes. In the face of depersonalisation brought about by economic models and rampant technology, we need human-centred leadership more than ever before. We need human-centred leaders to build the kind of organisation in which people can be treated as human beings, which respects its place in society, and which upholds what is right. Human-centred leadership is the key to success in the 21st century.

Anthony Howard is an executive mentor and founder of The Confidere Group. Known as the ‘CEO Whisperer’, he is the author of Humanise: Why Human-Centred Leadership is the Key to the 21st Century (published by Wiley, January 2015, $32.95). For more information, visit humancentredleadership.com or email anthony.howard@ confideregroup.com.

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FEATURES

CHALLENGER AGGREGATORS

CHALLENGER AGGREGATORS: THE ULTIMATE ROUND-UP It used to be all about individual service, but now the challenger aggregators are pushing the boundaries of technology, training and diversification. Here they tell you, the broker, why itâ&#x20AC;&#x2122;s time to look beyond the major players

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THE BUSINESS world is obsessed with the mega and the micro; the typical examples being Apple and whatever happens to be the latest hot fintech. What tends to get ignored are the challengers – established companies that need to fight for new customers, through innovation and competitive offers, while satisfying their existing customer base. This is the situation that Australia’s challenger aggregators face, and this article is about how they’re responding. The past 12 months have seen challenger aggregators – a term that includes boutique

adopted by different aggregators. The traditional challenger aggregator proposition – emphasising individual service – is still valid of course, but with diversification and technology becoming ever more pressing concerns for brokers, individual service alone is not enough. The way challenger aggregators are addressing these concerns, by delivering diversification opportunities through powerful software platforms, is one of the most interesting developments in the sector in recent years. Whether it’s eChoice’s FLeaTS,

The past 12 months have seen challenger aggregators be far more vocal within the industry operators – be far more vocal within the industry. Indeed, challenger aggregators have started important debates about the value of mentoring, while overturning established thinking in areas like white label and technology. Challenger aggregators also disagree with each other on these issues; you can read their differing opinions over the next few pages. Words only go so far; brokers will be looking for examples of concrete investments in support and infrastructure before they consider leaving the major players in the sector. Nevertheless, the overall challenger aggregator proposition has arguably been improved by the very diverse approaches

nMB Pro, or Liberty Network Service’s Spark platform, brokers are being empowered to diversify their businesses by using intelligent software that reduces their workload and actually assists them in identifying new business opportunities. Bigger, established aggregators can afford this technology too, of course, so challenger aggregators can’t afford to rest on their laurels. As smaller organisations, challenger aggregators have the advantage of being able to respond faster to changes, and will be expected to do so as regulation and changing market conditions begin to bite. They need to show brokers how they can take their brokerages to the next level.

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FEATURES

CHALLENGER AGGREGATORS WHAT YOU WANT FROM YOUR AGGREGATORS MPA’s 2015 Brokers on Aggregators survey revealed which aggregator services brokers value most highly:

What does your typical broker look like?

Accurate and on-time commission payments

4.60 Quality of lending panel

4.49 IT and CRM support

4.44 Communication with brokers

4.39 BDM support

4.27 Compliance support

4.19 Training and education

4.03

Liberty Network Services (LNS) doesn’t have brokers; it has advisers. This distinction is important when answering this question because our network allows our advisers to sell so much more than just mortgages, including SMSF, motor and commercial loans. Using the term ‘broker’ just doesn’t suffice. So we’re looking for operators who recognise the value of a growing brand, want to work smarter through better technology

3.75 Additional income streams

3.48 White label offering

3.11 Lead generation

2.82

attracted to our ability to innovate and deliver customised tools and service platforms.

Outsource Financial Outsource’s typical broker is often a financial planner or accountant who wants to diversify their business by adding lending. This type of member has the advantage of a financial background and an existing database. Our models attract these professionals as they can mix and match the loan writer and referrer models to suit the level of business in their

“Our network allows our advisers to sell so much more than just mortgages, including SMSF, motor and commercial loans. Using the term broker just doesn’t suffice” and diversify beyond mortgage lending, need comprehensive marketing support, and embrace business coaching.

eChoice

Marketing support

Liberty Network Services

eChoice broker partners are a diverse group of individuals who as a collective share the common goal of developing not only a successful but sustainable business. Our programs are designed to complement and develop skills at every stage of the broking business cycle, which is why we are attracting high numbers of new partners. Typically our brokers have a background in a finance-related trade, such as financial planning, banking or accounting, and more recently we have seen many younger candidates coming on board as they choose broking for their preferred career path. Our brokers embrace our technological edge and are

existing practice at any one time. That is, if their practice is particularly busy with planning or accountancy at a specific time of year, then they can refer lending to a dedicated Outsource lending manager during that time and then write loans again when it suits.

nMB A typical broker with nMB is one who is professional, focused, independent, and has a strong interest in providing a great client experience. We do not believe there is a ‘typical broker’ in a sense of gender, background, experience and/or business model. Our most successful brokers operate under a range of different business models, varying from retail to corporate office or home office, and can be sole operators to being part of larger teams.

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What are you doing to help your members diversify their businesses?

REASONS FOR LEAVING EXISTING AGGREGATOR

24% Poor IT and CRM support

16% Poor accuracy and timeliness of commission payments

eChoice Innovation and diversification are at the very core of our forward strategy, and given our industry moves in line with property and interest rate cycles, challenges will always be present. Our goal of providing a ‘complete’ and progressive borrower solution is very clear and real to us, so as we continue to develop and add to our suite of products and services, we not only support income diversification but also ensure our broker businesses are fortified for the long term and can sustain any inevitable market changes. In addition, our white-labelled outbound call program and customised marketing toolkit also assists brokers in identifying new opportunities, which is particularly valuable when the market is slow.

lending. There are many examples, but one would be that Outsource provides its members with an uncomplicated motor vehicle and equipment finance platform. Members are given access to 10 funders without the need to hold individual accreditations, and an online quoting and application system. A second example is the provision of a unique property platform which is designed to offer an investment property solution for the clients of financial planners, accountants and other groups in a professional and easy-to-use offering of listings that match their clients’ requirements. What is different is the member does not need to be a property expert; there are no middlemen involved and it is FOFA compliant in terms of vertical integration.

nMB

Liberty Network Services

Our first approach on diversification is to broaden our brokers’ range of lending products. Many brokers do tend to specialise in only one segment of the market, and miss out on many opportunities that are available through specialist lenders, commercial or business lending, and asset finance. Many of our brokers use nMB to introduce a broader financial services offering to their existing accounting, financial planning or other financial services business. This is a focus for us in 2016. Firstly, to widen our supplier panel in a few of these areas and then run single-topic training sessions in conjunction with our suppliers to broaden skills and opportunities.

The cornerstone of the LNS offer has always been diversification. This is why we have advisers, not mortgage brokers. Our network distributes motor, business, SMSF, personal and small business loans, not to mention insurance. Given Liberty’s strength in specialty lending, LNS advisers can also help customers who can no longer be serviced by the banks due to their unpredictable rules. Brokers who are smart wouldn’t have waited for the market to turn before diversifying their portfolio; they’d already be selling new products. Our mobile platform, Spark, has been cleverly designed to bring all of our residential, motor, SMSF and insurance solutions together in the same place, making the process of engaging with customers about different products more natural.

Outsource Financial Since inception, Outsource has promoted diversification and a holistic approach to

15% Poor BDM support

14% Poor lead generation

11% Poor quality of lending panel

7% Poor communication with brokers

3% Poor marketing support

3% Poor additional income stream offerings

3% Poor compliance support

2% Poor training and education

1% Poor white label offering Source: MPA Brokers on Aggregators Survey, MPA 15.5

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FEATURES

CHALLENGER AGGREGATORS LIKELIHOOD OF CHANGING AGGREGATOR IN NEXT 12 MONTHS

Should mentoring of new brokers be free?

74%

Very unlikely

Outsource Financial

Unlikely

10% 5% 6% 6%

Possibly Likely Very likely

Outsource does not believe in charging members for mentoring. Many aggregators are charging for the service and additionally require members to operate under another group’s tutelage until the mentoring is complete. This does not suit our membership as we attract a large portion of accountants and financial planners who obviously have a finance background and often already run busy practices, making it impractical for them to work out of someone else’s office. We

can operate totally independently from the support mechanisms provided.

Liberty Network Services Anyone who is new to an industry needs as much training, mentoring and support as they can get – it’s the only way they will compete with established brokers. It is unfortunate that many in the industry have taken advantage of this and charged ridiculous fees for the privilege. LNS has a comprehensive, high-touch onboarding process that invests

“There is no way we would charge them for mentoring when we see these entrants as a positive to the industry”

Source: MPA Brokers on Aggregators Survey, MPA 15.5

feel we are attracting the right people to the industry and there is no way we would charge them for mentoring when we see these entrants as a positive to the industry. Instead, Outsource has a new-entrant program that allows participants to maintain their operational independence and does not charge for the service.

nMB Where mentoring is being provided by a dedicated specialist then logically a fee should be paid for that service. However, the best form of mentoring is where a new broker can join an existing business which supplies an environment where the new broker can learn and build their knowledge and experience on a daily basis in an active broker business. The ‘cost’ to the broker is such an environment should then be reflected through a lower commissionsharing arrangement until such time as they

the time and resources needed to ensure success. And we charge a fraction of the price – in the first 12 months it’s just $100 a month – so our training is accessible and affordable.

eChoice There is a great deal of discussion around the cost of mentoring right now; however, the emphasis should be placed on the quality of mentoring and the ‘value for money’ this provides to the new entrant. Internally developed, managed and maintained aggregator programs provide greater value to new brokers, as the control element not only encourages broad-based learning, it allows the teaching to incorporate specific technology, process and procedural elements. Mentoring is not just about deal submission and funder idiosyncrasies; it’s about a holistic approach to building a career on sound coaching and instruction – and our Broker Academy is a fine example of this approach.

www.mpamagazine.com.au

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BEATING THE COMPETITION: BRENDAN O’DONNELL, MANAGING DIRECTOR, LIBERTY NETWORK Liberty Network Services is going from strength to strength, and we’re well on our way to having a big 2016. This is a significant year for us, particularly as the Liberty brand increases its profile amongst consumers. More advisers are joining LNS to get upwardly mobile and to sleep more soundly at night. We keep our advisers’ businesses powered up through: Economics: Our unique hybrid model offers exceptionally competitive commissions, alternate income opportunities, and a market-leading premium club program. Technology: Award-winning technology platform Spark improves adviser productivity up to 30%, helping

advisers meet the technology demands of tomorrow. Diversification: Our adviser network is provided all the support to offer customers motor, business, SMSF, insurance and small business loans. Marketing: Liberty’s new brand positioning and identity is growing, with significant national and local marketing initiatives. Our dedicated team of marketing professionals provide bespoke campaigns. Strategic referral partnerships: Our successful strategic referral partner programs continue to grow and provide additional business across a range of asset classes to our adviser network. High-touch support: Our national team

and local network sales managers are passionate about what they do and are skilled in lending, coaching and helping advisers execute integrated advertising and marketing strategies.

www.mpamagazine.com.au

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FEATURES

CHALLENGER AGGREGATORS BEATING THE COMPETITION: TANYA SALE, CEO, OUTSOURCE FINANCIAL As we position ourselves on being the preferred aggregator for the professional sector we don’t feel the need to compete with larger aggregators. Our models are different to most and cater for financial planners, accountants, quality loan writers and other professional groups. We rarely advertise as our reputation and credibility within the professional services sector drives our recruitment, which is evidenced by the number of professionals within our database. Outsource also prides itself on providing the tools and resources to ensure education and training is at the forefront of our members’ interaction with their clients. There is a need to educate clients, and with our education and training we intend to change the way lending is done in Australia. Because of the support mechanisms that we provide, in addition to the relationship that is created, our retention is extremely high. Our success is attested to by the number of members referring their industry colleagues to Outsource.

Do you have a white label product, and if not, why not? nMB Our ‘white label’ product is currently on hold. It has never been a big part of our business model and only comes into play where we think there is a gap in current suppliers. In the current climate our suppliers are able to meet the vast demands of our brokers. When we did run with our ‘nMB Direct’ product line we felt it was of paramount importance to treat it as any other supplier on our panel in both the manner in which we promote it and the transparency of the remuneration model.

eChoice As our name suggests, the eChoice brand is all about ‘Choice’ for the consumer. Part of our broader business platform includes a white label funding arm, but this is not available to our broker partners. We are funder agnostic – our technology platforms allow our brokers to connect and deliver the right product for the customer

such we are not promoting any particular lender or white label. Our members have access to a huge panel of lenders already, and simply provide the best comparisons to

“In the current climate our suppliers are able to meet the vast demands of our brokers” suit the client’s needs. If we were ever to add a white label it would have to be in line with other lenders (especially in regard to commissions) and would have to exist on its benefits to the clients, not on any incentives offered.

“We are funder agnostic – our technology platforms allow our brokers to connect and deliver the right product for the customer based on their individual needs” based on their individual needs, without proprietary incentive or motivation. This can only benefit the consumer and enhances our position as a brand of ‘Choice’.

Outsource Financial No, we do not have a white label. Outsource is one of the few aggregators that is not owned or partially owned by a bank, and as

Liberty Network Services LNS is unique because it doesn’t offer any white label products. That’s because our portfolio of products is so broad we don’t have to. In addition to our 18-strong lender panel, we have a broad and deep range of Liberty products available to our advisers, which provides excellent flexibility to diversify.

www.mpamagazine.com.au

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FEATURES

CHALLENGER AGGREGATORS BEATING THE COMPETITION: BLAKE BUCHANAN, NATIONAL SALES MANAGER, ECHOICE Part of our genuine competitive edge is that we don’t compete with the larger aggregator businesses in the marketplace. We are setting new industry standards and benchmarks in relation to lead generation, IT and CRM support, business sustainability and digital solutions. Our size allows us to be nimble to the changing needs of the market and deliver an intuitive and adaptive platform for the modern digital broker. Our success to date is evidenced by the results of the MPA magazine 2015 Brokers on Aggregators survey, in which eChoice ranked number one in the IT and CRM support category (relative to importance) with a performance score of 4.63 out of a possible 5. It’s not enough any more for an aggregator to just simply connect with their broker partners, as the combined success of both parties should rely on a profound base of mutuality. The size of our business complements our ability to deliver to this brief – with real people, dedicated resources and bespoke programs at the core. We consider ourselves a whole business enabler, investing in individuals and businesses to deliver what we believe is the best-value proposition for new and experienced brokers on offer today.

What have you done over the past 12 months to invest in IT and CRM support? eChoice

Liberty Network Services

We’ve recently released a new version of our CRM platform FLeaTS. This state-of-the-art system is one of the most dynamic and broker-intuitive in Australia. Available across all devices, it’s been designed by our dedicated tech team to allow brokers to be mobile and responsive to the immediate and ongoing needs of customers. We’ve recently integrated insurance programs, free property reporting, and an interactive ‘Ask eChoice’ forum. Conveyancing solutions, along with building and pest reporting, are next on the list, as well

Our mobile technology platform Spark continues to innovate, and provides a service to our advisers that they couldn’t get elsewhere. Liberty is an established player in the fintech space, so we have a significant technology team that marries our 19 years of experience and data with the latest technological tools and capabilities. Spark has won awards for its innovation and continues to evolve without the legacy constraints experienced by so many other aggregators. Having made the initial leap to

“Conveyancing solutions, along with building and pest reporting, are next on the list, as well as a new credit repair service” as a new credit repair service. Our newly developed ‘smart reporting’ program will also be added, identifying risks and clients that could potentially refinance or sell.

condense an adviser’s office into an iPad, Spark’s feature enhancements are really just business as usual at LNS.

nMB Outsource Financial In the past 12 months we have invested in IT and CRM support for various areas of the business. In 2015 we built a new, updated version of our Referrer Online Tracking Software, which provides referrers with the ability to track the status of their referrals. Features include the ability for referrers to submit a lead via the web at any time or place; updates and status changes in real time; even more comprehensive reports; and records can be reviewed by our audit team. Other investments in 2015 included updating our website with an even more interactive members’ area, and an update of our commissions system.

nMB has invested heavily over the past year to deliver a new and innovative point of sale platform (nMB Pro). We believe a customised IT solution should encompass relevant tools and features which simplify, through automation, key client transactions and interactions. It should have flexibility to follow a broker’s daily activity and accurately reflect individual workflows and practices. Above all, it should enhance both broker and client interactions through a number of tools designed to deliver ease of use and efficiencies. nMB Pro delivers on all these fronts, and perfectly complements our existing Mortgage Broker Suite and our unique Affiliate Marketing Software.

www.mpamagazine.com.au

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FEATURES

CHALLENGER AGGREGATORS BEATING THE COMPETITION: GERALD FOLEY, MANAGING DIRECTOR, NMB The strategy for smaller aggregators when competing with the bigger players is to play to your strengths. Operating at a much lower BDM to broker headcount, business support is paramount. It is important to create a culture across the whole staff that we are here to support our broker business partners. Each broker is important to the overall success of the business, whereas in the larger groups often brokers are lost in the crowd or treated as just another number. We often get feedback from brokers who move to nMB from larger aggregators that there is a real sense of camaraderie among the group. That is something we value as a business and that is core to our company culture. We’re fortunate at nMB that we can provide a sort of ‘boutique’ service with the benefit that comes with strong corporate ownership through the Aussie/CBA relationship. Our approach of working with business owners through the ‘Broker to Broker Business’ model puts a greater emphasis on improving broker profitability through better use of resources and understanding business dynamics than purely a revenue play. At the end of the day it is all about understanding, then working with our brokers to maximise their business objectives and profitability.

How will you respond to new, technologically driven aggregators competing for brokers? nMB Having an accurate, user-friendly and relevant platform is now a ‘ticket to the dance’ for all aggregators. It is not the key decider in a broker joining or moving between aggregators, just part of an overall package to be considered. Systems, along with competitive commission

“All aggregators need to maintain an eye on advancements in technology … however can’t get caught up thinking systems will be the only point of difference”

Outsource Financial

models and, most importantly, business support in marketing, recruitment and licensing, are all key elements for brokers to consider when deciding on their aggregator partner. All aggregators need to maintain an eye on advancements in technology to ensure their business platforms remain relevant, however can’t get caught up thinking systems will be the only point of difference.

eChoice

Liberty Network Services Technology has always been at the heart of our offering, and we have decades of experience refining our tools – so we’re not concerned about fresh new competitors. Our advisers run their entire businesses through Spark and can

process any loan end-to-end, which is unique in the industry. For aggregators to remain relevant and competitive they need to continuously update their technology platforms. We’ve been doing this for years and have led the way in this space, particularly when it comes to streamlining and future-proofing our technology.

Whilst we keep at the forefront of technology we will always be an aggregator that concentrates on building strong relationships with our members, and to us that means personal contact. I meet all new members prior to them signing with Outsource, and will always continue to do so. All members also know that they can contact me personally if they need to. This attitude flows down through the staff and even to how a member treats their client. We not only become our member’s partner in lending but play a strong role in assisting them to grow a multifaceted business, which is required in this current environment to ensure longevity and success.

The eChoice aggregation business has led, and will continue to lead, the industry in relation to technology and innovation – and as such we welcome new competitors to the space. Part of our core philosophy is our commitment to building and delivering the cutting-edge tools of today and tomorrow to our broker network, leading the industry in lead generation, intuitive customer management systems and digital marketing programs. The future of broker is exciting, dynamic, technology-driven, and to some extent elegant. The future is digital. At eChoice, we have a saying: we don’t just participate in aggregation, we are defining its future.

www.mpamagazine.com.au

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FEATURES

STARTING AN INDEPENDENT BROKERAGE

TAKING THE PLUNGE Entering broking today as an independent broker is a daunting prospect, but it neednâ&#x20AC;&#x2122;t be. Three up-and-coming brokers told MPA how they not only survived but excelled in their first year on the job

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SPONSORED BY

STARTING AN INDEPENDENT BROKERAGE SUPPORT FOR NEW BROKERS “You can never get enough support for the first year because it’s the toughest,” reckons Sophia Wu, recalling LESC Financial’s first year in business. That might be true, but there is extensive support available, beginning with your aggregator BDM/PM. “My role is to support my portfolio of brokers with pretty much whatever they need support with,” Choice PM Timothy Schneider explains. That includes helping brokers with lender relationships, software compliance, and more, he says. “At Choice we make a very conscious effort to be proactive, [with] analysis on our personal CRMs; we track visitations, appointments, follow-ups, etc.” Kirsty Dunphey of UpLoans is one of Schneider’s brokers and has found his support invaluable. “I consider him a real partner in our business, but we don’t have to pay him, so that’s great!” She’s also learnt a lot from other brokers in Tasmania, including spending time in other brokers’ offices. “We couldn’t have asked more from the local broker community,” she says.

deals predominantly with foreign investors, mainly from China, Thailand and Hong Kong. Her language skills give her an advantage here, but she found these clients “mainly by chance; initially we’d deal with Chinese buyers based in Australia, our friends and families, and they started to refer their friends in China … those clients in China began to refer their [real estate] agents to us, and we began to participate a little more by going to China”. Wu now makes several trips to China a year, in addition to running Chinese newspaper adverts in Brisbane and maintaining a presence on Chinese social media site WeChat.

kids learn to hate your phone because it’s always ringing; when you realise you’re not actually listening to your child read you a story because you’re checking your emails. That’s the danger for someone who’s trying to fit family life in a career; it’s not something that lends itself that well to part-time.” Schneider agrees that, in some cases, the second year can be harder: “By year two, your business has exploded … if your issue is [your own] finances, then year one is more of a challenge; if it isn’t, then year two is more of an issue because your business gets big, and at that stage you need to be able to manage it.” Eventually Dunphey wants UpLoans to employ four to five brokers and provide them

“It’s like the first year of having a baby. You’re running on adrenalin; you don’t have as many clients as you’ll have in that second year” Kirsty Dunphey, UpLoans For all three brokers, referrals are important for generating leads, and at Equatorial Finance Solutions they have helped diversify the brokerage’s client base, Wong explains. Through an accountant he deals with mumand-dad clients, self-employed people and farmers. “You never know where it leads,” Wong insists. “My attitude is you don’t shut doors on people, because you don’t know who they know, especially in Adelaide.”

Looking to the future Equatorial Finance Solutions is now into its second year in operation, as is UpLoans; LESC Financial has just passed its third birthday. While it’s the first year in business that gets all the attention, each year brings new challenges. In fact UpLoans co-founder Dunphey thinks the second year is the most challenging. “It’s like the first year of having a baby,” she explains. “You’re running on adrenalin; you don’t have as many clients as you’ll have in that second year.” As business has picked up, balancing UpLoans and family commitments has become much harder for Dunphey. “That’s when your

with a good livelihood. At Equatorial Finance Solutions, Wong is also looking to bring on extra brokers, providing they respect the brand. “The people I bring on understand the brand is my livelihood; the brand puts food on the table for my family.” Finally, at LESC Financial Services, Wu wants to diversify the brokerage’s portfolio, while stepping away from front-line sales to further develop the business. For all three brokers, the memory of starting up is still fresh, and has affected how they advise their new brokers. “Do the research; go out your own; chat to different brokers and franchises,” advises Wong. “Even now I say to the brokers I bring on: ‘Go chat to someone else before you make a decision, because I don’t want you to regret something when joining me’.” Starting a brokerage is undoubtedly a challenge, but few regret making the move to broking, Schneider believes. He says: “Six to nine months in, for every banker that I’ve ever recruited, the penny has dropped: ‘Why haven’t I done this earlier?’ The biggest misunderstanding for bankers is how amazing the opportunity to be a broker is.”

www.mpamagazine.com.au

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PROFILE

MARSHALL CONDON

CHANGING THE FINANCIAL ATTITUDE OF A GENERATION Through his new brokerage, award-winning broker Marshall Condon has a bold vision to educate his generation, Gen Y, and enable them to live the lifestyle they dream of sooner, he tells Maya Breen

A YEAR ago, one of the industry’s top brokers had a vision to launch his own brokerage, and soon it will become a reality when it officially launches at the end of March as Neue Black. The brokerage will target millennials and serve as a ‘private bank’, catering for all their finance needs. “We wanted our brand to be unique and to reflect our values,” says Neue Black’s founder and CEO Marshall Condon. “We’re a premium brand, for people that want a premium service and a level of sophistication. So far we’ve found everyone has responded very positively – we’re really happy about that.” After four months working together with a branding company to create the look and feel of the brand, they settled on the name. Part of the offering will be options for clients to put their equity in different asset classes, Condon says, and the wealth management side will involve platforms that offer different investment products that traditionally have been out of reach for many millennials. The impetus for Neue Black started with Condon’s background in broking. Part of the industry since he left school, he got his

broking start at Mortgage Choice and gained his Bachelor of Business in Economics and Financial Planning alongside his career. He then explored management in the banking world for a time before returning to the franchise and running his own branch in South Yarra for the past three years. During this time he has been repeatedly recognised for excellence as a broker and carved a successful niche in the industry, providing an end-to-end service for property developers and their off-the-plan apartment buyers. “I have always wanted to build my own brand and business,” says Condon. “It gives me a great feeling of satisfaction knowing I have built a great company with great people, delivering a worthy cause: enabling the next generation to own their future.”

ONE OF THE INDUSTRY’S BEST MPA Top 10 Commercial Broker 2014 MPA Top 10 Commercial Broker 2015 2015

Australian Mortgage Awards

AMA Quality Young Gun – Franchise 2015

Creating a brand The biggest difference between a franchise model and starting your own brand is the support you receive to help you get up and running. “The franchise model works really well when you’re starting out – they can be very

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“Sometimes I think millennials leave it too late to look at finance or investing or even saving – we’re very much a spending generation”

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PROFILE

MARSHALL CONDON

NEUE BLACK

Bases in South Yarra, Melbourne

Vision: “Enabling the next generation to own their future”

Target client: Gen Y/millennial consumers

Personal and residential lending and strategies

Commercial lending, particularly to developers of high-end apartments and retail spaces

supportive. When you venture out on your own you’re starting from scratch,” says Condon, as leaving the franchise also meant leaving behind his existing residential client base. But he says it is really a positive as it enables him to build

first rather than the customer – it was a fair mind-shift for me, coming from broking. One thing I’ve really worked hard on is to form relationships with bankers, so my relationship with the client is protected … they realise

“Will our generation have access to an age pension that covers inflation and population growth? I believe our generation needs to take action and build a secure future – starting with ourselves” the business the way he wants to and focus on targeting the Gen Y demographic. “The grass is definitely greener on the other side. Our marketing strategy focuses on generating in excess of 20,000 visits to our website in the first 12 months.” Condon’s business-to-business focus on commercial loans is quite a different ball game to targeting millennials for residential mortgages but is an area he is still heavily involved in. “We have a strong pipeline in the commercial channel, and that’s still a large part of the business. We’ve recently added another commercial broker. The rebrand complements the commercial side; however, we’re putting more resources into promoting our message for our residential clients throughout the launch campaign,” he says. When MPA spoke to Condon for our Top 10 Commercial Brokers report in 2015, he said he had chosen to target the construction and development space because it was a growing area. “To mitigate the market risk, we have relationships with long-standing developers, and their site locations and product are of such quality that they will continue to develop when the market is not as buoyant,” he said. Condon also made our Top 10 Commercial list in 2014 and said his time in banking had helped in the way he deals with lenders. “I quickly learnt that when you’re on the other side of the fence it is about the bank

there are other deals to come.” Condon and his team of four create a young, energetic work culture at Neue Black, based in South Yarra. They all came on board late last year and filled the roles of operations manager, head of commercial, and sales, marketing and administration support. Their backgrounds include banking and commercial, and one team member is also fluent in Mandarin. “We love working in South Yarra. It’s close to the city and has a bohemian feel that our clients really enjoy. A lot of our clients live around the South Yarra area so our office location is convenient,” says Condon. “Building a team with great people where attitudes and values align makes this a great place to work and has been personally rewarding for me. I really enjoy spending time with my team. We’ll keep growing by focusing on attitude and values. “People will get to know us as a brand that understands people want sophistication, elegance, wealth and to still maintain a lifestyle. We’ve stayed true to this and we believe our values resonate through the brand and the customer experience.”

Educating a generation for financial success When asked why he had decided to focus on Gen Y as his residential clientele, Condon revealed where his passion for his work comes

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from and how the brokerage was part of a larger vision: to contribute to making his generation more financially savvy. “Fundamentally, we’re enabling people to take control of a significant part of their life. Whether it’s their first home or finance for different assets, we believe it’s important to make the right decisions and have the right long-term strategy that will, essentially, set them up to have a secure future,” says Condon. “Sometimes I think millennials leave it too late to look at finance or investing or even saving – we’re very much a spending generation, focused on living a comfortable lifestyle instead of focusing on balancing long-term wealth and lifestyle. We believe both are achievable. “I think the millennials need to spend some time thinking about what the economic climate will look like at retirement age. Let’s say the resources boom will have ended by 2040; add to that an ageing population and then add population growth ahead of estimates.

He adds: “We believe that the millennial generation will outspend Gen X over the next five to 10 years, and we’re positioned really well to address the needs of the next generation.” Condon told MPA back in 2015 that he presents himself to clients as a partner in the project and ultimately as a source of finance. “I will show them different structured options to consider and let them make an informed decision. I find that by being seen as part of their team and another resource for their business, I have a deeper relationship with my customers.”

Using technology to grow Condon intends to incorporate robo-advice into the wealth side of his business and doesn’t see it as a threat but more of an add-on, using technology to assist growth rather than hinder it. “What we’re offering will not cancel out financial planning – there’s always going to be people who need to have a face-to-face conversation with their trusted adviser. We know this.

“Fundamentally we’re enabling people to take control of a significant part of their life” “Will our generation have access to an age pension that covers inflation and population growth? I believe our generation needs to take action and build a secure future, starting with ourselves. “If Neue Black can start creating change within a generation, to start people thinking about it earlier and to get them planning for their future, we’ve fulfilled our purpose.” He has a target number in mind of Gen Y clients he wants to help in a certain time, and once the brand is launched he looks forward to focusing on the educational side of things. Condon says the brokerage will be utilising various media outlets to do this. “One of our core values is education. We work very hard on this aspect throughout the client experience. We’re often surprised by our clients’ knowledge of the options available to build wealth effectively and still maintain a flexible lifestyle.”

MILLENNIALS PREFER TO DELAY WEDDING FOR MORTGAGE

23%

Corporate regulator ASIC estimates the average Australian wedding costs $36,000, and at that significant price tag nearly 23% of Australian millennials would rather delay or downsize their wedding day in favour of buying a home. Twenty-one per cent have delayed or downsized their honeymoon and 24% decided to delay or have fewer children in order to commit to a mortgage. Source: 2015 RFi Group national survey of 2,036 Australians commissioned by ME

“We’re currently working on incorporating a wealth management offering into the Neue Black experience – in a non-traditional way but staying true to the traditional values of face-toface advice and maintaining that personal touch. We can deliver sophisticated products and structures in a way that suits the preferences and cost tolerances of our generation.” At the time of writing, the official brand launch of Neue Black is set for the end of March and will be marketed heavily via diverse media. “We’re really excited to formally launch the brand in March,” says Condon. “We’ve been working on the rebrand for quite some time, making sure we get the positioning right. We received really positive feedback from our clients and partners during the concept and testing phases. We’re investing in a successful launch and we’re definitely looking forward to the market’s response.”

www.mpamagazine.com.au

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BUSINESS STRATEGY

TEAMWORK

THE REINVENTION OF TEAMWORK Technology gives us the power to communicate, collaborate and learn across great divides – but, ultimately, it remains a tool. The real key to 21st century business success is teamwork, writes Graham Winter

DISRUPTION IS the buzzword of business. And why wouldn’t it be when tech-centric companies such as Amazon, Uber, Netflix and Twitter are transforming the way we shop, travel, play and communicate? Perhaps your business is trying to disrupt itself? If not, then you can be sure that someone else’s is, and chances are they’re doing it with quite different teamwork practices to what you treat as the norm. Is it technology that’s making the difference inside these disruptive companies? Yes, to the extent that product technology supports their exponential growth. However, in-company everyone has the same access to much the same technology at the same time, everywhere. It’s cheap, easy to use and mobile. And let’s remember that instant messaging, email, smartphones, video, collaboration software and the like are tools and tools only. Where’s the difference?

Share and share alike There’s a clue in the common purpose of many of these new technologies: to facilitate the sharing of information. Indeed, this is exactly why the net was invented in the first place. Social media platforms, such as Facebook, LinkedIn and Twitter, are popular because people like to share. We have social brains and our evolution has programmed us to connect

(because it saved our early ancestors from the disruption of sabre-toothed tigers). Even Daniel Goleman, the acclaimed thought leader in emotional intelligence, now speaks of social intelligence. We are genetically wired to engage and share with others and, in doing so, to adapt and respond and learn, which is precisely what the disruptive teams in places such as Uber and Dropbox are doing so brilliantly,

the distraction of ‘always being on’. The better performers in this digital world derive their focus from the core belief that it’s not so much which collaborative technology they use to share information (the tools are very similar), but with whom and what they (collectively) do with it. Fast disruptors know that technology can be duplicated, but there is one thing that can’t be. In a disruptive world the secret to success

Technology is the vehicle. It is who you take along for the ride and how you use the technology to share the challenges and opportunities that makes the real difference and they’re doing it with the help (and at times hindrance) of new technologies. Here are six things you might do to lead your team to be the disrupters, or at least the nimble adaptors.

remains what it was thousands of years ago: the ability of people to work together towards a shared purpose. In a word, teamwork – but a more fluid and flexible style that suits a world that has seen its boundaries shatter in the face of globalisation.

Find the secret

We live in an age of information overload, bombarded with data 24/7. We are most certainly sharing and it’s on a global scale that’s faster, more frequent and, some would argue, less meaningful than ever before. The importance of focus can’t be underestimated as we must navigate through

Make the secret scalable

While technology and globalisation continue to disrupt the business landscape, they are not so much reinventing teamwork in their wake, but rather scaling it as a capability and culture. The typical company circa 2015 has people

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turn, connect with them. They inspire people to think as one team, to move as one team and to learn as one team. Think of a flock of migrating geese, which always fly in a V formation. Geese innately know the secret to great teamwork. They have a common destination and work in perfect unison. When a goose drops out of the V formation, it quickly discovers that it requires a great deal more effort and energy. Geese help each other too. When a goose gets sick or wounded, two geese drop out of the formation and follow their fellow member down to help provide protection. They stay with this member of the flock until he or she is either able to fly again or dies. Then they launch out on their own, creating another formation, or they catch up with their own flock.

dispersed across multiple locations, and issues arising at the speed of light, which is why teamwork makes the business more than the sum of its parts. Great teamwork scaled across the business makes anything possible. This is why a national 2014 employment survey in the US, as reported by Forbes, found that the skill employers looked for in their new recruits was the ability to work in a team structure. The next-most-important skill was the ability to communicate verbally with people inside and outside an organisation.

Accelerate and share the learning

Business has always been a team sport and there are many good reasons for this, however, one now stands alone as pivotal to organisation survival and success. Business is consumer driven (or more specifically, customer experience driven) which means that our teams must be agile, innovative and constantly learning how to optimise that experience for a customer who has abounding choice. Shared learning is the key because working alone or in silos of expertise reduces

learning, growth and creativity. When there is no one to challenge us we simply don’t leverage our experience and ideas.

Escape the gravity of hierarchy and structure

Daniel Pink, acclaimed business thought leader, argues that we are now in the Conceptual Age, in which right-brain thinking reigns supreme. There is much evidence for this. Pink talks of the necessity for organisational symphony, through empathy, intuition, play and meaning. The disruptive companies are enterprises more than organisations, unencumbered by the gravity of organisational hierarchy, process and division. They play like they’re in the Age of the Entrepreneur – those risk-ready, nimble, well-connected folk who thrive on change.

Harness the power of the whole team

The leaders of the most successful disruptive companies share their vision and move others to see it too. They’re marvellous storytellers, connecting with others who, in

Share the truth

The disruptors share the reality. They are not afraid of the truth. In fact, what they fear most are hidden agendas, silos and the status quo. As in professional sport, they make sure the whole team knows whether they have won or lost and why. The focus is always on what is best for the business, even if getting to the marrow of this takes some tough conversations. The leaders insist that they be challenged. They embrace feedback and tap into the power of their people, because a good idea can come from anywhere.

Make the secret yours Technology gives us the power to communicate, collaborate and learn across great divides. Very few of us do this well. To prosper in today’s markets takes real teamwork, and we are just beginning to harness technology to this end. Beware those who see technology as an end itself. Technology is the vehicle. It is who you take along for the ride and how you use the technology to share the challenges and opportunities that makes the real difference. This is what it’s really all about. Graham Winter is the best-selling author of Think One Team (Wiley $25.95) – thinkoneteam.com.

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BUSINESS STRATEGY

DECISION-MAKING

BALANCING DATA AND GUT INSTINCTS IN DECISION MAKING When it comes to making decisions on a new hire, many experts will say that gut instinct should be left out of recruitment. But Christine Khor explains that balancing that innate instinct with cold, hard facts has many benefits

GUT INSTINCT or intuition is thought

The role of the gut

of as dangerous ground as it can, and often has, led to a discriminatory selection process. Using intuition by itself may lead to situations where we only hire people who we know or like, people who we don’t feel threatened by / that remind us of ourselves / that are exactly the same as the other people in our team, etc. In other words, your gut instinct, if not combined with more scientific data, is likely to result in hiring the person you can see yourself having a drink with or inviting to a barbeque – not necessarily the person who is the best for the job. Though these experts are correct, it is important to note that the role of gut instinct and intuition should not be completely ignored. Instinct plays a vital role in how we make decisions and prevents us from falling into the dangerous territory of groupthink and over-analysis.

Instinct is a biological function that helps us to determine danger. It is a natural subconscious response. Think of a time when you’ve met someone you just didn’t feel comfortable around and then you later found out that person had a shady past. Your intuition was confirmed by evidence. Think of a time when you felt a little off in someone’s house, only to find out later that your host had only just had a heated argument with their partner before you arrived. This is your brain taking the temperature of a room, feeling the underlying tension and responding to it by eliciting your fight or flight instinct. When it comes to business decisions, it is usually our expertise, experience and knowledge that allow us to read a situation and respond to it instinctually. So, why are we ignoring our instincts in business today?

Analysis paralysis When it comes to business decisions, the fear of failure mindset has permeated organisations at all levels and in all industries as a not-sosurprising side effect of having gone through a global financial crisis. It makes sense that after a period of economic instability, businesses will be cautious in their strategy and business leaders will be apprehensive when making decisions. However, we all know that this kind of fear-based thinking is the major obstacle to innovation and can have a major impact on the hiring decisions of a business. Because of this fear, businesses are relying heavily on groupthink and committees. Management will call meetings, send group emails, request more research and stall for more time, rather than taking the perceived risk of making a decision. Many executives don’t want to be the one to make the final call in case things go pearshaped. We like to call this analysis paralysis and it has become rampant in the recruitment industry. Increasingly, recruitment within businesses is being stalled by elongated processes that include numerous rounds of interviews, background checks, psychometric assess-

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training, has a high intellect but won’t get bored easily, will work for a salary lower than market rate, and will be satisfied doing a job they have already done before. Basically a unicorn! Of course, unicorns don’t exist. But people with the potential to grow and learn do. Your best candidate may not tick all the boxes and in actual fact, shouldn’t! If they did, they would have nothing to learn or gain from working at your company and would therefore be a flight risk. In other words, decision is risk, but in some stage of the recruitment process, a decision has to be made.

The balancing act

When it comes to business decisions, the fear of failure mindset has permeated organisations at all levels and in all industries as a not-so-surprising side effect of having gone through a global financial crisis ments, case studies, an increasing amount of reference checks and then a long waiting game, where all the data is analysed but a final decision is still not made. While this is happening, the talented prospects that went through this arduous process have gone on to find other opportunities. While it is absolutely necessary to gather evidence-based data on the skills, experience and cultural fit of a prospective employee, this process has to be as streamlined as possible and not become excessive. Three references are the standard to get a general consensus on how well a person did their prior jobs; however, we’ve been asked at times to do six! While it is often necessary to do a second round interview or have the person meet

additional people within the team, a process of four interviews is excessive. If a manager cannot make a decision based on two rounds of interviews, three reference checks and perhaps one psychometric test, then it is usually their gut instinct telling them that the candidate is not the right person for the job. If instinct were listened to at this point, then a lot of time and money would be saved.

The key to making a good hire is to combine data-based evidence with instinctual responses. What it comes down to is that gut instinct should never trump evidence in the making of a decision, but it shouldn’t be ignored if it is sounding alarm bells. Our advice is to pay attention to your instinct when it is telling you not to hire someone, but disregard your instinct if it is telling you to hire someone in spite of the evidence gleaned from interviews and reference checks. It is most likely personal preference at work here. Secondly, make sure you qualify your gut instinct with objective reasoning. Are you an expert in the area in question? Have you had a similar experience before and was your instinct correct at that time? Do other people agree with your instinct? Are you sure that you are not engaging in any form of bias or discrimination? By removing the fear of risk mentality that may have taken residence in your management team, you give them permission to use their expertise, experience and wealth of knowledge to navigate decision-making. Provided data-based evidence is not ignored, the instincts of your management team can be a valuable asset to your organisation.

Searching for a unicorn The heavy reliance on group consensus and box-ticking not only takes the humanity out of the hiring process, but it also supports the fallacy that there is a perfect person for the job in question – someone that has all the experience, all the skills, does not require

Christine Khor is the managing director of Chorus Executive, a talent management company focusing on the recruitment, coaching and personal branding of executives. Her book, Hire Love: How to Hire Passionate People to Make Greater Profit, is now available on Amazon.com

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BUSINESS STRATEGY

FEEDBACK

FEEDBACK IS BROKEN Providing feedback is vital to improving performance, yet many people receive it – and deliver it – poorly. Georgia Murch explains how you can train your leaders to give feedback that is beneficial to the employee and the company as a whole

understand the value and power of giving and receiving feedback. We are aware it builds trust and respect between our employees, customers and stakeholders. We know that great conversations lead to better outcomes and therefore productivity and profit. So we send our people to a training program in the hope they will come back a changed person. Yet we find that our people, and if we are honest… ourselves, still avoid it or handle it poorly.

The history of feedback The concept of ‘performance management’ was introduced about 60 years ago as a means to determine the wages of an employee based on their performance. It was used to drive behaviours to generate specific outcomes. When employees were solely driven by financial rewards this tended to work well. In the late 1980s not all employees felt rewarded, nor motivated by financial gain alone; many were driven by learning and the development of their skills. From here performance management started moving into more frequent monitoring and reviews with a focus on ‘regular feedback’ outside the formal review process. As organisations put more regular conversations into the mix there was a notable improvement in productivity and employee engagement, when the conversations were handled well. In fact, the Corporate Leadership Council tells us that when informal feedback is delivered well it can improve productivity by nearly 40%. Now that’s pretty compelling. We are now seeing an emerging trend in high-performing organisations where all employees, not just the leaders, are being

is not as difficult as you may think but it does require planning upfront to understand what you want to improve and how to measure it. Another challenge can be getting traction after the training. It can be difficult to keep the momentum up when people are either not motivated or not supported to embed what they have learnt. Unless we make people accountable to implement what they have learnt it is likely to be forgotten. We also need to make it inspiring to do so. We want people to know they are gaining time by focusing on improving, not stealing it.

taught how to give great feedback and also how to receive feedback with equal candour and grace. Organisations that do this are in their ‘feedback flow’. But there are far too few that are gaining this as their competitive edge. Many are still running training programs in isolation in the hope it will develop their people and create a new organisation, which is as likely as going to the gym once and expecting a body transformation. When done well it is a start, and a good one, but a start alone nevertheless. Nelson Jackson was on to it when he said, “I do not believe you can do today’s job with yesterday’s methods and be in business tomorrow”.

Training alone is not enough to drive change We need to get comfortable with pushing through the awkwardness of changing habits and processes to move to a breakthrough in the capability of people and to create improved cultures. Otherwise we have a breakdown and go back to old styles which often don’t serve us or the business.

So, why aren’t all organisations focusing on improving the feedback skills of their people? In a challenging economy it’s getting harder to justify training without proving the value, both to the individual and the organisation. This

STEPS TO CREATING A SUSTAINABLE CULTURE breakthrough

awkward Return on investment

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STEP 4 Review Too many times we implement without measurement. Based on the foundations we set in the planning phase, we should consistently measure progress. Then report back to engage people and the business. We also set up ‘remembering rhymes’ so people are able to recall what they learnt easily and put this into place.

STEP 5 Rewire We need to understand what’s working and what’s not and then tweak the implementation and change direction if required. There is no point pushing something that is not at its optimum. In particular we can do an ‘appreciate inquiry’ to understand what’s working well and amplify it across the business.

STEP 6 Sustain We shouldn’t make the mistake of thinking we’ve made it and then drop all our good work. Whilst sustaining suggests a holding pattern it still requires careful planning to keep people motivated and supported to be the change they seek.

Many of my clients tell me that they understand the need to push through the awkwardness but they are not quite sure of how to do this. If we want the change to be sustainable and improve over time, then we should consider all the elements to creating a remarkable culture. Following is a high level guide that considers all the elements to create a sustainable culture.

STEP 2 Learn For the training component to be successful it is more than just great design. Hire remarkable facilitators and trainers. Make sure they suit your culture. Consider what methods outside the workshop you have to embed such as coaching, mentoring, online tools, etc. Make the learning highly engaging and heavily pragmatic.

STEP 3 Do STEP 1 Plan This phase is about setting the foundations for a successful rollout. What are the objectives? How do we know the program will address what we need? How can this be measured? Consider qualitative and quantitative measurements. What is the communication strategy? Who are the key stakeholders? Consider pilot programs to test the design.

It’s make or break time. Set up systems and processes where people are accountable to deliver on what they have learnt. In my space, it is about having the tough conversations. Create lots of space, in and out of the initial training, for practice. Create the right conditions and this will help people move from awkward to an outcome. If we don’t, then the return on investment is lost.

If we really want to create cultures of feedback we need to put in place a program to embed the learning. Too often I see organisations miss this opportunity to improve their return on investment, on the dollars spent and time allocated, post initial training… then wonder why people are not being the change they are looking for. Changing habits does not happen overnight. It is a planned and considered approach. And it’s not as complicated as we think. When we get clever about how to embed the learning the change then becomes effortless and the culture is able to self sustain.

Georgia Murch is an expert in teaching individuals how to have the tough conversations and create feedback cultures in organisations. She is the author of Fixing Feedback and a highly engaging speaker. Visit www.georgiamurch.com or email georgia@georgiamurch.com

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UPFRONT

CAREER PATH

FROM FITNESS TO FINANCE Multiple Australian Mortgage Award-winning broker Josh Bartlett started pushing himself at the gym

After graduating with a Bachelor of Business from Swinburne University of Technology, Josh Bartlett’s passion for fitness led him to opening his first personal training studio in Victoria.

2000

OPENS HIS FIRST GYM

2011

GETS INTO BROKING Bartlett’s businesses were running smoothly and successfully, but he was looking for a new challenge. Having invested in his first property at just 17, he attended a Young Professionals in Real Estate event. It’s at this function that Bartlett found his calling – he was impressed with a mortgage broker who presented on the night. He made the decision then and there that broking was his new challenge. The very next day he set in motion the sale of his gyms, and he chose to join Loan Market.

I had been running the gyms for nearly 11 years and after being in the business for so long I was on autopilot; I knew I needed a new challenge

2007

EXPANDS HIS BUSINESS With his first business running successfully, Bartlett decided to expand his business and purchased a second gym. He ran the two businesses with a simple strategy: to give his customers an unrivalled experience.

2012

WINS AMA YOUNG GUN AWARD Bartlett hit the ground running at Loan Market and was recognised at a national level, receiving the AMA Young Gun award. He used the same business strategy as he did with his gyms and created a customer service-oriented operation.

2013

CREATES eBROKER Bartlett was building a solid foundation of referral partnerships but was finding it hard to keep up with the demand. He searched for a way to keep on top of his leads but couldn’t find a solution that worked for him, so he decided to create one. Bartlett worked with an app company (AppCloud) to design and develop eBroker – a lead management tool that allowed him to track the progress of every lead he spoke to, while giving his referrers regular updates throughout the sales process. “My capacity was increasing and my referral partnerships growing, but I couldn’t keep up with the admin. The eBroker app was essentially my first assistant.” 62

2015

AGAIN NAMED AMA FRANCHISE BROKER OF THE YEAR Bartlett’s referral base grew to 90 partnerships, thanks to eBroker. The app was launched nationally to Loan Market brokers in the same year. At the AMAs, Bartlett was named Franchise Broker of the Year for the second consecutive year.

I am absolutely thrilled to have achieved ‘Broker of the Year’ status twice in a row – it’s a huge honour

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PEOPLE

OTHER LIFE

GOING THE DISTANCE When he gets out of the office AMP bank’s Glenn Gibson goes for a run – seven marathons in seven continents, to be exact AFTER A long day in the office, a run can be just the thing you need. Glenn Gibson, head of sales & marketing at AMP Bank, takes it to the limit – he’s a dedicated marathon runner, and has completed marathons across the world. Gibson credits his wife with getting him into marathons: “She had entered me

into the 2012 Gold Coast Marathon which was only 14 weeks later. So my first race ever was a marathon and then I got the bug.” Less than four years later, Gibson is now a serial marathon runner. He’s completed more gruelling courses up 5,000 stairs on the Great Wall of China and through the South African bush, the latter being particularly challenging

because he was “worrying about getting eaten all the time”. Keeping a high level of fitness is all about priorities, Gibson insists, whether they’re work, family and fitness. “You just need to make sure you are disciplined… and also willing to do two to three hour training sessions after 8pm.”

Seven marathons in seven continents:

Rome / Sydney / New York/ Antarctica / South Africa / The Great Wall / Rio

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