Mortgage Professional Australia issue 18.00 by Key Media

MPAMAGAZINE.COM.AU ISSUE 18.00

TAKING ON THE BANKS After a huge year, Australia’s leading non-banks discuss what comes next

Trailbooks Do you know what yours is worth?

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Hot List Who matters most in mortgages

David Carter Suncorp’s banking & wealth CEO

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DECEMBER 2017

CONNECT WITH US

CONTENTS

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

UPFRONT 04 Statistics

Property investors and brokers: the love affair that only gets stronger

SPECIAL REPORT

HOT LIST 2017

30 brokers, bankers, regulators and innovators who dominated the industry in a year of chaos

THE BIG INTERVIEW

DAVID CARTER

12 Suncorp’s CEO of banking and wealth talks property investors, credit reporting and their $100m ‘marketplace’

Three brokers on supporting interestonly borrowers through tough times

08 News Analysis

How comprehensive credit reporting will transform lending and borrowing – and leave customers less equal

10 Opinion

Connective CEO Glenn Lees on seizing the opportunities presented by broking technology

MORTGAGE INSIDERS

NON-BANKS ROUNDTABLE 2017 Australia’s leading non-banks talk regulation, property investors, foreign buyers and “picking up the scraps”

06 Head to head

54 Career Path: Daniel Carde

The journey of the Homeloans and RESIMAC boss through the world of lending and mortgage management

56 Other Life: Matt Punter

FEATURES

Broker and lifesaver on his work for the Metropolitan-Caloundra Surf Life Saving Club

Everything you wanted to know about maximising and selling your trailbook but were too afraid to ask

BUSINESS STRATEGY

TRAILBOOKS

46 Holidays

How to build a business that can survive and thrive in your absence

48 Legal issues

Lawyer Jeremy Streten on what smallbusiness owners need to watch out for

44 FEATURES

LOAN PROTECTION

Bad things do happen to good people, which is why brokers are so important

50 Virtual workforce

Get out of the office and in front of your clients, forever

MPAMAGAZINE.COM.AU NOW ONLINE: Our new daily newsletter, with expert news analysis every day. It’s free to subscribe; simply go to our website.

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UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au DECEMBER 2017

Decision time

f 2017 has been the year of talk, 2018 will be the year of action. That’s not to say that the past 12 months have not been without changes, particularly for interest-only and investor borrowers and the brokers that deal with them. Yet the biggest issue – broker remuneration – remains unresolved. Although volume-related and soft dollar incentives have been pared back, brokers are still paid in essentially the same way, at similar levels to two years ago. At the time of writing, the industry view on commissions has yet to be made public. The Government has trusted the brokers, banks and other parties involved in the Combined Industry Forum to recommend new approaches, but that doesn’t mean the Government will implement those recommendations. What we do know is that in November the forum delivered their recommendations to the Government. We also have some idea of where different parties stand, based on their submissions to the Treasury’s consultation earlier this year. Paying commissions only on the drawn down amount, quality-related metrics and service-dependent trail commission have all emerged as possibilities. Making predictions is dangerous, however, and is made more dangerous by the number of new faces that will enter the industry in 2018. On the regulatory side, ASIC’s long-serving chairman Greg Medcraft will be replaced

“The biggest issue – broker remuneration – remains unresolved” by James Shipton in February. While ASIC are focused on taking banks to court for rate-rigging and improving corporate culture, it is not inconceivable that the new chairman could make a point of taking a tougher line on brokers. Banking will be transformed on two fronts. After an awful year, Commonwealth Bank’s CEO Ian Narev is retiring and his successor will need to repair fractured relations with the broker channel – or ditch it entirely. At the Australian Bankers Association, the sponsors of the controversial Sedgwick Report, new chairman Shayne Elliot, also CEO of ANZ, will need to chart a course between commercial interest and creating a public perception that the banks really are cleaning up their act. If you’ve spent this year assuming that changes won’t affect you, you’ve so far been correct because few things have actually changed. But 2018 will likely prove you wrong. Sam Richardson, editor, MPA

EDITORIAL Editor Sam Richardson Journalist Maya Breen Contributors Stephen Barnes Jeremy Streten Ruth MacKay Production Editor Roslyn Meredith Jo Crichton

ART & PRODUCTION Designer Loiza Caguiat Traffic Coordinator Freya Demegilio

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

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

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

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

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UPFRONT

STATISTICS

RIDERS ON THE STORM

UNFAZED BY CHOPPY WATERS Investors are still confidently holding their ground and keeping their investment plans in place even though their borrowing power is being tested.

Investors are remaining confident despite rising pressure from regulators and lenders, a recent survey by PIPA reveals IT TAKES a lot to pressure an investor to put their investment plans on hold, according to a recent investor sentiment survey by Property Investment Professionals of Australia (PIPA). According to the survey, only 15% of investors have held off buying a property because of property price “bubble” concerns. Likewise, speculation about negative gearing and capital gains tax changes have only led to 14% of investors putting their plans on hold.

64%

of investors’ top reason to invest is long-term capital growth

47%

of investors intend to hold and never sell their investments

PIPA chair Ben Kingsley said the results confirm the commitment of investors to property as a long-term investment option. “It has been an eventful time for residential property investors since we published our last survey in 2016,” he said. “Similar to last year, most property investors are looking past shortterm challenges and are remaining focused on the long-term wealth benefits that are available from residential real estate.”

67%

of investors would buy a house as their preferred property type

70% of investors believe now is a good time to invest in property

92%

of investors would buy existing or established property Source: PIPA Annual Investor Sentiment Survey 2017

BROKERS IN DEMAND

REFINANCING TIPPING POINT

Brokers remain firmly in demand with investors, as the majority indicate they have used or intend to seek out a mortgage broker’s services in the future.

Although investors are showing resilience through a tougher lending environment, they are not escaping unscathed. More investors report feeling the impact more than last year and would consider refinancing.

secured their last investment loan via a mortgage broker versus 20.35% direct from a bank intend to secure finance for their next investment via a broker

82.75%

73.16%

Proportion of investors who feel affected by policy changes 32%

43%

23%

POINT

More than 23% of investors would consider refinancing for an interest rate differential of 0.5 percentage points and 23% would consider refinancing for 1 percentage point.

84%

have sought services from a broker in the past 2016 Source: PIPA Annual Investor Sentiment Survey 2017

0.5%

POINTS

2017 Source: PIPA Annual Investor Sentiment Survey 2017

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61% of investors expect to purchase in the next 6–12 months

55% of investors holding interest-only loans didn’t expect to struggle to meet new principal and interest repayments

75% of investors are not concerned about possible changes to negative gearing Source: PIPA Annual Investor Sentiment Survey 2017

INVESTOR PULLING-POWER Brisbane is still the property investor’s top capital city of choice when it comes to buying property. Although it dipped slightly in appeal this year (49% to 43% of investor’s choice), it still holds a strong lead over other capitals.

0.3% Darwin

42.9% Brisbane

7.8% Sydney 1.7% Canberra 6.6% Adelaide

5.5% Perth

32.1% Melbourne 3.1% Hobart

Source: PIPA Annual Investor Sentiment Survey 2017

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UPFRONT

HEAD TO HEAD

How are you helping interest-only borrowers? As ASIC’s review of interest-only lending makes an impact, three brokers tell MPA how they are assisting their clients

John Tindall

Principal Accumulus Home Loans

Damien Waters

Franchisee LJ Hooker Home Loans Brisbane Bayside, QLD

Fabio De Castro

Upfront education supported by ongoing service are the main pillars with which we support our clients. Even before recommending an interest-only loan, we explore the clients’ reasons for wanting interest-only. We explain the impact on their cash flow when the interest-only period expires, and ensure the appropriateness of the structure for the present. As time passes, we proactively use our CRM to automatically send clients a reminder email and then back that up with a scheduled task to call the clients in the month before expiry. For those clients that may be reverting to P&I, we suggest a budgeting exercise to ensure that they won’t be financially stressed when the adjustment happens.

Interest-only loans predominately offer a potential benefit for investors. For investors, the structure of their finance products is crucial to ensure it suits their cash flow, and supports any taxation and growth strategies. We focus on our customer’s cash flow. Given the rate difference can be up to 80bps, it may be prudent to take out a P&I loan with a lower interest cost. We help them look at potential capital growth rates through our property reports to help them decide if P&I repayments will accelerate equity growth. For customers who have had an investment property for some time, we educate them on why it may be prudent to convert their loan to P&I and start to pay down principal.

With recent regulatory changes in this area, we’re focusing on educating clients. We are also meeting regularly with clients impacted by rate rises, ensuring they’re financially prepared for further increases. We’re monitoring clients’ property portfolios, ensuring they have information to make decisions around refinancing (if appropriate) because banks are now offering attractive rates for principal + interest loans – therefore refinancing may be advantageous in some cases. It’s also a good time for investors to pay the principal and reduce exposure. For potential investors, we’re discussing the fact that the double-digit property market growth we’ve had for a decade is slowing down, but with interest rates still low, the coming months could be a good time to purchase property.

Mortgage broker Oxygen Home Loans

A DINT IN DEMAND Interest-only lending by the major banks has dropped by $4.5bn over the past year, ASIC stated in an update on its review of interest-only lending to find out if lenders and brokers are “inappropriately recommending more expensive interest-only loans”. Mortgage Choice chief executive officer John Flavell said recently that their data showed a fall in demand for interest-only loans, from 35.95% of all home loans written in April to 14.64% in September 2017. But this could turn around, he said. “In recent weeks, we have seen some lenders start to reduce the rates on their interest-only loans. As a result, we may see demand for this type of product pick back up again over the coming weeks and months.”

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UPFRONT

NEWS ANALYSIS

THE NAKED BORROWER Comprehensive credit reporting has finally arrived in Australia and promises to reveal all when it comes to your clients, writes MPA editor Sam Richardson

SOMETIMES, VERY occasionally, the industry really is transformed overnight. When Treasurer Scott Morrison stepped up to the lectern at Melbourne’s Intersekt festival, most of the audience of fintech entrepreneurs expected more of the usual lip service to innovation: better regulation; more lavish start-up hubs and the like. Instead they got a game changer: the Government will force the major banks to share customer data, starting just eight months from now. By making comprehensive credit reporting mandatory, Morrison has ended a fight that has lasted for more than three years. The Financial Systems Inquiry of 2014 recommended that lenders share not only negative but all data about borrowers, to help smaller and datadriven lenders make smarter decisions. The major banks, which hold most client data, have

That will increase to 100% by July 2019, with non-major banks and potentially non-bank lenders being added shortly after. CCR will have huge consequences, Morrison predicted. “For borrowers, this regime should lead to one thing – a better deal on your mortgage, your personal loan or business loan.”

The benefits of baring all Morrison’s promise could be the one commitment the Coalition can actually keep. Lenders in the US have shared data since the 1970s, while the UK government is currently pushing through CCR, so Australia is not entering the unknown. For established lenders, access to more data has two potential benefits, Suncorp’s CEO of banking and wealth, David Carter, told MPA. “We should be able to make the origination process

“This regime should lead to one thing – a better deal on your mortgage, your personal loan or business loan” Scott Morrison done their best to delay the process, and the Australian Bankers’ Association has finally committing to sharing customer transaction data within two years. The ABA was too late, and it appears that the Government’s patience has run out. Less than 1% of customer data is currently being shared, Morrison observed. By July the major banks will need to share 50% of their data.

quicker, and at some point we should be able to offer differentiated pricing.” Lenders already offer differentiated pricing, hence the higher rates on interest-only loans that are deemed to be more risky, for example. Tailoring pricing to an individual borrower’s risk profile – rather than just a category of borrowers – could be “a great thing for brokers and their customers”, according to

John Flavell, CEO of Mortgage Choice. “Some [customers] will definitely notice a difference, and others may not. It all depends on their unique financial situation.” It’s possible that the introduction of CCR in 2018 and 2019 could prompt a one-off refinancing boom. Data from Experian suggests that many customers would like to renegotiate lower interest rates based on strong financial history (see boxout). Brokers have the client databases and knowledge to target the borrowers who could gain most, at the right time. Over the longer term, Flavell explains, “the introduction of comprehensive credit reporting will more than likely increase the level of competition between Australia’s lenders”. Non-major lenders have been calling for CCR’s introduction for a number of years. CCR could even give birth to new lenders, as Morrison acknowledged in his speech. The UK has seen a wave of online-only banks, such as Starling Bank and Monzo, giving borrowers new options in recent years. In Australia, business lenders, including Prospa and SocietyOne, indicate that data-driven lending can be particularly profitable. Six-year-old

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DO CONSUMERS CARE? A survey by data provider Experian in March looked at the attitudes of over 1,000 Australians to comprehensive credit reporting: Unaware of CCR 66%

Supported sharing more data with credit providers 70% Wanted to negotiate lower interest rates based on strong financial history 30% Source: Experian, July 2017

Prospa has lent over $400m, while SocietyOne will begin credit sharing this month.

Nowhere to hide For Australian borrowers and their brokers, CCR is an opportunity but also a challenge. As the Consumer Action Law Centre puts it, “the flip side to lower fees and interest rates for some is that costs will increase for others. These ‘others’ will undoubtedly be Australia’s

Profiling could nevertheless benefit brokers, although brokers may have to change the way they work. Today, interest rates are widely advertised and easy to explain; under CCR they could go the way of insurance, Carter predicts. “My premium will be different to your premium, even if we live next to each other, because my house and the characteristics of my risk are slightly different to yours.” Most worryingly for consumers is the

“All borrowers won’t be equal; they’ll be less equal under comprehensive credit reporting” David Carter, Suncorp most vulnerable, disadvantaged and financially stressed households”. Lenders will be able to “profile for profit”, the Consumer Action Law Centre explains, raising rates not only for genuinely risky borrowers but for any they consider undesirable. Consequently, as Suncorp boss Carter says, “all borrowers won’t be equal; they’ll be less equal under comprehensive credit reporting”.

prospect of interest rates increasing because of incorrect information. At present, 20–30% of client credit data is inaccurate, lawyer Joe Trimarchi of Trimarchi & Associates told MPA sister title Australian Broker. With the Privacy Act currently unable to enforce correct reporting, this will be another challenge for the government. The ABA has also raised concerns about borrowers being

penalised for natural disasters or small business cash flow issues. Finally, CCR doesn’t just make borrowers less equal; it could exacerbate differences between lenders. Suncorp’s Carter is sceptical that CCR can improve competition, because capital requirements for banks still allow major banks and Macquarie to hold less capital than non-majors. In practice, this gives the major banks the ability (if not necessarily the will) to offer cheaper rates to clients. With borrowers chasing personalised rates, the pricing differences between major and non-major banks could become particularly apparent, Carter says. “What would be good for competition is more of a level playing field on that best-quality risk … if you want to get the true benefits of comprehensive credit reporting into the market.” For brokers, concerns over competition or increasing interest rates may be a moot point. CCR, as Mortgage Choice’s Flavell explains, will “make the mortgage market more complex and confusing than ever before – which will help to further enhance the broker proposition.”

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UPFRONT

OPINION

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

Make technology work for you Adopting the right technology is pivotal to gaining a competitive edge in today’s rapidly evolving industry landscape, explains Connective CEO, Glenn Lees

ACCORDING TO the ancient Greek philosopher Heraclitus, the only thing constant is change. While this idea was first defined around 2,500 years ago, it has never been more true than right now and is very applicable to the mortgage broking industry in 2017. There are two primary forces currently placing more demands on brokers than ever before. Firstly, consumer expectations are far greater than they have ever been. This is being fuelled by a more connected and knowledgeable society that is plugged in 24/7. Secondly, brokers are now challenged by a rapidly changing lending environment. After many years of a static, predictable landscape, brokers now have to continually adapt to moving goal posts as lenders adjust and readjust their pricing and policy to meet their own obligations. As a result, it is far more time and work to stay current, be across the specifics of each lender’s offering and continue to deliver great consumer outcomes. There is no doubt that many brokers are feeling fatigued by the relentless change. The good news is that within this shifting and unclear lending landscape, there is an opportunity for brokers to shine and demonstrate their true value – if you are uncertain about the current state of the market, then imagine how your clients are feeling. To engage with your clients effectively and help them navigate the complexities of

today’s market, you must cut through the peripheral clutter that can distract from providing meaningful guidance. And that’s where technology can play a significant role. The right technology, utilised in the right way, will provide your business with meaningful back-end efficiencies and purge many of the mundane, process-driven tasks from your working day. Automating your businesses’ marketing and CRM platform is just one example of how to systemise an important, yet relatively

space for better intellectual engagement with clients. It is also important not to be seduced by technology. New solutions, all of which promise to change your world, are coming to market at a frightening rate. In this environment, it’s easy to fall into the trap of having the latest tech for the simple sake of having the latest tech. Ultimately, the reality is that people don’t borrow money for fun or because they have nothing better to do. People borrow money for a purpose connected to their lives and their goals – and it’s our job to make the complex simple, to make the scary achievable. So the technology you employ within your business needs to do one thing – support and enable you in satisfying your client’s goals. We recently surveyed a number of our high-performing brokers to understand what they will be focusing on over the next 24 months. A number of common themes emerged from this research, the most notable being how they can drive productivity and create efficiencies across their businesses through technology-based systems.

“You must cut through the peripheral clutter that can distract from providing meaningful guidance” process-driven, business function. Yes, it takes time and effort upfront to establish, but once created it should operate on a near ‘set and forget’ basis. Similarly, we are seeing a number of leading brokers offshoring some back-end business functions, and this is a trend that will only grow. Again, this development would not be possible without the support of secure, robust, seamless and affordable tech-based platforms. Technology is not, however, a silver bullet solution. It should be viewed more as an enabler for you to work more productively. Used effectively, it will allow you to expand your horizons and create

Mortgage broking is certainly evolving quickly, and often with change comes frustration and uncertainty. We understand that dealing with change can be taxing, but those brokers who view the current industry dynamics as an opportunity and adapt accordingly will be the brokers who will emerge on top.

Glenn Lees is a founding director and CEO of Connective, which he co-founded in 2003. He has a special interest in technology and how it can be employed by brokers to assist them in running more efficient and profitable businesses.

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PEOPLE

BIG INTERVIEW

DAVID CARTER: IN SEARCH OF DIFFERENCE Suncorp Group’s CEO of banking and wealth tells MPA editor Sam Richardson how he plans to stand out through a distinctive mix of finance and insurance

AS NO doubt intended, Suncorp’s Synergy conference presented a vision of the bank of the future. Delegates, who signed up on touchscreens, came from three corners of financial services: mortgage broking, insurance broking and financial planning. On stage the pattern was repeated, with Suncorp’s heads of risk, customer platforms and banking talking excitedly about sharing expertise and developing a diversified ‘marketplace’ for the future. For Suncorp’s banking CEO, David Carter, today’s reality is bittersweet. Suncorp is an insurance giant – which earned $723m in the last financial year – but in banking it is yet another non-major in a crowded market, struggling to differentiate itself. Competitive interest rates worked for Suncorp, until the cash rate bottomed out; broker commission incentives worked, until regulators took a closer look. It’s not clear what comes next. “We play in the same market the major banks do, so our targets are quite broad,” Carter explains. “Within the challenges of the various regulatory macroprudential settings – when you’re smaller you have to watch some of

those things – we’re happy to write good business for most people.” Restrictions on investor and interest-only lending gave non-major banks an opportunity to increase market share, which they have largely failed to take. In fact, the share of mortgages written by non-majors in AFG’s Competition Index fell from June to August: Suncorp’s own share fell to 4.35%. Carter admits that the bank “took a lot of time – maybe too much time” in responding to investor lending changes. Nor has Suncorp differentiated itself in the interest-only lending space. In November Suncorp followed the

only and investor settings, which enables us to write the business we want to write.” Carter believes the market is moving in alignment with Suncorp’s position.

The constraints of capital Suncorp’s conservative policy has given it a point of difference: unlike other banks it has not had to ‘pull the handbrake’ and stop investor lending overnight. Yet two insurmountable obstacles stop Suncorp from consequently rebranding itself as investors’ bank of choice. Firstly, APRA’s speed limits have created a zero sum game: if other banks cut investor

“We’ve positioned ourselves well, so we find ourselves well inside both interest-only and investor settings” majors in raising interest rates for IO loans. Suncorp’s considered response to last year’s lending changes is now paying off, Carter insists. “That cost us some growth and some share, but we’ve positioned ourselves well, so we find ourselves well inside both interest-

lending it could push Suncorp above the limits. “We’re operating in a market where there’s 20-plus other players, and we’ve all got to manage how much risk we take on,” Carter says. Secondly, proposed changes to capital requirements could see higher requirements

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PROFILE Name: David Carter Title: CEO banking & wealth Company: Suncorp Group Years in the industry: 27 Career highlight: “I spent a couple of years in New Zealand. It feels awkward as an Australian saying this, but that was a fabulous experience. It was a great time – we enjoyed very good success; I got to know a lot of the independent financial adviser community in New Zealand. For all we Aussies joke about the Kiwis, they’re a nice people and have a very innovative, entrepreneurial culture.” Career lowlight: “Everything in my career, whether it’s been good or bad, has been an opportunity to learn, so whilst I won’t pull out a specific lowlight, it’s always about learning from something I didn’t enjoy.”

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PEOPLE

BIG INTERVIEW

SUNCORP: BROKERS’ HIGHEST-RATED NON-MAJOR BANK Suncorp was voted fourth by brokers in this year’s MPA Brokers on Banks report, the highest-rated non-major bank in the survey. Top non-major banks:

3.46

Suncorp

3.44

Bankwest

3.38

St. George Group

Scores go from 1 (very bad) to 5 (very good)

Have banks’ product ranges and pricing improved or worsened over the past year? Improved

51%

49%

Worsened

being applied to investor lending. Banks with large numbers of these loans on their books would need to raise capital rapidly, Carter explains, and “the last thing we want to do is take business on and then reprice it”. So where can Suncorp differentiate itself? Carter sees an opportunity in flexible products. Mortgages “have become relatively more commoditised as a base product, but I think there are opportunities to develop things that are more flexible and change with the customer through their life cycle”. For example, products that are flexible to accommodate households with changing incomes, a major challenge for borrowers with high mortgage repayments. When it comes to origination, the introduction of comprehensive credit reporting (CCR) could particularly benefit Suncorp. The data provided by CCR could allow banks to personalise pricing, bringing mortgages in line with insurance. As Carter explains it, “my premium will be different to your premium, even if we live next to each other, because my house and the characteristics of my risk are slightly different to yours”. With its existing expertise in insurance pricing and marketing, Suncorp may have a head start on other banks.

Rather than wait for APRA, Suncorp has its own plan. Last year the group underwent a huge restructuring, replacing a number of senior staff and vowing to spend $100m on the ‘Suncorp Marketplace’ to make the group “the destination for moments that matter”. Carter explains the marketplace in more straightforward terms. “The customer need should not be defined in the context of a specific product but as a set of needs that are related to an activity, ie buying and owning a house,” he says. The marketplace will offer financial and insurance products from Suncorp and affiliated partners, with a single digital access point for consumers, making it easier for brokers to cross-sell, although Suncorp rejects that term. Not only does the marketplace leverage Suncorp’s expertise across finance and insurance, it also leverages the increasingly diversified nature of broking. An increasing number of brokers sell insurance, and Yellow Brick Road and Mortgage Choice have financial planning arms. Carter says “we’re also seeing more and more firms starting to think about their business models and how they can potentially broaden their relationships with their clients

“We really have to rethink the value proposition: a lot of these products by themselves aren’t a value proposition” Carter is cautious about the promise of CCR, however. Personalised pricing will exacerbate the non-majors’ disadvantageous higher capital requirements when compared to the big four, he argues. “What would be good for competition is more of a level playing field on that best-quality risk … if you want to get the true benefits of comprehensive credit reporting into the market.” While Suncorp has invested “tens of millions of dollars” to gain advanced status, Carter says, “it’s up to APRA to decide we’re ready”.

A $100m marketplace

by providing more products and services”. Above all, the marketplace is realistic and, despite its digital tag, somewhat old-fashioned. Asked about digital disruption by a delegate at the Synergy conference, Carter is adamant that “the basic tenets of relationship-based sales haven’t moved”. The challenge is creating sticky clients and getting clients to engage with what, Carter admits, are far-from-exciting financial services. “We really have to rethink the value proposition: a lot of these products by themselves aren’t a value proposition.”

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SPECIAL REPORT

NON-BANKS ROUNDTABLE

2017

NON-BANKS ROUNDTABLE Our first ever roundtable for non-banks capped off a year of impressive growth and innovation from these six diverse lenders

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A LIVESTREAMED non-bank roundtable had been on the cards for a while at MPA, to go with our aggregator, major and non-major bank panels. Non-banks have been growing in importance and, while diverse, compete for similar enough borrowers to make for a productive conversation. The past 12 months, however, have seen an explosion in the awareness and use of the non-banks as they snap up borrowers ignored by the majors. Property investors may have slipped off APRA’s banking statistics, but they are still very much in the

market and increasingly being financed in the non-banks. For non-resident and expat borrowers, non-banks are one of the very few avenues they have left. For brokers, nonbanks are becoming an essential alternative. Don’t take it from MPA; ask the Australian Government. This year’s Federal Budget announced a change in legislation to allow APRA to have ‘oversight’ of nonbanks. Although the exact nature of this oversight is yet to be made clear, the motivation behind it was clear: to control an increasingly important part of financial

services. That non-banks are being discussed in the Senate and mainstream media is a significant milestone for the sector, even though it revealed the public ignorance and misunderstanding that non-banks have to overcome. This roundtable brought together the biggest and most influential non-bank lenders, covering questions posed by MPA and sent in by readers. You can watch the entire roundtable on our website and please join us for the next non-bank lenders roundtable in 2018.

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SPECIAL REPORT

NON-BANKS ROUNDTABLE THE PANELLISTS

Aaron Milburn, director of sales & distribution, Pepper Money

Cory Bannister, vice president & chief lending officer, La Trobe Financial

Daniel Carde, general manager third party distribution, RESIMAC and Homeloans

John Mohnacheff, group sales manager, Liberty

Should brokers be concerned by APRA’s intended oversight of non-banks? The success of non-banks over the past year has much to do with regulation – or the lack thereof. Being able to lend outside of APRA’s investor and interest-only lending growth and portfolio caps have made non-banks a vital solution to brokers, but that could end as APRA’s powers are extended to cover the nonbanks. We wanted the non-banks’ reactions. Firstmac’s Kim Cannon went first. “There should be some concern,” he told the panel. While he had expected general regulation to control the housing market, “suddenly it was a whole different type of oversight – they were controlling what colour underwear you had on”. Discussing the non-banks’ submission to the Treasury, which involved Pepper Money, Liberty, Firstmac and RESIMAC, Cannon warned that their advice was being ignored. “I think they’re going to ignore a fair bit of it. I think high regulation is on the cards to some degree; however, we go through these cycles every seven years.” Both Aaron Milburn of Pepper and Cory Bannister of La Trobe Financial argued that, with non-banks representing just 4-5% of the market, sweeping powers could

powers, first announced in this year’s Federal Budget, as validation of non-banks and the innovation and competition they brought to lending. Better Mortgage Management’s Murray Cowan agreed with Bannister, noting that as non-banks don’t hold customer deposits, the risk they pose to consumers would subsequently be lower. Daniel Carde, representing RESIMAC and Homeloans, played down the immediate implications of APRA’s oversight. “As a group we largely originate in line with the ADIs anyway, so there’s no major change in that space,” Carde explained. “It’s more the concern of when it will be enacted and what they’re trying to achieve with it, because it is quite broad and not specific.” The concern about the broad nature of the legislation was shared by much of the roundtable. “What will be will be,” Liberty’s John Mohnacheff told the roundtable, “we just hope that the government doesn’t take a sledgehammer approach to this regulation. “We will try and influence and moderate it and prove to the regulators that we don’t need such stringent oversight like we do with the banks because we’re not ADIs. We rarely see a situation where consumers complain because they got the loan.”

“We just need to make sure regulation doesn’t shut people out of the market” Aaron Milburn, Pepper Money

Kim Cannon, owner, Firstmac

Murray Cowan, managing director, Better Mortgage Management

be unnecessary. “We just need to make sure regulation doesn’t shut people out of the market,” commented Milburn, noting that ASIC already had “robust oversight” of the sector. He wanted to understand the motivation behind the new powers and how and when APRA’s new powers would be used. Bannister took a different angle, telling the panel that “we see it as recognition by APRA that non-banks are potentially going to play a much bigger part in the industry than they did in the past”. He saw the new

According to Mohnacheff, the only disadvantageous outcome Liberty could see would be a slight reduction in their ability to fund consumers. However, Firstmac’s Cannon ended the discussion on a darker note, observing that APRA had already severely limited the competitive power of smaller lenders. “APRA’s grip on the industry is quite astounding, with what they’ve been able to do without legislation. The big concern is where do they go next: do they try and regulate us to death like they tried to regulate to death the small ADIs?”

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Various banks have had to suspend lending to property investors as they reached portfolio limits. What are you doing to support property investors? Since 2015, the investor lending landscape has been thrown into instability. Banks have

rapidly left and then re-entered the market, citing APRA’s limits, forcing brokers to look to the non-banks. We wanted to know whether the non-banks could offer not only the products but also the stability brokers have been craving. The surge in property investors “was a

nice little windfall for us”, recalled Liberty’s Mohnacheff. It had allowed Liberty to deal with brokers who’d never used a non-bank before, he explained. “Hopefully we proved to the market that not only were we a viable alternative in the market, but that our service standards were there, our BDMs were able to step in and be able to engage more deeply with a lot of brokers.” While all the non-banks on the panel had products for property investors, not all had been traditionally associated with this type of lending. Pepper, for example, has built a business on specialist and self-employed lending but, explained Milburn, “we’re in the business of meeting customers’ unmet needs and clearly there was an unmet need because banks weren’t able to support investors”. “Investor lending is solid lending; it’s good lending, and we’re in a position to be able to help the consumer,” Milburn insisted, saying that Pepper would monitor the market and the balance of their portfolio going forward. Although non-banks aren’t currently subject to APRA’s 10% investor lending growth cap, they have their own portfolio limits. Brokers should not be concerned, insisted La Trobe’s Bannister, pointing to La

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SPECIAL REPORT

NON-BANKS ROUNDTABLE entire portfolio, not only property investors, Carde noted. Longer-term shifts could also help the non-banks, although the panel could not agree on their exact nature. “The market’s changing,” observed Firstmac’s Cannon. “Have we seen the end of home ownership in Australia?” He believed Australia was entering an investor-dominated market, which would assist non-bank lenders. Liberty’s Mohnacheff disagreed, suggesting that high Melbourne and Sydney property prices would drive buyers to regional areas, which also suited non-bank lenders.

Can and will non-bank lenders fill the gap of lending to nonresidents?

Trobe’s diversity of funding. “Most of us probably have warehouse facilities from the banks and they have certain covenants we need to adhere to so it’s important you have other avenues, whether that’s through RMBS. For us, it’s through our retail credit fund, which gives us a large degree of flexibility.” Furthermore, explained Bannister, although investor lending had spiked immediately following bank policy changes, they had now settled down. Non-bank growth was now sustainable and broad based. “Getting the attention to non-banks was important, but because of our superior service proposition many brokers are returning to non-banks not just for investor lending but for other products. It’s been a case that the rising tide lifts all ships for us.” La Trobe can raise its own funds, but mortgage managers such as Better Mortgage Management cannot, explained Cowan. While largely controlled by their funders’ policies, BMM was still able to lend to investors to 95% LVR, interest-only above 80% and SMSF lending, Cowan explained. In fact BMM was developing a niche around Australian expats: “It’s a great time to have multiple funders. That

diversity of funding has assisted us to solve problems for a lot of customers.” The big question facing the non-banks is what happens when – or indeed if – banks are again able to lend to investors on a large scale. Homeloans and RESIMAC’s Carde took on the challenge, explaining that “we do have the diversity of funding so we can stay in that space a lot longer. It’s not a matter of

Perhaps the most divisive part of our roundtable concerned a borrower type few brokers now deal with: non-resident borrowers. Largely rejected by the banks in early 2016, non-residents turned to nonbanks, echoing the same journey property investors took just months earlier. One of the beneficiaries is La Trobe. “Nonresident is a great example of a product that suits non-banks generally,” Bannister told the panel. “They’ve got a fantastic profile: they display a lot of prime characteristics over time; they have fantastic resources, so you’re

“We do have the diversity of funding so we can stay in [investor lending] a lot longer. It’s not a matter of here one day, gone the next” Daniel Carde, Homeloans here one day, gone the next, and then coming back cap in hand to woo brokers back.” Carde was backed up by Bannister, who suggested that the banks’ “tap on tap off approach will help the non-banks in the long term”. Carde went on to add that, as small organisations, non-banks could make the requisite changes to control their portfolios more quickly and easily than the banks can. Non-banks simply needed to grow their

lending at a low LVR; they are often professionals with both high network and high LVR.” As non-resident lending required manual assessment, the non-banks had a major advantage over the banks in this sector, Bannister suggested. He explained that La Trobe’s international desk, which is staffed by multi-lingual assessors, had managed to weed out the suspect applications that had

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SPECIAL REPORT

NON-BANKS ROUNDTABLE FROM THE AUDIENCE: SERVICEABILITY [Can] you apply more liberal debt-servicing standards than the major banks? Kim Cannon: “Totally impossible. ASIC has really come down hard on all of us to make sure we’re on an equal playing field with the ADIs.” Daniel Carde: “The guidance they put out is black and white: they have numbers in there. We’re not talking about ‘you should stress a loan’. We’re talking about ‘you should stress a loan to 7.25%’ . They give you guidance and guidance is best followed when it comes to a regulator. They give you rules about how to treat negative gearing and whether you should apply a stress rate or so on. While we’re not governed by APRA yet, there are guidelines out there about responsible lending and at the end of the day we all want to be responsible lenders. You don’t want to be an outlier known for the fact you can lend $350,000 more than any other lender in the market.”

concerned banks and regulators. Bannister’s enthusiasm was evident: “It’s a fantastic product and I think we’ll see more and more lenders come into that area into the future.” Better Mortgage Management’s Cowan could also see more lenders moving into the non-resident space, although BMM currently focused on expats. Australians living abroad had been ‘unfairly characterised’ by bank rules that discriminated against those earning foreign income, even though they had substantial links to Australia, he argued. Homeloans is another of the non-banks that does not play in the non-resident sector, but perhaps not for much longer. Nonresident loans were good loans to write, Carde recalled, even though they paid down relatively quickly. The problem was an influx

“[Non-resident lending] is a fantastic product and I think we’ll see more and more lenders come into that area into the future” Cory Bannister, La Trobe Financial of non-residents unbalancing the portfolio. “To a large degree we were victims of everyone else leaving the market in non-residents.” A tenfold increase in non-residents could not be equalled by other types of clients, Carde explained, and it was that concern about being overwhelmed that made Homeloans cautious about re-entering nonresident lending. “If you turned that back on today you’d triple your volumes overnight.” Is a tripling in leads really such a bad thing for a business? With this question, the discussion turned to Liberty’s Mohnacheff. “No business is set up for triple volumes,” Mohnacheff responded, comparing nonresidents to a wave that could disrupt nonbanks’ performance standards. “We can probably handle 5–10% variability,” Mohnacheff explained. “All of us here work

tirelessly to make sure we return to normal levels of serviceability as soon as possible.” The conversation was then turned on its head, by Firstmac’s Kim Cannon. “I’ve done non-resident loans for years and never lost a cent; they’re good-quality borrowers,” he told the panel. “But the point that’s being missed here is that artificial property markets were being created by this wave of non-residents buying property; the RBA wants to stop it; they don’t want to cure it.” A strong increase in non-bank lending to non-residents was ‘treading on dangerous ground’ with the regulator. Instead Firstmac was “competing for owner-occupied customers; we’re not just picking up the scraps from the banks because they fall into our laps today, and when they’re ready they’ll come back and take it from us”.

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SPECIAL REPORT

NON-BANKS ROUNDTABLE Unsurprisingly, Cannon’s ‘picking up the scraps’ comment did not go down well with the panel. “It’s not picking up the scraps; it’s picking up on an opportunity,” argued Homeloans’ Carde. He said that non-resident and investor borrowers opened the door for non-banks to compete for owner-occupiers by building relationships with brokers. Cannon retorted that during the GFC banks had mistreated brokers but were quickly forgiven, and non-banks forgotten. Non-bank growth needed more sustainable foundations, he suggested. “We’re 5% of the market; let’s go to 10%; let’s go to 20%. I want to see our industry build.” Finally, the conversation turned to Milburn, who noted that although Pepper doesn’t currently offer non-resident lending, its growing international presence provided the infrastructure for such a move: “I wouldn’t discount it for the future.”

“We’re competing for owner-occupied customers; we’re not just picking up the scraps from the banks because they fall into our laps today” Kim Cannon, Firstmac We’ve heard very little from non-banks during the debate over broker remuneration, following the ASIC and Sedgwick Review. Given brokers are the sector’s biggest distribution channel, how are nonbanks participating? Non-banks frequently portray themselves as the biggest supporters of mortgage brokers; with minimal direct sales (with the exception of Firstmac), they don’t have a choice. Now changes to brokers’ commissions and livelihood are currently being considered by Government, we wanted to know why nonbanks were seemingly unrepresented in the recent round of submissions to the Treasury. Pepper’s Milburn was adamant about Pepper’s support for brokers: “We believe brokers should be fairly remunerated for the role that they do.” Milburn explained that

Pepper preferred to make public comments in support of brokers, adding that the industry had become far more professional in recent years. “We see the remuneration that we offer our brokers is fair and we have no plans to change that in the future.” The message of support for brokers was reiterated by La Trobe’s Bannister. “We’re quite open with brokers,” Bannister explained. “They’re the lifeblood of our business so we’ll continue to support them actively.” While ASIC’s proposals to get rid of shortterm incentives that create conflicts are important, said Bannister, he opposed changes to commissions. He pointed to changes to commissions in financial advice: “If the same thing happened in our space, if it forced people to go to a bank because they couldn’t pay their broker $5000 upfront, it may not be the best option in the marketplace.”

Better Mortgage Management’s Cowan is one of the directors of the MFAA and provided an invaluable insight into associations and regulators’ debates over commissions. Cowan indicated that the non-banks had some input into the Combined Industry Forum, which will present its recommendations on commission changes to the Government in November. Cowan also explained that BMM had made a submission to the Treasury regarding commissions, but had kept it confidential. Carde, representing Homeloans and RESIMAC, suggested that aggregators were best placed to represent brokers’ views on commissions. “We haven’t been as vocal in the broker remuneration debate,” Carde explained, summing up his own view as “along the lines of ‘if it ain’t broke, don’t fix it’”. With the current debate focused on brokers and their commissions, explained Carde, “one area I think has been overlooked is the mortgage manager space”. Unlike brokers, mortgage managers need to calculate commissions into their margins. “That’s one area we will need to watch because we’re heavily involved in the wholesale space as well as the retail space.” The only pure mortgage manager present at MPA’s roundtable was

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SPECIAL REPORT

NON-BANKS ROUNDTABLE Better Mortgage Management. When questioned about Liberty’s support for brokers, Mohnacheff pointed to Liberty’s record of supporting brokers over its 20-year existence, including throughout the GFC. “We’ve never had backroom deals; we’ve never done special deals; our remuneration is clear and concise,” said Mohnacheff, explaining that Liberty supported commissions at their current level. “They [brokers] are their sales force and they deserve to be remunerated for it – the old adage of ‘pay peanuts, get monkeys’; we want the highest possible standards.” Firstmac founder Cannon said that while he hadn’t got involved in the commissions debate, “I started as a broker so I believe you should get paid fairly for the work you do; we’re very in favour of brokers.”

What are you doing to challenge negative public perceptions of non-banks? Although brokers have become increasingly aware of non-bank alternatives over the past year, it’s unclear whether the wider Australian public has taken note. Ignorance about non-banks is not only a problem for the lenders themselves, or the brokers that recommend their products, but could influence the regulatory process. In a Senate meeting discussing APRA’s powers over non-banks, Tasmanian senator Peter Whish-Wilson asked APRA chairman Wayne Byres to explain what ‘shadow banking’ was, adding that “I think I know what it is, but I think most people think it is illegal banking and kind of shady and dodgy”. Non-banks are becoming more noticeable in public, with arrangements like Homeloans’ sponsorship of the Perth Scorchers in the Big Bash League leading the way. “Our feedback is that it does actually work,” explained Carde. “We’re not a massive marketing machine with millions and millions of dollars behind us to back up an advertising campaign. The fact they won last year didn’t hurt either!” Negative perceptions of non-banks were getting “a bit old and a bit tired”, said Carde, observing that RESIMAC had been around for 30 years. He also suggested that consumers

“We’ve never had backroom deals; we’ve never done special deals; our remuneration is clear and concise” John Mohnacheff, Liberty were open to new financial services providers. Liberty won the Australian Mortgage Award for Best Industry Advertising Campaign in 2016 and 2017, which Mohnacheff ascribed to “breaking away from rate and detail and making it very visual and entertaining”. However, most of these adverts ended up in industry publications, rather than targeting consumers directly. “We have quite a firm position that we’re here to support the broker,” Mohnacheff explained. “Liberty is at the absolute vanguard of promoting the third party channel.” The conversation then turned to Firstmac’s Cannon, who had earlier argued that non-bank lenders should aim to increase their market share. How exactly would that happen? “I think competition is coming; life is changing,” replied Cannon. “We’re seeing the dismantling of the power of the four major banks.” He argued that the major banks had

been hit by a combination of the Government, who imposed a levy on the major banks earlier this year, as well as regulation and consumers themselves choosing to go elsewhere. “The stars are aligned, but I just get concerned that we get mixed up in picking up the scraps.” Pepper is a lender that has invested extensive funds into marketing and education of both brokers and consumers. The aim has been to raise awareness, that customers with non-conventional documentation or credit histories can get access to finance, and Milburn believes these efforts are bearing fruit. “Times are changing; they are becoming more and more aware.” “We know we’ve cracked it when we see deals coming in where there hasn’t been three or four hits on the credit file, when someone’s tried to push a square peg through a round hole,” Milburn explained.

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FROM THE AUDIENCE: CUTTING TURNAROUND TIMES What are you doing to reduce turnaround times using technology? Aaron Milburn: “While there needs to be a focus on the SLA time, there needs to be a focus on getting it right. We play in a space where people have been let down in the past. It takes a little bit of time to assess that and ensure the family get back up on their feet.”

“There are different ways of building that brand and one of them is providing good service” Murray Cowan, Better Mortgage Management Milburn explained some of Pepper’s other initiatives: sponsorship of Western Sydney Wanderers in the A-League and the Pepper Stadium Penrith for NRL. “I’ve tried for the All Blacks; I haven’t got that over the line yet,” quipped Milburn. Drawing on his own experience working for Westpac, Milburn observed that banks were becoming unable to provide any flexibility to borrowers, making non-banks increasingly important to borrowers. La Trobe’s Bannister continued this point, noting that in MPA’s Brokers on Non-Banks survey, 85% of brokers’ customers said they would be open to using a non-bank. “Brand awareness has always been an issue because we haven’t had the brand awareness or marketing power of the main banks,” noted Bannister, telling the panel about La Trobe’s sponsorship of Collingwood in the AFL and their upcoming sponsorship

of the National Basketball League. Bannister also took on the association of non-banks lenders with ‘sub-prime’ lending. “No lender in Australia would be operating in sub-prime; it’s gone. There’s no difference in standards between us and the major banks and that’s important for people to understand.” La Trobe has been around for 65 years, explained Bannister, taking a fundamentally different approach to the banks. “It’s not about high-volume lowmargin markets; that’s not what we want to play in.” Better Mortgage Management’s Cowan had the final word. BMM didn’t have the budget or appetite for extensive marketing, said Cowan; instead they focused on brokers: “We need to show respect for that and in return give them good service. There are different ways of building that brand and one of them is providing good service.”

Kim Cannon: “It’s no secret we have an online business and as we strive to improve that and build market share we improve our technology, and that technology flows back through to the brokers. Speed, reliability and consistency; that’s what we’re aiming for in the long term.” Daniel Carde: “The technology is what allows you to scale turnaround times. You still need people looking at deals; we still assess deals manually, the good old-fashioned way; you have to sometimes.” John Mohnacheff: “There’s one thing I’d like to add here and it’s a little controversial. Give us all the information upfront. Fill in the application form completely; don’t try and second-guess it, don’t try and withhold information. If every lender here got application forms packaged correctly, I guarantee you that turnaround times would dive.”

You can watch the full non-banks roundtable, including audience questions, for free on MPA’s website: http://www.mpamagazine.com.au/tv/

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FEATURES

TRAIL BOOKS

The trail you blaze A broker’s trail book is essentially their life’s work, charting their career in broking. Maya Breen hears from aggregators and trail book brokers on what makes a strong book

WHETHER YOU’RE about to hang up your hat and exit the industry to retire or have a change of scene, or you need to free up cash quickly for expansion or an unforeseen event, it’s worth keeping your trail book in top condition at all times. We hear from two leading aggregators and two trail book brokers about how a broker can manage their trail book to maintain its highest value for when they need it most.

Manage your book Poor management of your trail book can have consequences that stretch further than you may think. Outsource Financial CEO Tanya Sale says over the years there has been a lack of focus by the industry on the management of trail books. “Everyone’s been poor at it, but there’s probably a strong percentage that get their trail and they don’t really drill down,” she says. “As an aggregator, we recognised that a while ago, so we changed some of our systems to assist our members in managing their trail books.” Brokers need to manage their book in case of unforeseen hardship that may hit them with little notice, Sale says. “They can’t wait until the trail just drops off and they go, ‘Oh, I wonder where that trail went’.” Every trail book tells a story, she explains, and effective management of a book goes hand in hand with keeping in touch with clients regularly. Outsource Financial’s system shows brokers how their book has changed monthon-month or year-on-year, and can reveal early warning signs. “So every month, if all of a sudden their trail book, instead of going up is going down or something has dropped off, that highlights that it’s either in arrears or it’s been paid out,” Sale says. Connective director Mark Haron stresses that, before anything else, a strong trail book starts with looking at the fine print of your aggregator agreement. “Maximising the value of your trail book and ensuring it’s a saleable asset starts with having the right agreement in

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place with your aggregator,” he says. “A trail book is one of a broker’s most valuable assets, so you need to look closely at the terms of your aggregator agreements to ensure you are not adversely impacted by an inflexible contract. Understanding who actually owns the trail book is crucial from the outset, as this can greatly impact its value.”

A TALE OF TWO BOOKS BBBSA Finance has provided the following indicative examples of two different trail books. The comparison highlights how Book A can be more valuable for an owner or purchaser than Book B, due to underlying variables. This example assumes that both books have $10,000 in trail income. They cover the period of October 2017 and have a value of $151,200 in upfront commissions earned over the past 24 months, a purchase multiple of two, and a purchase price of $235,484.

A strong book So what steps can you take towards building a valuable, highly saleable trail book? We asked two experienced trail book brokers. Mark Osborn, director of Trail Book Buyers, says the value of a trail book relies on a combination of different factors that make up the book, and how well they’ve been tended to. “That might be the nature of the lenders or the age of the loan; it could be the mix of owner-occupiers and investors, fixed rate products as opposed to variable rate products, and also the debt pay-down on the book.” Along with the contents of a book, Osborn says there are certain things brokers should be maintaining that will influence a book’s saleability. Staunch record-keeping is one. “If you’re going to sell your business, the purchaser – if they’re looking to take over the client relationships – wants to see that that client relationship is strong, that the contact details and information supplied is up to date, and that the broker stays in contact and maintains that relationship rather than just writing the loan and walking away. That’s important from the purchaser’s perspective when they’re looking at not only the trail income but also building their business for acquisition,” Osborn explains, stressing the importance of an updated CRM system. “They want to see something that’s been actively worked rather than just passive. Buyers want to see that they are taking over a client base that they can actually get in contact with and create a relationship with.” James Turk, acquisitions manager at Trail Book Buyers, highlights what not to do in

Book A

Book B

Run-off rate

18%

Arrears

Clawbacks

Forecast trail earned over next five years after adjustments

$478,562

$352,539

Excess return for purchaser

$243,078

$117,055

Net present value for purchaser @ 15% IRR

$91,349

$9,724 Source: BBBSA Finance, 2017

pursuit of maximising the value of your trail book. “I wouldn’t turn away customers purely on the basis of trying to maximise the value of my trail book. You never turn away a customer and give up money. More customers mean more trail, which means more that you can sell later on.” Although there are many different reasons why a buyer looks to purchase a book, Turk says there are two factors that always increase its value. “There are different motivations for buying a book – whether it’s to take on clients or the income, it comes down to longevity of the relationship and longevity of the loan that increases the value in general.” Jeff Zulman, the founding managing director of BBBSA Finance and former CEO of Vow Financial, specialises in helping brokers buy or sell their trail books and also evaluate them. He says trail books are in high demand. “We’re finding people are looking to

buy trail books hand over fist – there’s a large imbalance between the number of sellers and the number of buyers. We have a ratio of roughly six people looking to buy for every book that’s for sale.” So who is driving up demand for these books? Zulman says BBBSA sees a mix of industry participants, financial buyers and passive investors seeking out trail books. A strong trail book has ‘sticky loans’ with long-term clients, and diversifying also helps with clients choosing to remain with a broker long-term, Zulman says. “Essentially, if the broker’s done a good job and they have maintained contact with their client, if they’ve invested properly in putting all the data in a CRM, made it part of their business’s discipline to send out Christmas cards, and they’ve done their bit to make it so that they can be remembered by those clients – those clients are much more likely to hang around.”

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FEATURES

TRAIL BOOKS

Why sell?

AVERAGE VALUE OF A BROKER’S BOOK The latest MFAA Industry Intelligence Service (IIS) report has found the national average value of a broker’s book to be $38m. The findings also revealed the average value of a broker’s book for each state below, for the period October 2016–March 2017. Average value ($m) by state $50m $40m $30m $20m $10m 0

NSW & ACT

VIC

QLD

TAS

Total nationally

Source: MFAA Industry Intelligence Service (IIS) report, November 2017

TRAIL UP CLOSE The national average gross trail remuneration generated per broker per annum, prior to costs, was revealed to be $56,500 in the MFAA’s latest IIS report. Average gross trail remuneration by state $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 0 NSW & ACT

VIC

QLD

TAS

National average

Source: MFAA Industry Intelligence Service (IIS) report, November 2017

A lifestyle change, such as reaching retirement or delving into different interests, is a common reason for a broker to sell their book and exit the industry. “People say, ‘Look, I’ve run my business, I want to hang up my shingle; I’ve had enough. I’m finding it tougher to do and I want to buy a caravan and follow the sunshine’,” Zulman explains. But there are other motivations, such as unlocking its value for extra funds for their business. “They’re staying within the industry but are looking to raise some capital,” says Trail Book Buyers’ Osborn. “They’re looking to grow their business in other areas and they are happy to sell off a portion of their client base or of the trail book, depending on what they want to do, and raise capital and continue working within the industry.” Turk adds that a broker’s personal circumstances may have changed and they need access to cash, or they may want funds for another project outside the industry. “They have a better use for the money than having it sitting in their trail book, effectively.” Zulman agrees that a life catastrophe or financial distress, perhaps due to divorce or delayed settlements, can lead brokers to monetise their book at short notice. This can involve borrowing against their book, rather than selling it, which he says is a popular option if a broker does not wish to exit the industry yet. “So we say keep your book, keep your clients – we’ll just lend it to you like I’d lend you money against your house – use it as security,” Zulman explains. “Because then you’re not forced to exit the industry or start all over again – you’ve got your clients, you borrow for a few years, and then you pay back the loan and continue.” It is also a great option for releasing funds at short notice, because selling a book doesn’t take long at all. “We would normally have an offer to them within 14 days for a qualified buyer to purchase their book,” Osborn says. He explains that they would find a buyer who

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“We’re finding people are looking to buy trail books hand over fist” Jeff Zulman, BBBSA Finance is the best fit for the broker selling it, often one with similar interests and demographics.

What is your book worth? Have you ever wondered what figure your book is currently worth, even if you may not want to sell it just yet? Zulman says a number of brokers come to them once a year “like an annual health check” to see how the value of their book is tracking. “That’s what they’re really building – that’s the true value

when they do one day want to retire or sell and live off the trail without having to work.” He says BBBSA will value each mortgage within a book. “No two books are the same, because no two mortgages are the same. It’ll be a function of the individual loan. How quickly is it running off, has it had arrears in the past, has there been a situation where it’s been there for too long – and we know that they don’t last forever – or is it still very young and at risk of being clawed back?”

Zulman says they will then apply an algorithm factor to each loan and add all the values together. Their model also has an alert feature that triggers ‘red flags’, such as if the book is running off more than a certain rate or arrears are more than a certain rate, effectively alerting the broker to the current ‘health’ of their book. Turk says evaluating on a regular basis can be a good move, but brokers should not forget the influence of timing on a book’s value. “So what necessarily holds today won’t hold two years down the track – the industry is always changing, and the economy is changing”, and the value of a book can change with it, he says. “But it is good to explore your options.”

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20/11/2017 2:25:20 PM

SPECIAL REPORT

HOT LIST 2017

HOT 2017 Whoâ&#x20AC;&#x2122;s on top in an industry turned upside down?

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IT’S BEEN a big year in broking, perhaps the biggest since the NCCP. Or even the GFC – for some brokers, the change in lending appetites have been comparable. While we won’t understand the true relevance of 2017 for a number of years, it’s already apparent that the way brokers do business and the products they’re selling are undergoing fundamental shifts. MPA’s Hot List is our attempt to tell the story of this year, through its key characters. The Hot List is no popularity contest: the next few pages include failing CEOs, outspoken analysts and advocates. Nor is it a list of the most powerful people, otherwise why not start with Malcolm Turnbull and work your way down? The Hot List is about influence: who is changing the industry, what they’ve done and why that matters to brokers. Paradoxically, this means we have fewer brokers in the Hot List than last year. This reflects our view that, in many ways, brokers have lost control over their own industry. Buffeted by regulation, commission negotiations and bank changes, even elite brokers have shifted from innovation to maintaining business as usual. Many brokers are still running excellent businesses of course, and the channel continues to expand, but brokers operate under the shadow of uncertainty over commissions. With the future of commissions being negotiated within the Combined Industry Forum, the members of this forum have become enormously influential. Given the closed, secretive nature of the forum, it’s difficult to measure the relative power of the heads of industry associations, bankers and regulators involved. What we know is that the final reports of the Combined Industry Forum, and the reception of these reports by government, will affect your business. The forum delivered its first report in November 2017 and further reports will follow in early 2018. Twelve months from now the industry could be in a very different place.

KEY NUMBERS FROM 2017

243 Number of pages in ASIC’s yeardefining Review of Mortgage Broker Remuneration

55.7% Percentage of residential mortgages that went through brokers in September quarter – an industry record

$142,000 p.a. Average up-front and trail commission per broker, prior to costs

30% APRA’s new bank portfolio limit for interest-only lending

160 Brokers and brokerages recognised in MPA’s special reports

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20/11/2017 2:00:19 PM

SPECIAL REPORT

HOT LIST 2017 JUSTIN DOOBOV

SIMONE TILLEY

Managing director

General manager retail broker distribution

Intelligent Finance

ANZ

Justin Doobov may well be the most competitive man in the mortgage industry, and one of the hardest working. After being thwarted in 2015 and 2016 – despite writing over $300m in both years – Doobov clinched no. 1 in this year’s Top 100 Brokers report with a record total of almost $360m in residential lending over 12 months. Writing such staggering numbers simply cannot be achieved without an excellent team and considerable willpower: luckily Doobov has both. Intelligent Finance is structured so Doobov’s time is spent on high value activities and he is constantly looking for efficiencies, promoting staff depending on ability. Doobov’s willpower is needed to deal with constantly changing bank appetites. He spends hours on the phone, unwavering in his belief that “no is negotiable”.

If any major bank can claim to have had a good year in the broker channel, it’s ANZ. Under Simone Tilley’s guidance the bank has experienced a surge in market share, taking 18.3% of all mortgages in AFG’s Competition index for August, higher than any other lender. Ironically, ANZ’s low market share in recent years is itself a significant advantage. According to JP Morgan’s Australian Mortgage Industry Report, ANZ is best positioned among the majors to grow its investor lending portfolio because it has not reached portfolio limits or APRA’s 10% growth cap. Although Tilley has been vocal about keeping ANZ open for broker business, the bank is not immune to regulatory pressure and has introduced an extensive new interview guide for brokers.

JEREMY FISHER

JOHN SYMOND

TONY MACRAE

Director

Founder

General manager third party distribution

1st Street

Aussie

Westpac

This year saw major changes for 1st Street, with the appointment of a chief operating officer to assist Jeremy Fisher, who had previously run the business himself. 1st Street is expanding nationally, taking on brokers in addition to a financial planner; insurance and commercial lending are also continuing to grow. This expansion was recognised at the Australian Mortgage Awards, with 1st Street taking home the NAB Australian Brokerage of the Year award.

August spelled the end of an era for mortgage broking, as John Symond sold his remaining 20% stake in Aussie to Commonwealth Bank. The additional $164m from the sale will help Symond pay for his new 239-foot superyacht, launched in Holland earlier this year. Yet while the 70-year-old Symond has every right to ride (or sail) off into the sunset, he continues to be outspoken about bank misconduct and actively defends broker commissions in the media.

Westpac made it three in a row this year, being voted Bank of the Year in MPA’s Brokers on Banks report by a comfortable margin. Yet the overall first-placed results didn’t tell the whole story: under Tony MacRae the bank was ranked among the top three for every category of service, and won in areas such as commission structure, an area in which major banks traditionally struggle. Westpac’s Flexi First Option Home Loan was also voted Product of the Year by brokers.

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20/11/2017 2:03:33 PM

MICHAEL SAADAT Senior executive leader – deposit takers, credit and insurers ASIC

This is the second year ASIC has taken a prominent position in the Hot List – last year featured deputy chairman Peter Kell – and this situation shows no sign of changing. More than any broker, lender or even politician, Michael Saadat and his team at ASIC have set the tone for the entire industry in 2017. ASIC’s much-anticipated Review of Mortgage Broker Remuneration was published in March and its proposals sparked a conversation which has carried on ever since. ASIC did not call for the end of commission, as many had feared, but it did raise serious concerns about brokers incentivising consumers to take out larger loans, as well as criticising soft dollar and volume-related incentives. Saadat will not make the decision on exactly how commissions will change, which is up to the Government. ASIC will, however, be the enforcer, which alongside its initiatives in interest-only lending and broker shadow shopping means brokers will hear a lot from Saadat over the coming year. From the increased scrutiny of mortgage applications to aggregators’ shift to onshore conferences, the influence of ASIC is everywhere and impossible to avoid.

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20/11/2017 2:03:35 PM

SPECIAL REPORT

HOT LIST 2017 JOHN MOHNACHEFF

MIKE FELTON

Group sales manager

MFAA

Liberty

Liberty is a lender on the rise and John Mohnacheff has the results to prove it. Liberty saw a staggering 48% increase in new loan originations to create total assets of $7.5bn. Within AFG’s Competition Index, Liberty is now regularly appearing in the top-10 lenders, forcing out non-major banks. And if that wasn’t enough, Liberty acquired National Mortgage Brokers, a 400-strong aggregators with a loan book worth $14bn. Property investors have played a major role in Liberty’s rise, as they have been driven away from banks bound by APRA regulation. Yet rapid turnaround times, excellent BDMs and commission structures have meant that brokers that try Liberty first for investor clients are coming back time and again.

CEO

When Mike Felton arrived in December 2016, the MFAA was in serious trouble. For many, the MFAA simply wasn’t vocal enough in defending brokers. This would be bad enough in a normal year; with ASIC’s Review of Mortgage Broker Remuneration just months away, it was disastrous. Felton stepped up to the challenge. The MFAA’s response to ASIC was rapid, specific and public, harshly critical in key areas, such as LVR-based commission, while pragmatically conceding ground in other areas, such as volume-based incentives. Felton’s willingness to work with lenders and regulators played a key role in setting up the Combined Industry Forum to develop a new approach to commissions. If this approach satisfies both brokers and the Government, Felton can take much of the credit.

ERIN TURNER

AARON MILBURN

CORY BANNISTER

Acting director, campaigns and communications

Director sales and distribution

Vice president and chief lending officer

CHOICE

Pepper Money

La Trobe Financial

You don’t need to be liked as an organisation to be influential, as CHOICE proved this year.When the Combined Industry Forum was formed, CHOICE was vocal in condemning the lack of direct consumer representation. This paid off, with consumer groups’ views now represented within the forum. Whether CHOICE’s controversial views on commissions will have any effect on the forum’s recommendations is doubtful, however, particularly given the limited data – in comparison with ASIC’s on which CHOICE have based their views.

Joining Pepper earlier this year, Aaron Milburn is a familiar face to the third party channel, having headed broker distribution at Citi, Westpac in NSW and ACT, as well as working abroad for nine years at British bank HBOS. Milburn therefore provides Pepper with experience and expertise from across almost the entire spectrum of lending. This will be particularly important as Pepper attempts to cater to all borrowers, not only to the self-employed and specialist segments they’ve traditionally catered to.

Non-banks are having their biggest year since the GFC, and La Trobe Financial are leading the pack, according to brokers. Under Cory Bannister’s leadership, La Trobe was voted Non-Bank of the Year in our Brokers on Non-Banks report, being applauded for its offering in the foreign non-resident and commercial lending sectors. Combined with innovative products such as parental assistance loans for FHB and aged care finance, La Trobe is fulfilling the promise of the non-bank sector by taking a genuinely different approach.

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20/11/2017 2:04:06 PM

SPECIAL REPORT

HOT LIST 2017

WAYNE BYRES Chairman APRA

Interest rates going up? Blame APRA. Banks turning away your investor clients? Blame APRA. Struggling to get the same discounts for clients? No prizes for guessing: it’s APRA again. For the past 24 months lending has been transformed by Wayne Byres and his organisation’s quest to make Australia’s banks ‘unquestionably strong’. This year saw a number of new rules from the regulator. In March, APRA announced banks must limit interest-only lending to 30% of new mortgage flows, in addition to limits on LVRs to IO borrowers and concurrent action by ASIC. Banks consequently raised rates and introduced extra processes for interest-only borrowers and their brokers. APRA’s reach goes further, however; they’ve had just as big an impact in the commercial space. APRA was concerned about the banks becoming overexposed to high-density apartment developments, leading to a near shutdown in bank lending to this sector and forcing developers to go to private funders. It’s not all going Byres’ way, however. APRA has been criticised for reducing competition in lending, leading Byres to say he’d like to ‘step back’ from lending limits – but only once the banks get their house(s) in order. Photo credit: CEDA 38

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20/11/2017 2:04:18 PM

JASON BACK

GEORGE GIOVAS

Managing director The Australian Lending & Investment Centre

Seemingly unstoppable, The Australian Lending & Investment Centre enjoyed another excellent year, topping MPA’s Top 10 Independent Brokerages rankings and winning the ME Brokerage of the Year (>20 staff) award. For a brokerage focused on investors, 2017 was not without challenges, however – as Jason Back puts it, the year was “25% harder and 25% less fun”. In addition to his day job, Back now runs his own ‘Broker Essentials Masterclass’, passing on his expertise and focus on efficiency to a new generation of brokers.

Managing director Axius Partners

What’s the largest loan you’ve ever written? For George Giovas, an average loan is in the region of $34,000,000 and the median is even higher. Coming no. 1 in this year’s Top 10 Commercial Brokers, Giovas deals with property developers alongside running a funds management business; he describes Axius Partners as “an old-fashioned merchant bank”. Giovas was previous ANZ’s global head of property and is part of a small but influential flow of high-level bankers into mortgage and commercial broking.

DESLIE TAYLOR

JONATHAN MOTT

STEPHEN MOORE

Owner

Analyst

CEO

Mortgage Choice Ormeau

UBS

Choice Aggregation & Choice Home Loans

Writing almost $130m in residential loans this year, Deslie Taylor has become both Australia’s leading female broker and Mortgage Choice’s top writer. Taylor has been gradually climbing the ranks of MPA’s Top 100 Brokers report over the years, reaching 16th this year. In fact Ormeau was one of 16 female brokers to make it into MPA’s Top 100 Brokers, a significant increase on recent numbers and an encouraging development that could help mortgage broking present itself as an accessible and open profession.

Swiss investment bank UBS doesn’t deal with brokers in Australia; it doesn’t even offer mortgages. Yet a series of controversial reports from Mott has caused fury in the mortgage industry, with bankers, brokers and regulators scrambling to respond to his allegations. Mott is, in essence, deeply sceptical of the rigour of Australian lending, claiming banks have written $500bn of ‘liar loans’ based on incorrect information. However, with a limited data set and questionable methodology, Mott’s claims should be taken with a pinch of salt.

Not all aggregators are equal, Choice Aggregation proved to the industry this year, beating all others in MPA’s Brokers on Aggregators report. Stephen Moore and his team have got the basics right – providing great BDM support – while offering innovative extras. These include peer-to-peer learning in professional development, and this year a partnership with HR Assured to provide staffing and employment law assistance for brokerage owners. Choice’s $60bn loan book and rising broker numbers, now above 1500, are the reward for such innovation.

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20/11/2017 2:07:45 PM

SPECIAL REPORT

HOT LIST 2017 PETER WHITE

ANNA BLIGH

Executive director

CEO

FBAA

Australian Bankers Association

Saying that 2017 has been a busy year for Peter White would be an understatement. White has been everywhere: travelling back and forth from Brisbane to Canberra to educate politicians, to Sydney to consult with regulators and almost everywhere else to hear from brokers. This energy and White’s willingness to speak about sensitive issues such as out-of-cycle rate rises has not gone unnoticed by brokers. White is increasingly seen as a defender of the broker channel and the FBAA is a founding member of the Combined Industry Forum. Nor has White neglected the Association itself: the FBAA has grown its ‘Awards of Supremacy’ while launching a members’ magazine. It’s also talked about issues as diverse as broker mental health and reverse mortgages.

Who’d want Anna Bligh’s job right now? Since taking on the role in February, Bligh has been faced with a constant balancing act. Essentially, after years of scandals, bank reputations have never been lower and it’s up to the ABA to fix them. Take the bank tax. The ABA has had to fight a tax that specifically targets banks, while appearing to give back to communities – all while avoiding Labor’s proposed Royal Commission. When it comes to lending, the ABA needs to balance the controversial recommendations of the Sedgwick Review with ASIC’s own review and the need to negotiate within the Combined Industry Forum. Confused? Imagine what it’s like being Bligh. Yet the worse things get for banks, the more important the ABA becomes.

ANTHONY WALDRON

DARREN LITTLE

LISA CLAES

Executive general manager, broker partnerships

General manager

CEO

NAB

Smartmove

CoreLogic International

Since the publication of ASIC’s remuneration review, industry dialogue has resembled Chinese whispers: banks and brokers say completely different things in public and behind closed doors. Not so with Waldron at NAB, who has been open with his views on remuneration and not afraid to present solutions, including paying upfront only on the drawdown and attaching quality metrics to trail. Whether or not brokers agree with Waldron’s suggestions, they at least know NAB’s stance, unlike some of its competitors.

A serial award-winner over recent years, Sydney-based Smartmove had a particularly impressive 2017. Two of Darren Little’s brokers were recognised at the Australian Mortgage Awards: Simon Orbell as FBAA Broker of the Year (Independent) and Misa Huynh as ING Young Gun of the Year (Independent). Smartmove also came third in MPA’s Top 10 Independent Brokerages, writing half a billion dollars in mortgages over the space of 12 months, with a focus on residential lending.

In a nation obsessed by house prices, the one who knows the house prices is king. Or queen, in the case of Lisa Claes, who presided over another exciting year for data and analytics specialist CoreLogic. After criticism by the RBA last year – itself a reflection of how important CoreLogic has become – Claes and her team made major upgrades to their influential Home Value Index, to better reflect the actual value of properties rather than market movements.

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20/11/2017 2:10:10 PM

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Find out more and subscribe at mpamagazine.com.au MPA ad FP.indd 1 32-43_Hot List 2017_SUBBED.indd 41

2/11/2017 2:10:16 8:07:48 PM AM 20/11/2017

SPECIAL REPORT

HOT LIST 2017

DANIEL CARDE

KELLY O’DWYER

MARK VILO

General manager third party distribution

Minister for Revenue and Financial Services

Head of bank intermediaries

RESIMAC and Homeloans Ltd

Federal Government

Suncorp Group

When it was announced last year that non-banks RESIMAC and Homeloans would merge, it raised a number of questions. Both lenders were known within the broker channel: additionally, Homeloans had an expanding consumer presence, while RESIMAC is also a wholesale lender. The man tasked with resolving these disputes and taking the combined group to the next level is Daniel Carde and he has already achieved success: Homeloans was named Preferred Lender for first home buyers in our Brokers on Non-Banks report.

For all the talk of self-regulation, industry forums and cooperation, make no mistake: Kelly O’Dwyer will have the final say on broker remuneration. The Combined Industry Forum first reported to O’Dwyer in November (yet to be made public at the time of writing) and although the Government has encouraged self-regulation, O’Dwyer is under no obligation to accept their recommendations. O’Dwyer’s views on broker remuneration remain unclear and while the Coalition’s supporters see it as a ‘light touch’ on regulation, this year’s bank levy would suggest otherwise.

When Mark Vilo moved from wealth to mortgages at the start of this year he faced a daunting challenge. Outwardly, Suncorp has had two excellent years: it ranked fourth in our Brokers on Banks, ahead of all other non-majors, with sharp pricing and increasing consumer recognition. Internally, Vilo’s employer has undergone a major restructuring with senior staff constantly shuffled around in a $100m drive to improve profitability. Vilo has played a vital role in preventing this instability affecting brokers and maintaining Suncorp’s reputation.

ANDREW RUSSELL

IAN NAREV

Executive director

Commonwealth Bank

REA Group Financial Services

When they hear the word ‘disruptors’, brokers traditionally look towards Coles and Woolworths and more recently Google and Amazon. In doing so they miss the giant in front of them: online property giants realestate.com.au (owned by REA Group) and Domain, both of which are going to start offering home loans. Many buyers start their journey on realestate.com.au, and Andrew Russell has other advantages. Realestate.com.au is using borrower information to provide smart searches, auto-filled mortgage applications and a near-instantaneous online pre-approval. Whether it disrupts the industry is yet to be seen.

CEO

That brokers’ market share will continue to increase is often viewed as inevitable. CBA proves this does not need to be the case. This year, for the first time since 2012, the bank managed to reduce the share of loans coming from brokers, a shift applauded by analysts. Yet this occurred in the same month that CBA spent $164m acquiring the rest of Aussie. That a major bank can invest in the broker channel while simultaneously disengaging from it is typical of the confusion that has paralysed CBA this year. Hit by a seemingly never-ending list of scandals and regulatory intervention, Narev’s decision to retire (whether voluntary or not) is completely understandable. To put CBA back on track, his successor will need to be open about CBA’s true intentions.

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20/11/2017 2:11:23 PM

CAMERON PRICE & STEPHEN ZAMYKAL Owners Mortgage Choice Melbourne

For several years, MPA’s Top 10 Franchise Brokerages report was dominated by a brokerage in Adelaide – until now. Mortgage Choice Melbourne wrote $198,179,128 across four brokers, despite losing two brokers during the year. Cameron Price told MPA that an excellent admin team and holding lunchtime information sessions in referrers’ offices had helped the brokerage get an edge over the competition. Being part of a franchise provided a useful forum for sharing expertise and learning from other brokerages, Price added.

IAN ROBINSON Founding director Robinson Sewell Partners

This year’s Australian Mortgage Awards ended with a shock. When the Westpac Australian Broker of the Year was announced, the winner was not a Sydney broker, or a Melbourne broker, nor did they specialise in property investors. The winner was Ian Robinson, an agribusiness specialist based in Wagga Wagga in rural New South Wales. Robinson is no normal broker. He grew up on a 28,000 acre sheep farm, before working in banking in Toronto, London and eventually Australia, all while travelling around the globe and climbing several of its highest peaks. Robinson Sewell Partners, which Robinson co-founded with Brad Sewell, has grown through helping hard-pressed farmers negotiate with banks. Both brokers regularly drive across the nation and this year began taking on ‘corporate partners’ to aid their expansion.

GREG MOSHAL AND BEAU BERTOLI Joint CEOs Prospa

Too often fintechs are great ideas – and nothing more. Small business lender Prospa is an exception, moving beyond an exciting prospect to becoming a major player. Prospa has now leant out over $400m in five years to small businesses, using a technology-driven high-speed process which includes rather than excludes brokers. This success was recognised this year in the Telstra Business Awards, where Prospa was announced as the NSW Medium Business Award, the first fintechs to achieve the accolade.

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20/11/2017 2:12:46 PM

FEATURES

LOAN PROTECTION

Protection for a rainy day Loan protection should be a standard part of the mortgage process, but too many clients are never offered the opportunity to have this. MPA and ALI Group look at how brokers can make a difference

OF ALL the diversified income streams available to brokers, loan protection is perhaps the least diverse. As Gabrielle Moscati, national sales manager at ALI Group, puts it, “this is diversifying when you’re not diversifying. You’re dealing with the very same client and still addressing their original need”. For many brokers, offering loan protection seems obvious. Multiple Australian Mortgage Award-winning broker Peita Davies of Choice Home Loans typifies this view. She argues that “it’s important for brokers to understand when talking to their clients that it’s not a bolt-on, it’s not an add-on sale; it’s part of the process. If you are going to go into debt, then make sure that debt is protected”. Yet the numbers suggest quite the opposite. Ninety per cent of brokers did not offer their clients any insurance, other than LMI, during their last appointment, ALI Group claims. Of the 10% of clients who were offered insurance, just half were offered loan protection. This is despite consumers being more likely to take out insurance through a broker than through a bank, according to research from CoreData. Over 300,000 mortgage holders aged between 20 and 49 have loan protection, which means 1.9 million do not.

Underinsurance in Australia The low level of loan protection – and the challenge for brokers offering this product – can be traced back to consumer confusion. “Australia is really underinsured,” Moscati explains. “We actually rank 16th in the world for life cover density and penetration.”

personalised advice with higher levels of cover, but this comes at a price. Premiums can be extremely high, over $200 a month, and the process often involves inconvenient medicals, putting young and healthy borrowers off this approach. Furthermore, unlike brokers, advisers charge for their time.

Loan protection Loan protection offered by mortgage brokers provides a middle ground. Premiums are lower – around $50 a month – and the policy can be personalised for a client’s desired level of cover. ALI’s loan protection offers three benefits, the first of which is three months’ benefit for involuntary unemployment, a major concern for clients. ALI’s loan protection also covers 11 serious medical conditions, including cancer, heart attacks and strokes, with no limits on how the money is spent – clients have used funds for carers, cleaning or even a holiday. Finally, the death and terminal illness benefit provides a lump sum to be paid to the joint owner or estate, not the lender, and can be used for any

“It’s not a bolt-on, it’s not an add-on sale; it’s part of the process. If you are going to go into debt, then make sure that debt is protected” Peita Davies, Choice Home Loans Many consumers believe their super annuation fund will cover mortgage repayments in the event of illness or injury, when in fact it may not. Nor will it necessarily cover involuntary unemployment, and the level of life cover it offers (an average of $200,000, according to ALI) may be far from enough to pay off the mortgage, leaving the borrower’s estate to pick up the bill. Traditionally, those have who wanted more certainty would visit a financial adviser. An adviser can offer more sophisticated,

purpose. An optional extra is accidental injury benefit, which provides benefits in the event of a disabling injury, such as a sports accident.

A three-stage process For clients, the key attraction of loan protection is not the product itself, however; it’s the ease with which it can be acquired. After a quick accreditation and training process taking around three hours, brokers can offer loan protection. Much of the information required for the process comes

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20/11/2017 2:27:32 PM

Sponsored by

THE NUMBERS NO ONE WANTS TO HEAR from a broker’s fact-find, a necessary first step, Moscati says. “There’s no point in presenting a solution if you haven’t identified the need.” Presenting a loan protection offer and getting the client a quote is then an extremely quick process. No medicals are required; after a five-minute conversation the broker can obtain a quote online, personalised to the client’s budget, without any signatures being needed. Crucially, clients and the broker will be sent an email confirming whether they have chosen or declined to take out mortgage protection. In an environment of increasing regulation this gives the broker a vital audit trail, Moscati says. “If you get the client coming back and saying, ‘Why didn’t you offer us the opportunity to protect ourselves?’, you have a record that you’ve done that.” With that, the broker’s role largely comes to an end. Brokers are not required to play a

58,000 jobs were lost in Australia due to redundancy in September 2016 60% of Australians believe they would need to sell an asset within three months of losing their income Every year in Australia:

130,000 new cases of cancer will be diagnosed

54,000 people will suffer a heart attack

52,000 people will have a stroke Source: ABS/ALI Group

role in claims, and loan protection is attached to the borrower, not the loan, meaning it carries on despite refinancing. The broker’s commission of around $500, although this is variable, therefore stems from around 15 minutes of upfront work. Finally, loan protection offers another

benefit to the broker: peace of mind. “You can’t take out liabilities without discussing the risks involved,” says Loan Market broker Phil Rogers. “It scares me to think that life is short and bad things do happen to good people... and I don’t want that client to ever be one of my clients.”

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20/11/2017 2:27:36 PM

BUSINESS STRATEGY

WORK-LIFE BALANCE

HOW TO GO ON HOLIDAY AND STILL MAKE MONEY Without systems in place you will be forever working in and not on your business, making it difficult to escape, warns management consultant Stephen Barnes

IF I had a dollar for every time I heard people say they are either too busy to have a holiday, or they couldn’t leave it to others to run the business while they were away, or it wouldn’t be a holiday as they would be tethered to their emails and phone calls and disengaged from their families, I’d be a very wealthy man. It doesn’t need to be like that. Let me tell you a secret – (well, ‘secret’ is probably the wrong word as what I’m going to tell you is what most small-business gurus will tell you) – systemise your business! Michael E. Gerber of the E-Myth books fame, Dale Beaumont from Business Blueprint and serial business author of the Business Secrets Exposed books and Koos Kruger, author and founder of the Business Exit Companion all give this advice. Let’s take a look at an example: Larry the Landscaper is super busy and works around 100 hours each week. He gets up, goes to work, comes home and either falls asleep in front of the TV or drags himself straight to bed. Larry is working in the business rather than on the business and he has really created himself a job and not a business.

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Larry’s philosophy at coping with the workload, or not coping as is probably the case, is ‘just do it’, rather than figuring out how to get the work done through using other people who use innovative systems to produce consistent results. Now, I concede, in theory this is easy and in practice it is hard, but it takes continual steps forward to climb a mountain. So, make time to systemise your business. Josh Kaufman in his book The Personal MBA – Master the Art of Business describes systems as: “… a process made explicit and repeatable – a series of steps that has been formalised in some way. Systems can be written or diagrammed, but they are always externalised in some way.” Kaufman continues: “The primary benefit of creating a system is that you can examine the process and make improvements. By making each step in the process explicit, you can understand how the core processes work, how they are structured, how they affect other processes and systems, and how you can improve the system over time.” Systemising is the process of documenting everything you do in your business – from answering the phone and opening the mail, to pricing work and aftercare service. There are many ways to do this and some aren’t as daunting as you might expect. Here are some ideas: Over the course of a week write down what you are doing – sort of like keeping a log book. Use short sections of time and be quite specific. Use this as a starting point to document the tasks you do every day. Use voice, video or screen capture technology to document the tasks, e.g. answering the telephone. When training someone, get them to document the task they are undertaking and then review and refine it. This might take several iterations.

Create an intranet site where your documentation and videos can be stored and accessed from anywhere. It’s very easy to do this. You create a Google Sites account and then a sub-domain to your website with the URL going to Google Sites.

It lets you sit on a beach in Bali knowing that tasks are being performed the way you want them to be done. Without putting systems and processes in place, your business will become allabsorbing, with endless tasks to complete

“Create a recording – a system – of your business, your talents, your way of doing something” Make a start. The most energy you spend to get something moving is getting it to start. So, what does documenting and systemising your business do for you? Here are some of the advantages: It clarifies your thoughts and relieves stress. It can be used to train staff and provide a resource for staff to refer to, which will increase your staff ’s confidence. It makes you question if there is a better way to do something (part of working on the business rather than in the business). It creates the ability for a task to be replicated the way that you want it to be done, without you actually doing it. It lets you guarantee the quality of work because your staff will follow the same process. Your uniform processes are simple to audit. Staff will feel relieved because there is structure.

– like painting the Sydney Harbour Bridge. However, when faced with the reality of their all-absorbing tasks, or finding an alternative, most business owners would rather live with the frustrations and endless tasks rather than risk enduring new, short-term frustrations of systemising their business. Systems and processes allow others to share the load. These people then become what a studio recording is to Taylor Swift. A Taylor Swift song can be played by millions of people all at the same time. It sounds the same every time it is played and Taylor Swift collects a royalty every time the recording is played. Create a recording – a system – of your business, your talents, your way of doing something and then, like a song, replicate it, market it, distribute it and manage the revenue. Without putting systems and processes in place, your business will become allabsorbing. Stephen Barnes is the principal of management consultancy Byronvale Advisors. He has spent more than 20 years advising clients from new business start-ups to publicly listed companies and across a wide array of industries. He is also the author of Run Your Business Better – Essential Information Every Business Owner Should Know and Use. To find out how Stephen can help you run your business better, visit www.byronvaleadvisors.com

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BUSINESS STRATEGY

LEGAL ISSUES

IGNORANCE IS NO EXCUSE Staying on the right side of the law can be difficult for small businesses with limited time. Lawyer Jeremy Streten runs through the key points to pay attention to ARE YOU running a business and confused about what you need to do in your business from a legal perspective? Are you confused by the seemingly neverending list of legal considerations? Do you recognise that you need help but don’t know where to start? Paying attention to all aspects of your business is important for every business owner to ensure that you are legally compliant. The traditional answer to the question of when do you need to pay attention to the legal aspects of your business is: all the time. That advice is not wrong, however business owners are often so busy doing the work in their business that they don’t have the time to work on their business. The law is complicated and since you often don’t know what you don’t know, we developed the Business Legal Lifecycle. This Lifecycle is a practical and easy-to-use system for when business owners should take certain legal steps in their business. In this article I will go through five of the key inflection points in a business and why you need legal advice at those stages of your business.

Lifecycle. It comes right after the conception phase, where you have the idea to start your business. The advice that you receive and the decisions that you make in Phase 2 will set you up for a successful business. It is critical at this point to make sure that you have a team of consultants advising you (as a team) on the best way forward. The most important aspect here is the question of the entity that you will operate your business through. It is tempting

“You need to determine what your current business looks like at peak capacity and then work out how you are going to get there” to see what your friends or colleagues have done in their businesses. No two businesses or business owners’ circumstances are the same, and slight differences may require different considerations of entities. What is right for you as a start-up business may not be right for another business.

Start-up Starting your business properly will save you thousands of dollars in the long run. This is Phase 2 of the Business Legal

Bringing on employees This is Phase 4 of the Business Legal Lifecycle. This is the stage of your business

when you have too much work for you to do on your own while still operating the business. There is no one-size-fits-all formula for when a business is in Phase 4 – different business owners have different points at which they will bring on employees. A key point is when you say “I don’t have enough time to do all of this work”. At this point you need to ensure that you obtain advice from a qualified professional (whether that is a lawyer or employment consultant) to ensure

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step and move straight to expansion, and this is why we have placed this in Phase 6 of the Business Legal Lifecycle. What maximising your business looks like for your business really depends on your business. It does not necessarily mean that you and your staff are working every second of every day. You need to determine what your current business looks like at peak capacity and then work out how you are going to get there. When you bring on an investor you are bringing in another owner to your business. You need to make sure that you are comfortable bringing them in and that you work out the rules and obligations of each party.

Expansion

that you bring in your employees correctly. Ensuring that you have the right type of employment contract, workplace policies and that you comply with the National Employment Standards are all important aspects that you need to consider at this point. The law in this area changes regularly so make sure that you keep up to date with news for any changes and obtain regular advice to ensure that you remain compliant.

have the money to pay to apply for trademarks etc until they know that they have a viable business. Once you have customers/clients, and have a business that has employees, then you are in Phase 5. It is important at this stage that you look at your intellectual property to ensure that it is properly protected. Proper legal advice in this area will cover registering the trademark for your business and setting up different structures to protect your intellectual property.

Protecting intellectual property Phase 5 of the Business Legal Lifecycle is the point at which you need to protect your intellectual property. We have placed this after bringing on employees in Phase 4 as we acknowledge that in modern times start-up business owners often donâ&#x20AC;&#x2122;t want or donâ&#x20AC;&#x2122;t

Maximising your business/ bringing on investors After you have built a business, brought on employees and protected your intellectual property, you now need to maximise the business. Many business owners miss this

A lot of business owners have goals of expanding their business into multiple locations, or franchising their business. This is Phase 7 of the Business Legal Lifecycle. If you are looking at expanding your business, there are many different legal pitfalls and issues that you may encounter. These issues and pitfalls are unique to every business and it is critical at this stage that you obtain advice particular to your business to make sure that you are set up correctly. The right legal advice will help you ensure that your business is set up correctly and that you avoid the problems commonly associated with the expansion of your business. In this article I have looked at five of the 13 phases of the Business Legal Lifecycle. Understanding the Lifecycle and its different inflection points will help you build a successful business. Jeremy Streten is a lawyer and the author of the Amazon best seller The Business Legal Lifecycle (www.businesslegallifecycle.com, www.facebook. com/bizlegallifecycle), which is designed to help business owners understand what they are doing in their business from a legal perspective and give them a plan for the future.

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BUSINESS STRATEGY

VIRTUAL WORKFORCE

HOW TO BUILD A VIRTUAL WORKFORCE From cost cutting to freeing up brokers to meet clients, ditching the office has a lot to offer if you can get it right, explains virtual working expert Ruth MacKay THE TRADITIONAL boundaries of officebased work no longer apply in the modern business environment. With the proliferation of mobile technology, professionals can now work from home, on the road, in their favourite cafe or indeed almost anywhere there is a good internet connection. Never before have workers had so much autonomy over when, where and how they work. This brings a long list of benefits to the forward-thinking companies that are using virtual workforces to maximise their competitive advantage, attract and retain the best talent, and become first-choice employers, all while cutting overhead costs and increasing productivity. However, running a successful virtual workforce requires a completely new management philosophy. Traditionally, the manager’s role was to supervise, direct and interact face-to-face with employees. For most managers that was easy. With employees at their desks from nine to five, managers could stop by at any time and check in. Now they’re asking: “How can we maintain solid oversight while allowing our employees the freedom to work virtually?” That’s a good question, and one that can only be answered with solid planning, training and a top-down understanding of how to implement, integrate and manage a virtual workforce designed to address the challenges

of doing business in the 21st century. Follow these four steps to build an effective virtual workforce that will take your business to the next level.

STEP 1 Evaluate Not every business is the same, so there is no one-size-fits-all virtual workforce that you can simply drag and drop into play. Some businesses will be more suited to a virtual workforce than others, as will certain business units within your company. Take some time to carefully evaluate your business for strategic fit, and consider the following: How will a virtual workforce potentially increase your competitive advantage? Consider how a mobile workforce may be able to outpace your competition by providing your clients with on-location service. How will a virtual workforce impact your market position? Without the overhead drain of maintaining a bricks-and-mortar office, you may be able to offer discounts to high-value clients or become a lower cost provider. Will a virtual workforce open entry into new markets? Having employees stationed around the country and even around the globe operating on a range of time zones

may open up new opportunities to expand your territories and enter new markets. What is your competition doing? If they have moved or are moving to a virtual workforce, you are definitely at risk of being left behind the eight ball.

STEP 2 Assess Virtual workforces offer a range of potential benefits, but also require investment in key areas to ensure maximum effectiveness. Like every business decision, you must assess the benefits against the costs to determine if a virtual workforce is the right fit for your organisation. Here’s some food for thought to get you started: POTENTIAL BENEFITS Reduction in employee commuting time increases flexibility and improves work–life balance. This leads to reductions in staff attrition and associated recruitment and training costs. Fewer in-office distractions can improve employee productivity and boost motivation and engagement. Cutting your overhead costs may offer the opportunity to rethink your pricing structure and improve your competitive advantage.

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sales and IT have worked with all areas of management to identify the most effective management of software, hardware and support each business unit has clearly written policies that can be easily distributed to your virtual employees. During your pilot program, look for gaps that may require training, new technology or infrastructure, and recruit staff – either internally or externally – with the attributes required to work virtually. Plan out the scope, tasks, timing, resourcing, costs and acceptance criteria (use these as the basis for your ongoing management metrics) so that the transition is as seamless as possible. Be disciplined in completing the plan, and after a meaningful period (this should represent at least one complete business cycle) measure outcomes to goals. This will enable you to construct a new project plan that offers solutions to the gaps in the initial cycle. This may be improved by utilising relevant expertise from outside. Potential to improve client relationships via face-to-face visits with staff stationed nearby. POTENTIAL COSTS Required investment in new software and hardware technology to support the virtual model. Initial management training required to convert to virtual workforce management practices and techniques. Training and support costs required to assist employees transition to new technology and work philosophy. Resources may be required to ensure buy-in up and down the management chain to prevent resistance.

STEP 3 Implement With your evaluation and assessment complete, it’s time to enter the implementation stage. Running a pilot program provides a positive pathway to transitioning to a virtual workforce in one part of your business without impacting overall operations. Most importantly, you must have the various business units take full ownership of the transition to ensure they have clearly identified both the opportunities and the risks within a virtual workforce. Also, your managers will need to be trained and motivated so as to be up to the challenge of effectively leading their virtual employees. To run a successful pilot project, ensure that: software and hardware selection and application is approved by all of the company’s units

STEP 4 Launch! Your pilot project will have lessened the overall risk while gaining the much-needed support for the virtual model across your organisation. And with all your evaluations, assessments and planning in place, it’s now time to pick a specific date to launch – because the only way you will identify what will work and what will need improvement is by doing it. Ruth MacKay is the founder and managing director of OURTEL Solutions where she manages a 100% virtual workforce. She is passionate about helping businesses gain a competitive advantage, improve profits and retain top talent through leveraging proven virtual workforce models. Ruth is also the author of the new book, The 21st Century Workforce. For more information visit www.ourtelsolutions.com

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PEOPLE

BROKERAGE INSIGHT

GETTING FINANCIALLY FIT MPA Top 100 Broker and director of NSW brokerage Infinity Group Australia, Graeme Holm, is bringing the personal trainer concept into finance MPA: In what ways does Infinity’s approach differ from that of a traditional broker? Graeme Holm: Firstly the entire approach is different with our fact-find going into extensive detail around household expenses and ongoing family needs, not just wants. Infinity works with clients across multiple meetings to understand, fine tune and assist our clients in implementing a weekly cashbased budget for the necessities such as, but not limited to, weekly groceries, fuel, travel expenses and entertainment. Typically, once the application is approved and your loan has settled, a traditional broker’s job is finished, however this is where Infinity just gets started. Our clients are allocated a personal banker to help them pay the loan off as quickly as possible. One of our greatest achievements this year was a reduction of $96,271 in just 12 months from a couple with a young family.

Infinity provides a monthly performance report to all clients that enables them to ascertain if they should make adjustments to the family budget or if they are performing in line with goals and expectations. We also provide our clients six monthly, detailed reviews to ensure client success and absolute commitment to reducing the family mortgage.

MPA: How does your debit card concept help to control consumer spending?

GH: If you can’t pay cash, then you’re not buying it! At Infinity, we give every dollar a purpose and focus on teaching the difference

“At Infinity, we give every dollar a purpose and focus on teaching the difference between a want and a need while keeping you accountable to your goals” MPA: What kind of consumers does this approach attract? GH: We haven’t yet met a client that we couldn’t help. We have a range of clients from athletes like Paul Gallen to a 22-year-old navy officer

AUSSIES OUT OF THEIR DEPTH IN DEBT Nearly 30% of Australian households were found to be ‘over-indebted’ in 2015–16, based on the ratio of debt to income or assets, ABS figures show. Mortgage holders were more prone to be over-indebted (47%) in regards to tenure type. Of those households with a mortgage, 62% of those aged 25–34 years were over-indebted and 51% of 35–44-year-olds. Out of the capital cities, Sydney and Melbourne ranked highest in number of over-indebted households. Source: ABS Household Income and Wealth, Australia, 2015–16

who has just purchased his second investment property.

between a want and a need while keeping you accountable to your goals. Most of the stuff we spend our hard-earned money on ends up in the trash within a few months of being purchased. That money should be sitting in your mortgage reducing daily interest. Most people forget that interest is being calculated daily and charged monthly. We focus on mitigating expenditure without our clients eating mince seven different ways each week. We are very aware that most families spend what they have direct access to, so credit is an ongoing enemy of the average Australian family. A debit card can operate with the same

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flexibility of a credit card but ensures clients do not hyperextend the family outgoings.

MPA: Beyond commissions on mortgage products, how else does Infinity make money? GH: Infinity charges a fee to establish our debt reduction model and assign your personal banker. We then charge 10% of your annual debt reduction. The key outcome is that an Infinity client will pay more off the home loan in the first three months as a client than they did in the entire previous full 12 months without Infinity guiding and supporting them. This model was created as we were losing our mortgage commissions because the banks didn’t like our clients paying their loans off so quickly. Does anyone else think it’s strange that four businesses make $30 billion a year in profits in a country with just 24 million people? Infinity often ends up having commissions clawed back so we developed an open and honest fee-for-service model that clients understand that we are mutually invested in – the stronger the result for the client, the stronger the result for Infinity. Win-win!

MPA: How has Infinity’s unique approach been received by borrowers?

GH: Most love it. They can go to work, spend time with their partner/kids knowing all the bills are taken care of, which removes a lot of stress. For others who like to be more hands-on with their finances, it can be a big adjustment but by month three, when they have paid off more debt than they had in the previous 12 months, they can all see the big picture. Infinity was nominated in the Optus Business Awards 2017 for customer service experience business of the year which is reflective of our belief that we don’t have clients, we have financial family members! Just a quick read of our Facebook reviews or our testimonial page will demonstrate how well our financial family members are feeling about the success they are experiencing.

FAST FACTS Year founded 2012 Team Graeme Holm, Rebecca Walker Headquarters Bella Vista, NSW Ownership Private

Services offered Mortgage broking, debt reduction, ongoing money management and financial coaching plus a financial planning arm, property investment arm and associated entities

Income Brokerage commissions, fee-for-service establishment charges, ongoing annual fee-forservice based upon service levels, insurance referrals

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PEOPLE

CAREER PATH

ONWARDS AND UPWARDS Twenty-three years into his career in finance, Homeloans and RESIMAC’s Daniel Carde says he wouldn’t change a thing Carde’s career started out at Bank of Queensland while he was a student. “After a number of years of full-time university study I converted to part-time study and started applying for full-time jobs in the banking industry.” He would spend the next eight years at BoQ rising from teller to branch manager by 25 years old to running the largest branch on Brisbane’s south side a year later.

1994

STARTS IN BANKING

2005

EMBRACES THIRD PARTY As third party was then a small part of Members Equity Bank‘s business, Carde chose to move to “global financial powerhouse” Citibank. “After a short stay at Citibank I decided that I wanted to return to a smaller player in the third party space,” explains Carde, which saw him join RESIMAC in 2006.

2002

BREAKS NEW GROUND Seizing the opportunity to join a fairly young but rapidly expanding bank, Carde moved to Members Equity Bank (now ME). “The decision to make the change was driven by the desire to try something new, coupled with the opportunity to join a growing organisation.” Two years after the transition he moved into the third party side and hasn’t left it since.

2006

FOCUSES ON MORTGAGES Carde said the appeal in moving to RESIMAC as its senior BDM for Queensland was because it was solely immersed in mortgage management at that time. This offered him the chance to gain new experience and tackle fresh challenges. “RESIMAC gave me the opportunity to try something new again, while still remaining firmly in the third party sector.”

2010

MAKES A MARK After a few years with RESIMAC while its distribution footprint continued to grow, Carde was promoted a number of times: from state manager Queensland to sales manager wholesale and on to national sales manager third party. “This involved managing the sales function for both the mortgage manager and broker divisions, including managing the now expanded sales team.”

2015

FACES CHALLENGES As RESIMAC continued to evolve as a business, Carde moved into the role of director product, marketing and strategic partnerships. The change presented new challenges and spanned a number of different areas within the company. “The role did, however, give me oversight of a number of key areas within RESIMAC and helped further develop my skillset, particularly in the marketing area.”

2016

MERGES AND GROWS In 2016, Carde was promoted to general manager third party distribution of the Homeloans Group, after the merger between RESIMAC and Homeloans in October of that year.

“We merged the sales teams of both organisations, rationalised our distribution strategy and worked towards further growing our distribution within the third party sector.”

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PEOPLE

OTHER LIFE

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

OUT IN THE SEA AND SUN

When he’s not solving people’s financial problems, Queensland broker Matt Punter is out in the surf saving lives MATT PUNTER, CEO and director of The Savings Centre, is a dedicated member and assistant secretary of Metropolitan-Caloundra Surf Life Saving Club. Averaging about 60–70 hours on the beach every season, Punter received his bronze medallion when he was 18, soon after his start in banking. His family has a long-time connection at the Club too, with his father and uncles being members back in the early ’70s. Originally from a central Queensland country town, Punter has lived in Japan, England and Melbourne but, for him, the Sunshine Coast has a great community vibe. “It’s a really nice community within a larger community,” he explains. “[Broking] is a high-pressure job, so it’s nice to spend a few hours on a Saturday or Sunday morning or afternoon on the beach – you just let go of the finance stuff and stresses of that. There’s a lot more to life than building the castle – contribution is a really big part of what we do as a family.”

120,000

people visit Kings Beach, Caloundra, each patrolling season

1933

100+

year Metropolitanactive surf lifesavers and Caloundra Surf Life Saving 260 nippers call the Club Club founded home

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