MPAMAGAZINE.COM.AU ISSUE 18.04
MOMENT TO SHINE How the non-majors are backing the third-party channel – including commissions – as the majors face the heat
BANKS’ MEMOS TELL ALL ACCC’s new report reveals how the major banks make mortgage pricing decisions
PEPPER MONEY’S NEW BROKER TOOL Aaron Milburn on how brokers can get quick decisions and smart solutions
SHOULD YOU OUTSOURCE? Take back your Sundays without compromising customer service
APRIL 2018
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CONTENTS
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UPFRONT 04 Statistics How ASIC is cracking down on industry fraud
06 Head to head
28 FEATURES
SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE
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With the big four under intense scrutiny and pressure, now is the moment for the non-major banks to shine. They explain how they’re standing by the third-party channel and why brokers should be choosing them
OUTSOURCING Why brokers are increasingly choosing to rely on staff beyond Australia’s borders
Three brokers predict the future of trail commissions
08 News analysis A new ACCC report reveals what’s behind the major banks’ mortgage pricing decisions
10 Opinion Where do investors stand in this changing regulatory landscape?
FEATURES 32 SME lending NAB’s big plan to help brokers capitalise on “the engine room of the economy”
36 Construction finance
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Non-bank lender Australian First Mortgage on how brokers can bring people’s blueprints to life
BROKER SUPPORT
PEOPLE
Suncorp is revolutionising how brokers, BDMs and aggregators work together
44 Brokerage insight
FEATURES PEOPLE
VENDOR FOCUS Pepper Money’s Aaron Milburn on the tool that’s making it easier and faster for brokers to find solutions for underserved borrowers
12
It took an epiphany on a Greek beach to set Peter Vassilis on the track to opening Black and White Finance
46 Career path Glenn Gibson’s path to Yellow Brick Road included stops in operations, sales and marketing
48 Other life
38 FEATURES
REVERSE MORTGAGES Heartland Seniors Finance on the one area of finance that is destined to soar as the population ages
How Sam Makhoul infuses others with positive energy
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UPFRONT
EDITOR’S LETTER www.mpamagazine.com.au
When no one is watching
T
rust, transparency and accountability should be the guiding forces for anyone in financial services, but that is unfortunately not the picture that took shape following the first two weeks of public hearings of the banking royal commission. From 13 to 23 March, bank executives filed past the news photographers on their way into the Melbourne courthouse, where they endured an exhaustive examination at the hands of senior counsel Rowena Orr. Breaches were revealed, banks were criticised, brokers were blamed, and fingers were pointed every which way. As the blame gets shifted, so too do the facts. Who is responsible for what, and who should face the consequences? Will brokers bear the brunt of it as the smaller, less powerful industry compared to the banks? As one industry observer noted, many of the things that have come out of the royal commission aren’t a surprise. They’d already been subject to public case study. The real concern comes from the complacent banking culture from which they arose, which allowed profits to come before customers.
The silver lining is that more accountability is being demanded, and that will force bankers and brokers to do better and be better for customers What bubbles up to the surface from all of this is that the lack of trust in financial services is pervasive, something ASIC chairman James Shipton spoke about recently at the regulator’s annual forum. “The sustained degradation in trust in the people in finance will eventually start to degrade trust in the financial infrastructure itself. And this would be catastrophic,” Shipton said in his speech. To rebuild trust, one must earn it by being competent, caring and ethical, especially when no one is watching, he said. “I am suggesting that we need greater levels of professionalism in finance,” Shipton said, recognising that the regulators aren’t exempt from this either. The silver lining is that more accountability is being demanded, and that will force bankers and brokers to do better and be better for customers. There is no downside to that, but it does mean there’s a lot of work for the industry to do to lift standards and rebuild people’s trust in the importance of financial services and the integral service brokers provide. Otiena Ellwand, editor, MPA
APRIL 2018 EDITORIAL Editor Otiena Ellwand Journalists Paolo Taruc Sam Richardson Abel Riototar Contributors Dominique Grubisa Emma Bannister Michelle Gibbings Production Editors Roslyn Meredith Clare Alexander
ART & PRODUCTION Designer Cess Rodriguez Traffic Coordinator Freya Demegilio
SALES & MARKETING National Sales Manager Claire Tan Account Manager Simon Kerslake Marketing and Communications Manager APAC Michelle Lam Marketing Executive Emma Kemmery
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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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
Policing the industry ASIC’s latest enforcement report provides insight into how the regulator is dealing with industry fraud ASIC’S REPORT on enforcement outcomes between July and December 2017 gives an inside view of what happens to the small minority of financial professionals who attempt to skirt the law. During the second half of last year, ASIC completed 61 investigations and removed 54 people or companies from the industry or restricted them from providing financial services or credit. This report also establishes the regulator’s commitment to continuously enforcing higher standards to maintain people’s trust in financial
services. At the ASIC Annual Forum in March, chairman James Shipton spoke about the importance of re-establishing the public’s trust in the people who work in this industry. One must earn the consumer’s trust by being competent, caring and ethical, especially when no one is watching, Shipton said. “We must never forget that, ultimately, the financial system provides vital functions for the economy and for society. And if we get things wrong, the result could very well have a devastating impact on real people.”
63
235
5 years
$94.4m
investigations have commenced since July 2017
criminal charges were laid during the same period
was the longest prison sentence handed down for loan fraud
in remediation has been paid to investors and consumers
PROTECTION AND RESTORATION CONTINUES In the latter half of 2017, ASIC’s policing of financial services included 105 matters, nearly half of which (45%) were addressed via administrative remedies. As ASIC continues to deal with misconduct in the financial services sector, the regulator says it plans to pay close attention to several key concerns over the coming months, including responsible lending practices and financial advisers’ obligations to provide advice that is in a client’s best interest.
Source: ASIC enforcement outcomes, July to December 2017
LOAN FRAUD BY THE NUMBERS Since ASIC became the national consumer regulator in 2010, it has made tackling loan fraud a priority, which in turn helps to protect the integrity of lenders and brokers.
100+
investigations into loan fraud
15
criminal convictions
BANNED FROM PRACTICE ASIC’s enforcement efforts have led many people and companies to be banned from the industry due to loan fraud since 2010. Cases of deliberately falsifying documents in support of loan applications “has a detrimental effect on the lending industry”, ASIC wrote in its report. “It damages the reputation of lenders and brokers, increases the cost of lending, and creates affordability risks for borrowers.”
660
people havee bee been removed or restricted from om pr providing financial services vice
336
of thee 60 ppeople removedd we were permanently banned anne
220
people or co companies have had their heir licence l cancelled or suspended spend
$42,500
in infringement notices paid Source: ASIC enforcement outcomes, July to December 2017
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Source: ASIC enforcement outcomes, July to December 2017
DISHONEST CONDUCT, MISLEADING STATEMENTS
CREDIT • Criminal • Civil • Administrative • Enforceable undertaking • Negotiated outcome TOTAL MISCONDUCT
2 0 23
• Criminal • Civil • Administrative • Enforceable undertaking • Negotiated outcome
2 7
34
TOTAL MISCONDUCT
OTHER FINANCIAL SERVICES MISCONDUCT
4 23 8
2 3 17
• Criminal • Civil • Administrative • Enforceable undertaking • Negotiated outcome
2 2
39
5 5
32
TOTAL MISCONDUCT
Two criminal matters and one civil matter in the ‘dishonest conduct, misleading statements’ category are currently under appeal. One administrative remedy in the ‘other financial services misconduct’ category is currently under appeal. Source: ASIC enforcement outcomes, July to December 2017
CRACKING DOWN ON MISCONDUCT
PENDING CASES
By weeding out those who are putting consumers at risk with actions such as falsifying documents or failing to act in the client’s best interest, ASIC seeks to build consumers’ trust in the financial services industry. 8% 32% 13%
As of 1 January 2018, 70 financial services matters still awaited a final result, either because the court was reviewing the case or had not yet determined a penalty.
Credit
37% Dishonest conduct, misleading statements
31% Other financial services misconduct
Criminal
Negotiated outcome
9%
Criminal = Total: 14
25%
Enforceable undertaking
Civil
Outcomes by remedy type
Outcomes by misconduct type
Civil = Total: 56 2
Credit
3
Dishonest conduct, misleading statements Other financial services misconduct
10 19 0 31
Theft, fraud, misappropriation
45%
Unlicensed conduct
Administrative Source: ASIC enforcement outcomes, July to December 2017
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1 0 Source: ASIC enforcement outcomes, July to December 2017
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UPFRONT
HEAD TO HEAD
What does the future hold for trail commissions? The exhaustive scrutiny the financial services industry has been enduring lately might not be a cause of concern for brokers after all
Justin Barnes Director Finagri
“I think there is definitely a place for trail commission. Brokers work very hard at sourcing financial products that are inaccessible to many people. There are many options in the marketplace that families or businesses wouldn’t be able to enjoy without professional assistance. Removing commission may push some brokers out of the market and could ultimately lead to less competition in the lending market. “I understand there is a lot of noise in the market and a lot of press at present regarding trail commissions, but ultimately, more competition in the market is better for consumers and business operators.”
Janine Leafe
Credit adviser Approved Financial Planners “Trail commission will remain for the time being. We just need to sit it out until the heat disperses. Without it, we may see a number of diligent and ethical brokers/firms remove themselves from the industry, and this will have a detrimental effect on consumers. “The royal commission can dismiss those who do not belong in the industry, and the remaining will continue to service their client books with care. Their debt plans, regular contacts and trail income are reflections of their workload. “The issue, as I see it, is a small portion of ‘bad brokers’ slipping through the cracks due to lack of monitoring and compliance checks.”
Michael Russell Managing director MoneyQuest
“Normally I’d provide a stock standard response, but given the sensitivity with the Sedgwick, Productivity Commission and royal commission reports, I’ll be a little more circumspect. “Mortgage brokers are paid an upfront commission to originate a mortgage loan. Brokers are then paid a trail commission for providing a ‘life of loan’ service to mortgage customers post-settlement. This service includes, but is not limited to, making a six-week post-settlement call, providing opt-in annual reviews, and submitting pricing requests and loan variations. Mortgage brokers provide this service willingly in consideration for receiving trail commissions. I foresee no change, but brokers must live up to their obligations.”
IMPROVING CONFIDENCE IN MORTGAGE BROKING On 11 December 2017, representatives of Australia’s mortgage broking industry publicly released a landmark reform package in response to ASIC’s review into broker remuneration. The industry has agreed on six principles that aim to improve consumer outcomes and confidence in mortgage broking. The six principles encompass changes to commission structures, addressing bonus commissions and volume-based payments, implementing changes to tiered-service models and eligibility of non-monetary benefits, and implementing a new ownership disclosure, as well as new public reporting and governance frameworks.
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UPFRONT
NEWS ANALYSIS
Bank memos tell all A preoccupation with reputation and a desire to conform may be reminiscent of high school – but the stakes are much higher when these are the concerns of Australia’s biggest banks. Otiena Ellwand breaks down the banks’ mortgage pricing decisions THE ACCC’S interim report into residential mortgage pricing found that the biggest banks in Australia have become more concerned with “maintaining orderly market conduct” – as one bank memo revealed – than with fuelling price competition. The ‘inquiry banks’ (CBA, Westpac, ANZ, NAB and Macquarie) therefore tend to employ pricing strategies that align with, rather than rival, one another. “There are signs of accommodative oligopoly behaviour among the big four banks,” the report said. In the past, the banks’ interest rates were more transparent because they were linked
“That’s no more. The gyrations of the last 12 months have dispelled the myth that the Reserve Bank is setting rates.” What this means for borrowers – and for brokers – is that the pricing landscape has become even more complex, and as the ACCC report shows, neither party is always getting as good a deal as expected. The ACCC’s report collated documents and data from the inquiry banks’ pricing decisions from 30 June 2015 to 30 June 2017. As of December 2017, these five banks held approximately $1.3trn in outstanding residential mortgages, representing 84% of all mortgages held by Australian banks.
“The discounting by big banks lacks transparency, and it’s almost impossible for customers to obtain accurate interest-rate comparisons” Rod Sims, ACCC to the cash rate decisions of the Reserve Bank, says Steve Mickenbecker, group executive of financial services at Canstar, a leading comparison website of home loans and other products. “Consumers used to watch the Reserve Bank’s every move in expectation that a 0.25% move in the cash rate would mean a 0.25% move in their home loan rate,” he says.
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Not the best deal While consumers might think that basic or ‘no frills’ mortgages are the most affordable option, the ACCC found that that’s not always the case. A price comparison found that borrowers on no-frills owner-occupier loans with ANZ and CBA actually paid higher average interest rates than borrowers with standard
owner-occupier loans once discounts were factored in. This was not a one-off occurrence either, but was indicative of a broader trend where the discounts offered to standard loan borrowers actually amounted to a better deal and lower average interest rates than the no-frills option. Banks offer borrowers various discounts, both advertised and discretionary, based on a range of factors, including the lender’s policies, the individual’s characteristics, their value or potential value to the bank, and their ability to negotiate. These discounts can significantly impact what a customer pays. Across the five inquiry banks, the average discount on variable rate loans ranged from 78 and 139 basis points off the headline rate, the ACCC found. At each inquiry bank, 44% or more of borrowers were receiving a discount of more than 90 basis points in June 2017. “The discounting by the big banks lacks transparency, and it’s almost impossible for customers to obtain accurate interest-rate comparisons without investing a great deal of time and effort. But the potential savings
THE MAJOR BANKS’ MORTGAGE MONOPOLY Market share* Commonwealth Bank** 25% Westpac** 24% ANZ 15% National Australia Bank** 15% Macquarie Bank <2% Other banks 15% *Share (by value) of residential mortgages outstanding with banks. Banks account for approximately 94–96% of all outstanding residential mortgages. **Data includes the inquiry banks’ other brands Source: ACCC Residential mortgage price inquiry, interim report
from these discounts are immense,” said ACCC chairman Rod Sims. Lenders provide discounts to win or retain business, and may price more attractively in the broker channel, Mickenbecker says. “The problem with discretionary discounts is that consumers have no idea how much is on the table,” he adds. “Is 20 basis points all that I could expect to negotiate, or are people like me getting a 40-basispoint discount?” This is historically where brokers have added value: by being able to negotiate, navigate the complexities, weigh up the options and score a better deal for customers. But the Productivity Commission has seeded doubt about this in its draft report, claiming that “brokers do not consistently get lower home loan interest rates for consumers”.
Shared interest in avoiding disruption The ACCC stated that the inquiry banks – and the big four in particular – lacked the appetite for “vigorous price competition”, appearing to have a “shared interest in avoiding disruption of mutually beneficial
pricing outcomes”. Instead of trying to increase market share by offering the lowest rates possible, the banks were mainly preoccupied with each other, the report said. In late 2016 and early 2017, two of the big four banks each adopted pricing strategies aimed at reducing discounting in the market, even though this was potentially costly for them if the other majors didn’t follow suit, the ACCC found. Similar sentiments were expressed in bank executives’ internal communications, which made reference to “maintaining orderly market conduct” and “industry conduct”. The banks were not only attentive to how their direct competitors were setting rates, but also to how they would be announced to the public. Fear of bad publicity and political scrutiny even prompted one inquiry bank to defer a rate rise due to the potential reputational damage. Another bank’s internal document noted that changing the variable interest rate without an easily understood reason, or a trigger event, could have the “potential to attract a lot more attention and focus”.
Blame it on APRA APRA’s prudential measures limiting lending to investors to 10%, and interest-only repayments to 30% of new lending, compelled the banks to employ a number of strategies to curb their appetites. Some reduced discounts to new investor borrowers and tightened loan approval criteria. When those measures weren’t sufficient, the solution across the board was to increase rates. The opportunity to gain “substantial economic benefit” of hundreds of millions of dollars in additional revenue – as one internal document put it – and meet performance targets was not lost on the banks, the ACCC said. Once some of the inquiry banks raised their rates, the others claimed a need to do the same or else be inundated with new loans and breach APRA’s cap, the report said. In 2017, all the inquiry banks attributed an increase in variable interest rates for interest-only loans on both new and existing customers to APRA, a matter that will be investigated in further detail once the ACCC releases its final report after 30 June.
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UPFRONT
GOT AN OPINION THAT COUNTS? Email otiena.ellwand@keymedia.com
OPINION
Where do investors stand? A federal politician recently argued that radical action was needed to prepare the Australian economy for a looming disaster. Was he right? Dominique Grubisa takes a closer look
WITH AUSTRALIAN household debt at an all-time high and a potential global downturn looming, the Australian economy is in dire trouble. What’s needed is a radical shake-up of our economic policies – and fast. That’s what Liberal MP Tim Wilson argued when he stepped onto the floor of Parliament at the end of February to deliver an impassioned speech. Pointing to the low cash rate of 1.5%, “overvalued housing assets” and the fact that our collective housing debt is now almost the size of our GDP, he said the federal budget in May must confront structural imbalances in the economy. While there’s no doubting Wilson’s passion, I believe he has got it wrong. Current government policy is actually right on track to bring the housing market back into balance over the next few years, and there are likely to be plenty of opportunities for investors as a result. Basically, what the government is striving to achieve is a balancing act between a gentle cooling of the hot end of the market while trying to keep the overall property market buoyant. Because 60% of the country’s economy is derived from spending, it knows that the more money we put into servicing our mortgages, the less we have to spend on other things – and that hurts the economy. The RBA is too worried about quashing the housing market entirely – and the flow-on effects on the economy – to raise rates any time soon, so the government is opting for a clever middle-of-the-road
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approach. It realises that by controlling the source of credit and making credit harder to obtain, it can reduce the amount we spend on housing and remove some of the heat from the market. How is it doing this? One major way is by targeting interest-only loans. Through APRA, the government has mandated that such loan products must be reduced in the marketplace. Rather than just paying the interest and waiting for capital growth, investors and owner-occupiers will increasingly be
So what will this mean for your clients? They are going to experience significant flow-on effects from a reduction in the availability of interest-only loans. Sadly, many people who were able to make ends meet when they were only paying interest will struggle to pay off principal as well. Because the loans market is changing, they are likely to find it hard to switch to another interestonly loan. As a result, we’re likely to see baby boomers, retirees and first home buyers forced to sell their properties. Anyone in that situation should be aware that there are interest-only loans still out there, as well as provisions in the Banking Code of Conduct and the Credit Code, that people experiencing such difficulty can rely on in order to vary their loans. Also, CBA and Westpac both lowered fixed interest rates on interest-only loans for new customers recently, so clients can look at switching and fixing. What does this mean for investors? Those who are cashed up and ready to buy will benefit from an increase in supply and a reduction in pent-up demand – both resulting in lower property prices. However, the big joker in the deck is disruptive changes to the lending arena, like peer-to-peer and market-
Current government policy is actually right on track to bring the housing market back into balance over the next few years forced to pay down their debts. The number of interest-free loans in Australia is immense. Michele Bullock, assistant governor of the RBA, said in a recent speech that in early 2017 some 40% of debt did not require principal repayments. A particularly large share of this debt is held by property investors, although some owneroccupiers have also not been paying down principal. The interest-only period of most loans is only five years, and according to the ABC, some $640bn in interest-only loans is currently outstanding. The holders of many of these loans will need to start paying down principal as well as interest between 2018 and 2022.
place lending and crowdfunding. APRA does not control non-bank lending, and if the banks stop lending due to APRA’s rules, this could free up space in the market for nonregulated lenders to move in. There’s no doubt that the next five years will be an interesting time for both investors and the mortgage market.
Dominique Grubisa is the founder and CEO of the DG Institute, a wealth management education service specialising in making property investment possible for all Australians. She is also a practising solicitor and property investor.
PEOPLE
VENDOR FOCUS
AARON MILBURN: SOLUTIONS AT YOUR FINGERTIPS Pepper Money’s director of sales and distribution talks about the Pepper Product Selector tool, which is making it easier and faster for brokers to find solutions for underserved borrowers MPA: What sort of technological changes has Pepper made recently for the broker channel? Aaron Milburn: At Pepper, we believe customers should never be in a position where they don’t understand their financing options, regardless of their circumstances. We know non-conforming borrowers are the largest underserved segment of the market. Our research has shown that six out of 10 eligible non-conforming customers go empty-handed when they could have been helped by a broker. We wanted to make sure that those clients never leave a broker’s office with a “no” when it should have been a “yes” – that’s why we developed the Customer Conversion Toolkit, featuring the Pepper Product Selector.
MPA: The Pepper Product Selector was launched last year. For those brokers who haven’t used it yet or don’t know how, why should they and what should they know about it? AM: Essentially, it’s a market-first conversion tool that allows brokers to identify a specific home loan product, interest rate and
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fees for any client in less than two minutes. The Pepper Product Selector takes the guesswork out of finding the most appropriate Pepper product for brokers’ customers, especially for difficult scenarios.
As part of the product matching process, Pepper Product Selector will ask if the customer’s credit score is known. If the score is not known, the tool will access the credit bureau to retrieve the credit score free of
THE PEPPER PRODUCT SELECTOR TOOL: WHAT’S IN IT FOR BROKERS Convert more customers Create incremental sales and revenue opportunities Improve customer service Provide a timely, readily available and customised product offer Alternative to a decline Pepper Money may provide a viable loan alternative in minutes Ease of use Mobile-responsive application with one-time log-in to Pepper Product Selector and the credit bureau No cost Free for accredited brokers to use and submit Pepper Product Selector applications to the bureau It’s fast Receive an indicative decision within minutes
Sponsored by
charge via an ‘Access Seeker’. This method does not impact the customer’s credit score and is visible to the customer only, not to lenders and other credit providers. PPS can be used for any customer situation. However, it can be particularly useful where their circumstances will not typically fit the banks’ criteria and you are searching for an alternative solution.
“Pepper Product Selector can be used for any customer situation. However, it can be particularly useful where their circumstances will not typically fit the banks’ criteria and you are searching for an alternative solution”
MPA: How has the tool changed and evolved since 2017 to further assist brokers? Did you take on broker feedback? AM: Following feedback from our early-
adopter brokers, we released our first round of improvements in January, all aimed at optimising the user experience for brokers and their customers. We will continue to release further updates as more brokers use the tool.
MPA: How are you seeing brokers use the PPS tool? Any surprises there? AM: We’ve really seen brokers embrace the extra information they are receiving upfront to help their customers make a decision.
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FEATURES
VENDOR FOCUS
PEPPER PRODUCT SELECTOR BY THE NUMBERS
1,700 brokers used the tool 4,600 times in January 2018
$2bn worth of submissions have been put through the PPS tool since it launched in 2017
60% of brokers who’ve tried PPS have used it more than once
85% of users say it’s easy, simple and quick
9 out of 10 times, PPS will provide an indicative offer
The uptake has been swift and overwhelming. In January alone, we had 1,700 brokers utilise it 4,600 times. We have had nearly $2bn in submissions put through the Pepper Product Selector tool since it launched last year. It’s brought a number of new brokers who are relatively new to writing nonconforming business, and it’s helping dispel the misconception that writing a non-
conforming loan is too hard. What’s been most pleasing is the level of repeat use the tool is getting. Sixty percent of brokers who’ve tried PPS have used it more than once. Eighty-five percent of users have told us they like how easy it is to access the tool, they love its simplicity and how quick it is to use. These findings aren’t really a surprise to us, as we designed the tool with all this in mind.
they quickly realise how readily they can adopt it for all their customers who might not meet a bank’s criteria.
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Selector will provide an indicative offer which includes the product, rate and applicable fees. For those extra-tricky deals, PPS will refer the broker to the Pepper Scenarios Team, who are trained to work with the
“[The PPS tool] has brought a number of new brokers who are relatively new to writing non-conforming business, and it’s helping dispel the misconception that writing a non-conforming loan is too hard”
MPA: Are there any features of the tool that perhaps brokers aren’t yet using to the full extent and that you think they should know more about? AM: Not really. Once a broker tries the tool,
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MPA: What about those tricky deals? Can the PPS still provide an indicative offer in those cases? AM: Nine times out of 10, Pepper Product
broker to determine the best and most appropriate outcome for the customer.
MPA: After a broker uses the tool and receives an indicative offer, what do they do next? AM: All the broker needs to do is submit a formal application as per the usual process, attaching a copy of the indicative offer letter to the application. Pepper will honour the rate and fees documented in the indicative offer, subject to there being no material differences between the information entered into PPS and the formal application. If there is a material variance, Pepper will contact the broker to discuss the application.
MPA: How is the tool speeding up the loan process for brokers’ customers? AM: PPS was built around returning a
MPA: If brokers want to start using this tool or they want to find out more, what steps should they take to do that? AM: We have lots of information available
quick decision so that brokers can provide a customer with an alternative solution in less than two minutes.
on our broker portal. Alternatively, a broker can talk to a Pepper Money BDM to request a live demo.
SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE 2018
2018
NON-MAJOR BANK ROUNDTABLE With the big four under intense scrutiny, now is the moment for the non-major banks to shine. During a live panel discussion, two non-major bank heads explain how they’re standing by the third-party channel – including upfront and trail commission – and why brokers should be working with them
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MPA’S NON-MAJOR bank roundtable did not go according to plan, but sometimes a bit of the unexpected actually makes for a more fulfilling and worthwhile outcome. Brokers know that better than most. A few hours before we were set to go live on 14 March, Bankwest’s Ian Rakhit had to recuse himself from the broadcast. The roundtable was already down to three participants after the confirmed spokesperson from Bank of Queensland, Adrienne Smith, announced just a week before the event that she would be leaving the bank to take a position with AMP. So the stage was set for two. In the end, MPA was fortunate to have Mark Vilo, head of bank intermediaries at Suncorp, and Sarah Willsallen, NSW/ACT state general manager of broker distribution for St. George Bank, still keen to take on brokers’ questions. Having fewer participants actually allowed us to have a more intimate and in-depth conversation. Both Vilo and Willsallen covered a lot of ground, explaining where their banks stand in regard to some of your pressing questions about the banking royal commission, the Productivity
Commission, trail payments, competition and household living expenses. While the non-majors aren’t the prime targets of the royal commission, they’re no doubt still feeling the pressure. Hopefully it won’t scare them into silence, because this might actually be the non-majors’ moment to shine – something both Vilo and Willsallen did brilliantly at MPA’s roundtable. They both championed the progress made by the Combined Industry Forum, lauded collaboration as the key to improving industry standards and professionalism, and expressed unwavering support for the third-party channel, evidenced by the amount of money both banks are investing in education and training resources. While it’s hard to know now what changes might come down the pipe out of all these inquiries, brokers have some allies. As always, you can watch this panel discussion on our website, www.mpamagazine.com.au. Our next roundtable on 11 May will feature some of the industry’s biggest aggregators. Join us then to hear what they have to say about commissions, accreditation, bank ownership and more.
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SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE 2018 THE PANELLISTS
AUDIENCE QUESTION How will the banking royal commission impact the non-major banks?
Q
Mark Vilo Head of bank intermediaries, Suncorp
What changes do you plan to make to broker commission and governance in response to the CIF reforms, and how will these affect brokers going forward? Despite ongoing inquiries by the banking royal commission and the Productivity Commission, the Combined Industry Forum [CIF] will be ploughing ahead with its reforms to broker commission structures based on the facility utilised, net of offset. It
Sarah Willsallen NSW/ACT state general manager of broker distribution, St. George Bank
than they required. While the CIF has crafted its proposal around this, most lenders haven’t actually touched commissions yet. So as far as brokers are concerned, it’s business as usual, Vilo said. Based on MPA’s latest Brokers on Banks survey, the majority of brokers weren’t happy with the CIF’s commission reform. Sixtynine percent said commissions should not be based on facility drawdown, net of offset,
“We need to be willing to contribute and invest in our industry without necessarily expecting an immediate financial return … Brokers are a partnership in an ecosystem that we think is really important in delivering great outcomes for customers” Sarah Willsallen, St. George Bank will also be introducing a new ownership disclosure and public reporting framework and commence work on an industry code. As part of the CIF’s commissions working group, Mark Vilo, Suncorp’s head of bank intermediaries, had a front-row seat to the consultation and debate that went into deciding how to amend upfront commissions to deal with ASIC’s primary concern around the potential for brokers to encourage borrowers to take on larger loans
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while 31% said it should. So once this reform is implemented, how will it affect brokers’ profits? “There has been some healthy debate around the impact that it has on a broker’s back pocket, and certainly from an aggregator’s point of view, but I think the broker community does understand the rationale behind it,” Vilo explained. “The thinking is we are going to pay on a facility when it is being used, as opposed to
Mark Vilo: “It’s hard to talk about something that is currently in flight, and naturally ... it will be challenging for us to start making comments on it. However, if you think about the work that the CIF has done, the recommendations that we put forward were not actually put forward on the basis of expecting a response. So, what we’ve done is we’ve submitted it to Treasury and to the minister, and the expectation, from our point of view as an industry, is that we need to get on with it. We can’t sit back and say, ‘I wonder what is going to happen with the royal commission?’” Sarah Willsallen: “We are absolutely cooperating with the royal commission. We are fully supportive of it, and we think anything that does lead to better customer outcomes can only be a good thing for our industry and for brokers. Obviously, it’s still unfolding as we speak, so there’s probably not a lot more we can go into there, but I think it will be a good opportunity to drive standards forward.”
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when it’s sitting there or lying dormant in an offset account. I think that’s reasonable.” St. George Bank’s NSW/ACT state general manager of broker distribution, Sarah Willsallen, added that the Westpac Group was also an active participant in the CIF and was fully supportive of the recommendations. St. George Bank will be moving ahead with paying brokers on the ‘facility utilised’ model and is currently making changes to its systems so it can implement that reform. Willsallen said the bank would be in a position to meet the CIF’s target for commission changes to be completed by the end of the year. Both Vilo and Willsallen spoke highly of the CIF for demonstrating that the industry could work together in a sensible and constructive way. Vilo said that in the early stages of his intermediary role at Suncorp, he was concerned about how the industry would collaborate. “In my previous lives, that was always very difficult – a lot of kicking and screaming to get everyone at the same table. I’ve been really inspired by the amount of effort that’s gone in from all stakeholders, whether it’s been brokers, aggregators, lenders, consumer groups or associations, all rolling their
sleeves up.” The CIF’s crowning achievement, in Willsallen’s opinion, was defining a good customer outcome and clearly articulating what that is and what it involves. “With all the changes that are going to continue to evolve in the landscape, that becomes your guiding light; it’s your North
“The thinking is we are going to pay [commission] on a facility when it is being used, as opposed to when it’s sitting there or lying dormant in an offset account. I think that’s reasonable” Mark Vilo, Suncorp Star. If we hold true to that, it will always put us in a good position,” she said.
What is holding the non-major banks back from becoming significant challengers to the majors? ACCC chairman Rod Sims recently said the competition regulator would look at what barriers existed for the non-major banks and why they hadn’t become stronger rivals
MARKET CONCENTRATION OF AUSTRALIA’S ADIs BY ASSET SIZE 9.6%
0.8% 0.3%
Major banks
0.1%
2.8%
Other domestic banks
9.9%
76.4%
Foreign subsidiary banks
Building societies Credit unions Other ADIs
Foreign branch banks
Source: APRA, banking royal commission, September quarter 2017
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to the big four banks. “There’s nothing wrong with having four players in the industry, provided they have the threat of real competition on them,” Sims recently told MPA. According to the ACCC’s interim report into mortgage pricing, which was published in March, the five biggest banks in Australia
held approximately $1.3trn in outstanding residential mortgages as of December 2017, representing about 84% of all mortgages held by all banks in Australia. Vilo acknowledged that there were a number of challenges for non-majors, including the need to hold more capital and a higher cost of obtaining wholesale funds than the majors. While the bank levy on Australia’s five largest banks had improved the gap, Vilo said non-majors still had to work “a little bit harder to get the business that we need to get and the funds that we need to get access to and the capital we need to hold”. That said, he and Willsallen both felt the non-majors deserved a bit more credit than Sims allowed. “I actually think that the non-majors are doing a tremendous job in being active and driving competition in the marketplace, and I think the winners out of that are customers,” Willsallen said. She added that across the Westpac Group’s customer base, which is composed of Westpac, St. George Bank, Bank SA and Bank of Melbourne, there was very little crossover because customers appreciated the experience they got from the bank they were with. “What that says to us is customers do
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value the choice, and I think the non-majors are doing a tremendous job of driving that competition and customer choice in the market,” she said. Any opportunity to look at what the industry could do better or differently was a good thing, she added. Vilo agreed that non-majors and others had made a “dramatic difference” to the marketplace and that they would continue to shine by increasing their service proposition. “It’s kept the market on its toes, and it’s kept us all honest, and it has allowed customers to get better deals, and I think mortgage brokers do an awesome job around all of that,” he said. With the ACCC looking into competition issues, Vilo said this would allow the nonmajors a chance to step back and reflect on how well they were doing and what obstacles were preventing an even playing field.
Does more need to be done to ensure brokers are acting in their clients’ best interests, or is the current ‘not unsuitable’ obligation enough? The Productivity Commission has called for a new legal duty to be introduced for mortgage brokers who work under bank-owned aggregators to ensure they act in their clients’ best interests. A few banks have said that if this is introduced they’d like to see it applied across the board. They have also pointed out the challenge of defining what a ‘best interest’ is for the many diverse clients they serve. Vilo said the vast majority of brokers already did what was best for their clients, so he didn’t see any reason why that legal duty shouldn’t expand across the whole broker network. While consumer credit products are subject to responsible lending criteria, the broker’s primary obligation is to ensure the loan is not unsuitable in meeting the client’s requirements and objectives. Whereas the best-interest duty would exist beyond the first discussion and the recommendations put forward during that encounter to ensure that there was an ongoing review of clients’ needs. He said the most important thing was
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WHERE BROKERS’ LOANS ARE GOING 6.9% 2.4% 5.9% 4.8% 10.2%
12.7%
7.2% 3.5% 6.6% 5.0%
4.9% 3.4% 7.1%
7.7%
7.1%
7.6%
8.6%
5.6%
4.6%
4.9%
4.7%
5.7%
7.4%
6.3%
6.6%
6.6%
4.9%
4.2%
5.0%
6.4%
5.7%
7.4%
5.7%
5.9%
5.9%
6.2%
6.5%
11.7%
14.8%
Others
6.2%
14.7%
14.8%
14.8%
13.6%
Non-bank lenders
7.1%
Brokers’ white-label loans
6.1%
International banks
6.7%
Independent regional banks
13.0%
Regional banks owned by or aligned to major banks
57.0%
59.8%
57.5%
55.6%
54.9%
55.9%
55.2%
53.0%
Jan Feb Mar 2015
Apr May Jun 2015
Oct Nov Dec 2015
Jan Feb Mar 2016
Apr May Jun 2016
Jul Aug Sept 2016
Oct Nov Dec 2016
Jan Feb Mar 2017
Major banks
Note: No data was available for July-September 2015 Source: MFAA Industry Intelligence Service report, October 2016–March 2017
AUDIENCE QUESTION Q Where do the non-majors stand in regard to trail commissions, and do you think trail will continue to exist?
Q
Despite the negative attention it’s recently received from the Productivity Commission, Vilo and Willsallen both expressed support for trail. “From a St. George perspective, we actually continue to see trail as an important part of broker remuneration,” Willsallen said. Part of that is making sure that brokers continue to conduct a review with their customers so they understand their requirements and objectives as their circumstances evolve. Vilo said commissions were the right way forward to ensure competition between
the direct lending and broker channels. “It will be challenging to get individuals to pay a fee for service that’s provided by a mortgage broker when they can walk into a branch and not have to do that,” he said. “To remove trail commissions [would] adversely impact brokers’ businesses, so we need to be really mindful of that as lenders across the whole spectrum.” While the vast majority of brokers already review their customers’ circumstances and service those ongoing relationships, there’s nothing actually embedded in the Corporations Act or anywhere else that explains what those rules and expectations are, Vilo said. “I think there is an opportunity for us to clearly articulate what that means and what the purpose of trail is,” he said.
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NON-MAJOR BANK ROUNDTABLE 2018 AUDIENCE QUESTION Given APRA’s obsession with monthly household expenses, is there any chance that credit providers can develop a standard format to categorise the expenses?
Q
to make sure there were “proof points”, or documents explaining the rationale behind each decision. Vilo pointed to the financial planning industry, which has implemented a bestinterest duty, and while he didn’t suggest that should be replicated with brokers, he believes it is worth studying what other industries and countries have done. “It’s not to inhibit what a broker is doing. I think any change that we do make should
a good consumer outcome is, which aligns with what brokers are already doing. “The vast majority of brokers absolutely do the right thing; they act in their clients’ best interests. They spend lots of time getting across the customer’s requirements and objectives; they make sure they really understand a holistic picture of the customer’s expenses and the circumstances of their situation,” she said. “What we see as well is how we continue
“We help people into their homes; we help people build successful and financially stable retirements …We’re really lucky ... to have something so honourable to do” Sarah Willsallen, St. George Bank be designed to enable a broker to be able to confidently talk with their customer and know exactly what the purpose of their role is, and it’s defined throughout the course of the customer’s journey,” he said. Willsallen said she was proud of the work the CIF had done around articulating what
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to all have a role in raising the bar.” Both Suncorp and St. George believe education is the key to raising that bar, and it’s something both banks are investing in. St. George has launched a webinar campaign and has an online platform where brokers can learn through peer-to-peer sharing,
Last September, ANZ and CBA added extra checks to their loan application processes. ANZ’s updated customer questionnaire prompts brokers to ask prospective borrowers about their Netflix and Spotify subscriptions and whether they’re planning to start a family. CBA introduced a simulator to show interest-only borrowers how their repayments would change and affect their lifestyle. Customers wanting to proceed had to fill in an acknowledgement form. Westpac now requires customers who use digital credit platforms like AfterPay and ZipPay to disclose what they owe on those transactions if they apply for a home loan. In response to the question, Willsallen said that while APRA’s focus provided a good opportunity for consistency both on income and expense categorisation and labelling, the challenge of standardising the practice was that each lender had its own credit policy and its own systems and decision-making processes. “We’ve seen some good outcomes from the CIF about what we can do as an industry when we do collaborate and the opportunity that it does provide for us, but I do think it’s more likely to be a slower road,” she said.
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including podcasts. Suncorp offers diversification masterclasses in person and a broad range of diversification modules. “We need to be willing to contribute and invest in our industry without necessarily expecting an immediate financial return. It’s actually not about that. Brokers are a partnership in an ecosystem that we think is really important in delivering great outcomes for customers,” Willsallen said.
As the scrutiny and inquiries into the broking sector and the home loan market continue, how should brokers stay informed? Vilo advised brokers to keep close to their member associations, as they have been actively involved in representing the industry and ensuring it remains sustainable, as well as to their aggregators and the leadership within those groups. Willsallen said that while the inquiries were ongoing, it was important for brokers not to lose sight of having pride in what they did every day. “We help people into their homes; we help people build successful and financially stable retirements. And I think, yes, staying current is important … but I just keep to the vocation and the sense of purpose. We’re really lucky ... to have something so honourable to do.”
BROKERS’ THOUGHTS ON COMMISSION CHANGES Should commissions be based on facility drawdown, net of offset?
31% NO 69% YES
Source: MPA Brokers on Banks 2018
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AUDIENCE QUESTION Looking forward over the next year, will brokers be writing more or less, and why?
Q
Mortgage brokers are very resilient, Vilo said. “You only have to be out in the field talking to them. They acknowledge that there’s stuff going on, but they’re focusing on what they can control, and that’s seeing customers and getting good customer outcomes and continuing to work and grow their business and their people.” There’s no shortage of business for brokers, he added, as plenty of customers around the country are keen to get advice from them, especially as the lending landscape becomes more complex. “Will more brokers be doing business
with the non-majors? Absolutely, that’s my plan ... We want to make sure that we have currency with brokers,” Vilo said. Willsallen said the mortgage broking industry had been on a 20-year journey from non-existence to more than 50% market share because of the independence, expertise and convenience it offers consumers, and that likely wasn’t going to stop anytime soon. “Our role as lenders is how do we help support that journey? How do we partner with them all on education and training, on tools and systems and a relationship that is going to enable them to be in the best possible position to continue to deliver great customer outcomes so that customers will continue to vote with their feet?”
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OUTSOURCING
Take back your Sundays The huge economic benefits and excellent backoffice support and customer care are leading more and more brokers to consider outsourcing. Two leading companies in the space explain how outsourcing can improve a broker’s business
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MPA TOP 100 mortgage broker Deanna Ezzy first started working with a team offshore about four years ago, through her previous employer. “As brokers know, there are many more t’s to cross and i’s to dot than ever before,” Ezzy says. “An offshore team is a fraction of the cost; they honestly love doing the work and will work hard for you.” When she started her own brokerage, More Than Mortgages, in November 2017, Ezzy decided to continue with the same set-up, as it had worked so well. She now has one loan processor in the Philippines who assists with a number of tasks, including filing, data entry, valuations, pricing, commission tracking and following up with banks for updates. Outsourcing and offshoring is no longer reserved for big businesses like Qantas and the major banks. The practice has become much more familiar to small business owners, including many Australian mortgage brokers who are looking for ways to cut costs while still providing excellent and efficient service to customers. According to an AFR article from 2013, the outsourcing industry in the Philippines at the time was estimated to be worth more than $13bn per year and employed more than 750,000 people. Those numbers have most likely only risen since then. Garry Driscoll, president of Boutique Outsource Solutions, a company that sets up and supports outsourcing offices in the Philippines for Australian businesses – including the hiring of staff, IT infrastructure, payroll and government reporting – says he’s seen a spike in enquiries from SMEs over the last six months. Many have begun to recognise the advantages and excellent customer service that can be provided from abroad. “Offshoring is the same as having one of your staff work remotely from home, except you have far more control when they are
located in an office like Boutique Outsource Solutions,” says Driscoll, who works in Manila 80% of the time to provide direct on-site assistance. Customers don’t care so much where the employee is located as long as they can get something done quickly, efficiently and accurately when asked, Driscoll says. The
can process these deals without impacting their service proposition on their core business, and the additional business has more than paid for the staff member,” Driscoll says. Andrew Duerden, director of business services at Loanworks Technologies, a company that has been providing outsourced back-office support and specialist loan
“I have had a broker client say that they are now accepting a greater variety of business because they are comfortable that they can process these deals without impacting their service proposition”
OUTSOURCING IN AUSTRALIA Business process outsourcing is a growing industry in Australia that assists businesses with their front- and back-office tasks. IBISWorld puts the current size of Australia’s business process outsourcing industry at:
$32.1bn
$2.9bn
Revenue
Profit
Garry Driscoll, Boutique Outsource Solutions economic benefits of outsourcing, coupled with better quality of service and greater customer satisfaction, leads to an improved bottom line for brokers. “I have had a broker client say that they are now accepting a greater variety of business because they are comfortable that they
processing services from Manila for more than nine years, has also seen an increase in interest from aggregators and broker groups. They see outsourcing as an effective way to grow their businesses while maintaining a high level of compliance, he says. “We have been able to achieve a preferred
1.2%
29,256
Annual growth, 2013–2018
Businesses
Source: IBISWorld Business Process Outsourcing in Australia, January 2018
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OUTSOURCING
COMMON OUTSOURCING TRIGGERS Loanworks Technologies shares the top reasons brokers and others turn to outsourcing: Not enough hours in the day; sick of working in the evening and on weekends Data entry distracts from focusing on customers Too much work for a part-time PA
Want to focus their skills on delivering excellent customer service and outcomes instead of lodgement and loan tracking Need to reduce costs in their back office to make more profit
supplier status with a number of aggregators and broker groups. We have already had more than 100 enquiries this year and onboarded dozens of brokers,” Duerden says. Outsourcing can help brokerages handle all of the tasks associated with the basic transaction-based process, such as loan processing, general administration and customer service, freeing up time for brokers and their in-house staff to work directly on adding value to their face-to-face relationships with customers. “In these activities, personalised customer contact adds value, helps manage customer expectations and identify customer priorities,” Duerden says.
When is the right time to outsource? Do you work on Sundays? Are you sending emails and answering calls well after business hours? Are menial tasks distracting you and cutting into your productivity? How much face time are you getting with clients? These are all common triggers for why brokers turn
It’s also worth considering how outsourcing can assist in different ways throughout the business life cycle, Duerden says. For instance, at the beginning, when brokers are trying to grow their customer and referral base and commission comes in ebbs and flows, they can leverage outsourced loan processing services to reduce the time spent on data entry, loan tracking and administrative tasks. As the business grows, they can extend their use of outsource services, which could include establishing their own dedicated outsource team, including personal assistants and post-settlement customer service. Once the business stabilises, the brokerage will have achieved a strong relationship with their outsource provider and can work towards future transformations and innovations for the business as a team. “In all cases, brokers are looking for an outsource provider who understands their particular business needs and has experience in their core activities,” Duerden says.
“As brokers know, there are many more t’s to cross and i’s to dot than ever before. An offshore team is a fraction of the cost; they honestly love doing the work and will work hard for you” Deanna Ezzy, More Than Mortgages to outsourcing. The writing is on the wall when basic repetitive tasks start to interfere with a broker’s ability to focus time and energy on more productive and important activities, Driscoll says. However, he cautions brokers not to wait until they’re completely snowed under to make the transition, or they’ll have little time to train their offshore staff member on their way of doing business.
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Finding the right balance Ezzy’s staff member in Manila is a valued part of her business, but she admits that working with employees overseas did take some time to get used to. At first she thought she had to treat outsourced employees differently than she would have treated an Australian employee to account for different social and cultural norms. She made an effort to tread lightly and
“In all cases, brokers are looking for an outsource provider who understands their particular business needs and has experience in their core activities” Andrew Duerden, Loanworks Technologies be overly nice so as not to offend anyone, an approach she later realised was detrimental to their professional development. It made staff feel like they had no ownership over their work, so she adjusted her approach. “They will grow and add the most value to
your team if you give them honest feedback about their work performance and hold them accountable, at the same time encouraging them to contribute to team meetings, systems and processes, and saying good morning and goodbye,” Ezzy says. “Basically, they want
to belong to the team, so treat them as you would all your other team members, and you’ll get the best result.” When she officially opened More Than Mortgages, Ezzy brought her staff member, Glaiza Miguel, from Manila for a week to be part of the launch. Miguel’s photo and bio are also posted on the ‘meet the team’ portion of Ezzy’s website. “Doing this has had so many benefits for the whole team,” Ezzy says. “Not only did she get to see the office where we work from each day, but we got to know each other well, and there’s no doubt in my mind that we both want the best for each other, professionally and personally.”
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SME LENDING
Going beyond a mortgage NAB’s broker head, Steve Kane, tells MPA how the bank is helping the broker channel capitalise on the “engine room of the economy”: SMEs
AUSTRALIA MIGHT have been a resourcebased economy for a long time, but that’s no longer the case. Now SMEs, microbusinesses, entrepreneurs and sole traders are becoming the “engine room of the economy”, says Steve Kane, NAB’s general manager of broker distribution. “We look at the types of customers that brokers introduce to the banks, and around 30% of those are in fact small-business customers, so there’s immediately an affinity between brokers themselves and smallbusiness customers,” Kane says. There’s a big opportunity for brokers to assist their existing customers with a wider set of products that go beyond just their needs for a mortgage. Not only that, but there are numbers to back up the growing appetite of this market. According to NAB’s research, 44% of small businesses are expected to expand in the next three years, and that means they’re going to need a trusted adviser whom they can rely on for credit services. NAB has already braced for that surge in demand by introducing a number of technological enhancements to the broker channel, including online verification tools IDyou
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and ZipID, to make it easier for brokers to securely collect and submit customer identification and other documents. NAB’s small-business toolkit for SMEs includes a conversation guide for brokers, so even those who aren’t 100% commercially oriented can have informed discussions with clients and better navigate the questions and information required to get these transactions across the line. NAB’s market-first prequalifying tool is
Kane says NAB will continue to invest in technology that eases the burden on brokers, including introducing new digital capabilities that streamline and consolidate the SME loan application process. Technology will also allow customers to sign documents upfront and digitally from anywhere they’re located via their phone or tablet, as well as upload
“We’re really focused on making sure that we make digital capabilities an enabler for brokers” Steve Kane, NAB another valuable component of this kit. It gives brokers an understanding of how to structure an SME loan and provides them with a good indication as to whether the application is likely to be approved by NAB. The bank also has a dedicated BDM workforce on the ground servicing the third party, as well as a broker response centre and a credit coaching centre.
these documents electronically, Kane says. Later this year, NAB plans to launch its $100,000 unsecured QuickBiz Loan for small businesses into the broker channel with electronic lodgement in place. This all-in-one digital experience will enable brokers to provide customers with efficient service and quick turnaround times. “We’re really focused on making sure that
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TAP INTO THE SME SPACE: TIPS FROM A COMMERCIAL BROKER Citadel Capital Solutions finance broker Aaron Ly shares some of the key benefits and challenges of working in the SME space. BENEFITS You can broaden your industry knowledge “This is crucial for growing and diversifying your business” You’ll enjoy greater customer respect as an all-around finance broker “Better customer experience leads to stronger customer retention”
we make digital capabilities an enabler for brokers because we still believe very strongly that face-to-face interaction, and the relationships that brokers develop with their customers, is the reason why the channel has grown as fast as it has over the last five or six years and will be the reason it continues to grow,” Kane says. One man who knows the difference that technology can make for SME deals is Sydney-based finance broker Aaron Ly of Citadel Capital Solutions, who started in small-business lending in 2012. “[Technology] would help speed up our turnaround times from workshop stage through to settlement,” Ly says. “The majority of the lenders that are on our panel are still paper-based. Turnaround times would be greatly improved if SME deals can be lodged via an electronic portal like ApplyOnline. And this will, in turn, help contribute to a better customer experience.” If residential brokers apply the strong customer focus they’re known for, spend time
You’ll have an additional income stream Your job will be more interesting “Every customer is unique. I really enjoy learning and hearing how my client’s business got there. They love sharing their breakdowns and breakthroughs, and there’s heaps to learn from them.”
getting to understand the unique needs of each of their small-business customers, and build on those relationships, they’ll be able to diversify effectively, Kane believes. Ly agrees that understanding each transaction on a case-by-case basis is important. “There are a number of factors that I take into consideration when recommending suitable lenders to our customers: solution and outcome, the client’s financial goals and objec-
CHALLENGES There’s a learning curve “SME lending is a specialised space; it is definitely harder to grasp. You also need to fully understand your client’s business, financial situations, goals and objectives in order to put your submission forward to the lender. ” It can be time-consuming “Deals can take longer to prepare. Your submission papers are much more in-depth and thorough. Deals can also take longer to assess and approve, unlike normal residential loans.” You need to be comfortable with asking for help “Don‘t be afraid to engage your commercial BDMs and business bankers. The majority of them are more than happy to guide you through the process.”
tives, rates and fees, and convenience, banking platform, and customer service.” In the end, brokers who continue to strive for increased involvement with their customers, and who are determined to lift the standard of professionalism of those interactions and the quality of the loan applications they submit, will be able to build their businesses and find that sweet spot of success with SMEs.
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FEATURES
BROKER SUPPORT
A business built on relationships Suncorp has overhauled its partnership model with the aim of becoming a true business partner to brokers and aggregators. The lender’s head of bank intermediaries, Mark Vilo, explains how it works SUNCORP MIGHT not have the biggest reach of Australia’s banks, but its innovative partnership model is setting it apart from competitors. With a focus on relationships, the model is not only giving brokers better support but also giving aggregators the ability to respond to changing needs in the market. According to Mark Vilo, Suncorp’s head of bank intermediaries, the model is surprisingly straightforward. “We took the notion that our business is built on relationships and partnerships, and then we designed the model around ensuring that we gain a deep knowledge of every level of an aggregator or broker’s business. That’s it in a nutshell. It’s as simple as that,” he says. Dubbed ‘The Power of Partnerships’, Suncorp’s model moves away from the traditional geographically determined system and instead matches a three-person team with a specific aggregator. “We wanted to get focused on understanding the aggregator and the brokers within that business,” Vilo says. “We wanted to gain a deep understanding of their strategy – what was challenging them, what things we could do to partner with them, what things we could do to support them.” Under the new model, a dedicated business development manager is on the road talking to brokers every day, a business development
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“We wanted to gain a deep understanding of brokers and aggregators’ strategy – what was challenging them, what things we could do to partner with them, what things we could do to support them” Mark Vilo, Suncorp
consultant is providing over-the-phone support, and a small business BDM is sitting alongside those two individuals to create what Suncorp has deemed the Power of Three. “The BDM is naturally busy, as we would expect, and they’re in and out of meetings all day, but we have a BDM who is in the office waiting for brokers if they need any questions answered, or if they have a situation they’d like resolved, or if they have something they want to put to us,” Vilo says. The BDMs are now more accessible, and there will always be somebody in the office that brokers can call. “We know brokers are busy, so we want to be able to offer them the opportunity to choose their own method of being engaged with. If they don’t want to have a BDM come and visit every month or two months, that’s fine,” Vilo says. In addition to giving brokers the ability to customise their own interactions, the new model makes it easier for BDMs to become genuine business partners who can provide meaningful insight. “We don’t believe that a transactional conversation is a sustainable one, so we’re ensuring that our BDM team – whether they’re on the phones or on the road – are able to have a conversation which is about more than just our latest rate,” Vilo says. “We want them to be able to have good, rich conversations about business and what’s
going on in the regulatory environment. We want them to have an opinion and be able to share those opinions and take feedback from brokers around what their views are. We’re trying to get our business to the stage where we’re more of a trusted adviser, rather than a transactional BDM.” One way the bank is ensuring its BDMs are in a position to do this is by bringing together everyone who manages the same aggregator on a quarterly basis. “We’ll have a Power of Three looking after one aggregator in New South Wales, and we’ll have another Power of Three looking after the same aggregator in Victoria, so we get them all together to discuss what’s going on strategically at that particular aggregator – what insights we have, what we understand at
the most senior levels and what that strategy means in relevant regions,” Vilo says. “We also discuss what brokers are saying about the aggregator – the issues they’re dealing with, the opportunities they’re seeing, what customers are saying.” The feedback brokers have been sharing with Suncorp doesn’t stop there. The bank passes on information to aggregators so they can respond and make any changes required. “We’re able to share those insights back with the aggregator – both the positive and the negative – and the things brokers are looking for as we head into this period of change and a more stringent regulatory environment,” Vilo says. The model has only been in place for around nine months; Vilo says Suncorp is committed to refining the system and has a full-time employee assigned to do just that. “Her sole role is to ensure the model is embedded and continues to improve over time,” he says. “She looks at things like our 90-day plans and how the Power of Three meets. We want to provide them with a framework so there’s an action-oriented meeting occurring and they’re talking about how they’re going to work with their aggregator group this week, the next week and so on.”
LEARNING AND DEVELOPMENT After gathering feedback from brokers and aggregators, Suncorp plans to launch its intermediated learning marketplace in the very near future. “Using the power of what Suncorp is able to secure through our size, we’ve identified a range of different vendors that we can provide to aggregators that they can then deploy with their brokers,” Vilo says. “Our BDMs are giving us feedback about what brokers really want, and we’re looking at programs that are run through businesses like the Australian Institute of Management or Kaplan.”
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FEATURES
CONSTRUCTION FINANCE
From the ground up Non-bank lender Australian First Mortgage outlines how brokers can get started in construction finance, opening new referral streams for their businesses and bringing people’s blueprints to life
HELPING A client build a home from the ground up might seem like a daunting process, but just imagine how much more overwhelming it would be for a first-time client if they didn’t have guidance, advice or support from an experienced broker. Becoming an educated construction finance broker will not only open new doors for your business, but will also allow you to offer a crucial service to time-poor clients who can’t navigate this process alone. According to the ABS, residential construction work completed in the 2017 December quarter was valued at $17.8m seasonally adjusted. Here’s what you need to know to tap into this vast market and bring your clients’ blueprints to life.
paying rent (if it’s owner-occupied). Clients should make sure they have a buffer in case the construction timelines get extended. “Ensuring your customers have a full understanding of their construction property loan, value and location is vital for a successful purchase and loan transaction,” Grippo says. Next, brokers need to choose a lender that has an appetite for construction lending; this will simplify the process and ensure the customer has a positive experience, she says. Acceptance Finance credit adviser Matt Mannaert agrees. An experienced construc-
tion finance broker based in Melbourne, Mannaert says it’s important for the lender to have a dedicated construction team, great BDMs who return calls quickly and a good product that’s not too heavy on fees.
Collaborative construction One of the most important traits of a good broker is being hands-on and highly communicative with clients. That’s especially important when it comes to construction finance. Clients will often need more assistance upfront to understand the additional requirements involved when building a brand-new property, Grippo says.
KEEPING EVERYONE IN THE LOOP Upfront conversation Construction loans are suitable for anyone wanting to purchase land and build a new home. This has become a popular option for first home buyers and investors who want to accrue equity in a new property over time. When a client is considering this route, Australian First Mortgage director Trayce Grippo says it’s important to make sure the borrower is aware that they’ll need to pay for their construction loan while not receiving rent (if it’s an investment property) or while
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“AFM has an exclusive, custom-built tracking website that allows the broker, builder and customer to log in and see live tracking of their construction loan post-settlement,” says AFM director Trayce Grippo. “This gives complete transparency to all stages and all parties involved. The tracking site provides history notes, payment tips and even photographs of the property as it’s being built. It also has a ‘demo site’ that brokers can log into to see example data of what this site will look like for their customers and builders.”
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informed on the project’s progress. Mannaert describes it as “working hand in hand” with multiple parties on one transaction. “Together with my team, we aim to be across all aspects of the transaction and the deadlines involved so that finance approval and settlement milestones are met in a timely fashion,” he says. To make the process transparent at all stages and for all parties involved, AFM has created a tracking website that allows the broker, builder and customer to log in and track the progress of the construction loan post-settlement. “Our tracking site gives history notes, payment tips and even photographs of the property as it’s being built,” Grippo says.
What’s in it for brokers?
“All of our construction loans are for residential purposes, therefore residential mortgage brokers are perfect to write these loans” Trayce Grippo, AFM They’ll also need to have a good understanding of the different stages of a construction loan once the purchase of their land settles. A construction loan has two components: a land settlement and a construction phase. Depending on the lender’s processes and policies, there are generally two to five progress valuations done during construction to ensure the building is being completed as per the building contract. Invoices need to be
signed by the customer at each stage, and the lender pays the builder in five stages. The transaction involves multiple parties, including the builder, developer, valuer (who conducts progress inspections) and the lender (who will have to pay the builder in stages), not to mention the solicitors and referrer. All in all, construction finance demands an agile broker who can juggle multiple people at once and keep them all
Because AFM’s construction loans are for residential purposes, residential mortgage brokers are perfect to write these loans, Grippo says – although she adds that customers’ needs will be slightly different, as they’ll likely need extra support and education in the post-settlement construction process. Brokers who want to diversify into construction finance and become experts in this field will be able to expand their opportunities for new referrals. For instance, when brokers use tools such as AFM’s exclusive construction tracking portal, they gain a unique selling proposition that will help them add builders and property groups to their referral network, Grippo says. Mannaert says he enjoys this type of work because he shares common goals and mentalities with his investor clients. “Although the work involved in each transaction is about double a normal purchase deal, due to the amount of liaising with all parties, progress draws, etc.,” he says, “I find it very rewarding seeing clients grow their portfolios and the capital growth achieved.”
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FEATURES
REVERSE MORTGAGES
Getting to the heart of it As more baby boomers retire, demand for reverse mortgages is destined to grow. Abel Riototar spoke to Heartland Seniors Finance CEO Andrew Ford to find out how brokers can help clients retire easy
AUSTRALIA IS home to an ageing population. More than a fifth of Australians will be aged 65 and over by 2056, according to projections from the Australian Institute of Health and Welfare. The ageing population, coupled with rising property prices, essentially means reverse mortgages are a product of the times. “A reverse mortgage is a great opportunity to not only provide excellent customer outcomes but also to provide brokers with a way to expand and diversify their business,” says Andrew Ford, CEO of Heartland Seniors Finance. Reverse mortgages are a tailored solution for people aged 60 and over who want to stay in their own property. They require no regular repayments. Customers can make payments if they wish to, but they are not mandatory until the last resident vacates the property, either by sale, moving into aged care or within 12 months of death. Importantly, the client can continue to own their own home. Interest is added and compounded at the end of each month.
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Repaying debt, home care, home improvements and supplementing income streams to pay living expenses are some of the common reasons customers opt for a reverse mortgage. Heartland Seniors Finance offers three reverse mortgage structures: standard for any personal purpose, including renovations; aged care option; and investment property/
For brokers, a reverse mortgage is a longterm ‘sticky’ loan. Loans written a decade ago or more will still stick around in a portfolio, attracting income. Brokers will most likely delight in the reverse mortgage’s straightforward application process. Reverse mortgages are one of the most heavily regulated financial products
“When sold appropriately, a reverse mortgage can be genuinely life-changing to our customers and really help them live a better retirement” Andrew Ford holiday home as security for any personal purpose. A reverse mortgage loan can also be approved for use for travel, a new car or to supplement income streams, so long as the reason is legal. The product is flexible with lump-sum, regular advance and reserve drawdown options.
in the market, combining regulations with a very rigorous and ethical standard of compliance. This is an advantage when it comes to the application process, as it makes it quite prescriptive. For instance, legal advice is mandatory, so there are no grey areas. That can help when
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brokers are communicating with customers, as they will know they’re in full compliance with the law. It also protects the client to make sure the loan contract is fair and reasonable, and that they understand their rights and obligations. “When sold appropriately, a reverse mortgage can be genuinely life-changing to our customers and really help them live a better retirement,” Ford says. “We do have a very thorough and robust fulfilment process that ensures compliance with all the regulations.” Once customers see that difference, they become an excellent source of referrals for brokers, he adds. Heartland recently conducted a survey of its customers and found that, of those who responded, 96% of existing customers said they had or would recommend the lender to friends and families. Ninety-four percent said they would recommend a reverse mortgage. “It’s a powerful source of new business because they know first-hand what a difference it can make,” Ford says.
MPA: What aggregation groups are you associated with, and can brokers still write these sorts of loans even if you’re not on the aggregator’s panel? Heartland: We are on some aggregator panels. But as a specialist provider, despite
having a market-leading product that is Canstar-awarded, this can be challenging. We are making good progress but many brokers deal with us direct and we offer a training and accreditation process for them.
MPA: Are there any challenges or areas that brokers should look out for when writing a reverse mortgage? Heartland: Exploring the customer’s demonstrated and communicated needs is central to any proposition, whether it’s a standard mortgage or reverse, so ensuring that the customer is taking a loan for the right reasons – that’s the key to it. Being able to work out how to best structure the loan is also important.
MPA: Why is the interest rate higher than a standard variable home loan rate? Heartland: If you look at some of the protection we offer, it’s clear that Heartland takes more risk with reverse mortgages than a bank does with a traditional mortgage. We guarantee that there will never be negative equity, so effectively we have no recourse over borrowers. There is no payment, no cash flow for our business, and the indefinite term of it makes it more expensive to fund. That said, our interest rate is very competitive.
WHAT BROKERS NEED TO KNOW ABOUT HEARTLAND SENIORS FINANCE
A TYPICAL REVERSE MORTGAGE CUSTOMER
48% Retired couple
17%
35%
Male
Female
Around 72 years old Have depleted super and other assets On aged pension Located in Sydney, Melbourne Brisbane, Coastal NSW/Qld Property worth $910,000 Fund 13% and set balance aside for cash reserve and/or regular advance Use it for debt, aged care, renovations, medical expenses, travel, car
BROKERS’ THOUGHTS ON REVERSE MORTGAGES
58% Yes
Have you ever written a reverse mortgage?
42% No
Established in 2004 as Australian Seniors Finance Has more than 6,800 customers and over $550m in financial receivables 0% No
Has released more than $750m in home equity Accounted for 70% of growth in the reverse mortgage market in the 12 months to 31 December 2017 Owned by New Zealand-registered bank Heartland Bank Limited, which specialises in niche products
94% Yes
Do you think the reverse mortgage sector will grow in the next five years?
7%
Not sure
Brokers make up 70% of Heartland’s distribution Source: MPA Diversification Webinar 2018 – Reverse Mortgages
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FEATURES
PRESENTATION
How to create a winning presentation Learning how to make your point in a simpler, more authentic way will yield results, writes professional communicator and author Emma Bannister
EVERY TIME I go to speak or train at a different company, I get the same response: “You make presentations sound so simple. I get it, but I don’t get how I get buy-in from everyone else.” The goal of any presentation is to influence your audience to act. Maybe you want your employees to get on board with your new vision or idea, or to motivate your client towards a new outcome. You want to make them feel excited, inspired or ready and raring to go. Yet nine out of 10 times, at the completion of a presentation, you’re probably met with chirruping crickets, blank faces or stifled yawns (if your audience hasn’t fled the room). So what gives? Make a point You can only claim that you have a ‘winning presentation’ if your presentation achieves what you wanted it to achieve. If your audience does what you want them to do and they respond in the way you want them to respond, that is how you measure the success of your presentation. The problem most of us trip up on is that you need to think about the behaviour of your audience long before you start talking. All too often when I ask a speaker what their objective is, they don’t know. They can’t tell me why they are presenting (other than because they’ve been told to), or what they want the audience to feel, act or do after they have seen the presentation. You have to be 100% clear on the purpose of your presentation.
Be human The key challenge we all face, regardless of industry, is that the world is more and more competitive every day. It is harder than ever to stand out and be noticed, and to communicate your point of view with the right people in the right way. But one thing that’s not going to help is using business or corporate jargon as a crutch. All this does is create unnatural, overcomplicated
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“The best presenters are those who can use a combination of facts and emotions to explain a future that everyone wants to work towards” messages that people can’t engage with. What the world needs today – what your customers, clients, stakeholders and team members are crying out for – is natural, human-to-human connection through compelling visuals and emotional stories. In business, we’ve been taught to stick to the facts and leave out any hint of emotion, yet research proves that our decisions – whether we buy or buy in to something – are influenced by our emotions. Remember, people buy from people they like. So you need to make your audience feel something towards you other than the urge to flee the room. The best presenters are those who can use a combination of facts and emotions to explain a future place that everyone wants to work towards. Use images and video to create excitement, inspiration or action, if it’s appropriate to your cause. Pair these with infographics and diagrams that sum up your main points and data.
I’ve also seen people use videos to successfully create something that tugs at the heartstrings and lingers for a long time in everyone’s memory. When you share your vision and goals through compelling stories and slides, you reduce fear and instil confidence in your audience. That’s when they will connect to a future they want to be a part of. Many of us believe that sharing everything and anything, blinding our audience with numbers is the best way to be transparent and open when it comes to a presentation – that couldn’t be further from the truth.
Emma Bannister is passionate about presenting big, bold and beautiful ideas. She is the founder and CEO of Presentation Studio, APAC’s largest presentation communication agency, and author of Visual Thinking: How to transform the way you think, communicate and influence with presentations. Find out more at www.presentationstudio.com.
IDENTIFY YOUR PRESENTATION’S PURPOSE What is your main message? You should have only one. Less than 10% of a presentation is remembered, so if you start jamming in too many messages then you will lose your audience.
1
What is your objective? Are you trying to educate your audience, share results or sell something? Again, you should only be doing one of these.
2
What are your audience’s needs? Do you have a clear understanding of who you are presenting to? What do you want them to think, act or feel after you present? You must assess their beliefs, values and motivations. What makes them tick? Get into their shoes at the start, listen to them as you walk through the presentation and gather feedback at the end.
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FEATURES
LEADERSHIP
Why good leadership is about asking the right questions Being a good leader isn’t about always having the answer – it’s about knowing what questions to ask, writes leadership expert Michelle Gibbings IN TODAY’S fast-paced world, there’s often
Your mindset is critical
an expectation that leaders need to have the answers at their fingertips, that’s it’s not OK to say “I don’t know” or “I’m not sure”. However, it’s not possible for leaders to have all the answers all the time. Additionally, we are surrounded by more information than ever, and it’s becoming harder to know which sources to trust. Discernment and good judgment are
History is littered with stories of leaders who thought they had the answers, ignored advice and consequently made poor decisions – from the failure of Kodak to AOL’s disastrous purchase of Time Warner to the collapse of Lehman Brothers. When leaders are certain they are right, they close themselves off to other ideas and different opinions. This can lead to poor decision-
When leaders are certain they are right, they close themselves off to other ideas and different opinions critical – particularly because in a complex, ambiguous and interconnected world, everything may not be what it seems. When we take something on face value, we may be missing key pieces of information or overlooking unseen options. And when leaders hold dogmatic views and are certain about their opinion, they open themselves to decision failures.
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making due to the bias we all have in how we process information and make decisions. Stanford academic Carol Dweck confirmed this in her research on fixed and growth mindsets. She found that people who have a fixed mindset see intelligence as static – a fixed trait. As a result, they always want to look smart and appear as though they have all the answers. They believe that success is based on talent
alone, not work. This means they will avoid challenges and give up more easily. They also ignore feedback, which they see as criticism, and they often feel threatened by the success of others. In contrast, people with a growth mindset believe intelligence can be developed through hard work and effort. Consequently, they are more eager to embrace learning, take on
challenges and persist in spite of setbacks. They love learning and usually display higher resilience. They are also more willing to learn from others and receive feedback.
• help to seek out different ideas
The art of the good question
• make sure the trade-offs from decisions are clearly articulated
Leaders who are comfortable with uncertainty have a growth mindset and are more willing to embrace their curiosity. They recognise that good decision-making comes from asking lots of questions, not finding the one right answer. This isn’t about asking a question to get the answer they want. Instead, leaders need to ask questions that: • clarify their understanding
• ensure that outlier opinions and diverse views are heard
By asking questions, leaders show they are interested in the ideas being shared and open to new information and thoughts. They are also welcoming divergent views and encouraging debate and discussion – all characteristics that are critical for successful leadership. So instead of encouraging leaders to find the answers, encourage them to ask the right questions.
• uncover elements that may be missing from the conversation • ensure the discussion has examined the issue from multiple perspectives • challenge their own thinking process and the processes of those around them
Michelle Gibbings is a change leadership and career expert and founder of Change Meridian. She works with global leaders and teams to help them accelerate progress. She is also the author of Step Up: How to Build Your Influence at Work.
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PEOPLE
BROKERAGE INSIGHT
Making finance black and white MPA 2018 Young Gun Peter Vassilis reveals how he surpassed the goal he set for himself within less than a year of launching his brokerage, Black and White Finance IT TOOK a vacation to bring Peter Vassilis back on track to his true career path. Shortly after starting his career at an accounting firm, he had realised his passion lay in finance and property. But nothing came of it. As the years went by, he jumped from one banking position to another, forgetting about the career trajectory he and his mentor had designed years ago, which would culminate in Vassilis owning his own brokerage. It wasn’t until one sunny day on a beach in Greece when all of those good intentions and ambitious plans returned. Vassilis and his wife, Jaimee, thought about what success would look like for their family in three to five years. They realised there was a piece missing. “We envisioned a brokerage that would help simplify finance for people, make it black and white. And that’s when our business was born,” Vassilis says.
As simple as it can be Transitioning from a secure full-time position to taking a huge risk by going out on his own became even more intimidating for the couple because of a newborn on the way. But Vassilis was all fired up to execute his ideas and realise his dream, and to finally create his own work standards. The couple immersed themselves in research,
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spoke to key industry figures, and studied how brokerages contributed to the economy. From the events they held at the local shopping centre and calls they made to local businesses and associates, the couple built a strong client base from which their business successfully took off.
They knew competition was strong in broking, but felt that their strategic approach and value proposition would resonate with customers. To this day, their guiding principle is to help people find a long-term solution to creating wealth in a way that is simple, well
“No matter how complex the lending scenario appears, the process should always be black and white” Peter Vassilis, Black and White Finance BREAKING THROUGH THE INDUSTRY In order to carry out Black and White Finance’s unique selling point, Peter and Jaimee Vassilis live by three values: 1. Care Customers are first and foremost. The couple create a personalised experience and never compromise on their responsibility to maintain the highest standard of customer service. 2. Providing a simple approach to the finance experience Vassilis created a “visual method to success”. The guide, displayed on their website, helps people to see where they currently sit in the finance process. 3. Feedback This allows them to determine which approach, particularly in regard to their social media educational efforts, is working.
FAST FACTS Year founded: 2017 Owners: Peter Vassilis Location: Rose Bay, NSW Ownership: Private Services offered: Residential, commercial, equipment and asset finance Number of employees: 2 Major awards: MPA Young Guns 2018; finalists for the Australian Mortgage Awards in the New Brokerage of the Year and Most Effective Online Presence categories; finalists for the Better Business Awards in the Best Customer Service Individual and Rising Star categories
planned and easy to understand. “No matter how complex the lending scenario appears, the process should always be black and white,” Vassilis says. As Vassilis knows, not everything goes according to plan, so one should be flexible. “You don’t have to prepare a perfect plan. It just needs to be something that can be executed,” Vassilis says about what he learned from the mistakes he made along the way. “Excessive planning can blind us to the situation at hand, causing us to miss opportunities.”
Surpassing the target In their first 12 months of operation, Vassilis set a goal of $20m in settlements; and$30m if asked to be audacious. A month short of
reaching its one year anniversary, the business was already on track to reach $40m. For a budding husband and wife team with only one broker at the helm, Black and White Finance has come a long way even though it only launched in 2017. And it didn’t take long before the industry took notice. Invitations for Vassilis to appear at various key industry events and speak on podcasts started pouring in.
Aim for the 5% Black and White Finance aims to hire more staff in the next two years, either locally at its Sydney-based office or outsourced, to sustain and strengthen its service offerings. Other than looking for more ways to engage in collaborative work with local businesses, the
couple also puts effort into improving the business’s digital footprint by providing free seminars that feature field experts they have close relationships with. “Black and White Finance is all about giving people valuable content, as opposed to monthly Black and White Finance updates,” Vassilis says. He believes anyone can do a job in a specific industry, but to become successful one needs to be in the top 5% of that industry. Vassilis says the key to getting there is “knowledge, the right people, a sustainable business model with a mission statement, values that are true to you, and some trade secrets”. “And don’t forget to stay on your toes, and constantly seek feedback.”
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PEOPLE
CAREER PATH
BRICK BY BRICK Experience in operations, sales and marketing prepared Yellow Brick Road’s new general manager, Glenn Gibson, for big challenges and responsibilities
Straight out of high school, Gibson worked as a batch clerk for NAB in Toongabbie, where he encoded, sorted and balanced the cheques the bank received each day.
1985 STARTS A CAREER IN FINANCE
2002 FROM CEO TO DIRECTOR Gibson expanded his knowledge in wholesale lending, white labelling and securitisation as director for wholesale at Resimac. The lessons he learned there have been invaluable throughout his career. “The role was both educational and thoroughly enjoyable.”
2010 RISING FROM THE FINANCIAL CRISIS Gibson moved to AMP, where he was tasked with re-establishing the bank’s presence in the third-party space just as it was coming out of the GFC. During his eight-year tenure at AMP, the bank accomplished an incredible number of achievements, particularly in the broker space. “The numerous awards we received at both the bank and individual BDM levels were particularly pleasing because they reflected our growth and standing in the market.”
1999 TAKES ON CEO ROLE As the CEO of Security Credit and Union, Gibson quickly discovered the importance of backing himself and his decision-making skills. He also discovered what it takes to build a strong working relationship with regulators.
2004 MARKETS A NEW FRANCHISE Joining the ANZ Mobile Lending team on the same day as the very first franchisees, Gibson took on the responsibility of developing and delivering both the sales support model and marketing initiatives for the business. Growing the support structure of a brand-new franchised business and recruiting talent at the same time was both challenging and rewarding. “I was very proud that at the same time, I developed the initial print, radio and television marketing campaign for the business.”
2018
“My career has been a combination of two halves. The first half was running credit, operations and risk business functions, while the second half has been running sales and marketing functions – a unique blend of experiences, considering the different personalities you normally need to do these different functions”
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BUILDING BRICK BY BRICK With a network of more than 120 franchisees covering both lending and advice services across all states, Yellow Brick Road is set to become a larger player in the advice and broking markets. “I joined Yellow Brick Road in April, and my primary responsibility is to grow and develop its retail branch network. I’m excited about the opportunities the YBR brand will deliver. I look forward to cementing our reputation in the marketplace as a fullservice advice business.”
PEOPLE
TELL US WHAT YOU GET UP TO Email otiena.ellwand@keymedia.com
OTHER LIFE
1997
Year Makhoul wrote his book, A Higher Branch
8
Number of modules Makhoul’s coaching program carries
2010
Year Makhoul started to coach burnt-out financial services workers
TEACHING THE GOOD LIFE MSA National founder and managing director Sam Makhoul channels his passion for writing and coaching to help bring out positive energy in people MSA NATIONAL founder Sam Makhoul firmly believes that in order for a company to flourish, its people need to grow both personally and professionally. “The energy people bring to their work is far more important than how much they know,” he says. Makhoul has held coaching seminars not just on banking and finance laws but
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also on wellness, which includes eating right and getting regular exercise. He attributes the principles and frameworks he imparts to his book, A Higher Branch. Heralded by many as a blueprint for living a complete and happy life in the 21st century, Makhoul’s book helps people discover their inborn fearlessness so they can effortlessly live a happy and
successful life. Also the chief wellness officer at MSA National, Makhoul takes a keen interest in people who commit to both their career progression and health and wellbeing. “I commit to the committed. I meet with people who struggle with motivation and energy levels. It is the most rewarding aspect of my role,” he says.
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