Mortgage Professional Australia 19.12 by Key Media

MPAMAGAZINE.COM.AU ISSUE 19.12

HERE COME THE NON-BANKS Seven lenders talk about their investment in the broker channel

AUSTRALIA’S TOP 100 BROKERS The ultimate list of 2019’s leading brokers

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COMMERCIAL DIVERSIFICATION Why brokers should expand their offering

A WAY FORWARD FOR FHBS A look at the market and why insurance is vital

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DECEMBER 2019

CONNECT WITH US

CONTENTS

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

UPFRONT 02 Editorial

A united front

FEATURES

MPAâ&#x20AC;&#x2122;S TOP 100 BROKERS

Find out which of the industry's leading brokers made it into the biggest list of the year

Take a look at what seven non-banks had to say about the current broking and lending environments

THE BIG INTERVIEW

CLIVE KIRKPATRICK Looking back at a difficult year, the general manager of Vow Financial sees a positive future

First home buyers are taking a pragmatic approach

06 Head to head

Brokers discuss what makes a good broker

08 News analysis

Looking at the first year of AFCA

10 Opinion

Reflections on the year just gone

FEATURES 58 Leading a team

SPECIAL REPORT

NON-BANKS ROUNDTABLE

04 Statistics

Five things you must have as a leader

46 FEATURES

FIRST HOME BUYERS

62 Brokerage insight

Find out what drives Foster Ramsay Finance to greater heights

PEOPLE 64 Other life

A Resimac BDM takes on Ironman challenges

Genworth explains the importance of insurance in building this home buyer segment

48 FEATURES

COMMERCIAL DIVERSIFICATION Lenders, aggregators and a broker talk about the value of diversifying your business offering

MPAMAGAZINE.COM.AU NOW ONLINE: Our daily newsletter. Keep on top of property market trends, business strategy, and what industry leaders have to say.

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19/11/2019 1:18:57 PM

UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au DECEMBER 2019

Celebrating a united front

e have saved the best for last by presenting to you MPA’s Top 100 Brokers in this final issue of the year. I always love putting lists like these together because I get a real chance to chat to brokers about their experiences. While everyone has commented on the challenges of 2019, it’s interesting to see how many have fought through them and continued to build their businesses. The industry is nothing if not resilient, and that is just one of the many things I love about it. Second to that is the passion behind each and every person in broking. I have never worked in an industry or even been exposed to one that had such camaraderie and love embedded within it. If I have learnt anything in 2019, it is how strong a united front and common belief can be. As you will read in the following pages, we held our non-bank lenders roundtable this month, and one thing that really sticks out in my mind when I talk about this is the passion that was apparent. When I asked the non-banks what their strategy was towards the third party channel over the next few years, one representative declared, “We are third party.”

The broking industry is nothing if not resilient, and that is just one of the many things I love about it If you didn’t watch it, it was a great moment, and I would encourage everyone to go back and find the video of the roundtable discussion on our website. Talking of passion, this month’s big interviewee was someone else who exuded love for the broking industry. When I asked him about the challenges he had faced in the last year, the tone of his answers reflected someone who had deeply felt the disappointment and heartache of the royal commission. As we come to the end of 2019 and look forward to 2020, I’d like to take this opportunity to wish you all a great and happy new year and one in which we can look ahead to a positive and growing broker market. Thanks for reading MPA in 2019, and I hope you enjoy this issue.

EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Journalists Mariam Gabaji, Tom Goodwin, Abel Riototar Contributor Sam White

Global Head of Communications Lisa Narroway

CORPORATE

Production Editor Roslyn Meredith

Chief Executive Officer Mike Shipley

ART & PRODUCTION

Chief Operating Officer George Walmsley

Designers Noel Avendaño, Cess Rodriguez, Marla Morelos Traffic Coordinator Freya Demegilio

Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

tel: +612 8437 4784 rebecca.pike@keymedia.com

SUBSCRIPTION ENQUIRIES

tel: +61 2 8311 5831 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES claire.tan@keymedia.com

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

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

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UPFRONT

STATISTICS

Taking the practical route The great Australian dream is still alive for first home buyers – with some downsizing and family support A REPORT released by Genworth Mortgage Insurance Australia has shed light on how changing housing values over recent years have influenced the first home buyer (FHB) segment. The Genworth First Home Buyer Sentiment Report was based on a survey of 2,001 prospective FHBs and 1,008 recent FHBs in capital cities and regions across Australia, and was undertaken by CoreData in June–July 2019. A ‘prospective FHB’ was defined as someone looking to buy their first property in the next 24 months, and a ‘recent FHB’ as someone

28.9%

$359bn

of Australia’s residential mortgages are held by FHBs

was the value of Australia’s residential mortgage market in 2018

who had bought their first property in the last 24 months. According to the report, survey participants would rather follow a “more pragmatic approach” to attaining the traditional Australian dream of owning a freestanding lifetime home by going for an “entry level” property and trading up within five years. “Dynamic market conditions are resulting in changing first home buyer behaviour and needs,” said Genworth CEO and managing director Georgette Nicholas.

1 in 4

prospective FHBs are likely to rely on parental or family assistance

AN OPPORTUNE TIME TO BUY Because of the rapid house price appreciation from 2014 to 2017, almost three in four prospective first home buyers believe now is ‘a good time to buy’, with one in two pointing to ‘falling property prices’ as their primary reason. Sixty-eight per cent of recent first home buyers and 58.8% of prospective first home buyers believe property prices will stabilise or grow in the next 12 months.

68.7%

of recent FHBs did not fund 100% of their deposit from their own savings Source: The Genworth First Home Buyer Sentiment Report

LOCATION AND BUDGET CLASH

The rapid growth in house prices has made it difficult for recent FHBs to find a property in the right location to suit their budget. Barriers to owning a property for prospective and recent FHBs Affordability of the housing market

59.9% 66.7%

Finding a suitable property within my budget in a suitable location

58.3%

Saving for a 20% deposit

55.6%

Satisfying lenders’ requirements and securing loans Job security

76.7%

65.8% 28.4% 35.4% 24.0% 17.5%

Too many other 23.5% expenses/debts 20.1%

Irregular/variable income I want to start/grow my family and can’t afford both Difficulty in making loan payments Bad credit score

Other

Prospective FHBs

15.3% 8.7% 14.0%

With the intention of holding their first property for less than five years, many prospective FHBs are increasingly considering small apartments. Property-type preferences of prospective and recent FHBs 42.8%

Small house (one to two bedrooms) Small apartment (one or two bedrooms)

37.2% 21.1% 15.6%

11.3% 6.0% 8.6%

16.2%

Large house (four or more bedrooms)

27.8%

1.3% 0.8%

Townhouse/terrace

1.8%

Recent FHBs

Source: The Genworth First Home Buyer Sentiment Report

GOING SMALLER

Land (to build a home on)

7.8% 8.3% 4.0% 6.0%

Prospective FHBs

Recent FHBs

Source: The Genworth First Home Buyer Sentiment Report

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REASONS FOR BELIEVING NOW IS A GOOD TIME TO BUY A PROPERTY It’s a buyer’s market, making it easier to negotiate

Falling property prices

34.7%

65.0%

28.9%

56.8% 40.4%

34.4% 63.3%

40.4%

35.7%

28.6% 51.8%

32.7%

I’m at a stage in my life where I want to own my own home

The federal government’s new First Home Loan Deposit Scheme makes it easier for me to buy

53.4%

32.8%

58.4%

27.3%

62.3%

27.2%

49.5%

22.9%

67.9%

31.0%

58.5%

30.6%

Low mortgage interest rates Other

51.2% 44.5%

0.0%

43.7% 45.0%

0.9%

50.0%

0.0% 0.8%

46.7%

Sydney

Melbourne

0.3% 0.6%

Brisbane

Perth

Adelaide

National Source: The Genworth First Home Buyer Sentiment Report

SURRENDERING TO MEDIA PRESSURE

Nearly three in five prospective FHBs reported that the media had influenced their decision of where and what type of property to buy. The influence of media on FHB decisions When to buy Your saving/spending habits Where to buy

GETTING IN WITH LESS

With the swift growth in house values from 2014 to 2017, more prospective FHBs are willing to buy a property sooner with less than a 20% deposit. Prospective and recent FHBs with less than 20% deposit

66.6% 40.8% 63.8% 37.5% 58.6%

Prospective FHBs

59.3%

30.7%

Recent FHBs

47.4%

57.7%

Which institution to obtain a loan from

30.4%

What type of property to buy

28.9%

55.5%

Prospective FHBs Recent FHBs Source: The Genworth First Home Buyer Sentiment Report

Source: The Genworth First Home Buyer Sentiment Report

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UPFRONT

HEAD TO HEAD

What does being a good broker mean to you? For these brokers, it’s seeing customers achieve their immediate and future goals

Jordan Chantry

Matthew Mannaert

Broker Trinity Finance Group

“A good mortgage broker works with clients, assisting them to secure the right finance solution from a range of different lenders. I help clients achieve peace of mind by guiding them through that journey, positioning finance that is appropriate to their circumstances and aligned with their goals. “I work with clients to understand their needs and borrowing capacity based on their specific position. This takes into consideration how each loan functions and its real cost, factoring in interest rate, features and fees. I see clients as lifelong customers. Knowing that their needs and goals will change over time, I endeavour to help them through their entire journey.”

Cameron Price

Credit adviser Acceptance Finance

Owner/partner Mortgage Choice, Melbourne

“Being a good broker means that I can be proud of the work and effort I put into achieving good outcomes for my clients. I’m comforted by the knowledge that I’m making a positive impact in my clients’ lives. “I also think a good broker is able to provide clients with honest feedback, and at times gives them a ‘reality check’ on their financial situation. I’ve found some of my most memorable journeys with clients have been those that started out with me giving them some hard truths, then seeing them accomplish their goals. The cherry on top is when they refer me to all their friends and family. That’s when I really feel that I earned the title ‘a good broker’.”

“It gives me satisfaction to know that I’m helping clients achieve their aims with the minimum possible stress. It means that I am working to help create a successful business with a staff that enjoy coming to work. We’re all focused on the end goal of helping our clients. “There’s the personal aspect that I am striving to be the best that I can be, continually trying to improve myself as a person and business. Our team also stays in touch with clients to ensure they are on competitive rates and products and moving ahead financially. If I am doing my job well, then our clients notice the benefits and continue to want to do business with us.”

TRUST IN BROKERS GROWS The proportion of home loans written by mortgage brokers increased to 59.7% between 1 October 2018 and 31 March 2019, according to the MFAA’s latest Industry Intelligence Service report. “We think the future for brokers is really bright,” said Warren Shaw, general manager of broker distribution at Westpac, during MPA’s 2019 Major Banks Roundtable. He believes brokers will have “an increasingly huge role to play” as the home loan process becomes more complicated and digitisation enters the scene. Steve Kane, general manager of broker distribution at NAB, added that he expected to see the roles of brokers as trusted advisers expand, so that a broker’s relationship with customers would be longer, and not just based on a single transaction. “From our perspective, we’ve got a strong focus on small business, a strong focus on business banking and a strong focus to enable those brokers to offer more services than just a mortgage,” Kane said.

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ondeck ontop Thanks to you.

You’ve come onboard. Now we’re on top. We’re proud to be recognised as Fintech Lender of the Year. Thank you to the brokers who’ve embraced us and the small businesses that inspire us to stay on the front foot.

To come onboard Visit ondeck.com.au/mpa Call 1800 831 294

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19/11/2019 11:06:38 AM

UPFRONT

NEWS ANALYSIS

The first year of AFCA Despite the heavy scrutiny amid talk of removing broker remuneration, mortgage brokers are proving their value, and the figures from AFCA’s first year in operation speak for themselves

THE NEW dispute resolution scheme has completed its first year in action and the figures paint a pretty picture for the mortgage broking industry. Over its first 12 months, just 0.35% of complaints lodged with the Australian Financial Complaints Authority (AFCA) were related to mortgage brokers. Of 73,272 complaints lodged by Australians against their insurer, superannuation fund, bank or other financial service provider, only 254 were against brokers. These figures back up the message that associations like the MFAA have been sharing with key decision-makers on behalf of the industry, said MFAA CEO Mike Felton. “The extremely small number of complaints demonstrates again that mortgage brokers value their customers and are highly focused on the customer outcomes they produce – and we can see the result of this in continuous market share growth,” he said. “Customers are voting with their feet. We place great value in independent data like this, as it provides an objective look at the immense value brokers are providing for customers and for the entire home lending industry.” Greater transparency of complaints AFCA replaced three other dispute resolution schemes towards the end of last year and began to take complaints on 1 November 2018. The number of complaints it received in its first

year was 40% higher than the complaints received by its predecessors in the 2017/18 financial year. Of the complaints made, 56,420 have been resolved, with the majority resolved in 60 days or less. However, research conducted in July this year showed that only 3% of Australians actually know that AFCA exists. Despite that, they are making almost 200 complaints a day. AFCA also released a new online tool last month called the ‘Datacube’. It allows anyone to go in and search to see how their insurer, superannuation fund, bank or other financial service provider has responded to customer

with 56% of these in relation to housing finance and 10% to business loans. AFCA’s CEO and chief ombudsman, David Locke, said he was proud of the significant milestones the group had achieved in its first year.

“We place great value in independent data like this, as it provides an objective look at the immense value brokers are providing” Mike Felton, MFAA complaints brought to the authority. According to the Datacube, in the period from 1 November 2018 to 30 June 2019 there were only 33 complaints made against mortgage brokers and 16 of these were closed. Looking more broadly at the industry, there were 103 complaints progressed in relation to fintechs, while nearly 8,000 related to banks and just 58 to finance brokers. There were 29 complaints against mortgage aggregators,

“Establishing AFCA as a new organisation and handling a 40% increase in complaints was never going to be easy, and we are still improving the way we operate,” he said. “I am very proud of the AFCA team and what has been achieved so far. I am fortunate to work with a great team of people who are professional, passionate about fairness and independence, and who care about our customers.”

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SNAPSHOT OF AFCA’S FIRST YEAR

73,272

complaints received

25,826

complaints received against banks

3,869

complaints from small businesses – most about misleading products or service information

$185m

in compensation

613

calls per day on average

17%

Problems with the system Not everyone is so positive about the dispute resolution scheme, however. While brokers have clearly not been too affected by any complaints, one broker said the system was too heavily weighted towards the customer.

last minute and stop a decision from happening. That meant that if the complaint cost $12,000, the broker would have to pay for it. “In AFCA’s current process, in whose best interest is it to cancel the complaint before it gets finalised? AFCA gets that fee income if

“I am very proud of the AFCA team and what has been achieved so far” David Locke, AFCA Daniel O’Brien, director of PFS Financial Services, said there were no consequences for clients who lied or deceived. He said that apart from two free complaints per year, brokers had to pay a complaint process fee for each complaint filed against them, but the customer could file a complaint with no evidence of wrongdoing. Brokers could only get the complaint process fee rebated once AFCA handed down a final decision. However, if AFCA informed the consumer that the situation was turning against them, the consumer could cancel at the

the client cancels,” O’Brien said. “If a client knows this information, they can use it against a broker.” O’Brien believes that AFCA should move to a model where the loser pays, and the only time consumers should be ordered to pay is when they have been proven to be lying or not fulfilling a fee agreement. This model would put more onus on clients to justify their complaints, especially with the amount of paperwork and email exchanges loan applications generate these days. O’Brien’s concern is not so much about

of licensee members had a complaint lodged against them in the first 12 months AFCA exploiting him but about clients exploiting AFCA. Over 15 years, he has settled more than 4,200 loans and received no ombudsman complaints about service or advice – only a few from clients trying to avoid fees they agreed to pay. “We need to even the scales. Maybe the way to do that is by doubling the fees for brokers ruled to be ‘at fault’ and waiving the fees for brokers ruled to be ‘not at fault’,” O’Brien said. An AFCA spokesperson said that in situations where a complainant was unable to provide any evidence of wrongdoing, it did not progress very far. “Approximately 15% of complaints closed by AFCA are found to be outside our rules, and this would include complaints without evidence or foundation. Financial firms may feel a complaint has no basis, but we are legally required to investigate all complaints,” they said.

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com

Reﬂections and observations This year, which started with such uncertainty, is ending with a lot of momentum, writes Loan Market executive chairman Sam White

2019 IS a year the finance industry will not forget – one that many have described as the most challenging of their career. But while there’s been a great deal of stress and uncertainty, there have been many positives. As I reflect on it, I think about three things.

Our customers took a stand – #brokersworkforyou At a time when there was so much misinformation and confusion about what brokers do, it was our customers who spoke loudest. Campaigns that were started by brokers, aggregators and industry bodies showcased scores of consumers who were keen to tell their stories of how brokers had helped them. They also expressed that they wanted to continue using brokers without paying a fee. As a consequence, we saw the community, and then politicians, respond by endorsing brokers and the role they play in driving competition.

The industry acted as one Our industry bodies, lenders, aggregators and brokers came together as never before to work out solutions to questions raised by ASIC and later by the royal commission. At the heart of that was a collective commitment to make changes and improve outcomes for the consumer. We have now developed new frameworks that will give customers more confidence when they deal with brokers.

We accepted change When I look back on 2019, I will think about the lesson I learned on how important it

is for us to keep changing. We saw significant change in lender credit policies; it took a while to adjust to them. But those brokers who adjusted the quickest prospered. Those who didn’t change their processes or approaches struggled. It’s a reminder that we need to constantly review and improve our systems and processes. We can’t afford to stand still.

before and have emerged stronger. At Loan Market, our focus will be on keeping our brokers safe, saving them time, helping them grow their businesses, and finding and keeping clients. As the commencement of the best interests duty approaches, we will work closely with our brokers to ensure that our office systems and technology platform consistently deliver outcomes that will prove the broker is acting in the client’s best interests. By 1 July 2020, we will endeavour to have a network of brokers who feel safe with the new duty. We also need to save our brokers time. When you are already so busy, it’s hard to hear messages about having to do more. We know that Loan Market needs to help our brokers reduce the time it takes to process loans and run a business. Part of this is delivered by better technology. For the first time, we now have brokers operating paperless processes in their businesses. We have seen brokers save

Looking back on 2019, I think about the lesson I learned on how important it is to keep changing As we go into 2020 there are many reasons to be optimistic.

Best interests duty Under the best interests duty customers will have a choice: to deal with a broker who is legally obligated to work in their best interests, or to deal with a banker who is legally obligated to work in their employer’s interest. It’s a clear choice that I believe will drive broker share to new heights in the years to come.

Technology Technology will keep improving and creating new efficiencies and opportunities for quality operators. We are enthusiastic about the opportunities that open banking will bring for customers and the ability it will give brokers to provide up-to-date information to their clients.

Stronger than ever before Perhaps the best reason to be optimistic is the fact that we have been tested as never

time by using our online fact-find, Bank Connect, eSign and credit checks, all of which are built into our award-winning platform, MyCRM. And part of it is driven by more automation in marketing – our brokers can generate partial applications from their websites and social media profiles, and they can stay in touch with existing clients and nurture future ones through segmented, personalised and automated communication programs. Finally, with all the talk of scale and technology, this business is, and will always be, about people and relationships. I think brokers want to be part of a group that has their back, where they are not just a number and where their opinions and voices are respected. Sam White is the executive chairman of Loan Market. Proudly family-owned and led, it was founded by White in 1995.

L 2

T C f

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19/11/2019 11:16:44 AM

PEOPLE

BIG INTERVIEW

CLIVE KIRKPATRICK: PREPARING FOR THE FUTURE After one of the most difficult years of his career, the Vow Financial general manager can see only blue skies for the future of mortgage broking

IT’S WORKING with mortgage brokers that makes Vow Financial general manager Clive Kirkpatrick love his job. Having started out as a graduate trainee at Westpac, his love of working with people brought him into third party. He went on to lead the mortgage broking business for the St. George Banking Group brands and head up franchising at RAMS Home Loans. Kirkpatrick says he has learned a lot from brokers – about how they run their businesses, deal with customers and navigate complex issues. “That’s what I really love; it’s the people within the industry. They’re self-motivated, they’re result-orientated, and the good ones understand that the only way you’re going to achieve success is by helping more customers,” Kirkpatrick says.

Working through a difficult year While the industry has been a great one to work in thanks to the people within it, the recent scrutiny has also made it tough. With the ASIC broker remuneration review, the Sedgwick report, the banking

royal commission, the tightening of credit, and the various reactions from the banks making the landscape complex, Kirkpatrick says, “I think the last year has been one of the most difficult years in my working life.” Having to respond to a royal commission result that was “inappropriate and misinformed”, Vow joined industry groups in working with regulators and government. It backed the MFAA’s Your Broker Behind

to make sure they’re constantly aware of the importance of brokers to the marketplace and the economy, and we’ll be working with the opposition.” One of the things that has concerned Kirkpatrick over the last year is the toll the environment has taken on brokers. He has spoken to those who have said they are made to feel like fraudsters when they submit a deal to the bank, which then goes through a

“I think the last year has been one of the most difficult years in my working life” You campaign, working closely with its own brokers to help them understand the importance of meeting with local members and opposition representatives to drive what Kirkpatrick describes as “a real grassroots push against unnecessary change”. “We’ll continue to work on the industry boards and the Combined Industry Forum to ensure brokers’ voices are heard,” he says. “We also – because of our relationship with the government – will be working with them

line-by-line analysis of expenses. “A line-by-line analysis of an expense over the last three months does not make for a better credit decision for the future,” he says.

A feeling of family among brokers Having a close relationship with its brokers is something Vow Financial prides itself on. Not only backing them when things get tough, the group always strives for a feeling of connection. Kirkpatrick says the biggest thing Vow

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PROFILE Name: Clive Kirkpatrick Company: Vow Financial Title: General manager, lending Years in the industry: 35 Career highlight: “Being selected to be transferred to London to work for an Australian bank. I learnt so much” Career lowlight: “The evening I listened to and read the recommendations from the royal commission that were specific to brokers”

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19/11/2019 11:20:16 AM

PEOPLE

BIG INTERVIEW

hears back from brokers is how much they love the feeling of family at the aggregator. “The brokers that join us talk about that from the time they go to a PD day or a coffee cluster; they talk about the different feel, and it’s an unquantifiable measure, but it’s a wholly emotive feel of being part of something,” he says. That sense of family was vital over the last year, with brokers facing the extra pressure. Kirkpatrick says they were concerned about mental wellbeing and therefore focused on it at their conferences. “That family feel helped those guys get through that period because they could talk to others and feel they weren’t alone and realise others were feeling the same pain. They were able to work through their problems as a team or a family rather than feeling alone or victimised,” he says. Things might still be difficult for mortgage brokers, but it is certainly getting better; Vow has seen its brokers receiving more enquiries.

more people. He says the industry has to get “smarter” at recruiting new entrants. What he does see growing, though, is the offering of finance and commercial through brokers as demand and broker education increase. The word ‘diversification’ is used so often, but a better way to think about it is simply that by expanding your services you’re ensuring a better outcome for your customer, he says. “If you just focus on converting enquiries to a home loan, you’re going to miss all this other stuff,” he adds. “Customers need not go anywhere else. If they have trusted someone on their home loan, they can get it all done by the broker.” Kirkpatrick says it’s not about being an expert in everything. Vow has a diversification module on its VowNet platform, guiding brokers through their conversations with customers so they can identify their needs beyond just the transaction in front of them.

“[Brokers] were able to work through their problems as a team or a family rather than feeling alone or victimised” Kirkpatrick says he can see only blue sky ahead and believes the industry will continue to grow and reach 75–80% of market share within the next five years. “There’s so much distrust, of the major banks in particular, that people don’t know if they’re getting the best deal,” he says. “That opens up an opportunity for mortgage brokers to help more customers. They can provide customers with choice; that’s what everyone is looking for, and they can do that 24/7.”

Preparing for the future of broking Kirkpatrick does warn, however, that there could be a reduction in the number of brokers if there is not the right balance of bringing in

Its VowNet platform is currently being rolled out to the Yellow Brick Road network. It was built because Vow recognised the time it was taking to get deals approved, as well as the higher reliance on compliance and documentation. Kirkpatrick says the point was to “futureproof ” broker businesses. With the ability to record all conversations and virtual meetings, and have time-stamped documents and pre-filled fact-finds, Vow is prepared for any regulatory changes that come through. “We have set it up so it helps brokers get their deals in quicker and allows them more time to see their customers or review their current customers’ business,” he says.

FEATURES OF VOWNET

Digital fact-find Includes ability for clients to electronically sign documents

Pipeline management Drag-and-drop digital whiteboard to track deals

Marketing integration SMS and email/campaigns and triggers

Document creation Simple to create new, custom-branded templates

Communications integration Email and video conference

Data validation Veda/CoreLogic/bank statements

White label To brokers and customers

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SPECIAL REPORT

NON-BANKS PANEL 2019

NON-BANK LENDERS ROUNDTABLE 2019 As brokers send more home loans to non-bank lenders, seven representatives took part in a live-streamed discussion looking at the future of third party, remuneration and living expenses

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AFTER ANOTHER YEAR of growing market share for the non-banks, it was great to have seven of their representatives join MPA for the annual non-bank lenders livestreamed panel. Held at the Hyatt Regency in Sydney at the end of October, it featured a good cross section of non-banks: those that had been around for more than 20 years, newer players, as well as fintech players. The roundtable panellists were Aaron Milburn from Pepper Money, Cory Bannister from La Trobe Financial, Daniel Carde from Resimac, Joanna James from Mortgage Ezy, John Mohnacheff from Liberty, Michael Burke from OnDeck and Yotta Agamemnonos from Loanworks.

The topics discussed by the group ranged from technology and innovation to the assessment of living expenses, as well as BDM and credit assessor support. Brokers were able to text in their own questions, and one about the lenders’ strategies for the third party channel led to some very positive and passionate declarations of support for brokers. The discussion was interesting because non-banks’ distribution sources are primarily brokers, which means they are heavily invested in the channel. Each panellist explained how their organisation was going to invest in broker tools and in human capital to support brokers. The assessment of living expenses has been a particular area of concern for brokers

over the last two years. Not only has it slowed down turnaround times as credit assessors have been taking an overly cautious look at borrowers’ spending, but brokers say they feel scrutinised themselves when the banks call them to ask questions. Non-banks have the ability to be more flexible, and you will see how they addressed this difficult topic in the following pages. MPA would like to thank each of the seven non-bank representatives for joining the panel and answering the questions, as well as those brokers who sent in questions ahead of time and throughout the discussion. Those who missed or would like to watch the live discussion again can find it at www.mpa.com.au/tv.

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SPECIAL REPORT

NON-BANKS PANEL 2019

THE PANELLISTS

Aaron Milburn Pepper Money

Cory Bannister La Trobe Financial

Brokers are sending more home loan applications to non-banks. Why do you think this is? According to the latest MFAA Industry Intelligence Service report, the proportion of broker-originated loans going to non-bank lenders currently sits at around 9.4%. The segment has seen continued growth, which has tripled since early 2015. Joanna James, general manager of Mortgage Ezy, said she believed the growth was down to three factors: the policy changes in relation to things like living expenses; the banks taking a “cookie-cutter approach” to applications; and the wide variety of products non-banks were able to offer. “The non-bank sector looks at individuals and at individuals’ needs, and I think there’s great sentiment in the market generally amongst brokers and consumers to be considered for their individual situation, and people are realising that non-banks actually offer that,” she said. Emphasising the range of products that non-bank lenders offer, Liberty Financial’s national head of sales, John Mohnacheff, said people were starting to realise the unique products on offer, particularly for small business owners. He mentioned borrowers who needed to use alternative verification of income, such as those who were self-employed or received Centrelink payments. “We take all that into consideration, because our primary driver as a non-bank is

Daniel Carde Resimac

Joanna James Mortgage Ezy

John Mohnacheff Liberty

to find a solution for as many customers as we can,” he said. “So not a cookie-cutter approach; we assess everything holistically and try to provide a unique solution for people’s unique situations.” The growth since 2015 was a result of regulatory changes, added Resimac’s general manager of third party distribution, Daniel Carde. The industry saw tightening of interest-only lending and investment

Michael Burke OnDeck

Yotta Agamemnonos Loanworks

said the lender was continually frustrated with the service the banks were providing. She said the best thing about a non-bank was that it could provide that customercentric and broker-centric service and build strong relationships. “Communication is the key,” she said. “As a non-bank sector we tend to communicate a lot more with our brokers and mortgage managers and originators that come through, and I think that’s very important.”

“You can have as many BDMs as you like, but if they’re not empowered to do anything, then really what value can you add?” Aaron Milburn, Pepper Money lending, with the majors making “drastic changes” that gave brokers a reason to look at non-banks. “We weren’t under the same pressures to make those changes, so as brokers started to use us for those particular loans, they actually saw what we could do as a whole,” Carde said. “I think that trend has continued because they do now see us as a genuine alternative to those major lenders, so the regulatory change drove the behaviours to have a look, and it’s just continued from there.” Agreeing that brokers want to move away from the major lenders, Loanworks director of lending products Yotta Agamemnonos

Why would you tell brokers they should go to non-banks? For OnDeck Australia’s head of sales, Michael Burke, brokers should be considering non-bank lenders for two key reasons: access to capital, and speed. The online lender conducted a survey earlier this year, which showed that one in four SMEs had been declined finance by a bank. Of those that did receive finance, 29% said the time it took for the bank to approve the loan had negatively impacted the revenue of the business. “Small businesses today are opportunistic in their decision-making; they need

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BROKER QUESTION

With a focus on responsible lending, will alt-doc products always have a place, or will they be phased out?

to move quickly,” Burke said. Being a non-bank lender and a digital one at that, Burke said OnDeck had the ability to service that need for speed and assess the transaction differently to the way banks might do it. “For us it’s really about assessing transactions based on the cash flow merit of the borrower, whereas mainstream have a stronger focus around how much equity is in the house,” he said. “That’s coupled with the fact that, through technology and established credit decision models, we’re actually able to make informed decisions quickly, so that allows small businesses not only access to capital but access in a timely manner.” Being able to help customers with their dreams and aspirations is a big reason for brokers to use non-banks, added Pepper

Money’s general manager of mortgages and commercial, Aaron Milburn. He said a customer would go to a broker for help, and that broker could either choose a bank with one product and a changing appetite, or go to a lender like Pepper, which had a variety of options. “What we’re trying to do through education is say we are here; we have the solutions to help more Australian families, and we’re here to help educate you and your clients on what we can do for them,” he said.

A recent report has also shown that SMEs are more likely to turn to non-banks to fund their growth plans. How are you helping your SME customers and the brokers who are trying to assist them?

Daniel Carde: “They’ll always have a place in the market; in fact regulatory guides even make allowances for it. The guides don’t specify between self-employed or PAYG; they specify in terms of what you can do to take adequate steps to verify someone’s income.” Aaron Milburn: “That question or the statement indicates that a full-doc is a less risky loan than an alt-doc. It’s just another way of showing someone’s income, under the same parameters, same risk guidelines, same policies; it is just a different way of assessing someone’s income.” John Mohnacheff: “The word ‘alternative’ verification is the most articulate way of putting it. It’s alternative verification. We’re not here to cut corners or do dodgy deals; this is full assessment but with a different lens, and a lens from the consumer and the SME’s perspective.”

The Australian Banking Association report

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SPECIAL REPORT

NON-BANKS PANEL 2019 BROKER QUESTION

How borrowers spend prior to taking out a mortgage can differ once a mortgage is in place, but lenders are scrutinising every penny. Why can we not remove some of the categories, like recreation, and let the client decide if they can still afford these things when they have a mortgage? Aaron Milburn: “I think the category can stay there; I just think the input and what you put in your notes to the credit officer needs to articulate that.” Cory Bannister: “That’s what brokers are telling us is the fundamental difference with non-banks: we’ll take the time to understand the situation, have the conversation and then make an assessment based on the reasonableness of that.” Yotta Agamemnonos: “I think you have to really concentrate on the situation that the borrower is in. You need to deem whether those expenses you’ve declared, whether they’ve understood everything the broker has explained to them, they’ve had those conversations and they seem reasonable for the situation of the borrowers.” John Mohnacheff: “If we look at the credit assessment that used to happen just two to three decades ago, compared to what we’ve got now, and the electronic lodgement and everything, we are light years ahead of where we used to be.” Joanna James: “I’ve had conversations with consumers who are aware that Uber Eats is going to be evaluated, and they’ve started to think about what they need to do to be comfortable and confident when they go for the home loan that they really are ready for it, so it’s like a trial period for them to practise their expenditure.”

“We understand that they’ve got their own unique needs and requirements and we tailor our products accordingly” Cory Bannister, La Trobe Financial on SME Lending in Australia published in August showed that 60% of people who had thought about starting their own businesses cited access to money as the factor holding them back. It also indicated that, while most businesses were still turning to banks for funding, the smaller the business the more likely they were to use a finance company instead of a bank. Small businesses have been struggling with tighter lending restrictions, meaning many of them are turning to non-bank

lenders. Treasurer Josh Frydenberg recently called on banks to make it easier for small businesses to access finance, as many of them have been held back by tighter regulations since the royal commission. Cory Bannister, vice president, chief lending officer at La Trobe Financial, said non-bank lenders were in fact better conditioned to dealing with SMEs and selfemployed borrowers. As well as offering the options of alt-doc loans and self-managed super fund lending, Bannister said there were a number of ways

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SPECIAL REPORT

NON-BANKS PANEL 2019 BROKER QUESTION

One-touch decisioning. Is better tech the answer and what do you see as game changers in 2020? John Mohnacheff: “If we want to go down that path and we want to take away the human interaction, then perhaps we don’t need brokers, perhaps we recognise the whole lot and we dehumanise it. I think that would be a terrible outcome.” Yotta Agamemnonos: “If it is those rare vanilla deals that everyone loves, sure the broker can maybe help put it through the one-touch and get it through, but so many situations are different. The world is changing so quickly that people’s situations are changing, and I think that personal touch is needed more and more.” Daniel Carde: “One touch, it’d be great. I think we’re getting closer, though, to that because of the benefits technology provides through those tools.” Joanna James: “We’ve got all this new technology coming in, but it’s still quite segregated. People are submitting through different platforms. We’ve got different people that are scraping in different ways; they’re classifying things in different ways. We’re going to go through this period of time of working out that the game changer of technology is actually the connection of how the pieces of technology come together as opposed to it necessarily being a one-touch process.”

“Rate’s not actually the most important factor on those types of transactions; it’s the solution that you’re providing” Daniel Carde, Resimac La Trobe Financial was helping SMEs, such as with Lite-Doc products, SMSF loans and cash-out. “Non-banks and the manual assessment process can handle inconsistent or variable incomes as well as seasonal income,” he said. “We understand that [SMEs] have their own unique needs and requirements, and we tailor our products accordingly.” While the banks might have more stringent credit policies when it comes to lending to businesses, Mohnacheff said that was not the case for non-banks like Liberty. He said the lender had always looked at selfemployed people as individuals who had “taken an enormous risk”. “We understand that every small business person is different, be it from a trade or a finance industry or catering. They’re all quite diverse and very different industries,” he said. “We will engage with the broker to help

the small business person have that wonderful personal connection to help them get the outcomes that they need.”

In our recent Brokers on Non-Banks survey, brokers said the biggest barrier to using non-banks was their higher rates and fees. What do you say to that? Forty-three per cent of respondents to the 2019 MPA Brokers on Non-Banks survey said the biggest barrier to using non-bank lenders was their higher rates and fees. James said this was a “preconceived idea” about non-banks, but it was not true. She said Mortgage Ezy had some of the sharpest rates in the country and had seen growth in volume because of that. The important thing was not just the headline rate, she added. It was the fees and charges over the life of the loan.

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SPECIAL REPORT

NON-BANKS PANEL 2019 BROKER QUESTION What are your strategies towards third party over the next five years?

Cory Bannister: “We’re fully invested in the third party channel; it represents 98% of our business now, and we see no reason to change that. For non-banks without branches, distribution is the toughest bit … so we’re fully focused and committed to the third party space.” Aaron Milburn: “We are third party. We wouldn’t have a business without brokers; we are fiercely protective of brokers, supportive of brokers. This is not a choice for us. We don’t choose between first party or third party when it suits; we are all in on third party.” Daniel Carde: “It’s an efficient distribution strategy. In terms of our strategy going forward, it’ll be investing in that channel to make that process that little bit easier, through technology advancements.”

“There are a lot of non-bank products that are offered at a very competitive rate, and I think as we start to take market share people will realise that we really are moving into some of the spaces that the banks are leaving behind,” James said. Carde added that it was also about the solution non-banks were offering. If a borrower had adverse credit, a bad repay-

to realise that dream and aspiration.” Milburn agreed, and said the best rate the customer could get was one specific to the product that could help them. Often, a borrower would start out on one rate, but as their credit journey continued, they would move on to another product. “They might start on a rate in a specialist or a near prime product, because that’s where

“I think there’s great sentiment in the market generally amongst brokers and consumers to be considered for their individual situation” Joanna James, Mortgage Ezy ment history or short-term employment, there was a higher risk, and they would not qualify for the best rate. “If you do have impaired borrowers, we can help those as [we are] solution-based,” he said. “The rate’s not actually the most important factor on those types of transactions; it’s the solution that you’re providing to get the borrower to where they need to be

their credit journey has them at the moment,” he said. “We will work with them as they cure, to work them through the different products, because everyone is on a journey. This is not a set and forget. We provide solutions that move with the customer.” Burke pointed out that there was a lot to consider when it came to rates and fees. He said people just wanted to know what the

Joanna James: “Mortgage Ezy has always been very outspoken; we consider ourselves to be the champion of brokers, and also because we really fight for independence for brokers as well.” Michael Burke: “Outside of us being passionate about brokers, there was an East & Partners report that spoke of 75% of SMEs who access capital through a broker and intermediary, so that speaks volumes around what the SME thinks in relation to the importance of [brokers].” John Mohnacheff: “We made a promise that our distribution channel is the broker channel. We said there would be no channel conflict. We never once moved away, never once cut commissions, through thick and thin with the broker community. I think it’s symbiotic and long may it continue.”

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$ $

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SPECIAL REPORT

NON-BANKS PANEL 2019

total cost of the facility was going to be. OnDeck had joined other SME lenders in incorporating the SMARTBox requirement, and Burke said this was a great way that the industry had been making fees and rates much clearer for brokers. “Our industry has gone through this transformation over the last 18 months or so, where we’ve driven greater transparency, which I think is fantastic, not just for brokers but also the SME owner,” he said. Milburn acknowledged that it was difficult for brokers because of the various rates offered, as different customers were on different credit journeys. To help brokers, he said Pepper had a five-step process to guide them on how to position a customer’s credit journey, help

them understand why they were suited to a particular product, and look at the future options as the customer’s journey changed.

The Brokers on Non-Banks survey also showed that the biggest thing non-banks could do to improve was to increase their BDMs and credit assessors. What are you doing to ensure brokers have the level of support they need? Although BDM support was lowest on the list of important criteria for brokers in the Brokers on Non-Banks survey, just over 22% said non-banks could improve by having more BDMs or credit assessors. A little over 21% said they could have bettertrained BDMs or credit assessors.

Agamemnonos said Loanworks saw its BDMs as important because they helped brokers get the direct service and support they needed, but the group actually allowed brokers to talk directly to its credit assessors. She said this direct relationship with the decision-makers helped brokers look at how they could do things differently. Loanworks also holds educational days so brokers can learn how the group packages deals and looks at credit. “I think it’s important,” Agamemnonos said. “Of course you have to have a BDM presence for them to go out and feel the love, but as an organisation we’ve tried to find various other aspects where we can help these brokers and support them in various ways.” With a focus on investing in human capital,

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Bannister said La Trobe Financial had increased its sales team by 27% over the last year. However, he added that it was not always as simple as “throwing people at the problem”. Bannister said he wanted to focus on credit staff and finding strong, credit-skilled people. The non-bank has turned two of its most senior credit analysts into credit coaches, and it quarantines new recruits for two to three months while they learn the processes in a live environment. “One thing I think is unique in the nonbank business is that manual assessment process, and if you’re recruiting, and a lot of the time you are recruiting from banks, you need to be sure the answer that’s getting back to the brokers fits with your credit appetite and the way you interpret your own credit policy,” he said. Agreeing that it was about more than just BDMs, James said that, with the number of products and options non-banks offered, it was more complex. She said Mortgage Ezy had around 1,800 computations of products, so it was less about having BDMs to sit down face-to-face with a broker and more about having people available on the phone. “We looked at a model where we could have desk-bound BDMs to provide that service, and then as a business we’re currently doing a huge review around the tools our BDMs need to then be able to train and educate and leverage, and to help the brokers,” she said. Carde said Resimac employed the same strategy and had expanded its relationship management team nationally. They sit close to the credit team, so if there is a complex scenario they can talk face-to-face with the credit officer, and if a broker needs a quick response they are available. “BDMs are busy at the best of times and quite often tied up for anywhere from an hour in an appointment to two hours or three hours at a PD day, and brokers are looking for a fast response,” Carde said. “Absolutely, BDMs are important to spread the word, but I think in terms of service you can balance that with a really

good relationship management team and we’ll continue to expand that relationship management team over the years, because it has worked quite well for us.” Providing the right tools was also important, Milburn said. Pepper has invested heavily in technology with the Pepper Product Selector, which enables brokers to select products and get all the information they need within a couple of minutes. “You can have as many BDMs as you like, but if they’re not empowered to do anything, then really what value can you add?” he said. “If you think about being a broker – where the cost of doing a deal now has increased because of the compliance, the

necessary because of the variety of spaces the non-bank played in, but there had to be a personal service underpinning that. If the broker’s BDM was busy, the broker could ring customer support or the underwriter, or could go into the LibertyIQ platform to ensure they found the answer quickly. “The investment is very much into human capital at every stage of the process, be it an initial engagement with the BDM, be it a scenarios team, an underwriter on the way through, or the settlements officers or post-service of settlement,” Mohnacheff said. “Most of us here have a human person engaging with the broker and the consumer all the way through.”

“We assess everything holistically and try to provide a unique solution for people’s unique situations” John Mohnacheff, Liberty time it takes, and you’ve got 20-odd lender BDMs trying to get hold of you and get you to do different things – where’s the time to do your work?” With respect to business loans, Burke said brokers wanted to triage scenarios before submitting an application, so he had employed in-office staff to be available to do just that. He said that over the last 12 months OnDeck had tripled the size of its BDM team, but the lender had evolved in this area as it had scaled. “What’s interesting is there can be a level of confusion in our space as well, because some people do not think fintech means customer service, and they actually go hand in hand,” he said. “You deliver speed not just through actually processing the transaction but by being able to call out to a broker early and quickly as to whether or not that scenario’s going to fit our credit model as well.” With 73 BDMs on the road and a 22-year history, Mohnacheff said Liberty had learnt that there needed to be an “amalgam of services”. Its large number of BDMs was

How are you helping brokers who may want to diversify their customer base? Particularly since the royal commission final report threatening mortgage broker pay, diversification has been a key topic. Mohnacheff said he saw the broker as the “financial go-to person” for all consumer needs. With most people’s first experience of taking out finance being a credit card or a personal loan, without a broker that person would probably go to a bank, and “all their choices are gone”. “You as a broker are this amazing conduit for choice, for all finance requirements,” he said. “So this is why we have a lot of BDMs and we spend a lot of time with our ‘do more’ sessions, to educate and help the brokers realise what is there in front of them, and the only thing that’s holding them back is the fear of ‘I don’t know how to do it’.” In terms of the royal commission report and how brokers would have been affected, Bannister said brokers needed to look after their investments.

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SPECIAL REPORT

NON-BANKS PANEL 2019

“You need to diversify so you don’t have all your eggs in one basket,” he said. “Brokers were staring down the barrel of their business value going overnight because it probably wasn’t diversified well enough.” To help its brokers diversify, La Trobe Financial has looked at its barriers to entry and removed accreditation requirements across specific product sets. It has also enabled its credit staff to guide brokers through the process so they are not fearful of doing something they don’t understand. Pepper Money launched into CRE lending at the start of this year, and Milburn said the non-banks were collectively challenging where the major banks had not allowed diversification. The non-bank has ensured its systems for the commercial side are the same as those for the residential side, to make it as easy as possible for brokers looking to diversify. “The major banks were saying only this subset of brokers could transact CRE deals,” Milburn said. “So if you had a customer come

“Through technology and established credit decision models we’re actually able to make informed decisions quickly” Michael Burke, OnDeck in, you would have to refer them potentially to someone that’s in competition to get that transaction done for your client. “That is not a great model for brokers, and so we created a platform where we wanted to smash hub-and-spoke approaches and give the ability for brokers to help their customer or the family in front of them, whether it was a home loan, a car loan, a CRE loan, a personal loan.” Burke agreed that the broker should be able to keep their customer, having worked hard to build the relationship and earn their trust. “Clearly, I’m advocating for diversification because my product is essentially a non-core product; it’s not a home loan or it’s not an

equipment finance solution, so we’re obviously big about diversification,” he said. “But I look at brokers, and I think you’ve done all the hard work, you’ve got the relationship – ask the questions.” Mortgage Ezy is also enabling and encouraging brokers to diversify, seeing a real need to do so in this market. The lender has focused recently on SMSF loans, and James said it had spent some time training brokers on how to put the products together. While many brokers were concerned at first, James said they had seen growth in their businesses, which showed how important it was to diversify. Mortgage Ezy has also focused over time on non-residential lending.

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“Australia is a country based on a diversification of cultures. So I think diversification has also got a cultural element to it as well,” James said. Although the lenders and those brokers who do diversify are seeing positive results, the prospect of diversification can still be daunting. Agamemnonos pointed out that there were many different options for brokers to be aware of across many different products. To combat that, she said Loanworks had tried to make the process as simple as possible, acknowledging that the onus was on the lenders to help. “We’ve tried to simplify and streamline all our processes so that whether you have a full-doc loan, a commercial alt-doc loan, or an SMSF loan, the process that you have to follow is the same,” she said.

What role is technology playing in lending at the moment, and how are you keeping up?

“We’ve tried to find various other aspects where we can help these brokers and support them in various ways” Yotta Agamemnonos, Loanworks

Loanworks Technologies is part of the Loanworks group, so Agamemnonos said the lender had always been able to stay at the forefront of innovation and automation. It recently teamed up with neobank 86 400 for straight-through processing and she said it would be incorporating that into the broker space. “We want brokers to be out there doing what they do best,” Agamemnonos said. “So if they can automate processes, the more we can automate the back-end processing stuff, the more they can have time to be out there doing what they do.” While technology is streamlining processes and making transactions faster and easier, Milburn warned that it should not replace human interaction. Instead, it should be an enabler. Technology should be used to help a customer or a family with a solution that they could still talk to a broker about, he said. Then, when the loan application was submitted, technology should be used in the right way to expedite that journey. Pepper Money has recently launched in New Zealand, where Milburn said it had introduced the country’s first end-to-end

online submission platform. “We’re not replacing human contact over there,” he said. “We still have credit staff that will manually assess the deal; we use technology to get the deal to us quicker and then back out quicker. “We’ll do that in Australia; we’ll continue to build out what we’ve got already, and we’ll continue to invest in it. But caveat, we’ll not look to replace the human element that’s at the heart of that business.” Agreeing that technology should not replace the human, Carde added, “It’s about improving time and just keeping on top of the flow that comes through. It’s absolutely an enabler.” For fintech OnDeck, technology is a big part of its service offering. Burke said it enabled the lender to make more informed decisions, particularly with tools like bankstatements.com, which allowed the lender to look at real-time statements rather than PDFs. Comparing the response of customers in this market with those in the US where the brand was first established, Burke has seen a

difference in how Australians are adapting to technology. “North of 75% are taking up bankstatements.com, so the preparedness to embrace technology as a whole in Australia is considerably higher than what we see in the US,” he said. The use of technology should also mean there are fewer errors, said Mohnacheff. Online systems can tell a broker if they have missed a field in a document or entered something inaccurately, which helps improve the speed of processing from application to settlement. However, Mohnacheff agreed with Milburn’s point that the human should not be taken out of the process. “That’s where the brokers engage in coming up with the right solution,” he said. “Machines won’t do that. They can’t sit there and say, ‘I understand this life situation’. Maybe one day who knows, they may. But I’m telling you right now, it just doesn’t happen. So this is where you negotiate and discuss the right solution, but the machines will help the outcome.”

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SPECIAL REPORT

TOP 100 BROKERS

Diversification and education are two of the strategies that have helped this yearâ&#x20AC;&#x2122;s Top 100 bag a spot on the list. While loan values have taken another hit in 2019, these brokers have prepared their businesses to succeed

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19/11/2019 1:08:45 PM

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WITH THE challenging lending environment of the last two years, brokers’ figures for 2019 have taken a hit, but those who made it into MPA’s top 10 have something in common: they have diversified their businesses. When the banks tightened up and changed their appetites, these brokers were ready and able to help their customers in other areas. Diversification has been talked about a lot, but nothing explains the benefits as much as the figures from those who have branched out from just mortgages. In the past, the Top 100 list has been based on the value of loans written over the past 12 months. But this year we have changed the criteria to take into consideration some of the other factors that show a broker’s success. While loan value still makes up most of the weighting, conversion rate, number of loans and growth in value have been included. Over the following pages we present the full Top 100, with highlights of some interesting facts and figures, and commentary from some of the brokers who made it on to the list. The feature then focuses on our top 10 brokers, who talk about what they put their success down to and how they run their businesses. A welcome addition to this year’s top 10 is a female broker, who shot up the list from 36th position in 2018. Understanding the importance of a flexible and accepting business culture, she talks about how her team have helped her over the last year and how the industry has become more diverse since she started out. Thank you to everyone who entered this year, and congratulations to those who made it into the Top 100, particularly after such a difficult year.

$8.80bn

$194,026,090

Combined settlement total of the Top 100 Brokers

Total value of residential loans written by 2019’s No. 1 broker

A MESSAGE FROM OUR SPONSOR We’re in business to help everyday Australians succeed. As an industry, we support Australians through the biggest financial investments and decisions they will ever make. It’s our collective responsibility to do this professionally, with integrity and collaboratively to achieve the best outcomes. We value our relationship with brokers and rely on their expertise delivering solid customer outcomes. We’re proud to support the MPA Top 100 Brokers, recognising our highest achievers in the industry. We are committed to supporting all brokers by offering meaningful and relevant education about our awardwinning products, our processes and policies. We know that professional brokers who are supported deliver better customer outcomes. Congratulations to this year’s No. 1 broker, Darren Liu, whose dedication, hard work and customer commitment reflects Suncorp’s genuine desire to help customers carve out a better today. Of course, Darren is in excellent company with this year’s Top 100, and it gives me great pleasure to recognise their hard work and dedication. We know that you – and all brokers – strive to offer customers greater access and choice. Renee Blethyn, National partnerships manager, Suncorp

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19/11/2019 1:12:10 PM

SPECIAL REPORT

SPONSORED BY

TOP 100 BROKERS

100-75 #77 INVESTOR FOCUS Focusing more on investor clients, Peter Gwynne gets returning custom as they might look to purchase up to 10 properties and often want to upgrade their homes. He also knows the importance of not just sticking to residential loans but helping his clients with car and equipment finance as well. Having seen a number of challenges over the last year, including time-consuming applications and the reduced ability for investors to build their portfolios, Gwynne says he takes the harder times and changes in his stride. “You just deal with it and move on and embrace change,” he says. “I always see a positive in changes and most often see why it is necessary.”

#78 MORAL COMPASS The biggest challenge for Paul Wright over the last year has been the extra hours required to achieve the right outcomes. While the group has recruited additional resources, including new-to-industry entrants, he adds that another challenge has been finding the right people, due to the lack of good people with industry experience. MoneyQuest Wollongong focuses on ongoing advice to its growing 2000-plus client base. “We truly care about our clients' individual circumstances and understand that everybody's different,” he says. “The people who work within our business have a strong moral compass and are passionate about making a difference.”

MPA TOP 100 BROKERS: 100-75 State

Total value of residential loans FY2018/19

Total number of residential loans FY2018/19

Alert Finance Pty Ltd

NSW

$61,550,000

101

Joshua Durrant

Choice Capital

VIC

$64,691,136

109

Leeanne Scott

Mortgage Choice North Sydney

NSW

$66,009,258

110

Paul Hixon

Loan Market

QLD

$66,219,300

120

Chris Crook

Aussie Shellharbour

NSW

$69,691,209

129

Xavier Quenon

Go Mortgage

QLD

$65,523,467

191

Hamish Crawford

Aussie Stones Corner

QLD

$62,908,935

121

Sakib Manzoor

Secure Finance Services Pty Ltd

NSW

$65,499,817

128

Faris Dedic

Red Door Financial Group

VIC

$63,941,812

100

Stuart Turner

Findex

NSW

$64,234,790

Quentin Grofski

Aussie Morley

$64,215,670

146

John Kennedy

Mortgage Choice Mudgeeraba

QLD

$68,802,117

147

Raymond Teh

Mortgage Choice Pyrmont

NSW

$69,314,809

130

Kiran Thapa

Capkon Investments Pty Ltd

NSW

$67,229,242

155

Kirsty Dunphey

Up Loans

TAS

$65,751,000

314

Josh Gilbert

Loan Market

VIC

$70,360,914

123

Joshua Carleton

SMS Finance

QLD

$66,579,442

179

Andrew Baker

Port Finance Group

VIC

$71,460,716

Peter K Johnson

Mortgage Choice Sutherland

NSW

$71,786,859

191

George Mihalopoulos

Connected Finance

NSW

$66,067,557

163

Jarrod Carland

Aussie

VIC

$64,846,842

115

Nicholas Jones

Aussie Belmont

NSW

$68,517,480

167

Paul Wright

MoneyQuest Wollongong

NSW

$69,250,380

272

Peter V Gwynne

Financing Property

QLD

$68,703,000

201

Aaron Christie-David

Atelier Wealth

NSW

$67,323,422

125

Keith Caine

Mortgage Choice Glenelg

$71,902,065

196

Rank

Name

Company

100

Aden Williams

WHAT ARE SOME OF BROKERS' BIGGEST CHALLENGES? ZAIN PEART: “I am a very positive person, but it’s hard sometimes to keep a smile with so much going on. Lenders’ policies are changing constantly, servicing calculators are constantly updating and taking longer to fill in, and to stay compliant we are having to do more and more work.”

MARK DAVIS: “All the regulation changes and then waiting for the Commissioner’s responses. Then waiting for the election results to see what the outcome was for negative gearing and capital gains tax.”

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19/11/2019 1:12:12 PM

SGS-12

Congratulations! To all MPA ‘Top 100’ award winners. As a long-standing supporter of the broker community, Suncorp will continue to work with brokers to provide better outcomes for customers.

Talk to your Suncorp BDM or visit businesspartners.suncorp.com.au

Banking products are issued by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No: 229882 Australian Credit Licence 229882 (“Suncorp Bank”).

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19/11/2019 1:12:13 PMpm 13/11/19 5:27

SPECIAL REPORT

TOP 100 BROKERS

74-40 #74 PEDAL TO THE METAL Keeping up with the various policy changes over the last month has been a challenge, but for Charlie Loveridge, having solid knowledge of current policy has allowed the Shore Financial team to demonstrate real value to their clients. Coming up to five years in the industry, he says he feels like he is still constantly learning and developing his knowledge base and broking skills. “You can’t take your foot off the gas in this industry,” he says.

#51 FROM THE GROUND UP Bundy Financial Services started out six years ago, with just Holly Bundy working on her laptop in the spare room. Now she employs three staff and they work out of an office in Melbourne. Bundy has seen the same challenges as everyone else and admits this was her hardest year yet in business. Having typically grown 20% year-on-year, the brokerage saw a drop in loan volumes in the last year. But with a high number of loans written and an impressive conversion rate, Bundy has managed to get herself up to 51st position this year.

MPA TOP 100 BROKERS 74-40 Rank

Name

Company

State

Total value of residential loans FY2018/19

Total number of residential loans FY2018/19

Charlie Loveridge

Shore Financial

NSW

$72,319,854

Serge Scekic

Aussie Balgowlah

NSW

$68,162,545

Sandeep Boob

RateOne Home Loans and Financial Planning

VIC

$67,957,016

142

Robert Callander

Aussie Morayfield

QLD

$70,211,452

188

Daniel Gold

Long Property

VIC

$69,910,650

136

Mitesh Dedhia

Think & Grow Finance

VIC

$71,491,000

164

Hoa W Hong

Mortgage Pros

NSW

$68,000,000

150

Mathew Crossley

Coronis Finance

QLD

$71,000,000

124

Mark De Martino

Loan Market

VIC

$70,988,487

172

Jacob Decru

Loan Market

VIC

$73,200,215

145

Andrew Algie

Addisons Advisory Group

NSW

$72,960,671

159

Fane Levy

Shore Financial

NSW

$76,249,309

Daniel Zarkovic

Loan Market

NSW

$84,484,598

158

David Thurmond

Mortgage Choice Berwick

VIC

$76,788,181

248

Luke Camilleri

Smartline

NSW

$73,885,000

167

Balpreet Bal

Loan Market

$76,521,647

184

Phil Gallagher

Aussie Belmont

NSW

$74,217,387

156

Toby Edmunds

Loan Market

VIC

$77,667,234

157

Scott Durrant

Successful Ways

NSW

$85,912,241

125

Jason Cuerel

Loan Market

$77,431,016

201

Leon Spadavecchia

Financia

$75,183,262

126

George Tzilantonis

Aussie Berwick

VIC

$77,797,637

162

Karen Bashford

South Coast Business & Financial Solutions

NSW

$79,016,868

600

Holly Bundy

Bundy Financial Services

VIC

$79,038,629

224

Matt Cunliffe

Mortgage Choice Brisbane City

QLD

$86,491,176

Deanna Frances Ezzy

More Than Mortgages

ACT

$77,915,480

257

Mark Stevenson

Bell Partners Finance

NSW

$85,327,616

104

George Antonas

Investloan

NSW

$75,714,523

205

Clinton Waters

AXTON Finance

VIC

$78,865,423

106

Anthony O’flynn

IFA Mortgages & Finance

NSW

$76,562,430

201

Matthew Pongrass

Certe Finance Pty Ltd

NSW

$72,565,004

Zain Peart

ZEP Finance

NSW

$73,982,073

205

Anthony Knight

Mortgage Choice Erina

NSW

$85,210,650

152

Barry Thatcher

Thatcher Finance

VIC

$81,780,450

David Steere

Summit Finance Group

VIC

$81,365,653

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19/11/2019 2:02:16 PM

SPONSORED BY

WHERE THE POWER LIES While home values in most Australian cities are well below where they were last year, recent figures from CoreLogic show that in the lead-up to October 2019 there were four consecutive months of price rises. The October result was the largest month-on-month increase since May 2015. There has been an interesting shift from last year’s results in that NSW has taken more of the share of brokers – and seemingly from Victoria. In 2018, 42 of our Top 100 brokers were in NSW and 37 in Victoria. It is interesting that the number of top brokers in NSW has grown, despite house prices being 2.5% lower than the same time in 2018. Melbourne’s house prices are just 1% below where they were a year ago, and the city is seeing much larger increases in prices than Sydney. Hobart’s house prices have seen the biggest increase over the past 12 months, with a 7.8% jump on October 2018. This year the list has welcomed one female broker from Tasmania, after having no one from the state last year. However, the NT has gone back down to zero brokers in our list, after having one broker last year following two years of no representation. However, with the biggest house price drop across Australia of 9.2% in the past year, this is no surprise. SA, WA and the ACT have all seen an increase of one broker per state. Again this is interesting for WA, which has seen price falls of 8.7% over the past year.

Western Australia

Northern Territory

3 brokers $435,119

Queensland

0 brokers $394,132

15 brokers $493,426

Sam Carrello Napoleon Finance

Colin Mason SMS Finance

New South Wales

46 brokers $817,886 Darren Liu My Home Loans

South Australia

3 brokers $433,140

Victoria

30 brokers $650,197

Scott James Marshall The Loan Arranger

ACT

2 brokers $601,487

Glenn English Aussie Carnegie

No. of brokers

David Thomas Trilogy Funding

Tasmania

Median capital city dwelling price, October*

1 broker $460,033

2019 Top Broker

Kirsty Dunphey Up Loans

*Source: CoreLogic Home Value Index, October 2019. Note: Figures refer to capital city, not entire state.

AGGREGATORS IN TOP 100

GENDER OF TOP 100

91%

LARGEST FRANCHISES

LARGEST WHOLESALE AGGREGATORS

Mortgage Choice

Connective 14

MEN

AFG

Aussie 12

WOMEN

Choice Aggregation Services

Loan Market 11

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19/11/2019 1:12:35 PM

SPECIAL REPORT

TOP 100 BROKERS

39-11 45-11 #38 KEEP IT SIMPLE As a mobile broker with Aussie, Peter Corta knows that flexibility is vital to success and to maintaining relationships with his customers. In the current home loan environment, he has recognised that many of his customers feel confused by the process, so he has focused in the last year on guiding them every step of the way and ensuring the process is kept simple.

#24 REFERRAL NETWORKS After almost 20 years at Westpac, Gary Gregson joined Right Choice Mortgages and Finance four years ago. Basing his business around a referral network of real estate agents, builders and solicitors, he has developed loyal clients. Around 60% of his transactions are land and construction loans, and despite facing “the greatest of challenges” this year, he has ensured that he spends even more time with his clients.

#22 HIGH-TOUCH SERVICE Throughout the last year, Daniel Hustwaite has focused on improving the internal processes at Aqua Financial Services in order to streamline the experience of the customer from loan submission to approval. The group has implemented new systems and a high-touch service to ensure constant communication so that “customers feel like they’re loved”.

MPA TOP 100 BROKERS: 39-11 State

Total value of residential loans FY2018/19

Total number of residential loans FY2018/19

Mortgage Choice Arundel

QLD

$89,767,732

246

Peter Corta

Aussie

QLD

$79,772,346

184

Mick O'Shea

Loan Market

QLD

$78,937,124

143

Champika Herath

CLN HOME LOANS

VIC

$80,220,670

221

Kim Horan

Aussie St Marys

NSW

$77,132,432

181

Ryan Ewart

Mortgage Choice Northern Beaches

NSW

$95,287,281

148

Sam Carrello

Napoleon Finance

$79,829,610

190

Jinkai Ryan Zhang

Option Finance Australia

NSW

$75,709,422

156

Andrew Heath

Mortgage Choice Richmond

NSW

$96,705,225

146

Sze Chuah

Mortgage Lending Specialists

NSW

$100,560,191

354

Marvin Coleman

Mortgage Choice Oakleigh

VIC

$93,547,418

183

Natasha Choi

The Australian Lending & Investment Centre

VIC

$83,229,464

237

Jordan Chantry

Trinity Finance Group

VIC

$80,468,064

174

Scott Partridge

Mortgage Choice Baulkham Hills

NSW

$86,170,799

155

Alex Nochar

Shore Financial

NSW

$103,394,750

Gary Gregson

Right Choice Mortgages and Finance

NSW

$89,469,948

189

Navjeet Matta

Gain Home Loans

NSW

$123,397,390

287

Daniel Hustwaite

Aqua Financial Services

VIC

$101,047,457

187

Josh Bartlett

Loan Market

VIC

$162,984,957

304

Deslie Taylor

Mortgage Choice Ormeau

QLD

$135,492,482

319

Fabio De Castro

Oxygen Home Loans

NSW

$96,211,304

171

David Thomas

Trilogy Funding

ACT

$95,852,758

292

Stephen McClatchie

Loans Australia Pty Ltd

VIC

$100,178,869

198

Scott James Marshall

The Loan arranger

$105,129,868

315

Josh Egan

Astute Financial Melbourne City South/Gippsland

VIC

$100,778,282

293

Andrew Mirams

Intuitive Finance

VIC

$125,941,019

296

Kevin Agent

The Australian Lending & Investment Centre

VIC

$135,568,869

365

Russell Munfaredi

Mortgage Pros

NSW

$143,318,150

330

Daniel O'Brien

PFS Financial Servcies Pty Ltd

NSW

$144,900,710

338

Rank

Name

Company

Darren Comerford

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19/11/2019 1:13:44 PM

SPONSORED BY

A TOUGH YEAR The total value of loans written by our Top 100 Brokers fell for the fourth consecutive year, dropping by more than $530m to $8,804,833,693. While it is a less substantial drop than last year, it is the first time the value has fallen below $9bn since 2013.

Top 100 – Combined value of settlements

Top broker’s total

$11bn

$500m

$10bn

$450m

$9bn

$400m

$8bn

$350m

$7bn

$300m

$6bn

$250m

$5bn

$200m

$4bn

$150m

$3bn

$100m

$2bn

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

$50m

Productivity

MPA’s Top 100 Brokers collectively wrote 18,759 loans this year – a drop of 3,134 from the year before. The median number of loans written this year was 169.

Median total value

The total value of residential loans written by the median Top 100 Broker based on volume size was $82,764,902, which is more than $4m above last year.

Dropping values

Only one broker wrote more than $200m in residential loans this year, which was a stark difference from last year when two brokers wrote more than $300m. Twenty-two brokers wrote more than $100m, compared to 24 last year and 33 the year before.

ANALYSIS: 2018/19 IN BROKING The tougher lending conditions have really been reflected in this year’s results, as the overall loan value for the Top 100 Brokers has taken a big hit. While some brokers have continued to grow, those we have seen at the top in previous years have fallen back. Feedback also suggests some brokers were nervous about submitting their names this year, as they were worried about the drops in values. Looking at the total figures, the overall loan value fell by more than $530m; last year saw a drop of $600m. The number of loans written fell by 3,134, which was a much bigger drop than the previous year, which saw a reduction of 2,402 loans. The bigger drop in the number of loans alongside the smaller drop in the value of overall loan size means the median value is actually above last year. Brokers might be writing fewer loans, but there are larger ones among them. Last year, there were only three brokers who managed to increase their loan value. This year is a different story. Only one broker in the Top 10 dropped in loan value compared to the year before – however, he still managed to write the highest value in the entire list. With the criteria having changed this year, this broker did not come in first place but instead came in third with a 27% drop in volume to $219,432,735. If he’d had this year’s total last year, he

would still have come in third place. The number one broker last year wrote $323,534,150. The top brokers this year have talked about lengthy turnaround times as the banks have increased their scrutiny of applications and regulations have tightened. All of this has contributed to tougher conditions for brokers in 2019. As one broker said, it was taking almost three months for banks to draw a loan, and customers were getting frustrated in half that time. Most of the brokers speaking to MPA talked about how they had diversified their businesses to make sure they had even more touchpoints with their clients. Others also said they were introducing technology and tools to ensure they could maintain constant communication with their customers so they understood exactly what was going on at all stages. As has been a theme throughout the year, many brokerages have increased their focus on education and training so that all brokers and support staff know what to do throughout the changes. It’s also important to remember that, throughout all the scrutiny in the difficult lending environment, brokers have continued to grow their market share over the past 12 months, with 59.7% of all residential loans in the quarter to March 2019.

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19/11/2019 1:14:26 PM

SPECIAL REPORT

TOP 100 BROKERS

WOMEN IN THE SPOTLIGHT With a significant drop from last year, there are only nine women in the Top 100 Brokers list for 2019, compared to 12 previously, when there had already been a 25% drop. On a positive note, one of these women made into the Top 10.

Rank Name

Company

State

Total value of Total number residential loans of residential loans FY2018/19 FY2018/19

Sarah Thomson Loan Market Geelong City

VIC

$118,201,747

309

Deslie Taylor

QLD

$135,492,482

319

Jordan Chantry Trinity Finance Group

VIC

$80,468,064

174

Natasha Choi

The Australian Lending & Investment Centre

VIC

$83,229,464

237

Kim Horan

Aussie St Marys

NSW

$77,132,432

181

Deanna Frances Ezzy

More Than Mortgages

ACT

$77,915,480

257

Holly Bundy

Bundy Financial Services

VIC

$79,038,629

224

Karen Bashford South Coast Business & Financial Solutions

NSW

$79,016,868

600

Kirsty Dunphey Up Loans

TAS

$65,751,000

314

Leeanne Scott Mortgage Choice North Sydney

NSW

$66,009,258

110

Mortgage Choice Ormeau

TOP WOMEN “I’d rather write no business than the wrong business,” says ALIC’s Natasha Choi. Despite this being her most challenging year as a broker, Choi moved up from 50th position last year and wrote over 5% more loans. Her typical clientele are young professionals looking to rent-vest or buy their first home. Finding these clients have a minimal level of financial education, she focuses her meetings on teaching her clients things they don’t know. Mortgage Choice franchise owner Deslie Taylor focuses on consumer education after all the changes of the last year. While she says it's been a tough time, she has found fulfilment in working with clients to ensure the best possible outcome. Taylor has seen continued growth, with her loan value increasing 3.53% from 2018 and 4.3% from 2017. While she wrote fewer loans since her last appearance in the Top 100 in 2017, the rise in value shows she is writing even bigger loans.

JARRED SPURR Sphere Finance, NSW

Aggregator: AFG Total value of residential loans FY2018/19: $111,041,594 Total number of residential loans FY2018/19: 247

For a broker in the business for just three years, it’s an impressive feat to be in the top 10. To achieve this, Jarred Spurr, director of Sphere Finance, grew his loan value by more than 120,000% in the past year. Spurr says his success is down to hard work and being driven, as well as having a great team at work and at home. Sphere Finance has nine staff and has been in business for only the last five years, but it continues to grow. “The team is an extremely driven team with amazing support, and everyone is there for each other,” Spurr says. “We set high expectations in all areas and frequently smash our goals. There’s no way I would be able to achieve my goals without my team – and a special mention to my assistant, Hannah.” Being a new broker is tough at the best of times, but the challenges of the last year have applied extra pressure. Spurr says everyone would have been affected by the huge changes in the industry over the year, but it hasn’t been all bad. “I think the changes have been needed and have been good changes in respect to ensuring we are placing the clients’ best interests first and making sure the clients are going to be OK moving forward,” he says. “There’ve been some extreme changes throughout the year, which I believe were slightly over the top and not needed, but these have been looked at and changed throughout the year.” Spurr says he has always put the client’s interest ahead of his own, ensuring they are provided with clear information and expectations. The client relationship is key, he says. Spurr and the team at Sphere ensure the client is contacted regularly with updates throughout the loan process and after settlement. “A happy client is key to any business, especially in our industry. The client is at the centre of everything we do and will always be provided 10 out of 10 service,” Spurr says.

“A happy client is key to any business, especially in our industry”

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SPONSORED BY

TONY BICE Finance Made Easy NSW

Aggregator: Finsure Total value of residential loans FY2018/19: $120,000,000 Total number of residential loans FY2018/19: 120

A “frustrating” year has not stopped Finance Made Easy director Tony Bice from making his way up to the top 10. In a period of tighter credit and “endless extra questions”, he says he has had to have a lot of patience. The scrutiny and policy decisions have meant time has been added to each transaction and brokers are having to work out the logic behind what is a deal and what is not. “I’d like a dollar for every broker that has said, ‘This time last year that same deal would have sailed through’,” he says. Bice noticed from about 2012 that his business model was gaining traction, and the past year has just been a case of really focusing in on that model. The key element is that the group offers financial planning to each client who takes up a home loan. Concentrating more on the financial planning side, Bice has a team of loan packagers who package the loans before he reviews them, which he says allows for a greater volume of loans. With the tougher environment and longer transaction times, customer education has also been an important aspect of the business over the last year. “It’s all about positioning,” Bice says. “If the client is educated as to why there are time delays, and they understand that it’s not our fault, then it makes for a smoother, albeit longer, transaction.” For Bice, that communication with the client is a key part of what makes a good broker. He says he could say that “caring for the customer” is important, but that should be a given. “You can be the smartest broker in the world productknowledge-wise, but if you can’t communicate with your clients then you can’t sell, and if you can’t sell you don’t get business – it’s that simple,” he says. Along with the patience needed to get through the last year, he says it’s been important to not take things too personally. Not only did the scrutiny of the royal commission make brokers feel bad, but brokers are now also facing scrutiny from the banks. However, Bice says he takes a deep breath, dusts himself off and moves on to the next transaction.

COLIN MASON SMS Finance Maroochydore, Queensland

Aggregator: AFG Total value of residential loans FY2018/19: $164,318,570 Total number of residential loans FY2018/19: 384

Colin Mason’s motto to “do a good job” might sound simple, but he sees it as has having many facets. And with the greatest number of loans written by this year’s top 10, it is clearly working for him. Part of Mason’s approach is to build relationships with referral partners, such as real estate agents, accountants and builders all around the Sunshine Coast, where his branch of SMS Finance is based. He has ensured that each of these partners has been kept fully up to date with all the changes over the last year. “We just really stayed abreast of what was going on in the market and communicating that to our referral sources, so they knew what was going on at the coalface,” he says. “And trying to help them really steer their businesses through the muddy waters, because everyone was affected; it wasn’t just mortgages and brokers. A whole lot of different businesses were affected because of what was going on in the banking commission.” In the Sunshine Coast market, Mason saw people leaving the region and heading back to the cities after their businesses failed. But his approach to his own business has kept him going strong, and he saw 7.90% growth in loan value from the year before. He says it is important to take a “helicopter approach” and look down on the business sometimes, rather than working within it. “If you’ve got a good business, you’re motivated and you’re working on your business, I think you’ll always be successful,” he says. Communication and strong relationships with his customers have also been a top priority. Particularly during the royal commission, Mason made sure they understood trail commission and how the brokerage would earn it moving forward. “We made it very clear that we’re here to do a whole lot of different stuff post-settlement, and that’s brought a lot of business back through the door,” he says. Mason, alongside his business partner, continues to hire new staff when neeeded. While he takes the lead and meets with the clients, his team handle much of the processing. This allows Mason to start conversations with the next client while his support staff ensure everything is “watertight”, and it has helped him reach those impressive volumes of loans.

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19/11/2019 1:14:55 PM

SPECIAL REPORT

TOP 100 BROKERS

SARAH THOMSON Loan Market Geelong City, Victoria

KIN WONG One Solutions NSW

Aggregator: Loan Market Total value of residential loans FY2018/19: $118,201,747 Total number of residential loans FY2018/19: 309

Aggregator: Connective Total value of residential loans FY2018/19: $121,227,000 Total number of residential loans FY2018/19: 196

The only female in this year’s top 10 is Loan Market’s Sarah Thomson, sweeping up the list from 36th position in 2018. She “landed” in finance after applying for a sales role, and has been able to focus on her business thanks to her husband giving up work to look after their two young children. Thomson & Co is based in Geelong with eight staff and two brokers. Understanding the need to offer more than just home loans, the group includes an asset finance/business specialist. Thomson's focus over the last three to four years has also been on culture and ensuring the right staff are in the right roles. That strong team is one of the reasons behind her success in the past year, which has been driven by their supportive business culture and the array of lenders they use to provide the best products. Their knowledge of the market was particularly helpful during the turbulent times of the last year. Having always been a people person, Thomson says a good broker is one who is able to connect and genuinely care for their clients. “A lot of that comes down to really listening and understanding what people want, and then delivering on it,” she says. “Too many people want to sell first and listen second. Clients need and want to trust their broker and know they have their back.” Thomson has seen a positive shift in the broking industry in terms of gender. When she first started at Loan Market around 14 years ago there were only three women and around 100 men. “You’ve got to remember, though, that this was also a time when stay-at-home dads were scoffed at and the world was a very different place. We’ve come a long way,” she says, praising projects like Loan Market’s Leading Ladies initiative and ANZ’s Doyenne program. For her, all types of diversity should be viewed as an asset and not a weakness. “I also like demonstrating to industry peers that gender – particularly in this day and age – shouldn’t be a consideration; there’s nothing women can’t do!” she says. “The industry has allowed me to champion women in broking, and that, I hope, is helping the next generation of brokers have smoother pathways into the industry.”

Despite the difficult lending environment, Kin Wong has maintained a fairly steady business, growing his loan value by 1.53% in the last year. With a high conversion rate of 95% and the second-highest number of interest-only loans in our top 10, he has earned his sixth-place position. Wong joined the banking industry in 1995, later becoming a broker in 2001. One Solutions incorporates a number of different offerings beyond finance. It includes help with lending, financial advice, property, accounting, insurance and even wellbeing. Having written almost 200 loans in FY18/19, Wong attributes his success to his team and the clients who refer business to the brokerage. His relationship with clients is very important to him.

“Our approach is to treat all our clients as number one” “Relationship is what our business is built on, so our approach is to treat all our clients as number one,” he says. To build those relationships, he says it is important to understand the client’s vision and “implement suitable solutions to help achieve their goals”, whether these are financial or life goals. He says this attitude to his clients will stand him in good stead as the industry moves towards a best interests duty regulation. Having always put the customer’s interests ahead of his own, Wong says the transition will be easy when the duty is enforced. To overcome some of the challenges of the last 12 months, which not only the broker industry has faced but borrowers too, One Solutions has introduced new tools to help its customers navigate the difficult environment. “We have implemented a lot of user-friendly budgeting calculators for clients, and educate them so they understand their current position and what they need to do to achieve their financial and lifestyle goals,” Wong says.

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SPONSORED BY

JORDAN BEH Insight Property Finance NSW

Aggregator: Connective Total value of residential loans FY2018/19: $104,636,367 Total number of residential loans FY2018/19: 197

Jordan Beh doesn’t spend his money on marketing and doesn’t even have a website – his business is built entirely around customer relationships. While marketing works really well for some people, he says not doing it helps him cut out the clutter and focus all his efforts on the customer. That way, he can deliver the best experience possible for the customer, and they will refer family and friends. His approach to good client relationships is a simple one, he says. “I want to create rock-solid professional relationships with my clients so that they will stay with me for life,” he says. “For me, quality relationships are more important than quantity. It isn’t easy – there are many late nights. Many of my clients contact me outside the traditional nine-to-five working day, but I always try to make myself available to them.” Beh launched Insight Property Finance in 2017 after three years at Westpac made him realise how passionate he was about lending. The group provides finance solutions for asset and commercial, as well as their “bread and butter”, residential property. The last 12 months have been “a bit of a rollercoaster”, Beh says. He has seen lenders tighten up in some areas but loosen up in others, with higher scrutiny of living expenses and increased appetite for interest-only lending. Beh himself wrote 15 interest-only loans in the last financial year. He has also seen a tightening of the gap between investment and owner-occupier rates. Beh’s willingness to learn and adapt has helped him overcome these changes. “Being relatively new to the industry has had a benefit as I don’t have many ingrained habits yet, which makes it easier to change our processes as required,” he says. Beh says that in this competitive environment there are many different characteristics that make a good broker. “Personally, I think a few key qualities would include good attention to detail, tenacity and a genuine care for the clients they service,” he says.

VISHAL GUPTA Unique Finance Services NSW

Aggregator: FAST Total value of residential loans FY2018/19: $128,194,777 Total number of residential loans FY2018/19: 209

Jumping 10 places this year is Unique Finance Services founder and sole director Vishal Gupta. With more than 20 years’ experience in finance, Gupta established his brokerage in 2011. He has a strong educational background in finance and business administration, and believes education plays a big role in the industry, particularly as new entrants come in. “Not only does it lift the standards as to who can enter into the industry, but it also changes the perception of the general public of the entire mortgage industry,” he says. Unique Finance Services has diversified beyond home loan lending and created long-lasting relationships with its customers by doing so. The brokerage provides specialist services to fund clients’ ventures into the franchise business, pharmacies, dental and other healthrelated types of business. “Being fully diversified also means that our business has kept a momentum during a severe downturn in the industry,” Gupta says. That severe downturn has been “draining” on the industry as a whole, he adds, including consumers. He says the unclear direction from lenders and regulators, on top of the difficult market, has produced a mixed outcome. “Many times decisions, which took a no-common-sense approach, were taken without considering how they would impact the end consumer,” he says. “Everyone was overcautious in the lending space, which at times was hurting the right consumers, and at times it was producing unwarranted outcomes. “Thank goodness this year has come out relatively well, and we have overcome the troublesome period. The focus should be back on achieving the right consumer outcomes, which we in the broker channel have always worked so hard for.” Gupta ensures he sets the right client expectations from day one. He says it is important to be realistic about what can be achieved, and open and honest with clients, even if it sometimes means saying no. “We have a very simple philosophy in our business, which is keeping an open mind, and we pride ourselves in following this at all times. It has kept up our momentum during very low and volatile market times,” he says.

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SPECIAL REPORT

SPONSORED BY

TOP 100 BROKERS

MARK DAVIS

The Australian Lending & Investment Centre Victoria

GLENN ENGLISH Aussie Carnegie Victoria

Aggregator: Connective Total value of residential loans FY2018/19: $219,432,735 Total number of residential loans FY2018/19: 301

Aggregator: Aussie Total value of residential loans FY2018/19: $154,193,606 Total number of residential loans FY2018/19: 295

Don’t be deceived by Mark Davis dropping down a position from last year; he actually wrote the highest value of home loans in our Top 100. In what he says was the hardest year of his career, his loan values fell 27%, but he is the only broker to have written over $200m in 2019. Lending only to investors, Davis is another broker who doesn’t use marketing or advertising to push his business; customers come to him through word-of-mouth referrals. The lending environment was particularly difficult in the investment space over the last year, with tight regulation and the anticipation of a federal election that had the potential to affect negative gearing and capital gains tax. With all the changes that were made, including to net of offset, and the reduction in sales, Davis’s business was down 54%. “It’s a year we never want to go through again. No business wants to go through a 54% change in costs and revenue,” he says. Davis says he had to work even harder than before, ensuring stronger communication with banks and customers and turning the business into one that consistently educates and trains. The Australian Lending & Investment Centre, which Davis set up in 2009 after 20 years in banking, offers a different model to other brokerages, establishing loan structures and strategies for clients who want to create wealth. He doesn’t believe in lending money for the sake of lending money. Conducting on average 7.2 interviews a day, five and a half days a week, Davis tries to spend the majority of his time in front of his clients. The long days are something he has taught himself to manage. “I believe you should get better every day; you should be better tomorrow than you are today and then better the next day,” he says. He admits being in front of the client has become harder over the past year, however. “That’s become challenging because of the amount of changes and red tape, and how many times you get dragged back into the file,” he says. Despite that, Davis not only made it to third place in the Top 100 but also won three AMAs. “It’s nice to have something come through after a year where we were coming home and thinking, do we want to be in this industry any more?” he says.

Storming his way into the top 10 this year from 12th place in 2018, Aussie’s Glenn English has also made it to the runner-up spot. What does he put his success down to? His team. It’s no secret that this past year has been another challenging one, but the Carnegie brokerage has shifted the balance between brokers and support staff, now with more support staff than brokers. “I am very fortunate that the majority of the team I work with have been here for many years,” English says. “All of my team are professional and very knowledgeable. They’re always willing to pitch in and stay back late to get the job done.” English’s clients have also helped, with referrals and repeat clients making up more than 80% of his business. “It’s not uncommon that I write a loan for the brother or sister, or work colleague or family friend of one of my clients,” he says. “The part that makes me feel old is that I’m now writing loans for many of the children of my original clients!” Increasing the number of loans he’s written over the last year, English knows that a good broker needs to have the ability to juggle and manage their own time and priorities. He works six days a week himself, with Saturday being his busiest day, when he might have seven or eight back-to-back meetings. But he also knows that a good broker has to be able to delegate. “Many brokers try to do everything themselves, and in today’s age when it takes so much longer to prepare and submit an application, it really isn’t possible for you to do everything yourself,” he says. Noticing people sitting back while they waited for the results of the federal election on top of all the other changes, English has had to continuously review his business plan “as the goals have changed a few times over the past 12 months”. One of his big lessons from the last year is that “you need to have your Plan B and sometimes a Plan C ready to fire to cater to any future changes”. One positive thing he has seen, however, is the federal government’s first home buyer scheme. “I think that this will spark a lot of interest for the first homeowner market and will help to balance the owner-occupied/investor scales a little,” he says.

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SPECIAL REPORT

TOP 100 BROKERS

DARREN LIU

Aggregator

Finsure

Total value of residential loans FY2018/19

$194,026,090

Number of residential loans FY2018/19

248

My Home Loan North Sydney, NSW

After his debut in the Top 100 last year landed him in fourth place, Darren Liu has come back stronger and taken out the top spot. With a growth in loan values of 6.4% and a 10% increase in the number of loans written, the tighter lending of the last year has not held him back. Liu says he did this by meeting the challenges “head-on”, working hard to ensure both the business and its customers were looked after. Not burying his head in the sand, he stayed focused on his vision and had a team that adapted to any changes. “It’s been a difficult year due to constant changes; however, I run the business by getting down to the basics – what advice we could provide to customers, and being the finance pal along their homeownership or investment journey,” Liu says. Instead of a broker just doing home loans, he says it’s become about more than that single transaction. For Liu, being a good broker means switching the focus to customer service and really understanding the client so he can maintain a long-term relationship with them. There are two stages to his approach to relationships with customers: gaining their trust and maintaining the relationship. “We always ensure we can do better either through knowledge or solutions. We make sure the customer is in the right hands to get the right advice and we’ll meet them again along the journey in the future,” he says. With the lending environment the way it has been over the last two years, part of Liu’s strategy has involved continuous education of the client as well as diversification of his business. Diversification has been a huge talking point,

particularly since brokers faced losing trail commission. But Liu says there is a real benefit to learning new skills and broadening your offering, and why wouldn’t you take the advice of the No. 1 broker? He says it’s about having more touchpoints with customers by providing them with more comprehensive advice on various finance needs. My Home Loan’s slogan is ‘Real advice, real people’. The group was founded by Liu in 2014 and, while initially set up as a “one-man band” it has grown over time to include a loan processing, credit and support team to facilitate the customer’s entire finance journey. Since the brokerage's establishment, Liu has seen changes and disruption with the emergence of fintechs and other technology. While some of this has been a challenge, he is currently looking at different ways of improving his service to customers through better technology and workflows. The biggest challenge for Liu over the last year has been the increased workload for loan applications as a result of the regulatory changes. He has managed to keep on top of that, however, as demonstrated by the brokerage’s growth in loans written to 248. He says he hired more processors and also developed My Home Loan’s own CRM system; he also used Finsure’s software and resources “to help create a better customer experience”. “Our office has benefited from multiple training and education sessions organised by lenders and aggregators to get us on the road to business commercial lending and insurance,” he adds. “It’s not like a switch of a button but a mindset change, and we’re getting there.”

“We make sure the customer is in the right hands to get the right advice, and we’ll meet them again along the journey in the future”

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19/11/2019 1:17:02 PM

SPONSORED BY

Darren Liu (left) is presented with the trophy by Renee Blethyn, national partnerships manager at Suncorp

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19/11/2019 1:17:13 PM

FEATURES

LENDERS MORTGAGE INSURANCE

Breaking down barriers to entry Buying a house is life-changing, but saving for a deposit can be hard work. Genworth talks to MPA about how prospective first home buyers can enter the property market more swiftly

HOMEOWNERSHIP IS one of the most exciting times in any first home buyer’s life. However, achieving one of the ultimate dreams also comes with its own big challenge: the time it takes to save a substantial deposit – typically 20% of the home’s purchase price – is never an easy (or quick) ask for most people. As of 30 June 2019, first home buyers comprised 28.9% of the Australian market. House values are currently down 8.4% from the high of 2017, and the median house price sits at $530,317. “This decline, combined with historically low interest rates and relatively high employment levels, has provided a window of opportunity for first home buyers to re-enter the property market,” says Genworth CEO and managing director Georgette Nicholas, whose business provides lenders mortgage insurance (LMI). Genworth recently released its First Home Buyer Sentiment Report based on a survey undertaken in June and July 2019 of 2,001 prospective buyers and 1,008 recent buyers across Australia. The survey revealed that almost three in four prospective first home buyers believe now is the right time to

purchase property, thanks to the decline in median house prices. Investment properties have also become increasingly popular among those keen to enter the market, with one in six (15.5%) planning to buy one as their first home. This trend is especially prevalent in Sydney, where affordability poses the greatest barrier

taken by recent first home buyers, with approximately 70% reporting that they did not fund 100% of their deposit from their own savings. The majority (56.9%) relied on parental or family assistance (via gifts, guarantees and loans) to supplement their deposit. However, LMI, a popular option for more than one in three (35.6%) of the

“It’s important for first home buyers to educate themselves and take notice of the options available to them” Georgette Nicholas, Genworth to entry into the property market. Given the change in market conditions, Nicholas believes “it’s important for first home buyers to educate themselves and take notice of the options available to them. Some people wait almost a decade before purchasing property, as they’ve been trying to save up to a 20% deposit for their home.” This hurdle, though, can most definitely be overcome. There are various paths to homeownership

responders, is one to take notice of if you have limited resources at your disposal. Through LMI, borrowers can quickly break down the barriers to entering the property market; they can purchase a home loan using a smaller deposit – sometimes as little as 5%. This allows the buyer to acquire the asset and start building equity on it much sooner; they can stop paying rent, and in some cases buy a more expensive property with the deposit they have. It may also enable

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19/11/2019 12:41:27 PM

Sponsored by

the interested person to take out a loan at an interest rate that is comparable to a borrower with a substantial deposit. “LMI is an insurance policy that the lender takes out to protect itself against the risk of a borrower defaulting and the lender being unable to recover the full outstanding loan amount,” says Nicholas. “It is important to note that LMI does not protect the borrower or any guarantor; it just helps the borrower secure a home loan faster.” Nicholas further explains that the lender arranges the LMI as a one-off premium cost, which is collected by companies like Genworth upon settlement of the property purchase. The cost is generally passed on to

the borrower by the lender as a fee. “The lender will give an estimate for the LMI after the borrower applies for a loan,” she says. “The cost will depend on various factors, including the size of the deposit and the type of loan. For instance, Genworth’s online calculator can provide an estimate of the premium payable.” The borrower may have the option of adding the cost to the loan amount and paying interest on it over the term of the loan. Otherwise, the cost can be paid upfront before the borrower receives the home loan. Genworth assists lenders and mortgage brokers to help them successfully under stand LMI, which enables them to attract,

“LMI does not protect the borrower or any guarantor; it just helps the borrower secure a home loan faster” Georgette Nicholas, Genworth acquire and retain clients purchasing their first home. The company supports brokers through its marketing resource centre, which provides information for borrower education on its website. These resources allow brokers to grow their businesses and help customers understand the home-buying process and the options available to them. In addition, Genworth also conducts ongoing face-to-face engagements with brokers and aggregators to support their education on LMI. “Looking ahead, the resurgence of the first home buyer sector is expected to continue,” says Nicholas. “Stimuli on multiple fronts – notably the RBA cash rate cuts, APRA changes to serviceability, government tax cuts and continued infrastructure investment at a state and federal level – will provide foundational support to the economy.”

THE FIRST HOME BUYER PERSPECTIVE

72.4% of prospective FHBs believe now is a good time to buy

51.8% of prospective FHBs believe price moderation will not last

59.3% of prospective FHBs are proposing to enter the market with less than 20% deposit

32.3% of prospective FHBs are looking to buy an entry-level property and sell within five years

15.5% of prospective FHBs are planning to buy an investment property

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19/11/2019 12:41:51 PM

FEATURES

COMMERCIAL DIVERSIFICATION

Staying ahead of the curve After the year the broking industry has had, diversification is a bigger talking point now than it has ever been. Lenders and aggregators are working to ensure a smooth transition for those brokers who are considering the move IT ONLY took a few months for finance broker Faris Dedic to realise he was missing out by just offering mortgages. Having started out in 2017 as a home loan business, a commercial deal landed on his desk and opened his eyes to a whole new market. The deal did not go through, thanks to the banks tightening up; in fact, he says it took him “through the ringer”. But it did show him how lucrative the space was, and he even found it more interesting. While he was exposed to the commercial lending space early on in his career, he says other mortgage brokers may not have been.

“Everyone says brokers need to do this with commercial lending, but they’re not being told when they first enter the industry what it is,” he says.

Why should a broker diversify? One of the biggest benefits of commercial lending for Dedic was that client relationships go beyond the one transaction of a home loan: “They’re a client for life.” Dedic’s aggregator, Connective, supports brokers who are diversifying and walks them through their initial transactions. Head of Connective Asset Finance Brent

Starrenburg says the royal commission really highlighted that a mortgage broker’s trail could be taken away in “one foul swoop”. Diversification is a way for brokers to futureproof their business. “If you’ve got all your eggs in one basket, if that one basket suddenly is not there any more, what do you do?” he says. “You’re better off diversifying now; make sure you’re across all the different areas of what finance offerings you can do. In that way, if one of those avenues changes or the income stream reduces, you’ve still got the other income streams going strong on the other side.”

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FEATURES

COMMERCIAL DIVERSIFICATION

Starrenburg says there is a huge benefit not just to the broker but to the client of being able to offer more than just one service. “If you talk to anyone in this day and age, they’re always busy,” he says. “That works for a customer as well; they’re in the exact same boat as everyone else. “If I as a customer have to go to one broker for my mortgage and another broker for my business and another broker for my asset, I’ve got to explain my business and my income to three different people and three different scenarios.” There is a relationship aspect as well. Buying a home is known as one of the biggest financial decisions in a person’s life. If the customer can trust a broker with that transaction and they have built up a relationship with them, it makes sense that they would want to stay with the same broker for all other financial business. Peter Vala, general manager partnerships and distribution at commercial lender Thinktank, says there is a “natural expectation” that the broker will be able to assist the client with other finance. “The maturing of product distribution channels allows a contemporary broker to occupy a very similar role to that of a traditional relationship manager in a major financial institution in proactively helping to meet a wide range of a customer’s financial needs,” Vala says. “Critically, however, brokers are not driven to cross-sell from a singular institutional platform and are essentially unlimited by way of product offering, recommendations and eventual selection.” For the broker, Vala says diversifying is a retention play to defend against potential loss of the relationship. “Looking after your customers’ broader finance needs is a proven and effective way to ensure they have no reason to look elsewhere,” he says. Agreeing with this, ANZ’s GM commercial broker, Angelo Manos, says customers have a

NUMBER OF MORTGAGE BROKERS ALSO WRITING COMMERCIAL LOANS 4,000 3,500 3,668

3,000 2,500 2,374

2,000

2,647

3,617

3,481

2,932

1,500 1,673

1,641

Apr 15– Sep 15

Oct 15– Mar 16

1,000 500 0

Apr 16– Sep 16

Oct 16– Mar 17

Apr 17– Sep 17

Oct 17– Mar 18

Apr 18– Sep 18

Oct 18– Mar 19

“You’re better off diversifying now; make sure you’re across all the different areas of what finance offerings you can do” Brent Starrenburg, Connective variety of needs and “if customers have a need, you should build your business to assist your target demographic”. “By diversifying, you will find yourself integral to the end-to-end customer experience, which ultimately adds value to your customer base,” he adds. “It’s important for brokers to consider diversification to capture and service the full range of customers’ needs. It will not only help them build a strong rapport with customers but also mean they become a problem-solver for them.”

What do brokers need to know about commercial lending? Dedic warns that commercial lending is “extremely difficult”. Not only are the clients often busy, making it difficult to get hold of them and their documentation, but the complexity of the transaction is far greater. “There have been heaps of times I have said it’s too hard, but at the same time it’s long-term gain and we need to stick through it,” he says. While some mortgage brokers try out commercial lending, thinking they can do it because they can write a home loan, Dedic

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FEATURES

COMMERCIAL DIVERSIFICATION

“By diversifying, you will find yourself integral to the end-to-end customer experience, which ultimately adds value to your customer base” Angelo Manos, ANZ says there is more that brokers need to know. “If I take three steps back, it’s the same thing. We’re getting money for something. But take one step forwards,” he says. “For someone who’s self-employed there’s a significant difference in the way we look at their income. Then most lenders knock back deals because the client owes money on their tax. “Once you take more and more steps forward, there’s more and more hurdles to start crossing.” Although brokers are being advised to diversify as a way of improving their revenue stream, Dedic says there is actually less commission paid on a commercial deal. “It’s more work for less payment, but once you realise you bank the client and they come to you for everything, that’s a completely different story,” he says. Starrenburg says commercial and asset finance is “a different beast” to mortgage broking, and brokers who do want to make the switch should ensure they do the right research. Commercial deals are more onerous than home loans because of all the

complexities of understanding a business, he says. “That’s where you would have a company with trusts and trustees and you need to understand how it all ties in together and where the money comes in, where the outgoings are,” he explains. “If you talk to CAFBA [the Commercial

and Asset Finance Brokers Association], who are specialists – this is what they look after – they’d be of the same opinion that you can’t just wake up one day and start going, ‘I’m going to do commercial and asset’. You need to have some sort of understanding of it.” It is important to remember as well that there are different areas of commercial lending. It includes commercial property transactions, cash flow lending and asset and equipment finance. Depending on the transactions, timing is generally not the same as for residential purchases, which have fairly predictable time frames, says Thinktank’s Vala. “Some commercial transactions are very quick to settle, such as short-term cash flow providers, whereas others may take months or even years to come to fruition, such as a complex construction or development loans,” Vala says. “We recommend taking care with regard to how much time might be invested in a transaction, and assessing whether the return will be realised and be worth it.” Because of the varied nature of commercial lending, Manos says he sees a lot of successful brokers specialising in one particular area. He adds that, because commercial deals are not

WHY SMALL BUSINESSES SEEK FINANCE Top three reasons why businesses employing 0–4 people seek finance – 2017/8

40% To maintain short-term cash flow or liquidity

32% To ensure survival of business

24% To replace equipment or machinery Source: Australian Banking Association, SME Lending in Australia

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FEATURES

COMMERCIAL DIVERSIFICATION

as structured as residential lending, brokers often tell him that commercial lending seems too complex. “It cuts both ways,” he says. “Commercial brokers are often afraid to step into regulated lending. With that in mind, I’d like to encourage brokers to embrace the challenge of broadening their skill set.” New-to-commercial brokers can also be nervous about jeopardising their relationships with their customers by providing commercial services before they are confident about their ability, Manos adds. So the major bank has focused on its education program in 2019.

What is your advice on helping brokers diversify successfully? Naturally, education is the big piece of advice from across the board. Dedic warns that if a broker does not know what they are doing in the commercial space, they will be caught out fast. “You need to understand what an overdraft is, understand how trade finance works, how invoice finance works, how the tax office works, how corporate structures work. You need to educate yourselves,” he says. To do just that, Starrenburg says brokers should partner up with someone who does it already so they can “pick their brains” and

understand what they are doing and how they are doing it. He talks about learning the basics, such as understanding how to read profit and loss statements and balance sheets. On top of that, he says brokers should speak to BDMs. “These are people that deal with these transactions on a day-to-day basis,” he says. “Start talking to those commercial BDMs, start talking to your aggregator and understanding what commercial events they put on, or even the industry body, so you can

One of the big hurdles for mortgage brokers is building up their client base, but Vala says it is important that those who already have clients should let them know they are expanding their offering. “Let your clients know that you are not just their broker but their trusted finance partner, and that the lending solutions and lender partners you can provide them with access to are essential elements in helping to achieve their financial and wealth goals,” he says.

“Once you take more and more steps forward, there’s more and more hurdles to start crossing” Faris Dedic, Red Door Financial Group have those conversations with like-minded brokers to understand the nuances, the ins and outs, so you can better prepare yourself.” Agreeing that brokers should be talking to BDMs, Vala says it is important to develop networks with three or four relationship managers “who are willing and experienced in helping to structure and shape transactions for you to suit your clients’ circumstances or needs”.

Manos reiterates the essential need for education but also for brokers to dedicate time to investing in themselves. ANZ has a team of BDMs on hand with experience and knowledge who can connect brokers with the right people. “We recognise that in order to receive quality customer outcomes, brokers need to be educated on the product options, and therefore must invest in themselves,” he says.

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FINANCE OPTIONS CHOSEN BY SMES If you need to access finance in the next six months, which of these would you consider? 45% 40% 35% 30% 25% 20% 15% 10% “Finally, consistent, regular exposure is key to becoming an expert at any skill. Don’t be afraid to jump in.”

How can brokers use their existing residential client base when looking for commercial customers? If a mortgage broker is considering diversifying, the first place they should look is at their own database of clients. Starrenburg says segmenting their database is something every broker should be doing regardless of whether or not they diversify. “They should understand that a client’s business or lifestyle is enough to be able to say this person is self-employed or this person is a business owner, or they’re a tradie, whatever it might be. You should be able to gauge from that alone how much potential business you’ve got,” he says. Using their database, brokers should also be marketing to clients. Vala says brokers can send out regular reminders to their database so customers know they have access to other finance solutions; this marketing can even go a step further. “Cultivate and distribute relevant content about different solutions, such as with case studies, while being sure not to step over into

5% 0%

Credit card

Overdraft

Bank loan

Equity capital raising

Other Source: Sensis Business Index 2019

the licensed territory of providing financial advice,” he says. Vala would also ask the broker whether they had met their customer’s accountant or financial planner; if they had a list of their current asset finance commitments, residuals and expiry dates; and whether they had conducted an annual review with them regarding their future needs. Customers value the service brokers provide, Manos adds, which is why a broker’s greatest asset is their existing customer base. He encourages brokers to analyse their books, look at where they’re growing and look to build on that. He recommends looking for things like a customer’s ABN to see if they might have some form of business lending requirement. “Be curious about what the customer is telling you, because there might be an underlying business that you can support,” he says. “For example, when you look at your customer base, do you have a natural affinity

towards a specific industry or profession? Is this something you can build on and leverage to further grow your business?”

Are there any warnings you would give to brokers who think they can just jump into writing new loans? As someone who has been doing commercial lending for around two years now, Dedic has seen how complex the space is. “You can’t be a yes man in commercial lending,” he says. “You need to understand the client and have all the information from the client upfront. It’s a completely different ball game; you can’t just pick up the ball and do a commercial loan if you want to be the best. And there’s no point operating in this space if you don’t want to be the best.” In the same vein, Starrenburg says one of his biggest warnings is, “If you don’t know, don’t pretend you know”. Instead, say you don’t know and then find out. “It’s the age-old don’t overpromise and

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FEATURES

COMMERCIAL DIVERSIFICATION

WHAT ARE YOU DOING TO HELP BROKER BUSINESSES DIVERSIFY? Brent Starrenburg: “We have a specific commercial and asset PD event which we did throughout 2019, and we’ll continue to do that in 2020. We hold webinars; obviously we like to try to connect our commercial brokers to the lenders available on the panel and look to try to expand that panel to make sure we cover all the various niches that might be there in the marketplace.” Peter Vala: “We have a team of relationship managers that are capable of assisting and supporting the workshopping and deal preparation of any type of commercial property transaction. We have no minimum volumes hurdles or educational requirements as our team is capable of assisting you and your client at every step of the way as required. We can be as hands on or as hands off as you like.” Angelo Manos: “We regularly partner with our residential broker team to provide a unified approach to our brokers. Whether it’s participation in PD days or broker meetings, across the board we want to keep it as simple as possible for our brokers to deal with us. ANZ’s commercial and residential BDM teams sit side-by-side nationally, allowing us to work as one and provide brokers with a seamless transition from residential to commercial.”

underdeliver type of thing,” he says. Starrenberg also reiterates the importance of partnering up with someone and going to events to talk to like-minded people and learn from their mistakes. “There’s enough business out there that we don’t have to fight each other for it,” he says. “I think that most brokers are very willing and able to have those heart-to-heart conversations and happily share information and knowledge that will put somebody else in just as good stead as they are.”

“Looking after your customers’ broader finance needs is a proven and effective way to ensure they have no reason to look elsewhere” Peter Vala, Thinktank Continuing on the same theme, Vala stresses the importance of having a support network of lender relationship managers around the broker. “None of us travel this journey entirely alone,” he says. “They can be an excellent resource, not only for achieving lending solutions but also in being able to provide a quick third party sanity check on whether a transaction is likely to be successful.” As an extra warning, Vala says the broker needs to make sure they are not being “shopped”. “Mandate the customer where possible, which doesn’t necessarily mean charging extra fees. If you are unsure how an effective mandate strategy works, we recommend you speak to your aggregator or one of our team

members who can explain what this looks like and how to implement it effectively.” From ANZ’s point of view as a major bank that is receiving the end application, Manos puts an emphasis on application quality. He says “a good application tells the whole story”. He adds that it is important for brokers to lay the right foundations in terms of their experience and education. “This applies particularly to long-standing residential brokers who have built trust over time, as they often don’t get a second chance,” Manos says. “To help drive better customer outcomes, brokers should also work to further understand the customer and understand the problem they are trying to solve.”

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FEATURES

LEADERSHIP

Five things you must have to lead a team Employees often fail when they ascend to leadership roles because they haven’t cultivated the qualities necessary to lead a team. John Eades highlights five attributes that are critical for new leaders

IF YOU KNOW about your industry, perform your job well, and show ‘potential’, there’s a good chance your organisation will consider promoting you to a management role. Unfortunately, as a manager, you’ll only use a small percentage of the skills that got you the promotion in the first place, and according to the latest statistics you have a greater chance of failing than being successful. (Sixty per cent of new managers fail in their role every single year in the United States alone.) Sadly, I’m qualified to write on this topic because soon after I was promoted into a role leading other people I quickly figured out that I had no clue what I was doing. I did everything wrong, and unfortunately my people bore the brunt of the pain associated with my lack of leadership skills. At the end of the day, leadership is a journey and not a destination. To improve your odds of success on your leadership journey, there are

skills and behaviours you need before and while you lead a team.

1. Have a servant mindset I’ve written about this many times, but the best definition of leadership comes from John Quincy Adams: “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” Leadership is about serving and empowering other people. No longer do you come to work for yourself or for your own selfinterest. You now come to work to serve other people and help them become the best version of themselves in order to achieve more as a team. Serving others doesn’t mean being a pushover or not holding others accountable. It’s actually the opposite. In truth, you can’t effectively lead in today’s environment without it.

2. Know the qualities you want in people One of the biggest mistakes I’ve made in my leadership career was not knowing what I was looking for in people. We now teach something called the Leadership Compound Theory, which shows the four characteristics we look for in people – confidence, drive, selflessness, and character – and what we expect each team member to bring to work every single day. You might be looking for different things based on your role or position, but the important thing is that you define them, communicate them and live them yourself.

3. Find an excellent mentor Leading a team is hard work. I tell my team all the time, “If it were easy, everyone would do it.” Because of the difficulty, having someone in your corner is

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FEATURES

LEADERSHIP

Leadership is about serving and empowering other people. No longer do you come to work for yourself or for your own self-interest extremely important. Sir Richard Branson said, “If you ask any successful businessperson, they always will have had a great mentor at some point along the road.” The same goes for leadership. If you ask any successful leader, they always will have had a great mentor at some point along the road to ask questions and learn from.

4. Discover a love of learning The best leaders are learners. PJ Fleck, the current head football coach at the University of Minnesota, became the youngest head coach in college football in 2012. By that time, he had built a book of lessons he had learned during the

seven years he spent as an assistant coach. The lessons were things he did or didn’t do when he became a head coach. That book continues to evolve and grow five years later. The minute you think you have it all figured out or you forget to be curious is the minute your skills start to diminish.

5. Understand the importance of culture When I first started leading a team, I thought it was all about strategy and execution. I had no idea how important culture was to the results of the team. On my Follow My Lead podcast, Step Up Leadership founder Jason Barger told me, “Culture is every-

thing”. Culture is really all about the beliefs and behaviours that produce the results of any team or organisation. The word ‘culture’ actually comes from the Latin word cultus, which means ‘to grow’. In today’s modern business environment, that really means ‘to grow people’. Put an emphasis on and define the culture you want to create for your new team. Before you accept your first leadership position and the responsibility that comes with managing other people, consider these five skills and behaviours. If you’re already leading a team, it’s never too late to start. John Eades is the CEO of LearnLoft, a full-service organisational health company whose mission is to turn managers into leaders and create healthier places to work. He is a speaker, host of the Follow My Lead podcast, and author of F.M.L.: Standing Out & Being a Leader and the upcoming book The Welder Leader. For more, visit learnloft.com

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PEOPLE

BROKERAGE INSIGHT

Fostering positive broking practices Over the last eight years, Foster Ramsay Finance has established itself as a notable player on Victoria’s mortgage broking scene. MPA talks to principal Christopher Foster-Ramsay to find out what drives the business to greater heights

2011 WAS a milestone year for Christopher Foster-Ramsay. Already a veteran of the finance industry, he decided it was time for a change. Years spent in call centres, then in lending and assessing, had given him a desire to help people, but it wasn’t enough. Broking seemed a natural fit. As someone who enjoyed both working with people and a broad variety of day-to-day challenges, Foster-Ramsay realised he could channel his existing skills in a new direction. And thus Foster Ramsay Finance was born. “Broking was an emerging area at the time,” says Foster-Ramsay. “And I’d found that wherever I worked, I had a need to meet with people day-to-day and work for their benefit. Foster Ramsay Finance was the end product of all of these desires and ambitions.” Today, as the company’s principal, FosterRamsay has continued to build upon these initial principles to create a company that’s geared towards serving the local community.

Working through the elastic market During his time in the business, FosterRamsay has come to believe that brokers

must be prepared for a wide variety of market conditions. When the company was founded, the housing market was just beginning to emerge from the devastating effects of the GFC, and it’s faced any number of changes over the years since. “Every three or four years there seems to be some sort of major event that acts as a bit of a cleanout in the industry, as well as the normal market ebbs and tides,” says Foster-Ramsay. “The financial services royal commission is one example, but there’ve been a number of others over the last few years – changes to loaning and licensing laws, for example.” The key to not only surviving but thriving during such times is to have effective policies, processes and people in place within your organisation, he says. Best practice should ideally go above and beyond legislative requirements and be human-focused in order to keep the company relevant even through the most difficult periods. “The market is elastic – it grows and shrinks,” says Foster-Ramsay. “But with the right tools, you should be able to run to its parameters.”

He also points out that diversification can be a valuable tool for businesses looking to expand into new areas, but it isn’t something that should be done solely for novelty. Most

HELPING AUSTRALIANS INTO OWNING A HOME It’s a core component of Christopher Foster-Ramsay’s philosophy that everyone in Australia should be able to own a home at some point in their lives. Indeed, it would be fair to say that it’s something he sees as inherent to the nature of mortgage broking. “I worked in finance for years before I went into broking,” says Foster-Ramsay. “It gave me a background in the core skills I’d need as a broker, but it also showed me the importance of helping people own their own home.” “As mortgage brokers, we should be able to help enable that.”

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FOSTER RAMSAY FINANCE AT A GLANCE Founder: Christopher Foster-Ramsay Locations: Mooroolbark, Victoria Year founded: 2011 Services offered: Home loans, investment property, personal finance Number of employees: 3 Awards: Australian Mortgage Awards New Brokerage of the Year 2015;

“The market is elastic – it grows and shrinks. But with the right tools, you should be able to run to its parameters” Christopher Foster-Ramsay, Foster Ramsay Finance brokers are best served by focusing on their strengths rather than diversifying merely for diversification’s sake. “If you look at our books, you’ll see it’s primarily owner-occupiers, who are either first home buyers or upgrading the family home,” says Foster-Ramsay. “But from there we also get a lot of related referral business – car loans, small business and personal loans. It’s been a pretty organic process.”

Future risks and rewards To succeed in weathering storms is also about keeping a close eye on changing market trends and future risks. Foster-Ramsay points to several risks around equity, with

homeowners and clients potentially unable to grow their wealth through equity release as loaning agents become more conservative. There are other factors too, especially at a micro level. Living expenses are being heavily scrutinised, and clawback issues remain a major topic of discussion. “There’s also likely to be increased regulation around serviceability, especially in the wake of the royal commission,” says Foster-Ramsay. “That will influence lenders’ comfort levels around debt exposure too.” Yet he’s optimistic, both for the industry and Foster Ramsay Finance. Though he describes 2018 as “difficult”, Foster-Ramsay is positive about 2019 – and, perhaps even

MPA Top 100 Broker 2016; Australian Broker Awards National Finalist Industry Thought Leader of the Year 2017 and National Finalist Customer Service of the Year 2017

more importantly, the plans for the firm’s future that still lie ahead. “2018 was all about looking at ways to make the business as efficient as possible, which brings its own challenges,” he says. “2019 was about continuing to steer things in the right direction and ensure we were looking after what we’d put in place. For example, we’ve got a significant rate of referrals for new clients coming from existing ones – we needed to make sure we had systems in place to make sure they were being looked after.” 2020, he notes, will be about growth. “We’ve had several new hires in the last three months, and more are scheduled for the coming months,” says Foster-Ramsay. “We’ve funnelled extensive resources into developing the business so we can fully realise what we’ve been building over the last two years.”

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PEOPLE

OTHER LIFE

TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com

“I really enjoy the goal-setting side. Being able to focus on a specific goal and work towards it makes it much easier to push yourself to do these crazy Ironman events”

2018

Year Gillard took part in his first Ironman event

Number of triathlon events Gillard has already participated in

2020

Year when Gillard’s next race will take place

IN IRONMAN MODE

Resimac BDM Nathan Gillard is as attracted to the goal-setting aspect of Ironman events as to their health benefits LAST YEAR, having gained a few pounds on a trip to Europe, Resimac BDM Nathan Gillard was asked by his wife if they could do a half marathon. He agreed; however, being the competitive person that he is, Gillard told her he would do a half Ironman instead – a gruelling series of long-distance races that involve a 1.9km swim, a 90km bike ride and a 21km run. “I’m super competitive, and I love to set

goals and to challenge myself to achieve them, no matter how small or big,” Gillard says. “The trick is to start small and work your way up to the bigger goals to make sure you succeed and don’t fail.” Being told he was “aiming too high” by choosing a half Ironman as his first triathlon experience, Gillard was called “stupid” a few times. But he pressed on and even finished the race under his set goal time.

Presently, Gillard has put his Ironman training on the back-burner to prioritise his volunteer work with Surf Life Saving Australia, a non-profit community organisation that promotes beach and coastline safety and provides surf rescue services. He will soon resume training for his next race in Cairns in June, and for his big goal – the Busselton Ironman, a full Ironman in WA in December.

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