TMM - The NZ Mortgage Mag Issue 3 2017

Issue

03

2017

INAUGURAL

Better Business Conference

industry

2017

SEE INSIDE FOR DETAILS

revolution The hot issues facing mortgage advisers debated

NEW REGIME HAVE ALL VOICES BEEN HEARD?

BUSINESS GOALS

GETTING IT RIGHT

CLIENT PLEASER BOOST CUSTOMER SATISFACTION

CONTENTS

industry set for revolution

UPFRONT 04 EDITORIAL

A conference just for you

06 NEWS

Small-deposit loans dry up and is the end in sight for hand-written apps?

08 PEOPLE ON THE MOVE

The hot issues facing mortgage advisers debated

26

16 FEATURES 10 HOUSING COMMENTARY

The heady days of phenomenal price growth are slipping into the past, so what's next?

12 PROPERTY NEWS

The Labour Party has property investors in its sights and DTIs looming

14 REGULATION CHANGES

Has the review of the Financial Advisers Act been a win for the big end of town only?

26 MY BUSINESS

Zane Torkington reveals how he consistently tops his network’s customer satisfaction rankings.

Zane Torkington

COLUMNS 24 SALES AND MARKETING

Paul Watkins explains why when setting goals for the shot term, it is critical to consider the long-term effects.

28 PAA

What's in store at the National Advisers Conference 2017?

30 INSURANCE

In the first part of a new series, Steve Wright asks will the product you recommend do the best job when cancer happens?

32 UNTAP YOUR ONLINE POTENTIAL Maximise your business website's potential and reap the rewards.

03

EDITOR’S LETTER

A conference just for you

W

e are absolutely excited to announce that TMM will be running a one-day conference just for mortgage advisers

in October.

For some time now advisers have been telling us that they really want a conference that is totally focused on lending. There’s already plenty of options for life insurance advisers and financial planners.

The TMM Better Business Conference will be held at the Novotel, Auckland Airport on October 19.

We have a number of themes running through the programme. The first is around adviser regulation. Mortgage advisers are facing massive change to their businesses with the way that the review of the Financial Advisers Act is heading.

Every mortgage adviser will have to make changes to the way they operate, their conduct and face additional compliance. The Financial Markets Authority will present on what it will be expecting from mortgage advisers and RFAs in the new world.

Also the Ministry of Business, Innovation and Employment will provide an update on

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the new legislation. BNZ economist Tony Alexander is the first keynote speaker. Tony will give you a great economic and interest rate update and you will get plenty to think about.

We will also have a housing market update from CoreLogic.

Another theme of the conference will be around the changing lending landscape. It’s no secret the big banks are facing challenges and credit rationing is real. However, there are many other options available. By attending the conference you will get to learn more about the options out there.

One thing we are seeing currently is a significant increase in the number of newto-market mortgage advisers. We will have some sessions here to help newbies learn what they need to do to be successful. These sessions will also be useful refreshers for more experienced advisers.

Over time our goal is to build this event into a bigger annual conference, a little like the old NZ Mortgage Brokers Association’s events.

Numbers will be limited so do register as soon as you can. Also, for the out-of-towners, if you book your airfares well in advance fares will be pretty cheap.

We’re excited to be bringing you the Better Business Conference. It is part of our support of mortgage advisers across New Zealand. For more details, go to www.tmmonline.nz

PUBLISHER: Philip Macalister EDITORIAL: Adrian Gallagher SENIOR WRITERS: Miriam Bell CONTRIBUTORS: Susan Edmunds Paul Watkins Steve Wright GRAPHIC DESIGN: Jonathan Harding ADVERTISING SALES: Freephone: 0800 345 675 Kelly Thorpe kelly@tarawera.co.nz SUBSCRIPTIONS: Dianne Gordon Phone 0800 345 675 HEAD OFFICE: 1448A Hinemoa St, Rotorua PO Box 2011, Rotorua Phone: 07-349 1920 Fax: 07-349 1926 tmm_editor@tarawera.co.nz

The NZ Mortgage Mag is published

by Tarawera Publishing Ltd (TPL) in conjunction with the Professional Advisers Association. TPL also publishes online money management magazine Good Returns www.goodreturns.co.nz and ASSET magazine. All contents of The NZ Mortgage Mag are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited.

The NZ Mortgage Mag welcomes opinions from all readers on its editorial. If you would like to comment on articles, columns, or regularly appearing pieces in The NZ Mortgage Mag, or on other issues, please send your comments to: tmm_editor@tarawera.co.nz

Philip Macalister Publisher

Better Business Conference

2017

BROUGHT TO YOU BY

NEW MORTGAGE ADVISER Thursday, ONLY CONFERENCE DATE: 19 October The inaugural Better Business Conference has been tailored specifically for mortgage advisers in New Zealand. A range of industry experts will be focusing on the key areas facing the industry as well as providing valuable and practical advice on how advisers can improve their business.

BOOK TODAY!

PHONE 0800-345-675 VISIT tmmonline.nz THANKS TO OUR SPONSORS:

VENUE: Novotel, Auckland Airport Book your seat today for the inaugural TMM Better Business Conference, New Zealand's biggest event solely for mortgage advisers. Numbers are limited, so don't miss out.

NEWS

SMALL-DEPOSIT LOANS DRY UP Advisers are struggling to place loans for borrowers with smaller deposits.

B

anks can lend up to 10% of their new mortgages to owneroccupier borrowers with deposits smaller than 20%.

But few are being issued.

Reserve Bank data shows there was just $263 million in home loans with loan-to-value ratios over 80% issued in April, down from $390m in April 2015 and $493m in April 2016.

Westpac is understood to have temporarily stopped applications from brokers for deals over 80%, although a spokesman would not confirm that.

An ANZ spokeswoman said it had a maximum LVR of 85% since August 2016.

“We only do a limited amount of lending above 80% LVR but we believe it is prudent to ensure our customers have strong equity positions in this part of the market.”

ASB will go to 90% but is understood to prefer deals for existing clients. Kiwibank has had its lending constrained while it works through the fallout from its disagreement with the Reserve Bank over the classification of its capital notes.

Brokers said banks wanted to see higher levels of income and fewer commitments before they signed off on the deals that they

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Massey University banking commentator Claire Matthews were prepared to do.

Gareth Kiernan, chief forecaster of Infometrics, said some of the reluctance to lend was probably coming from the banks’ parents in Australia.

“I wouldn’t be surprised if that were the case - there's a definite level of concern about

overexposure to property in New Zealand that seems to be driven primarily out of Australia,” he said.

“I don’t think it’s all Australia-driven, though – the at least perceived potential for a correction in property prices, most particularly in Auckland, would mean that banks could easily justify being even tighter on low-equity lending than required by the Reserve Bank to minimise the risk of incurring a loss if prices did fall.

“The experience of the global financial crisis, with a 10% drop in house prices here, combined with tighter supervision and tougher capital requirements by the Reserve Bank, mean that banks are significantly more sensitive to the downside risks than would have been the case a decade ago.

Furthermore, housing is more overvalued now, at least in some locations, than it was pre-GFC.” Massey University banking commentator Claire Matthews agreed the banks’ position was likely to reflect local concerns.

“Perhaps banks are expecting the Reserve Bank to take further action to restrict riskier lending so they are being pro-active to make that less likely. Perhaps banks are now starting to see some easing in house prices so are wanting to reduce their exposure."

HANDWRITTEN LOAN APPS SCRAPPED Handwritten loan applications may be on the way out for ANZ but are any of the other banks rushing to follow suit?

F

rom September 1, ANZ will no longer accept handwritten loan applications, or those that are not typed, from brokers.

The rule change will only apply to brokers because non-broker home loans applications are done with the help of an ANZ staff member.

An ANZ spokesperson said it was motivated by the fact that handwritten information can be difficult to decipher, which meant decreased service levels and increased risk of incorrect details being recorded.

However, it seems that the other major banks are not rushing to follow suit.

A BNZ spokesperson said that brokers have to lodge loan applications through BNZ’s electronic portal.

This means that if they do have handwritten forms they have to re-enter that information into the system anyway.

But BNZ doesn’t have a specific rule about not accepting handwritten applications, she added.

Likewise, an ASB spokesperson said they don't have a specific rule about not accepting handwritten applications from brokers.

“But all applications do have to meet a high quality standard and if they don’t meet our requirements they will be returned to the broker to re-do and re-submit.”

A Westpac spokesperson said Westpac has no plans to change its current system, while a Kiwibank spokesperson said they don’t use brokers, which means that the issue is not relevant to them.

Among brokers the rule change has elicited some discontent.

The Mortgage Supply Company’s David Windler said that, in his experience, most banks are pushing back on handwritten applications.

This was on the basis that it meant they have to rekey the information and that is greater potential for mistakes.

But most brokers would be submitting information electronically so ANZ’s rule change seems based on the lowest common denominator, he said.

“It is not that hard to complete an application form correctly. You might get the odd occasion when something handwritten is submitted but it shouldn’t be a train smash.”

He had no inkling that the other banks would be following ANZ’s move but said that banks were expecting brokers to fill out more and more forms.

“It doesn’t make it any easier to write business.

And that’s a common theme really.” ✚

07

PEOPLE

PEOPLE ON THE MOVE

Got a new appointment you would like to tell advisers about? Email details and a pic to editor@tarawera.co.nz Rachel James has joined the group from an accounting background. She is a property investor who will work as an adviser in Wairarapa, with the Ray White network.

Rotorua-based Ross Fowler, with 10 years’ experience in mortgage broking, joins the Loan Market business in the Bay of Plenty.

He was previously with Plus$.

After a career with the BNZ, Vaughn Fraser has joined the Christchurch network.

Debbie Reed has signed on in Hawkes Bay, after many years in banking.

On the insurance side, Hannah Findlay has joined her husband, Brent’s, loan market business, operating under the Insurance Market brand.

Mortgage Express expands Rachel James

Loan Market makes appointments

Mortgage broker group Loan Market has added a number of new advisers.

Former Mike Pero Mortgages adviser Mike Kingston has joined the network in Wellington. The group said he would work to build his business in Kilbirnie.

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Ross Fowler

Mortgage Express has appointed Cristina Simeonidis as a mortgage and insurance adviser.

Simeonidis joined the industry in 2009, first working in insurance. In 2013, she trained as a mortgage adviser specialising in construction lending, achieving accreditation as a mortgage adviser with Strategi in 2016.

In 2013 she was awarded the Sovereign Apex Silver Award for outstanding performance and quality of service to clients, one of only 80 insurance advisers nationwide to receive the award that year.

“I work transparently and am straight with

Cristina Simeonidis

Limited and included time with AMP Asset Management, BNZ Finance, BNZ, Kiwibank and most recently as a valuer with Telfer Young (Otago) Ltd. She has spent 15 of those 20 years working in credit approving a variety of commercial property transactions including commercial properties, commercial developments and commercial and residential subdivisions along with some residential housing.

In her new role as Head of Operations, Credit and Risk for First Mortgage Trust she aims to ensure First Mortgage Trust has the systems in place to continue their growth with minimal impact on clients and investors.

my clients. I strive to find the right solution for every problem and use the resources and relationships I have to find the best solution,” Simeonidis said.

From Avanti to Mortgage Supply Co Tenzin Choedon has joined the Mortgage Supply Co in its West Auckland business.

She was previously a senior lender at Avanti Finance.

Mortgage Supply Co said Choedon was an expert in specialist lending. “Tenzin will be working directly with clients, but is also available to help other advisers find solutions for tricky deals.”

Marié Dickinson

GFS adds marketing focus

Global Financial Services has appointed Marié Dickinson as marketing manager based at Airport Oaks, Auckland.

She is new to the mortgage and insurance industry but has 18 years of marketing experience in various other fields, including FMCG, manufacturing and education.

Dickinson will lead the online, digital and traditional marketing with focus on geographic and demographic expansion. ✚

Nicole du Plessis has joined First Mortgage Trust as a business development manager in Auckland.

Du Plessis has a solid background in banking with more than 27 years’ experience. She has worked for Westpac, Kiwibank and ASB. For the past two years, she worked for ASB as a Business Manager.

“I like to think outside the box and pride myself on being an open and honest down to earth professional with a strong work ethic and can-do attitude. I provide good old fashioned customer service,” she said.

She will be servicing the Auckland region, assisting clients and brokers with financing for residential, commercial and rural properties.

Rachel Bush has also joined the company in its Tauranga-based head office.

Bus’s career in property and finance has spanned 20 years and started with the Government-run Community Housing

Mortgage Advisers

Since 1991

Branded and Non-Branded Options Promotion on Website Advice Process and Flowchart Market Leading CRM’s Iress incl Mortgage Tool & Finware Leads PD Days and Conference New to Industry Adviser Training Compliance Support Business Planning and Support Succession Planning and Support

Tenzin Choedon

FMT adds experience

Supporting

Got a new appointment you would like to tell advisers about?

Email details and a pic to katy@tarawera.co.nz

PI Cover and Disputes Resolution Scheme Package Access to Insurance Link and Insurance Link General

Call Josh Bronkhorst: 027 397 7198 Helena Merson: 027 466 7010

Thinking Mortgages ?

Think Link

mortgagelink.co.nz 09

HOUSING COMMENTARY

By Miriam Bell

Cooling

HALO SPREADS

The Auckand market’s slowdown is now clearly spreading round the country, but Miriam Bell finds the consensus indicates the market is normalising rather than priming for a crash.

N

ot too long ago it was hard to see an end in sight for New Zealand’s booming property market. But the latest wave of data leaves little room for doubt. The heady days of phenomenal price growth are slipping into the past.

Not only has Auckland’s formerly over-heated market hit a much slower pace, but cooler times and reduced sales activity now characterise other major markets around the country.

Don’t think this development is neccessarily bad news though. Growth has slowed, rather than stopped. Some regional markets continue to do well. In fact, experts say that

markets are normalising and becoming more balanced and buyer friendly.

STOCK UP, DEMAND DOWN

Just a couple of months ago, Auckland was alone in seeing an increase in the number of properties coming onto the market. That has now changed, according to the May data from realestate.co.nz data.

Realestate.co.nz spokesperson Vanessa Taylor says the last time their data recorded an increase in total housing stock in a region outside of Auckland was back in October 2015.

But their latest data shows that four other regions saw a lift in total housing stock in May, as compared to the same time last year.

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Housing stock in the Waikato was up by 18.9% while the Bay of Plenty saw a 5.1% increase in stock. Both Wellington and Canterbury also saw growth in the amount of stock on market, with increases of 13.2% and 4.1% respectively.

While the remaining 14 regions all experienced a fall in housing stock in May, nationally the total number of homes for sale went up by 4% as compared to May 2016.

With a 50.8% year-on-year increase in housing stock, Auckland probably contributed to the national rise.

However, the rise in stock in Wellington, Waikato and the Bay of Plenty also coincided with a fall in demand in those regions, Taylor says. Of New Zealand’s 19 regions, these three – plus – Auckland sit at the bottom of the demand table and are the only areas which show a drop in demand.

“Demand for housing in Auckland fell the most. It is down by 28.7%. But in Wellington demand has fallen by 14.1%, in the Waikato region it is down by 13.3% and in the Bay of Plenty it has dropped by 8.7%.”

MARKET FRENZY LIFTS

The May data from both QV and REINZ backs up Realestate.co.nz’s tale of reduced activity and cooling demand spreading to markets other than Auckland.

According to the latest QV House Price Index, value growth has slowed dramatically. Annual value growth has now dropped to below 10% – both nationally and in Auckland. Once adjusted for inflation, the national average value was up by 7.4% year-on-year, leaving it at $634,018. That is the slowest rate of annual growth in two years.

Likewise, in Auckland, value growth remained flat, with the average value coming in at $1,044,561 in May as compared to $1,045,362 in April. Once adjusted for inflation

they were up by 7% year-on-year. This rate of growth is the slowest annual rate Auckland has seen since November 2014.

QV national spokesperson Andrea Rush says that nationwide value growth continues to ease back. This is due to lower demand in the housing market caused by the latest round of LVRs and tougher lending criteria from the banks as the market heads into the winter period.

“Sales volumes are lower than they were this time last year, particularly in Auckland, and its possible market activity may now remain more subdued until after the election. Auckland, Hamilton and Christchurch are all relatively flat markets, while value growth in Wellington and Dunedin is also starting to ease back a little.

“Values in Tauranga are showing stronger quarterly growth than last month,” she says.

“But it appears much of the frenzy has come out of the housing market there and have returned to more normal levels of activity and demand.”

CAUTION EVIDENT

Meanwhile, the May REINZ data suggests that Auckland’s housing market slowdown is spreading, with flat prices and declining sales nationally.

The national median house price stayed flat on $540,000, which was the same as April – although, once seasonally adjusted, it was up by 6.2% year-on-year. At the same time, seasonally adjusted sales volumes nationwide were down by 22.2% year-on-year. While Auckland’s much slower market will have had some impact on the national data, seasonally adjusted sales volumes excluding the Super City declined by 17.4% year-on-year.

The Super City’s median price actually increased slightly in May as compared to April. It came in at $865,000 which was a 1.6% increase on April’s median of $854,500. But, once seasonally adjusted, Auckland sales volumes were down by 31.2% year-on-year and the number of properties for sale in the region was up by 47% year-on-year.

REINZ chief executive Bindi Norwell says, overall, the data shows continued buoyant activity across a number of regions which contrasts with the continuing stability of the Auckland region. “We are seeing a continuing trend of strong median house price growth in many of the regions year- on-year, although a lack of inventory continues.”

But, in her view, buyers are being more cautious. “We’re heading into winter which traditionally sees a slowdown in activity, we’re in an election year, and first-time buyers are finding access to capital more difficult.

RETURN TO NORMAL

While the heat may have come off the market in the bigger centres, the changed market does not equate to bad news. Not only are a number of regional markets still firing, but experts believe that the market is returning to a more balanced and normal state.

QV’s data shows that many regional centres are seeing the strongest value growth. For example, Rotorua values were up by 23.9%

year-on-year, while Whangarei values increased by 19.4% year-on-year and Napier values rose by 19.3% year-on-year.

At the same time, the REINZ data had four of the 14 regions turning in record median prices in May. They were Northland ($450,000), Manawatu/ Wanganui ($269,000), Nelson/Marlborough ($483,250) and Southland ($238,000).

Additionally, Norwell says that price growth, particularly in Auckland, may have slowed but it is continuing. This can be explained by looking at the wider fundamentals currently at play in New Zealand, she says.

“Given the considerable mismatch between population growth, increasing immigration figures, low interest rates, high housing demand and low building consents and housing supply, it’s clear why prices are still rising, although at single rather than doubledigit growth levels.”

What the slowdown does mean is better opportunities for buyers. In many markets, there is a greater, or growing, number of properties for sale along with less competitive pressure when looking to buy. This is particularly the case in Auckland.

QV Auckland homevalue manager James Steele says Auckland’s market is currently seeing a return to more “normal” market conditions. “Some of the heat has come out of the market and buyers are being pickier about what they buy. Properties with undesirable features or maintenance issues are sitting on the market for longer and many sellers may have to accept a lower price than they would have achieved mid-last year.”

REINZ SALES: DOWN

Once seasonally adjusted, sales volumes were again down around the country, and particularly in Auckland, in May.

INTEREST RATES: UP

Interest rates remain low, but banks are now announcing increases on a regular basis.

OCR: DOWN

The Reserve Bank left the OCR on hold at the record low of 1.75% in June.

IMMIGRATION: DOWN

Migration eased slightly in April. Monthly net migration was down on March, while the annual net migration gain did not change between March and April.

SUBDUED BALANCE

The more subdued market, particularly in Auckland, was noted by many economists – but there were different views of what this might represent.

For ASB economist Kim Mundy, the data suggests a more balanced market. While sales activity, both nationally and in Auckland, increased in May it remains subdued compared to the same time last year, she says.

“The fact that the median days to sell figure continues to tick higher suggests that buyers are losing the sense of urgency they had this time last year. Indeed, the REINZ HPI reflects the fact that the imbalance in the market has lessened lately, with house prices dipping slightly in many regions over the month.”

She says ASB expects to see activity and price growth slow over the remainder of 2017, especially in Auckland where prices are most stretched.

However, Westpac’s acting chief economist Michael Gordon says the decline in Auckland house prices seems strange given the city’s large supply shortage, and that higher mortgage rates and tighter LVRs can’t account for it.

“Our view is that much of the rise in Auckland property values over recent years was driven by the land component, which in turn reflects the value of the homes that could be built on that land in the future. It may be that the slow pace of building and rising construction costs are now undermining the perceived development value of land.” ✚

BUILDING CONSENTS: DOWN

Once seasonally adjusted, building consents were down again in April. But Statistics NZ says the overall consent trend is on the increase.

MORTGAGE APPROVALS: DOWN

Reserve Bank data shows that mortgage lending overall was down in April – after rising in March. New lending to investors was also down in April.

RENTS: UP

The average national rent remained unchanged in April but rents were up in many markets – notably Auckland, Wellington and the Bay of Plenty.

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PROPERTY NEWS

By Miriam Bell

Labour sets sights on housing market While the media continues to debate whether or not the market cool down will last, the dominant issues for those in the property sector were different. Here’s our take on what they were.

I

t’s just three months until the election, the housing market is shaping up to be a defining issue and that means property investment is firmly in the sights of many election players.

The Labour Party is promoting its housing market policy package heavily and it features a range of policies aimed squarely at reigning in investors. They include expanding the bright line test from two years to five, getting rid of negative gearing, and only allowing nonresidents to buy new builds.

But it is the party’s negative gearing policy which has, to date, created the most waves.

Labour leader Andrew Little claims investors avoided paying $150 million in taxes last year, by claiming losses from negatively geared investments. Removing this “speculators’ tax loophole” will create an even playing field for first home buyers, he says.

However, critics of the policy view

NZ Property Investors Federation executive officer Andrew King

it differently.

NZ Property Investors Federation executive officer Andrew King says Labour is overstating the benefits of the losses being deducted.

“Labour's proposal will likely result in increased rents, making it be harder for first home buyers to save the deposits required to purchase homes.”

Most investors are smaller investors and it is those investors who will be affected by the policy, not bigger investors, Gilligan Rowe & Associates director Matthew Gilligan says. “If you take the liquidity, which negative gearing gives, away from small investors, it will simply undermine them.”

“They are not going to be able to subdivide and build and increase supply; they are not going to be able to renovate run-down properties and improve the housing stock. This will have a big impact on supply and will force many out of the market completely.”

DTIs looming

D

ebt-to-income ratios (DTIs) are another policy which could have a big impact on investors - if they are adopted as the Reserve Bank has been

pushing for.

The Reserve Bank has long wanted to include a DTI instrument, which would limit the amount that people can borrow to a multiple of their income, in its macroprudential toolkit. Recently, it released a DTI consultation paper and a cost-benefit analysis of the proposed policy.

The paper estimates that around 2,000 owner occupiers and 9,000 investors a year might not buy a property if there was a limit on high DTI lending. The higher number of prevented investor purchases reflects that fact that they currently account for a greater share of high DTI lending than owneroccupiers.

The Reserve Bank says that if it did have a

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DTI instrument in its toolkit today it wouldn’t implement it - especially given recent evidence of a cooling in the housing market and borrower activity.

However, it believes that if the housing

market takes off again then a DTI instrument could be the best tool to employ alongside the existing LVRs. If a DTI tool was used, the Reserve Bank estimates that house sales could fall by around 9% which could reduce house prices and credit growth by 2-5%.

In the paper, the Reserve Bank does not suggest a limit on the size of a loan a borrower can have relative to their income.

But it does say it would like to make use of a “speed limit” under which banks could still undertake a proportion of loans at DTIs above the chosen threshold.

But staunch criticism of the prospect of DTIs continues from both sides of the spectrum.

Property Institute chief executive Ashley Church says DTIs would have a disastrous impact on the Auckland housing market as they would kill off the construction on new homes and lead to rent raises. The Labour Party say DTIs would have a disproportionate effect on first home buyers

Compliance crackdown

P

ressure on landlords to shape up has also been coming from the Ministry of Business Innovation and Employment and its new tenancy investigations team.

In April, the team’s manager Steve Watson announced that it is putting landlords and property management companies on notice to meet their tenancy obligations under the Residential Tenancies Act. The announcement came after a recent audit of five property management companies which revealed varying levels of compliance when it came to smoke alarms and insulation.

Some of the companies had to take action to

ensure they met their obligations under the RTA – although all are now fully compliant.

Watson says smoke alarms are now required in all rental properties and all new tenancy agreements must include an insulation statement which details the location, type and condition of insulation in the property.

“This action should serve as a reminder that we take breaches of residential tenancy law seriously, and are working to crack down on poor landlord behaviour across New Zealand.”

However, the NZ Property Investor Federation believes that most landlords are not bad and take their obligations seriously. NZPIF data shows that 83% of their

members’ properties are fully insulated to the RTA’s standards, two years ahead of the 2019 deadline.

NZPIF executive officer Andrew King says they have always supported the smoke alarm and insulation standards as it makes a good business case and, as such, they encourage their members to meet them.

“The key message is that it is getting harder for people to manage property. If people want to learn how to do it properly, they should join their local property investors association.

That’s the best and cheapest way to learn what landlords need to do and how to do it correctly.

It saves time and money and decreases risk.

Investors under fire

A

dding to investors’ sense of being under fire was a recent frenzy surrounding a Ronovationz video. The video was distributed to Auckland Property Investors’ Association (APIA) members but found its way into the hands of media.

In the video Ronovationz, which is run by “super investor” Ron Hoy Fong,

urges investors to target mortgagee sales, "dummies" who do not know the value of their homes, and people going through divorce.

Tactics such as asking other investors to make offers on properties to convince the vendor to take a lower price, and making offers under different names are also suggested.

Public outrage followed, Consumer Affairs Minister Jacqui Dean referred the video to

the Commerce Commission – which is now investigating Hoy Fong - and both ANZ and Mitre 10 terminated their sponsorship of APIA. APIA president Andrew Bruce says the video has now been withdrawn, that APIA and Ronovationz have parted ways and the company will no longer be a sponsor of the association.

“The loss of ANZ's sponsorship was significant but the organisation is still solvent and the impact on members will be minimal.” ✚

REGULATION LEGAL

By Susan Edmunds

Small adviser firms’ voices ‘lost’ in review MBIE says it tried to tackle the concerns of independent operators when it rewrote advice legislation but industry commentators are unconvinced.

T

he review of the Financial Advisers Act has been resoundingly a win for the big end of town, says veteran financial adviser Murray Weatherston.

Weatherston, one of the founding members of SiFA, has been a strong voice for independent advisers through the review process. But he was sceptical about whether that had been heard at official levels – and whether it was worth fighting now in a last-ditch attempt for change to the Financial Services Legislation Amendment Bill.

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“The people doing the review didn’t actually have much experience in the financial sector, let alone financial advice, and I just think they’ve been captured completely by the big end of town,” he said.

Weatherston said the review would make it easier for banks, insurance companies and big institutions to sell their products but would make life harder for smaller operators.

He said big providers were being offered the chance to sell their products under the guise of offering “advice”.

But James Hartley, Ministry of Business,

Innovation and Employment manager of financial markets policy refuted his claims.

“We heard from many small businesses and industry associations that the current regime is inequitable to small providers. For example, QFEs are currently able to coordinate their licensing and compliance activities at the firm level, while others are not, and QFEs and RFAs are not currently held to the same standards of conduct and client-care as AFAs,” he said.

“Many features of the new regime are a direct response to these concerns. For example, all firms will be able to be licensed

at the firm level to reduce compliance costs.

Licensing requirements will be proportionate and will depend on factors such as the nature and size of the firm. In addition, anyone giving advice will be held to the same standards.

“Throughout the review we engaged extensively with a range of stakeholders, including small operators and consumer representatives. All feedback was considered equally against the objectives for the new regime.”

The outlook for one-man- band-style advice firms was not good, Weatherston said. The cost to AFAs of regulation so far had been more than $100m, with very little to show for it.

“If I was 40 years of age as a sole practitioner, I would say, ‘There is no way in Hades that I have a chance of continuing to age 60 in my current shape’. The cost is just too large. The requirements that they seem to think you have to have – I mean, as a sole practitioner, should I need procedure manuals?”

But Weatherston said too many advisers had sat on their hands through the review process.

Many had hoped that someone else would argue for them, he said, or assumed it would not matter whether they engaged with the process or not.

Institute of Financial Advisers chief executive Fred Dodds said his organisation had tried to lobby for small operators.

“The Institute in its submissions did its best to try and give some clarity and definition to the sales versus advice issue and adviser world

“Throughout the review we engaged extensively with a range of stakeholders, including small operators and consumer representatives.”

– James Hartley, MBIE

in general has voiced their views on this.

“In my opinion sole practitioners will and should continue to survive and the career of a Financial Adviser needs to be promoted strongly. But Murray’s comments on costs and time are very valid. I am sure we are going to see a growing number of Camp Mother businesses which will offer a safe harbour for a large part of the compliance process for advisers. Even now some of these businesses are positioning themselves for that role and are staffing up accordingly. I am sure that Jeff Page for example will want to keep Kepa.”

He said adviser associations would have a role to play but advisers would need to understand that any organisations taking over their compliance would expect to be paid for

the service.

David Ireland, current chair of the Code Committee, said people should wait and see what the outcome was of the consultation process before they decided how effective it had been.

“We will hopefully see that in the form of an updated bill within the next couple of months.

Bear in mind that if a submission point you have made has not been adopted it does not mean that you have not been heard or that your input has not influenced the outcome in some way – there are a lot of different perspectives on what is best for the MBIE team to take into account, from both the small end of town and the big end, as well as from all the places in between and from those who prefer the countryside...

But the one way to guarantee your voice is not heard in this process is to say nothing.” ✚

Murray Weatherston was interviewed as part of the new Good Returns TV show.

Watch Murray's full interview and more episodes of GRTV by visiting www.goodreturns.co.nz/grtv

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industry set for revolution Mortgage brokers face more change with new regulations and moving lender appetites. But industry participants at a recent roundtable say the client is still at the centre of everything they do.

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ADRIENNE CHURCH RESIMAC

SHAUN DRYLIE SBS BANK

JENNY CAMPBELL

MORTGAGE SUPPLY CO

TONY KINZETT

FIRST MORTGAGE TRUST

What are the biggest issues you see in the industry today?

Adrienne Church: I think that the market is changing rapidly with regulation, banks lending and everyone’s policies and products. I think one of the biggest issues is everyone keeping aware and educated as to what’s going on.

Shaun Drylie: Margins have compressed somewhat, funding challenges across the banks, capital, and you’ve got regulation that’s sitting over the top of that with the Reserve Bank, for instance. Then you’ve got the market just starting to soften. From a medium to long-term point of view, I think what we’re going to see are banks looking at cost structures and banks will be challenging themselves around how they provide services for lower costs. I think for the adviser network, there are some threats around how banks and businesses look at distribution models. That will be primarily digital – how’s digital going to change the face of the advisory network?

Jenny Campbell: The biggest challenges that we see is probably the difficulty of getting deals done. Certainly, the lending conditions that we’re experiencing now are some of the tightest that I’ve seen since the GFC. There seems to be plenty of consumer activity out there, but getting the deals

done is really difficult. There are some issues around that with service delivery levels from our partners at the lenders. That whole broker experience is becoming somewhat compromised by lack of service, I hate to say. I think it’s a great time to be an adviser; people need an adviser more than ever, given the difficult lending conditions and the LVR restrictions and the rest of it. As an industry, we need to be working closely together, because we’ve got to be sticking up for the smaller advisers.

Tony Kinzett: I think a real issue for the advisers right now - to give good advice to their clients, to place the applications – is for the lenders, such as ourselves and the banks, to come out clearly and consistently and advise the advisers on what we will or won’t do and what our appetite is. That will bring more professionalism to the advisers, to the clients and also create a better relationship between lenders and advisers.

Penny Burgess: I think that need to ensure good customer outcomes is paramount. Any industry is better off if we can demonstrate, through systems and processes, not only that it’s not happening, but that a poor customer outcome couldn’t happen in the industry.

CHRISTINE LOCKIE LOANPLAN

PENNY BURGESS ANZ

GLEN MCLEOD

EDGE MORTGAGES

KAREN TATTERSON PAA

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I think the conversations are quickly turning to that. An industry that faces into those will be better off in the future, irrespective of whether there’s a regulator saying those things or not.

Glen Mcleod: What we’re seeing is so many articles that are affecting the clients.

They’re scaring the clients, whether or not that’s to sell papers or whatever it may be. It certainly doesn’t give the full picture of what’s really happening. There are so many aspects within the legislation that enable us to do the deals that the clients are looking for, it’s actually just trying to find where they fit in to that picture.

Karen Tatterson: One of the scariest things as an individual adviser is certainly what’s happening with regulation. We don’t know what’s going to happen. In fact, I know FMA are currently meeting with mortgage, investment and insurance advisers at the moment to get their feedback, so that they can revise and review what they are proposing. Also, from an industry point of view, we’re looking at some major changes with the potential development and introduction of Financial Advice New Zealand.

Why hasn’t there been more engagement from mortgage advisers with the changes in regulation and legislation?

Karen: I think a lot of people get quite insular and you get so busy doing your own stuff that you forget about that external stuff.

I’m like Christine; I’m an AFA, but I trade as an RFA, because there was no logical reason for me to prevent myself as an AFA. If you talk to a client, they don’t know what an AFA is, or an RFA, or a QFE, or whatever. When we go into the new system, whether you’re going to be a financial adviser or a financial adviser representative, again, the consumer doesn’t care about that sort of stuff.

Glen: If we go all the way back, every time we’ve gone and been proactive and actually started doing the education, we’ve got there and they’ve gone, “No, we’re going to change that now.”

Christine Lockie: There’s also some proactiveness behind the scenes, trying to work with the draft and what is proposed.

REGULATION How ready are mortgage advisers for change?

Christine: I’m working under an aggregator which is being proactive. There are some out there that are not being proactive and they may find it very difficult when the hammer comes down. I would say within the industry there are very few, if any, individual advisers who are totally compliant.

Jenny: I think the branded teams that work together really closely - like my Mortgage Supply guys and Loan Market, for example - they’re entities that could very easily be licensed on their own and keep a pretty tight control over what their advisers are doing.

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The disconnect is for those guys that work outside under their own brands. What do we do with them? We’re going to struggle to find groups that would be willing to take on the liability for those people and it’s a real shame, because these are people that might be working in the regions, that have really successful businesses that have been going for a really long time, but they may really struggle to find a shelter with this regulation.

Can they do it on their own? What’s the cost associated with your own licence? Who’s going to take care of their compliance? We know we’ve got a couple of the educational providers putting their hands up now, saying, “Oh, we’ll do it!”, but of course they will, that’s so self-serving because they’ll charge you for it!

Penny: Coming from a bank point of view – the compliance requirements that are in proprietary channels are pretty extreme, too.

There’s training, there’s file checking, there’s observation. There’s a lot of compliance requirements in any channel, which has the

ultimate goal of making sure the customer outcome is the right outcome for the customer. I actually agree with Jenny that there is a tension between the paperwork and systems and tick-the-boxes versus actually giving people scope to recommend the right product and doing a good job. The challenge is, though, that there has to be some system, some process, some absolute pointing blackand-white, that we can go, balance it out, any customer walking into a branch or seeing an adviser gets a good outcome for them. I think that’s the tension that everybody’s talking about. We’re worried that it won’t be at that right level. My challenge a little bit is why are we waiting for regulation to say, “This is what we should do”? Where does the obligation sit right now, without regulation, to make sure that customer gets great advice?

Christine: Ultimately, we’re going to see very few single-person operators and more of the larger companies.

Jenny: How is that better for the consumer? It doesn’t leave any scope for

that bespoke business and there’s a lot of those around. These are people that have been around for a long time, offer a fabulous service to their clients and give really good advice. Everyone that works in the mortgage industry as an adviser has made that giant leap of faith in themselves to leave a bank, usually, or something like that, to go out for self-employment purposes, to take control of their own destiny, and we’re going to push all of those guys back into a corporate environment. I just think that’s really unfair.

Glen: The advisers that are out there that are really passionate about the industry and give a lot back, that deal with their clients extremely well - they have businesses now.

We’re not running around out the back of a car like it was in the 90s. We are so passionate, we’re not fearful – well, I’m not fearful – of legislative change. I see that as being of benefit to us, because it means that the type of advice that’s going out to the clients is good. We want that. The consistency that Penny was talking about across a level playing field needs to come. I don’t think it will mean that the smaller businesses will disappear, they might just go under an aggregator that will assist with that.

Jenny: The big issue around that, too, is that nobody knows what that cost is going to be. And with all due respect Glen, you can probably afford it! But others will really struggle.

Glen: But isn’t that being responsible about the business itself? And always keeping yourself prepared for change? It hasn’t been a silent situation, it has been creeping. We now have trail books that are assisting with actually employing team members to assist with creating businesses that are more robust, that are there for the longer term as well.

There are hundreds of people taking the course to become brokers and we are about to go to this different model. Is that a problem?

Penny: ANZ changed its accreditation process. Accreditation was always subject to doing some sort of external qualification.

Rather than giving people their accreditation on this understanding that they would complete that, we actually held the accreditation back until they had completed the course. The number of people that we had to have pretty strong conversations with and say, “You have to submit your files.

You have to get this done”. It worries me that if people aren’t managing their own accreditation process, for something as simple as that, the regulation will be a really big shock. There were some people that we cancelled their accreditation. Something as simple as that.

Jenny: I think that course was the best thing that happened for our industry. It made a new adviser put some skin in the game from the get-go, because it’s not the cheapest course in the world and they actually have to make

a time commitment, not to just turn up to the classroom but to actually complete the assignments and do the work. I think it has weeded out a lot of people who were just looking for an easy way to get into a new career.

Christine: Westpac and ASB have done the same. They’ve culled, so to speak.

Are all these new people being mentored?

Jenny: I don’t know if there really is a group that is doing the “newbie experience” overly well. I’d much rather take on someone who has already got some really good lending experience and community networks, all that sort of stuff, so they can hit the ground running.

Should they have to do level five?

Jenny: That doesn’t teach you how to be a mortgage adviser.

Karen: It just says that you’ve done some study and passed.

That’s what regulation might say you have to do.

Glen: If regulation says it, then you go with it. But having the regulation there in that way doesn’t actually give you the skills to be an adviser.

Jenny: It would be really great to see more programmes around professional development, specifically for mortgage advisers as well. Trying to get specialised mortgage training is really difficult.

Shaun: I think part of it is a benchmark on, from my point of view, people making a commitment to put the work in and to make a statement that this is what they want to do for some time. It’s not an in-and-out game. When you need to achieve a certain level, you actually have to make a commitment to be in the game.

So, there is some value in that, but I think you can overdo some of this and just create stress in an industry that actually has some really good things in place. That’s the danger.

Penny: I think the banks have a pretty high standard of what’s required under legislation.

The bigger question in my mind is actually the ongoing accreditation. Just because somebody passed an accreditation setup on Monday, doesn’t mean that on Friday they’re giving great advice, or even that they’re still meeting those obligations. I think that is probably the big thing that worries me.

Adrienne: I think there’s a responsibility with all of us, especially lenders, to call it out when you see something that’s wrong.

Tony: It’s probably the 80/20 rule. It really just comes back to that. I think some groups are doing an incredibly good job in bringing the younger ones through and training them.

But I do say “some”. It really comes back to the commitment of the owner of that group.

Adrienne: And I think that the environment and the market has been so strong that a lot of people have come to the industry, because it has been so prosperous.

Should we be concerned about the fact that we’re at this point where the market’s changing, we’ve got a sudden influx of all these new people and when it turns, it might not be good for the industry?

Karen: PAA did some research on the people that have been through the PAA five-day course. I can’t remember the exact statistic, but I believe about 60 of them have stayed in the industry, but within a year 40% of them have gone. So, they’ve come in all guns blazing, thinking they’re going to set the world on fire and then realised it’s a pretty tough row to hoe. I always laugh when you talk to someone from the bank and they go, “I’m going to be a mortgage broker because I can work nine til three! And I’ve got the rest

❝It’s not an in-and-

out game. When you need to achieve a certain level, you actually have to make a commitment to be in the game.❞ – Shaun Drylie

of the year off!” They really have no idea how hard some of us work out there and the hours they put in.

Penny: I think that’s a really good point, because what I’m certainly seeing is that my own appetite is changing and I’ve become more and more concerned about making sure that the customer is getting great advice.

An adviser that is not giving quality - even if it’s one file that I’m worried about, that there’s potential fraud there – their whole accreditation is on the line. It’s so high-risk.

It really worries me when you’ve seen great lenders that are used to an employeeemployer relationship moving into their own business model. High return, high risk. It can be difficult.

Adrienne: We have disaccredited advisers and told some aggregators and they’ve done nothing about it. They will continue to write with other lenders.

Karen: But the adviser thinks that they will be able to get that across the line. Some advisers – I have to generalise – believe that providing you with “minimal” information will be sufficient to get across the line. If they get away with that once, they’re going to try and do that on a regular basis. I think it’s about setting your expectations, Penny.

Penny: We do that.

Karen: We see that coming. And you’re saying, “We’re not going to assess a deal until you provide us with this information.” It’s the whole quality-quantity thing, I believe. There’s a lot of people that think they can get away with it, throw you in a Sale and Purchase Agreement and say, “Client wants to buy a house”, which I believe is the calibre of some deals that have come through over the years.

Whereas now, you’re saying, “well, we want to know why; how; what for; what they had for breakfast last Wednesday…” which puts the responsibility on us…so that when I present a deal, you go, “Oh, it’s come from Karen, I know she writes quality business, I know we can check it and it’ll all be okay and everything will be there”, as opposed to going, “Oh god, here’s another one from Mary-Jane.”

Penny: Part of the challenge is that we’re not particularly digitally savvy, as Shaun was saying. It’s this incredible inefficient machine.

We’ve got over 130 people focused on the adviser channel and our service levels are still not what I’d like them to be, but the fix isn’t just throwing more people in it. It’s actually about having better systems and processes.

The challenge is, our defer rates – so we call a defer rate when we have to go back to the adviser to get more information, which could be, “You haven’t told us how much income they’ve got” – can reach up to between 40%-60%. On something like a defer rate, we recognise that there may be a new adviser to the market and they may be learning.

So, we get the BDM to go and visit them, they sit down and walk through a whole training pack, we walk through what an application should look like. We’re doing that at the moment. What’s happened to their mentor?

Where’s the aggregator?

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Glen: Is there also a degree of the shotgun approach, where they put up an application and then they send it to five different places…Penny, you must be able to see, as a bank, that this broker has put in 50 applications…

Penny: Yeah, absolutely.

Glen: …and 10 have crossed the line.

What’s happened to the other 40? Are we just going with that one because they’ve given more, A, B or C? Those are the things where I think there’s got to be a push back and say, well, one in five of your deals is actually getting accepted.

Penny: Absolutely, all banks will look at conversion, but there’s a bit of a doubleedged sword with conversion, because a reason why a customer comes to you (in all of the surveys that I’ve read) is because you do have access to different banks. Now, your knowledge of the different banks and the

products and services that they offer will be the best fit for the client. Like Glen says, you don’t necessarily need to submit an application across all. It’s pretty frustrating when the whole system slows down and there also isn’t a valid reason why they’ve submitted a couple of different applications.

Karen: There is. I’m sorry, there is. Because they have no idea who’s going to approve it, so they just scattergun them through the banks and hope like hell someone’s going to approve it.

Jenny: It’s credit appetite too, though, isn’t it? It’s such a fine line. I spend a lot of time talking to the newbies about this because that’s the impression that they get when they come out of the course; “Well, now I send this off to five different lenders.” No! The problem that the advisers have got at the moment in particular is if it takes three days for the deal to get picked up, if they’re on a really tight

deadline, the temptation to get some back-up offers is so strong because they don’t want to lose that client. It’s a really fine line between doing the absolute right thing by the lenders and protecting your stats - because we talk a lot about stats now, your conversions and all that sort of stuff is really, really important – but you’ve also got to keep your client.

Penny: If we could resolve actually having a clean application, something that has a great statement of position, that has the customer’s proper name, a really good application, then we don’t worry. The conversions, in those instances, fall right down on the priority list to worry about.

Tony: But as lenders, if we’re serious about having an adviser business model, don’t we have an obligation to be out there training these advisers? And are we really doing it very well? I think, as a lender, that we’ve got a huge responsibility to be putting time and effort into the adviser market, explaining where our appetite is, what we will and won’t do on a regular and consistent basis. Obviously, technology is the quickest way to do that.

Adrienne: It’s the new ones, it’s the ones you don’t get a lot of business from that are coming to market. What we’ve done, which most people here know, we did a lot over the last year with segmentation.

So, we have our top advisers, our platinum advisers that we deal with all the time. Their process is different. The 80/20 rule - 20 that can do it that way and 80 that do it this way.

That 80, we insist that they use our system, so they have to log it online. That system has in there policy rules, it has servicing, it has dollar amounts, it has postcodes. We’re using technology where we can. I know that’s double-keying and it is painful, but it’s actually an education process. Then, if all the information that goes into it is true and correct, they have an approval at the end of it within 20 minutes.

Glen: The other thing is that our aggregators are there; you’ve got statistics, Penny, those statistics should obviously be passed on to the aggregator, I’m imagining that they are. So, when the aggregator’s got them, if they’re identifying, “Oh, look at that conversion ratio”, or “Look at that quality ratio”, at that point, you’ve done your job. It’s then, I believe, the group’s job to get in there and go and do the training and things, because the brokers pay for that service, whether it be by a percentage of commission or paying an upfront fee or whatever it is. We’ve got our CRM system which is absolutely fabulous.

There is no reason why an application shouldn’t come absolutely crystal clear.

The approach that Penny and ANZ has taken, saying “We won’t accept anything that’s handwritten” - bang on.

Penny: Oh, to be fair, some individual advisers were worried about it, but we worked with some of the industry players to get an editable form for people that didn’t have their own form. We’re able to supply them with an option.

Jenny: The only grumble I heard about that from advisers was that they were

concerned about transposing information that a client had filled out by hand.

BANKS Are there other things that can be done to improve turnaround times?

Penny: Having a really well-written application, the diary note being nice and clear about what the customer needs and wants, making sure that statement of position is broken down and is complete. If there’s just one thing, that would be my one thing, because credit policies, appetites and pricing will change, sometimes on a day-to-day basis between the banks, particularly with pricing.

We expect that flows will peak depending on what’s happening. That’s sort of an uncontrollable thing from an adviser point of view. They can, though, control the quality of the application.

Adrienne: We still get applications with no diary note. We go, “What are we trying to achieve here?!” It goes back to the BDMs. They work with them, talk to them. You will still get that, you’ll still see it.

Shaun: I think banking, especially on the fringes, has become quite complex for some of the deals that have been put together. A lot of banks are using scorecards to approve and it’s not good old policy as it used to be. At times, the degree of complexity does extend the process because you’ve got credit sitting behind not only the offices that are taking the deals, but you’re having to go through credit, etc. Firstly, the quality of the broker relationship with the lender is paramount, because there is some forgiveness when people can trust information. Secondly, it’s quality of information and just the understanding of (particularly) where a bank is. With some of the scorecards, it’s not too clear now. That does delay and defer things.

Tony: When we talk about turnaround times for a broker, what are we talking about?

Are we talking about the turnaround time that the loan is approved and the documents are out? Or are we talking about the turnaround time to be able to go back to that adviser and say, “Yes, we think that could well be a deal”? When you’re looking at a vanilla residential loan - pretty simple. When you’re looking at a commercial property - quite different. When you’re looking at a development loan - quite different. When you’re looking at a rural loan - quite different.

An industrial piece of dirt - very different again. I don’t believe for one minute the advisers saying to us, “Are you gonna approve it?” I think what the adviser just wants is a steer; “Am I going to be wasting my time putting this application together and submitting it to A, B, C?”

Penny: My frustration with it is that it’s not just the length but it’s also the inconsistency.

The adviser is sitting in front of the customer going, “Well, crap, yesterday it was two days, last week it was three days, I better go five days just in case.” I think that’s something that we’re very focused on improving - just the consistency. I think generally if it’s two to three days and it’s consistent, then that helps the advisers. Everybody’s expectations are really clear.

Christine: Way back, it was just normal to have a week’s turnaround or whatever. Then we reached a period of time where banks were giving one-day turnarounds. It became a consumer expectation that it would take 24-48 hours to get an approval. That was driven, effectively, perhaps by the real estate market who put tight timeframes on their agreements. They have very much driven the urgency and still do. I think it’s up to us to educate clients - “Hey, it’s not likely we’re going to get an approval in that period of

❝It worries me

that if people aren’t managing their own accreditation process, for something as simple as that, the regulation will be a really big shock. ❞ – Penny Burgess

time. You’re going to need to go back and look at this realistically.”

Karen: But it’s the expectation that we submit a deal and it takes five days to come back from ANZ. However, the same client can walk into an ANZ branch and see the people over the counter and have a decision in half an hour. The fact that it’s an uneven playing field makes it really hard.

Penny: My goal is to get to an immediate or one-day. Like most big lenders, we will get intraday reporting; we know exactly where everything is going, we shuffle resources around. We’ve fundamentally changed our structure on how we assess to try and get service levels at best. My view on why customers go to advisers is actually not to do with the turnaround, it’s the advice that you offer. Rather than the customer negotiating with the bank on price, it’s the adviser negotiating. I think that’s the biggest selling point. If you’ve got reliable turnaround, that’s a great setup.

❝I am sceptical

about relying on, 'Yay! Trail income coming in!' It’s not going to change my mind about where I send that deal and neither should it.❞ – CHRISTINE LOCKIE

Christine: Why is there such a difference in timing between someone going over the counter versus us presenting an application?

Penny: It’s just pure volumes. We’ve got a lot of people, but with a 50% deferral rate. We don’t have that in the other channels.

Christine: There seems to be a big discrepancy between what that person behind the counter needs in the way of hardcopy information or evidence versus what we have to provide.

Penny: There shouldn’t be. I can only speak for ANZ, but certainly the policy is completely channel neutral.

Glen: Is there an online system in Australia that ANZ has? Is there no way that could be shifted here?

Penny: We’ve looked at it a lot and other banks have too. Some banks have done it well, some banks haven’t done it as well. The thing that worries me the most, that we’re trying to achieve, is the double keying.

Karen: Didn’t Westpac have one for a while?

Jenny: They withdrew it last week.

Christine: The problem is that it becomes a Clayton’s approval, because it is still conditional on this, that and the other thing.

Jenny: It’s a shame, though, because it was

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a great initiative. It was great to see a lender really moving forward, but I think that was driven by some previous managers there, then that project just kind of stagnated after that. It was a bit of a shame.

Adrienne: The tools in Australia - so Nextgen and Simpology - they’re gateway providers. So, they just sit in the front and then they connect to all of the lenders. That’s why it works, because they connect to all of the lenders. Our conversion rate in Australia with that is in the 70%/80%, whereas here we used to be under 20%, now we’re in the 40%, but that’s with a lot of blood, sweat and tears it’s taken us to get to that stage.

What are your views on trail commission, is that likely to get bigger and bigger as a revenue source every year?

Christine: I’m very sceptical about trail from banks. We’ve been through it before and just overnight the banks said, “We’re not paying trails anymore.” So, the trails disappeared.

Whatever our remuneration is, it’s driven by what the banks decide to do. We can’t change that, it’s the nature of the industry.

I am sceptical about relying on, “Yay! Trail income coming in!” It’s not going to change my mind about where I send that deal and neither should it.

Penny: Christine’s just said the milliondollar statement – it won’t influence where she sends the deal. It shouldn’t [influence advisers]. That’s a fundamental breach of their obligations. If they’re sending deals based on how they’re being paid, not what’s in the best interests of the customer, that’s alarm bells in our current legislation, morally strange and will certainly come unstuck in the future.

Jenny: But trail does encourage great adviser behaviour in the long term, because it just removes that churn. I see people advocating now for the lender, which is really quite unusual for an adviser.

Shaun: To a large degree, it’s a competitive question for banks. You offer trail in order to build more business, but it comes at a greater cost. I think that lenders have to think about sustainability, because without sustainability the industry could be impacted. Advisers are a very important channel to lenders, without a doubt. Channels are going to change, too, in the future, as banks become better at digital channels and offering services. Robo-advice is coming. The danger is if the tides rise too high, you’ll find that those other channels will be explored more aggressively, because cost is such a big factor.

Glen: The interesting thing around that is if we talk about cost and the evolution of the adviser channel. If you ask advisers where they see their businesses going in the future – it would be that we have a book of our clients that we service, that we look after for the long-term, which actually reduces the costs from the bank.

Christine: But that then creates a situation where you’re valuing your book based on the

trail they do, which, in a mortgage advisory industry, historically is not possible. We haven’t been able to do it because the trail value is only of value for as long as those trails are being paid. It’s different to the insurance industry.

Christine: That’s why so many brokers have written through Sovereign. Sovereign still puts a high value on the trail value of the business.

Glen: But if you look at the servicing aspect of Sovereign, Christine, they give you access to their system. So, we can actually go in, we can see whether the loan is in arrears or not and we can manage that. We can also make sure we get a notification on the refix, which goes in line with our CRM anyway. We’re actually managing that upfront. There’s no churn basis on that.

Penny: Funnily enough, we do an annual review on our commission and we check a couple of things. We check what’s happening in the market and cost analysis. We’ve also pulled in, this time, a lot of the work that’s been done with ASIC and Sedgwick review over in Aussie. Generally, we’re pretty comfortable with where we’re at. It doesn’t look like there’s any particular behavioural drivers happening between different models, which is one thing we look at. It’s not that trail is a bad model, it’s just not one that we’re interested in going to right now. We’ve had it in the past and we’ve stopped it, as Christine pointed out - sorry! The thing I do like in upfront, which is a really simple advantage over trail day-in-day-out, is that it’s so simple.

How worried should brokers be about digital disruption?

Shaun: A lot of it is about advice, confidence and relationship with your clients. The advisers that are focused around that, I don’t think need to be worried at all. The brokers that are very transactional and perhaps haven’t built those relationships or those influences, I think it will be more challenging for. Lenders are there to be able to promote their products and to be able to do it with the best service at the lowest cost.

Christine: This is what we’re seeing with ASB at the moment and their online digital refix tool. The issue I have, as an adviser, is that doesn’t offer the customer any advice at all.

Glen: I think just as much as the banks are trying to spend money on digital, so are our businesses. We’re looking at our businesses and promoting online applications through our own websites. That’s about business growth and commercial reality just as much.

Yes, it’s harder for someone newer coming in to be able to do that, but that’s normal. You’ve got to start somewhere.

Shaun: And again, it’s all about customer choice, isn’t it? What do the customers value? If it’s ease of transaction, or ease of relationship, or depth of relationship, all those things come into play. These [robo] tools will be built on very quickly. The advice that people may be able to get through the digital

space may be enhanced advice, that might be almost as good as your advice down the track. Things are moving quite quickly.

Christine: So, what you’re effectively saying is that there may not be a need for an adviser?

Shaun: For many people who are looking for a transaction to be completed at the lowest price, maybe not - in the future. For people who are not very well-versed and for whom trust is a big factor (because it is a major transaction), or it’s quite complex, I think advisers will always exist. It’s where that sits.

Are we seeing a seachange happening in the industry around lenders, with more business going to non-banks?

Christine: We’ve got to be careful now, once again, with regulation, that we’re not going to be digging a hole for a customer. We’re not going to go to a non-bank lender even if the non-bank lender is going to do it (because nobody else is going to do it) if it’s going to be digging a hole for that customer.

Glen: Sometimes it’s time-bound as well.

Jenny: Yes, that’s right. Transitioning to those lenders (and I hate the word secondtier and all that sort of stuff) I always think it’s alternative solutions. Particularly when we’re in a complex environment right now, where we have got a lot of rules that we have to work with – LVRs and what have you – I think using that wider panel of lenders is where we really add value as advisers to the consumer.

Adrienne: I was doing something for the board and of that information that we have (I obviously don’t have all the groups or all the lenders), stats for 2016 for non-banks - not limited to my business, that’s other non-banks that I had the data for – was 1.9% of industry and for 2017 that’s up to 4.5%. It’s growing.

There’s an opportunity for growth and it is growing and that’s with people taking choices, changes in credit appetite, it’s the changes and opportunities that creates.

Penny: There’s a good element of the RBNZ with the LVR. The investor market has completely changed. It’s definitely reduced, the flipping. Even though there are media articles, as Glen said, about the flipping, the haircut on that flipping is enough to make people pause. The LVR bands make the returns a little bit different.

Glen: The investors that are actually in it for the long-term won’t buy into doing deals like that because they’re not seeing the yields.

Yes, there might be capital gain, but if they’re holding long-term you’ve got to have a yield to keep that going, otherwise you have to stop your investing.

Tony: What’s very interesting is that there’s this perception that non-bank lenders are doing high LVR loans. We’re actually not. It’s anything but. Because we’re a mortgage trust, we’re fairly limited to the LVRs that we can go to anyway, which are typically less than where the banks have always been. In fact, they still are in some cases. It’s not the LVRs, it’s the

way we structure the transactions. I still think that it’s very much people doing business with people to ensure that the customer gets the absolute best result and that the broker is provided with the absolute best options that we can provide. I don’t believe for one minute that we can do that through technology. I really don’t.

What do you think of the state of the mortgage market?

Christine: You look after your clients and they will continue to come with you. We’ve got to know what’s around in the market and we like to be told what lenders are offering. We’ve got to be aware of the lenders out there and, once again, it comes down to the lenders. It’s a matter of keeping up, going with the flow and ensuring that our customers are getting the best advice.

Tony: It’s a time of great opportunity. It’s a fantastic business to be in. It’s up to us as lenders to get closer to our adviser network, see them as an extension of our sales force, an extension of our business. It’s up to us as lenders to find the best possible, quickest, most consistent way to communicate any changes so that we’re not wasting the advisers’ time.

Jenny: I think the reason we all love this business is because it constantly changes. It’s the old story – cream always rises to the top.

I think if you operate your business with ethics, transparency and professionalism, you’re going to do well in any market. We just need to consistently keep up those standards.

Shaun: It’s a great industry with great people within the industry. I think the industry needs to continue to look forward and that’s always the challenge when the industry is quite fragmented in places. It is about partnerships with your clients and partnerships with us as lenders. That is particularly strong with the likes of our organisation – when people get our story and we get to understand the advisers well, and them us, then it works really well.

Adrienne: How do we make sure that everyone is abreast with what’s going on?

I think there’s a huge opportunity in the industry and in the market and I think the good ones, the larger businesses, will succeed through it.

Penny: We’ve talked a lot about the

customer in these conversations and I think it’s a good reminder that we’re in these businesses because there is a customer. If we keep that at the centre of everything we do and also run really good businesses, whether it’s from a compliance point of view or a revenue-cost point of view, things will be fine and things will continue to grow.

Glen: We all care about the industry. It’s making sure that the synergy between lender, adviser and client is smooth and clear and that we can go forward as one voice. We’re all clients of the banks, with the houses that we have and so on and so forth. Our role and responsibility is to actually really educate our clients and help them to grow. We do that as a team rather than separately. That’s the thing that I’d really like to see. ✚

❝What’s very

interesting is that there’s this perception that non-bank lenders are doing high LVR loans. We’re actually not.❞ – TONY KINZETT

SALES & MARKETING LEGAL

By Paul Watkins

DAY BY DAY OR YEAR BY YEAR?

When setting goals, it pays to consider if chasing short-term gains could ultimately damage the long-term health of your business.

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any tend to look at their sales and marketing activities on a day to day basis. When I talk to brokers, I hear, “Hey Should I give this a try!” or “This could be a great event” or “Well my last newsletter got no responses, so we may as well not do one.” Very tactical, short term thinking and obviously unplanned.

This is not a direct criticism, but an observation about how many do not think long term, which you need to do.

It’s easy to focus on filling the appointment book for the following week and not looking beyond that. But sustainable growth requires a long term view of marketing. It all starts with setting yourself a goal for the year. Then your time needs to be spent working out how you will get to that goal. This requires a broad

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understanding of marketing.

The best way to think of marketing is that it should be designed to replace your worst clients with more of your best clients! This means that it should be focused on your best kind only. You will of course pick up all sorts of clients along the way, but your goal is to get more of the best kind.

So now define your “best” kind of client. It should be easy to work out the 20 or 30 you would most like to replicate. It isn’t necessarily the ones that gave the biggest commission, so much as the ones you genuinely enjoyed dealing with and know you can be of the greatest service to. You may be surprised how narrow pattern is that they fall into.

How do you wish to be known to this clearly defined target market? In marketing terms this is called ‘Positioning’, which is how you are

perceived by your market. Such descriptors as ‘experienced, client-focused, one-stop-shop, professional, service first and client satisfaction is our goal, are all clichéd and are in fact expectations. (These are all real from broker’s web sites by the way) Think of them in reverse.

A client would never deal with a brokers who is NOT professional, NOT client-focused and one who does NOT have their interests at heart.

And what does a ‘one-stop-shop’ mean? In the main, you are a single product service – mortgages. You may offer life and general insurance and may even offer investment advice, but why does the client call you in the first place? For a mortgage! So how do you position yourself within the very crowded marketplace? The easiest way is to focus on a market segment or to re-position your offer.

Some have done the latter by offering a

‘debt-reduction’ service. This works for those who do.

Others target investors wanting to finance rental properties.

What’s important to note is that this does not stop others outside your focus contacting you. It just gives your marketing a shaper edge that can cut through the over-filled internet chatter.

We live in an online world and at random, I Googled “Mortgage Broker Hamilton” to see what came up. The top four and bottom three are paid ads, through Google AdWords, which include some banks. Under those I didn’t detect any immediate points of difference, until I can across “Stop Renting, Buy Sooner” as one headline. Clearly aiming for first home buyers, this broker has chosen a position that sets them apart from others.

It doesn’t matter if you do not want first home buyers, the point is that this broker does. If you were a first home buyer and were a little afraid to see a bank for fear of being declined, then you are highly likely to click on this search listing. Get the idea? It’s worth taking time to find your own ‘position’ based on your preferred client base.

An adjunct to this is that not everyone is a client. You may be called by someone, who after hearing their situation, you realise they could be a difficult case. But you may have a clear desk at that time and the commission would be appreciated. The problem here is that the time to deal with this case distracts you from finding a new much more preferable client. This is incredibly hard to do, but turning down undesirable clients is without doubt in your best interest long term.

On the subject of search rankings, posting blogs, newsletters, articles and new content to your web site is the fastest and by far the cheapest way to do this. Google penalises static sites and rewards frequently updated ones in terms of rankings.

In keeping with looking at the long game of client hunting, keep in mind that you are selling your expertise and not a service.

There is a definite distinction. Prospective clients already know what your service is – it’s providing them with a mortgage. But why go to you? Because you are the ‘expert’! A first home buyer would probably contact the broker mentioned above, as that person is perceived as the ‘expert’ for first home buyers, despite every other broker and bank being able to help them.

This means not promoting interest rates, a shopping list of services (which many do) or your flash new office with great parking. It means working out how to show your expertise.

Examples are explaining case studies in your blog, (no names of course), making comments on issues of the day and putting all this in jargon-less terms reflecting the ‘pain’ you are solving for your clients.

A term you may have heard is ‘Dolphin Marketing’. This is only promoting yourself when things slow up. Popping you head above water now and again to breathe. As we move more and more online, this doesn’t work. High search ranking do not find themselves, getting across a perceived expertise is a constant activity and looking closely at your market position (or reaffirming it) should be at least a quarterly exercise.

I heard this whole idea of a long game put very well one day on the radio. Marcus Lush (Former Radio Live presenter) was interviewing a café owner who had added a 15% surcharge to dining on a Public Holiday. He pointed out that the short term gain of the 15% could cause damage to the long term health of the business. The owner of the café disagreed and cited staff costs on such days.

Marcus was right. As a customer, I might buy from the café if I was on a trip and had already stopped, not knowing where the next one was. But I would never go back. Sting me once and the damage has been done. That café owner should have factored the public holidays into the whole year. But she chose to take each day as it came to ensure that on that individual day she made a profit.

Very short sighted. ✚ Paul Watkins writes blog content and newsletters for financial advisers.

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MY BUSINESS

CLient

By Miriam Bell

PLEASER

Embracing challenges and focusing on relationships has helped Zane Torkington, from the LoanMarket network, to consistently top his network’s customer satisfaction rankings.

WHAT PROMPTED YOU TO GO INTO MORTGAGE BROKING?

move into the mortgage and insurance space together. But I operate as part of the LoanMarket network.

My wife was planning to leave her role as a bank insurance manager and I was looking for a change of direction. After a few dinners, a few wines and a bit of planning we decided to go into brokering at the same time, as a couple. This has worked out well. It enables us to help our clients with everything they need as mortgages, insurances and KiwiSaver all go together from a business point of view.

WHAT ARE YOUR NEXT MOVES?

HOW DID YOU FIRST GET STARTED IN THE INDUSTRY? I started in the financial services industry in 2004 as a tax consultant in London. It helped me get a good grounding of the ins and outs of the industry. Then, in 2013, my wife and I decided to

I am moving into growing numbers of real estate offices and working alongside more real estate agents. This works well for the client as they are looked after from the moment they find a house they like right through to the end of the process. I intend to keep moving forward with this. I'm looking to develop more of these relationships, and develop them organically, to keep providing a high level of customer service for my clients.

WHY ARE YOU PASSIONATE ABOUT THE INDUSTRY? It's rewarding to help people make their dreams come true. There have been a lot of people that I've helped that wouldn't financially be where they are now if left to their own devices. I am in one of the few professions that can make a huge difference in peoples’ lives and I value that over anything else that comes with the job.

WHAT HAVE BEEN YOUR BEST AND WORST TIMES IN THE BUSINESS? Seeing my customer satisfaction survey score come out as the highest out of the 120 brokers in our broker group and then seeing it stay on top has been great! Some of the best times have come with the hardest loans and seeing those clients when they have gone unconditional or

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“Even the most experienced investors make rookie mistakes when it comes to lending, so I feel my service is really valuable.

I'm very focused on getting the best result for the client” settled on their first home. I've had emotional calls from clients celebrating what they thought might never happen for them and being able to share that moment with them is special. It brings back the memory of going unconditional on my first home and sharing in that sense of achievement is rewarding.

The worst time was the first six months in the industry, losing deals to the same lenders I was trying to put business with.

HOW DO YOU APPROACH BUSINESS DIFFERENTLY TO OTHER BROKERS? I try to approach the business not as a business at all. I don't see myself as a broker or a salesperson, but more of a guardian, guide, and adviser. For some people it is not only tough to get a loan, it can also be tough to avoid the pitfalls of buying. If I don't think something they are looking to do is right for them, I'll let them know so they can go in with their eyes open.

I feel it is my responsibility to get the best result for the people I am helping. Even the most experienced investors make rookie mistakes when it comes to lending, so I feel my service is really valuable. I'm very focused on getting the best result for the client, in the easiest, most timely manner for them, and on trying to reduce the amount of friction to a minimum.

DO YOU MAKE USE OF SOCIAL MEDIA AND NEW TECHNOLOGY OR PLATFORMS IN YOUR WORK? Yes, I'm on all of the main platforms in some form or another. I get a steady stream of referrals from people referring me into Facebook posts, etc. Any new technology that makes the role easier, without reducing the quality of my work, I will look to take advantage of. I use every available online avenue to check out everything about a property a client is looking to buy and advise them on each one in detail.

WHAT ARE YOUR GOALS AS A BROKER? My main goal is to provide great service and advice, get back to people quickly, and be brilliant at the basics. Often the broker goals I

hear about have a number attached. But I don't wish to pump out numbers. Rather I want to continue to provide quality advice and service.

WHO IS THE INDIVIDUAL THAT HAS MOST INSPIRED YOU IN BUSINESS? I have many business inspirations. But the person that has helped me most in this industry is Stuart Matheson, one of the top brokers in the LoanMarket group. He helped get me through some hard times in the industry and went the extra mile for me in those tough times. Without Stuart, I'm not sure I would have got through the first two years - which are the hardest for any broker. I can't thank him enough.

WHAT’S THE BEST ADVICE YOU’VE RECEIVED? To focus on the client and income will follow organically. This is hard to do when you're starting out, but it becomes easier and easier. Now that I'm experienced, I live by it every day. I also read everything on the industry that I can and apply any useful advice or angles to my own business.

LOOKING AHEAD, WHAT ARE THE CHALLENGES FACING THE INDUSTRY? Upcoming challenges for the industry are the regulation changes and the technology that is being adopted. But both are also excellent opportunities. The regulation changes will likely see some of the older advisers bowing out of the industry. This makes it an excellent opportunity for younger advisers to upskill and cement their knowledge with a higher education. I see new technology as an opportunity to adopt it into my own business and improve and streamline what I do to give the client the best results and service.

WHAT ARE YOUR TOP TIPS? My top tips would be to stay active, take time for yourself, don’t let fear hold you back and be consistent. I try to get to the gym every morning before work, and when I'm exercising I listen to a podcast or commentary about the industry, or inspiration from others. There is always room to learn more and get better.

It's a great way to get your mind and body into gear for the day ahead. Taking time for yourself is important: it's easy to work 24/7 in this business – but doing so actually makes it harder to do the best for your clients. ✚

FROM: Rodney District, Auckland FAMILY: Just me, my wife, my cat - for now - and my parents and in-laws.

INTERESTS: Music, basketball, snow sports, water sports.

MOTTO: Be brilliant at the basics and do unto others as you would have done to you.

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INSURANCE

By Steve Wright

Trauma cover for cancer, know the risks Cancer is likely to impact the lives of many trauma cover clients. In the first part of a new series, Steve Wright asks will the product you recommend do the best job when cancer happens?

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F

irst off I must disclose I am not medically trained so no doubt my comments can be accused of being medically simplistic. However, while I don’t believe the law requires advisers to be medical cancer experts, I do believe the law requires, and clients expect, advisers to know, at a product level, what cancers will and will be not be covered by the trauma cover they recommend and, if covered, how much of the cover the client will be paid.

The good news is that the cancers advisers need to focus on, those that are most relevant to the advice process (because they are very likely to occur and because there is a significant difference between what providers products will pay) are relatively few. In this and the next few editions of TMM, we will explore some of the most common cancers (carcinoma-in-situ, breast, prostate and skin cancers) to see what might be covered and how much might be paid.

A good place to start is with skin cancer, particularly because many skin cancers are not actually covered by trauma policies.

Non-melanoma skin cancers

Non-melanoma skin cancers are typically not covered. This is completely appropriate in my view because the vast majority of non-melanoma skin cancer cases are easily cured and cause almost no financial loss to the client. It is very important that clients understand this so that their expectations are not unrealistic come claim time. Non-melanoma skin cancers are not covered unless they are serious enough to demonstrate evidence of metastases or ulceration (which more closely mimic the behaviour of a malignant melanoma).

Squamous Cell Carcinoma (SCC) and Basal Cell Carcinoma (BCC) are two very common and well-known non-melanoma skin cancers, which are commonly easily treated by topical treatments or excision when discovered early and treated promptly. In these circumstances good medical insurance should cover the costs of treatment, but the client’s trauma cover will not be paying them a windfall!

Clients’ knowing SCC and BCC are generally not covered under trauma policies before they buy is important because clients may otherwise think the word carcinoma in the title means the condition is cancerous and

❝ Being the

third most commonly diagnosed cancer in NZ makes melanoma coverage a very important advice and product selection criteria.❞ is therefore covered. Trying to explain that there is no coverage for these conditions at claim time, when a client may have already started spending their trauma payout in their heads, could give rise to advice complaints.

Malignant melanoma

Malignant melanoma is a different, much more sinister, beast altogether. Trauma cover does typically pay benefits for malignant melanoma. If the lesion is serious enough, the full trauma benefit will be paid. If a lesion is caught early enough, before it becomes more significant, many trauma policies will still pay a partial benefit. This is useful for encouraging appropriate treatment early.

Being the third most commonly diagnosed cancer in NZ (after Prostate/Breast and colorectal cancers) makes melanoma coverage a very important advice and product selection criteria. The real question for advisers is: ➤ How serious must melanoma be to get the full trauma cover sum insured?; and ➤ How much, if anything, is paid for less severe cases?

In trauma policies, the clinical staging of melanoma is typically used to differentiate between serious and less serious melanoma.

Early staging (less serious) uses ‘Breslow’ and, to a lesser extent, ‘Clark level’ to determine the thickness or depth of invasion of the melanoma. Breslow and Clark measures become redundant for melanomas which have spread out of the skin. Melanoma is typically rated Stage III once the cancerous cells have spread to near lymph nodes or Stage IV once

spread to distant lymph nodes or other organs, like the lungs, liver, brain or bone.

Most traditional* comprehensive trauma policies will pay the full sum insured for melanoma of: ➤ Clark level 3 or above; or ➤ measuring more than 1.5mm using Breslow; or ➤ if there is evidence of ulceration.

The most generous policy available will pay the full sum insured for malignant melanoma measuring 1mm using Breslow. This is quite a bit of difference in outcome for the client and is why having a good adviser who knows their stuff is so important!

For melanoma of lesser Clark levels or Breslow measurements, many providers will still pay a partial benefit (although with some providers an optional extra early cancer benefit must be bought to get it). Benefit payments for such less severe malignant melanomas range from 25% of the sum insured to a maximum of as little as $25,000 on the less generous side, to a more generous 25% of the sum insured to a maximum of $100,000. In some cases no partial benefits are paid. *By ‘traditional’ trauma policy I am not referring to: ➤ Trauma policies that pay a fixed percentage of the sum insured and allow for multiple unrelated claims; or ➤ Trauma policies designed to pay different proportions of the sum insured depending on severity of the condition; or ➤ Trauma policies designed to pay benefits only for severe trauma conditions.

Advisers recommending these products should make their own analysis of how much, if anything, these trauma products would pay for melanoma of various stages, and, how this accords with their client’s needs. ✚

Steve Wright has qualifications in Law, Economics, Tax and Financial Planning and is General Manager Product at Partners Life.

This article is for information purposes only. Its content is intended to be of a general nature, does not take into account your financial situation or goals, and is not a personalised financial adviser service under the Financial Advisers Act 2008. It is recommended you seek advice from a financial adviser which takes into account your individual circumstances before you acquire a financial product.

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PRACTICE MANAGEMENT LEGAL

By Susan Edmunds

UNTAP YOUR ONLINE POTENTIAL Don’t slip up when it comes to your business’ website, maximise its potential and reap the rewards.

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website is as fundamental a requirement for a modern mortgage advice business as a phone and a car. But how can you make sure the investment you put in to your business site will pay off? We asked the experts for some tips to stand out online.

Keep it simple and relatable If you’re trying to attract new clients to your website, you need to make it as easy-to-understand as possible.

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Use your homepage to state who you are, what you do and how you can help potential clients.

Add a photo of yourself so would-be customers know who they will be talking to when they pick up the phone or send an email. Be wary of relying too heavily on stock photos.

Teresa Watkins, of website design firm Monster Graphics, said personalisation was particularly important for mortgage advisers who were relying on their own names and reputations for their brand.

“Videos are gold,” she said. “Talk about your hobbies, your family,

what you like to do at the weekend.”

She said New Zealand businesspeople sometimes seemed particularly reluctant to personalise their sites but it was often the difference between one that was mediocre and a successful site. “People don’t like putting a photo up, let alone a video or information about their families – people have the most reluctance there but these are the important things in creating a successful website.”

Make it easy to find what customers are looking for Do not force people to scroll endlessly or hunt through lists of link.

Think about what your potential clients most need and provide that in the clearest positions.

Sara Reid, of GFM Web, said the top third of the screen should be seen as “prime advertising space”, where the messages and the business points of difference were displayed.

“The look and feel of the home page is important,” she said.

“You literally have got about three seconds to capture attention and make sure they progress further. Make sure the website is laid out and designed in a way that is easy to navigate and to ensure that visitors to the site can quickly find the information they are looking for - so the ease-of-use these days is really important.”

Make it adaptable It’s no good having a beautiful website if it only works for people viewing it on a desktop PC. Your website should adapt to the device that is being used. Many people might find your site through Facebook while using their iPads, for example, or want to click on your phone number to call you direct from your site via their phones.

Focus Would most people come to you because they need help getting a mortgage? Or because they want to make sure they are getting the best deal? Or are your clients self-employed or in unusual circumstances that require expert help?

Don’t try to be everything to everyone. Watkins said people should research their target markets and work out what they would want to know. “If you’re trying to rattle off how great you are and all your qualifications you’re not solving anyone’s problem.”

Once you know who you want to target, set up your website to speak to them.

If you want to appeal to first-home buyers, focus on avoiding jargon and explaining in straightforward terms how you can help them navigate the property purchase process process. If you cater for investors, talk about how you can help them find their way through rules and regulations to get deals done.

Can you give away something your ideal client would want?

You could offer downloadable free guides to making an offer or finding the perfect house. Can you negotiate a discount for your clients with a valuer, or a property inspector?

Watkins said websites should answer questions before people even knew they had them and work to have a conversation with clients to keep them engaged.

SEO Don’t be tempted to skimp on your website content. Have it written by someone who is confident about crafting search-engine friendly copy, without making it read like a collection of keywords.

A website with good search-engine optimisation should appear further up the rankings than competitors. You will need target keywords in the first few paragraphs of your website content.

You may need to be tactical with these – in an industry such as mortgage broking, there is a lot of competition. While featuring “home loans” as a key word probably will not make you stand out against competition from banks and big lenders, identifying an area or type of borrower might give you more success.

Update Don’t let your website get old. There is always something to say about mortgages. Update your blog regularly, even if it’s something as simple as posting links to news articles about interest rates that you think are useful.

If there’s a tip you can offer clients to get a deal across the line, offer that.

Let them know about any great rates you’ve been able to access. Tell them what an OCR decision could mean for them. Keeping your page fresh will help it rank better and also ensure you maintain your status as an expert in the field.

Watkins said people should also start pushing their site out via social media channels, Google ads and email newsletters. You can use your website to judge the effectiveness of your marketing campaigns.

“You need to be proactive and promote it,” she said.

“It’s one thing having a good website but it’s pointless if no one knows about it.”

Reid agreed. “A lot of people think they will just be found but it’s much more than that. Small-to-medium businesses often don’t have big marketing budgets but you need to have a plan for how you are going to use it. People won’t necessarily just stumble across it.” ✚

Build trust Use your website to build connections with potential clients.

Showcase your credentials, including any relevant association memberships or qualifications.

Watkins said small businesses should always include testimonials from clients on their sites, preferably with videos.

Reid said mortgage brokers could focus on pushing the fact they offered local support, rather than dealing with a big corporation.

“People still want to deal with a person rather than over the phone. Online forms are also great as it allows you to capture the visitor’s information while they are ‘hot’ to get more information from you, they can fill them in there and then rather than waiting for an appointment. This means you end up with a semi-qualified lead before you even meet with them.”

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Intelligence

PROPERTY STILL KING New Zealanders still prefer to invest in property rather than any other asset.

Residential real estate

$1.03 trillion

Commercial real estate

$162 billion

NZ listed stocks

$120 billion

NZ Super and KiwiSaver

$67.9 billion

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Get all the best mortgage broking news online TMM ONLINE keeps you up to date with all the news, and rates.You can also get digital copies of the magazine and watch video clips with key industry players.