Mortgage Professional Australia magazine Issue 13.07

2013

WHICH BANKS ARE FOLLOWING THE BLUEPRINT FOR BROKER

SATISFACTION?

CLIENT COMMUNICATION

HOW TO GET IT RIGHT

SAM WHITE THE LOAN MARKET CEO'S

GRAND PLANS

SMSF SPECIAL REPORT YOUR COMPLETE GUIDE

TO SMSF LENDING

MPAMAGAZINE.COM.AUISSUE 13.7

http://www.nabbroker.com.au

MORTGAGE INSIDERS36 | Stuart Turner Centric Wealth’s Stuart Turner already has a $100m loan book under his belt but has big goals for the year ahead

61 | Favourite things Macquarie Mortgages head of sales Doug Lee talks AFL, Hawaii and experimenting in the kitchen

62 | A day in the lfe CUA’s national manager, broker sales, Natasha Kelso talks MPA through her busy schedule

NEWS4 | Round-up The latest market intelligence from the world of property, economics and mortgages

11 | Online The best from MPA Online and Australian Broker Online

12 | News analysis Signs point towards 2013 being a resurgent year for brokers. Could the GFC hangover be over?

64 | YM data The latest mortgage hunter trends from our sister website

BUSINESS STRATEGY54 | Client communication Why understanding a client’s world view is often the best way to effectively influence and serve them

58 | Team motivation Nine essential ways to keep your team motivated

63 | Self-motivation Getting ahead when others say you’re too young and inexperienced

22COVER STORY

Brokers on Banks 2013 MPA reveals the 2013 Bank of the

Year, and the banks that are scoring well with brokers in key areas

FEATURE

SMSF lendingYour complete guide to tapping into this rich vein of potential business

MORTGAGE INSIDER

Sam White The Loan Market CEO talks MPA through the organisation’s grand plans

38

18

WEEKLY INVESTIGATIONS

NOW ONLINE:

Productivity

Diversification

mpamagazine.com.au

CONTENTS / 13.07

1 | JULY 2013

SMSF LENDING:

YOUR

COMPLETE

GUIDE

http://www.mpamagazine.com.au

EDITOR’S LETTER / 13.07

Banks. You deal with them every day, and their products are an essential ingredient of your business, but how satisfied are you with their services? In this issue of MPA we’ve given brokers the chance to offer their feedback and rate 12 of the country’s biggest banks on their performance in several key areas.

Yes, it’s Brokers on Banks time. From turnaround speed and interest rates to online platforms and credit policy, the banks have been scored by brokers on 10 performance metrics, and the top five performers in each category are revealed in this year’s eagerly anticipated report. Plus, the best performer overall has been named the 2013 Bank of the Year. Who are this year’s winners? Turn to page 22 to find the results of our ground-breaking and independently researched survey.

Speaking of banks, one sector of financial services that banks and non-banks alike are exploring with vigour is the fast-growing self-managed super funds (SMSF) market. As our special report discovers, money is pouring into SMSFs like never before. What’s more, many self-directed investors are choosing SMSFs as a vehicle for property investment, but few are consulting brokers when it comes to choosing an SMSF-compliant mortgage. How can you crack this market? Turn to page 38 for essential expert guidance.

On the business strategy front, we explore how to hone your client communication skills (page 54) and motivate your team (page 58) to get this financial year off to a flying start. And, with positive signs pointing towards the beginning of a broker resurgence (news analysis, page 12), it’s going to be an interesting 12 months ahead.

Robin Christie, editor, MPA

UNDER THE MICROSCOPE

CONNECT

Contact the editor:robin.christie@ keymedia.com.au Printed on paper produced from 100%

sustainable forestry, grown and managed specifically for the paper pulp industry

COPY & FEATURESEDITOR Robin ChristieJOURNALIST Amy RosenfeldCONTRIBUTORS Roger Ellerton, Leanne Faraday-Brash, Cindy TonkinPRODUCTION EDITORS Roslyn Meredith, Danielle Chenery

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

http://www.cashflowfinance.com.au

http://www.planaustralia.com.au/growthplatform

NEWS / ROUND-UP

4 | JULY 2013

FAMILIES SHUNNING INNER-CITY LIFEThe high price of rentals in the Sydney metropolitan area has prompted some families to move from the inner-city suburbs in search of more affordable dwellings, according to PRDnationwide research.

The company said popularity of three-bedroom houses in Wyong and Port Stephens has risen steeply in the past two years, with strong demand for family homes driving up rental yields for investors in the region. Port Stephens, a two-and-a-half-hour drive north of Sydney, has seen a 14% increase in new bonds lodged with Housing NSW as renters steer away from more expensive Sydney locales and flock to the seaside town to take advantage of cheaper accommodation and lifestyle benefits for their families.

PRDnationwide research analyst Oded Reuveni-Etzioni said the price difference between Sydney and that of more affordable areas to the north and south of the city is significant.

“In the current climate, people are trying to live within their means and, as a result, there has been a drift away from inner-city living for families,” he said.

28.04%The percentage of new home loans approved in May that were fixed rate

Source: Mortgage Choice

AFFORDABILITY

STATS

APPOINTMENTS

KANE REPLACES FLAVELL AT NAB BROKER NAB has put the rumours to bed by announcing former Advantedge GM Steve Kane as the new GM of NAB Broker distribution.

Anthony Waldron, NAB executive general manager, growth partnerships, said Kane had been selected due to his extensive experience in the industry.

“Steve has more than 30 years’ experience in financial services and is a long-standing industry professional who will continue our work to cement NAB as the preferred lender for brokers,” Waldron said.

Stable

52%

INFOGRAPHIC

DO YOU BELIEVE HOME VALUES WILL RISE, FALL OR REMAIN STABLE OVER THE NEXT 6 MONTHS?

Rise

41%Fall

7%Source: RP Data-Nine Rewards consumer housing market sentiment survey

Stable

52%

http://www.interimfinance.com.au

http://www.fastgroup.com.au

NEWS / ROUND-UP

6 | JULY 2013

NEWS / ROUND-UP

80%The percentage of survey respondents who think now is a good time to be buying a dwelling

Source: RP Data-Nine Rewards consumer housing market sentiment survey

STATS

WESTPAC RETURNS AS AMA EVENT PARTNEROrganisers of the Australian Mortgage Awards (AMA) are pleased to announce that Westpac has signed on as event partner for the sixth consecutive year.

“As a bank committed to supporting professionalism in the mortgage industry, Westpac is proud to be the official event partner of the Australian Mortgage Awards in 2013 for the sixth consecutive year,” said Westpac’s general manager of mortgage broker distribution, Tony MacRae.

“This is a premier event in the mortgage calendar as it recognises the very best in achievement and success of individuals and businesses in the Australian mortgage industry, and we look forward to another great night.”

The AMA has enjoyed widespread support from leading practitioners and businesses over the past 12 years, making it the leading independent awards event for the mortgage broking industry. Online nominations are due to open in just a few weeks as the search for this year’s outstanding brokers and brokerages begins.

The 12th annual Australian Mortgage Awards will be held at The Star, Sydney, on Friday 18 October 2013. Online nominations will open on Monday 24 June. Visit www.australianmortgageawards.com.au for more information.

ASIC REQUIREMENTS NOT ENOUGH TO PROTECT BROKERSIt’s crucial that mortgage brokers should get their heads out of the sand when it comes to risk management, says QED Risk Services director Greg Ashe. He believes it’s not enough for brokers to comply with basic ASIC requirements, because ASIC is focused on protecting the consumer, not brokers’ businesses.

He recommends auditing your risk management strategy once, or even twice, a year, checking you have systems in place to cope with everything from health and safety risks to potential negative social media comments.

“It never stops or starts. Prioritise. Identify all of the risks,” Ashe advises.

AUSTRALIAN MORTGAGE AWARDSRISK MANAGEMENT

INFOGRAPHIC

WHAT IS THE MOST IMPORTANT FACTOR WHEN PURCHASING A PROPERTY?


48.5% Personal financial situation

Prospects for capital growth21.9%

13.4% Interest rates

Government incentives4.2%

The level of housing supply1.8%

Other1.2%

Job security9.1%

http://www.pepperonline.com.au/financepartners

http://www.qbelmi.com

NEWS / ROUND-UP

8 | JULY 2013

55%The percentage of survey respondents who expect rental rates to continue rising over the coming half-year


STATS

DRAMATIC REGIONAL DISPARITY IN HOUSING MARKET CONFIDENCEAccording to the RP Data-Nine Rewards consumer sentiment survey, 41% of Australians believe house prices will increase in the next six months, but there are massive disparities between states.

RP Data researcher Tim Lawless said the survey questioned 1,030 consumers on their expectations for the Australian housing market over the next six to 12 months and found a “substantial upward shift” in overall consumer expectations for housing market conditions. But this was largely led by high expectations in concentrated regional markets.

“Based on the survey results, we’ve seen distinctive differences from region to region where, as an example, 59% of respondents in Perth expected values to rise over the next six months.

“In contrast,” said Lawless, “survey participants in Tasmania delivered a much more sedate reaction, with no local respondents expecting values to rise over the next six months.”

PROPERTY MARKET

PROPERTY INVESTORS ‘MISSING OUT’ ON THOUSANDSProperty investors are missing out on thousands of dollars’ worth of potential tax savings, with 80% failing to claim depreciation on investment properties, according to Raine & Horne and quantity surveying firm BMT Tax Depreciation.

Angus Raine, CEO of Raine & Horne, is urging property investors to be proactive about determining depreciation on rental properties.

“Many investors do not understand how to properly claim depreciation on residential properties,” Raine says.

“Anecdotal evidence from our network of offices and the experience of BMT Tax Depreciation shows around four out of five landlords overlook this entirely legitimate tax deduction, thereby paying far more in tax than necessary.”

TAX

INFOGRAPHIC

QUARTERLY ASSET FINANCE APPLICATIONS: MARCH QUARTER 2013

Source: Veda Quarterly Business Credit Demand Index

WA+4.8%

NT+19.9%

SA+3.4%

QLD+8.8%

NSW+3.3%

VIC+2.5%

ACT+8%

CORRECTION

In MPA 13.6, p26, Mortgage Choice Glenwood principal Bianca Long’s 2012 settlement figures were incorrectly labelled. The correct figures are as follows:

http://www.bransgroves.com.au

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JUNE 2013 | 9

http://www.specialistmortgage.com.au

NEWS / PRODUCT ROUND-UP

10 | JULY 2013

WHO: MFAA

WHAT: SMSF trainingKEY FEATURES:• Three different programs provide credit advisers with the tools and

knowledge to assist their clients in the project management of their SMSF lending

• The training, delivered through MFAA Pathways, includes a program of up to 10 hours of online modules and assessments that provides credit advisers with an understanding of SMSF basics, at a cost of $440

• Two programs that are more extensive include up to 30 hours of online modules, exercises, assessments and workshops, for MFAA Credit Adviser (SMSF) accreditation, at a cost of up to $1,089

• The online modules combine audio and video sessions, assessments and learning checks, case studies, course notes and handouts, concluding with an optional workshop

They say: “The programs provide our members with an opportunity to expand their scope of services, as more than 3,000 SMSFs are being established each month in Australia.” – MFAA CEO Phil NaylorWe say: It’s vital brokers are educated on SMSF lending before entering this market. See our SMSF Special Report on page 38 for expert opinion.

WHO: Macquarie

WHAT: General insurance option as part of mortgage applicationKEY FEATURES:• This product allows customers to incorporate building, building and

contents, and landlord insurance into their mortgage application process with insurance provider Auto & General

• Premium costs will be capped for the first three years of a loan if the borrower does not claim on their policy and their situation remains unchanged

• In addition to the cap, the insured value will be indexed in line with rising building and contents replacement costs

• Workshops are led by SalesDNA.com.au• They include follow-up online coaching modules and videosThey say: “We’re delighted to be working with Auto & General to offer a comprehensive mortgage and general insurance solution for mortgage brokers and their clients. We’re also pleased to be able to provide added security to borrowers in the knowledge that their premium could be capped for the first three years of their policy.” – Macquarie Mortgages product head James CaseyWe say: Macquarie’s claim that the risk of delayed settlement due to an outstanding certificate of currency would be reduced by taking up this offer could make brokers’ ears prick up.

PRODUCT NEWSYour bite-sized guide to the industry’s newest products and initiatives

WHO: WESTPAC

WHAT: Commission incentive programKEY FEATURES:• This program could see brokers receiving an

extra 10bps of upfront commission• The program, which runs to the end of Sep-

tember, will reward aggregators who see their groups’ overall volumes through Westpac increase

• Members of aggregators who hit the targets will receive an extra 10bps of upfront commission on Westpac deals, regardless of their individual volumes through the bank

They say: “I hope they [brokers] give us the opportunity to prove we can deliver for them and their customers with market-best turnaround times and service.” – Westpac general manager of mortgage broker distribution Tony MacRaeWe say: Westpac is pushing to grow its mortgage book at system. How will the other banks respond?

NEWS / MULTIMEDIA

JULY 2013 | 11

STAYING RELEVANT IN AN ONLINE WORLD

The latest highlights from MPA Online

LINEON Business strategy expert Michael McQueen says brokers

who fail to react to the online market are doomed to fail, and he offers three key ways brokers can define their worth to customers:1. Experience. In order to separate themselves from online lenders, brokerages need to be more than just places to do business transactions. The experience of going to a broker needs to be pleasant for customers, suggests McQueen. They need to feel welcome and valued from the moment they walk in the door, so they want to keep coming back.2. Expertise. “While there is an abundance of information in the marketplace, consumers will always compensate companies and individuals who can help take that information and turn it into advice that is personalised and relevant to their needs,” McQueen says. “Brokers who can drill down to understand the true needs of consumers and can leverage expertise to craft tailored solutions will have a path beaten to their door.”3. Expedience. Customers looking for a simple transaction are increasingly unlikely to bother with intermediaries, something banks have been seeing for years as their in-bank transactions drop.What customers will look for is someone who can explain the obscurities to them, and who can break down the legalese and jargon of complex loan systems in a clear and concise way.

TO FIND OUT MORE...To find out more on all of these stories, as well as the latest business strategy advice, special reports, profiles, news, views and analysis, visit mpamagazine.com.au

IN MOTIONThe latest from Broker News and MPA TV

GROW YOUR BUSINESS (AS A BUSINESS)Brokers are facing the challenge of how to grow their businesses. Stephen Moore of Choice and Tony MacRae of Westpac (pictured) offer their insights.

HOW FOFA WILL IMPACT BROKERSThe roles of planners and brokers are converging. Mark Woolnough of ING DIRECT explains how the industry is embracing the change.

http://www.owenlaw.com.au

ARE THEBUYERS BACK?

NEWS ANALYSIS / BUYER SENTIMENT

12 | JULY 2013

‘The market is heating up’. ‘House price expectations are heading north’. ‘Confidence is returning fast’. ‘Brokers are back’.

Scan through the headlines in the latest CBA/MFAA Home Finance Index, and you’ll be forgiven for thinking that the age of the broker is well and truly upon us. Throw in April’s surprise 0.25% Reserve Bank of Australia interest rate cut, and the reasons to be cheerful are well and truly mounting up.

So what’s fuelling the MFAA’s optimism? According to the index, buyer sentiment has skyrocketed. In September 2012, for example, survey respondents believed on average that their households’ financial situations had become 10.8% worse over the year. Fast forward to March of this year and the average score was far healthier at just -0.9%.

While householders are becoming less pessimistic about their finances, they’re also displaying a marked improvement in optimism when it comes to the property market. In September 2012, only 28.9% of respondents believed that residential property prices would rise over the next quarter. By March 2013 this figure had jumped to 49.8%.

“The survey shows that the property market is definitely recovering,” says MFAA CEO Phil Naylor, “with sentiment of both first home buyers and investors improving dramatically.”

And it appears that potential clients are becoming more willing to match their words with deeds, with 18.9% of survey respondents stating that they would be likely to be in the market for a home loan in the next 12 months – a 6.2% increase on September 2012’s result.

RATES COME TO THE FORELooking at the index, it appears that a high level of awareness of interest rate movements is helping to fuel this increased desire for credit. When asked what factors were most important for them to

WHO COULD GET YOU THE LOWEST RATE FOR YOUR HOME LOAN?

Source for all graphics: CBA/MFAA Home Finance Index

Mortgage broker

Bank

Credit union/building society

Non-bank lender

Other

39.7%

39.1%

16.5%

4%

1%0 10 20 30 40

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14 | JULY 2013

consider when selecting a mortgage product, 46.7% of survey respondents stated that the interest rate was their number one priority. Number one for 17.4% of respondents were fees and charges, while 9.7% said that special features (such as redraw or offset) were top of their wish list.

CBA third party and mobile banking general manager Kathy Cummings believes that, with rates moving in the right direction for buyers, things are looking up.

“The property market is all about confidence, and the survey confirms that good times are ahead, especially as interest rates continue to be at historic low levels, creating a situation where mortgage repayments are more affordable than rents in many areas,” she says.

BROKER RESURGENCERunning in tandem with this increased buyer sentiment and interest rate awareness is a growing desire to explore the mortgage broker channel.

“The survey also shows that the broker proposition remains very strong in the market,” says Cummings. “There is an increase in the number of consumers who are prepared to choose a mortgage broker to find a home loan appropriate for them.”

And the numbers certainly appear to back Cummings’ sentiments. When asked which of the organisation types was likely to be their preferred choice for finding a home or investment loan, 34.5% of survey participants opted for mortgage brokers – the biggest tick of approval for brokers since the start of 2011, and a 5.1% increase on September 2012’s figure.

When it came to choosing who could provide the lowest rates, 39.7% of respondents believed that mortgage brokers were the way to go. Banks were close behind on 39.1%, with credit unions (16.5%), non-banks (3.6%) and ‘others’ trailing behind.

“The survey shows that mortgage brokers are now well accepted by all home buyers and investors, beating the banks in preference to who would deliver them the best home loan deal,” says Naylor.

Cummings adds that customers in their twenties or thirties, in particular, are showing an increased preparedness to choose a mortgage broker for their home loans. According to the index, 26.8% of under-29-year-olds and 26.6% of 30–39-year-olds who have a home loan and/or property investment loan go through the broker channel. This figure drops to

ARE YOU LIKELY TO BE IN THE MARKET FOR A HOME LOAN WITHIN THE NEXT 12 MONTHS?

Jun-

06

Nov

-06

May

-07

Nov

-07

Apr-

08

Nov

-08

May

-09

Nov

-09

Mar

-10

Jul-

10

Jan-

11

May

-11

Sep-

11

Mar

-12

Sep-

12

Mar

-13

30

25

20

15

10

5

0

Continued on page 17

MOST IMPORTANT MORTGAGE FEATURES

Interest rate

Fees & charges

Special features

Flexibility

Type of product

LVR

Exit fees

Brand

46.7%

17.4%

9.7%

9.1%

8.2%

3.5%

2.7%

2.6%

%0 10 20 30 40 50

First ranked option shown

YES %

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PREFERRED CHOICEFOR FINDING A MORTGAGE

Jun-

06

Nov

-06

May

-07

Nov

-07

Apr-

08

Nov

-08

May

-09

Nov

-09

Mar

-10

Jul-

10

Jan-

11

May

-11

Sep-

11

Mar

-12

Sep-

12

Mar

-13

60

50

40

30

20

10

0

Continued on page 17

%Bank

Mortgage broker

Non-bank lender

http://www.nationalfinanceclub.com.au/whatsnewatNFC


16 | JULY 2013

http://www.mebank.com.au/brokers

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WHICH OF THE FOLLOWING SERVICES DO YOU BELIEVE YOU COULD GET FROM A MORTGAGE BROKER?21.4% for 40–49-year-olds, 16.9% for 50–59-year-

olds, and 12.5% for 60–69-year-olds.

CROSS-SELL OPPORTUNITIESOne key finding was that brokers are not seen only as a potential source of mortgage advice. When asked which services they believed they could get from a mortgage broker, more than a quarter of respondents ticked the insurance, business lending and personal and car loan boxes.

Meanwhile, self-managed super fund (SMSF) lending has been identified as a market mortgage brokers have yet to penetrate in numbers. Only 2.7% of respondents who had an SMSF that they used as a vehicle for property investment had sourced funding for that property purchase via a mortgage broker. Almost half of these respondents (47.9%) sourced SMSF funding directly from banks.

For more information on gaining a foothold in the SMSF market, turn to our SMSF special report on page 38.

Loans for first home buyers

Refinancing

Loans for next time home buyers

Property investment

Insurance

Business lending

Personal and car loans

Credit cards

Other

78.50%

77.90%

76.40%

69.30%

26%

25.9%

25.2%

10.7%

2.3%

Continued from page 14

0 10 20 30 40 50 60 70 80

%

http://www.depositpower.com.au

HEAD TO HEAD / SAM WHITE

18 | JULY 2013

SHAKING UPTHE LOAN MARKET

Loan Market CEO Sam White talks MPA

through the organisation’s grand plans

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MPA: What is Loan Market’s key service proposition compared to

other aggregators or franchises?Sam White: Loan Market brokers have access to $25bn in potential customers that are ready to buy now. Our partnership with Ray White is a proposition that cannot be matched by any other business, because no property group is as large as Ray White. We’re able to put brokers in front of leads that are active and intending to buy.

MPA: What type of broker is best suited to joining Loan Market?

SW: We’ve got a variety of models that work for nearly every type of broker out there. Every broker wants some type of support to grow their business, but this means different things to different brokers. We’ve got an academy that helps new-to-industry brokers; we’ve got channels to reflect the lead and referral volumes brokers want; and we’ve got a channel for established brokers who want to work behind a reputable, trusted brand. Furthermore, the underlying core of Loan Market is support. Our marketing team, compliance team and business development managers help our entire network of brokers grow their businesses. The expertise they provide the network helps grow broker businesses.

MPA: What do you think are Loan Market’s key strengths in terms

of serving its brokers?SW: Everyone knows that Ray White and Loan Market are co-owned family businesses, but what external brokers probably underestimate is the volume and quantity of leads they can get from a

Ray White office. We provide the tools, training and resources so that a Ray White office and principal can become your business partner, rather than just another referral source. Sixty per cent of our 10 top brokers and 19 of our top 30 brokers have a Ray White relationship, and every one of our top six settled more than $5m in April 2013 and each has a loan writer or PA. A great example of the value of the network is demonstrated by our broker Mary Ramsay, who recently joined a Ray White office in Canberra and submitted $6m in her first six weeks. Another one of our long-term brokers in Victoria, Daniel Vella, has been getting over 80 leads a month from his Ray White office, and has had to hire another broker to handle the volume. We’ve also got the best compliance, marketing and digital teams in the country.

MPA: What kind of feedback have you been receiving from brokers

about Loan Market’s services over the past 12 months, and what kinds of improvements are you making in reaction to this feedback?SW: We just completed our annual broker survey, and the feedback is incredibly important to me. Listening to our brokers ultimately makes sure that we make decisions that improve and grow their businesses. The feedback from our survey was overwhelming positive; Loan Market brokers are proud of our brand and want to be part of what it represents.

Many pockets of our business operate like a family, and that’s a tremendous thing to hear, as we truly are a family-owned business. Marketing, compliance and our commissions team, who pay

SHAKING UP

http://www.trailbookbuyers.com.au

HEAD TO HEAD / SAM WHITE

20 | JULY 2013

SAM WHITE’S CAREER TIMELINE1993Completes Bachelor of Commerce, University of Queensland

1992–1994Research/sales, Ray White Queensland

1994Mortgage broker, Austhome (later named RWFS, then Loan Market)

1995–1998Moves to Sydney to establish RWFS. Then starts RWFS in NZ, Victoria, SA and WA

1997Deputy Chairman, Ray White Group. COO, Ray White Real Estate. Heads up RWFS, Ray White Investments and SOCOG Olympic Accommodation Programme

2001Starts REA Home Loans

2002 Board member, realestate.com.au (later named REA Group)

brokers three times a month, were also highlighted areas of strength.

Additionally, our brokers wanted to see our brand engage the national and local communities more, and we’ve responded by rolling out our HOPE program (Help Open People’s Eyes). The program aims to combat homelessness in Australia, and we are going to support national and local charities throughout Australia. The program is all about giving back to the community.

We did not escape the survey without some areas for improvement: with slowing housing approvals, brokers have asked for more coaching on lead conversions. We will strive to improve the level of business coaching we provide in this regard to ensure we’re providing our brokers with the best tools and training.

MPA: What are the key issues that you believe brokers are dealing

with at the moment?SW: A slower housing market means brokers are working harder on their existing database for each deal, which really emphasises the advantage we have because of our Ray White relationship.

Coming to terms with new technology is always an issue; however, we believe we are moving ahead strongly in this regard. We’ve moved our network onto the Google system, which is helping offices work remotely through cloud-based servers.

MPA: Where do you see the property and mortgage markets going over

the next 12 months? Are there any areas of the market (eg first home buyers, upgraders) or locations that are set to perform better than others?SW: The positive auction clearance rates of the past several weeks are encouraging more stock into the market. This will likely cause clearance rates to

come down slightly, but seeing a higher volume of property being bought and sold will be very encouraging for the market. Low interest rates will also help the property market increase sales volumes. We’re also expecting more property investment coming into the market in the second half, and I think Queensland is the space to watch for this market.

MPA: Do you have any advice for brokers who are looking to expand

their businesses (areas of diversification that are taking off, for example)?SW: We recently merged with a business in NZ which is heavily slanted towards risk insurance, and it’s obvious that Kiwi brokers are further ahead in offering these types of products. Because NZ brokers do not receive trail, it’s been imperative for them to diversify into other income streams, and many of them are doing this very successfully. I think for brokers who are struggling in this flat market, it’s worthwhile to look across the Tasman and see the Kiwi brokers are successfully diversifying their businesses.

We are also seeing brokers diversifying into real estate. A number of our brokers now own Ray White businesses, which is really exciting, including Jamil Allouche in Victoria who has been among the elite in Loan Market for some time. There is a natural crossover between finance and real estate, which is really exciting, and we haven’t even scratched the surface of this opportunity yet.

MPA: What direction are you planning to take Loan Market in over

the next year or so? Are there any exciting developments in the pipeline?SW: We’re going to continue improving our online presence so that our brokers are always ahead of the competition. The websites and web pages we

2005–2007Heads Ray White Victoria. Rebrands RWFS as Loan Market (2005). Merger with X INC (2006)

2011 Resigns from REA board

2013Merges Loan Market NZ with Allied Kiwi

2008–2013Harvard Presidents Program (one week per year)

offer our brokers have an unlimited potential and are a fantastic tool to help brokers ‘own’ their local area on Google.

MPA: What issues are new entrants to mortgage broking facing, and how

is Loan Market addressing these issues with its broker academy?SW: We designed our academy course to recognise new entrants to the industry would need the skills to hunt for business much more aggressively than new entrants of past years.

We dedicate a large portion of the course to teaching brokers how to develop their own referral networks and also how to successfully work with different types of referrers, such as real estate agents or accountants.

“A slower housing market means brokers are working harder on their existing database for each deal”Sam White

http://www.brokerreferral.com.au

SPECIAL REPORT/ BROKERS ON BANKS

22 | JULY 2013

SPECIAL REPORT

Independently researched by:

2013

WHICH BANKS ARE FOLLOWING THE BLUEPRINT FOR BROKER

SATISFACTION?

Independently researched by

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Welcome to the 10th edition of MPA’s Brokers on Banks report. This keenly anticipated annual sur-vey of the mortgage broking community allows lenders and brokers alike to gauge how 12 of the country’s biggest banks are performing in the third party channel.

Ultimately, the results of the survey allow us to crown our bank of the year, but the report also fea-tures the top five banks – as scored by brokers – in a variety of key metrics, such as turnaround speed, commission structure and interest rates.

So, which banks came out on top? With thanks to all the brokers who managed to take a few minutes out of their busy day to vote in this year’s survey, the fascinating results of this year’s Brokers on Banks report are presented over the next 14 pages. Enjoy.

METHODOLOGYThis year we joined forces with Beaton Research + Consulting to conduct the survey. Partnering with an independent research provider has allowed MPA to reinforce its commitment to providing rig-orous and independent industry surveys.

With Beaton’s help and expertise, we achieved over 530 completed surveys with active mortgage brokers and a total of more than 1,500 performance ratings for the 12 banks included this year.

In the survey, brokers were asked to provide a rating between zero and 10, where a zero rating is poor and a rating of 10 is excellent, for up to three banks. An overall average was then calculated for each bank in all of the 44 specific performance attributes brokers were asked to provide a score for. The results were then weighted to account for lender business size to ensure a more representa-tive view of the market.

As with last year’s report, we’ll be featuring the high level performance ratings for 10 key perfor-mance metrics. These are:

• Turnaround speed• Interest rates• BDM support• Product diversification opportunities• Communications, training and development• Product range• Commission structure• Service levels• Online platform and services• Credit policy

The scores for some of these key metrics will be the bank’s average score for standalone attributes, such as the provision of market competitive inter-est rates. Others are the total score across a number of performance attributes relevant to that metric. Each bank’s score in the BDM support metric, for example, is the average score for the six BDM per-formance attributes brokers were quizzed on. These included BDM responsiveness, BDM pro-duct knowledge and BDM ‘going the extra mile’.

As points of interest, the rankings for some of the 44 individual performance attributes have been presented within the relevant sections of the report.

On top of this, the bank with the highest average score across all 44 performance attributes will be named as 2013’s bank of the year. And the single product that scored the most votes for being the best in the industry over the past 12 months will be named as 2013’s product of the year.

The scores have been totted up, the rankings have been compiled and the wait is over. MPA reveals this year’s bank of the year, and shows which banks are scoring highly with brokers in 2013.


24 | JULY 2013

CBA: “It is always helpful, turnaround times are excellent, documents issued in a timely manner, loans always settle on time.”

ANZ: “It is on the way up and has come a long way in turnaround times and segmentation in the past 12 months.”

Adelaide Bank: “Service – rates out of the market but great turnarounds.”

NAB/Homeside: “Improved out of sight over past three years. Responsive to broker feedback, competitive and turnaround times usually good.”

BROKERS SPEAK: TURNAROUND TIMES NAB/Homeside: “Its interest rates and charges generally makes it the most attractive lender on a ‘cost’ basis.”

CBA: “Interest rates and charges are generally slightly higher than NAB/Homeside, but it’s similar to NAB/Homeside to deal with, helpful and on the ball.”

Macquarie: “Excellent niche lender, highly competitive interest rates and fees. Sound products.”

St.George: “Good rates. Good assessment process.”

BROKERS SPEAK: INTEREST RATES

Rank 2012 rankings 2011 rankings

1 CBA CBA

2 ANZ ANZ

3 NAB/Homeside Adelaide Bank

4 Adelaide Bank Suncorp

5 ING DIRECT ING DIRECT

TURNAROUND SPEED


1 NAB/Homeside NAB/Homeside

2 BankWest ANZ

3 AMP ING DIRECT

4 ING DIRECT BankWest

5 Macquarie CBA

T urnaround speed. For clients and brokers alike, it’s recognised as a vital ingredient in getting the deal over the line. Judging by the rankings in this category for the past

couple of years, it looks as if few brokers will be surprised to see that CBA and ANZ have retained first and second place respectively. NAB/Homeside has slid from third to fourth over the past year, but the average score difference of 0.01 that splits it from third-placed Adelaide Bank couldn’t be closer. Westpac’s fifth place ensures all of the big four are present in this year’s rundown.

THE TOP 5Rank Bank Score

1 CBA 7.82

2 ANZ 7.26

3 Adelaide Bank 6.73

4 NAB/Homeside 6.72

5 Westpac 6.5

Total industry average 6.74

Major bank average (big four) 7.11

Non-major bank average 5.94

INTEREST RATES

T his year’s respondents were asked to rate the banks for the provision of market com-petitive interest rates, and NAB/Homeside has come out on top for the third year run-

ning. CBA returns to the top five after a year’s ab-sence, taking second spot, while Macquarie, St.George and ANZ are also new entries this year.


1 NAB/Homeside 8.07

2 CBA 7.94

3 Macquarie 7.73

4 St.George 7.27

5 ANZ 7.2




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CBA: “Excellent BDM, it is very helpful, always willing to go the extra mile.”

Macquarie: “Excellent BDM with helpful support and knowledge. Nothing is too much trouble.”

NAB/Homeside: “Great service from BDM – will always go the extra mile, escalate when required, sort out issues and obtain credit opinion in a timely manner.”

ANZ: “BDM knows the product knowledge very well. Fast in assisting the escalation process and very good in the loans structure guidance.”

BROKERS SPEAK: BDM SUPPORT

GOING THE EXTRA MILEWithin the BDM support category,

brokers were asked to rank each of the bank’s BDMs for “going the extra mile or making the extra effort to get things done”. The same five banks that came out on top in the wider BDM support category once again took the top five spots in this subsection, but in a slightly different order. Macquarie just beat CBA to the top spot in this instance, with NAB/Homeside, Citi-bank and ANZ making up the rest of the top five.

Rank Bank Score

1 Macquarie 7.8

2 CBA 7.77

3 NAB/Homeside 7.58

4 Citibank 7.55

5 ANZ 7.4


1 CBA CBA

2 NAB/Homeside BankWest

3 BankWest Suncorp

4 Citibank Citibank

5 ANZ ANZ

BDM SUPPORT

BDMs are vital cogs that keep the broker to bank relationship turning, and it appears many of last year’s top five performers in this category are still going strong. CBA re-

tains the top spot by some margin, while NAB/Homeside, ANZ and Citibank have all kept them-selves in the top five for another year. The revela-tion this year is Maquarie, which has rocketed into second place for BDM support after a couple of years in the wilderness.


1 CBA 7.89

2 Macquarie 7.66

3 NAB/Homeside 7.58

4 ANZ 7.4

5 Citibank 7.1





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http://www.commbroker.com.au


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PRODUCT DIVERSIFICATION OPPORTUNITIES

I n recognition of the increasing role diversifi-cation represents in many brokerages, this is the second year in a row we’ve asked brokers to rate the banks on the diversification oppor-

tunities their products presented. Leading the pack once again is CBA, with its score of 7.9 in this category, leaving the rest some distance behind. St.George put in a strong showing this year, rising from fifth to second, while Macquarie is a new entrant at number three. At fourth and fifth respectively, NAB/Homeside and ANZ hold onto top five places for another year.


1 CBA 7.9

2 St.George 6.99

3 Macquarie 6.93

4 NAB/Homeside 6.61

5 ANZ 6.58





1 CBA n.a.

2 NAB/Homeside n.a.

3 Westpac n.a.

4 ANZ n.a.

5 St.George n.a.

COMMUNICATIONSTRAINING AND DEVELOPMENT

T he score each bank was given for com-munications, training and development was the average for three areas: technical training, transaction reports and product

information. This year, CBA continued its dominant run of form to score an impressive 7.8 out of 10 and take the top spot from NAB/Homeside. Macquarie held onto third spot, while ANZ and Citibank are new entrants at fourth and fifth respectively.


1 CBA 7.8

2 NAB/Homeside 7.17

3 Macquarie 6.9

4 ANZ 6.44

5 Citibank 6.24





1 NAB/Homeside n.a.

2 CBA n.a.

3 Macquarie n.a.

4 Suncorp n.a.

5 ING DIRECT n.a.

CBA: “Has provided me with an overall service I can rely on and am happy to provide to clients.”

St.George: “Its SMSF is a market leader.”

BROKERS SPEAK: PRODUCT DIVERSIFICATION OPPORTUNITIES CBA: “Excellent communication and

BDM for support.”

NAB/Homeside: “Provides regular face-to- face updates and training.”

BROKERS SPEAK: COMMUNICATIONS TRAINING AND DEVELOPMENT

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CBA: “It has a broad range of products and a flexible lending policy.”

ANZ: “ANZ’s product range has not changed in 10 years – this is not necessarily a bad thing, but nothing innovative has come from it in a long time.”

NAB/Homeside: “Great product range and simple to understand.”

Macquarie: “Macquarie has good products, but its back end does not seem prepared to handle volumes.”

BROKERS SPEAK: PRODUCT RANGE

PRODUCT INFORMATIONOne of the attributes within the commun-

ications, training and development metric was “quality and usefulness of technical product information provided to brokers”. Looking specifically at this question, the top five was almost identical to the overall communications training and development rankings, the only difference being that ING DIRECT managed to take the fifth spot in this subsection.

Rank Bank Score

1 CBA 7.99

2 NAB/Homeside 7.36

3 Macquarie 7.30

4 ANZ 6.98

5 ING Direct 6.68


1 ANZ ANZ

2 CBA NAB/Homeside

3 NAB/Homeside CBA

4 BankWest Westpac

5 St.George BankWest

PRODUCT RANGE

I n the product range category, brokers were asked to assess each bank on how it scored for having a range of mortgage products available to meet a variety of customer needs.

This is a metric ANZ has performed well in over the past couple of years, taking the top spot in 2012 and 2011. This year however, while ANZ has once again taken a top two spot, CBA has broken its stranglehold on first place. NAB/Homeside held firm in third, while Macquarie and Westpac are new to the top five this year.


1 CBA 8.03

2 ANZ 7.58

3 NAB/Homeside 7.53

4 Macquarie 7.38

5 Westpac 7.22





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AMP: “It cares about the broker.”

NAB/Homeside: “Excellent fee structure and commission. I dislike selling the Homeside brand, which the public does not understand.”

ANZ: “Add another five points to trail from day one.”

Suncorp: “Service is quite good and commission structure fair.”

BROKERS SPEAK: COMMISSION STRUCTURE

CBA: “Systems, products, pricing and service levels are consistent.”

NAB/Homeside: “Most of my business goes through it because of product and pricing, and then it delivers service to me and my business as well as to the client.”

Macquarie: “It has good service currently. As it exited the market in the GFC we are working towards getting comfort that it is here in the broker market and will stay that way.”

BROKERS SPEAK: SERVICE LEVELS


1 AMP AMP

2 NAB/Homeside ANZ

3 ANZ ING DIRECT


5 Citibank NAB/Homeside


1 CBA CBA

2 ANZ ANZ

3 NAB/Homeside ING DIRECT


5 Suncorp Adelaide Bank

COMMISSION STRUCTURE

T he score given to each bank for commission structure was the average of three attributes: upfront commission level, trail commission level and clawback arrange-

ments. Mirroring last year’s rankings exactly, AMP, NAB/Homeside and ANZ took out the top three spots. Suncorp entered the top five after a long absence, coming in at fourth place. CBA put in a relatively poor showing by its standards, only scooping fifth place in the list. However, this is something of a result considering it failed to make the top five both in 2012 and 2011.


1 AMP 6.11

2 NAB/Homeside 6.1

3 ANZ 5.84

4 Suncorp 5.78

5 CBA 5.71




SERVICE LEVELS

T o create a service levels score for each bank, we used the total average for the following categories: online platform and services, communications training and

development, BDM support and call centre support. This encompassed the scores for 17 attributes, testing the banks more comprehensively than ever before. CBA rose above the pack to repeat its 2012 and 2011 performances and take out the top spot. NAB/Homeside continued its upward trajectory to take second place, while ANZ slipped from second to fourth. Macquarie hit the top five again in third, while Citibank rounded out the list of star performers.


1 CBA 7.88

2 NAB/Homeside 7.27

3 Macquarie 7.1

4 ANZ 6.97

5 Citibank 6.65




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CALL CENTRE SUPPORTWithin the service levels metric, various

questions were asked of our respon-dents regarding call centre support. Brokers were asked to rank the banks’ call centre staff for technical knowledge, responsiveness and helpfulness, and the average weighted scores for the top five banks under the call centre support banner was as follows:

Perhaps unsurprisingly, those banks that scored well for call centre support were the same five that took the top spots in the wider service levels category. Once again, CBA took the top spot, with ANZ managing to squeeze into second place ahead of NAB/Homeside, Macquarie and Citibank.

Rank Bank Score

1 CBA 7.89

2 ANZ 7.32

3 NAB/Homeside 7.14

4 Macquarie 7

5 Citibank 6.88

CBA: “CBA has the call centre in Australia and in NSW. You are able to speak with the credit assessor in a timely manner. They work with you to resolve any issues.”

ANZ: “It is sometimes difficult to contact. Overseas call centre is very frustrating.”

NAB/Homeside: “Call centre always friendly and helpful.”

Macquarie: “It is very responsive.”

Citibank: “The process was smooth and easy. Call centre wait times were not too long. The application settled in a timely manner.”

BROKERS SPEAK: CALL CENTRE SUPPORT

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CBA: “Excellent broker website.”

NAB/Homeside: “Its online tracking of the application process is great and it is always available to check on files and escalate when necessary.”

BROKERS SPEAK: ONLINE PLATFORM AND SERVICES

MOBILE DEVICE INTERFACEMobile devices are part and parcel of

moving with the times as a mortgage broker, and in this year’s survey, one of the attributes within the online platform and services category was a question regarding each bank’s performance when it came to mobile device interfacing. Brokers were asked to rank the banks for “ease of use of software and interface for electronic tablet devices such as an iPad or smartphone such as an iPhone”, and the top five results were as follows:

Once again, CBA and NAB/Homeside took out the top two spots, with ANZ managing to squeeze into third ahead of Westpac and Macquarie.

Rank Bank Score

1 CBA 7.37

2 NAB/Homeside 6.53

3 ANZ 6.48

4 Westpac 6.24

5 Macquarie 6.19

ONLINE PLATFORM AND SERVICES

T his was another category that took various attributes into account before a total average score for each bank was calculated. Brokers were asked to rate each lender on

e-business efficiency, online application status, website navigation, mobile device interface and website value/usefulness. The bank with the highest average score for all of these attributes came out on top. This year, that bank was CBA – topping the pile for the third year running. Both NAB/Homeside and Westpac jumped by one position this year, while Macquarie came in fourth and ANZ slid from second to fifth.


1 CBA 7.95

2 NAB/Homeside 7.19

3 Westpac 7.08

4 Macquarie 6.82

5 ANZ 6.7





1 CBA CBA

2 ANZ Westpac

3 NAB/Homeside ANZ

4 Westpac St.George

5 St.George NAB/Homeside

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1 CBA CBA

2 NAB/Homeside ANZ

3 ANZ BankWest

4 ING DIRECT NAB/Homeside

5 BankWest ING DIRECT

CBA: “Fair assessment of customers based on a commonsense approach without the rigidness of hardline credit policies.”

ANZ: “It has very good credit policies and processing systems.”

NAB/Homeside: “Very good for most of the year. However recent changes of credit policy are for the worse and we will have trouble finding it suitable deals from now on.”

BROKERS SPEAK: CREDIT POLICY

PRODUCT OF THE YEARFor the second year running we asked

brokers to highlight the best product of the past 12 months. And, for the second year running, NAB/Homeside’s Homeplus took out the top spot. ANZ’s Breakfree jumped from third to second, while ING DIRECT’s Orange Advantage was a new entrant at number three.

CBA’s Mortgage Advantage Package held firm in fourth place, while BankWest’s Premium Select fell three places but managed to hold onto a top five finish for another year.

Rank Bank Score

1 NAB/Homeside Homeplus

2 ANZ Breakfree Package

3 ING DIRECT Orange Advantage

4 CBA Mortgage Advantage Package (MAV)

= 5 BankWest Premium Select

= 5 CBA No fee

7 Westpac Premier Advantage Package

8 NAB/Homeside Other

9 Macquarie Macquarie Classic

= 10 St.George Advantage Package

= 10 ING DIRECT Mortgage Simplifier

CREDIT POLICY

T o get a score for each bank’s credit policy, we asked brokers to score on whether they: had easy to understand credit policies; were fair in their decisions about credit avail-

ability; and had processes in place to enable nego-tiation of credit policy outcomes for customers. Once tallied up and averaged, these attributes provided CBA with the highest score in the credit policy category – once again taking first place for the third year running. ANZ and NAB/Homeside reversed their placings from last year – coming in at second and third respectively. Adelaide Bank and Macquarie completed the top five.


1 CBA 7.88

2 ANZ 7.13

3 NAB/Homeside 7.1

4 Adelaide Bank 6.72

5 Macquarie 6.69





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BANK OF THE YEAR

T his is it, the big one – bank of the year 2013. Given its phenomenal run of first places and top five finishes, it’s no surprise that CBA takes out the top spot – mirroring its

achievements in the past two years’ Brokers on Banks surveys. NAB/Homeside takes second place for the second year running, while ANZ holds onto the third spot it secured last year. New entrants this year are Macquarie and Suncorp.

This year’s bank of the year was awarded to CBA following the most comprehensive assessment in the 10-year history of MPA’s Brokers on Banks. As explained in the methodology, each bank was rated on no less than 44 separate attributes to come up with its overall average score. Congratulations to this year’s top five, and look out for next month’s Banks on Brokers report to hear the reaction from all 12 banks involved in this year’s survey.


1 CBA 7.75

2 NAB/Homeside 7.14

3 ANZ 7.09

4 Macquarie 6.96

5 Suncorp 6.45




THE VIEW FROM THE TOPIn order to get an overview of how the

cream of respondents rated the banks, this year we’ve also taken the average bank of the year scores for brokers who wrote more than $25m last year. This represented just under the top 30% of respondents by volume. Their top five banks were as follows:

Perhaps unsurprisingly, given its stellar performance in most of this year’s categories, CBA takes the top spot among our sample of top brokers. ANZ takes the second spot, with NAB/Homeside being pushed into fifth by Macquarie (third) and Citibank (fourth).

Other key points from the top broker sample included:

CBA took the top spot in eight categories (product diversification opportunities, turn-around speed, bank of the year, online plat-form and services, communications, training and development, BDM support, credit policy and service levels).

NAB/Homeside came number one for interest rates and commission structure.

Macquarie scored top five finishes in all 11 categories.

St.George reached the top five in two categories (product diversification oppor-tunities and interest rates).

Rank Bank Score

1 CBA 8.25

2 ANZ 7.63

3 Macquarie 7.21

4 Citibank 7.16

5 NAB/Homeside 7.13

CBA

ANZ

NAB/ Homeside


1 CBA CBA

2 NAB/Homeside ANZ

3 ANZ BankWest

4 ING DIRECT NAB/Homeside

5 BankWest ING DIRECT

CBA: “Competitive loan products, supports the broker relationship and does its best to make life easier for the broker.”

NAB/Homeside: “Reliable with an excellent product, low fees and competitive rates.”

BROKERS SPEAK: BANK OF THE YEAR

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http://www.ballast.com.au/bpp

BROKER PROFILE / STUART TURNER

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GROWTH PLAN

Centric Wealth’s Stuart Turner works on a salary-

plus-commission basis, making the most of

references from the firm’s financial planning arm. With a $100m loan book

already under his belt, he tells MPA

about his big goals for the year

JULY 2013 | 37

MPA: Do most of your leads come from existing financial planning clients?

Stuart Turner: I’ve got a loan book of $100m that was given to me from the lending department. Centric have also got a financial planning arm, so I’m aligned with planners there. At the moment we’ve got 50 financial planners under one umbrella under the Centric name. They’ve got a client base of around 3,000 clients. Working with the financial planners it’s definitely an eye-opener as to the different ways that you can use debt. Their clients are looking at debt consolidation, buying their next investment property – or they’re just looking for a better rate. But it’s not normally rate driven with the financial planning clients; it’s normally a holistic move. I’m not a rate-driven broker.

We’ve also got corporate benefit schemes – major organisations that have an association with Centric. For example, one major company that has just come on board has got 6,000 employees. So there’s an opportunity for me to sit in front of those 6,000 clients.

MPA: Did you have to buy your loan book?

ST: I didn’t have to buy it. I’m a salaried employee with Centric. I have a base salary and commissions on top of that. I receive a pretty high-end salary, and then once I hit a certain number I’ll start to receive commissions. Part of that salary is for maintaining relationships. But I’ve also got targets, which are up to $40–50m a year. So once that loan book starts to build up I start to get more commissions. But I don’t churn clients to get more money out of them at the end of the day. That’s not the way I operate.

MPA: Do financial planning clients have high expectations of you as a

mortgage broker?ST: We’re dealing with high net worth individuals that are on salaries that are well into six figures, so your level of knowledge and detail on the loan has got to be spot on. They are very demanding, but it’s also very rewarding. When you’re dealing with that client’s loan you’re not dealing with a vanilla loan.

MPA: Does this mean employing a high-touch approach?

ST: Yes, especially through the transaction. High-quality customer service is going to bring in repeat business and keep that client for a long-term

relationship. They’re also very rewarding in terms of referring like-minded colleagues. We won’t churn a client from bank to bank; that’s not the way we do it. If there’s an opportunity to keep the client with their current lender and keep that relationship go-ing, then we will – but if there is a better option out there, obviously we’ll look at it.

We could also have clients that have been given approval in principle, and they can sit there for month after month. I keep touching base with those clients. I touch them weekly or fortnightly and say “Can I help you with RP Data reports?” or “Can I help you with updating anything?”, and help to turn that approval into a settled loan and help the client purchase their property.

MPA: Do you see brokers aligning with financial planners to be an

ongoing trend? ST: With NCCP [National Consumer Credit Protec-tion] coming in, it’s now a highly regulated industry. So that’s got rid of a lot of the tyre kickers. I’m working with financial planners and the feedback I’m getting from those types of referrers is that our industry is getting more scrutinised and is not as loose as it used to be. Going forward I can see it growing and having more alliances with financial planners.

MPA: Do you charge a fee?ST: No. But I think in the future, with the

way things are going, we could end up with a fee-for-service type scenario. It wouldn’t surprise me if it happened in three to five years’ time, with the way that we’re regulated and that brokers are becoming more professional. We want to see people in their twenties or thirties at university studying to become a mortgage broker like financial planners do – and get that recognition that it is a growing industry and a career option.

“High-quality customer service is going to bring in repeat business and keep that client for a long-term relationship”Stuart Turner

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SPECIAL REPORT / SMSF

SMSF LENDING:

YOUR

COMPLETE

GUIDE

The panel

Sinclair Taylor, head of SMSF segment, Westpac

Iain Forbes, director, Australian First Mortgage

Alicia Carter, national sales manager, Australian Financial

Richard Chesworth, senior manager, Macquarie Adviser Services

Phil Foweraker, national BDM, SMSF and custom lending, National Finance Club

38 | JULY 2013

MPAMAGAZINE.COM.AU

Self-managed super funds (SMSFs) have been creating a buzz in the financial services industry for some time now. As self-directed investors choose to shun the large super funds and instead take a more active role in investing for their retirement, finance institutions and professionals are clamouring to get a slice of the action.

Take a look at the numbers and it’s clear to see why. According to statistics from the Australian Prudential Regulation Authority for the March quarter, SMSFs now account for a staggering 31.5% of the nation’s $1.58trn superannuation pool. Overall, the value of assets held in SMSFs reached $496.2bn, an increase of $22bn over the quarter.

“Despite the market volatility of the past years post the GFC, people still want to take control of their superannuation and be responsible for it,” says SMSF Professionals’ Association of Australia (SPAA) director, technical and professional standards, Graeme Colley. “This reflects both a growing awareness by trustees of superannuation, and their capacity to be able to get professional advice on all issues pertaining to the management of their SMSF.”

But while there’s a clear market for professional advice in the SMSF sector, it would appear those

Now worth almost $500bn, the SMSF market is the fastest-growing area of superannuation in Australia. However, while a large proportion of SMSF investors choose to invest in property through their funds, mortgage brokers have barely scratched the surface of this rich vein of potential business

SMSF investors choosing to purchase property within their funds aren’t turning in significant numbers to mortgage brokers to help them secure SMSF mortgages, which ATO regulations state must be a limited recourse borrowing arrangement (LBRA).

According to the March quarter CBA/MFAA Home Finance Index, 18.1% of SMSF investors who responded to the survey invested directly in residential property, 4.7% invested directly in commercial property, and 4.7% invested directly in both.

However, only 2.7% of respondents who were investing in direct property through their SMSFs went through mortgage brokers to get mortgages for these properties. The majority went directly to the bank for funding (47.9%), 41.1% didn’t need funding for the purchase, and the rest went directly through a credit union (2.7%), building society (2.7%) or other (2.7%).

So what can you do to improve these numbers and get a foothold in the SMSF lending market? MPA has assembled a panel of industry experts to answer some of the key questions brokers need to ask before taking the next step.

Greg Mitchell, general manager sales, Homeloans

Suresh Pillai, GM commercial, Liberty Financial

Allan Savins, COO, RESIMAC

Julie McKay, senior manager technical & research, Bendigo Wealth

Per Amundsen, director, Thinktank Commercial Property Finance

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ALICIA CARTERThe potential for the SMSF market is endless. Anyone with the right amount of money in their superannuation fund is able to roll it into an SMSF and invest in property. The ATO regularly publishes the latest statistics on SMSFs. For the financial year ending in June 2012, 7,654 new SMSFs were established; and this, coupled with the fact that Australia is an ageing population, indicates the SMSF space has a lot of potential.

ALLAN SAVINSWhile gearing into property is relatively new to SMSFs, holding it in such funds is not. In 2008, more than $10bn of residential property was

already held in SMSFs. With the help of SMSF loans, that increased to over $15bn early in 2012. One thing unique about SMSFs is the level of con-tributions going into them; member contributions are typically more than double the employer contributions. On top of that, more than $16bn in transfers were made to SMSFs in 2010/11. All those funds need to be invested somewhere. Many analysts have predicted moderated returns from share markets for years to come. That, along with moderately low interest rates and high rental demand, should boost investment in real property.

RICHARD CHESWORTHIt is clear there is huge potential for further growth in the SMSF market. In fact, a recent report commissioned by Deloitte estimates Australian SMSF assets will grow to $2trn by 2030. As a result of this growth, intermediaries, including brokers, are naturally looking at what opportunities the SMSF market presents. For brokers, property lending is the key area of focus within SMSFs, and

HOW BIG IS THE SMSF MARKET, AND WHAT IS ITS POTENTIAL IN THE FUTURE?

http://www.resimacfs.com.au

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we expect to see further growth of property as an asset class within SMSFs in the years ahead.

SURESH PILLAIWe expect the strong growth in SMSF loans to continue in the short to medium term, with good potential for the future. Where 12 months ago there was a large spread of brokers testing the water with the odd one or two deals, we have begun to see the growth in specialist brokers for whom SMSF loans have become a material and growing source of new business.

GREG MITCHELLThere has been growing interest in direct property investment. We believe there is strong potential. While it will be at the ‘low end’ of the lending scale, volumes can still be quite large.

JULIE MCKAYAccording to ATO annual statistics, the SMSF sector remains one of the largest sectors of

the Australian super industry. There were approximately 913,550 members in the SMSF sector, almost 8% of roughly 11.6 million members in Australian super funds. Between the years ended 30 June 2008 and 30 June 2012, the number of SMSF funds grew from almost 376,000 to more than 478,000 – a growth of over 27%. So, although the number of Australians who are members of an SMSF is relatively small, the amount of money in the sector can’t be ignored.

PHIL FOWERAKERThe SMSF market is growing every day, as is the flexibility with new funders coming on board offering more choices for brokers and clients. The opportunity for brokers to tap into this growth is right under their noses, in their existing database.

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PHIL FOWERAKERBrokers benefit because they are presented with the opportunity to write more business through existing clients and build stronger networks and referral relationships.

PER AMUNDSEN The main benefit for brokers is the potential for additional investors in direct real estate who can now borrow a portion of the investment they wish to make in either residential or commercial property. As the number of individuals looking to borrow through their SMSFs increases, a certain number will need the services of a broker to arrange financing and, for those brokers that have the expertise to assist, it means an increased flow of business.

IAIN FORBESIt delivers to brokers the benefits of building a bigger client base, thereby increasing cash flow and income.

SURESH PILLAI SMSF lending presents an opportunity for brokers looking to provide more value to their clients. Clients may not be aware of their potential ability to acquire property using borrowed funds via their SMSFs, and brokers can play an important role in providing relevant background and credit product information.

JULIE MCKAY In essence, although the broker deals with one person, there are in fact two customers: the individual in their personal name and the individual as trustee for their SMSF. For employed people there is a set amount going into super (ie the employer contribution to superannuation). This is forced savings that must be invested into some asset, thus there is certain cash flow (in addition to rental income) to support borrowing to buy property. Together this means the broker has a broader scope of investable funds. Discussions between broker and customer can come from the perception of a single pool of money available for investment, while ensuring the pools remain strictly segregated.

WHAT BENEFITS DOES ENTERING THE SMSF LENDING MARKET DELIVER TO BROKERS?

RICHARD CHESWORTHSMSF property lending has put superannuation on the agenda for brokers and opened up a new lending channel within their existing client base. In addition, for those brokers who can demonstrate a level of experience in SMSF lending, it offers the opportunity to attract a new client base of those looking for expertise in SMSF property lending.

ALICIA CARTERAn SMSF loan is not a new product; it isn’t as if you’re trying to sell insurance, financial planning advice or a property. The benefit of offering SMSF is that you’re still dealing in your area of expertise and getting paid a trail.

“Clients may not be aware of their potential ability to acquire property using borrowed funds via their SMSFs”Suresh Pillai, GM commercial, Liberty Financial

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http://www.amp.com.au/bank


44 | JULY 2013

ALLAN SAVINS Many people have little interest in their super. They know it’s there, and hope that it will provide something for retirement. However, it is managed by others, and often their only consideration of it is twice a year when they have a glance at the statement. When they create an SMSF, all of that changes. They are now the manager, and when they have an investment property there is something they can look at that reminds them of what is happening with their superannuation.

PHIL FOWERAKERClients can benefit by identifying the opportunity for SMSF, but most importantly by ensuring the SMSF is an investment vehicle suited to their needs through advice from a licensed financial planner (referred by a broker).

RICHARD CHESWORTH Sixty eight per cent of SMSFs have two members,

where, most commonly, couples have rolled their combined super funds into one SMSF fund. This provides a larger pool of funds with which to acquire assets. Having more capacity to borrow, buying a property within their super fund then becomes a possibility. Rarely do investors have sufficient funds to buy a property without the need to borrow. Having bought property within their super through gearing, this leaves the SMSF member with the ability to gain exposure to other asset classes within their SMSF.

SURESH PILLAI Depending on the circumstances, there could be a number of benefits from investing in property via an SMSF, including tax, investment diversification and asset quality benefits. For example, SMSFs may be eligible for concessional tax rates on rental income and capital gains. Subject to obtaining the appropriate advice, the introduction of direct real estate investments (either in residential or commercial property) into an SMSF’s investment portfolio may also provide an additional option for diversification of assets. By combining super with an SMSF loan, there is also the potential to acquire investment properties of greater value, higher quality, and with enhanced long-term potential.

JULIE MCKAY Superannuation, and particularly an SMSF, is an intergenerational wealth tool. Current SMSF members think about long-term assets, such as property (particularly rural property), as assets that will be passed to children. The SMSF can in some circumstances be an effective tool to support retirement of the current generation and pass important family assets to the next.

IAIN FORBESThere is an opportunity to build a property portfolio by buying a property in its SMSF, thereby utilising its cash that may be earning low bank interest of around 4%.

ALICIA CARTERTrying to liaise with solicitors, accountants, financial planners, conveyancers and the bank would be a tall order for anyone in conjunction with a full-time job. Clients can take control of their super and use the expertise of a mortgage broker to get their retirement strategy in place without the hassle.

WHAT BENEFITS DOES IT DELIVER TO THEIR CLIENTS?

PER AMUNDSEN The clarification of the rules regarding borrowing by SMSFs has made it much more feasible for individuals to consider investing in real estate for the purposes of building their savings for retirement within the framework of superannuation. It is not an investment that is going to suit everyone, and there have been some well-publicised comments made by ASIC as to the need for good advice – and that the size of investment required means this may not be appropriate for smaller funds. The main benefit that appears to be provided for long-term investors is the ability to acquire a stable income-producing asset that can be funded on a modestly geared basis. Repayments of principal and interest can then be structured to leave a debt-free asset by the time of the investor’s planned retirement and the transition of the SMSF to pension phase.

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PHIL FOWERAKERThe SMSF market is growing, and the potential to build new networks through financial planners and accountants is limitless. Diversifying into this field not only assists their existing clients but also benefits all business partners. For example, a broker can strengthen mutually beneficial partnerships with financial planners, accountants and real estate agents, who are all potential participants in an SMSF deal.

ALLAN SAVINSGeared property investment through an SMSF is still in its infancy, which presents an opportunity to

WHY SHOULD BROKERS DIVERSIFY INTO THIS AREA? GREG MITCHELL

There are plenty of opportunities for brokers to enhance their revenue stream. It’s a great niche sector, and for brokers with strong affiliations with financial planners, accountants or lawyers, it’s a healthy addition to their business. But obviously it has to be done properly.

diversify your business into an area that is likely to see immense growth.

IAIN FORBESIt is an opportunity to diversify, and capture additional income.

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WHAT FURTHER TRAINING DO BROKERS NEED TO UNDERTAKE TO TACKLE SMSF DEALS?

RICHARD CHESWORTH It is easy to get product training, but what brokers are really looking for is more information on the differences between borrowing to invest in property inside and outside of super so they can familiarise themselves with all the considerations their clients need to be aware of too. This is what will help them to better understand what questions to ask through the fact find process to help establish whether borrowing is suitable for their client or not.

PER AMUNDSENThe most important part of contributing effectively to satisfying their clients’ needs in this regard is understanding that it is not their role to give advice, but at the same time ensuring their clients are getting the professional advice they need and then working with lenders who also understand SMSF-LRBA lending. Many lenders who provide these facilities require separate broker accreditation for this particular product, and the MFAA has just announced the launch of a training program specifically designed for brokers wanting to develop their skills in this type of lending.

JULIE MCKAY Even if brokers are only concerned with one transaction, it is important to at least understand the broad obligations imposed on SMSF trustees and the requirements of a limited recourse loan. Knowledge can be gained from many sources. The ATO (as SMSF regulator) website has some good introductory material. However, for those truly interested in pursuing this market, specialist accreditation (such as SPAA or Kaplan courses) is a good way to build confidence and attract clients.

SINCLAIR TAYLORBuilding referral relationships with accountants and financial planners is key to tapping into this affluent group of consumers, as those professionals are often very involved in establishing the SMSF and advising on the investment strategy of the fund, including what asset classes should be considered.

SURESH PILLAI There is no reason why a traditional home loan client would not be interested in learning more about SMSF loans. So, the first step to drawing SMSF clients is to conduct a critical analysis of current and past clients to identify potential interest, and then make these clients aware of SMSF lending products.

ALICIA CARTERI think most brokers would be surprised at the number of existing mortgage clients who have entered into an investment loan and who have an SMSF. If your CRM is up to date, it would be easy to identify the clients who would benefit from reviewing their superannuation situation.

SINCLAIR TAYLORUnderstanding the boundaries is important to ensure brokers do not provide financial advice to existing or prospective SMSF clients unless they are licensed to do so.

IAIN FORBESWhen talking to borrowers and when a broker completes an application for a refinance or the purchase of an investment property, the statement of assets and liabilities will ask the question. If a borrower has an amount of, say, $200,000 in a super fund, it is a good candidate for suggesting that the next investment be in the name of the super fund.

HOW CAN BROKERS ATTRACT SMSF CLIENTS?

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http://www.australianfm.com.au


48 | JULY 2013

PER AMUNDSENUsually the broker’s role will be to source the funding for a property acquisition that has already been reviewed with a licensed financial adviser, and where an SMSF already exists or is in the process of being established. The client will also require legal advice in reviewing SMSF trust deeds and establishing a ‘bare’ trust to hold the security property. None of this will be the role of the broker to actually do, but it is important they know what needs to be done so the transaction can be successfully completed. Their prime function and value to the client is to find the best lender to provide the funding, and this can vary depending upon whether the investment is to be made into residential or commercial property.

Probably the biggest thing to recognise at the outset is these types of loans will take longer to arrange than most others. Attention to detail is very important and getting it right the first time is key. The MFAA training emphasises the importance of teamwork and the important role the broker can play in co-ordinating the other members of the team. Most lenders who provide funding for SMSF-LRBAs can help in this regard,

HOW CAN BROKERS SET UP SMSF DEALS?

and building a good relationship with a well-qualified lender for both residential and commercial properties is a great start.

ALLAN SAVINS Once the broker has completed the lender’s training, the matter of setting up an SMSF loan is very straightforward. Access can be provided to the lender’s panel lawyers. They are the ones who prepare the documentation and can set up the appropriate trust deeds if they are not already set up. The broker acts as the hub of communication that connects the client with the various pro-fessionals involved in setting up the loan.

RICHARD CHESWORTH The first step is for the client to make sure it’s the right decision for them to borrow, and if they’re not confident the broker should use the experience of their referral partners and direct them to an accountant or financial adviser.

Unless they are licensed to do so, brokers cannot provide advice to the SMSF. They can, however, undertake their ordinary functions, such as dealing with the facts and confirming the loan is being borrowed under the right name. Plus they can make sure the contract is signed in the holding trustee’s name, as required by the legislation. Brokers should provide their clients with an understanding of the financing requirements and of what can and can’t be funded, such as the requirement for a ‘single acquirable asset’.

SINCLAIR TAYLORIt is critically important that the loan structure and documentation complies with the LRBA provisions in the superannuation legislation.

GREG MITCHELLHomeloans has a specific application form, and then there are specific set-up processes that are handled by the financial planner or solicitor. The overall process is involved, so it’s vital to use the relevant experts for the different components.

JULIE MCKAY There are a lot of working parts to a loan within an SMSF, and each deal can be unique (because of the nature of the SMSF or the property itself). It’s critical to get the set-up right, even before considering a specific property. There are several traps for new players, and specialist advice can prevent investments that are extremely expensive and complex to unwind or correct. The consequences for the customer of an incorrect set-up can range from annoying/ time-consuming and expensive (for example extra stamp duty) to disastrous (a non-complying super fund can incur significant tax penalties).

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http://www.liberty.com.au


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JULIE MCKAYThis is a difficult question as it will highly depend on their AFS licence (if any) and, potentially, their AC licence. Generally, without an AFL a broker could not recommend setting up and switching super into an SMSF. Even a fully accredited and trained financial planner must be careful not to stray from general advice to legal advice (eg about

the terms of the trust deed, structure of the SMSF, etc). If the SMSF is established, care must also be taken in giving financial advice about shifting investments from one asset class (for example, a term deposit) to another (for example, real estate). Generally, brokers should align themselves with quality financial advisers. The planner can recommend switching from a retail fund to an SMSF, for example, and direct the client to a lawyer about the specifics of set-up. Further, the planner can provide advice, given the customer’s circumstances, about the pros and cons of investing superannuation money in property. Once the SMSF is established, the broker can work with a business banker to set up all the requirements for the loan.

SINCLAIR TAYLOR Brokers can fulfil a client’s request to recommend and establish an SMSF loan to purchase an investment property through an SMSF structure. As such, they can make a recommendation as to the right SMSF loan product.

GREG MITCHELL Brokers take care of the loan application. Lending is just one piece of the puzzle, and a financial planner and solicitor are required for the other elements.

ALICIA CARTERWithout a financial services licence, brokers should be cautious about offering any SMSF advice. ASIC is on the prowl for any wrongdoing in this space.

I believe disclosure is the best policy, and I don’t see anything wrong with prompting clients to review their superannuation on a somewhat regular basis.

GREG MITCHELL Brokers can advise on different types of products and lenders. Clients will need independent financial and legal advice as part of the application process.

SINCLAIR TAYLORBrokers can talk in general terms about the pros and cons of SMSF borrowing; however, they should recommend the client seek independent financial advice before proceeding.

RICHARD CHESWORTH A broker can provide lending advice and factual advice only. There is an abundance of information on what can and can’t be done, and this factual information is knowledge that can be shared.

SURESH PILLAII think the principal role for brokers is education – making people aware of the existence of SMSF loans. Once a client has interest and has obtained suitable advice, the broker plays a fundamental role in managing the credit process.

ALLAN SAVINSBrokers are only licensed to provide credit advice. While they are not going to provide advice in the other areas, it is very important to make the clients aware of the need to get advice and refer them to the appropriate professionals to obtain this advice. Most lenders require SMSF borrowers to receive independent legal and financial advice.

WHAT PARTS OF SMSF CAN BROKERS TAKE CARE OF THEMSELVES?

HOW MUCH ADVICE CAN BROKERS OFFER CLIENTS?

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Product name Residential/commercial Initial rate Term Variable/fixed Max LVR Start-up Fee Max Loan Amount

Platinum Option Residential 6.14% 30 years Variable and fixed (fixed rates from 5.64%) 70%

$750 inc. std vals up to $1m. Residential zoned & metro location only

$2m


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30 yearsVariable and fixed (fixed rates from 6.52%)

80%

Establishment fee: $350 (waived for a limited time).Settlement fee: $250 (waived for a limited time. Solicitors fee: $1,925

$750k


SMSF Loan Residential 5.89% 30 years Variable and fixed 70%$1,365 + legal expenses

(approx. $1,950)$2.5m


Homeloans ProSmart SMSF Residential 6.24% 30 years Variable and fixed (fixed rates from 5.84%) 70% $2,719 $2m


SMSF Property Loan Residential 6.1% 30 years Variable and fixed 80% $500 + legal expenses $500k

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BUSINESS STRATEGY / COMMUNICATION

54 | JULY 2013

Making sure you understand a potential client’s world view is often the best

way to effectively influence them, argues Roger Ellerton

STANDING IN THEIR SHOES

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People may not remember exactly what you did, or what you said, but they will always remember how you made them feel - Maya Angelou

As a mortgage broker, you are constantly influencing others to accept you, your ideas, products or services.

Many people have difficulty influencing others because they tend to use the same strategies and emphasise the same needs and values with other people that they would like other people to use with them. Alternatively, they take the ‘spray and pray’ approach, hoping their clients will find something useful in the information provided.

Each of us has different needs and different strategies for buying. To be truly effective at influencing others, you need to view the situation from their perspective; that is, to determine what is important to them and how they like to purchase.

Take me, as an example: I am not a mortgage broker. From my perspective, all mortgage brokers are the same – you have access to mortgages with various rates and features. It is up to you to be the difference that makes the difference. I want you to help me feel good about the process, and to allow me to buy the mortgage that I need rather than sell me the mortgage.

DETERMINE YOUR CLIENT’S NEEDS AND VALUESFar too often we think it’s the product or service that people want to buy. In reality, people buy the benefit that the product or service provides. If you are not certain what is important to your client, you will not be able to present your products or services clearly. Having an understanding of your client’s needs and values can:

• shorten the whole influence process• provide a better understanding of how to present

your offering• lead to a better agreement for both parties • give you an opportunity to suggest something

the other person forgot, did not think was possible, or that was out of their awareness

• create a firmer foundation on which to conclude this and future interactions positivelyHow do you become the difference that makes

the difference? Begin by asking questions. Listen for what is important to your client and how they express what is important to them.

Some clients will come to you with their minds already made up as to what is the best mortgage for them, having usually obtained ‘expert’ advice from their friends or an internet search. They may be incorrect, but rather than telling them why their choice is not a good idea given the current financial climate, or simply offering the best available product, acknowledge their choice and explore the reason behind it. Once you have clearly identified the underlying need or value, you can raise the possibility that this need could be addressed in ways that provide additional benefits.

With some people, you may have to ask lots of

Each of us has different needs and different strategies for buying. To be truly effective at influencing others, you need to view the situation from their perspective

BUSINESS STRATEGY / COMMUNICATION

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questions. With others, you may have to interrupt politely to ask questions to get them back on track.

A client’s needs and values can be intangible, such as respect, or tangible, such as a monthly payment that is within their budget. Having an understanding of your client’s specific needs and values provides clarity on what is truly important to them and will help you recognise where you can compromise, suggest trade-offs or hold firm.

I have found that specifying your client’s most important needs and values in terms of the acronym ‘RIGHTS’ (see box opposite) can stimulate your thought processes, encourage you to take a more concerted look at their needs and values, and help you remember what is important to your client.

SPEAK TO ME IN A WAY THAT MAKES ME FEEL UNDERSTOODEqually important is how your client expresses their RIGHTS. Each one of us experiences the world around us in our own unique way; that is, we tend to focus on certain types of information to the exclusion of others. For example, some people focus on what they want to achieve; others are more interested in avoiding potential problems.

With the former, you would emphasise how your proposed solution would help them to achieve what they want. With the latter, you would point out how your proposed solution would allow them to avoid potential problems.

The words and phrases we use give away our world view. By listening carefully to a client’s communication style, we can work out what’s important to them and adjust our responses appro-priately. And these are exactly the words you can use to motivate them. Listen for the key words and phrases that betray your client’s views, and use the same words and concepts to explain your offering.

FIGHT FOR YOUR RIGHTS

Use this profile to refresh your memory about each client, and modify it as you repeatedly meet and focus on their specific needs. By refining this profile, you will improve the way you interact with your clients, increase your closing success rate, and receive more referrals.

Assessing your clients’ needs using the acronym RIGHTS can help you understand their point of view. For each client, identify at least one key need or value for each letter that is most important to your client. By doing this, you can build up a quick profile of that client.

Reputation Risk (minimisation) Reduce (costs) Respect (their viewpoint) Responsive (to their needs)

R

Health (reduced stress)

Helpful (quality service)

Heard and feels understoodH Time (meetings are convenient)

Time (to settling mortgage)

Timely (response to requests)T Safety (affordable payments)

Savings (money)

Satisfaction (with process and results)

S

Guarantees (mortgage for a specific period of time)

Green (environmental priorities, such as electronic rather than paper documents)

G

Information (on mortgage or how to better handle their needs)I

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The added advantage is that these words also have a clear meaning to your clients, reducing the risk of misunderstanding. Therefore, if they talk about ‘avoiding a potential problem’, then say that when presenting your offering, instead of referring to ‘mitigating undesired consequences’.

1. TOWARDS VS AWAY FROM

Towards people are focused on their goals. They are motivated to have, achieve and attain. They are clear about what they want. Key phrases: accomplish, attain, get, achieving, goals, results and outcomes.

Away-from people often see only what may go wrong in a given situation; they notice what should be eliminated, avoided or repaired. They are motivated when there is a problem to be solved or something needs fixing. Key phrases: avoid, steer clear of, prevent, eliminate, solve, get rid of, fix, prohibit.

2. INTERNAL VS EXTERNAL

Internal people have internal standards and use them to make their own judgments about you or your offering. They have difficulty accepting other people’s opinions. If they receive negative feedback regarding something they believe to be correct, they will question the judgment of the person giving the feedback. They assess the validity of information from outside sources according to their own internal standards.

You can motivate this type of person with the following phrases: Key phrases: I just know, it feels right, I’ll be the judge of that, I know what’s best.

External people need outside direction and feed-back to decide on the mortgage that is best for them. Without external validation, they may feel

confused. They will turn to you as an expert for your opinion.Key phrases: according to the experts, your friends will think highly of your choice, is this the product most people are choosing?

3. OPTIONS VS PROCEDURES

Options people are motivated by the possibility of doing something in an alternative way. They enjoy bending the rules or exploring new ideas and possibilities. An options client may continue to explore other alternatives, even when the best one for their situation has been identified. Key phrases: alternatives, bend the rules, flexible, unlimited possibilities, expand your choices, options.

Procedures people like to follow established rules and processes. They are more concerned about how to do something than about why they should do it. Bending the rules is sacrilege. A procedures person will be interested in the process, rather than the outcome. To motivate a procedures person, for example, state that there are five critical steps to acquire a mortgage. Tell them what these five steps are. Then lead your client through these steps in the order you specified.Key phrases: correct way, tried and true, first, then, lastly, proven path.

The words and phrases we use give away our world view. By listening carefully to a client’s communication style, we can work out what’s important to them, and adjust our responses appropriately

Roger Ellerton is a public speaker, coach and author. This article is based on his book, "Win-Win Influence: How to Enhance Your Personal and Business Relationships". For more information, see www.renewal.ca.

BUSINESS STRATEGY / MOTIVATION

58 | JULY 2013

Ensuring your team stays productive when the pressure’s on can be a challenge for any

manager. Leanne Faraday-Brash highlights nine ways to keep your people motivated

WHEN THE GOING GETS

In the space of three days, the unthinkable happened. I read that China’s annual economic growth had slowed to 7.7%. Goldman Sachs was quick to point out that the market must shed expectations that continued double-digit growth could be sustained. Then, after digesting that one, I was sent reeling again when Apple reported its first profit decline in a decade.

As someone who’s mad for an allegory, it got me thinking about those individuals and teams who sustain extraordinary performance for an extended period, so much so that the unexpected is what we come to expect. What pressure is there on a manager and team members when the extraordinary becomes ordinary? How do you continue to inspire and how do you keep your staff’s hunger burning without burning out yourself in the process?

In the course of a typical working week, I found that four separate clients were puzzling over this same issue in very different contexts and which they described in very different ways (see box overleaf ).

In all these situations, an almost idyllic past has been replaced by a fraught, stressful state of play that requires balancing the needs of the team with the needs of the organisation, and the needs of the team with the needs of the individual.

HOW TO KEEP A TEAM ON TRACKThe most critical balance to strike is between relationship and outcomes. If we’re too soft on relationships, teams can run amok. If we’re too hard on relationships and only serve profits, targets, senior management and our own careers, we will have a target on our backs long after any problems have abated.

As a leader of people, you have a responsibility to

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WHEN THE GOING GETSstrike this balance effectively. These nine strategies will help you manage your people effectively and keep their momentum heading in the right direction.

1Communication is critical. If you are asking the team to shift gears, make sure you spend more time on the why than the

what. The former is more likely to be heard as inspirational, while the latter will be viewed as transactional. You will also need to be more accessible and visible, as your team will resent and disrespect any hint of abandonment.

2 Be honest when you’re asking a lot from them. They know it, but need to know you know it so they can feel less exploited.

3Be compassionate, but don’t let anyone get away with murder. Don’t let anyone jeopardise good culture because they’re

bringing home the bacon. That’s how we create vulture cultures that ravage the organisation.

4 Don’t get sucked into doing other people’s jobs for them. Resist the temptation to do so, and take every opportunity to coach

your people. Astute managers have worked out that it is more sustainable and impactful to get everyone to do 5% more than for you to do 60% more on your own. Besides, stepping in or stepping on your people can result in one of two untenable outcomes: either communicating a lack of trust that stifles initiative and innovation, or allowing the lazy to take a leisurely ride on a titanium road bike while you wear yourself out running alongside them.

5Distinguish between those who want to and can’t right now, and those who can but won’t. The former deserve our

compassion; the latter, an enunciation of potential consequences. I am not suggesting we ever become threatening or punitive for its own sake, but individuals who are not living up to the team code need to understand this is not acceptable. Ensure they see the line in the sand that you’ve drawn before

TOUGH…

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you ever penalise them. Set them up to win, but red card them if they refuse to take the field or play dirty.

6 Don’t be too proud to bring in reinforce-ments. Unless you have advanced train-ing in mental health first aid (and even if

you do), don’t give struggling employees gratuitous advice, or tell them they should be at home when perhaps only work is getting them up in the morn-ing, or pretend you have the answers or know how they feel. Let those who aren’t coping tell you what support they need and defer to expertise while check-ing in with your staff tactfully, discreetly and often.

7Put on your oxygen mask first. Don’t be selfish, but don’t assume you must be selfless. Martyrdom isn’t attractive and is

often self-serving anyway. This is a time to take care of yourself. Opt for peer support over beer support, get a coach, have a confidant, and don’t ruin your relationships at home or become sick with guilt because you gave your life to the workplace and your kids don’t recognise you any more. Unless you really want to travel incognito, you’ll only get more

Leanne Faraday-Brash is an organisational psychologist and principal of Brash Consulting.

She is the author of Vulture Cultures: How to Stop Them Ravaging your Performance,

People, Profit and Public Image. Leanne can be reached at

www.brashconsulting.com.au.

stressed if you walk in the door and someone says, “Oh, it’s you.”

8Adopt a stable yet flexible style. Too many of us lurch from a relaxed management style (aka team neglect) to authoritarian

when people “take advantage of our good nature”. Sometimes we lash out with exaggerated intensity because we got told off for seemingly letting the lunatics take over the asylum. The professional embarrassment alone may make us want to pay out on team members when, in effect, we were asleep at the wheel and blamed the tree when we crashed.

9Finally, don’t get too bogged down in the day-to-day. You’ll miss the bigger picture. This might be convenient and less

confronting but not helpful to you or your team. If you’re a people manager, the best you can do for all concerned is to embrace the role and truly manage your people. Ensuring roles are clear and meaning-ful, expecting excellence, and providing compassion when required balances what you want from your team and what your team needs from you.

WHEN THE STATUS QUO CHANGES

Every team is different, and every stressful situation requires a different approach. How would you tackle these situations?

MANAGER ONE Manager One is a full-blown creative and runs a loose confederation of creative cowboys (yes, they are all boys). They have enjoyed lots of trust and freedom for several years.

Our manager’s issue is that his team have become so accustomed to a permissive, supportive and encouraging regime of loose leadership that they’ve become entitled and precious. They haven’t adjusted to a more constrained fiscal environment. They pout and tantrum when told “we can’t afford this”, and now bicker with each other over whose project should be supported.

The executive have said this team doesn’t want to be handled, and that they forget they are part of a bigger organisation. This manager is upset and disappointed that this mutually supportive team has morphed over time into a kindergarten cohort who now won’t share and are more likely to want to hit others over the heads with their buckets and spades when no one is looking.

MANAGER TWO Manager Two runs the trading floor. She is used to mavericks and would peg herself as one. However, in the wake of several scandals in other organisations, she has always instilled some notion of the importance of boundaries in the team.

While living on the edge of their authorities, they haven’t stepped over the line, until she hired her latest recruit; that is, a tiger that doesn’t want to be tamed. They all see the brilliance, the flair and

the smooth way in which the new recruit has masterfully made rain in a short space of time, but this one is truly a law unto himself.

MANAGER THREE Manager Three runs a tax team in a second-tier firm. The firm has always been profitable, but some of their clients are doing it hard. Margins are squeezed, bills are contested, write-offs are up, and two associates who left within weeks of each other have not been replaced.

While the team is not traditionally known for oozing excitement out of every pore, the manager can see the beginnings of real disgruntlement and withdrawal. Some staff are quietly telling others they’re feeling vulnerable to layoffs. Others are resentful about workloads increasing but do the work anyway. Others are working to rule, having acquired a profound interest in watching the clock.

MANAGER FOUR Manager Four had a dream team, albeit a small one; cohesive, friendly, purposeful and focused. Regrettably, one supervisor separated from their life partner some five months ago. This took everyone by surprise as there had not been any hint of problems until it was blurted out at a team morning tea.

People didn’t know where to look or what to say. It’s obvious to all, even without clinical qualifications, that the supervisor’s mental health has been in steady decline since then, and the manager freely admits she’s out of her depth. The supervisor is barely functioning and the rest of team are having to make major allowances.

MPAMAGAZINE.COM.AU

JULY 2013 | 61

Favourite thingsDoug Lee, head of sales, Macquarie Mortgages

Vacation spot: Hawaii (Maui in particular). Great climate, lovely people, and Maui is not as busy/commercial as Honolulu.

Food: Thai would be one of my favourites. Also love experimenting in the kitchen –and I’m still alive!

Book: Any book authored by Peter FitzSimons. Last book of his I read was Eureka: The Unfinished Revolution. The way he writes transports you into the story!

Sport: AFL. I’m a Collingwood fan but also have a soft spot for the Brisbane Lions since I live in Queensland.

Music: Bit of everything, other than rap and heavy rock.

Place to be in Australia: I’m really content with where I live now – Wynnum/Manly on the bayside in Brisbane. It’s got everything you need, from schools to recreational activities, and the views across the bay are sensational. I’m still only 14km from the city and, importantly for me with my role, it’s only 20 minutes to the airport.

Drink: Now I am being a true Queenslander – Bundaberg rum and Coke!

Movie: Forrest Gump. A very clever and witty film about life in general.

Hobby: Running/cycling: it’s more of a way for me to relax, especially an early morning run along the foreshore, and if I’m out early seeing the sunrise over the bay.

Doug Lee

LIFESTYLE / FAVOURITES

62 | JULY 2013

Day in the life of...Natasha Kelso, national manager, broker sales, CUA

5.55am: Alarm goes off. It is on the opposite side of the bed, so my husband David turns it off and elbows me to make sure I get up.

6.05am: After splashing my face with water, and getting changed into my gym gear, I’m off to the gym.

7.30am: Laptop on. Breakfast at the dining table while I am reading the last news stories.

8.00am: Catch up with broker support colleague and understand where we are placed for the week ahead. We had a big week last week; want to make sure everything is on track. Good news – everything up to date.

8.45am: Catch up with Jose, head of mobile banking and broker. Discuss week ahead numbers, strategies for the next PD day – I want to do something different. Really pleased with NSW/Vic numbers last week.

9.30am: Hit the road. Catch up with state manager from one of our panels. Run my PD day idea by them. They love it. Ask them for more business while I am there – need to pay for the PD day. Talk about Rate Breaker Package, our innovative prod-uct that recently won us a Best Innovator award. Want to make sure the brokers are all over that.

11.30am: Back to the office. Meet with the product team and discuss some policy and process enhance-ments for our next phase.

1.00pm: Quick bite with David. Sort out the after-noon with what he needs to do around home, as I will be home late.

2.00pm: Teleconference with one of our major partners and our IT department to progress our new lodgement platform.

3.00pm: Proofread our next newsletter with the marketing department.

3.45pm: Fresh coffee, and I lock myself in an office to catch up on some emails.

4.30pm: Call to my daughter, Nekisha, to make sure she got home and that she is on to her homework. David has the afternoon under control, Nekisha is sorted, and I have an hour left in the office to return some more calls.

5.00pm: Ring two of our bigger brokers and thank them for their feedback. Great news – they are very positive about our new structure and process. I ask them to share the news, and shoot a note off to the BDMs and broker support team to share the feedback.

5.30pm: Pack my bag with some reading to do tonight (or it might have to wait till the morning).

6.35pm: Get home. Check in on the family. David has done a good job – dinner is underway, Nekisha has her homework done, and pets are fed. We pick up our conversation about our next camping trip and start some more planning.

“Ring two of our bigger brokers and thank them for their feedback. Great news – they are very positive about our new structure and process”

Natasha Kelso

JULY 2013 | 63

01| CHECK IF IT’S TRUEThere may be some truth in it. Make an honest

appraisal of yourself. Do you have the qualifications and experience you need? If not, do what you have to do to get them. Even if you do have the qualifications, make sure you improve your profile and continue to build experience: go to school, shadow an expert, find a mentor, write a book, get some media coverage. Make sure no one can deny you’ve got the skills.

02| WORK IN A YOUNGER MARKET Find a market that wants young people

– for their ideas, for their connection with the customer, for their energy. Specialise in finance for the under-25 market: young entrepreneurs, tradies who have been working since they were 15, kids who have inherited a fortune. Make being young, up-to-date and technologically savvy a selling point, and market that selling point. It’s only valid for a window of time (because you will get older), but it’s a niche and it will allow you to sell yourself more effectively.

03| IS IT AGE OR AUTHORITY?Are people concerned about your chronological

age or about your air of authority? If it’s about authority, there are ways to build that.

People wearing white coats and carrying clipboards are more trusted than those wearing civilian clothes. Find the equivalent in your business of a ‘white coat and clipboard’, and use it. This could be glasses, hairstyle or a suit. Perhaps it is certificates on the wall, or regular features in a trusted publication, on TV or radio. When you have authority, age becomes less important.

Make sure that you look credible and experienced. When he was in his twenties, my friend Jeff used to wear glasses with clear lenses to make him look older. Anne, who was young at the time, wore black all through her twenties and thirties. Use people like image consultants to make you look good – and more credible.

GETTING AHEAD

04| GET TESTIMONIALS FROM ‘GREY HAIRS’

You may be young, but you’re not too young to be good at what you do. Get grey-haired and mature clients to endorse you. Get them to start the testimonial with the objection and then counter it: “I was worried because Mary was so young. What I found was that this made her more tenacious, better informed, and more recently educated than the last guy I dealt with…”

Get their photos for the testimonials, and use them. Ask them to dress authoritatively for the photos (suits are especially good). Seek people with good job titles and public positions and be willing to ask them to endorse you. It’s about credibility, authority and social proof, so the bigger the fish, the more value you get.

05| DON’T WORRY; YOU’LL GET OLDERIn the end, the age and experience will come to

you (whether you want it or not)! Make sure you capture and continuously update your look, CV, testimonials and approach to take advantage of your changing circumstances. Don’t get caught in someone else’s definition of you.

When you are old, grey, and rich, you’ll be able to look back and wonder at your energy, commitment and get-up-and-go. And that you convinced everyone you knew what you were talking about.

Cindy Tonkin is the consultant’s consultant. She is the author of

seven books, including the AIM bestseller “The Australian Consultant’s Guide: Setting up

your Consultancy Business Profitably and Painlessly”.

Sign up for her newsletter at consultantsconsultant.com.au.

WHEN THEY SAY YOU’RE TOO YOUNG AND INEXPERIENCEDSo you’re being bashed about how young and inexperienced you are. Here are a few strategies to try

MPAMAGAZINE.COM.AU

64 | JULY 2013

BUYER TRENDSData from Yourmortgage.com.au shows the borrower breakdown for year-to-date

15% $0-50,000

25% $50,001-75,000

25% $75,001-100,000

35% $100,000+

ANNUAL HOUSEHOLD INCOME

None One Two Three Four58% 14% 22% 5% 1%

HOW MANY DEPENDENTS DO YOU HAVE?

No

44%

Yes

56%

ARE YOU BUYING WITH A PARTNER?

http://www.rpdata.com

http://www.australianmortgageawards.com.au

http://www.commbank.com.au

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