TOP 25 BROKERAGES 2011

The Adviser ranks the Australian brokerages that have made the most of market conditions in 2010

GETTING TO THE TOP

A NOTE FROM THE PUBLISHER

THERE’S LITTLE question about the calibre of Australia’s leading broker groups. These are the brands synonymous with mortgage broking, and include some of the best known names, not only in mortgages but across corporate Australia.

It is this brand depth that has helped to give greater credibility to the industry and its service proposition, and these groups will continue to lead the charge in terms of innovation and development.

But it’s not just the big brands that have given weight to the expansion of the industry. Indeed, it is the smaller operations – those with three to six loan writers – that are the very backbone of broking at a local level and that play an essential role in the overall future of the industry.

This year’s Top 25 Brokerages report has once again reaffirmed an industry in its ascendency. While some groups have maintained volumes – and others have surged ahead – they’ve done so at a time of increased compliance and attrition in broker numbers. What shines through is solid productivity and a coming of age for the industry.

We’ve now entered a new era of professionalism, with our industry supported by the firm bedrock of its leading groups. Congratulations to this year’s Top 25.

Jim Hall

Publisher, The Adviser

PARTNER’S MESSAGE

IN THE following pages of The Adviser, you will find the results of a rigorous survey to establish Australia’s Top 25 Brokerages.

The results are based on performance in calendar year 2010. It has been a challenging one, but we still see impressive performances by a number of brokers in these tougher conditions.

It’s important we celebrate success as well as look forward to what lies ahead. In 2011, brokers will have had more than a full year of NCCP regulation, dealt with a flat property market and possibly low consumer confidence, and witnessed the introduction of the exit fee ban.

Our industry is changing constantly, impacted by local and global economic environments, and the increasing need for professionalism and quality. However, opportunity also awaits us, with changing industry dynamics as well as game changing trends like mobility and social media applications.

In 2010, brokerages laid the foundations for their performance in 2011. Is what worked for them last year also working this year? Will the big names of 2010 also be the big names of 2011?

The recognition of Australia’s top brokerages is important for our industry – particularly as brokers this year face new challenges – and RP Data is proud to partner The Adviser in ranking Australia’s Top 25 Brokerages.

As expected, the large, well-known brands have performed strongly and dominate the top ranks; but once again, some of the smaller operations have also achieved recognition, demonstrating that all industry participants should be confident about having the opportunity to succeed.

RP Data welcomes the opportunity to work with the industry to increase the profitability of all industry professionals regardless of size or experience – through the development of expert information services that improve customer growth, operational efficiency and compliance.

Congratulations once again to each of this year’s Top 25 Brokerages and to the individuals that have contributed to their success.

Graham Mirabito

CEO, RP Data

THE BEST OF THE BEST

With the broking industry’s professionalism and its standards increasing, a select few brokerages have delivered outstanding performances to earn a place in The Adviser’s Top 25 ranking

IN 2010, brokers finally turned a corner after the battering they – and the economy – received during the global financial crisis and well into 2009.

Lower interest rates boosted the demand for property from first home buyers, while investors were once again eager to scout the market for a bargain.

Borrowers’ confidence was back with a bang; the economy was going from strength to strength; unemployment fell to a new low; and the mining sector was booming.

Mortgage brokerages which previously had focussed on providing excellent customer service were able to capitalise on this renewed buyer demand – and many now find themselves on The Adviser’s Top 25 Brokerages list.

RANKING METHODOLOGY

In ranking Australia’s Top 25 Brokerages, The Adviser applied a robust assessment process to ensure all participating brokerage groups were on a level playing field.

To be eligible for consideration, a brokerage needed to have at least five brokers, all of whom were operating under the same brand.

Brokerages were invited to complete an online survey, data from which were compiled and then assessed against agreed criteria, including loan book size, loan volumes, number of loans written, business growth and broker productivity.

Brokerages were then ranked from one to 25 based on a comparative assessment of these key indicators.

GETTING TO THE TOP

Many of the nation’s leading broking businesses have size, therefore the ability to leverage economies of scale, behind them. This, combined with a client-centred approach and a passion for improvement, has helped many of them make the top end of the list.

However, the quality of their achievements is often equalled and even exceeded by the country’s top boutique operations – those brokerages that operate within a particular region or market segment.

The performance in the ranking of the larger brokerages has certainly been helped by the size of their volumes, their loan book, the number of loans written and their broker numbers.

Larger groups obviously have strengths and resources that can help them achieve excellent growth, regardless of the field or market sector in which they operate.

Aussie continues to be Australia’s biggest brokerage in terms of broker numbers.

With more than 790 brokers operating under the Aussie brand, the brokerage boasts 275 more brokers than its nearest competitor, Mortgage Choice, which has 515 loan writers operating under its network.

Aussie wrote more than $10.72 billion in residential mortgages in the year to 31 December 2010, the highest of any of the brokerages ranked.

However, these figures don’t tell the entire story.

In a scenario very similar to last year’s ranking, Aussie’s rival Mortgage Choice was able to secure the top position due to the group’s higher productivity.

Mortgage Choice’s productivity in 2010 – expressed as dollar volume per broker – stood at $16.89 million per broker. This compares to Aussie’s very respectable productivity of $13.57 million.

Mortgage Choice’s 515 brokers managed to write $8.7 billion in residential mortgages during 2010

That said, Aussie still has the largest number of brokers and was able last year to write the greatest dollar amount of residential mortgages.

A ROBUST INDUSTRY

The range of brokers that appears in the Top 25 Brokerages ranking bears witness to a diverse and robust industry, something that will stand it in good stead following the introduction of NCCP regulation.

Big name brands such as Mortgage Choice and Aussie have reaffirmed their dominance, but there’s still strong representation from other groups.

Australia’s smaller or boutique brokerages’ solid performances in the productivity area helped catapult some of them into the ranks of the Top 25.

Non-franchise brokerage Tiffen & Co, for example, was ranked tenth with an operation comprising just 10 brokers, but with broker productivity at year end 2010 of $31.1 million.

Even productivity, however, is not the final measure of a brokerage’s success.

After profiling each of the nation’s Top 25 Brokerages, The Adviser can reveal that client retention, lead generation, marketing, brand, training and education and diversification all play key roles in determining a brokerage’s overall success.

These factors will play an important part in determining who makes the cut for next year’s listing of The Adviser’s Top 25 Brokerages.

PICKING A WINNER

This year’s Top 25 Brokerages report has again highlighted that the nation’s leading groups share a number of successful traits that help ensure business success

AFTER A torrid 2008 and 2009, 2010 was – for the most part – a good year for many of Australia’s brokers.

The major banks began to reengage the market, opening up lending by easing policy and beefing up maximum LVRs to near pre-global financial crisis levels.

A more relaxed approach to lending was supported by interest rates remaining relatively low by historical standards, encouraging property buyers to invest, upgrade or refinance.

The Adviser’s Top 25 Brokerages ranking identifies which businesses made the most of market opportunities.

In analysing the results of this year’s ranking, it is clear that the nation’s top brokerages share common traits that have ensured they have been commercially successful.

From the capability to generate a steady stream of leads, to attracting and retaining top quality brokers, there is considerable value in gaining an insight into what it takes to run and operate one of Australia’s leading brokerages.

BRAND

All of the Top 25 brokerages effectively highlight the benefits of having a strong brand, but perhaps none more so than Aussie.

Since opening its doors in 1992, Aussie has managed to cement itself a place in the hearts of everyday Australians.

Aussie executive chairman John Symond’s iconic slogan, “at Aussie, we’ll save you” has worked its way into the Australian lexicon, and is as uniquely Australian as kangaroos or the Sydney Harbour Bridge.

This catch phrase along with Mr Symond’s strong presence in the Australian media, have helped the brokerage successfully create a recognisable brand that consumers associate with quality and reliability.

But, according to Aussie’s general manager of marketing, Stuart Tucker, the brand wasn’t just built overnight.

“It takes years to develop a reputation that is as solid and steadfast as Aussie’s,” Mr Tucker explains.

“It also takes consistency and saturation.”

According to Mr Tucker, the company adheres to a very structured marketing campaign that helps reinforce the branding and allows the company to remain in the forefront of customers’ minds.

“We have a very aggressive and a very proactive approach to mass media marketing,” Mr Tucker says.

“We advertise on television, radio and in print. This helps us stay in touch with our clients and potentially generate new business leads for our broker partners.”

In addition, Aussie also actively engages with social media to ensure the brand is touching as many people as possible.

“We understand that people are now connecting and interacting through Facebook, Twitter, LinkedIn etc.

“Social media has, in many instances, replaced other forms of communication such as telephone calls, texts and even emails. Companies that ignore social media do so at their own peril.

“Social networking is the way of the future, and if you are not embracing it, you are going to be left behind,” Mr Tucker says.

This perhaps explains why Aussie recently appointed a dedicated social media team.

But while social media appears to be the new business frontier, Mr Tucker says you can’t overlook good old fashioned marketing techniques when driving a brand.

The company actively sponsors many sporting teams including the NSW team in State of Origin.

“Simple things like sponsoring a football team really help drive your brand forward, because it puts you in the face of potential clients,” Mr Tucker says.

CLIENT RETENTION

But while a strong brand presence will ultimately help a brokerage attract new business, it can also be a powerful tool for retaining business and deepening client relationships.

Mildura Finance Limited understands the impact good client relationships can have on a company’s bottom line.

The company’s owner Peter Schroeder says it is much easier to retain a client than to have to find a new one.

This is why the company takes a very regimented approach to marketing.

Mr Schroeder says the company sends out a monthly newsletter to its entire client database in a bid to stay front of mind.

“We don’t just send out any old newsletter though,” he says.

“We make sure our newsletters are informative and worth reading. We give some analysis of what is happening in the market as well as other interesting titbits.”

In addition to its monthly newsletter, Mr Schroeder says the company also engages with the local press and gives opinion and comment whenever possible.

“If people read your name in the local paper, they come to think of you as respectable and informed, both of which are essential to the success of a mortgage business. We need to be seen as educated, trustworthy advisers, otherwise our clients won’t continue to use us and our services.”

But it is not enough to just have your ‘mug’ in the paper every now and again or send a bulk newsletter to your entire client database, Mr Schroeder says.

It is also important to show each individual client that you care about them.

To stay in touch with each client, the brokerage sends out birthday cards and Christmas cards.

“It is simple techniques such as this that have helped us secure a significant amount of business over the years,” Mr Schroeder says.

“Not just repeat business, but referred business as well.”

LEAD GENERATION

Any brokerage worth its salt will always have a steady stream of referral leads.

Referred business is a broker’s bread and butter and staying in touch with existing clients is an excellent way of generating new and promising leads.

But while some brokerages rely on positive word of mouth to drive new leads, others prefer to take the bull by the horns and create a referral partnership with another company.

Loan Market Group is one such company.

The brokerage has a referral partnership with leading real estate group Ray White.

According to the group’s chief operating officer Dean Rushton, the partnership provides Loan Market’s brokers with a steady stream of warm leads.

“Cold leads that are generated through advertising, branding and the internet have a lower conversion rate than warm leads suggested by existing clients or a referral partner,” he says.

“The leads we receive from Ray White estate agents are all warm. The client has a relationship with the agent and so consequently trusts them when they recommend seeing a Loan Market mortgage broker.”

But Mr Rushton also sees value in the generation of cold leads.

“At Loan Market, we have what I like to call a dual business creation channel. We generate leads for our brokers through two different avenues,” he says.

The first avenue is of course the company’s relationship with Ray White. Alternatively, brokers can source leads from Loan Market Group’s own marketing initiatives.

“These leads may be cold, but for those brokers that play their cards right, they turn out to be very lucrative business builders,” he says.

“As far as I’m aware, there is nobody else in the market that uses duel channels to help create business for their brokers.”

TECHNOLOGY

Bernie Lewis Home Loans is another brokerage with a strong focus on lead generation. Bernie Lewis leverages its online presence and this has been a major contributor to building a solid loan book.

But it is not the only strategy that has helped the company achieve success.

During the last financial year the brokerage settled $502 million in residential home loans, in part based on the significant investment it has placed in developing its technology platform.

Last year the company officially rolled out a new platform to its broker partners that promised greater productivity and a more simplified loan writing process.

Internally referred to as “avenue”, the company’s chief executive officer Stefan Lipkiewicz says the platform helps brokers diversify their core offering and cross sell wealth products to their clients.

“All the data that a broker records about a client for the mortgage application is saved and automatically uploaded onto our wealth management system,” he says.

“So, if brokers look to diversify away from residential mortgages, they won’t have to ask the client all the same questions again as the new applications have been populated with that client’s personal data.”

While the broker response to the new technology platform has been overwhelmingly positive, Mr Lipkiewicz says training brokers to use the new platform was not without its challenges.

“It has taken some getting used to, but we are starting to get there now. We weren’t just pushing brokers on to a slightly different software platform, we overhauled the way they do business,” he says.

Mr Lipkiewicz says he expects it will take another 18 months before all of the company’s brokers fully understand exactly what the new software can deliver.

“Those that have made the change, have been amazed. We have seen a 40 per cent increase in broker productivity already.

“I expect 18 months from now, once we have all brokers completely on board, we will see a 50 per cent increase in productivity across all our broker partners.

That is how good the software is.”

PRODUCTIVITY

Technology and productivity are very closely linked in mortgage broking.

The greater the efficiency of a brokerage, the more effective its service – and this can have a major impact on a business’ bottom line.

By streamlining systems, application forms and other aspects of its operations, a brokerage can turn loans around faster and with much greater ease.

Tiffen & Co & The Mortgage Detective knows just how much of an impact quality software can have on a brokerage’s productivity.

The company boasts a comprehensive and user-friendly platform, which it believes is behind its high productivity levels.

In 2010 the company’s brokers wrote an impressive average of $31 million – slightly down on the $33 million achieved last year.

The brokerage achieved a record month in May, writing more than $48 million in loans.

“That’s almost $6 million per broker,” Ms Whittle says.

What does she attribute the brokerage’s astonishing result to?

“An easy to use software system, hard work, and a sound client retention strategy,” she says.

“We just had our big movie night for the year, where we take 600 of our best clients and referral partners for a night out.”

“We don’t use the movie night as a way to push company propaganda on our business partners. Rather, we think it is important to do something that shows them how much we appreciate what they do for our business.”

Ms Whittle stresses it is critical that brokers stay in touch with their clients on a regular basis.

“We have various touch points throughout the year. The more regularly you interact with your client database, the more likely you are to generate repeat or referred business opportunities,” she says.

However, Ms Whittle says the company’s record result can also be attributed to the company’s new mentor program.

“We have recently started using sales mentors, which has had a really positive impact on everybody at the company. It has given our sales team a lot more confidence.”

TRAINING AND EDUCATION

Tiffen & Co & The Mortgage Detective is not the only company to embrace a mentoring program. LJ Hooker Financial Services also uses a mentoring program to great success.

“We don’t just want to provide a basic level of training and education to our brokers, we want to help them run a very successful business,” LJ Hooker Financial Services general manager Peter Bromley says.

As part of its education and training, LJ Hooker Financial Services provides each broker with a coach who can help them write a business strategy and stick to it.

“You would be amazed at how many brokers do not have an effective business strategy in place.

“They just don’t think they need one,” he says.

Mr Bromley also says many brokers don’t know how to create an effective business strategy, which is where the business coaches come into play.

“Each broker is given the chance to work with a corporate professional as well as one of our top performing loan writers to help them craft a business strategy.

“The response has been overwhelming. But perhaps more overwhelming are the results.

“Brokers that really take the time to engage with their business coach are 20 to 30 per cent more productive than other brokers, which is just phenomenal,” Mr Bromley says.

In addition to providing a business coach, LJ Hooker Financial Services also makes its new brokers attend a two week training course that teaches them how to interact and work with real estate professionals.

“We obviously have an excellent referral partnership with the LJ Hooker real estate group. All our new brokers are given the chance, during their training, to meet the estate agents they will work with and to form a rapport with them.

“Brokers cannot expect to sit back and watch the leads roll in; they have to work with the estate agents, and we teach them how to do this in our training program.”