The five-step approach to providing sustainable solutions in a time of crisis.
Many of the brokers in our network have aptly described the current climate as an “onslaught”. Feeling peppered by bullets of unpredictability and uncertainty from all directions is affecting us all, as we battle such unchartered territory.
In these unprecedented times, it’s crucial to be adaptable – which is challenging when instinctively it’s tempting to “hold your turf” (or conversely climb under a rock) and wait for the storm to pass. Though while a blissful thought, it’s absolutely unsustainable.
We’re now experiencing the “trifecta” of major legislative disruption, prolonged natural disaster and now an all-encompassing pandemic that’s expected to adversely affect 86 per cent of businesses over the next few months. The only way for business in general, as well as in the broking sector, to survive (and thrive) right now is to discard how things were and focus on shifting the parametres of “business as usual”.
In 1859, Charles Darwin argued that “cohesive communities were resilient communities, and resilient communities were those deemed most sustainable”.
There’s no doubt that the mortgage broking profession is both resilient and sustainable. The unity demonstrated by industry bodies, associates, aggregators, lenders and brokers alike has created an enviably tight-knit community with strong foundations that is well positioned to manage adversity. That said, long-term survival will depend on how agile we can be in reframing our response.
As an industry veteran, my caution to the profession is to realise we’re currently in a “false summer”, whereby brokers are uncharacteristically busy managing the pipeline of deals coming to fruition from the past few months in tandem with the unexpected and often urgent requirement to resolve disruptions caused from recent events. While it feels like this tornado is nauseatingly perpetual, this frenetic state won’t last. And when it redirects, then we all need a plan to remain viable.
We’ve found that, particularly in times of heightened emotions triggered by often extreme anxiety, it’s important to not “knee-jerk” when providing solutions, as this often bypasses the true understanding and curated problem solving required to develop sustainable outcomes. This starts with clearly distinguishing between a “situation” versus a “scenario” to avoid providing superficial responses that provide initial, versus ongoing, relief.
In this context, the “situation” is what’s happened (i.e. the state of affairs, such as not being able to deliver a mortgage payment). Conversely, the “scenario” is the underlying contributor (i.e. unexpected unemployment and/or reduced salaries in stark contrast to existing debt/outgoings that create imminent mortgage stress).
How we respond to clients’ current and emerging environments is critical in amortising their exposure.
There’s a five-step approach that we recommend to be applied in such times to help clients transition through a state of distress. This reinforces brokers’ position as advisers and notably ensures that deal flow continues. To dissect these elements:
1. Be informed: The tremendous upside of the pandemic are the stimulus initiatives that continue to be developed to support individuals and businesses throughout the crisis. It’s essential to remain across the general principles of what’s being offered and consider how these may be of benefit to your clients. However, cut through the hype and ensure your information is from a legitimate source, such as the Treasury. Conversely, don’t rely on the snippets of news that comes through on your social media feed. We highly recommend collaborating with an accountant to provide clients with a holistic solution.
2. Be empathetic: More than ever, the simple question of “How are you?” has true impact. Most people are feeling the effects of isolation and fear. To be asked how you are, with a genuine investment in the response, is extremely powerful, appreciated and remembered.
3. Listen: Your job is to listen, not solve at this stage. Probe with your questions to assess your client’s current circumstances and importantly, get an understanding of their future exposure. This can be achieved by conducting a financial health check and should include assessing debt-to-income ratios in relation to current and potentially impacted future earnings. Keep in mind that for many, exposure may be compounded by chronically bad savings, with many households having little to no financial buffer.
4. Focus on the scenario (problem solving): “Triage” your problem solving by using scenario mapping. For instance:
- Scenario A (reframing “business as usual“): Explore the immediate situation and identify corresponding pressure points.
- Scenario B (substantial negative effect): Identify areas of difficulty that could lead to further discomfort, without being catastrophic, such as further lockdowns, trading halts and salary cuts.
- Scenario C (major disruption): Investigate situations that could lead to “worst-case scenario”, such as job loss, business closing etc.
5. Provide a staged solution: Prepare a staged plan that addresses each phase with specific tactics (i.e. refinancing, debt consolidation, obtaining a line of credit, securing a business loan or selling assets) and schedule formal assessments to stay ahead of the game.
In the meantime, thank God there are trails. They have always provided stability and confidence. And now more than ever, trails are the backbone that will help brokers weather the storm.
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Nick Young is a results-driven specialist who has more than 20 years’ experience in the mortgage broking industry, and now heads Trail Homes: Australia’s most established and longest serving trail book purchaser.
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