In this episode of Elite Broker, Tony Bice from Finance Made Easy explains why he’s driven to control his own destiny through mortgage broking, and shares his unique journey into the industry – from how he first “stumbled” into broking during its infancy, to how he later merged his broking and financial planning experience into a thriving business.
In this episode, find out how this broker:
- Came to broking from a banking background
- Made risk insurance products affordable to clients
- Has prepared his business for potential industry disruption
James Mitchell: Hello and welcome to Elite Broker. I'm your host James Mitchell, editor of The Adviser, and we're joined once again by our lovely co-host, Annie Kane. How are you doing, Annie?
Annie Kane: I'm fine thanks James. How are you?
James Mitchell: I'm very good thank you. We've also got Tony Bice with us today. He's not in the studio but we've got him on the line. Tony's a bit of a veteran when it comes to mortgage broking, and he's also a qualified financial planner. So we'll hear all about his story now, we'll patch him through. Tony, are you there?
Tony Bice: Yeah, yeah I sure am. How you going James?
James Mitchell: Yeah, good thanks Tony. How you doing?
Tony Bice: Good mate, good.
James Mitchell: Good. How's business been?
Tony Bice: It's been good. I've actually been flooded with leads. Remember I told you I've set up this joint venture with a company called Debt Negotiators?
James Mitchell: That's right.
Tony Bice: Yeah, well I've actually created a real monster James. I've been absolutely flooded with leads. A lot of them spin the wheel, so I feel as if I'm inundated with inquiries and leads but I'm not getting as much traction as I could if it was referrals or existing clients so it's just part and parcel for the business. But it has taken up a fair bit of my time in so far as trying to write as much risk as I have been over the last twelve months. It'll all fall into place, I've just got a few new staff that I've brought on so I'm training them up as well.
Annie Kane: Can you tell us just a little bit more about that please Tony? Just how you got involved with Debt Negotiators and what you're actually doing with them?
Tony Bice: Oh. They're one of the largest partner-owned denigrated companies in Australia. And I met with the managing director about three years ago, for no other reason than I could see that there was a gap in their sales process whereby they could help out most clients that have got debt problems for consolidation, but when a client has a property and they've got a certain amount of equity in it, well it actually falls outside their parameters. So they were just letting those ones go and unable to assist them, "Go back to your bank. See, here you go."
Well a lot of the clients would go back to the banks, and obviously the bank didn't have the policy that fitted their requirement. So I'd picked this up in a conversation I'd had with one of their staffers about three years ago, and then sat down with their MD and put an agreement in place. And since then I've probably received anywhere upwards from a dozen leads a week, 15 leads a week, and I contact each one of those clients after they've initially contacted Debt Negotiators. Then I sit down with them and I work out a way in which we can restructure their finances to consolidate all of their personal debt that they're struggling with, put it into a manageable loan, under NCCP of course, and then I cross sell the risk insurance and superannuation as part of my financial planning business.
James Mitchell: This is-
Tony Bice: It's going well.
James Mitchell: This is something which I know, Tony, you and I have spoken about many times over the years but for the listeners out there, for the brokers who may not be too familiar with your story, tell us a little bit about how you got into financial planning, or maybe take it back a bit further actually, how you got into broking to start off with, and then how you progressed into planning as well, because it's quite an interesting story.
Tony Bice: Okay, okay, well all right, I spent nearly 20 years working for the Commonwealth Bank since I was a young lad about 18, so I started off as a teller like most of the young guys working now. Went through the ranks got into personal lending as a loans officer and then I was fortunate enough to be able to get a redundancy when the bank CBA, merged with Colonial. And that was my choice. And I then stumbled into the mortgage broking industry, when it was right in it's infancy.
When I started in the aggregation or the mortgage broking side of the business, there was only about 2 per cent of all loans were actually written through the third party channel. And I started with Law Fund, funnily enough, and they were an aggregator back in the early 2000s, 2001-2-3-4-5, around then. And they were quite large at the time and instead of going in as a mortgage broker I actually went into the senior management side of the business and I was the national manager for sales and then I, later on I became the general manager. I sat back at that stage in the early 2000s and I could see just how lucrative it was to be a mortgage broker. But at that stage I still didn't have the experience and I was more on the senior management side. But after a couple of years, the law firm actually got bought out by First Folios so I took the opportunity at that time to get all my accreditations and become a mortgage broker and then I drifted out of senior management side of aggregators, if you like, and started up as a mortgage broker.
I started doing that in the early stages 2005-6-7, around then. And after learning so much on the other side from how brokers actually work, it was quite easy for me to make the transition. But then, you may remember, this is probably before your time, but, Westpac around 2007-8 from memory, they actually flashed the upfront commission from point seven down to point five overnight. And I remember it clearly, it was kind of like, "well, gee-whizz". And it struck me, as a broker or even as an aggregator we had no control over, at that stage, what the banks could do with regards to our remuneration.
Annie Kane: Yeah.
Tony Bice: I remember speaking to a senior mortgage broker at the time and said "gee-whizz, if Westpac can do this what's to stop CBA from doing it and ANZ and NAB and Quarry Bank?" and he said "yeah, you're right", and I said "what are you going to do?" and he said "well I think I just going to have to write more business". And I'll never forget it. So I thought, you're going to have to write twice as many home loans to bring in roughly the same amount of remuneration as you've been getting in the past.
Annie Kane: Hmm.
Tony Bice: And I thought to myself at the time, there's got to be a better way, so I started toying with the idea about what was good fit with a mortgage broking suite of products, namely the home loan and investment home loan. That's when I started to gravitate towards risk insurance and the like. And I remember thinking to myself, becoming a financial planner, that sounds really, really scary, gee, I don't know whether I'm up for that. And all I did was buddy up with friend of mine and we went and got our Diploma in Financial Planning, which took us about six months at the time. And then having a buddy made it easier to do the course and then we basically stumbled through it together with regards to finding a dealership, getting all accreditations with the insurance groups, just like you find an aggregator and you get your accreditations with the banks. And once we got all that in place it was then a matter of, "Okay, righto, we've got our diploma, we've got dealership, we've got our accreditations, now how do we do this?"
For the next two years I struggled with writing mortgages and then cross selling the obvious products such as life insurance, critical illness, income protection and total disability. Mainly because at that stage I was trying to sell a monthly premium of anywhere upwards of two or three or four hundred dollars a month to a client that had just taken out a home loan and was already going to paying $2500 a month in their mortgages. So a lot of my business, for the work I was doing, wasn't being set, and they were just knocking it back and saying thanks, I understand what you're saying, but it's all a little bit too expensive for us at the time. And it wasn't until I sat down with Cal and a number of other insurance groups that I started to understand a better way to structure risk insurance so we could make it affordable and that was to put it inside their super.
James Mitchell: Yep.
Annie Kane: Right.
Tony Bice: So I started to look at that, got trained up. It took me couple of months and then I started to restructure my risk statement of advice plans so that it would be more affordable. When you get life insurance, the bulk of your critical ... Your income protection premium, and your total and permanent disability premiums inside your super, and it was deducted annually and automatically. So I did that and I found that the whole life tee-grid-ay, protection and critical illness could be sold a lot more effectively if the client only had to pay $50-60 per month.
Annie Kane: Yep.
Tony Bice: So I've been doing that since about 2000 – for the last, I don't know, eight or nine years, but what I had to do then was seriously think about how I was gonna have the time to be a mortgage broker and be a financial planner at the same time, it's a challenge.
James Mitchell: Yeah, of course.
Tony Bice: What I then did was I sought out a para-planner, I bit the bullet and I realised I was gonna have to pay the para-planner a fee per plan or per statement of advice, and that was up to me to then sell it back. So I factored in those fixed costs in my budget, got the para-planner to prepare a statement of advice on every occasion and then over the last six or seven years, I fine-tuned my sales process as well as bringing on a financial planning processor, so then I could then juggle and just concentrate on just selling the plan back to the client.
If you look at the financial planning part of my business, I'm the salesperson, I basically bring the initial concept of the importance of risk insurance to the table, then I outsource the structure of the statement of advice and all the supporting documentations that my para-planner needs. When the statement of advice comes back to me, I then chuck it up into a nice summary email that's easier for the client to understand, and now I sell it back to the client at the peak of the buying cycle, which is around about conditional approval of their home loan.
There's no point trying to sell a risk plan to a client at the time of settlement, because they won't be interested, they've got the full picture at home-
Annie Kane: Yeah.
Tony Bice: -and it's not on their radar.
James Mitchell: That's a good point.
Tony Bice: If you bring the process down to an important stage where they're listening to you, which is around the time they're sweating on the conditional approval, then the client gets it. That's what I've found success in. It's a lot to do with the process I've put in place, but the process doesn't work if it's not sold with the client at the key point in the transaction.
Annie Kane: And how long did it take you to realise that? Was it a sort of trial-and-error process or did you start off with that sort of timing?
Tony Bice: It's a bit of a trial-and-error process, I mean I did lose quite a lot of business in those early stages because I was struggling with the whole workload thing, and I was not getting the risk insurance to the client as a tool to talk to them about it until later in the process. And I realised that I was wasting my time. So now that I've brought it forward under a suck-it-and-see, it's actually working very well.
James Mitchell: Tony, one thing that's really interesting about your story in terms of why you decided to go into broking and planning is because the banks made a decision that was impacting your remuneration, and then you had the foresight to think "How can I put some parameters in place, or sort of diversify exactly – sort of like "safeguard my income for the future". And it comes at an interesting time, because a lot of that talk is happening right now. Obviously we've got the ASIC review happening, we've had the Sedgwick final report come out-
Tony Bice: Sedgwick, yeah.
James Mitchell: -we've obviously run news on it and we've been inundated by comments from brokers, and some of them, sadly, are saying things like "I'm gonna exit the industry"-
Annie Kane: Yeah, a few of them.
James Mitchell: -and things like that, which is quite sad to read. Where did you get that resilience, or foresight, to take a different route?
Tony Bice: Anybody that becomes a mortgage broker in the first place, including myself, made that decision because they wanted to control their own future. Being self-employed certainly comes with a lot of perks, insofar as you don't have to answer to anyone, there's no office politics, and all the stuff that goes with working for a boss. I think the initial force to become a mortgage broker were heavily weighted towards me wanting to control my own destiny. I think the likes of wus-pac at that time, and the other banks that followed suit fairly shortly thereafter, they just reaffirmed my desire to want to control my destiny even more.
I wanted to make sure that I would live and die by how successful I was gonna be, based on how much I was earning without having to be dictated by the industry, if you like, with banks. I guess once I started to see the remuneration and the value that financial planning was putting to my bottom line, it just drove me further to make sure I got it to work. I guess at that time I realised pretty quickly that there are only so many hours in a day, and I've read so many articles and comments from people, industry-makers over the years that have said "stick to your own, you can't be a jack-of-all-trades, you're a broker, you stick to being a broker", and all that sort of stuff.
I hear that, but I guess at the end of the day, if you do it correctly, and it does get back to your ability to be able to sell, feel comfortable with risk insurance as an add-on or as a product that goes hand-in-hand with the mortgage, but more importantly, you've got to have the resources around you. I mentioned a para-planner as being a critical part of my business.
Annie Kane: Yep.
Tony Bice: My para-planner knocks out about six plans per week for me, and then I also have a financial planning processor. Again, without the financial planning processor, just like I have a home loans processor, I wouldn't be able to do what I do. My planning processor is responsible for taking the initial application off the client, which includes all their medical history, putting the application in online, and then organising a roll-over of their superannuation from where it is to where it needs to be, in order to get the platform to put the products inside that super.
Those administrative tasks are all done, like my home loans processor looks after the processing, the transactions from initial submissions through the settlements. If you think about it, all I've done is really ... looking in a mirror, I've duplicated what we do in home loans with regards to selling a home loan product, getting a lead, getting the client comfortable, taking an application, selling the home loan, getting it, putting in it the system, ordering eval, doing the process, liaising with the banks, the river-sale agents, the solicitors, all done by my home loan processor.
Flip it over, and on the other side you have my financial planning processor doing exactly the same thing. Taking the application for the risk insurance, not the home loan, organising the application to be put in online, which I don't do, and then organising the rollover to super, which I don't do. So I sit back and just manage both sides of the business, jumped up at a sales level, but ensuring the client gets the best of both worlds throughout the transaction, through the settlement.
At the end of the settlement of the home loan, every one of my clients were told right back at the start when I'm talking to them on the phone, when I've got their inquiry, "we're gonna look after you to the point where you're gonna get your mortgage and your financial all sorted out, and you're also gonna have your financial plan all sorted out. So when you get your keys to your house, not only is your mortgage gonna be in place and ready to go when you're buying your home, or moving your home, but you'll have everything protected at that time".
The client doesn't see a lot of work that goes on behind-the-scenes, they basically get their home loans sorted, they get their risk insurance's superannuation sorted, and then I'll roll it up with a gift basket that they get at settlement, that just puts the icing on the cake.
James Mitchell: Fantastic. I just want to get your thoughts around the current climate at the moment in mortgage broking, there's a lot of uncertainty up in the air. But there's also a school of thought that says "don't listen to the noise, just stick to your knitting and get on with what you do best". What are you feeling at the moment?
Tony Bice: I've been playing around in this space for nearly 17 years now James, and what you just said is what I always do. I don't worry too much about all the noise that happens within the industry, Sedgwick reports, and all these other things that are impacting, and "who's ending the businesses, who's leaving the business", all this sort of stuff. Because you can't control it. If a mortgage broker sat down and freaked out about every piece of industry news that's going across their table, I'd be a nervous wreck. What I tend to do is just push it to one side and keep going with what I'm doing.
I'm still providing the same amount of business I have been for years, regardless of all the other things that are happening within the industry. I guess being a financial planner as well as a mortgage broker gives me that extra little bit of comfort, that if things do tighten up, if things get tougher, if remunerations do get flashed or reduced or changed or anything along those lines, then I've got the comfort of knowing I'm still gonna be a mar-lee front with what I'm getting on the other side of the business, with regards to risk insurance and superannuation as well.
Annie Kane: I just want to ask, Tony, a little bit about the changes to the financial planning education requirements that were announced recently. Talking in how about 2019, anyone new coming into the industry needs to have degree-level education. From 2024, anyone who is currently a financial planner needs to have a similar type of education. Do you think that's gonna make it harder for people to enter into the industry that haven't already got financial planning qualifications? Are you planning to ... Are you going to take the steps to get the qualifications needed to continue financial planning, or do you think you'll stop?
Tony Bice: I don't think I'll ever stop. If I was to stop that would be a major mistake.
Annie Kane: A step backwards.
Tony Bice: I'd probably gotta realistically, I'd like to go for another ten years. I think by stopping now, that'd defeat the purpose of my whole goal, which is to end up at the age of 65 with a business that is the most valuable it can possibly be. In answer to your question, I already have a Bachelor of Commerce, I've got a marketing degree from Western Sydney uni, so I'd like to think that would count for something. I may have to do some extra-
Annie Kane: CBD, something, yeah.
Tony Bice: -rather than start from scratch. I think it will make things a little bit more difficult for people entering the industry. There's a lot of mortgage brokers out there that'd make great planners, and the thing that's stopping them is the fact that they're a little bit hesitant about selling these products because they're not used to them. If there's gonna be another barrier to entry by now having to have a degree and more study, over and above the work that you do as a mortgage broker now, I think that's gonna be an impediment to a lot of planners that were possibly thinking about planners not going that step now.
James Mitchell: Tony, we're almost out of time. I just wanted to ask you one final question. That was ... We ask this to a lot of brokers who come on the show, and it's sort of like their end goal, their next five years, and that sort of thing. You mentioned an age, the age of 65 when you were speaking previously with Annie, answering her question. It was interesting. I wondered what your end goal ... It sounds like you've got something quite specific with age of 65, working backwards from there. What's the end goal for your business as a broker/planner?
Tony Bice: Yeah, that's an interesting point, because I have said all along that at the age of 65 which I guess is still the kind of rounded retirement age, it would be nice to have a business that would be maximum value. But to be honest with you James, I don't think that I will stop at the age of 65, I think I'll slow down, I-
James Mitchell: Yeah I don't think you'll stop either!
Tony Bice: Yeah! I'd like to think that the young guy out there, 30 years younger than me, jumping at his chair, I could teach them the sales process, and then all I'd be interested in doing would be to travel, come back and make a nuisance of myself once a month with the figures and have a look at the way everything's been cross sold, and then pay this individual a strong salary so that they could control the business and have it running the way I've had it running. That would do me nicely, we could pick up the monthly trail with the help of a nice funded retirement.
I'm still in two minds. Everything's for sale, the pricing – who knows what the value of this business would be when I retire in ten years’ time? But I do know one thing: that in the last five years I've essentially doubled, and some, the amount of my monthly remuneration through bringing financial planning into the business. I've doubled it in five years, and I'd like to think I could double it again in another five and double it again in another five after that, which makes it ... I'm hoping to be a very lucrative business that then becomes a matter of whether I want to sell it for the price it's worth then, or as I said get somebody in the chair and just keep doing what I'm doing.
To be honest with you James, when you whine in this business and you love what you do, I think I'll still be networking home loans at the bowling club!
James Mitchell: For sure! Absolutely.
Tony Bice: It's not as if I'm gonna be digging holes or -
James Mitchell: No, I can't see you retiring and playing golf unless you're actually selling loans to your caddy!
Tony Bice: No, that's exactly right, I think I'll always be selling.
James Mitchell: Excellent. Well I really appreciate your time, Tony, thanks for being on the show. We'll have to get you on again soon.
Annie Kane: Thank you Tony.
Tony Bice: Okay Annie, nice to meet you.
Annie Kane: You too.
Tony Bice: Okay guys.
James Mitchell: Cheers.
Annie Kane: Bye!
James Mitchell: All right, I think that's all we've got time for this week, just a big reminder to all those listening, particularly to new-to-industry brokers, we've got a new event. It's called The Adviser New Broker Academy – and thanks to Heritage Bank and our generous partners, we've got a number of free tickets to give away. So that event will be coming to Melbourne on the 11th of July, and Sydney on the 13th of July, and you'll be able to hear from some of the top young performers in the industry about how they survived those tough couple of years. Definitely check out all the information on that on The Adviser website, and we'll see you next time.