The Adviser talks to Aaron and Bernadette Christie-David from Atelier Wealth, who explain why higher education is essential to achieving better consumer outcomes and why current broker education simply isn't enough.
In this episode of Elite Broker, the duo also discuss how they’re preparing their clients to face changes to mortgage lending, why they’re passionate about giving back to those in need, and how they complement one another’s skillsets to effectively run their business as a family unit.
In this episode, find out:
- How this couple sifts out ‘tyre-kicking’ clients
- Why mortgage broking is a game of chess
- Why higher education is essential to providing sound financial advice
James: Hello and welcome to Elite Broker. I'm your host, James Mitchell, editor of The Adviser, and we're joined once again by the lovely Annie Kane. How are you doing Annie?
Annie: I'm fine thanks, James. How are you?
James: Very good, thanks. We've also got Aaron and Bernadette Christie-David from Atelier Wealth in the studio with us.
Bernadette: Very well, thank you.
James: Awesome. The first question I wanted to ask was how did you get into broking? It's a question I ask pretty much everyone who comes on the show, but everyone's got a bit of a different journey. I understand, Aaron, you've spent a bit of time in the banks as well as in broking. Maybe tell us. You can both describe your history.
Aaron: Yeah, sure. I'll jump in there. My background, I started out with Wizard Home Loans back in the day which was an interesting journey to kind of see. I guess that entrepreneurial side of home loans, seeing Mark Bruce grow the business and I was on the ground of New South Wales, so seeing the likes of Ross and Scott from Parramatta building their business again from the ground up, which has been phenomenal to watch. Once that business got acquired by Aussie I moved across to Commonwealth Banks and my role was in third party banking, which again was incredible to watch, I guess, the two different channels, which was mobile banking versus the brokers and seeing how. I guess we worked a lot with the diamond brokers at that point and seeing the top brokers and how they had a business and grew it, I thought that's really what I want. Seeing the bankers and how they kind of took for granted the business that came in – not to discredit them, but almost as if to see how hard the brokers worked and the rewards they got for that.
They were always so open and willing to share, and I thought I really want to be a part of that community and not just get into it but do it well if I'm going to go into it as well, so that's been my foray. Then I'd bought an existing Mortgage Choice franchise, which I ran for the last two years. That was exciting to I guess kind of have the support and the systems behind you when you come in to the industry. They always say the first year's a make or break and then twelve months ago I joined Astute Financial under my own brokerage, Atelier Wealth, to kind of create the home loan experience how we wanted to, a bit less cookie-cutter. Then six months, I brought Bernadatte, my wife, into the business as well. She's been there since day one actually. She's kind of behind the scenes, but we said it was always our plan and, Bernie, you can jump in and talk about your experience, but Bernie brings a different skillset to the table as well.
Bernadette: Yeah, absolutely. I started off in accounting actually, so I was studying my Bachelor's of Commerce and was working as a tax accountant completing business activity statements and tax returns and then I moved into human resources, so another complete shift really working with people and I was really missing the connection between both the numbers and the people. I saw the business and what Aaron was doing. It was a perfect opportunity to bring both of those skillsets together, and six months in, and I am really enjoying the journey so far. It's been an extraordinary six months for a new-to-industry broker to come on board. Just the amount of changes that we've seen with interest only lending, with APRA, banks sort of running their own show. It's quite an interesting journey at the moment.
James: Yeah, it's a lot going on. We actually had another couple in the broking industry, they worked together and married, and they were on the show and they were describing the dynamic in terms of who shares the responsibilities in the business. Tell us a little bit about how that works with you guys.
Aaron: Yeah, we definitely don't tread on each other's toes, and I guess that's the misconception about husband and wife teams. We have very different skillsets. My focus is on the business development, on building the brand, on the marketing side, and with Bernie's skillsets, they are operations, finance, the processing, the people side, so we don't actually ever cross paths. I think that's almost a perfect business relationship. But even from home people are like, "You don't switch off?" I'm like, I didn't switch off beforehand. Now we just don't switch off.
Annie: You have someone to talk to about it.
Bernadette: That's right.
Aaron: Bernie understands kind of what I go through and she sees that, whereas I think from the outside it's a little bit hard sometimes to kind of see the challenges day to day because it just doesn't stop with the calls, emails. That's what you sign up for. There's nothing wrong with it, but to have someone else that I can really trust? That's probably the biggest difference to say my first recruit is going to be my best, and it is a family business, and that's what we always love about this industry as well. You can really create a family owned business and I think clients tend to love that as well. We're not going to do the wrong thing because this is ultimately our livelihood, so we're going to be around for a long time. We even brought Bernadette's brother, Damien, into the business recently, so it really is a family.
James: It really is a family.
Aaron: Yeah. That's been exciting. I think it's special when you can share that with the family, and the levels of communication are slightly different as well because you can be fairly open and honest with each other but not be rude or offensive.
Bernadette: A little more direct, I find.
Aaron: Yeah. We're all marching to the same beat of the drum, so let's just get on board and make it happen.
Annie: Yeah, I think if I worked with my brother, for example, that's definitely so. You can be a bit more direct. Like if I was working with a professional I probably wouldn't throw things at them, but my brother would no problem. I would just be like, "What are you doing?"
Aaron: It's always very accepted, right?
Annie: Yeah, exactly. It would just be much more sort of physically involved with them. Just giving them dead arms and stuff when they've done something stupid. But I just want to talk a little bit about, Bernadette, obviously you come into the industry from HR and accounting. I just wondered what you thought about the actual education side of how you become a broker. Do you think that was sort of something that you had prepared for? Did you know about it, and then when you were going through that process, did you think it was sort of easy, hard? From my point of view, what I'm trying to get at really is that I was quite surprised that it's just a Cert 4 you need. Do you think that's the same, because obviously with accounting you need quite a lot of stuff behind you…?
James: Well, we've had some brokers on the show say they think there actually should be more education. Some brokers have got degrees for example and that sort of thing.
Bernadette: Absolutely, yeah.
Aaron: Yeah. For us we're both degree qualified. I always say we're dealing with people's money here, James. We should be upping the ante on the education, but I'll let Bernie answer that question, but to your point we should be doing a lot more in terms raising the minimum standards to get in.
Bernadette: Absolutely. I completed my Cert 4 before I joined the business in anticipation and I completed it online, and it did not prepare me for what the broking experience would be like. I have now gone on to complete my diploma, which was a three day face to face course, and even then I don't think that was enough. Everything I've learnt has been on the job, has been working through client applications, has been through the mentor relationship that I have with Aaron, and also connecting with other brokers as well, so to answer your question, I don't think it's enough. Working as an accountant previously, you are taken through almost a cadetship, so you're really given that one on one mentoring. You're sort of worked through opportunities and clients and files to get yourself to a point where you can really work on those more complex deals. It's not enough.
Annie: What areas do you think particularly we're missing or that you just struggled more with when you came into the job rather than from the opposite of finance?
Bernadette: It's working with the number of different banks and lenders that you have. You can learn one bank's policy really well and you can learn their structuring, their sensibility calculator, but you then have to learn twenty others because that bank may not fit your client's needs. As you get more and more complex, and with my accounting background I'm working with a lot of our self-employed clients as well, so you're working with people who haven't completed their 2016 tax returns yet. What banks are taking 2015 still? You're sort of crossing lenders out and you're working through your options.
James: Like a process of elimination.
Bernadette: Absolutely, yeah. Almost like a Guess Who. You're sort of knocking.
Aaron: We tell that to clients. It's like Guess Who. Kind of knock out these guys and you're kind of left with these ones. When you explain to a client this is why we're going to these banks, it's a process elimination sometimes. Spot on.
Bernadette: Absolutely. So we need more. We do.
Annie: I know, Aaron, you've spoken previously about sort of trying to maybe break into a bit more of the mentorship role, and I know that you guys call up some people across the country, so I know you've got some brokers in Queensland and Melbourne that you speak to regularly just to try and touch base with them, see how they're going. How did that relationship come about, and why did that get started and how has that been going?
Aaron: Yeah, there's nothing formal to it. They're really just friends, and friends of friends now. It's kind of branched out to, I think I put it out there that I've been fairly fortunate with the industry, that it's really helped me out to get to where I am. I think I really want to kind of pay that back to the industry. I always say that at the top of forming brokers they've got such open door policies. That's why they do well because they want to give back to new brokers. They want to see new brokers do well, and I think I want to take a leaf out of that book and say the industry's been great to me. I want to leave it in a better place than I'm finding it, so why shouldn't I help out new to industry brokers that are going to come in and really struggle with, there's a couple things. One is maybe the loneliness. Sometimes they work from home, and I think you should be working in an office environment. Share ideas or share the challenges is what I say. That's one.
The second is you're obviously around cash flow. Coming in here the first two months is diabolical to your cash flow, right? We know that. That almost then feeds into the next part, which is relationship. If you are in a relationship or even from the social point of view, everyone's going to ask you how is business going because it's all new and exciting. It's so topical, but if you're not doing well that almost comes out a little bit. It's all well and good to put up a mask, put up a wall, say, "Yeah, things are great," but you scratch the surface and you've really got no one that you can kind of level with to go, "Mate, this is very hard," or "This is very taxing," and you've got to be able to kind of put on a brave face for everyone. Maybe that's why we do get such a high failure rate because they it's easier just to kind of step out than it is to battle through that as well.
So to your point, Annie, about what am I doing, I'm really kind of helping to say, that's where I throw psychology. I'm not a psychologist, but I want to say let's work for that mentor toughness and that resiliency. Maybe that's one part that doesn't get touched on enough for the industry to say we need to toughen up and grin and bear some of it as well because at the end of the day you're dealing with a client. If you're not on when you're seeing a client, they're going to see through that as well.
Aaron: You've got to be able to put on a brave face. The next part is around how do you then maintain a relationship as well? I'm lucky that Bernadette and my family and her family have been so supportive, and that's probably the big things we need to speak about as well. That level of family support has to be the absolute peak if you're going to survive as well. I think if you speak to any good broker, they've probably had that as well, which is some type of family support. Yeah, you might see the individual brokers do well, but behind them is a good support structure as well.
James: I think that's something which, like you said, doesn't get touched on enough, that wellness component about breaking into the industry, especially when brokers, if they're joining a big franchise group or they're branching out on their own, they might not have that support. Family and everything is so important, and also it's something which I suppose once they are further down their careers I think identifies brokers with their self-employed clients in a way. I've been having a chat with a few brokers about the self-employed piece. Broking is essentially a non-conforming business in the way you get paid.
Aaron: Spot on.
James: I think that level of understanding with SMEs, with self-employed individuals who might be in a tough spot, brokers could definitely relate to that.
Aaron: Exactly. That almost carves a niche out, because the banks can't understand that. To them you're really just another number in the day, whereas we've walked that path. We know what it is from a challenge, from a cash flow point of view, to have a bad year but then have a good year, so which bank can you work with? We go, "Right, we won't use that first year. We can use the second year and it works well within their policies as well."
Annie: Obviously, Bernadette, you were talking earlier. You deal a lot with the self-employed sort of clients. Aaron, who are your main clients? Are they investors or occupiers?
Aaron: I've gravitated toward the investment side of it. We've got a really good buyer's agent that we work close with, Paul Glossop. He's been incredible. His clients are savvy. We've got a few other buyer's agents as well. Those clients come. They've been through the process, they want a brokers that knows credit policy, so automatically I've had to lift my game. At the start I've had to turn away a client and I recall that, just going, "I'm not the broker for you. You need someone that's going to be much better for you," and I'm happy when they've gone to one of the top-performing brokers. I think you need them, but I want to be that person now. I've had to learn credit policy, especially with all the changes coming through particularly in the investment side. These are the brokers that are going to come out and they're going to survive because I say to clients, it's a game of chess. You've got to think two or three steps ahead because we know bank policy's going to change. We know your own situation's going to change. Job situation, you're going to have another child, for example, so we know this all in the background because we've spoken to our clients enough as well.
The next step is how do we kind of navigate all the changes coming through as well in the future and almost anticipate that. We knew some of the policies last year were too good to be true, like actual repayments. That was too good to be true. It wasn't going to last. You almost had to know that to go, "Let's use that bank now because they're not going to be a viable option in the future as well."
Annie: Just in terms of we touched briefly on things like the interest-only crackdown. You've previously told me that you could see that coming as well. You're sort of saying you start maybe recommending more PNI because you knew the interest-only was going to be sort of locked out and the banks would start tightening up. What were the warning signs for you in terms of actually knowing that was going to come and how did you explain that to clients about why you're putting them into PNI rather than IO?
Aaron: I guess it's having a feel on the pulse is one to answer your question. I read AFR like a fiend I guess, and all the industry blogs and feed myself a lot of investment lending changes that were coming through. The next part was, I guess, what's your goal? If your goal is to have maybe one or two investment properties paid off, then why wouldn't you just pay if off now? You've got the cash flow to do it. You're not intending to grow a big portfolio, so just pay the debt off. Otherwise the option is to sell one property and then have the cash to reduce the loan balance for example. Again, understand the client's needs to go maybe PNI is a good option.
I told everyone that were PNI on investment properties last year purely because it's the lowest rate we've had on record. Why wouldn't you just pay if off sometimes if you've got the cash? Quite often it could go on a dinner or a brunch out, smashed avocados for example. Having those conversations with clients isn't easy because they think you're mad sometimes to recommend PNI on an investment property, but I said now those ones are coming to the fore because median rose over the last 12 months, 18 months on some of their investment properties and they were a little bit better placed than the guys that are kind of heavily geared on interest only, which the banks aren't loving at the moment. We know that too.
Annie: I know, Bernadette, before you came on with Aaron, you were working at the cricket for New South Wales in HR, and now you've got a charity relationship with Batting for Change, another cricket organisation. I just want to ask a little bit more. When I heard what you guys were doing I thought it was quite unusual in that when your loans are settling for your clients, you're not just giving them the sort of standard, "Here's a bottle of champagne, here's something that you can kind of eat or drink or forget about tomorrow." You're actually saying, "We're going to give a donation to the charity on settlement," and I just want to understand a little bit more about how you chose Batting for Change and then what they're doing and how you actually explain to clients why you're doing it.
Bernadette: Absolutely. I'll explain Batting for Change. It's run by Ryan Carters who plays for the Sydney Sixes and for the New South Wales Blues, and it's really about empowering women in cricket playing nations, developing cricket playing nations, to get them an education, so to improve their lives, to get them the education, and then to spread that knowledge. I was speaking to Ryan at the launch and we spoke about how when men get educated they'll often go overseas and work and send the money back, but when a woman gets educated, she then educates her family and educates her community, and that's how communities and nations change.
He's super passionate about it. We're both very passionate about it. We believe in diversity and equality, and we're also very passionate about education. Aaron is from Sri Lanka, or is Sri Lankan. I'm part Fijian Indian, and part Australian, so we've both come from countries where if we were living there now we would not, nowhere near have the some opportunities that we have now. We wanted to pay it back to those countries.
Aaron: That's why we tell clients, they'll buy upwards – a million dollars doesn't get much in Sydney, so they buy upwards of a million dollar property and say "You're both so lucky to call this place home, so why don't we try and use this as an opportunity to help people that are less fortunate." It's not about us then, it's about helping other people do well. Our clients do well. Some of us in another part of the world does well and we might not see that direct result sometimes, but if we're doing it behind the scenes it's fantastic.
James: That's awesome.
Aaron: The charity has been vetted as well. They're vetted by the LBW Trust, so we know we're coming on board with a well-known and well-run charity partner, which is very exciting and kind of marries our two loves. Obviously we love cricket, which is great, and obviously helping people in nations close to our heart as well.
James: That's really cool. Among your clients when you let them know once the loans settle in and they've given this generous donation, I guess it's spreading the awareness in the community of clients as well about what you guys do.
Aaron: I think it's special. That's why I say we're always grateful. We've been able to have a great life in Australia, so let's try to help a few more people. I think you see a lot brokers. We're not the only brokerage doing it. A lot of brokers do it for causes that are close to their heart, so encourage anyone that's out there. Find something that's close to your heart. It doesn't have to be a big charity. It can be something fairly local, community-based, but it's not about trying to get any business by any means. It's more so to say how do we give back and be thankful for what we've got.
Annie: I know also in terms of what's going on in the industry at the moment we've had the AIC Report, we've had the Sedgwick Review – there's a lot of concern and uncertainty over what will happen to commissions and whether people should start bringing in a flat fee for example, and there's been a lot of debate in the industry about it. I know that you guys are sort of commission based but you sometimes implement a few. Is that right? Can you just explain a little bit more about that?
Aaron: Yeah, sometimes. It's a very loose approach to it. It's not a formal fee that we charge. It's more so for clients that come in, we know that maybe they're, I don't want to say tyre kickers, but they're shopping around a little bit.
James: Like rate shopping?
Aaron: Rate shopping or they're playing us off against their bank for example. There's nothing wrong with that. I guess it rubs me the wrong way when brokers say their services are free. It's not. Our time is currency, so if you don't value your time then clients will see that. They'll just get all the information out of you and go elsewhere. Thanks very much. I guess what we try to do is our value proposition needs to be strong as a brokerage and that's kind of where we said what do we stand for as a business and try to communicate that to clients. It's not just about rate, which is the conversation we always seem to have.
I guess the next part really is around trying to get clients to respect that as well. We bring about a fee, I call it a disorganised fee, I say, "Look, we've done a fair bit of work, but if you can't pull your finger out and get a few documents to us then we'll have to put out a disorganised fee because now we're scrambling around." Other clients that are organised are becoming a lesser priority because it's time critical for you. We've got to drop other clients. That's not fair to them, so I think to be fair I think that's why we've introduced a disorganised fee. I've threatened it, I've never charged it. I think maybe it's kind of a sneak approach that might work.
Aaron: I think to your point around commission structures, yeah, I think we're up to about 17,000 brokers in Australia, so it's going to get some point around saturation. They've got to do something I guess from a banking point of view. Again it's noise that can distract you from your business a little bit. Our core business is around broking and they're always going to chop and change commissions and we can't fight that. We can't change that. I guess as an industry we can kind of have a collective voice, but we just need to get on with the job. Things in your own business maybe clawbacks if you have those conversations with clients to say, "Look, there is a clawback. Our time isn't free, so we're not going to get a commission. Maybe we charge you or part charge you that," for example. That to me is fair. I've even read in one of your publications that we're one of the only countries that charges a clawback, so maybe that's something for the banks to consider as well right there.
James: You touch on a good point there in terms of the statement gets banded about all the time, but broking's a free service. We don't talk about the commission review, all that sort of stuff. Everyone's like, "Oh, well it's free," so of course people are going to gravitate towards it, but you're right. We shouldn't really be going around saying mortgage broking is a free service, because like you said it sort of dilutes the value proposition. At the moment what you've got, obviously the brokers have the lion's share of origination at the moment, but you've got the broker, you've got the online bit as well, you've got the comparison websites, and obviously you've got the customers who have their own everyday bank, so this thing about people sort of rate shopping or tyre kickers is something which I guess every brokerage has to learn how to deal with. I know when we had Jeremy Fisher on the show he was talking a little bit about that as well that over time he had to sort of sift through the ones he knew weren't going to transact and the ones who were going to be clients of his.
Aaron: And that, you don't feel like you can be picky and choosy. You feel like I need to grab anyone with a heartbeat, but what I find is that business, that's the evolution of your business in three years. The clients who you work with now, goes to the clients you'll attract in a few years’ time, so you actually want to attract good clients. If you can sift out some of the ones that you don't really want to work with, and it sounds a bit righteous to say, "I don't want to work with those," but if you know your niche, and it was really like a business coach that said, "If someone doesn't pay for your service, what's your value proposition?" That forces you to think about what you offer as a business and as an individual broker to go, "Someone had to pay for my service. What are they paying for?" I think that's where you have to know your trade so well that someone comes to you and goes, "Yeah, you know your stuff, mate, so I will pay you."
James: I think we're almost out of time, but I just wanted to ask one more question for the both of you and that's about new to industry brokers. It's been a big focus of ours over the last year or so and obviously we've got a new broker event we're putting on as well. What would be some advice or any sort of tips you could share for those who are either in their first couple of years and might be struggling, might be done it tough alone, in that lonely space, or they're looking to become a broker and they're not quite there yet? What sort of advice might you give them?
Aaron: I'll kind of jump in and say from my point of view having tread that path, and Bernie, you can kind of jump in and say for someone that you've seen tread that path as well, but I say hang in there. Like any industry it's going to have its challenges. It's going to have its good days and its bad days. I think resilience is something that's not talked about enough. You have to be resilient if you're going to be in this industry. You can do all the work for the client even now and they can turn around and change their mind. You have to deal with that and then put it to the side and then move on to the next one and the next one. I think that's probably the biggest challenge.
The next part is having a bigger plan. Don't worry about the first 24 months. That's a drop in the ocean. If you think about this as a 10-15 year business, what's the first two years? The first two years are all about the grind. It's all about getting as much knowledge and spending as much time in other broker's offices that have done it very well because they will share their trade secrets with you. That's the other part. There are no secrets. People are always looking for the silver bullet in this industry, and I just think hard work is probably it really. I guess from your perspective?
Bernadette: It's having a mentor 100 per cent. It's having someone that you can pick the phone up to or go into their office and have your little cry if you need to, which I have done, or ask, "I need help." It's having that support network, which we've already spoken about. It's so crucial, not only in the business but at home as well.
James: Good stuff. Well, thanks very much for taking the time to be on Elite Broker.
Aaron: No, thanks for having us.
Annie: Thank you. I could just carry on talking to you for another like two hours.
Aaron: Yeah, listeners might get a little bored. That's all right. That'd be okay.
Annie: This is a special two hour podcast.
James: Well, we'll definitely have to get you back now. Thanks very much. All right, I think that's all we've got time for this week. Just a big reminder to all those listening, particularly 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 The Adviser website and we'll see you next time.