In this episode of Elite Broker, The Adviser talks to award-winning regional broker Tamara Virgo, who reveals how she made the most out of an adverse economic climate to succeed in the broking industry.
Tune in as the TV Financial founder explains how being made redundant spurred her on to a career in broking, how she got her business off the ground during a financial crisis, as well as what she’s doing to prepare herself for exciting new developments ahead.
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James: Hello and welcome to Elite Broker. I'm your host James Mitchell, editor of The Adviser, and we're joined, once again, by Annie Kane. How are you doing, Annie?
Annie: Fine, thanks, James. How are you?
James: Very good, and Annie and I are going to be chatting to Tamara Virgo. She's a WA based broker. She's joining us on the line just in a minute, but I'll give you a bit of an intro about what Tamara's been doing. She's taken home a handful of awards at the Better Business Awards in Perth earlier this year, and quite a standout achievement. She won Broker of the Year, Best Regional Broker, and also, her office was named Best Regional Office two years running. So she definitely must be doing something right, but we'll have a chat to her now. Tamara, how are things going?
Annie: Hi, Tamara.
Tamara: Hello, good. How are you?
James: Very well, thank you. How's everything going with TV Financial Services out there in WA?
Tamara: Everything's wonderful in downtown TV Financial at the moment. Yeah, I don't know, it's been very, very busy, so that's a wonderful thing and I'm certainly not going to turn it away, but I guess it's a bit of a juggling act. But, no, everyone's well, happy, and healthy, so that's the main thing.
James: Very good. Just before we kick off with some questions about you and your business, I just wanted to say congratulations once again for your wins at the Better Business Awards this year.
Tamara: Thank you.
James: You really cleaned up.
Tamara: I took the trifecta, so I don't know that that's still actually really settled in and actually sunk in, but yeah – really happy and then this morning Craig sent me a lovely email to say that we'll be featuring in the Australian Broking Awards, late in June.
James: That's right, yes.
Tamara: Yeah, looking forward to that.
James: So I thought regular question asked a lot of our guests on the show, but how was your journey into broking? Did you come from banking? Did you come from another industry? Personal training? We've had all sorts of guests come from all corners of life, in terms of their entry into the channel. What was yours like?
Tamara: Yeah, my entry into broking was somewhat very unplanned. I had come from a corporate banking environment where I thought my position there was made, and I thought that I would be working for the institution for a long time. The GFC came to visit and what the GFC brought me was a redundancy in late 2009. Living in a rural and remote area, this was home for me, so I had a pretty tough decision to make on, how do I follow my career when I'm somewhat limited in my geographical position?
So after much consideration and thought, I tried multiple jobs after being made redundant, but my heart just wasn't in any of them because they weren't banking orientated, they were more training and development. And then an opportunity came along when someone reached out to me and said, "Do you know what, you should really become a broker." And I said, "Well, that sounds fabulous, but have you not worked out that we're in the middle of the GFC? Do you really think that a business is going to thrive?" And he said, "If you support yourself, you believe in yourself, you can do anything." And that was the born of TV Financial Services and eight years later, here I am.
Annie: Who was that, that recommended it to you?
Tamara: Just a colleague who was already a broker in the industry, so I worked with him previous in a past life. And he had said to me, "Look, you can do this." And I, "Okay, I can do this." So I didn't really know what I was actually going to do, I never had any aspirations to run my own business, was never a vision or a plan that I was going to be a director of a company with four staff. That was never on the picture or vision board of Tam's world, but due to that adversity, it basically gave me a push where I had that ability to either think, "Right, you need to sink or you need to swim." My preference was to swim.
James: Fantastic, and I guess it would mean you're pretty resilient starting a business in the middle of the GFC. We've spoken to a few brokers or businesses who have done a similar thing, and you've obviously got it up against you during that time, in terms of the funding being pulled back and differences happening with lenders and things like that, but I guess as you come through that it'll probably leave you a lot stronger for when the market recovers.
Tamara: Yeah, look it was an interesting one because if I had a dollar for every person says, "You're what? You're starting your own business, in banking, in this time? Like in the GFC?" I was like, "Yeah, that's what I'm doing." I had to act quite confident in the decision that I made, but unfortunately the people around me probably didn't share that vision as strongly as I did, so initially, not only geographically was a little bit of a rough start, but obviously believing in ... I knew that I knew the content of banking and I knew I knew the structure of it. I knew I had lots of areas to develop in, i.e. running my own business. But I guess the one thing I carried with me was absolute belief and absolute determination that all those other doubts I basically put in a vault and thought, "I'll come back to them later, and if these people are right, then I'll deal with that later as well."
But at that point, it was sheer focus and planning and having a good business plan to make it work, and I think it's just understanding what those goals were, we were trying to achieve, how we were going to grow the business and how we were going to get there. Because I kept coming back to one thing. No matter what economic times we're in, the reality is we all have debt of some description, so where it's good times or bad, it's making your point of difference that you're able to service a client and give them the best possible service. So we really built a charter around being customer focused and customer service focused, rather than volume and transactional type brokering.
Annie: The GFC hit everybody, but especially I think in the more rural areas, in WA particularly was really, really felt. I can imagine that would've been the time that people most needed a broker, almost. That they were struggling with their finances, they needed someone to hold their hand and show them what could be done. We keep hearing now that WA market's not doing great and the people are struggling. How does it compare now to what it was then?
Tamara: Yeah, look, it's interesting because there's quite many areas at the moment that I would say are similar to a GFC, so for example at the moment, the lending restrictions and tightening. We saw the same restriction and tightening through the global financial crisis through the GFC, so I guess it's interesting you say that. At the moment, probably over the last 6 to 8 months in particularly, I've felt like we're chartering similar waters too, from a business point of view, to where we were when we started in '09 with the GFC times where we were at.
So I guess the one thing that is different now to what was different when I first started, is believing in being diversified in a range of offerings as well, so hence why we have the financial planning model, as well as the brokering. Because you're a hundred percent spot-on with what you say, clients actually come to us not wanting the best rate, the low fees. People come into us and say, "This is our situation, this is what our struggles are", or "This is where we're trying to achieve", or "This is where we're trying to take our business", or "This is where our farm is at, what can you do to really help us?"
They're not really interesting in what is my interest rate and what fee am I going to pay? They're wanting someone to break down all of the jargon, all of the bank jargon, all of the time it takes dealing with our lenders and they're wanting someone to actually, literally, if I can use the metaphor, hold your hand and take you through that process. And I guess that's where the business is really focused on being well known for, because we are those people that can take that person through that journey.
Annie: And when did you make that decision to go into financial planning, as well as broking?
Tamara: Pretty early on in the piece, purely because when I was working for my previous corporate organisation, I had started financial planning. Because I believed in the essence of lending, that there was more than just getting someone a loan. Like that's one small element of someone's complete holistic financial journey. You have a loan, but you have so many other factors that come into your financial world, so i.e. superannuation, creating wealth, making sure that I'm going to have enough money to retire on. What happens if I can't pay my mortgage tomorrow? How do I make sure that I'm protected if I lose my job? All those things come up, so it's more than just the mortgage.
I made that decision probably about two years in, three years into the business, that there needed to be a strong focus on making sure that we were able to be all things financial to our client, not just a small section of that. So the business incorporated the financial planning about three and a half years into the business, and it's been a very slow amalgamation of the two together, but it's making sure that we get it right.
James: And I just want to ask you Tamara, a little bit about this idea of building a business, because you've obviously got a very strong team with you, you've won awards as an office as well as for you individually. I wonder, I go back to that GFC period if we could and talk about that transition from you working in the banking space, obviously PAYG I'm guessing, and becoming a self-employed person. And this is something which we don't really talk about too much, as brokers setting out on their own, being self-employed. What was that transition like?
Tamara: Yeah, look it was an interesting one because being forced, it was very quick and very rushed. I came from a corporate world where my employer owned the motor vehicle that I drove and paid a subsidy towards the roof over my head, so it really enlightened me very quickly that the rug could be pulled quite swiftly and that I would be left fending.
I guess when I went off to start the business, the one thing that I maintained, that I needed to get was a really good accountant and business coach. Two people that were going to be able to mentor me through really setting up a sound foundation of a business, so making sure that that business practises were really strong and robust.
My own personal means, I had to shift my thinking of my personal requirements day in, day out, and internships to focus on earning obviously enough money personally to support myself, but I never focused on the initial profit to be made. What I looked at is where the business had to grow too to be sustainable, and what would steps that I had to do to get there. So that you built that foundation initially to make sure that that's never going to be compromised, so that the business long-term, as of 8 years later, can have a longevity and you're not meeting cashflow restrictions or not having enough cashflow to be able to grow and invest into the business. So from a very strong principle that every year, a percentage of money from our gross profits needs to go back into building the business, so that every year it's getting stronger and stronger.
James: So getting down to practicalities, were you looking from the get-go on like productivity and efficiency and conversion rates and things like that?
Tamara: Yeah, look the first six months was survival. It was like, "Is this actually even going to work?" So I put a small investment into the business, I didn't launch into putting huge amounts of investment into it, but I had a plan. I said, "Right, in the next six months, if we achieve this, this is then what we need to invest", and so on. So that we did, as the business grew, so did all our requirements that went with it, and to make sure that we didn't end up with a cashflow issue or a funding issue by not investing into the business, the business growing to a certain point and then having to spend a bucket-load of money trying to put it back into the business to get it to being efficient.
So I think one thing that brokers need to pick up on is the efficiencies of how you do things is so important, because the more efficient that you can actually make your process and the way that you do something, both the client experience and your business benefit from that very, very strongly.
Annie: And you've previously said about your team that you work with, you were mentioning earlier you've got other staff members. Is it three other staff members or four?
Tamara: Yeah, four in total. Three in the office and one externally.
Annie: So what are their roles and how do you interact with them and why did you decide to bring on more than just yourself into the office?
Tamara: At the end of the day, you can't do everything. I learned that the hard way and realise that you just can't, you can't do everything. So what that basically meant was that we were very…planned in the people that we needed inside the business, so what it meant is that we knew what people we needed, in order to be able to move forward. So our staffing ability was then mapped towards what we needed to be able to keep the business moving forward.
Annie: And that is ... Can you describe the breakdown of what people do now? Do you have loan processors or just administration?
Tamara: Basically what we have now is I have a full-time employee both that works across the planning and the brokering space. I have then an office manager who then also overlooks the processing of the line lodgements and all the customer end-to-end dealings. We have a customer service representative, so front of house, helps in the mortgages and helps in all the other transactional type banking, and then we've got one external processing staff member.
James: Fantastic. And I understand you recently completed a strategic review. Is that correct?
Tamara: Yes, correct.
James: So tell me a little bit about that because I mean strategic reviews are something which -
Tamara: It starts nice, I guess the strategic review of the business, I guess we're all very different in swimming inside the fish pool. So as I keep saying I've a very strong practises of making sure that the difference is under review all the time. So the review that was with Darden was basically, business was pulled apart from top to bottom and I'm actually still working through this as we speak, and what it basically has done is looked at systems and technology, looked at people, looked at outcomes, looked at profitability. So really just stripped everything that we do and pulled it apart and then redefined processes and redefined practises, and that then streams into our business plan. So looking at our profitability, looking at our future goals.
Because I think what we're really ... Brokers are really tending to find, or what I find by talking to other brokers is you're so busy being busy, and that might sound fulfilled, but you don't have that ability then to be able to continue to spend time on your business, actually viewing it from a completely different light. What is working? What are you doing, but you could do better? And also bringing in elements of help. The business myself has got an external business coach, who the accountability of keeping the business being looked at through an independent set of eyes.
Annie: And how does that work? How often do you meet up with them and how long did the strategic review, for example, take?
Tamara: Yeah sure, so the review of the business process took almost 12 weeks.
Annie: Okay, wow.
Tamara: Yeah and that's not 12 ... That's not every day for 12 weeks, I must admit, but it's 12 weeks to put the processes and information that went into them initially for myself were massive, so it's pulling apart everything, looking at all our processes, mapping all our processes, looking at all the financial reporting to the business over the last three years, looking at the staff then looking at their job descriptions, looking at their performance, it breaks down every section.
So that's just been completed or finalised for a better word, and then as for the business coaching and the mentor, so what happens is once a quarter there's a team of us, so my business coach and my accountant and myself get together and have a look at how that plan is going from a coaching point of view, that's ongoing. So every month we have a three hour hookup – like, I’m in Esperance and she's in Perth – have a face-to-face meeting via SuiteBox and basically review of where we are.
And keeping me accountable, I'm not allowed ... I can't make excuses for why something hasn't happened, I've got to have accountable outcome. Okay, we did want to achieve this and we haven't. Why weren't we achieving it? What are we going to do different? Are they factors that are in our control or they factors that are outside our control? If they're outside our control, is it a market that's moving, that we're not staying on top of or is it something different that we need to be doing as a business?
Annie: That's really interesting I think having that opening yourself up to someone, where you can get censured or they hold you accountable for the plans that you put in place. I think all too often, it's quite easy to set a plan and then forget about it, and not ever revisit it.
Tamara: I think you're right because what happens is you get to that point where you can't leave your homework to the last minute. You can't just think, "I'll bluff my way through this next conversation." I think as brokers, we're really good at being able to make things up as we go along because it's the world we live in, as in you've got to be diverse across the different range of people, but with your own business practises.
And I guess the nice thing it takes away for me to a certain degree, is that element of worry because before actually really being serious about this process, you used to have oodles amounts of worry and stress leading up to key times in the year, whereas now I guess by that ongoing review, it's able to stay on top of things. You're not looking back six months and going, "Oh, well that really our line book dropped off six months ago", and then worrying about it or because of a change in the lenders or a change in the marketplace, your book has altered, you are able to adjust it as you go along.
Annie: Yeah, just touching there on changes in the marketplace, obviously recently we had the budget announced and I know from your perspective as a financial planner, I'm sure a lot of your clients would be interested in things like the SEPA contributions for first home buyers, and as well as the banks saying as well that the new levy that they're going to be subject to won't necessarily be scot-free for customers and borrowers as well. How are you having to ... What are your reactions to the budget and how are you -
James: Yeah, yeah did you receive a lot of phone calls from people saying, "When are my rates going up?"
Tamara: Is this being recorded? Is this bit going live? So look, the budget announcement was really interesting because I guess my ... First speaking from a financial planning point of view, the budget announcement was obviously a lot less scale back to what we experienced 12 months ago, so as planners we've been working through a lot of those Super changes that came into effect 12 months ago. Whereas from a financial planning point of view, the budget had quite a soft scale of changes and obviously some positive ones, in relation to homeowners after the age of 65, proposed to be able to pay money into Super without penalties up to 300,000. There's some positive stuff around there.
I'm also pleased to hear that there is that potential assistance there for first-time buyers. I think it obviously doesn't come in effect 'til the 1st of July. My understanding is that they're able to salary sacrifice money into Super over 12 months, in order to then be able to withdraw that back out to get into their first time. So look from a financial planning point of view, this is where I say to myself, "It's a good thing that the business again, is holistic." Because there will be a need for financial advice around withdrawing money out of Super, so for our clients we're able to give them that financial advice, as well as also do their mortgage, whereas I believe that maybe brokers who don't have that wider diversity in their business, their clients manage their financial planning advice prior. So for our clients we're going to be able to be educating them and updating them, as the proposals become legislation, and soon letting them know what they can and can't do.
So look, I think it's a positive find, I think it does indicate to me though that first-time home buyers are still going to need to have a strict savings plan, because obviously with the cost of housing, maybe not so much here in regional WA, for us that's enough for a deposit for a first time, but obviously, when I think across Australia, there'll be pockets of Australia where that sort of deposit still isn't enough for them.
Annie: That's true, I mean a lot of people are saying, "Well, that's great but $30,000, what's that in Sydney or Melbourne? Doesn't even cover stamp duties." But obviously, in WA for your market particularly, I'm sure that will go a lot further.
Tamara: Yeah well, we're lucky in regional WA, that's your 5 per cent and your first-time buyers’ happy days, but obviously when I looked at it I thought exactly the same thing. It's great for our market, but this isn't going to be something that necessarily ... We're still going to need to be educating our borrowers that even though this is an option and there's obviously advantages for them to be able to do that, they're also going to need to still have a focus on raising further savings on top of that. But it's a positive start, I guess is what I'm trying to say though is it might not be perfect, but it is a positive start.
Annie: Okay good, and I just want to ask as well, obviously with your background in banking, we've heard a lot of people on The Adviser website come out in the last few months really criticising the major banks and saying, "What are they doing? They're hiking their rates, this is making it so difficult for us and looking at commissions for us as well." I just wondered if, you with a banking background, had any attitude change in how you viewed the big 4 banks or the 5 major banks in the last 12 months or since you've come into broking?
Tamara: Yeah look, I mean for sure lenders have had to make a lot of changes and those changes have come from a broking point of view, very quickly. However, I'm not surprised that the banks have had to make the changes that they've made and I think this is where it makes the importance of a broker even stronger, because whilst we have our major banks and I believe they have a place to play in our markets because without them we can't do our job without them. But alternatively, I guess as a broker, we have a choice and we have access to many, many lenders in the marketplace, so I actually think this is a really exciting time for us to show our worth. Because we can get deals set elsewhere where consumers might just go through the five major banks thinking that that is their only option.
Look, banks have to look at risk and once upon a time, there was always that difference between an investment home loan rate and an owner-occupied rate, so I think we've forgotten over a long length of time that there was always a difference, and I think the banks can't continue some of those practises that they were and staying sustainable for a long period of time. And I think the hard thing from a broker point of view is we've seen those changes rapidly, really, really quickly. And maybe some of them not communicated in the best light, but I certainly think that they're changes from term that the lenders have had to make to be sustainable.
James: Well, I think we're just about out of time Tamara, but I just want to ask you one more question, and that was about the review you've been doing of your business, and your office and obviously things are going from strength to strength there, what's next for your business? For TV Financial? For you as a broker?
Tamara: This is like telling you my darkest secret.
James: No, no, I mean you've obviously, you've got the planning piece and the broking and everything, is there something else you're going to launch or looking to expand?
Tamara: There is, there is and I'm very excited about it. Basically, without giving too much away because it's still being developed and I'm really excited about it, but over the next 6 to 12 months, I guess you've probably read through a lot of my material, well hopefully have, or my report or my awards that come through all my speeches that I've given – one of my biggest things I'm really passionate about is providing people with education and knowledge. But everyone says that, but what I really mean by that is breaking down the language around lenders and banks and funders and putting it into a client's own world, I guess.
So we're developing at this point of time, an education centre like a portal that our clients are going to be members of, and going to be able to leverage that to be all things financial to them. So be able to, the general advice product must admit, so it's about general advice it's not intimate financial planning, but it's able to get people from point A to point B before they're ready to take that next step into a full financial plan. It's incorporating their day-to-day banking, it's incorporating education pieces and also gives them the ability from that website to enrol in a few short courses in different bits and pieces.
So it's about helping people with information, converting it into their own language and style and educating people, because I feel with all the changes that are happening in the marketplace and the way that our world is changing, that's probably one of the most powerful tools you can give your clients.
James: I think you're absolutely spot-on and it's especially-
Tamara: I don't want to give too much away though, I don't someone to read and go, "That's a great idea."
James: Yeah, but this whole idea of like financial management and budgeting and stuff like that I think it's going to become really important and something where brokers in particular, can help out their client.
Tamara: Yeah, it's a really, really strong focus so I'll be excited in 12 months’ time to show you how successful that is. Yeah, it's been something that we've ... talking about strategic planning and business coaching and something we've actually been working on for close to nine and a half months now, so it's getting closer to it.
Annie: We look forward to hearing how it goes Tamara.
Tamara: Yeah, yeah, so the launch date for it is quarter four of this year, so not that far away.
Annie: Well, best of luck with that.
James: Yeah, we'll have to be in touch and good luck at the Australian Broking Awards as well.
Tamara: Thank you, yeah, I'm really excited. It was nice to wake up to Craig's email this morning.
James: Yeah, no worries.
Tamara: He can send those every day.
James: Well, we'll have to catch up with you soon, so thanks very much for taking the time again.
Tamara: No worries, you're very welcome. Thank you for your call.
James: All right, I think that's all we 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 survive those tough couple of years. So definitely check out all the information on that on The Adviser website and we'll see you next time.
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