Yellow Brick Road Earlwood principal Effie Nicol joins Annie Kane and James Mitchell as the first Elite Broker guest of the new year.
The broker reveals how she works with clients to address their financial needs, some details of her work fundraising for charities and supporting women in finance, and why she is setting her sights on expansion.
Ms Nicol also talks about how she achieved her goals of building a business as a “one-woman show”, the biggest change in her life and how she manages her work and social life.
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James Mitchell: Very good. Good to be back for 2018.
Annie Kane: Yeah. Did you have a nice break?
James Mitchell: It was very good, thank you.
Annie Kane: Good. I went to New Zealand for the first time.
James Mitchell: Nice.
Annie Kane: Yeah. Very exciting. Very much enjoyed myself.
James Mitchell: Cool.
Annie Kane: To head back into 2018, let's focus back in on mortgages. For the first guest of the year we have Effie Nicol, who's broker, wealth manager, and principal at Yellow Brick Road, Earlwood. We're going to learn how she works with clients to develop their financial needs, how she got into the industry, and her work fundraising for charities, and supporting women in finance. Thank you Effie for coming in. How are you doing?
Effie Nicol: Good, thank you, Annie, and hi James.
James Mitchell: Good to see you. Earlwood, I actually spent the first 18 months of my life in Bardwell Park in Earlwood. That's where I was born.
Effie Nicol: Really?
James Mitchell: Yeah.
Effie Nicol: I grew up in Earlwood. Went to school at Earlwood public school.
James Mitchell: Nice.
Annie Kane: Well, that's always a thing that you always get questioned about, because you sound English.
James Mitchell: Yeah. Everyone thinks I'm English.
Annie Kane: Yeah, but actually you're Aussie.
James Mitchell: That's right.
Annie Kane: From back in the day in Earlwood.
James Mitchell: Bardwell Park, Earlwood.
Annie Kane: Earlwood possie here now.
James Mitchell: That's it.
Annie Kane: Effie, let's just hear a little bit of background to how you got into this industry. You started off with Westpac, is that right?
Effie Nicol: That's right. I worked for Westpac for a very long time in the retail banking space, and I actually managed a team of home finance managers and also have worked in bank manager roles as well, so I'm always dealing with people and customer needs. I was observing my home finance managers at the time and they were interviewing customers, and I thought to myself, "I can do this so much better. We're very limited in the banking industry, and I need to make a change." Hence, I joined the broker network, because I kept getting calls from aggregators asking me to join them, and at the time I wasn't ready. In 2010, I took the plug and changed my life for the better, and here I am today. A new life creating miracles for people, as you say. I've made so many changes for the better, and I'm going to continue to do that in 2018.
James Mitchell: That's awesome. Just want to go back to your experience in banking, what was it you identified in the interaction that some of the home loan managers were having with customers where you thought, "I can do this better"?
Effie Nicol: That was a real concern for me, because I was observing an interview and I'm thinking, "Is this the right product for the customer?" They were very limited because they could only sell the one product. There is so many options that they could have directed the customer to save them money and make the right choices, and hence I'm in the broker space because that gives me that flexibility to help the customer, direct them in the right channel, and make sure they achieve their dreams.
Annie Kane: You went and did your diploma in broking. Did you say that was 2010, 2011?
Effie Nicol: Yeah. I started doing it in 2010, end of 2010, and then in 2011 I actually started broking officially.
James Mitchell: At Yellow Brick Road. Sorry, I was just ...
Annie Kane: We were probably going to ask the same question.
James Mitchell: Great minds.
Effie Nicol: I did start at Yellow Brick Road on the 1st of March in 2011, so this year it's going to be seven years and here I am still sitting here broking. It was a choice that I made to join Yellow Brick Road, reason being I like their model. I believe in the chairman. He's a leader, and I can work with the team there to help me improve myself and self development, and that really made an impact rather than working on my own. I initially started working on my own in the lounge room trying to build a trail book. I started it with nothing, and now I'm actually working with my old home finance manager. He's working in my office, and this year I'm on to bigger and bigger things. I'm actually having another branch that I'm opening.
James Mitchell: Really?
Annie Kane: That's exciting.
Effie Nicol: Stay tuned for that.
James Mitchell: Fantastic.
Annie Kane: We'll have to have you back in once that's up and running and established to find out how it's all going. In terms of you mentioned there you started off on your own, and you're sort of in the lounge and trying to get the work. What was it that actually made you think, "Actually, no. I need to join a group"?
Effie Nicol: I actually felt lost, and I thought to myself, "What am I doing?" I was in the lounge room trying to figure out the systems and work my way around everything. I felt really isolated. Then a colleague of mine worked at Yellow Brick Road and she used to pester me all the time: "You need to join us and we'll help you." Hence, I used her as my mentor to help me get systems up and running. I already knew how to process a loan, how to have a customer conversation, so it was just the technical backend to make myself more efficient, because I was used to one system. I knew Westpac inside out, back to front, so I could write a Westpac loan tomorrow no problem. However, there was so much choice and systems, and I needed to work out serviceability calculators. I was pulling my hair out.
Now, I'm actually more confident and I actually employ staff to help me with the backend process. I can do what I love, you see customers and help them. It makes a big difference. If I hadn't joined a team, I would have been so lost for a long time, and maybe I wouldn't have achieve so much in such a short time.
James Mitchell: I wanted to ask just in terms of building a franchise, building a business, a small business effectively, what have been some of the challenges of that? Obviously you've got the technical capabilities of doing the job of a broker, which is difficult enough, but then building and running a business as well. Did you get some sort of help or mentoring in terms of that business aspect?
Effie Nicol: What I did at the time I actually budgeted and had some money to keep me going to get myself established, because I actually started with zero income, and I actually have a friend of mine that I used to chat to and just run things by them. Obviously working at Yellow Brick Road I've got some great mentors like Andrew Morello. He's a good, energetic person that helps me. I also have Mark. I can bounce ideas if I want to, however I just make sure I budgeted carefully and I made sure I built a solid pipeline to make sure I can achieve my financial situation. I've actually exceeded, and I employ staff to help me. From a one man show, I've built the business in seven years to a very profitable business, and it's a huge achievement for a person that has never done it before.
It's about self-development. I actually read books to motivate myself, and I always make sure I budget and make sure I allow myself that I've got excess funds for a bad day. Like everybody, business goes up and down, but however, you need to plan ahead. That's where a lot of businesses fail, because they haven't done any planning. They just spend, spend, spend, and don't look at the future. I'm very diligent around that, and that's what I coach the staff, as well, to make sure that they're budgeting as well.
Annie Kane: How do you actually do that? Just for our listeners who might be thinking, "That's a great idea. I want to start doing that myself." How do you go about doing that?
Effie Nicol: Just like we organise a budget calculator for customers, I actually have a spreadsheet where I put my expenses down every day, and I know exactly what I'm spending. I get it ready for my baz, so therefore I always align excess cash in a buffer that I don't use to make sure it's available for a rainy day, so that I'm not in a situation where I've got no money. I'm always a step ahead. People are not very savvy with their money, and they keep spending it. I'm very fortunate that I'm very well-equipped in doing that, and it helps run my business successfully. I don't have the burden every day of not having money to run it. That's where a lot of brokers fail, because they just can't rise to the challenge and do what they love, because it's the financial burden. They got to go and get a PAYE job to pay their bills, because they don't survive.
I've got a friend that recently was a broker and he just couldn't cut the mustard, and he's gone back to work and get a paycheck because he can't feed his family.
Annie Kane: That's a shame.
James Mitchell: That's something which I think doesn't get enough attention is the self-employed aspect of the job and I guess also the nonconforming nature of a broker's income as well. It's funny, we often write features about nonconforming loans and specialist finance and stuff like that, but I mean a broker's job unless they've got a really well-built pipeline, like you said, is pretty piecemeal in terms of deals coming in and when they're getting paid, and stuff like that. We'll obviously move on to some other questions, but what was the transition like for you? You've talked about budgeting and stuff like that, but just in terms of going from PAYG to self-employed, how do you run your life and manage your costs when you're making that transition?
Effie Nicol: That was a big change in my life. I was used to having money, spending it all the time, and I really needed to buckle down and save my dollars for a rainy day. I didn't go out as often, and I actually cut down in spending, not buying outfits, not going out all the time. I had to really buckle down and make sure that I was focusing on the business. The biggest challenge was the first six to twelve months was the hardest, building the pipeline. Then after the 12 month period I just got stronger and stronger, and I made an incredible change in my life. My income was risen, like doubled overnight sort of thing, and I didn't have the pressure anymore. It gave me the opportunity to actually employ staff to help me.
James Mitchell: That's fantastic.
Annie Kane: You were saying it's almost seven years now that you've been doing this, but just going back to the beginning days and establishing yourself and finding those clients to get this money coming in, how did you go about doing that? What was it that you did to first get your name out there?
James Mitchell: Friends and family.
Effie Nicol: Friends and family but more importantly I actually met a solicitor and also I worked with the White Ladies Funeral. We set up a store at a shopping centre, and I worked through the shopping centre every day and just work in the evenings as well, and actually help them. Customers were coming over to talk about wills, and then I was having discussions about their finance. Then we could create more leads and referrals amongst ourselves, and that was the starting point for me is like, "You know what, I need to collaborate with women." Hence, I build a relationship with a solicitor that referred conveyancing deals to me. That really gave me a kickstart. From there I met other accounting firms, so I met another lady, an accounting firm, and I still have the relationship to date. It just opens other doors that you don't expect.
Initially I obviously had my existing Westpac customers that constantly contacting me, and I've still got them at Westpac and made sure that they are on the right product for the right reasons, and that grew from there, because they refer their customers and so on. The best referral source is your last customer. My last customer always refers me my next customer. Hence, that's why I'm still in business and moving on to my next branch, because I really want to make a difference.
Annie Kane: Do you ask your customers to refer to their friends, or how do you? You have to be quite tactful, I imagine, when you're doing that.
Effie Nicol: Every customer they always want to thank you, and they normally buy you a gift. I don't want any gifts. I want them to give money to charity, but I always say to them, "Just take a couple of extra cards," give them my name and number, and they always know someone that needs help. Everyone knows someone at work or their cousins have got a problem, or someone's going through a divorce, or someone down the road's got declined and they need someone else to have a look at it. There's always opportunities to discuss things with people. It's just putting your name out there, and hence that's why I'm always proactive. You can't be reactive. Sitting in your office waiting for your phone to ring, you'll never survive. You need to be proactive. You need to be looking for your next opportunity.
James Mitchell: In terms of the way brokers are remunerated, I mean because we cover the industry so much and we've been across the remuneration review and that sort of thing, and we know the way brokers run their businesses we're probably not as across the customer-facing aspect, because we don't speak to people who speak to brokers.
Annie Kane: We should do.
James Mitchell: We should do. We should do that definitely.
Annie Kane: Go find them.
James Mitchell: What I meant, or always been in interested in is the fact that brokers don't typically charge a fee. They're remunerated by the lenders and therefore the client's getting this amazing service basically for nothing in a world where we're increasingly paying for everything. What's the interaction like with a client once you've done all this work for them and you've done the finance, they're in their home, maybe their first home or whatever? What's the sense of gratitude they have when they haven't really paid anything for it? Are they surprised that they don't pay a fee?
Effie Nicol: They are. They're very surprised. They always say to me, "How much do I owe you?" I go, "You don't owe me anything. I'll get paid and remunerated by the back." Obviously we disclose that upfront, so they're fully aware exactly what they're in for. A lot of times they ring up: "Do I need to pay to come in?" I'm like, "There's no fee for service." They're surprised. They know at the end of the day that they've got a great customer experience, because when you go into one back you're restricted. They can only offer that product. When you're speaking to a broker, we've got various options that we can look at and make the appropriate recommendations to the customer to ensure that they've got the right service that they require and product to help their needs. It makes a big difference, and they know that now, and that's why they come and speak to brokers.
Annie Kane: I just want to talk about your actual customer base now. Were there any key trends in 2017 that you saw in terms of the finance you're writing or the types of customers that were coming to you for finance?
Effie Nicol: They're various types of customers. I had a lot of customers that wanted to refinance their mortgages, reason being is they had a lot of credit cards. They were using a lot of credit cards and they got to the point where they were just paying a credit card, paying a personal loan, paying a home loan, and they needed to free up their cash flow, and pay-
Annie Kane: And consolidate.
Effie Nicol: Yeah. Consolidate and pay the one mortgage. I needed to explain the offset facility to them because they don't really understand how to use their money smart, and the dollar for dollar each day. A lot of the clients, their pay, they put them in different bank accounts, for example. One's in Commonwealth, the one's in ANZ, and their mortgage is with a totally different bank. Then you have to explain the concept and the benefits to them and show them, demonstrate the savings pattern. It makes a big difference. I've addressed that with numerous customers this year, and I think that'll be the trend moving forward, moving forward all the time. It's going to become a common thing for people, because if it's a couple what they want to do: spend one pay, and pay their bills with the other. That's the common trend.
Annie Kane: I should also probably mention at this point that you also have a diploma in financial planning, which you brought on later and a few years after you started broking. What was the decision, I mean obviously there you're talking about you've got great wealth management strategy and trying to actually understand finance just from a basic level, but what was the decision to start broking and then move in to also doing financial planning too?
Effie Nicol: Working at Yellow Brick Road they are a wealth management business, and I wanted to be able to understand the financial planning side. It was more for self-development. I wanted to be able to understand what the customer needs were, and hence I took on the education piece to make sure I can have a conversation with a customer at that point in time. Now, I've been more focused on the mortgage broking and the women in finance, and the notions of charity work and self-development in that part, that I now have a specialist that looks after the financial planning piece for me.
Annie Kane: You started talking there about the charities and women in finance work that you do, which is always, I think, such a fascinating side of things. It sounds like you're doing such great work. I know that you were president of women in finance for YBR separate from Momentum Media's Women in Finance initiative, I should mention. What's driving that force for you? You also mentioned at the beginning that a lot of your refers to begin with were from women, and you were supporting that network. What is that's important to you about supporting women in this industry?
Effie Nicol: What happened to me, when I joined Yellow Brick Road I was in Crow's Nest and I remember walking into the room, and it was the first date meeting. I thought to myself, "Where are all the women?" It was all men. At that point in time I thought to myself, "I really need to make a difference. I'm going to do this." I organised a solicitor, at the time a referrer, and myself went to the PR person and I said to them, "We need to have a women event. We need to run women in finance." It was earlier on in the piece, so there wasn't many women. The initiative was put on hold for a little bit, but then I was fortunate a couple of years ago that we brought it forward, the business grew, we were having a recruitment drive for women, and here we are, we're going to celebrate two years anniversary this year on the 8th of March on international Women's Day. It's going to be our second year anniversary.
What I do is help the other women now, women in finance and also we've got other finance women that join us as well. I organise events to educate them. Last year we had a women and wellness well-being event. We were supporting the Her Heart. Yeah. Do you know that there's about in Australia in general there's at the moment last year was over 8,000 women that passed away from heart disease. It's very important that people are educated to look after their health, because your wealth is your health. I want to make sure that we actually help our colleagues and help them get better at improving their health. I want to make sure they can help their family as well, and I want to make sure we work as a community together.
I've got big plans for this year. I'm going to run another event, as well, and I want to do more volunteer work as well and get the ladies involved in actually making a difference.
Annie Kane: Will that also be with Her Heart or is it with different initiatives?
Effie Nicol: I will also do Her Heart, because it's very important. It's the biggest killer for women, and then we've got cancer. Last year I did an event for a lady at Bardwell Park. Her kid goes to the school at the preschool there, and we all came together and the preschool organised an event to raise money for her therapy, because the drug that she requires is not supported by the government, so you've got to fund it yourself.
James Mitchell: Yeah. Not on PBS.
Effie Nicol: It makes a big difference. The community came together, and was such a buzz in the room. I've also been to their art show, and I saw the education piece on the children. We've got so much potential in the community. Want to be out there speaking to the people and making a difference.
James Mitchell: I think that's fantastic, and I think mortgage broking probably the only other industry which would have that sort of, I guess, opportunity for that level of community engagement would be real estate maybe, because they're community-minded as well. I think it's such an important thing to ... You obviously service your community, you're helping house your community, or at least get finance for the people in your local community, but doing some work for charity or just helping human beings is so important. When you're talking about the health, I mean it's funny, we write news and features and produce content about high achievers and all this sort of stuff and building a business and being gung ho, but if you don't have your health it really doesn't amount to much. I think that it's really important to focus on that stuff. Good on you.
Annie Kane: That's why you're now heading up Wellness Daily which ...
James Mitchell: Wellness daily. That's right.
Annie Kane: ... you might have seen in the bulletin now. We have a story every day that comes out which is meant to be supporting Australian businesses in their wellness, their health.
James Mitchell: Yeah. Personal well-being and mental well-being.
Effie Nicol: That is excellent, and last year I also had a week of Odd Socks to the stigma mental health. My uncle has dementia, and every Friday I spend my evenings going there and helping the dementia patients. Try to have a conversation with them and just treat them like normal people, because they're really suffering. They can't control their actions and it's an eyeopener for me, that, hey, I'm healthy today and I'm here helping other people, and hence so I make a habit of doing that every week, because it gives you a realistic approach of, hey, I'm very fortunate and I can do everything I can every day to make a difference. It makes a difference. I want to continue that every year. I want to move on to so many different things.
James Mitchell: Is there a culture within your business, within your office and within yourself and the people that you work for where it allows for the flexibility for people to go and spend time on themselves with personal development or do some charity work and that sort of thing? Is there that sort of thing flexibility?
Effie Nicol: In the day-to-day obviously it's very busy, so we need to coordinate time to do that, so a lot of the volunteer work is after hours on the weekends. We do a lot of charity work in the evenings, and obviously on the weekend, because during the day we need to make ourselves available for our customers which is important. That's what's important. You need to in broker world it's not a 9:00 to 5:00 job. You need to be available with the customer and you got to work around whether you go and see them at work, whether you go to home, because their hours are busy too.
Annie Kane: Well, I think this is one of the things that we keep on seeing in 2017 and probably in 2018 I imagine coming up as well will be this focus on good consumer outcomes. As you say, making yourself available to be available for the consumer, I think a lot of the time brokers don't get enough recognition for that. They're so flexible that they're a lot of the time really bending over backwards to meet these good consumer outcomes.
James Mitchell: Not many people will go do house calls and go and visit you wherever you are to set your finances.
Annie Kane: I think in terms of we've had so many reviews and now the Royal Commission into, which will also now cover mortgage broking too. I think it's really one of these elements is talking about, well, actually it's almost a great opportunity for brokers to be like, "Well, we can actually show and demonstrate what we're doing to government." And be like, "This is what we're providing. These are the good consumer outcomes we're providing." I wonder what your thoughts are on these reviews and commissions that have been coming out?
Effie Nicol: Yeah. It's important that they review all parts of the finance industry, and it'll be interesting what the outcomes will be for all of us. Hopefully it will be an improvement, and that everything will make it easier for us as well, because there's a lot of red tape and a lot of policy changes, and we need to be constantly up to date. It'll be interesting what the outcome is and whether the money will be well spent.
James Mitchell: I think with regulation, I mean it always results in, I guess, a stronger industry, which is what people such as yourself would want, which is what the successful brokers who are doing good who are achieving great client outcomes is what they want. You're obviously going to have a few bad apples on the fringes, but I think with regulation they'll fall by the wayside. I've been saying for quite a few years now what's happening in Australia is similar to what happened in the UK where they had the increased regulation, but it actually strengthened the sector and you got a much greater market share. Fewer brokers, but greater market share, because I think the brokers that are really in it for the clients and for the growth of the industry will take on the regulation and the compliance and just carry on professionally.
It'll be those ones that are maybe part-time or aren't keeping up with compliance which will fall by the wayside. I think that'll just be a natural thing.
Annie Kane: I think that's pretty much all we have time for today, so Effie, thank you so much for coming in.
James Mitchell: Yeah. Thanks for your time.
Annie Kane: Best of luck opening your new store.
Effie Nicol: Thank you so much and thanks for having me.
James Mitchell: No worries.
Annie Kane: We'll look forward to hearing more about it in due course. Thank you all for listening. Best wishes for a happy and healthy 2018. We'll be here next week with Travis Meyer from Finance Detective, so stay tuned for that. Thank you.
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