Under conditions of uncertainty, the demand for strong and effective leadership becomes a necessity. Tas Bindi speaks to leaders about how the broking industry could approach leadership in 2019 to ensure their businesses can survive change and thrive in the aftermath of the royal commission.
Whether change is positive or negative, exciting or demoralising, much-needed or unnecessary, the effects of change can be felt at every corner of a business.
There are certainly a number of question marks hovering over the broking industry, as Rob Emmett, the founder and CEO of Collins Home Loans, notes.
“It is an incredibly volatile time in the industry at the moment,” Mr Emmett says, touching on the financial services royal commission.
“Any move to reduce the value proposition of the mortgage broker network would ultimately end up handing power back in the hands of the banks, leaving millions of mortgage customers with no access to credit outside of the big four banks.”
In the face of change, leadership will require a leader, in collaboration with the broader business, to address beliefs and mindsets and develop practices that help people adapt to change.
According to Jason Back, director of Broker Essentials, it’s always worthwhile engaging staff in discussions and decisions about the changes that are or could be taking place, such as through “fireside chats”.
“A fireside chat for me is about getting my staff to ask questions that they’re probably a little bit scared to ask, such as about the royal commission, about what [CBA chief executive] Matt Comyn said in relation to how he sees commission structure working and what would work for CBA versus what works for brokers and what that could mean for the future of the industry. It could be questions around the future of the business like ‘Do you see us expanding?’, ‘Are there buyers of brokers and back books at the moment?’,” he says.
“I don’t believe you can over-communicate, [because] generally the complaints are ‘I didn’t know’, ‘You didn’t tell me’, ‘I was worried because XYZ’, [which are] all about under-communicating.”
Mr Back also suggests that leaders prompt employees to ask questions rather than expect them to come forward at their own will.
“In the current environment, good leadership is about asking questions [such as], ‘What do you want to know? What are you worried about? Tell me how you feel’,” the Broker Essentials director says.
According to Mr Back, these questions are the starting point to getting the most out of employees because “they work their best when they’re feeling their best” and “they feel their best when they’re well communicated with, well educated and able to make informed decisions.”
He says he talks to his staff about topics such as the findings of the Hayne royal commission and the recommendations that could be presented in the final report, as well as the changes that the Labor government could make in regard to capital gains tax or negative gearing if the party is voted in at the next federal election and what those changes could mean for the marketplace.
“The harm factor [comes in when you] leave your staff to go out there and find parts of messages or [become] partly informed and then talking about that at the water cooler,” the director says.
According to Peter White, managing director of the Finance Brokers Association of Australia (FBAA), when there is disruption and uncertainty, it’s important that leaders “keep a cool head”.
“It’s very easy to be very emotive about things. People get passionate in our industry, and rightly so. But sometimes that passion gets in the way of clear-headed [thinking] and it can distort what you’re trying to achieve,” he says.
“Being able to sail the ship with a clear mind is beneficial to the journeys that are ahead of us. I know that we’re not going to be seeing anything that will sink the Titanic by any means, but there’s still a bit of nipping and tucking that’s going to happen.”
Rob Ryan, FAST’s head of Northern Region, believes the “key” for leaders in 2019 will be having a nuanced understanding of the markets in which they operate, including the challenges it faces, by asking stakeholders the right questions, taking quality quotes, as well as leveraging insights gained through technology-driven data analysis.
“In a market that is facing into so much disruption, the Combined Industry Forum is a clear example [that] to me demonstrates how leaders have come together to represent the industry and share their best ideas on how to shape the broking industry of the future,” he says.
FAST, as with other aggregators, will seek to keep brokers informed on the latest from APRA, ASIC and the Combined Industry Forum through regular consultations via forums, professional development days and targeted communications, according to Mr Ryan.
It will also continue to deliver training programs to help brokers diversify their offering so that they’re able to cater to more of their existing and future clients’ needs.
“I believe sound leadership, in this case, means not just showing the path but also guiding brokers step by step along the way,” Mr Ryan says.
“We are seeing a shift in customer demand for more advice-based services, and we believe brokers who adopt a diverse business model will be better prepared for the future to cover the complete financial needs of their customers.”
Meanwhile, Mr Back suggests that brokers could focus on their back book and “getting the best deal you possibly can to set your clients up for purchases in 2019 and beyond.”
“You have to be strategic in your current business and [have realistic] expectations about how hard you’re going to have to work to get the same amount of revenue in the door, because there’s no doubt that things are 25 to 35 per cent harder now than they were 12 months ago,” he says.
Mr Emmett, meanwhile, says it would be worthwhile finding a good mentor, especially for emerging and new leaders.
“There is so much benefit to learning your trade under the watchful eye of a qualified mentor. There is nothing like the wisdom and support of a mentor to help you through your career, sharing knowledge and experience,” he says, explaining that this is why Collins Home Loans has a structured employee mentoring program in place for brokers.
In the face of change, Mr Ryan advises industry leaders to avoid “being complacent” and ensure that their businesses have “robust risk management processes in place”.
“Change is a constant, and leaders need to continually stay on top of industry and consumer trends in order to provide the best support and service,” he adds.
It’s also important that leaders avoid isolation, according to Mr Back.
“I think the thing that leaders across the board next year need to do is be kind to themselves and realise it is difficult and ask for help. Don’t be a martyr. We’re all going through this together,” he says.
“Remember, with change comes opportunity, so it’s an exciting time. Yes, there are threats, but there always will be. Why are there threats to our market? Because it’s a great market to be in.”
The Broker Essentials director recommends industry leaders to “be alert, not alarmed”.
“You need to know change is happening, but if you are in panic, you get distracted. That’s when there’s real danger,” he says.
Likewise, Mr White, the FBAA managing director, says: “It’s not about waiting for the storm to pass. It’s about learning to dance in the rain. These things that happen around us will always be there. We’ve got to learn to deal with it and make the best out of every move we make.”
Tas Bindi is the features editor for The Adviser magazine.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.
The Adviser’s EU Study Tour 2019 took place in Dublin, Ireland,...
The head of the FBAA has expressed strong support for the ACCC’...
In a post-royal commission environment, brokers are labelled the ...