Australia's third party channel continues to go from strength to strength, but who are 2012's best performing brokers?
THE FORECAST IS GROWTH
Australia’s broking channel continues to go from strength to strength, according to The Adviser’s Elite Business Writers ranking
THE UNSTABLE global environment has not put people off jumping into the property market, if The Adviser’s Elite Business Writers report is anything to go by.
According to this year’s report, brokers are writing more residential mortgages than ever before.
While last year’s top 50 business writers all managed to settle more than $50 million in residential mortgages, insurance and other financial service and product volumes combined, this year’s top 50 each wrote more than $60 million – highlighting the ongoing strength of the property market and the broker proposition.
In addition to this impressive statistic, the data revealed that each of The Adviser’s Top 50 Elite Business Writers managed to settle, on average, more than 200 residential mortgages over the last 12 months – significantly higher than the 180 recorded this time last year.
Interestingly, the latest data from the Australian Bureau of Statistics (ABS) shows lending for owner occupiers has fallen approximately $1 billion in the last 12 months. Looking at the July statistics, housing finance for owner occupiers was approximately $13 billion in 2012 – a far cry from the $14.5 billion recorded in 2011.
So while lending has fallen, brokers are writing higher volumes than ever before which suggests the broker proposition is improving.
Moving forward, I believe mortgage brokers who continue to provide their clients with an unbeatable service can expect to see their numbers grow, regardless of what the market is doing.
I would like to congratulate those brokers who make up the top 50 in this year’s Elite Business Writers ranking, and I commend all brokers who participated in this year’s survey.
I would also like to extend my gratitude to our industry sponsor, the Commonwealth Bank of Australia, for making the 2012 annual Elite Business Writers ranking a resounding success.
RESILIENT BY NATURE
In this year’s Elite Business Writers Ranking, the nation’s top brokers have shown how passion and adaptability are the keys to success
OVER THE last 12 months, Australia’s mortgage brokers have proven just how resilient they are.
They have continued to adapt to the implementation of licensing and legislation and the enhanced educational requirements including the Diploma.
They have adjusted to market conditions and shown the ability to grow and prosper.
Their ability to adapt highlights just how passionate they are about the industry in which they work. In addition, their adaptability continues to pay dividends in the form of greater market share.
Over the last 12 months, the broker proposition has gone from strength to strength and this is clearly highlighted in The Adviser’s Elite Business Writers ranking.
From the report, we can see that there are many brokers who continue to write incredibly impressive volumes, regardless of the slow credit growth in our market.
The Commonwealth Bank of Australia is proud to be the leader in such a vibrant, strong and passionate industry.
We are also pleased to partner The Adviser’s 2012 Elite Business Writers Ranking.
At CommBank, we understand how important strong relationships are in business, which is why we are constantly looking at ways to improve the relationship our brokers have with the bank. We know that productivity is essential for success and we are offer training and processes to brokers to improve their own business productivity.
Relationships remain a core focus for CommBank and this year’s ranking shows brokers with sound bank partnerships can enjoy solid results.
I would like to congratulate all of the brokers who make up this year’s ranking – you should all be very proud of your achievements.
BETTER THAN EVER
Australia’s third party distribution channel continues to perform strongly as the broker proposition resonates with buyers in an increasingly complex lending environment
THE LAST 12 months have definitely been interesting.
Over the course of the last financial year, Australia’s mortgage brokers have had to come to terms with the new legislative environment and their enhanced educational requirements.
While many believe the Diploma requirement placed upon brokers is too much too soon after the National Consumer Credit Protection Act was introduced, there is no argument that the additional educational requirement will ultimately lift the standard of the industry.
The legislation, on the other hand, has not been met with the same level of respect.
According to a recent The Adviser straw poll, 71.3 per cent of brokers believe the NCCP has had a negative impact on their business.
Of the 307 respondents, just 11.7 per cent of brokers believe the NCCP has actually had a positive impact on their business.
Furthermore, when asked whether or not licensing had rid the industry of unprofessionalism, the overwhelming majority said no.
More than 76 per cent said unprofessional brokers still exist despite the legislation, while 23.3 per cent were slightly more optimistic and argued that the new licensing regime had helped rid the industry of wayward brokers.
But brokers have not just had increased compliance requirements under NCCP to contend with; the third party distribution channel has also had to battle global economic uncertainty.
According to a survey conducted by the Housing Industry Association (HIA), global economic uncertainty in Europe is deterring some potential home buyers from entering the property market.
New home sales slumped 5.6 per cent in July 2012, reflecting a 5.5 per cent fall in detached housing purchases and a 6.4 per cent drop in the multi-unit market.
HIA chief economist Harley Dale says global uncertainty and the prospect of little capital gain is keeping a lid on demand from investors and people seeking to upgrade to a bigger home.
In addition, data from the Australian Bureau of Statistics (ABS) found the value of lending to owner occupiers fell $1 billion in July 2012 in comparison to July 2011.
Despite this, Australia’s top brokers have managed to knuckle down and write some impressive volumes.
In fact, in this year’s Elite Business Writers ranking every broker managed to record volumes over $60 million – a feat not previously achieved.
Furthermore, the top 50 loan writers also managed to write, on average, 202 loans per year – significantly higher than the 180 achieved this time last year.
So, what is helping the industry’s best to write more business?
The answer is simple: diversification.
In the 2011/2012 financial year, more than 50 per cent of Australia’s elite business writers added a revenue stream to their business – suggesting they are using diversification to drive their businesses forward.
According to the Elite Business Writers ranking, almost 20 per cent of brokers said 80 per cent of their business included an associated cross sell product.
In fact, just 5.6 per cent said none of their business included a cross sell product.
Of the top 10 business writers, on average, 78 per cent of their business included the cross sell of an associated product.
The ranking’s overall winner, Justin Doobov, says he cross sells to 100 per cent of his clients.
“While clients come to us for a home loan, if you talk to them, listen to their situation, you will find that, in every instance, your client requires more than one financial service or product,” the Intelligent Finance director says.
“It could be something as simple as a credit card. Ultimately, the more products you offer, the stickier the client.”
And Mr Doobov would know. The broker wrote more than $167 million in insurance over the course of the financial year.
In addition, he wrote more than $15 million in other financial services including commercial mortgages, leasing and equipment finance, business loans and personal loans.
And Mr Doobov is not alone.
Second and third place recipients, Jeremy Fisher and Warren Dworcan, respectively, also heavily diversify their core financial services.
Both Mr Fisher and Mr Dworcan wrote more than $100 million in insurance or other financial services such as commercial mortgages and cash flow finance.
But Rate Detective Home Loans’ Mr Dworcan says diversifying wasn’t just about gaining an additional revenue stream.
“With the NCCP changes and compliance, we were positioned to make sure we were facilitating reviews to give our clients adequate protection,” he says.
“From there, we tried to develop touch points with clients in a few different areas to make them stickier.”
And stickier they have become, with two thirds of clients returning to Rate Detective Home Loans for an additional service in the last three years – a
statistic that ultimately helped Mr Dworcan claim the third position in this year’s ranking.
To be considered an Elite Business Writer, a broker needed to have written a minimum of $25 million in residential mortgages in 2011/2012.
Loan writers were also required to meet the following criteria:
To ensure transparency, information provided by brokers was cross-referenced against that held by the broker’s number one lender.
Brokers’ volumes for residential and non-residential business were then combined to give a figure for total business written.
This figure was then used to determine the overall ranking in this year’s list.
The top 50 loan writers (based on total volume) were assessed against a range of criteria to create individual top 10 rankings for key business indicators such as residential volumes, mortgage size and number of mortgages that included a cross sell.
The Adviser took into account that some brokers utilise support staff in their businesses.
In this ranking, brokers were allowed to include any work that their administration staff does as their own.
However, brokers who have additional loan writers on their team were not allowed to claim their volumes as their own.
TO BE THE BEST
This year, The Adviser decided to find out exactly what it takes to be an Elite Business Writer and the results were enlightening
WHEN DESCRIBING Australia’s elite business writers, there are a few ‘buzz words’ that often get tossed about: diversification, perseverance and passion, to name but a few.
While there is no doubt Australia’s best business writers are passionate, persevering brokers, who don’t let hurdles such as global economic uncertainty, the flat property market and NCCP get in their way, there are other contributing factors that help make a broker ‘successful’.
In a desire to uncover what these ‘other factors’ are, The Adviser decided to survey all of Australia’s top business writers and ask what it takes to run their business at full speed.
While almost all of the top business writers admitted that support staff was critical to the successful running of their business, the majority only currently employ one support staff member.
According to the survey, 42.1 per cent of brokers have just one support person on staff, while 10.6 per cent said they didn’t currently have a support staff member on board.
The rest of the brokers admitted to having two or more support staff on the payroll.
THE BEST REFERRAL
Just like a good credit support employee can free a broker up to meet more clients and ultimately write more business, a good referral partner can also help a broker write greater volumes.
According to the survey, real estate agents make the best referral partners, with more than one in five brokers admitting their real estate agent was their number one referral source.
Accountants and financial planners also faired quite well with 9.4 per cent and 8.5 per cent of brokers, respectively, admitting that these professionals were their number one source of referrals.
Professional referrers aside, the majority of mortgage brokers said their existing database was the best place to source new business.
As per the survey, more than 50 per cent of brokers say their existing database is their number one referral source. With this in mind, it is fair to assume that a broker’s existing clients can provide them with significant new business opportunities, as the survey revealed that the majority of brokers source approximately 75 per cent of their business from new clients.
When asked what percentage of their business in the 2011/2012 financial year came from new clients, 41.5 per cent said 75 per cent.
34.0 per cent said 26 to 50 per cent of their business comes from new clients, while 16.0 per cent said up to 100 per cent of their business is made up of new borrowers.
That said, these new clients are rarely first homebuyers, with the majority of Australia’s elite business writers admitting they write the most business with investors and second homebuyers.
Just 12.6 per cent of the top 50 said first homebuyers account for the lion’s share of their business. 44.7 per cent said second homebuyers were their bread and butter, while 39.8 per cent said it was investors.
DIVERSIFICATION IS FOREVER
Regardless of who a broker’s target market segment is, all of Australia’s elite business writers have one thing in common – they all cross sell additional products to their clients.
According to the survey, 66.4 per cent of the elite business writers said they cross sell two or more associated products to their clients – highlighting just how important diversification is to an elite business writer’s bottom line.
In addition, 57 per cent of the elite business writers admitted to adding to their revenue stream this year by including another financial service.
All of this suggests Australia’s top performing brokers know that the key to success is diversification.
THE BEST IS YET TO COME
While The Adviser’s number one Elite Business Writer, Intelligent Finance’s Justin Doobov, has achieved a lot in his career – including a very impressive loan book – he remains optimistic about the future and believes the best is yet to come
Q1. WHAT IS THE SECRET TO YOUR SUCCESS?
I don’t take no for an answer from a lender. At Intelligent Finance we always look for a unique angle to help get the lender on board so that they will approve our client’s loan. This may involve workshopping a loan with the credit department before a loan is submitted, or even spending a day at a client’s work to get a more in-depth understanding of their business so that we can explain the merits of the deal in more detail to the lender.
Q2. YOU MANAGE A VERY IMPRESSIVE BROKERAGE COMPANY - WHAT SKILLS DOES A MANAGER NEED TO HAVE?
In any business, not just a brokerage business, the most important skill to possess is people skills. While I feel very lucky to have been able to grow a leading mortgage broking business, I could not have done it without being able to harness the power of people. My team have been one of the key factors to Intelligent Finance’s success. We always hire new team members who have the right attitude - this can’t be taught. You can however, always teach someone how to write mortgages.
Q3. YOU SELL A LOT OF INSURANCE - HOW DIFFICULT WAS IT TO INCLUDE INSURANCE INTO YOUR OFFERING?
Not difficult at all, it’s just a matter of asking the client the question. It doesn’t matter what the new product or service is that you want to add to your complimentary products, if your client will benefit from the product or service and they are not adverse to having it, then just asking the question is 90 per cent of the sale done.
Q4. HOW CAN A BROKER (WHO DOES NOT CURRENTLY OFFER INSURANCE) SUCCESSFULLY SELL/OFFER INSURANCE TO THEIR CLIENTS?
Just ask the question, “Do you want insurance with that?”. Sure you will get knocked back a few times, but you will also close a few deals while you learn how to ask the question more convincingly and slowly increase your conversion rate. In the end, insurance is a product that clients need, so don’t see yourself as needing to “sell” it to a client, rather, see it as providing a solution – because that’s what you’re doing.
Q5. WHAT IS THE BIGGEST BUSINESS HURDLE FOR YOU AT THE MOMENT?
Over the past year we have invested heavily in improving our processes and making the business more efficient and more cost effective to process each application. The biggest issue I have found in recent times is that a lot of lenders have lost their good staff, and replaced them with inexperienced staff on the front line of their credit departments and processing departments. This therefore causes us to run inefficiently as we are constantly having to fix up mistakes inexperienced lending staff make. I guess this is one of the reasons clients love using Intelligent Finance. We deal with the headaches for clients so they can rest easy knowing they are in safe hands.
Q6. WHAT PERCENTAGE OF YOUR CLIENTS ARE REPEAT OR REFERRAL BUSINESS?
We have never had to spend money on conventional advertising, so all of our business is either from repeat clients or referred from happy clients or referrers. Our clients are so impressed with how we have been able to help them, that most of our clients have already referred us to at least one other person even before their loans have settled. We don’t like to ask our clients for referrals, instead we like to provide them with a six star service.
Q7. WHAT IS BUSINESS LIKE FOR YOU AT THE MOMENT?
We have been very lucky to have been busy every day for the past nine years. There has never been more business for brokers in the market than now. We add so much value to a client’s purchase or refinance – so saving clients money on a low interest rate is only the start of what we do. There are opportunities everywhere you look. Whether the market is going up, down or sideways, people still need a loan and they need our assistance to help them through the maze of options.
Q8. WHAT DOES THE NEXT 12 MONTHS HOLD FOR YOU AND YOUR BUSINESS?
Growth in revenue. Over the last 12 months we have made the business more efficient. Because of this, I will now have more time off to spend with my lovely wife, daughter and soon to be born baby. I love coming to work each day, the future is exciting.
THE OTHER SIDE OF FINANCE
When the residential property market goes flat, it often pays to look outside the square and delve into other financial services, just like Adam Grocke did
WHILE ADAM Grocke’s key area of expertise has always been residential mortgages, a flat property market forced the broker to look outside the box and see what other business opportunities are out there.
“I saw the commercial market was really heating up, so I decided to tap into that area,” he says.
And tap into it he did – over the course of the 2011/2012 financial year, Mr Grocke wrote $100 million in commercial mortgages.
“The commercial market took a hit over the last year in terms of prices, which encouraged a lot of people to buy into the market,” he says.
“When prices are low, it is always a good time to buy – so I just tapped into that positive sentiment.”
Of course, writing $100 million in commercial mortgages wasn’t easy.
By his own admission, writing a commercial loan is vastly different to a residential mortgage.
“Some commercial deals can be very complex, so it really pays to know your stuff,” he says.
Working in an all-servicing financial house like Johnston Grocke, has ultimately helped Mr Grocke in the education process.
“Johnston Grocke has been around for approximately 20 years and we have accountants and financial planners all working out of the same office – so there is a lot of knowledge sharing in-house, which makes writing commercial loans a lot easier.”
That in-house knowledge sharing has also helped Mr Grocke to write significant business in other areas, including $250,000 worth of equipment and leasing finance and $28 million in loan/mortgage protection insurance.
“I am lucky in that I work for a great company that is committed to excellence,” he says.
So committed to excellence in fact, that the company contacts its preferred lenders and organises additional PD days for its staff.
“The additional workshops help us to extend and expand our knowledge. Our lenders are more than happy to come out and conduct additional training courses because they know they will benefit down the track,” he says.
In addition to the extra PD days, the company also casually catches up with its preferred business partners once a quarter to help “keep the relationship strong”.
“In this industry, you have to take the front foot. You cannot wait for people to come to you – you have to be proactive in every area including education, tapping into your existing database and even marketing to new clients.”
A NEW WAY OF THINKING
Australia’s number one residential mortgage writer, Mark Davis, talks about his point of difference in the market and what it takes to be a successful broker
WRITING HIGH residential mortgage volumes isn’t dependent on the state of the market, The Adviser’s Elite Business Writer Mark Davis says.
According to the Australian Lending and Investment Centre director, writing high residential mortgage volumes is dependent on a broker’s business model and their client base.
“I target high net worth investors who aren’t risk averse. The investors I target are savvy business people,” he says.
So how does Mr Davis and his team at ALIC find these types of clients?
“Word of mouth is the best form of marketing,” he says.
“We don’t advertise and we don’t market our services externally. Instead, we let our existing clients do the selling for us.”
Mr Davis says brokers who build strong relationships with their clients, can almost guarantee their clients will pass their details on to friends, family and colleagues.
“We are all about building relationships. We want to make sure the service we provide is second to none, which is why we spend so much time with each client discussing their budget plans and investment goals,” he says.
“We don’t just deal with people who are ready to buy a home.
“We deal with people at every stage in their property investment career.
“We make sure we put each client on the right path – the path that will ultimately lead them to their end goal, whatever that may be.”
But while these existing clients do make excellent referrals, they are not Mr Davis’ only method for generating new business.
The broker also enlists the help of several professional referral partners, including buyers’ agents, lawyers and accountants.
By his own admission, the Australian Lending and Investment Centre partners with some of “the nation’s best businesses”.
“We have great referral partners who provide us with quality warm leads,” he says.
Of course, when it comes to generating leads from professional referral partners, Mr Davis remains realistic.
He understands that to generate a good number of business leads, brokers must refer a good number of leads onto their partners.
“I am a big believer in helping build other people’s businesses,” he says.
“By supplying my referral partners with an excellent number of strong leads, I know that they will return the favour. You have to give to receive.”
Highlighting just how committed ALIC is to building its referral partners’ businesses, Mr Davis says he referred 32 “warm” leads to his legal referrer over a 10 week period.
THE ROAD AHEAD
Moving forward, Mr Davis says he will continue to support his referral business partners in a bid to build his own business – the company aims to settle more than $1 billion in mortgages within three years.
While this is a big ask for any company of any size, Mr Davis is bullish that his medium-sized brokerage can achieve its goal.
“We will write more than $500 million this year – so we are definitely on the right track,” he says.
The biggest challenge for Mr Davis and ALIC moving forward is recruiting the right talent to help the business write its desired numbers.
“It is always hard to find the right people.
“There’s a massive skill gap out there and we believe that a lot of brokers and mortgage writers really don’t have the knowledge or the expertise to be able to arrange loan structures correctly, which is why we have to recruit carefully,” he says.
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