A new diploma specialising in commercial and asset finance is set to launch next month, enabling brokers and bankers to become qualified specialists in this area.
Last year, the Commercial & Asset Finance Brokers Association (CAFBA) and Institute of Strategic Management (ISM) partnered to launch a new Certificate IV in Financial Services; Specialising in Commercial and Asset Finance.
The course – which contains four modules covering the basics of commercial and equipment finance, including the products used, the tax treatments, legislative issues and regulation, marketing, pricing and credit – was developed to “attract a new generation of brokers for whom a credential is a necessary first step”.
This Cert IV is now to be followed by a diploma, which is set to launch by the end of May 2019.
According to CAFBA president and director of Quantum Business Finance, David Gandolfo, the younger generations coming into the job market (such as Millennials) are attracted to professions that offer a structured career path.
He said that developing a qualification system therefore ensures that the profession continues to attract new participants while simultaneously raising the professionalism of the sector.
Speaking to The Adviser, Mr Gandolfo said that the launch of the diploma was coming at an opportune time, as more residential brokers are moving into the asset finance and commercial space as a means of diversifying their offerings to customers and bringing in new revenue streams.
Mr Gandolfo said: “We welcome resi mortgage brokers diversifying their business by moving into other parts of financial services, particularly asset finance, but they should understand and they need to be aware that asset finance is very different to mortgage broking.
“There is a lot of talk from some aggregation groups encouraging their members to move into new spaces, but we are concerned that some may be doing it without really talking about the necessary skills and training that you have to have in order to be successful in that market,” he said.
Mr Gandolfo said he believed that anyone operating in the commercial and asset finance space has to have “a very good understanding of how a small business operates because a business client who comes to you is looking for a solution, and you can’t offer a solution if you don’t understand their business”.
He elaborated: “Asset finance is more than just being able to write car loans… Asset finance is about plant, machinery, equipment, infrastructure and it requires you to understand the cash flows and tax position of a business and where that business has been, where that business is going, and what that income producing asset will do for that business.
“It’s not about simply providing money for a lifestyle asset or a leisure asset, it’s about an income-producing asset – a very different concept.”
Mr Gandolfo said that the new diploma will therefore be offered to brokers, business bankers and banking BDMS to give all facets of the finance sector “a very good grounding in commercial finance, how to read a balance sheet, how to understand what the customer needs, and the product knowledge”.
He concluded: “Our prime motivator is good customer outcomes, and you can only have good customer outcomes if you know what you’re doing.
“We welcome people into our market as we need regeneration, youthfulness and diversity in our market, but we also want to make sure that the people coming in have the correct skills so that the integrity market – which we have built up for 10 years – is maintained and that people who come into it have a career.”
He said: “We are not about to let those standards go in order to let a whole lot of other people into the market without them having the required knowledge to provide good customer outcomes.
“So, we would certainly discourage lenders from accrediting brokers with an asset finance product unless they understand what that product is and how to use it. Because the right product in the wrong hands can produce very bad outcomes,” he said.
It is expected that the diploma will be followed by a higher level qualification, based on the Certified Lease & Finance Professional course in the US, which attracts the CLFP post nominal. CAFBA and the CLFP have been working with academics to “Australianise” the qualification over the past few years, and it is hoped that the higher level qualification will launch next year. This course is supported by the Equipment Lease and Finance Association (ELFA) of the US and is adopted by the US major banks as the pre-eminent industry qualification.