The Adviser talks to Hank Hong about the decision-making process behind choosing an aggregator for his new business, how keeping in touch over social media turned many of Hank’s clients into life-long friends, and why he believes the emergence of online disruptors won’t have as large an effect on brokers as many believe.
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James: Hello and welcome to Elite Broker. I'm your host, James Mitchell, editor of The Adviser. Today we are joined by our regular co-host, Annie Kane, deputy editor of The Adviser. How are you doing Annie?
Annie: Good, thanks James. How are you?
James: Not too bad. We've also got Hank “The Bank” Hong in the studio with us. How you doing Hank?
Hank Hong: I'm doing very well today.
James: Good stuff. Hank's a big name in mortgage broking. He was a regular in our top 30 brokers under the age of 30 for quite some time. A little bit over the 30 mark now but still…
Hank Hong: Yeah, 32. An old man in a young man's game now.
James: ...but still very much at the top of his game. Started the New Year in 2017 by branching out on his own. He was with Homeland Experts for quite some time and looking to do his own thing now. We'll ask him how it's all been going. What's the plan, Hank?
Hank Hong: The plan is, at the moment we're still in the planning phases. It's only been about three or four weeks. Having an aggregator onboard they pretty much give you the checklist. They give you ideas, all the licencing and compliance you have to get through. They hold your hand through that. Then they bring you into, here's the systems. There's webinars in there. After that you're left to your own devices.
There's always the help there from the BDM and everything else but the best way to learn anything is to be thrown in the deep end. Pretty much from Christmas Eve to about New Year’s I was sitting there working out the systems, working how it works for myself and during that time, once the emails and the CRM systems were up and running it was contacting, not really contacting but waiting for a flow of clients to come through.
James: Did you spend some time I guess shopping around aggregators?
Hank Hong: Yes. I did meet up with pretty much the big four aggregators. I came out of Connective which is a great aggregator itself. Sat down with quite a few BDMs, looked at their systems, looked at their software. There was a lot of shopping around. And a lot of coffees.
Annie: What was it about eChoice that made you select them?
Hank Hong: Out there right now I think we've got probably about maybe 16 aggregators give or take. There are quite some large big players out there in the market. eChoice for me was a very petite kind of feel. A lot of guys I guess are hitting the ship with eChoice. They've got expertise and SEO and all that kind of stuff. But they also came back from an old mob I used to work before with ResiMortgages. The guys running that side of things, it's people I've known for 10 or 12 years so there was a very family feel. They brought that into the office. Into the rest of the brokers.
We're only a boutique aggregation firm so it's only I would say maybe about 450. Hopefully maxing out about 550-600. That way they can still pretty much build a group of brokers and bring the standard up.
James: In terms of the startup business you want to run, you've been in the industry for a little while now. What are your goals and ambitions now that you're setting up something else on your own? Is it do your own thing quietly, take along, or do you want to be one of the top brokers in Australia?
Hank Hong: Hanky de-banky always like to be out in the media. When I initially came out the main idea is not anything so grandeur. Basically get on my feet, start building my own trail, build my own income, and build a client list. In the last couple of weeks the fires sparks itself once you've been doing some on your own.
Going from working in a large firm to working for yourself, every hour at work is actually for my business. Every little thing I do is for me, for my family and for my future. The idea now is now that a lot of things are cemented down and I know where my path is going to be, I want to be back in the top 100.
This year one of my biggest goals was to keep helping. With the aggregator that took me on I'm trying to give as much as I can, upskill other brokers, bring mentees onboard. I've given feedback to eChoice in regards to certain systems and ways that could work and this. Anything that I can help I'm happy to pass on.
James: One thing I wanted to ask, and it goes back to when you were at Homeland Experts, I know that outsourcing in their office in Nepal was a big part of their business. I was fortunate enough to visit there last year. Visit the office there. Is outsourcing going to be something which you might focus on later on down the line?
Hank Hong: Part of the initial plan was to wait maybe three or four months depending on how the business went. Luckily in the last couple of weeks my business has flourished. The only way I was able to keep up with the demand was actually to outsource already. I'm not outsourcing overseas. There's actually quite a few companies, and you guys know yourself, in our industry that specifically helps brokers. They usually hire, I know this is a stereotype but, mums that are home with their kids that have mortgage backgrounds.
I hooked up with a company called I Administrate Your Loan. Basically they're taking the process from submission and data entry all the way to the end for me, at $300 a pop. What that allowed me to do for the first week, I was trying to submit four loans spending over 16 hours, I'm still doing 16 hours a day, and doing two or three hours of data entry and checking compliance and everything. Now I can go back to the process of putting all the applications together, make sure it’s serviced, make sure it's all done, put the data in. Then I send it over to my support staff who does the data entry, does the NCCP documents in liaise with the client as well.
What happens after that is once the privacy stuff back, they submit the loan and they keep track of everything. They order evaluations. If it's construction they do they do the progress vals. If there's missing information, she actually beats me to emailing to the clients. I've been able to outsource my whole back end for 300.
Annie: Do you have just one person from that company that works with you? How would you develop that sort of trust with someone that you've never really met before?
James: Yeah, with outsource. Do you sit down with the outsourcing partner?
Hank Hong: Not at all. The lucky think I was able to track down was people that have worked in the past, that were support for myself in the past, are at that company. Immediately that rapport was built already for me. Basically how it works is you get assigned one person. You set up an email account for yourself which is a support email. You still get access and the support person has access to that as well. She has all your passwords and details. Of course it's a trust. It's a professional business side of things and they run the game.
That way I can now, instead of playing with four applications, I was able to submit 12 in that month. Then in the last three days was able to do a lot more.
James: On that level of volume it becomes pretty cost effective to pay $300 for a loan. If you're getting all that done you can focus on the lead generation and the conversions.
Hank Hong: Correct. The more grain-like, income productive situations. Basically if you're settling a loan of what, 500 thousand dollars, you should make about three, three and a half thousand dollars give or take. What's 10% of your income to allow you to go off and not spend two hours on doing data entry?
James: Talking more broadly now about broking. There's a few different rolling stories which we're always covering in The Adviser. One's the diversification piece, one's the rise of fintech or online-type prices.
Hank Hong: I was listening to Joey's last week.
James: What are your thoughts on that? It's funny, there's been, young brokers in particular but also, some experienced brokers who I've had a chat to off-record. They've said they think this space could be a potential threat. Not necessarily for the more complex deals but for your stand of vanilla loans and that sort of thing. It'll force brokers to specialise and focus on customer service. What do you think?
Hank Hong: I would agree with that. The other thing I think about fintech as well is I personally don't think it's going to effect as much as everyone is all doom and gloom about. You should notice it and adapt to it as well. Not ignore it. But I don't think it's going to hurt as much as it should be. We've always had to fight with online lenders. This fintech thing, I believe it will speed the process up and give the clients a lot more information and experience, but I don't think it will disrupt the brokers.
End of day the clients do like to work with a specific person. That's why us brokers, the service side of things, it's always going to stay. The retention side of things, I don't the fintechs will be able to hold on to a retention compared to a normal broker.
James: That is a very good point.
Annie: They don't have that kind of relationship or trust.
Hank Hong: No, you're a number. People walked away from banks because they're a number. So they go to a broker. Why are they now going to fintech? Of course the fintech and online mobs, it is a right side of things but again, that fits in a box. If it's outside the box, gets declined and after that they won't touch it. They will go seek a broker. Brokers I think will still be there.
James: You touched on that point of client retention. It's something which doesn't get talked about or written about or discussed enough. I know it's a big deal with the banks. I've got a couple of friends who work at the major banks and they're talking about this runoff from the books. A lack of loyalty to your bank I think because there's so many brokers in the market at the moment and it is so competitive. If someone's not providing that excellent customer service and keeping in touch with their clients, they will leave and go to another broker that does.
What's been your experience over the years that you've developed in terms of helping make stick your clients and helping retain them?
Hank Hong: There is one thing I've banged on about for six and a half years. You can tell people things and they don't listen or they don't take it onboard. It's something I've learned from, I call him the wise man. I have lot of these broker mentors that they give me a bit of information here then. It was actually a year after I won the newcomer award. No, it was the same year. An older broker gentleman who we keep in contact he taught me the 21 touch points. It's something I've banged on about every single time.
You should be able to contact your clients in one shape or form, 21 times every year. A lot of brokers might send an email, send a present at their birthday, anniversary, but you need to take that one step further. It's basically the monthly newsletters. You need to know when the interest-only product comes off. When their fixed rate comes off. There's all these extra touch points. Not just your, happy birthday.
Effectively what I've done very well for the last six years is, a lot of my clients have become my personal friends. They're all on Facebook. They see me playing with my mum and playing with the wife and eating food and doing all that. They've been brought into my life. They've looked at me less as a broker. They go, “Hank's always done finance. He's always there for us. But Hank's a nice guys and he comments on things.” It's a true thing. I'm a bit of a Facebook freak as well so I'm always having a look.
That's a contact point which I can actually contact a client over maybe 30-40 times a year. I know when their birthday is. I know about their kids. They know about my life. One big mistake that a lot of brokers out there do is actually create a separate Facebook account. It's a big no-no for me because you creating your account you only got 40 people there. Your client doesn't feel very special after that. And they don't know you and you're not updating your life.
I like to think that I've built friendships as well as knowing their life. The referral and the retention from that product itself, Facebook is amazing.
James: That's an interesting point you make about having the two separate Facebook accounts. I remember when I was reporting for real estate business and I was at the AREC conference in the Gold Coast and I've forgotten the name of the real estate agent. He's New York's top agent. He was on a TV show and there's three agents and he was one of them. I've forgotten the name of the guy but he's very flamboyant and outgoing. He was saying that's the general line of thought. Trainers are like, “Make sure you separate your accounts. Have your business one. Personal one.” He says he goes against that as well.
I think he wrote a book about it. Same with his Twitter as well. He was obviously in property sales but I think he was talking about how you manage to sell all of the apartments of a big development in New York purely off of one tweet because he's got that many followers and he's got that much of a social network, which is being bridged between his existing close-friends and his clients have merged into one, that's he's got almost a fan base now.
Hank Hong: That's it. It's not something he would have built over night. It would have been years and years of putting information out. Building a trust network out there as well.
James: It makes you more transparent as a broker and builds up trust with your clients. It may sound strange to say but if you have two separate Facebook pages you might look like you're trying to hide your social life and professional life.
Hank Hong: Clients don't want to be a one transaction. By bringing them into your life than they're always there. A lot of brokers will do that one transaction and never talk to them again and they'll forget. This Facebook keeps the retention. It keeps the fan base. I get hashtag team Hank. I get team Hank's loyalists.
James: You're building a personal brand.
Hank Hong: Yes.
Annie: Yeah, you've got Hank “The Bank”. We know your LinkedIn profile's says, awesome home loans broker.
James: Where did Hank the bank come from?
Hank Hong: Actually from a client. It literally was about four years ago. Hank was what I was going by then she started calling me Hank “The Bank”. I pay referrals and that's Hank money. It's a little bit of a brand in itself. That's another thing. Brokers need to build a brand of them.
Annie: To differentiate themselves.
Hank Hong: To differentiate themself. The first thing I say to a lot of young brokers coming up is what makes you different to the guy next to you? The things I teach is you need to educate yourself. You need to show what you're good at. Something different. Everyone's going to say the standard cliché things.
James: That's really good. It's words of wisdom to the young brokers coming up, like you said. There's definitely a place for building your personal brand and having a niche as well in the market. We were having a chat with, Beth Powell, who's going to be speaking at the Better Business Summit this year. She was talking about that as well. You've got to have a niche. Particularly in today's market.
In terms of the client retention piece and the 21 touch points that you said, I guess that comes into thinking about choosing an aggregator as well. I know you've written this in your blog, you want a software provider which has those updates and that sort of stuff which can help you set up those alerts and manage your retention a bit more.
Hank Hong: Correct. One of the most important thing I was looking at, there was a software that still could be customized, still could be amended and changed to the way I wanted everything to be done. Most softwares allow you to do that as well. When I talk about setting up the workflow and the checklist, for example, once you change an application over to conditionally approve it should automatically hit another task from one month later to check if the client's found a property. Or if it's hit formal approval it should drop down three more check things then we send an email to the client, send an email to the solicitor and the counter who was involved. Make a reminder two weeks later. It's automated. Processes and templates are ideal for you to be able to process faster. Work faster and do double the amount.
Annie: I know you came in to do the SPI podcast as well. You've done lots of property investment. I wonder if you could tell us a little bit about your properties that you've invested in, how many you've got now, then how that informs your broking. Do you do a lot of property investment loan?
Hank Hong: I do. I don't really specifically deal with investors. I deal with pretty much everyone and anything. What I was saying on the Smart Property Investment podcast was the broker is someone that you can go to because they've seen so many transactions. Over the last 10-15 years that I've been doing this I've seen the unit purchases, townhouses, houses, and construction, duplexes, transportable homes, all kinds of rural lands so I've got the experience without actually investing into it myself, but seeing what other people do.
A positive portfolio is neutrally good mix of this, DHAs. With my own portfolio I started small. I've got units, townhouses, a couple of houses up in Queensland, I've got a couple of development projects. That's been built over the last six, six and a half years. That flows through when I can give, not really advice, but point clients to the right direction.
James: And have general discussion with clients to make them feel at ease. If they're buying their first investment property and that sort of thing you can share your own experience.
Hank Hong: The experiences a broker that has is that he's dealt in Blackwater where the mining towns have boomed and gone down. He's dealt with WA. He's dealt with Tasmania, the units, the oversupply. That advice is what a client is really looking for as well.
You can spend one hour, which I wouldn't, talking about a rate or product. They know all that. That's a five minute conversation. What they want to do for the next couple of years and what they want to do now is the most important side of things. They're looking to you to have unbiased opinion of what to do. If they go to the real estate agent, he's like, “I'm in Burwood.” But from a broker we're not biased to anything. We're doing the loan which is pretty much the same across the board. The rates might be a bit different but the property side of things we will go to RP data. We will go, “Look, this is a good area,” or, “This is an issue with this side of things,” or that and that.
James: Having a chat with Ben Kingsley from the Property Investment Professionals of Australia. PIPA. He's a chair there. They're actually running a course now where, you've seen quite a lot of demand from brokers, actually looking to become not just a loan writer but also sort of a property advisor as well. So they can give a bit of advice around that. It's obviously still very unregulated, or completely unregulated.
Hank Hong: It's the Wild West over there. Or the east, depends where.
James: It's an interesting point. In terms of you starting into the industry and that sort of thing, what was your path? We've spoken to broker's who've come from the banks, we've spoken to some who've come from sales background, some who had no experience in finance whatsoever. What did you do? Did you go to uni? How'd you come into the industry?
Hank Hong: I fell into it actually. Basically I went to university to do a business course. In my first year I met another friend. He goes, “Do you want a job?” I was like, “Sure.” I found myself sitting in Parramatta in the office where I opened up the Yellow Pages, and this is 14 years ago-
Annie: They still had Yellow Pages.
Hank Hong: Sorry, the White Pages. I was actually literally cold calling. That's what it was back then. 14 years ago. Cold calling. I found out that I was working for a mortgage manager. Trying to get loans. Trying to get time in. Spent a good six months calling the White Pages. No win at all. I had my script. I was trained. They said I had potential, put me in as a, I was a receptionist. Basically doing admin work for a couple years.
That went for about two, three years. Learned about the basic mortgage management days. Back then it was Interstaff. Then I found myself a couple years later landing in Resi, working credit there for about four years, five or take.
James: Another mortgage manager.
Hank Hong: Another mortgage manager. I like to say I faked my way in. I said I had a DUA. I don't think I even knew what a DUA was at that point. I think they saw through that but met a lot of people along the way that taught me a lot of things. Then after that went out and found myself back at HLE.
James: We're almost out of time. I wanted to get any top tips you might have for other young brokers coming to the industry at the moment. The FBAA said that in the first 18 months of a broker's life it's sink or swim.
Hank Hong: It's the hardest point.
James: Exactly. I think 50% of new brokers, in their first two years, don't get past that point. What advice would you have for those either looking to get in or at that point at the moment in terms of sticking with it and gaining success?
Hank Hong: The first thing is, I'm tuning into Joey from last week, George Samios in Queensland, I think the things as what they said is patience. 18 months is the hardest time. You've got to be patient. You've got to work at it. Number two, the biggest thing you need to do is set goals. If you don't set a goal you don't know where you're going to. You sit there and go, "I'm going to try to settle 30 million," but how are you going to do that? You need to breakdown what your daily routine's going to be. Do I have to find two clients a day? Convert that to add a 50% and find the funnel and go, this is going to get me to that point. The biggest thing is-
James: You need to quantify it.
Hank Hong: You do. You need to quantify to a daily basic schedule. If I haven't spoken to two people today or I haven't got two referrals today, I need to go find something. Those two have to convert out and they will make me my 200-300 grand a year. The third side of things is education. It is hard for a new broker to understand all the banks. You've only got a limited supply of loans coming through. You get used to a couple lenders and you keep popping them off but you've got to test other lenders. This is where I believe that there's non-conforming.
Non-conformers are now doing all the prime stuff. You've got your Pepper's and Liberty. Liberty's doing all the 95% lends at the moment. Pepper's is there and they're picking up a lot of slack that the normal banks aren't doing. Don't be scared to go out and work with a non-conformer. They're not really non-conformers.
James: They're specialists.
Hank Hong: They're specialists. A specialist lender will help. Don't be scared to go out of your comfort zone.
James: Good stuff. I appreciate you taking the time to come in Hank.
Hank Hong: Always.
James: Definitely have to get you back in later in the year and see how things have been going. Thanks again to Annie.
Annie: Thank you.
James: That's all we've had time for this week with Hank the bank Hong. We'll be back again next week. Of course for all the latest news, insight, and analysis do log on to theadviser.com.au. I've been your host James Mitchell. I'll catch you next time.
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