Despite international travel restrictions, there's still a significant market for non-resident lending
Coming from the United States, he had to get used to a new way of doing things
- 2018 Commercial Lenders Roundtable
- Top 10 Brokerages 2018
- 2018 Brokers on Aggregators
This year's Aggregators Roundtable looked a little different to previous events, but the industry’s top aggregators were still able to get together to discuss what they had been doing for brokers. Taking place over a Zoom call, it was no surprise that much of the conversation revolved around the pandemic.
Aggregators have been working hard for the last few months as the industry has had to shift the way it does things to bring forward new innovations and increase the support and education it offers brokers.
Over an hour and a half, the discussion focused on how the aggregators were preparing their systems to help brokers, and gave some insight into the webinars and marketing tools they were offering. Their plans for face-to-face development days and other events this year have obviously had to change, so they talked about what they were doing instead to ensure they were still in front of brokers.
It was not all about COVID-19, though. The group also talked about issues like the best interests duty, which has been postponed from its original implementation date of 1 July. The aggregators are still working behind the scenes to finalise what the duty will look like and to ensure that the industry is ready when it does eventually kick off .
The aggregators joining the virtual session were AFG, Choice, Connective, FAST, outsource financial, PLAN Australia, Specialist Finance Group and Liberty Network Services.
Usually when this roundtable is livestreamed MPA invites brokers to send in questions during the discussion. Although we were not able to do this in the virtual session, we still wanted to encourage broker questions. So, as part of a recent survey and in other marketing we invited brokers to send in questions ahead of time. We received more than a hundred questions, and while we could not get to all of them, we passed on as many as possible and have provided the aggregators’ answers in the boxouts on the following pages.
MPA would like to thank all the aggregators for taking part in the roundtable this year and for being so patient with the new format, as well as all the brokers who submitted questions.
Keep reading to find out what the aggregators are doing for you – and we look forward to being on your screens again soon!
Q: What are you doing at the moment to support brokers?
The current environment is one of high uncertainty across many areas, from health to the economy, the property market and the business landscape. For brokers, this presents challenges for their businesses, but also opportunities.
Many Australians are looking to adjust their mortgage repayments and defer other loan repayments or are searching for loan solutions for their businesses. With the number and pace of changes leaving many borrowers confused, brokers are in a unique position to help.
As the COVID-19 crisis is creating a heightened level of activity for many brokers, aggregators are there to support them.
Brendan Wright, CEO of FAST, said there were a number of important things to be done to support brokers, but the aggregator was putting a particular focus on communication.
“There’s so much coming at brokers and business owners at the moment, it’s around communication: being consistent, crisp and clear about what brokers need to be aware of so they can continue to run their businesses, engage with their customers and then meet the needs of their customers, whether they are business owners themselves or they invest in a residential property,” Wright said.
Brokers will be looking to their aggregators more than ever for support at this time. Choice Aggregation Services CEO Stephen Moore said it was “the moment of truth for the relationships aggregators have with their brokers”.
He agreed that communication was important, particularly to filter through all the changes coming from lenders and the government, as well as to confirm that trail was being paid.
Choice is also focusing on broker wellness, offering confidential counselling support and partnering with R U OK?
Moore added that it was also crucial to ensure brokers were prepared for what the next period might look like, and that included helping them be “digital ready” with things like digital document collection, digital ID verification and DocuSign.
“We shouldn’t assume that all brokers have already embedded those in their businesses,” he said. “It’s not only critical for the current period; there will be enormous efficiency gains ongoing and well into the future from embedding those digital tools in your business.
“If there’s any good coming out of this, embedding those great digital tools will be really valuable.”
Recognising that aggregators needed to be strong in themselves to support brokers, Specialist Finance Group reviewed its business to ensure that staff could be kept on at the same rates and e ciencies when working from home, said head of aggregation Blake Buchanan.
SFG began holding daily webinars on its digital systems, as well as a weekly COVID series “which catered for the things that were most important to brokers and their business”. SFG also brought in counselling sessions to support the wellbeing of the team as well as their clients.
“Those sessions were about your own wellness, working out what the signals of distress are within yourself and giving tips and tools on how to deal with that as a business person,” Buchanan said.
“Our philosophy on this has been high-touch, great information and really quick turnaround time, with little to no impact to our aggregation business.”
Behind every broker are customers who are being impacted by COVID-19, and AFG wanted to focus on those people and help brokers help those borrowers, said head of sales and distribution Chris Slater.
He said the aggregator had got in early to create an information site for brokers and offer on-the-ground support from its partnership managers.
The aggregator has also had to redesign its own strategy, having been prepared for a whole face-to-face program for this year. But in a sign of how well the industry is adapting to change, Slater said AFG saw almost 10,000 brokers attend its sessions within the first two months.
“It was about keeping them safe, saving them time and making sure that we had everything in one place to ensure they were best placed to help their customers and win more customers,” he said.
One of the challenges for aggregators at the moment is how to provide information and support in a unique way, and outsource financial has managed that very well. CEO Tanya Sale said outsource was trying to “do things a little differently”.
The aggregator has launched a new virtual learning festival made up of numerous components, such as education on its software platform iOutsource, a virtual coffee cluster called ‘Bring Your Own Cuppa’, and a lockdown learning program for kids.
“We really wanted to support our members and off er them opportunities to increase their skill sets during these times of isolation. So we did it on two fronts: one on the educational piece and then another on the personal piece,” Sale explained.
“For us at outsource we look at our members as business partners and want to ensure that they know we are there to support them.”
Preparing for a difficult few months ahead, Anja Pannek, CEO of PLAN Australia, said all aggregators were working hard to support brokers and their customers, but that the economy was not going to be in a great shape for a long time.
“The reason I want to highlight that is it’s really important that brokers think very carefully about who they partner with,” Pannek said.
Like all aggregators, PLAN has been keeping brokers up to date and assisting customers with their financial positions, but Pannek warned that it would be “a long road to recovery”.
“This isn’t a matter of ‘we’re going to snap out of this in three months or six months’. I think we’d like to see that, but we won’t,” she said.
Q: Is this the time to diversify, and what are you doing to support brokers?
Diversification is a topic pushed frequently in the broker industry, but the coronavirus pandemic has really highlighted the need for brokers to help business owners.
While some brokers may be playing cautiously at the moment, Wright said now was not only the time to diversify products and services but to be deliberate around forming a diversification strategy.
“Delivering a diverse culture and diverse products and services for a broker business just makes sense; it always has and even more so now,” he said. “Even if you’re unsure about where you need to go as a business owner, ask the questions, be curious, talk to your aggregator about where you can go next and what makes sense in relation to the capability that’s within your business right now.”
FAST launched its Business Lending Index last year, which provides quarterly business insights. It has shown that not only are businesses coming to brokers for assistance, but it’s all sizes of businesses. To help brokers diversify, the aggregator has built an education platform for those looking to move into different financial services and has partnered with the Commercial and Asset Finance Brokers Association.
“It’s fundamental and critical that the platform that we provide to the brokers can enable them to meet the broad needs of their clients,” Wright said.
“We have dropped a whole heap of solutions, updates, capability and functionality into our platform so that brokers at FAST can deliver to their clients across mortgages, business lending and asset finance.”
Connective executive director Mark Haron said it had been the right time for brokers to diversify “forever”. It had already been happening without prompting, he said, calling out figures for brokers offering insurance on top of mortgage solutions.
Connective partners with ALI Group, and in March the aggregator saw a 230% increase in policies sold since February, as well as a 20% increase in Allianz policies for house and contents insurance.
“I think brokers are already starting to embrace the opportunities that are presented to them, and it’s also coming off the back of brokers communicating with customers a little bit more around the current environment,” Haron said.
The Liberty Group has always helped lead the way in encouraging diversification, which is why Liberty Network Services refers to brokers as Liberty advisers rather than mortgage brokers.
Brendan O’Donnell, managing director at LNS, said he also believed the opportunity to diversify had been around forever, and there was no reason broker market share of commercial loans wouldn’t reach the heights that their share of the residential market was at now.
“I think that journey is well on its way,” O’Donnell said. “Equally in terms of business finance, commercial motor finance, etc., we’ve seen advisers embrace that in a fantastic way over time. What that’s done is diversified their income streams, which is of extreme value to them.
“Let’s not kid ourselves. Over the next three to six months we’re going to see a challenging time around volume. I think a bit like technology and digital this gives us a fantastic opportunity as an industry to take this disruption and use it to our benefit.”
Looking at how it could use technology to help brokers with diversification, AFG has developed a commercial and asset finance platform that’s separate to the aggregator’s residential platform.
Slater said brokers should know what their customers needed before they came to them for help, and technology would help with that.
“Every single residential mortgage broker has got to be able to use that platform and get a commercial and asset finance accreditation,” he said.
“Twenty-five percent of customers that sit in our brokers’ databases are actually SMEs, and they have commercial and asset finance needs. We’re finding right at the moment that those customers need help more than anybody else in the marketplace.
“I think technology is going to start enabling a lot more diversification, and my view is we need to get out in front of it.”
Q: Technology is more important now than it has ever been before, thanks to social distancing measures. What are you doing to ensure that you off er the best technology to your brokers?
Talk about digital innovation and technology is nothing new, but it has ramped up in the past few months as face-to-face meetings have not been possible. Innovation and products that may have been introduced over several months or years have been fast-tracked within weeks.
Moore said technology was not just important for the current crisis but would continue to be needed as businesses become more sophisticated and markets more complex. It is not a matter of choosing either face-to-face interactions or digital tools, however; they should work together.
“Equally fundamental is not only how those tools are used but how data is then stored,” he said. “We certainly believe the future for broker businesses is combining great digital tools with high-quality face-to-face customer interactions.”
Choice has done a lot of work with its CRM system Podium and in helping brokers get the most out of it. One of its functions is My Finance Communities, which enables a broker to interact directly with the customer, who can then forward on documentation via the same tool.
Everything is stored in the customer’s records, and the data is then pre-populated into the required documents.
“It’s not only a great user-friendly way to interact with customers but an efficient way to operate as well,” Moore said.
With more people heading online, many are finding their connections slow and frustrating. To combat this for brokers, Connective wanted to make sure its systems were ready to run as fast as possible even under increased pressure.
Haron said technology had been a core part of Connective’s offering since it began operations in 2003. The aggregator has its own proprietary system, so it can respond to broker feedback by building new features and making changes.
“It’s been a significant reason why mortgage brokers have chosen to use Connective,” he said, “because of our technology and the capacity that enables them to look after their customers, manage their CRM more effectively, and stay in contact with their customers too, during and post-settlement.”
Sale said that as outsource financial was an independently owned aggregator it was important to partner with an independent software provider like Salestrekker.
“The system already had so many features that were helpful, such as the client portal, e-signatures and integration of third party applications,” she said. “But as non-face-to-face interviews became the norm in this pandemic, it enabled us to rapidly respond. Even over the last two years, it has brought out new tools we didn’t even know we needed, like client interview mode and video technology.”
Following Sale’s mention of being inde-pendently owned, the conversation fl owed away from technology as the aggregators began discussing what that meant for the current environment. Pannek said that while it was great to have that conversation, there was another level to the discussion right now. Pointing to the GFC, she said everyone on the call had already seen where the current situation could go.
“I think lenders in Australia have absolutely come to the fore and been the backbone and the buffer, if you think about partners that we work with,” she said.
“But there’s another side that we saw through the GFC, and it’s going to be bumpy for some lenders as well. I think we’ve got a role to play in understanding and working with our lenders through risk, because the cost of funds may look very different, and that’s got customer consequences on the other side.”
Q: How important is communication for you right now?
As the panellists had already pointed out, frequent policy changes have added a layer of confusion for both brokers and borrowers, meaning communication has had to be increased and methods changed.
Liberty’s approach to communication had been about “consistency and frequency”, said O’Donnell, who explained that as a boutique aggregator LNS had the benefit of being able to get in touch with each and every one of its advisers.
“Ironically, we found that brokers at large are a lot more susceptible to engaging in these times, whereas normally it’s very difficult to get hold of them because they’re all extremely busy,” O’Donnell said.
“Of course, while they are very busy we’re in a good position to be able to engage and have meaningful discussions with our businesses.”
As far back as in mid-March, outsource hosted a compulsory webinar to pre-empt the lockdown and discuss with lenders the types of things they needed to start thinking about with the aggregator’s members.
Sale said this culminated in an information page on its members’ website, to which updates were added as they came out. In addition to the weekly updates and virtual events already mentioned, the aggregator has a Facebook page on which brokers can discuss scenarios.
“What has been really encouraging is that everybody wants to help each other,” Sale said. “With the variety of things we’re doing, it’s making it easier for our members to keep up to date with the ever-changing landscape and lender policies. In turn, our members are able to keep their clients informed.”
Choice is providing frequent daily updates, as well as digital tools to analyse lender portfolios for a customer’s individual needs. Moore said things like this were important because of the difficulty in keeping up with changes.
“Communication is more critical now than it’s ever been, and I think the challenge is to ensure that whatever we provide has perspective and relevance,” he said.
Buchanan added that communication had “entered a different level of importance” for many in the industry, and he himself had been “enlightened”.
“I think communication is very important and we should not categorise that importance for just business; it’s about people as well,” he said.
“It’s about care in our business, more caring for our people, more caring for their circumstances, being more empathetic and taking more time in listening to their challenges, not just within work but in their social lives and personal lives.”
Wright added that it was not only important to communicate but to be consistent and have a positive approach in removing the complexity.
“We’re in a very interesting environment and a very challenging one,” Wright said. “Brokers are concerned about themselves, their families and their clients, so being consistent and communicating what they need to know in a positive way, showing progress and providing positive feedback along the way through whatever communication channel they’re using is an approach we’re taking so that brokers continue to understand that we will get through this.”
Q: How do you think the best interests duty will affect the broking industry?
The best interests duty was set to be enforced from 1 July this year, but due to the pandemic it has been deferred by six months. Brokers are understandably anxious about this, but aggregators are well prepared, and the panellists believed the duty would only enhance the broker offering.
Calling it a “once in a decade” regulation, Pannek said it would enable brokers to sit in front of their customers and tell them they legally had to act in their best interests, which wouldn’t be the case for the lender if they went direct.
“We at PLAN are very positive about the outlook for brokers and the broker channel,” she said, adding that broker market share would only increase.
“The way we’ve seen our members adapt and shift over a very short period of time, moving to digital means, I think it’s a clear running start, and also the advantages of the depth of relationships that brokers already have with their customers places them in a really good stead.”
Recognising that the best interests duty might cause anxiety for brokers, Slater said this was something the industry needed to work through together. He echoed Pannek’s sentiment that the duty would add value to the broker proposition, in that it was not something a lender had to abide by.
“Some brokers are showing signs that they are very anxious about it,” Slater said. “I think that’s natural, but we need to focus on the opportunity collectively. There’s not much point in having 5,000 mortgage brokers doing the right thing and 12,000 mortgage brokers doing the wrong thing.
“This is a great opportunity to grow market share, and it is a great diff erentiator to say BID only applies to mortgage broking. It’s not a responsibility on a lender. It’s only on brokers.”
O’Donnell said brokers had already demonstrated over many years that they did the right thing by their customers.
“The good thing about BID is it’s incremental,” he said. “So you’ll see a circa 20% change in the way we do things that’s going to give us an 80% benefit in the marketplace, and that will result in increased market share.“
No different to NCCP and post-GFC, we’re in a really strong position to navigate the industry to that 70% of market share we’d all love to see, which makes us stronger versus the banks.”
Looking at previous examples of how regulatory changes had affected the industry, Haron said that after the implementation of the NCCP and licensing for mortgage brokers there had been a significant shift and growth. They enabled borrowers to have more confidence in mortgage brokers, while making brokers more conscientious about what they were doing.
“I believe, like Anja, that BID will just take us up another notch. It will give customers in the longer term a lot more confidence in dealing with the mortgage broker,” he said.
Haron added that it would also help get rid of “rogue brokers” who continued to be a challenge.
“With stricter and stronger laws there’s probably better opportunity for us to make sure that only the best and well-intended brokers operate in our industry,” he said.
Buchanan warned that guidelines for BID had not yet been finalised, but the industry had a good idea of where they were going. As for what they would mean for a broker’s business, he recommended brokers should be focusing on a few things, particularly documentation.
“Note the reasons why you’re doing things and why it is in the client’s best interest,” Buchanan said.
“By and large brokers are overwhelmingly already operating in the best interests of their clients. The final guidelines from ASIC will confi rm that whilst there may be some changes to broker processes, there will be no changes to their intentions, which is to give amazing service and the most appropriate products to their customers”.