Aggregators roundtable 2021: Sailing through uncharted waters

The aggregators roundtable returned in 2021 as an in-person event after being held virtually last year. Joined by six aggregators and two mortgage brokers, MPA asked some of the biggest questions on brokers’ lips, including those sent in by brokers themselves.

Taking place at the iconic Café Sydney, the roundtable featured Brendan O’Donnell from Liberty Network Services, Susan Mitchell from Mortgage Choice, Mark Haron from Connective, Chris Slater from AFG, Blake Buchanan from Specialist Finance Group, and Tanya Sale from outsource Financial. They were joined by mortgage brokers Bernadette Christie-David from Atelier Wealth and David August from Initial Finance.

Aggregators worked incredibly hard over the last year as the pandemic changed how brokers were able to do business. Unable to meet their customers in person, and with lender criteria changing rapidly and government incentives being introduced, brokers needed a great deal of support.

The aggregators talked about having to not only provide them with the tools and technology to do their jobs as e­fficiently as possible, but also to check in and make sure broker mental health stayed strong.

They also put a real focus on education and training so that brokers could be constantly on top of all the changes in the lending market. One of the areas of particular interest to brokers was lender turnaround times, so the aggregators made sure they had systems in place to help brokers understand exactly what to expect from each lender and why.

Another big topic of discussion at the roundtable was broker remuneration. As the review of remuneration instigated by the Hayne royal commission approaches in 2022, there is increasing concern among brokers about what might happen. Fortunately, the aggregators seem confident that there is nothing to worry about. Keep reading to find out why.

The panellists also talked at length about the best interests duty, which came into force in January. While they said it was too early to assess its impacts so far, they addressed the fact that it was being tested in an environment like no other, and each aggregator has been supporting its brokers through the transition with development days and webinars.

Thank you to everyone who joined MPA’s Aggregators Roundtable and shared their experiences of the last 12 months.

In next month’s issue, find out how aggregators fared in the opinions of brokers in MPA’s Brokers on Aggregators survey.

MPA: In 2020 we were in the midst of the pandemic and had to do this roundtable virtually. What were some of the biggest challenges you had to work through last year?

When we held the Aggregators Roundtable in May 2020, Australia was still in the grips of a lockdown, and the panellists were unable to get together in person. Like most other meetings across the country, the roundtable was forced into a virtual setting.

A lot has changed since then, and with restrictions eased the aggregators were able to meet in person for the 2021 event.

Looking back at the past year, Tanya Sale, CEO of outsource Financial, said the industry had faced “uncharted waters”. The aggregator didn’t have any issues in making the transition to a working-from-home environment. Instead, their main concern was for their members and ensuring they were supported in a holistic sense.

“One of the biggest challenges when we were going through the pandemic was coming up with innovative ways to support our members digitally,” Sale explained.

“We were able to do this on two fronts: professionally, through education and various opportunities to expand skill sets; and personally, delivering mindset and mental health sessions and creating our online ‘Lockdown Learning Centre for Kids’.”

Responding to Sale, Connective executive director Mark Haron said the pandemic had been “an emotional roller coaster”, but he was impressed with how brokers had responded.

He called out the period when banks brought in ‘repayment holidays’ and there was a lot of misunderstanding around what that meant, and therefore it had to be explained properly to customers. He said it was also difficult to get hold of the banks, and there was real caution about whether application numbers would stay strong.

“May went nuts, and it just continued for the rest of the year,” Haron said. “For a lot of brokers there was a moment where they went, ‘I’m going to be good; I’ve looked after my customers, things are going well for me, my business and my staff, but I’ve still got a lot of customers who are struggling’.”

Concerned about people having “knee-jerk reactions”, Mortgage Choice CEO Susan Mitchell said the aggregator tried to bring a sense of calm. As brokers panicked about application numbers, she assured them they would have plenty of time to react if numbers were affected, and, in the end, it was about helping them take hold of even more opportunities as the numbers blew up.

“I think some of the brokers were a little hesitant to grab the opportunity, and then once the opportunity became clearer and clearer, everyone was on board,” Mitchell said.

“Then it was, ‘how fast can I grow my business?’ and ‘now I’m struggling with too much business’. It was just a crazy up and down, but now they’re just thrilled. I don’t think anyone is as happy as an unhappy busy broker.”

Agreeing that the start of the pandemic was filled with uncertainty, Liberty Network Services (LNS) managing director Brendan O’Donnell said the first six weeks raised a lot of concern about where brokers’ busi-nesses were going to end up. LNS communicated and worked closely with its broker network to help them with their customers, but it wasn’t long before they saw a shift.

“I don’t think any of us anticipated that a month later we’d have this complete outlook reversal, with advisers asking, ‘I’m so busy – how do I manage this?’,” O’Donnell said.

“Lender cashbacks certainly helped the increasing appetite for refinancing, plus we’ve seen a growth in renovations, etc. This sparked brokers to take a different mindset throughout 2020. Brokers have proved they are recession-proof.”

To combat the fear and uncertainty many experienced at the start of the pandemic, AFG took a proactive and inter-active approach to working and communicating with brokers. Home loans general manager Chris Slater said the aggregator ran live webinars weekly, including sessions with government ministers, the Small Business Ombudsman, regulators, SME experts and AFG’s heads of risk and marketing.

“We bring everyone in, and we do a live Q&A, and we found our brokers engaged; they were happy to ask questions and ask whatever they wanted to. It wasn’t just crisis management; it was making sure our brokers had as much information as they needed, and that just became normal,” Slater said.

As brokers eventually saw huge demand, many businesses needed to grow to keep up. Specialist Finance Group aggregation manager Blake Buchanan pointed out that many brokers weren’t scaled up for the increase in business.

But businesses that were trying to find new brokers or underwriters to join them were realising that the pool of quality applicants was dry. Many brokers who would have previously been looking for work were struggling with volumes as they were busier than ever.

“One of the problems we have is you try and support your members in growing their businesses and alleviating some of the challenges with writing double and sometimes triple what they were doing the year before,” Buchanan said.

“Somebody who might have taken up that opportunity in 2019 isn’t going to do it now because they’re happy with their present volume. We see brokers still facing those challenges potentially with a little bit of burnout, not being able to fi nd the right resources for their businesses.”

Atelier Wealth co-owner and broker Bernadette Christie-David said for her the challenge was “fear of the unknown”. She questioned what would happen to her business and what would happen to her clients, many of whom were fearful themselves. Clients began calling to talk about refinances or what would happen if they lost their jobs, and as a broker dealing with the effects of the pandemic herself, she said it was a tough job.

“We had a ‘reset’ moment in our business where we flipped fear into confidence,” she added. “We wanted to have confidence in our team that we’d come through this period stronger and better. We also wanted to give our clients confidence that we would handle their application and take any stress they had away from them.

“It was a delicate balance to manage clients’ expectations, your own headspace and being physically stuck at home.”

Initial Finance director David August praised the aggregators for the support given to the industry over the past 15 months. His brokerage became so busy that it had to include on its website a disclaimer asking clients to be patient during this time and letting them know that enquiries could not be addressed immediately.

“Talk about turning something from a negative into a positive,” August said of the aggregators. “The relay of information, the implementation of technology and the support from the aggregators really needs to be commended. We often are vocal about the negative or bad stuff we encounter, and it’s very easy to forget to praise and acknowledge the good stuff that happens.”

MPA: In terms of technology, what have you introduced to help brokers in their businesses?

Needing digital tools to do their jobs when social restrictions were in place, brokers began seeing a number of new technologies come through the pipeline. The panellists agreed that a positive from the pandemic was that it forced the hands of banks and lenders to implement technology such as electronic verification.

Aggregators also introduced new technology, mostly aimed at making things easier for brokers. Connective provided a Client Centre inside its Mercury software which enabled brokers to send a link out to the client with forms to be completed virtually, and allowed for the uploading of documents – all things brokers used to do physically.

“Now it’s like, OK, we can get all this information and we can actually assess you with all that information and start that process faster,” said Haron.

“And clients are itching for that; they want this digital process, like using bankstate-ments.com and CashDeck to categorise living expenses. Customers are now letting brokers access their information digitally, which obviously leads nicely into the Consumer Data Right eventually.”

Technology is also helping brokers stay compliant. LNS uses the KYC (Know Your Customer) platform, which enables brokers to send the aggregator their information via a web platform. It allows them to better engage with customers and reduce loan processing times, creating a more positive customer experience.

Before COVID-19, only around 30% of LNS brokers used the program, but this rose to 75% during the pandemic when brokers were forced away from in-person verification.

Advisers had to embrace digital ways of engaging with customers during this period, using Microsoft Teams, Zoom and Facetime. However, O’Donnell said there was still some way to go in getting every broker to change old habits and use more digital tools.

The proportion of LNS advisers using the KYC platform reduced to 60% as face-to-face interaction became possible after the COVID-19 lockdowns. Still, the industry has made excellent progress, and digital tools are no doubt the new frontier when it comes to further improving broker–customer engagement.

Slater commented that, as what brokers needed shifted so dramatically last year, aggregators were forced to get better at what they do. He added that being a broker had “changed forever”.

“It’s making us change too, because we’re part of this journey, and we’re helping our brokers connect with customers and advise customers, so how do we facilitate that better?” he said.

“For us, it’s been about how we facilitate those connections between you and your customer, where you can get together and find great outcomes for them.”

Mitchell said that, with the introduction of the best interests duty, many of Mortgage Choice’s software changes were related to the duty and making sure brokers were able to document their conversations and recommendations made to customers.

“There was a lot of change management across the entire broking industry with the introduction of the best interests duty as well as all the changes relating to COVID, so that was our experience,” Mitchell said.

She pointed out that this was all done with the tech teams working at home, where she found they were much more productive.

“That actually helped us, because it was so much change at one time. If they weren’t able to be that productive, we might have had some hiccups,” Mitchell said.

Already allowing brokers to interact with their customers digitally, Specialist Finance Group felt that its systems were “COVID prepared”. Buchanan said that while the pandemic had created that urgency for everyone to get onto the same page, he still found that 25% of brokers had not yet fully automated their workflows.

The use of technology, particularly as the industry moves further into open banking, will hopefully also make it clear to regulators and the government that the industry needs tools like bankstatements.com and CashDeck.

“As part of our systems we give post-settlement to our customers being able to access these financials,” Buchanan said, “and so if that’s put a rocket up CDR changes to give us access to open banking, it’s going to make everyone’s world a lot easier, and it’s really going to justify that position of what does a broker do for their customer post-settlement.”

MPA: What insights can you share of the first few months of the best interests duty? How are you supporting brokers in terms of BID?

ASIC released its final regulatory guidance on the best interests duty in June 2020, clarifying what was expected of brokers, but many are still unsure what it will mean for them. Several questions were sent in by brokers who wanted to know how the aggregators were approaching the new duty.

Pointing again to the fact that BID was introduced at a time of unprecedented turnaround times for major lenders, O’Donnell said it was really interesting to work out how the duty would fit into that.

“You’ve got customers who need a loan to urgently settle – they need money now – and brokers are having to navigate this urgency, together with providing the product/lender solution in the customers’ best interests,” he said. “This creates challenges for brokers, and I believe they have managed exception-ally well, ensuring they meet the customer’s needs. Of course, this is where note-taking is essential.”

AFG found that anxiety was high among its broker network when the duty kicked in in January. The group ran live webinars that hundreds of brokers logged into, with numbers dropping over March and April as brokers gained more confidence.

“There’s still a few little bits and pieces [to clarify] around doing a top-up or a switch,” Slater said. “And one of the toughest challenges is the rapidly reducing interest rate market, so, for example, a broker wanting to put a customer from a 2.35 variable into a 1.89 fixed.”

Slater added that another thing AFG had done was create two full-time BID coaching roles to help brokers with their files. The aggregator gives brokers two sets of scores so they can see how they scored before BID and in the current environment.

“Some of them were getting an 80 on the old method and a 60 on the new method, and we just had to coach them on how to get up to an 80,” he explained.

“The real answer is, it’s dying down. Our brokers are starting to get more and more comfortable.”

Taking things “by the horns”, outsource Financial “took the fear out of BID” by beginning its training back in 2020.

The aggregator created mandatory online modules and increased the educational content it provided to broker members to prepare them accordingly. It also hired a national education coordinator to spear-head its national training program on BID best practices and obligations.

Sale said, “Our mantra is ‘Education is Empowerment’. It’s a promise to our members that we will always ensure they are prepped and ready to face challenges and opportunities with confidence and expertise.

“In this landscape, it’s imperative brokers are educating their clients, and I believe it is an aggregator’s role to provide the skills, understanding and tools to empower them to do so.”

Buchanan said Specialist Finance Group had not received any complaints about the process or requests for more content, which suggested it had been successful in its support for brokers.

Acknowledging that every aggregator had “loaded up on content” last year, he added that SFG had its brokers do courses and sign attestations that they knew what they were in for.

“Of course we’ll go through the peaks and troughs of compliance performance, but at this stage no complaints,” Buchanan said.

“So the transition to BID has been one of those ones where there was a lot of hype about it, and it has kind of fizzled. It’s not as noisy as what I would have expected or thought.”

O’Donnell responded with a warning, however, that it was important for brokers to have the right discussions with customers so they knew exactly what was happening.

“In the last three months I’ve been asking brokers out there: ‘Have you had customers challenge or query or ask what BID is all about?’ The answer: ‘Not one’,” he said.

“It comes back to the fact that customers trust their brokers. They’ve signed the documentation. And that documentation is comprehensive and made clear to customers. Of course, this also creates a challenge as we want to ensure that we don’t fall into the same position as financial planning, where in many instances customers don’t know what they are signing.”

MPA: We’re seeing record house prices and record-fast property sales. What opportunities do these provide for your mortgage brokers?

House prices have reached record heights in Australia, with 10% growth nationally in the 12 months to March 2021. At the same time, there have been record levels of mortgage lending; in the same period, there was 55% growth in housing loans commitments.

While the industry is being buoyed by the strong market, and there is plenty of opportunity for brokers, Sale urged caution.

“It’s important we don’t get lulled into a false sense of security,” she said, explaining that there were a number of factors that needed to be taken into consideration.

“We are still seeing record-low interest rates, a lack of stock on the national market, and a steady stream of expats returning. And while I’m not necessarily saying that we’re experiencing a false market, it is certainly not going to keep on going at the rate it is.

“What we all need to be aware of is that when we start seeing the market shift – more stock, rate rises, etc. This is when we will see more consumers start to struggle and when brokers will be needed more than ever – ready to support and assist their clients.”

Sale urged brokers to maintain consistent contact with the consumer to ensure the industry “keep[s] our finger on the pulse”.

Mitchell added that she thought the current environment was the perfect opportunity for brokers to grow. She said the reality was that good brokers would consistently settle the same number of loans each month regardless of the market.

“That doesn’t mean it doesn’t come down a little bit or go up a little bit, but really good brokers that take care of their customers, deal with their customers, their volume is going to move up and stay at that level. This is their opportunity,” Mitchell said.

Agreeing that there were opportunities for brokers, Haron said that while the current “frenzy” would calm down, he still felt the market would remain strong for some time.

“The best job in the market for probably the next 12 to 18 months is a real estate agent; second best job is a mortgage broker, because there’s a lot more properties coming on to the market, a lot of financial opportunities for purchases,” he said.

As a consequence of high applications, there are also borrowers who are struggling to get through to the banks. Buchanan said this was leading customers to try brokers for the first time and then realise that “they love what they get”.

He said the pandemic had also created “refinance urgency”, which is seeing the average broker-introduced loan last for less time than it did a few years ago.

He also believes it will become the new norm that customers will choose to use brokers and monitor their expenses much more closely.

“Often we undervalue our own book. If people are refinancing every five years, and I’ve got 500 customers in my database, I should be mining 100 refinances a year post year five from my own business without having to market,” Buchanan says.

“That’s the proposition. If that shortens to four years, well, you’re going to be doing more out of that 500 base. There’s a real opportunity to really harvest your own book.”

Raising the topic of diversification, O’Donnell said this was another route brokers could take, particularly as many potential customers for new business would already be in their database.

“Commercial and small business is a massive opportunity,” he said.

“This is the new frontier where we can help more brokers grow their businesses and build further industry market share.”

Talking about diversification in more detail, the panellists proposed various ways that brokers could make the most of the opportunities available.

Haron explained that Connective provides a service whereby a mortgage broker can pass on a customer to an internal asset finance specialist.

“You don’t have to be the expert in asset finance; there’s an internal expert you can give that deal to, knowing full well you can trust that person, your client is going to get good service, and they won’t steal your client. Doing that with confidence, skilling up on the commercial side of things, working with other commercial brokers, there’s lots of opportunities there,” he said.

Helping its brokers upskill, outsource Financial put together a program for commercial lending, Sale said. One residential broker who has been involved in the program for a couple of years has become one of outsource Financial’s best commercial brokers, she added.

“It’s been very successful for our groups that have said, ‘OK, I have wanted to go into this space, and that’s where I want to specialise’ – and the mentoring program has been very successful,” Sale said.