KAN podcast interviews commercial adviser
While the NZ mortgage industry is picking up steam, its commercial cousin is also generating some buzz this Spring season.
In a recent episode of the Kiwi Adviser Network podcast, Ben Pauley (right), co-founder of Lateral Partners, shared insights into the opportunities and challenges for New Zealand advisers branching out into commercial lending.
Hosted by Warwick Slow (left), the podcast delved into Pauley’s journey from his early days in finance to establishing a niche in development lending and commercial advice.
A journey from residential to commercial lending
Pauley’s career in finance began after studying in Dunedin and working as a commercial manager at ASB. He later joined Squirrel, a major mortgage broker in New Zealand, where he was tasked with setting up their commercial space.
This experience highlighted the potential in the commercial sector, especially in property development, and ultimately led him to co-found Lateral Partners.
“I realised maybe the bank was too small for me,” Ben said, reflecting on his move away from traditional banking roles.
“Squirrel saw a lot of opportunity in the commercial space, and I was fortunate to set up their commercial arm, which shaped my approach when founding Lateral Partners.”
Pauley said that while there are many advisers who do residential advising really well, there weren’t many specialist commercial advisers that are “purely focused on that niche of advising”.
The appeal of commercial lending
For Pauley, the commercial side of lending, particularly development finance, offers a lucrative and engaging alternative to traditional residential mortgages.
He noted the large-scale nature of commercial transactions, which often involve significant capital and complex financial structuring.
“What I like about it is that it’s lucrative,” Pauley said. “I’ve also been financially focused, and business focused, and it does resonate with me compared to home lending.”
Despite this focus on commercial lending, Pauley acknowledged the importance of providing high-quality advice across all lending segments.
“There’s a real need for great financial advice, especially post-COVID, where we’ve seen a lot of inexperienced investors entering commercial transactions like property development,” he said.
“I like the idea that we can cater to that market and help Kiwis manage their risk well and succeed in those financial outcomes.”
Ensuring quality advice in an unregulated space
With many nonbank and private lenders entering the space in recent months, the commercial lending sector is growing to meet the evolving opportunities.
However, much of Lateral Partners’ work in the commercial space is unregulated, given it operates on a fee-for-service basis.
Pauley stressed the importance of maintaining high standards of care and diligence, mirroring regulated processes as closely as possible to ensure clients receive comprehensive and responsible advice.
“For us, it’s not just about ticking boxes; it’s about genuinely helping clients structure their transactions, identify risks, and navigate the often complex commercial lending landscape,” he said.
This approach includes creating detailed credit papers for each transaction, which can range from five to over fifty pages depending on the complexity of the deal.
Advising clients from the ground up
Pauley and his team at Lateral Partners take pride in engaging with clients early in their property development journey, which helps prevent costly mistakes before construction begins.
“We love getting clients at the start of their journey because early advice can save them a lot of headaches down the road,” Pauley said.
He highlighted that the consent process alone can take six to 12 months, with significant front-end work required before any development can commence.
Building a young and dynamic team
Lateral Partners boasts a young and enthusiastic team, with a mix of commercial and residential advisers.
Pauley believes that having a team of similar age and stage in life fosters a strong office culture and a collaborative environment.
“What I love about our team is the enthusiasm and the shared journey we’re all on,” he said. “Everyone enjoys coming to work with their mates, and that camaraderie is a big part of our success.”
Looking ahead
As Lateral Partners continues to grow, Pauley remains committed to helping New Zealanders navigate the commercial lending landscape, providing expert advice that helps clients succeed in their financial journeys.
His passion for the sector and dedication to his clients are evident, making Lateral Partners a standout player in the commercial advisory space.
For those interested in learning more about commercial lending or exploring opportunities in this niche market, the full podcast episode is available on Apple, Spotify, and YouTube under Kiwi Adviser Network podcast.
