MFAA YOUNG PROFESSIONALS REPORT

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MFAA YOUNG PROFESSIONALS REPORT REPORT II – 2017/18

Understanding the next generation of brokers

An

Initiative

Introduction

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It’s an exciting time for a career in broking

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Background

CEO’s report

About the MFAA Young Professionals Path to the industry

Settling in to the industry Success as a broker

4 6 7 8

13

19

Future of the industry

20

The MFAA Young Professionals

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Discussion

21

MFAA

Mortgage & Finance Association of Australia Suite 2, Level 9, 130 Pitt Street, Sydney, NSW 2000​ www.mfaa.com.au General Enquiries T: 1300 554 817 (calling within Australia) T: 02 8905 1300 Professional Development Enquiries [email protected]​ Membership Enquiries [email protected]​​

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Introduction Building on questions from the last report, this Young Professionals report compares the perspectives of the MFAA’s current Young Professional against the perspectives that the MFAA’s Over-35’s members reported to have had at the time they were new-to-industry. We also look at current Young Professionals data compared to the results in the previous Young Professionals Report. We investigate these perspectives across four key areas - Path to the industry, Settling in to the industry, Success as a broker and Future of the industry, by looking at the results from the recent MFAA Young Professionals survey (October 2017) in the context of commentary from the MFAA’s Young Professionals panel. New for this report, we now (where applicable) also look at the views that Over-35's have of current Young Professionals, to help understand the environment that they've created for them. From this report we intend to educate the industry and inspire further thought and consideration of the unique needs and perspectives of the emerging generation of finance brokers, to ensure industry sustainability and longevity. Note: Additional response options had been added to some questions since the last Young Professionals survey (2016/17). Therefore, for these questions, comparisons over time and between reports is limited to a degree.

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Background The finance broking industry continues to experience strong growth. It is estimated that there are now 16,940 active mortgage brokers across Australia, up from 16,009 six-months prior (MFAA Industry Intelligence Service, Fifth Edition). Furthermore, new lending has grown to $101.23bn, up +5.2% over the same period (MFAA Industry Intelligence Service, Fifth Edition). And brokers now write 55.7% of all residential loans according to the September 2017 MFAA Quarterly Survey, the highest ever recorded in the survey. But on closer inspection, according to the MFAA Industry Intelligence Service (Fifth Edition), gross earnings-per-broker are down seven percent, from $142,500 a year ago, to $132,800; the growth in the net population of brokers (+5.8%) is only comparable to the growth of new lending (+5.7%), and there is now one broker for every 1,452 Australians. These are interesting statistics at a time of unprecedented regulatory scrutiny and an impending generational shift. It's now more important than ever that the younger generation of brokers – the Young Professionals, aged 35-years and under, and representing approximately 18% of the MFAA's membership (as at the time of survey) – are counted and have their voices heard. For this reason, the MFAA undertakes regular research to determine what motivates young professionals to join the industry, and their challenges, aspirations and outlooks, compared with those of established brokers – the Young Professionals Report. This report (survey conducted October 2017), as a guide, should not only enable the industry to develop programs to better recruit younger brokers, but should also help form strategies to maintain and retain them.

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It’s an exciting time for a career in broking Last year we entered a new era in the profession of mortgage broking. On the one hand, mortgage brokers now account for over 55.7% of all residential loans written in Australia. But on the other, rapid regulatory change, heightened scrutiny, increasing consumer expectations and technological advancements are now the new normal. In times of reviews, reports and commissions, consumers are looking to their broker to provide a source of truth, to make sense of the complexity – and for you – it’s a time to turn this challenge into opportunity. At Connective, we are passionate about helping brokers embrace and own the change our industry is experiencing. It is our job to provide brokers with education and knowledge that will equip them to succeed. That is why we have partnered with the MFAA on this report, and are proud to support activities that grow and build the professionalism in the mortgage broking industry. It is our responsibility, as an aggregator, and the industry as a whole, to attract, develop and support the new talent entering our industry in a time when staying up to date with changes is one of the biggest professional challenges. This report presents the views of the next generation of brokers. A key highlight for me was the fact that the top attribute of being a good Young Professional broker today is a focus on customer experience. It’s so positive to see that good consumer outcomes are front and centre with these young brokers. That focus, alone, is why this profession will continue to thrive. We hope you find this report valuable and that it helps to attract more fresh and motivated minds to join our industry. And to the young professionals looking to join, or just starting out, we look forward to working with you to help drive your success as you continue to embrace change, add value to your customers and grow.

Mark Haron Director, Connective

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CEO’s Report In the current industry environment, including a Royal Commission into Misconduct in Banking, a Remuneration Review, a Productivity Commission inquiry, and tightening lender policy, it’s more important than ever to gauge the opinions of the industry’s future, the industry’s young professionals. The industry’s young professionals will be the ones inheriting an industry defined by the decisions made today, based on actions from the past. Despite the challenges our young professionals know they’re going to face, it’s heartening to see their underlying sense of enthusiasm and resilience. The finance broking industry is a ‘people’ industry. It’s not an industry about issuing credit, it’s about customer outcomes – helping customers appropriately achieve their needs and wants. And with young professionals reporting that a focus on the customer’s experience is the key to being a successful broker, the industry is in good hands. With the industry facing a period of unprecedented change, it’s encouraging to see that we’re attracting talent from more diverse professional and educational backgrounds. This tells me that one, the industry has a strong brand, and is viewed as an increasingly desirable industry to work in; and two, we’re attracting increasingly diverse skill-sets and experiences from non-finance industries, which will help us better adapt and respond to future change. Regardless of age, this report suggests that brokers face two common challenges – lead generation and keeping up-to-date with lender policy, regulation and compliance changes. Neither the life experience of the Over-35’s, nor the technological experiences of the young professionals, has helped either generation overcome these challenges. Hopefully we can all come together to address these issues. And with so many young professionals reporting that they wished they had become a broker sooner, coupled with the decreasing emphasis on income generation as a motivator, we can see that young professionals find great satisfaction in the career that they’ve chosen, hopefully meaning that our young professionals view their job as a life-long career. Finally, I’d like to thank Connective for partnering with us on this report, and helping make it possible. We hope you enjoy reading this report. If you have any feedback, or any questions, please feel free to email us at [email protected]

Mike Felton MFAA CEO

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About the MFAA Young Professionals A demographic summary of the MFAA’s 35-years-of-age-and-under membership (N: 2,757) at the time of writing (March 2018)

By age

By gender

20 years old

0.5%

21-25 years old

7.3%

Male 69%

31.6%

Female 31%

26-30 years old

31-35 years old

60.6%

Young Professionals: 18% of MFAA membership By State

Education?

NSW/ACT

38.8%

Certificate 20%

VIC/TAS

32.3% SA/NT

6.7% WA

11.5%

Diploma 80%

QLD

10.7%

By loan writer status

Being mentored?

Currently

28%

Accredited Finance Broker

64.7%

Completed

72%

Finance Broker

32.8%

$

$

Non-loan writer

2.4% Student

0.1%

An accredited finance broker has completed two years of mentoring and obtained their diploma.

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Path to the industry Is broking now viewed as a ‘real career’, or is it something you just ‘fall in to’, and how have these views changed over time? In this section we look at where Young Professionals joined our industry from, and what motivated them. Q: What were you doing before you became a broker? – Multiple choice 2017/18

2016/17

35% ( )

41%

Wealth-knowledge industry, such as financial planner or accountant

7% ( )

10%

High School/TAFE

3% ( )

2%

University

10% ( )

11%

Non-finance industry - white collar

21% ( )

17%

Non-finance industry - blue collar

8% ( )

5%

16% ( )

14%

Financial institution, such as a bank or non-bank lender

Other 2017/18 N: 205

When Over-35’s were asked the same question, their top three answers were… Working in a financial institution

50%

Working in a non-finance industry (white collar)

26%

Other

11%

Furthermore, Over-35’s responsible for hiring brokers were also asked where they were recruiting brokers from and given equivalent responses to choose from – to gauge whether young professionals were taking the best path in to the industry. The top three answers were… Other

44%

Financial institution

32%

Non-finance industry (white collar)

5%

Observations The main path for Young Professionals joining the industry was from ‘financial institutions, such as banks and non-bank lenders’ (35%); followed by from white-collar non-finance-related industries (21%). The rank of these top results was the same between generations. A noticeable difference though was that a considerably higher proportion of Over-35’s came to our industry having worked in financial institutions (50%), compared to Young Professionals. When comparing the Young Professionals and the Over-35’s results to that of the results in the previous Young Professionals survey, we can see a clear trend that as time progresses, Young Professionals are coming in to the industry from an increasingly diverse range of other industries, as opposed to predominantly from the finance-institution industry. This suggests that broking as a career has become more widely known and recognised – you don’t need prior finance experience to consider broking as a career option.

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Path to the industry (continued) “I’m surprised that so many have come from various other sources. Most of the people that I have met had come from banking or some other financial institution.” ~ YP Panel Member Comparison between generations shows that more brokers are coming in to the industry from High School, University and TAFE than previously. Combined, 13% of Young Professionals entered the industry after completing their studies. This is up compared to 1% of Over-35’s who entered the industry from High School, University or TAFE. “13% straight from education? I’m surprised it’s that high!” ~ YP Panel Member This suggests that broking is increasingly being viewed as a long-term career for the young to aspire to – in the same vein as a career as a doctor, lawyer or engineer – rather than something one ‘falls in to’. This also supports the notion that broking as a career is increasingly achieving a level of respect. Noticeably, there was also a large jump in the proportion of brokers coming into the industry having previously had blue-collar careers – between generations and between reports. 8% of Young Professionals noted this versus 5% of Over-35’s, and 5% last report. This once again shows that broking as a career is becoming more widely recognised. Despite these promising statistics, it is still very clear that broking was not the first career choice for the majority of Young Professionals – 87% having come from another industry. “It doesn’t actually matter where I find that person, it’s about the sort of person they are.” ~ YP Panel Member When surveyed on where they were hiring most Young Professionals from, the Over-35’s were hiring most brokers from the ‘other’ category (44%). When investigated ‘other’ was mainly ‘responsible for hiring, but not hiring at the moment’, or from sources within the immediate industry including from other broker businesses. This requires further investigation in the next report. Concerningly, with 21% of Young Professionals having come from white-collar, non-finance industry roles, and only 5% of hiring managers currently sourcing recruits from this source, is there a mismatch between supply and demand? Does the industry need to increasingly think outside the box to recruit talent? “Some of the best people I’ve worked with and recruited, then employed, have been ones that I’ve poached from other industries.” ~ YP Panel Member

Connective Insight: The fact that more young people are becoming a broker from a wide range of other industries tells us that the profession of finance broking is now seen as a real ‘career’. In our own independent research, we found 3 key attributes that make a

successful broker – sales, personal and technical orientation. At the end of the day, if someone has those traits, regardless of how they came to the profession, we believe they can be a successful broker.

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Path to the industry (continued) Q: How did you first hear about finance broking as a profession? – Multiple choice 2017/18

2016/17

Friend/family member

29% (=)

29%

I had engaged a broker for my personal needs

25% (=)

25%

Online research

5% ( )

11%

Media coverage/advertising

1% ( )

4%

From working in the financial services industry

24%

From working as support staff at a brokerage

9%

Through studies at University/TAFE

2%

Other

5%

Other – 31%

2017/18 N: 205

Observations Results show that news of broking as a career travels largely through informal channels – either through word-of-mouth with friends and family, or via experience interacting with the industry. 29% of Young Professionals first heard about broking as a career from either family or friends – the same figure as last report. A combined 49% of Young Professionals heard about broking as a profession through experience – either working with an existing broker (25% - same as last report), or having worked in the financial services industry (24%). These three channels form just over three-quarters of responses and suggests that the industry is doing a good job building its own brand, and advertising itself as a great career choice, by creating interactions and experiences with individuals that leave positive impressions that are worth talking about. “As much as we need new entrants in the industry, I think our focus should actually be on finding the right ones.” ~ YP Panel Member One surprising result is that only 2% of Young Professionals reported hearing of broking as a career through their formal studies at TAFE or University, which raises the questions – how is broking as a career, and the financing industry, viewed by educators? And are there enough formal education pathways that lead a student to a career in broking? “The problem is when you go to Uni, you can become a stockbroker, or you can become a financial planner, or something like that. But mortgage broking as a career choice isn’t even an option.” ~ YP Panel Member

Connective Insight: As an industry, if we want to keep attracting more of the ‘right’ brokers, we need to consider

the journey they take to get here, and how we can better support and educate that journey.

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Path to the industry (continued) Q: Why did you decide to become a finance broker? – Select up to three answers 2017/18

2016/17

Income growth potential

57% ( )

70%

Lifestyle factors

42% ( )

65%

To become my own boss

40% ( )

54%

Better future prospects

32% ( )

52%

A challenge

29% ( )

47%

Wanting an interesting career

24%

Other

12%

Other – 15%

2017/18 N: 205

When Over-35’s were asked the same question, their top three most popular answers were… Lifestyle factors

50%

To become my own boss

43%

Income growth potential

41%

Over-35’s brokers were also asked what they felt were the benefits of becoming a broker these days, and given the same answers (select up to three) to choose from. This was to gauge how the perceived motivations of new-to-industry brokers had changed over time. The top three answers were: Lifestyle factors

62%

Income growth potential

55%

Becoming your own boss

50%

Observations The most popular three answers between generations were the same: ‘income growth potential’, ‘lifestyle factors’ and ‘to become my own boss’. This was also the case compared to the previous Young Professionals report. But for Over-35’s ‘lifestyle factors’ was the top response (50%), compared to the Young Professionals’ ‘income growth potential’ (57%). “If you’re really good, and really committed to being a good broker, you can earn really good money.” ~ YP Panel Member “New entrants need to know that it is going to be hard work for the first 10 years, and then maybe you can have more of a lifestyle later.” ~ YP Panel Member At 57%, ‘income growth potential’ was a stand-out motivator for Young Professionals, but compared to the previous survey, this figure had dropped significantly from 70%. Having experienced all the pros and cons of being a broker over time, Over-35’s felt that ‘lifestyle factors’ were the biggest benefit of being a broker these days.

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Path to the industry (continued) What’s interesting is comparing the Over-35’s original perceptions when joining the industry to their current day perceptions of being a broker – ‘lifestyle’ 50% up to 62%; ‘income growth potential’ – 41% up to 55%; to ‘become my own boss’ – 43% up to 50%. In their experience, it seems that the industry has improved over time. This suggests that, in all their experience, Over-35’s strongly feel that broking as a career had drastically improved in the areas that matter most today compared to the period when they entered the industry.

Connective Insight: Income, control and lifestyle remain key motivators to start a career in broking, regardless of age or experience. To decide you want to be your own boss, to take that risk, is a huge commitment. It says a lot about the people working in, and entering our industry. With a quarter of the respondents stating they are

motivated by an interesting career, we can see that mortgage broking is perceived as varied, challenging and exciting. We see this when we look at successful brokers today – they have customer skills, technical knowledge and are hungry and ambitious.

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Settling in to the industry How tough is it to succeed as a young broker these days? As regulations, compliance, products and customer needs become more complex, do Young Professionals have the support they need to survive and thrive? Q: What professional challenges do you often face? – Select up to three answers 2017/18

Formerly openended question

Staying up-to-date with lender product and policy changes

54%

~

Time and workload management

40%

~

Staying up-to-date with legal and compliance changes

34%

~

Earning trust, respect and recognition

18%

~

Too much competition

16%

~

Recruiting and training quality staff

11%

~

Client management and relationships

9%

~

Motivation

8%

~

Other

4%

~

Lead generation and marketing

65%

~

2017/18 N: 196

When Over-35’s were asked the same question, their top four most popular answers were… Lead generation and marketing

58%

Staying up-to-date with lender product and policy changes

58%

Staying up-to-date with legal and compliance changes

42%

Time and workload management

34%

Over-35’s brokers were also asked what they saw as the biggest professional challenges facing Young Professionals these days. The top four most popular responses were: Lead generation and marketing

63%

Earning trust, respect and recognition

45%

Staying up-to-date with lender product and policy changes

37%

Staying up-to-date with legal and compliance changes

36%

Observations Like their Over-35’s counterparts, the Young Professionals biggest challenge was reported as ‘lead generation and marketing’ (65%) – suggesting it’s the industry’s top challenge. It also suggests that experience isn’t necessarily an advantage when trying to develop solutions. “Starting out, the biggest surprise was finding customers. You’re like ‘I do this for free and I get you a great rate,’ and you think that everyone will want to use you. But that’s not the case.” ~ YP Panel Member

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Settling in to the industry (continued) Like the Over-35’s, the need to stay up-to-date with lenders changing products and policies, to stay up-to-date with legal and compliance changes, and the ability to manage time and workloads, were also top challenges for Young Professionals. “When we first started we worked out how many hours it took to process a loan, and each time I revisited it, it just kept growing more and more as more compliance is going in.” ~ YP Panel Member Despite some indicators suggesting there are potentially too many brokers for the Australian market (1 broker for every 1,452 Australians, MFAA Industry Intelligence Service, Fifth Edition), competition for customers wasn’t considered a highly rated challenge for Young Professionals (16%), even though many are in the earlier stages of establishing themselves and their business, and they’re reporting that attracting customers (lead generation and marketing) was a challenge. Surprisingly, contrary to the perceptions of Over-35’s, Young Professionals are reporting low issue with ‘earning trust, respect and recognition’ from customers, despite their age. 45% of Over-35’s believed Young Professionals would have trust, respect and recognition issues, whereas only 18% of Young Professionals actually experienced this challenge.

Connective Insight: Staying up-to-date is a huge professional challenge for all mortgage brokers. It is our job as an aggregator to make getting the right information easy and simple. By keeping brokers

better educated, informed and engaged, we are progressing the industry and profession as a whole.

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Settling in to the industry (continued) Q: What areas of business would you like more support in? – Select up to three answers 2017/18

2016/17

Marketing, branding and lead generation

65% ( )

78%

Referrals and sales skills

54% ( )

58%

42%

New

32% ( )

69%

27%

New

23% ( )

36%

3% ( )

8%

Legislative changes and regulation Starting and growing a business Service diversification Technology Other 2017/18 N: 196

Over-35’s brokers were asked what areas of business they saw Young Professionals needing more support in. The most popular three answers were: Starting and growing their business

75%

Referrals and sales skills

65%

Marketing, branding and lead generation

55%

Observations When looking at areas of business administration, two-thirds of Young Professionals felt they needed more support in ‘marketing, branding and lead generation’ (65%), areas critical for attracting and retaining customers, and driving revenue. In a similar vein, Young Professionals then felt they needed more support in developing their referrals and enhancing their sales skills (54%). “They (brand new employees) don’t realise how hard it is to get that phone call and get the leads, or to get referred from an existing customer”. ~ YP Panel Member Surprisingly, three-quarters (75%) of Over-35’s believed that Young Professionals needed support ‘starting and growing a business’, but only 32% of Young Professionals selected this in the current survey – considerably lower. The Young Professionals current figure also contrasts with the 69% of Young Professional respondents selecting this answer in the previous survey. This may be for two reasons. One, starting and growing a business has become a lot easier recently – possibly from increased help from industry resources, or thanks to technology; or two, only a small proportion of Young Professionals are considering starting their own business, and for the majority now, compared to last report, business ownership is not a concern yet. “When I sat down and did a proper business plan and strategy and branding and worked on all of that, it did become a lot easier to generate that business.” ~ YP Panel Member

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Settling in to the industry (continued) Interestingly, only 5% of Over-35’s felt that keeping up with, and using technology was a challenge for Young Professionals. This in itself is not surprising due to the common-held stereotype of young people being technological natives. But nearly one-quarter of Young Professionals (23%) did report technology as a challenge they needed more support in. This suggests that maybe fintech is progressing too fast, even for Young Professionals who just don’t have the capacity to keep up-to-date, amongst all their other commitments.

Connective Insight: Over a quarter of respondents listed “service diversification” as a business area they would like more support in. We are seeing an increasing number of our newer brokers looking to add asset

finance early. We feel this is a key criterion for success, particularly in those early days when cash flow can be a challenge.

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Settling in to the industry (continued) Q: What might you have done differently in your career so far? – Select up to three answers I would have...

Become a broker a lot earlier in my career

Formerly open2017/18 ended question 44%

~

Spent more time and effort on lead generation and marketing

41%

~

Set up better initial business systems and processes

31%

~

Organised my time and workload better

30%

~

Spent more time maintaining my customer database/book

26%

~

Made more use of industry networks and industry connections

24%

~

Hired support staff sooner

10%

~

Researched the industry and profession more

10%

~

Spent more time and attention servicing clients

7%

~

I would have listened to my mentor more

1%

~

Other

3%

~

2017/18 N: 196

Over-35’s brokers were asked what the common areas of improvement were needed by Young Professionals. The most popular four answers were: Should spend more time and effort on lead generation and marketing

47%

Should listen to their mentors more

37%

Should make more use of networks and their industry connections

34%

Should set up better initial systems and processes

30%

Observations Retrospectively, the Young Professional’s biggest regrets were not becoming brokers earlier (44%), and not spending more time on lead generation and marketing (41%). The Over-35’s agreed with the Young Professionals on the point regarding effort spent on lead generation and marketing. But other than this, the top perspectives between generations were mixed. Equivalent proportions of Young Professionals and Over-35’s agreed in the value in setting up initial business systems and processes, but setting up networks and industry connections was viewed as important by more Over-35’s compared to Young Professionals (34% to 24% respectively). On a positive note, as nearly half of all Young Professionals reported that they regret not becoming brokers earlier on, this suggests there is something very rewarding about broking as a career – that being a broker has either met or exceeded their expectations (see question ‘Why did you decide to become a finance broker?’). “I could do something where I work nine-to-five, spend my evenings doing what I feel like doing, not work on Saturdays and Sundays, and earn eighty-or-a-hundred thousand a year, and live a pretty decent life. But that’s not why I gave up everything, and that’s not why I did it.” ~ YP Panel Member

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Settling in to the industry (continued) One interesting observation is the extremely low proportion of Young Professionals who reported that they should have listened to their mentors more (1%). This is despite 37% of Over-35’s believing Young Professionals should have spent more time listening to their mentors. Why is the Young Professionals figure so low? Is the mentoring process perfect, with Young Professionals learning everything they need to know, so there’s no need to listen to their mentors more? Or is the mentoring process so flawed that it was viewed as a waste of time? Or, stereotypically, like all ‘young people these days’, do Young Professionals simply think they know everything there is to know?

Connective Insight: Looking at those top areas – marketing and business processes – it really comes down to having the tools to do this. Using the right software platform for your business can make a huge difference, and we have seen in our own research that our more successful brokers

are more avid users of our software platform Mercury. Just under half wishing they had become a broker sooner! That’s fantastic, it tells us that a career in broking is satisfying that initial motivation to join, and more.

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Success as a broker Q: Name up to three things that you believe makes you a successful broker – Open-ended response When the open-ended answers were coded and categorised, the top four most popular answers in order, were… 1. A focus on customer experience 2. A focus on having the right success-orientated personal qualities (e.g. driven or hard-working) 3. An unwavering focus on achieving the end-result 4. A focus on other achievements (e.g. accreditations and awards) 2017/18 N: 174

Observations Promisingly, the top, and stand-out, attribute of being a good Young Professional broker is a focus on their customer’s experience. “That’s how the value of my business grows because that client knows that I forgo commission, and work extra hard than I usually would have to.” ~ YP Panel Member In times of reviews, reports and commissions, where the spotlight is on the industry, it’s fantastic to see that good customer outcomes are front-of-mind of the future of the industry. “When it comes to broking I can teach anyone to be a broker. I can’t teach somebody to have passion and love for clients.” ~ YP Panel Member Furthermore, it’s good to see that Young Professionals are outcome-focused, suggesting that the industry will continue to grow, develop and evolve with the times and challenges, thanks to the people that make up the industry.

Connective Insight: At the end of the day, the consumer is at the heart of everything the industry does. It’s so positive to see that customer experience and good consumer

outcomes are front and centre with these young professionals. That focus, alone, is why this profession will continue to thrive.

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Future of the industry Q: Where do you see the future of the industry going? – Open-ended response When the open-ended answers were coded and categorised, the top four answers were… Industry expansion: From more brokers entering the industry, and from lenders relying on the broker channel more Tougher and more challenging: Because of more brokers creating more competition, more regulation, and changes to lender remuneration structures

Move to online: Client services and lenders moving online Maintained demand for human brokers: Despite the rise in fintech, and all the entailed possibilities, the customer will always prefer to deal with a human broker

2017/18 N: 148

Observations The Young Professionals see a mixed future, characterised by growth amidst a changing and evolving environment. They see the industry growing as broker numbers increase, matched by the lenders greater reliance on the broker channel, and by the customers’ continued need to meet face-to-face. This is within the context of ever-increasing regulatory and compliance scrutiny... so it’s business as usual. But around this they predict significant changes due to the continued rise and impact of fintech. “I look back at some of the businesses I’ve helped save, and the people that have not managed money well, and I’ve sat down with them for hours and hours and have helped them consolidate their debt, and help them get trade finance, and things like that, and then to see their business succeed.” ~ YP Panel Member Interestingly, according to the Young Professionals panel, fee-for-service was not predicted to arise from changing remuneration structures when servicing a client’s loan, but due to the rise in the diverse services brokers continue to expand into to assist with providing an all-encompassing service for clients.

Connective Insight: We are seeing a new era in the Australian mortgage broking industry. It’s a future where rapid regulatory change, heightened scrutiny, increasing consumer expectations and fintechs are the new normal. But it’s a future that will be owned by innovative, resilient and customer

focused brokers ready to turn change into opportunity. Consumers are looking for a source of truth in all this complexity, so it’s time to shine. It’s such an exciting time to be a broker, and we love being a part of the profession’s evolution.

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Discussion It’s an interesting time to be a broker. Broker numbers continue to rise. New lending continues to grow. And broker market-share is at an all-time-high. This is contrast with average broker earnings contracting, a magnifying glass cast over the industry by the regulators, and rampant technological change. It is assumed that the Young Professionals generation, born in to a world of constant technological, economic, political and social change, would be in the best position to survive and thrive amidst all the industry change. But this isn’t necessarily the case according to this latest MFAA Young Professionals Report. While there are noticeable differences between generations, allowing the Young Professionals to have a positive outlook towards the future, some things are the same. On the face of it, it’s promising that young brokers are joining the industry from a more diverse range of sources, including more joining straight from higher education – making the industry more diverse – diverse skills, experiences, knowledge, and most importantly, customer solutions. This survey has also shown that Young Professionals are more satisfied with their career choice than previously, and whilst they are predominantly motivated by the potential for income, motivation and satisfaction is derived from a range of factors, such as lifestyle factors and wanting an interesting career. Throughout the research, it has been clear that generating leads has been the stand-out issue facing Young Professionals – an issue that also effects the Over-35’s as much. This may suggest that neither experience of the old, nor the technology of the young, will solve this problem alone. Staying up-to-date with changes in lender and product policy, and changes in compliance and regulatory requirements are also challenges across generations, a poignant observation in the current climate. Unsurprisingly there are some differences between generations, mainly down to perceptions between generations. The two that stand out were the older generations perceptions that Young Professionals had little issue adapting to technological change, where a significant proportion disagreed and found staying up-to-date with technology a challenge; and that the older generation felt Young Professionals should have listened to their mentors more, a point categorically denied by the Young Professionals. The Young Professionals see a positive, but mixed future. They foresee the industry growing in broker numbers, matched by greater lender reliance on the broker channel, and by the customers’ continued need to meet face-to-face. This is within the context of ever-increasing regulatory and compliance scrutiny.

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Discussion (continued) Closing remarks Looking at the information and data in this report, there is a lot to be excited about. The next generation of mortgage brokers are more satisfied with their career choice, and coming from more diverse backgrounds than ever before - bringing with them new skills and new attitudes. We’re also seeing more young brokers looking to diversify their offer, open to the opportunity of increasing their value to their customers in areas such as business lending and asset finance. Regardless of age or years of experience, some common challenges are apparent – lead generation, and adapting to changes in the industry and technology. The older generation of brokers perceive that young brokers know everything there is to know about technology, however this is not necessarily the case. To continue to develop talent in our industry, together we need to find ways to address the challenge of more effective mentoring and invest in the development of this next generation – for all our futures.

Mark Haron Director, Connective

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The MFAA Young Professionals As at December 2017. Bernadette Christie-David Atelier Wealth Tommy Lim SF Capital Bianca Patterson Calculated Lending Iva Rasic BorrowRight Tim Reynolds Accession Finance Dylan Salotti Divitis Finance & Mortgage Broking Donald Tang Alliance Mortgage Solutions Justin Vella BCP Finance Sophia Wu LESC Financial Services Joel Wyld Peasy

For further information on the MFAA’s Young Professionals program, contact: Chris Hamilton Marketing Manager, MFAA E: [email protected] P: 02 8905 1300

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