Welcome to June Intell.

Licensing is still the main topic of discussion across our industry.  It has been interesting to hear and read how some businesses are preparing for licensing.  The 2 key areas of immediate concern seem to be around the need (and process) to conduct a “fact find” and receiving leads from referral partners.

I understand that some aggregators are publishing their “fact find” documents running into many, many pages, which seems somewhat of an exercise in overkill.  The key objective in completing a “fact find” with a potential customer is to ensure that the loan is not unsuitable to their needs, which is the required test contained within NCCP legislation.  I can see no reason why the key objectives of a “fact find” could not be contained within a few pages of standard Q & A approach.

The issues surrounding referrers have been subject to much discussion since the earlier release by ASIC of their referrer exemptions.  ASIC released last week the following guidelines which are a welcome step in the right direction.

To be eligible for the proposed referrer exemption, businesses who pass on consumers' details (referrers) to licensees [or their credit representatives] will need to:

from 1 July 2010:

The following additional requirements need to be in place by the end of the transitional period so that businesses using the proposed upstream referrer exemption will need to:

from 1 October 2010:

• pass on a consumer's contact details within 5 business days; and

• not conduct their business from temporary or non-standard business premises (such as a stall in a shopping centre); and

• have in place an agreement with the licensee or registered person (in which the referrer acknowledges and agrees to the limitations on the information they can provide to a consumer and the need to obtain their consent to having their details passed on).

In addition, a licensee or registered person who makes contact with a consumer as a result of a referral must,

from 1 October 2010:

• do so within 10 business days;

• inform the consumer that they have obtained the consumer's contact details from the referrer;

• explain the financial benefits, if any, the referrer may receive for the referral; and

• specifically ask the consumer whether they are happy to continue with the conversation. 

So whilst these may seem a little cumbersome, they certainly are a step in the right direction and will be easily adapted through the nMB Affiliate Business Model.

Until next time, stay well!

Gerald Foley - Managing Director

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4casting Sales

Recently our BDMs have been conducting business reviews with brokers in preparation for the new financial year.  The reviews include: an analysis of current performance; a discussion around external and internal contributing factors; a sales forecast to the 2011FY; and an action plan to achieve the desired objectives.  In this edition of nMB Intell I have focused on one of the most important aspects of a business plan...forecasting sales. 

What is sales forecasting?

Forecasting is a process by which management accurately estimates future demand by anticipating the buying behavior of consumers under a certain set of conditions.  Successful organisations have long term, medium term and short term forecasts that are continually reviewed and adjusted according to company and market performance.

How important is forecasting sales to a business?

At the core of long term organisational success is management’s ability to foresee future events and develop appropriate strategies.  Accurate forecasting helps ensure advertising, human resources and inventories are all lined up to take full advantage of market opportunities.  Inversely, poor forecasting lends itself to over or short supply of stock, reduced margins, lost sales and potential cost blow-outs.

Who should set sales targets?

Depending on the organisational structure and culture, sales forecasts may be bottom-up or top-down prepared.  Sales managers need to plan forecasts that are inline with company revenue, profit and market share objectives, whilst achieving buy-in from the sales team.

What are some of the most practical and effective methods to forecast sales?

To accurately forecast sales, successful companies use a three-stage process.  Firstly they make an environmental forecast, followed by an industry forecast and finally, a company forecast.

• Environmental Forecast - The environmental forecast includes a projection of the overall economy and how it may affect future demand.  Interest rates, inflation, unemployment, consumer demand, business confidence, government spending, imports and exports and any other environmental factors that may be of influence.

• Industry Forecast - An industry forecast is then prepared largely due to: previous industry sales; supply-side factors such as availability of credit; results of competing businesses in your area; and the performance of related industries such as, construction of new dwellings and the performance of the secondary real estate market.

• Company Forecast - A company’s sales forecast is then prepared by projecting the desired share of total industry [or local] sales.  

Forecasting Models:

There are several forecasting methods used by companies and all are based on one of three information bases: what people say; what people do; or what people have done.

• What people say - This information base is largely built on asking people such as customers, sales staff and industry experts for their opinion.  Surveys commissioned by companies and industry bodies are used in conjunction with the consumer or business confidence index to help forecast sales.

• What people do - Where companies feel consumer surveys are not an accurate reflection of future demand, test marketing may be used.  Test marketing of existing products in a new distribution channel or new products in an existing market can be an extremely useful forecasting tool when measuring “what people do”.

• What people have done - This information base is built on past performance by using time-series analysis or statistical demand analysis.  The underlying theory of these methods is that by studying historical sales data, future performance can be projected.  There are four components used in time-series analysis:

1. Trend analysis - A trend is the long-term pattern of growth or decline of sales of a particular product or industry resulting from changes in population and technology.  A trend is represented with a straight line that best fits the historical data.

2. Cycle analysis - A cycle is a mid-term, wavelike pattern that is useful for mid-range forecasting.  A cycle presents changes in sales performance due to general competitive and economic forces.

3. Seasonal analysis - Seasons are represented by a consistent pattern of changes to sales within a year - year on year.  Seasonal behavior that affects sales activity may be related to weekly, monthly and quarterly events or changes within the year such as weather, holidays or customs.

4. Extraordinary Events - Erratic events such as: unusually high or low sales; strikes; earth quakes; riots, fires; wars; and any other acts of God must be identified and removed in an effort to normalise the data and analyse real sales.

Note:  Please see the November ’09 edition of nMB Intell on how time-series analysis is used in a broker’s business.

Companies also turn to leading indicators as a means to forecast future sales.  As an example, changes to interest rates, population growth, government policy and share market indices may be representative of future demand for home sales and home loans.

In Closing:

Your preferred method of forecasting is not as important as the process itself.   It will provide clarity around past performance, desired outcomes and future activity plans.  If you would like assistance with your sales forecast and business plan, please don’t hesitate to contact your nMB BDM for support.

Sal Cinque - Director, Sales and Marketing

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Increase Your Business’ Local Community Presence Via Sponsorship

The concept of ‘sponsorship’ is by no means ground-breaking. In fact, some say it dates back to ancient Greece, where wealthy Athenians who contributed money to sporting events were recognised by having their names engraved in stone. The practice of sponsorship has evolved a great deal since ancient Greece and remains one of the most effective means for companies of all sizes to achieve a number of business objectives.

Your business may not have the resources to sponsor the likes of the Olympics or AFL, however, sponsorship of local sporting clubs, schools events or charities, as part of an overall marketing strategy, may prove highly valuable for your business.

The benefits of sponsorship:

• Creating brand awareness – Creating brand awareness is a key benefit of local sponsorship. Brand awareness can be established via; the use of your logo in association with the club, school or charity; the facilitation of networking with club members/ supporters etc, and; the additional promotional opportunities that may exist as part of your sponsorship deal.

• Building relationships – Sponsoring a local organisation provides an excellent opportunity for you to build relationships with members of your local community. Chances are, they, or someone they know will be in the market for a home loan at some point in time. If you are able to establish a trusted relationship with these individuals, you will likely be their first port of call when this need arises. See ‘Lending a hand’ below for advice on how to establish relationships via sponsorship.

• Creating positive publicity – By sponsoring a local club or charity you are demonstrating your genuine interest in the local community. This is a clear benefit for any company, particularly a service based business.

• Driving sales – Driving sales will most likely be a key objective of your sponsorship strategy. The sales generating potential of sponsorship is virtually unlimited, especially taking into account the positive word of mouth that you will be able to generate if your sponsorship efforts are successful. One of nMB’s brokers has managed to secure $10 million worth of loans as a direct result of outlaying $4,000 to sponsor his son’s sporting team. This is unquestionably a great return on investment.

Who should I sponsor?

It is important to sponsor clubs, causes or events that will maximse your exposure to individuals who may be interested in the services of a mortgage broker. Consider aligning yourself with a sporting club or local organisation that you are an existing connection to, whether it be via your partner, children or your own association. This will enable you to build on the relationships that you have already established and may give you a greater ability to influence the nature of your sponsorship. If you are not already linked to a local club, school or charity, devote some time to researching sponsorship opportunities that may exist in your community. There is nothing stopping you from establishing new mutually beneficial relationships.

Sponsorship opportunities you may like to consider include:

• Sporting clubs

• School events

• Clubs – e.g. Rotary or business clubs

• Charities

• Fun runs

• Fetes

Maximise your sponsorship opportunities:

In order to achieve the best results from your sponsorship investment, it is important to consider how you can maximise your business’ sponsorship exposure. Consider the following:

Branding opportunities.

Devise a list of where your business’ logo can potentially be utilised and pass this onto the organisation or club. Some organisations will already have a standard sponsorship prospectus detailing sponsorship inclusions, however, smaller organisations may not. Examples of logo usage include:

• Billboard

• Website

• Newsletter

• Event programs

• Brochures

• Banners

• Show bags

• Uniforms

• Scoreboard

• Team photo

• Merchandise

Creating an additional presence.

Consider approaching the organisation in regards to additional opportunities for you to create brand awareness. Opportunities may include; promoting an incentive scheme for member referrals, or a service such as a free home loan health check, via the organisation’s newsletter, website, social events or notice board. Depending on privacy rules, there may also be an opportunity for you to be granted access to member or participant contact details which will enable you to send targeted communication, such as enewsletters or direct mail campaigns.

Lending a hand.

It is difficult to build lasting relationships with people by merely having your business’ logo visible on the scoreboard at their local footy club. The key to developing lasting relationships with those in your local community is by establishing trust and credibility, and the best way to do this is by spending time with people. With this in mind, consider volunteering as part of your sponsorship and use this opportunity to develop your relationships.

Volunteering opportunities may include:

• Scoring a sporting game

• Assisting with event organisation or setup

• Presenting club awards

• Speaking at an event

• Joining the club’s committee

• Selling raffle tickets

• Manning a stale at a fete

• Distributing show bags

If you would like more information about sponsorship, please contact me.

Kate Jeremiah - Marketing Coordinator

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The Low Down on Low Docs

Low Doc loans have undergone a serious transformation in this post GFC world of tightened credit policy. Whilst lenders are requesting further documentation to support income declarations, we still have options available for those clients who may not be in the position to meet the stricter criteria. 

16 of the 21 consumer lenders on our panel are still offering a Low Doc alternative. 6 of those only require a self-certification of affordability from the borrower.  It is important to note that clients who only meet the minimum requirements are likely to incur a higher interest rate, to reflect the increased risk associated with this type of loan.

Here is a snapshot of what is achievable under the low doc facilities offered by our Lender panel, keeping in mind that conditions may apply:

• 80% LVR plus LMI

• Refinance with only 3 months statements

• Cash Out

• 6 months ABN

• Business Debt Refinance

• PAYG Lo Doc (max 60% LVR)

• Defaults of up to $500 considered if paid >6 months

For further information please refer to the Lo Doc/ Self Cert section of the Broker Forum on MBS or give me a call with your scenario.

Jodie Hainey - Lending Services Manager

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Here we are the end of the financial year and judging by the number of brokers calling in to request new copies of our software, it seems the run on new computer equipment leading up to 30th June is in full swing.

With this in mind, I thought it would be a good opportunity to remind you of the specifications required to run our Mortgage Broker Suite software, (MBS)

From a software perspective it’s relatively minimal:

• Windows 2007 or XP - Usually bundled in with the purchase.  

• Office 2007 - Office 2003 is fine if you don’t wish to upgrade.

• Outlook - Full version not Express. Comes bundled with Office.

• Adobe Acrobat Reader - Free and available from adobe.com.

• Anti Virus Software - Personal choice really, try to pick a well known brand.

Things to look out for

MBS is relatively light on memory and storage, so the good news is that it operates in almost any environment.  It is important, however, when looking at a new computer that you cover off a few basic requirements. After all you will be spending a lot of time using your PC in your business.

• Brand - Select a well known brand. You are more likely to get valuable support in the event of an issue arising.

• Muscle - Intel Core Duo processors or the newer I7.  Plenty of RAM, 4GB is good and sufficient for Windows 7 to run well.

• Graphics - Brand name, good quality graphics card, say 500Mb - 1GB.

• Size - It’s all about presentation, so if your budget can handle it, the bigger the screen the better. Laptops are getting up around the 17 inch screen size, but check the weight.  Hard disc size should be 300GB+.

• Communication - WIFI essential.  Bluetooth handy, especially for your mobile phones and PDA’s .

• Peripherals - DVD burner, wireless mouse & printers are nice to haves. A DVD burner will also enable to you to back up to 4GB of data to each DVD. 

• Costs - Expect to pay around $1,000 - $1,500 for a known brand laptop with above features, and between $2,000 - $2,500 for larger 17” screen models.

Operating software is usually bundled with the unit, but you will need to purchase MS Office which will come in at around $200 - $700, depending on the version.  Virus software sets you back about $150.

Other Tips

Ensure when you set up your user account in Windows, that you select “full control” or Administrator access.  MBS requires access to folders on your hard disc to exchange data, so if the user account you are logging in with does not have full control credentials, MBS will not update information or allow you to synchronise your database.

When configuring Windows 7, select standard 32-bit, not 64- bit mode.  Selecting 64- bit mode creates a second 'Program Files' directory in your C: Drive, (Program Files (86)), which may cause problems with MBS.

We recommend turning down UAC (User Account Control).  This is relatively easy to do, via the user accounts section in the control panel

Finally, don’t forget to include the nMB website as a trusted site on Internet Explorer, and make sure you update the MBS software “Get Updates” at least twice per day.

We do not recommend loading MBS on Apple computers.  Aside from configuration issues, we are unable to provide support for Apple computers.  To you Apple devotees out there, nothing personal, in fact, I have been eyeing a new MacBook Pro for home, but really can’t see a business case for it in our world.

Kon Avramidis - Director, Operations

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Gavin Cox - nMB Broker, Mortgage Advice Plus.

1. Why did you join nMB?

They were focused on quality brokers rather than how many brokers they could sign up!

2. What do you like about being part of nMB?

The willingness to help as best they can.

3. What do you like about being a broker?

Accountability to yourself.

4. My all time favourite food is:

Gummy lollies.

5. The last book I read was:  

The instruction manual to the TV!

6. Lately I’ve been listening to a lot of:

Bamboo pipes…I just got back from Bali yesterday!

7. My favourite saying is:

“This is going straight to the pool room” (or in my case, Man Cave).

8. My Ideal Sunday involves:

A slow grazing breakfast and something constructive/productive non-work related in the arvo.

9. My biggest inspiration is:

Genuinely happy people.

10. If I didn’t live in Australia I would live in:

New York - I would love to have coffee and watch the world race past.

11. The most extravagant gift I have bought myself was:

My MINI Cooper S.

12. If I could have dinner with anyone (dead or alive) I would choose:

Wife to Be, Mark Webber, as I am a big F1 fan and Bono as he has a great opinion about the future and great stories of the past.

13. Three things I would love to do in my lifetime are:

• Achieve wealth

• Maintain health

• Build on happiness

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nMB Personal Development Days

Please see below for upcoming nMB PD Days:

Benalla - 27 July

Brisbane - 29 July

Sydney - 3 August

Melbourne - 5 August

Gippsland - 6 August

ACT - 10 August

Perth - 12 August

Invitations will be sent shortly by your nMB BDM.