Spotlight - Young ambition

For Ethical Lending Concepts directors Mark Davis and Kevin Agent, the sluggish market has not affected their success in the slightest.

If anything, the pair viewed it as the perfect time to set up a new mortgage broking business.

“There’s a massive skill gap out there and we believe that a lot of brokers and mortgage writers really don’t have the knowledge or the expertise to be able to arrange loan structures correctly, ” Ethical Lending Concepts director Mark Davis says.

The company has two divisions: The Australian Lending & Investment Centre and Professional Mortgage Managers, which evolved from Mr Davis’ belief in wealth creation, gearing and property.

After 10 years’ experience as one of ANZ’s top state managers, Mr Davis saw that the bank could improve on its service offering, and approached ANZ executives about setting up a new lending division.

But when the GFC hit, and the banks began tightening their lending, the plan was scrapped.

It was then that Mr Davis and his business partner, Mr Agent, set up the company, with the aim of bringing back relationship banking and customer service.

“Clients don’t want someone to just talk about lending, nor just about products and rates, they want to be able to ask questions and have access to specialists that can be trusted” Mr Agent says.

The partners saw that a number of pieces were missing from the puzzle when it came to how the banks talked to their clients.

“The banks employ staff at very different levels to the skills required,” Mr Agent says.

“All they are doing is one part of it, which is finance.

“They’re not looking at the fundamentals that are separate to lending; so all they’re going to be competing on is product, price and simple lending structures. All aspects need to be considered, and whilst we’re limited to giving advice around credit, we provide access to business partners that can provide advice on all other aspects to ensure that a holistic view is taken.

“We don’t want to compete on product and price. There are enough people out there doing that,” he says.

LEADING THE WAY

Mr Davis and Mr Agent have achieved remarkable success in the short time that Ethical Lending Concepts has been operating.

With the support of their aggregator, Connective, and a strong relationship with ANZ, Mr Davis and Mr Agent are in a good position for growth.

In the last 12 months they’ve written $340 million in loans and drawn down $250 million, and have ambitions to become the biggest loan writers in the country.

“Our ambition is to be writing one billion dollars a year within four years,” Mr Davis says.

They don’t advertise, cross sell, purchase leads or give kickbacks, instead preferring to focus their efforts on a holistic service offering and their relationships with strategic business partners.

“The business proposition involves talking to investment clients about their cash flows and loan structures [in order] to achieve their investment and personal goals,” Mr Davis says.

“The only way you can actually set up loan structures correctly is to have a pretty in-depth understanding of all the different industries,” he says.

As such, the business model is heavily reliant on a team of strategic partners, including accountants, tax advisers, stockbrokers, buyers’ advocates, financial planners, surveyors and legal specialists.

“We’ve chosen the best wealth business partners in Melbourne,” Mr Davis says.

“Most people out there will struggle to beat the advice coming from our partners.”

In order to understand the evolving needs of their clients, they are continuously educating themselves on the services of their referral partners.

Having a deeper understanding of their partners’ proposition makes identifying client needs a more thorough process.

“Mark and I are very keen to learn as much as we can so we spend a lot of time listening to our other partners,” Mr Agent says.

Armed with this information, Mr Davis and Mr Agent have seen the results, not only in their bottom line, but in their growing list of clients.

COUNTING CLIENTS

There are currently 1,950 clients on the Ethical Lending Concepts database, with 80 to 90 new clients being added each month.

As they don’t advertise, their source of business is mostly through referrals from existing clients.

Even if a client decides not to borrow, their various needs can be identified and then passed onto one of the company’s strategic partners, Mr Agent says.

“Not all clients will have a lending need,” he says.

“We’ll have a discussion with them and say ‘you need a financial planner or tax adviser given your current position.’

“By giving them that holistic view and providing access to our partners, those clients will refer business to us,” he says.

Together they pass on about 700 clients a year to their strategic partners.

For this they receive no payment, as they are careful to avoid a conflict of interest; the client must always come first.

“I hand out about 500 clients a year myself,” Mr Davis says.

“From referring those 500, the aim is to get approximately 250 referrals in return.

“To make this business a success we need to have about a 50 per cent hit rate coming back,” he says.

When clients are referred back, it is a sign that the strategic partners understand the business and know how to sell the proposition of Ethical Lending Concepts correctly.

LOOKING TO THE FUTURE

On paper, it seems the boys from Melbourne can do no wrong.

Twenty months in and they are certainly hitting their targets in loan volumes, and have leads coming through from their team of professional partners.

“We’re after the best writers that we can educate and turn into ‘Investment Lending Mangers’, and welcome anyone who wants to discuss our proposition with a view to join our team,” Mr Davis says.

As for the future success of the business, Mr Davis is aiming high.

“Wendy Higgins just hit a loan book of $1 billion in 14 years,” he says.

“I reckon we could do this in five years as a business, and individually I may take nine or 10 years.”