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Oxygen Home Loans’ general manager Alan Hemmings discusses his new role, industry consolidation and the future of fee for advice
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WHAT ARE YOU HOPING TO BRING TO YOUR NEW ROLE?
A fresh perspective and my banking experience over 15 years, particularly in running a high volume business.
It’s about getting the fundamentals right and removing the ‘speed bumps’ for the brokers. I want to allow the team to focus on the reason they are in the mortgage broking business – that is, getting out and building referral networks, meeting new clients and generating business.
WHAT’S NEXT FOR OXYGEN? WHAT ARE YOUR GOALS FOR THE COMPANY OVER THE COMING 12 MONTHS?
To continue the growth story. Having sat in the chair now for a couple of months, leveraging the opportunities within the McGrath network will continue to be the focus. As McGrath Estate Agents continues to grow, so will the Oxygen network of brokers, so recruitment will play a vital, ongoing role.
Secondly, extending the reach of the Oxygen brand. At the moment we are linked to the McGrath business; I would like to expand the reach of the Oxygen brand and its offering to mainstream consumers. This will deliver more business and also strengthen our proposition for recruiting new brokers.
Finally, I want to make sure Oxygen is synonymous with having the right brokers in the right places doing the right things, providing the six-star service expected of a McGrath business.
DO YOU THINK WE WILL SEE GREATER CONSOLIDATION IN THE AGGREGATION SPACE?
Given the level of consolidation we have seen over the last few years, I believe it is only inevitable. We have seen smaller or boutique aggregators disappear as they try to compete with the big boys. I am not seeing anything that will change this trend.
The demands to keep up, from a technological perspective, [to] continue to provide training and support, will mean margins for smaller groups will continue to reduce, putting more pressure on them to survive.
HOW IMPORTANT IS IT FOR BROKERS TO DIVERSIFY?
Very important – not only from a revenue perspective, but also [to retain] your clients. Do you want your home loan clients talking to someone else for insurance? That insurance person may also do home loans. It is about protecting your business.
At Oxygen, we offer risk and general insurance as well as having a financial planning business. Ultimately, we want to be a one-stop shop for all our customers’ financial needs.
WILL WE EVER SEE THE INDUSTRY MOVE TOWARDS FEE FOR ADVICE?
At Oxygen, we don’t charge a fee. I know there are brokers who do – more to cover the cost of the work they do for ‘tyre kickers’, clients who have no intention of proceeding with a broker but who are only using them to get a better deal from their own bank.
If the industry mandates a fee for advice, how will the lenders react? Current commission levels are paid on the assumption that [commission] is the only income a broker earns. Will they see it as an opportunity to cut commissions in the belief that brokers are now receiving greater income?
The other issue with fee for service is justifying the fee. You can get a home loan over the phone, via the internet or in a branch at no cost (other than the establishment costs that are paid irrespective of channel).
IS CHANNEL CONFLICT BETWEEN BANKS AND BROKERS STILL AN ISSUE? IF SO, HOW CAN IT BE RECTIFIED?
Yes, it is, but I don’t believe it is as widespread as many believe. Unfortunately, while every branch/bank staff has sales targets there will be the temptation to poach business. How can it be rectified? I’m not sure it can, but provided the lender acknowledges the situation and ensures the broker gets recognition for introducing the customer, [that] is probably the best we can hope for.
The alternative is to stop it before it happens; have good, strong relationships with your local branches; and make sure the service provided to your clients is exceptional. That way the branch or even another broker won’t get the opportunity to steal your business.
WHAT ARE THE BIG ISSUES FOR BROKERS AT THE MOMENT?
Productivity. When do you pay for an assistant in the business? The amount of paperwork required in completing a loan application, the time it takes to lodge a deal with a lender, and the ongoing management of the process can impact on a broker’s ability to incrementally increase business.
Increasing compliance requirements are only reducing productivity further.
I think this is particularly important for new entrants into the market. It can be a real balancing act – when do you start paying for this support?
At Oxygen, we are exploring how we can assist our brokers – either new entrants or existing – through this process to ensure they are out there growing their business.
