The insider

Like many in the mortgage industry, Andrew Brumby switched from banking to broking. And at a time when broker frustration is reaching new heights over lengthy service delays, having that extra bit of knowledge of the inner workings of banks could prove invaluable to getting deals across the line.

"We have a very low decline rate," Brumby confirms. We basically make sure it's going to fly before it goes to the bank."

His thoroughness and ability to place clients with lenders have catapulted him to the apex of MPA's top 100 brokers list - Brumby sits fourth settling almost $110m in 2007/08.

The road up
Born and bred on the Mornington Peninsula, Brumby started his career with Westpac where he spent 17 years working in lending roles. In 1996, he was hired by HSBC, where he worked as the manager for its third party broker business.

Around 2004, HSBC wanted Brumby to move to Sydney, but the long-time Victoria resident and father of three small children wasn't keen to pull up sticks. Weighing his options, Brumby decided that it was the perfect time to strike out on his own. And the timing was perfect. A long-term associate asked Brumby to work in-house at his accountancy practice and write loans for his clients. In the four and a half years since then the business has grown dramatically, and Brumby has expanded his strategic relationships to include another - much larger - accountancy firm and a real estate agency.

"Had HSBC had a role for me that was Melbourne based I'd probably still be there. There was no animosity with the bank at all; as it turned out they sold the broker business anyway after I left, so it was probably fortuitous in some ways that I did do what I did."

Having made the move into broking, Brumby says he can't imagine life any other way. "I just couldn't go back to the meetings for the sake of meetings corporate environment," he says. "The freedom and the flexibility that broker life gives you is really good."

While Brumby's banking background gave him a leg up in so far as understanding the loan process, he says going from knowing only one bank's process to suddenly having to know 20 different lenders systems was "a bit of a nightmare".

"That's probably the biggest thing I've found is that the processes between lenders is not identical and the requirements of each lender were quite different ... [It was difficult] getting through that mine field as far as getting the right documentation done and what allowances they took into account and what allowances they didn't take into account."

Brumby says that switching from banking to broking really opened his eyes. "Whilst you think, when your on the banking side running the broker business for a bank, that you understand what a broker is going through it's very hard to get out of the focus on being just that lender. If the deal comes to you, you don't understand what that deal might have gone through to get to you. That broker has probably critically looked at your product and compared to it to other lenders products. So I very much appreciate the fundamental difference between bank and broker."
 
Issues
It's very tough dealing with the present crisis in lenders' service levels, especially when it comes to setting reasonable expectations for clients, Brumby says. The variance can be quite great - not just from lender to lender, but even within the same organization. Brumby says he can place two very similar applications with one lender and get very different loan turnaround times.

"It does put a bit of the onus back on us to make sure it is going to work with the lender. And you really have to precondition clients more than you have in the past."

He says customers are not taking the delays well. "It's very hard for them to comprehend that they're going to borrow money that they're going to pay interest on and that [banks] are not going to provide a service for."

At times you've got to be a bit thick-skinned about it, he says, as he's got to shoulder much of the blame and angst.

Much of Brumby's business goes to the majors, as he's found it's very difficult to sell a non-bank to clients in the current market. "There is reluctance in the marketplace to go outside that and also the products that the majors are offering are probably the best around at the moment."

While many brokers in the industry are raising the alarm regarding similar actions by Westpac and CBA to introduce a "re-accreditation fee", Brumby takes a broader perspective.

"I suppose it's indicative of the environment where banks have a lot more power than they did in the past. But I can see it from the other side. One of the problems the banks do have is they do service a lot of brokers who don't give them any value and I suppose they're trying to force people to decide whether they're going to have Westpac on their panel or not - much in the same way that some of the banks are offering preferential treatment for brokers who do large volumes," he says. So it's regrettable but understandable if I'm going to look at it objectively."

On the issue of the draft legislation, Brumby doesn't see the changes being too onerous for experienced brokers. He does question how ASIC's involvement with licensing and regulating mortgage brokers will affect the role of the MFAA.

"The MFAA have got a problem in so far as whom they represent - the brokers or the banks? It's very hard to be an industry body when you're representing both sides. It's almost like one organisation looking after the builders and the unions. If you look at it like that you would say the MFAA's current position is untenable. But in saying that, I do think the industry needs a body like the MFAA. And I'm a member and I'll support them but with this legislation there probably needs to be a fundamental change to what they do."
  
Success tips
Brumby's business employs five support staff who are the real key to his success. All the people that work at Develop & Invest have worked with Brumby in previous roles. "Even though I've only been broking for four and a half years, I've known these people for a long, long time and I trust them. I don't question anything they do. We work in a partnership really." Brumby says many of his staff had to hit the ground running as "It's certainly not a training role".

The other cornerstone of his success is his strategic relationships. His first referral partner was an old client. Brumby had worked as his business manager for 15 years and the two developed a professional and personal relationship. It's been a lucrative partnership that acted as a springboard to his broking career and led to two other referral partnerships.

Because he partners with accounting firms, Brumby leaves the insurance side of things to them. But he has diversified his offering to include commercial, particularly equipment finance. As a result, his business split is about 25% commercial to 75% residential.

Brumby also receives referrals from clients. Like many brokers, he segments his clients into two tiers. He communicates with his top 50 clients on a monthly basis, while other clients may receive something quarterly. Brumby maintains contact by sending clients articles or information that he has come across that might be applicable to their situation.

Going forward, Brumby says he's going to try and maintain his settlement rate in the short term. While in the long-term he's looking forward to a stabilisation of his businesses growth pattern.

Fast facts:
Andrew Brumby
Company: Develop & Invest
City/State: Seaford, Vic
$ amount settled 07/08: $109.6m
No. of support staff: 5
Years as a broker: 4.5
Interests: Golf, racehorses
Family: Married, three children (9-year-old twin boys and six-year-old son)
Favourite movie: Blues Brothers