This two-woman team talks about how to do diversification right.
The name Belinda Gibson chose to bestow on her brokerage is perhaps the most suitable way to sum up her business ethos. Her company is called Thomas Magdalene Finance Group. Thomas and Magdalene are Gibson’s children’s middle names. They are named after two people who had a major influence on her and her husband’s lives – her husband’s brother, Luke Thomas, and her grandmother, Gladys Magdalene. For Gibson, naming her company after her children and their namesakes was just another way of honouring the importance of family and emphasising her philosophy that finance is about people as much as it is about figures.
With those founding roots, it’s no surprise that customer service, community, advocacy and relationships are some of the areas in which TMFG thrives.
At the Australian Mortgage Awards on 27 October, just over a year since the company was founded, TMFG won the Bluestone Brokerage of the Year –Diversification award for its multipronged approach to finance. But Gibson says there’s more to her brokerage’s success than its diversification strategy.
“It’s a collaboration of not just products and service offerings but what we also do outside of the business that is part of our business: the community projects that we’ve been involved in, the charity donations that we’ve made, and also what we’ve done in the broking industry,” she says.
It was family that inspired Gibson to start her broking business in March 2016 after 14 years at Westpac in commercial banking.
“When you’re working for a corporate you literally work yourself into the ground doing anywhere from between 60 to 70 hours per week, and one of the reasons why I left was to … bring more balance into our family life and not be all about work and to blend it all together,” Gibson says.
She hired Evelyn Clark, a recent bachelor of commerce graduate from Monash University and an accredited finance broker, to join the team at TMFG.
“It’s a collaboration of not just products and service offerings, but what we also do outside of the business” Belinda Gibson, TMFG
Together they have built their service offering around being a one-stop shop that focuses on service, integrity and community. They specialise in all aspects of commercial business and equipment finance, SMSF lending and property development, particularly petrol stations.
On the consumer side, the brokerage also offers home and investment property finance, specialised lending such as SMSF, and personal finance for existing clients. It offers home and contents insurance as a complementary service. It refers specialised equipment finance to an equipment finance broker and refers other professional services, such as financial planning, accounting and legal advice, to selected businesses that they trust.
While Gibson already had expertise in these specialised areas from her time at Westpac, she suggests that a broker should listen to their clients and let their needs guide the broker’s diversification strategy.
“We have focused on growing our diversification offering and referral sources in the past 12 months by adding services through client needs and identifying gaps in our offering. We always ask our clients for feedback, both positive and negative, as all feedback should be taken on board to improve future service, experience and skills,” she says.
Clark says once a broker decides how they want to diversify they should speak to BDMs, mentors and experts in those areas. “Use your support networks and ask loads of questions so you can diversify to the same level that you’ve already achieved in your business,” she says.
Clark knows this from experience.
“I couldn’t have found myself a better organisation in terms of learning and being mentored and being able to work on any transaction, from a simple first home buyer right through to a cash flow deal, so having [Gibson’s] experience has just been really helpful to me,” she says.
TMFG is unique in more than just its name. For each new loan settled in FY17, TMFG donated $150 to charities selected based on their relevance to one or more of its staff or client community. It now works with Fight MND, Bowel Cancer Australia, Heart Lung Transplant, the Bourke Street Fund, Oz Harvest, Golf Fore A Cause and the Westpac Foundation.
Outside of this, both Gibson and Clark volunteer with various sports initiatives. Gibson raised more than $2,000 as a champion runner for Fight MND at the Run Melbourne half-marathon in honour of her stepmother who suffers from the disease.
Gibson and Clark created the Ladies Who Lend network, a small group of Victorian brokers who meet once every couple of months to troubleshoot deals and support each other.
“It involves encouraging other women to develop their skills, sharing knowledge within the finance broking industry, and having true courage to constantly source new leads, meet new referral sources, and generate conversion so we can be equally successful,” Gibson says.
TMFG is also an advocate of supporting micro and small businesses. It does this by connecting its business clients to one another, or to other companies externally that it partners with and trusts. It outsources its own copywriting, web and graphic design to small businesses in the community, and it promotes different clients’ businesses in its bi-monthly newsletters.
The idea is that “one of our clients might become one of their clients in the future”, Clark says.
“We always ask our clients for feedback, both positive and negative, as all feedback should be taken on board to improve future service, experience and skills” Belinda Gibson, TMFG
In addition to all this, there’s customer service, the cornerstone of any successful business. TMFG has established a process from the enquiry stage through to settlement and beyond that ensures the customer feels informed.
“Our engagement with them doesn’t just stop when their loan is settled. We donate, we celebrate their settlement, and we reward them as well, and we continually make contact with them,” Clark says.
They also throw in a few perks along the way. Before this winter began, they sent their clients branded golf umbrellas.
“It’s something that’s not expected and clients actually appreciate it,” Gibson says.
Achieving success in broking is about more than just the types of lending you offer. It’s about what you provide customers, as well as what you contribute to the industry and the community as an organisation, Gibson says.
“Our clients, referral partners, lenders and the businesses that support our business and our team are the reasons behind our success. The feedback we have received from our clients supports our business model, so we know we are on the right path for the future.”
La Trobe Financial
has long embraced diversification as core to its strategy. We have one of the broadest loan product suites in the market, one of the broadest funding profiles of any specialist lender, and we have created highly diversified portfolios for our investors.
In discussions with brokers, we like to focus on the benefits to any business that can accrue from sensible and measured diversification. The addition of commercial lending to a predominantly residential broking business, for example, can open new revenue lines that can increase profitability and market share.
We have also seen many examples that highlight the importance of diversification. Consider broking businesses set up specifically to write one particular product. We have seen these businesses grow exponentially, and watched as their brokers have risen through the ranks, winning awards for volume and growth in the industry.
Unfortunately, success was not sustainable for many of these businesses because when lender supply lines were cut unexpectedly the broker’s own supply capabilities evaporated, along with their business plans. Case studies of markets that have changed significantly over the past 12 months, and which may have disrupted business models include the following:
• SMSF loans
• Non-resident loans
• Development finance
• Commercial loans
• Investment loans
• Interest-only lending
We strongly believe diversification to be one of the most important fundamentals of any investment, and arguably, a finance broking business is just that, an investment. Therefore a strategy to diversify should be seriously considered in order to safeguard a broker’s business. Specialist lenders can make diversification easy.
Other lenders may require finance brokers to sit a test or hold off on lodging applications until they can be formally accredited (when convenient for the lender in question). However, at La Trobe Financial accredited brokers are able to write all of our products without delay.
We use the same forms and documents and follow the same approval processes, ensuring that brokers who are not so familiar with a particular product can easily adapt, hence there is no need for any additional accreditation procedures.