Opportunity from Chaos

by Melanie Mingas26 Feb 2019

Founder and CEO of Blue Wealth Property Dr Tony Hayek, urges brokers to step away from distractions in the market.

LIVING in the information age isn’t all it’s cracked up to be.

At a time when information is commoditised, distorted and pushed to audiences through a plethora of connected devices, it’s hard to keep your head above water, let alone distil fact from fiction. Although there is more information available than ever before, people are increasingly wary of trusting it – and when they do, it brings conflicting narratives that compromise the ability to make decisions. This paradox is officially known as ‘information overload’.

The term was coined in 1964 by Professor Bertram Gross, but it’s more relevant today than ever before.

“When information overload occurs, it is likely that a reduction in decision quality will also occur,” Gross wrote.

The fallout cascades throughout daily life and, according to founder and CEO of Blue Wealth Property Dr Tony Hayek, it has given an unprecedented edge to the property cycle’s current phase. “I think the intensity of the feelings around this property cycle has been driven by the availability of information,” Hayek says.

“Everyone has a social media feed.

Your smartphone is notifying you about the front page of the Sydney Morning Herald and a disastrous article about the property industry.

It’s a much more difficult environment in which to form a clear and concise opinion and stick with it.”

In terms of economics, the last property cycle – which peaked in pre-social-media 2004 – is echoed in today’s cycle, and Hayek says the usual scenario is to experience three to four years of strong growth, up to 18 months of correction and stabilisation, and a “handful of years” of stagnation. “There’s nothing unusual this time, but the one key factor that is different about this cycle is the availability of information. You used to have to go looking for it. Now it finds you,” he says.

While that information includes an “overwhelming wave of negative sentiment” around the property market, over recent weeks brokers, too, have found their interests volleyed across the media, again intensifying an already-complex situation.

Add to this the potential for the industry to be used to score political points in the impending election, and the distractions soon add up.

“We all need to give clients clarity around why they should buy an investment property when the media is telling them not to” Dr Tony Hayek, founder and CEO, Blue Wealth Property

“There needs to be some real focus. Never in the entire history of the broker channel has there ever been as much noise as there is now,” Hayek says.

Back to school

Focus isn’t just a skill for brokers to hone; it’s Blue Wealth’s theme for the coming year.

Now that its training and education program is established, a full agenda of events is scheduled for the coming months, with more to come.

These cover the Insurance Masterclass, Boot Camp – the highest-level course – and a new Masterclass Mechanics focused on the key skills needed to run a business, ranging from time management to client goal-setting (see page 2 for dates).

In Hayek’s words, the courses teach the “things that brokers should know but don’t know”.

He reports a 50–60% increase in attendance at Blue Wealth’s training seminars in 2018, fuelled in part by the firm’s proactive expansion activities and by brokers’ desire to tap a new and extensive client base.

“What we found was a hunger from brokers for new knowledge,” Hayek says.

“I think one of the skills that has become underrated over the last few years is just basic human communication skills, basic sales skills, your ability to communicate your message clearly to your customer and explain what’s in it for them. We have lost sight of that.”

In the new environment, training attendance figures are likely to increase again as brokers look to diversify their portfolios of client solutions.

Although aggregator training plays an important role, Hayek says there’s a secret to success.

“If you want to diversify, learn from the organisations that you’re diversifying with.

“I think one of the things about the aggregators is that a lot of them are delivering very similar information and training programs. Quite often brokers get a different perspective on the client, environment and pitch from an organisation that does things a little bit differently,” he says.

Eyes on the prize

In going back to basics in their professional skill set, Blue Wealth’s network of brokers will have a new tool at their disposal – a market-first calculator to help their clients visualise the financial benefits of property investment. Developed by Blue Wealth for exclusive use by its broker network, the calculator incorporates the balance of any existing home loan and investment interests and applies a modest level of growth in order to generate a date for when the investment property will have paid off the home loan. “It’s absolutely brilliant,” Hayek says.

“The intensity of the feelings around this property cycle has been driven by the availability of information” Dr Tony Hayek, founder and CEO, Blue Wealth Property

“It was created to help brokers find solutions for their clients. The great Australian dream is to pay off the home loan, and we believe investing in property is a great way to build wealth. We all need to give clients clarity around why they should buy an investment property when the media is telling them not to. They want to know, what’s the end game? What’s the big picture?” For the housing market, the big picture remains a blurry apparition with a lot of dark clouds.

Steadfastly objective in his outlook, Hayek is quick to draw on his own advice, applying focus and perspective to his observations of recent trends.

“I think it’s very important to find a way to get some perspective, because when the media talks about places like Sydney and Melbourne losing up to 15% on the back of gains of 75% and 80%, it’s really easy to lose that perspective,” he says.

Assuming the credit outlook will bring more of the same muted activity that was seen in 2018, Hayek expects there may be more regulatory intervention on the cards.

“We expect there will be some relaxation of policies similar to the lending cap threshold last year, which was a small sign of change. I think those signs will continue throughout this year,” he says. After a strong 2018, during which Blue Wealth saw hundreds of clients settle despite the market conditions, Hayek is confident about keeping the pace.

However, for brokers a number of unknowns remain on the horizon, meaning that focus will be paramount over the coming months, along with diversification and book building.

“Times like these present the greatest opportunity,” Hayek says. When it comes to transacting well-negotiated property deals, these are the markets that you find them in.”