Leading non-bank lender Resimac is encouraging brokers to offer more services to clients through diversification as a way of growing their businesses. The sponsor of the Resimac Brokerage of the Year – Diversification award at the 2021 AMAs and award winner Empower Wealth discuss diversification opportunities.
Resimac and Empower Wealth recognise the value of diversification as a way for brokers and lenders to drive success.
Empower Wealth, named Resimac Brokerage of the Year – Diversification at the Australian Mortgage Awards last month,
is more than just a mortgage brokerage. The Melbourne-based business also offers property advice, financial planning and accounting services.
“Our core focus is to help our clients design the lifestyle they desire and to become financially free,” says head of mortgage broking Ben Magnus. “That journey starts with educating them on how to manage their money better, how to create and trap surplus money, and guide them on how to use our proprietary money management platform, the MyWealthPortal, to achieve their financial goals.
“This means that our clients can be ahead of the curve in everyday cash flow management, which helps them achieve financial peace and a comfortable retirement.”
Magnus says once clients are cash flow savvy, “this is when the real magic starts”, with Empower Wealth’s dedicated team of specialist advisers applying their skills to a range of property and financial services.
“Those specialist services can include property and mortgage advice, financial planning and accounting services, and also buyers’ agency assistance.”
Diversification is vital to Empower Wealth’s growth and success.
“It’s absolutely critical for a brokerage to diversify its services to its clients – this provides protection to your business in case there is a shift in a specific market segment,” Magnus says.
“For example, interest rate changes, an over/undersupply of properties or macroprudential regulations can quickly change the lending landscape. Having alternative lead sources and a holistic proposition for your clients can all help ensure business continuity and growth.”
Magnus says most Empower Wealth clients are set up with a long-term plan to build their household wealth through property investment.
“Those plans usually include multiple property purchases over a number of years. With that in mind, we need to continue to adapt and diversify with our clients to ensure we can meet their needs now and into the future,” he says.
Diversification is part of Resimac’s DNA. CEO Scott McWilliam says Resimac looks at diversification in two ways – at what it offers customers through its products and services; and how it operates and grows business.
“Our goal is to offer a diverse range of finance solutions to give as many Australians access to credit as possible,” McWilliam says.
“In partnering with Resimac, brokers are able to service a diverse range of customers with a broad spectrum of needs, which helps them create new streams of revenue and grow their business.”
“Our mortgage products are designed to be used for a diverse range of purposes. In addition to purchasing property and refinancing home loans, customers can use our products for business purposes, debt consolidation, investment, and cash-out.”
Resimac used to be a prime residential mortgage lender focused on the typical Australian borrower, McWilliam says.
“In 2007, we saw a gap in the market for those borrowers who were being overlooked by the banks – those borrowers that fell outside traditional, and somewhat rigid, lending guidelines.
“So we diversified our product offering and launched our specialist lending program with products that catered to a broader borrower type, including the self-employed and credit impaired. Today that business represents approximately 30% of our originations, and we expect that to grow over coming years.”
Last year Resimac further diversified and bought a small asset finance company, then relaunched it in early 2021 as Resimac Asset Finance, providing a combination of asset finance, secured business loans, personal loans and car loans.
“We share the same view in terms of our brokers,” McWilliam says.
“Brokers are in a unique position in that they’re often the first port of call when a customer has a financial problem. Often, a complete solution entails more than just the financial product.”
“By diversifying the services that they’re able to offer customers, they can play a bigger role in solving their problems, thus adding more value to the relationships and receiving more value in return.”
“Diversification will allow a broker to say ‘yes’ more often and not only grow their business with new clients but also retain those clients they worked so hard to acquire.”
Empower Wealth, which specialises in servicing its customers through their property and financial investment journeys, is a great example, McWilliam says.
“Buying an investment property is not as simple as getting a loan, buying the property and making a profit. Instead, it’s a long and staggered journey, which Empower Wealth is well equipped to take its clients on through its offering of diverse related services, creating reciprocal value at each stage,” he says.
Magnus says Empower Wealth has broadened its market presence by offering complementary services for clients who are passionate about property investment and money management
“We continue to build technology that makes it easy for our clients to stay close to their lifestyle design journey,” he says.
McWilliam says all of Resimac’s products are offered at competitive mortgage-based rates, as “we secure the loan against the customer’s residential property rather than the purpose of their loan”.
“This contrasts with the standard industry practice of setting rates based on the loan purpose, and it can provide borrowers with signiﬁcantly better outcomes.”
McWilliam says Resimac’s comprehensive and competitive solutions are available to a diverse range of customers, including those who don’t ﬁ t the standard lending guidelines – a segment typically overlooked by the major lenders.
“These include self-employed borrowers who require alternative methods of income veriﬁcation, and borrowers with credit impairments such as defaults and discharged bankrupts.”
The majority of Resimac’s residential mortgage products can be used for any worthwhile purpose, including purchasing new equipment for a business; consolidating debt; investments (including in assets other than property) and cash-out.
Resimac Asset Finance also provides more options for borrowers, including secured business loans and personal loans, and products to fund automobile or equipment purchases and insurance premiums.
“Brokers can be conﬁ dent that, for the vast majority of customers who walk through their door, Resimac has a competitive product to suit their needs,” says McWilliam.
Funding is another area in which diversiﬁ cation has been essential to Resimac’s growth, namely funding mortgages by issuing residential mortgage-backed securities.
“Strong demand from investors in Australia and off shore resulted in $6bn worth of prime and non-conforming RMBS transactions in FY21 alone,” says McWilliam.
Magnus says Empower Wealth’s diversiﬁ cation path has always started with education: “ensuring our clients have the tools and technology available to make educated decisions about their ﬁnancial future, then ensuring our staff are trained to execute on the strategies that help guide clients in the right direction”.
He advises brokers wanting to diversify to back themselves.
“Take a chance on broadening your business strategy and client proposition. Be mindful that you will need to invest in educating your people, building technology and ﬁnding the right specialist business partners. Getting those things right will help ensure you future-proof your people, systems, revenue sources and client base. This is also made easier when you hire passionate property enthusiasts into the ﬁrm.”
McWilliam says while the residential property market is extremely strong, markets ebb and ﬂ ow, and “it’s important to ensure that a broker’s business is sustainable”.
“By looking into other areas to diversify into, brokers can enhance their success when times are good, but also insulate their business when the market changes,” he says.
“For example, some brokers may just be focusing on prime PAYG customers looking to buy or reﬁ nance. But they could expand their customer base by diversifying into residential purchases or reﬁnance for prime alt-doc customers such as the self-employed.”
McWilliam says brokers don’t necessarily need to make drastic changes to their business.
“Start off small by educating yourself on servicing customer needs that currently fall out of your remit, as well as about lenders like Resimac that cater to a diverse range of customer types. Then, as you grow more conﬁ dent and start to pick a good volume of business, you can think bigger and build diversiﬁ cation into your business strategy.
“Pick a niche … it needs to be focused and targeted, so direct it towards a speciﬁ c customer segment or niche,” says McWilliam.