In the last 18 months – The Mortgage and Finance Industry has been looking for answers – many even a magic pill; most have been looking for a plug.

Servicing tests increased, lender appetite had largely shrunk, valuations in different states had softened. The % of income everyone had budgeted from residential refinances was halved – at best.

As such every aggregator and association has been spruiking the importance of diversification.

Commercial and Asset Finance have become like the new black – with everyone stepping up their game in running training and masterclasses.

But what is the narrative behind the training? Has the rubber hit the road? Or are we collectively hitting pause until the dust settles from the Royal Commission?

Any broker, adviser or business owner knows they don’t have that luxury of time.

1. Evaluate your own risk profile – rather than enforcing it on clients

Many advisers are simply looking at the world they know – the cheapest rate. Commercial lending involves understanding of tax consequences, structures and opportunity cost. We need to trust that clients understand their business better than we do – and accommodate that with options and value. Missing an opportunity for their business may be a substantially higher cost that a high double-digit interest rate.

2. Know your value and charge for it.

The amount of work required on a complex deal in this space may well require charging a client upfront through a mandate fee. Given the role and integration of a banking institution or finance product with the very operation of a business – many businesses want the path of least resistance. They may love that you can save them money, but if they simply use your letter of offer and their existing bank magically changes tune – where do you stand?

3. Sell the strategy; smell the surroundings

Commercial Lending is rarely a single product; it’s a means to something more. The preservation of working capital and management of cashflow is often at the core; however many businesses have multiple advisers, accountants, lawyers, bankers – and shareholders. Know who has the clients’ ear – and have your own network of people that are across the different facets of business advice.

Whether they are your people or the client’s – use every interaction as a learning experience, remember that to be successful – you need to be across where your client is focussed, understand your role as a trusted adviser to your client and ensure your input remains valuable beyond sourcing funds on a singular basis. No one expects you to know everything – everyone expects that if you receive payment – that you’ve delivered value, whether directly or through their association with you.

4. Take control of your own education – Widen your source of truth.

Realise that many educational opportunities are still profit centres. Everyone must make a dollar, and aggregators and associations have really stepped up. But to be successful – know what you need to work on – don’t limit yourself to knowledge just from funders paying for shelf space. Most importantly – understand the way different lenders view a client’s financials and the opportunities for you to meet their next funding need.

5. Put your hand up.

We have an amazing group of people in our industry who are willing to share their experience and knowledge. Set up peer groups, work with people both inside and outside your aggregator, outside your region. Work on transactions with others to gain the practical experience you need to grow, without expecting reciprocity. Seek out different viewpoints regularly – whether it be from a mentoring relationship or otherwise.

There is no substitute for experience – so leverage from those that are willing to provide it, strengthen your networks and your value proposition.

Chris Slack recently founded The Finance Consultancy to work specifically with brokers and accountants on commercial and equipment finance transactions and training. He previously was the National Business Development Manager with Platform Consolidated Group rolling out Asset Finance Solutions for Aussie Home Loans and prior to that managed Global Capital’s Business Finance Division and ran Count Financial Group’s Asset Finance Business.

To discuss further contact Chris

chris@thefc.com.au
+61 415 305 502
Linkedin