PLAN CEO Trevor Scott is a passionate supporter of the broker industry and a big believer that brighter days are ahead for brokers

PLAN CEO Trevor Scott has a bold vision for the broking industry. "We estimate that, at present, 40% of Australian home borrowers use brokers," he says. "Personally, I would like to see that increase up to 50% over the next two to three years."

Considering the third party distribution channel has hovered around the 40% mark for several years now it's a big call - but not entirely out of reach. Recent statistics from the Market Intelligence Strategy Centre reveal that brokers posted a 7% jump in loan volumes to $14.8bn during the December quarter 2010. The hike marked a huge turnaround for broker-sourced lending which previously dropped in five successive quarters.

Scott admits that the industry has a lot to do to get there, but says helping achieve it will be one of his challenges. It's just one of many goals Scott has set for himself in his new role as CEO of PLAN. He took over the role from outgoing head Ray Hair in March and concedes he's got a lot of ground to cover in his new post.

"The learning curve is stellar. You could probably say at this point it's vertical. Ray Hair's shoes are big ones to fill - he's been an icon in the industry for many, many years," he says. "Having said that, it's an opportunity to move in a new direction. Nine and a half years in one role for Ray is a long, long time and I think there's an opportunity for me to take a whole new look at PLAN, at where it's going and where we can add value to the members."

White label success

Despite being new to the role, Scott is hardly a rookie in the industry. His appointment coincides with his five-year anniversary at Challenger/Advantedge. Prior to taking over as CEO, he successfully set up the broker platform distribution business rolling out the white label program through PLAN, Choice and FAST. Since the launch of those white label products, Scott has grown distribution to over 5% through each aggregator.

"We've had a lot of success with our PLAN Lending products," he reports. "And I think one thing that's changed in the last two years is brokers are much more willing to accept a white label product than they have been in the past. So I think we'll see a lot more of that type of product development going forward. It will be very interesting to see what unfolds - it's still early days."

Scott predicts even more brokers will warm to white label products as a result of the decline in competition from non-bank lenders. "The abolishment of exit fees and differed establishment fees has put a little bit of pressure on the non-bank lenders which is very unfortunate. Without those guys, the market will be heavily dominated like we saw in the GFC and I don't think that's a good thing for the industry. I think the more choice and the more lenders that are available in the market, the better it is for everybody because it keeps you on your toes."

First-hand experience

Scott's long-time participation in the banking industry has made him a witness to the rise and fall of competition in Australia and its effect on the mortgage market.

He got his start in banking and finance at a young age - joining State Savings Bank at 17. About 15 years ago he became involved in the third-party channel, an area he says he's passionate about. In 2000, Scott became one of the founders of Bluestone Mortgages. He is also the founder and managing director of a boutique aggregation business called Majestic Mortgages, which was very successful prior to the GFC.

Scott has also spent some time as a broker. "So I've walked a mile in the other man's shoes," he admits. "That really helps me understand the issues that are facing brokers today and this is where I think I can add value to the PLAN members."

Scott adds that PLAN has been a leader in the aggregation space for a long time, but its focus remains constant. "One thing I'm very mindful of is that without brokers we don't have a business. We don't have any other distribution channels, we don't have bricks and mortar, we don't have mobile lenders - we are solely reliant on broker distribution."

According to Scott, PLAN has always enjoyed a position of trust, which has put the business in good stead going forward. "We set up the system for managing commissions via a trust account - we were the first ones to do that. So I think we occupy a very good space in the market."

Positioning will be key going forward, as PLAN embarks on a recruitment drive in 2011 to try and recoup some of the member losses it experienced during the licensing transition. Upon Scott's appointment as CEO, Advantedge general manager of broker platforms Steve Weston noted Scott's long-standing service in the industry and reputation for being relationship and sales-focused would be particularly helpful in growing PLAN's business.

According to Scott, the series of roles that led to his current position have allowed him to meet with many brokers across the country. "Apart from the downside of the travelling it's actually been very good for me because it means I know as many brokers in Sydney, Perth, Adelaide and Brisbane as I do in Melbourne. So that really helps me in the role as CEO of PLAN because I do know the local issues and understand what their businesses are about."

While he already knows about a third of PLAN members, Scott says one of his first goals is to get out and meet as many other brokers as possible. "That's one of the things that I really want to do and it's a personal challenge for me to get involved in their businesses and better understand how they work, what affects them on a day-to-day basis, what keeps them awake at night and come up with some solutions to some of their problems. I really want to roll up my sleeves and get in the trenches with those guys."

Fee for service

One topical issue that has divided brokers is fee for service. On this, Scott comes down in favour of brokers charging for their services. "I'm a big supporter of fee for advice," he concedes. "There's been quite a bit of chatter on whether it should be termed fee for advice or fee for service and my view on that is actually quite simple. If you look at an average PLAN broker who's been in the industry for 10 years and they do say five or six loans per month that settle - that's about 600 loans over the period of the journey and if you look at a 70% conversion rate, that means they would have looked at almost 1,000 applications in their time. When a borrower goes to use that broker, they're getting 10 years experience on how to package loans properly - and lenders prefer loans packaged in a certain way - and on which borrower or profile will suit a particular lender and I think that advice has intrinsic value and I don't think brokers are exploiting that knowledge enough. If you go to an accountant, you're expected to pay an upfront fee for their advice and I think we've been a little bit shy in putting forward the quality and the knowledge we have as brokers."

He says the ones that do it well make very good incomes from the fee for advice and they have very low rates of losing customers as a result of charging for advice. "It's early days but I think borrowers are warming to the fact that there's real value in using a broker from an impartiality view and from the knowledge point of view. So I think in the next two to three years we'll see a sharp increase in the acceptance and the uptake of people willing to pay for advice."

According to Scott, fee for service, along with diversification will really increase brokers' incomes, although he confesses the latter isn't for every broker. "I think the diversification argument is an interesting one - some models are set up for it, so you become a holistic one-stop shop able to offer not only a mortgage product, but risk insurance and property insurance. On the other side of the ledger, some models really don't cater for that. So I think we'll always have a broker camp fitting into two groups - some will be for it, some will be against."

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