How to introduce specialised loans
~ without becoming a specialist
The Superannuation Industry Supervision Act (SIS Act) was amended in September 2007 to allow Self Managed Super Funds (SMSF) to borrow and charge their assets so long as a special trust structure is established. Many commentators are suggesting that this is destined to have the greatest impact on real estate since negative gearing. There is little doubt that SMSF lending promises to be one of the ‘hottest’ spots in the specialist lending arena.
As such many lenders are trying to position themselves with some 'early mover advantage'. However, like most specialist areas, this area of lending requires far greater levels of education and skill. It is extremely unlikely that any borrower would be able to utilise the necessary structures for a SMSF loan without the assistance of their accountant or financial planner and it is unlikely that a SMSF trustee would turn to their mortgage broker for advice ahead of their accountant or financial planner for information regarding their retirement nest egg.
Furthermore ASIC and the Federal Government have made it clear that they intend to clamp down on anyone who is 'advising' or 'recommending' the establishment of a SMSF or leveraging through a SMSF ~ unless the person making that recommendation holds appropriate qualifications and / or is licensed under the AFSL regime.
This fact could serve to deny SMSF lending transactions to brokers ~ however it also presents a wonderful opportunity for brokers to form strong partnerships with accountants and financial planners
More than any other ‘tool’ available to the broker, SMSF lending will open doors for referral from accountants and financial planners if the broker learns how to ask the right questions of existing clients regarding their investment strategies or commercial business needs.
Once a solid relationship is established with an accountant or financial planner around SMSF lending it becomes a fairly straightforward matter to source that professional’s referral for conventional lending products – from home lending to business and commercial loans.
The pitfall is that many brokers are going to be tempted to play "instant expert" and fail to deliver a knowledgeable and competent service to these professional advisers – who will not tolerate any risk to their clients or their professional reputation. Unless the broker has an accounting or financial planning background and is choosing to specialise in the SMSF arena – they may be far better served to ‘partner’ with a specialist for lending fulfilment. They can then use the expert service delivery to the professional adviser to cement that relationship and foster further SMSF and conventional referral.
This is where SMSF Loans comes in. We have access to all lenders who have brought SMSF products to market ~ including many who will not make their products available to the broader broker community. We have detailed knowledge and understanding of the 'niches' and nuances of each lender and loan. In the vast majority of cases we have developed very strong working relationships with lenders and often influence product development and processing protocols. We will ensure that any new products that come to market are also available to us. The broker, and the referring professional, can be assured that the borrower is being served by a company that has been established for the sole purpose of SMSF lending.
Our SMSF Loan Consultants are specialists and only write SMSF lending business. All Consultants are salaried employees with appropriate supervision, support and professional development requirements in place.
We offer the referring broker a revenue share of all upfront and trail commissions. SMSF Loans has Head Agreements in place with a number of Aggregator groups. To see if you are already covered by a Referral Agreement please CONTACT US.
Where your Aggregator has not yet entered into a Referral Agreement with SMSF Loans you can enter into a direct Referral Agreement with SMSF Loans. Unless you are part of a franchised group, you are not contravening any agreements you may have with your existing Aggregator as you are a referrer only. SMSF Loans has the appropriate arrangements in place to ensure that you will meet requirements under the NCCP / ACL regimes. Please call us if you have any concerns in this regard.
The Referral Process
All that the broker is required to do is provide us with the details of the borrower and their adviser/s and we do the rest. You own the client and we keep you informed at all stages of the process.
We liaise directly with the SMSF member and their advisers. We ensure that the right lender and the right product are selected to suit the borrower’s unique circumstances. We also work with the adviser to ensure the right structures are used for the underlying lender.
Our referral processes meet the requirements of the NCCP Act and are at best practise.
Points to Consider:
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SMSF Loans routinely achieves structural, time-frame, or 'pricing' outcomes superior to those offered by a direct approach to lenders.
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The referring Broker receives a generous % of the upfront and trail commission for a simple referral of the client's business.
- Many Aggregators and broker groups have already acknowledged our specialised service capability in this area and have formed agreements with us.
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If you wrote the loan yourself it is unlikely that you, the Adviser nor the borrower could be confident that the best structure had been achieved.
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The goal for the broker is gaining an ongoing referral partnership with professionals – many of whom have previously been very difficult for most brokers to form solid relationships with.
We believe that the focus should be on long term relationships, with both clients and referral partners, that will enhance the broker’s reputation in an increasingly competitive market.
CLICK HERE to register your interest.
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1300 485 243
