Diversifying pays dividends
Origination News 20 April 2015

Over the coming weeks, we would like to take the opportunity to share three specific case studies with you that highlight well the benefits of diversifying into alternative asset classes and loan products.

Maintaining one of Australia’s broadest suite of loan products means we often see first-hand, the compounding benefits diversification can bring to a mortgage broker’s bottom line.

We will take you through three real examples of how you can create additional opportunities for your business by diversifying your product offering and marketing them to your clients:

  • Part 1 – Creating additional opportunities from marketing new products direct to clients within your existing data base.

  • Part 2 – The “knock-on” benefits from marketing new products to your existing clients – referrals (new clients).

  • Part 3 – Creating additional opportunities by marketing new products publicly.

Today, we bring you Part 1 in the series.

Creating additional opportunities from marketing new products direct to clients within your existing data base.

You may recall, last month we produced a short video highlighting the potential benefits diversifying into Commercial SMSF lending can create, explaining that these opportunities are likely to exist in every broker’s current client lists. We are pleased to report this advice was successful for one particular broker, as the case study below demonstrates.

Case study

A suburban Sydney broker emailed their existing data base of approximately 400 clients advertising Commercial SMSF lending as we suggested in our video, and pleasingly, has since received and submitted 6 loan applications as a result. Interestingly, not all of the applications received were for the Commercial SMSF loan product, proving that just by marketing a new product to existing clients can be thought-provoking enough to result in additional applications generally as you are adding value.

The broker received both commercial and residential SMSF loan applications, along with an equipment finance and leasing application.

Details of the SMSF loan applications received are as follows:

  1. Commercial SMSF purchase - loan amount $945,000 – 70% LVR

    Applicant had been in negotiations recently with the landlord of the light industrial premises from which they operate their manufacturing business with a view to purchase the property. The applicant negotiated a purchase price of $1,350,000, and required finance for 70% of the property’s value.

    Upfront commission: $4,725.00
    Ongoing trail commission: $2,362.50 p.a.

  2. Commercial SMSF purchase – loan amount $682,500 – 70% LVR

    Applicant had recently purchased a retail shop for investment purposes via their SMSF -purchase price $975,000,and was looking to borrow up to 70% of the property’s value to complete. Client had contacted another broker who advertises SMSF finance as they were unaware the current broker offered SMSF lending. Upon learning of the broker’s ability to offer SMSF finance, the client immediately lodged an application.

    Upfront commission: $3,412.50
    Ongoing trail commission: $1,706.25 p.a.

  3. Residential SMSF refinance – loan amount $450,000 – 70% LVR

    Applicant called broker to enquire about whether a cheaper interest rate was available for their existing residential SMSF loan; they were currently paying 6.45%. Broker offered La Trobe Financial’s Residential SMSF product rate of 5.60% and the client lodged an application to refinance.

    Upfront commission: $2,250.00
    Ongoing trail commission: $1,125.00 p.a.

  4. Residential SMSF purchase – loan amount $630,000 – 70% LVR

    Applicant had been considering purchasing an investment property via their SMSF but had been unsure how to go about it. Upon seeing the advertisement, the applicant contacted the broker, who then referred him to a financial adviser, two–weeks later, the client lodged an application for a residential SMSF loan to assist with a purchase of an investment property located in Mosman, NSW purchased for $900,000.

    Upfront commission: $3,150.00
    Ongoing trail commission: $1,575.00 p.a.




As you can see from these real examples, diversifying your product capability really does pay dividends, in this case, a little over $20,000 could potentially be generated over the next 12 months from one very simple email marketing campaign to your direct network of clients.

Part 2 in the series...

In Part 2 of this “Diversifying pays dividends” series, we will provide you with a case study that highlights the potential “knock-on” benefits of a direct marketing campaign of a new product to your clients.

Until then, best of luck with your business.

Best regards,

Cory Bannister
Vice President, Head of Distribution

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La Trobe Financial is one of Australia's leading independent credit specialist Fund Managers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 130 staff and has managed over AUD$10 Billion covering over 100,000 investment grade assets since inception in 1952.

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