The Hot Seat (Jeff Zulman) - Mortgage & Finance Brief

June/July edition 2010 - Mortgage & Finance Brief

This issue, Mortgage & Finance Brief puts CEO of Vow Financial Jeff Zulman in the hot seat for his views on the new brand and the industry.

What prompted the creation of Vow?
"Vow was born from the desire of a handful of founding aggregators to unite, and by doing so, to get the benefits of scale for their brokers - but without losing the intimacy, the value system, and the strong relationships that symbolised their businesses. Vow believes that this solid foundation, coupled with its independence and capacity to offer allied services to brokers, means it is well situated to take advantage of industry consolidation. We are determined to be one of the winners in an industry we expect to be leaner, more profitable, and more service-oriented in the future."

What is the most challenging aspect of getting a new brand up and running?
"Vow is an empowering brand - the force behind the force. Our brand is not just about us, but, more importantly, the collective value system and independence of our constituent brokers. We want to create a brand that doesn't pander to our egos at Vow, but rather one that reflects, harmonises and personifies the ideals, the ambitions, and values of our brokers. That is the key challenge for our brand."

How will the new brand assist brokers in their business?
"We give our brokers the option to decide to what extent they want to use our brand - whether in the forefront or background of their businesses. Some treasure their own identities, but value carrying our logo and professional touches as an adjunct to their marketing material. "At the other end of the spectrum, we will increasingly allow select brokers (that meet defined standards of professionalism) to utilise our brand in its entirety, allowing them to ride the crest of Vow's marketing spend, with little or no investment on their part - in effect, it's a franchise without the fee."

What is one of your key goals you wish to achieve at Vow?
"We want to play a central role in redefining the industry in which we operate. Fifteen years ago the mortgage brokerage industry was an infant force. Today, it is a mature teenager - growing to have the power and potential to expand beyond the industry in which it operates. "In my opinion the industry is coming of age and increased regulation will bring more accountability - and professionalism. Regulation will provide the keys to unlock the door for new allied services, offering clients unfettered choice around property and, increasingly, related financial services. "Our goal is to serve as pioneers, guides and coaches, so that brokers can embrace these opportunities." What are the threats, and the opportunities, for brokers this year? "The new compliance regime will be a testing time for brokers, but, at the same time, an opportunity."

How can brokers maintain their competitive advantage in the new regulation environment? "Contrary to common thinking in the industry right now, we believe the new regulatory environment will actually offer those brokers who come to grips with it a competitive advantage. What do I mean by this? They will have to spend time explaining their products to clients and by doing so will establish better relationships with them. The emphasis will be less on the 'sale' of a product and more on consulting and educating clients about the different products on offer. "As the relationship between broker and client deepens, there should be the possibility to sell other products to this client, in the process moving a single transaction-based relationship to a lifelong relationship."

What is the number one issue in the mortgage and finance industry today?
"I believe that there is an inherent conflict between the volume-based accreditation protocols that have been put in place by some lenders and the need to ensure that the borrowers are always given the best deal. If a bank is not competitive for a period of time, perhaps simply because they wish to decrease exposure to property market, why should the broker be punished and risk losing accreditation for putting their client first? This attempt to use quantity as a surrogate for quality must stop if mortgage brokers are to remain true to their clients."

What can be done to boost competition?
"As we speak, competition is re-emerging in the market. The taps are slowly being turned on, not with a gush but with a trickle, allowing capital back into the beleaguered mortgage finance industry. That more optimistic scenario is, of course, tempered by the fact interest rates are rising, which will dampen market activity. However, if mortgage brokers remain open to embracing offerings from alternative sources, then that will help to level the playing field and re-establish the market equilibrium that was upset when the Big Four banks, helped considerably by the Federal Government's debt guarantee, consolidated their position during and in the aftermath of the GFC."

How do you seek to differentiate your business? "Vow believes there are four points of difference setting it apart from its competitors. They are: 1. Allied services: services outside the traditional suite of products that aggregators offer brokers. 2. Listening: all our competitors profess to listen to their brokers, but how many are willing to put them front and centre of what they do? 3. Independence: Vow is truly independent, and as new lenders enter the market we believe they will value this independence. 4. IT innovation: no IT system that we have seen allows brokers to put their clients at the epicentre of their business dealings. By contrast, our new design is aimed at changing the way brokers use IT to streamline their day-to-day business activities."

How important are relationships in your business?
"This is a relationship business! In setting up Vow we spent hundreds of hours speaking to our brokers and others to better understand what elements of our relationship they valued. We strongly believe the relationship we will have with our brokers will differentiate us from our competitors. Empowering brokers is fundamental to the relationship; we will listen to them and, more importantly, act on what we hear. Our role is to give them their voice back, as well as the opportunity to be involved in Vow at many levels."

What is the best business lesson you have learnt?
"At the start of your career focus on learning your chosen trade or profession in a reputable organisation. In my opinion, it's the core skills that you learn, and the mentors you learn them from, that provide you with the invaluable foundation for the rest of your business life. If you put the building blocks in place at the beginning of your career, your salary, and in turn your income, will take care of itself. "Finally, always try to do business with honest people. Even the best contract is powerless when confronted by dishonesty."

What is the greatest opportunity in the year ahead for Vow?
"This year will see more funders come back into the market offering a greater array of mortgage and other debt related products at more competitive pricing (compared) to the Big Four banks. "It's important to remember that the underlying housing market has remained remarkably strong in the aftermath of the global financial crisis (GFC) and Australia has emerged relatively unscathed by global standards, a trend we envisage continuing, higher interest rates notwithstanding."

If you could improve one thing in the industry, what would that be? "A magic wand - that would be handy. I would like to see the entry of more young talent into the industry. The original pioneers are ageing and we need to ensure that there is a new generation of young blood to succeed them. We will need to have well thought out succession planning and, at the same time, ensure this industry's pioneers are handsomely rewarded for what they've built. We have to be ready for generational change and facilitate and reward it."