Keith Hilsdon

The release of the latest Investment Trends Margin Lending Report surveying financial planners has been welcomed by David Arnold, Head of Leveraged.

Leveraged took the lead in both planner satisfaction (up 30% from 2014) and advocacy (up 26%), after making significant gains in both measures over the last 12 months. The proportion of financial planners selecting Leveraged as their main lender for good BDM relationship also doubled from 30% to 60%. The findings are testament to the fact that last year’s rebrand and website enhancements goes much deeper than colour and movement and signals Leveraged’s commitment to retaining the mantle of the professional’s choice in this niche industry sector.

Commenting on the findings, David Arnold said: “These findings follow through from our announcement three years ago that we were serious about boosting investment into the Leveraged business with a particular focus on service excellence and value for money. We have listened to our customers so we could better understand their needs, been consistently first in passing on interest rate cuts and made significant changes at the very core of our operation.

“Leveraged now has the highest advocacy among planners serviced who currently advise on margin lending and this result is a credit to the entire Leveraged team.

“Investment Trends found that Leveraged’s successful performance against these industry-wide measures are attributed to improvements made to both our BDM relationships and communications. These enhancements have clearly translated into service provider selection drivers.

“Our team of BDMs and relationship managers are now empowered to reduce service friction wherever possible. Customer surveys are inclined to find the scales tipping toward people who want lower interest rates and the lowest fees, but on the other side of the ledger, experienced investors want high touch, frequent contact and excellent communication.

“The combination of low interest rates, relatively cheap share prices and steady dividends have combined to prompt people to explore and revisit gearing as a strategy to build and diversify a share portfolio.

“We may be seeing an increase in younger borrowers with smaller facilities, but as a strategy, gearing remains a relevant pathway to build wealth, particularly when regulatory signals and property prices in the eastern capitals are making investors baulk at the initial outlay involved in entering that market,” concluded Mr Arnold.

Keith Hilsdon, Head of Distribution, Financial Planning at Leveraged said:“Our focus is always on the financial adviser and providing value. Leveraged continually strives within the business to get this balance right. As our call and service centres are domiciled in Australia, this aspect of our operation is not cheap, however it is a decision that has helped bring about a great result in terms of administrative accuracy and customer satisfaction.

“Significantly more planners are now saying their most recent discussion about margin lending was instigated by the client, indicating unmet information needs in the planner community. We are already expanding upon our existing range of resources and educational materials with other service providers such as Kaplan and the ASX to address those needs.

“We have seen growth in our ‘direct’ customer base too with borrowings from direct investors rising 3.65% from $299M to $310M and Leveraged’s ‘direct’ customer market share rising 0.55% to 5.97%*. It’s a pleasing result and a credit to our crew,” Mr Hilsdon concluded.

*According to RBA 2015 December Quarter data.

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Head of Leveraged David Arnold credited the win to a focus on a commitment to continually improve the customer experience.

“The survey result is reflective of the great work we have done in the education and communication space, along with enhancements to our overall customer service capability,” Mr Arnold said.

“The survey revealed quietly growing investor confidence with almost 80% of our customers intending to maintain or build on their gearing strategy.

“We will continue to add to the material we have already delivered for brokers, financial advisers and direct investors through organisations such as the ASX, Kaplan and trade press to improve awareness and understanding of gearing as a strategy,” he said.

Leveraged Head of Distribution – Direct, Darryl Drown said there has been a shift in the type of customer who is gearing and how people are gearing their portfolios.

“We’re seeing the rise of the unadvised or ‘direct’ investor and we’re seeing younger people with smaller facilities taking up the strategy while others are ‘buying the dips’ or diversifying an existing portfolio using their margin loan,” Mr Drown said.

“We’re also seeing a rise in the number of younger investors with smaller credit limits, particularly in the east coast capitals. It may be that they realise the need to consider an investment strategy that has the potential to get higher returns than cash in the bank when building wealth to reach goals such as saving for a home deposit.

“The most recent Adelaide Bank/REIA Housing Affordability Report shows that in NSW, first home buyers would have had to borrow an additional $1100 for each week they waited to buy a property between September 2014 and September 2015. Home loan sizes increased by $60,000 over that period and as a consequence, the required deposit on a property increased as well.

“With the current low interest rate environment and market volatility presenting opportunities to acquire blue-chip stocks at reasonable prices, borrowing to invest in shares and managed funds is a strategy that is likely to be one that more financial advisers revisit or at least consider as part of a client’s overall financial plan.

“Diversification is also a significant driving factor for some investors taking up margin loans. Many people will have significant exposure to ‘Mum and Dad’ stocks in their super funds and come to the realisation that they also have the same shares acquired as a result of various demutualisations in their share portfolio as well.

“In line with the Investment Trends findings, international share trading is also growing rapidly – with the US market a particular favourite at present among the Leveraged client base,” he said.

*Results from the Investment Trends 2015 Margin Lending Investor Report, based on an online survey of 1,793 investors.

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