By Leon Gettler, Talking Business >>

THE KEY to the Rethink Investing business model is that it is very much like the Virgin brand according to co-founder Scott O'Neill.

It adapts fast to meet the needs and wants of its clients. And, like Virgin, Rethink Investing moves fast, but with a reputation for taking greater care than its rivals. 

Rethink Investing has become Australia’s largest and most experienced buyer’s agency. Since 2015, it assisted more than 3750 clients in acquiring over $4.25 billion worth of real estate.

Rethink has strategically focused on positively-geared, high cashflow investment properties. It has built the wealth of its clients, who are all sophisticated investors and high net worth individuals.

The extraordinary part about the Rethink Investing story is it has expanded from being a commercial property buyer’s agency to a business that focuses on residential buyers and mortgage broking, with a team of property lawyers.

“We have a common goal, a common set of beliefs and values, and ours is all around helping clients build wealth,” co-founder Scott O’Neill told Talking Business. 

“We want to use our knowledge in different aspects for the better of our clients and really help them build that sustainable long-term wealth.

“It’s not a get-rich quick scheme. It’s about helping them invest smartly, leveraging properly, protecting their assets and, obviously, you back them up with insurance and lawyers so they don’t make mistakes and get caught out.”

Assisting time poor clients to amass wealth

Mr O’Neill’s firm does all the due diligence for its clients – which is to be expected as they are all busy people who do not have the time to focus on property investing themselves because they are all dedicated to operating highly successful businesses. 

“They don’t want to spend three hours a day trying to understand the commercial market, bidding on properties, visiting properties, or trying to gain access to off-market deals,” Mr O’Neill said.

“They get us to do all that hard work and leg work and we’re there to lower the risk and bring them more deals than they would be able to see on their own. The idea is that they do better (in the process) with us purchasing at a low price and getting a better yield.

“They know we’re not going to be putting risky deals in front of them.”

Rethink Investing proves its worth

And despite the state of the economy, there is a role for Rethink Investing in building wealth for its clients.

Mr O’Neil said the beauty of the commercial property market was that investors could position deals appropriately.

For example, buying office space at the moment is “not a good idea”.  He said, simply, one wouldn’t go near it with a “10-foot barge pole”.

Similarly, buying a fashion store in a time of high inflation – and the cost of living crisis hitting middle income earners – “would not deliver good returns”.

However, neighbourhood shopping centres since COVID would be good assets, he believed. As would be medical suites – but only “following a process of due diligence”,

While Rethink Investing is a Sydney-based business, it has branches right around Australia, from Perth to Townsville to Hobart.

Interestingly, 25-30 percent of the Rethink Investing workforce are former-clients. 

“They’ve invested, they’ve done well and a lot of them have walked away from their jobs … and they (later) get a little bit bored so why not stay in the property game?” he said.

www.rethinkinvesting.com.au

www.leongettler.com

 Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

 https://shows.acast.com/talkingbusiness/episodes/talking-business22-interview-with-scott-oneill-from-rethink-

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By Leon Gettler, Talking Business >>

TIM GASPAR, the CEO of Hatch Financial Services. has noticed a big change in the mortgage market.

Since COVID in 2020, the borrowing capacity of borrowers has declined by 30-35 percent (%).

“So if you’re thinking of borrowing $1 million, that’s $300,000 less that they can borrow now,” Mr Gaspar told Talking Business.

“Therefore, for someone trying to buy their first home, or someone looking to move to their next home, their ability to execute that plan is now greatly reduced because they can’t borrow enough.”

Fundamentally, he said, it has been caused by the rise in interest rates.

“At the start of Covid, the RBA cash rate was 0.35% and it dropped down to 0.1% and now we are up to 4.35%,” Mr Gaspar said.

He said while economists were talking last Christmas about three rate cuts in 2024, now they are talking about a rate cut later this year – while in the US, the talk about rate cuts has been pushed further back. And now, with the latest inflation figures in Australia, some are saying there won’t be a rate cut until 2025. 

“It leaves the market in a position where it’s really hard for people to get in or make their next move, so we’re seeing less transactions than we might otherwise,” Mr Gaspar said.

”The other thing we’re noticing is it’s really hard for clients to refinance to secure lower rates because if they set their loan up two years ago, maybe on today’s rates, they can’t afford that same loan in the eyes of the banks.” 

Backing up investment lending

Mr Gaspar, who has been a mortgage broker for 15 years, said it was having a similar impact on investment lending.

He said a number of banks now have an alternate refinance policy which, rather than apply a 3% buffer to current rates to assess affordability, they will only apply a 1% buffer. The conditions for using that policy are dollar-for-dollar refinance and the borrower can demonstrate they are better off by moving to a lower rate.

Mr Gaspar said there had also been an increase in part time brokers.

“Those that are part time appear to be parents with young families who are working and balancing families or who are accountants and financial planners who are doing a bit of mortgage broking,” he said.

“It must be really tough to be an expert both as a financial planner and an accountant as well as keeping up with what you need to know as a mortgage broker, so hats off to people who think they can do it.

“I think there is enough to know and keep across as a mortgage broker for that to be a full-time endeavour.”

Mr Gaspar said mortgage brokers were now starting to look at how they can use artificial intelligence to deliver a better service, whether that involves preparing applications to send to banks or creating marketing content to share with customers.

However, he had some reservations about it.

“Like every industry, AI will have a big say in broking over the next decade – but there is a really strong place for individuals and for personal service,” Mr Gaspar said. 

www.hatchfs.com.au

www.leongettler.com

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

https://shows.acast.com/talkingbusiness/episodes/talking-business-13-inrterview-with-tim-gaspar-from-hatch-fi

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By Leon Gettler, Talking Business

GENERATIVE artificial intelligence is starting to have a big impact on the financial services industry and it’s likely to become even more prevalent.

Nick Smith, vice president and general manager for the Asia Pacific region at Smart Communications, said AI was ‘almost made for’ banks, insurance companies, wealth management firms and superannuation providers.

First, it could save them on costs by automating processes. Then it would also change the way their employees talked to customers.

“All of them share the challenge of engaging with their customers, educating their customers and using AI in a way that creates value,” Mr Smith told Talking Business.

“If you look at superannuation, engagement with the younger customer is difficult so I can see how they can simplify their language and engage with their customers over the life-cycle with AI, because they can do more frequent communications on broader topics much faster. 

“With the banking sector, I can see (AI address) a lot of the processes that are frustratingly managed through a call centre with customers. And that will actually free up the staff to have those valuable conversations with customers.

“In insurance, you can see how AI can automate a claims process and make it faster, better, quicker.

“So there are lots of opportunities and we’ll see how it goes.”

AI will not cost jobs

Mr Smith said AI would not cost jobs in the financial sector as a lot of the processes need humans to vet them.

“Fundamentally in the financial sector broadly, there is this concept of trust.,” he said.

“We as humans are very quick to spot insincerity and lack of authenticity.

“A level of automated processes will frustrate us. We want to speak to a human so I think, as AI evolves … when we as humans want to have a conversation about something more challenging.

“I think AI will free up staff to have those more valuable conversations and provide a level of differentiated service that we seem to have lost over the last few years with automated calling into the call centre where you have to wait for 15 minutes and go through seven buttons before you get to somebody,” Mr Smith said.

AI could help improve service quality

Mr Smith said AI could also provide a better quality of service.

He said an AI tool needed humans to manage it and create a more personalised communication system.

“But we’ve also seen, in the early days of AI, it’s not very good in dealing with bias and complexity and there are risks in it as well.

“Certainly, we can see the generation of prose being very valuable but we also feel you have to have humans involved to validate and check because ultimately, in highly regulated industries, you don’t want to upset the regulators or your customers because both would have expensive consequences.”

Mr Smith said most banks, insurers and superannuation specialists have people on board managing AI but there were risks.

“The fundamental risk with AI is we might have organisations pivot too quickly and rely too heavily on the tools and that runs the risk around more complex products and calculations producing the wrong information,” Mr Smith said.

“So again, that human intervention before the information goes out is critical.” 

www.smartcommunications.com

www.leongettler.com

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

https://shows.acast.com/talkingbusiness/episodes/talking-business-16-interview-with-nick-smith-from-smart-com

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By Leon Gettler, Talking Business

WHAT ARE the big industries now getting crowd-sourced funding? Food and beverage, craft brewing and consumer packaged goods.

That’s the result of a survey done by Birchal, an Australian equity crowdfunding platform that connects investors with brands.

“It shows stability and resilience in fund raising, particularly for early stage businesses,” Birchal co-founder and CEO, Matt Vitale told Talking Business.

He said Birchal had shown that crowd sourced funding was a reliable way for early stage businesses to raise capital and build communities.

Mr Vitale said it was also good for start-ups as well as early-stage businesses and small businesses. 

“We have a vision that all offers should be crowd-sourced funding offers,” he said,

“This is a very practical way that entrepreneurialism can be supported and fuelled in Australia.”

This was particularly at a time when there wasn’t much venture capital for early stage businesses in Australia, apart from those in mining, and the banks tightening up on lending.

He said early-stage businesses in Australia struggled to raise capital. Instead they were doing what they had to do by maxing out credit cards and re-mortgaging houses.

“The revelation has been that early-stage businesses can raise equity capital, something that historically has been only the domain of large typically listed businesses,” Mr Vitale said.

Mr Vitale said Australians tended to compare their equity market to the United States, which was the largest pool of venture capital on the planet where the money, and there was plenty of it, had to be put to work.

“In Australia, we don’t have that mindset, we’re not set up in that way but equity crowd funding is a great way to unlock a greater investment universe and I think increasingly, people who are investing in other asset classes, they don’t know how to get exposure to venture type investments,” he said.

“What we’re able to do is enable companies to open their opportunities to a national audience of investors and find their crowd, find their community to support them.”

He said investors in food and beverage and craft brewing companies understood those sorts of industries and could relate to those sorts of businesses.

“They’re often businesses that people want to be associated with,” Mr Vitale said. “What people have found is they can source their capital from their customers. They already know about your product, they understand your business.

“For the businesses, it’s not just the capital. They’re building a connection with often their most passionate customers by involving them in the business.”

Mr Vitale said Birchal’s goal was to expand the footprint for crowd-sourced funding.

Health care is now a growing area for crowd sourced funding.

Mr Vitale said last year was a big year for investors focused on medicinal cannabis.

“We’ve noticed there a lot of investors who are incredibly passionate about medicinal cannabis and other alternative medicines,” he said.

“I think this year we will start to see that expand to businesses that are in the psychedelics space.”

www.birchal.com

www.leongettler.com

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

https://shows.acast.com/talkingbusiness/episodes/talking-business-4-interview-with-matt-vitale-from-birchal

https://leongettler.com/talking-business-february-23-2024/

ends