Episode 119 | Bank or Broker? What’s the difference? | Chris Bates, Wealthful

What's the disadvantages with going direct to bank versus the advantages of going with a broker 

In this special episode Veronica interviews our fellow host Chris Bates, financial adviser, mortgage broker and the founder of Wealthful. A boutique financial firm that assists couples and families to secure financial products that suit their needs. Over the last 20 years individuals and families are increasingly opting into obtaining their finance through Mortgage Brokers over going direct to bank; over 60% of loans being settled through a broker. Chris discusses the current trend and where the benefits lie with working with a broker over a bank. 

Here’s what we covered:

• Broker vs private banker?

• Are you with the most appropriate bank?

• What will banks do to win clients?

• Why are you limited to going directly to the bank?

• Are you dealing with the real talent at your bank?

• How the banks have discriminated against industries?

• Bank Policies how often are they changed?

• Can you use a broker to get a better rate at your bank?

• Which banks don't use brokers?

• How to find a good broker?

• What questions to ask your broker?

MENTIONED EPISODES:
Episode 52 | Jennie Tonner

GUEST LINKS:
Connect with Chris, he is a regular poster on LinkedIn

HOST LINKS:
Looking for a Sydney Buyers Agent? www.gooddeeds.com.au
Work with Veronica: info@gooddeeds.com.au 

Looking for a Mortgage Broker? www.wealthful.com.au
Work with Chris: hello@wealthful.com.au

Buy the book - AUCTION READY How to buy property at auction even though you’re scared s#!tless:
www.getauctionready.com.au
Use the coupon ELEPHANT for your 30% listener discount.

EPISODE TRANSCRIPT: 
Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…
This episode was recorded on 26 March, 2020.

Veronica Morgan: You're listening to the elephant in the room property podcast where the big things that never get talked about actually get talked about. I'm Veronica Morgan, real estate agent buyer's agent cohost of Foxtel's location, location, location Australia and author of a new book called auction ready, how to buy property at auction. Even though you're scared shitless.

Chris Bates: And I'm Chris Bates, financial planner, mortgage broker and together we're going to uncover who's really making the decisions when you buy a property.

Veronica Morgan: Don't forget that you can access the transcript for this episode on the website as well as download our free food or forecast report, which experts can you trust to get it right. The elephant in the room.com.au.

Chris Bates: Please stick around for this week's elephant rider bootcamp and we have a cracking Dumbo of the week coming up

Chris Bates: Before we get started, everything we talk about on this podcast is generally nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyers agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica Morgan: Early. Last month Chris interviewed me about what a buyer's agent does and how we can add value. So now I'm going to return serve. I'm going to interview Chris, but this isn't simply what does a mortgage broker do and why should use one conversation. This is driven by something I've been seeing a lot with my clients at the moment. Many of my clients have private bankers and start their property search by getting finance preapproval directly through their existing bank. Now it seems logical, which of course is why they do it. However, increasingly we've been coming up against obstacles with these approvals, so I wanted a quiz crease as to why these issues are coming up and what the real benefit ease in using a broker versus relying on these long standing relationships.

Chris Bates: Well, I'll look forward to this. I haven't prepared anything which is good for me. I have to just stay out and rock up, so let's, let's do it.

Veronica Morgan: You wouldn't know what I've been coming across. Okay. So numerous times a client has been told that they'd have no problem getting finance to a certain level and then found once I submitted paperwork that the reality is significantly different. And I'm talking here about clients who have been banking with a particular institution. This is not just one bank I'm talking about. This has happened across many banks that they've got all their, their sort of personal accounting with that or banking I should say with that institution. They borrowings everything. So they've got a fairly transparent understanding of their position and yet then there's becomes sort of almost like a procedural hurdle that they've got to overcome. And that's just put the cat amongst the pigeons and meant that what they expected to be the case just wasn't going to be the case.

Chris Bates: So, I mean, this has happened with a client just recently. He came to us and there's, he's, you know, he's already kind of quite kept on servicing and I looked at the numbers and Ben ran the numbers as well, and we went, you know what? I reckon we could probably only get you say 700 on top of what you've got. And he's like, well CBA have offered me 900. And I said, well if you can get 900 CVA, go there. Right. cause I just don't think that's possible now. And I said to him, if you've got that in writing, he said, no, no, no. But that kind of said it over the phone. So I said, well let me know how you go. That was in November. Middle of December. I touch base it. How's it going? Is, I know they're still working on it.

Chris Bates: And you know, fast forward a few months later, we've actually just got him approved literally this week with a new vowel and things like that. But for what we told you we were getting, cause the CVA couldn't come through with it. Now, I think what happens is there's people in the branches who want to be, yes, they pull them, want to promise that they can do things to win the client, but they haven't got the grass in the credit knowledge to foresee issues that could pop up that they might not have the evidence for. So there might be any casual employment for a little bit or the bonus might only be one year, not two years or they might not know how to read a self employed customer or et cetera. So what happens is they do their initial numbers and it looks great, but they can't, they don't, they miss a step or they miss a number and or they don't even do the numbers properly. So I've seen this a lot. Clients say they've got preapproval, but it's really only a bank staff or a private banker, which is an interesting one. I'm saying they're willing to do the money, but they haven't got an actual preapproval or they've only got an email or something like that. Actual improve or has has gone through credit and credit has signed off on it and you've sent all your paperwork off. Et cetera. It was a big difference.

Veronica Morgan: Yeah. And what I'm starting to see a lot of my clients are starting to see is that when they quiz the person they're dealing with in the bank, often they've actually got a fairly junior staff member with not a lot of experience as you had mentioned, that can sort of foresee where the hurdles are going to be. And often we don't even that fully fully versed in actually the bank's policy. So they don't even know what to do next in a way. So this has been something that we've come across and I've been quite shocked because he's a, some of these very large loans and we've had

Chris Bates: The banking model though is, is in any business, if you're good and you're a gun and you've got talent and you don't stay in your seat for long, right? So you go into a branch and you might find them a mortgage broker, you know, Sydney, George street, right. They've been there for a year. If they're good, they move into private banking or they move into another branch of CBA or they move into an, and so it's hard to hold a relationship down with someone who's just stuck in a branch. Cause the good ones get moved on. They get up, pushed up through the organization. And so a lot of what you do is you have a lot of turnover of staff. There's pros and cons to it. Sometimes they do understand the policy, but they don't understand what other banks have got in terms of where their policy differences are.

Chris Bates: And so when I was working in the banks and from a financial planning sense, I only knew my bank's products. Now I didn't know really how good they were compared to, in this case it was like Barclays or Royal bank Scotland, et cetera. I only knew what Santander had. And so this is where a lot of, I guess I guess brokers in branches don't really understand that sometimes they can borrow more money if they go to other banks. They can sometimes get better rates, obviously. They can potentially do structuring things differently in terms of relocation, loans and interest only different periods and things like that. So, you know, it's not all banks are the same, not all policy, you know, credit policy, et cetera. So when you go to a branch, have to conform to what they offer you. And sometimes that's not the best option for you, obviously in terms of all the bank bags out there.

Veronica Morgan: So there's issues with the person you're dealing with in terms of limitations of their experience and knowledge. There's issues with the limitations of a bank only been able to offer their products to you. And then there's the limitations of the nature of a corporation such as a bank where a talented staff member is not going to retain, that will not going to remain in a position very long. They are going to be big on what they way up through the ranks. So therefore the relationships, you know, they call them a relationship manager. And you know, in the years that I've had relationship managers, I've had one really good one and yes, you're right. He, the last in that job very long. And all the others are pretty ordinary. And so they were there for a while and I've, I actually stopped talking to them. So, so that, that's sort of an interesting in terms of the whole banking process. But I think also you touched on something there about policy change because it's not just the bank's policy. So like they said a policy and that's eat, they seem to change them quite regularly. Right?

Chris Bates: Yeah. Almost obviously changes this week, which is pretty horrible that certain professions and certain industries, the banks don't want to lend to because, you know, let's say it's hospitality or let's say it's tourism, things like that.

Veronica Morgan: The current virus you're talking about.

Chris Bates: Yeah, exactly. So like these are changes where the banks are saying, well, if you do work in these industries, we don't want you as customers. Right. So but then, you know, that's, I guess you know, a change today, but through the 2018 downturn, et cetera. Thanks for changing policy almost weekly, you know, de-risking no longer doing interest, only loans, you know, changing policy around bonuses, overseas investors, et cetera. So policy is always shifting where you get email updates from all the lenders as soon as they make a policy change. And it might be like st George and no longer doing casual employment less than three months, let's say. And so, you know, every single client, you know, when I asked Ben, I said, well, who are we using? He goes, so and so, and I said, what about this? He goes, no, because of X, Y, Z. So that's where we kind of were always figuring out who's the bag.

Chris Bates: The other thing that's really interesting is I a client, literally a different buyer's agent bought through and the buyer's agent referred me a client this week. And he said instead, I'll, I'll give you a call at 9:00 AM in the morning. I called him at 9:00 AM, he didn't answer. And then you tell me an email at five o'clock last night, or maybe it's Tuesday night. And I said, Oh, we're going directly to nap. Now what he doesn't realize is that NAB right now I have a 20 day turnaround for that file to get upset assessed. So he's got maybe a six week settlement. Now, if he hasn't, if he doesn't keep on top of NAB right now for 20 days turnaround, yeah. Plus he's going to get loaned off spots. He's got to get him signed. And he might have complication. He might not, it might be a clean skin. So he should, because of the offshoring, a lot of country countries right around the world, I've got limited ability to assess and produce loan docs. And so a lot of the banks, you can't turn around applications fast. So

Veronica Morgan: Yeah, I don't feel like I've heard this. I was talking to another broker yesterday was saying that st George has also got a 20 day turnaround. And it seems to be across the board. And I think you mentioned in the previous podcasts about having this sort of, I don't know what you call it, it's like the human, there's no automatic pre-approvals, right. So,

Chris Bates: So I ain't, they're going to be the biggest hit. Here's for my understanding, I don't know everything behind the banking scene, but from my understanding, their whole back office is in India. Yeah.

Veronica Morgan: And India just get shut down. I mean, we're recording this on the 26th and of course there's going to be a 26th of March. It'll be a little while before he'd see. Anyway, so it's gonna be a little bit of whole news. But I think I heard India got shut shutdown on the 25th. Has he locked up?

Chris Bates: Yeah. In India completely can't leave your home now that's that. Unless they've got their business set up to run at home. Most businesses have any specialty in these countries because the privacy and things like that. So I don't think, I think that is going to completely destroy the back office. And the it aren't just the only one. We've got other country companies use like the Philippines and and you know, India and article that's in the air. But you know, other countries

Veronica Morgan: We locked down now for a couple of weeks.

Chris Bates: Yeah, exactly. So in saying that though, like there's still banks for example, like you know, Macquarie, a lot of is done by a computer with an Australian and assessor and a lot of their back office, they're producing their loan docs, they've systemized it online so they can still turn around, you know, customers in two or three days without the reliance on people overseas.

Veronica Morgan: When everyone goes to, all of a sudden they're going to get overloaded. And that's gonna that's gonna create another jam in the system. But I guess what you're saying that the purpose of this particular interview is around what some of the benefits of using a broker versus directly with the bank. And this is a really good example of a really unusual situation, but when you've got structural problems caused by the way the banks actually resourced themselves and chosen to go offshore versus how they've chosen to set up their back office, as you say, and in some pandemic, it's and completely upends and nobody's actually affected this into their risks and risk analysis. So,

Chris Bates: Well, you're right because a lot of clients will say, Oh, I've just read online like ING last night or yesterday, came out with a two zero nine two year fixed rate. All right, so 2.99 so that's an amazing to you fix. Right now we know I, and J and J are usually pretty good with turnaround times, but sometimes they blow out and so they can go from two days. Turnarounds does a 12 day center. And so, you know, even if you want that deal, if you're doing a refinance, you can happily wait, you know, I'm happy to send it out for three or four weeks. It doesn't really matter. But if I'm doing a purchase, turn around and do something you've got to be super across, because the last thing you want to do is, is miss settlement. And especially with pre-approvals, our clients will say, literally last night, a client was going to sell a property. And I said, look, you're pretty crazy. He's selling right now. And without knowing where you're gonna go I be trying to buy before you sell because they've already done a sales campaign. But anyway, long story, but I'd be using a relocation line. Now they've got a place they want to buy, so we've got to then, you know, go and get a relocation loan, explain how relocation line works and get that done, you know, really fast. So we've got that whole process, which has gotta be really across turnaround times.

Veronica Morgan: Yeah, it's tricky actually because I was talking to Jenny Tano who we interviewed back in episode, I think 53 I've top of my head now she's at convention, so she's, she's told me last time she's a on a look, and if I get this wrong forgive me, Jenny. I think she's a member of the conveyancing association or something. Our meeting last night, I was hoping to hear from her before we recorded this actually because they talking about putting a clause in contracts, which, which covers an extension to settlement due to coronavirus because of course if we do go into lockdown, there's no way in a million years people are going to be unsettled. Because there's, well, I, well they basically, I'm gonna appreciate anyway, let's face it, but, but we've also got the situation where you can't move if you're locked down, you can't move physically. So excuse me. Yeah. If you look down physically, he caught me. So who is going to want to settle on a property that the vendor is still living in? You know, I've very much doubt that it's going to happen. 

Chris Bates: So that's a good point. Look, settlement times is something we a, it's one of the benefits potentially of using a broker. So, you know, a client initially made an offer this week on an apartment in Bondai actually at Randwick. And she's like, look, what can we do a four week settlement? I was like, yeah, we can do four weeks. Like I've got no problems with doing four weeks knowing where banks are at and knowing what, where they're at, et cetera. The preapproval, the valuations, you know what I mean? So,

Veronica Morgan: Well a settlement's going to slow down now if you forget whether we go into lockdown for a minute because that's going to, that will, that will make sure that we'll make settlement stop. Right. And I'm like everything's still, but forget that from it. If the bank, the backend of the bank is slowed down in terms of loan application processing and from what I understand it's been a spiking applications. I think everyone's taking your advice from last week. Chris gone and started putting in their on application. So if the banks are already snowed under with their inquiry or their applications, good new borrowing they already got a capacity problem because they're offshoring resources shut down East that going to impact on their ability to deliver in time to settle. Because I know that,

Chris Bates: I mean potentially, but like if you've got a motivated vendor that needs a fast settlement and you need to find a bank that can deliver a file, so it's possible, but if you don't know what you're doing and you sign up to a six week settlement, just assuming that it's going to be okay. You lodge an application with a bank that's turnaround times are blown out because of the way that they work. You could crate point where you in six weeks time you're not ready. So if you are by signing a contract right now and so how about having that conversation pre signing up, understanding where you're going to go for your loan, how much you're going to borrow. Is there any issues, you know, where, how's that bank sitting right now? How fast can you turn that around? Can I hit my six word settlement or do I need to ask for a cause of 12 weeks or whatever it might be. But you know, terms in settlement periods is one of your negotiation tool. So if you say like, I can't do a short settlement, well sometimes the seller needs to short settlement. So I think it it's not there yet where you can't settle early because I think that's, you know, you need that up your sleeve.

Veronica Morgan: True. But you know, it's funny over the credit crunch if you like the slowdown of the access to credit and the whole processing of applications that cha, the processing process of processing that makes sense. That changed with Prisma you know, the, the tightening of credit a couple of years ago that slowed down things into the point that previously you could probably even squeeze in a 21 day settlement. But you know, every broker I spoke to said don't even try or listen 28 days. I mean, reality 42 is really needed. You know, is that going to,

Chris Bates: That was because banks were doing strange things in terms of they were assessing policy and they didn't know because of the Royal commission. They were freaked out. What was being taken on too much risk where there's discretion with applications. Generally, banks would probably be a bit more aggressive and would be willing to lend the money. That's just what banks do. So if there's a gap or something that might not be 100% perfect they're willing to put an exception on the file and push ahead with the application in the Royal commission. That was not happening, especially around living expenses and things like that. So for living expenses were on two credit cards, we're showing $10,000 for the last three months. Then you couldn't argue that living expenses are only 6,000 and they were one offs. So there was all these things where the banks didn't know what to do and the brokers are lodging application and they were getting in gridlock. Because the banks are so scared of the Royal commission and get doing a wrong thing basically. So

Veronica Morgan: The different scenario in the sense that they've got their processes back underway and we'll every reset them or whatever they've done to, to, to refund them and then now literally just be purely capacity.

Chris Bates: Yeah, exactly. And, you know, and now it's literally a case of loans aren't getting declined. Like we don't get declined loans anymore. Like if there's a problem with the file, the banker calls you and we talk it through, we get the paperwork through and it gets through. But in the Royal commission, perfectly good customers we're getting, we're getting declined just because the bank just couldn't look at things logically and we're just so risk adverse and we're just declining application cause it was easier than potentially getting them in trouble. The assessor that is. And so, you know, the whole fee was through the whole organization and that just wasn't with the big four. That was even banks like Suncorp and a lot of the smaller lenders and et cetera.

Veronica Morgan: Yeah. Okay. So that makes sense. So obviously so once again, an understanding of if which bank is likely to be able to get you to settlement sooner if that's necessary, if that adds if that adds like a, a benefit to, to your, or add some advantage in terms of you want negotiation power. Yeah, because once again, I mean you've got the situation where, you know, if you're dealing with your bank, that's the only policy you've got available to you. There's also, you know, I think too that clients who have had a preapproval, but as we all know, then they're subject to valuation, all LVRs and those sorts of things. And then found afterwards that all of a sudden the LVR rule has changed with the bank's policy or the value, the bank might have decided that they want their evaluations to come at lower, you know, so there's always other policy changes that can impact on their borrowing capacity that, that they don't know that has changed since they got their preapproval and they can actually then impact them at the point at which they're about to make an offer on a property.

Chris Bates: Right. Yeah. So 100% is happened to a client couple of weeks ago where we had him pre-approve with Macquarie and purchased a place up in the Northern beaches purchase a 2.2. We did a valuation on it and the vow yeah, luckily he had us calling off and he did a valuation on at 1.975. Now there's two reason why the vow came in low. One was the assessor was the evaluator was thinking he's a forecaster, not actually a value. R is different. Right. And I don't understand how value is getting their job confused sometimes because previous silos were supporting a two point $2 million purchase price, maybe a little bit under two be in fairness. So maybe he did overpay a little bit out of just probably didn't have the market knowledge. So I, there was a bit of that and there was a bit of the, the assessor saying coronavirus in their notes and saying fear in front of ours.

Chris Bates: We think 1.95 which was ridiculous. So we did another valuation with another bank. Valuation came back at 2.2. Now in this situation, the client actually called off on his property and purchased another property and go to probably potentially a bit more to get a better deal. But this is a case where when we got that low thou back, if that was you're dealing directly with the bank and you've just worked with one bank and you have no idea where else to go, what would you do? You would, how do you turn that around in five business days, which is all you've got to get another bank approved, which we did.

Veronica Morgan: Yeah. Even less than that really because you know, gender, you've got your, you exchange with the cooling off, you get five business days. You might be able to extend it if there's Goodwill on both sides. But, but basically the valuation might come in and your buddy got 48 hours.

Chris Bates: Yeah, it's true. Actually. You're right. Actually. Cause if we didn't do the vowel, so that day and then that came back a couple of days later, so you're already two, two days in DFR days, we've got the low, we through experience, we know it's very hard to argue evaluation. So you need a value at approved to say to you that they've done the wrong thing, which, and it goes against their KPIs, et cetera. Like that. So in this situation, there's no point as arguing. We best off to go see we can get a solution elsewhere. Now we don't do any of it off the plan, but sometimes clients will come to us who've already purchased off the plan and if we are really like them as people, then we want to help them and you know, they really need someone to guide them through the process. Then we will of course help.

Chris Bates: And this is another case where I definitely, definitely need a broker if you're buying off the plan because the policies and the banks that will do it at different LVRs and different rates. And if you get a low value, you need to have a plan B, plan C, plan D because when you get the occupation certificate or whatever it is, a couple of weeks before you need to move in you need to have a couple of things. You know, a couple of lots of things in the oven, couple of steel rods in the fire. So that's what you need to be. So I think yeah, you just, that's another place around the valuation around policy changes. You really need to be across it because end of the day it's risk management. What you need to do is make sure you settle on this property and do you really want to be putting all your eggs in one bank and one personal banker that you may have already met a couple of times. It might not even be doing the job when you are, you know, in six months time. So

Veronica Morgan: I actually think it's really important because you know, in days gone bottle years gone by and not even days, but years gone by, you could actually get a bank valuation before you exchange contracts. And, and this is what really excites me because then the bank retains the last right of refusal. So they tell her about, you know, you've got preapproval, the buyer thinks is that means that they can borrow X amount of dollars. So that, I think that they can spin up $2 million on a property that's, that's reliant on the valuation coming in at a million or more. Right. And so that valuation comes in at 900,000 they've got a, the bank will only lend them that 80% of whatever, all 900,000 so I didn't get to that. They've got a fund and and a lot of buyers don't realize that they, they're wearing that wrist and we talk through that with this part of our process to make sure that our clients have had that conversation with the broker.

Veronica Morgan: What are the risks of the devaluation coming in low, where, where are the additional funds that you've got access to, what's plan B, C, et cetera, et cetera. And we have had situations where a broker has not been on top of these and we've actually after exchange, despite the client being advised that yes, you're right to go and you know, there's no real risks for you that then the valuation is coming low and in the brokers are basically out of, out of dips in Oh that seat. And it's like that's, you might as well just deal directly with the bank if you go to broker. That's one trick pony. So we've had situations where we've stepped in very quickly and said, right, you need another broker, you need a better broke, you need a more experienced broker and that broker needs we B, C and D now and then, you know, we'll work and do what we can do to help provide the value.

Veronica Morgan: Is that information. So, you know, I don't think of one particular case where the client, I would say his client had their own broker kicked. It's insisting, yes, no, no, no, this broker is really good with me, refer to my friend, et cetera, et cetera. We kept thinking, no, this does not sound right. This broker does not sound like they really know what they're doing. After exchange, despise valuation came in really low. And there was panic stations. So we got them at a much more experienced broker who the next valuation was a drive by, which was also a little bit low. And then finally he actually got in with a different bank who would do a proper onsite valuation. And we met them. Now we handed over our research, which they took and they basically came back with the valuation at the past. But it was a harrowing experience for our client and wasn't too comfortable for us either. Even though we, we had followed out process to make sure they checked and they deed, but it was harrowing. And that was because the broken really got really crap advice and you know, I mean this is really about why you should deal with a broker versus why she deal with the bank, but it's also why you should deal with the brokers cause it's very various experienced.

Chris Bates: I'm going to say, I think the a at a local broker in that state that you're, you know, not that we don't, we still help clients, you know, by Brisbane and by Melbourne, et cetera. But you know, initially a buyer's agent preferred me a client a few weeks ago and they buy in Sydney buying and all the beaches and they are using a broker that's based in Brisbane. Now, these broker in Brisbane, they, the buyer's agent client called me because my buyer's agent, the buyer's agent in situation was saying, look, I don't think this other broker understands 66 W's and calling off if you, if you, it's one of the parts that we do is when clients are making offers and they have to sign 66 w sometimes to get a deal done, whether it's pre auction, whether they just want to use it as a negotiation tool to win the deal. You know, we've got to really understand the numbers because if a client does sign a 66 w and they can't get the finance, they lose their 10% deposit, which sure.

Veronica Morgan: Let's, we'll clarify that. The 66 w certificate in new South Wales, it's a new South Wales thing they didn't know upstate. And what of these is the certificate that they solicit it or the conveyance it provides that waves the cooling off period. So waves the buyer's rights, we're cooling off period. It cannot be waived by the buyer. It has to be waived by the solicitor or the conveyancer after explaining the consequences to the buyer. Now obviously that means you buying under auction conditions. So if you're buying a property that's pre auction or even if you're buying a private treaty property in a hot market where there's lots of buyers around, well who you want most agents and most owners don't want to take their property off the market for five days so that you muck around with evaluations, you're building piss up, usually citric cetera. So, and that's the reason for the 66 w now really the reason for the CCC CW actually was it was introduced to actually protect buyers from being zonked.

Veronica Morgan: But in reality it gets used as, as a tool by agents in a hot market to make you unconditional so that you can, I'm sorry, the coolest, sorry, rewind. The cooling off period. The five day cooling off period was introduced to stop gazumping. All right. 66 WCP kit is used by agents in a hot market to say, well, I'm not going to give you the cooling off period because there's other buyers. So you bring that to me with a 66 w and I will take it to the owner because that's a much more compelling offer.

Chris Bates: Exactly. And then if I was selling and I've got hot property and it's running an auction campaign, or I've got six people wanting, I'm only going to sell if the person who's going to give me an unconditional offer. So that's the reality. So that's one of the things that we do is helping them, I think.

Veronica Morgan: But I was fighting just the sipping that. I agree it's a good litmus test for brokers and we Abby's, it's the same thing. It's like if the minute the broker says, Oh, I said, all right, you know what? We'll ask them a pointed question about the risk. You know, how are our clients, how is that client's finance approval? Are they ready to go on these one? Oh, let's throw it. They'll get a five day cooling off period. And then we'll sort everything out. I said, I really want to say, and I've already told you we're going in unconditional, so I need from you what we need to know before they can go on conditional. And, and when they say that, I'll go, you don't know what you're talking about. And then I think, Oh, here we go back to square one.

Chris Bates: It's the same thing with conveyances and solicitors. I mean, obviously you mentioned Jane, Dan, we do a lot of work with Jenny. The reason we do a little bit with Jenny's, Jenny always, always does her job correct in terms of really going through a contract, really understanding where the risk lies for the customers, anything there. And then also always stays on top of the paperwork in terms of making sure that they're going to get the ready, their ducks lined up. So it settles. Whereas something like you wrote with conveyances and we, we're calling them four or five times, three days before settlement asking, where's, why haven't you loaded up on PEXA, you know, the documents transfer is not there, et cetera. And they're just too laxy Daisy, you need to kind of be building these kinds of 18 around you, I believe. Because you know, speed is what, and just sleep at night factor. If you've signed a contract for a $2 million property, let's say you really want to be stressing for six weeks about whether it's going to settle or do you want to make sure that the people around you have, I've got your back and really know what they're doing. 

Veronica Morgan: This is a problem because of course most people only buy one or two properties every 10 years, you know, I mean it's, you, you don't really know these pitfalls and risks and not and often say it really sort of takes a village to buy a property. And this is a really good example of it. You just mentioned something in there about Pixa. Okay. So Pixa is relatively new, right? And not all conveyances are on Pixar. Correct. And do you want to explain what peaks it is?

Chris Bates: Well, it's just a, it's just an electronic platform now, which is absolutely game changing for conveyancing. And I think a lot of conveyancers probably would wish that it's old school they've been doing for 20 years. They want to keep going to their paper base. But many of you get up to 20, 20 and basically everything can happen online now. Now there is major benefits of this is cause you don't have to go to an office in the city and curtain track and try and control around a Fox or something but on online. But and also refinances can happen online now. So in time we will be able to do refinances extremely fast once everything gets digitalized. So it's just an online electronic platform.

Veronica Morgan: So explain what the Parsis was before when you used to have to get a whole bunch of chicks, a chick, you know, to pay out the bank loan, a check cause the vendor a check to give you know, the council for rice or the water company, you know, there's all these different payments that happen on settlement of a property and they sort of draw a line in the sand. So right today you, I, you, I this for rights, you are that for water, you've got to pay, you know, if there's other sort of Libby struggle levies for instance, if you're in a strata building. So there's all these payments that have to be made. There might be caveats on the, on the contract for arguments. And so there's this whole shed you'll of payments that get provided by the vendor or solicitor to the purchaser and the purchaser and in the bank arranges largely where this money comes from. Right?

Chris Bates: Settlement is one of the things that brokers do do, right? So we will talk clients through around structuring when they first meet. Now a lot of clients will say, Oh, well I've got to buy a half. I'm just getting round numbers. I want to buy a house at 1.5 and I've got $800,000. Right? So I need a loan of $800,000 to cover the gap plus stamp duty. Now most people would think, well, that makes sense, right? I've got 800 and 800 to cover the difference plus stamp duty plus the costs. But you know, as a broker, what we would be saying is all, do you know, should she be borrowing more than 800. Now this, to give you an idea, brokers don't get paid based on the loan amount. They get paid on the net loan amount after offset. So brokers who recommend these aren't just recommends so they can get paid more.

Chris Bates: But in this situation, what we'd probably say to the customer is, can you have Kev, you got the servicing in this situation to borrow 80% on 1.5. So at 1.2, then you've only got to put in a 20% deposit, like 300 grand plus, you know, another hundred grand for your stamp duty and things like that. And then you've got 400 grand in an offset account as a buffer straight away. So rather than just borrowing a smaller amount and have no money leftover, we'd educate them on the structuring benefits of going say 80% and having a big amount in the offset. Now just this, a lot of clients said, Oh no, I don't need that. You know, I don't need a big buffer, et cetera. It would always be very forceful because the rates exactly the same that some changes are happening around this, but because the rates are generally the same at 80% versus 70% or 60%, then there was no financial benefit.

Chris Bates: We go going with a smaller loan, you were just giving yourself a smaller buffer. Now this last couple of weeks, a couple of those clients who were self employed who went down this advice you know, their revenue's gone to zero and they've called up and said, look, you know, a bit worried. And I said, well, don't be worried. You've got 300 grand in your offset and another client, you've got 600 grand in your offset. Now they've got huge buffers set up. It's actually years of repayment. They're in, in offset of cap. So structuring of loans. Sometimes clients will come in and say, look, I'm going to work my, my guy out to get to 20% because I don't want to pay that lenders mortgage insurance now because they would only understand lenders mortgage insurance. And how it actually works and where's it actually get really expensive.

Chris Bates: And people just think it's really expensive. They don't actually understand how it gets more expensive. So a lot of the time, especially when clients are getting very close to that 20% Mark sometimes they're buying a cheaper asset just to avoid paying lender's mortgage insurance, which might not be a good property or be the right property for them. And then sometimes we're reeducating and saying, well actually lenders, mortgage insurance doesn't get that expensive unless you borrow more than 88%. So why don't you consider just using a 12% deposit? And then, and then 5% for stamp duty is that 17% not trying to get to 25%, which is what you've been kind of slugging away for. And then you'll still have a buffer leftover and their mortgage insurance is only X. And it's an investment property, let's say. So it's tax deductible over five years. So structuring of lines is a big part of it as well. And making sure that the customer is really aware of where can they really stretch to, what is the cost of that making. And then having a flexible budget and not just basing their budget on how much deposit they've got. Plus the thing about,

Veronica Morgan: Like when we interviewed David Johnson, you know, you're all Boston property planning Australia, he did talk about mortgage strategy or borrowing strategy. And that's exactly what I'm talking about here, isn't it? And, but not all brokers can do that either. Can they? And so look, I would hazard that you're probably not going to get there from bank. Where'd you get that from bank?

Chris Bates: No, so literally a client board so was a friend of my sister's might be listening, but he been wanting to win him as a client for many years. And he's recently, he's dealing with a CPA, private bank. Now Haley came to me, said, look, I've just purchased this place. It's quite sensitive house. And I said, look, we need to talk strategy. So you know, you've got a couple of other properties. He's saying he's going to sell to fund this new property. And I'm like, this is pre Corona is about six weeks ago. I said, look, you need to make protect yourself in case you don't sell these properties at auction. And or you get offers that don't aren't what you want. But he says, I've got all sorts of private banking. I said, no, no, let me, let me give you what our best strategy.

Chris Bates: So we go whole strategy about keeping the properties, how's he going to do it funded, et cetera. Just in case he can't sell them, you know, just, I mean, it's just not Pat on our back at all, but then the world changed, right. And now he can't sell those two properties and he doesn't want to sell them. And so it's, the strategy part is the valuable there and now we've ended up getting the same rates as what he's getting at CBA. So rate's not usually a problem for brokers that generally can always win on rate. So because there's always a better bank on rate,

Veronica Morgan: Can you use a broker to get a better deal with your existing bank?

Chris Bates: You can. I mean, you can go down the whole route and speak to a broker and then leverage all their hard work and then take that to your bank and say, look, my broker off of me 3.0 2.08 can you match it? And then the broker didn't get, you didn't work with a broker, the broker didn't get paid.

Veronica Morgan: I know it's mainly around where, where you go to the broker and you still work with the broker, but the broker puts, puts a deal together with your existing bank.

Chris Bates: 100%. So literally a client the moment he's at CVA and there's literally no reason for us to leave CVA because you know, he's getting a really good rate and he's already got the loan there. And so we need to get cash out so he can buy an investment property. So, but when we did the numbers, we were like, you know what, let's just keep your current loans CPA. Let's refinance there. Get enough money for the deposit and then we'll go and do a preapproval somewhere else for the next property because we need to use a bank that's got, you know, bigger servicing capacity even though CDA usually quite good. So yeah, 100% we do work with, if the customer situation, their current bank is their best bank, then why would we go anywhere else? And sometimes we, what we do is we'll send pricing there to sharpen the right out there to avoid them having to do a refinance, especially when they need to turn around and things fast.

Chris Bates: Because you know, to do a refinance, you're talking probably eight weeks till you've got the money on the other side. And sometimes clients can't wait eight weeks till they get the deposit ready for an investment property, let's say. Or if they want to do a renovation, they want the money today. They don't want to wait eight weeks for it. So yeah, we always worked with their current bank.

Veronica Morgan: Interesting. And so do you think there's ever a time when it actually is better for a client to deal directly with the bank versus dealing with a broker? Potentially. you know, if you are someone who prefers to walk into a branch and you know, and you want that real confidence of that branch around you and you feel safer that way, some demographics and some generations would, would prefer that. You know, like a, we don't have a branch.

Chris Bates: We are a small business. You're dealing with you know, you can't just walk in and see me, you know, but I'm on the phone. But you know, some people would prefer that the comfort of knowing they can walk in and talk to someone. But the reality is if we did a loan with that bank, he could still get there. But yeah, that's, that's sometimes people I assume would use go direct to the bank. And that's been proven through surveys and things like that. But brokers do about 60% of loans now, so we're not a new industry. And that was 30% you know, so that was zero at one point. But every year that broker share of loans goes up and you know, it was 50% say five years ago, so it's jumped 10%. Now this is why in the Royal commission, the banks try to kill brokers.

Chris Bates: So, but in particular, CVA went to try to kill brokers because CBA know that they've lost the fight to brokers because consumers are happy with brokers. There's very few complaints about how mortgage brokers and consumers compared to other financial services and every year their, their market share grows. Now there are great brokers as average brokers and there's poor brokers, but that's in every industry. And most loans go through the good brokers, you know, 80% 80, 20 rule sort of thing. So yeah, I think that the consumers have already made their decision and are using brokers. There's not really a reason why you would be better off to go to the bank. Now sometimes there are banks that won't work with brokers, like online lenders. Now, if for example, you bank loans.com, today you tick tock some other ones, I'm trying to think, but there's these kind of online lenders.

Chris Bates: Now if you know that you qualify there, you're willing to do the paperwork, you understand the risks of working with that place. Especially if it's a purchase refinances, you probably Athena's another one you, you will probably find that their rates are slightly better than potentially what brokers can get at some times. So potentially if you're looking for the optimal rate and you don't want any advice or any service or any guidance, there may be best to use an online lender. If you're willing to, in the end you understand the risks of doing that. So that's another reason why you might want to use a broker.

Veronica Morgan: The online lenders, is that normally price driven?

Chris Bates: Yeah, it's always price driven. Generally that's the only benefit. And generally there's always a bank in the broker toolkit that can be very to what they're offering. There's always a bank that's willing to be that desperate to get business that will be very close to what those online lenders or will want to offer.

Chris Bates: You know, like Citibank will offer a 2.49 variable rate, which is the same as those banks, you know, or Samsung called or you know, there's always a bank there that are just offering a really good rate to brokers, but sometimes they're not the best bank because the policy is not great. And a lot of these online lenders, they get their funding off from wholesale lenders. Basically the bank will give them a funding line if say a hundred million or a billion. And those funding lines can get pulled or changed on them or be limited. And one of the things that's happening right now is the big four banks. They've got very cheap funding because RBA is basically flooding them with cash right now to keep the system going. But a lot of these smaller lenders, Bluestone, for example, pepper ethane has got super funds. Their funding lines can get cut and get increased very quickly. And in the GFC, a lot of the smaller and secretaries and non-banks, their rights bounced up a lot more than the big four. And so there's risks of going with these online lenders sometimes because if their funding line changes, their rates change. And so you got in there and you thought you're getting a super cheap rate, but that the things have changed now and that's unlikely to change like that at a bigger lender because you've got millions and millions of customers that would kick off a fight and beyond today, tonight.

Veronica Morgan: So would you say like if you had an elevator pitch, what's the elevator pitch for the benefit of someone to use a broker over going directly with the bank? Just to sum all this up.

Chris Bates: So I mean, fundamentally if your broker is just offering you a rate, then you know they're just, they're not really a great broker in my view. If you sit down and say, and you, and as a customer you kind of asking if you ask the wrong questions and brokers and go in there with a wrong expectation, you're going to get the wrong service. So if you go in there and say, look, what's the best rate you can get me? Well they're going to give you the best rate, but really a good broker is going to do a lot more than just offer your rate and why even think about, right? You know, for example, there's, you see why we had to delight this podcast this morning. You know, client referred a new client. I just chatted to her and her partner about what, you know, where they're going in life, what are they thinking, what are they going to do with this property?

Chris Bates: They've building up in Newcastle, they've got a 25% share with another family member. You know, what's their plans with that one? Are they gonna buy a house they're renting? Like, so we talked for their whole life and where they're going. And then we started to talk about, well, what's their structuring of their loans, where their lines are and what are their rates. So good brokers focus on getting the structure right and get the, get the loan to match their longer term plans. And then they go shopping. And they say, okay, see this is what we want, what bank or do it at a really good rate. So you kind of put your, your putting it the other way around. If you focus on rate.

Veronica Morgan: Well I love that. Ask you for an elevated

Chris Bates: Ph. Yeah, exactly. It's 120 stories. So I mean that's probably your major one. I just think it's really good at understanding structuring and banks. You know, I'm not here to say I'm the only good broker in Australia. There's plenty of good brokers, right? And there are plenty of very experienced brokers and most of those good ones understand the complexities around structuring. And if you've got one of those, then you're onto a winner. Like you really are. And if you ever worried about the right move, then ask them, you know, is there a better deal? What can we do? And you know, they'll always have an option for you and they'll, they'll be there. So, but just go, if you go to a branch and you just go to a broker, they just start talking around. Right? I just think keep shopping, you know, they're not, they're really kind of guiding you on what you really need to do. One morning. I honestly do think, and this is where I do think I'm a bit of a black sheep in the broking world, I do think a broker who has knowledge and experience helping potentially thousands of customers has some understanding what's a good property and what's not a good property.

Veronica Morgan: I told you because it did deal with thousands of customers, and I honestly tell you I would not rely on that at one little bit.

Chris Bates: No. And I don't think that's because they have, they haven't taken the time because what it is, it's a slow down to the transaction because, and reality is it's the line of least resistance. So if you're working in a service and or a, and you're trying to, for brokers, it's loans, then all they really want to do is to fast not that transaction. So most brokers will not stop and ask you questions about the type of property you're buying. Why are you buying that? How does that fit into your longer term plan? You know, do you understand what the risks of buying new property? Most brokers won't want to have that conversation because it slows down the transaction

Veronica Morgan: Or cause wouldn't even understand the questions to ask all the implications if they're, if they're just siloed in terms of just dealing with transactions and they don't actually pull back and have a look at the whole life cycle. If you like of the property then

Chris Bates: It's a five ways of seeing these transactions. They've, they've their clients, they've seen their clients go buy and off the plan and how to low vow they've seen five years later that property is worth the same cause they've done another vowel on it. My, my bugbear with the broking industry is that brokers don't take responsibility for helping their clients make better property decisions now because they can see the data. Like when, when you have a customer come in and they say, Oh, I've got that investment property. Okay, where is it? When did you buy that? Okay. It's in Southeast Queensland. I bought in 2006 what'd you pay for it? Three 20 what's it worth now? Three 40 okay. How, how did you, how did you buy that property? Oh, I spoke to him

Chris Bates: Yeah. It's positively geared, et cetera. And then the probably doesn't say, well it's actually made you any money, you know, et cetera. And so that's where I think that that's our niche and it is reality is there's not many brokers that have come from financial planning into broking and have made that their sole focus, they might still do super, they might still do, et cetera. Like our focus is 100% on that property guidance. But I do think brokers need to get better there. I do think they're first time buyers don't go to financial planners because they want to buy a house. So it biggest and most important financial decision they don't go to buyer's agent cause they don't even know they exist. They exist and I can't afford, so they've got a broker that's their first person in a financial sense that they're dealing with.

Chris Bates: Or they might go directly to the bank. Now don't expect banks to go down this because the banks there sell products. I don't expect things to start becoming property experts and guiding people on property decisions. They're just there to sell you a mortgage. But a brokers I think need to get better at this because if you, you know, if you're not helping that first time buy and make a big, an a sound property decision, that is the one decision that's gonna have the biggest impact on them in the next five or 10 years. And then compounding over the rest of their life. I think a good first buy versus a poor first buy.

Veronica Morgan: I think that I'm very, very passionate about and it's why we're launching home bar Academy first home buyers because they can't afford a buyer's agent because most of them do tend to have brokers that, as you say, the first port of call, they don't necessarily have an accountant. They don't, you know, not likely to have a financial planner. The problem is a lot of financial planners don't know anything about property either. And I'll let you talk them out of it. A lot of accountants will say, Oh well you got a tax problem so you need to negative. He, he'd go and buy these brand new property will be spark is a lot of all three of those actually get incentivized by developers to actually encourage their clients to buy these properties, these off the plan properties that don't perform over time. And I just want to just step in here and go, we very careful by saying that brokers need to be giving advice around these.

Veronica Morgan: So I think what I would like to say is I 100% agree with you in terms of a smart broker would sit down and look at the data and say, well this evidence here that some properties do well over time and some don't and we understand better what those differences are and you as a, as a potential borrower or as a borrower and a potential seller need to understand and look at this data and the relativity of it so that you can actually make more informed decisions. And so 100% agree with you on that. But the problem is there was already too much advice, property advice being given by people who are not qualified in property. So while, so I agree that brokers do need to plan more more of a pod and looking at that data, we helping people might be in a decisions we've got to be very careful about how much of that is property advice.

Chris Bates: Exactly. So this is where as a business, we've got a line where we don't cross, right? So we have to I've gone, you know, since I met, I mean the first part days and I mean it was Kobe course right back in 2012 and since then I've pretty much met most buyer's agents. They've, I haven't met you and you want to have a chat, let's have a chat. Because I had, I've gone and tried to build that network because if a client is buying a property where, or that might be where it's a South coast or whether it's Brisbane or Perth, there's people I've met and I know that can help them. And as I broke up, I am not in terms of forceful, but I've seen the value so many times now through so many transactions, the benefits of buyers agents that I will really recommend them to actually go and consider and made a buyer's agent.

Chris Bates: It's a specialist in that area and buys that type of asset to experience and to understand their value proposition. Now, not all clients will use buyer's agent. In fact, one client recently, I lost a, he went to, he doesn't want to work with me basically, and I think the real reason is is that he could afford a buyer's agent. He was Brian. He was not any experience buying property at two to $3 million before. He was very all over the place in terms of his strategy, in terms of where he was thinking. He was thinking woman in a West next minute, upper North didn't really understand anything around negotiation and agents and just thought he could pull off this big financial decision without any help. And I kind of said, look Mike, you really should be using a buyer's agent. You've got the cash, you, you know, you are not going to regret it and eat it.

Chris Bates: I think. And that was the reason why I decided not to work with us. So it doesn't really matter to us. You know, I ended the day we were doing really well as a business and this is what it is. I'd rather just give the advice and they don't take it that I take it, but in that situation he should have used a buyer's agent. And I don't know whether he's bought or not because not working together, but in this situation, because I agree with you where the problem is brokers try to look for additional revenue streams because they're like, well, I've got all these customers, they all want to buy property. Maybe I could earn more money if I start to refer them to people to make money. And this is where they start referring to developers. They start referring to off the plan or they start trying to charge for their property advice and provide all this research that supports poor investments. So I, I agree with the brokers need to be careful with that, but it's about cutting the line and then referring it to independent sort of buyer's agents that are specialists in the areas that you probably have clients want to buy. But it's hard work building up all those relationships.

Chris Bates: Every week we hear incredible stories of the dumb things, property buyers do, dumb things that end up costing a whole lot of money and, or a whole lot of stress mistakes that can be avoided. Please, Veronica, can you give us an example of a property Dumbo? We can all learn what not to do from these stories. Dumbo, I've got a Dumbo

Veronica Morgan: That sort of came about after a conversation with Jenny Tanah yesterday and then when she was talking about some clients that have actually bought, they bought a few weeks back when the market was going gangbusters. Clearance rates were 80% only a few weeks ago. They, they bought without having, bridging a financing place. And so they bought with the longest settlement, both thinking that they had the ability to sell their property and then negotiate a similar tiniest settlement with their buyers. And so they're in a world of pain now trying to work out how they going to coordinate and orchestrate simultaneous settlements in the world of coronavirus. When all of a sudden open houses have been shut down or tunes are shut down they, you know, they're under pressure then to sell at a cheap price so that they can actually just settle. So they put themselves under ridiculous pressure.

Veronica Morgan: But not only that, if there is a new clause that goes into a contract that allows for delays to settlement due to coronavirus will, it will be on the sales contract, but not on the purchasing contract. So they will no doubt incur penalties for the property they purchase. Whereas the buyer, if they do manage to get their property sold you know, with the timeframe that they've put themselves under, then that buyer may not have the same penalty imposed on them so they could absolutely get themselves in a world of pain. So I think that's an enormous Dumbo.

Chris Bates: Yeah. I mean it's just about understanding join settlements on a buy and a sell. You really need to be careful though. You really understand the person you're selling to is able to settle on that day that you want to settle. And that they're got their ducks lined up because they also have to get their finance ready for that day. And so, you know, if they haven't got a good broker, the person buy your property and they're not ready, they can, they easily could send you a notice the day before sediment, say Oh, you know what? We can't settle. Our bank's not ready. And so, well then they have to start paying penalty interest on the buy and then they can have interest on the thing. But then if you get to two weeks later and then they don't settle because they couldn't get the finance then they, Oh yeah.

Chris Bates: And so you are, you've got to understand these risks now. Life is for the risks. We know that now more than ever, but the reality is it's just about understanding what the risks are before you go into a transaction, not just going in there with those Rose colored glasses and just assuming she'll be right mate. Because when we're talking the biggest financial decisions of your wife probably be like one little mistake could potentially unwind hundreds of thousands of dollars. And you know, I've seen it all before. You know, we're seeing people walk into off the plan. I've got a client at the moment and we did everything. You see everything we can to stop her buying this apartment off the plan. Multiple conversations. She was extremely frustrated with you know, missing out a couple of auctions and a friend is solid. It's off the plan.

Chris Bates: Now she still got a job and she's going to settle in a couple of months, but these, she signed this before Corona virus. Now I'm hoping, you know, touching board, everything's okay with her employment, but you know what I'm saying? She lose a job over the next two months before this place settles and she's got to settle in two months and she can't actually buy it. She's going to lose a 10% deposit. And so, you know, and a lot of people being in this position now where they thought they had a job and they'd have a job, there's no reason why they would lose their job and they've got to settle on and off the plan in the next couple of years. There's still 100,000 apartments still getting built and Sydney just understanding your risks that if you don't know your risks and you don't understand and then you're just opening yourself up to a can of worms.

Veronica Morgan: Right. Well that wraps up our interview of Chris to work out why you should do with a broker rather than, than directly with the bank. Thank you very much for your time, Chris. I'll see you around. So you're around. Well, we won't see your hour beyond these. A remote recording for a while. So sorry about the sound quality. Everybody. I know it's not quite the studio, but Hey, we prefer to bring you good content as we continue towards lockdown. We want to make you a better elephant. RADA and this week's elephant RADA training is

Chris Bates: So, I mean, if Ronnie has asked me to say what the questions you should ask a broker now, you know, I think the most important thing is really focusing on the structuring of the advice and how much the broker cares about it and, and what sort of structuring strategies that broker has. Now, if they don't have any, they don't even know what you're talking about. I think that's a problem, you know, because they should have lots of different strategies and, you know, what's their attitude around fixing versus variable? You know, do you fix all your loan or do you keep some variable? Now that's a common mistake I've seen brokers make where they fix all the loan and they don't keep any verb with any kind of offset. So there's certain things around structuring. I think if you ask a broker what's their best, right?

Chris Bates: Anyone can print off a rate sheet. We've all got it. We've all know exactly can tell you what the best owner occupy, right? Or the best three year fixed rate. You as a customer could type that into Google and find it out. So those things are not going to teach you anything about whether the broker is good or not. Learning about their structuring. And then personally, I know Veronica and I've debated this one, but asking you what's their view on different types of property? You know, do you think they should buy off the plan? You know, do you think you know, et cetera, those sorts of things and getting their experience. Now most brokers do send banks business to lots of banks as well. So I would ask them just to explain a few different banks that they've used recently and why did they use them for those customers. And most brokers should be able to rattle that off in seconds cause it's no big deal.