In our business, we often get enquiries from people who think we deal in second-hand literary books. At TrailBlazer Finance, we actually buy, sell and lend against trail books – which are not even close to story books. But these mistaken phone calls to our office became the catalyst for us to support a charity which is doing life-changing work for people who often can’t even spell B-O-O-K.
A few years ago, our Managing Director Jeff Zulman read John Woods’ remarkable book, Leaving Microsoft to Change the World: An Entrepreneur’s Odyssey to Educate the World’s Children. Jeff was inspired by how one person who recognised the power of words went on to establish Room to Read, a non-profit organisation focused on girls’ education and children’s literacy in Africa and Asia.
We later discovered that one of Room to Read’s annual fundraisers was a long trail walk in Sydney. There are too many coincidences here, Jeff thought to himself. We make money from books – albeit not literary ones – so why don’twe help others to read, write and benefit from books. In that moment, TrailBlazer Finance’s support for Room to Read was born.
According to the UNESCO Institute of Statistics, over 750 million people worldwide are illiterate. Two-thirds of them are women and girls. “World change,” says Room to Read, “starts with educated children.”They’re right: educating girls is much more than a gender equality issue.
As Damon Gameau’s recent documentary ‘2040’ makes clear, educating girls is a vital weapon in the battle against climate change. Why? Because empowering and educating women and girls means they are more likely to marry later and have less children, which leads to a lower population and less pressure on resources. In a recent Sydney Morning Herald article, Elizabeth Farrelly wrote that the film 2040’s “most surprising [moment] is the thought that the sixth most effective weapon (of a hundred) against climate change is educating girls…educating girls is worth 105 gigatons of Co2 due to its effect on fertility, population growth and land management.”
So now, your books – your trail books – are helping those less privileged than us to learn to read and delight in the power of words and literary books.We donated 100% of the proceeds from ourrecent webinar for mortgage brokers to Room to Read. This impressive organisation – which to date, has benefitted 16.8 million children and their communities – means that when you take a loan from TrailBlazer Finance, you’re also giving back: helping to combat the scourge of children’s illiteracy, to educate underprivileged girls and even to fight against climate change. Your trail book is valuable in more ways than you might have imagined.
A pinball machine sits in the reception of our offices. For stress relief, I am rather partial to the occasional game. It struck me that pinball is an ideal metaphor for mortgage broking: brokers are like the ball – constantly being bumped around at the whim of big external players, bounced off the bumpers to help others score points. For some brokers, the potential abolition of trail might spell “Tilt”or even “Game Over”.
But never fear, for what I’ve always liked about pinball is that it has five balls. So even if you suffer a loss, if you understand the game and how to play, you can keep playing. Here are some tips from a “pinball wizard” on how to play on in the current environment, and perhaps even earn bonus points and an extra ball.
1. The UK trail experience
In 2014, trail commission was banned on new products in the UK. Two years later, it was completely abolished. Yet concerns over churn have seen UK lenders pay retention fees to brokers, to encourage consumers not to switch lenders. In effect, these ‘retention fees’ are just another name for trail commissions. So even if trail is abolished in Australia, it seems likely that trail will reappear in another form – another ball.
2. Federal election pressure on the ALP
The Liberal party’s turnaround in their stance on trail clearly shows the power of political pressure. With the ALP still planning to remove trail for new loans from 2020, the Liberals’ win in the recent NSW state election could lead Labour to reconsider its position, as they try to win votes in the upcoming Federal election. Notice that the ALP rhetoric is starting to shift – they recognise that bumping the machine too hard could lose them lots of credits.
3. Our exclusive revenue projection calculator
We have built an indicative revenue projection calculator which is available here. Our modelling indicates that even if trail is abolished on new products, many brokers’ income will actually improve in the medium term due to the combination of larger upfront commissions,coupled with grandfathered trail payments. Think of it as a period of double scores and more points for playing on.
4. The FOFA experience
Even if the ALP wins the election and abolishes trail, they’ll have to enact legislation to this effect, which must then pass through the Senate. In the case of financial advisers, the FOFA legislation was supposed to be passed relatively quickly but ended up taking over 18 months. And even then, it was watered down from the original proposal. In short, even if the current trail regime does change, it is likely to be some time before any changes take effect.So there is time to play until the credits expire.
At TrailBlazer Finance, we’re optimistic about the future of the mortgage broking industry. We’re Playing On, writing more loans than ever to help mortgage brokers grow their business. Whatever happens to trail, the game isn’t nearly over. In fact, I can see smart players racking up some pretty big scores.
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