MPA explores two expanding industries with a long-term need for brokers, both residential and commercial.
Although this is the first time we’ve covered healthcare and education in MPA, a select group of brokers have long been reaping the benefits of these industries, including three of Australia’s Top 10 Commercial Brokers and the current No. 10 broker in our Top 100.
Not only are healthcare and education expanding but they’re doing so through brokers. These are fragmented industries, with small operators having considerable funding needs for acquiring businesses and infrastructure. In Australia’s slow-moving economy, it is difficult to find an industry with a 3.3% forecast annual growth rate, as is the case for healthcare; and for education it is higher, at 6.1%.
Be under no allusions: private bankers are currently working very hard to engage with these industries. However, many have realised that they can’t do without brokers and the long-term trust and relationships they engender. MPA partnered with Westpac and talked to its experts in healthcare and education to explore how brokers can play a crucial part in the development of these industries.
As clients
If you’ve encountered clients in healthcare, it’s likely been through your residential database. Doctors make for excellent borrowers, explains Leon Berkovich, national head of healthcare, commercial banking at Westpac. “Pretty much as soon as they’re graduating from university they’re earning quite a lot more. They’re the higher end of the salary band, and that just accelerates throughout their career.”
With wealth come additional opportunities in property investment, creating another need for a broker. “Doctors love that longevity of relationship,” adds Berkovich. “What we recognise and really respect is the longevity of relationship that brokers have with clients.”
In education – which includes childcare – many business owners will be accustomed to getting expert guidance when it comes to their finances, according to Sharon Watkins, Westpac’s national head of education and social sector. “With childcare, a lot of the owner-operators have either had a really strong relationship with their bank or a really strong relationship with their accountant, so they’ve had that trusted adviser.”
Daniel Green has been working with childcare providers for years at his Top 10 Independent Brokerage Green Finance Group and finds these pre-existing relationships set expectations. “I think everyone has high expectations of finance brokers these days! And so they should – brokers are finance professionals just like your accountant, and they need to be able to deliver quality results to you, on time.”
Brokers in turn shouldn’t underestimate their clients, warns Westpac’s Berkovich. “They’re very smart, so they also want to be across all the detail, so don’t take ‘time-poor’ for ‘I’m going to miss detail’; time-poor means they want you to do a lot of the heavy lifting for them, but they’ll still be across the detail.”
As industries
In education, childcare centres are morphing into early learning centres, and mid-level players are acquiring smaller businesses. Both processes require funding. The importance of upgrading facilities in this industry should not be underestimated, says Green. “Outdated play equipment and facilities that are beginning to show the passage of time will quickly see parents turn away from your centre.”
Education is a collaborative industry, insists Westpac’s Watkins, which brokers can use to access clients. “I’d always advise a broker trying to get into an industry to look at those peak bodies first and understand how they can leverage those bodies to build a brand and profile, particularly in the education space.” The main organisation is the Australian Childcare Alliance, which has state-based subsidiaries.
Conferences are equally important in the healthcare industry. “Doctors look up to their key opinion leaders,” explains Berkovich. They make good referral partners for brokers, so attending these conferences is essential. “For most conferences you can be an attendee or set up small booths to promote your products and services.” The Australian Medical Association caters to doctors, but of course there are many other areas of healthcare.
Growth in the healthcare sector is better explained on an individual level. Berkovich suggests brokers talk to medical professionals about their business plans, whether it’s a doctor acquiring a new practice, or one who needs to purchase new equipment. These costs can be enormous: an MRI scanner typically costs between $1m and $2m; starting up a radiology clinic can come to $4m.
Dealing with lenders
Banks are targeting healthcare and education with special policies for commercial and residential clients, meaning brokers need to do a balancing act. Both Berkovich and Watkins head divisions of dedicated expert business bankers who can provide advice and should be contacted early on. This can, as Green notes, help an application get a far quicker turnaround.
Many banks will try to integrate these clients into their private banking structures, and so as a broker it’s vital to continually reinforce your value proposition. This proposition is about guidance and expertise, Green explains. “Knowing which bank and which banker to approach, and how to mitigate any perceived shortcomings in the bank’s eyes, is key to getting your transaction approved. That’s where the services of an experienced finance broker come in.”
Not only are healthcare and education expanding but they’re doing so through brokers. These are fragmented industries, with small operators having considerable funding needs for acquiring businesses and infrastructure. In Australia’s slow-moving economy, it is difficult to find an industry with a 3.3% forecast annual growth rate, as is the case for healthcare; and for education it is higher, at 6.1%.
Be under no allusions: private bankers are currently working very hard to engage with these industries. However, many have realised that they can’t do without brokers and the long-term trust and relationships they engender. MPA partnered with Westpac and talked to its experts in healthcare and education to explore how brokers can play a crucial part in the development of these industries.
As clientsIf you’ve encountered clients in healthcare, it’s likely been through your residential database. Doctors make for excellent borrowers, explains Leon Berkovich, national head of healthcare, commercial banking at Westpac. “Pretty much as soon as they’re graduating from university they’re earning quite a lot more. They’re the higher end of the salary band, and that just accelerates throughout their career.”
With wealth come additional opportunities in property investment, creating another need for a broker. “Doctors love that longevity of relationship,” adds Berkovich. “What we recognise and really respect is the longevity of relationship that brokers have with clients.”
In education – which includes childcare – many business owners will be accustomed to getting expert guidance when it comes to their finances, according to Sharon Watkins, Westpac’s national head of education and social sector. “With childcare, a lot of the owner-operators have either had a really strong relationship with their bank or a really strong relationship with their accountant, so they’ve had that trusted adviser.”
Daniel Green has been working with childcare providers for years at his Top 10 Independent Brokerage Green Finance Group and finds these pre-existing relationships set expectations. “I think everyone has high expectations of finance brokers these days! And so they should – brokers are finance professionals just like your accountant, and they need to be able to deliver quality results to you, on time.”
Brokers in turn shouldn’t underestimate their clients, warns Westpac’s Berkovich. “They’re very smart, so they also want to be across all the detail, so don’t take ‘time-poor’ for ‘I’m going to miss detail’; time-poor means they want you to do a lot of the heavy lifting for them, but they’ll still be across the detail.”
As industries
In education, childcare centres are morphing into early learning centres, and mid-level players are acquiring smaller businesses. Both processes require funding. The importance of upgrading facilities in this industry should not be underestimated, says Green. “Outdated play equipment and facilities that are beginning to show the passage of time will quickly see parents turn away from your centre.”
Education is a collaborative industry, insists Westpac’s Watkins, which brokers can use to access clients. “I’d always advise a broker trying to get into an industry to look at those peak bodies first and understand how they can leverage those bodies to build a brand and profile, particularly in the education space.” The main organisation is the Australian Childcare Alliance, which has state-based subsidiaries.
Conferences are equally important in the healthcare industry. “Doctors look up to their key opinion leaders,” explains Berkovich. They make good referral partners for brokers, so attending these conferences is essential. “For most conferences you can be an attendee or set up small booths to promote your products and services.” The Australian Medical Association caters to doctors, but of course there are many other areas of healthcare.
Growth in the healthcare sector is better explained on an individual level. Berkovich suggests brokers talk to medical professionals about their business plans, whether it’s a doctor acquiring a new practice, or one who needs to purchase new equipment. These costs can be enormous: an MRI scanner typically costs between $1m and $2m; starting up a radiology clinic can come to $4m.
Dealing with lenders
Banks are targeting healthcare and education with special policies for commercial and residential clients, meaning brokers need to do a balancing act. Both Berkovich and Watkins head divisions of dedicated expert business bankers who can provide advice and should be contacted early on. This can, as Green notes, help an application get a far quicker turnaround.
Many banks will try to integrate these clients into their private banking structures, and so as a broker it’s vital to continually reinforce your value proposition. This proposition is about guidance and expertise, Green explains. “Knowing which bank and which banker to approach, and how to mitigate any perceived shortcomings in the bank’s eyes, is key to getting your transaction approved. That’s where the services of an experienced finance broker come in.”
