FNSPRM613 - CS1 - MortgageFirst written Question

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Monarch Institute *

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FINANCE AN

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Business

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Feb 20, 2024

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docx

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Uploaded by manvikk

FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) Case Study 1 Written Questions (MortgageFirst) Scenario Instructions © Real Estate Academy Australia Page 1 of 10 Version 1.0 – August 2022 RTO 32426

FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) What you need to do: Answer the questions below by writing in the space provided. You are required to answer all questions correctly. If correct, you will see ‘Satisfactory’ or if incorrect you will see ‘Not Satisfactory’ in your grades section of your learner portal next to the assessment name. The assessor will provide feedback and a Record of Results in the assessment task once graded. You will be required to resubmit your work for any ‘Not Satisfactory’ assessment tasks. What you will need: Use the learner material provided in your online student portal as well as research materials such as books, internet, magazines, workplace documentation etc. to assist you in gaining the knowledge required to answer the questions. Remember that the assessment task is self-paced and open book. You can use whichever resources you have to answer the questions. What you need to submit: Your answers to these questions. How to Submit your Assessment: Upload your completed document into your learner portal following the instructions provided within the assessment task. You can drag and drop the file into the window or use the add file icon in the top left of the submission window and select the file your wish to upload by using the browse/choose file option. Click on “ finish attempt ” to submit it for grading. © Real Estate Academy Australia Page 2 of 10 Version 1.0 – August 2022 RTO 32426

FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) Scenario 1 – MortgageFirst MortgageFirst is Australian owned & operated and well-established mortgage broking company located in Gosford, NSW. Its vision statement is to ‘Help as many people as possible by improving their financial situation, without compromising on exceptional customer service’. The team includes 5 mortgage brokers, 1 office manager and 5 mortgage processors. The panel of lenders consists essentially of traditional-backed loans from Tier 1 lenders, as well as a few Credit Unions of Tier 2 lenders. MortgageFirst has a limited appetite for property development financing. While settlement volume has been consistent for the past 3 years, the net profit of the company has slightly declined as a result of inflation (expenses have been on the rise) as well as employee wage increases. The whole team were invited to a brainstorming session to reflect on strategies, and to boost revenue and target growth in the financial practice by 20% over the coming 12 months. To better expand the business, it was agreed that a greater number of new leads were needed. The average upfront commission paid to a mortgage broking business per new mortgage taken equates to $2,500 and it was unanimously agreed to take on three to five new clients each per week. The first marketing strategy to be implemented is to increase the number of new leads as well as to target a population between 19-55 years of age. Specifically targeting renters holding at least $30,000 in Genuine Savings (determined to be 55% within that age bracket). This includes a campaign to encourage lenders to take advantage of a free & personalized assessment aimed to compare their current financial situation as tenants, to a potential owner-occupied financial situation (rent versus mortgage). A recent survey also shows that 22% of current tenants are expecting to take on an owner-occupied mortgage in the next 12 months. It was also acknowledged that the business has a significant database of existing clients that could be worked on to generate a better yield. The second strategy selected by the team to grow the business via this database is to organize a follow- up meeting in order to identify any potential cross-selling and/or up-selling opportunities. MortgageFirst has a direct competitor named ‘Better Finance Pty Ltd’. There office is located 5klms from MortgageFirst on a busy street. Better Finance opened seven years ago and is abranch operating under an international parent company. They are offering a wide range of financial services and products with in-house mortgage brokers, accountants, and financial planners, © Real Estate Academy Australia Page 3 of 10 Version 1.0 – August 2022 RTO 32426

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FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) which makes it an easy one-stop-shop for potential clients. They specialize in property development financing and also offer free translation in more than 15 languages from nationally recognized translators for documentation for every application. While they are offering a broad range of finance facilities, their panel of lenders focus more on Tier 3 lenders, which allow for flexible and low documentation loans, suitable to new ABN holders and overseas investors without Australian employment. Based on the supporting documentation and the information you hold, complete the activities below. These activities will assess your ability to explore the possible direction MortgageFirst may take in order to improve their situation. Question 1 a) Identify MortgageFirst main objective and need. Main objective is to boost revenue and target growth in the financial practice by 20% over the coming 12 months. And Help as many people as possible by improving their financial situation, without compromising on exceptional customer service. Need: Better expansion the business, and greater number of new leads. b) Identify the work activities conducted by MortgageFirst and the growth that the business is seeking. Do these activities support and align with the business growth plan or does the business need to seek any specific authorization, training, education or license to implement its plan? MortgageFirst works with traditional Tier1 lenders and a few Credit Unions as Tier2 lenders. They have a limited interest in property development, financial planners and have a goal to increase revenue by 20% within a year. To achieve this goal, they are targeting renters aged between 19 and 55 years with a minimum saving of $30,000 and they are organizing follow- up meetings with existing clients to identify cross-selling and up-selling opportunities. Although these activities are in line with their growth plan, it is important to note that mortgage brokers in Australia must possess a valid license to offer mortgage-brokering services. Depending on the operations to introduce by mortgageFirst, they may require ACL License, appropriate training & education to carry out their plan. For example, if they intend to provide financial advice, they need licence to provide financial advisory services by the Australian Securities and Investments Commission (ASIC). Furthermore, if they intend to provide property development funding, they may need to obtain specific licences and training © Real Estate Academy Australia Page 4 of 10 Version 1.0 – August 2022 RTO 32426

FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) related to development. While developing and implementing their expansion strategy, MortgageFirst must ensure that they should comply with all regulations and criteria in the financial industry. Questions 2 to 5 are related to the FIRST marketing strategy selected by MortgageFirst. Question 2 From the Gosford census provided, analyse the information, and identify what would be the ideal criteria of the target market that MortgageFirst should focus on to gain new leads, according to their first marketing strategy selected. MortgageFirst first chosen marketing strategy: First marketing plan is to target people aged 19 to 55, specifically renters with at least have saving of $30,000. They hope to persuade these people to take advantage of a free and individualised assessment. And increase the number of new leads every week. Social Marital status: According to the Gosford Census 2016, the majority of persons between the ages of 19 and 55 are married or in a de facto relationship. Citizenship: Australian or permanent Residence Language spoken: English is the most widely spoken language in Gosford, followed by Mandarin and Cantonese. Employment status: Full Time Employment or Self-Employed Occupation: Professionals, clerical and administrative workers, and technicians and trades workers. Tenure (in accordance with the chosen marketing strategy): Rented Question 3 a) Obtain research data from the Census Extract and analyse the market research. Complete the following table. Note : For the purpose of this exercise, you will consider that 100% of tenants are aged between 19 and 54 years of age. Gosford total population: 169,053 Gosford total adult population between 19- and 54-year-old: 70,286 Gosford total adult population that are 16,245 © Real Estate Academy Australia Page 5 of 10 Version 1.0 – August 2022 RTO 32426

FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) renting: Average upfront commission on new mortgage 2,500 TAM: 70,286 Percentage of market that meets the genuine savings criteria: 55% SAM: 38,657 Percentage of market that would take on a mortgage in the next 12 months: 22% SOM: 16,245 b) According to the SOM estimated in 3a, calculate how many clients does this represent per mortgage broker on a weekly basis. Compare this number to MortgageFirst mortgage broker’s realistic capacity: is the target market large enough to allow MortgageFirst to proceed with its plan to increase new leads with the target market over the next 12months? Detail your answer. Population renting : 16,245 Percentage of market that meets the genuine savings criteria 55 % Percentage of market that would take on a mortgage in the next 12 months Eligible : 22 % 55 % of 16245 = 8935, 22 % of 8935=1966 Per week : 1966/52 = 38 leads per week The market is large enough to proceed with that plan and With increased number of potential clients, the probability of generati ng leads becomes greater which can prove to be a wonderful opportunity for MortgageFirst to expand their business and reach their marketing targets. Question 4 a) Examine MortgageFirst direct competitor offers, strengths and weaknesses, and complete the table below: Better Finance Strengths: Office located on busy street Franchise operating under parent international Wide range of financial services. One stop shop for all National Recognised language translators © Real Estate Academy Australia Page 6 of 10 Version 1.0 – August 2022 RTO 32426

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FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) agency. Have high chance of getting international clients client’s financial needs Weaknesses: Reactive and primarily reliant on the banks Complex process Refusal to provide direct funding for Alternative Businesses No Traditional- backed loans from Tier 1 lenders b) Identify the main features that would be relevant according to the target market defined by MortgageFirst for its growth plan and develop a competitor analysis using the competitive matrix below. The first feature is given as an example. Better Finance Features: traditional- backed loans from Tier 1 lenders Large target market Personalised Assessment to compare client’s current financial situation to market Cross selling and up-selling opportunities Better Finance no Yes No No MortgageFirst X No Yes Yes c) According to your findings, explain why MortgageFirst has a competitive advantage on its direct competitor ‘Better Finance’ based on its defined target market. Based on the analysis presented in the competitive matrix, 'MortgageFirst' has a competitive advantage over 'Better Finance' in two key areas: traditional-backed loans from Tier 1 lenders, personalized assessments, and cross- selling & up-selling  MortgageFirst offers traditional-backed loans from Tier 1 lenders, which could attract new clients who prefer to work with well-known lenders in the market . because clients go with risk-free and want to ensure that their mortgage provider is trustworthy and reliable. In contrast, while Better Finance's services and products include a wide range of financial services and products and they did not mention about the information would provided on whether they offer traditional- backed loans fromTier 1 lenders.  MortgageFirst offers a free and personalized assessment to compare client's current financial situation as tenants in the market. This personalized assessment © Real Estate Academy Australia Page 7 of 10 Version 1.0 – August 2022 RTO 32426

FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) could attract to renters looking to become house-owners, as they may have tight budget and it provides clear understanding of their financial situation and the steps they need to follow to become a house-owner. In contrast, Better Finance did not provide any information on personalized assessment.  MortgageFirst offering cross-selling and up-selling to existing clients. which is also beneficial for them when compare to Better finance company as they not provding such type of services. Overall, based on above findings, MortgageFirst has a competitive advantage over Better Finance which could attract more new leads and satisfy existing customers. Question 5 According to your findings questions 2-4, develop a Promotional Plan including: ● The distinct target audience ● A suitable promotion name ● An appropriate promotion type ● The key message that MortgageFirst is to deliver ● At least three promotion material that could be used You are to create a suitable Promotion name and type to deliver the key message that MortgageFirst is to deliver to its selected target audience in order to implement the growth strategy #1 they selected. Promotional Planning – Strategy 1: Tenants under 55 living in the Gosford area Target audience Promotion name Promotion type Key Message Promotional material Tenants having $30,000 in savings Why rent when you can Buy Social Media Campaign You can own you own house! MortgageFirst is here to help you take the 1 st step towards your house ownership with free personalized assessments Social media graphics featuring about the promotion name and key message. Use images of families and company’s logo Video bites: records video bites with existing satisfied clients of © Real Estate Academy Australia Page 8 of 10 Version 1.0 – August 2022 RTO 32426

FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) MortgageFirst Online resources: Create a series of online resources that tenants can use to learn about the home buying process. Question 6 Now that a promotional plan is in place for the First marketing strategy chosen, you are to develop a promotion plan for MortgageFirst second marketing strategy selected to grow the business. Use the table below to create a suitable Promotion Plan to deliver the key message that MortgageFirst is to deliver to its target audience in order to implement the growth strategy #2 they selected. Caution : the target audience has changed. Promotional Planning – Strategy 2: Tenants under 55 living in the Gosford area Target audience Promotion name Promotion type Key Message Promotional material Self-employed individuals who have been in business for at least 2 years “Self-Employed mortgage solutions” Direct mail Campaign At MortgageFirst we understand the challenges that self- employed individual face when seeking loan. That’s why offering free personalised assessments, flexible tailored lending option for clients. Brochures: create brochures that explains solutions for self employed Personalized letters to self- employed individuals in Gosford area Testimonials: Include testimonials from satisfied self-employed clients who have used © Real Estate Academy Australia Page 9 of 10 Version 1.0 – August 2022 RTO 32426

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FNSPRM613 - Grow Financial Practice (Release 1) Case Study #1 (MortgageFirst) MortgageFirst's services in the past. Question 7 According to MortgageFirst growth needs and objectives and its specific vision statement, explain why it makes sense to rank and implement the two promotional plans developed in questions 5 and 6 in this particular order (new client audience prior to existing clients). It makes sense to rank and implement the two promotional plans developed inquestions 5 and 6 in the specific order because it aligns with MortgageFirst'sgrowth needs and objectives and its specific vision statement. MortgageFirst's primary growth need and objective is to expand its customer base by attracting new clients. The first promotional plan developed in question 5 targets a new client audience - tenants under 55 with $30,000 in savings and living in the Gosford area who are seeking to become house-owners. By implementing this promotional plan, MortgageFirst can reach out to a new market leads and attract new clients who may not have been aware of MortgageFirst's services in the past. With the second promotional plan developed in question 6 targets an new and existing clients - self-employed individuals who seeking mortgage financing. By implementing this second promotional plan, MortgageFirst can focus on retaining and expanding its client base. This is there with MortgageFirst's vision statement, which emphasizes the importance of building and maintaining long-term relationships with clients and providing exceptional customer service. which is a strategic approach that aligns with its growth needs andobjectives and its specific vision statement. © Real Estate Academy Australia Page 10 of 10 Version 1.0 – August 2022 RTO 32426

FNSPRM613 - CS1 - MortgageFirst written Question

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