The Wizard of Aussie

The John Symond Aussie Home Loans story is one based on a businessman determined to succeed by forcing change on one of Australia’s most over-charging and uncompetitive industries.

His upbringing was important.

“I was fortunate that I was brought up in real working-class Australia,” he says.

“I went to 11 schools and that was because my parents were in the fruit business. They opened up a little fruit shop and every 12 months or so move on after building it up and making a profit.”

Symond thinks this gave him an advantage that helped him grow his brand and business. “When I look back, I think it was positive being forced to embrace change at such a young age in primary school,” he says.

“After the first two or three school changes I realised that probably next year I’ll be at a different place – new schoolmates, new teachers, new house – and that made me embrace change as a youngster; the majority of people find change really uncomfortable.”

The Symond kids worked after school and on the weekends in the shops, but after John finished school he went to university to become a dentist.

“My father wanted that and I hated it,” he says.

“I finally got my own way and did law at night and worked in a legal firm as an article clerk during the day.”

But even at an early age, Symond was giving into his inherited entrepreneurial spirit, developing with a cousin apartment blocks while at university.

The 15 years in law working in property gave him the insights to see what his competitive advantage would be, which is critical for growing a business.

He even learned something that made him ready for the credit crunch.

“I learned during those years that there were credit squeezes,” he says.

“That was an important lesson.”

He also learned a lot in the 1980s when he nearly went bankrupt.

Setting up a financial advisory business focused on property, he went into partnership with a fully-owned subsidiary of the then State Bank of South Australia, which was owned by the South Australian government. It went broke, but it wasn’t all bad news.

“In those days I was very naive and I didn’t think I had any need for advisers. The small banks like the State Bank of South Australia were trying to take on the big, commercial banks and ultimately went broke, and I never, ever thought that a government-owned bank could go belly up,” he says.

“I was facing bankruptcy and that drove me to come up with a way to make it easier for mums and dads to not only get into home ownership, but afford it.” Symond says the banks were getting a 400 to 500 per cent profit margin over cost of funds on housing.

“That’s when I came up with the idea of Aussie, to try to give people a fair go. Miraculously, without any backers or money, and facing bankruptcy, I came up with a way to eventually launch Aussie, and the rest is history,” he says.

Paving the way

Starting in the post-recession year of 1992, Symond called in favours.

He secured premises for two years rent-free – these were really tough times – and he asked for long repayment terms, such as 30 to 60 days, from conveyancing lawyers and valuers to help the business beat the cash flow challenge.

“Of course, those 30- to 60-day creditors blew out to 180 days and some hit a year, but they all did very well in the long run because they got thousands upon thousands of instructions,” he says.

But where did a near-bankrupt get money from to lend?

“That was very hard because I had to go to non-retail financial institutions and my first break was Primary Industry Bank of Australia, which concentrated on rural lending and didn’t have shop fronts,” he says.

“I had to come up with a risk-free offer that was too good to let go and I achieved that after persisting with the then Housing Loans Insurance Corporation of Australia (HLIC), which was then Commonwealth government-owned – AAA rated – and I really hounded them.”

His loans with insurance made his business virtually risk-free and then all he had to do was convince the borrowers of Australia. That’s where Macquarie Bank was important.

“Macquarie came on the scene in 1994 and we partnered to be the first to introduce securitisation of home loans which could go to mums and dads in suburbia, and that took three per cent, or 300 basis points, off the cost of mortgages,” Symond says.

“In so doing, other mortgage originators copied and started a couple of years after we started. RAMS then followed and a few years later Wizard and a whole industry was born, and through what we started.”

Consumer champion

The new competition resulted in the Commonwealth Bank shocking the market in 1997 by dropping interest rates by about around 250 basis points in one hit.

“Every building society and housing lender had to follow and that was the biggest single turning point for consumers in decades, so that was a great result for the Australian community,” Symond says.

Aussie Home Loans led the way for competition, but the brand and business was also grown by one of the most enduring do-it-yourself marketing campaigns in the country’s history.

Symond fronted his own ads and his legendary ‘At Aussie, we’ll save you’ has become as memorable as ‘Not happy Jan’ and ‘Meat pies, kangaroos and Holden cars’. But the latter were ads from big businesses; Aussie John was a small business.

Unlike many small business operators, he was smart enough to hire a public relations consultant and then went after his rivals, big time.

“I was very fortunate in that I had no money to advertise, so I learned all about marketing myself – this was by default, not a plan – but because my story was so controversial and it was what consumers wanted, it worked,” he says.

“There wasn’t a newspaper in the country, a television station or a television current affairs show, which didn’t want to understand the story better, and I found then the value of marketing yourself and being honest and, yes, controversial.”

Staying on top of his game

With the business growing nicely but some challenges emerging, Symond again embraced change eight years ago. Recognising consumers were changing, he turned Aussie into a mortgage broker, which meant he would be offering his own loans as well as those of his rivals.

“People were wanting choice and trust; you couldn’t ignore the market,” he says.

He was also concerned about the securitisation market and this decision saved Aussie from the fates that befell RAMS and Wizard with the onset of the global financial crisis.

“I doubted whether securitisation pricing would be able to compete when banks were ultimately forced to halve their margins again and I wasn’t clever enough to predict the global credit crunch,” Symond says.

Aussie has taken over Wizard and the Commonwealth Bank has acquired 33 per cent of the company.

The operation has more than 150 shopfront outlets and oversees $34 billion worth of business. Symond’s parents could not help but be proud of that quite substantial Aussie battler.

John Symond in brief

Best piece of business advice you’ve been given:

"Listen to customers."

And the worst?

"Buy horses and boats."

Most frustrating part of doing business:

"Trying to manage business partnerships, as you do a deal with people, then people change and all of a sudden there’s a different focus."

Favourite marketing technique:

"Meeting people in the street and taking the time to listen."

Business leader you most admire:

"There are a few. Harry Triguboff, Frank Lowy and Richard Pratt. These people all started with nothing."

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