I am pleased to report that there is not much to report.
The foundations have been laid and so it is heads down for us at GPS for us to achieve a loan book of 24 active loans (two new loans and two loan payouts per month).
The loan pipeline remains sound and is benefitting from reduced competition, good conditions in our preferred market space and our ability to consider larger loans via access to alternative funding lines.
Increasing the number of available investments will assist in generating further diversity for Investors.
In coming months, we should be able to accommodate an orderly increase in funds under management through the GPS Invest Select Fund, GPS Invest Pooled Fund and GPS Invest Access Fund. For assistance or further information regarding any of the above, please call Lisa Power or Bruce Atkinson on 1800 999 109.
As GPS is largely a “word of mouth” business, we appreciate referrals to friends and colleagues.
“In a move that could usher in mortgage rates below 4 per cent for the first time in generations, the Reserve Bank has cut its official interest rate to a new low of 2 per cent to bolster economic growth and weaken a resurgent Australian dollar.”
SOURCE: CREIGHTON, 2015, ECONOMICS CORRESPONDENT, THE AUSTRALIAN, SYDNEY.
The recent mea culpa by the banks regarding the ongoing discussion around the future of the financial planning industry has drawn an acknowledgement that they need to change their culture.
While the statements were well crafted they omitted to define what their new culture will be.
There was no admission that they now support the catch all in the Future of Financial Advice (FoFA) direction in that they should “put the interest of their Investors ahead of their own”.
The issue for the banks is that the core of their constitution requires them to put the interests of their shareholders first.
It would be a career-defining moment for a CEO of a bank to say they are putting anyone’s interests before those of their shareholders. If that statement was made, I am confident that the share market would speak loud and clear!
The regulators brought in cultural change for operators such as GPS in 1998. The lynch pin to these changes was that we had to put the interests of our Investors ahead of our own. We have embraced this concept not only as a legislative requirement, but good business practice.
History has shown that it takes at least a generation for such change to generate any real traction.
On a personal note, I do not want to see too much change from the banks. GPS has carved out its niche market by not competing with the banks, and treating its Investors and Borrowers as clients working with them to generate commercial outcomes.
I expect more crocodile tears from the banks but little real change. This is good news for both GPS and those of us with bank shares in their superannuation funds.
The SPDS’s for loans over $5m are currently being reviewed.
As a general rule, GPS does not settle such loans unless we have a certain level pre-commitment from alternative funding sources. This is to bring the funding required from GPS Invest Select Fund Investors back to a level similar to our traditional product being loans of around $3m to $4m.
An example is the 1057 Wynnum Road, Cannon Hill loan. While the total loan amount is $7,686,500, we achieved a pre-commitment for half the loan amount. Allowing for investment by GPS Invest Pooled Fund and other Funds managed by GPS, the allocation for GPS Invest Select Fund Investors is approximately $2m.
GPS being able to fund larger loans increases the number of loans which we can assess and thus increases the overall quality and diversity of investment opportunities available to our Investors. It is all part of making GPS an even more robust business.