Margin Lender of the Year

Switched-on investors are getting ready to take advantage of any opportunities that emerge from the volatility

Leveraged, a subsidiary of Bendigo and Adelaide Bank, has dethroned CommSec to claim the Margin Lender of the Year award for 2020.

According to industry researcher Investment Trends and its 2019 margin lending adviser report, an overwhelming majority of stockbrokers (87%) believe their clients can benefit from the use of borrowings to boost investment returns, up from 72% in 2018. Borrowing is even more popular among financial planners – 89% believe it can benefit their clients compared with 82% in 2018.

However, their support for margin lending doesn’t necessarily mean these advisers always recommend it.

“Advisers do not expect the local equities market to repeat its strong 2019 performance, prompting more advisers to consider gearing to magnify investment returns for their clients,” says John Carver, analyst at Investment Trends.

“While the use of gearing to invest in the advice channel remains below pre-GFC levels (only 21% of planners and 60% of stockbrokers currently recommend margin lending), most advisers consider gearing products as part of their advice process.

“Margin lending remains the most popular option, but there is also appetite for non-margin lending products such as internally geared funds, home loan redraw facilities and lines of credit.”

Lily Elliott, head of Leveraged, says customers are increasingly knowledgeable with long-term investment horizons. “They have a plan and they have a better understanding of markets and volatility. We are seeing more customers positioning themselves to take advantage of opportunities in a market environment of low interest rates and what many consider to be undervalued equities.”

The customer experience is an increasing focus for the industry.

“Many advisers are open to re-engaging with margin lending, but improved product features are important to convert interest into action,” says Carver. “While improved product features are key, margin lending providers must also continue maintaining their high levels of service and support.”

This is particularly true when it comes to support from business development managers (BDMs). “A good BDM relationship is among the top three reasons why advisers favour their main provider aside from its good reputation and range of approved shares/funds,” says Carver.

Elliott believes much of the success of Leveraged comes from its responsiveness and respect for customer choice. “This approach comes from a long-standing service offering that includes dedicated relationship managers to keep our customers informed, along with great online access and functionality at competitive rates,” she says.

This is reflected in its connectivity to most investment platforms, a leading end-to-end online application process, a competitive lending rate and a dedicated service team.

In second place, Bell Direct moves up one place in the rankings this year. It was recognised for its comprehensive ASX list, a variable rate of 5.8%pa and its 10% margin call buffer.

Last year’s winner, CommSec, was noted for its margin lending rates starting from 5.5%pa.