The 2023 roundup episode

Highlights from interviews with Matt Heine, Managing Director of Netwealth

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Sarah Wolfe (SW) (00:49):

This episode is a roundup of highlights from our 2023 podcast, so you can catch up on what you missed or find an episode you'd like to hear more of. Let's get into it. In episode 75, Matt chatted to Jennifer Risher, author, speaker, and co-founder of Half My Daf. One of the most interesting parts of the conversation is when Jennifer talks about her experience with wealth and how it affected her relationships with family and friends.

Matt Heine (MH) (01:38):

So it's interesting coming back to the book, you had all of these people around you that presumably were getting similar stock options were suddenly very wealthy overnight, but none of you were talking about it or working through the issues it created. Yeah,

Jennifer Risher (JR) (01:50):

It's very strange at first. I mean, well, and this is from Bill Gates too. He was a very frugal person. He was working nonstop. He very famously at the time, only flew coach. He wore a sweater and jeans and he was working. He wasn't flashing well. It was very much like a culture of frugality and heads down work was the primary thing working hard, and so money was not talked about. There was, and there weren't incredible cars in the parking lot. Everyone kind of was driving a normal car. There was not a lot of flashy, and I think that's sort of true of Seattle as a city too. It's low keyed, but over time, as the stock when I was there, the stock just took off and at a certain point people were tracking it and they knew how many options they had. They could see that they made a hundred thousand dollars today because of the stock price going up.


And so there was a sense of the excitement around that. At the same time, there was no real conversation about what it meant, how it affected your identity, how it affected your relationships, and that's the impact of it was not discussed and it did have an impact on me, especially later on. We came into the wealth of Amazon. It impacted me as a parent. Was I going to spoil our kids? It impacted me as a sister. My brother was he resentful. It impacted me as a friend. I didn't want to be seen as other. I didn't want to be judged. I wasn't worried about people liking me for my money. I was worried about people hating me for it. I didn't want anyone to know. I grew up thinking of being responsible and not wasteful, and spending was excessive. Spending was bad. Saving was important. The rich kind of seemed like other and them. And so I had become that, and so it's a little painful to feel as though my parents might disapprove of what I had. So there were a lot of things going on for me emotionally that just weren't being discussed, and I do appreciate that I had some good friends going through the same thing. But looking back, I think, wow, we didn't really talk about the reality.

MH (03:59):

You went about writing a book and through that process, no doubt, a lot of discovery, what were the key learnings that you came to? Obviously talking about it and having that conversation has been really important, but you've just listed off a number of items with all very different outcomes, I imagine. So

JR (04:13):

The book, it was in itself a therapeutic process. It was actually a long process. It took me 14 years to write the book. I guess the best way to describe that journey of writing was, well, I started out, the titles of the book have changed as I've changed. So initially it really was examining my own experience and it was titled The Embarrassment of Riches, and it was actually the embarrassment of riches for many years. And I was teaching myself to write by doing it and trying to figure out, okay, how do I piece together all these different experiences in a way that's compelling for other people? How do I talk about money in a way that's not offensive? And it was tricky. And I remember at one point I went to a writer's workshop and it's probably four years in, and I was at this writer's workshop and I was really excited because I was surrounded by writers.


I was going to be able to talk about the craft. And I remember the woman at the beginning was like, okay, look around yourself. You're surrounded by people who love the written word and the story. And that was all great until I realised I had to introduce myself to people. And then the first thing people would ask me is, what are you writing about? And Hi, I am Jennifer. I'm writing about wealth. And it was really difficult to say that and to feel, I felt very judged and I spent time crying in my room. It was really tricky. And I remember one woman, I said, oh, I'm writing about having a lot of money. And she looked at me and she's like, you don't look rich. That was embarrassing. That was an embarrassment of riches. So it was embarrassment of riches for a long time.


Then it was the tiniest violin. Now how can I be complaining talking about this and what sensibly is a positive? So the tiniest violin, then it was the last taboo, actually it was confessions of a rich woman for a while, then the last taboo, then it's not about the money. And then it became kind of what you don't talk about when you don't talk about money. And then I landed on We Need to Talk memoir about wealth because I'm happy with that title because it is a call to action. I think we do need to talk, and I think it's important we learn from each other's stories. And so by sharing my story, I'm hoping that other people, and I've found this to be true, people are very thankful to hear my story. It helps them understand their own story.

SW (06:33):

Episode 76 took us to the US where Matt spoke to Brent Brodeski, the CEO of Savant Wealth Management. In this part of the conversation, Brent talks about how he aligned the interests of his co-founder, employees, and outside capital partner in a recapitalization deal that enabled him to grow faster and have more fun.

MH (06:53):

So you've obviously done a lot of things right over the last 30 years. I'd be fascinated to know what some of the things were that didn't go so well.

Brent Brodeski (BB) (07:00):

Yeah, yeah. Listen, a couple things come to mind. We were talking to m and a, our very first deal was over 10 years ago, and everything we could have done wrong, we did wrong. Now the good news is it worked out in the long run. It turned out to be financially creative and most importantly, we learned what not to do. We learned about the importance of not having a country club mindset, but having a growth mindset. The importance of having low ego people, the importance of taking care of your team. I go on and on, but we learned a lot what not to do. And then that really informed all of our other deals we thought differently. And it wasn't just about, wow, this looks great on paper. It had to be really a good tailored fit. So that was painful, but it worked out well.


I think the other big thing that stands out is I was a co-founder. I had a co-founder and six years ago, he was 17 years older than me and it was ready to retire. It was been challenging. Partnerships are challenging, especially after so many years. And I started savant when I was 25, so I didn't really know what was good. I mean, we were successful. I think of it as like America's Cup. We were winning America's cup, but the boat we were racing was an old model. It had barnacles on it. The crew were fighting, we were dragging anchors behind us. There was holes in the sail, but we were still winning. It was really hard and it wasn't all that fun, but I didn't know any better. This is all I'd ever done. And the biggest lesson I've learned the last six years is we recapitalized the business.


He wanted all cash from the barrel head. I had to raise $53 million. I put in north of 20, my employees put in eight. We went and got family office capital to fill the difference, fill the gap. And it was great because as part of that transaction, everybody got what we wanted. My co-founder wanted to cash out, retire a lot of different agendas. There was a lot of employees that wanted to come in and be owners. The outside capital, we had 70 different interviews of capital providers and found one that was highly aligned. So the term I learned was alignment of interests, and I didn't realise how difficult it was to win before when we didn't have alignment. There was a lot of fighting, there was a lot of dysfunction. There was different agendas. Some people were half out the door. It was we won, but there was a lot of cost and a lot of energy.


When we aligned interests, we got the right employees, expanded ownership from 17 to 50 employees, and we brought an outside capital partner. All of a sudden, our successes has skyrocketed, have compounded since then at north of 45% annual rate of return over the last six years. So it's pretty cool. We were successful before in spite of ourselves, but when you align interests and you get the right people in the right seats on the bus with the right shared vision, shared philosophy, positivity, we were able to now we were winning, but it was a lot more fun and winning by a lot larger margin. So I think it's like, again, I didn't know what I didn't know. I didn't know how dysfunctional some elements of our business had become until we created an alignment of interests. And it's been a lot more fun since then.

SW (10:29):

Episode 77, once again took us to the US and Matt talked to Matt Brinker, founder and managing partner of Merchant Investment Management here. He discusses the importance of investing in WealthTech, not only to automate and streamline the middle and back office functions, but also to enhance the front end client engagement and experience.

MH (10:48):

It's probably a good point to change the conversation slightly. I think you've described the landscape really well and we're starting to see those different business Myles emerging in Australia. But when you look at the firms, regardless of the business model that have been really successful and being able to scale, what are the things that you see that they're consistently doing well? Where are they driving efficiency or business model improvement? I

Matt Brinker (MB) (11:07):

Think it's a first day realisation that WealthTech and it's a big broad bucket, is way more effective in, like I said, scaling the scalable, right? So scaling a lot of the middle office functionality. When I think about Bill pay, payroll, hr, it, investment management, those components of the business really lend themselves to scale. And I think we have to accept that where advisors are winning new clients is the ability to spend actually having, creating more actual capacity in the given day to spend more time with clients and prospecting for new, right? So if there's an ability for you make it up to 40 hours a week and you're finding that advisors are spending three to four hours working literally in the operations of the business or spending more time opening paperwork and like those things are immediately tend to lend themselves to a high degree of scale with the firms that I see that are doing that really well in the United States here, some of them are partner firms.


They've invested heavily in understanding workflows, the integration of technology to make it easier for clients to onboard and to service the clients. Now, I understand that the part of the client engagement, the actual delivery of advice, literally the quarterly semi-annually meetings, they don't scale all that well, and that's okay, right? Because that's where our industry becomes very defendable against outside competitive forces. And so to me it's like more human engagement. Where can we find more human engagement? The firms that sort of figure out the next sort of hack beyond that is that their understanding that technology isn't necessarily going to scale and grow the business, it's the empowerment of the advisor by technology that I think is the alchemy. That is where I see firms figuring out using forward digital tools on the tip of the spear of the client engagement that tend to be differentiated.


I know you've had a bunch of people on here on the podcast, but the technology that we built at United Capital, but the digital engagement tool that we built that was behavioural finance driven, we found really where we could scaled the human engagement with the client and the advisor by providing them front end digital tools where let's be honest, the ability for advisors to immediately instil a level of confidence and trust between the client is a bit of a innate skill. It's not necessarily learned. And unless we're able to clone all of those advisors that have that skillset, we need to figure out as an industry, how do we deliver that type of client experience where it doesn't necessarily require that type of skilled advisor to get to that level of intimacy and trust. And so I'm seeing a lot of digital tools bridging that gap for advisors that may not be necessarily a significant part of their skillset and gauge having tools that help them get to those conversations quicker with a little bit of a digital crutch to dive into those conversations and sort of invoke those conversations that tend to be personal, nuanced around their money behaviours and some more financial and personal attributes that a really good advisor with a pen and paper and a pad can get to in a half hour meeting

SW (15:05):

In episode 78, Kendall Flutey, co-founder and CEO of banker took Matt through how Banqer also engages parents and guardians in the financial education journey of their children and encourages them to talk about money at home.

MH (15:18):

And given that banker is a virtual economy, do you find that children are actually getting that money experience? How does that translate then into real life and their understanding of financial literacy? I

Kendall Flutey (KF) (15:27):

Mean, our platform's all about experiential learning. Evidence would suggest that we learn best about money through trial and error. Unfortunately, the majority of us have to do that in the real world with real world consequences. So our students definitely get that hands-on practise. And because we're a tech platform, we get to collect a bunch of data points around the development of that capability. We get to see them opening an appropriate bank account for them. We get to see them potentially and taking out insurance after an event that affected an asset they own. We also see some of that translating into real world. And we do that through impact reporting whereby we hear about students actually engaging in the real world, either with a parent or with a parent's support, because working in primary schools by opening up a financial product or asking the right questions to their parents when they're engaging with their financial products.

MH (16:19):

And I think that's a really interesting point. It's probably a bit of a gap. When you first rolled out the platform between what the kids were learning at school and the financial literacy of their teachers and also their parents, and you embarked on a bit of a programme to uplift the capability of both, just interested if you tracked or seen any improvement in each either of those cohorts

KF (16:37):

We have. So engaging family is such a critical component to effective financial education of our students. We did a deeper dive impact study recently. We haven't quite announced those results yet, but family, family, family, they show up in every single insight in a material way. So we have engaged our Parenting and guardian cohort by taking them on that financial education journey with our students. And we've had to do it in a way that's sort of accessible for that family and where they're starting. And really the main way our parents can contribute at a baseline is actually just by talking about money. It's pretty crazy. But looking at the recent stats, I think 89% of Australian parents, this is some FPA research, believe that their kids should be learning about money at school. So that's nearing a resounding majority, but only 42% of parents actually talk about money at the home. So there's a bit of disconnect there in terms of perhaps their confidence, their capability or their literacy levels. So we try and really include parents in that conversation.

MH (17:40):

So this might be delving into deep psychological areas for a moment, but what I've been interested in, you've managed to take what a lot of people would consider a very boring topic, and you've managed to get children highly engaged. And I've talked about it with you before. I've never been to a school and talked to a group of students who have been so excited about retirement, let alone a group of adults. So when you've designed the programme, how have you thought about engaging with the children and building on that base knowledge, but keeping them excited? Because I think a lot of those lessons can be applied to people listening to this podcast when they're looking at helping to coach and educate their own clients.

KF (18:16):

Yeah, that's a great question, Matt. I think fundamentally it comes back to the fact that we might consider financial literacy boring, but that's probably typically a lens that we've had to look through because we haven't been able to engage with money in the way we have wanted. It hasn't necessarily been, maybe we've navigated some adverse outcomes, but when our kids are looking at money, they're looking at it through the lens of unlimited possibility. So from a psychological perspective, and look, I, I'm not a psychologist by any means, exac accountant slash software developer in the room. We'll put that out there to start with. But we try and treat students with the responsibility that is needed to navigate the financial world by meeting them where they are today. So with that, I mean that we give them the opportunity to navigate the financial world just like their parents do, but in terms that they're already used to dealing with. So these kids live in the digital world, so navigating their finances digitally is actually a very safe, comfortable environment for them. In the app, we have streaks and we have other social concepts that they're used to. So we make money familiar sounding to them, but we don't remove that layer of responsibility, which I personally think is one of the reasons they're so engaged. They feel like they're doing adult things, but they're doing it in a way that speaks to them.

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SW (19:37):

In episode 79, Matt SWitch seats to be interviewed by Peter D on the ensemble advice tech podcast. One of the most interesting parts of the conversation is where Matt dived into AI use cases, emphasising that the goal of AI is to augment the advisor's capabilities and efficiency not to replace them.

Peita Diamantidis (PD) (19:54):

Are you seeing any more things that could be exciting about, hey, the next best thing for the advisor to work on for a client, or anything like that that you're starting to see that technology can add some real value to?

MH (20:05):

Yeah, so there's a couple of things. And again, I talk about what we're doing and I do that because it's what we actually believe in. So we do a lot of the research and we see, we think where we see the industry going. So I think customizable reporting is huge and we're spending a lot of money in that space to make sure that an advisor can basically, and we're calling it the advice illustrator. They can tell the story using our data and imagery to explain it, the strategy, how they want each to the client, and more importantly, how the client will understand it. So it could be that you've got a new client that's not overly literate, that ultimately just wants to say, what's my balance over time? What's my asset location? If the advisors just started having that discussion and maybe was money and money out versus someone that's very sophisticated that's going to want all the bells and whistles and line by line asset performance report and benchmarking and contribution analysis and some of those things.


So I think being able to tell the story the way that you want to tell the story to the clients that you want to tell it is going to be really important. So that's certainly coming. And then if you think about ai, I was fortunate to do a live interview with the header of data and analytics and AI for Morgan Stanley in the US where they have 16,000 advisors that they're building solutions for and they're doing some really cool stuff, and they've got an arrangement actually with OpenAI, which is the engine that sits behind Chatha pt. And so they're training, so they've had next best actions for some time. So when an advisor logs into their desktop and their whole theory is that it's man with machine versus man without. And so they're not trying to replace the advisors, they're trying to make them as efficient as possible and put them in a position where they can add the most value.


So next best actions is when they first log in the morning, it basically says, this has occurred overnight. These portfolios might be out of balance or range, or you might want to speak to these clients because they hold X stock. They can then automatically press a button, email those clients or arrange a phone call with them. So that's sort of the first thing that they do when they go in the morning where it's heading though is really interesting. So they're using the open AI engine, they're training it only on Morgan Stanley data, so can't hallucinate or sort of go off and find with wonderful statistics from around the web. And it'll allow the advisors to effectively ask the engine things like what's better, BHP or Rio? And then rather than having to pull down two different research reports and try and work out what the key drivers are and who's doing well, where it'll do a full analysis and basically say BHP is a better option based on the following things. So again, potentially saving the advisor 20 or 30 minutes of analysis almost in real time while they've got the client on the phone. If it's a new client and the client's asking some broader questions, they can then sort of query, okay, how do I open an account, follow 'em down, and automatically walk 'em through the next steps or how a particular process works. So really driving efficiency using the in-house capability and the in-house IP around data and research.

SW (23:11):

In episode 80, Matt spoke to Michael Kollo, the CEO of evolved T Reasoning, who's a natural language processing and AI expert. In this interesting excerpt, he explains how chat GBT can be used for various applications in finance and why he foresees the biggest impact of AI on education, especially in areas like financial literacy.

MH (23:30):

So the question that clearly comes up is, is this how SOAs and ROAS are going to be produced in the future? I saw a post earlier on LinkedIn regarding what it means for paraplanners. I'd love to get your feedback on that. So

Michael Kollo (MK) (23:42):

I think the genuine content part is very interesting, right? I'll tell you a story, which I probably can declassify now because it's happened maybe more than a decade ago. I used to work at BlackRock at the beginning of my part of my career, which is a wonderful, wonderful shop. And I was working in the risk department and we had about 400 billion worth of bandaids that were looking after, and it was a very high quality risk group, 90 people, PhDs, whatever. And we would talk to unusual behaviours in markets, and it was quite formulaic by the end of it, it felt very formulaic. And so I wrote a little bit of automation. I remember in Excel back in those days that would just create the comments and it caused a big upheaval because on the one hand, the comments had become quite formulaic, so the algorithm was correctly representing what we would've said, but the assumption was that you were looking at some information and data and making those comments, and by giving it the hands of algorithm, you were automating that.


I think on the one hand, this can be an extremely good efficiency saver, SOAs and so on are tedious and they're quite structured and so on. But one has to be very careful that you are signing off on that. So don't let the fact that you have a piece of automation behind it mean that you pay less attention to what is being done or how it's being done. And I think as soon as you have an external vendor or a company that's providing you an algorithm to do that, it can feel like who owns that piece of content? And again, I think being very clear about saying, no, no, no, I am the one providing this advice. I'm using the tool to reformat my advice or my information in a different way that is regulatory compliance. And I take the risk that it isn't regulatory compliant, importantly because the algorithm can kind of get me out of the way there, but not all the way there. So I think it'll kind of post some really interesting questions and maybe we've gone a bit too far into that formulaic reporting mindset. And as soon as you start to, I suppose, create these automations, you're going to start to see this question being thrown up. And you'll definitely see companies who are on the wrong side of that. You'll see companies who are throwing out hundreds of SOAs just for a fee point. And I think the regulator will have to be very careful to come back and say, okay, but is this really yours or not?

MH (25:56):

Michael, we're running out of time, but I guess before we finish, I'd love to understand your thoughts on perhaps where this is going to have the biggest impact. We can see applications for investment management and modelling. We can see marketing, efficiency, engagement. There's so many areas that this new technology is going to touch upon and enhance. Where do you think it's going to have the biggest impact?

MK (26:19):

I think it's very hard to say because a lot of the impact will be about industry adoption. So the system has a lot of capability, as you said now, CAT capabilities transformed into outcomes when industries adopt it and use it, it's up to us essentially the question in terms of how much we want to use it. A big topic that's very close to my heart is education. And I think if we deploy these systems as educators, as mentors, I think we could achieve an enormous uplift in our communities, in our families, in our working environments, in our civilizations, because so many people receive partial or partially informed, I suppose, clues or information especially about topics like financial literacy or financial markets. And these systems have the capability to put a much more scientific and thoughtful view in front of every person that wants it and needs it at the level that they are at at this stage that they're at in the way that they want.


And whether these are children we're dealing with or adults, I mean, one of my thoughts was we could be at a point where this will be the last generation solely taught by teachers, and in the future we might have a large chunk of material being delivered and tested by AI algorithms. And that's not as scary concept as it might seem because at the moment we've got three or 30 or four kids in high school, primary school classes all around the country. And while a good teacher is definitely not replaceable by Chad GPT, the bar is these overworked poor teachers who are trying to do their best with a class full of people similar with financial literacy. I think it's hard to find good consistent and reliable and applicable sources of that information for all different forms in the society. And as we know, financial literacy is one of those key early skills that you want to embed in people so they make good decisions and better decisions throughout their life, not just about superannuation, but everyday spending and so on. So I think our ability to use this technology and to create that future we want and that we desire is up for grabs, and that's a once in a generational opportunity.

SW (28:28):

In episode 81, Matt chatted to Blake Briggs, CEO of the Financial services Council. Here Blake discusses the importance of engaging with a range of stakeholders to achieve a healthy advice sector and the key areas of focus for the FSE.

MH (28:42):

Often when we're out speaking to advisors and licensees, there's a perception that they're too small or their voice won't be heard and that they therefore will leave it to the likes of the FSE or the big organisations. And then sometimes we'll be disappointed with the outcomes. How do we avoid, I guess, the vocal minority and making sure that all the voices are heard. And before we move on to some of the work you've been doing with the QAR, how would you like to see the industry engaging better with the FSC and vice versa?

Blake Briggs (BB) (29:07):

Well, for my part, I spent far too long reading the comments section in trade press, but there is a good reason for that. It is very important we just don't solve these policy questions for the beginning of town because one of the reasons we ran what we now refer to as an advice white paper process a couple of years ago was that a healthy advice sector, and that includes everything from your small mom and dad, individual advisor business all the way through to the large advisor licensees a healthy sector is critical to a healthy industry because the advisors play such important role in that process. Now, the FSC has a board committee with some of the larger advice licensees and a few of the mid tiers to be fair, but licensees and the bigger end of town, we're trying to build that out and we're trying to have conversations with different licensees because it does have a singular folks on the interest of advisors, it's really important we have a broader reach into the sector because that will allow us to make sure we balance the different interests to different business models. And if we're able to get that, then hopefully we achieve a regulatory framework at the end of this process that is durable, that doesn't have people throwing rocks at it from the outside because our part of the decision-making process. And if we're successful in that path and we have better engagement through FSE and other vehicles, then I think we can achieve that outcome.

MH (30:25):

Great segue into some of the work that you're doing at the moment. Before we move on to that, in addition to QAR, what are some of the other hot topics that you are looking at or thinking about at the moment?

BB (30:33):

Well, retirement is a really big piece for both us and will be a really important one for the government. The advice piece of retirement is obviously important. That's something the government's talked about quite a lot in the QAR context, but there is a lot more to good retirement planning than just the financial advice piece. And so there is a question around the suite of products that should be available in the market that are quite often available overseas but not here. What are the tax and regulatory barriers to them coming to the market in Australia and who is going to provide some of those products? So insurers are the obvious anSWer in some cases, but I know a lot of their FSEs funds management members can have really innovative solutions to retirement needs and different asset allocation to achieve that. And we really need that diversity of product opportunities to give advisors a full suite of options to work with their clients. Given the 5 million odd Australians approaching retirement now, we need better solutions for them when they hit that point. So that's a big focus for us over the next 12 months.

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SW (31:35):

In episode 82, Sarah Abood, CEO of the F AAA spoke to Matt about the merger of two longstanding industry associations, the A FA and the FPA. He or she explains the reasons behind the two organisations coming together, how they created a new brand and the importance of representing the voice of financial advisors.

MH (31:54):

I'd love to understand from you maybe the inner machinations of how you put together two very large longstanding industry associations, and I guess how it all really, the conversations have been going for many years. What was it that actually finally made the two organisations sit down properly and start to map out what a combined future might look like?

Sarah Abood(SA)  (32:13):

Yeah, Matt, I think you're right. I've certainly been told by many people that those conversations have been had on and off for a very long time, but there were always good reasons at the time why they couldn't proceed. I think there were two big drivers, well, maybe three big drivers. So one was that the membership of the two associations had in the past probably been somewhat different. There was a perception that the A membership was more focused on life insurance and that the FPA membership was more focused on a kind of traditional wealth kind of role that had been becoming less and less true. And certainly when we got to a point when we could look at the actual data and demographics of the members, they're very, very similar. So I think the previous concerns that members would've had different goals or maybe a group wouldn't have felt represented was no longer true.


And that was an important success factor because I'm sure you are extremely well aware that the success of any merger is in large part down to the cultural fit and alignment of values and so on. Financials are really important, but they're not enough on their own. That sense that there was a strong cultural fit, strong alignment in goals was important, and we were able to tick that. The other thing was, of course, the external environment that we all find ourselves in, and the key piece that the number of advisors had crashed we're down famously, almost 46% now on where we were back in 2019. That has an impact. It has a very direct impact on financials of organisations that have advisors. As members, we'd both been suffering from some level of membership outflow, although less than the overall profession. Still, you can't escape a tide that is that strong.


So there was financial pressure there, and there were very clearly synergies and very obvious ones like premises for example. There were quite a lot of synergies that we thought members would get better value from the two organisations coming together. So that was number two. But the third one was the most important, which I'm leading up to, and that's impact of advocacy. Certainly in my first months in the role, I was getting feedback from government, from regulators, from all sorts of people who are very important to us, that we were not aligned as a sector. It was put to me in fact that we were a rabble, that we were always arguing and couldn't come up with a consistent position. And that in the past, the government had perhaps had a view that if we couldn't decide what we wanted, then they'd do it for us.


So there was a very strong desire on the part of both organisations to be more effective in advocacy, to not have that accusation levelled at us to ensure that we could build a coalition and a united voice. And that was probably the number one reason why we got serious about talks very soon after I joined and we were able to go to members within nine months, we literally launched almost exactly a year ago. We went to members on the first day of spring last year with a proposal that we should merge and asking them what they thought,

MH (35:30):

Congratulations on your one year anniversary

SA (35:33):


MH (35:34):

They're all really good points. You merger of any businesses, whether that's financial planning or just business in general, culture is absolutely key. And if you think back through those early discussions, once you understood what the objectives were and the reasons, what were the cultural aspects from the A FA and from the FBA that were sort of non-negotiables, when you were sitting at the table, what were the things that the A wanted to make sure were kept sacred and vice versa?

SA (35:58):

Of course, there were a few, as there always are from the a FFA side, there was a really strong desire to ensure that life risk in particular would continue to be prioritised and supported by the new association. I mean, as I said, that was actually important on both sides because there were a number of specialist firms who were members of the FPA and a number of firms were members of both because they kind of wanted to really ensure that the voice of life insurance was strong in the importance of that sector, not just to members, but really importantly to consumers was going to consider continue to be supported. It's well known that the number of advisors that practise in this space is quite low. It's probably somewhere of the order of the register would write at least a couple of policies a year, but the number of advisors who specialise in that space and actually have a substantial practise is lower still.


It's probably less than a thousand. There's a number of different ways that you can cut the data, but certainly that function is so critically important. It is an important goal for the F AAA to focus in that area and support it and grow the sector because we think it's critical for our profession and for consumers. So that was really important for a ffa. From the FPA side, the designations and education was really, really important. So the CFP as a designation that the FPA was offering and the F AAA continues to offer, it's a really important part of what our association does. It's a global designation. We have almost 5,000 holders of that designation, and they were very, very keen to ensure that that designation would continue to be supported and positioned as lead designation. So there were two examples of things that were really important on each side, but interestingly, both sides were really, really focused on professionalism and ensuring that we were acting as the voice of a profession, not an industry, not a job, and specifically the profession of advice and specifically for financial advisors. So that was interestingly and not negotiable on both sides. So it didn't become a problem during negotiations. That is the United Voice, is the United Voice of Financial Advisors. That's what we're taking to Canberra, and that's what this association represents.

SW (38:30):

In episode 83, Matt sat down with Marcus Price, the CEO of Iris. In this interesting snippet, Marcus talks about ecosystems as a powerful strategy for financial services and the potential of AI to make sense of vast amounts of information in the financial services industry.

MH (38:45):

Ecosystems is one of my favourite strategies, and it can work in incredibly powerful ways for you or against you. And certainly if we bring conversation back to Iris for a moment, financial services has got so many participants now, and we often do research with our advice tech report around the average number of technologies in the technology stack. And I think we're pushing 14, which is just far too many. How do you see the ecosystem evolving in the future in the industry? Or what would you see other than maybe a hundred percent Iris?

Marcus Price (MP) (39:13):

Well, actually I don't see a hundred percent Iris. I see quite the opposite actually. I see us participating in a particular way in the industry, but I think one of the things that did strike me about Iris was it was quite inwardly focused as a company, really inwardly focused. And it was sort of a 1980s, 1990s software culture really, if I can describe it that way, where you tended to build a piece of software handed over to a client and send them an invoice and you do customization and maintenance and those sort of things. And even today, we're still working through this. What does the ecosystem around Iris look like? For example, we don't treat our financial advisors well at all, in my view. We've got a long way to go there. We need to be thinking about them as an ecosystem around ourselves and embracing them and thinking about what they need and what they want and allowing them the opportunity to steer what we do.


In fact, as an old company, it wasn't even possible to think like that 20 years ago probably. I think it's fair to say. But the modern companies do think like that. You think about customers and ecosystems, and I don't mean just in customers and advisors, but also the participants around us, such as the platforms, of course, net being one of them. We feel the need to collaborate more fulsome and more meaningfully with those sort of companies as opposed to trying to carve out our spit and defend it to the death, which is the, I think, an old and dangerous way of thinking about a business.

MH (40:27):

It's hard to have a conversation these days without talking about ai, generative ai. Interested in just your general thoughts on where it's heading, either just more broadly or as it relates to Iris and FIN services.

MP (40:38):

I think it's very interesting. I don't see it as a breakthrough. I guess as the first point I'd make, AI has been around for a long time. I was building AI models in the nineties when we were first building credit algorithms to try to work out how to do this. And most people do know this, the generative part of it and the generative text part of AI is definitely a groundbreaking innovation in AI and is making AI more accessible and more part of the actual dialogue. But one thing I'll say about ai, it's terrific and has a particular purpose, and it's very, very good at assimilating vast amounts of information and making it more simply digestible. I don't think it provides any particularly new insights, though. It's more of an assembly machine to assemble what in all this huge data set do I need to pay attention to what's meaningful?


And that's something which can be done analytically or anything else. It's basically a correlation machine, if you can want to think about it that way basically produces a synthesis of what's in there. And when I think about what's happening in financial services, there's been a massive proliferation of product and services that confront consumers of all types, even in this country. Think 30 years ago you could buy blue chip Australian shares. That was it. Nowadays you could buy anything and even worse from anywhere, anywhere in any offshore market. How many exchanges do we deal with when a person can go on their phone and buy a share on nasdaq? It's just, it's extraordinary. We forget that's not, you put that in someone's hands 30 years ago, extraordinary, but think about how much information you need, how much information you've got that you need to be able to make sense of. And so here we have a problem, vast amounts of information, and that's not going to get less, that's going to get a lot more. Then we've got a tool which is actually able to ingest and digest. I think I can see a real role for AI in helping make more simple sense if you like, and provide actionable type of insights that you can actually then go and act on in financial services. And I think that's, its found its SWeet spot

MH (42:24):

And the point that you've made now numerous times. So AI is only really as good as the data that it sits on our industry, and I often say this is sitting on more data probably than any other industry bar, maybe healthcare. What advice would you have for advisors when they start thinking about their data strategy and what they need to be doing to set themselves up for the next couple of years of the AI driven world? I

MP (42:44):

Think the platforms, frankly, us need to be thinking about how to provide toolkits for advisors and people in financial services. It is a technology problem. I first say it wouldn't be closed to it as the first thing. It's not a threat. It's a tool to be used. It won't replace the judgement and knowledge of an advisor necessarily, and particularly the real crafting of something for a particular client. I don't think it changes that, but I think it does help, and I think it helps them consider more things than they would've otherwise considered. But I do think it needs to be embedded as part of their toolkit. So I don't think it's necessarily something they would need to go out and build themselves. For example, they could certainly use chat GPT and produce reports and so forth, but they're going to look like everyone else's. So is that what you want to do? It could evolve In many ways. I see AI as something we need to be right across at Iris. I think it's something that's because we have vast amounts of data all sitting there, literally mouldering away. And we can, I think, produce considerable insight from that data by ingesting it and actually summarising it for advisors.

MH (43:37):

Are you excited about the potential product opportunity it creates? And when I say product, maybe robo in conjunction with advisors and that hybrid advice model, where do you see it all really heading?

MP (43:47):

I think it's getting increasingly difficult for a human being to understand and consider all the various investment scenarios, stocks, options available to people. But I don't see, one thing that AI is not great at yet and probably never will, maybe be one day, I don't know, is trust. Ultimately investment decision comes down to trust. Do you trust the information you've got? Do you trust the person giving you the advice? Do you trust, and this is where that, I think hybrid always ends up. You kind of come back to it. You sort of still want someone across the table that saying, no, this is okay to invest in. I've looked into Word, I've got this AI tool which is ingested 500 ETFs, and these are the five that came out. And I think it's that one. You kind of want that. I think there's a real role at this stage. I'm a dinosaur Matt, right? I'm old. So I'm sure that younger people will probably feel differently about that and might be quite happy. Sort of have five different algos face off on their phone to work out, which is going to give them the optimal result and trust the outcome. And that I think I've also got to probably colour all of my responses with the fact that I'm a particular generation and next generation might think differently to me.

MH (44:48):

Thanks for listening to this episode of Between Meetings for more episodes and to subscribe to our series, visit the Netwealth website, iTunes, Spotify, or your favourite listening service. And if you want to contact me or engage or discuss any of the topics raised, please find me on LinkedIn or Twitter or send me a private message. We hope you can tune into the next episode.

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