AdviceTech Leaders Series - Episode: 1

With Dan Rake, Chief Operating Officer & General Manager at Freedom Finance Australia

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About the podcast

Dan Rake, COO at Freedom Finance Australia chats to Matt about selecting and deploying AdviceTech to meet the needs of a multi-disciplinary firm, which technologies have provided the biggest business and client benefits and the process of creating his own digital coaching tool, Cleva.

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Matt Heine: Hi, Dan. Welcome to the show.

Dan Rake: Thanks Matt. Great to be here.

MH: Now, Dan, just before we kick off, can you just give us a little bit of background about yourself and also the business?

DR: Yeah, so I'm chief operating officer and general manager with Freedom Finance Australia. We're a multidisciplined financial services business. We've got offices up and down the Eastern seaboard. Our head office is in Melbourne, but we also have our presence in regional Victoria, Sydney and Brisbane. We deal holistic financial services. So we've got accounting for financial planning, mortgage, and general insurance as part of the business and service as many Australians as we possibly can. 

MH: Having known you for a number of years now, I know that you're an avid technology adopter, which is fortunate in your position given that you have got an extremely distributed workforce and a very, vary client base, how do you go about selecting tech in your firm? What's the process?

DR: I think we start off by just looking around the industry and looking at what others are doing. And so we do constantly check in with what others are doing, we get involved and we make it a habit of opening up our business for people to come and have a look at. And in return, we get invited to go and have a look at what others are doing. And so the first place we do is we start there. We pick a few people overseas that might be doing cool stuff in our space. And someone who we've certainly looked at is the work that's coming out of United Capital and the work that they've done.

And so they run a business similar to our business and what we aspire to be and so their journey's been part of that. And then looking outside the industry and saying, well, if we're just looking at financial services as a benchmark, sometimes the customer service and level of technology there can be a low benchmark. And so who outside of the industry is doing cool stuff and how do we learn from them? And what can we take away?

MH: Given the different business lines, you've got mortgage, accounting and wealth, the industries are all quite specific in the technologies that they use. How have you gone about trying to find commonality between the different providers and software solutions that you need?

DR: So I think the core part is making sure that we understand our customers. We've got a single point of view, and that we understand the value of a customer within our business. And if you went down the traditional model and said, financial planning was stored on one system and accounting was stored on another, a $5,000 accounting client and a $2,000 financial planning client, whether they're a $2,000 client, a $5,000 client or a $7,000 client. And how do we make sure that we're treating them with the right level of service and support, but also how do we make sure that we share across? And so I think their core part there is saying, what's common within that?

The common paths are around what's a customer's goal and what's their accounting goals versus their mortgage versus their wealth goals. What information is common about that? So they don't have to keep retelling their story all the time. What's their address, what's their date of birth, what's all their account details. And how do we then streamline sharing that back and forward into the various systems that service each of those industries?

MH: You make it sound easy, but there's a lot happening there. When you think about your tech stack, what sits at the core and how do you actually integrate those different nodes?

Dan Rake: Yeah. So about three years ago, we made the decision to go out to the market and have a look at a whole heap of different CRMs and come up with a solution. So primarily for our accounting business, we work on Xero for financial planning, we've got Xplan and Midwinter for our mortgage. We've got the mortgage origination and the software that we use. And so across all of those, there were some commonalities.

And so when we went out to market to say, well, we needed a single CRM and we landed with Salesforce and Salesforce provides us the ability to feed data in and out of those systems so that we can start to build and generate that single client view, knowing that within those systems individually, they've each got common customer demographic details. And so date of birth, addresses, contact details, balances, transactions. And so how do we make sure that we store all of that centrally and then feed that in and out to those bits of software?

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And how have you actually gone about that? That is a huge undertaking.

Dan Rake: It was. I think three and a half years ago I think we were the first firm, or certainly one of the first firms to own a financial services cloud in Australia. And we went on that journey. It was a huge undertaking. We looked at some of the work that the groups like Practifi had been doing and are doing, and also Creativemass and a few of those other groups that are working with Salesforce and they're doing some really cool things.

One of the reasons why we had to look for a solution was traditionally, each of those industry specific software had built software that was for the mass market. And so if you wanted to tailor it, or if you want it to build it down to suit your particular business, it was always a challenge having to go back and either pay someone an exorbitant amount to try and customise it for you or in fact, it just couldn't get done.

And particularly three or four years ago, not all of the software providers were open to API sharing. And so that forced us to look for ourselves. And so we went down and said, we didn't want to get caught up with software that we had to conform to the mass market and be like everyone else. We wanted to have that flexibility. And so we made the decision not to go with Practifi or Creativemass. And with those groups, we go out and we talked to a number of other businesses, and we're the first to recommend that they should go on talk with those groups because they may not have the scale, or they may not have the IT team that we have.

So Practifi and Creativemass and other businesses like that are doing great work, but for us, we wanted to do it ourselves and have a control of our own destiny and not get caught up to a point where we had to conform to a mass market. And so that was the undertaking we took. And three years later, we're probably only starting to see a return on investment now. It's taken us a good three years to get there.

MH: And so you've got Salesforce developers on your staff?

DR: We have a combination of three. So we have developers on our staff, but they do the light sort of touch development work. So Salesforce it's really easy to add fields, create reports, create dashboards, create process flows, et cetera, once you undertake the training. So we do all of that in house, the more complex stuff we work with a Salesforce partner and we have two partners, we've got a onshore partner. So a group that work here they're based in Australia. And we also have offshore resources that we can tap into when we know specifically what we want. We know we can't do it, but we don't necessarily need a partner to model that out for us. So then we'll use our offshore resources to do that just from a cost effectiveness point of view.

MH: And how do you actually manage when you're looking at an enterprise wide solution like that, which might apply to a business of your size, but also even a small firm or a firm with one or two offices, how do you go about prioritising development when you've got so many different stakeholders wanting different things?

DR: Yeah. Well, I think that's always a challenge, isn't it? And that's the challenge of trying to implement it. So how we do that is we take a lot of feedback. So we've got a cases solution within the software. So we built that so the users can submit their ideas and can share and vote and outvote that so we can prioritise it based on demand. We look at also what impact that's going to have, and at the end of the day, the more that we can get the team involved in helping us to build stuff out, then the more suitable it's going to be for what they want.

MH: And where do you think the biggest benefit of all that work has been? Has it been through the client engagement at or has it been efficiencies that you've been able to drive through back office?

DR: It was certainly not as regular as it is now. So pre COVID, we've always driven the team to try and make the clients where they are. using 20 cents worth of the capabilities and similar offices around Australia, but head office in Melbourne is in St. Kilda Rd. If a client's going to come and meet us there, it's a one hour drive in from their office, find a park, come up to the office. They meet with us for an hour or an hour and a half, and then an hour for them to get home. So it's a four hour turnaround for them to do that. Whereas if we can line up Zoom or teams or other technology, we can actually meet them where they are. We can do that in a 45 or 60 minute appointment. The clients appreciate it more because they can do that from their office.

Our target demographic, we're looking for people who are working, earning income, have families, have mortgages, et cetera. I know for my wife and I to get us in the same appointment at the same time will be difficult, but if you can connect us [inaudible 00:09:50] in her office and me and my office, we've got much more chance of being able to do that. So pre COVID, we already had a strong take-up of Zoom and to take the next step forward post COVID, we look at sign to the team, you can either ask them to keep coming along or you can force them to do something. And I know it last year and have a great model where they say they retire their previous version, and you can only work on the new version and COVID's that new version. And so we had good take-up of technology before COVID, but now with it now being, this is the new version, I think we've got great take-up.

MH: And that's a great point, you've grown exponentially over the last couple of years and a large part of that's been through acquisition, change management must be a huge part of what you do day to day.

DR: Yeah, it sure is. And again, there's another core reason why we chose software like Salesforce that can hold large and handle large transactions of data. And so the core part of being able to do acquisitions effectively is the ability to get the right data, extract the value out of that data and turn that into client engagement and so change management absolutely but again, if we build the right systems and processes, you get the right data dictionary upfront, the data comes into the software, it then goes into the machine. And it's the benefits of having strong technology because it takes raw data from a variety of different businesses. And that's everything from we've literally taken over businesses where they're still using pencil and paper through to businesses that have got strong technology. And to be able to feed that in the backend of our Salesforce, and our broader technology stack allows us then to manage that change and identify the value in there.

MH: So Salesforce sort of cater to your operations and enterprise wide. What are some of the other technologies that you're using around the peripheral so you've mentioned sort of explaining some of the others. Are there any sort of unique or specialist softwares that you're using for particular issues?

DR: Yeah, I think around Salesforce what we then look for is what are some of the natural partners that plug in there? And so we certainly like everyone has been using Zoom for our Zoom meetings. We've recently adopted zoom phones. And so we've shifted all of our phone system on to Zoom. And what that allows us to do is to plug that in. It means that we can create calling lists for advisors, for booking in their annual reviews. They can open their computer and they can see their list of clients they need to call in booking a review. When they make those calls Zoom phones will automatically log that back in that we made the call, we can record the call and grab a transcript of that. So certainly looking at technology that plugs in, we use Twilio for sending out email, SMS, and automating some of the chat functionality that we have.

We've used Nod as a document production tool. And so being able to automate the production of annual statements and advice documents out of Salesforce or out of our technology, we use Nod. And we've also invested fairly heavily in building out our own client digital portal or digital advice tool, which is clever and Clever is a digital advice coaching tool. That is a digital advice backed by an advisor sitting at the back end with a video chat inside the app and the ability to message within the app or built into an iPhone app so that we can start to, again, service clients where they are. They spend a huge percentage of their time on their iPhone. And so we know that we had to have a solution there to start to future proof our business next.

MH: And that's a great point. I'm going to change to about this probably two years ago. Why did you decide to build not partner?

DR: We tried to partner first and what we found is on three different occasions, we got fairly advanced in actually starting to develop the technology with partners. So on contracts started to build and for one reason or another, they either got bought out or they aligned with a larger institution. And we just kept finding that being slightly smaller, fishing up against some of the big institutional players in this space we struggled to be able to get the traction that we wanted. So we went out and built it ourselves, and it's probably the best decision we ever made.

And so in the last six months, we've built that and we've delivered a product to market in the iPhone, it's in the iPhone store now. A product within six months, it's short of where we ultimately want to be, but the imperfect plan executed is better than the perfect plan sitting on the shelf. And so we've got an application out the market and it allows us to control our own destiny again.

MH: And did you find that what you set out to build has ended up very different to what you have built?

DR: Probably, yes. Yeah. I think we set out originally thinking we were going to build something a little bit more in the super and product space. And so maybe moving down that robo advice, we always had an advice flavour to the back end. In working with some of those partners early, some of the challenges they were facing is that they were targeting a demographic of 25 to 35 year old who's working on their iPhones, et cetera.

And what we know about those clients is they change jobs regularly. Every time they change a job new super form under their nose and their rolled away and consolidate it somewhere else. So you're constantly working with a leaky bucket there. And so we realised quickly that we wanted to be product diagnostic and to make it a genuine advice tool.

And what that allows us to do then is to not only have a tool that services the Australian market, but by being product diagnostic, it can sit over the top of the market in the U.S. and the UK. And in fact, some of the biggest areas of inquiries that we've had for that technology has come out of the UK and the U.S. around being able to plug that in. And so it's more general, it's more about advice than the product.

And it probably aligns into a paper that ASIC released last year, where they research, why the Australians weren't using digital advice and the number one reason, or one of the top reasons that paper identified was that clients were willing to use a tool, but they wanted some advice still in there. And they wanted to be able to connect with an advisor at a time and how they wanted to, even if it was just to ask a basic question or to inquire about, "Hey, I'm stuck here. Can you help me?" And so that's why we built in app messaging and in and out video calls. So if a client's got a question, they can call us or message us and we can handle that inside the app.

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 So clever is now available to not only employees of Freedom Finance, but also to other wealth management groups. Is that correct?

DR: Yeah. So we're still piloting it with our business and important to say, whilst we're looking to use that with our Freedom clients, clever is a separate standalone entity. And so it is available to be used with other financial services businesses, and there's various models that we've got there and how they can either outsource it all to us, or they can buy the technology and use that within their businesses.

MH: And given that you're now in that space and developing, I guess, your own product, I'm sure you've got a very clear view on where you think technology can have the biggest impact over the next 12 to 24 months, but I'd be interested to hear that. Is it going to be true client portal and engagement tools or are there other areas that you're looking at as well?

DR: I think client portal and engagement tools are definitely part of it. I think the philosophy that we approach both clever and our advice at Freedom is the idea of self driven wallet. And so, most people will be familiar with a self driving car and all the work that people are trying to do about automating vehicles, et cetera. And the way that they work is by driving down the road, they take in a whole heap of sensory information and make decisions as you go along to drive that car. And we believe that it will only be a matter of time before you have a self driving wallet. We know that every single statement of advice that we produce at the moment is wrong the day after we produce it. And so we know that

there's assumptions in there on the market or on the contributions of clients going to put in, or what's going to happen in their life.

And we know that outside of that statement of advice, markets will do their things and perform in different ways. Clients will have health issues. They'll have family growth, they'll have divorces, they'll change jobs, et cetera. And so we believe that you need a living SOA and a living wallet. And so that statement of advice should be able to automatically update and take in what's happening with market performance and live market performance. It should be able to take in from your banking details, your salary information from your expenditure.

And so having that sensory information come in will give us a live wallet, a living statement of advice that will update and clients shouldn't be coming in for a one off review where we go, "Okay, well, let's run a portfolio report. Let's see how you've performed over the last 12 months." There should be actual alerts popping up saying your assumption was X, Y, and Z. You're now outside of those boundaries, you need to take these actions, whether it be around mortgage, expenditure, investments, insurances, et cetera.

MH: And how far off do you think that realistically is?

DR: Well there's firms around the world already working on that and doing that way. I think from our perspective, we certainly think it's inside the next three years that we'll have something working around that. Clever is designed with an ability to build some rules in there. We're just about to plug into some technology that will give us the live feeds that we need to be able to start making those decisions. And baby steps, so again, the imperfect plan executed is better than the perfect. And so it may be that were only start by saying, well, our assumption on returns was 7% and you're only getting five or you're getting eight. What do we need to do around that? Your income was this, what do we need to do about your income protection? So it might be baby steps, but if we chip away at that, then it won't be far off before we get that. And we know that technology is becoming more powerful exponentially. And so things we don't even think it can do today, it'll be here quicker than we think.

MH: Absolutely. Dan, you're very advanced in your technology adoption, as I mentioned, earlier in the piece therefore makes perfect sense while you classify as an advice tech star. What's some advice though that you would have for those that are starting on the journey?

DR:  Yeah. I think a couple of things is to understand what you want to achieve. And so one of the things that are constantly challenging our team and I'll challenge myself on is defining what the end result is going to look like before we start. So start with the end in mind and work out A, do you want to do it yourself or B, you're better off partnering with someone who's already going there? I think one of the frustrations I have is as I go around the industry and talk to people, is that everyone seems to have similar problems. Everyone's spending money, trying to solve those problems and not enough people are coming together to solve that. And so I think the decision around whether to do it yourself or partner and where you can partner up with someone who can help you out.

I think also make sure that you do it from a client's point of view. And so if we're building it because it makes us more efficient and because it's better for us, but it creates a poor experience for the client. Then at the end of the day, you're not going to run a sustainable business around that. And so think about the impacts on your clients, think about how you can better service your clients and why it will be better for you to service your clients in that particular way. And as I keep saying, just execute the imperfect plan. So don't wait for the perfect plan.

And it's a journey. So we knew that when we started off on Salesforce, we've still going a long way to go. We've still got years before the software's the size of this room I'm sitting in and we're using 20 cents worth of the capabilities. But if we didn't start, we'd still be three years away from being where we are today. And so we had to make a start and people overestimate what they can do in one year and underestimate what they can do in 10 years. And so it's about having that longterm view about technology and saying if you put in the hard yards, the benefits will pay.

MH: Yeah. I think that's fantastic advice. And you've mentioned a couple of times on the race horses, where do you go for, I guess, your tech insights as it relates to around the industry in Australia are there peer groups? Are there certain magazines? Websites?

DR: Yeah, probably the peer groups is the number one. I don't specifically focus on any particular magazines or websites, but I am an avid reader. And so I find myself waking up at four or 5:00 AM most days, and I spend the first half hour or an hour just absorbing content of different sorts, whether it be the news or whether it be what's happening in tech world. And then when I get an idea, I'll Google it and just chase down the rabbit hole that it takes you through. And ultimately you'll end up across three or four different websites and your work out how others have solved the same problem, and then come back and then work out how we apply that in our business. And so nowhere specific, but Google is the best friend. And just type the question in and you'll come up with a hundred different websites.

MH: Yeah, absolutely. are curious, one of the key findings from the report was that those with the Silicon Valley mindset tend to achieve much better outcomes from their tech then than those that are probably at the like odds and trying existing technology that's maybe not pushing the boundaries. Dan we've unfortunately run out of time. That's been really insightful. Thank you for sharing your insights and for all of the hard work that you've been doing.

DR: Thanks, Matt. It's been great having a chat. You obviously put out some contact details, but if there's any way we can support others on the journey or indeed, if any others want to come and talk to us around what we've done, we're an open book we've developed what we've developed because we've learned from others. And we're just as keen to share with others as we go along. So thanks for the time and good luck as you see through this COVID.

MH: Thanks Dan. Speak soon.

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Views expressed are of the interviewee and may not be the opinion of Netwealth or its related companies.

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