Shaping team culture and the real value of financial advice
With Alva Devoy, Managing Director of Fidelity International.
Matt Heine: Hi Alva. Welcome to the show.
Alva Devoy: Morning Matt. Thanks for having me.
MH: Now Alva, we had a quick chat just before we started today and there's lots of fantastic topics that we're going to be able to cover. But before we do, I'm interested in just getting a bit of a temperature check on how you and the team at Fidelity are going?
AD: Yeah, pretty good, touch wood. There's always a little monkey sits on my shoulder when things are too easy. So in terms of moving forward, and Australia is roughly a hundred people to working from home, that was done over a three-day period. During that period, as somebody leading a business, my main three priorities, which were telegraphed to everybody is, you continue to service our current clients, and we absolutely can't have anything drop through the cracks that would cause a regulatory issue. If we achieve that, and we shift everybody to a fairly good working environment at home, that's all you can ask in the early stages. We did that and more, where our client engagement absolutely ramped, the investment team behind us, their performance has been terrific, but their connectivity massively arced up between themselves globally, but also with the companies that we invest in.
So we've come out now to a point where I'm looking at the business and thinking about next avenues of growth and moving us back to thinking about our progression. But I do worry about the complacency in markets. So I cannot believe that we've had the fastest bear market in US equities between late February and March, and the rebound that we've had, relative to what I think are going to be pernicious impact from this virus. So I'm still a bit worried.
MH: I think you and the team are in a very unique position as far as how you think about your own business because your job is actually to think about the broader business environment and how that's going to change as we work through the pandemic, and more importantly, what happens afterwards. How are you currently thinking about the world and getting back to normal and what does the new normal look like?
AD: You think about Netwealth and it as a business proposition, platform, technology-driven, digital, digital engagement, and then digital way of doing business, if you like. All of that has shifting post-Industrial Revolution creeping up on us. But I think technology to date has been used to reduce friction. You get rid of the wet signatures when you've got a client onboarding, et cetera, et cetera. Now, we are way past Industrial Revolution and we are into the virtual world and virtual ways of doing business.
And so, for me, I'm very lucky with a business that is largely driven by human capital. Our assets walk through the door every morning, or they did before COVID-19, and then they walk out again. I'm looking to and have been in the position of working with amazing people and harnessing their brainpower. That's my true value as a leader and a manager of a business is finding these great people, knocking their heads together, giving them the supporting environment so they can do their best work.
But that has been still done on a person-to-person basis. And now we move to distributed leadership, where I can't pat somebody on the back when they've done a good job. I can't get a temperature gauge of the room. I don't know who's snipping at who and which project is falling off the waggon, if you like. So when I sit and think, "How am I going to do this into perpetuity?" And I think that's kind of the lens that we have to take, that this is not going to end. It will be with us now in some form or another. I've had to step off the treadmill with my leadership team and think about what's going to support us forward.
The major piece is a focus on our governance structures. By that, I don't mean the risk and compliance side. I mean about the connective tissue inside our business, which is the rituals of the business. It is the meetings, the various groups, be it the product team, the sales and strategy team, the senior leadership team. Looking at the charter against each of those, what is their mandate? What are they expected to do? And then really emphasising the delegated authority to each of those groups. And then, I, with the leadership team, sit over the top and make sure everybody stays connected. So that governance structure, rather than a hierarchy structure, becomes way, way more important. And we've shifted now into distributed leadership, whether we like it or not.
In this podcast series Matt Heine, Joint Managing Director of Netwealth, chats to industry professionals and thought leaders on what opportunities and challenges they see for financial advisers and the wealth industry as a whole.
MH: When do you think you will start to move people back into the office and what does the office look like in the future?
AD: We're actually in the middle of a big office move in Sydney, which I'm delighted to say is on track, and now nobody cares, because everybody's working from home. So while there was lots of deliberations and discussions around who sat where, and arguments up to the middle of March, now, nobody cares. So we will have probably hold our position on require work from home until we get through the flu season in Australia, which has not impacted yet. I remain concerned, not just about natural re-spiking, if you like, because of reduced restrictions, but that you have an environment with cold weather, which promotes the virus.
When we do come back in or allow staff to come back in, invite them to work from the office, we will work on a split-teams basis. In my mind, that's at least until January. Because in reviewing our BCP, our business continuity plan, we've stress-tested our structure for a 20%, 30%, and a 50% hit to our teams. We've now got minimum thresholds. But certainly in critical functions like operations and legal, if 50% of those teams are impacted, we're not in trouble, but it's been surfaced as an issue. It's meant that I've had to focus on getting a coverage model, which is not in-country, it's actually out-of-country. So we're now doing back-up for Hong Kong and Dalian and they're doing back-up for us. So it's a nice reciprocal arrangement. That is in place, but I would still worry if 50% of my ops teams was out sick.
So split teams means I can just defray that risk, so long as nobody's meeting up between A and B, team A and team B, outside of work, which would be fine. But that's what I'm planning for.
MH: Given your team most likely has investments in real estate and commercial real estate particularly, have they started to hypothesise around what the purpose of an office is in the future and how our work habits might change, potentially forever?
AD: Yeah, and that obviously has flow-on effects to lots of different industries, including transport and infrastructure as well, and beyond into construction and cities. So I think the first order of focus has been around what facilitates connectivity. And so the utility companies that lead into that, be it broadband, telecoms, et cetera and then what technology do they use? And obviously 5G which is highly topical, second order. But then sitting and thinking about human behaviour into the future and what are going to become the priorities that aligns with human needs, absolutely.
I attended a seminar this week on the future of cities, which, if you think about cities as a source of pollution, traffic and reduced quality of life, and you now layer epicentres of disease on top of that, the propensity for us to continue with the Industrial Revolution-style, bring people from the country into centralised talent pools, if you like, for industry, is no longer required. What does that actually mean? Yes, for office space, but also for residential as well.
You sit and think about younger generations who are debt-averse, who don't want to take on huge amounts of debt, but who had thought about, "Well, if I can't get on the property ladder, I'm not willing to take on that huge debt to get on the property ladder," and you've seen a swing around to them investing elsewhere. We've seen it with platforms, with direct investment platforms, the kind of the smashed avocado, Bernard Salt people, saying, "Well, if I can't invest in property, I'll find other ways to invest." There's a beneficiary, if you like, of dollars and changed behaviour that I think amps up on the other side.
MH: It's interesting, listening to you, talk about a range of those topics. There was a couple of key words that probably go back to the start of your career. You talk about obviously, connectivity, research, and you've obviously got a high level of understanding around disease and how it spreads. Your career started off in a very different industry to financial services. Do you want to give us a bit of a background to your degree and maybe even your upbringing?
AD: Sure. Happy to. My background is actually very working-class beginnings. My dad was a baker. My mom worked in a bakery. But their focus and emphasis around education for both myself and my sister, it was the number-one priority for them, along with putting a roof over our head and food on the table. So it was drummed into us to get good grades and set ourselves up well for the future.
With that being said, my parents, they were older when they had myself and my sister. My dad had been a Merchant Navy Seaman, so he'd done quite a lot of living. His attitude to life was quite unique for the time, in the '70s and '80s, where he was an ardent feminist. He wouldn't even have known he was a feminist, but he didn't know that there was a difference or certainly never behaved as if there was a difference between men and women. So he taught me how to box as a four year old. But his attitude was, "You can do anything if you put your mind to it. What you choose to do is up to you."
So when I was doing my leaving cert, which is our year 12, it was like, "Get good grades, and if you choose to be a beautician or a scientist, totally up to you. Will you be happy when you earn a living?" So I guess that's an incredibly supportive backdrop to move forward in your life, irrespective of your beginnings.
My choice was to go into the sciences and then into molecular engineering, because I have flights of fancy where I did think I was going to be the next Marie Curie. That was my ego back at the time. So roll on and I decided to do a Ph.D in genetic engineering, molecular engineering. It was applied, which has been all about, I'm not just interested in information for information's sake, it's what is the call to action from that information. It was vaccine technology that I ended up in.
So yeah, I have a level of understanding of disease, epidemiology, enough to be worried and probably more worried than most. And to have opinions on zoonosis and the requirement for change there in various cultures, be it wild meat markets in various geographies, et cetera. For us not to be in this situation in the future, once we get through the dealing-with-crisis phase, I think there will have to be mandated change for stand through cultures, so we don't end up in this position again.
But I digress. Rolling back to how did I get from a Ph.D in genetics into finance. I was working through the first Iraq War at the bench. Really interested in Desert Storm impacts on oil price, impacts on economies, and I would tootle into the laboratory and my department at [Finnerty 00:13:18] College and be hopeful of discussion about this and there was none. So I was working with a group of people content to focus down and learn more and more about less and less. And I wanted to go that way.
Along with not particularly enjoying bench research and definitely not making Marie Curie grade, I decided to exit stage left. My sister was doing a degree in Finance and her degree was infinitely more interesting than mine. So I went along to careers evenings where big brokerage houses, IBs like Goldman Sachs, would come into the university and talk to students. And I got chatting to them, said, "Would you take someone on with a very non-aligned background?" That was when the whole world of financial research, equity research, opened up to me.
This is a funny story. I got a job with a stockbrokers in Ireland and I honestly think the panel hired me because I knew how to use the internet. Because when I said I sourced my data from the internet, it was like, "She knows how to do... get her on board. She knows how to use the internet."
MH: What year was that?
AD: That would have been '96, so the mid '90s, yeah.
MH: It's amazing, isn't it?
AD: Yeah. Look how far we've come. Now there isn't hardly a job that can't be done via the internet.
So yeah, started off as a technical analyst with a brokerage firm. Two things came out of that. It was just at the dot-com boom period, so all I had to do was put a buy on a stock and it was going up anyway and I looked like a hero. There's a lot of risk in that. You start to believe your own hype.
And then come out the other side of that, I'm a PM, portfolio manager, for a big Belgian bank, where I stayed for 10 years. We had the dot-com bust. I have to go out to explain to one of our pension fund clients, think it was Hewlett Packard at the time. I stood up and said, "We've outperformed the benchmark. We've delivered 2% over or 3% over." And a guy in the audience put up his hand and he said, "What do the brackets mean around the number?" I said, "That's a negative number, so I've lost you 28% of your money, but I've done better than the benchmark which delivered, whatever, 30%, minus 30%." Talk about learning humility and never wanting to be in that position again. Never wanting to lose a dollar of a client's capital like that, if humanly possible. That was a pivotal moment for me in the investment management side of my career.
MH: In 2009, I think you moved to Australia?
AD: Yep. So I came out on holidays around 2003, 2004 and learnt about superannuation during that time. I was beginning to think of a move out of Europe and whether it was going to be to the US. Actually, Australia hadn't been on the radar screen until I came here. I just thought, "Well, I get all the optionality of the US with a growth industry, with super." So sorted out visas which takes a while from afar. I got permanent residency before I came. I didn't want to be sponsored.
So arrived on Easter Friday with no job, knowing one of my sister's mates and crashing on his sofa in 2009. I came from a country, Ireland, where it had literally gone from up here to the bowels of despair. Arrived into a country where it was for two-for-the-price-of-one drinks and cocktails at The Fountain in Kings Cross, and everybody out, and everybody spending and it was like, "What Global Financial Crisis?" I was very fortunate, guys at RBS gave me a shot and I was in working for them by July.
MH: It's interesting. In my last podcast, we were talking about, like in Serendipity and Sliding Door moments, and it sounds like you've had quite a few in your life. One of the questions I know you love getting asked is, what advice would you give to your younger self that's actually allowed you to go from Ireland, as a genetics major, all the way to what you're doing now, which is running one of Australia's largest fund managers?
AD: That is a good question. I think the biggest source of my confidence to make the leaps and to make the jumps has actually been other people's insights. So I've never been shy about picking up a phone or sending somebody an email and said, "Would you talk to me about X, Y, Z?" It's what I did when I was changing careers, like, "Where will I fit? What can I do?" Doors opened and ideas came by literally asking those questions and asking those questions of anyone and everyone that I came into contact with.
When I came to Australia, I emailed everybody back in Ireland. I said, "Do you know anybody in Sydney? Put me in touch with them. It doesn't matter if they're running a welding firm," which I did go and meet four Irish lads running a welding firm. It doesn't matter. They'll know somebody who knows somebody and that's exactly what happened. A guy called Paddy Hayden in RBS put my CV on the right desk.
So I think other people's insights and your willingness to be humble enough to go and ask these individuals for their experience, definitely put me on the right road. So I would encourage everybody to do that.
Once you make a move, the second piece of advice, and I keep saying it, especially to women in business, is learn your business inside-out and back to front. So I have a funny little book which was printed probably in the '70s called How the Stock Exchange Works. I sat and read that cover to cover to understand all of the mechanics that sit in behind investing from custody to clearings, settlement, all of the rest of it. That has stayed with me ever since. Irrespective of how progressed you become in your career in a certain environment, relearn it every so often.
So how do I do that now? Well, I'm very fortunate to be able to access external expertise. So with the Royal Commission happened in Australia, a superb analyst at Morgan Stanley wrote a post-Royal Commission report on our industry, and we just brought him in to talk to the team. There has a been a shift. What do we need to think about and adjust our thinking on? So never stop relearning your industry or your craft, because that's the way to have a Kodak moment if you do.
MH: We had a chat again just before we started, just about millennials, millennials in the workforce. I guess there is also a bit of a movement at the moment, fake it until you make it. How do you react to that comment and how are you finding interacting with the next generation in your business, but also more broadly?
AD: I love it. We have a number of young people working for us and our invitation to them always is to reverse-mentor us. We were saying before we started the podcast, I had the opportunity to be reverse-mentored by a group of millennials on careers, where they told us to stop giving young people career advice because our pathway is now obsolete. We're being disrupted. So the three-stage life of educate, work and retire is now done.
So to me, when you bring young people into an organisation and/or engage with them, it should be a reciprocal arrangement. It is, yes, "What can you do for me? What is the contract for which I am paying you?" But by return, it's not anymore just about, "What do I owe you?" It's, "What can I learn from you?"
So we've had a number of our younger teams, because of the remote working environment, have come up with solutions on connectivity and keeping everybody in the loop in terms of, let's say, workflow documents aligned to teams, new checklists in place to make sure handover's happened, which would have normally happened at the desk or et cetera. So there's that.
I don't find it so much anymore the sense of entitlement. I would have found it probably more 10 years ago when I was hiring graduates in, where, "Oh, I've got a 2-1 in my degree or a one and the world owes me a career." That happens less and less because I think there is more of a level of humility. There's more of an acknowledgement that, "Just because I've done a degree in one area, it doesn't make me God's gift. Actually, there's so much more that I don't know about, that I'm not across."
And I actually find now the engagement with prospective employees and new younger team members is they're, "What can you teach me?" It's not about, "What can you pay me?" "What can I learn in the job? What has this organisation got to teach me?" Which I think is a very healthy attitude.
MH: Given that your team is very diverse, what are the core values that you try and instil in your leadership group and your staff?
AD: Yep. Hot topic of mine because I really believe in team. No one person can do it all, can know it all, and can be on top of absolutely everything. So the benefit and the actual value of team, now more than ever, is critical to making progress as an organisation but also to making sure our clients are looked after, either via investment or service.
So I guess, now, the culture that actually supports an organisation has now become really, really critical. I think it had been growing, if you like, because we've moved away from command and control to a much more egalitarian way of working, moving information around in order to do a better job, et cetera. So that kind of power structure has meaningfully flattened.
In order to derive the best out of people, and actually just to take one step back, in leading and managing people, because we're really not leading organisations. I'm leading people who ultimately deliver for the organisation. You have to love it to do it. Because it is hard. But to me, if you see it as a privilege to influence and affect a huge amount of lives, so with the team that I work with and my employees, if they feel self-actualized and they feel valued in an organisation and they are making progress and have purpose, they go home to their respective families and bring that persona with them. So that affects their partners, children, parents, et cetera. So there's a multiplier benefit to good management which I don't think is focused on enough, to be honest. That makes it hugely worthwhile going the extra distance and making sure you're bringing the best out of people. So the right person in the right job with the right attitude, primary, that's priority number one.
Priority number two then is being a gardener. So by that, I mean if you've got the right seed and the soil, it is tending and nurturing. And then sometimes it's just stepping out, letting them get on with it, letting them feel their own power, et cetera.
The values piece, so that's kind of I suppose the infrastructure and culture. The values piece is, for Fidelity, is integrity and trust. We do want everybody doing the right thing all of the time. We want to trust each other. We want our clients to trust us. So what behaviours support those? It is being brave and it is being bold. Speaking of. But also in there is compassion as well for us as an organisation. And we have at our AEC level, this is my exec co. We've sat down, we've worked out our charter and then we have worked out our behaviours, the non-negotiables. So things like no side conversations, no through-another-person conversation. If somebody comes into me to talk about one of my heads, it's like, "You've got to have the conversation together, or we do it together as a group." We all fall out of good behaviours into bad behaviours at times. It's easier to have a bitch about somebody than actually go talk to them.
So bringing it back to centre is absolutely critical. If you do that at the top, then the expectation is there for our teams, all of the way down. We don't get everything right. This shift to working from home because of COVID has exposed for me a gap, which is communication. So I'm in the office, I walk the floor, I'm readily available to staff, and the bunk conversations, the temperature gauge, was all done like that in person. And now I'm not. I relied on that informal connectivity. Now I've had to literally write out a comms structure for me that I am connecting with certain teams. I'm connecting with the whole business. So Michael becomes, my head of corporate comms, has become even more critical to me functioning, to the leadership functioning. I think looking at organisations from here that function, that's just gone up in terms of value to each firm.
MH: Absolutely. We're certainly doing town halls every couple of weeks now instead of every six weeks. Interesting, we're actually finding we're having a lot more conversations because it's so easy to jump on a video call with someone, but you've got to get that discipline.
AD: Yep, absolutely.
MH: Given that culture is obviously something that you are passionate about, what are some of the other things that you do to instil culture and to celebrate success?
AD: I'll deal with the negative side first. So I work very hard against blame culture. The thing about our type of business is irrespective of what layer you're in, you are likely being paid very, very well. So we're a very privileged industry. So the stakes are high. If there's a mistake, the propensity to point fingers, even though we are supposed to be quite well-evolved individuals, that isn't necessarily the case. So being very, very conscious of that inside an organisation, especially inside an organisation that's expanding and diversifying like Fidelity Australia, like we're on a big growth trajectory at the moment, is key.
When we've had things fall through the cracks, projects run behind time, there's been an issue, et cetera, et cetera, dealing with that in a certain way has been absolutely pivotal. So we have something happen, I call all of the key operators, protagonists, stakeholders, activists, whatever you want to call them, into a room, and it's like, "You've got to say what you need to say in this room. We've got to get all the venom out on the table." And then once that's done, we've got to look at what the global organization's going to expect from us because we all align into... it's a very complex big beast, so we have global legal, we have global ops, et cetera. Then key next steps. We want to focus everybody on key next steps and you want to move a distance away from the very emotional epicentre, oh, there's been a mistake made, or something has happened, or this has fallen over.
So I think that's been key to helping people take more risk and drive the business harder and faster because that support net, that lack of a blame culture, is absolutely critical. So that's one thing.
The other side then is around, we talk about celebrating successes. And so, we could talk about client wins, and more AUM through the door, et cetera. But that is a very one-dimensional sense of purpose. For me, you've got to have brought your team on the journey with you so that there's alignment. If you hire the right people, then your purpose as an organisation, ours is building better futures for clients. They should align to that very, very strongly, that strong sense of purpose. And then if they've been on the journey, generating your strategy, and they are clear what part of that that they own, if you have KPIs that are linked to purpose, that's a great way to celebrate successes.
So for us, it is new clients, no matter how big or small, if they're in a new channel, for us, that's a way bigger win than a billion-dollar win at a super. Which sounds counterintuitive but I've got to diversify our types of clients, our strategies, our vehicles, our platforms, in order to create a really resilient business for the future. So those types of wins are actually celebrated in a different way. They link to our purpose-based KPIs and there's almost an extra gold star for winning on those, if you like. There's a bigger celebration because that's really hard-fought, new types of business for us.
MH: And do you encourage a lot of 360 feedback for your staff?
AD: We do run 360 feedback for individuals. So we have a couple of different systems insights. So we have a four-growth framework for talent development. Our staff have to actually, they pick which bucket they sit in. We don't pick it for them. Obviously, if you think they're way off being, there's a conversation to be had, but are you ready for the next stage of growth in your career? If that individual wants to step up, I'm honour bound to give them a project or put them into a global project that will do that.
For some, it's, "I want to stay in my role but I want to deepen my expertise," or, "I want to stay in my role but I want to broaden my expertise." Or there's somebody who's just, "I just want a big change. It's what next?" So there's backdrop which is a very easy conversation to have. That's linked to a talent card for each of our staff where they get to do an elevator speech. They get to put forward what they want to work on and then I'm honour bound as a manager to put in place learning and development programme that by the end of the year, their top thing to work on has been achieved. Obviously, the individual has to do it.
So there's that. I think that helps us frame people's progress, our team's progress, in our system and through our system. That actually helps because if I'm sitting with the head of ops and he's got somebody who wants to shape shift, it's like, "How do we do this? How do we facilitate that as a team?" And we discuss that at the senior leadership level for all of our teams.
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MH: Fantastic. This is a topic I love and we could probably talk about for another hour. Given we are on a limited time, thought we might shift gears for a moment, and talk a bit about some of the research that you and the team have done recently around the value of advice. I think you've uncovered some great insights and love to explore them.
AD: Yep. So why would a fund manager who's actually a supplier of product to advisors choose to do a value of advice research report? We did this in partnership with CoreData who have been partners of ours on many different projects.
So I witnessed the RDR in the UK and the fallout of that review, which was not dissimilar to the Royal Commission in Australia. Behaviours that had been embedded in the system, fleas on fleas basically had to be eradicated. It's probably no different here in Australia. However, the post-RDR environment in the UK was exceptionally negative and was unhealthy for financial services overall. So I guess many of us in the system were concerned that we could reach something similar where this fabulous system that we have put in place, in part because of superannuation, large part because of superannuation, but the overall strength of an advice model in a market could be lost or certainly, differentiated. We were very anxious, as were a number of our peers, to not see that happen. Because a healthy functioning ecosystem draws more investors in and actually improves the futures of so many more and has a massive societal benefit as well.
So we thought about what we could do and we talked, Russell have come out with very much a monetary, metrics-driven value of advice. If you took advice from point A to point B, or if you didn't, here's the divergence in your financial fortunes. I think you can run that analysis here in Australia and that has absolutely got a value.
But we asked CoreData, what's the white space? What have people not looked at? We chose to do a very big sample size, roughly two and a half thousand people, which is enormous. The databank that we have of answers now is huge. We have published some of the insights, not all, so you will see more from us. But it was looking at things like in a much more holistic frame, if you like, the person in totality. Do you worry about money? If so, how often do you worry about money? The vast majority of Australians, roughly 60%, are worrying every week about their financial position. It's not based on their socio-economic group. For those who actually have a million or more to invest, it's similar levels, worrying weekly about their financial position. So irrespective of your quantum to invest, you're worrying.
What have the impacts been to you? It's had an impact on my mental health, so that's up around the 60% impact level as well. Impact on my relationships, of course, it's going to impact your relationships, especially with your nearest and dearest. Then your physical wellbeing. We finally come to a place where we realise we're not just head and body, we are an integrated human being, and if you worry here, it transmits to feelings here in the body, which obviously have negative effects, et cetera, et cetera.
So if people are worrying at that order and it's actually having massive impacts in the most important areas of our lives, physical and mental wellbeing, and then relationships on the other side. Why are you not doing something about it? What are the barriers that are stopping individuals? So for those out of our sample set that weren't advised, interestingly, right down, the, if you like, the major reasons for not seeking advisor or gaining control, was trust. Which, when we looked at that, we thought, "This. This is amazing. After a Royal Commission, number seven reason on the list was trust." So we don't have to rebuild. And that was only 10% of those who weren't advised, felt that they couldn't find a trusted advisor. For many, it was, "I don't think that my finances are complex enough, or that I warrant advice." And yet, you're worrying continuously about money.
MH: Was there a limit or a portfolio value where you noticed a change in that?
AD: We didn't actually do that, something we could go back and certainly interrogate the data around. For those who, I suppose, have bigger balances, there was more of a propensity to seek out advice. But then they generally are older and one of the triggers for seeking advice is a major life event, which includes retirement or a death in the family. So it's kind of what chicken-and-egg situation through there.
The other barriers were I feel I can't afford it. So let's look at this. How many thousands of dollars do you spend on your flipping holidays? Which give you a two-week breather, if you're lucky, maybe twice a year, maybe three times a year, away from your worries and your concerns. But you're not willing to spend a few thousand to take this big cloud that sits over you around financial worry off your head. So I guess, right, now we know people are worried, we now know people, individuals, potential investors, recognise it has a negative impact on mental and physical wellbeing and relationships.
Galvanising activity now, that's the next step. How do we actually do that? Shining a light, I guess, on what many advisors would tell you they already knew, they're quasi-counsellors to a lot of their clients, but being able to put a evidence-based number down that if you take control of your finances by talking to an advisor, and finding one that's right for you, and this is where personas comes in, you will feel better, never mind achieve your aims. Which are usually around things like, "I want to live the lifestyle that I want, that I deserve in retirement especially." Or, "I want to provide for my kids," whatever is the most appropriate goal for an individual.
So I've been calling those things out and looking at if we do have triggers like retirement, our big life events, how do we push that right back to a value proposition that people don't need to be triggered to seek advice? So if you think about the US, it's a badge of honour to talk about my broker, my financial planner, et cetera. I think in this country, certainly in Sydney where I live, which is the eastern suburbs, we're so health-conscious. We're all talking about our chiropractors, our osteopaths, our naturopaths, or whatever. So we've gone well beyond the GP structure. This is just another professional in your arsenal to help you live a very full, healthy, rich life. That's all it is. It is just one more tool in the toolbox to help you achieve what you need to achieve.
And so, for me, possibly naively, but my aspiration is that were we to move forwards in five years time, a much more normal environment where having a financial advisor is just part and parcel of most people's everyday life. That would be an absolutely terrific outcome. How do I have that? Well, I help advisors by coming up with this research. Fidelity, I should say, rather than I. Fidelity wants to help advisors articulate their value proposition in a myriad of ways.
The other thing that came out of the research is again, I guess, we've talked about this in terms of where Netwealth can bring its force to bear. Risk profiling, regulatory requirement, right? We need it. But it's like really, how much does this tell me? Let's get the three legs on the stool, where I'm looking at the objectives the client wants to achieve, risk tolerances, but also their total portfolio view. So an individual sitting in front of an advisor may have a couple of investment properties and therefore investment income is not paramount and there'll be low volatility in that income as well as investment fee. So they can take more risk, take more equity risk, et cetera.
So we kind of have been talking about encouraging a much more three-dimensional review of the client sitting in front of them, but the thing that we did miss, which come up out of this study, the persona that sits in the middle of that will hear what an advisor has to say differently. And so, we ended up with four different personas that have surfaced and one of our aspirations is, later on in the year, to have a digital tool. Everything will be digital, where an advisor could survey a client who's made an appointment to come and see him or her, and get an idea what that persona is, that's going to walk through their door. Because what they anchor to as the value of advice is different per persona.
MH: What's an example of a persona? Is this similar to DISC or is it a very different way of looking at someone?
AD: It's a little bit like DISC, but it is for... I guess, let me see. The navigators, if you like, which would generally be the more wealthy end of the spectrum. How they anchor to advice is that the advisor actually understands me and the level of complexity in my financial affairs because I'm very special. So if an advisor were to know that that's the type of person coming through the door, the first few key messages that he's going to give are, "I see that you've got a very rich and quite complex set of financial setup," if you like. "I have dealt with this before. And I have helped many clients move from here to here." It is that kind of connecting straight off of the bat. You know it. The first conversation is exceptionally important.
But there's also an added benefit. This is around resilient and stable and sustainable businesses as advisors. Advisors have worked, let's say, with a couple over a long period time to build up their balances. And then something happens. Let's say, the male of the couple dies. There's less than a 50% chance that that advisor will retain the woman as a client. When it comes to intra-generational wealth transfer, there's only a 4% chance the advisor will actually retain the client. So you just think about client acquisition, the client build phase to actually get to the point that there is a meaning commercial business sitting in front of them. I think a lot of advisors are waking up to this.
So what if you could use our tool or just use this knowledge to say, well, what type of client is the wife in this situation? Do I need to actually be talking to her differently? The kids. They should be part of the journey, hopefully the parents want them on the journey. Maybe there'll be nothing left for the kids, which is a good outcome for many. But again, how do I engage with the next generation that could be coming in as part of this package, this client as well?
I think just, whether you take our personas or not, just sitting and acknowledging how you articulate your value proposition has to change depending on who's sitting in the chair. Anything that helps you to identify what they're going to hear has to be helpful, has to be enriching.
So we are hopeful that later on this year, we will have a tool out. We're already working on that with CoreData, that it will be very simple. Our firm's discussion that we could help advisors segment their client base in turn on how they actually want to be spoken to and then serviced.
MH: That's very exciting. We actually did a similar study and research, going back a couple of years now, based on the fact that we agree that the rich profiling is broken. One of the personas that I love is the one that you pretty much touched on then, which is we call it the explorer. It is that more sophisticated. So we look at resilience and capability, and can very quickly plot them against those personas for what sounds like a similar outcome.
AD: Yep, yep. I think with moving us all into really digital engagement, whether it is... our advisors are going to be doing their Zoom meetings for a long period of time. A lot of them have older clients who won't take the risk of face-to-face meeting. Just think about that. I can no longer have a coffee with this individual. The getting-to-know-you piece of interpersonal relationship building has shifted. My God, are we going to have to find the tools to solve for that gap, whether it is an advisor servicing a client, or it's me hiring new people. If I'm not sitting in the same room as an individual and I'm not reading body language, et cetera, how am I going to make sure that that individual's a good fit for me? And psych testing in hiring processes now has just gone up the value chain as well. So it's not just advisor-land that is going to need additional help. We're going to have to think about it in all of our engagement that's actually moved to the Brady-Bunch-style of screen meetings, if you like.
MH: Alva, if the listeners want to find out more about the research that we've just talked about and when the tools might be available, what's the best way for them to do that?
AD: Right. So up on our website, the report is there. So it's fidelity.com.au. That's up there. It's called The Value of Advice. You can download it, we can send it to you in hard-copy format. We actually have decided to revisit some of our database to check how they're doing, post the COVID-19 impact in March. So has your view of advice or markets changed post-this? So CoreData's working on that, so you'll see an update come through there, which hopefully will be useful again for advisors, judging, temperature gauging, their audience.
AD: The tool. Don't hold me to this. But we are planning, because there's an event mid-year, to have it available by July. At that event, we will be running workshops for advisors in using the tool. But I'm saying don't hold me to it because anything can happen between this and then, going back to COVID and we could have another spike and God knows what's going to happen with the flu season.
MH: Alva, unfortunately, we have run out of time. Thank you so much for being so generous with your insights across a very wide range of topics, as it turned out. Congratulations on a great career and the work that you're doing at Fidelity.
AD: Thanks Matt, and thanks to Netwealth for all your support.
Views expressed are of the interviewee and may not be the opinion of Netwealth or its related companies.