COVID-19 special: Managing culture, clients and technology

With Andrew Rutherford, founding partner and COO of Koda Capital.

With the majority of the advice industry working virtually, discover innovative ways that can help you to maintain meaningful client relationships and keep your team motivated from Andrew Rutherford, COO at Koda Capital.

As well as sharing how Koda Capital is managing this new way of working, including virtual yoga classes for clients, Andrew also discusses the technology he is enjoying and what he looked for when deciding upon a new CRM.

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Matt Heine: Hi and welcome to this special edition of Between Meetings. Delighted to have Andrew Rutherford online. Hi, Andrew.

Andrew Rutherford: Hi, Matt. Thanks for having me.

MH: First of all, how are you coping?

AR: Well, I'm probably a little unusual compared to some people in that I don't mind this environment at all. I've worked from home at least one day a week for about three years. And in reality I find that I get more done in that one day a week then I get in the other four days a week in the office normally. Well, I'm missing the social dimension of the work environment. In terms of productivity, it's fantastic and you absolutely can't beat the commute between the kitchen and the study.

MH: I totally agree with that. Before we move into sort of the Koda set up, who's in your household at the moment?

AR: So, everybody's home. So, my wife is a physio and you might think, "Okay, how do you do physio remotely?" But she is doing... So, you can't do the initial consultation in a remote environment, but you can certainly do the followup. So, she's got a Pilates studio in one room with a camera and TV set up, and then she's got another kind of setup which are for private sessions with her patients, and she's doing it all entirely via Zoom. It's been fantastic. She's loving it

MH: And presumably getting say a lot more clients that way?

AR: She's seeing more clients, and it's really interesting because they are more distant there's almost a higher level of deliberate intimacy as distinct from like an intuitive defence [inaudible 00:01:50]. It's been quite interesting watching that dynamic evolve.

MH: Yeah, we might dig into that, I think that's a really good term that we'd love to explore it further. Interestingly, my wife actually had a digital physio session yesterday as well. She's been at home with the kids now, with three young kids, for the last three to four weeks I think. She's damaged her hand and she was able to get a whole lot of exercises and sorted out pretty much within the hour session.

AR: Yeah, that's great. And people have been forced to kind of shift their risk profile in order to be agile and innovative. So, the government has kind of thrown out the rule books and so suddenly you can get telehealth reimbursement from health funds and from Medicare that they've been resisting for years. And so I think in many ways, what did I say? Necessity is the mother of invention. People have been incredibly inventive and far more risk tolerant because there's just so much at stake. And I think the leap forward that we have as a society and across industries is amazing. You might occasionally hear a weird noise in the background because my son's on holidays, but he's been attending classes from home for the last two weeks and has not skipped a beat. Yes, he's driving us nuts because you can't get out and expend some energy. But in terms of the social dimension and the learning, it's been fantastic.

MH: Well, and kids had been socialising remotely anyway for, well, for the last many years anyway.

AR: Correct. So, it's just gaming to a different level.

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MH: Yeah. Have you been surprised at how quickly the government's reacted to many of these situations?

AR: I think the... Yes, I have. I think there's a couple of things that's interesting. One is, the government at both the federal and state level are acting as one and you've got to say, "Well, why do we need to have two levels of government going forward? Because clearly having an aligned government at both levels kind of works pretty well." And I think as a general rule, the leaders have been on the same page. There've been a couple of gaps emerge here and there, but overall they've been very consistent with their approach. And given the speed with which things have changed and the need for clarity of communications, I think they've done an extraordinarily good job.

MH: Having learned what I did horribly wrong during the bush fires, I think they were certainly aware of what needed to be done. And yeah, the communication I think just across the industry and from the government has been outstanding.

AR: I think what it does raise though is, "What's going to happen on the other side of this?" Because whether we have a U-shaped, V-shaped or L shaped recovery, a recovery will come at some point, and the bipartisan support that's kind of reflected all of the changes that have happened in the last four weeks, I think that will evaporate when they start to unwind those. And my personal concern is that that will be very hard to withdraw the level of fiscal and monetary policy stimulus that's been put into the economy, and certainly as quickly as it's been put in. And as a result we could end up with a fairly overheated economy in 12 months time.

MH: Particularly given that whilst you mentioned federal state politicians are working well together, when you've got... You're based in New South Wales, I'm in Melbourne... Lifting isolation rules and easing back into slightly different rates, it's going to create a sort of a two or three gear economy.

AR: Yeah, absolutely. Yeah, that's exactly right. And we've already got that. And we're seeing some distortions in the labour market. So, one of my wife's colleagues who works three days a week, she can actually earn more money by not working than by staying in her job with unaltered hours. And so, there have been these distortions in the labour market created by some of these fast moving initiatives.

MH: Which is a good segue. How are you travelling at Koda from a business perspective?

AR: Look, I think there are three parts to the answer. One, from a financial perspective, we're in really good shape. We've just got our numbers for March and while revenue's down a little bit, it's nothing compared to the turmoil we've seen in the markets and the turmoil that we've seen on a lot of other industries. So, we are very lucky. And yeah, there is an element of luck to it, but also we have deliberately brought our client's portfolios together so that they aren't entirely exposed to the listed markets and they are balanced and diversified. And so, we're seeing that play through. Plus we've been also very early and strong advocates for fixed fees because we think that's in the best interest of clients. And so in that context, we have less fee volatility both when the market's going up and when the market's going down.

So, yeah. So, at a financial level we're doing great. In terms of the servicing clients, I think within the context of not being able to have face to face contact with our clients, using Zoom and other technologies to have deep client relationships is actually working incredibly well. And so, it's no substitution for direct face to face, but it's pretty good. I can't imagine how we would conduct our business in this environment 10 years ago, it just wouldn't have been possible. And as much as everybody knocks NBN, the reality is, I think if we had not had that infrastructure in the background, we would be in a very different spot today. And let me tell you, with teenagers at home, the idea of not having technology is terrifying.

MH: NBN is a bit of a sore point for me at the moment. So, we might move on. Andrew, Koda's a relatively new firm within the industry. Can you just spend a couple of minutes just giving us a bit of an overview of Koda, how many staff locations and the type of clients that you look after?

AR: Yeah. So, we are about five years old. We have 75 to 80 staff spread across five locations. So, our customer supporting staff are in Sydney, Melbourne and Brisbane. So that's where all of our advice based services are located. We have a customer admin team in Kuala Lumpur and I finance accounting and all that sort of function in Ho Chi Minh. So, we've got six people up in Ho Chi Minh and a couple of people up in KL. So, we've been running for five years. When we set the business up back in 2014, we deliberately had a goal of making it family-friendly. We wanted to use that family-friendly dimension as being a differentiator to attract new staff and to attract high calibre staff, and that required us to adopt technology and the use of technology but also culture in a different way.

We don't measure people based on how many hours they're in front of the desk or in front of a computer. We assess people's performance based on the outputs they achieve and their contribution to culture. And so, if you can get the job done in about an hour a day sitting at your desk, then knock yourself out and away you go. So, that cultural dimension and the technology that we put in place has really kind of held us in good stead as we've gone into this environment. It would be nice, but untruthful to think that we created it from the get go to be robust to this sort of scenario, but it wasn't. The truth is I guess about nine months ago, Sydney had some really ordinary weather and I know Melbourne experiences [inaudible] daily, it not an hourly basis. But in Sydney, really bad weather is less common.

And so, a lot of people actually couldn't get into the office. We had rain and wind and all sorts of things, and that only lasted for a day, but it made us think, "Okay, we really need to make sure that all elements of our tech stack are able to cope with having everybody working from home. And so, we moved a couple of key technologies. So, we moved from an on-premise office 365 to cloud-based. We moved from an in-house shared drive system to a cloud based shared drive system with basically unlimited capacity. We upgraded our technology, we put a couple of VPNs and et cetera.

And as a result we have been able to move from being entirely office based to being entirely remote based almost seamlessly. We've been able to re-divert our phones on the fly simply using a browser. Everyone has got a Zoom on their laptops and their phones. Everybody has a laptop. We've had to invest in a whole bunch of webcams and screens for people so that they can work safely and comfortably at home. But as a general rule the transition has been incredibly smooth.

MH: Andrew, I think given the size of the business, you mentioned 75 staff both locally and also overseas, there might be a misconception that you've got incredibly deep pockets and are able to spend on all sorts of expensive infrastructure. Shouldn't we just talk about that for a moment?

AR: It's exactly the reverse. The benefits of this infrastructure, it's entirely flexible. So, you can add another person and another licence for five, 10, 15 bucks a month, whatever it is. You don't have to put expensive infrastructure up front that scales up you, you just pay for it as you need it. So, it's scalable both in terms of volume, capacity as well as price and it's just bulletproof, it just never goes down.

And so, we have really beefed up our security over the last three weeks. We've been very conscious around the trade off between convenience and security. And clearly you could have everybody having to log in and put their password in every 30 minutes if you wanted to, but that's probably a little overkill. Whereas we were in an environment before where most of the work was being done in an office, we've now tightened up the security, so you have to re-authenticate, re-log in more regularly than we had to, we've made the passwords longer, we've had two-factor authentication, et cetera. So, we've been able to do all of that stuff on the fly as we've needed. So, if you've got legacy or on-premise technology, you simply don't have that flexibility.

MH: And that's something that you personally are very focused on day-to-day, just looking at every part of the business and looking at where you can scale and move things into the cloud?

AR: Yeah, absolutely. Again, one of the core [inaudible] of the business when we set it up was we don't want to own anything unless it's adding value to a client. And so, we have outsourced as much as we sensibly can. So, clearly the advice investment strategy, all the four pillars of our business, tax structuring, all of those are owned and they are part of the Koda ecosystem. But those bits which don't add value to the client, so how we do our accounting, how we do our technology, for example, that's all outsourced, and as much as we can we've use the cloud, and in some ways we've been very lucky that the cloud has kept pace and in some ways enabled our growth down this path.

MH: So, in this situation, nine months ago and in between, I guess, then and the pandemic, you've clearly had people choosing to work from home maybe one or two days a week, whereas now the whole of the workforce is out of the office. How are you managing the culture and maintaining, I guess, the collegiate nature of the firm and potentially even developing the culture?

It's a great question. In the first week or two the executives of the firm kind of led, and so we set up a weekly whole of company in call. And so, I've got two big monitors in my office at home and they are absolutely chockablock with one inch by one inch photos of all the staff around the country, and indeed around the world. And so, that's kind of cool. We have... So, that was a top down. We then started to see everybody in Koda come up with ideas. So, for example, one of the young guys said, "Okay, let's run a virtual yoga class." And so, we found a yoga teacher who was happy to do a yoga class via Zoom and he's doing that twice a week. And we then said to clients, "Well, why don't you attend? It's kind of easy for us and the technology is infinitely scalable at no additional cost. Away you go."

So, we've now got clients dialling into that yoga class. We're in an environment where a whole bunch of assets like screens and webcams and that sort of stuff is actually hard to get, and so we have... Again, we're a bit lucky in that we got a bit of ahead of the curve about five weeks ago and we bought a whole bunch of screens and webcams just in case we needed to send a whole bunch of people home. And sure enough, we're able to give people those physical pieces of infrastructure they needed at home. We said to people if they need to buy a better chair, so they're comfortable if they need to buy an external keyboard or whatever it is, go and buy it.

And again, the cost is very small in the scheme of things. If you think about the money we're saving on outgoings in the office, we're probably actually saving money on a net basis. And then, we've got a couple of other things we've done, for example, in one part of the business, they have an hour and a half every day in the diary where it's just BS and banter session. So, it's basically mimicking the office environment where there's no fixed agenda, no particular topic, you've just got a Zoom meeting going and you're doing your work and whatever it is, but in the background, people can chat and they can ask questions and whatever. And it really does mimic that unstructured banter that you kind of enjoy in the office environment, albeit virtually.

We've created a couple of Zoom Rooms with fun names, so it's just 'the kitchen', so it's a virtual kitchen. So, if anybody has got a bit of spare time or they feel like a bit company and they're doing work on one screen, they go and open up the Zoom Room in 'the kitchen' and they kind of hang out there. We've had virtual drinks, we've got virtual drinks this afternoon before the Easter break. So, we are being much more conscious and deliberate in those cultural dimensions rather than having them happen kind of sporadically, but it's actually working really, really well. It works better for those people who are naturally a bit more sociable, who are a bit more extroverted, like those on this call. So, what we've done for those people who don't suffer from that problem is we've had a calling tree. So, the senior executives have got a number of people and they call them every week. How are you going? How's everything travelling? How are you feeling? Et cetera.

And people have different personal circumstances. So, we have a number of our people on our staff who live in Australia, they have no family here, they live by themselves, sometimes in relatively small apartments and in this environment it's really isolating. And so having someone from work ring up and say, "How are you going? Hey feeling?" And not have any structure to the conversation, it's actually really valuable because they are feeling isolated. Sometimes they're feeling scared. And by having that interaction and that one on one, it's been really good at helping bring some of those more introverted characters back into the fold if you like. And I think that's been invaluable.

MH: Yeah, I think that's a great point, that not everyone actually wants to engage for a virtual coldie or a cup of coffee in the morning, and that outbound call, I think is some great advice. I think one of the themes that your colleague, Paul Heath, mentioned was [inaudible] potentially as the plus one where you can bring a friend, a pet or an invisible friend.

AR: Yes. That's exactly right. And the other thing that's been interesting is with clients we made probably the wrong assumption that the first thing they wanted to talk to us about was their portfolios and how they're going. But for many of our class, particularly the older clients, the first thing they wanted to talk about was, "How are you going? How are you coping? Are you getting the supplies you need? Is there anything I can do?" And actually looking after the person before the portfolio was a really important way of not just maintaining connection, but actually building a certain level of intimacy at a human level.

With that comment, particularly as it relates to I guess the older generation. For years, I've been battling, I think, the false assumption that people over 60 don't want to be online, they don't want to use FaceTime and they don't want to engage in a virtual meeting. Has that now been dispelled for necessity reason or are you finding that they're actually very happy to engage in that environment?

MH: To all clients?

AR: I think it's a mixture. So, we have some really technically forward thinking older clients, and so they were early adopters way before we had a relationship with them. There are a whole bunch of others though who were not early adopters and have been forced down this path. But I think they will never go back to where they were before because having been forced into using their technology just because of the circumstances that we're in, they're now going, "Whoa, what was I afraid of? This is absolutely awesome."

MH: And are you finding that with the existing clients it's easier to create that sort of online relationship? I don't know if you're seeing new clients, or how are you finding the different approaches to new that are either come on board recently or still looking at signing up with Koda versus those that have been clients for a long time?

AR: So, we have signed up a lot of new clients over the last three weeks. I think the truth is that they were probably in the works prior to the lockdown. I think it would be difficult to acquire a new client without any kind of person to person contact. However, having said that, we've had a couple of data points this week emerge suggesting that that may not be right. So, people have got a bit of time on their hands because they're not having to spend time doing kids board and commuting and whatever else, so they've got a bit of time and they're looking at markets and they're looking at the performance of our competitors' portfolios, which have got big exposures into the listed markets and they're going, "Why am I paying my advisor and I'm only really getting the same experiences as if I invested in the market? I really wanted an advisor who's going to give me something a bit different."

And so they've started to question that part of their current advice relationship. And a lot of advisors have run for cover. They have avoided ringing their clients, presumably because either they are themselves a bit worried or because they have looked at the portfolios and say, "Well, I really don't want to talk to a client who's dropped 25%." But for whatever reason, a lot of advisors are not talking to their clients. Whereas all of the Koda partners have been absolutely all over their clients and talking to them a lot because we just don't think you can over-communicate.

And so we have had a number of brand new relationships approach us and they're quite happy to go through the signup process entirely virtually. And that surprised me. I would have thought that if you are going into a new trust relationship, and an advice relationship is a trust relationship, you'd need to do that face to face. But that's not what we've been finding the last week. But the first three weeks... So, we've been running virtually for four weeks now. The first three weeks I think was more carry through from before the lockdown. But in the last week, we've started to see brand new business emerge without any contact at all.

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Amazing isn't it? The virtual meetings are very important and creates that human element we've talked about now. Some interesting stats that I just got about an hour ago from one of my colleagues unprompted was, that since we've introduced Teams into our business for virtual meetings, but also messaging, there's been on average 5,000 messages a day and since the start of the pandemic that we've seen, from basically a zero start, 300,000 messages between colleagues over the course of the last three to four weeks, which is staggering and I'm hoping might actually be the death of email. What's your experience there?

AR: Well, I think the death of email is absolutely coming. So, we have been, in fact, if anything I'm probably feeling a bit overwhelmed by the number of channels that I'm kind of being bombarded with. So, we've got WhatsApp, still got a bit of email, a lot of Zoom and Slack. And so, the number of channels has really kind of exploded. I think people will gravitate to the ones that works for them. Sounds like you guys have gone with the Teams and that's been successful for you. We're probably more Zoom based, and that works really well for us. So, one of the things we're going to do later in this year is we're actually going to turn the ability off in email to send an attachment. So, we will actually physically turn off the ability to attach a document or anything else to an email because it's not that we don't want people to share stuff, but we want them to share it in a more structured way, in a more scalable way.

So we are using a file sharing platform that you can attach a link, a sharing link, and everyone in Koda can access that. So, they don't need to attach documents to emails.

MH: Which one are you using?

AR: We're actually using Google Drive or the enterprise version of that.

MH: How does that interact with Microsoft?

AR: Ah, brilliantly. Absolutely seamless, absolutely seamless. And fantastic security and very flexible. And then the second thing that we're doing at the moment is implementing a customer management platform called Salesforce with a partner called Creativemass. And that product which goes under the brand of WealthConnect is going to completely transform not just how we work internally but how we engage with our clients. So, I'll give you an example. We've been in the process of changing banks over the last couple of weeks, which is, not fun at the best time to learn in this environment.

And to the great credit of the banks and I'll call it out, Commonwealth Bank is our new bank and they've done a fantastic job. They're normal process would require you to sign things and get things witnessed and whatever else. And they said, "Look, in the current environment, what we'll do is we'll allow you to have a document signed in front of a bank officer via Skype or Zoom or whatever it might be. And we'll take that as having been validly witness and endorsed as if you're in the room."

MH: Wow.

AR: Very, very sensible, very pragmatic and very effective. The fact that a big organisation like that has been able to get their heads around that problem and solved it that quickly, awesome. So, yeah. So, we've been very impressed with that level of innovation and it's allowed us to continue, as I said, pretty much without any interruption to the business.

MH: And to your point earlier, I hope that some of this innovative process re-engineering actually stands the distance because something like that, it makes perfect sense. But three weeks ago, if someone had suggested that was the case, I would have laughed at them.

AR: Yeah. Yeah, absolutely. So, we're really excited about this WealthConnect Salesforce combination. We think that's going to make a huge difference to our internal operations, but we think it'll also make an incredible difference to our clients. We send our clients enormous volumes of documents and sometimes it's in hard copy, sometimes it's in soft copy, but the risk of fraud and phishing and all the other kinds of cyber risks in an email world is so great that we've got to get away from it. And so, we're making a really big investment in this WealthConnect Salesforce capability, and in three to six months time we will have transformed the business and gone to another level in terms of being able to work in this style of environment.

MH: That's probably one of the questions I feel the most from the field is around which is the right CRM. I know you've spent the better half of 18 months, maybe two years, maybe longer looking at different CRM systems. What was it in particular about Salesforce and WealthConnect that got you excited?

AR: It's the combination. So, Salesforce is a big beast. And so, it's industrial grade, it's incredibly robust, it's a very well known platform, so there are lots of people with skills to know how to use it. So, it's got all those dimensions, but the downside of working with organisations outside of the Salesforce is you are just one of however many billions of users and clients. And so, it's very easy to get lost. The thing that we're really like about it... Oh, sorry. The other thing about Salesforce is, it's kind of like an Excel spreadsheet, you can kind of do anything with it, but when you get it, it's empty. So, it's only what you put in there that kind of makes it work.

And the thing we like about WealthConnect is that they take that Excel spreadsheet and they put all information, all the algorithms and the calculations and the formulas and the macros and whatever else, to make it really, really powerful right out of the box. And so they take that raw capability of Salesforce and tailor it very closely to our needs. And I think the WealthConnect product is kind of 80 to 90% of any advice businesses' needs out of the box, and then they help you kind of get that last five or 10% to really kind of fit you like a glove. So, we've been really excited about that combination. So, having industrial grade enterprise standard, but also very kind of tight local personalised service from a local firm. It's a great combination. We love it.

MH: Yeah. I think that's a great insight because certainly that localised understanding has been missing up until recently.

AR: Yeah. It's all about relationships. So, we will be having meetings with that team twice a day via Zoom at the moment. And if anything, we've probably actually improved and increased our intensity of engagement with them because we don't have to commute from one office to another or from home to the office or whatever else. We're just kind of there and online. It's awesome.

MH: Absolutely. Andrew, it sounds like you're well progressed with your, I guess, digital transformation if you like. Salesforce is clearly going to take up a lot of time for you. What else are you thinking about at the moment that you think could enhance your offering in this virtual world?

AR: Look, I think the reality is we're on this Salesforce journey before we were forced to go virtual and I think the real opportunity is when we can extend this ecosystem that we're building internally around Salesforce into third party partners. So for example, we obviously work very, very closely with Netwealth, and so the integration points between our Salesforce implementation and Netwealth for opening up accounts, for conducting AML, for sharing key attributes about a client portfolio to include and review documents, that exchange of information in a secure way, that's the next level for us. And it's all around building security and convenience for clients, but also efficiency and productivity for our own staff. And so when you can get a tech combination that actually delivers on both and actually makes everybody's lives easier, that's a great outcome.

MH: Andrew, you've been on this journey for a little while now. For those that aren't as well advanced and are rapidly having to catch up or thinking about what their future looks like, what would some advice that you would give them to probably help them avoid any traps?

AR: Look, I suspect that the reality is that there was no one on the market even 12 months ago who could do what we're now doing. There've been lots of people who have promised the world, but I think the reality is that they didn't have the runs on the board. Whereas I think the combination of WealthConnect and Salesforce is fantastic, but it's really only been around for six months. I think those who have not made the jump yet, they kind of need to get their running boots on because they need to make that jump. For those who've made the jump before and have been burned, I kind of get that, but as I said, I think 12, 18 months ago that there just wasn't the combination that was kind of compelling, whereas we're looking at the decision we made five months ago and we're really happy with that decision and we think it's going to be transformational.

MH: And actually looking at your whole business as an ecosystem rather than trying to solve one particular problem with a bit of tech that doesn't necessarily integrate.

AR: Yeah, you've got to start from the perspective of, "How do I solve a business problem? How do I make the lives of clients, staff, shareholders, through profitability, better?" And it's not a matter of taking 10 cents from mine and 20 cents from another and giving 40 cents to the third. You've actually got to give to all three. And that's where this tech stack really kind of does deliver. It actually delivers better outcomes to all three parties. So for example, with this Salesforce thing that we're doing, yes, we're using it for client management, but we're also going to run all of our shareholder registry and shelter communication through it, all of our staff activity, our training registers, all that sort of thing. And so, it becomes an enterprise management tool set. And again, it's a monthly subscription, you can dial it up and dial it down depending on your staff numbers. It's fantastic.

MH: Andrew, I know you've got a lot on at the moment. There's one or two things to think about. Thank you so much for your time. Your insights have been excellent and I think very practical for a lot of our listeners. Congratulations on what you've achieved so far and good luck for the future.

AR: Thanks Matt. Good luck to everybody else.

MH: Thank you. 

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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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