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Dean Lombardo, Founder & Principal, Effortless Engagement

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About the podcast

Dean Lombardo, Founder & Principal of Effortless Engagement

Listen to Dean Lombardo, Founder & Principal of Effortless Engagement, as he shares his history in advice to becoming a consultant and an author.

Dean talks through how he developed a unique method of evaluating client progression and confidence using short-term milestones and adult learning theory. He discusses the benefits of goals-based planning and explains how re-engineering adviser processes could lead to increased productivity, referrals, and better client outcomes.

Dean suggests that advisers could address the advice supply gap and service more clients with less effort by using technology. He warns of the risk of not investing in intergenerational planning and multidisciplinary services and finally concludes that the best businesses are already using AI and other tools to enhance their client engagement and value proposition.

Transcript

Matt Heine (MH):

Dean, welcome to the show.

Dean Lombardo (DL):

Great to be

MH:

Here. I was just chatting to one of my colleagues and reflecting on the last time we properly caught up was actually about 15 or 20 years ago when we were on an A FA roadshow. Lots happened since then.

DL:

Definitely lot's happened. The A FA don't exist anymore.

MH:

Correct. That's a good place to start. Dean, we've obviously known each other for some time, but for the benefits of the listeners, are you able to give me a bit of your history and how you've ended up doing what you're doing?

DL:

Yeah, I've been in advice now for I think some 25 years and started about as a paraplanner and found myself as an advisor shortly thereafter. And really it was an opportunity at IPAC that really kicked everything off for me and the directors were terrific in providing opportunities to learn and grow. Shortly thereafter, I established a business called Access Financial Management. Had a really successful business that scaled and grew quite rapidly and successfully sold my stake in that business probably about 2008 just as the GFC actually kicked in. So I was great timing and that really found my way into consulting thereafter. It was really an planned accident, so to speak. It was back in Venice where a writer of all things of a sitcom we were talking and I was explaining my story and my journey and what I did that was unique at the time. And he said, well, why don't you write a book on it? And so really it was the writing of that book that created interest and people wanted to hear the story. And here we are some 15 years later.

MH:

So if we then go right back to the beginning, do you remember what it was that initially attracted you to the industry and why you started paraplanning?

DL:

Well, I came out of university and back then there was a job board at Centrelink. The younger listeners won't remember Centrelink and job boards, but I walked into Centrelink and there was a board that had an opportunity as a paraplanner. I didn't know what it was, but it said you needed a finance degree, which I had. That's how I really stumbled into the industry. So it was very much an unplanned accident as well at that point in time, but so happy that opportunity set the pathway.

MH:

You just mentioned you're in Venice and that the person you're chatting to suggested you write a book because of the uniqueness of your story. What was so unique? I mean what you've just described sounds like a pretty typical pathway.

DL:

Well, we'd established a method of evaluating client progression. So essentially taking a client's long-term plan, breaking it down into short-term milestones, measuring that progress and really using principles around adult learning theory, improving the probability of success. And I say it's well known today. I've been promoting this concept for a long time around client confidence, but certainly at the time it was not known anywhere whether here or in the states. And he'd had his own financial planner and just really cashed in his 401k and that's why he was travelling around and he said, I wish my advisor had done that for me. My son was two at the time, and I really thought for me, my time in industry might be coming to an end in what I was doing. And he said, you should write a book for your son. Explain your story and what you did that was unique and explain this concept to something that needs to be read. So I did write it and he ultimately went on and promoted it overseas. And again, that's how the story found its way. Well, really to where we are today.

MH:

I iPad back in the day was a very progressive business. You started presumably when you were quite young as a paraplanner and ended up advising quite young. What was it that you saw at the time that led you to effectively or overhaul the way that probably they were doing advice, but also many in the advice industry were doing it?

DL:

I a's proposition at that point in time really was around how would we describe a systematisation of the client offer My role quite quickly in that organisation through opportunity grew into the national practise development role where it was about building that system and way of thinking to really stop different advisors in different organisations doing things differently. So, we wanted a standardised way of approach. And what worked really successfully for IPAC was a method of helping people understand aspects around their progression, simplifying advice and applying a solution to that advice, which was an investment solution at the time. But all of those factors really did make IPAC what was a progressive company at the time, and it was a very successful company at that point in time.

MH:

So I remember you talking about it back many years ago when we were on the A FA roadshow. You talk about progression or client progression, many would now call it goals-based advice. Is that fair?

DL:

Well, it's one attribute of it. Everything does start with the client skull as you know Matt. And then from there again, the plan takes shape. So yeah, absolutely goals-based advice is the central piece and evaluating progression is merely a tool that's used to help improve the probability of that success.

MH:

What are some of the typical metrics that you would be mapping against that success or progression?

DL:

Well, again, if we think about that term goals-based advice, and we start with a client's plan and their goals, and what we typically do in the industry is we build lifelong cash flows, which is really the starting point of understanding all the inflows, all the outflows, and what needs to happen to achieve success, whether it's from a cashflow standpoint, savings tax, the wealth aspect of the plan, there's insurances required. What those premiums are in terms of all the funding, all those things go into the plan. So if we're talking about evaluating progression, really what we're talking about is breaking that plan into those three subparts of cashflow, wealth or investments and contingency planning, what can go wrong, understanding what the client is meant to do from a strategy perspective in terms of where they're supposed to be, and really mapping their progress towards those endpoints in time and using those particular results to better equip the go forward plan. Because the reality is life's dynamic, not static. I can't think of one plan I've seen over the last 25 years and there's been not just thousands, probably tens of thousands, not one plan is static life changes. So therefore you are really using past money, behaviour and past goal-based behaviour to better equip future goal planning and set better plans, again, improve that probability of success

MH:

When you detail it. And when you look at how the industry's evolved to a goals based or an outcome-based planning industry, it's kind of obvious, but at the time it was revolutionary. I remember you were running pretty sophisticated spreadsheets at the time. For those that haven't fully evolved or aren't really adopting this style of planning, what are the major roadblocks or why has it not been adopted more broadly?

DL:

It's a great question, and I think a lot of it has to do with the fact that the knowledge isn't out there. It doesn't exist certainly at an industry-wide level. There's no coincidence that we still have less than one in five advisors who even do projections for clients on an annual basis. We're doing it as part of a strategy aspect, but not considering it relative to be it client confidence and the probability of success. Because again, what's a forward projection? It's a method of showing the client that here we are today, and if you do these things that you're likely to achieve success. So evaluating progression can only actually occur if you're creating a go forward strategy. So the fact that we have less than one in five advisors who are continually creating a go forward strategy makes it near impossible for people to be considering it.

What I've found with advisors is that most advisors intellectually understand the value and the need to do it. Most don't have the tools, the technology, and in truth, they don't have the background associated with the work. And so getting off the tools to be able to do that can be very difficult for an advisor, particularly when from a statistical perspective, advisors are spending something somewhere up to about 60% of their time in the back office not even seeing clients. It's pretty hard to, as you know, Matt, to get off the tools and start thinking about these things and implementing. So it's not well known. And certainly what we're seeing is that advisors just don't have the space to think about it on their own.

MH:

I want to come back to change management and leadership in a moment, but for someone to change what they're doing, particularly when the common view would be, well, it's not broken, this is how we've done it for a long time. Why do you see this as a better way of planning and what are the hard metrics

DL:

From the perspective of it isn't broken, it is broken. In fact, the entire model associated with reviewing clients is fundamentally broken. We have an industry where review meetings themselves contain enormous waste in the channel where the cost of service, the cost of delivery and business profitability have all been in decline. It could be fair to say, Matt, if we go back some seven or eight years ago, the average profit margin of advice businesses across the industry would've been in the early to mid-thirties. Today we're centering in about the mid-twenties, and yet we should have far greater profitability given technology given the ability to seek resourcing overseas given well, we're not in an office five days a week. In many cases we should have far more capability in terms of improving productivity. And yet here we stand with businesses that are quite the opposite.

So the roadblocks that people are facing or that typically advice businesses are facing are often self-inflicted, and it is a broken model SMA. So my personal experience now in again, seeing lots of businesses around Australia and overseas, but we'll stay within the Australian confines today, is that advice businesses are really working in paradigms that aren't too different to when we did that roadshow with the A FA, some whatever it is, 10 or 15 years ago, the way they're operating the model and all the characteristics of those businesses are essentially the same. In a world that's changed,

MH:

I'm potentially assuming that the client outcomes are better here. And again, maybe if you can share some thoughts on that as far as satisfaction NPS scores, whatever it might be. But if you look at the reduction in profitability, I think many firms would suggest that that's directly correlated to the changes in compliance regime and the additional work that now needs to be done, not the planning model per se. So I'm interested from a process perspective, not from a client sat perspective at this stage, how what you do actually improves profitability when on the face of it, it sounds like you're actually adding more steps and more complexity to the process.

DL:

It's interesting when you say that because when we talk about scale, scale fundamentally is about being able to do more things with less effort or less resource intensity, but it doesn't come at the expense of client value because scale is actually about enhancing client value and using that ability of scale to again, do that work much more efficiently. So when we think about, we'll just look at the standard industry review process for example. It's a process which normally involves limited client engagement ahead of the meeting meetings take shape where advisors aren't sometimes over-prepared for those meetings because they're trying to have everything on a platter just in case the client asks a question, they can't fully answer client questions in the meeting, of course, because they haven't got the advice prepared, they often have to go away and do modelling. So the work takes shape not somewhat before the meeting, but a lot of it takes shape after the meeting and the moment work takes shape after a meeting, you have exponential efficiency that takes place.

You have advisors who have spent all this time and effort preparing for a meeting who go off and prepare for the next meeting, but still have to do the work. And the moment you stop working on a client file, what occurs is you create waste in that channel. So we've got an industry that still has tremendous handoffs associated with work. Every time there's a handoff, you have inefficiency. We have model of operating, which is post-meeting, which is exponential in terms of inefficiency. So when we talk about re-engineering, even for, and again, just staying with the client offer or the client review meeting, what we're doing is we're actually moving the pieces so that at the point of the meeting, the advisor is fully prepared and able to give advice then and there in the meeting, unable to move immediately to implementation, which stops all post-meeting work. Now simply by re-engineering or recalibrating how that works prepared, you gain an enriched client experience because everyone can be fully prepared both in terms of understanding the past, which is a valuation, but also the go forward plan, but the ability to execute and complete that offers again, a greater client benefit. From an efficiency standpoint, we tend to find that it's around 40% increase in advisor productivity and efficiency, not having to touch the file after the meeting.

 

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MH:

Amazing. And on the client side, what sort of increases have you seen to satisfaction scores or NPS?

DL:

NPS is interesting because NPS for most small to medium sized businesses isn't a concept that they would be fully aware of. But client satisfaction is something that most do, and I'm only making the distinction here because we'll have listeners at different ends of the spectrum. If we take typical client satisfaction, those who have measured client satisfaction before normally have quite positive results. But when armed with a new offer that's actually delivering both the ability for the client to understand their progress and gain the benefit of implementation at a far faster, more effective rate, the client satisfaction levels move from about the mid-eighties through to the early nineties. Now, that might not sound material in itself at that level because results are always sound quite good at that level, but armed with a fully comprised offer that does all those particular components and includes an organic growth systemic way that we're embedding that within the process, referral rates tend to jump from roughly about one in 20 in terms of the industry average to about one in seven clients will refer. So the referral rates increase dramatically associated with the fact that there's a proposition that's different to what every other advice group in the country is basically offering. So the ability to promote something that improves client outcomes does improve both client satisfaction scores, but it's at the referral level where you tend to see the uplift through that differentiation.

MH:

There's an interesting dynamic in the industry at the moment that's played out now for a number of years, which is around just the supply and demand. So there's way too much demand and reducing supply of advice in Australia. So the numbers that we have at the moment would be about 2.2 million Australians looking for advice and maybe somewhere in the vicinity of 11,000 advisors, even though there are more registered to service the huge amount of demand, we need to go from about 110 clients per advisor to 140, 150. And I heard a number the other day, which is 220. Do you think that is achievable and how important is the work that you are doing in getting there and what else do advisors need to be thinking about?

DL:

Great question. And look, from the perspective of advisor productivity, a hundred or 110 clients seems to be the urban myth in the industry at the moment. And the reality is if we think about the cross section of advice, businesses certainly that we work with, the average number of meetings per advisor associated with those clients are about 1.3. So if you have a hundred clients, if that's what we're saying, capacity is at 1.3 meetings, that's 130 meetings with existing clients a year. So we work on 40 weeks. Well, that's really less or just about say three meetings a week, three and a bit meetings a week. That's nowhere near what capacity should look like. This goes back to the model being broken and the industry trying to recreate a norm where we are saying that running an inefficient way is the pathway of the future and trying to justify that through metrics like a hundred clients and 110 clients.

The reality when we talk about capacity, it's really if you want to work on a base number, there's about 1600 hours of advisor time a year that advisors can devote to clients. If you simply divide that by the numbers of hours that advisors are serving those clients, that will give you a capacity number. So if we're able to improve the client experience, which is an important part of this, and we're able to limit advisor time on average per client to somewhere around about five to six hours, and most of that's belly to belly time, right? Because all the preparation happens along the way, there's a little bit of work associated with it, the capacity number is significantly higher than a hundred. Now the number of relationships one can service and from a depth of relationship is a separate argument. But certainly the minimum numbers in capacity when we work through the model with the advice businesses that we're engaged with is about one 50 to one 60, and that's not capacity at a level where they've stopped.

That's a capacity point where they're actually still growing but have to start really moving clients on to keep bringing those new clients into the mix as well. So could we get to 200 or two 20? Absolutely. If an advisor was no longer growing and just looking after their existing clients, quite possibly, it's certainly 1 50, 1 60. It's been proven to be more than achievable at a depth of relationship level where sustainability in terms of advice fees is, well, again, we can talk about that in a moment, but for the businesses we work with, well north of $10,000 per annum is where the industry is, and we're seeing profitable clients at the 5,000 level as well and below. So I think the urban myth, Matt, is one we need to move on from pretty quickly if we're going to grow.

MH:

You talk about 1 50, 1 60 being sort of the extent from a relationship perspective. You're talking about being able to have a deep and meaningful relationship with those advisor. What does that add with those clients? What does that actually mean?

DL:

So to me, depth of relationships means that you're fully invested in the client. It's not just come along to a review meeting, and I'll talk to you today and I won't speak to you again for the rest of the year. So developing, there's only one sustainable competitive advantage, Matt, for all advice businesses, there's only one and we'll, I'm sure we'll talk about technology, but there's only one sustainable competitive advantage, and that's the relationship that advisors have with their clients or the advice business has with the client. So if that's the one sustainable competitive advantage, you want to make sure you're investing in that, really investing in that. So when we build out a complete model for an advice business, again, it's not a once review meeting. There's progress check-ins, there's a whole host of things that happen along the way to again, materially make sure we're engaged with the client and always working towards their next measure of success.

But at the 1 51 60 level market that vicinity, it's still enabling advisors time to actually go and source new clients and work their existing books. So if you have an advice business, and if you've got advisors for example, who are working with you who are managing let's say 150 clients or a million dollars plus of revenue, if they're not extracting referrals from that, it's actually detracting from the value of the business because a book of clients actually comes with an embedded value set, which are the relationships of those clients with people that they truly value and want advice for. So if advice businesses aren't really extracting that, if advisors aren't being proactive from an organic growth perspective, again, I think we're missing the opportunity. So different advice businesses will have structures in different ways, but again, if we've got about 160 clients, we're looking at somewhere, if we're running on the 1.3 meetings per client on the average framework, we're still only running at about four to five review meetings a week, and that's giving plenty of capacity for growth in the model. And as you start to extract that, what we're starting to expect and to see are advisors managing revenue. Again, we talk about client numbers. Ultimately if we're talking about the business and profitability, it's about the revenue per advisor. A million should be the minimum target for advisors. But certainly when we are working with businesses about 1.5 is the target per advisor, and that generally gives us a nice healthy EBIT north of 50,

MH:

North of 50% margin.

DL:

Yeah, absolutely. In fact, if I hear a whole host of things at the moment, people saying we're in the mid-twenties, it'd be great to get into the thirties, some people advocating for north of 40, the best advice businesses are well and truly north of 50% in terms of EBIT and a growing businesses. So this notional side that that cost to serve requires an investment of more than, I guess a margin that's acceptable within that range is again, misguided. We've got waste in the channel that exists and we've got to remove that waste. We also tend to overcapitalize on resourcing associated with those clients. So if we take existing clients and they're the best ones to think about because existing clients, we've got existing relationships, if we've got really good systems, we should have good data. If we've got really good data, we should be able to streamline the efficiency of engagement.

If we're able to streamline the efficiency of engagement for new clients, you're not recalibrating the strategy and overhauling the strategy every year. Yes, you're doing it with some clients, but not every client offer and it's at the margin. So we've got different savings rates. We might have different pensions we're taking out, we might be adjusting insurances, but they're all within the existing framework that we've already set. So if we have a proactive offer that gets us ready for the meeting, fully engaged and able to execute effectively same day, you have stripped us so much waste out of the equation and so many resources out of the equation. Again, we're talking about price, but if we're charging well for our services as we should, given the value that we're providing, certainly on an individual client alone, when we work the pricing model, to give you some context, we're generally aiming between 75 and 80% margin on those clients. And that's a big number for some to understand. But again, there's a historical way of thinking in our industry map that is flawed and there's an opportunity right now, and if you're not extracting it, well, it's your loss,

MH:

Dean, these are some impressive numbers that you're throwing around. Have you actually got evidence of this being achieved? Is this the sort of numbers that your consulting clients are actually seeing?

DL:

They are the numbers from the businesses that we work with who are maturing through the work. So anytime you are going through a transformational plan, it's a bit of a J curve associated with it because you're running essentially two models at the same time. You've got old CO and NewCo that essentially are operating. But as you start to, and again, hopefully this makes sense for you, Matt, and hopefully for the listeners, it makes sense. But most advice businesses, the greatest cost associated with work lives with their existing clients, the existing clients are the majority of the workload associated with that business. So we're not yet talking about whether we should be using an SMA or whether we should be an MDA or whether we should be completely outsourcing portfolio management, and we're not talking about that aspect. But if we can simply turn the process around on its head where we are not having waste post meeting, where we are fully engaged in data, where that data is enriched through the systems that we've got in place where again, the preparation process isn't the advisor, we are actually utilising both system and lower paid resources.

That includes offshore resources for certain businesses as well, which again, not advocating that we offshore all of our work here map, but I'm simply saying that there are components of work which can be shored for certain businesses and certain styles of business. What happens is your cost to serve reduces dramatically. So if we're in an environment, as you rightfully said, demand exceeds supply, what a great place to be. The moment you hear demand exceeds supply, it's not a race to the bottom in terms of advice fees, particularly if you're a professional services firm who can demonstrate the difference between, call it traditional industry advice and what a professional service firm does. We should be in a position where we should be increasing fees or certainly charging well for that advice at a decreasing cost to serve. And yes, post Royal Commission, there were lots of changes.

The issue with those changes, Matt, is that they weren't systemically embedded in and system. They became manual overrides that people work with. So again, waste. So you build it into the system, you remove waste. And this comes back to the fact that if we've got advisors today, again from a statistical perspective and the value quick gap white paper that we had supports this that we're spending essentially north of about 60% or advisors are spending north of 60% of their time doing anything but seeing clients clearly, if we can get advisors reducing that time and spending more time with clients, A, it increases capacity. But two, if you don't want to do it, use it from a capacity perspective and grow. You can do more for your clients, which gives you the ability to either charge more or extract greater value from

MH:

That. Dean, there's a inflated or huge amount of m and a activity in the industry at the moment, which is being spurred by internally funded acquisition, offshore capital. What have you seen in the m and a market that's working, not working, and what would you suggest to those that are considering an m and a path?

DL:

Okay, so at an advice business level, this is to use the term a multi-layer growth strategy. So we build scale, which is great, which is a more efficient way of working and building ourselves to be able to do more again with less effort. But the desired outcome is to grow, which is again, the pathway to utilise that scale for greater good. Having a multi-layer growth strategy for some businesses does involve the idea of acquisition or m and a. And if we think about m and a, what we've seen that, let's start with what doesn't work. What tends to not work are businesses who come together who either at a philosophical level are very different or where the systems are so different and the expectations around advice delivery are so different that you've actually got a cultural change before you can actually see value associated with that transaction.

So what we've seen work really well are businesses who are very clear on their advice model, and again, the cleaner your advice model is, the better. What we've seen work and we've instigated more recently, certainly within the last 12 months, has been prior to the business that's been acquired coming in actually going in and beginning the change management programme, while it's not culturally muddying the waters, and the benefit of doing that is you get to deal with a lot of the problems associated with either mindset or thinking around change before you again bring people together and you're trying to do it on the fly. So the better the purchasing business is in terms of its system and its philosophy and the way it wants to advise, the easier it is to go and begin the change management process. And then as that starts to mature, bringing that in becomes much more effective. And so you start to see that the transferability of client relationships is better, but it's almost at a team level. You've got people who now understand what they're walking into. And so I think there's a lot of opportunity there, notwithstanding interest rates are no longer what they were, Matt, when you could buy businesses at under 2%, but there's a lot of opportunity there for really well run organised businesses to be bringing in either books or doing full acquisitions.

 

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MH:

Dan, you've touched on it a couple of times now, and we're going to go back to it, change management. Everything that you talking about is going to potentially tip a business model on its head and require not only the principal to get on board, but clearly all of their staff as well. What's important to you and what would you suggest when thinking about a change management plan and making a huge change such as this or just implementing any change across the business?

DL:

I'd say this is with any change that firstly people need to see the problem. There's no point. If I go back 15 years ago, what would typically happen is the solution would be presented and people would have to move into that solution, and that creates all sorts of angst and people don't feel like they've been listened to and validated. And the reality is, with all aspects of adult learning theory, one of the first ingredients of success is you've got to actually embrace the experiences that people have had. So the easiest part of change, or sorry, no change management is easy, but one of the easiest ways of commencing that process is for people to actually see the problem. And sometimes people are really aware of where they fit in the system or what they do, but they're not really aware of where everyone else fits in that system and what they do.

So if you can actually show people the issue is if they can see it with their own eyes, they then can't unsee it, which then creates, well really one or two options. You either live with that problem or you try and fix the problem. So the experiences that we've had are showing people the problem's important, but then also letting the business and the people become part of solving the solution. So what we'll tend to do is provide the skeleton or the strawman and actually build that up with the experiences of the people in the business. So we use the term test and learn, so we'll commence a programme for work. Let's say we were re-engineering or re-imagining a review process, for example. We would actually trial that with a handful of clients, getting the people involved, helping them see again the difference in work, and then they advocate for the work and actually help roll in more and more team members.

So it's a reasonably simple process, but the complexity comes from getting people to actually see the issue and getting the right people involved early on in terms of being willing to try new ways of work. So definitely the old way of just, here it is off you go, go and do it. It's the fastest way to failure going slowly, testing and learning, iterating, and then once you know it's working and you've got back to your point, you've got demonstration of success and real figures and real data, then you invest in the build underneath, it saves a lot of time, a lot of effort, and normally gives a much greater chance of success.

MH:

One of the biggest areas of change at the moment, we can throw around all the buzzwords, obviously technology, the opportunities, the risks, the disappointment. What excites you at the moment and how are you seeing firms adopting AI in their businesses?

DL:

I like the idea of technology. When we talk about firms and adopting ai, I think some of them are still coming to grips with chat GPT on their phones and typing in one line sentences and being amazed with, can you write a birthday card for my partner or something like that. I think unfortunately, this is again, going back to if it ain't broke, don't fix it. It is broken. For most advice businesses, technology is a well underutilised service that involves a lot of manual intervention that's built around it, or a lot of workarounds, probably another way of describing it, it's not too uncommon, Matt, for us to go into an advice business and see seven or eight different pieces of technology that exist, none of which are integrated. And most small to medium sized businesses don't have a technology department who can provide integration. And so they've gone and bought pieces of a puzzle that they think will solve what they think is an efficiency problem that's actually created a greater efficiency problem.

They've gone and bought another software solution in the hope of solving it. And then what's actually occurred is they've just created are essentially a basket case in terms of technologies, the best businesses that I've seen absolutely moving towards, not moving towards, actually they are using aspects of ai, whether it's from a file note perspective, whether they're using things like loom videos and actually using the AI function to support that. So just dipping their toes in the best businesses are absolutely already doing that at the moment. It'd be fair to say that that's not the norm at the moment. From an industry perspective, I think the industry is still seeking guidance and still seeking. They want the solution before doing the work. So unfortunately, I think there's an opportunity that's being missed today because there are aspects around AI that advice businesses can and should be using to create efficiency right now this minute, but fear of change, fear of technology, seeing a lot of them just wait and hope someone else comes to them with the answer.

MH:

Maybe as an extension to the technology question, there's a lot of press at the moment and the thematic spend around for some time around intergenerational transfer and what advice firms need to be preparing for how maybe they need to be thinking about technology using technology to service the cohort. Interested in your observation again in what are the best firms doing and thinking about in this space?

DL:

Well, I think that the best firms are well and truly investing in intergenerational planning because the transfer of wealth is real, it's happening. It's not too uncommon to see advice businesses, even very large advice businesses have average client base sizes from a demographic perspective in their seventies. So while again, we might be looking at very healthy numbers today, you've got a real running risk on that business moving forward, not simply because they're in withdrawal phase potentially of their lives, that that money will potentially go to other people that the business has no relationship with. So the very best businesses are investing in that side of it from a technology standpoint, those that are working with younger demographics and not just doing it in an ad hoc, we've got the odd client who comes in in, I'd like to say in my age bracket, but geez, I'm in my late forties now, Matt.

I used to think, I still think I'm in my thirties or twenties, but I'm not. Those who are actually engaging with clients who are in their thirties and forties are using technology from an engagement perspective, whether it's through existing technology. So I mean Xplan, some people have a really positive or negative viewpoint depending on where they come from. But regardless of what technology exists, there are capabilities to front end the client engagement piece to use videos if you're in that H 30 bracket or thereabouts, no one wants to read long emails, no one wants to read extensive advice. Documents stated, we actually be able to use technology from the point of view of communication to use and gain the value from video conference technology in terms of engaging with that young demographic. Again, they don't want to come into the CBD mat and have a day in town to see their advisors or things like that.

They want quick, fast, easy solutions. They want to be able to get advice and breed advice when it suits them. So the best of businesses that I'm seeing that are working with that demographic, understand that are investing in it and are also investing in a younger cohort of advisors to grow with those businesses. So again, it's not a very difficult model. Oddly enough, we do see the average fee of those younger clients being less than some of the older clients, but for those who are embracing loans, for those who are embracing personal insurances, believe it or not, the average client size in terms of revenue, total revenue generator per client is still north of seven to $8,000 when you add all the pieces of revenue up, particularly those again who have got loans. So note, if you know anyone who's in their thirties and forties with a million dollars of debt, who wants to refinance, there's six, six and $5,000 upfront and potentially two and a half thousand dollars ongoing per annum that again, a business has available to them if they want to invest in that area as well. So multidiscipline firms are awesome for the younger generation, would

MH:

You say it's now got to the point of ignore it, your peril?

DL:

I think when we say ignore it, your peril, I think if you're wanting to ignore, you're really making a decision on your business to say it's a job and it's no longer an enterprise because the opportunity is evident at every level. And you know what, guess what's coming in the future, Matt, which won't be a surprise to you. It's superannuation funds who want to provide scaled advice. So if you want to provide a solution out there that's just basically we provide wealth advice and here's a portfolio and go ahead and do it, that's going to be a race to the bottom in terms of advice fees. But if you're wanting to provide real advice across all areas, and particularly target that younger generation who will carry the future wealth, well, again, if you're missing out on a real opportunity, and again, talk about other areas of advice on contingency planning, which isn't just personal insurances, but extends across to everything that can go wrong for a client in terms of asset protection, state planning, and the like.

We think about, again, loans and structuring and cashflow. It's a fraction of businesses who actually are investing their energy in providing structuring advice to clients in those areas. And not only does the client need that advice, so ignore it your peril because they're going to get the advice somewhere or worse, or they don't get it at all. But we're missing out on significance amounts of revenue that are really almost all to the bottom line if you structure it correctly. So debt, insurances, estate planning, aged care, these are not things that are eruptions for businesses who want to progress in the, because if you want to stay one dimensional, you are going to run a risk of, again, being eaten up by institutions,

MH:

Potentially a self-serving question. But I think those listening would be well aware of my views managed accounts, SMAs, MDAs, where do you see them fitting into a business now and into the future?

DL:

If you're wanting to go out there and run bespoke portfolios for every client and you're wanting to, again, be really, really active, you better be charging well for it and find a really efficient way of doing it. The ability to use SMAs and MDAs and solutions that, again, provide the ability for scale, but do deliver towards client outcomes and provide a way of, again, engaging in a complete proposition. I think it'd be fair to say with just about all businesses we work with, that's either the pathway that they're on or certainly the way we encourage those businesses to think about their future, because you can't run scale on bespoke individual portfolios. You will cap out very quickly and you will run heightened business risk. So not sure if that's the same as your view, Matt, or where do you sit on that one?

MH:

No, totally aligned on that. Dean, we've covered a lot as always in this podcast. You've mentioned a couple of times a white paper that you've done your book. What's the best way for people listening to find out more about not only you, but more importantly, a lot of the things that you've talked about today?

DL:

We can start by going to the website, which is effortless engagement.com au, but from there, I mean, I'm always up for a chat. As you know, Matt, I love meeting new people and hearing stories. I mean, really that's the way that I've grown in my career. It's asking questions and listening to the experiences of others. It doesn't mean we always have to agree that's okay as well, but you often find that through the experiences of others, it challenges your thinking, ultimately leaves you to new areas of growth. So that's the best way of making contact.

MH:

Fantastic. Dean, been excellent catching up. As always, thanks for the conversation and look forward to keeping in touch.

DL:

Thank you very much.

 

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