Utilising governance and tech to scale wealth firms
Jonathan Christie, MD, Oreana Financial Services, Australia
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About the podcast
Hear how Jonathan Christie, Managing Director of Oreana Financial Services (Australia), came to create the licensee in 2018 and has since overseen its growth from just one client at inception to now having 33 clients and around 94 advisers under management. Driving their growth has been Jonathan and Oreana’s ability to retain experienced and passionate advisers, as well as their total respect for the power of governance-led strategies, believing that discussions around governance should always occur before discussions on investment philosophies. Jonathan also shares his views on the future of advisory services, the rising trend of segmented investment approaches, and how regulation is impacting platforms’ ability to create technological solutions for faster advice delivery.
Thanks, mate. Appreciate it. Thanks for the opportunity.
Unfortunately, as with many of my conversations of late, we haven't actually had a chance to catch up in person for quite some time.
I think we've had about three false starts. I think you were going to be presenting at our conference two years ago last year, just at the end of January-gone, but it's all been pushed back again, hasn't it?
We'll get there, I'm sure. But great to have you on the show and thanks for joining us today. Now, John, you've been around in the industry for quite some time, but may not be well known to that many of our listeners. It'd be great just to get a little bit of your history. It is quite varied, particularly given that your first job was actually in a pub.
Yeah, that's right. I'm from a family of publicans, right? So back in Scotland, my granddad used to run pubs. I think that's where I got my ambitious nature to talk to people. You're always talking to people in pubs in Scotland. But I came to Australia in 2002, I think, and started working with MLC back in the day, my first job in Australia, and actually worked there with the NAB / MLC merger up until 2016 in numerous roles. I was in a product role for a while, and then I was in distribution in some sort of practice development roles under people like Tom Redcliff and James Bee, Greg Miller. And then Angie Mentes actually picked me up and put me into the NAB private business, which was an amazing experience under her watch. And I think, working with experienced professionals in financial services like her really gave me some insight that I didn't have before.
I even ran a bit of a banking team at NAB Private for a while. And then with the JBWere, NAB manager back in 2016 it was I think, we saw that transition. And then ended up leaving NAB post that, because I think it was just time for me to move on and do something else. So yeah, a fairly institutional background in Australia, but always in the financial advice sector. And I think that's sort of where I enjoy playing, because dealing with advisers, I find enjoyable, and I always have done.
Yeah. One of the questions I always enjoy asking, is why financial services? You started your career in the pub talking to people, but it's a stretch to then end up doing many of the roles that you have done
Well look, you go to university, you start in these jobs, you got to a university, you're trying to work out what you're doing, right? And I think, when I was younger, you never really got educated on what you're going to do with your degree. You just did a degree. And I was actually an engineer by trade. So a mechanical engineer with a bit of business lobbed in, just to make it feel diversified. And so then you go down a path of just trying to work out well, where do you fit in? And a think that's, for your first few years in any career, is a learning journey. And I started pharmaceuticals and then moved into financial services in London, as you do. And I think that sort of teed me up just to... I really enjoyed it. And I really enjoyed the people, and the institutions I was working for then were quite exciting.
So you land in Australia, you've got to select your opportunities and right then financial advice, as it is still today, was a complicated, big industry that people were trying to work out. But at the heart of that were just good people. And I think from my back in the day, when I was young, working in pubs to today, working with professionals, the most important thing, is working with good people you have a great conversation with. And I think that's how I managed to find out that I really like, enjoy this sector. And that continues today. We've got some really great clients and really great people we work with, including yourselves.
Well, one of the issues that the industry's facing at the moment, is obviously reducing adviser numbers and not many new people coming into the industry, whether that's out of the universities or through a career change. How do you typically... What would you say to someone considering joining the industry now to convince them to come in?
Well, just on that point, right? It's sad that we've off-shored thousands and thousands of roles in this sector because no one wants to come into it. Not only advisers, but power planners, CSMs. It's not just about advisers, it's about all roles in our industry. And I think what you've got to really out to people is, what is the financial advice sector trying to do? It's trying to help people, right? First and foremost. And I think people still struggle to articulate the value of advice, particularly to that young generation looking for a career choice.
So I think there's got to be some time spent on both sides of potential candidates and employers like ourselves, to really have great conversations with not only potential advisers, but power planners, CSNs, or anyone who wants to work in this industry. And show them that there's actually a long term career. Because, particularly younger graduates today, it's a very short-term mentality, and you've got to show them the opportunity of a long term, sustainable, enduring career in this industry, which there is one.
And I just don't think we've done that very well, and I include ourselves in that. And that's starting, right? So we've now got six professional year advisers in our network, which is awesome. And it's a different conversation to the conversations I was having with advisers 15 years ago, but clients are still at the heart of it. And I think if you can really helped people understand that this industry's geared up to help Australians, then that's where you need to start. And I think we've got to do a better job of it.
Hope that answers your question, but yeah, that's... I’m pretty passionate about that. It's scary that we've only got... I think the last numbers I saw were 12,000, potentially, advisers now in Australia, if you strip out BDMs and all that sort of stuff, myself included. That's a scary number, and I think we've got to do more to improve that.
And as a number of my guests have actually highlighted on a regular basis, there's a real demand issue. So people are wanting advice, or more people are wanting advice than ever before. And increasingly there's no one to actually serve them. So what a better time for someone actually coming to a new industry.
And I think that's right, and it's not only that. People want advice, but they still don't know what that means either. Gone are the days that we were... Oreana is, obviously we do a number of things. I'm sure we'll get into that, but we are a strategy and investment-led licensee. I think most of the advisers in our network talk about strategy and planning over investing, because that's where it starts. Financial planning is a specialist skill. It's not just about investing money. And I think clients even don't understand the correlation between their issues, objectives, goals, problems, and what the strategies that advisers can provide.
And I think we've got to, again, continue to do a better job in educating people, not only here looking for advice, but what that means when they get to that conversation. Because, as we know, anyone going through a financial advice conversation walks out, I believe if it's a good one, knowing a lot more than they came in and understanding how advisers can help.
Yeah. And I think that's a good point and certainly agree. And we see it through our research all the time. There is still a misconception that financial advice or financial planning is about the investment return.
And that's something that I think as an industry, we need to continue to do a better job of explaining to consumers that that's actually, whilst an important part of it, it can either be outsourced or it's very much the last part of the process is.
Yeah. And I think that's right. And I think where we play in the clients that we deal with, a lot of time is spent just listening and understanding structures, goals, timeframes, implications, different scenarios, contingency plans. It's not just about numbers and investing, even though that's still a critical component. But I think as this industry matures and becomes... I think it is a profession, I don't think it's becoming a profession. We've just got to have our ability to communicate that better to clients. And I think we're starting to do that. I think I'm starting to see a shift in how we are engaging and how we're talking about our industry, and the narrative you see in the media now is starting to change, I think.
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We'll come back to what you're doing at Oreana in a moment, but you're not off the hook yet. I'm keen to know a little bit more about your sporting career.
Oh well, mate, that's... I used to play hockey. Well, I still do actually. I started playing hockey when I was 14. Scotland doesn't have many hockey players. So I managed to get picked for my country over time, which is a great achievement, I'm very proud of it. But silly enough, when I came to Australia, I actually gave up. 2002, I stopped playing and I don't know why, actually. I think kids in just a new country and a whole bunch of stuff. But I played at a very high level for a long time. And what that provided me was not only an opportunity to play for my country, but I love being part of teams. Team sports for me are just a great thing. And I just think the learnings and the team building and the understanding of others that comes through that, is just fantastic.
So I actually gave up, for some reason. I still reflect back on why, and I'm sure there's many different reasons. But for my sins, I actually kicked off my hockey career again, three years ago during COVID. And still playing with 25-year olds at the fine old age of 40. So I've still got it in me. I don't know how long that's going to last though. But just picking up a hockey stick for me again is one of my passions, and it's great to see the game. It's like our industry. I stopped playing for 10, 12 years. And I came back, the rules had changed, the game had changed, people were fitter, faster. And I think it's like our industry. If you look back 12 years, things change, and you've got to adapt to that.
So instead of me getting fitter now, I just do more yoga, so don't break. But I think it's an important narrative, right? I think everything in the last 12, 15 years is changing, and we've got to find better ways as teams, as individuals to adapt to that. And I think that's... If I draw on my hockey career and look at financial planning, there's probably lots of similarities around what's changed in that discipline.
Yeah. And that was really, I guess, where I was going with that, the parallels between sport and business are certainly very important as people evolve into leadership positions. Is that teamwork aspect the bit that you would think has flowed into what you do the most today?
Oh, look, you have to ask my team that. We're a small team of 12 in Australia. But how I think about it is: people like to be a part of something, generally. But you've still got to give them the right freedoms and barriers, right? And this is not rocket science, I'm sure you do the same with your teams. But particularly when you're employing experienced people, they need autonomy and decision making, right? And it's just like a coach with their players. They've got to have the freedom on the pitch to do their job, and be guided off of it. And sometimes it's a hard conversation in between.
So I think if I look back at even in my, when I was a player and my coach, and how he treated me, it could be firm and fair, but there was a definite ability to do what he had to do to get the outcome as you want to achieve. And I think I apply that. I hope I apply that with the team I have today. They seem pretty happy. And I think that's... We were doing some research recently, and I know you probably know the same. This year, in our industry, the number one game is people. If you do not retain your teams as an adviser, as a licensee, as a product provider, we're going to be in trouble. Because consistency and experience is critical, and you can't keep turning over staff.
So your leadership style and your coaching style, however you want to call it, has got to make people happy, make people enjoy their work, but they also need to get value from that interaction. And I think I do a fairly good job with that. I think so, and our team, we've got other leaders in our team as well. And I think that we all try and aspire to that.
Yeah. To draw on perhaps one last analogy there. I think it's fair to say the rules of the game of being a leader and a leader of any size team over the last couple of years have changed significantly, the way that people want to work, where they want to work, how they want to work, is completely different to what it was two years ago. How are you adapting to that in your environment?
I'll talk to two fronts, I'll talk about our business and I'll talk about our clients. We started a business four years ago, and so when you start something you want to make sure your game plan is set. So we've never really had this five day a week working mentality... Sorry, working from an office mentality, we were obviously five days a week. But we've got teams all across the country. I've got a head of operation, sits out in Orange, Angela, and we've worked together for 20 years and she... To find that right individual, you've got to go where the great people are and allow them to operate in the way they need to operate. So we are lucky that we don't have to change that mindset, which is really good.
So we've got people working from home, we've got people working in the office, we've got people working in different geographies and different time zones. And my rule is if we're communicating and delivering the work we need to do, and we're providing opportunities to come together at the right time, then that's fine. And I think as long as it doesn't impact those things, and people are continuing to be happy and engaged, and the work is done to the great quality that it is today, then we can continue that.
I think the difference is when you have clients like an advice business who has clients, it's a different lens. So for the last two years, obviously clients have been comfortable sitting at home on a Zoom call like we are doing today, but I think that might change. And I think you've got to be a bit more flexible to client needs, because some people need to come in and some people won't. And that's going to really dictate how you're structured as a business and some of the rules and structures you have in place for your team.
So I think as a licensee and as an Oreana business, we're really comfortable where we're at. But as soon as you start throwing clients into that equation, it can become more complicated. So just being clear... I actually had a conversation with an adviser the other day and he said, if you actually give too much flexibility, it can become confusing, because family structures can’t operate also. If you say, "Come in when you want," and the husband has also got a similar request from their employer, actually planning that as a family unit and as a business is very difficult. So some structure is critical.
One of the challenges in your situation may be a little bit different because you mentioned you'd worked with people like Angela for 20 years, so you already had a good working relationship, is how do you build culture via Zoom? So if you think about that as it relates to your immediate staff, but also maybe to those in your network.
The word culture can be quite subjective, right? But to build relationships, I think you're limited to what you can do in my view. You're limited, but you've got to put your best foot forward. So maintaining and enhancing relationships is what you can do virtually, I believe. That will obviously improve culture. But you've still got to have a balance.
I think we are definitely Zoomed out as a network. So I think we've now got to find the right avenues to educate and build relationships via Zoom virtually, but really be clear about the value of bringing people together at the right times. Because advisers obviously, we're running very busy businesses at the minute. People are busy, and so giving up time is a luxury. And so bringing people together in a face-to-face environment has got to be clearly articulated, the value of why we're doing it, not just doing it. I think, five years ago, there was a lot more just getting together for together’s sake. I think you've got to be really clear on the benefit to businesses, and your staff, because I think people have got a very efficient business model now, balancing face-to-face in that virtual environment.
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John, we've spent a bit of time talking about your personal journey, and it'd be a great opportunity now to hear about what you're doing now at Oreana, and why you decide to start another licensee.
Yeah. So, well, thanks. I think for me, it's more than a licensee and we'll probably touch on that. But if I look back at why, back at NAB, when I was running NAB Private Wealth, the advice side, I saw the writing on the wall with obviously the banks getting out of advice, and we merged with JBWere, which was the right thing to do at the time. And with a lot of advisers starting to show rumblings of wanting something different outside of institutions, and obviously through networks and relationships, you want to make sure you can maximise those in time. But instead I decided to leave NAB and build a house for a year, and I contemplated life and did that usual journey. And Luke Moore, who I used to work with back in my NAB days, NAB actually sold a part of their NAB Wealth business to Oreana up in Hong Kong. So we have an expat business up there. It's been around for about 20 years. And Luke Moore went with the transaction.
And back in 2018, we started talking, and we talked about myself coming back into the business and thinking about our Australian operations. And at the time, as I said, we had a lot of good relationships and a lot of advisers looking to leave licensees and not necessarily be self licensed. So we worked with a couple of Godfrey Pembroke advisers, and looked at the opportunity of building our own licensee.
Now, at that time, the Royal Commission was on, lots of activity, lots of regulation change. Some people would probably think I was mad for starting it up. But for me, it was an opportunity that if you want to build your own business, work with great people that you know, and in an industry that you love, then you've got to take those all opportunities, regardless of the environment.
And so in 2018, we started a licensee with one client, and today we're now 33 clients. And I talk about clients being a practice, about 90, 95 advisers. And it is great when you build something from scratch, you don't have to worry about legacy. And I think that was something that was really exciting. So, building a licensee back then was the right thing for us, because there was an opportunity to build a really sustainable business.
And a lot of business people talk about licensees being unprofitable or high risk. I think those days are gone, because what we're trying to do, is build a great network of great practices that operate with a lot of consistency and a lot of similarities, to deliver the best outcomes for clients. And I think if we've set ourselves up to do that, how we operate, it’s that we work with experienced professionals to deliver operational efficiencies through common sense compliance. That's my vision and my aspiration.
And so we don't work with startups or mortgage brokers. It's not saying there's anything wrong with that, but we're really clear on the clients that we work with, in terms of advisers. And that's really exciting, because we can actually help them. And if we can help advisers, then we can help clients. And I think that's where I've always wanted to be, is helping advisers and clients.
So coming into the market, it sounds like you were quite clear on that. And the value proposition really is around that experienced adviser, reducing complexity and compliance. In many ways easier said than done. How have you actually gone about doing that? Because if you talk to advisers, the biggest pain point still is compliance and just the continuing regulatory environment that we're in. Were there certain software solutions or people or processes that you brought with you that enabled that?
Well, the first thing is we were... I'll use the word lightly. We were a clean licence. What I mean by that is it was a new licence. Okay? So the first point is that our starting position wasn't fixing the past. It was looking forward to the future. So that's a benefit, right? So how we think about bill building that advice, I call it advice framework, if you want to call it. You can start to think about where you want to play and who you want to partner with, to deliver that.
Now I'm not saying what we've built is rocket science, but it's simple and clean. Because I think advisers, where they were coming from in the institution know world was the goal post change, band aids get put in, technology's always moving around. There was no consistency. And the first thing that advisers want is limited change or good change. And I think where we are able to do, was build... We're using Xplan and all the common things, but where we started was Xplan at the core, built around it with capability. We don't do internal compliance. We leverage experts externally. And then we partner with others around those two components to build out process, efficiency, technology.
But at the centre of everything we do, every practice currently, is in that Xplan environment. And that's important, even though that's got challenges. It's important for us to enable that in the right way. And if we get good compliance advice and input that I can challenge, and this is the key thing. I don't have internal compliance people, because they're my compliance views. I can challenge external compliance views to my risk settings. And I think with those two things at the core, you can build something that works and is efficient from an advice-delivery perspective. And then you can start fixing the problems of this industry, which there's still many because it's a complex industry, with other processes, specialists, technology, and capability. And we can talk to that, but you've got to start with that core, which is consistent in my view,
You've mentioned additional capability a few times now, you've invested heavily into the investment research of the business. Do you want to just talk a little bit about what that is, and why you've decided to go down that path?
Yeah. Look, I sit back and look at financial advice businesses, and I talk about governance, right? It's probably the most boring word ever, but governance is... What does governance mean? It means good process, good skill sets, managing risk, repeatable, consistent, all those great words, right? So if you look at a financial advice business, some of the components are in the governance senses, good investment management, great process and great compliance, but compliance is a part of process.
So we did a lot of work early on with practices in the investment governance space. And the reason for that, is we were lucky enough to have a great capability in the Oreana Hong Kong team that currently exists today. And that starts with good people, right? And good process. And so what we've been able to do is take how we've managed money internally from a repeatable process perspective and good capability perspective, and said to businesses, "Well, how are you managing that?"
And as a licensee, I go, "I'm indifferent about how you're doing it, but I want to know you've got great investment governance in your business. And if you need help with that, we can help you." And so having a team that can go into practices to understand and advise them on asset allocation, research, the process of investing, investment committees, how they're implementing portfolios, it has got to be a great value add, because it goes to the heart of efficiency, the ability to scale up and at the same time, deliver high quality outcomes to clients.
And if businesses aren't looking at their investment governance, or haven't done that, then it's the first thing you've got to do, because it impacts everything, people, process, technology, everything in your business. And I think that's sort of where we come from. So, it's not necessarily about products, it's about that governance piece. And the outcome of that is, "How are you doing it, and how are you implementing it, even to the point of which platform are you using?" Yeah? So, if you've not had that conversation as a business, then it's going to be really hard to gain efficiencies in your business, because that is core to everything you do. Does that make sense?
It does. Having once owned a national licensee and also a national financial planning business, the investment philosophy was often the number one item that was debated rigorously. And it was very hard to actually get two practices to agree, let alone a whole licensee. When you talk about consistency and delivery, is it about pushing everyone down into the same model so that everyone has the same asset allocation and the same investment beliefs, or is it more around providing a flexible framework that they can work within?
I'm all about flexible... Look, there's principles. Firstly there's principles you need to follow as professionals, and if a certain methodology or an approach resonates with you, then that's fine. So, we've got our flexibility in the offering to client. Now we've got, in our business, two models, obviously. We partner with businesses from an equity perspective. So, we have an Oreana private business, and we've got licensee clients who are branded themselves.
So in our Oreana private business, there's a lot more consistency around asset allocation views and investment approach, which is appropriate, because we want to make sure that the communication and marketing to client is consistent. And not to say that the products are SMAs versus MDAs versus funds. It's about a philosophy and how, from bespoke portfolios to outsource solutions, the narrative and the process is similar.
And on the licensee side, it's providing a framework for businesses to build their own philosophies. But we, as a network, as a licensee through our investment team, can consult to them and help them build that out themselves. And I think mandating how investments are made is a difficult place to be in this industry - but good investment approach and investment governance and process is critical. So you can apply that to any sort of business, moving forward. And we do both, right? So we build portfolios for internal teams, and we consult and advise our licensee businesses to have good, rigorous processes in their business around managing money.
And what are the big investment trends or themes that you are seeing emerging at the moment from the practice, and ultimately from the end customers?
So we probably, as a network, advise clients in... I hate the word high net wealth. It's not that, it's more affluent space. That's sort of where our bread and butter is. And so what do you see there, is pre-retiree and retiree clients. The segments that want to conserve their money. There's clients who are of a wholesaler nature, looking for different ideas. So the trends that we're starting to see are how do businesses scale up and provide great outcomes to clients, and what's the investment solution for different segments?
So segment, you're definitely starting to see simpler segments of advice being outsourced, absolutely. SMAs, multi-manager funds, back in that space again - because, in scaling up, efficiency is critical. All the way up to clients that are looking for more bespoke solutions, wholesale products, different types of investments.
So I think you have to take a segmentation approach to investing, but we're definitely seeing themes. And where businesses are looking to tackle different solutions or problems in the business through simplicity to complexity, more practices are segmenting by, I'd say it's probably two or three segments in their business, and building out two or three different investment propositions for those clients, from SMEs up to bespoke portfolios. That's what we are seeing.
Excellent. And we're unfortunately about to run out of time. But before you go, if you just take a moment to crystal ball with me, where do you see the industry in five years, and how is Oreana going to respond to that?
So look, so where are we at at the minute? So we go as a licensee, as an equity partner in businesses, which we are doing more of, and as a provider of good investment governance to businesses, we see the trends of more consolidation in the industry, so advisers are merging. As a licensee and an owner of businesses, we're looking to invest in those businesses, moving forward. So we're doing a lot of work in that succession, joint venture relationship discussions. So we're not trying to buy up every business out there, but we're certainly looking to invest in that part of the value chain. So we've already done a couple of transactions. And we.
Can definitely see more efficiencies through technology and investment management. So I don't think technology solutions have solved the advice delivery game, but there's definitely a trend where technology's solving problems within the advice process. And I think you'll see that continuing to a point where I believe something in the future, two to three years, will eventually crack that financial planning process piece, which is a technology solution to solve that problem for advisers, that one size fits all.
It's not there yet, but there's certainly players coming into the market. However, if you go back to 11,000, 12,000 advisers in this sector, there's a lot of technology providers out there, they're all fighting for the same client. Okay? So there's going to be, I believe, a lot of consolidation in the tech space, from my perspective. And so to move, and to watch out where that space is going, we've got to be... I think I'm not a first mover. I like to see where things lay out, but I think in the next 18 months, the financial planning tech space will become consolidated. And I think better solutions will come to market because of that.
So I think, yeah, there's going to be... It's pretty exciting. From a legislative perspective, we just hope there's just no change. I think we've done all the change we can do, because when you get regulation being simplified, that's still change. And I think change is work, and change is complex. So we're just hoping for the next 18 months of, at a minimum, no change, because businesses are busy. We're seeing more clients, and we can't disrupt them and basically having this opportunity to really take advantage of that. So there's quite a bit in there, mate.
With that in mind though, final comments, perhaps. There's a potential change of government ahead of us, and a new advice review looking to simplify advice, which as you say, will require change. Are there any aspects that you're hoping they really focus on and solve?
The thing is, right, so if you want to get better outcomes to clients, start with clients. Then you've got to break down the process to get that to clients. If you can simplify the advice process, the compliance, and the documents, then you can actually build technology solutions that will work. Okay? So I know that we are actually engaging directly with treasury through a licensee forum and it's great to see that treasury are actually wanting to understand this more. And they're actually going out to some businesses in that forum, to understand, "Where are the issues? Show us directly, what are the impacts?"
So it's not about an SOA for me, it's not about a fact-find document. It's actually about stripping all components back to something where advice can be delivered really efficiently. That technology providers, including platforms like yourself, can build solutions around that to help advisers get advice to clients quicker. It's taking four to eight weeks to get an advice document to clients, it's just not acceptable. And so if regulation and treasury can come in and start to strip things back, not necessarily reform things a hundred percent, I think that's a start. Because I think technology players particularly will enable that change in a better way. So that's what I'm hoping for. And that's just reducing process steps, documentation, tick boxes, and requirements. It's not difficult.
John, that's going to be a great place to finish. Thank you as always. Great to catch up. Hopefully, we can do this probably over a beer next time and-
That'll be good. Yeah, thank you. Thanks for the time. Appreciate it.