Breaking the Financial Mold: How Life Sumo Emerged from Unregulated Chaos

Alright, let's be really honest about it. I don't want to do this. I don't want to do it. The reason I don't want to do it is because there's something really narcissistic and gross about doing this. Think of life as an epic game. Let's make sure you're playing to win every step of the way. Live the big, play and bigger. You're now listening to Wealth Hunters. This. Talking to people in town. What they need to hear and want to hear, but that's what we're doing because the boffins that are sitting across from me are saying you need to tell people your story. And what it is that actually motivated the creation of life's tour. I say here we go. The main reason life's tour, my exists at all, is because I have fucked up in every possible way that you can fuck up. And through all of that, I have learned a thousand lessons that I genuinely wish I could have told myself 20 years ago. And for that reason and that reason only, life's demo was born out of chaos as most creations are. And my history in financial advice has come from daring hell in the face, literally, staring hell in the face. I started off in financial services a long time ago with a group that most of you would never even have heard of. A company that your parents may have heard of, called Storm Financial. And at the time when Storm Financial was a thing, I was only 19, 20 years old. And it was my first ever job, my first ever real job, I should say. And I was thrust right into the limelight of financial services in Australia and was given a really in-depth overview of what it meant to provide financial services in this country. And I got to share something with you and I think it's really, really telling. And that is, I think the Australian population have been let down massively by financial services, by our education system, by our own ego and historical issues. And I think that we've got to a point where people are beyond the blind, leading the blind, that we are now so far down the track that it actually needs a real intervention in education to try and rectify some of those issues. So yeah, my first ever job was with Storm Financial. Storm Financial spectacularly managed to blow up something, you know, in the billions of dollars in terms of capital for clients. I did leave the organisation two years prior to their collapse, but that has never left me. The idea that people could trust an institution with their financial futures and have it fail so spectacularly. And then you find yourself asking, "But where did that go wrong?" And if you can't trust the institutions who can you trust, well intrinsically you have to be able to trust yourself. The problem with being able to trust yourself is you don't know enough about what you don't know to know whether you can or can't trust the information that's been provided. From Storm Financial, I ended up moving over into what you would consider to be a far more conventional financial planning organisation, and was able to stabilise that position. But again, found that you end up being in this cycle of sales, the cycle of product, the cycle of platform. And if I were a layperson looking at that, someone who doesn't understand somebody whose day job is bricklaying dentistry, being a lawyer, a doctor, a teacher, a stay-at-home parent, again, you can be exceptional in your area of expertise and still not understand enough to know what you don't know. And then you find yourself in a position where even the people who are selling those platforms and products also don't know enough about what they don't know because we have industrialised financial product provision. Just in this country, but in most Western economies, that you go to these people who often are not in a better financial position than you, to ask them for advice about what to do and how to do it. And so that was really problematic. You get to a point too where I've found over the years that when I'm delivering financial education one-on-one with clients, the most common piece of feedback I ever hear is, "Oh, God, I wish I'd known this when I was at high school or in my 20s or whatever." And that's sheer reality is one of two things have happened. Either I weren't taught, which is highly possible, because again, the curriculum doesn't lend itself to empowerment. It lends itself towards regurgitation. Or two, you were taught and didn't listen, which is fair enough to because you're 16, 17 years old and what does it matter? Right? And so if both of those two things have happened in the only place that you could possibly have gained your financial education is around the kitchen table. And sadly, you've got this cycle of people who are providing education who aren't making great decisions themselves. And it's not for any reason other than the system isn't geared towards empowerment. It just isn't. You've got a process like superannuation, for example. The word superannuation itself, it's a scary proposition. It's a scary word. It's something we don't want to have. We don't want to know about. The idea that someone is taking 11.5 or 12% of your income away from you on an annual basis for the next 40 years and doing something with it. That's totally disempowering. And we don't have any connection to it. And when you're asked to deal with it, you are 17 years of age. It's your first job. And now you've got to make a decision about where you want to put your money to invest it in a compulsory fashion for the next 40 years. Right? What do you make those choices? How do you make those decisions? And so the people that we only ask at the moment are the people around the kitchen table. But then if you want to dig deeper into a situation that your mum and dad find themselves in or you're a caregiver, is that they're not doing great either. Right? They're just not. Why? Because their background is your background. They had the same issues and struggles and problems and education and sales-based issues that have had to deal with through their entire lifetime. They're in the same boat you are. And so we end up with this cycle of the blind leading the blind. And it should be a case of, well, they've got to be these professionals out there that we can trust to go and pay them money to provide us with, you know, advice going forward. And again, the harsh reality is that a vast number of those professionals may not be in a better position than you are in terms of putting together advice going forward. So a little bit of a rewind. And to work out how did our country end up in this situation that it's in at the moment. And when you look at something like financial services or the provision of advice around investments, super personal protection, it all came from a very, very sales-based place back in the late 70s early 80s where the only financial products you could get in this country were life insurance policies. And the people who were selling those life insurance policies were salesmen. And those policies were generally being sold door to door. In fact, they used to call the original door to door sales people nappy chases, right? That sounds kind of gross and weird, but there is a reason for it. So if we go back to the late 70s early 80s and now imagine that you're one of these guys who have been sat in a room given a briefcase and told right, you have to go and sell these policies on the street, walking door to door, knocking on the door. And the only way you're going to feed your family because they're all commission-based products at that point is you've got to sell these policies to the people who answer the door. Imagine if you're staring down a street, you've only got a limited amount of time to knock on as many doors as you possibly can and sell these products. How are you going to determine from the outlook of a house who is going to be a more viable prospect to sell those policies to? Well, back in the late 70s early 80s, disposable nappies were kind of not really a thing and they used to, as gross as it sounds, have cloth nappies, which they would wash and rinse and hang on the lines to dry. And so the nappy chases used to be able to poke their head over the fence and look for the cloth nappies on the clothesline. Why? Because that's an amazing hook. Hello, Mrs Smith. Hi. I noticed that you've got two young ones over there. You must really care about their future. And can you imagine how awful life would be if you weren't around to look after them? They're going to need a life policy to make sure that if you or Mr Smith disappear, then of course they're going to be looked after financially. Now, is it wrong for them to sell that policy to Mr and Mrs Smith for the most part, absolutely not? But in fact, that's how they did it. And so they start segmenting and segregating and applying pressure to make those sales happen. Why? Because that's how they feed their families. And we don't begrudge people wanting to feed their family, but you have to do it honestly and ethically. And so then it gets into an era where, you know, if you're no good at selling telecommunications, go and sell life policies. If you're no good at selling cars, go and sell life policies. And then you end up with a very, very, very sales driven culture. Which again, is fine. These policies do good things when they work and when they're right for the person who takes them. And we've had plenty of times where we've had claims on these types of policies that have really benefited people. But now we have an issue. We're in the 70s and 80s, mid 80s. And the sophistication of financial services is starting to build. We'll talk about wanting to bring superannuation in to help try and mitigate the problem. that, that'll be a story for another podcast, but I'm going to tell you now that when those policies were coming in, people were looking at investments and the investment time frame was becoming more sophisticated, the investment framework was becoming more sophisticated. Who was going to be the ones going out there selling these sophisticated investment products? Well, the people who had the existing relationships. Guys who only years ago were selling life policies door to door looking over the fence for nappies. Now again, not that these people were uneducated or wrong or unethical, but also not what you might consider to be financial professionals. They're of course waiting for the AMPs and the MLCs of the world, the big companies of the time to come in and sit them down and give themselves training on how these investment products were going to work. And then go back to the people they'd sold the products too previously. Now again, this isn't disparaging those people who are really the bedrock of the industry in Australia. But things have changed. Okay. We have become so much more sophisticated in this space and that there has had to be over time changed to try and help protect people because that sales culture really did go too far too quickly and ended up hurting a lot of people. Now one of the downsides of that is that it causes mistrust in the industry. In fact, even calling it an industry is something that we've tried really hard, I guess, particularly over the last sort of 10 years to try and change. But I think it was a fair description. I think it was an industry. I think that it was out there. An industry is something that manufactures some sort of product or service for sale. And that's exactly what it was. You didn't have a profession in the sense that these people who were selling these products needed to be out there learning more than what the sales professionals told them in order to move the products on. I can tell you my start in this industry, the only real qualification that was needed was a DFP, a diploma of finger painting. Okay. Deployment of financial planning. But the diploma of finger painting, I called it that because it was literally two lots of eight subject segments, which had an open book exam, multiple choice. And the questions were in chronological order of the content in the book. Right. And as long as you had your DFP and RRG 146 compliant, you could get the tech to go out there and sell these products. It's not good enough. It wasn't good enough. And while I do think that the regular Tory framework has gone too far in one direction, it certainly had to go further. And so now you're in a position where people who are out there giving these financial, financial advice need to have tertiary qualifications, need to have a bachelor's degree in business and commerce and law or whatever the case may be, depending on your own journey, as well as having an understanding. And so that kind of gives you a little bit of the history. And the history is really important because what it does do is it does help to show why there's such mistrust in this space. And why you have to be really careful about who you deal with and how you deal with them because there's no guarantee that well, particularly back in that transition period that they were any better off than you in terms of making decisions about what to do and how to do it. And with the regulatory framework, there's been a lot of work done on making sure that if you are going to pay for somebody to provide this service to you, that you're actually getting something for that provisions. So we're in a place now where you have to get yourself into a position where you need to learn and understand more. So as I was progressing from the sales type culture of storm of which again, I'm happy to talk about in another episode that and I know this is controversial. I think they actually got the service provision 95% right, but the 5% they got wrong was really, really wrong. So taking that on board, the level of education presented, going into a more traditional financial planning space still left me wanting as far as clients were concerned. It left me in a place where I really still felt like we weren't spending enough time giving people the tools they needed to be able to go away and assess a situation and say, yeah, actually this makes perfect sense, right? Or I know enough now to know what I don't know and I can go and ask those questions in a meaningful way. And that is essentially where life sumo came from. Even the name itself, life sumo, I didn't call it that because I'm a massive human and sumo seem appropriate. I did that because sumo was a composite word. We had life support SU modules, MO, life sumo was life support modules. The entire premise was we're going to take traditional financial services and flip it on its head. Every convention of financial services which I don't believe works, we want to turn it upside down. So we took all the roadblocks, we said, right, why don't people get advice? Number one, there's a perception that it's expensive to get advice, okay? That because we're a profession now, you need to pay for our time and pay for it. And so for a young person to get advice, when you look at the amount of time required to do it, and lots of financial services firms that want to charge $1,500, $2,000, $3,000, $5,000 to even create a statement of advice. Well, they want to charge you $250 for a meeting or give you 15 minutes free but then charge for the rest of the meeting. And so we looked at that and said, right, we want to help young people, young people can't afford to pay for that upfront. Let's take that convention and destroy it. We're not going to charge for meetings. Let's look at the creation of advice, giving you a document that you can walk away with, which is a legal requirement, which most people want to charge you a couple of grand for. Let's do it for nothing. People need to have knowledge of what they don't know. So let's provide that education for nothing. Why? Because when you've got the education and the understanding, when you have the chance to meet and have your entire situation, quantified, consolidated, and have someone give you advice about your circumstance that you can take away in writing and cross-check and look at and review and analyze, then you can make an informed choice. Reality is it works. So the life semi-model essentially says, no, we're not going to allow those roadblocks to stop people educating themselves to make a better choice. And if we get to the end of that process and you decide with all the information, the education that you don't want to do anything about it, or now isn't the right time, which is also perfectly reasonable. That's okay. It's fine because at some point in the future, you're going to send that email. You're going to walk up those stairs. You're going to pick up the phone and say, hey, my life went to shit for a period of time. I had other stuff to deal with. Things weren't right, but I need the help now. You just pick it up and keep on going. So the whole point of this, these episodes is to continue to provide that intellectual property to you for free so that you can take that information, learn from it, become critical. Know what you don't know. So you can go and do the proper investigation to say, yeah, you know what, that default option inside my industry, super fun sucks. Or this insurance that I thought I had, which was going to help me out, isn't going to do three-fifth of F all if something goes wrong, which you don't know enough to know, you don't know. So how can you know whether I'm telling you what's right or wrong in the advice document? Only way you're ever going to know that is if we give you that upfront. And having done that, we find ourselves in a position where most people when confronted with all the information make exceptionally good choices.