James Wortley: The Power of Video Advice and Having a Strategy Coach

- Hi, my name's Chris Freeman. I'm the chairman of the Barron's advisory programs here in Australia. And today, I'm glad that you could join us for one of our podcasts. We've got a change of pace from our previous podcasts. And I'm delighted to welcome James Worthley from Enlightened Financial Solutions in Mackay, Queensland. It's the first time we've sort of ventured out of Sydney and Melbourne to have a regional planner in the podcast. And I thought it would be a good thing to do because we can learn from each other and what they do in Queensland. And James has got a very successful business up there. So welcome James. - Thanks Chris, good to be here. - Good to see you. Well, let's kick off. Tell us a little bit about your business. - Yeah, so we're a regional financial vice practice. We're in the glorious with Sunday islands. Just absolute gateway to heaven. They call it here in Australia. So our business is around about 470 clients, six financial advisors. We've got a young professional guy going through their professional year at the moment as well. So that'll take us to seven advisors this year. Staff of about 15, couple of virtual business partners in the Philippines that do a couple of their administration roles. So our business really focuses on pre-retirees and retirees. And we also look after a lot of high net worth clients through a wholesale offer as well. - Yeah, good. - We're also merged into the Viridian group nearly 12 months ago. - Okay, and that's worked well for you? - Yeah, it has. It has, we're still running our own license, which so really it's just business is normal for us. And I think what we'll get into in the next six months is actually starting to work with a lot of the innovations that we've done in financial vice and talking to the Viridian business to see if they can actually start looking to implement that. And depending on what happens with our QAR as well, so that's obviously a big issue depending on what happens with the license. - Okay, how much money do you get under advice, James? - We would be around about that sort of 450 to 500 on your mark. - Good, good size business. And I didn't mention before, but James has been a regular in the barren's top 100 ranking. So congratulations on that. - Thank you. - And I've been a good supporter of barrens over the years. So you mentioned there about the number of financial planners that you have and your support staff you do a bit of outsourcing in the Philippines. - But are you the CEO, the CFO, the HR person, the compliance person, the business development person or how are you structured to get, you know? - Yes, we previously we had three business partners and we all had different roles in the business. So probably mine is the CEO and running the business, but we got Scott Jamison that runs the HR side. We got Mike Thakray that actually runs the advisor side as well. Just about their cannibalies for the advisors, making sure that they're doing the right things, but then also making sure that they're promoting the business, promoting themselves and looking to grow. So we've had some pretty exceptional growth for the last 10 years. So it was a pretty small business 10 years ago. And we actually adopted probably a good one for your listeners is we adopted a strategy coach back. I think it was around about 2013, 2014. So very different from business development and planning, but we found with that strategy coach, it really defined our business and what our strategy was and what we're looking to do. So I know a lot of businesses tend to get that strategy drift and sort of head off in different ways in their strategy. And then what we find is there's a lot of costs there and a lot of time wastage there. So he keeps us in line with our strategy and making sure that we're heading in the right direction. - Oh, that's great. That's great. So that's really helped you sort of formulate your focus on your business and keep you in check as to how you're progressing towards your goals. Like a financial advisor for a financial advising firm. - Yeah, I think most businesses will have some idea what their strategy is. And I think when we actually went through the process and it's called strategy choices program and it was actually back from the LBT days. You might remember that Chris, but yeah. So we thought we had a strategy, but when we went through our strategy, we really found that there was really, we had an idea of where we wanted to go, but strategically there was just no alignment with what we're trying to do. Just looking at our core capabilities and especially from the way we wanted to grow ahead, we want to grow and probably one of the key issues, one of the questions actually, Steve Browning's the guy that we actually use from the strategy institute. I'll give him a little bit of a plug. But yeah, we just talked about some of our numbers. And one of his questions was, okay, you want to get there in five years' time. How do you get there in two years' time instead of five years' time? What would you need to be able to change? And if any business there wants to be able to think about growth and what they're looking to do is that's what you need to be focusing on is okay. Instead of growing over a five year period, what would you need in two years? So the one thing that we actually did early was invest into our staff. We invest, we brought on advisors before we needed them because it takes probably good 80 months to two years to be able to get advisors on their feet and actually understand what their systems are and the way we actually provide advice. So we've done that very well. And as we started to continue to keep on growing, it's been, the growth has actually came with that. - Excellent, excellent. And with your growth of your new business to grow and it sounds like you've had plenty of that, do you have a business development plan or do you hold yourselves accountable to business to development? What do you do regarding business to development? - Yeah, this one's probably a really good tip for all financial advisors. So from a accountability point of view, we have an advisor meeting each week. And one of the accountability is that each advisor has is they need to have one professional contact. So that professional contact is about to be either a solicitor at account or one of those guys, but it's not just a conversation to be able to say, okay, look, we need a tax return. It's about to have a conversation to be able to promote yourself, but also talk about the client that you're actually dealing with as well. So that's the one thing I think. There's always been a little bit of separation that I've found between accountants and financial advisors, unless it's been in-house, but the one thing that we do and we get a lot of referrals from accounts, many solicitors firms and many accountants here in Macchi because we are open, we're talking. So if we've got six financial vise, we've got six professional contacts each week that's converting to over 20, sometimes 30 connections every single month. So if we're in the mind of our professional partners and they know what we're doing and how we're doing it and we're also getting them involved because they're the specialists. They're the specialists when it comes back to legal and estate planning accountants when it comes back to tax. And for us, our role there is to be in the middle of that and making sure that we're all working as a team for a client. So I think that's where we've actually found a lot of success by having those accountability in the business. - That's good. So you're in regular contact with your centres of influence, you know, top of mind with them and hopefully when an opportunity comes, you'll get a referral. So you actually take time to think about that and work that is a good tip. - And all the professional partners know what we're very good at as well. So they know we're in that free retiree space, that high net worth space and special retirees and we do things very different than some of our other competitors in that particular market as well. So it actually works really well for us. - Okay, so what do you think your clients value most from what you deliver? - Trust, I'll always say trust and making sure they actually understand the advice and I could probably jump into it. That's probably why we started video advice back in 2018. So understanding advice. So there's one of the critical things that I just don't think is work very well in our financial advice industry or profession. The statement of advice is a long document. Clients don't understand it. I think it's probably more non-compliant when you're providing a full advice document. Whereas we developed a video advice back in 2018. I think with any, well, the first financial vice business in Australia do that and we've done some work with the FPA back then as well. So, but really just come back to, okay, we had our losses back in 2017. We said, okay, how do we actually start the business from scratch, but looking at from a client experience point of view and that client experience all about, okay, simple advice that clients can easily understand. But then do it in that mode of video where clients can easily understand that when we're actually just summarizing a quick video in three to five minutes and it's been really well clients have taken that up, but then also the referred other clients because of the way we actually provide advice. So, it's, it's worked well. It's been over six years now since we've been doing video advice. - It's great, it's great. So, yeah, good way to communicate, I guess. Just on that, yeah, we did clients. How do you charge fees? - Well, yeah. So, we, we, we've utilized Peloton partners back about three years ago. So, so we are purely fixed fee based on service. So, all comes back to its complexity. We've got a big range of different services for our clients. We'll work out what the complexity is. So, we've actually got a calculator there that talks about no service minimum, moderate and maximum. And then we can actually just depending on that particular client while we're actually doing for them, making sure that we, we provide the services that they want. It's probably critical. But then also the service that we think that they need as well. So, it all comes back to, and it'll, a little bit different because we don't charge big up front fees for plan fees. It's all about providing them the calculation. So, okay, look, we might charge our average fees about eight and a half thousand dollars per year. So, we'll actually give that client first interview. We'll go through, work out what their values are, what's really important to them. Talk to about how we can actually help them. But after that first interview, we'll actually price it up. We'll bring the calculator in front of the client, go through it. And so, look, this is what we think it, it is based on the service. We think we can actually provide you with value. And then they'll come back and say, okay, we're happy to go ahead because we won't do an any interview. We won't do any other work after that. So, it works really well. So, if it's a ten thousand dollar fee, we'll actually charge that fee on a monthly basis, but we'll charge them within 48 hours, which means we're working for them from day one. So, probably the interesting part about that and why we bought it was that client experience again, where it just says clients don't have, and a will or they don't have any insurance. So, there's some real key priorities. We can provide that advice within even one or two weeks. So, we're turning over advice really quickly, but prioritizing on what the client actually wants. And also what we think the client actually needs as well. - That's good. So, you've got sort of like an ala cart schedule of fees. - Yeah, yeah, it works really well. It has nothing to do with relation to funds under management either. So, but you do find that bigger amounts of money, there is more complexity, because again, you're starting to build in trusts and other structures as well. So, the complexity increases and the fee increases proportionally with that. - Oh, that's good. And just on that part of your service, of course, is managing investments and portfolios and the like. What do you do for your portfolio construction? - Yeah, so we utilize a couple of individual managed accounts. So, we use implemented portfolios with our wealth platform. So, we find that individual managed account service actually works really well. But again, we're a little bit more hands-off where we leave the professionals make those calls. We're a big believer in dynamic ass allocation. So, we think that's probably where you get your best return is actually being more dynamic with that ass allocation. So, watershed is another fund manager more on the SMA side. And then also black crock, I shares for a smaller client. So, but we also do a lot of work with clients that have got industry super innovation funds. So, if there's no reason, so we'll actually go through a process. We use Lumiant to be able to talk about investment preferences. So, having a really good discussion to say, okay, what do clients actually want? And then once we actually work out what they actually want, what their investment preference might be. And it might be fees and charges that they just want to have the lowest fee possible, but they don't want all the bells and whistles. And they still might have a million dollars or two million dollars, but they just want to be able to make sure they got the cheapest fees. If that's what their investment preference is, that's the way that we'll actually design it. So, as we're industry super funds come in, and black crockers as well. So, it actually works really well. So, we also do a little bit on the property side as well, looking at that income year. We've been doing that for the last probably five to seven years, just providing good income for those retirees and required, especially when interest rates are really low. - Okay. So, basically outsource the portfolio construction and investment management so you can focus on the planning side of the business. Yeah. - Yeah, that's all about strategy. And we do, again, we do values based advice utilizing that aluminum platform. So, understanding what those core values are for each client, because as you start to, we talk about the young and those layers of the young and, I think, with financial advice, if you're only getting in one to two layers, then you're potentially being a little bit more on a product, product advice side. We're getting into that fourth and fifth layer. They are really understanding what the values are for those clients and what's really important to them. And sometimes that's not just about investment. It's about what those core values are on the Y. Why are they living life the way they are? - That's good, that's good. I noticed on your website, I had a look at that the other day, and offered tailored and professional advice service to optimize your finances and provide you with a financial piece of mind. That basically says it all, doesn't it? - That's good, yeah. - Yeah, that's a good, good starting point. There's been tumultuous change in the industry over the last five years. You've been around for a long time, not as long as me. No one has. But it's, you've seen a lot of change over the last five years. You know, advise the numbers that reducing education standards going up, banks withdrawing from financial advice. What do you see the biggest challenges and opportunities for the profession over the next five years? - Five years, look, I think QAR is that, that'll be interesting just to be able to see where that fits the way that we should provide advice, 'cause I'm big believer that at the moment, you can't look after more than, say, 120 clients right now. - Yeah, just for the audience, just explain what QAR is. - Just the, the, the, the volat, Quality Advice Review, the Australian Government, especially doing, sorry about that. Yeah, Quality Advice Review. So that will hopefully minimize some of the, the getting rid of the statement of advice and actually come back to, probably similar to what we do. We, we still have a statement of advice, but it's by video, but it's just small chunks of advice provided to clients, so, yeah, a lot more efficient. So, so the one thing for us, we think that, as long as that can get through, then the 120 clients you can look after, we think as long as you technology enable business, that you can get up to around about 200 clients, and actually do that efficiently. So that also means that your, your administration people aren't just doing applications. We've got that sort of, off-site, but they are, they're actually become more client manager roles. So I think that's probably a key ingredient there. It's just one advice is not going to be able to look after 200 clients. They're going to have to have a team around them to be able to manage those particular clients. So I don't know where fees are going to go. I still think for what we do is high net worth clients, they're, they're still, I don't think the fees are really going to change too much on that side, but certainly the small undertown, the ones off fees. I think that'll actually start to increase through, through what a financial bias is you're actually doing. And probably though, the big change that we are going to see, and we're already seeing it already is the baby boomers. There's going to be a lot of baby boomers coming through the next five to 10 years. So for the number of advisers, if we're looking at 16, 17,000 advisers, we just can't cope with the amount of baby boomers that are coming through. So we need to get those numbers back up. So, so from a profession point of view, it's just, it'd be fantastic. I'd love to be able to get my girls into financial advice. Because I think it's just going to be a great profession going forward for the next 10, 15 years and beyond. - Yeah, I think you're right. In that regard, you know, let's advisers and proving demand. It's not a bad place to be. We've talked about, I wanted to talk about opportunities. Well, that's obviously one. One question I did have is a lot of advisers, I think we might have talked about this over the years. A lot of advisers hit their limit as far as the clients are concerned. And then you're faced with the problem, how do you move them on? - Yeah. - Do you do that? And any tips for the audience on how you do that? - Yeah, it's, it's tough. Definitely, we've, I think we went through the first around about 2014. So we were one of the earlier businesses that actually worked out how profitable our clients so you need to be able to understand that. So we actually went through, and that's probably where the fixed fee came in. So it doesn't matter, like for retirees, like percentage fees, it just, it doesn't work in my mind. So comparing a client who's got a million dollars versus 500,000 dollars, I could actually say there's more work than a 500,000 dollar retiree with Centrelink issues compared to a million dollar client that has no Centrelink. So why are we charging one client more? So anyway, that's probably how long a conversation could have there. But yeah, so I know you actually just lost my chain of thought there, Chris. - No, we're just talking about how you, you know, you get your capacity. You have to move clients to one of your colleagues or have that conversation, any tips there? - Yeah, we've, we've done that really well. So there's, there hasn't been a, I don't think there's been one client that we've actually lost by actually moving to another financial advisor 'cause we are a team approach. So when we bring a new client on, we've got six advisors are actually going through that one particular client and actually working out a strategy. So all our financial advisors pretty well understand what majority of their clients where they are and what we're actually doing for them. So that works really well. So that also means from a transition point of view, especially for me that started the business back in 2007. And some of these clients, I had from back in my Westpac days. So they've known for 25 years. But we haven't had any issue with all transition of the clients. I think clients just want to know that number one that you're there as support for that financial advisor. But they also understand that there's so many hours in the day that financial advisors just need to make sure that they're looking after their key clients for what their skill set is. And I think that's critical. But for me, I've been out of insurance for a long time. So why would I be talking about insurance for my clients? So we've got an insurance financial advisor just specializes in that. So that makes sense. And we've got a financial advisor that just looks after all their settling clients as well. So I think that actually works really well when you actually got those specials financial advisors in your business. But we've had to do that through that accumulation of advisors to get there. - Yeah, it makes sense. You've got specialists in your firm that you can sort of wheel in for those various categories that you mentioned. So we're just about out of time. So a couple of questions to finish with. What's been the biggest learning over your career? - My learning is all about, as a business, it's not about what you're trying to do efficiently and profitably from a business point of view. Always look at from a client point of view. Is it what does the clients want? And what are the service that you need to be able to provide? To provide that good service that will actually get them from remaining as a client. So building that loyalty. But then also they'll refer other clients. So that's one of my big learning curves. Always look from a client point of view. Not a business point of view. Cause I know there's always different advice that comes out to these business people. And sometimes they lose that. They don't lose what we should be here for, which is our clients. - Yep. Put yourself in the shoes of the clients. Always a good thing to keep thinking about. Okay. And in conclusion, what's the best bit of advice that you've received out of your career? - Yeah, I'll still come back to strategy strategy, which has really set our business apart. Strategy and I'll even throw in their innovation. Don't be scared of innovation. Because again, I'll bring up that video advice that we provide. No one was doing it. And so we had a lot of hard work there. We had to do to be able to innovate when it came back to that video advice. And then you've actually got a regional financial vice practice that started video advice in Australia. You don't have to be a big business. You can still be able to innovate with anything you can do. So, but you still got to take a little bit of risk that you need to make sure it's measurable as well. So you need to make sure you've got the legal side cupboard and doing everything that you need to be able to do correctly. But certainly innovation, I think here. If the more innovators that we've gotten now in our profession, the better they are, professional will be. - Excellent. That's a good spot to conclude. Thanks for your time, James. There's a lot of good stuff in there for advises and good to see regional advisor that's sort of forefront of innovation and change. And congratulations on building a successful business and all of us. - Thanks Chris. - Thanks for having me. - Bye.