#395 Tony Smilevski – Transcript

James Wrigley
Hello, welcome back to another episode. Today I’m joined by Tony Smilevski. Tony, thank you for joining me.

Tony Smilevski
Thank you for having me, James,

James Wrigley
Appreciate you reaching out the other day to, to have a chat, I’d actually seen you some of your stuff popping up on LinkedIn over the last little while learning, you put the odd, the odd post up written or otherwise. So it’s in your name popping up a bit. And then and then you reached out to somebody, why don’t we do a podcast which will, which will be great, I’m keen to understand the space that you’re working in. So thanks for joining me again. Thank you for having me. Maybe if we start like we tend to with, with most most guests a bit about your journey in financial advice, maybe what are you doing at the moment? Maybe why don’t we start there. So you run your own business, tell us about your own business,

Tony Smilevski
Yeah, running my own business, selling retail life insurance, the exact same products, all financial advisors would be selling as an authorized representative and not as a financial advisor. That’s that’s where the current business sits. My background, when I started in the industry was providing general advice back when it was a very different place playing field back in 2012. And moving on from there. I moved into after about four years or so that I’ve moved into providing financial advice as a risk specialist. That was about the time when the Royal Commission began. And then, at the time of the recommendations and the changes that were happening because of the Royal Commission, I stepped into business or partnership with business accountants and another financial advisor where we were I was providing the risk insurance piece of advice. And after a few years of that, the changes that everyone saw the hurdles that were put in front of us from the compliance requirements, it meant that and like a lot of other advisors would relate that it wasn’t profitable to be running just a risk only. It wasn’t profitable to be running a risk only specialist business. In our scenario, you there’s a lot of advisors, obviously out there doing it very successfully, and kudos to them great work on it. But for the majority of us, it meant that we either had to be providing holistic advice, or find another way to provide a risk advice. And that was by charging a fee. And with our business model that we had in place meant that holistic advice in the business that we set up for the risk insurance wasn’t really an option. As the clients were already clients of the firm that were receiving advice, in some form, are charging a fee also wasn’t really an option, because they were already paying fees and the majority of the clients that we were dealing with at the time, and even now that I deal with that are referred to me from that firm, those clients aren’t looking to receive advice necessarily. They’re looking to just have some product put in place. They’ve got their advice team, they’ve got their direction that they’re heading in their semi professional professional already running their own business on a higher level. So they’re not interested in receiving the advice piece around the insurances, because they’ve already risks received that in some sense.

James Wrigley
Gotcha. Yep. So that business that you said that it didn’t work out to be profitable, were you? Were you doing insurance advice on that on a Commission’s basis? And then the tapering down of how those commission’s work that meant it wasn’t profitable to continue in this current fall?

Tony Smilevski
Pretty much. Yeah. So it wasn’t, it wasn’t profitable. And in the main hurdle being the compliance that was required to be ticked off, to get the advice out there, we did our best to streamline that process and make it as efficient as possible. But being a small practice, not having all of the resources that we could put into it. And I guess a bit of a timing factor of starting it at the time that the Commission’s that have to drop down, it might not have played into our hands very well. Hence, hence why I give kudos to those businesses that do do it profitably, especially off commission only these days, because they’ve had the ability to do that. But again, you know, doesn’t always work for everyone else.

James Wrigley
Yep. So what did what does your current business look like at the moment then? What’s the setup there and, and how are you operating?

Tony Smilevski
So the current business after all of all of this, there was a lot of other advisors that didn’t that up in the same boat. So for my decision, it was based off VI, whether it was viable or not to continue on in that direction. For a lot of other businesses, there may have been also education requirements that they fell short on. And other decisions that came with that. So for me, I’ve passed my fasciae exam. The second exam they ever had sat down with my business partner, we got it done, got started on the education requirements, which were getting ticked off. So everything was fine. But then I noticed that a lot of my peers or one of my colleagues were struggling in the same in the same environment, they they had all these clients, they had all this business. And it was a little bit frustrating at the same time COVID had hit. And that was early 2020. And I sat back and thought, there’s no point in continuing a business that’s not working in the sense that it needs to as a business. So what are my options out there? And I explored the general advice path not to not be compliant. A lot of advisors have this perception that general advice is a way to avoid providing advice. The reality is general advice is there to provide product only to clients, isn’t there? The perception they have that general advice is not possible, funnily enough is correct. Because it as an advisor, you can’t not provide advice to a client that’s come to you to seek advice, that you can’t say, I’m not providing you advice, they’ll always be under the perception that they’re receiving advice. So it’s a catch 22. The only solution to that to make it clear to a client is to not be an advisor in the first instance, hence why that stepped to the side to say, Okay, well, I’m no longer authorized on the financial advisor register. I’m just an authorized representative with ASIC. I’m licensed to provide retail insurance products. So it’s a limited license. And that’s all I do. So now I operate as support to existing advice businesses, which because of this void that was created by advisors leaving, whether it be for compliance reasons or profitability, or whatever the case may have been, or education, there was a void left where people wanted insurance, but they didn’t want advice. My people I mean, our our clients go to, and a big part of the Australian population that isn’t interested in receiving advice. But once the more direct service, they don’t want to go online, they don’t want to be told, you know, here’s, here’s an option to click a button and you’ll have insurance they want someone they can ask a question to, they know they’re getting factual information. And at the same time, they know that if they do want their device, they have someone they can be referred to, which would be their financial planner that they obtained from. Yep. So to give a real life, to give a scenario that I see often is a client that would be looking for advice would go to their find an advisor that have been that has been recommended by someone that’s happy, they received the advice, they sit down, tell them what they want, you know, I would just organize their mortgage, we want to have a million dollar life cover policy, maybe some total disability, whatever that conversation might be. And the adviser looks at that and says, Okay, well, there’s about a $1,000 commission in there. And so we charge a base fee of, let’s say, you know, minimum three and a half 1000 client looks at them and says, Well, why am I paying, and all I want to do is cover this mortgage. Traditionally, they would be set off to fend for themselves, in a sense. That’s where I stepped in as an alternative to the online option, or an alternative to them going elsewhere where the advisor says, Look, based off our initial discussion, you require a product but you don’t at this stage require advice. So we we work with in partnership, in a sense with Tony insurance, Tony can organize that policy for you. There’s no advice that there’s no fees being charged. It’s just commission only model. Yep. So if you need advice, or if you require any specific services, you’re welcome to come back to us. Now, mind you, this only works if it’s just insurance, you know, with the you know, the fasciae code that if you can provide the service, you must provide the service certainly paraphrase. So if a client comes to you and I get this question often from advisors, they say, Okay, well if I do the investment piece, can you just do the insurance part? And I told them no, we can’t do that because you’re not meeting Your obligation there to provide all of those services. So it’s a matter of understanding what I do, and where I sit, because I’m not in competition with advisors. And no one providing general advice can compete with an advisor, we don’t provide that service, what we actually compete with, is the online channels. So where you know, if you happen to be an online business, providing all insurances with the call center, that’s who my competitor is. So your your decision as an advisor, or if there was an accountant out there, or mortgage broker, their decision is, do I send this client to online to buy their insurance and hope that the call center person does right by them? Or do I send it to someone that I have a personal relationship with them professional relationship that I know will tick those boxes, and keep me in the loop. If we need anything, which that client needs advice, they’re not going to be referred to some other advisor, if they need another service, they’re not going to be referred to some other third party they have

James Wrigley
so far is if we talk through, like sort of sci fi, if I play the advice own the traditional financial advisor. So as you said, we know we have a duty to do if we identify a need for something even that might not be necessarily what they’ve come in asking for. But in in the, in the financial advice process we identify a need in any insurance is a is a pretty typical one with a lot of the clients that I work with, they’re not coming in saying, Hey, James, helped me work out how much insurance I need, and what what the appropriate product is, and how I should, you know, pay for it or hold it? What will what that’s often being driven by me as we go through the the initial engagement with the climate, say, Hang on, you’ve got a bit of insurance in your super fund here. But you’ve got this mortgage, we’re talking about buying this thing or doing that thing, and we need to look at it. Do you want some help with it? And so then, then the onus is on May to do a whole needs analysis of how much insurance should they have held? Should they hold it? Which policy should they be looking at, and all the rest of it, and I get, you know, there’s limited commissions on the other side, unless someone’s paying for it for an upfront. So if that client comes into me and identify a need, this isn’t so much about outsourcing that fulfillment of that need to you, as you just said, is No, not at all. So how does that how does? How does my client that comes in to see me for James, I’m 45 years old, I work for this tech company, I’ve got all of these RSUs vesting my home loan this that the other in the mix of that we identify there’s a need for insurance. I have to deal with that, myself. How in that process? Do you get involved? Or do you get involved at all? Where does that fit?

Tony Smilevski
That’s the most common confusion that comes about with advisors. And it’s understandable, right? Because the clients come to you for advice, and they describe their situation you’ve identified needs. That is not the client that comes to us. Yep. So the clients again, that come to us, or the clients that before you do any of that you identify, they’re not a fit for your practice, if there’s no advice, they’re not interested in paying a fee, or the commission component, that if you’re a commission only practice isn’t enough to cover your fees, where you identify from the initial discussion prior to going into any detail what their expectations of you are as their advisor and say, Okay, well, you just need an insurance product at this stage, or you just need the cover that you need doesn’t seem like it would be enough to cover our fees, where you don’t want to pay fees. Okay? For the time being, you’d be better suited going to just buy the product over here. When you’re ready, then you can come to us and go through that process. And that is where we sit we are the I’d say the first step, the ground level, be it not even the first step of the advice. Staircase.

James Wrigley
And so so when you you’re saying to like there’s no advice you’re not you’re not providing advice, that how is it that someone has a million dollars of life insurance half a million dollars or $5 million worth of life insurance? Where does that number come from?

Tony Smilevski
Great question. So that again, from an advice standpoint, is very contentious and confusing to everybody involved? Because to determine a figure, it requires a conversation, and it’s a conversation of what the client needs. The difference between general advice and personal advice is what the client means versus what the client wants. Should when they come to us. We don’t ask them, what they, what their needs are, what their situation is. We obviously we don’t consider any of those things. Those things. All we ask, the only question we ask is, What do you want? And the client says a common or common responses, I don’t know. Right. And that’s where the difference can become very great. However, the right process and understanding your obligations, right, and the right compliance regime in place will make sure you’re working to the right standard. So whenever clients ask that question a while I’m not too sure. It’s always about what they want. So we go back to that, and say, Okay, well, look, if ideally, you were to put something in place, what would that amount be? Let’s have a look at what the options are. And then you can work backwards or add more if you want from there. Now, everyone has a rough figure in their head, the easiest one to refer to is their debt position. Official, we don’t bring that up ever. It’s just asking them the question of okay, well, listen, if you had a figure in mind, what would that figure be? Let’s start there. And then you can let me know if you want to add or remove something with each product. We ask them the exact same question so they can amend our, they can choose different figures. But it’s always making sure that they are directing the conversation rather than the advice way of us directing the conversation. And I feel a little bit better equipped, in some instances to do that, because I’ve gone through the advice part, and being an advisor, so I know what I do as an advisor. So every, every time I have a conversation with the client, I just do the opposite. And I always say, I always say to advisers, if you’re using your brain, as a general adviser, if you’re thinking you’re doing it wrong, you shouldn’t be thinking, if you let the client do the thinking, you just do the key entering and factual information providing so when they do ask the question of okay, well, what is what is real trauma reinstatement? You know, what does trauma cover, you can give them the factual response of what the insurer is provided as trauma covers what the general definition around trauma, it’s some general statistics, so they’ve got a concept of what they’re looking at. But again, you’re not promoting products, you’re not selling products, you’re not advising the client to purchase a product. If you take it to step one, you’ll know you don’t have to do that, because they’ve called you to buy a specific product. So I don’t need to talk to them about, you know, double buyback on life with TPD. Own through Sue, but I don’t need to go through that Spiel because the clients called me for something, I just need to implement their request.

James Wrigley
So how do you decide then? Or how does the client decide? Because it’s it has, it’s not you giving the advice, the clients making a decision, while they’re telling you what they want? So I guess it’s the first part is, how much insurance do they want? The second part might be, how are they going to own that? Whether they pay themselves whether they have some through soup, or whether it’s half half, you know, what, whatever? How is the client making that decision? In Question, where does that come come into the conversation? Question?

Tony Smilevski
You and I both have young kids. There’s this picture, lunchtime, Franklin, with your toddler, if you start asking them, and giving them options and 50 different options of what they want, or what’s what’s on the table that has everything thrown in your face and no decision. So it’s a matter of giving exactly what they’ve asked for in the first instance, and staying on message. So I don’t need to introduce concepts. When they say, for example, I want some life insurance and I want some total disability cover. Right? I can ask them okay, well, what do you ideally want? We’ll come up with a round figure. I’ll let them know. Okay, based off what you’ve requested, the approximate premiums about it will starting from $1,000 per annum and I’ll be met with a response. Ah, okay. That’s a bit more expensive than I thought, whatever it might be. We can determine a figure that way based off premium if we’re not discussed as a decision maker. But the client direct that conversation when they see you know, odd Ideally, I’d like 5 million of total disability. Okay, client, Mr. Client, well, that’s going to be you know, $10,000 per annum. Oh, no way. I’m paying that. Oh, that’s way too expensive. Okay, well, if we To reduce it, what would you want the other figure to be? Well, let’s try 2 million, or that’s still expensive. Let’s try 1 million audits still expensive. So they’ll make a decision of what’s important to them. Exactly in the way when you when you can do a needs analysis, you’ll determine what’s important to them what they want to cover, how to discuss the price, we don’t ask those questions, but we just lead into those questions based off their responses. So they’re not concerned about price. I’m not concerned about price. When it comes to more technical questions, like, would you want to pay for this out of your superannuation? Should it be half half? What’s the ownership? What’s the any your own occupation? Those are questions we posed to the client, as part of our checkboxes as our script. So we have to discuss the options, we let them know what those options are. And then we let them make the decision. So in the superannuation instance, it’s, you have an option that you can pay for this premium out of your superannuation, or you can pay for it out of your own pocket. So you might have experienced with this where your your current cover, or you might have previously had cover might have been going through super, you know that they have or haven’t, they can ask a question, we can give them a factual response. And then they’ll tell us, no, I’d like I’d like to pay for this out of my own pocket. And I don’t need to ask why I don’t need to get into specifics. One thing to note, on this whole, in this whole discussion, is this clients most likely come to me referred from an advisor. And they weren’t, or advice for whatever reason. Yes. So if I’m having this discussion, and the clients giving me signals that they have zero idea about what they want, they’ve got zero idea about what they’re comfortable with. We’re not there to sell a product where they’re doing execute their request. So if they’re really stuck, I’ll bring that conversation back up and say, Look, you, you’re really not sure that doesn’t seem to be making too much sense to, I know that James referred you for me to get this product in place for you. But I really think you need to speak to James to go down the advice path, because you’re going to make some decisions that you’re definitely not going to be happy with. Yeah. And you’re going to end up canceling in that instance, you would have spent your money for nothing. And that’s it. That’s an easy conversation to have. So

James Wrigley
it’s almost what’s it’s all starting to make sense in my in my heads. Appreciate the explanation. But it’s sounding like it’s almost like that, and we’ll get we’ll get to product. Question about how do you decide which product but from which insurance provider, we’ll get to that one in a minute. But when it comes to, like, you’re afraid to just kind of tick a box in your process, it’s almost the bit that’s standing out in my head, it’s almost like you’ve got the application open with the client on your computer, and they’re sitting there, and you’re helping them use it as you go through the application. You got different boxes for different options about add ons, this thing and that thing and ownership and and how you want to pay for it. So you will just help it it’s almost as if you’re just helping them fill in the application form.

Tony Smilevski
What exactly?

James Wrigley
Would that be a fair bit? It’s maybe not the process. But would that be a fair assumption if I was trying to get it to make sense in my head?

Tony Smilevski
Yeah, I haven’t put it that way. But I like that. Yeah, it is very accurate that that is exactly what we do. We just go through that. And again, we’re the alternative to you sending them to a call center. Yeah, to do the exact same process through

James Wrigley
the person on the course ends is just going to help them complete the application anyway, are they?

Tony Smilevski
Exactly and they’re employed to, you know, just do exactly that, where we’re here to build a relationship with the advisor.

James Wrigley
It’s in so the product piece, we know there’s half a dozen or however many insurance companies there are out there in the marketplace. Yep. How’s the client deciding where which insurance company? They want to go with? What what’s what’s driving that decision?

Tony Smilevski
In my experience, it’s always price tip. When I say always, I’ll say 99%. I have had clients say to me, I haven’t heard of these ones, not to mention names. And funnily enough, they’re the biggest insurers in Australia. But I have heard of this one here. And they’ll go a little further down the list. I’d be more comfortable there. Again, I’m not there to tell them what to do. One question I get often, and this is I always like explaining this to advisors is the client says well, there’s 10 of them on this list. Which one should I go with? And I have to I have to answer that question. Right. And that has to be factual and not influenced their decision. So I explained to them okay, well, all of the insurers on the list to contain the benefit amounts and parameters that you’ve requested. So is there anything specific that you’re looking to have with this policy that I can, you know, have a look and provide you the PDS or the wording? Or are you happy with the parameters that you’ve set? Up? Like, oh, there’s nothing specific, are well, okay, they all have everything that you’ve asked for, on this as we were preparing the quote. So we’ve just arranged them for you from cheapest to most expensive. Yeah, but which one? Would you like to proceed with? Like I will, was there any reason why should go with a more expensive one? It’s up to you. And I tell them, sometimes people choose one because they know the insurer or sometimes, you know, they make a decision on the price. What would you like to do?

James Wrigley
So do you do you this list? No. So they’ve set the r1, half a million dollars of life and total disability insurance. You do your quotes somehow in your in your process? And you put this list in front of them? Do you have in the having that list? Does it just say Insurance Company A, B, C and D? Or does it have the name of the insurance provider, and then the associated cost with that insurance provider?

Tony Smilevski
So they they provided? So initially, they’re provided with the FSG privacy policy, links to the PDS is just an initial welcome email. Yep. And then post that when we’re having the discussion with the client, we emailed them, what the estimates of all of the insurance which will contain the insurance name, product, we’re just trying to remember. So they’ve got the logo, the insurance name, the premium, and if there’s a breakdown, so we’re using just a premise all of that as well, when using the popular comparison tool, software. So it’s not like x plant? No, no, no, but you can, I don’t, from my having used explained previously, risk researcher, the the view that you’re picturing with EX plan risk researcher is the same, if so that’s what the client is seeing, in a sense when we send it to them. And they’re seeing the estimates of all the insurers and they’re making a decision, based off whatever it is, they want to make a decision of that obviously includes the pdss. So there’s no specific ticks and crosses to sway their decision one way or the other. It’s just, here’s the information. You ask me what you want to know. And I’ll provide you with that factual information.

James Wrigley
Gotcha. And do you have to go? See you got any of these kind of limited license that you’re explaining? Right, right at the start? Do you have the same auditing obligations and all the rest of it that that other financial advisors have to go through from licensees? Like what what does all of that look like in the in, I guess, in the back office for you,

instead of not not to talk too much about, you know, business practices, this, but every licensee will have their own compliance regime, full advice, person, you know, personally advice or general advice, they’ll have their own systems. We’ve all got our own responsible managers and who have their own view on how things should be run. So we’re, we’re meeting the requirements that we need to meet that we’re required to meet under. As general advice advisors.

That’s fine. Something that popped into my head because it like it says, I can say, I don’t know, it sounds like it. It sounds like a great option. I don’t you’ve you know, that in the half hour that we’ve been, that we’ve been chatting, you’ve convinced me about the place that you that you can you kind of fit in, in the whole advice landscape of full, full advice at one end, and we’re in this world of, of someone’s come in asking for this thing, but because we have a duty to uncover, you know, ask some deeper questions and go back and do some research. And then we’re often having to prepare advice that covers off on all of these different things that have, in at least in the first instance, nothing to do with what the client might have come in asking for in the first place. And, you know, at least in our, in our business here, insurance is that real sticking point that we do some insurance advice that we’re not we’re not a and then a risk only business. So you know, so getting through that insurance advice piece is probably the hardest part in our whole process. I would think preassessment underwriting the advice you know, getting the products across the line and all the rest of it, and I can absolutely see where If I were you and your business and your service would, would fit into that for the right clients, fantastic.

Tony Smilevski
Yeah. And I think it’s important to to understand for advisors that your job is to identify the client at the door. But once they’re in the door, then it’s then it’s a whole different ballgame. That’s your process. But out of that door, you can see, okay, this is a sticky risk insurance client risk only. I might refer him to another advisor that does advice on risk insurance, and there are specialists there. But the reality is the majority of people in Australia don’t want advice for some reason or another. The funniest thing that I’ve seen in my experience as an advisor, is having great relationships with accountants and mortgage brokers, and having a hard time getting referrals because they don’t want their clients to get advice, in the sense, because they feel like that’s stepping on their toes in some way. So any sort of questioning around their, you know, their situation is awkward for the accountant or the mortgage broker. So our service is a, you know, great place to, you know, compliment the businesses to say, Okay, well, how about, we just work as an extension of you, because I’m not here to build a relationship with your client. I’m not here to understand their family and Estate Planning needs and wants and tax situation. I’m just here to make you look good. And how do I do that? I just, I just sign them up to an insurance product and do it efficiently. And the client thinks, Oh, my God, James is an amazing person here. Look at this amazing part of his business, I didn’t have to stuff around for whatever period of time. So that’s the, that’s the fun part of what we do. And a lot of people as well mix it up between direct insurance, General, General Insurance, general advice and direct insurance to, again, we’re not direct, we’re just, we’re just the kindergarten version of a financial planner, is really how I would say it. So we’re just there to provide that product. And there’s, the funny thing is, there’s hundreds of us, they’ll know we exist, we do business every day. But not many of us bother making any sort of noise about it. My my, my business is based solely on referrals from other professionals that don’t chase individual clients, I don’t try to sell insurance. I piggyback off your existing expertise and relationship and provide that level of service to your clients.

James Wrigley
I didn’t know people like you existed aside from seeing your face pop up on my LinkedIn feed. Yeah, I didn’t even know it was a possibility. So there you go. You’re educating me and everyone else that might be listening at the same time. Thanks, Tony. I appreciate you coming along. For anyone that wants to reach out and understand a little bit more if not work with you. Where can people find you? Where Where can we? Where can we track you down?

Tony Smilevski
I’m most active on LinkedIn. To Tony Smilevski. You can spell the surname you’ve been a prize. Do you want to spell it for everyone? Yeah. Smile. s mi, l e. V for Victor and ski. Ski down the mountain.

James Wrigley
Nice easy one.

Tony Smilevski
All Tony insurance? Yep. Anyway, that

James Wrigley
Perfect. Thanks, Tony. Thank you. Appreciate you coming along. I’ve learned a lot. Hopefully others have to. Thanks for spending some time chatting with us today.

Tony Smilevski
Thanks heaps.