Engine Room Podcast #11 – Dr. Paul Moran and Alex Hont – Transcript

Andrew Rocks
Welcome to another engine room Podcast. Today we have the pleasure of the dynamic duo from Moran partners, financial planning, we’re joined by Dr. Paul Moran. And Alex Hont will be attempting to wrangle these two giants of the industry and figure out what makes them tick. Have a look under the lead at their engine room and figure out while they’re part of the solution of driving efficiencies in financial planning. So Alex and Paul, welcome to The Engineering podcast. Thank you. Thanks for having us on. Really appreciate it. Great. And I’m also very happy to say that I’ve got someone who has been doing this, and is obviously, as insane as I am who’s been doing this from the 90s. And, Paul, you kicked off the business in the early 90s. I’ve loved first to hear your journey, because it’s, it’s quite remarkable. And then after that, Alex, I’d like to hear how the hell you’ve got involved and what keeps you there, and what makes you happy to be part of this journey. So Alex, sorry, Paul, over to you. Thanks, Rocksy. Well, you’re right. We started in as a financial planner in 1995. I came to finance from an unusual source. I’ve been a paramedic for about 10 years.

Dr. Paul Moran
During that time as a paramedic, I did an MBA and which believed NOC was not recognized as a management qualification in the ambulance service. So my ambition got the better of me and I left and and got a job with a wall people Westpac

Andrew Rocks
gonna ask me what why, what why you decided to do an MBA, whilst being a paramedic, I would have thought that that would have been a pretty intense vacation as a day job. Look, I

Dr. Paul Moran
had a I had a degree in applied science degree, which which I’d used before and got me into Hamilton. I was actually the first person Victoria’s Namco with a degree they actively discourage people from degrees becoming an an both. But I wanted to do a master’s in something that was unrelated. So an MBA was something that interested me at the time, he didn’t exam the GMAT exam, then I scored very, very highly in that so so reinforced it, so I didn’t MBA over five years did part timer for about five years. But I was probably too ambitious for the abled service, to be honest. And so after about 10 years, I left there. I also had enough of being an NBA, that’s a pretty tough job and went to West back at the time, Bob Joss had come over from America with Westpac to shake up Westpac, and he wanted to bring in people who had a marketing background, and my major was marketing in the NBA, to shake up banking, hated being a bank manager. It was a terrible job. But but that was at the time in the mid 90s, when they were just introducing financial advice. And so I hopped across to financial advice. Status a financial advisor and Westpac in 95. Within a couple of years, I was sort of the state training manager because you know, they figured I had a degree, the Masters I must be good at training. So therefore, I became the Trainee Manager and probably trained the best part of a couple of 100 people has advised us at Westpac during that time of massive massive growth a lot of people are still around in low and high profile jobs in the profession now. So that’s how I kind of got in but but I often describe the job has been quite similar to being an ambo.

Andrew Rocks
To tail Well, I think I think that the industry might have been in one life support for the last decade. So I’m really interested in your, your take it

Dr. Paul Moran
or not, I’ve told this story before and other people but but the job of an ambo is to know what to do. You know that no matter what situation you’re going to what horrible situation you’re in, people used to always say the same words, I always say it’s okay, the ambulance is here now. And they weren’t saying I’m gonna save lives, what they knew was I was wearing a uniform, I was expected to know what to do in that situation. And that chaos to calm is what we’ve carried through into our practice motto and how we operate because I strongly believe and my other educational background really confirms that. The reason people don’t seek advice is because they’re embarrassed and frightened. Not because it’s too expensive or not because we’re all crooks, but it’s because they’re embarrassed and frightened. And when they come in, they’re coming in in this chaotic mindset. You know, I’ve got all these things swirling around my head what’s gonna go wrong? And things like have I left it too late Have I got enough all this embarrassment causes this chaos and my job is to prove to them I know what to do. I can’t control investment markets I can’t make money out of nothing. But I know what to do there’s a process to go through and explain that process to them calms them down and they walk out calm and that’s our job is to help them walk out calm with their finances so cost account

Andrew Rocks
and Alex as a as a counter that maybe a bit about your backstory and and did your relationship with Paul and the team started as chaotic and is it calm now? So bit about yourself first.

Alex Hont
Yeah, sure. So look, I guess. You know, I sort of didn’t quite know what to do coming out of high school did a Saturday in a business degree because in with hospitality and tourism as the major because the first year was going to be Mount Buller, and I thought, how good is this, it’s going to be up at the snow got talked out of it, because it was a bit too, you know, sort of railroaded me into that that section and I sort of had, I might have had a bit more opportunities in other areas if I did a straight business degree. Anyway. So I was at uni. I had dreadlocks at the time, you know, living the life. And my dad actually saw Paul present at one of the investment conferences that you surrounded the exhibition center. And he’d become, he’d seen Paul, he’d be as as a club potential client. And I think one day he saw Paul, he said, Look, you know, my son’s kini, are you looking at taking anyone on? And so hence, I turned up to Paul’s office in a shirt that I borrowed from my dad and with the dreadlocks and, and started working there one day a week, at the beginning, and before coming on board full time.

Andrew Rocks
So legitimately, you, you had your first interview with dreadlocks? And what you bet,

Alex Hont
I reckon that might have been 2008.

Andrew Rocks
Right. Okay

Dr. Paul Moran
Look, actually, I might, I might jump in and say that my wife, we can do this at a time. And one of the reasons we liked him coming in was because he had dreadlocks. And then he cut them off. And we were shattered, that he cut them off.

Andrew Rocks
Is that does that coincide with the day that you were told you were seeing clients? Alex?

Alex Hont
No, no, it happened to me before then, look, it just got to a point where they needed to go. But I still miss them. Actually, I still have them, you know, tucked away in a bag somewhere at home, I couldn’t get rid of them. That was that was a fun period of my life. It sounds

Andrew Rocks
like an eBay job in about just just just part of yourself. And it’s super fun. Now, Paul, throughout your journey, is there been any sort of key cathodic milestones within that financial planning journey that has sort of shaped the way in which you deliver advice,

Dr. Paul Moran
but I think, coming out of the bank, you know, which was very sales focused, there’s no question about that very heavily sales focused, I always thought there was a better way that this is about proper personal loyalty and relationships. And I probably became very influenced by a book called The Trusted Advisor by mastering green a bit about it, which takes it away from regulation into relationships and, and being that person that the client implicitly trust for everything. Yeah, we get phone calls for all sorts of reasons. And but perhaps my background is pretty broad, you know, and so, you know, we can help people with, well, everything from choosing doctors to, you know, just all sorts of stuff that people come in and ask us about, and that that process, to me is something you can’t do unless you’re working for yourself. So, so being able to do what you want to do when you want to do it is something that’s really important to me. And it’s not, I’m not a corporate kind of guy. This is we don’t run a corporatized kind of a business. It’s a personalized business. And often described as a family business, we see Alex and the other team is part of the family. My wife worked in the business, my daughter worked in the business, my father, who’s 80 years old, still does a job in the business. You know, so everyone’s part of the family. And we treat it that way. And I think the clients feel that way, as well, part of a family,

Andrew Rocks
what quite often clients engage you as a family unit. So that makes a lot of sense. And I might just backtrack, the book that you mentioned, was the trusted advisor and who was the author, or just so I can,

Dr. Paul Moran
originally it was Meister MI, S, T, er, and green Meister and the original version.

Andrew Rocks
Yep, that’s always good to pull out some nuggets of gold for our listeners. And so that they can they can they can go on their journey. And Alex, yourself, when you started in financial planning 2008, how many months under the desk? Where you until we had the global financial crisis? And what did you learn from that? Look,

Alex Hont
I think I came in kind of in the middle of it, right? Or, you know, it was February 2008, when I started and I didn’t really know what was happening in investment markets or understanding at particular at the time, but you know, my sort of knowledge was starting to grow. But yeah, look, we started writing plans and starting to take phone calls during that time. So yeah, it really sort of got in in the thick of it was a good time to start. It’s,

Andrew Rocks
I had a recent person on and they started in August 1987. So potentially, you’ve both picked at the best time to start because it’s um, it’s best to get those band aids ripped off. So the actual business, Moran partners, maybe if I could just get is to paint a bit of the picture. Where are you located and just sort of the clients that one you like to service and the clients that are attracted to you?

Dr. Paul Moran
Sure, I’ll have a crack at that. Look. We’re located in North Carlton in a suburb in Melbourne in the north of Melbourne. But we attract clients from all over the state and some for me to state, mainly from referral referrals. We don’t really haven’t gone out of our way to focus on developing referral sources. We tend to grow organically. We have a couple of accountants who refer through to us but Um, but primarily this stuff comes through word of mouth or the construct of word of mouth. Now, there’s a significant age difference between Alex and myself. And so we have a different kind of not a core client, but it’s, but we have slightly different types of clients have come to come to see us. My clients have been around for more than 20 years. So so it might quite probably probably aged from from late 50s to 80s. But But new clients coming in in that pre retirement phase, which is typically when clients come and seek advice. From Alex’s point of view, he can probably talk about your clients, you tend to see

Alex Hont
Yeah, sure. So I don’t have that many in that retirement phase, I’ve got a lot, probably starting mostly starting around late 30s, through to mid 60s. So there are a few that we’ve taken on that are starting to hit that or have started to hit that retirement phase in the last few years. But we also get given where we are we we get a lot of clients inquiring about some ethical investment options. And that tends to be another area that I focus on within the practice, as well as this sort of, you know, the family’s mortgage, that sort of that sort of, you know, mid to late 40s, early 50s type client

Andrew Rocks
and maybe tease out a bit more in relation to that ethical sort of aspect of it. Why is that? And what what do you bring to the table,

Alex Hont
I think it’s just changing attitudes. But in particular, in the sort of inner north of Melbourne, it’s tends to be very left leaning. And to me, it’s more typical of that sort of attitude towards not just investment, but I guess lifestyle as well. And so I think we’ve seen it as an opportunity to skill up in that area to be able to provide that sort of a service to clients. So while we have some internal beliefs or ideas around ethical investing in how it should work, and pros and cons, and we also have developed some tools and abilities to try and tailor what we provide to the clients to suit exactly what they want. And that comes a little bit back to the questions that you ask, and then how but then also having a solution and being able to then provide something to meet the sort of answers to those questions that you get. It’s not a huge part of our business. But it is certainly a trend that we’ve seen, or I’ve seen, particularly in the last five to six years.

Andrew Rocks
And I like to quite often shift gears and talk about the practice of the practice next, but there was a section in your website which outlaid a professional consultation, which, which kind of appeared to be the bridge between providing information and people coming on board as a full client. Maybe if one of you could just give a bit of a feel for that, because it’s on your website, there is hourly rates. And there’s a bit of a disclaimer, but I thought it was pretty neat. So over to you in relation to that particular bridge that you’ve built.

Dr. Paul Moran
Yeah, so I might jump in on that one out? Well, we, we’ve always had a view that everyone who walks in the door gets what we call the treatment. And the treatment is that

Andrew Rocks
history coming out. That’s right, an epi pen, everyone gets an epi pen just to pick them up.

Dr. Paul Moran
But but the expectation for us is when they walk out no matter who’s coming in, they walk out thinking very positively about financial planning, and very positively about us. And so so everyone gets treated as if they’ve got $5 million, and a Catholic five cents, they all get treated the same way. They get an explanation, what we do, they get some help, and some tips along the way that we explained what we charge and how we operate. And we’ve talked about whether or not we think we can help them or whether there’s value in the assistance. The professional consultation comes down to the sort of client who wants to come in and ask some specific questions. They don’t want to become an ongoing client, they just want to ask him specific questions in a general advice kind of environment, but more than just saying, Do I want to use you as a, as a financial adviser? So that’s, that’s where the professional consultation comes in. But, but the treatment is important, because we don’t want to be outwardly disqualifying people, you know, obviously disqualifying, you know, you’re not suitable for us. So go away, we want everyone to be thinking positively. Hence, we have a constant stream of people coming in. Because because they talk about us in positive in a positive way, you know that by not by not trying to disqualify them. In fact, by treating them with respect and helping them where we can, they tend to refer refer become clients, they tend to still refer to us. And so we get a lot of referrals,

Alex Hont
or some of our best clients have come from those people that came in didn’t become an ongoing client, but walked out with a great impression. And it might not be next week, it might be a month or two or even a year later, but someone comes in and he says, you know, we often ask so, you know, how did you hear about us? Where did you find out about us? And they say, Oh, I spoke to so and so you know, a year ago and they said great things and I’ve just had a you know, haven’t got around to it, but here I am now and then they’ve been some of the best clients I’ve taken on

Andrew Rocks
and just to, you know, to meet to, to that. You actually have articulated, you know, a fee for service for when people love doing that. It’s, it’s on your website. It’s, you know, it starts at the associate, associate $160 and goes up to the senior partner so you You know, this industry is attempting to move into a more professional kind of lens in the general public. And, you know, historically financial planners have been the only people, professional people who’ve gone and done degrees and postgraduates who don’t charge for their, their first consultation. And I don’t imagine that the first time you ever did that it was overly difficult to take money from people, would that be correct?

Dr. Paul Moran
Correct. We often don’t charge for the first appointment, knowing that professional consultation is an option we say at the end of the meeting. Yep. If at this, if it seems to us, you’ve come in, just to get some questions answered, I’m going to come get give you a bill. Yeah. If you’ve come in to genuinely see, you know, I’m looking for a financial planner, and can you help me, then then that’s fine. That’s what that’s what it’s part of the cost of doing business, you know?

Andrew Rocks
Absolutely. And that’s the bridge. And I think for a lot of people, I think by putting a value to that, as as actual or nominal as it is just positions, you’re highly so that when they get to a juncture in the future when they need for financial advice, as Alex intimated that they come back to you. So you’ve got this wonderful, broad platform, you’ve got this, this stretch of ability, as far as an age demographic, that you can attract clients, you’ve got a great way of engaging them. But what I want to ask you next is how they what happens next? How do you actually run the business? So? So maybe, Alex, if you could give me a bit of an idea of the organizational structure? Because, you know, from previous conversations, you are you You are self license, you run some stuff, but I’d just be keen to hear how that operates. seamlessly. So those client experience or the treatment, as you intimated, is smooth from from from that aspect?

Alex Hont
Yeah, sure. So we are self license, which, you know, as Paulson, I mentioned, gives us the ability to make some decisions, and to have a bit of autonomy around how we do the operation and providing advice. We tend to operate in a kind of a pod structure with the advisors and their client bases. And so while we have a, we just kind of have three running at the moment with the way that the advisors set up, one of them is particularly bigger than the others, but also has a bit more resources sitting behind it. But yeah, you’re right, there is a challenge sometimes in making sure that it’s consistent, especially from a license point of view. But I guess that’s where you start leaning on some of the tech stack at a license level, you know, what, while we do operate as pods and have some autonomy, within those pods, we’ve made some decisions around Okay, well, how do we manage this at a license level and and across all advisors so that we’re all on the same using the same sort of platforms is in the same processes, with an ability to tailor those as the advisor likes, but we we usually discussed that as a more as a team. If something if there’s something that someone wants, we’re not, you know, we’re not tyrants. We try and accommodate if it’s going to work. And

Andrew Rocks
so you’ve got the three, there’s three pods, as you say, one, one’s a bigger one that’s probably got to do with history and just just a scale. And you have you share the commonality of the licensing. So the, the governance and whatnot. You You’ve also also mentioned there that you share the the sort of investment management’s What do you operate an MDA or an SMA? Or was that is that a commonality? Because in these particular structures that that is historically what’s been done? What what do you guys do?

Alex Hont
Yeah, so I mean, while we do operate as pods, the commonality does come back to the investment management side app signing an NDA, I think we started back in June, or June 2014. So we were we made, we made some decisions a few years ago, when we you know, Paul, and I were doing some research around managing portfolios of the dynamic asset allocation, and how do we manage and balance downside risk? In particular, we in managing asset allocation for clients? Now, you know, we we had a lot of clients on platform. If we we had a look at actually how do we implement this sort of dynamic asset allocation where we’re looking at a few particular indicators at really was around changing the equity allocation. And so But practically, to implement that, and actually roll it out would require a huge number of personnel is to write the ROA days, and then actually to physically action, the transactions one by one. Now, this back in 2014, we didn’t have some of the model portfolio tools that are around on platforms today, and that the smart ROA days and those sorts of things. So we went down the path of looking or what else can we do? And the obvious standout was using a managed discretionary account service. Now we didn’t have an NDA license. At that point, we were self licensed. At that point, we didn’t have an MBA license. And so we had a look at who we could partner with and and we became appointed as the investment managers on the platform. Now even though we have the different pods, we we have an investment committee that was set up at the time, which we all sit on, and so we all have a consistent view across the practice as to what our investment funds was a few years and how those portfolios run and even the portfolio decisions that get made. So there is a consistency across for all clients across that.

Andrew Rocks
So I like in the engine room to running a Formula One. And, and quite often, the the engine room is the pit team is the design team. And the advisors are the other race drivers. The departure here is is that it’s still the case in that the engine room and all the operations is done by the pit crew. Your advisors are the race drivers, but every so often the advisors have a meeting together to see whether or not they can build a better racecar, would that be fair to say?

Dr. Paul Moran
I think that’s right, I think we have a uniform approach what Well, we’d not every client sits in the NDA, we have by the way, we have an NDA and an SMA offering, depending on the platform and the trustee or non trustee. But the portfolios are the same, we just found that having you to form portfolios like that, in that structure allows us to have I think, up to 50% more clients per advisor. Because because the risks and the workload around transactions is reduced to almost nothing. You know, the process of changing a portfolio takes someone Alex does most of that but, uh, physically but but that process of changing from from a product A to product B within a portfolio, or increasing or decreasing allocation is that he’s done it in a matter of an hour across the entire portfolio. So it’s not always sometimes it’s said we’ll do

Alex Hont
it in minutes, just get a little bit more care and attention. Sometimes

Andrew Rocks
you’re coming up to 10 years as an MBA. So in 2023, what’s the platform that you run through and, and sort of what’s the platform that you place most of your MBA money with?

Alex Hont
So the MBA runs on the we started with called managed accounts.com.au, which has been rebranded as explorer wealth, which was recently bought by hub a few years back, but still running under the Explorer badge, Explorer wealth badge.

Dr. Paul Moran
So actually, we also run an SMA with the same portfolios on the Macquarie platform. So McQuarrie offered us to put two of our two of our portfolios, which are income focused on their platform. So explorer didn’t have a trustee option at the time. And so the trustee version sits sits with with Macquarie

Andrew Rocks
will you’ve you’ve had to hustle because you were very early adopters, in relation to the types of clients and this is probably directed to yourself, Alex, given the demographic of your clients being younger, does your digital business offer life insurance? As part of it? Or do you refer out what how do you handle? How do you handle the life insurance advisory component? And then importantly, how do you actually implement it and make money?

Alex Hont
Yeah, good question. I guess I started doing a lot of the insurance for the practice, going back a number of years and sort of took over that part within the practice. So when people would come through, particularly the risk only people I look after them, but even then, you know, I would refer internally within the practice. So yes, we do it. It’s, it’s, I have to say that the risk only part is not something we really want to do, we still do it. But it’s it’s not something that we, we really love doing it that it is a challenge to try and make it profitable. We’ve tried to move as much as we can towards a fee for service model. And I’ve had a tough time trying to figure out how to price that risk only advice and your fee for service model, I liken

Andrew Rocks
it to the issue is fee for services. I’m pretty sure that anyone who’s got to the hospital after being delivered there by an ambulance after the fact is more than happy to pay a fee for service for the ambulance. But anyone moments before that tragic accident probably doesn’t see value. And is that the correct analogy?

Alex Hont
I don’t I’m not sure if it’s exactly the case, I think we’re you run into a bit of trouble with fee for services, often that year, one piece when you’re asking the client to pay not only the insurance premiums, but then to also pay the fee on top so that that’s all they’re paying twice anyway. And then they while you can explain the benefits of looking at, you know, your discounted premiums over the years of the policy. Yeah, that’s where it becomes a little bit more unpalatable in the in the first year because they you know, as you know, insurance costs can be significant, especially when you’re putting an appropriate level of cover or you identify the client here all the areas of risk that we see or gaps in your in your insurance program and here’s what it’s going to take to cover them and unfortunately, here’s what it costs. So I think it’s it’s not so much that people are not willing to pay it’s just there is a level there is a point where they say that’s just too much I just can’t I can’t go that far. I can’t pay that much for for you know that that much of an outlay to put this in place.

Andrew Rocks
Yep, that’s fair enough. And having your own license also gives you the ability to make other decisions. such as whether you have contractors in house or out house or, or whether you are what the composition of your tech stack would be. So maybe out of those two, I might just start with the tech stack. What is the tech stack? That Moran has? And I do know the answer to part of this because we’ve had a chat off air and I can’t wait to elaborate more. But But Alex, yeah, what’s, what’s the tech stack of how you guys deliver your advice?

Alex Hont
Yeah, so right now, we’ve been in work sort of as our CRM for a long time, given that we’re self license, we also have the, the job of managing revenue collecting and managing revenue, and then matching it off against clients and work sort of seemed by far the most efficient and cost effective way for us to do that. It also comes with all the, you know, the workflows, the task management, the compliance record, the ability to communicate, so that that’s sort of forms the basis of where we start, what we then have to look at is how do we add the advice tools. So things like we still use x plan X tools, plus, we have Marcus in our practice, who I don’t think will ever be able to leave x tools. Plus, I think we’ve tried, we’ve looked at other options, and he’s just absolutely wedded to it. While you might do it is still probably the best cash flow modeling tool around. So nothing against that. But we we often use voyant as the case is the cash flow modeling or projections tool, it’s really client friendly, it’s very visual. Even if it sometimes can’t tease out some of the more complex scenarios, he does a really good job most of the time. One of the key parts that we use, which is, you know, when we tried to move away from this idea of paper factfinder. And I’d love to take some credit for this one. But but really, Paul decided that the paper platform wasn’t good enough. So I’m gonna He’s gonna build his own platform. So I might say to you pulled us to talk through Ifat fine, which is another key component of our tech stack and of the things that it can do.

Dr. Paul Moran
Yeah, sure. So Robin, heavy, go Rocksy. So what I guess, look, about five and a half years ago, myself and my business partner, sat down, looked at looked at what technology was missing in advice, and started the process of identifying that, in fact, where it’s thoughts is the client data. That’s where everything starts calling information. And holding client information in a uniform source, detailed holistic, editable, updatable. You know, where clients can add advisors can add is where I first started, it’s got a long way to go over the fact find itself is I think I’m gonna say it’s the best back on the market, you’d expect me to say that, but, but it’s got a long way to develop further into what we wanted to get it to be, which is a lot more than just a fact, fine. But, but the fact BI tool enabled us to get this really deep understanding about the clients, what we were finding was that the paper base fact find is pretty superficially completed, my estimate would be there around about 20 to 25 cents per paper base fact, one gets completed when when it gets filled in, and the advisor then flushes out the rest over over a period of time. And that sits in his head or in file notes or a bit sticky paper or whatever. We want to have somewhere that that everything could be put in the one spot where the clients could interact with it, they could log in, they have a client portal, so we were avoided the ability to send sensitive information to them via email. So we’ve got a lot more flexibility about how we deliver stuff.

Andrew Rocks
And so this is ifec find.com. That are you I’m just reading it as you’re going through. And when you started doing that for your own business and making those connections at what stage did you think that I’m solving a problem for my own business it might actually be useful for others are probably

Dr. Paul Moran
after we’d spent 50 grand and and I thought I’d better start trying to look at making some extra money on this. And we’re a long, long, long way passe now but but, but it is it the more people I spoke to the more people who said to me were using paper. And in fact, my estimate is more than 90% of people in the market. But in the place of the most are still using paper or something similar collect data, editable PDF or paper. The very few are using a digital format. Some are using Excel, all sorts of things which are static and no much different or paper. So we want to build something that was that was genuinely holistic, not not geared towards selling a product, but genuine holistic about gathering as much information with the client as we can and having that live and updated in real in real time. So

Andrew Rocks
and you’ve got that feeding into any of your other pieces of software at the moment.

Dr. Paul Moran
So it feeds into work sorted the feeds into x plan. As of the end of next week, it will feed into voyant feeds into venturi six, five and progressively. q3 This year it will feed into to practice AI and into midwinter and more to

Andrew Rocks
come. So Alex when you when you sit down there and say I think we should do something with technology but he’s gonna be really aware because Paul would just go off into his garage and start building something because that is that the problem you face from an executive perspective right

Alex Hont
now but anytime we do have the tech stack talk I, you know, I have to, we have this joke that Paul’s now their CEO of a software company. So he’s he’s opinion has to carry a lot of weight.

Andrew Rocks
Well, for those private equity, that just means you’re 100 times multiple. So there you go, that that might be part of it. But you mentioned something about keeping things are female because of a security and you know, the cybersecurity and data breaches is very topical. With with, you know, the biggest companies in Australia falling victim to it. You You mentioned, you have people working within your office, and you’ve also got people working remotely. Alex, how do you manage that from from mainly I’m interested in how you manage it from an operation and security. And then then after that point on what what asked you a few questions and people and culture, if you don’t mind. So, so over to you, Alex. Yeah, sure.

Alex Hont
So I guess you know, there’s the password managers are a crucial thing. And really staying within the the Office, Microsoft Office 365, or Microsoft 365 ecosystem, where we have a lot of control and oversight around, who’s accessing what and where most of our operations happens within the office, we do have a shout out here quickly to virtual business partners as well. So we’ve got a couple of people working for us for them. So they’ve been great the last little while and really helped. But there is that challenge of working internationally. And so it really, it’s just having sort of good hygiene procedures around how you manage access, how you manage logins, how you send information, where we’re I’m a little bit paranoid about cybersecurity. So I hope that makes us proactive, or I like to think we’re proactive in that space. And I don’t think we ever were ever at a point where we’re exactly comfortable. And so things like the fact find portal where we can share documents with clients is fantastic. Internally, we try not to email, really any personal information. It’s all done through portals or through the Microsoft teams where it’s a bit more of a closed loop. But we also have someone working in Point Lonsdale who is about a couple hours away. So it is it is really a hybrid sort of set up between the office and home. And but using those sort of tech tools, it works really easily. And I think we’ve got a pretty good, we’ve got a reasonable level of security or cybersecurity awareness around what we’re doing.

Andrew Rocks
Yeah. And I think by having that awareness, and by using, you know, anything, anything but email, I think is, if you talk to a cyber security specialist, I think they even got an acronym for that. And if you’re listening to this, and you think just because you’re on a on an email system setting information, it’s probably what is the weak point? And what was the password management tool that you used? Alex just,

Alex Hont
we use LastPass. It’s been amazing. I know they’ve had a couple of incidents slightly, but it’s still a way better system than anything we’ve used prior to that. Yeah,

Andrew Rocks
I’m a LastPass. person as well. And for a couple of reasons. One is data security. And the other one is when you get older, you just start forgetting passwords. Yes, Ali simony, pet names that you’ve got. And you’ve even start forgetting your pet names. So I think

Alex Hont
that one’s the biggest that one’s the biggest product productivity pickup that we’ve had in last five years, right. And it’s a simple one. And it’s not as sexy as some of the other advice tools. But by far and away it, I think it’s made the biggest difference to to, to our sanity in the office.

Andrew Rocks
So we’ve now got a bit of a feel for for your business, it got a bit of a feel for the pods. Paul, when you have crafted this business, you mentioned you’ve had a lot of family and friendship, your child has worked there, you’ve your parents that work there, your wife has worked there. And so part of your recruiting process is obviously, you know, a marriage certificate or there abouts. But in the event that they’re not somehow related to you. What I love to ask is, why do people join your firm? Why do they stay? And why do they grow?

Dr. Paul Moran
I think we treat them as family. That’s the thing we do. We don’t treat this as a business somehow. I have a strong view that I’m a practitioner, and this is a practice. And that’s different to other people, other people treat their businesses as businesses business first, in our financial planning. Second, we’ve always treated this as a practice and we’re practitioners first and foremost. And that allows us to focus on their clients, first and foremost and focus on our staff. So so we genuinely treat them like family. We know that birthdays we go out together, we you know, we care for them. You know, we really do care for everyone and think they know it and they care for us. You know, it works both ways. You know, and so, we cover for each other we know what’s going on. It’s a little tight knit community and people people like that, you know, we’re pretty flexible in how we how we operate. You know if someone can’t come in because they’re sick or they’ve got kids look after we just cover Howard, it’s this this done that one works well together. But but it is, it is, it is a, you know, a is a personal business we’re in. And the more we try and commercialize it, the less personal it becomes well, to us, so that we want to operate.

Andrew Rocks
And look, whilst you were saying that in an action that’s completely not built for podcasting, Alex is nodding. So Alex, maybe if I could just get you to maybe verbalize your thoughts for a few seconds, because now you’re not in Paul, we’re gonna have to run through this again sometime. So over to you, Alex.

Alex Hont
Look, I’ve really enjoyed the Yeah, the podcasts that you’ve done in the engine room. And I think there’s a few people that have come out, you know, that have said, we’ve been very deliberate in the culture that we’ve built. And we’ve got, you know, we’ve listed out a few things that are the key lines and the mission statements and the like. And I think that’s great. But I think, for us, we’ve been a little bit different. And I think, yeah, has to have to look at where it starts. And it starts at the top with Paul. But we don’t have a formal culture handbook or a mission statement. And and what Paul says about us caring for people, that is just part of what, what, what happens at the place. And it does start at the top with Paul and his wife in particular who, you know, it does feel like a family to me, I’ve been here 15 years now and haven’t ever really thought about leaving, at all. No, it’s barely crossed my mind in the 15 years to look at anything else. And I can’t imagine going anywhere else. And I made a joke with, with Marcus, who started with us, I think in 2014. Who even got the new guy? That’s right, he’d been a paraplanner. At the time, he’d been a paraplanner, just about everywhere, he lived down in Portland, Sally being a paraplanner, all over julong, it worked for any number of different firms. And I made a joke to him when he joined us at all, you know, great to have you on board, you’re never gonna leave. And he just looked at me and thought, you know, what an idiot? Of course, you know, why would you say that. And here we are have many years later. And he’s not going anywhere. He loves it. So I think it starts at the top with Paul. And I think it’s the case with a lot of organizations, it starts with the leader, who or whoever’s whoever’s running the place, and you have to set the example. Well,

Andrew Rocks
I also think that having a really clear articulation of how you engage people, having a very transparent philosophy from what you’re doing with them to the billing just means that it doesn’t, you don’t have that anxiety. It’s there in front of you. People make decisions to work with you or they don’t. And I think by by being upfront and as transparent as possible, does probably liberate you from those other stresses about, you know, is this going to happen? I don’t know, you know, so would you agree with that sentiment?

Dr. Paul Moran
Yeah, I think, look, we have a bit of a policy on our Sounds ridiculous says I’ve never making an outbound call to a prospective client. So when someone comes and sees us, we send them away after the first meeting, and we never call them, we wait for them to call us. We have enough confidence in our process that they will eventually call sometimes that’s a year, two years, even five years later. But but as soon as we start chasing up people, putting pressure on them to become clients, then it changes the nature of the relationship. So we have this policy of never making an outbound call to a prospective client. They’ve got to ring us,

Andrew Rocks
does that come from the trusted adviser sort of philosophy that you mentioned earlier? Yeah, it does.

Dr. Paul Moran
It does build trust, trust, what we do is good enough, you know, and that was talking to me about maybe the statement was vice, but our statements are bespoke. You know, we

Andrew Rocks
we worry about them. You know, let’s talk about Absolutely.

Dr. Paul Moran
So I have a really, really strong view that, that the reason people don’t read statements of advice is because they’re rubbish, right? We have rubbish. It is what you just said. It is what it is just said. Now, I’ve been I’ve been marking marking assignments on on this Oh, SOS for a long, long time, and they’re not getting any better. So all the talk about video SOA, which is all great. I’m not saying we shouldn’t do it, but but the fact of the matter is, it’s an excuse, because we have trouble writing and articulating a proper statement of advice. You know, I know we get people picking up statements of advice for us. And on page 42, they’re picking up spelling mistakes, which is a good indication, they’re reading the damn thing. And they read the thing and because it sounds like I’m talking Alex’s sound like he’s talking John sound like he’s talking, it’s written in a narrative style. It’s verbal, it’s not a it’s not an excuse to sell a product. It’s about strategy. It’s about understanding, we understand what their needs are, and here’s how we’re going to meet your needs. And so that that’s hard to put down into a really, really quick, efficient process. We’re always striving to make it more efficient, but but the output that little document give the client is the basis of the relationship, and it’s what they’re paying for their pay three, four or five $6,000 That piece of paper, which is comes with our expertise, I get that but that’s what they’re paying for. And if they can’t read, it doesn’t make sense to them. And they’re gonna just put in the fox that can’t be been that’s terrible, terrible, terrible outcome. So I think we need to be better at producing statements of advice for clients and have that have them readable and understandable, rather than moving down the path of, you know, all this new technology sort of stuff.

Andrew Rocks
And I think that’s how long when did you get your license? When did you become self license? Just a quick question 2013 2013 End

Dr. Paul Moran
of 2012.

Andrew Rocks
I think that being selfless, and it does give you the ability to back to back yourself and back your advice, because you’re not all thrown into the risk bundle of everyone. I feel the larger advice practices, or larger licensees are coming to the party as much as they can, with that sentiment, and I love I love writing in the narrative, I’m actually not smart enough to not write in the narrative. So if it doesn’t feel like someone’s talking to me, then I probably am not engaged. So I completely and utterly agree with with that, as far as the SOA is, now, what I quit question I had in relation to people and culture is you’ve got different pods that you operate. And clearly, you must you’ve got some targets for them, you know, whether it be through port for for clients, or maybe even meeting new clients, that sort of thing. When you do achieve them, how do you celebrate, you know, what, what does what does a celebration at Moran look like? And what what triggers them apart from obviously getting a year old or being a birthday, or more interested in performance or or team based ones?

Dr. Paul Moran
You know, Rocksy, we don’t do that. We don’t have targets. We don’t have KPIs, we know the expectation, everyone operates their own little business, on their own their own pace. If having a couple of kids and slowing down for a couple of years is important to you, then that’s fine with us. You know, we don’t we haven’t taken the path of setting up, you know, KPIs for everyone, and having strong expectations, what you should be doing, everybody works here works well. They work hard when they hear if they need different targets and time off different things for different people. Alex, we’ve got three little kids, terrific little kids who we love coming in. John’s got one one young child. And so if that means that they can’t work for a couple days, because the kids are sick, that’s fine. There’s no point putting incredible pressure on them to it’s their income, they earn their own income. So there’s no need for that sort of stuff.

Andrew Rocks
Filling basically. Yeah, I think yeah, you know, I’m reading Macquarie banks, I think they’ve got the next incarnation of one of their books out at the moment. And it’s called the loose tight principle or, you know, freedom within boundaries, which is very much that which is they can make as much as they want, they can have the freedom, they’ve got a little boundaries. But but it sounds very similar that you you’re allowing people to, to ever lifestyle bent, or, or move up or achieve. And does that, does that resonate with you, Alex?

Alex Hont
Yeah, look, it absolutely does. Excuse me, I think, you know, you’re the master of your own destiny, I just want a little backstory as well. You know, I grew up with my watching my dad who became self employed, running a telecommunications business. And we got to a point where my mom got really ill was terminally ill actually, when I was a teenager, and in fact, a little bit before then, and being able to watch my dad do not necessarily work less hard, but have the flexibility to work around that and make those arrangements was really inspiring in that way. And so sort of something I always wanted to, to have a look at. And so I think we are a bit more of that sort of a lifestyle firm, where you can make the job fit a little bit within your lifestyle. And with that said, I don’t think anyone doesn’t work hard. You know, I know, we’ve got someone who works nearly seven days a week, maybe not full days every day, but he he’s up at it, and just doesn’t stop. And you know, the rest of us, we sort of have to fit in a little bit sometimes around, you know, working late into the night or early into the morning. And I think, Rocksy, I’ve heard you, you are a member of the 5am club, or at least we’re at one point. I’ve heard that before. So you know, even if it’s not necessarily the nine to five, you’re in here, you know, before nine and leaving after six. And, you know, that’s sort of a sort of way of working. I would say everyone’s got their nose to the grindstone,

Andrew Rocks
and we chatted beforehand. And I said to both of you, you know, would you like what would be the call to action at the end of this, you know, are you looking to attract advisors and whatnot, and you kind of you will, you’re less than committal, but I’m going to actually articulate that, that their premise now. So exactly what what, what Alex is just intimated there, and thank you very much for your, for your, your, your sort of backstory and, and your your inspiration. I really appreciate that. If you’re an advisor where you also want to be able to be empowered and you know, be able to tackle whatever life throws at you in a in a family environment. I think that’s your, your point of sales difference. I think that’s your, you know, your articulation. So that would be what I would lead with if anyone was interested in that as as a change from where they possibly are now, in in Victoria,

Dr. Paul Moran
we do our space in the office, Rocksy, I’ll just say that

Andrew Rocks
it’s because you don’t have been pumped out was so

Dr. Paul Moran
dry, right? We have remote control racecars. i Oh, wow.

Andrew Rocks
Okay, so we’re gonna we’ll have a link to that in the description. Now in relation to the, the actual business itself and other things, I always ask the question, do you guys involve yourself in any, any giving back? I know, Paul, you’ve got significant sort of lineage in, in academia, I know that you give, you’ve got your own podcast series, where you put sort of tips and things out to the universe, which, you know, it must be rare being interviewed, rather than doing it the other way around. But is there any other things that that you as a group or individually support?

Dr. Paul Moran
I mean, primarily, our Alex has been running for a long time, which has had a little hiatus lately. But the mass of the fires podcasts, I know, we get back on that a bit surely, from from my point of view, my kind of extracurricular is around what was now the F AAA. And also, I’m on the academic advisory panel, the FPSB, financial place international financial standards board and run a couple textbooks. So it’s not third party stuff, it’s more within the profession, to try and promote the profession as much as possible. But Alex does a great podcast, I reckon he’s, he’s, he’s very, very on on board with he’s really good. So.

Andrew Rocks
And it’s entirely findable on your website, which will be part of part of this as well. So in relation to the future, okay. So the future I’m interested in, you know, as this is an engine room, podcast, and you know, you’ve you’ve mentioned how you deliver advice, and that starts from how you engage the clients, how you’ve used technology, you’ve used stuff, you’ve bought your build, you’ve had your courage and your own conviction, you’re efficient, your data secure, you’re using some in office and some outside of office and outside of country resources. What do you see as the the type of practice into the future, or maybe even the types of different financial planning practices, I’m gonna get opinions from both of you, maybe I’ll start with you, Paul, and come to you next, Alex,

Dr. Paul Moran
I think I think there’s going to be a divergence between, there’ll be the large corporate ICE officers, you know, with with 10, to 50, advisors, you know, running a large business in that sense. And then at the smaller end, I think there’ll be collaborations, more and more collaborations where there’ll be, I think it’s gonna be harder and harder, it’s still totally possible, but harder and harder for white men office, like it used to be, I think, we’ve got four advisors and this practice, that’s about right, I think it’s about the right number. But even that, we could probably benefit from having two or three practices, working in a bit of a collaborative way, maybe maybe even some more shared resources, we share resources amongst the four of us, but maybe across practices, sharing some resources might be the way to go. So some more collaborations, I think that’s going to allow us to be able to bring people in for their professional year, because very hard in small business to bring someone in for a year and pay them to be unproductive for 12 months, and run the risk of you’re gonna leave. Yeah, across across two or three practices and sharing the resource might be a way to go. So you know, I don’t think we have to have practices of 10 or 20 people, but we might have practices or two, three or four people linked to other practices of two, three or four people. That’s where I think they’ll go then

Andrew Rocks
share the intellectual economies of scale on the investment side, and the the operational economies of scale and on the throughput in the delivery of advice. Is that correct? I think so. Yep. And Alex, what do you see as, as the future of advice practices given that, you know, you’re a quite a bit younger than both Paul and myself?

Alex Hont
Sure. Look, I actually probably echo what Paul has just said, I think having seen and spoken to a few other people and tucked into, you know, advisors over the journey that have worked in some of the bigger practices, and then even to the one man bands or the one person bands, I think you’ve probably going to end up with these sort of small to medium sized practices that are the ones that are going to continue to work really well. And I think they’ll swallow up some of the the one person operations which I’ve seen a little bit in the last few years, there’s a few people that have sort of that were doing their own thing have decided it’s pretty difficult if I’m just on my own, but I think also you missed the camaraderie. There’s the social aspect, not just the the financial planning aspect and being able to what was it someone said I’m a burden shared is a burden halved. Right? And so, sometimes when you are, you know, in the thick of it, and you really just head down inside your work and things go wrong. Having other people to assist to bounce things off, I think it’s really beneficial. So from a practice point of view, I think where we’re going to get to, where are we going to see the most innovation and is still around that four to 10 person kind of practice a four to 10 advisor practice with the right support staff underneath them. And I

Andrew Rocks
think there’s actually some some data saying that, that that’s a quite reasonably efficient number. It’s pretty obvious that subscale practices are gonna struggle, not because they’re, their intentions are poor, but just at the cost of cost of service and efficiency. It’s hard enough to deliver something for clients wanting a timeframe that they expect, even with all the resources in the world. But to do that, with one arm tied behind your back is tough in my observations are that that practices will continue also to get specialized in the types of advice that they give, you know, one, one end of the spectrum, they might be just aged care specialists, or they might be, you know, into just a certain type of business and, and that might be for your practice over time, that might be something that that gets played out a little bit more, the other parts of it, and I’m poor back to yourself, given that you’ve got exposure to the international standards boards, where do you see, and I don’t normally ask this question, but I don’t normally get this opportunity. Where do you see Australian financial planning practices and operations sitting against some of our global counterparts,

Dr. Paul Moran
Rocksy, we are so far in front of the rest of the worlds not funny. As far as our operations and how we do financial planning, so the US would be at least 85% Investment Advisors, no more than 10 or 15% will be holistic advice. Their investment advisors, first and foremost, the UK gets swamped with with pension management, and not a lot else. So we in a holistic sense that we think in for me, in a perfect world, we’re all holistic advisors, right? We, we deal with a holistic person, everything make all their needs financially, the processes, we go through the qualification that the education that we have, is a mile ahead of everything else I’ve seen around the world, just Unfortunately, our regulator doesn’t recognize that, because we also have the strictest and most rigid regulatory framework of anywhere in the world as well. So it’s a real challenge that, you know, that we haven’t been recognized for, well, we’re focusing on the bad apples all the time. And that’s mainly, I guess, a function of perhaps the big end of town writing advice for long time. You know, and the challenges of having a big end of town with with with KPIs, with sales, targets, everything else or with it, but as far as the physical process, the average good quality financial advisors here, it’s it stands top top of the tree as far as everywhere else.

Andrew Rocks
Now, that’s, that’s, I mean, that’s really good news. And if you’re listening to this, and you’re wondering what the rest of the world are doing, then we are we are ahead of, of the world. We are hamstrung by, by the complexities that regulation has put on us. But the best will survive and it is it it all comes down to can you create an environment for your advisors to give the best quality advice. And I think that I’ve really enjoyed chatting with both of you today, we’ve managed to keep the three person one running very smoothly. I think you’ve thank you both very, very much for that. And if anyone wants to find out more about anything that said, we’re going to include a lot of links, both to the technology that was was referenced the ifec fine. We’re going to put feelings to the guys. Alex, we won’t we won’t put too much pressure on you to continue those podcasts. What with three kids running around? And yeah, but as a parting question, our parting sort of request, I always asked him afterwards for a photo that we could put out as a puff piece. And I don’t know how much money needs to exchange hands. But that photo of Alex coming into the office with the dreadlocks and Paul interviewing them back in 2014, I think would be a must. And if I could get that one, then I think this would probably write pretty highly what’s the chance

Alex Hont
to do a bit of work on the Photoshop because I don’t know if we actually recorded it but I reckon we can pull something together Rocksy.

Dr. Paul Moran
Alex has got a great picture of himself dressed as a pirate with those dreadlocks so you can get one of those and Photoshop me and Alex, it might be the way to go. All right,

Andrew Rocks
Perfect. Perfect. Well, gentlemen, thank you very much for sharing some time on the Engineering podcast. What is what is offset absolutely obvious to me is that best practice comes in all shapes and sizes. And in relation to that your business and the things that keep people in your business. You’ve obviously got some secret sauce there. So without any further ado, I’d like to thank you for being on the intro. And I wish you all the success in the future. Cheers, guys.

Alex Hont
Thanks, Rocksy. It’s been great. Thanks. I see really appreciate it.