Engine Room Podcast #21 – Drew Burden – Transcript

Andrew Rocks
Hi, My name is Andrew Rocks, and welcome to another edition of the Engine Room. I’ve got someone who I have known for many years, he probably knows a few skeletons in my closet today. And more importantly, he runs one of Australia’s largest, if not the largest life insurance businesses in this country. Welcome to the engine room Drew Burden and how are you?

Drew Burden
Thank you very much Rocksy. I don’t know about how many skeletons I know or want to know. But I appreciate the intro.

Andrew Rocks
Well, that was just giving me free range for your skeletons through so I think that’s that was par for the course. But I suppose getting getting back to yourself and look, thanks for coming into our offices here in Sydney. Why for insurance? Surely when you are going through school and and you know you had this aspiration of what you wanted to do, and I’m sure you had no aspirations of your career. At any stage in your high school formations, did you think I’m going to be a life insurance guy?

Drew Burden
I don’t know that anyone does? Know, I mean, I was very interested in business, first and foremost, and sort of didn’t know that I wanted to be self employed. So that was a key driver. And then, as was everyone in life insurance industry sort of somehow found my way here.

Andrew Rocks
So maybe on that, I mean, I’m very interested in the desire to be self employed, but but maybe give us a bit of a feel of of your backstory as far as you know, where you started, and what was the spark? The date you fell in, quote, unquote, to the industry, and you know what you’ve built over the ensuing 20 years. Yeah,

Drew Burden
thank you. Yeah, I grew up one of three boys father as a professional tennis player. So it’s pretty competitive environment, being the youngest of three. And I had a pretty normal childhood, I suppose. very sporty, went to uni, studied accounting, finance. We worked in equipment finance, then, and was referring to my business partner now of last 17 years Chris Mason. And one day we’re chatting, I don’t know how it came up. We were actually formally roommates, which was more disturbing, but we’re having a chat and thought, you know, maybe we can come together and and, and that was 79 years ago. So it’s been it’s been awesome, actually.

Andrew Rocks
So the moral of the story here guys is the way in which you scale up your business is just find it find an ex roommate. And as if you’ve got much in common,

Drew Burden
I mean, he was there was there wasn’t much in common is five, six years my senior but what he did have is he had a massive Sony Trinitron. He had Chesterfield couches. Yeah, the fridge he probably had no money in the bank. But geez, that looked good.

Andrew Rocks
You will. I’ve interviewed Chris before and if you want to listen to Chris, his backstory. It’s quite quite hilarious as well. Now, when did you kick off? MBs? And what does it stand for?

Drew Burden
Yeah, thank you. I think you know that. So that’s pretty pretty loaded. So Chris, Trevor, and David started MBS in halfway through Oh, six, right. And MB s was the initials of the surname, I joined at a month later, another B. So it didn’t become M double BS, or mbsp, or whatever it might have been. And then yeah, somewhere along the journey, which I’m sure we’ll get to a bit later on, when we decided to really scale up. It became Chris and I and then now two more shareholders.

Andrew Rocks
And you’re beginning a journey with MBAs. Were you the run of the mill. Life Insurance getting your own clients or, or from Emory, there was a bit of a tie in with accounting firms I think was one of your, your thing and I think sport has given your background as played a real part in your business. Would that be correct?

Drew Burden
You certainly on the recruitment side, it appears you know, we have a few a few people who have been actively involved a former professional golfer, and another one that worked at a pro shop and, and the like, but that was certainly the early days when you’re trying to get the right people together that that fit culturally and, and sort of had the same sort of level of ambition and competitive spirit. I forget the was the first part of this question. I just wanted

Andrew Rocks
to know, did you start off with some traditional life insurance, and what was the time with accountants because over the years, I’ve, I sort of got the vibe that you you managed to be able to become accountant whispers if that’s even a thing. And there’s a lot of planners out there who, who really struggle with with, you know, the Rosetta stone that is talking to accountants and, and I believe from from my anecdotal experience watching you guys that you seem to have pulled it off.

Drew Burden
Here. Thank you. So we were first launched, licensed through Lonsdale, which was an eye for sell that was more assisting accounting firms get into the wealth space, and are very clear around the need for life insurance. And a lot of the Wealth Advisors inside accounting firms were dabbling in it not really doing properly. And so Alonzo were really clear with them saying, if you don’t address this risk, we encourage you to, to refer it out. And so we were one of the firms in Sydney that there was the recipient of that there was a firm in Melbourne CRA who was sort of like a sister Firm A few years ahead of us, that we ended up acquiring, back in 2017, that also had the same origins.

Andrew Rocks
That’s great that Lonsdale did it? But ultimately, what drove what drove the ability for accountants to clearly identify and properly refer into your business? Because I find that there’s a bit of a disconnect sometimes, as far as they feel sometimes that they can be a bit transactional, as opposed to building that deeper relationship.

Drew Burden
Yeah, isn’t it isn’t isn’t where we see. So it’s process driven, where we see accountants that I suppose in two buckets that we would view, there’ll be those accountants that would have a like somewhat of a fact find, right, where they will know, their clients, wills, banking, relationships, mortgage relationships, etc. And those accountants are much more readily likely to raise the need for life insurance or to say, Roxy, we think you should get this reviewed, because we’re aware of this that on the other. And so we’re really clear on on keeping it simple. And so what we would start with is, let’s have a look at your clients existing policies. Or if I set up an SMSF, then that’s quite an obvious transition. Or if they’re, you know, under the age of X and earning over why, well, then they’re clearly someone that we can look like we could help.

Andrew Rocks
And when you’re on that, that pathway to where you are today, has there been any individuals that you think that she’s, they’ve assisted me or made me a bit of a shout out?

Drew Burden
Actually, lots? Not to be broad brush, but we’ve always been. We’ve always leaned on other people, or ask people who have done things before us what they did, how was it? Like, you know, What mistakes did you make? You know, we’ve all made plenty of mistakes. And that actually, what

Andrew Rocks
we’re doing right now, is, is doing that for others. Drew’s Yeah, so keep going.

Drew Burden
Yeah, and I suppose everyone’s been really generous. You know, we’ve had wonderful working relationship with Macquarie, inside their van network. That’s been excellent the principles community and Khan, Costas and his team, you know, similarly that they’re always happy to introduce you to other firms. You know, we’ve got a lot of joint ventures in place. So we have, you know, lean on people like Charlie Viola, pitcher partners, you know, who is reasonably prolific in what he does, and understanding what processes mean to him and his team and how they engage with each other and with the clients. And so, there’s been lots of people really across the last 20 years that have been instrumental and very giving of their time.

Andrew Rocks
And when I’ll think of that life insurance landscape as we speak, you know, when, when I got involved early on, it was very much a lot of older advisors were in life insurance, but I’ve seen a real sort of swing to more people that have got, you know, life insurance things going on. I mean, you’re a father with kids, you’re going through, you know, I imagine that that peak life insurance requirement, you find that that’s a lot of your team are in that zone.

Drew Burden
Yeah, we’ll be with we’ve got sort of most of the shareholders are in their 30s or 40s. Most of the team or you know, 30s 40s 50s Yeah, there’s probably a reasonable cross section to be fair, but definitely when you’re going through you know, I’m a father of two as you mentioned, my boys a 10 and eight you know, I’m in the eye of the storm for life insurance, right. You were people typically have yet you know, young family, maybe education requirements and not a lot of wealth yet.

Andrew Rocks
Yeah, that’s absolutely and I find that that’s some, you know, we were speaking off off air earlier about sort of the the makeup, the composition of your advice team and, and sort of as it’s changed from both demographics and gender, which we’ll get into a bit later. And that’s probably playing into the whole, you know, identifying the people who can identify with that peak eye of the storm, as you say. Absolutely. So MBS started off doing life insurance. She then did some joint joint ventures. Yeah, I’ve explained that sort of, what do you mean by joint ventures? Because no increase? Well, all I thought that was Was he went and played golf with accountants, but clearly, you know, you being the brains and the operations behind the business. What did that actually mean?

Drew Burden
Yeah, so in 2015, so the business was 10 years old 2015. John Trowbridge came out and made the recommendations that, you know, we saw commissions reduced, we saw the cost of advice increase, as a consequence, the education requirements obviously, increase, we, we viewed, the need for life insurance would remain, right, a few of these dimensions were unforeseen, certainly by us. So we sort of had this moment of time where we thought maybe for 24 hours use this could be Armageddon, the answer for us is going to be scale. So how do we deliver better outcomes for our clients for our referrers and for each other? And so what we did is we started approaching some of these firms that were doing it in part. So you know, Wealth Advisors have been comfortable in the recommendation and insurance portfolio. But it’s the execution component that we’ve used so commonly as being not their strength, you know, it’s tough. And we believe in specialization. We’ve never done anything else. We’ve never done mortgage broking, we’re doing general insurance. Well, nothing else. Aside from the specialty that is life insurance advice. So we approached these these businesses, and we ended up acquiring somewhere between 50 and 80% of their life insurance operation. Which would mean that we would seconded advisors into their office, we would put it paraplanners and client services in their office, we would

Andrew Rocks
just let’s take a step back. Yeah, well, so initially, you had a referral Partnership, which many of the listeners would would have, and, and I imagine there might have been a commercial component of that. The recommendations came down, and all of a sudden, what was an 80%? upfront for a hybrid commission went to 60%. And, and, you know, you had to put your engine room head on and go, Well, how do we efficiently deliver this because if we’re paying a cost of goods to acquire the client, we’re going to run out of out of sort of oxygen, wind. And so then you made the decision to then go and acquire the businesses of the people that you were joint venturing with and joint venture in a more meaningful commercial fashion. Is that right?

Drew Burden
Yeah. So, you know, again, we believed in the need for life insurance, but we didn’t like the changes that were being bought in, because we hadn’t planned for them.

Andrew Rocks
Nine years later, it’s it’s played out in the worst possible way. You know, there’s, there’s, there’s just a massive, massive gap in the market.

Drew Burden
Yep. So what we recognized is, you know, we could either keep remonstrating about it, or we could get on with it, really, and, again, the Wealth Advisors were in a terrific place to recognize the need. But we did believe that scale was going to help with advice, it was certainly going to help with buying power with insurance with having dedicated relationships being an underwriting or pricing structures or claims team. Absolutely. So we went into those firms and we did the white label the proposition so would use their brand mentioned Charlie from pitches before were

Andrew Rocks
they the first one that you did that secondment and embedding with,

Drew Burden
though a prime advisory in Chatswood, were maybe beat them by one or two months. And that model we’ve had, we’ve maintained our brand to NBS is the outward brand to their clients, whereas pitches in that example, pitch banners, insurance, Sydney, is the brand and and so they had an existing need. And the benefit of that for us was that they had clients renewing on a monthly and quarterly basis, which would get our advisors constantly engaged with a wealth advisor or with the accountants. And so there was there was a cadence of which you talked about earlier, that that helped propel. And in reality, the buying power now of where we’re at is, we can deliver a better outcome sincerely than what they’re able to deliver themselves. And that momentum is super powerful, right? They’ll recognize we get a new client on board, but you know, someone looking for buy sell key person or a family looking for personal cover. And we’ll review their existing policies and we’ll provide them with you know, information so they can make an informed decision.

Andrew Rocks
And you mentioned that you just wanted to get on with it, so to speak. So maybe just changing gears a little bit and finding out a bit more about your business. What’s the definition of getting on with it? How How big is the MBS? Now as far as you know, client numbers are or premium? And because I know that you’re going on with it would be great for our listeners to actually hear just the scale from that decision in 2015. Yeah, to where we are today. Yeah, so

Drew Burden
I think we did things, okay. For the first 10 years. To be fair, we weren’t like we did our best. But we probably could have run harder. We did have some time on the golf course. And we did have some nice work life balance. But then the changes to the industry came about, and we had around 1500 clients, that was 2000, January, February 2016. And we now have 13,000. So it’s been a nice period of growth, it hasn’t felt overwhelming, because we’ve we’ve tried to sort of have that balanced approach across all layers of the business. And really, we’re working with typically really good wealth and accounting firms that are the primary relationship holders of the client. So we sort of come in there as a secondary advice business.

Andrew Rocks
So is that what you call yourself as equal? Like a second chair? or secondary? Or what’s what’s what’s, how do you work with them? Because they’re doing the strategy and they’re the primary and or you’re like their execution partner, or

Drew Burden
it’s not that they’re doing the life insurance strategy, you know, are their overall strategy with the client? Yeah, they’re certainly doing the relationship. So we’re going in complementing what they do. So the primary product that those clients have with the firm would be the be accounting or wealth. And so we’re coming in giving specialized advice in a subset of the requirement for that client. And so yeah, we do see ourselves as a secondary advice firm, that is, that is complementing the delivery. And for that, I mean, really, it was a good way for us as well to have internal governance as required. Because if we’re carrying their brand, or we’re carrying their relationship, you know, we need to operate akin to the professionalism that they have

Andrew Rocks
just kind of play first grade, because you’ve been a for up under a national brand, like a pitcher’s, for instance, or several of our other wealth ones. And you mentioned that, that anyone can can sell the concept of life insurance, but it’s the operations, it’s the execution, it’s the, the, you know, the claims management, the whole thing that, that you really need to get scale for, in your opinion, in order to get delivered to those parts. Yeah,

Drew Burden
there’s some peer to peer as well, if you’re a life insurance advisory working inside a firm that is either a general insurer by heart or, or a wealth firm, and you’re one of one or one of two or three, you certainly don’t get that community engagement that you have with other advisors, you know, you yourself would I’m sure benefit from speaking to colleagues and peers across the industry. And for our advisors, we’ve got 23 hrs, it’s, it’s a nice environment for them to talk about what’s happening in underwriting what’s happening in product, how are we working with our firms, how we’re working with our clients? So that sort of success breeds success if you’ve got the right people, for sure.

Andrew Rocks
And you mentioned that some of your advisors are seconded. And you just gave me the headline of the amount of hours that you’ve got been 23? Yeah. When it gets down to the engine room of how you and your team then work out our deliberate? How are they structured? Is it? Is it in pods? Is it Are they allocated to JV partners? Do they run their own p&l Just be good to sort of flesh out and how they support it is an individual level collectively big question, but I’m sure that you can handle it.

Drew Burden
Yeah, thank you. Yeah, we’ve just gotten away from pods. We’ve tried lots of things, and many have worked and many have not worked. We thought pods would be a great way for a more collaborative, connected, intimate approach. It probably got teams a bit disjointed. And so we’ve gone away from pods. So where are

Andrew Rocks
you today? What’s what’s what’s, what’s the current state or that new cow of operations?

Drew Burden
So it’s more it’s more that people working within an office so location, bit Perth, or Melbourne or Sydney or

Andrew Rocks
wherever it may be great opportunities to ask, where are you located?

Drew Burden
Our engine room, as you say is in is in Perth, Melbourne and Sydney, Brisbane, Hobart, and Canberra is also our presence as well. Not yet in South Australia or, or NT. But, you know, opportunity might lead there one day, but there’s no immediate plans.

Andrew Rocks
And so they’re now arranged within the geographical offices that that’s what you’ve created. Yep. And so what does it look like if I’m an advisor in that office? Do I have a sort of an associate advisor or what’s the headcount of the balance of the people in your organization? Yeah, so

Drew Burden
we have is around 55 in the team. We have advisors, we have advisor associates, we don’t call them power planners, because we think it’s integral that the advisor creates the strategy and does the research. They might be assisted in doing the research, but ultimately, it’s their advice and advice is our commodity you know, like we get preferential treatment With regards to pricing, but we can’t get away from the advice component as the key item. We have client services, we have one team, that’s probably different than what we’ve seen elsewhere. And that’s an advice compliance team. So we have nine working in the advice compliance team. And what they do is, is they review the advice, and they review the advice document. And they audit it, and they audit the file before it ever goes to a client.

Andrew Rocks
So you’re getting a feeling two functions. One is a double check, so to speak, and then you’re proactively doing your audits for the purposes of your financial requirements as well, I imagined,

Drew Burden
we still need external audits, we still get them. But we manage other people’s brands, you know, and we manage as a secondary advice business, it’s important that the quality of our advice is to what we what we committed to be.

Andrew Rocks
That’s it. So you’ve seen self licensed. And, you know, we were talking off air, I think when we had a chat last week about about the tech stack, and and there’s been, you know, there’s been headwinds in life insurance, I suppose, over you know, quite a few years for new business. And that’s just the cost of the cost of actually delivering that and you guys are at the at the pointy end of efficiency. Um, but what’s your tech stack currently look like, given your life insurance specific? Business?

Drew Burden
It’s been very challenged it we’ve you sell rolling the therapy? Yeah, correct? Well, you know, nothing ventured, nothing gained. We certainly have have, have spent some money on it, not always with the best outcome. So that doesn’t mean we will stop. So we have Salesforce, and that, that has been very beneficial, particularly when we’ve got sort of partner environments being joint ventures or referral parties that we want to provide the right sort of visibility and transparency.

Andrew Rocks
So you provide your provide sort of live partner portal or something like that, is that right? And, and Salesforce, because they are, across a bunch of different industries are well known and facilitate that?

Drew Burden
Correct. We use x plan as well for our research. And there is there is a platform that is coming to the market that you’re aware of called Life bid. And we are supporting Lightspeed because we see we’re upset and disappointed that the industry to date doesn’t have a platform with renewals, that makes the management of existing policyholders easier. It’s very disjointed, and certainly harder for those doing sort of advice of life insurance on the side. And it’s hard for specialists as well. So we’re not having the same luxury that that Wealth Advisors would have from that perspective. And so you know, we think this is something that’s long overdue.

Andrew Rocks
And I was at a forum only last week, and I think either yourself one of your peers almost said, it’s it’s been, it’s embarrassing, sort of that it’s taken this long for, for technology or a tech stack to catch up with the fact that, that you don’t just write a piece of life insurance, but you’ve got to renew them, you’ve got to have efficiencies around managing it. And when you’ve got 13,000 People, I’m looking to renew and circumstances change. And this is without even going on claims. running it through what historically is a an investment based sort of piece of software or software Tech Tech, you’ve had to do a lot of work arounds, which I imagine is part of that, you know, you’ve wasted some money. Yeah,

Drew Burden
absolutely. Because insurance is not a set and forget outcome. Right. So you need to manage those existing policyholders. And, you know, we talked about the regulatory intervention early on the premium increases for clients have been incredibly high. Right. And, of course, this well known that the distribution has been steadily declining more consistently and persistently declining over, you know, over the last six, seven years, with, you know, lower interest rate environments we’re seeing, we’re seeing premiums increase significantly, you know, now we understand it’s CPI, that’s increasing the sum insured and the premium significantly. So, yeah, what we’ve got, what we do is we look at every policy that renews from a tech perspective, every month, and we look at the percentage increases, we more keenly look at the percentage increases per insured, that increasing for the first three years of a product life policy life. And after that, to try and gain trends and try and look to see who’s been more sustainable in the current time and having relationships that have said CEO to CEO, conversation perspective to try and fix that,

Andrew Rocks
given the magnitude of the numbers we’re talking about. You’re talking about more than 1000 policies per month. Yeah. that are that are getting to a call to action stage. And I imagine you’ve got to be, you know, a couple of months before that as far as their diagnosis and, and recommendations. So is that is that one of the largest parts of your your sort of strategic thinking in your role? Yeah. Or have you deployed sort of the accountability that to other team members within your org chart. Oh, we

Drew Burden
have a CFO grant McLennan who is very handy on the tech and the analytics. And certainly using that information that he’s able to curate, to have those conversations with insurance to say, hey, what we’re seeing is definitely a better outcome for our clients or something more sustainable, something more predictable, because, you know, we have seen upfront discounts, either embedded or, you know, been able to be turned on turned off policies. And we’re challenged by that.

Andrew Rocks
Well, they have that in in the home line, world as well with things like cash backs, and it potentially creates an activity, which is, which is costly and counterproductive. And for the people listening there on the product side, it’s trying to make it easier for the dwindling amount of people who really support you would probably be a very good idea. I’m sure you know that. And so

Drew Burden
you know, the scale assists with the amount of advice and the National relationships in terms of distribution. But the scale helps with actually having proper conversations with insurance as well, and trying to work together. So there are factors, it’s not me blaming insurers, there are ingredients that cause the outcome? Absolutely. And so we need to understand things such as, you know, their point of sale acceptance rates, like how can we make it more efficient for them to receive applications from us? How can we make it more efficient to go through the underwriting process? And, you know, we have a head of advice, Chris McKenzie, who has been prolific, and he’s particularly process orientated individual. And so he spends a lot of time working with underwriters, working with, you know, the premium service team to try and make their cost in delivering for our clients lower.

Andrew Rocks
And I find it surprising that we’re talking inherently you’re not a small business anymore, but you run you’ve got a small business mentality as far as problem solving and whatnot. And it’s the advice side of it that are going to the insurers talking about how to generate efficiencies, which is a win win. Is there, you know, from from the insurance companies that are out there, and is there any ones in particular that have worked well for you, as far as from a strategic perspective and from a dialogue perspective?

Drew Burden
Yeah, the certainly our, the support in terms of the willingness to engage in this sort of a process with with AIA talent Zurich, they’ve been standouts, absolutely, and that they’ve got scale, they are also viewing an industry that is going in the wrong direction in terms of distribution. So hopefully they can we can work together for the betterment of others beyond just MBs. Absolutely. And I’m not saying that from a charity perspective, but the clients of our our clients need a stronger industry as well, we need a stronger industry. Absolutely. Because that will create a layer of stability, a layer of premium certainty and certain profitability for insurers that that should flow through.

Andrew Rocks
Now I’m here listening to what you’re doing at a macro level and and I completely understand why advice practices out there who might be doing life insurance as a as well as sort of five to 7% of the time. They’re just going to struggle to have the headspace and the scale to be able to have those material conversations. Is that kind of your gateway into meeting with these practices? And by the way, are you still open to to new partnerships? Yeah, absolutely.

Drew Burden
We are. Yeah, I mean, we you, we sort of look at a few things in our business in terms of our operational infrastructure. We’re at 120 million in client premium. Now. You know, we’d hoped to get to 300 million over the next five years, and it will be through partnering up with firms, it will be through the acquisition of going concerns with with people who aren’t who aren’t transitioning necessarily on the way out, we of course, will be a succession plan. Absolutely. To some and keen for that. But we do recognize the benefits of scale. So when we look for a joint venture partner, oh, you know, we’re looking for three key ingredients we’re looking for, there has to be alignment, you know, there’s a toggle about the Sydney Swans and their sort of approach to

Andrew Rocks
you can say no, dickheads we’ve got rules. Do we say our guy? No, that’s not it? That’s,

Drew Burden
yeah, that’s an affirmative. Yeah. I mean, you’ve got to be alive. Life’s too short not to be working with the people that you want to work with. We’ve got to find partners, that that value us that we value that we work in and operate in a way that’s, you know, consistent to each other. And that we won’t have a view is quite honestly, like, life’s a bit too short with with trying to have phone calls, you’re trying to avoid it. So the first thing is there needs to be some natural alignment. And part of that is also growth. We want to work with firms that have an ambition to grow that aren’t standing still and And that have aspirations for something bigger than than today. And that’s

Andrew Rocks
the mindset of the principals fundamentally, to look into, you know, be better tomorrow than what they are today. Absolutely,

Drew Burden
yeah. And we’re also, we’re also looking for firms that have it have done already. So if they’ve got any as mentioned before, if they’ve got an existing portfolio, that means they’ve got clients renewing every week, every month, every quarter, and it just creates much better engagement between our team and their team.

Andrew Rocks
And harking back to the very beginning yourself. And Chris, there’s way more in the in the C suite of your business at the moment, maybe gets a bit of a feel for sort of who operates a business. And do you have a board or advisory board and be good to get a feel for the governance of the firm? Yeah,

Drew Burden
we do. I’m not sure who the individual was, I think he was from memory. He was allowed American fellow from young foods that own KFC and Pizza Hut, and he made a, he made a comment at a function that if you’re a growing business, the one thing he would recommend is that you, let’s say you’ve got a role that requires someone for $100,000 Go and find someone that’s worth $150,000. Pay them $150,000 and back them to cover that spread. And, you know, this sort of leads into our CEO Karen Clark, who came from our golf club, which she had been at a golf club for 24 years. She would have been there when she was 10. So but she she came to the business because we recognized that she had a skill set that was different to ours. So she was managing 60 staff at the time she was managing how many

Andrew Rocks
headcount were you when you took her on?

Drew Burden
Maybe 14?

Andrew Rocks
Yep. Okay, so So you’ve done that you’ve basically you’ve bought, you’ve bought future?

Drew Burden
Absolutely. But she also was managing different line functions. So she was managing a hospitality. She was managing the lack of receptions, weddings, and what have you events, I should say. And she was also managing the golf club or golf course. So she had a, she had a membership group.

Andrew Rocks
So once she bunch of inpatient personnel, and so she

Drew Burden
could handle that she could handle us. And so we’ve made deliberately made hires like that. And I mentioned grant earlier, he was very similar. You know, in the early days, we were particularly clear about just getting the right people, irrespective of experience. Whereas now we have, we’re now trying to find the right people with the necessary experience that can help us get to the next stage.

Andrew Rocks
That’s a great segue. And one of the things you mentioned was, we’ll get into the people side of it, you mentioned you like to have, you know, people you can have a beer with and our personal history. We do play sport together, but I’m probably the only decent skill I have is the beer at the end of the match. So I’d like to think publicly, I’m all the additional running that Drew has done for our team over the last 10 years to facilitate the beers at the end. So it is a people game. And you know, long after the result has been forgotten. You remember that people who are you doing it with

Drew Burden
is absolutely. And the genuineness, right, you want to be working with people with, that you want to hang out, have a beer with because they’re authentic, and because you actually enjoy it rather than for any other ulterior motive.

Andrew Rocks
You spend a lot of time with them. So why then two people join MBAs? Why do they stay in? How do you grow together?

Drew Burden
People join MBAs. If you’re an advisor, we have a clear pathway to equity. So we do recognize let’s flesh

Andrew Rocks
that out. Does that mean without numbers or people but what give us a feel for it? Right? Andrew rocks, God forbid, joins up. Mike got a history of doing Australian casualty and life lifetime lifetime income protections back in 1970s. Very relevant. Yep. Yep. There you go. So and what does the what does that pathway look like for a young, bright, reasonably handsome guy?

Drew Burden
Transparency? Right. So we will say to them, This is what as an organization we expect from you? And is there a commitment on the other side? And so everyone is aware of the level of you know, we have sold a somewhat of a balanced scorecard, right. And of course, the compliance needs to be your critical numbers for your numbers. And so and so we have that approach, and we give them a clear visibility of what we would expect for them until we would offer them then the opportunity to buy into the business.

Andrew Rocks
What are the elements then you’ve got you’ve obviously a compliance. Yeah, I imagine they’re, they have to deal with those partners. If they’re assigned, correct. We

Drew Burden
expect we expect that they will, appropriately and professionally engaged with the referring firms or joint venture firms they’re working with. We absolutely want to see them working well with their team. We want to see them working well with insurers and what that means it might sound a little bit unusual to say that but we distribute insurance part So we don’t tolerate people picking up the phone and abusing an insurer or someone who works there,

Andrew Rocks
what I call a quasi part of your team, where they might not maybe

Drew Burden
you don’t always agree, you don’t agree with an insurer, often. But we need to maintain a level of professionalism, because in the end, we’re going to need them to pay a claim, or we’re going to need them for the next policy or whatever it may be. And then we expect that they will have a certain level of activity. So we don’t look at dollars, yet, we look at the number of lives insured, so we’re not seeking for them to hit you know, to because they’ll prioritize, then a bigger case over a smaller case in terms of dollars, when, to the accounting firm and a wealth firm, that might be a key client that only needs a small amount of cover. And so we can’t have them persuade or consciously or subconsciously driven to write bigger policies, what we need to see is activity. So we want to ensure people

Andrew Rocks
and so so then, if you’ve got those 360 feedbacks, yeah, after a period of time, then then, you know, what, what’s the methodology? Is it is it, synthesize equity as an ESOP? Is it actual equity? What does? What does the MBS playbook look like? If you don’t mind me asking?

Drew Burden
It’s actual equity. So they would, they would set up a more commonly a family trust, and they would borrow the buy in.

Andrew Rocks
Okay, and how many shareholders do you see you’ve got 55? Team members, and some of them would be recent hires, and some of the been there forever? What’s the shareholder footprint look like? Yeah,

Drew Burden
sorry, one last comment to that, and we would guarantee the debt, because for a younger person, you know, maybe in their 30s, or maybe in their 40s, that might have young children might have a mortgage, or maybe they’re looking to buy so

Andrew Rocks
you know, crimping their borrowing capacity to buy a house?

Drew Burden
Yeah, correct. We want to support it.

Andrew Rocks
So you’re also backing your own business?

Drew Burden
Correct? Yeah. Yeah. And the business also, you know, it needs to be a worthwhile investment for them as well. So we’ll be transparent with them, you know, not just, you know, just in time in the days or weeks before their offer the opportunity to buy in, but we will want them to have full comprehensive knowledge of the business financials and the investment they’re making in the business. From that perspective, and the opportunity to talk to their accountants and have their accountants engaged with our accountants, there’s a

Andrew Rocks
level of transparency on your p&l and where you guys are going, but, you know, given the nature of your business, most of them who have a calculator can probably work it out to a certain extent. So I imagine they’d be quite enthusiastic, given that opportunity.

Drew Burden
Yeah. So we have 10 shareholders currently, and we also have bought on a capital partner, a US group called merchant, which have assisted in in strengthening our balance sheet. So what that means is they’ve they’ve taken care of Macquarie’s debt for the moment, and given us the opportunity for a bit of a reset moment. So again, you know, none of the existing shareholders wanted to take money off the table or wanted to sell down but what we wanted to do was strengthen our balance sheet for what we see is the next, the next run of growth and investment and reinvestment, you know, we need to reinvest in our policies in our tech stack, in our processes in our talent. And we do believe in acquired growth and organic growth working together.

Andrew Rocks
And I believe that what we just mentioned there with with the capital partner of merchant, there are a lot of other capital partners out there. And it really is the growing up of this industry. Yeah, it’s been wild that businesses in financial services haven’t had, you know, Capital Partners. Because at the end of the day, there’s only a couple of ways to grow, and that’s debt, or borrowings or equity. And there’s only so much equity that can come from internal people. So I think that’s a pretty shrewd move, it’s gonna it’s gonna give you the firepower to be able to actually do that in organic growth, as well as you know, give you the ability to weather any storms that that potentially could be on the horizon. Yeah, absolutely.

Drew Burden
And they, and that was the right fit for us for a couple of reasons. You know, the two obvious ones were, you know, they’ve come in at 19.9% ownership, but what they have done as well as you know, that they’ve, they’ve filled that brief, because we have sort of a 10 to 15 year plan and vision, none of us are sort of looking to exit out in the shorter term. And so we would have been very hesitant to do any, any sort of bringing any capital partner for a more material amount than than 20% or an under that.

Andrew Rocks
And so you’ve now got, so that would also bring with it. For the first time in I’ll pick on your business partner Chris Mason’s career. You guys now have another board member is the 19.91 below a board member?

Drew Burden
Yeah, no, they they’re not on the board. I’m so we still have a board that that Chris and I have control over in terms of the nominations. We have Peter McKenzie, who is the chairman of our FSL, who has a great experience has been chairman of several super funds and insurance lawyer by trade. And so he brings a very good level of experience in governance for our group, but we Yeah, so it’s still us for the moment. And yeah, it’s been enjoyable to date, and hopefully the user hitters equally enjoyable.

Andrew Rocks
Sounds good. You’ve always got to be moving forward. Yeah. Getting back to your actual team. Yeah. You mentioned they’ve got the officers, you mentioned. You know, your recruitment can come from a familiar place, or it could come from, you know, an acquisition of a going concern have like minded people, but out on a daily basis as far as running the operations. What’s, what’s the cadence of the business? Do you guys you know, the teams meet daily? Do they have quarterly? Do they know what what, what’s the what’s the day to day rigor or cadence of the bait business?

Drew Burden
Is this your way of asking? Do we do huddles? Your well, when

Andrew Rocks
it’s hot, a little cuddle? I’m not sure where it was sort of how progressive you are, but we have one, do you do adults?

Drew Burden
So the ops team, do huddles? They are not daily, the advisor team gets together quite frequently, and does you know, sort of one day where they’re all in the office, I mean, like others.

Andrew Rocks
So this is in each of the individual offices and runs in? Do you do sessions where they all come together?

Drew Burden
Correct. So we’ll do once a month where they all come together. Every 18 months or two years, the whole company gets together. So the last one was at the Gold Coast? Yeah. I bullishly announced the next one would be in Queenstown,

Andrew Rocks
which we can’t take that back now that we’ve recorded.

Drew Burden
Well, actually, I couldn’t take it back because I sit in front of everyone. So we’re Queenstown is a magical place.

Andrew Rocks
It’s a cracking place. So it’s really, really good. So but it does

Drew Burden
bring, you know, its challenges around what time of year? Do we have it there? And are we skiing? Are we not skiing? What does the insurance look like? All those sorts of things the Gold Coast was actually because no one lives on the Gold Coast. No one lives in Queenstown that works in our business. But that that works really well.

Andrew Rocks
So what does fun look like? So you’ve got to you’ve got the the operations team doing their operations do you do? So? Did they report up to Carolina CFO level on a monthly basis as far as numbers? Or how do you get them out to you get the pulse of the business? True?

Drew Burden
Okay, so the head of advice, Chris McKenzie, will work with the advisors. Now he’ll look at the performance, the training and the education, and the recruitment of see if there’s any gaps there and recommendations and be pretty constant with that. He also has, along with myself and our CEO, oh, Carolyn, have a report twice a week from our vice compliance team. Yep. Do you want to understand as early as possible, if things are happening, or what’s happening or what’s not happening, and then Carolyn performs a similar role that Chris does for the visors. But within the ops team. What we look at from a higher level is we sort of look at five things on a quarterly basis run ongoing, and that is, so distribution being the first one, do we have enough? Do we have too much? You know, do we want to seek out more? You know, what does it feel like? And then there is an element of gut feel, right? Because it’s you can’t focus on everything at all times. The second part is we’ll look at advisors, and similarly advisors training, performance, onboarding, offboarding, whatever it may be, do we have enough? Do we not have enough? Do we have too many? Then we’ll look at the ops team as well. So this is sort of, you know, what I’m talking about is going through these five items on, you know, taking maybe 45 minutes.

Andrew Rocks
So then the headlines that you have consistency with every time Yep, correct.

Drew Burden
And then so then we’ll look to what area we’re going to focus on. Yep. For the periods. So the next the next part, the fourth one will be, you know, systems processes tech. And so we’re spending some money at the moment. And we’ll we’ll we have got an 11 week project that is a significant revamp of our current Salesforce platform. And then the last one will be our insurer relationships. So are we happy with their insurance? Are we not happy with their insurance? What do we need to work on with them? What are we looking to achieve? What’s the premiums coming through? And what do they look like? So that sort of gives the management team the ability to say, Okay, let’s get aligned. You know, we’ve got a business and a management team that’s of a reasonable size, and you want people sticking in their lane. You want people focusing on what we need to be focused on at that time. Again, we can’t be all things to all people. We can’t do all things at all others. We won’t do anything well. So at the moment, there is there is training of of new team members that are coming on board. We have two advisors that we’ve recently recruited one started last week one will start in two weeks, we have three in the ops team that have just started. So we need to be focused on on on the onboarding effectively and efficiently of those individuals. So

Andrew Rocks
what did so on that onboarding? Is there a Do you have like a three month onboarding program? Or what what does it look like to be on boarded as an AR or an operations of your business?

Drew Burden
Yeah, so it’s not a three month thing. But firstly, they need to understand sort of the DNA of the business. And I don’t say that, you know, I’m not trying to be sort of airy fairy about that either. Like they need to understand the type of business that we are and the accountability that we want to have to each other, and also to our referring firms and to our clients. And then it will be it will move on to process training. So typically, assuming that it’s an existing AR, someone who’s been inside the industry has worked. So they come with experience, what we’ve realized is we used to just sort of, you know, give them a lot more free rein, and they still wouldn’t feel like they’re micromanaged. But what we recognized is, the sooner they can understand the process, the sooner they can fit in with the ops team, the sooner that they can get up to speed and it’s better for them,

Andrew Rocks
it liberates them. You’ve got to you’ve got to, you know, people don’t like change. But of all the successful practices that I’ve spoken to they’re, you know, one of the common threads is to get to get buy in as quickly as possible or identify if there isn’t going to be buying

Drew Burden
Absolutely. And we believe you got to live in the house before you renovate it. So a lot of a lot of people with experience will come to the business with really good ideas. And they would they ask sincerely good ideas, or they’ve seen in looking through a different lens. So we need to encourage that and embrace that, but not at the start. So we’ll say to them, you will say stuff that your question, why do we do that? You know, and maybe it’s because we have a techstack deficiency? Or maybe because of there’s other reasons that you can’t see just yet. So after they’ve been on boarded, and for a period of time, then we’ll be encouraging them to tell us their perspective about that.

Andrew Rocks
And that’s the meeting forums allow that so they can cascade up to you whether it be Chris or Caroline at some ideas. Is that right?

Drew Burden
Yeah. And Chris is. So one of Chris’s roles is the fireside chats. And he does that with everyone, twice a year. You know, he’ll typically do

Andrew Rocks
it all as a thing for Queenstown, we can probably go on winter, you’ll have plenty of fights.

Drew Burden
Well, not sure how productive the fireside chats, fireside chats are. But to today, he tells me very good for culture.

Andrew Rocks
And about your business, you are a big substantial business and you and being in life insurance, the byproduct that is you see a lot of you see a lot of human frailty and tragedy. But there is always that, that silver lining that you can produce by by, you know, effective advice and, and underwriting and insurance deliverables. In saying that does MBS have a charitable kind of angle or anything that you specifically support?

Drew Burden
Yes, we do. So we support a number of community groups and teams and sporting teams. So firstly, I think the first time I ever saw you was I turned up to watch. I don’t think I’ve been turned on to watch I might have been at a park that Mesa was playing soccer with you. And you’re wearing the NBS, you know, bad strip. And I thought, Oh, hang on a second. How long have we been sponsoring this club for

Andrew Rocks
how desperate must be

Drew Burden
and we sponsored Melbourne University Cricket Club and different organizers organizations that the team are involved with. I am using a pen that says club 1054, which is for ovarian cancer research, which we support. We have a team member whose young daughter has Rett syndrome. So that’s something that’s close to our heart. And similarly, my father in law passed away from motor neuron says there’s lots of good causes that we get exposed to and that we want to contribute to.

Andrew Rocks
And it sounds like almost all of them have had a direct sort of impact on individuals within in the group. How do you then decide? And how do you organize that on a yearly basis? Do you do is it reactionary? Which sure enough it which is a great thing as well? Is there proactivity you know, what, what’s, how does it work?

Drew Burden
We’re challenged by this is tough, because

Andrew Rocks
being in life insurance in particular, you’re seeing, you know, the best and worst of scenarios every day. Yeah.

Drew Burden
And we’ve got 90 claims on the go really, at any one time. So Yeah, it’s been completed. We’ve We’ve raised it a few times, we’ve thought about, you know, do we get people maybe the employee of the quarter? or what have you to nominate a charity of their choice? or what have you. We haven’t landed on anything in particular. There are lots of good causes. And, you know, people also have different causes that are closer to them. Yep. Personally, Brent McCullough, who’s one of our partners, his family been heavily involved with bear cottage for a very long time, which is a wonderful cause. So we’re, you know, we’ve had tables at those events or what have you. But no, we haven’t nailed down a methodology? Or

Andrew Rocks
maybe you never do if, if, if it works, but look, the main thing is, is that the common theme of successful businesses that we interview on the engine room is that they are philanthropic. And why that is, is that people don’t just want to work for a money machine, they want to work for people with heart, they want to work with people that that, you know, that got some common interests that they can enjoy. And one of my questions is, you know, what’s your workplace philosophy? I mean, are you work from home? Are you work hybrid work? I will ask that question. But the man against the backdrop of what sounded like about six geographical offices, so if I was to yet again, come for a role for you is, is it’s set in stone that I’m when I’m working in the office or hybrid or What’s What’s your philosophy?

Drew Burden
Three days in the office? You know, that’s become pretty typical.

Andrew Rocks
You try and marry that up. So people doing together or this absolutely. So advisors are

Drew Burden
in Tuesday. Probably not much happens Friday afternoon. Anyway, so we most will have the team together. And we’ll be enjoying a longer lunch on occasion,

Andrew Rocks
I think in your game you caught when we talk to our partners. No, that doesn’t happen anymore. Okay. Okay.

Drew Burden
I think I made I miss those. I missed that that era. But yeah, when we have like that, it’s nice for the team to be together. And it’s nice for the team to be together at the end of the month, or the end of the quarter or the end of the financial year. So Friday is typically when most are in Yeah, if not all. And then for the advisors, Tuesday’s is, is pretty much a non negotiable.

Andrew Rocks
Yeah, and look for the rest of the week. I mean, everyone, post COVID, everyone’s got very good at being able to do their execution. And, you know, the world’s gonna look back at how fearful, you know, bosses were of low productivity, when in reality, most people do the right thing. Yeah,

Drew Burden
well, it’s just the unknown. Right. So we had Microsoft teams at the time, and we had Salesforce, and so everyone really quickly could go home. Yeah. So that was fortuitous. You know, there’s always a balance, you know, we recognize that it’s harder to onboard people from home, we recognize that the younger people will learn stuff just by osmosis and, and have the ability to go across the room and ask a question. Like, if we were both working at home, and I had less experience than you, I’m not going to pick up the phone 10 times in a day and ask you a little question. It’s gonna be embarrassing. Yeah, you know, so. But if you were just next to me, or you’re just across the way I could, you know, go and have a chat you or maybe I could go and ask someone else. So certainly three days in the office is important for the development and progression of of everyone and the connectivity to the to the firm. Absolutely.

Andrew Rocks
And look, when whilst I’m sort of talking about how you, you operate your business and your people, I’d be really keen on hearing what your genuine vision is for the life insurance component of this grand thing called financial services. From an operations perspective, you know, you guys are hyper specialized. Is that something that you see continuing? Do you see any of the superfunds getting it right, with their own distribution teams for whatever better word? What What’s your thoughts of how this place is going to look in five years?

Drew Burden
Our view is, if you look at it very simply, and think, you know, 10 2010 2011 2012, think about what house prices in your local area were worth, then, you know, easily less than half or easily half or less. I in that period. I didn’t know what Buy now pay later was, of course is credit card debt. But we’re cognizant that there is a like the personal indebtedness ratio, and like the level of debt that has come on into the system relative to the level of income that people are paid, is significant. And so the need for life insurance will exist, right? People are having children later, people getting married later, the need for life insurance will continue. But when you have 15 consecutive negative points of regulatory intervention for life insurance advice, practice, distribution falls off a cliff.

Andrew Rocks
And well that’s a motherhood statement. 15 Negative regulatorily consecutive consecutive regulatory points of intervention. Yeah, yeah. And so

Drew Burden
better people in IMAP for so All of them. But you know, and this, this goes back to, you know, something that as a management team and for Chris and I, we believe in, you know, we’re committed to growth and ambition, but we’re going to be agile, right? We’re gonna be agile to change, we might not like it, but we’re going to embrace it. And so going back to your question about where do we see it in the future? We absolutely see specialization, we see the need, I’ve already addressed that the need continuing, so we think the market is going to grow. But it won’t grow quickly. It won’t grow quickly from ARS writing insurance, we haven’t I had a look at the most recent June quarter I facil data, so the productivity per AR, and it’s tiny, you know, the top 20 for sales and distributions, you know, most of the distributing 10 grand in life insurance premium for the quarter per AR is nothing. So this is long, long tail insurance companies. And technology, hopefully will help those who are doing part time life insurance advice, increase, but the true growth, Roxy will come from specialists. And the reason being, if you’re a wealth advisor, you may be seeing your clients once or twice or three times a year. So your capacity is limited. Whereas if you’re a specialist risk advisor, you have a much greater capacity. You know, if you are providing a really comprehensive quality high portfolio, then maybe you’re making adjustments every 234 years, particularly if you’ve got a more stable premium environment, right. So it’s touching base, but it’s not the same depth of of meeting advice process that the wealth advisor would have. So

Andrew Rocks
even within within advice, people are getting hyper specialized into industries that their clients are coming from, for instance. So I just think it’s a growing up of the industry. And I think that you know, being able to service, you know, one size fits all is pretty tough. And the platform of that is the case, but

Drew Burden
I just don’t think you’re sorry to interrupt you, I just don’t believe that you can do as good a job as someone for your client, you might be able to do a portfolio structure that is excellent, and and onpoint. But how can you be adequately across the wealth creation, and the wealth protection? Equally, if you invested all of your time in the wealth creation component of the business, then surely, you’re going to be better at that than if you spread yourself across multiple disciplines. And you’re dealing with different stakeholders.

Andrew Rocks
And as it turns out, commercially, quite a few people have agreed with your sentiment and have joined up with you guys over the years. So right now, um, you mentioned you a few minutes ago that you’ve taken on a couple of new advisors, given the scale of the business, are you still looking for is is there any sort of geographical area that you’re interested in? Because, you know, part of this engineering podcast is, is to take people on a journey and thanks for all the listeners for for being on here. And for people need to go you know what, that’s the kind of business I can see my future in. But no point doing that if the door shut? So are you guys still looking for ARS or people in your on your business?

Drew Burden
Absolutely, we are. Yeah. And so you’re gonna need specifics. People who want to do it and want to create a career and want, you know, recognize the value in being part of a team, where you’re working with peers that are in the specialists,

Andrew Rocks
I think that’s important, because so many advice practices, I’ve got one person in life insurance. Yeah. And I think what you’re intimating can be quite lonely. When they sit in a team meeting, everyone’s talking about investments, and they get to you, and they’re kind of well, I’m talking to myself a bit.

Drew Burden
Yeah, and so business level, we control the flow of distribution, you know, we have the business to business relationships. So we don’t require advisors to get out and knock on doors and, you know, wear the leather off the shoes. So we’ve got the distribution component to support the advisors, we’ve got, obviously an existing client group as well. And then we’ll provide the advisors with the right infrastructure around them, you know, on the tech perspective, advisor associates client services, so they can be focused on advising, we’ve had a number of join us that that are good advisors, and have come from environments that it wasn’t a specialization. And, you know, they’ve been quite vocal internally, which is great for our team to hear that this is different, you know, having a bit more scale would hope to, to do six and a half 7 million in new business this year. And so the reason I say that is insurance companies recognize this, that the market distribution is down, and we need them to recognize there are firms like ours that are growing, and that what we need is them to help our clients more meaningfully and better, and that can manifest in multiple ways. But having dedicated underwriters, having streamline processes internally and externally, you know, having a claims team having new business support, having some tech accountability and integration, there’s all these sorts of things make it a bit easier for our advisors to manage the client relationship and to manage the policy portfolios,

Andrew Rocks
I see that, you know, when I look at engine rooms out there, they are all different, but they are all sort of looking to achieve a couple of things. One is the ultimate outcome for the client. But increasingly, if you aren’t giving your team the platform for them to do their best sell for them to achieve, or at record levels of unemployment, they’re going to find the company that is. So

Drew Burden
and we have, you know, we’ve just had two new partners come on board as as at one July, and other people in the business see that, and sort of their, you know, colleagues or friends in other firms or that, you know, we all go to the same functions that that industry groups might put on. And so that sort of is helpful as well to our momentum.

Andrew Rocks
Group. It’s been a real pleasure. I’ve known you for many years, I was there when you guys made the decision in 2015. To scale up? I think at the time, you sort of said, well, you know, we’ve got to go for it, you’ve got to do it, you know, right. There was sort of situation where commissions were up in the air and, and I’d like to congratulate you for backing yourself and backing each other and, and that that vibe comes across to the team, right? So, you know, there’s no one in your team who doubts that the leadership in that business is not going to be on point and it’s going to be completely what they bought into. So well done doing that well known for supporting the life insurance industry. And more importantly, what I’m for being on the buddy engineering. Thank you. Thank you very much. Good. Cheers. Thanks, buddy.