Engine Room Podcast #5 – Peter Monahan – Transcript

Andrew Rocks
Today we’ve got a an individual who’s going to regale us with his background, which is a bit unique. It’s It’s not your typical way of getting into financial planning, but jeez he’s made up for the lost time. Without any further ado, I’d like to welcome Pete Monahan from EJM to the Engine Room, he’ll apt good Roxy, great to see you. And by the way, thank you very much for making the trip up to Sydney be most appreciate it’s always good to be in person. So what I thought I might just kick off. This is about the engine room and you have built an engine room but before we get into that, just a bit about yourself, how you’ve managed to get into financial services and make your way into that kind of operational part of a larger business.

Pete Monahan
It’s a bit different than most Rocksy how was it I was at uni, doing a boat business banking and finance degree back in the 90s and had no interest in a career in it, but I knew I needed to finish the degree working in pubs etc.

Andrew Rocks
Did you have any interest in pubs Pete?

Pete Monahan
I was pretty good at pumps both both sides of the bar and ended up being poached to go and work at the local Yacht Club, which is Sandringham Yacht Club Melbourne’s Victoria’s biggest Yacht Club and sort of got stuck there in a way ended up running that ended up there for seven and a half years. But it was the first in a long line of jobs where I’ve got no idea what I’m doing. And sometimes I actually just refer to myself as a fraud because I run a yacht club and I don’t know how to sail I’d rather boat. I moved from there into being gm of a cleaning and restoration business, fire damage, flood damage, etc. And I certainly get feedback at home that I’m no expert at cleaning. I then it’s a bit of a milestone where I got a call from my brother in law sister one day and she said, Look, Westpac are looking for bank managers, and I think the job would be perfect for you. They want certain amount of bank managers to come from outside of the industry to bring that external viewpoint. I thought, well, I’ve got a banking and finance degree in my back pocket that I’ve never used, so I might catch that ticket in. So went for an interview there, and no idea what I was getting into. But the crazy people that Westpac kindly gave me a role. And for years as a bank manager, and I really loved parts of it and really hated parts of it big corporates, big corporate banks don’t exactly always operate maybe in line with my moral compass. But the part of this deal

Andrew Rocks
To steal a sailing phrase.

Pete Monahan
Correct. But the part of it I really liked was the financial planning part. So that’s where I actually found that it makes a real difference in people’s lives. Selling people credit cards doesn’t. But giving them really good financial advice makes a tangible difference. So after getting that four years of sort of corporate experience, seven bosses in inside four years, I thought I wouldn’t mind getting into something where I can actually make more of an influence myself. And so I went and targeted a targeted a role in the financial services industry, but specifically in financial planning, but no interest in financial planning itself. So

Andrew Rocks
just to be clear, you loved financial planning, you still want to be the final

Pete Monahan
document practitioner, that’s just like everything else, I’ve ended up in a role where I can’t do the core skill. But I think it actually gives me a competitive advantage in the market. Because anytime you can do the core skill, you get dragged back into doing it. Absolutely. Even as the bank manager, I couldn’t do a transaction, right. So in other branches, that bank manager would be somebody calls in sick, they’d be standing there, doing transactions all day and my branch, my team just needed to work harder, and they knew they were happy to lift. So my focus has always been around culture, and creating an environment where we sponsor the success of the individuals within our business. They own it, we sponsor it. And if we do the sponsoring well enough and we recruit and create an environment for them to flourish, I actually don’t have to worry too much about business outcomes. Because if I can help people be successful individually within the business, then the business outcomes are naturally delivered.

Andrew Rocks
So it sounds like that’s that’s your motivations and that’s been there regardless of when what you started with, and I create the analogy of the Yacht Club and then the Restoration well I don’t know if you’re an 80s child but a bit of a bottom of the harbor and then maybe cleaning some some money but maybe that was why he got the job in the first place. But But yourself personally. So you went from the bank and and where specifically did you go? Did you go to a small business or medium sized business, and I’ll give you some insight,

Pete Monahan
so ended up at a JM EGM financial services. ATMs been going for 30 years now. We’ve been going for about 20 at the time, and I’m probably one of the things that I think is really, that I really liked about the business was that the founder, Manny, who’s a friend and a mentor of mine, he realized that he was really good at the client stuff. And he really enjoyed the client stuff. And he didn’t allow himself to get dragged into the operational side, which is probably not his greatest strength, and certainly not his greatest interest. So I think that a lot of people who are founders and they grow the business feel that they have to go and be the one that actually runs it day to day. And I think pretty early on money, always realized that he could influence the business in much more ways by being involved at a high level around the strategy, but not the Daily Execution of that strategy. So I came on board as ops manager in 2014. I became General Manager, probably about three years after that when many took a further step out. And as part of the succession plan, I took over a CEO last probably a year and a half ago, nearly two years ago, and took over the CEO role, which means you’re fully now own the strategy. And many still there, pretty much. I’ll go to him around the strategy, Brendan, who’s our other individual shareholder will have an equal say in all of that, but they’re off doing their client stuff, and I’m off running the business. And

Andrew Rocks
I suppose Firstly, congratulations. And, you know, the This podcast is all about, you know, getting the role of practice manager and General Manager. But right now, you’ve you’ve just cracked that glass ceiling. It’s Historically people in financial services, or financial planning practices, the CEOs have been the business writer. And it’s also a real shout out to Manny, as you’ve said, for that self awareness to know what he’s strong at and what he’s not. And then obviously, to create an environment so that you can then now craft something as much in in your kind of mold as it was so that that level of self awareness, you probably stumbled onto a good opportunity because there’s probably people listening right now that go, I’m this close, but geez, I wish I had that other person on the other side of the ledger, who understood that, that where I’m strong, they’re weak and where I’m weak, they’re strong, so make sure that so So now you’ve done that to your Melbourne based a little bit more about yourself? A family man yet, so?

Pete Monahan
Yep, family man, Melbourne based born bred. I think I’ve got out for about a year at some stage whilst backpacking, but I don’t really like being too far away from the MCG. So sort of that bungee cord that pulls me back. Family Man, three beautiful kids in a lovely wife, Carly. My kids are Ellie who’s four who at some stage I think she’ll run the world because she runs her household. Patio seven who is addicted to every sport I caught him watching lacrosse the other day which even for him I thought was extreme but chaos his best friend yet pay per view.

Andrew Rocks
Lacrosse is quite quite out there on the isn’t it so and,

Pete Monahan
and Isabel who’s, who’s nine and a beautiful soul and very quickly turning in from a little girl to a young lady and bringing a lot of joy. And a lot of attitude along with that.

Andrew Rocks
Like, like everyone who’s good. I’m sort of running, running and being part of a family. It’s, it’s good to know the pecking order, I always look at my Medicare card and realize that I’m one rung below the dog. When so that’s how you’ve managed to get there into the role you find yourself today at EJ M and, and we have given him credit to the rest of the team there at EJ M. But maybe if I could just change gears and get a real feel for the practice that you’re now running, you’re now leading but you were running it now you’re basically straddling this. Just give us an overview of, of maybe the org structure that what kind of business you’re in, as far as the types of clients you work on. And just just a bit more meat around the whole PJM operations, please.

Pete Monahan
So we’ve been through a big evolution over the last few years, like many have post Royal Commission and interruptions to revenue streams. And it’s very hard to sort of compare where we are today and where we were a few years ago. And one thing I’m really proud of, of the team that we’ve got, both from a board level strategy, and then the amazing team that worked with us is they’ve all gone through a journey and enabled us to change really, really quickly. And the business is unrecognizable. But it’s 1000 times better than it was three years ago.

Andrew Rocks
Well What makes you say that.

Pete Monahan
Brendan, who’s one of our directors, Brendan cans, who, who I believe is passionate about financial advice as any advisor I’ve ever met. And I think he should be up there. As you know, he will be the best coach of advisors. So anybody who gets time with him is lucky. But when we when we sort of were trying to work out who are who our ideal clients were and what we’ve done in the past, he came up with this and I loved it and said what was our target market three years ago, and the clients he said clients need to meet two criteria to be a client of a JM they needed a heartbeat and a checkbook. And it’s true we were we were out there trying to get clients not get specific REITs. So, we’ve had a real transformation in how we want to approach the business and how we want to reshape the business. And we’ve done a lot in the last three years, and we’ve got a fair bit to still go.

Andrew Rocks
And what what what typically does so as of 2023, yeah, what are the type of clients that not only are you attracting that you feel you’re good at. So,

Pete Monahan
like, everyone was so good, a large percentage of our book that is retirees, and I think the number one thing we do for retirees is make them comfortable. It’s that AOK index, right, so we deliver on that in spades. The focus, though, is we’re not targeting retirees, we’re good at that. But we need to make sure that we’ve got the retirees of the future. So there’s three key focus areas, or three key three key targets that we want to, that we want to search for. The first is we do really well with young professionals, basically households with 200, grand or more in income, because we can accelerate their wealth creation. And we can get them connected. So we’re a business that is driven by our mission, which is creating happiness. So through for young professional, we know what their happiness looks like, we know what so just to

Andrew Rocks
pause. So your mission is creating happiness. Yeah, I’m looking also at your website, and you’ve got EGM happiness stories on your website. So it’s not a throwaway line.

Pete Monahan
No, no, and I’ll talk about that in a bit. It’s a huge part of what we do. But we sort of work out well, what’s the happiness for a for a 40 year old person with two kids and a mortgage? And we understand that that’s going to mainly be around cash flow pressures, and those sorts of things. So how can we deliver a solution that fits them? We have a lot of success with with smase, small to medium businesses, we find that they’re really open to advice, because they get advice in their business on a lot of things. So that they’re not, I can probably sort this out myself, they’re naturally wanting advice, and they’re happy to happy to pay for it, and they’re happy to get the benefits of it. And then pre retirees, it’s an obvious market for everybody. But there’s a lot of people that just can’t get into the headspace around when they need to start making decisions for their future. And that time in their life, when retirement starts to be a consideration. Kids might be getting older, mortgages might be paid off, obviously, we can make a bigger, quicker difference for those for those clients.

Andrew Rocks
So you’re giving us an idea of the evolution and the honesty around the heartbeat and in the checkbook. Been a few years since the checks been written in this country. So a shout out to Brendan, he’s showing his age. But right now that how do you have your range do your team to be able to deliver for those three segments. So give me an idea of of the people involved how you organize the structure in your business.

Pete Monahan
So really excited this year, because I started back in January, and for the first time in my nearly 10 years in the business. I’ve actually got an org structure that I think works really well. I think I capped out personally

Andrew Rocks
Because you’re the CEO now.

Pete Monahan
I’ve actually we’ve we’ve got enough scale where we can actually have some key people doing some key roles rather than Pete Monahan doing some things, okay, and other things really badly, but no one else is around to do it. So, really exciting this year, we’ve now got that management structure. So we’ve got myself, but I think I capped out at 22 direct reports at one stage. So how many people in EGM? 4545. So yep. Okay. across five sites. Yep. So five physical sites by physical sites plus an offshore team.

Andrew Rocks
Okay. Okay. We’ll come to that. We’ll come to all that later. So 45 Show exam. That’s, that’s a big team in your you had 22 of those direct reports.

Pete Monahan
Yeah. So now now it’s great. So Brendan, who I talked about earlier, has moved into what we call an advice coach role. So he’s in a hybrid senior financial planner slash vice coach and he’s pathway now is to be head of advice in the future when we get to a scale where we need a full time head of advice. But that advice coach role is already showing dividends because the advisors now have a weekly check in with someone who’s a practitioner, who’s very, very good at what they do. We have individual business plans for each advisor that they draw up themselves, and they get checked in on weekly to see how they’re going.

Andrew Rocks
So we’re going to talk a bit about that in in people in culture. So love that individual business plan. How many hours do you have? We’ve got 1111, eight hours and, and they’re supported by how many people in your support team like client service?

Pete Monahan
Yeah, I’d actually don’t know the FTE number off the top of my head, but there’s around about 30 Okay, so, and then the rest in management.

Andrew Rocks
So you’ve got you’ve got a three to one support for your hours.

Pete Monahan
It’s probably closer to two when we look at FTE because we’ve got quite a few part timers.

Andrew Rocks
Okay, so to say your living advisors are supported by to people and, and how, and how is your advice produced?

Pete Monahan
So we run pretty simply, we call At the advice factory, so we’ve got the advisors who are the people who go out there and have the really good conversations. And it’s very much goals based advice. But advisors are really good at that. And most of them aren’t that good at the admin. So what we do is we try and take everything off them that we can. And we do that by a mixture of onshore and offshore support, free up their time to do what they’re good at. And also, we’re a business that talks about creating happiness. So we need to have an engaged workforce. So why have you been doing stuff that they really don’t like doing? Oh,

Andrew Rocks
absolutely. And I think you’ve even heard it, they’re unhappy advisors will not attract happy people. And with your, your organizational structure, is it in a pod system? Or is it a collective or arranged that Pete?

Pete Monahan
So I’ll go back to the org structure. So you’ve now got myself, we’ve got Brendan, who’s a hybrid, but effectively, it’s the head of advice roll, then we have many who’s really smartly as part of the succession plan, wants to make sure that his legacy is as big as it can be. So he’s been an exceptional advisor. But now he’s in a business to business role. So we call it chief growth officer. And he’s doing business to business work. So he’s generating leads for the business via AGM having relationship with multiple accountants, lawyers, brokers, etc, etc. rather than it just be one person getting them and then servicing them themselves. And also working on a few other side growth projects for us some generating acquisition opportunities, because we have a very steep growth, ambition to be have 15,000 clients by 2033.

Andrew Rocks
Okay, so we’re How many of you got at the moment? 14 1400 1400, you want to get to 15,000? So it sounds like there’s going to be a combination of organic, and inorganic, or acquisitions or mergers. Oh, great. Well, we’ll talk a bit about that as well, because some that’s that’s a very, very ambitious target. But Tom, I have no doubt that you’ve built the structure so far

Pete Monahan
to kick off. So yeah. So if I go back, we’ve got we’ve got Brendan in that sort of head of advice. We’ve got many in the chief growth Officer role, which, which is in its infancy, but working really well. We’ve now got a permanent compliance manager, Carly, who’s exceptional at challenging the status quo and going do we really need to do it that way? Hey, what’s the policy and getting the most efficient way to do it. And then we’ve got UNITA Hadar, who’s our operations manager. And she’s been with me the whole journey. So she was client service officer when I started. And she then went into a services manager, and then our operations manager. So her and I’ve been the two full time management in the business for as long as I can remember now. So I’ve got an awesome structure there, where now my job is to coach the coach. So I’m trying to catch up with four people a week rather than 22 people that we can see what’s happening in the business, which frees me up to do other things that are under my remit, which is own the strategy, own the m&a work, own the key stakeholder relationships. Yep. So I can do this sort of stuff and be out there and people can get to know us because we’re on an exciting, exciting journey, where

Andrew Rocks
you’re intending on being 10 times the size, but in the next 10 years. So if people don’t know you, they probably will in the next 10 years. When when when when you talk about your your advice, or the org structure. What are you self license, your license will maybe give us a feel for sort of the foundation. You mentioned you’ve got onshore and offshore. I’m aware of that maybe if you want to flesh out more of how that works as a one team philosophy, which we’ve spoken about.

Pete Monahan
So from a licensee perspective, we’re an a&p SP practice. Many work today NP so when he left a&p to start his own practice, it was a natural, it was a natural fit 30 years ago. We have been, we’ve been with them for 30 years, I’ve no no different in the last 10 years. But like us, they’ve been through a fairly big transformation in in recent years. And that said, plenty of media coverage. I think they’re the dust is certainly on that now and that the leadership team is doing a really good job somehow improving the licensee offering whilst getting themselves into a financially stable position. So we’re pretty happy with the new management structure within ANP. From how that fits into how we do advice fundamentally, they’re our licensee, but we’re a GM. So we’ll work within their guidelines. We have a partnership manager with him, Adriana, who’s been connected with our business forever, and she’s a superstar. And she’s our main point of conduit with the licensee, but she’ll also sit there and be a sounding board for strategy or if we’ve got an HR challenge we give her a call so it works. It works really well.

Andrew Rocks
And it’s part of being you know, EJM um, do you guys how do you how do you manage the the assets when the clients give them to you do you run out like an MDA or an SMA maybe gives a feel for for that because without some sort of structure? On on there, the chances of getting to 14,000 without going crazy is quite low.

Pete Monahan
So we’re, traditionally we ran model portfolios, and then do some direct shares for the clients that want to wreck shares. We moved and introduce our own SMA last year in about May. And we’ve had some really good inflows there. And we’re getting the benefits of the client of actively managed accounts. But we’re also getting the benefits to the business where we’re finding an efficiency and we’re now having better conversations at we call them progress checks, what the industry probably calls a review. We’re having better conversations with clients about where they want to go, how they’re going against the goal, what’s really important, not going through portfolio reports, and, etc. Because most of our clients actually just want us to do that and trust that we can do it. So that’s why that’s working a lot better.

Andrew Rocks
And do you, given the demographic of clients that you’ve, that you’ve, you’ve had, but also the ones you’ve targeted? Is life insurance, does that play a role in in the EJM advice profile?

Pete Monahan
Yeah, it does. And it always has, but like most of the industry, it’s, it’s, it’s got a lot harder. So if I look at it from a, the percentage of our of our new clients that come on board that ended up with personal insurance through us, it certainly decreased over the last five years. But it’s something that we were addressing at the moment, you know, trying to find ways to do it more efficiently trying to find ways to there’s no clean skins anymore, but how do we do it so that it’s easier, and that we can we can cost effectively deliver advice in that space? Because the time and money that we spend on it is is challenging?

Andrew Rocks
And in just some more information about the mechanics, your business? Tell me a bit about your tech stack and any journey you’ve been on there?

Pete Monahan
Yeah. So we we have we have five sites and a couple of those are via acquisition in in the last three years. So

Andrew Rocks
what maybe before we go on, rattle them off, where are they? Yeah, so we’re Melbourne, which is, which is the spiritual home? Yep.

Pete Monahan
Then we’ve got Wangaratta, which we’ve been in for about 12 years. 13 years, maybe we’re donger, which we’ve been in for three julong. We’re coming up to two years, and Bendigo is about a year. So we’ve just ticked over a year at Bendigo. It’s actually Eaglehawk. I always need to remember that. But when I’m talking to people who might not know this small town just next to Bendigo, I tend to call it Bendigo

Andrew Rocks
Eaglehawk does sound pretty cool. Yeah. And your natural aversion to the Murray River has been no. Okay, so we’ll continue on Sorry, I just wanted to get paint that picture. So you’ve really taken a tilt and on those those areas, and that’s probably where a lot of your SMEs are coming from as well. So, you know, those large, those large towns, the wealthy people quite often a self made and whether it be agri or industries, well done. So the tech stack, let’s get through the tech stack.

Pete Monahan
So we’re pretty vanilla on our tech stack. And we know that it’s an area that we need to develop being part of a big licensee, we use the the a&p version of of x plan. We’re on the a&p version of Salesforce as a CRM, we embarrassingly, were managing some of what we do via spreadsheets for a lot of our reporting. So we’re always on the lookout. And that’s the 2023 project to work out but work out what our future tax tax is going to be. And we’re we’re we’re some something that we desperately need to sort out is tech stack solution that’s going to do some automated communication with our clients because we’re just too slow on the on the take up in that space.

Andrew Rocks
So you too slow in, in responding to clients or communicating proactively proactively? Yeah, we got Robinson Crusoe there and, and that’s something that it needs to be addressed as soon as you get that scale.

Pete Monahan
So, and we’re constantly we are we’ve had five meetings in the last two weeks with different tech companies trying to work out the solution. Five years ago, we did a study tour to the states were a couple of our team went over to the international FBA conference, and no one seems to have this tech stack thing. Scan.

Andrew Rocks
No, that’s why it’s called a tech stack, not just tell us the tech that you use. So I’m always curious to ask that but but as you know, it’s only as strong as the purpose the motivation and the values of the business and, and having a clear articulation of the types of clients and people will be there. So of your 11 hrs that you’ve got them. So, maybe give us a bit of a feel for what, how they get managed by by, or sorry, how they get managed every week or every every month and how they interact with their operations team. Yeah. Is it is it is it closer? Is it sort of distant?

Pete Monahan
No, it’s it’s quite So every single person out of business has a sponsor. So we use the term sponsor. So I sponsor my department had success, they own their success. And then they sponsor their team success and their team owners success. So each advisor has that advice coach, there’s a structured frequency as to how how often they catch up, and there’s a structure to those catch ups. So yeah, we’ve got somebody who’s just come out of a py year, and they’re doing their first year as an advisor or their second year as an advisor, then that’s going to be weekly. If you’ve got someone who’s flat out with 200 Plus clients, and you’re looking for a million dollars worth of revenue and reasonably self sufficient, then it might be monthly. Yep. But we go back a step, we actually rolled out a capability assessment for our advisors last year. And I think I came up with 49 questions, so it wasn’t small. And it was all in categories. So it was, you know, what do you like it revenue generation? What do you like it compliance? What do you like it soft skills? How are you positioning ambition of creating happiness to our clients? How are you closing? closing a sale? And I don’t avoid that word sale, right? Because if we can give great advice, but if clients don’t want to take it, that would make no difference to anyone?

Andrew Rocks
Oh, look, the reality is that big part of our job is to get people to do things they know they should do on a timeframe they otherwise wouldn’t. And so if the byproduct of that statement is get closing the sale, then then then I think we should all own that. Yeah.

Pete Monahan
So capability assessment, everyone writes themselves on a scale of one to five on 49 key questions. The advice coach then goes and has a look at the answers and sort of goes, okay, and the challenge I put to my advice coaches, because we’ve got to, we’ve got Janice, well, in agile office who was previously practice principle and retired out of that role, and is just doing a day a week. It’s awesome, because you’ve got the knowledge of that business and a great relationship with our advisors there. And I challenged him and said, Cool, now your job is to go and validate this. And we sat down, and we did some we did some, some demos, and we’d look and we had, we had advisors saying, Yep, I’m a two in this, and we’re going down. And you’re better than that. So let’s get on the same page. But you also had some areas where advisors thought they were really good. And when we went to the data maybe to validate, or if we sat down and said, Okay, give me your Give me your pitch on, on our advice costs versus the, you know, the benefits they’re going to receive. Some wasn’t quite where probably the advisors thought they

Andrew Rocks
were, I can’t I can’t believe that her advisor might exaggerate. Yeah, it’s, it’s, it’s shocking for me.

Pete Monahan
So that that then left us with a baseline, right? We had honest conversations, we know where we’re at. And once we all agree where we’re at, it’s quite easy to move forward. So it’s exactly what you do for your clients. Where are you at today? Where do you want to be? What’s the pathway to get you there?

Andrew Rocks
And back to the business structure? Do you offer other services outside of traditional financial planning to your clients?

Pete Monahan
So we do lending, we do lending out of our Wangaratta office. And we’ve traditionally done it out of our Melbourne office as well. But we are looking, we’ve got a good relationship now with a good sized broking firm that has a great greater experience than we do in this space and provides a great service. So we’re looking now at do we want to continue in this space? Or do we want to just go that might be something that we do a JV and an outsource that effectively via JV?

Andrew Rocks
Yeah, well, look, I think increasingly, a specialist beats a generalist. So it’s well worth well worth looking at. But also, you know, making sure that it continues to fulfill the requirement of creating happiness with your clients. And after so many interest rate increases. Part of that happiness is painless. Yeah.

Pete Monahan
Correct. It’s pretty, it’s pretty topical. And I don’t think there’s any clients with a mortgage that wouldn’t like to be saving on those repayments at the moment.

Andrew Rocks
So another one is, um, after your journey going through this, are you do you guys? Are you a member of a community? Do you get any coaching? Who do you learn from outside of your mentors in the business yet?

Pete Monahan
So we’ve got we’ve got some formal structures and some informal structures. So I potentially like the informal ones more because you sometimes just get some gems. So we catch up twice a year with a group of practices within the a&p network. And that happened this week. And it’s really open. It’s really open group that’s happy to share everything. It’s kind of science sort of discussion. And we’ll just go through topics that are relevant you what’s your advisor, Rem structure, how do you incentivize what what a bit you’re trying to get? What’s your what, how would you value businesses, if you’re doing m&a, etc, at the moment, and we all share, and that’s awesome. Then we have formal structures. So we’re part of a caravan. And we’ve been with that now for two years. And that’s really good. So that takes us outside of our licensee which is great because sometimes within within the community heal, it’s got some common thinking about it. So it takes us outside of our licensee, and we meet with some amazing practices that have accelerated their growth really, really quickly. And that’s a really good community that’s happy to share. We’re gonna catch up there three weeks ago, one of the practices that’s done dozens of acquisitions, we’ve done about six, and they’ve done probably 50. And that has walked us through the whole process around it and said, We’ve got to, we’ve got to, we’ve got a checklist with 300 items on it, we’ll email it to everyone. So that’s the sort of community I want to be involved in where people are open and sharing and happy to pay it forward. And if they get it back, they get it back as a bonus,

Andrew Rocks
okay, she actually had out to Macquarie who have been doing that for many, many years.

Pete Monahan
And so so we really enjoy that I think, got some gems in other practices that we catch up with monthly. And that’s probably a bit more granular. Insofar as you know, let’s go down. So we caught up with them last month, and we went through every line item in the p&l and just said, Well, your your your property costs are low, and your tech costs are high. This is what we do. And we just share.

Andrew Rocks
Yeah, I think the it’s been a long time since any financial planners really thought any other financial planning company as a competitor. There is there’s an insane amount of clients and a very few amount of practitioners. Correct. So having a think about all thanks. Thanks for giving a lot of those details there, Pete. And I’d like to maybe touch on the culture. Because you’ve got 45 people, you’ve got people that are some are full time, some are part time, you’ve got some people that are transitioning roles as a function of their tenure. You’ve got people that are in six locations, and also overseas. The question is, I’d like to ask you, with that as a backdrop, why do people join you? Why do people stay? And why do they grow?

Pete Monahan
So fundamentally, they join us because we’re really clear on where we want to go. So as the business, we set our big, big, hairy, audacious goal, back in their B hag back in 2018. And we gave ourselves 15 years to achieve the 15,000 happy clients. We talked about that in the first interview, and people know that we’re a business that’s focused around growth. And the reason that we want to achieve 15,000 happy clients is that we think every client that we have influences at least six other people, whether that be their parents, their kids, their communities, which means we’ll be influencing over 100,000 Australian lives. And people join us because they want to be part of that. The second reason that people join us is that they really understand that yes, we’re clear on where we want to go. So there’s no secrets to it. But we’re clear on how we want to get there insofar as the way we want to do it, which is our mission of creating happiness. So our mission of creating happiness is for is for our team, our clients and our community. So they understand that we’re going to kick back into the communities in which we operate, they understand that we’re going to make sure that the clients are not only having a great experience, but are getting great outcomes. And they understand that as a team member, we can’t talk about creating happiness for our clients and our communities, if we’ve got a team that aren’t being fully supported, given developmental opportunities, coaching, training, fun. Yeah.

Andrew Rocks
What was the last one? What? How does the game have fun? I mean, I’m, I’m curious, I’m going to jump back into your charitable ones. And we’ve spoken about how to help the clients, but I’m really going to hone in on the team here. How does it James celebrate success? All right.

Pete Monahan
So we have six core values, fun, innovation, communication, leadership, accountability, and passion. And most businesses that I’ve worked in, will have a variety of those words. They’ll have a mission statement, and they’ll have a variety of values. And at the end of the conference, where they create them or communicate them, they go into a drawer. And in fairness at 8am, when I got there, I asked them for them and the current management in the business went searching through the drawers. So one of the first things I did back in 2014 was we are in a conference and the team came up with the values and the team came up with the mission around creating happiness. But the difference, the difference between I think, AGM and any business that I’ve been involved in before, is we live and breathe it every day. So the first agenda item on our Monday team meetings, is calling each other out for anyone that’s gone over and above and creating happiness.

Andrew Rocks
So it’s a bit of a gratitude session.

Pete Monahan
And in our melt in our in our original business, which is probably about 28 people, because we sort of segment the team meetings has got a bit big. That takes about 20 minutes every Monday so So it’s not talked about it at an interview and then not talked about we live and breathe it, the major award we have in the business is the creating happiness award. Okay, and tell me about that. So the team vote. As I said, I love the MC J. And I love my Ozzy rules. So we use Brownlow, medal Sol voting. So every quarter, our team do three to one for the team members that they think live their creating happiness mission, the most, and then they go get your group together at the end of the year. So that’s our main, that’s our main award,

Andrew Rocks
does that take three hours to present that award like brand lifestyle, or?

Pete Monahan
No, it doesn’t quite take that long, because we don’t like our beginning war. But it’s a really, it’s probably the, it’s in the top few moments I have every year when I get to present that award. Because it’s like your peers have just said, you live your mission, you are the best at living this mission. And this mission is everything that we are about, it’s the reason I get out of bed. So we live it that way. We have monthly creating happiness awards. And then we challenge ourselves, and we’re just rolling out in next week or the week after, when we do our next range of quarterly team reviews. Everyone’s going to need to be bringing examples of how they’ve lived each of those six values. So a quarterly basis.

Andrew Rocks
So I get that that sounds really doable when you when you’ve grown this business in one location for a long period of time. How do you manage the cultural integration of of when you’re acquiring businesses or merging? It’s really, really hard from feedback. What’s been your success and what have been your learnable? failures?

Pete Monahan
Yeah, so operating rhythm is the main success. So we’re really strict. We run run run with the Rockefeller habits. So we love the Rockefeller habits. So what we do we do daily huddles, we have a front of the front of house one a back of house one. So we’ve got a team member in Wangaratta, who’s been with us for a year, and I think only went to the Wangaratta office four times last year, but I see him every morning. So I feel like I know him as well as I know, F who was our first team member in the Philippines. Because I used to when I was doing the back office one I’d say if every morning. So we interact. And because we’ve got multi site, not everyone sees each other anyway.

Andrew Rocks
And you were doing this before COVID. Yeah, yeah. So yeah, I know that. And when COVID

Pete Monahan
had nothing changed the guy that we in one day, we said, everyone, grab your computer’s, grab a chair, grab whatever you need. And the next morning, we had a team meeting at eight o’clock. And it was exactly like a normal team meeting

Andrew Rocks
and your global team. We’re used to dealing with you in that regard anyway. So it just meant that everyone’s now the same height, you’re the height of the piece.

Pete Monahan
But in the interest of transparency, right, I tried to roll out the huddle three times and failed, right. So I think that’s something that maybe in Australian culture, we’re not great at letting people actually fail. And what’s the huddle look like? Pete? So huddles, 10 to 15 minutes. Every team member has key metrics that there are key performance measures that they’ve chosen to report on same every day. So for example, if we got somebody, somebody new in our offshore team, one of the will sit with them say what do you think you should report on and one of the things will be those measurement metrics that just tell me how much is the volume, what’s in their pipeline? Because if I can sit there as a leader in the business and go, Oh, that person’s got 17 in their pipeline. And really, that should be about four, I know that I can reach out to them straight after the huddle and say, Hey, going, yeah. And we don’t wait for them to crash and burn and feel the stress and not get any happiness, we’re actually going okay, well, there’s a challenge here. How are we going to solve it? So it gives you as a leader a really good snapshot, it gets the team engaged and going, wow. Yeah, I’m not as busy as that person, maybe I need to lift my game up, or Wow, that person is really busy. And I’ve got a bit of a, my workflows dried up. For whatever reason, it’s a bit like, I’ll grab some of their work

Andrew Rocks
and getting these operational rhythms. With new team members and new new branches. You’re obviously good at selling it. But how hard is it actually to get these people who may have come from a different environment into this audit is that part of the allure? Is that part of when you’re doing your investigation into whether these people will join it that finally they found a place that does this?

Pete Monahan
So it’s both. So for some, it’s the allure of going well, I love the systems, the structure, we don’t have this, we don’t have the scale to have this. I just want to walk in and that’s all taken care of. That’s really positive. For some others. It’s I’m really good at dealing with clients and doing this and doing that and more meetings and more meetings is taking me away from that, which is actually not not a good thing. So I’ve made more mistakes. I think that I’ve made good decisions. One thing that I’ve learned with the acquisitions is one of our acquisitions. We didn’t pour some into our operating rhythm because they were pretty pretty against it in the due diligence phase. And we’re like, Well, let’s not shake the whole deal up over this. And it took about a month. And eventually I said not the reason that the integration is taking longer than we wanted is because we’re not actually getting to know each other. And we just bitten the bullet and said, Let’s do it. And that’s been only going for about the last month. And I’m already seeing the connection amongst team members, right. So it’s now not I’m at this site, it’s I’m part of this bigger team,

Andrew Rocks
sometimes you’ve got to be good for people not good to them.

Pete Monahan
It’s the irony is that both thinking I’m looking after them by not putting that what they perceived as pressure, I’m actually making it harder for them to have fun, enjoy their roles be successful.

Andrew Rocks
And I’m that, from your own perspective, looking at the way you’ve evolved, has your leadership, style or methodology changed over the last 10 years.

Pete Monahan
It’s changed in so much that I’m more aware of what I don’t do well, and I’m more aware of needing to have people in the business and structures in the business to counter that. So I need to not try and be there for everybody all the time and let people actually make some mistakes themselves, they at times have been far too hands on and trying to not let them make those mistakes. So you’re changing as you get bigger, you got to let people have the confidence, I’m hugely confident in my team, I just sometimes get involved too much, because I don’t want them to make the same mistake I made. Whereas there probably just need to be like raising children, and isn’t. And now I’ve got to get really clear on what I’ll be involved in and what I won’t be involved in. So last year, I introduced a process like a weekly review process. So every Friday morning, I spent an hour and a half. The first thing I do is look back at my diary for the week, and go, is there anything out of any of those meetings that I haven’t actioned or etc capture that, but it also makes me evaluate and go, is there any of those things that I shouldn’t have done. And I pick up on more and more. So as I’m maturing, eventually I might be maturing at 47. I’d pick it up and more and more going I just shouldn’t have done that.

Andrew Rocks
I think probably just for those you listening, what a great exercise. What a great exercise once a week, jumping in, and having a look back that week, which is a short enough period of time that you can actually remember everything and and figuring out which of the ones you shouldn’t have done and learning from that. That’s a great one. Thanks. Just for

Pete Monahan
clarity, that doesn’t take me an hour and a half. Because if that took me an hour and a half, I’d be out of a job. So look back a week, look forward two weeks. And then you’re actually getting into every week confident that you’re prepared for all the meetings that you’ve got. And I’ll tell you what, when I take a Friday off, because it’s a long weekend, or somebody offered me a game of golf. It hurts me the next week, if I haven’t looked forward two weeks and, and plan by week. So yeah, it’s a really good process.

Andrew Rocks
And you’re talking about the happiness before and we just went through your TV, you mentioned that you guys do some some charitable stuff when we give us an idea because you know why people join why people stay. Operating rhythms. Absolutely. We’ve spoken about that fun? Well, it’s your first it’s the it’s the first cab off the rank, you know, in your your mission. But yeah, what do you get? How do you give back? And how does it work in ejf.

Pete Monahan
So traditionally, it’s worked in a really ad hoc way, which I think most people do, right? You know, a staff member comes and says, Hey, I’m raising money for something good the Business Champion, and we’d always chip in, but 90% of your staff probably don’t have the confidence to ask. We’ve supported a charity called Cambodian kids can because one of our clients set it up. And it’s basically set up a school in a really poor area in Cambodia, where girls would traditionally not get to go to school, families can only afford to send the sons to school and that girls would be left working in the fields. So we’ve done a lot of a lot of stuff supporting them over the years, but it’s it hasn’t had enough structure. So we’ve actually got a group of volunteers in our business at the moment we had our first meeting about at about a month ago. And we’ve set up and put some budget aside this year for what we’re calling the JM Foundation. And we’re building that with the team. So there’s certainly a financial element, which means team members can come and request support for things that they want to do. The business can make decisions as to things that we want to support. And so there’s a budget there. But we’re just working out what that foundation looks like because that foundation can also do things like run charity days run the biggest morning teas and Jane’s for Jane’s days. Maybe they’ll end up running the jam ball every year. I’d love it to get to that level where we raise money for a specific cause on a rotating basis. So that age and foundation is a work in progress, but it’s got a significant it’s got $10,000 put aside for it this year. And we’re going to tie future business profitability targets so that if we achieve this part of the bonus structure will be Well, we can allocate more money into the foundation.

Andrew Rocks
That’s awesome. That’s really, really good. Because it creates a rhythm and a structure and giving which which, as as a, as a firm as it grows, putting those things in place, just as you say, people don’t want to sort of approach you for an impossible. If you’ve got a whole structure like that, then then it’s one part of the hierarchy of why people join. And they’ll

Pete Monahan
also be able to approach instead of me, they’ll actually have approached the Foundation team members, who will actually be the one signing off on what we donate to, and what we support. So they actually get rid of that hierarchy level. And that can be approaching someone that they know really well, and they’re comfortable with. With the

Andrew Rocks
with the with the business some how often do so you mentioned that you do your daily huddles, and you’ve got quarterly meetings. Do you get together as one unit, Tommy, post COVID? Is that? Do you have a conference? Yes.

Pete Monahan
So we have an internal conference. So post COVID, we’ve done in February, the last so much last year, February this year. And that’s everybody coming in except our offshore team. So we’ve got staff, one of our team members in Sydney, we’ve got people working in our five offices, we’ve got one who’s about four hours west of Melbourne just works from home full time, everybody gets an invite into those conference conferences, two days, a mixture of having fun, some business planning, some, some coaching, some training. We had a great one this year, and we all had dinner on a floating boat on the Ohio River, and it was about 35 degrees, and the city just looked amazing. Getting together is really, really important. I’m in the car, I will be in a practice every week, I’ll be in, I’ll be in one of our regional sites, at least once a week, on average. And then we have management team rotating through the regional sites as well. So there’s always a physical connection. So you can touch and feel and get a sense for how things are going.

Andrew Rocks
And I know that you I know that you do that. And I think that the most time we’ve spent together was actually when you personally went and visited your team offshore as well. So So I know that you’ve, you’ve, you’re very sort of giving of your time. And from their perspective, in a business loan related to they love it. When when when Pete and the team come over.

Pete Monahan
Yeah, and it’s a luxury, it’s a luxury, I’ve got us we’ve got bigger, like I walk into our Eaglehawk office. And I’ll get smiles from people that I haven’t seen the last three weeks. And I love that Yeah, and I can go how’s it going, and I might find out something really good. But also might find out a challenge. And it gives me a chance to help with that challenge. So whether I’m in Wodonga, Wangaratta, Bendigo, or Eaglehawk, or whether you’re on the two times I’ve been lucky enough, lucky enough to jump on a plane and get over to Cebu in the Philippines. It’s a luxury I have that I that I can do now, because we’re getting bigger. And I absolutely love that part of my role.

Andrew Rocks
And I think that in order to be able to achieve the client’s happiness, you’ve got to have the team’s happiness. And that that extends to every member of your team, as we will. Tell me a little bit about sort of are you taking on advisors other than acquisitions at the moment? Are you you know, are you taking on advisors organically and bringing them through

Pete Monahan
yet? So we have been via the like, the professional year? Okay, were brought to on via that. When how

Andrew Rocks
was that experience, by the way?

Pete Monahan
It was, it was great insofar as it’s a long journey to get to there. But it’s what it’s been really exciting to see two people do it and it’s working really well. We, we need to get some better structure around how we do that and support. And so now with the advice coaches in place, they will run future py candidates. So that gets really exciting. What we haven’t been doing is recruiting directly from the market. Because as we do acquisitions, we’re generally getting enough of our talent acquisition, not just the clients and the business, but we’re getting the the HR solution as part of that. We’ve got a need this year at some stage to recruit one into definitely into the Melbourne office. We’re always open as well that we’re we’ve sort of stumbled across people referred by people who say, Oh, look, I’ve I’ve got 60 clients. I’m just trying to work out where my home should be. And so we we run that hub and spoke model, where we actually have people that have shares in our business equity participants in our business in every site. Okay, so we’re always looking for opportunities. So we just haven’t done a lot of direct to market recruiting because the acquisitions giving us most of that upside.

Andrew Rocks
And by just taking that last point and managing sort of a portfolio of owners, does your business have a board structure or how does it How does it operate to manage the stakeholders?

Pete Monahan
So we have five members on our board, which is the three individual shareholders and then two references represent initiatives of our corporate shareholder. Yeah. So we sign off on the strategy, we sign off as a CEO, I present, the budgets, etc. So that that’s really good from an accountability perspective, because we set a business plan and we don’t deviate from it, because you’ve got both the internal and the external people on there. We then have subsidiaries. So the shareholdings is generally in this, so Brendan, myself, Manny, and our corporate partner own shares in EJ and the head coach. But then we actually have we own the majority of the shares in our subsidiaries, and then individuals in in Geelong and Bendigo in Wangaratta. Except so

Andrew Rocks
there’s incentives for all of those that are upset that you guys are co invest,

Pete Monahan
and we’re keen to move that through to a proper employee share scheme, future and get everybody on board. What we’re, ideally what we’re trying to build, as we end up at 15,000, happy clients, we’re trying to create a business model where you come in and you you’ve got shares, if you’re an advisor, you’ve got shares in the subsidiary. And then once you meet, we’ve got five set criteria for that, once you meet those five set criteria, you can actually roll those shares which Brendan’s done into that company. So over time, as we get more of those people in head company, it’s a great, it’s a great succession plan, because you’d want to get to 60 and 65, and have a big business, but there’s not a market for it. So this way, you can actually just sell within the shareholders, bit of a partnership sort of structure,

Andrew Rocks
that’s wonderful. And what it means is that you know, why people stay is one aspect of it, we’ve also also put a bit of a pathway for ownership, and also liquidity as well, which, which is very important, because you know, life happens. And, and these businesses, these legacy that I think you mentioned, many wanted to have in the 15 year B hag that you’ve got, having that ability to have some people being very relevant for five years, 10 years, 15 plus, is is obviously going to drive that economic engine. So we were talking just beforehand, about the you know, how happy I was that, that you’ve moved through the operation side, and you’re self proclaimed, you’ve never really done advice. And you now I’m the CEO, and I sort of said, well, the whole purpose of this engine room podcast is to create awareness about the people behind the advisors, and you know, that that promotion of practice, practice manager and, and ideally, at the end of this whole series, if I asked the question, you know, who are the top five practice managers in Australia to actually get an answer? Because right now, they’re very, very hidden. And with that in mind, what do you see as your vision of where practices are going to where the evolution of financial planning practices are going to go? And how that’s going to impact? You know, the perception from from the the other stakeholders, such as the general public?

Pete Monahan
I think the the industry is evolving into a profession. And once you evolve into a profession, then from an outside perspective, you can sort of see what the structure is like. It’s been a bit hidden up until now. So definitely, practice is getting bigger. And bigger practices are going to need a management structure, not somebody who’s got 150 clients, they’re looking after him. They’re doing management on the side.

Andrew Rocks
Do you think that’s, do you think there’s an inevitability about that, because just the cost pressures of cost to serve, being able to actually deliver what you want for the client, given the cost pressures, kind of is pushed practices into that. But there are lots of different models, right. So there are models that you’ve got one, but you’re saying that they will be getting bigger, but you’re already at 45? Yeah,

Pete Monahan
but there’s no one right model. Yeah. So I’m a big believer that you can, you can hit the golf ball a lot of different ways and still land on the green. What you need to do, though, is decide how you’re going to hit it. And I think you need to have each business needs to have one model at any one time. So we’re really clear that our model is to have equity participants in each site. They drive the business, and we put in that level of management expertise, operational support, to enable them to do the stuff that they want to do. As we get bigger, it creates opportunities for our support team. So they’re not stagnant in roles if they don’t want to be stagnant in roles. And those development opportunities. Not only are they great for growing the business, but for me personally, every time you see somebody develop and take on a new role, and they’re putting the hard yards and they’ve they’ve done the learning and taken on the training, lead, that’s one of the biggest rewards you get in leadership. So internal promotion has to be available for your business to be a growth business. Businesses are going to get bigger, they’re going to amalgamate, they’re going to merge. So you got our goal is to find if people were looking for practices where they go, we don’t actually love the management piece, but I know I’ve got to do the management piece. So let’s get into our business and work with them where they’ll do that for us. I can do the bit I love. And there’s a there’s a group of experts that can do the bit that they do. The bit

Andrew Rocks
I like is that you’re going out to those exact cohort. But yeah, you’re not taking everything from them. You’re saying, well, let’s, let’s reboot, and let’s Let’s Participate in the synergies we have together and let’s co own this part of the business and and ultimately, maybe the part of the mothership as well. are you limiting your expansion from a mergers and acquisitions just to sort of Victoria or

Pete Monahan
not? We have criteria that we want to meet. And I quite often get asked this, you know, we were recently given an opportunity. Somebody said, Oh, look, we’ve got this opportunity for you. But it’s, it’s interstate. And I said, I don’t care if it’s inter Elgin, or Toowoomba? Well, it turned out to be in Toowoomba. So we’re about the right cultural fit, that’s the first thing we need, if we got the right cultural fit, where people have got the right behaviors, and are open to growing learning. And being part of this creating happiness mission, I’ll go wherever those people are, and I don’t really care where that is, and how that’s that that’s our key to success.

Andrew Rocks
This creating happiness mission is that something that that we’d be able to share with the community to get a bit of an idea of the pillars of how, what you mean by that, we can probably, you know, attach some things. Because if I’m out there, and I’m a practice, and I know that what I’m good at, I know what I’m not good at. And I really, you know, especially regional practices I’m from, from original area, and I’ve always, it’s always sort of played on my mind that if you’re in original practice, and you’ve been that man or that woman of trust and authority in an area, and then you sell your practice, and you see your clients walk down the street five years later, it’s just doesn’t work, you know, unless, unless you’ve plugged into something that shares your common values. So potentially, that might be something that we could glean from you so that if anyone’s out there, and they’re thinking, Well, I don’t mind this Pete guy started as a sailor, then did some sort of renovation, self proclaimed, you know, household kind of, I was gonna say you’re not household electric, because that’d be the beat. But you’re not that good at that compared to your background. And I want to actually, jokes aside, learn more about your business? What’s the best way of reaching out to you? Yeah.

Pete Monahan
For me, just give us a call, shoot us. Jump on the website, shoot me an email, give me a call. I’ll make time for anybody who wants to have a chat, if anyone is wants half an hour of advice. So if anyone wants to shoot the breeze and go, How do you do this? How do you do that? I weekly, we’ll catch up with another practice a variety of different practices with something they’ve got a you got, you guys look like you do that bit? Okay? Can you give me some insight into that. So reach out, we’d love to speak to people, because if somebody wants to get some knowledge from us, or even consider joining us in any capacity, we’d love to speak to you. We’re all about creating happiness. So we have this thing, if anybody joins our business, they actually have to do speed dating with four of our team members. So it’s final stage in our interview process is 15 minutes back to back with four of our team members. And I asked those team members at the end of it, there’s no structure, there’s no agenda, no swiping that no swiping can’t go left or right. And all it is is my team works so hard, and are so proud and protective of our culture, that they deserve the right to sign off on anybody who’s going to come in. And the one question I asked them is that person going to be committed to creating happiness as much as you are. And if they get the tick off on that, then the person joins our team. That’s powerful in our business. And it’s been something we’ve done for a long time. So we don’t talk about it, we live and breathe it. We’re really, we have a lot of fun. We’re really bad at dad jokes. They’re part of every huddle. Right? So if you don’t like dad jokes, we might not be the right place, but you’ll get used to them. And they are, we do really good ones. But people who want to be part of EGM want to come along for the journey that we’re on, get out of bed with some energy, get excited, make a difference, and then celebrate when the opportunity is there to celebrate.

Andrew Rocks
And look the the premise of of the engine room is, is is I suppose, you know, articulating the power that comes from that correct operations and correct structures, or best practice. But but the byproduct of it is is that we’re basically giving people an opportunity to listen, to find out who are their kind of people. So I’d like to thank you. On behalf of ensemble, I’d like to think that ensemble plays a part not just in promoting financial advisors, but the whole ecosystem. We want to know that people who are in practice management in paraplanning people living in client service and everyone people from their py year onwards can find a home and a community In the same way that you’ve got your own community there, and we want to put forward really positive businesses, stories and careers. With that in mind. Thanks very much Pete, for your time today and I wish you all the success in hitting your bag.

Pete Monahan
Thanks, Rocksy. Always good to catch up.