Engine Room Podcast #9 – Paul Barrett – Transcript

Andrew Rocks
Today in the Engine Room, I’m joined by Paul Barrett of Absolute Wealth Advisors. This is one of the more more sort of fulfilling interviews I’m going to do because Paul’s business partner, Dean Holmes has been a friend of mine for 18 years and just off camera. He said, When he worked with you, you kind of warmed him up to work with me, and he’s the best business partner ever. So it is good to see those sort of progressions with with people. Without any further ado, welcome to the engine room. Paul Barrett, how are you?

Paul Barrett
Thank you very much. I’m good. Great.

Andrew Rocks
You’re great to look, thanks for coming in on a Friday to see me. And look, what I always love to start with is just a bit about you. You know, what brought you to here because every backstory, really predicates, what people are doing now and their beliefs and whatnot. So how did you get started? And more importantly, how have you evolved to run a successful financial services firm?

Paul Barrett
Yeah, good. Good question. And I think this will resonate with some people, I think when you go through school, you either have a good idea of what you want to do, or you don’t. And I had a good idea of what I wanted to do, I’d love to be a professional sportsman or in the sports industry, and I wasn’t good enough at either. So I had to just take a stab in the dark at what I’d study. So I thought, well, working in and around money, at least if I’m unhappy, I’d have some money to spend. So I went in and studied economics. And I just followed that path into banking, finance, and had a good good roles there. I worked for a and Zed for a number of years. Then I went over into CBA. While I was at CBA, I helped set up and run a billion dollar global bond fund while I was there, and then I went from there to work for a listed investment company at the time, it was called Rekord investments. And I used to call it the financial Olympics, we were financing 747 aircraft ships lease to the US military, trains, buildings, photocopy years, artwork, just anything you could finance, I did it. And it was the financial Olympics. And you’re always it felt like you were competing with the smartest people in the room every day, which was excellent. And I did meet some fantastic people. But it was hard work. It was 68 hours a week. And ultimately, for me, there was not as much fulfillment in it. And so actually went to head again,

Andrew Rocks
can I ask you? Why did you think there wasn’t that much fulfillment at the time,

Paul Barrett
because and as simple as I could say it My job was fighting with other Titans over basis points on a deal. And that didn’t turn me on. Right. So huge amount of complexity, like there was a sense of pride, but there was a constant level of stress. And what I was fighting over wasn’t meaningful for me, for the ego. And so I went to a headhunter and said, Look, I can finance anything, this is what I’ve done. What should I do next? And it’s a shame I can’t remember his name, but he gave me the best advice, which other people have heard before. But look, make go away. Have a think about what you’d do if you didn’t have to work for money, and then work out how to make money out of doing that. And so, I took that literally to heart and when, when I’m in flow, or what I love doing most is talking to people I care about, about things that matter to them. And so I went well, how do I do that? And I went, Well, I could go and re study to be a psychologist and that’s what my mother is. So I knew that road. But you know, that would be a massive step backwards. And I’d also be throwing away this amazing skill set that I had, which I knew was pretty rare. So financial planning was the natural step. So I went and studied and then started in financial planning in 2004. In a in a broad practice. And that’s where I met Dean. And so Dean and I hired Dean into I was at that practice for four years, I hired Dean in after about the two year point. And after working together for two years, we both actually independently decided we wanted to leave. But then we figured out we were both looking to lead and we said, well, let’s go and do something together. And so then we looked for an opportunity. And we found a practice that had recently had its employee leave and its owner wasn’t engaged in the business. So we went and for the first 12 months, we just acted as consultants, we consulted to his clients and worked on my clients, we had a revenue sharing, and then we bought overtime, we bought him out. And and that was from 2008. Onwards, and we’ve just grown the business from there.

Andrew Rocks
And so I asked you a question. And look, I do. I was worried when you said that. The recruiter said, What would you do if you didn’t have to work for money, and you’re like financial planning. But for everyone out there, it’s, I suppose it really goes to the point that, that if you are working with something you’re passionate about, it follows, but you so you’re there you’ve, you’ve found a business partner. If you’ve bought out someone in 2008, it’s 2009. How did that impact you? Because there was a little event in our financial planning history that may have may have been relevant. And did you learn any lessons from that?

Paul Barrett
Yeah, and so that 2008 was the first time I really felt like I’d ever had people I cared about who were now feeling the financial stress from the advice that I’d given them. And not that it was bad advice, it was just that everything was tanking. And I’d never experienced that before, I’d never really had a major loss on any deal that I’d been involved in. And look, I’m not ashamed to say that that really did affect me emotionally and mentally. And so I had to, I had to work through that. I had good support around me at the time, it didn’t last very long. And I got the right help. So looked very stressful. But learnt a lot out of that, right. And if there was one thing that’s probably shaped our business from that time, is that complex products that that say that they are going to work well, in certain situations almost always don’t. And so keep away from complex things. Because A, the client will never understand it, which means you’re trading on trust. And as soon as anything goes wrong, it’s your trust that’s broken. And as soon as trust is broken, your relationship may never recover. So we now do very simple things. And we make sure that the clients understand it, and that they own the decision. And we we almost have zero ever clients call us whenever the markets are going down. literally zero.

Andrew Rocks
The great irony of your comments there is that, although you’re intimating that you do things very simply, a quick look at the clientele that you have, is that you deal with very high net worth people, we have 10s, if not hundreds of millions of dollars. And for those who are listening who are new to this, quite often it is the more simple and the clearer the articulation of what you can offer. For someone who has got a very busy life is the key, would you would you agree with that?

Paul Barrett
Look, I think I think that what a lot of happens in financial planning is you often attract the people who are aligned with the way you think. And so I became aware some time ago that one of the paradigms in financial planning or finance was that anybody who had money was financially sophisticated and their ego was wrapped up in making more money. And it’s absolutely not the case. There are so many people out there who have money, who they didn’t make it, they’ve received it through inheritance or divorce or, you know, the family has had a business and made money. And they literally are not engaged in wanting to eke out the last basis point or, you know, being in the latest sexy theme. They want simple admin, they want money in their bank once a month to spend, they want money available when they need it, and they just want peace of mind. And so I target people who have money, but who don’t want to be in commercial property or, you know, buying bhp selling bhp buying Rio ANZ like they’re just not into it. And there is a huge market out there for those type of people. And that’s who we target.

Andrew Rocks
Yeah, agreed. And we will talk a bit more about sort of your bit your goals and your philosophy later on. I just thought I’d sort of shift up the gears because we were talking earlier. This is a an engine room podcast, which goes into sort of the business of the business and Um, you’ve recently hired a new practice for a practice manager. Jan is that that’s restaurant Humphreys, who we’ve who we thought we won’t drag in here to do a practice management after six weeks 10. Yeah, no. But the good news is, is what you say today will be the blueprint of what your business practice manager has to do. So maybe explain why you’ve hired Jen and and what what role do you see her bringing to your operations?

Paul Barrett
Yep. So one of our guiding philosophies is that we think profitability is more important than revenue. And profitability is driven by minimizing the highest cost resources and building out lower cost resources to make the higher cost resources more efficient, this could be

Andrew Rocks
an adult channel with that one sentence. Keep going, keep going.

Paul Barrett
And so we are growing, and we could have kept throwing advisors at the problem. But we’re an advisor had to do a multitude of managing staff and also managing clients and we went, that’s just not the way forward, the way forward is to have somebody skilled, like super skilled at the administration, compliance, advice, delivery, advice, execution, so that the basically what we want is the most efficient meeting, booking process, meeting preparation process, and the advisor shouldn’t really be involved in any of that. The advisors should be receiving a comprehensive, pre meeting packet of information, they should have a great meeting with the client, where they’re focused on the relationship and the stuff they need to get out of the meeting. And then they need as simple as possible way of downloading the key takeaways from that meeting, to the advice delivery team. But having a skilled person do that what we had before was a huge amount of great. We had great specialists, but we started didn’t have that role, where the the knowledgeable person was guiding them other than their financial advisor. And that was a distraction for the advisor. So we’re removing the distraction for the advisor, getting this hugely technically competent person to now manage all advice delivery. And we’re super excited about it, because advisors don’t like doing all that other

Andrew Rocks
stuff. And just like that, Jan, we wrote your job description. She knows. So maybe give me a bit of a feel for the organizational structure of your business. You’ve got your multi car business, you’ve got support, but yeah, give us an idea of how it works in your business.

Paul Barrett
So when we started, Dean and I were both advisors, and within about a year, we took on our first staff member, stellar Norbertine. And within a couple of years, stellar became an advisor and an owner in the business. So really, for probably a good 12 odd years, we’ve had three advisors in the business. But then what happened was Dean has gone off and created the wealth network, which is how I practice business coaching business, lots of people would know Dean and the wealth network. And so he has gradually moved over there. So he’s stopped advising now. And so we brought in another advisor. So that’s Anthony McGinnis. And he was his super smart guy, physics degree business degree MBA, financial planning, but he came into us with a bit of a career change. And it was kind of like, I gave him the same advice that I was given. And he chose financial planning. He used to work for Deutsche Bank for 10 years, and then Avaloq. And he really wanted to get into the people side of finance. So he’s come in, he’s done his py with us. He’s basically becoming he’s getting off his py any day. And he’s been so good that he’s becoming a full blown advisor and buying into the practice as of July.

Andrew Rocks
Fantastic. So I mean, one of the other questions I always ask is, what makes people stay in your practice? But yeah, having a very open and transparent sort of ownership model is definitely one of those. And do you arrange your your support team into into pods? Or do you have a centralized system for sort of the delivery of your services?

Paul Barrett
That’s a great question, because we’ve tried and failed

Andrew Rocks
quite a bit. Let’s go through them because this is what we’re learning from.

Paul Barrett
So the first thing we tried without what before we even were outsourcing, we had that basically, advisor, associate advisor model where the associate advisor would do everything. Yep. And that worked when our practice was small, but it just ends up you don’t have enough man hours to do all of the things that you need to do to give great service. And so when we knew that model was broken, we looked to go outsourcing. But we went first of all to one of those outsourcing teams where you’ve got two or three allocated staff but they work for other practices as well and you put it put and that was terrible. We spent two years trying to make that work and And because they’re working for multiple practices, they wouldn’t. We couldn’t control them. They were doing the same thing three or four different ways. So there were errors. There were delays. It was just when you

Andrew Rocks
say it out loud, sounds crazy, doesn’t it? Some. And they’re also not aligning with your culture and your personality, and they’re not their fault, not their fault. But yeah, so So then how did that play out?

Paul Barrett
So the next thing is we, we went to be a platinum. And that’s been amazing. So from day one, we had dedicated staff and we we literally call them our staff. This is not offshoring outsourcing. These are just our staff who work overseas. And, again, we started with that one person does all but now that person was supporting an associate advisor was supporting an advisor. But we also quickly worked out again that there was too much for them. Like because they would do certain things infrequently, they would make mistakes, they would be relearning it was inefficient. So ultimately, where we’ve ended up is specializing, and it works for them, and it works for us. So we have an insurance specialist who does all of the insurance work for all the advisors, we have an investment specialist, we’re about to hire, our second one does all the investment work for all of the advisors, we have two power planners, they do all the power planning for all of the advisors, we have one CSO, will sorry, forgot to CSOs, they both do all of the extra jobs outside of those specialist jobs. But the other specialist jobs, which we now have four people doing this role to supporting each main advisor, or what we call advisor support specialists. And they’re the people who sheduled the meetings, booked the meetings, do the meeting, prep, coordinate the rest of the team, deliver the the meeting prep information, receive the file notes, outsource the tasks from there. So they’re the engine room behind the advice client journey. But then we’ve got those other specialists implementing all of the specialty elements of the financial plan, and it seriously works fantastically. Yeah, look, and

Andrew Rocks
having that specialization in your operations is something that people don’t immediately plan to do. But it’s hard not to. And I on your website looks like you’re a one team one dream. And yeah, shout out to Brian and the team over there with VA. I’ve been I mean that game as well. And he spent he spent the time and effort getting his data security. Tip Top. So it’s good outcome for all is my thoughts.

Paul Barrett
Yeah. And look, we you know, the competition to that model is just going over and hiring people ourselves. And there is no way that we were going to do that. It’s not good for that for them. Even though there might get paid a bit more, they don’t get all the health benefits. They don’t get the medical care, they don’t get all the training and support. They don’t get the tech support. And we don’t want to have to manage all of that. So the job that VA platinum do for us in hiring and managing that team over there, even though they work for us is invaluable.

Andrew Rocks
Yeah, perfect. And that also leads me to, you know, a bit more of the risk management side around, you know, how are you licensed? Yourself license? I can’t remember. So, yep. Are you licensed.

Paul Barrett
So interestingly, we were self licensed back in 2011. We were licensed to Fitzpatrick’s who were great for us were great to us. Sorry, we were we were licensed by Fitzpatricks in 2009, through to 2011. We went self licensed in 2011 through to 2022. So that was a good sort of 10 years, 11 years. We in 2022, we basically all moved all of our licensed client, our advisors cars off to Paragon which is owned by divergent. Now, how did that journey happen? Well, originally it was just absolute Wealth Advisors. But with Dean’s TW N business took the wealth network business, every time we would bring on a new financial planning firm, which is what we do, we would take equity in them so we can provide them free cash flow free coaching for five years, and then they would just buy us out of our equity, equity. But we ended up with five or six practices under our license, and we had to start throwing resources at the license to stay compliant. And that was never a job that any of us wanted to do. It was it’s nobody wants to pay for it. Everybody’s arguing about it. It’s not profitable, and it’s all risk. So we just divested of that business and we are so happy to now not be self licensed. And we’re really really happy with the service we’ve received from Paragon

Andrew Rocks
anyone in particular want to give a shout out to a perigee Cray

Paul Barrett
come on us is certainly is our our go to guy but we also know Nathan and Nathan Jacobson And he’s also been very supportive of us, in many, many ways. So another one of the things in the way we want to say thanks to divergent and Craig and Nathan is that they’ve super supported Dean and his business coaching business improvement business. So they now run a coaching business within the diverge your business. But Dean is the engine behind it. And so they promote it, where we’re getting clients from them. And it’s a symbiotic thing. So they believe in us and our methodologies. And they’re supporting us, which is amazing for, for a licensee to do that.

Andrew Rocks
And as I’m, as I’m here to chatting to you, today, I’m taking notes down the day, I best give Dean a call and bring him and drag him in front of here and get his insight. So you might be hearing from Dean the next couple of months as as well. And you’ve mentioned a couple of interesting things in that you’ve taken shares in other businesses, how is our you guys only you only have a board structure, what’s the mechanics of where you are now, or maybe what your aspirations are.

Paul Barrett
So we’ve always had like, a head entity, which owns all of our sub entities. And Dean, myself and Stella each have a family trust. And that’s how we own entity and the headstock, which then flows down to the to all the subsidiaries that we have. And one thing that we’re doing though now is we’ve this has been a slow burn between the practice coaching the wealth network, and absolute Wealth Advisors. And so what we’re doing now is we’re splitting that ownership, so that the people who are directly involved in absolute Wealth Advisors will own shares in absolute Wealth Advisors, the people who are involved in the coaching will own the shares in the coaching and, and that’s just better aligning something that just merged over time into something that probably was less equitable, because of contributions. And

Andrew Rocks
well, the great irony is, is the idea around coaching and assisting in those, those businesses, the genesis of that was years ago, but from the outside looking in, a lot of these businesses are killing it, I’ve got really big, and I would safely say that, that if, if the trajectory keeps going that I’m surprised that private equity haven’t already knocked on your on your door. But that’s probably for another discussion another time, but some secret sauce in there.

Paul Barrett
And you know, and you know, there’s no secret. And I told you before that that’s where we see the future of our business, which is we want to get to a 40% profit margin and at least 5 million, because I think that’s the entry point for private equity. Now, they could go and buy a commercial property, which has got a you know, a 5% yield on it. Or they could buy a high quality, very compliant growing financial planning practice, which has got a 40% profit margin. Now. Private Equity should be pretty interested in that. Well,

Andrew Rocks
let’s talk about then how that actually translates to the coalface. So, at the moment, you’ve got your advisors, and maybe give me a feel for what they’re currently managing, whether it be people or revenue per advisor today, and where you think it could go.

Paul Barrett
So at the moment, our target is a million dollars worth of revenue per advisor. Now, in our practice, we’ve got two different advisors, stellar and Anthony. Now Anthony is supporting me. But in that stellar her passion, and her client base is more around the pre retirees. So it’s sort of probably a million to 2 million worth of retirement funds. They’ve got the you know, they own their house, but they want to, you know, there’s they’re not they’ve not got too much money. So they’re quite carefully managing their money. And, and there can be some Centrelink stuff in there that she managers, whereas I’m much more interested in the larger, more complex, large. So stellar what might have so we actually are looking at how many meetings can we have a year, and we’re trying to up that to sort of 10 meetings per week over 40. So it’s about 400 meetings. And now we’ve got to work out well, is your client base, all just annual review clients, so you can have 400 clients? Or is my client base over here? I give them four meetings a year. So I can only have 100 clients, and the pricing has to reflect that. So that’s where we know our activity is and that’s how we plan based on meetings and revenue.

Andrew Rocks
And we’ve gone across licensing, but what technology do you use?

Paul Barrett
So interestingly, we thought deeply about this. So funnily enough, Dean, one of the reasons we went and got business coaching, which we’ll talk about later, was that Dean was very much a shiny toy guy. He was always looking at the latest shiny toy and going down rabbit holes and trying things and you know, as the non shiny toy guy who just got too much work and just wants to get under the work, that was a bit frustrating. And so we had an accountability problem and a focus problem. So we did go and get a business coach, which we’ll talk about later. But one of the things we did is got to his get a tech expert into our business to develop our tech strategy. So we’ve got a 10 point technology strategy. So every time we look at whatever we’re doing in a tech area, we hold up the 10 points, and we work out whether this fits the bill.

Andrew Rocks
But it’s just it’s just an instruction manual to tell Dean No, exactly. Right,

Paul Barrett
exactly. But he’s bought into it, because he realizes one of the things we did is we looked at our revenue years, and we could track when we were distracted from delivered servicing clients. Wow. And you went down, or when we were focused on clients revenue went up

Andrew Rocks
what percentage I’ll be really interested to know.

Paul Barrett
I don’t I don’t know what the percentage was. But it was it was significant.

Andrew Rocks
There’d be people out there who have either recently changed CRMs or looking and there’s no shortage of them. And, and there’s a lot of good stuff coming in. But it does, the cost is not just the cost, it’s the cost of time. And

Paul Barrett
once you break even point how long in times of dollars spent Miss clients, because you got to look at the lifetime value of a client, the client we missed 10 years ago at $10,000. That’s $100,000 worth of revenue, we lost just because we missed one client 10 years ago, because we were distracted on something

Andrew Rocks
else. And I can tell you the engine room concept is that the quite often CEOs or will will make a decision on technology. And then they throw that decision into their practice manager who has the role not only of implementing it, but also being the psychologists to the team members who don’t like change, because no one likes change, right? So it’s a quite often the unintended consequences, that you suffer attrition and whatnot, because you’ve just changed the tools, and they’re not working. Now. Also quick. So you obviously doing like life insurance? Because you mentioned about insurance specialist? Yes. Is there any philosophy with the way you do that? Or maybe anything to add is because it’s life insurance has become a lot more specialized. And some would say more difficult to implement? Is there anything that you’re doing that maybe our listeners could learn from?

Paul Barrett
We had a very clear philosophy right from 10 or 15 years ago about the way in which we analyzed insurance needs. And it was all about what’s your income and expense? What’s your expense need now, and let’s adjust that for life if there’s an injury. So then let’s just take away some of the income and see what your net position what your cash flow position looks like. It was very much cashflow based, we weren’t. You’ve got X number of debts. And that wasn’t an asset or liability based needs assessment. It was a cash flow based needs assessment. And we’ve got tools that do all of that the same way for every client. In terms of product specialty, you’re absolutely right up until probably I’d say the major changes came through a few years ago, Stella was our insurance expert. I was the investment expert. She was the insurance expert. As that’s evolved, and as Stella’s practice and desires have evolved. She’s less interested in that. But that’s one of the reasons why we’ve got Jan, she is an insurance specialist.

Andrew Rocks
And is there anything that the insurance companies could do to assist practice management?

Paul Barrett
Look, I actually think and I distance myself from insurance. So I have to say I’m not the best person to ask. And I do that deliberately. But because I’ve got high net worth clients, not very many of my clients have insurance. And so I’m not in the trenches very much. Whereas other other people will have lots of insurance cards. And I think it’s a great service. It’s a great business. I take my hat off to the insurance companies, you can go on to Tao or any of those and they are providing training after training after training. The issue is doesn’t advisor have time to keep up with it all the time. So I think they’re doing what they can. I just, it’s just one of those where the only way you over the edge thing about it’s just almost too much sort of firehose, well, the only

Andrew Rocks
way an advisor is going to get tired as if they organize themselves correctly in a great environment. Right. So you just want that the whole thrust of, of interviewing good practices.

Paul Barrett
And as you said before, I think just like lawyers don’t do all lawyering, there’s estate planning lawyers, there’s corporate lawyers, there’s all sorts of lawyers, I think insurance in particular, will become more and more specialized over time. And you’ll either have a specialist in your practice or you’ll refer it out to a specialist and I think that’s probably the way to go.

Andrew Rocks
And on that topic. Do you have professionals, so estate planning etc. But how does it operate for you for your your high net worth clients?

Paul Barrett
So we are predominantly a referral based business. One of the things one of the other things we tried and failed in was we tried to create our own little multi practice multi disciplinary practice thing. But we had an accounting firm, a legal firm and investment arm and the planning firm. We kind of they were all independent businesses, but we named ourselves as a group.

Andrew Rocks
So you could have a herding of cats

Paul Barrett
was herding of cats. And what we found out was that two people weren’t like, each person wasn’t marketing outside for themselves so that they were creating referrals within they were just waiting on referrals from somebody else. And other people wouldn’t refer to you because you were like a closed shop. So we after two or three years, we disbanded that so we have we are very focused on building relationships with accountants. So Chris Stan Stanley Williamson is one of our big supporters. RSM is a big supporter. trova tax is a big supporter. And so we regularly meet with them and we maintain relationships, a two way flow. Estate planning lawyers for many years, we had a great relationship with Michael Schneider from Diamond Conway. And Jennifer Yau, they both referred us our biggest clients at the time, they were $50,000 a year clients. So if you have a good relationship with lawyers, they might not be high volume referrals, but when they do refer it can be very valuable. And a quick

Andrew Rocks
look at your website is that you’ve, you’ve got a divorce, sort of as a bit of a speciality. And so And there’s, there’s, you’ve got your own backstory as well, on that topic. The clients that come to you because people don’t refer their friends who they think are going to get divorced in three or four years to come and chat to you. Right. It’s quite often. It’s, you’re in the trenches. Yeah. How do how does that business come to you? And and how does it work? Because there are some practices that, that they put their hand up and say, We’re good at this. But there’d be many people listening who get this every so often. Yes. So as an expert, what would your advice be?

Paul Barrett
So if that was something that you really wanted to get into, I would recommend looking up the collaborative law practices. Now collaborative. Lawyers are people who work. It’s a situation where each party gets a lawyer. But everybody, the four people sign an agreement, which says, if we don’t agree this without going to court, if anybody threatens to go to court or goes to court, all of this is undone, and you can’t use any of our work in the court process.

Andrew Rocks
Okay. And so it’s collaborative. I’m just collaborative law practices. Yeah, Google that. Yeah. But that’ll be something that they offer as a service. Is that right?

Paul Barrett
That’s right. Now you have to get you have to get credentialed. So there’s a course Okay, you go on, and you become the financial planning member of the collaborative team. And that’s where you get in, during the divorce, which is great, because what that person does, and you have to the licensee has to get their head around it. But that financial planner actually works for both parties in modeling up the outcomes that are being negotiated and helping them with the division of assets and what things are going to look like they’re not giving product advice. They’re just modeling up the negotiated outcomes in a collaborative environment. Now, there’s some pressure, isn’t it? There is some pressure, but it can be really false. It can be difficult, but fulfilling. It’s enjoyable work, if you like that sort of stuff. But that’s still in its infancy, there would be five or 10% of divorce practices out there. Working on that basis, most of them are still the adversarial one where you would have to work for one or either of the two parties that can work to but you’re working on one. So not often enough do we get in during the negotiation phase. And I think that’s a superly big opportunity for financial advisors, because it’s such it’s so distressing. The people who never ran the money are confused, they’re stressed. And the lawyers are just talking law and percentages. Nowhere in there, does it say how will you use your settlement to recreate your life, and that’s what financial planners do. And if we can get in early enough, and help them understand that, well, we’re fighting over x, hundreds of 1000s of dollars now, but that’s not going to make much of a difference to your life, but it’s going to cost you another $150,000 in legal fees in another six months in heartache and maybe break your family

Andrew Rocks
up like no lawyers were harmed in the making of this podcast.

Paul Barrett
So look, it’s it’s still not a big part of our practice. But like I get referrals from Samantha Lewis who’s who is a fantastic divorce lawyer, Luke Shanahan from it and Queensland we get referrals from him. So it’s a it’s a small to reasonable part of our practice.

Andrew Rocks
I think the takeout is that if anyone’s interested in that, and although we didn’t speak about this earlier, I see that as a specialized service. Like for instance, aged care would be where a practice might come across something complex like this every so often. And it’d be interesting to not that you offer this service, but I’d be spitballing. Here, it might be one of the the hyper sort of specialized offerings for financial planners do other financial planners in the future, which we might even run something on in sambal. On how that

Paul Barrett
works. But yeah, certainly, I think a number of people would feel uncomfortable taking it on. Yeah. And so if they did get a client who they were uncomfortable with, because there are a lot of emotions, and you’ve got to, you know, you’ve there’s a bit of a, you’ve got to absorb quite a lot of stress and anxiety. So not everybody, it’s not everybody’s cup of tea.

Andrew Rocks
Yeah, you’ve come from a family of psychologists earlier. So maybe it’s it, maybe it’s in the upbringing. Now let’s talk about the, the people and culture aspect of your business. It’s clear from what we’ve already spoken about that. Everyone who joins, you ends up becoming an owner of your business. So I normally like to say, what makes people join you, what makes people grow, and what makes people stay, we might have answered the statement already. But maybe give me a feel for what attributes or what values you want in your team members, and how you would how you would utilize that in taking on new team members.

Paul Barrett
And so Dana, and I worked out, and I think we probably realized that when we started working with Raj at the time, from leadership counts, he was our first business coach, and he was using the entrepreneurs operating system. And one of their quadrants is, or one of their things is your values. And the values is the DNA of the owners and the leaders. But the functional purpose of it is it’s the lightning rod for how you distill into all of your staff who are going off and working anywhere from Philippines to here to Sydney to Melbourne, whatever. What’s the lightning rod that they measure every one of their daily decisions by? And that is your values?

Andrew Rocks
Well, Thor, we’re ready. We’re ready.

Paul Barrett
So we’ve got we’ve got six values, it’s do the right thing, constant improvement, be a team player, exceed expectations. Enjoy what you do, I think that’s only five. I’ve written I’ve written be a team player twice. There’s another one. We hire based on that. So when we’re hiring people, we ask star questions like situation response around our values. So how have you demonstrated our values in the past? Yeah, so we know that we then talk about what our vision and value is, and staff has got to get it, they’ve got to get our vision, they’ve got to want to be involved in our vision, and we are a service business. And our purpose is to make our clients happier and more successful. So we need service orientated staff who love making people happy and giving great service. So that’s, that’s the hiring process. Every month, we have employee of the month and the way you win Employee of the Month is everybody else has got to vote to who they thought demonstrated our values best that month, nice. So we get 15 stories of how people demonstrated our value every month, and the person who gets the most votes wins, that person gets $100 for themselves, but they also get $100 to give to charity. So that’s another DNA part of our practice, we then have quarterly reviews. And the way we measure our staff is did they live our values always mostly or sort of not always. And it’s a pretty hard line, if you are consistently not leaving our values, then that’s a red flag. And we would start to manage that out. Either by trying to help them live the values or manage them out are sorry, the other, I’ve got one of the goals is enjoy what you do. And so we don’t want people in the practice who aren’t on this journey that don’t want what we want. And that’s a very good way of aligning your staff. So then we have so quarterly reviews, annual reviews, we have monthly culture discussions. So we talk about our vision, our purpose, monthly, we roll through sort of about 12 monthly topics, we review every one of our values, we ask people what that what that value means. How do they describe it? How do they use it? So these values piece is deeply embedded in our culture. And that’s how we get people to behave in the way that we want them to behave.

Andrew Rocks
So when we were chatting earlier, you mentioned that a lot of your team are working remotely from each other. And having having sort of the lightning rod of values give some commonality on bringing people together whether it being electronic or whatnot. But from an operational perspective, yep. What’s your meeting rhythms, with your with your team to for the execution of the services so did you daily or maybe give me a feel yes for what the meeting rhythms are, so that we will call

Paul Barrett
that the meeting cadence? And sitting behind the meetings, you’ve got to know what you’re trying to achieve with each meeting. So with and so one of our beliefs is that you will only achieve what you measure. So every staff member has what we call a scorecard, which tells us whether all of the things that they need to be doing are on track or off track. And we only need to talk about the things that are off track. So we have a meeting with every specialist on Monday. And we go through their scorecard. And we identify anything that’s off track, and we solve that issue to remove the roadblocks so that they can keep going for the week.

Andrew Rocks
And this is a curly one. You and Dean have a scorecard for yourselves?

Paul Barrett
Well, we Yes, we do

Andrew Rocks
is the business coaches, the sort of funny because you’re almost you guys coach, other people? And I’m and you did mention that you’ve had someone coach before, but yeah, we’re just we’re just curious.

Paul Barrett
Yes. So we have a scorecard for the business. Yeah, so we have scorecard for individual staff. And in my business, I’m an advisor as well. So I had the same sort of scorecard that an advisor has. Where we were, then we have a business scorecard. So a lot of those scorecards per member has to come down to one number. And that is really hard to figure out how each team member can have one or two numbers that so we can tell at a headline level, whether they’re on track or off track. So but we have developed it. So that’s a business wide scorecard. Dean has got some milestones within TW n that he’s got that he’s working on. The other thing that we do, which is probably more how we hold ourselves accountable, is that we operate at a business management level on a quarterly cadence. So we meet at the beginning of the year, we set our annual goals, our three year goals and our 10 year goals. Then we break the first year’s goals down into four quarterly runs. Yep, we each have rocks or goals that we need to work on. And we have to report on our progress every week on our rocks. Because if you don’t report on it every week, everybody tries to achieve their rock in the last month in the last week before the end of the quarter. So break those rocks into milestones? And are they on track or off track? So absolutely, we have a leadership scorecard.

Andrew Rocks
I’m completely aligned. I spent the last 20 years adhering to the Rockefeller habits or that yeah, that’s where we start and and you’re seeing from the same hymn book, it’s always off putting when when rocks and rocks has to refer to the first rocks as rocks. Yeah, that’s right. But you really can’t, a quarter if you’re there, just hope if you’re doing goals every year you’re not doing you just just hope it’s not real. So

Paul Barrett
that’s one of the things that we why we got a coach was because Dean and I became two good friends. And therefore we would just let each other off all the time. And we needed a way to hold each other accountable without breaking our friendship. And this was the way and we started at the right. So

Andrew Rocks
Jan, Jan had a job description earlier. And now she’s got a KPI.

Paul Barrett
hold us accountable. We absolutely, we think that’s right.

Andrew Rocks
And tell me that, you know, the war on talent is extreme. And there’s no doubt that you’ve got form and in, in bringing people in and teaching them to be better at their job. But these days, money’s one part of it. You know, what purpose Have you got? I do note that you’ve got quite a bit of charitable sort of endeavor. Yeah. Yeah. I mean, I’ve looked at that. And it’s, I did spend three minutes trying to enunciate, let me just say, I’ve worked out but before we do that, we’ll go on to just give me an idea of, you know, your relationship with the system of the B one G one, how that works, because that’s, that’s maybe a tool that we can put in the links for other people to give. And then how that’s played out? And what what charities that you’re involved with, please from firstly, and corporately,

Paul Barrett
and shout out to Ben Nash, one of the businesses that we helped

Andrew Rocks
get up and running, we can edit that out. Don’t worry, Ben.

Paul Barrett
Now, he found b one G one, which is one of the reasons we get a lot of benefit out of coaching all of these other businesses. Yeah, we get weekly input about what these other great practices are doing. Yes, we’re giving to them, but they’re giving back to us. So Ben found b one G one and it’s a micro giving site. If you go and read their story, it’s all about how people would love to give but they think they don’t have a meaningful enough amount and that stops them doing anything and the whole rationale for Anthropy. Exactly. So this is a micro gifting site with the other thing is how do you find the charity you want to give to? Yeah, so this is a two way marketplace where gathering donations and helping people find the charities that they want to give to. So our staff in Cebu there are a whole lot of charities based in the field panes that they support, whether it’s children or food or animal welfare, or you put in your topic, and they’ll come up with charities that enable you to give that and you can give anything from $1 through to as much as you like. But as I say, we give to them regularly.

Andrew Rocks
And they’ll come when I talk techstack, maybe in the future, the charitable giving technology will be coming to Alexian. And

Paul Barrett
they, they, if you are wanting to promote your social endeavor, then they have a widget that you can put on your website, which shows all that the impact of all of your giving, and it’s just a widget you embed in your website,

Andrew Rocks
it’s fantastic, I’m probably going to steal some intellectual property for one of the one of my firms. That sounds awesome. And tell me about the end Awaji

Paul Barrett
Well, that’s good try, good try the Angamaly project. So this was a charity that I got involved in through one of my clients. It’s so in, in the slums of India, there’s very poor hygiene, very poor environment for kids, often the parents will go off and they’ll work during the day. And they they need a system for looking after kids. And so this system over there is very small community based, really single room schools, where there is an appointed teacher, but that teacher looks after sort of prenatal, so pregnant women, nutrition, post birth, but then looking after the kids up until they’re about five, the anganwadi process project is founded in the principle of community design. So we send architects over into these communities, and there’s a lot of community consultation about what it is that they want and need, and that we design it and help build it. It’s not about going in there and telling them what they need, or just doing a cookie cutter approach. That community involvement in the design. The hours and hours that we spend with the teachers and the community to build something that works for them is probably the thing that sets this charity apart from some others.

Andrew Rocks
And look, I’m I’m looking at the website at the moment, and you’re always open for new sponsors, I see your, your name there with with encounter with Herbert Smith Freehills and other startup firms. So So if anyone if anyone’s interested in in learning more about that, or bringing their business, you know, I’m sure that you’d be open for that. Yes, look,

Paul Barrett
we are always looking to raise money. That’s why one of the firm’s on there is smack they have a charitable giving part of their business and they help donate so we can build a school now we can build a school for about $20,000 Wow. Now, it’s only it serves about 15 to 20 kids at any time. But do that year in year out year in year out and you’re helping 1000s of

Andrew Rocks
kids, it’s tangible, too, and your team can get behind it. So that’s awesome. And then with your with your team today. What sort of growth are you looking for? You’ve built a foundation, you’ve got some scalability there. You mentioned earlier, you know, 20 minutes ago around you want to work out the most efficient way to get to that 1.5 million of revenue advisor. Are you looking to expand your advisor numbers or What’s What’s your philosophy?

Paul Barrett
So, so not looking to expand our advisor numbers at the moment, because I think we’ve built a team that can sustain probably another 30% growth with maybe one more offshore staff. So yeah, that’s $35,000 worth of staff costs to grow a third bigger than we are now. And that would be getting everybody, all the advisors up to that target of 1.5 million, you know, keep going. And so the way we’re growing, though, is important. So I think word around is that, you know, those people who survived for the last two or three years are now reaping the benefits, we’ve got a smaller advisor base, the quality of the advisor base is good, the faith in the advisors is better. And so we’ve, we’ve had our best year of organic growth by 100%. Like we’ve doubled our normal year revenue, congratulations. So that’s been good. One of the things we’ve also Dede have done over time is we did start a few joint venture financial planning firms where we would join with who we thought would be a great referral partner where we would run the business they would bring the clients in, and for one reason or another didn’t work as well as we’d hoped. So this year, we bought both of those partners out and brought all of the clients that were in both of those businesses back into our practice. So we didn’t have to pay all that, you know, we only had to buy 50% of it out. So it was a pretty, you know, not a reasonably economic way to grow. But we also bought a third party business out this year. So One of the things so there’s three ways organic growth, partnership growth, and also buying acquisition growth. One of the things with Dean’s business where we get equity into startup firms, the way we always figured if any of these firms didn’t work, we as, as a 25%, owner could always buy the clients out from that advisor, if they decided they didn’t like it anymore, like it was our way out.

Andrew Rocks
Sadly, I don’t think any of them haven’t worked out exactly. Shout out to all those firms, you know, you are

Paul Barrett
exactly but so really, if that probably I probably said that a little bit wrong. The other thing is that we would look to bring some of those firms in like, if they brought either are completely aligned, or a divergent thing, like approach that would add to our business, that’s part of it’s almost like an incubation thing that if we ever wanted to merge, we could go to that. And we know and not only those ones that we have equity in, but we need to now do cash for coaching, and any of those businesses where, you know, it would have to be what they wanted. But you know, that’s, that’s a pool of businesses that we know intimately, both the advisors and the business side. So if we were ever to emerge, that would be the first place we go to.

Andrew Rocks
And I always like to ask about people’s vision for the future. And I’m less concerned about vision for, you know, investments and whatnot, I’m sort of getting a want to get a feel for where we see the business models going in financial advice. And then where you see yours fitting into it,

Paul Barrett
I think there is going to be a bifurcation of the industry. Like we already have 80% of the population don’t have advisors, I think that’s a space that technology can feel. It’s very simple like, but that’s a fairly homogenous group of people, they have a mortgage, they’ve, you know, they want to, they’ve got money and super, they want to put the kids through school. It’s reasonably homogenous. And I think standard tech will solve that problem over time, but it will be a do it yourself model. I think the other 20% of the people just like they’ll pay for the pool to get cleaned the car to get clean the house to get cleaned. Anything else that they don’t want to do themselves, that end of the market don’t want to go onto a website and do their financial planning themselves, they are happy to pay someone else. But the way that that will improve is through technology where the technology drives is a tool of the advisor, not a tool of the client.

Andrew Rocks
We’ve got a numbers problem with that statement. If if 20% of Australian sought financial advice, we’re about four times deficient advisors, given the current the current way in which they operate. Correct. And last time I looked at you can’t become a financial advisor overnight. So the runway is there. So we are we suggesting Are you making the suggestion that advisors need to get used to dealing with to 300 family units in a year with support around that? Or what’s what’s what’s your that’s

Paul Barrett
exactly what we think the solution is, we think that the that the increasing advisor numbers is a long, slow burn, and it won’t keep up with demand.

Andrew Rocks
You know, it’s really interesting, I see that number thrown around 15,000 hours. And it’s sort of it’s so simplistic that number, because for every AR, there’s associates, there’s paraplanners, there’s specialists, etc. So the industry is not those 15,000 ARS, it’s everyone involved in the business of the business, a financial advisor, which is what we’re promoting correct, and the growth is actually going to come in those numbers.

Paul Barrett
Exactly. And that’s our point, we think the way forward is to make advisors more efficient. It’s not about giving less service to more clients, it’s about giving more service to more clients, and the only way you can do that profitably. And this industry has been focused on revenue for far too long. Profit is important, not revenue. So in order to give quality advice, and profitable advice, the only way to do it is to build up the skill base below the advisor

Andrew Rocks
100%. And you’ll get a lot of ensembles supported by a lot of corporate partners, and this particular podcast is one of those but if you’re a corporate partner, just just take into account that you need to be supporting the advisors business and the other people not just the adviser quite often they are aligned and they’re ready to go. So So you know, we’re happy that we’re working with people to actually try and build those businesses. Now, I know that you’re you’re short on time today, which is why we wolfed down a sandwich together just beforehand. You’ve got a wonderful client you’re about to head off to. I’d like to I’ve got 20 minutes oh per Perfect. Okay, so I don’t have to wind you up.

Paul Barrett
i He’s, the meeting is only a few minutes away. And I said I’d be there a few minutes after, too. So we’ve got,

Andrew Rocks
and this particular client has nine figures in the bank. So that will, that will do so. Unbelievable now, so then in relation to your the vision of the future, we’re talking about that efficiency play, right? We’ve spoke about the technology you didn’t actually mention, we’re who he is. Yeah, so

Paul Barrett
our stack. So this 10 point, strategy that we have boils down to really one principle, no shiny toys, no shiny toy two principles go to second is that we try to use as few pieces of technology as possible. And we can basically get that down to two main ones. So we use SharePoint office 365. And we use advisor logic, we we don’t add on widgets for dirt, like anything that we think we need to do has got to be available through one of those two things, or we are very wary about slotting in bespoke tech.

Andrew Rocks
Yeah, I mean, that small, fledgling firm, Microsoft has quite a few features.

Paul Barrett
Well, you know, now we can look at, you know, we can do our meetings on teams, we can record our meetings on teams that can be transcribed in teams, we do our video, all of our training and meetings in teams, we can book our meet, you can get clients to come and book their meetings in our calendar in teams. Now you don’t need a different piece of kit for all of that stuff, you can. But we will try and find the solution and live with its limitations in office 365 Rather than go and try something that’s 5% better, but now has to be linked in to all of the other stuff and creates all the complexities of linking stuff up.

Andrew Rocks
I feel like that Microsoft wouldn’t have made it better if there weren’t those competitors over the last five or six years

Paul Barrett
to completely but work but we’ll take the we’ll take the benefit.

Andrew Rocks
No, exactly. I actually, although this is not a tech podcast, I feel that that’s the same way with the incumbents in the tech advice delivery as well. I think without the the new competitors there that the incumbents probably wouldn’t have moved the dial.

Paul Barrett
Absolutely, absolutely agree. And I really hope that the small guys become the big guys

Andrew Rocks
know it how it works. So well. I’ve really enjoyed this session. I’ve got bunches of notes, we’ve got things like the collaborative little practices, they the Big B, one D, one G one system, we’re going to put those links there. I’m probably going to reach out to Dean and talk about how spectacularly unsuccessful he’s been in, in taking on advice practices that fail that can merge into you guys because they generally don’t fail. So we haven’t merged with any yet. That’s what I mean. Yeah, so which is a delightfully ironic thing. And it’s always Yeah, it’s always pleasure. The one of the one of the jokes here is that, that whilst Paul was doing this, this podcast, he was just stipulating that much and hitting the table that we had our own back feet halfway through. So here’s a passionate guy, if anything he says resonates. Reach out to him and his team. And with that, I’d like to thank you. I’d like to hope that Jan has listened to this, your soon to be practice manager. Shout shout out there and to everyone else listening. Have a great afternoon.

Paul Barrett
Thank you very much for the opportunity and anybody who would like to chat Dean and I have this philosophy that our IP is the world’s IP we don’t have any unique secrets about how we operate so please feel free to reach out to me or Dean because we are passionate about the business of financial planning. Both running hours well, but also through Dean helping other practices be better financial planning businesses, or hazhar. To that haha, new series is coming out on Monday.