June 21, 2022

#319 Nathan Fradley – Transcript

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Ben Nash
Hey guys, Ben Nash from the XY advisor team. And today, I’m pumped to be here with fellow bearded men. Not that you guys can have the pleasure of seeing this, but the one and only Nathan fradley. Nathan is a senior advisor at Tribeca financial. He’s also director at ethos Australia, which is an ESG portfolio construction platform. And he’s actually the Founding Chair of the XY advisor ethics committee, so keen to pick Nathan’s brain about, you know, advice stuff, but also the ESG piece. Nathan, thanks for joining us, man.

Nathan Fradley
Great to be back again.

Ben Nash
Thanks, man. Made I thought a good place to start is really just talking a bit about your talking through and I know you’ve shared a bit of this before but your adviser story and journey, which I think is a pretty interesting one.

Nathan Fradley
Yeah, so go go start from the start. 21 years old, budding young Nathan got an advice job as a wildcard hire at NAB in the financial planning team. They worked there for a few years, and I think, met some really great people that I’m still friends with now. And prior to that, I think I did a couple of months at another firm which WPS Financial Group, which I think a lot of people who listen to exploit hook I seem to know about or probably worked for for at least a week. And then yeah, maybe way through that left after becoming senior after about four and a half years started line financial planning, which I think most people would know me from, and ran that for the last six or seven years and did the slog through that and learned an enormous amount. I think I did about 20 years of financial planning career in that six, seven year period. And then in December of last year, I decided that I for what I was looking for, and what the kind of work I wanted to do. And what gave me most fulfillment, I decided to merge into Tribeca, in Hawthorne in Melbourne.

Ben Nash
And so that’s pretty interesting. So you’re running a business for like six, almost seven years. And then join Tribeca, which is a fairly established much bigger business. How did that all come about? What sort of drove it? And how did you actually tackle that?

Nathan Fradley
I think the bet 12 to 18 months prior to that I was really soul searching as to what do I enjoy most of all, and fundamentally, my my favorite thing and advice is actually getting brand new people who have never had advice excited about changing their lives and bringing them in. So it might be called a hunter roll or anything like that, that people attach it to. But I love that part. I love people who have not had exposure to advice, bring him into a world and showing them how powerful it is the pure value of it, and then delivering on that. But as a self employed a financial adviser, that my time was spent less and less on doing that, and more and more on everything else. And you know, with COVID, and all those sorts of things. There were so many clients coming in and, and I really, I suppose started investigating what my options were. And I spoke to a lot of people I explored a few different options for different forms of acquisition and merger and, and then through a chat with Craig Bigelow. One day, he said, You should meet with Ryan. And so Ryan and I went for a walk in the gods backyard of cute. Dan through one of the parks there for about two and a half hours hit it off, like a house on fire. And yeah, got along really, really well. We’re very aligned. You know, I think for me, the advice I’ve done for a very long time is very strategic. And obviously with Ethical Investments, that’s the product piece, but the advice part, I do a lot of aged care work. I do a lot of Centrelink work, I do a lot of strategic work. And that’s the core of what Rebecca did. So I think the alignment was there. And then they had this entire part of their business around coaching and mentoring. The woman on the red fox xe of of AFA there, he’s Scotland. Yeah, he’s got an enormous amount of, of knowledge in that space and so even been last six months been working with them. I’ve learned a lot about structuring those sorts of things. But for me, it was about getting back to being an advisor not having to wear the eight different coats in a given week.

Ben Nash
Totally. I know for us, we’ve been hiring for Senior Advisor for a couple of senior advisor roles for for a while and increasingly I’m sort of talking to people that have come from being business owners where they’re they’re looking for Yeah, like like you say love talking to clients love being at that pointy end of the spear. But that need dragged down in, you know, how to structure an email signature and dealing with the, you know, compliance admin and you know, all of these things that do consume a huge amount of time and with the increased standards, which I think, you know, we’re just having having a bit of a chat offline that I think they have helped to push along advice to closer to where it needs to be. Yeah, it is increasingly important, but increasingly time consuming. And a lot of people, it’s like, I want to be an advisor. And for me, I love having those conversations, I haven’t managed to find someone that’s exactly the right fit for that particular hire, as yet, but I love that. And then you know, that people understand as well, for me and having these this conversation, it’s like, they understand the dynamics of a business, they understand there, all these moving parts, they tend to be a little bit more commercially minded, because you’re forced into that, obviously, as a business owner, which I think, you know, everyone can benefit from being a bit more like that, not to say that you have to be, you know, chasing every dollar. And, you know, that’s the only consideration, but it is a consideration inside of business. So, I think that I love that possibility. And I think we’ll probably see more of that, as smaller companies with that don’t have the same resources that they it’s just hard that you end up wearing all of the hats, and you’re gonna wear a lot of hats anyway, but you end up wearing so many that, yeah, can can be overwhelming and massively like, I love talking to people, but I just don’t want to do all this other stuff. So

Nathan Fradley
skill sets, right? Like, like, I’m really good with people. I’m quite technical as well, but I’m not, I’m not a systems process kind of guy. You know, I’m, I am, if I am, if I put the right team behind me, and you just put me I am on. Yeah, when it comes to follow and checklists. And, and one biggest challenge I’ve found and coming into a team of two people, where you just, you win them, and you know, everything that’s going on to a team of 21. Gotta make sure anyone can find out what’s happening with that file at anytime. And there’s a level of discipline in that, that, you know, I’m more like a Labrador, I’m just running around chasing tennis balls in the backyard. But if I’m if they throw the tennis ball in the right way, I’m on, you know, and it’s finding those complementary positions. And, you know, I think that’s, it’s a, I think that the the consolidation of our industry, you know, to the flip side, there’s probably great advisors out there who aren’t into acquiring new business, but are really good at taking care of existing clients, or really managing advisors, or where they’ve been forced into advice roles, because that’s where money was. And we might say, setting that consolidation over there for years.

Ben Nash
Totally. And I think it’s good, and people should play to their strengths. I think that makes businesses stronger, I think it makes advice stronger. So it’s great to see. And I feel like I need to call out the talk about yourself being a Labrador chasing the dog around the ball around the backyard. But yet you built a SAS portfolio construction. Business, so maybe, maybe that’s not 100% accurate. But anyway, um, Can you unpack that in a little bit more detail? But just to close out on on that transition piece? How are you actually finding it? Now? You’re about eight or so months into, you know, joining that business? How are you finding that transition? You know, what have been the learnings for you so far?

Nathan Fradley
I think, you know, key, and for anyone considering this kind of moves, it doesn’t happen overnight. You know, I think, you know, Ryan and I were really excited, let’s get started, let’s get on with it. And it’s taken six months before I’m finally doing things in this systematic way. And, you know, I mean, I’ve been been able to, to my strengths, right in your business, to bring on clients and take care of existing clients and that, but, you know, I think it does take time, and you’ve got to be patient, there’s got to be cultural alignment, you’ve got to be wanting the same thing, you’ve got to communicate well, you know, think that’s been really important things that we’ve been doing well, in that space has been patient with each other, communicate well, keep everything open and honest, to catch up regularly. You know, that’s been the big part of that. And I think understanding each other, you know, they they know that I’m the Labrador reigns, you know, very direct and down the line, and, but focus driven so we play each other’s strengths. And, and there’s other members of the team that you and I think understanding those dynamics and other members of the team and working together works really well. So that’s what I’d be, you know, when you’re looking at a similar position, don’t just look at the the numbers on the table? And what could be done if it was you doing it, look at how that interaction would happen. Because I think, again, strengths or weaknesses play to those don’t get beaten. Well, you know,

Ben Nash
yeah, totally team fit, all important, I think at any role, but particularly for that, if you’re especially I think, if you’re used to running your own show that you need to find someone that you can, I think communicate well with, you know, people start businesses generally, because part of it is that they don’t want to be told what to do so and then you join a business you need to be told what to do. So it’s you want someone that can deliver that message in the right way that’s going to be conducive to getting to where you need to be changing tack a little bit. Tell us a bit about the ethos Australia, you know, I think that last time that you’re on the x y podcast that was only basically it just sort of kicked off. So for people that don’t know, where does it come from? How’s it been? What where things aren’t? And what are you finding at the moment?

Nathan Fradley
It’s really, really hitting a stride. So it started actually, in the United States, the founder in Minneapolis, tried to build a Tennis app, couldn’t really get it across the line, went to invest some money, couldn’t figure out how to invest in some of these values and found a hole in the market. We’ve been working with him now to really develop the financial advice side of that it did start as a retail product. So financial advice side, we’ve developed out, you know, the investment consultant and SMA side. So a number of investment consultants and SMA providers are using it in the back end of the of the portfolios. We’re talking to fund managers using it for distribution now. So it’s really growing. But the goal for the next 12 months for us is to get as many financial advisors on the platform as we can. There’s a free version of the platform, there’s a paid version of the platform, and there’s training and coaching programs, we’re going to be rolling out to enhance that value proposition. We just want people using it. Because the basic idea is if you’re not a specialist, going through PDF documents like I do, when I’m looking at investments, you can still do really good quality ethical investment advice. You jump on the platform, you use the questionnaire with the client go through and open that up, you know, what are the things you care most about? And within those things, what’s more important between, you know, resource allocation and climate change and ranking and you follow the prompts and it develops a persona and impact persona for that person. And then that persona applies to the investments, you start looking at your in Australian super, you know, how aligned is it? Okay, it’s 65% alone to you? What if we flipped it into this socially aware option, okay, that 75% alone to you. But you know, their, their partner might be 80% alone, because they care about different things. And the different divestments will be good in it. Some areas are not as good and others. The example I was using is Tesla, if you care about climate change in innovation, but nothing else. Tesla’s a great investment, if you care about labor rights, not so good. So you know that I think that personalization piece really comes in. And from a best interest perspective, you’ve now gone well, what do you care about? What’s important to you? From the cost perspective, standard two, then you’ve got to keep looking at the options. So there’s your RJ requirements and your bat requirements? And then you’re going, okay, standard five, what about product options? And then you can go away and either put together a portfolio or compare some SMEs or compare portfolios, report on it, and go back to the client and say, Look, here are three or four options there, quantifiably, be the better or worse for your causes what you care about most? Here’s some performance, here’s semester location, here’s some of the considerations in pricing. What do you think, and they go, I want the more ethical one, I’m happy to pay more, or actually, I don’t want this one or, you know, it builds in to the advice process. Because it was to help develop by an advisor from Australia, who knows the advice process. So it’s been built around that. And the idea is that you can roll that out in five minutes with a client and have a really good backed up solution with as much or as little detail as you want for the client. In an easy way. That’s it’s we’re just trying to make ethical investment advice easy, because then everyone will do it. And if every advisor in the country did 10%, more ethical investment advice, I think I’ve done my bit for the planet.

Ben Nash
Totally. Yeah. And it’s not easy. Like it’s difficult to figure out what the, you know, what makes sense how to get that alignment. Everyone’s preferences are different as well. So it ends up being bespoke. But the I wonder with that Tesla thing, is it just because he’s making everybody work from the office for 40 hours a week is that where the labor rights thing is coming from or

Nathan Fradley
fuel, it’s purely the fueling that it has nothing to do with, you know, workplace breaches, and health and safety and all the rest of it? It’s just because no one wants to go back to the office. Yeah. And he’s tweeting too much, you know, make you clearly,

Ben Nash
you know, become a an expert in this particular space. I’m wondering like, how have you gone about building your your knowledge in the ESG space over time? And how do you learn, you know, in that changing landscape, for yourself?

Nathan Fradley
It’s there’s a couple of, I suppose different areas, I think, an understanding come from interest, I think is the first one. So for me, climate change was is a big thing. And I’m, I’m into climate change. So it’s something that like I enjoy reading about. But then I connected on LinkedIn with a bunch of professionals in this space. So like this, sitting this morning to the ABC Radio on Tim Buckley gets on, and Tim Blackie is just absolute legend in energy. And he just says talking to ABC about is like the cop the gas export market in Australia and why we’re in this energy crisis situation and how we need to transition to renewables. And I’ve listened that stuff all day. So I think that that interest piece comes in and I’ve connected with Tim and I follow him and I think, you know, talking to people that you’re interested in or you’re interested in is really important, whether that’s healthcare, whether that’s technology, you know, that’s the same as anything else. But then expanding outside of that I’ve done Alexandra browns, invest with ethics course, which I’d highly recommend. Everyone who wants to get more involved in this go down that path. It’s a really, really good entry level course. And then like anything talking to fund managers engaging with, you know, I think people love talking about things they’re passionate about. And people in the sustainable and ethical investment space, love it even more. If you work a normal fund and you say, I want to talk to the PM, there’s no way you’ll get through. If you bring an ethical Investment Fund and say, I want to talk to Pam about you bring us bill and say I want to talk to moms about modern slavery, he will talk to you for two hours, just just like that, because he cares about it, because he’s passionate about it, because he’s flying to Southeast Asia to go to these, you know, these manufacturing facilities and see if what they’re reporting is true. You know, so I think, you know, that level of interest, you can play to people’s passion, and through that you can quickly absorb, so you’ve got to be interested in it. And then and then the old good old fashioned tax outside of that, I think, you know, more broadly than that, I’d love to see more education, from conferences and things like that. I think that’s an area that we’re not doing really well at. There’s been a couple that I’ve seen or been to lately, where they just missed the mark. There’s greenwashing. There’s, there’s, there’s purchased spaces, you know that the key sponsor shouldn’t necessarily be on there. You know, there’s a newspaper that’s hosting an ESG summit with their CEO of Whitehaven coal is speaking, like you couldn’t even get a seat at the table in that conference. That kind of stuff, I think is really hard. Because that’s when you go to those conferences and you start hearing the message from 10 years ago. Oh, it’s not that big of a deal. And you’re you walk out of that, and you’re in your matrix in northern New South Wales and go your house, your house, or you’re not too bad. It’s just to get the degree to go on. You know, see the damage. But yeah, yeah. What’s the price of lettuce at the moment? Why is that happening? You know, like $12 Lettuce club change. No one wants cabbage on there. KFC burgers? I don’t know if you’ve seen this KFC? I did. Yeah. It’s, you know, they’ve stomped on their own lettuce supply. Because they can’t get this thing.

Ben Nash
I’m not a big fan of lettuce though. Generally like solo, okay, but cabbage, I was thinking about it. And like, you know, pretty crisp, I don’t know, it’s worth it’s worth a try. But I get the point that we if we want to have more, we should be able to have led us, which should be.

Nathan Fradley
Yeah, and if you want to have power and heating during cold Melbourne months, we’re having at the moment, which I’m loving my do not have power issues, we need to have supply of power. And if we’re exporting gas off to, you know, other parts of the world over doing fruit for domestic use, and I can go about that all day. The point is interest and passion, I think, and probably, you know, a bit of golden retriever energy again,

Ben Nash
where I was just going to say where should advise the start, because I think that ESG is impossible to ignore the moment but there is a lot of confusion out there, you know, advisors are pretty stretched as it is with your post COVID world and just all the things that are on our plates, what would be the best way for someone that’s that knows that it’s important that has a broad sort of alignment to it on a on a values perspective, but isn’t deep, you know, into the well, how should they go about learning?

Nathan Fradley
This is actually a problem that I’m trying to help solve at the moment. So one of the biggest challenges I’m finding from chatting to advisors is as soon as they start learning about it, and then they start seeing me talk about gas exports and, and they feel like it’s this massive rabbit hole. Like, I cannot possibly learn this. What if my client asked me about this, that she would have asked me about this? You should if they care about that, how can I respond? And that’s extremely, you know, confronting. And it’s a bit of imposter syndrome. I don’t know if I can talk to someone about something if I don’t understand it. I think you know, I’ve been we just finished our first pilot run of of what we calling a Kickstarter program, we’re just running through ethos. We’ll be running for a number of licensees next financial year. But if anyone wants to get on board with them, we can just start you into those programs. And the idea is baby steps. Start having the conversation just ask the client what they care about. And then leave the conversation. You don’t have to answer it don’t go into solution mode. And then go and do a little bit of research on that. You know, call me to ring a fund manager use Athos and the for the program we then go back into okay, we’ll have that conversation go what worked what didn’t next week, this is how you research cool, how’d the research go? What worked what didn’t next week, he’s how you present it back to the client. You know, and we use other tools outside of our own as well. We have a broad range of tools there. Okay, what worked, what didn’t and last week, overall, what worked, what didn’t What are we going to do from here? And I think by doing little steps, breaking it up into bite sized pieces. It’s not as scary as we might think. No Kids, we don’t need to be the expert on every area of sustainability and ethical investing to answer a client’s preference, because most clients just want to be better. I think we put this perfection instead of progress hat on, where, you know, clients just want to use a, you know, a bamboo toothbrush, even though it comes in plastic packaging, instead of a toothbrush that biodegrades and then regenerates into a new toothbrush or something, you know, that’s the image we have

Ben Nash
turns into, you know, mustard tree or something like that.

Nathan Fradley
You’d be at the plant, you plant it when it’s done. And then you can pick your toothbrushes off the tree later or something.

Ben Nash
Totally. And it’s funny, as you say that it made me have the thought, and I know I’ve fallen into this trap before, but when someone like we know that with financial advice, strategy and technical strategy, that we don’t have to be able to answer all the questions in the room. But I know that I’ve fallen into the trap of thinking like, oh, well, if I start going down this path, and I need to be able to do all that it’s like, you don’t think about it necessarily in the same way that that makes a lot of sense. Yes, you can just ask questions and say, Okay, well, yes, you know, ESG is a super technical area. So we’re gonna need to go away and do some thinking, do some research, then we can come in and talk about and I think, you know, as you say, most investors are on that journey, they’re probably not going to be a major issue that we’re on the journey with them. And in fact, I suppose that, you know, that is something that they might get behind even more as well.

Nathan Fradley
With, you know, going through that process at at Tribeca, we are coming on board and helping develop the ESG solution. And one of the scary things is we got to talk to each of the advisor in a room when, if we market it internally right now and said, we’ve, we could be talking about this to everyone, what’s the uptake, and everyone worked up at 90 95% of the clients. You know, the first the first client that I went into a joint meeting with was a client who hadn’t had an ethical investment conversation. But the advisor is one of the biggest clients of the firm, the advisors, so I reckon they’re going to want to note said things like, you know, the wife doesn’t engage. She’s not all that interested, generally, mostly, with the husband, blah, blah, blah, we started talking about climate change and politics on that side of the spectrum, she led up, we’ve engaged with them, they’ve sent us five referrals. Yeah, this is one of our wealthiest clients, like the it’s something other to talk about, then rising interest rates and inflation, as well as a whole spectrum to your conversation of, yeah, interest, fixed interest, men are doing great right now. But you know, it is great, the fact that your money has gone towards this halfway house and 55 to 65 year old women who were escaping domestic violence, that’s pretty cool. You know, takes away from just the up and down of markets.

Ben Nash
Love it. And it’s something that I can see how people get behind in terms of talking about it with their mates, and, you know, opening up those conversations, which I think is good for advice, but obviously, you know, commercially good in that could drive referrals and that sort of stuff as well. Like, I could honestly talk about that all day, but and I know that you could too, but I won’t. My last big question for you is that you obviously been an advisor for quite a while, if you could go back to forget exactly what you call a bit fresh face. Little Nathan, you know, walking in to the big bank way back when? What would be your one piece of advice? Or what would you do differently?

Nathan Fradley
I think I did a lot of things really well. Like I was fat from day diet, I back myself well, I you know, I focused on strategy over product, even if the bank, things like that I would still want to do but, and I love what I learned at the bank. But I would have said Go independent and go fast. Like get out there and start doing it. Break the mold to challenge the status quo. Be brave, do it the right way. From now, you know, if I never, I mean, personally, if I could start a business again, I wouldn’t take insurance commissions, I charge a fee for advice by the hour calculated, like, that’s how I would do it again. But that takes an enormous amount of confidence to do that. And it takes time to build that confidence. So I think that’s where our industry is gonna go. I look at the other professions and I look at those things. I look at some of the young people coming through some of the associates I’ve met, you know, and it’s the couple of things I’ve seen it strike that unreal talent coming through, if we as an advice community can support them, which is our challenge is how do we bring through, you know, new advices Yeah, be brave. That’s what I’d say.

Ben Nash
I think it also takes a bit of time to learn some of those lessons as well that I know for me, and we have been flat fee from DDOT. We have done no conference a.as Well, but we did Thumpy for a bit and then I you know it takes you a while that you go that’s not there and then it’s so many other things that happen as well that sometimes experiences that teacher and you need to Learn the lesson to realize what didn’t work in quite the way that you wanted it to. So that you know what to tweak and and refine. From there. Nathan, thank you so much for sharing your insights for people that are keen to learn more about ethos Australia or what you guys are about what should they know and where should they go?

Nathan Fradley
Email me, Nathan ethos esg.com or LinkedIn has always messaged me on x y. I try I log in pretty much every day. So I try and reply as soon as I can. Or Nathan dot friendly at Tribeca financial Comdata you as well more than happy to to help out along the way point you’re the right direction, introduce you to the right people, whatever you need. Yeah, I’d love to see that areas of the market develop.

Ben Nash
Awesome, mate. Well, thank you again for sharing your story and I look forward to chatting on the next one. Thanks, man.

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