June 1, 2022

The 12 Steps of a Managed Accounts Journey #3 – Transcript

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The 12 Steps of a Managed Accounts Journey

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Fraser Jack
Hello, and welcome to this topic series where we’re talking about the 12 steps to implementing managed accounts into an advice business. My name is Fraser Jack. And in this episode number three of four, we cover steps seven, eight, and nine in the change management process. In Step seven, we think about the perceptions around letting go of control, which is a big thing for a lot of advisors. And in Step eight, we’ll look at what you may want to look for in an investment partner. In Step nine, we think about the stakeholder engagement and change management and making sure that we bring everybody along for the journey, there is so much to cover in these three topics. So sit back, relax and think about what we’re talking about in this episode. So thanks for joining us, again, we’re at Step seven, we were looking at the concept of the perception or letting go of control as in letting go of control the investment management now for you guys, on your journey from our conversations prior, there was something that you did or you wanted to do a long time ago, because you had very good reasons.

Simone McMullin
Yes, yeah, definitely. That was important to us. From the outset that advisors focus on their strengths, which we believe is in uncovering client goals and putting in place the strategies to help them achieve those, that advisors focus on that and that we outsource the other parts of the advice process and, and that that goes for investment management to paraplanning to our basic administration is all outsourced allowing advisors to focus on what they do best.

Fraser Jack
Now, with your journey coming out of obviously, we sort of mentioned earlier on but it’s a matter of the advisors weren’t choosing the investment. And that was something that was that was sort of told was something that was a big part of what they did. But they didn’t necessarily want to

Simone McMullin
know, no, they didn’t, they didn’t want to and they also didn’t want to or they weren’t supported in terms of then keeping up with that. So it was very much a setup, structure. And then the ongoing advice piece was left sort of hanging. So in terms of the advisor built portfolios, there’s a lot of ongoing maintenance, and paperwork and records of advice, etc, that go into that. And the advisors aren’t necessarily skilled, or have this had the support to deliver on that for the client, and then resulting in really inefficient outcomes for clients.

Fraser Jack
So what does that do for the advisors mindset, then when they allowed to then let that go and then move into the world of, you know, communication and ongoing relationship?

Simone McMullin
Yeah, it’s, it’s quite freeing. The advisor, our advisors feel that they have a deeper relationships with their clients now than ever before, because, in fact, they have more engagement points with the client. So this is also come to light during COVID In terms of the amount of online meetings that we have with clients. And we will definitely be taking that forward into the new normal, you know, when we all go back to that to the normal world, because it’s enhancing the client relationship rather than detracting from it, which was our first, you know, gut reaction is, oh, we can’t we can’t do this. Because it’s, it’s going to be seen to be detracting so it’s certainly added to it.

Fraser Jack
Yeah. And took us through that meant you mentioned the COVID time, took us through that moment, when we when we sort of hit 2020 and markets dived and then jumped and went all over the show when nobody could work out, you know exactly where it was going to be in any particular day. Talk us through that relationship that the your advisors and had with their clients.

Simone McMullin
Yeah, so that was, obviously everyone had challenges at that point. And that was right at the same time where we were obtaining our own FSL so it was certainly a lot going on. But what we found then we had quarterly investment webinars with our clients and Drum in capital, the portfolio managers sort of co chaired those with the advice team. So we felt that that was very reassuring to clients, as well as a lot of online meetings, a lot of phone, contacts, emails and communication. So, you know, it wasn’t a panic situation, it was just, obviously, everyone was going through it. So it was just part of, you know, expectations. So it was a, it was a challenging time. But I think it was made easier by the fact that we had already had a managed account solution in place, because what the advisors were communicating with clients at that time is the managed account solution is all about active investment management to take advantage of opportunities in the market. But for us, and for our clients, just as importantly, it’s about capital preservation. So at that point, in COVID, when the market, you know, fell off a cliff in March 2020, it was all about that capital preservation discussion, and how we were looking to do that, compared to what was happening in the in the share in the market if we were passively invested what our outcomes would have been. So I think clients felt protected through that time, but it was necessary to ramp up the communication. And we did that through the webinars and the online meetings.

Fraser Jack
Welcome back, Dave. Thank you. Now we are talking about the perception of letting go. Now, I mentioned the word perception here. Because Because often people believe that this is a thing where you’re you might have spoken to clients previously about you know that your ability to find a good investment. And then all of a sudden, you’re talking about outsourcing that or using somebody else that might be you know, better than you at doing it. There is a little bit of a perception that you’re losing control. In this situation, you’re losing control of the investments, what are your thoughts? Yeah,

David Moloney
look, it’s a good one. Look, to be clear, we never sort of positioned ourselves too much in that space. But I can understand where people would come from, especially if they’ve built their practice over many decades. And that’s always been their value proposition. One thing I would say, I would arguably say you’ve got more control, right, and you’ve got better control over your clients outcomes over a wide range of clients, right. So if you want to implement your best ideas, you can do that extremely quickly. Right, without the need to call up the client, update their data, get an ROI, and make that change or an SLA in some instances. So I would say you got more control. In a lot of instances, it’s all about how you articulate your role in that investment process. But to be clear, it’s your investment process. You do call the shots, you’re just bringing in the best people possible to implement your process.

Fraser Jack
So the control and decision making process is one thing, but I guess controlling the the process of how much you can charge and how much profit and what efficiencies you add to your business is also something that comes in does more of a control.

David Moloney
Exactly. So on the fee point, I know we kind of touched on it before, obviously, your portfolios can be as high or as low as you wish. So you’ve got that tailoring there. But in terms of the advice fees, that we would charge, the efficiencies that obviously, it creates, our pricing methodology can be more around what we actually deliver to the client from an advice perspective, obviously, then there could be a component regarding investments, but you’re starting to have more conversations around the strategic pace, and where we can really add value there.

Fraser Jack
Melanie, welcome back to this step in the process of change management process that we’re talking about when people put managed accounts into their business. You’ve probably seen this a lot and had a lot of conversations with people around the concept of, you know, possibly losing control or the feeling of control who’s in control now, am I losing control? Talk to me about what conversations you’ve had around this topic?

Melanie Bennett
Absolutely. I mean, and if you’re looking at control, because I pick and control all the portfolio’s introducing professional management or a managed account, yes, you are going to be losing that control. I think the question then is, is that control you want to have? I mean, I think that’s probably the more relevant question, if that is control that you want to have, and you’re really comfortable with that. And you believe that and, you know, you’ve got your why for that, then that is a belief that you’ve got to work into the portfolio’s Yeah, I

Fraser Jack
just say that I’m thinking of the words you know, you always try and control what you can control and then realize what you can’t control and maybe that’s a there’s a certain thing in there around, you know, you can’t control how markets behave. And and to be fair, doing doing justice when your everyday job is looking and speaking and spending your time with the client and controlling all the things around the client behaviors and controlling that relationship. Maybe that maybe there’s no Anything you do want to control?

Melanie Bennett
Yeah, I mean, it’s incredibly complex a client’s affairs are incredibly complex. And do you want to be an investment specialist? Or do you want to be an advisor? I challenge that you don’t? Can’t be both?

Fraser Jack
Yep, yep. And one of the things I guess that is within your control or should be is the efficiency and, you know, the efficiency of the business, you know, the profitability of the business, all these sorts of things,

Melanie Bennett
yeah, and your governance over who you’re bringing in to help manage the clients, you have to do a whole bunch of work and the continued work when you adopt a managed account to make sure you’re comfortable and happy with the performance of these portfolios and the management of them. So it’s not that you outsource it and you know, kind of wipe your hands here, you have the governance role of all this.

Fraser Jack
Yeah. And when you say, governance, you’re talking about, you know, obviously, if somebody’s not performing, then you have the control to say, Okay, we need to try somebody else.

Melanie Bennett
Yeah, you’ve got the oversight of picking the managers, and the consistent and ongoing performance management of these. And then you might get to a point where you want to change managers as well. Now, Tom,

Fraser Jack
we’re talking about letting go of control. And you know, this is a big part, this is a big, emotional and mindset piece of the jigsaw puzzle. Tell us a little bit about your experience around advisors that have been through this process. And the concept of them having to give up control,

Tom Schubert
it’s really interesting is, first and foremost, in the traditional structure, where advisors are obviously giving you advice to the client, and the client is accepting that advice and argue the advisor doesn’t actually have control, the client has control. So first and foremost, what control exactly are you seeing in the managed account structure, because really, if your decision is around recommending a product or service or solution, in the same way, you’re recommending an individual managed fund, you are now recommending an individual portfolio or a holistic portfolio, if that makes sense. So the control element is still ultimately really the same, the advisor is recommending a solution for a client and the client is accepting of that. It’s just now within that structure, there is some more there is more discretion than there was before. And, but it’s not, it’s not really dissimilar to a fund manager who select stocks, you’re choosing an Australian equity manager to go and pick the best combination of Australian shares within the market to same way as you choosing an investment manager to put all together the best group of managed funds within a multi asset portfolio. And so I really don’t think it’s that different, is just a perception that one element which the Advisor may have been involved with, ie fund selection, that are no longer explicitly involved with

Fraser Jack
that we sort of touched on this earlier around the communication of this to the client, and the buyer to to the adviser buying into the process, and then be able to communicate that concept of control to the client. Tell us about what how you would do that with a client, if you were transitioning from let’s say, you, you had a process in place the client bought into your previous way you did things and now you’re changing it, we spend

Tom Schubert
a lot of time with our clients working through the sort of client proposition value proposition and the way in which they present the service, we think that that’s it’s really important part of the journey to empower the advisors to have those conversations. And so, first and foremost, we start on the base where it white label manager, and so we’re happy to sit in the background. And I think really, for our advisors, they’re just adopting what we’re doing is their own in some way, shape, or form. So they’re saying we know that the markets are complex, we understand the need to evolve our business model provide more resources within our business and, and better outcomes, and really focusing back on total portfolios in terms of objectives, and asset allocation. And then really positioning that with the clients is that as the go forward proposition, so they don’t, in a way, they don’t have to see control, they don’t have to tell them that there’s another fund manager involved. They don’t have to, you know, be as explicit as that there’s nuance in presenting a partnership solution to the client that really puts the advisor front and center still have the conversation. And that’s really what, what seems to be most important.

Fraser Jack
So the advisors essentially position positioning as they’re adding another level of expertise in the process.

Tom Schubert
That’s right, I think both COVID That conversations become a lot easier. So you had the fastest bear market in history, followed by the fastest bull market in history. And so I think most clients understand that, you know, investment markets, the world is becoming more complex, and it’s much harder really to deliver good risk adjusted returns to manage the complexity. And so the need to bring in specialists resources to their business to help them with the investment process should be expected and that’s really what the conversation is all about. Is there going we’ve gone from trying to do this ourselves to now having an extended investment team Um, you know, which in for our clients is, you know, the seven investment team, within our businesses now the seven person investment team within their business and really sewing is an extension of their existing resources, which is powerful for the client.

Fraser Jack
So it sounds like Tom, there’s a lot of different when it comes to control, there’s a lot of different aspects to it, I guess, if you would just sum up the section, but how would you

Tom Schubert
put it just that I think all of our clients through observation have started out wanting to retain control. And but back to some of our earlier points, it is liberating to let go of activities that you’re not specialized in, in a way and Investment Committee is a halfway house between traditional advice model and a full discretion model, because changes only ended up being made when committees made in the same way that changes are often only met when advisors meet their clients by letting go, the accountability performance for performance, and indeed, the service delivery is allied with that investment partner and our clients in the end, say, through data, through the service and through, you know, better reporting and insights, that they’re actually having deeper, richer conversations with their clients, despite, you know, letting go of the ultimate decision. And so you encourage, you know, when you’re seeking service providers to really understand, you know, the full service and reporting support that they can provide you because it’s one of the big upsides from going down to manage account.

Fraser Jack
Thanks. So we’re in Step eight, at the moment where we’re talking about, what do you want from an investment partner for now, this is obviously from a business decision from an advisor point of view, and also isn’t isn’t our aim? You know, there’s obviously lots of different hats that you wear. And yet, and when it comes to choosing an investment partner, what what are your thoughts? What were what were your thoughts on on your journey?

Simone McMullin
Sure. So one of the important things was that there was no conflict. So, you know, we felt it was important to find a partner who didn’t have any particular vested interest in underlying investments, that was a number one priority for us. And from there, it was about the alignment of philosophy. So do they believe in strategic asset allocation has been the most important factor of delivering client returns? And from there, how do they execute on the tactical asset allocation underneath that? So have they got the right resources? Have they got a team around them that can deliver on that? How do they go about executing it? And do we have confidence? Confidence in that? So we’ve looked at a number of partners, you know, and ended up landing on German capital? So there was all of those that were the main criteria that we looked at to start with?

Fraser Jack
Yeah. And so tell us took us through that process? And you mentioned a lot of partners? What did you do then do practically went and interviewed them? Or you? How did you how did you do the do the research? I guess?

Simone McMullin
Yes? Well, a lot of it was online, because it was during COVID. So most of it was online. In fact, we only met them face to face, you know, a year after we’d actually gone ahead with the whole project. So that was interesting, but similar to the client experience that allowed us to have more communication with them than probably in a face to face world. So, you know, we submitted our requirements, and then they came back to us with a list of list of answers and the list of reasons why there was synergies. And then it was from there. It was a process of, you know, the four was really sitting around and and threshing out how what we wanted and what they were able to deliver whether that matched or not, whether we were sort of meeting each other, where we both worse, and how we needed to see that relationship unfold. So yeah, it was it was quite a process. It probably took us about six months to work through.

Fraser Jack
Yep. And how many different businesses did you do into your opponents that interview?

Simone McMullin
There were four in total, but we started with the, you know, list of six to eight. And we, we relied on our personal networks as well, in terms of what other advice businesses were doing, who was doing it? Well, you know, finding out that sort of on the ground information and then shortlisting it through that process. We had support as well from platform. So most of our managed accounts are on BT panorama. And we did have support from our business development manager at BT to help us through that, that that due diligence process,

Fraser Jack
Dave, welcome back, we are at Step eight of the change management process. And this one is really just understanding what are some of the non negotiables? What are some of the decisions around what you want when it comes to choosing a partner? Talk us through your process and what for you was a non negotiable

David Moloney
for us a non negotiable was they needed to understand us and be aligned to us? We touched on it earlier, but it’s always that accountability. We wanted to feel that our investment team was accountable to us and we’re capable of actually delivering for our clients. So, you know, someone where they might have been larger, probably wasn’t quite suited to us, because there was that sense that, you know, there was a new analyst and A new portfolio manager, a new person coming in and out all the time. We wanted to partner with someone that was really aligned to our business. That was sort of a non negotiable for us. And we just felt the integration into our business and making it part of our investment process. All the more easier.

Fraser Jack
Was there anything that you wanted to avoid or stay away from or didn’t want? And in the process,

David Moloney
yeah, we didn’t want to just replicate something that everyone else had. And that was kind of keeping in mind, we wanted to create an edge for our business. So we did want something that was tailored to our clients and our demographic and someone that could actually roll that out. So we didn’t want something that was just off the shelf, otherwise, you might as well just engaged in that product directly. So that was a key thing for us.

Fraser Jack
Was it was there anything with regard to you know, communications or running seminars or webinars or you know, like having a having a partnership, where you’re actually communicating to the client, the client

David Moloney
spot on? So a key requirement for us was to create key bits of collateral that we can roll out to our client base that came for us? I think most would do that these days. At the time, there probably wasn’t a lot. But I think a lot of consultancies are quite good with the level of collateral that they’re providing. But at the time, for us, that was a really important thing. Because we weren’t providing too much of it. Nothing that was that meaningful at the time. So our business has completely changed. In that regard. Yep.

Fraser Jack
Now, I just wanted to ask you, from your clients point of view, when it comes to say, your branding, what do they see? Do they see your brand? Or do they is is this kind of like you’re using an outsource partner to create advice for you? Or are you using the outsource partners to create a community, you know, aligned to your client?

David Moloney
Yeah, so we get our partner to tailor the content for us, which is with our company logo on it. But we do make it clear it is in partnership with our consultants, but it does come from our business. So got all the appropriate disclaimers and communication in there around that. But we felt it was important that it was coming from our business to our clients. And when

Fraser Jack
you and when you went through that process of interviewing and choosing who you’re going to end up with, take us through that process. Was there a lot of backwards and forth and interviewing one off against another? Or was it sort of a fairly quick process when you met the right one,

David Moloney
it was like it did take time, I wish I’d kept a diary at the time. Just to go through that process. However, when we did feel like we we’ve landed on the right individuals, that was a relatively quick process, still a lot of you had to build everything, right. So we built everything from sort of scratch at the time. So there was a lot of things that we had to create a whole range of things kind of sold it for us. But they were extremely transparent. Like we went into their trading desks looked at their software, look at what they were doing. And it just highlighted how much an individual advisor just simply can’t do this. And the amount of money they spend on tech, getting the right data, getting the right inputs, meeting the right people. That just highlighted to us, that was a full time thing in itself. And they literally lifted the bonnet on all of it, and showed us exactly what they were doing. And that gave us great comfort.

Fraser Jack
Now, thanks so much for joining me, again, we’re at Step eight in the change management process. And this is really around, you know, you know, looking for partners, understanding alignment, trying to work out what you want, and what to start looking for. Now, it’s obviously a difficult thing. People would be big go through this all the time. You don’t know what you don’t know, sometimes

Melanie Bennett
I agree. And it’s really hard to define what you want for an investment partner, if you have no idea. And I think this step does stop a lot of people as well. I really encourage you to reach out and ask an investment partner, how do you service clients? What services do you offer? But some of the key things as well, you know, in that they’ll have to explain to you their investment philosophy, how they communicate with you how the portfolios are run, how our fees charged? I mean, does the client pay for this? You’re going to be paying for this? Do they sit on their in your investment committee? How does it all work? So I think I’d really encourage people to be brave enough to just ask partners, what the kinds of services that they offer. Key areas are around vestment philosophy level of involvement communications fees, It’s also I think, important to look at, and being transparent with your investment partners in this process, what your portfolio’s currently look like, now, be clear about the different dynamics in your business as well. And where you want them to kind of be, because you might have big CGT positions that you need to consider in this, you know, you might have one of your partners in your firm’s who really wants to stay involved and continue to pick funds in this process. And you might have an investment partner, who, you know, has been paid for an investment partner won’t want that kind of step with having to convince you to do so while they’re trying to pick a portfolio. So they’re some of the key questions that I think you can think about. But if you don’t remember that, and you’re not clear on all that, also just asking the investment partners that you’re thinking about, what kind of services will they offer? And how do they work?

Fraser Jack
Yeah, it’s kind of like come as you as you say that it’s, I’m thinking of the concept that it’s not, it’s you’re not just picking a brand, you’re actually trying to work out it’s a relationship, right? You’re trying to work out how they’re going to work with you and how you’re going to work with them in in a productive way. That’s, that’s just that it’s like, how are we going to have this relationship together, where we both, you know, know what each others can be doing and know what each other’s values are, and understanding and that thing that you mentioned that knowing where your existing portfolios sit now, is pretty important.

Melanie Bennett
And yeah, it’s often the simple questions that are the most meaningful here. Don’t overcook it. I mean, it’s just who does what, when? who’s communicating with who, when? How do you get paid? How does this all work?

Fraser Jack
Yeah. And I guess a lot of partners also have been through this process that we’ve been through in the last few steps around, talking to clients no becoming and then those sorts of things. And I guess you’ll you’ll be asking them, to help you with some of that stuff.

Melanie Bennett
Yes, this is not all on you, I’d be my key, you know, my last role and the teams that sat in that we were solely set up just to help firms through this process. You know, there’s a, all of the providers and the stakeholders in this are very invested in helping you through it. So don’t waste that resource. Reach out, make sure you’re asking, get them to take you through the process. And another tip is, it is important to have investment partners who can articulate their value proposition and can’t explain it all to you. So if you’re sitting there a bit bamboozled with what’s going on, that’s probably a sign as well.

Fraser Jack
And would there be different investment partners for say, different demographics of clients or different types of types of clients, I mean, it’s very easy to look at the practice and the investment partner, but you know, taking the clients into into consideration,

Melanie Bennett
most Investment Partners in my experience can make nearly any style of portfolio. I mean, some might cut it right down for some small real retaliate very baby accumulator clients. But usually, an investment partner will be able to cater to the entire spectrum of your clients, the number of portfolios that you’ll end up making will depend on what your client base is. So being transparent with what your client base looks like, you know, I’ve got this many clients in this segment, you might not have a portfolio for every single one. And, you know, you might also have your ultra high net wealth that you end up with a managed account just for the core, and you end up managing, you know, a satellite, I guess, for lack of a better term in in some other investments. But traditionally, the key things that you’ll need to land on is the investment philosophy, you know, active passive, another key thing is how much involvement, the investment partner will not let you have, but be comfortable in that relationship with you being there, because some will be really comfortable with quite a collaborative approach, and now bring to you their best ideas and sit around and you know, discuss and then if you can kind of take it or leave it, where others, you know, that’s not part of how they work and part of their philosophy, you know, if you’re paying for their services and their advice, they don’t want portfolios that have been skewed.

Fraser Jack
Yeah, it’s interesting, isn’t it? Because I think as as, as you say, that I’m thinking to myself, the advisors sitting in the middle of the sandwich going, I want to be I want the investment team to make me look good, as well as them look good. And so and but but definitely would be thinking about this from the client lens to say, what’s the client going to be thinking in this point? How are they going to see me and how are they going to see my relationship with the investment partner,

Melanie Bennett
and on reflection, even just mentioning that point, the firms that I’ve had that one had more investment control, initially haven’t ever ended up there. And they’ve, you know, I guess, relinquish also control or just let the managers do what the managers need. to do, it’s been probably part more of the change process and the fears around letting go that have, they’ve wanted to keep that kind of little door open that they can make decisions.

Fraser Jack
Yeah, that’s interesting, isn’t it? It’s a process, a fair process,

Melanie Bennett
and all questions that an investment partner will be expecting to ask them as well. Make sure you’re being really transparent with them and asking how they’re making the decisions. How do you find out about it?

Fraser Jack
Yeah, I’m sure I’m sure they’ve had plenty of conversations in the past, and people have come up with ideas, and they’ll be able to relate that conversation. Absolutely. Tom, thanks for joining us again, in this particular step, Step eight, we’re looking at, we’re chatting about the concept of what to look for, what do you want from an investment partner? I guess this, you know, this depends on the person and what they’re after. But tell us about what you’re seeing here with regards to what advisors are looking for.

Tom Schubert
Thanks, Rosa. There’s lots of different choices out there. And seems every day, there’s a new asset consultant or investment manager that’s coming into the space to provide solutions. So it is really important to understand what you’re looking for. And so first and foremost, you’re looking for resources that you don’t already have in your business. And so when you’re looking at, you know, the consultants or the investment managers that are out there, I’d be asking the same questions, you have yourself around your own business, do you have the resources, to provide all of the services and expertise that are required? And we see a lot of very small businesses in this space? And would question their ability for them to deliver consistent service and performance over time? And so I’ll be first and foremost, like in any assessment of investment management business, it’s all about the people, what are their backgrounds? What specialist expertise that they bring into the table? And how does that help you solve the problem for your clients?

Fraser Jack
Yeah, that was certainly going to be one of my next questions around the concept of is this like an interview process? Are we people are advisors out during the interview, you know, the whip around and finding out who they’re going to choose?

Tom Schubert
I think so. I mean, most of the most of our clients have been through some sort of tender process, whether, you know, through referral, asking platforms asking, you know, other clients, I might have met at a seminar who I’ve worked with, I think, absolutely, that’s important. So they should be assessing the different businesses, the alignment of interest is really important. So we’re owned and operated by the investment team, and we invest in the portfolios alongside our clients. And then you need to make an a strong assessment of the people in the business and the alignment they have to your client success. That’s, that’s really, really important.

Fraser Jack
Yeah, okay, that’s really interesting. And the longevity, I guess that means longevity in the business partner. Talk to us about fees, and how much sort of costs and fees and pricing plays plays a part in this decision?

Tom Schubert
Sure, again, different business models, different fee structures across the market. There’s a number of sort of traditional consulting lead arrangements where the advice practice will pay for the fee and delivering the service. And I think in a way, that’s putting the pressure on the advice business without creating the alignment with the investment consultant or partner, because there’s no, there’s no incentive for the consultant to help, you know, conversion and alignment and service, it’s all the risk being put back on the advice practice. So I’d say creating a fee structure that is aligned to long term success. So not having, you know, minimum upfront phase, but actually having phase which align to, you know, the growth in the business, the successful conversion of the business and the ongoing delivery of that, you know, that service is a much better fee structure. And secondly, you know, the scale of the partner that you’re choosing, are they able to deliver you lower costs than you’d otherwise be able to achieve on your own, I think is really important.

Fraser Jack
And I guess the probably the last theory here, when you’re looking at a partner is to look at the to and fro communication, what’s coming out what what you can rely on coming out on a regular basis?

Tom Schubert
That’s right. So what, what resources are they providing to you? So they are putting the responsibility of reporting and insight back into your business? What efficiency are you really gaining? I mean, that’s really important question. So assessing all of those service lines, the reporting the communications, looking at that and saying, is this an enhancement for me? Can I actually take this adopted as my own and deliver it to my clients and give them a better experience? Really important considerations?

Fraser Jack
Tom, thanks so much for being part of this chat. We look forward to talking to you in the next step. So thanks for joining us again, in this conversation, we are talking about stakeholder engagement and change management. Really, what we’re looking at here is the whole business coming along on a journey to tell us about how you bring your staff along on the journey. Obviously, we’re talking about a change management process right here. So I imagine there’s certainly some sort of a process that you have in your business.

Simone McMullin
Definitely here we had a full Project Plan, scripted from the very outset, in terms of what we felt we needed to do and who we needed to bring in, at certain points, it was important that the advisors obviously understood the reason for the change, and that they were on board. But just as importantly, internal administration team as well. Because ultimately, at the end of it, they’re the ones that are implementing a lot of the advice. And so we felt it was important to demonstrate to them why we’re making this change rather than just land on them. Look, this is the new way of, of doing things. So yeah, there was a whole there was a whole project there. And many, many people were involved in that. So from the advisors to the admin team, to outsource to paraplanning. Team. So we had to make sure that they understood the new investment service and, and we made sure we tweaked our SOA templates to cater for that.

Fraser Jack
Yep, so a fair bit of not just coming on board, but it sounds like a fair bit of training as well.

Simone McMullin
Definitely, definitely lots of training. And we also did roleplays, which some of the advisors didn’t overly enjoy, because it took them back to some of their previous days, but, but we felt it was important to have that roleplay environment because clients will ask questions, and we wanted to all be ready as much as we could to be able to explain to clients the reason for the change.

Fraser Jack
It’s a really funny concept that, isn’t it? Because none of us love a roleplay once I really come on, but I think it there is certainly it’s the bidding process, you know, we use the word bidding a lot, I guess. And it’s that process of you know, what, there is a safe space, go and fail fast and get all that out of the way. And then and also when you’re with your with your peers, and you’re anywhere doing that roleplay they come up with some magic, and it just goes in there was well, I’m going to use that that was amazing. Yeah, exactly. Right. Yep. And tell us about any referral partners or any, you know, bringing them on board or when you make changes.

Simone McMullin
Yeah, so we work with predominately three accounting firms are our main source of referrals. And we felt with because we’d always use managed accounts since 2015. It was I suppose they were quite familiar and comfortable with the way that we deliver the investment advice to clients. But when we changed to be self licensed as well, we were initially concerned about that, their reaction to that, but they were anything but but positive. They felt that that was the way the industry was moving anyway, so it was just about getting on the front foot and communicating the reasons for that change, and helping them to see that, behind that behind it all, we had a very, you know, robust risk management framework in place. And I think that, ultimately, it gives them confidence to refer because I don’t believe that any accountant wants an advisor building an investment portfolio, based on their thoughts and processes they want. They want their clients to be referred to someone who’s actually using an investment partner who really is their, their job, their full time job with a full team behind them to build to build that portfolio.

Fraser Jack
Imagine that if you’ve already set up the concept with your clients and your referral partners that you’re there to bring the best ideas, and it really is a conversation with you’re coming to them with a with what you believe is the best idea of the time.

Simone McMullin
Definitely. And interestingly, of the three accounting firms, two of those firms, both owners of that business have moved to this solution. So, you know, it’s important that they understand it themselves by going through going through the process.

Fraser Jack
David, thanks for joining us, again, we’re in Step Nine of the change management process where we really start to examine some of the stakeholders and the engagement of those stakeholders. Let’s start with your staff inside your business. How did the staff go with the transition? Or the idea? And how did you bring them on the journey

David Moloney
here to our journey, it’s changed a lot over the last five years, because we went from having our completely own practice with one of my business partners, to then integrating into a bigger business. And we weren’t just integrating what we had built. We’re now rolling that out across other advisors. And it will be the challenge. You know, when we buy new practices, we’ll have to do the same thing. But regarding our staff, it did take a while for them to understand. But once the penny dropped, and it clicked, they now see the benefit of it. And that’s now willing truly entrenched into our business across the staff. That’s not just advisors, that’s also the support staff as well. So paraplanners admin staff, client service officers, they fully aware of what we’re doing and why we’re doing it and the steps in that process. Our third parties in terms of as a consultants and MDA licensee, we’re very good at helping them train and try and It allowed them to understand why we’re doing things. And, you know, sometimes another voice always helps, you know, I’m telling them that this is the best direction for the business, but to hear others and other peers speak so highly about it really did help resonate with our clients, our staff, I should say,

Fraser Jack
it’s interesting, isn’t it? Because obviously, you sort of feel like, you know, getting the staff on board. And as you mentioned early and having something that you can clearly articulate and some collateral around that and better demonstrate why it’s such an important thing. And you just, your staff are a pretty honest point to start that conversation with, right? Because if the staff don’t get it, then the clients aren’t gonna get it and their referral partners aren’t gonna get it.

David Moloney
Exactly. And that just highlighted to us we didn’t have we weren’t articulating as well as we could be. Right. So that just drove us to really drill into those conversations. And what else do we need to communicate or provide to get people to understand what we’re doing?

Fraser Jack
And how have you gone with your referral partners, your multidisciplinary practice? So obviously, there’s your starts with the with your business partners and the in the other streams of business that operate? But what about external to that as well with the hammer compensation, but then the other refers?

David Moloney
Yeah, I guess it’s one of the things when you’re a multidisciplinary practice, it’s hard to establish key referral partners all the time, we obviously receive a lot of referrals. Our clients are our biggest advocates. Right? I guess when you do provide a lot of service lines, I guess the concern with some practice would be is that we would, then still their client, I guess, in a sense, for lack of a better term. That’s obviously wouldn’t be the case. But I guess we are well known within our respective nations in our demographic. And that’s always generated the leads for our business. Yep. Yeah. So third party is probably isn’t the major issue with us from that perspective.

Fraser Jack
Now, thanks for joining me, again, we are talking about step nine in the change management process. And this is the part where we start making sure that we bring everybody along on the journey, that we’re not just the lone wolf shouting from the rooftop, and all the staff, and also, you know, partners and referral partners and everybody in that all the stakeholders are involved. Yep. Tell us about you. Tell us about what you see in this space.

Melanie Bennett
I think that this can really make a change process and project work well, if you really engage all your stakeholders. And there’s an incredible amount of information that the power planners hold the client support staff hold, just making decisions at a firm or director level that yes, this is our strategy, we’re going to go forward and conquer said managed accounts. It is as simple and as easy as having a few hours with the back ends, back staff, the support staff, the power plan is, you know, the people that are really familiar with all the processes and systems, bring them along on the journey, asking them how this would work, flushing out where they’re going to have problems in this, because there are going to be things that you’re going to need to address in this process, you know, you’re not going to adopt a managed account and have, it’s not going to be complete, smooth sailing the whole time. It’s just not. But the way to minimize it is to bring forward any friction points, and then you can start to mitigate it. So little things like you might have to include extra things in your SOA, or you might have to change your implementation checklist. You might have to, you know, get something ready for x plan recode something, they’re really easy little things to miss, because you’ve also got to focus on the big picture stuff. But that is the stuff that when you start hitting go, it’s like roadblock after roadblock after roadblock for your support staff and your teams. And that can get very fatiguing.

Fraser Jack
Yeah, it’s interesting that the whole project management space and obviously some some people don’t like getting into the nitty gritty of all those change all that change stuff. But when a lot of people inside a practice, if you’re bringing everybody on board, and you’re setting the expectations that there are going to be friction points and and you know, tasking people to look out for them and lean into them and bring them forward as soon as they see something, I guess some. Yeah, I think that’s probably a decent way of doing it.

Melanie Bennett
I’d say make make yourself bring them forward. So as you’re kind of going through this process, sit down and go, Okay, what is that? What’s that SOA process going to look like? You know, and have have a champion from your power planning team have a champion from your client service team there and actually kind of go through step by step okay. I go into x plan and do XYZ I do this. I do that how will that work? What in what text do I need? What everything do I need? It’s sounds worse than it is it can be quite a quick process to go through but it will save a lot of angst.

Fraser Jack
Yeah, yeah. As we talk about this, I’m thinking of the concept that this is a team effort, right? I made a big change like this, and the practice is a team effort. And if anybody’s trying to do it alone, then they’re gonna end up with a whole lot of pushback. Yeah. And

Melanie Bennett
if you’ve engaged like, back when we were saying in episode one about, you know, what do we want the business to look like going forward? And the power planning team, you know, they don’t want to spend seven hours on an SOA, or for hours, every rebalance every quarter. Okay, this is how we’re doing. We’re all bought into that. This is how we’re going to achieve it. How do we make sure this is successful?

Fraser Jack
Yep. Fantastic. And then obviously, the you know, there’s there’s other stakeholders in and around businesses like referral partners and other stakeholders tell us about that process? Because I’m thinking it’s kind of like, well, you know, what do we bring them on after we’ve implemented or is it they need to be?

Melanie Bennett
Yeah, earlier, the better the earlier, the better. And just biggest tip in everything managed can is Ask, ask, ask. Just ask all the questions you don’t think are real questions. They’re simple. They’re basic, ask them reach out to all the stakeholders that you have, or your partners or your your entire ecosystem, ask the questions, right? Everybody is invested all of the investment partners, the platform’s everybody is invested on making this as seamless as possible. And they all have teams set up to do so. So reach out. And step one, the earlier the better, because the more that they understand your objectives and how your business works, the more they can take the grunt work for you,

Fraser Jack
Tom, welcome back to Step nine, we’re talking about stakeholder engagement and change management. Now, obviously, we’re talking about the teams around advice practices, tell us how important it is to get your whole team on board and everybody involved,

Tom Schubert
you are really changing an enormous part of the way that a vast business operates. And it is important that all layers of the team evolve. Firstly, starting at the top, some often there might be an advisor that sort of led the charge, if you will, when adopting a managed account service. And it’s important before you actually embark on the rollout that all advisors within the business actually agree and adopt the new philosophy and the way of doing things because if we come back to the objectives of wanting to change the way in which investments are delivered at a business level, and ultimately achieved at a business efficiency, and it’s important that all advisors actually agree and are looking to adopt the philosophy and the service going forward. So it starts from the top down. But then secondly, the change management process, you know, there’s, let’s, there’s definitely work involved. I mean, every client will need a statement of advice in order to make the transition. And so making sure that the there’s adequate resources and understanding within the power of planners, and sometimes that’s internal, and sometimes it’s external. And actually, sometimes a great way to do it is to bring in for a period of time a project team of external power planners, potentially, that can help facilitate that transition, and do so without burdening the existing team and advice process. You know, finally, then all the different partners that come together, I’m in the stakeholder management extends beyond the business. Managed Accounts require a specialist platform operator, so making sure that the engagement and training on the platform side, there’s resources there for that, there’s the responsible entity, there’s the investment manager. And so putting all of the parties together and having them coordinate, to achieve the goal and set that out over, you know, could be a 12 month horizon. And having clear accountabilities along the way is really gives you the best chance of success.

Fraser Jack
You know, obviously within that within the step itself, there is a whole change management process. So this is not something that you would just say announced at a at a meeting and everybody has to jump on board. This is obviously a process within itself, as you mentioned, the investment committees, responsible managers licensing all the way through to paraplanners. And people inside the office understanding how the new way of doing things around here, what’s the sort of timeframe, that’s what that’s what it takes a lot of practices

Tom Schubert
that lead time before an upgrade to launch can be anywhere from sort of three months to 12 months, when when we’ve seen them really drag out. Again, some businesses really uncertain about when to start or when to create the business disruption. If they’re at the beginning of the journey, they’re just setting up the business, potentially there might be acquiring a practice. There’s lots of distractions along the way. And so we see the most successful outcomes when the advisors all collectively know from a business point of view that it’s something that’s critical to them to do and there is no right time but but you must start they all know that really they must start and once you get to that point, once from the top down at an advice level, all advisors agree that it’s the path forward then really, you can start the process, the project plan, if you will, the change management process, but until you’ve got collected by and I think as a as an advisor, you know within an audit bosses within the business, it’s hard to, it’s hard to start.

Fraser Jack
Yeah. Now this is, you know, we’re sort of presenting this as a 12 step process as well. And I guess when we come to this stakeholder engagement, it’s, it’d be a good idea to start, take go back to the step one and run everybody through this 12 step process.

Tom Schubert
Most definitely, most definitely. Yeah, what are we trying to achieve? What are our clients want? What sort of business? Do we want to own and operate? What’s the endgame here? And if it all comes back to that, then unfortunately, some advisors may just find they’re very busy, but it’s important that they step back and put their business owner hat on for a period of time. Yeah, absolutely.

Fraser Jack
Yeah. Now, I Neva sort of just briefly touched on the content, but but referral partners is obviously a big part of this as well and explaining to you know, centers of influence and referral partners and other people in and around your business that promote your business, the new way of doing things. Yeah, it’s

Tom Schubert
been quite powerful. Actually, I’ve been out to see a number of the centers of influence referral partners with our existing clients to take them through the changes that have been made. And, and that’s actually been overwhelmingly positive. I think, you know, counting Brisbane practices, for example, the strong, often strong referrals into financial advice businesses, they get efficiency, they get business advice, and they get, you know, business management. And they also understand the complexity of, you know, managing investments and often looking towards when they’re referring to advisors, they’re not often referring to them for the investment per se, they’re referring to them for superannuation or pension advice or insurance advice. They understand that the advisors role isn’t is more holistic than that. And so when we’ve gone out and presented to them that, hey, we’re here with specialist and enhanced investment resources. It’s actually been a really positive conversation and we’ve seen actually pick up in referrals as a result of that.

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