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Scale Up Series #3 – David Pettit – Transcript

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Scale Up Series

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David Pettit

XY ADVISER

Podcast

SUMMARY KEYWORDS

clients, business, advisor, ultimately, people, running, technology, financial planning, advice, wealth, licensee, financial planners, australia, data, money, information, model, industry, financial wellness, company

SPEAKERS

David Pettit, Fraser Jack

 

Fraser Jack 

Welcome to the x y advisor podcast. A global community of financial advisors sharing and learning with one another to drive the positive evolution of financial advice. To get involved, go to x y advisor.com. Or simply download the x y for Pfizer.

 

 

portfolio construction of risk management tasks that take you away from where you need to be building relationships with your clients. Aberdeen standard investments can support you by creating bespoke investment solutions. Outsourcing portfolio and risk management creates efficiencies enabling you to focus on fulfilling the ambitions of both your clients and your business. This podcast has been prepared with tears based on sources believed to be reliable and opions Express honestly held that the applicable day however it is general information only and we accept no liability for any errors or omissions. Just be prepared without taking into account the particular objectives financial situation or needs of any investment investing involves risk including the risk of losing capital. It’s important that before acting investors should consider their current circumstances objectives and financial situation the information is appropriate and is to them and consult financial and tax advisers investors should consider PDS available Aberdeen standard.com before making any investment decision products issued by Aberdeen standard investments Australia limited ABN five nine double zero to 12336 for episode number 204263.

 

Fraser Jack 

Welcome to the xy advisor podcast. I’m your host Fraser Jack and today I am joined by the CEO of what is considered the fastest growing wealth tech company in Australia. Welcome, David. Hi res or should I or should I say cura

 

David Pettit 

Pura. It’s a delight to be speaking with such podcasting royalty as yourself. Stop stuff.

 

Fraser Jack 

Thanks. Now, a quick introduction to you David Pettit, you are both running a advice business, which is sort of morphed into a technology business over the years and an afsl.

 

David Pettit 

That’s right. Yeah.

 

Fraser Jack 

So what we might do is you might start at the beginning, because I sort of met you many, many years ago when you were running your private wealth practice and do sort of spent 15 years as a financial planner in a fairly traditional space looking after high net worth clients in in Western Australia.

 

David Pettit 

Yeah, that’s right. And yes, we’ve known each other for a while and along along the journey, I know always know that you’ve been party to a good dad joke or a good hump. So ultimately, today, we’re going to end up talking about technology. And I’ve got this friend over here in Perth. He’s a CEO of a large fisheries company. I met him in Antarctica a few years ago. He’s done some phenomenal things, most of it and sustainable fishing, being a carbon neutral fisheries company. And they introduced some tech, they put their supply chain on the blockchain. Ultimately, their customers could could end up tracking the origin of the fish. So the pretty progressive stuff and at the cutting edge. Anyway, the local newspaper reported on it, and said FinTech company that was scaling up. So fin like fish tech, like tech, and scales, like fish scale.

 

Fraser Jack 

Brilliant. I do love a great plan. Well done. Yeah,

 

David Pettit 

that was a double pan headline. But yeah, well, let’s let’s get to the FinTech part a bit later, and maybe share a little bit of the backstory. Yeah. You mentioned that we were a financial planning company that more often to detach. It was actually the reverse of that I’d had a career in financial planning. And then we launched a tech company, and then our financial planning sector changed dramatically. So we brought financial planning into that technology company, which, you know, ultimately ended up bringing in the licensing function as well. So keen to dive into all of that with you today. And again, appreciate that I get to speak to the pod God, I’ve got the backstory, I’ve been a private wealth advisor for about 15 years, I’ve got this fundamental belief between between the, the link in health and wealth, and that is if we can help people live, healthier life, both in terms of physical health and mental health, then they’re going to be better humans, better family members and better contributors to the community. I did a couple of degrees at uni, I did a commerce degree and a physical education degree, including exercise science, and my professional career largely followed the path of the commerce degree, helping people with sophisticated financial models, thoughts, theories, strategies, blah, blah, blah. And I was about 10 years into my career where I’ve kind of got this physical education part of my being back off the shelf and then and then really started to talk about health, and how that sits inside the other financial advisory work that we do. The health and wealth is a big thing for me. Within our business, we were working in some large corporates over here and W a big, multinational resources companies, helping their senior execs and our leadership team across their personal finances, and then ultimately having a chat to the decision makers in those companies around health and wealth and what that look like. And in the employees sense, how can we empower you as a company to get all of your employees optimized, less financially stressed in terms of their own personal finances, So ultimately, they could be more productive in the workplace. So at the absolute top of the org chart, they were clients of ours, and they gave us the Go ahead. And they they referred us down the org chart to kind of the HR and legal divisions to get the agreements in place. So we could look after leadership teams and execs, but that’s kind of where it stopped. And the reason for that is was around risk. You know, we come from an industry that was largely focused on on product. And there’s still a fair bit of stigma associated with that. And the risk that they were trying to manage was us going into their organizations and selling a product, which ultimately might be the right or wrong product, and they didn’t have the depth of knowledge to know. So it became a blanket known as an no access. So we really got to thinking at that stage. Right? I wanted to answer the question on how we could make your that integrity of advice available for the masses, and basically for free, and the only answer was technology. So the the next discussion we had with those corporates was if we came in with some technology that allowed people to basically diagnose their financial positions, ascertain what their financial wellness was, and then you know, work on creating a positive change effectively from bad or slightly good score to better or good score, then would that be something that would be of interest? So then we Yeah, we, we got a really positive response to that. And dove all the way into that rabbit hole and did some MVP, minimum viable product, testing, some online surveys, etc, push those across those corporates and then ultimately, got all of the feedback that we needed to, to kick off picture wealth

 

Fraser Jack 

to validate well, like before we go too much into that. A couple of quick questions the you were dealing with, obviously, and without naming names, or talking about personalities, large, you know, corporate CEOs, you mentioned with that personal finance, I mean, obviously, we all know, you know, having spoke to a lot of people, they just because somebody’s doing a lot of money or they’re receiving executive or they’re running a company, or they might be a CFO for a large company, that their personal stuff may still be in a mess is that is that sort of what you found it was the plumber with leaky debt. Exactly.

 

David Pettit 

So we had the CFO and our boardroom table. And part of that testing as well was also to push out a research paper around, it was called the consequences of personal financial organization. Now apparently, for a book to become an Amazon bestseller, it needs to be how to get six pack abs, or, you know, better better sex or eat more or lose weight, something like that. And the consequences of personal financial organization didn’t fly, fly off the shelf, maybe get rich quick, the other one. But anyway, the purpose of that research was to kind of let those CFO profiles know that it’s okay. And that you’re not alone. You are the plumber, you’ve got the leaky taps, but so do all of your, your colleagues, your associates and other people who hold similar roles within organizations, as you, you know, you’re managing multibillion dollar balance sheets, and at home, things are an absolute mess. So having the backstory on the research and the data and you could really, you know, bring down those walls very, very quickly in the first five minutes of a meeting. And can you just

 

Fraser Jack 

run through the research that you did in the in that space and how you went about it? It was brilliant, by the way.

 

David Pettit 

Thank you. We partnered with the Australian Institute of Management. And we went across execs and senior leaders and business across wha and asked a whole heap of questions in relation to wealth, but not many of them. were related to dollars and cents was more related to feeling emotion, wellness use of time. And you know, on a on a spectrum, where do you sit across all facets of wealth, super investment, debt, estate planning, yada yada? And yeah, we found that every everything that we probably innately knew later on, I met a lovely young lady at corner the networking event and I told her that I’d done some research to financial services sector and her eyebrows went up and then we We had another meeting and she later became my wife. So could have imagined that running some financial wellness research would later on, lend me a beautiful bride. But it did. But yeah, that that research, it was, it was a fascinating process. And the big number that came out of it was that only one in six people feel totally organized in relation to their money. Now, the interesting and scary thing about that is we did the same research inside one of the big four accounting firms, and had only one and 33 of them felt totally organized in relation to their money. point being is they they knew what they didn’t know, the one in six, who thought that they were organized, you know, broadly, they are blissfully unaware. And then those who were more in the professional services space knew what they didn’t know. And, you know, we’re calling me out, can you help me? So that that was the the advent of my career towards technology. It was fundamentally driven by improving financial wellness, which is kind of at my core as a human being. And, yeah, the research then that engagement with those corporates, which ultimately became picture wealth, which is our technology company was a pretty interesting and educational journey across across society and and humans as a home.

 

Fraser Jack 

Yeah, so here you are running a successful business, looking after CEOs and executive teams. And then you creating this thing, as you said, it was a bit of an MVP at the time as to how do we help all the other employees within that business? find their, you know, feel organized around their finances? How did you? How did you start that process? How did you go about it? How did you build something from scratch,

 

David Pettit 

so the driver of the tech was largely around education, you know, the, the financial information that was available online, and and, you know, largely ubiquitous, is quite blunt. I’m a big fan of Essex MoneySmart website, their information and glossary in there is financial planners, heaven because it goes into such detail, but the information is not tailored or customized to the needs of the end user or consumer. And it doesn’t provide any guided decision making on what people need to do next. It’s just it’s just information. So the technology was around, creating customized content for people in relation to their personal wealth, to educate them on on how to make better decisions, and ultimately do that, for free. Picture wealth, what is it, it was a tool that we put online, a few years ago, we launched the company in March 2017. And it wasn’t embedded in the name of the company, a single picture of your wealth, aggregate all of your financial information together. I don’t mean to downplay it, but think of it as a glorified Excel spreadsheet. It’s also tapping on your computer screen and computing some stuff behind the spreadsheet and saying, hey, do this or think about this? Or have you thought about this? Or why, why on earth you’re doing this. So we push the technology live and got some really great traction. That was at the advent of bank account, aggregation and transactional information, which, you know, largely had been invisible to them to the everyday financial planner in the past. And ultimately, it was very invisible to the the end consumer. As you begin to see a picture of your wealth you and believe it or not feel a sense of calm. Yeah, one of the, the users on the platform provided me some feedback directly to my inbox. And it said, and now that I’ve got my very own wealthy, which is then the dashboard, the wealth selfie that we we run, she said, Now that I’ve got my very own wealthy, my money is worse than I thought. But I feel more peaceful and calm that I can actually see it and start to understand what to do next. So the problem that we thought to solve for was just visibility, connecting disparate financial information into a single system and then ultimately sitting behind that data and information to educate and empower people to to make better choices.

 

Fraser Jack 

It’s a really interesting step. Isn’t it? Just that certainly he said even even if the certainty shows that you’re in a negative position, it’s still better than not knowing. Yeah, absolutely. And I love the love the selfie. Well, the wealthy By the way, let’s selfie let’s keep let’s keep the puns rolling.

 

David Pettit 

ads that people used to think I have a list we keep saying wealthy man. No, no hashtag wealthy look out for it. It’s going to be amazing. So yeah, that that ran for a year or so. And then and then we were thinking like a technology company. We were thinking about customer. Yeah. customer acquisition costs, we think about lifetime customer value, we were spending money on Facebook, LinkedIn ads, getting people clicking onto our platform to ultimately take them through a process that could lead to an advisory outcome. And, you know, I think this is where a lot of the, the FinTech companies, their models will have been revised significantly off the last 12 months, particularly off the back of the pandemic, which pushed the market down and, and dried up funding as if you didn’t have a model that produced revenue or allowed you to be sustainable, but you’re reliant on investor funding, then you weren’t gonna stick around. And we saw a massive cleaning out of fintechs across cross last year, or at least getting acquired by massive institutions so that they disappear into the background. The point being is that that really high cost of client acquisition in the robo advisory space, as it was was known earlier, or in the FinTech arena, is pushing people or ideally pulling people towards a product outcome. And products have to move towards free. So therefore, the financial model of those businesses becomes somewhat questionable. I’m paying a whole heap of money to attract you as a potential customer onto my platform to then sell you a thing which I have to make forever cheaper to keep up with my competitors. And, you know, you get to a point where you’ve run out of money. So we were looking at that customer acquisition costs and the business creating great outcomes for people on the platform. But then, you know, I kind of leveraged back off some of my financial planning knowledge and professional experience and mergers and acquisitions and looked at what failure meant to the future of our industry. And then instead of just pushing technology out into, you know, the great unknown through online marketing, we sent out completely the opposite direction, and that’s into those financial planners who were otherwise looking to have a massive change in their business exit and or not knowing what to do, as their next step was to give them a safe place to come to. And then now we use the technology to to ultimately unlock the dormant potential of their their client data, and provide better outcomes for their for their clients. Last year, 2020 was our second full year of trading. The business now has over two and a quarter billion dollars, funds under advice, revenues trending upwards of $20 million per year. And then last year, being the year of COVID. Well, it turns out, it’s this year as well. Yeah, we did 15 acquisitions. So we push the technology out into the great unknown. And then we want to sit here and help advisors who are a bit uncertain about their future, be they the ones that are leaving, or the ones that are starting, or the ones that just want to be optimized and have the best of breed technology backing them. And that’s kind of where we sit today. It’s one of those was the licensee, and we can we can talk about that when you’re ready.

 

Fraser Jack 

Yeah, yeah, we will. We’ll get to that in a minute. So I just wanted to, you know, obviously, you, as I mentioned, sort of earlier, you know, the one of the fastest growing wealth take advice businesses in Australia. Center acquisition, obviously, but some through, like you mentioned, unlocking the potential of the dormant potential in the existing client. Yeah. So you want to just run through how that works? Like? Like, how do you then just work out what that is? And then how do you grow that client?

 

David Pettit 

I’ll give you the extreme example, has a advisor who’s been in the industry for 30 odd years, and his client files are still paper in a filing cabinet and the corner, corner of the office? Yeah, probably a lifee. So he’s only ever sold insurance. But in order to sell insurance, he’s had to have, you know, the full depth of financial information across the whole client’s profile in order to get to an end outcome to advise on the insurance product. So yeah, let’s grab that filing cabinet. And we’ll shake it will shake the data and information out of it. And we’ll put that into a pretty sophisticated database, and then can look across that database and start to do some some pretty interesting things. First and foremost, stay on the insurance topic, we can run a needs analysis across 1000s or 10s, of 1000s of profiles at once. And provided the data that’s in the system is current and accurate and up to date, you can you know, link, sorry, let’s the sums insured from largest to smallest and choose which end of the list you started. But ultimately for the client, they potentially didn’t have all of their financial matters addressed. So the dormant potential that resides in that data, as you know, why do they have to superfunds Why are they paying the life insurance premium out of their own name? That seems like a high interest rate on their debt? What do you mean? You don’t have emergency savings, How come you’ve got money in the offset of 15 grand and your credit card. And that that stuff is it’s tiny in terms of the quality of advice that professional financial planners give, because they’re more on the headline topics. But if you can kind of shake that data and information and bring that stuff out to create some really, really quick wins for people, then that’s, that’s the process of education, you know, and it could be the case that they just didn’t understand why they would have money in their offset versus holding the credit card balances zero. Or the fact that they could have perhaps paid for that life insurance premium and and other other methods through superannuation and the likes. So doormen potential for us is working across large pools of information and using our technology, in terms of you know, all of the stuff that we’re running on the backend of system had to figure out how we can get someone further ahead. I presented to a group of advisors in Perth recently, and you know, just said to the room, put your hand up, if you’ve, if your clients have got insurance, yeah, everyone in the room puts their hand up. And I said, Put your hair, keep your hand up, if you know exactly how many of your clients have got kind of any occupation or own occupation definition. So then, a good chunk of their hands go down, keep your hands up, if you can give me the exact amount of premium that those clients are paying, you know, I probably had about 10 more questions up my sleeve, but by that stage bang, everyone’s hands have gone down. So when I talked earlier about empowering the end client or consumer with their own financial data and information, it’s the exact same philosophy that we hold across the advisory businesses that we work with under our license. And ultimately for our license. You know, what’s our funds under advice across the business today versus yesterday? Who is premium renewals are coming up? Yeah, what definitions reside inside insurance product policies that are now out of date, and that could be better. And for me, the fundamental driver is creating visibility across financial data and information to improve people’s lives.

 

Fraser Jack 

Yeah, so really being able to structure that data in a way where it’s easily visible, can be pulled up and can create a learning and create some what opportunity but also not just for the client, but for the advisor who was just opening files one at a time. Yeah. Now, tell me about the technology. Because I mean, I know there’s people sitting here, a lot of advisors have the idea that they might just design their own, go and build their own technology. Obviously, you and I both know that that technology is a bucket that you have to throw a lot of money into, and then continually fill that that bucket of money up again all the time. What sort of, if somebody’s you know, starting out thinking about building their own, what sort of tips and maybe we can talk about, you know, costs and fundraising and raising money, all those sorts of things along the way, if somebody is thinking about building their own,

 

David Pettit 

is this is this a three hour podcast?

 

Fraser Jack 

No. So let’s get let’s do the short version

 

David Pettit 

of the masterclass. first part of your question, you know, the tech, talk about it. I really look at the disparate systems that run financial planning companies at the moment, you’re probably running a Microsoft suite, maybe Dropbox, you’ve got a CRM of some description, you’ve got a revenue tracking tool, which may or may not be accurate. You’ve got some quoting software, you’ve got probably some level of business intelligence, maybe Microsoft bi running across the business, you got some stuff running through through MailChimp, and you know, fundamentally all of those things. What running financial planning looks at business looks and feels like the stack the stack around. So yeah, we I just wanted to make that all our own. So we the easiest way to think about it is we built all of those things together. And they’re our own proprietary code started from the ground up, and we now own and run all of that code as as one one system. The year I grew up in a little place in New Zealand called Queenstown, up in the mountains, lovely spot, and famous to the Lord of the Rings. There was one ring to rule them all. Yeah, I really wanted to think about what one system to rule them all might look like, as where we got to, we have written over 1.5 million lines of code. To put that in perspective, that’s about the same amount of code as it takes to fly a f 22 Raptor fighter jet. And it’s about a quarter of the amount of code that runs Google Chrome. So it’s a really The sophisticated space that we all operating in financial planning is not about just selling products, it’s about dealing with hopes and fears, and hopes and fears, drive strategy, hopes, being children’s education, planning for the future retirement, yada yada yada fears being protecting on downside insurance, wills, etc. And when you really think about the complexity of what makes us human beings, it comes back to those two things. And I believe those two things are really what we’re solving for in being financial planners. So the code base to address that uniformly on the front end of the system, which is, is what people would see when they log into picture wealth is a fraction of the code base that we’re running on the back end of the system, which really brings all of those disparate systems, the stack, as you’ve called them together onto our code. And that journey, you know, it started as a PowerPoint presentation. And I met with someone and presented that PowerPoint presentation and didn’t go according to plan. So I called up my brother and I said, you know, didn’t go according to plan. And he said, Did you include animation in your PowerPoint? As like animation? What’s that, and then kind of, you know, let’s get some stuff flying in from the side. If we did that, and funnily enough, it worked. True story. And we raised some money and have a vision and an intent. And the the strong footing of that research that I spoke about earlier, we had a MVP that we knew we wanted to bring to market. And we did. So that was really a young founders round, and friends and family, we then went through a seed round, and then a late seed round last year, where we raised about 12 million, and there’s a fair bit in the media about that we will pick 12 Have a look. But that points us now to be, you know, pretty well positioned to, to be considering a series as cap series, a capital race that we’re on at the moment. And our fundamental objective there is is to come east. I love the quote, out of the Art of War by Sun Tzu, he says, Let your plans be as dark as night and then strike like a lightning bolt. So we’re a little little wi business person a long way from the rest of Australia, Canada came from here, they did all right, we share our timezone with 60% of the world’s population. But we’re now ready to strike like a lightning bolt and coming east, and bringing people you know, into our fold, and really thinking about what the future of advice might look like together. And we’ve got a number of number of models that that represents, I ponder our future, I have a feeling that we may actually regress. And that, you know, could potentially be going back to the agency model. For those who are new in the industry sector came from life insurance brokers who had a story to tell and a policy to sell. They were representative of a product. And then we went through a whole heap of reforms where they had to walk differently, talk differently, probably start wearing ties, and then start delivering statements of advice. Yeah. And then, you know, if it’s five GFC, and ultimately, Fazio was, was the straw that broke the camel’s back. And now the regulatory or legislative burden that resides inside our businesses to run profitably is enormous. So I think what’s just around the corner is potentially an agency model. But instead of being an agent of a product, you’re an agent of a service. And if that services technology, then all you have to do as an advisor is, is feed the machine. And know that the whole back office support paraplanning advice, production, your data analytics, advice, opportunity, identification, etc, is looked after, for you. And, you know, bring us back to what advisors are best suited to do and that sit in front of clients and and help them with their hopes and their fears. So here we come. We’re in the market now, we had a big sprint through 2020 to get some scale, just like our friends at the fishing company. And now we want to we want to go north out into Asia where we were already reached out to and then come east as we expand our net network across the eastern stable seaboard of Australia.

 

Fraser Jack 

Wow, amazing. Yeah, so definitely on the technology side, it does. It does take a large bucket of money. And you know, a lot of a lot of you know, 1.5 million lines of code takes time as well, time and money and passion. I’m sure that journey is not an easy one and there would have been many of ups and downs along the way.

 

David Pettit 

Yeah, plenty of funny stories, heartbreaking stories. Joy, joy, hope. fears, frustration, all of that comes with it as a startup founder. But you know, I’ve just so strongly believe that the best time for innovation is when uncertainty is at the highest. And, you know, we can’t when I haven’t seen are set to go through a greater period of uncertainty. And, you know, the older generation who, unfortunately, you know, at their their wit’s end, you know, we I don’t want to just help the end consumers that were built to help I want to help our sector. I want to take financial planning forward. And that’s really what we’ve focused on. And, you know, how can we progress financial planning, financial education, financial literacy to become an everyday topic in all of everyone’s lives. And the only way in our humble opinion is with technology that doesn’t sit behind multiple multiple 1000s of dollars worth of fees, which your limit access to that to only only the select few,

 

Fraser Jack 

yep, yep, which the clients have to pay for. Now, it’s just think thing havens for animations on micro on PowerPoint, because otherwise, this might not have ever happened. But I wanted to just put video and PowerPoint, I think you can that

 

 

now, wow.

 

David Pettit 

Working on the microwave,

 

Fraser Jack 

I wanted to go into this idea that you mentioned around what the future of the financial advisor could look like because obviously, a big part of what advisors do, you know, they help clients with decisions and decisions, as you mentioned before, could be emotional decisions or logical decisions, and the end the software, the technology is taking a lot of the heavy lifting with the logical decisions. And then the advisors, their communication with the clients around the emotion of those decisions is happening is this does that mean for advisors, there was an opportunity that he mentioned before that had going to be making during the financial advice piece to be to do that coaching piece?

 

David Pettit 

Yeah, I mean, there’s, there’s a spectrum, think of it as a slider. On one end of the slider, you’ve got an advisor who is keen to get out, but they still want to share their knowledge, wisdom and information, either with well I primarily across across the industry. So if they’re out, they don’t necessarily need to be coaching the end client, because at the other end of that slider as someone who’s just starting their career. And so if you’ve got an advisor who’s exiting and handing over the servicing of their clients, however that may be, and then the new advisor that you’re bringing into to look after those clients, and the coaching can actually happen behind the scenes. So x advisor to new advisor, here’s the client case, here’s the relationship that I’ve had for a long time. And here’s the reasons why I’ve got three super balances running for them, because they’re each individually text parcels and there’s no information that would completely exit the industry, if you don’t create a space for those who, who were the pioneers of financial planning across Australia. And in terms of how the weather slider looks like for the people that couldn’t interact with us, it’s a different one, you’ve got completely independent on the left hand side, although you’re working with our licensing, you run your business, you run your brand, but you get access to our technology to optimize and drive profits and you and your company. And then we move it a bit further along. And that’s the part that model where we put in place all of the back office infrastructure. People support paraplanner, like I spoke about before, but we’re also acquisition on so. So you’ve got independent department transitioned, meaning that we’ve done some kind of transaction with them. And at that point, they’re either going to exit or become an employee of ours to continue servicing clients or can use it internally in the business to help coach and guide our advisors. Well,

 

Fraser Jack 

we got a lot of different models, obviously, you probably need that with 15 different acquisitions in the last 12 months. And and all of those financial advisors staying on in some form or capacity. Yeah, well, I

 

David Pettit 

think that you know, it all comes back to the client, you and I have spoken before about goals. And let’s talk and talk about it now before I steal your thunder and claim your term but right, you refer to it as goals under management. We track funds under management as a sector. But you track GM. Can you tell me a bit about that? And then, you know, that’s fundamental to what we do, but I just love hearing it from you. Yeah, so

 

Fraser Jack 

so that’s exactly right. So the idea that you can you can walk into any particular place or talk to a client or in media and you can say, these are this is the exact amount of goals that we have as a practice under management. You know, we hook up to this many clients, we look up to this many goals. And this is our goal and our management, our measure of success. And if you’d like you can really just say, look, we’re trying to get that down to zero that’d be the ultimate right everybody achieving the goals. That’s never gonna happen, because they’re always going to be more goals to come into place. But that and the concept of you know, how many goals in the last 12 months did you help your clients achieve? You know, that’s the other thing, you know, how can you just say, what we’ve achieved in the past, as a business, as a licensee, as an industry to be able to start talking about the fact that we’re looking after human emotions, human goals as an as a profession, not just looking after the unemotional pie while the money part of it?

 

David Pettit 

Absolutely. And GM makes clients more, come on. Is your joke. Sticky?

 

Fraser Jack 

I’d forgotten the answer to that one.

 

David Pettit 

But yes, it was one we prepared earlier.

 

Fraser Jack 

Earlier that GM makes clients sticky,

 

David Pettit 

correct? Yeah. So yeah, that’s, that’s an awesome way to think about it. Because, you know, coming back to the comment of hopes and fears, it’s all about goals. advices, about strategy and way down at the bottom of that, as this product sector needs to move really, really quickly away from product being the thing to having the consumer or the client being the thing, and then reaching back across across sector across industry, to see which products can help help those girls come to life.

 

Fraser Jack 

I think it helps with everything to do with, you know, FDS with opt in with you know, what, what service you’re providing for the fees are charging, there’s just, you know, something moving somebody towards the goal is part of the service, you’re offering. Just a review of their Superfund

 

David Pettit 

well. And beyond that a Fact Finder is not actually a thing, I reckon, somewhere in Australia, there was a conference and someone stood up and held a data collection document at the front of the room and waited in everyone. And then it got adopted and then got called a Fact Finder. And then we as financial planners spent a couple of decades sitting in front of people for an hour and a half, asking them to just spell their middle name and, you know, boring, blunt data that can be collected almost at the blink of an eye digitally now. And you know that that process needs to change. So the reference, the Fact Finder does not reside in the legislation anywhere. You know, we’ve got Craig, who’s working with us who spent 14 and a half years with esic, he’s joined as our Chief Compliance Officer. And yeah, it’s fascinating, when you really, really dive into what the regulations trying to help us do, and ultimately, it’s just saying, you know, your client, whilst we know that’s an our business, and it’s a checklist that we we must adopt, how about you get to know the data at arm’s length, and at least in a trusted way, but get to know your client or at a human level and dive into their goals and objectives? And then you know, what scoped in what scoped out? And do we have consent to provide you across the areas that we think should be scoped and that you potentially don’t need advice on? And you know, that’s, that’s the future of our sector.

 

Fraser Jack 

I think that financially was around before financial services reform kicked in 2001 2002. Because it used to be the information that you will put in the old customer advisory board before we had SLS. Yeah, it’s a sort of a hangover from a previous regime if you like,

 

David Pettit 

yeah. So you know, what do you what do you care about? What does success look like? Yep. Who’s important to you? Yep.

 

Fraser Jack 

Now I want to talk about I want to talk about the concept that during your acquisitions and process, in the last couple of years, you ended up with acquiring a licensee? We did. I want to talk about how that happened. And also, what you’ve turned that into

 

David Pettit 

Sure. We were looking at it. Yeah, it’s a bit like a bit like bacon and eggs, really, the chicken was involved, but the pig was fully committed. So we built the tech, we got the financial planning arm of the business going, but then we really wanted to commit and take over a licensing offer, so that we can make the most technologically advanced licensing offer available across Australia. So that was a transaction which occurred from the end of last year. The transaction settled on the 27th of March, which was four days out and the bottom market, bottom of the market, mid lockdown COVID at its peak, and none of the shareholders on either side, the finance ears, the lawyers, the bankers, or key directors across either business or could be in the same room. So a fun educational process there. But you know, like, like our industry, when we’re COVID taught everyone to bring forward about three or four years worth of digitalization into a two month period. We got it done. And the premise behind that transaction is that leadership team, particularly Mark who, who ran that licensee and now joins us as our chief operating officer has a very, very aligned belief in what we think the future of advice is. And he, he was completely there with the vision he was missing the technology piece. So on completion of that acquisition has become a meaningful part of our our org chart and our company as a whole. And that is to do what I’ve just said. And that’s bring the most technologically advanced licensee out to the country. What does that actually mean? Go back to my comments before the wealthy lets mom and dad Australia see their wealth. The super wealthy let’s financial planners who are working with us see the wealth of all of their wealth fees. guys might let’s begin. And you know, the superwealthy is acid, the licensee level, you know, what can we help you with in terms of getting data and information together that’s otherwise been through a third party provider and you didn’t have direct access or control to the ownership? Or will use of that data and information and bring that together? And then, you know, come to your business and say, you know, here’s some other stuff that you could you could improve on? Yeah, I

 

Fraser Jack 

was gonna, I was gonna ask you about this exact point, because I mean, the data has often flow through two or three different stepping stones before it gets to the financial advisor. That’s sort of the premise of why it’s always been untrusted or late, or we’re not sure about

 

David Pettit 

it, you can’t trust that it’s an accurate and you can’t have it fade straight on to advice documents to know hand on heart that you’re dealing with real source information. So the lesson for us is when we allowed clients on our platform who could connect to up to 22,000 financial institutions across the world to, you know, bring in historical spendings, or super fund balances, or share portfolios or everything, you know, really at the consumer side, we wanted to go to the other side. And that’s to connect straight into the institutions across what are the clients that were ultimately the servicing advisor for and connect directly into those institutions are live information so that we can hand on heart have have integrity of data and information that can drop straight on to advice documents, and we can know it and trust it, and you’re run analytics across it to determine if they’re in the right thing or not.

 

Fraser Jack 

So you’re saying have solved that?

 

David Pettit 

Yeah, that’s massive, its massive, we are not at the end of the list by any means. And in connecting to 100% of the institutions. There we go, just just think the old Pareto principle 8020 80% of your clients are going to be sitting with 20% of the providers. So we’re in that 20% of providers at the moment, but we’re starting to see closer to 80% of the data. That ultimately, then as the most technologically advanced licensee, we want to work with advisors on that continuum, either an independent model, apartment model, or transition model, or an employed model, to work with us in leveraging data and information to provide better advice in all the while. And the business is pursuing what we started, you know, a number of years ago now, which is the employee financial wellness, you know, where we’re picking up 1000s or 10s of 1000s of clients around point play financial wellness program, that people are coming under the license not only to get to use the deck, but we want them you know, if they following the other methodology and how we provide advice, we want them to help us serve as clients that’s less than our fair employee financial wellness program, which is larger than we have resources to get to. So that’s kind of where we sit make the lightning bolts hit, we were in market we we spent the time and energy quietly confident that we we have a solution for the future. We’re here now with that solution. And you know, we will bring some marketing and and presence across East we do have an office in Sydney, Melbourne, Adelaide as it stands with people on the ground there, but we really want to scale up for the purpose of getting to, you know, the 94% of Australia that it remains unadvised I made that statistic up, by the way. I reckon that might be about right, at 20 and an 8020 of the ones that are advised because a good chunk of them out. Yes,

 

Fraser Jack 

it’s an interesting one that what is an ongoing fee relationship? Is it a you know, is one piece of advice one off one time you know, it’s very difficult to sort of say but I think I’ve got a bit of a sign that 10% of any market will pay 10 times the price because its prestige and often financial advice the ways it is at the moment is that prestige in the market it’s the it’s the first class airlines and Prada handbags of the industry.

 

David Pettit 

Yeah, exactly. And with with Craig’s depth of knowledge from the regulator, you know, we bring that into the tech, think karaoke. Follow the bouncing ball as you sing along. The technology wants to guide you and your clients through systemized think of a process production line or assembly line almost where you know what you need to do next so that you’re compliant, you’re meeting the regulatory requirements that ultimately your client is getting frequent touch points along that production line to get to be in an ongoing service relationship, probably annually renewable. Because we know that’s just around the corner. And yeah,

 

Fraser Jack 

there were all these little stepping stones, the bouncing ball, I can just visualize the end of the song is the financial advisor standing going, what we do next,

 

David Pettit 

the Jetsons, what’s the jet?

 

Fraser Jack 

Sure, that’s exactly the visual, I’m getting. Um, so tell us about, you know, to, you know, two and a bit years now in as you as you’re going, how many clients have you got, or how many clients you’re looking after with that the picture wealth with the wealth wealthy, and in advise clients,

 

David Pettit 

yeah, is 40,000 clients across the business now. Which is, which is pretty quick growth, you know, we’re now at the we’re at the point where we’re aiming to get the technology into 100% of their hands. We’re not there yet. And, you know, we are talking to prospective investors in the company at the moment. And, again, there’s, there’s a deep topic here, which we could go all the way into, but, you know, we could have gone deep tech and building some AI, widget toy thing, which people would have plowed money into, which ultimately wouldn’t have made money, but it would have solved the problem that we went and learned from the other end, and let’s get to scale first. So we’ve got a pipeline ahead of us, which will take us out to about 150% of the clients that we have at the moment around about 100,000 clients across the business. And we deploy the technology across those and then we go deeper. It once the data and informations there, then you’ve got the balance sheet and the p&l to go deeper on the tech and bring the AI and the robots and the machine learning to the to the next level from what we’ve done already, you also start to see a different shape of your your p&l, I see a profit and loss statement, you see new income lines coming in, where those income lines are related to Software as a Service, as opposed to financial planning, advisory services, which also equal FDS. And opt in. It gives you the ability to introduce new income lines into your business. And yet, it’s us now to roll out the tech and and those software as a service agreements across our existing client base and and the work in progress or the pipeline That’s just ahead of us with some pretty big ambitions ahead. But yeah, I like I like the fact that we’re here in Australia, it’s the most heavily regulated environment in the world, which also means it’s, it’s hard. But if you can solve it, then as you globalize, it’s really just about decreasing complexity. And knowing at the core of the business, you’re still dealing with the same fundamental problem or opportunity. And that’s just helping people.

 

Fraser Jack 

Not sure the answer, that pretty much does, I’m blown away, and I and you know, you’re hitting towards 100,000 clients in only a few short years is, is pretty incredible, and totally goes to show what is possible and smashing a few glass ceilings on the way through congratulations. Now, if somebody wants to continue the conversation, what’s the best way they can get hold of you? And you know, talk about licensing or or anything today?

 

David Pettit 

Yeah, I mean, you’ll find me on LinkedIn, I love to communicate, where we’re here to help. If you’re in the industry, and you want to stick around, we’re here to help if you want to get out. We’re here to help. And or you can just ping us through our website or on email, which is info at picture wealth.com info at Epic Wealth calm and reach out, I’m a phone call away, I want to talk to people, I want some momentum, I want to, you know, fundamentally help the advice community to do what we’re all sitting out to do as somewhat in a disjointed manner, historically, and in a more cohesive manner as we go forward and really lean into the fundamentals of probably everyone who’s listening to this podcast. And that is how can we all learn from each other and create better outcomes for consumers. So I absolutely invite people to reach out whatever the topic may be. Wonderful. Thank

 

Fraser Jack 

you. David Pettit really appreciate you sharing your story with us and I really look forward to seeing how this pans out over the next couple of years. I’m excited.

 

David Pettit 

Thanks very greatly appreciate it.

 

Fraser Jack 

Well, there you have it, another episode of the Expert Advisor podcast. Fraser Jack here joined with me, Emily lunch. Hey,

 

 

Fraser, how are you?

 

Fraser Jack 

I’m fantastic in a fantastic moment where we get to do some shout outs,

 

 

like I say, my favorite time of the week. Alright, so today, I want to give a massive shout out to x y advisor, Thomas Lyon. He reached out to Xyz in particular through x y plus when he was looking to join a new practice when he moved into state from Brisbane to Sydney. And the reason I was Give him a shout out is because he sent the most amazing message through earlier this week and I want to quickly read it out. It’s he said super grateful that I found x y, I first joined and was using it or sorry I first joined when I started out as an undergraduate in financial planning and it gave me my first insights into the type of people that financial advisors are and what day to day looks like as a career. Recently I reached out to the guys at x y during my move into state and Emily put me in contact with the person who is now my new employer super cool that we’ve got this group for financial advisors amazing stuff great to be able to make those connections and I know Thomas was looking to join a forward thinking practice where he could become a real asset you know add to the company and deliver great value to clients and to be able to see that come about is amazing such

 

Fraser Jack 

a feel good moment you know essentially for for Thomas but also for you him to be able to connect that and you know and help Thomas’s career long I’m ever having a having a beer with you, Thomas at the x y Christmas party on the Gold Coast at the end of last year. So it’s really good to see that you’ve found your feet and congratulations.

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