June 1, 2022

The 12 Steps of a Managed Accounts Journey #4 – 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 discussing the 12 steps to implementing managed accounts into an advice business. My name is Fraser Jack. And in this the final episode of four, we cover steps 1011 and 12. In the change management process, in step 10, we think about just how to practically implement this into a practice. In step 11. We talked about the new client experience and all the things that go with it. In step 12. We think about the post transition and really looking back afterwards and measuring the success on what are those measures of success? This episode rounds out the series. So let’s bring this series home. Thanks for joining me again, Simone, we are talking about step 10 of the 12 step process for change management. I guess there’s the steps really around the concept of getting into the weeds and understanding some of the tactical things that you do to implement these any particular change. So tell us about the this, this these moves that you made to put both licensing and managed accounts? Where did it start from you? And how do you actually implement this sort of stuff.

Simone McMullin
So for us, it’s part of breehn people to support the process. So with the FSL, was really important to us that we had a legal team or compliance team or power planning team, and that we were able to rely on them for the various pieces that we needed to deliver. So there’s two responsible managers in our in our business. And we oversaw the whole project, obviously, but it was about bringing in experts to help us execute on things properly. So it was certainly not wanting to change. And I would encourage everyone to to dispel the fact that you will save money by starting up your own license. In fact, we invested heavily in the business at that point, to make sure that we had the right structures, the right people giving us advice, the right person applying for the license, building the policies and procedures, and then having a way to, to manage that ongoing ourselves.

Fraser Jack
Yep, so definitely, that’s the first step resource up, sort of invest in invest in the business itself. Don’t try and do everything yourself. No, no, definitely not. And talk us through the process. Once you you know, you obviously have to have a strong investment philosophy or belief around what you’re doing. And you have mentioned in previous conversations around the concept of using MDA, sma or industry funds, depending on how did you create that structure, and then work out who was going to be best in what,

Simone McMullin
yeah, we spend a lot of time on this. And in fact, we’re always building an evolving, we’re still tweaking it. But one of the decisions we needed to make was did we want an annex wealth managed account? Do we want it branded annex wealth? And we decided that we didn’t want that? Because it was, I suppose going against our belief that we’re focused on goals and strategic advice. We didn’t want it branded in that way. So we made that sort of core decision. From there, it was about understanding of the clients that we have, because we have around 530 client groups, and there’s, you know, multiple clients within that, but at a client group level, about that number. So it was about is this going to be right for all of our clients in terms of a MDA solute solution as an example. Now, it turns out that it’s right for 50% of our clients, because we’ve transitioned half of our client base to that solution. So there’s certainly other client segments that it’s not necessarily right for, but in that respect, it was important to us to build out well then what what is right for this kind of client group. So based on this client category, at this advice stage at this life stage, what is it that they’re that they’re looking for and is going to be suitable to them? So we’ve we’ve gone through a whole pro system that’s an investment committee level. So the head of our internal Investment Committee has undertaken that analysis to understand that if we’re looking at a smaller account balance with these type of needs very sensitive, what are our solutions that we have. And we felt that that type of guidance was important to give advisors so that we were following the same process, no matter whether we’re looking at an MDA and SMA and industry fund, it starts with the client uncovering what they need, and then looking at what’s the best available in the market. And this is why we’re giving these couple of solutions, our tech for these reasons, and then making sure that we’re constantly, you know, reviewing that and updating that and making sure not being afraid to make changes, where there’s a new, a new product on the market, where there’s something that’s changed, not being afraid to go back and, and tweak that.

Fraser Jack
Yeah, and I’d imagine having a fairly clear structure around that, from a both, you know, for compliance, our end point of view is pretty is is obviously safe. But from an advisor point of view, it probably feels like that takes the pressure off them. With the choice, it’s like know that we have a system and you fit here, and so that you’re definitely in that bucket,

Simone McMullin
definitely give them guidance and give some support gives them the confidence that they need, that all of that vetting has been has been completed. And also for us looking to bring in new advisors to our business, to be able to give them a framework and say this is the annex wealth way of doing things. This is this is the guidance that you need and the support that you need to get things to get things right.

Fraser Jack
And when you come up with that framework and structure, there’s obviously a lot of work involved in that, who helped you do that.

Simone McMullin
So started with the head of our investment committee, who was, you know, started the business with me back in 2015. So so he owned the project, but he brought him into it all different sorts of stakeholders in our business. So we looked at the platform provider gave us a lot of insights into into what’s happening in the marketplace. We looked at external providers, such as Core Data, these kinds of places that that look at what’s happening and giving us a lot of statistics around that. And then just a lot of research on the ground with various contexts that we had in the industry, working at different fund managers and bringing that all together, and also looking at external research houses, including Morningstar. And in one sec, that was important to us as well.

Fraser Jack
Yeah, well, that turns I love it. I love the term we used to own the project. Obviously, it was a project. It was owned by somebody, and in structured that way, and pulled all the research together to make it logical decision, and to say, yes, thanks so much for catching up in this particular section, we look forward to catching you in step 11. Dave, thanks for joining us, again, we are at step 10 of our change management process where we start getting into into the tactics a little bit and the How to and those sorts of things. And we mentioned before we had a conversation with you before about having an understanding of your value proposition and investment philosophy. But then I guess the next step off the back of that is to actually then working out, you know, how do you implement that? How do you choose a structure? What do you choose? Why do you choose it? All those sorts of things? What was what was your journey? Like?

David Moloney
Yeah, and this is we’re trying to understand the differences. And the nuances between all these different structures is really important. There’s managed accounts, but then within Manage Accounts, you’ve got NDAs, and you’ve got SMEs as well. So I guess the clear distinction is that an NDA is a service. And we really do well, we are a service orientated practice in business. So the MDR really resonated with us that it was a service. Also, the barriers to entry in terms of if we wanted to build a particular style, a portfolio, you know, a client could have a really ethical tilt or an ESG focus, or whatever it might be, we could create an investment program for those clients, you know, with $10 million. As an example, if you wanted to build a financial product that was tailored to that particular group of clients, you know, the threshold is extremely high right now, and we just simply don’t have that. So that figure a plucked out of the air by the way, but the point was, the barriers to create something and tailor something to the client is quite low within the MDA environment in SMA obviously, is a financial product. Again, that’s there’s nothing wrong with that, and they’re perfectly fine. And they give fantastic outcomes. And what we do like about SMEs is the transparency and the see through the look through. But it still is a financial product, and we do like the whole accountability to our business. And if we can just tie it back to that. That’s probably the key driver why we went down the MDA path.

Fraser Jack
And just while we’re on there, talk to me about branding around what you did. Around branding with your MDM.

David Moloney
Yes, so we branding wise, it was nothing too sophisticated, it was our business name, followed by, you know, the type of portfolio it is. So we wanted to make it not to confuse the client. But we did want it to be clear that the portfolios were delivered by us. And that we were actively managing and making our consultants accountable to the state of mandates. And the great thing is that the the naming conventions are filter through to a product level, while it’s on the platform, you can see our name, they’re on their phones, they can see our name there. So all those things, try to, you know, not only describes what we’re doing, but also enhances our brand as well.

Fraser Jack
Yep, yep. Sure. And now, obviously, when to talk about not, you know, the the concept that not every client puts everything right away, even even if you’re dealing in such as sharp niches as you are, there’s still going to be clients that don’t fit one or fit the other better. How did you go about that process, then? Then go right, well, this type of clients can be good here and this type of client can be good there.

David Moloney
Yeah. And it all boils down to our conversations, right, and ensuring that from a best interest perspective, we don’t want to introduce something that the client might deem too complicated, right? So we’re extremely mindful of that. There’s got to be a clear reason why they’re using it. So do they want something that is a bit more active? For starters, right into? Are they tired, poor? You know? And can they implement these changes themselves? And if some of these things are no well, then this is where the service is really a benefit to the client. But some people are extremely capable of doing certain things themselves, or they don’t understand the structure. So we don’t want to roll everything out to everyone. It’s only to where there’s a clear best interest narrative there.

Fraser Jack
So did you end up spending some time creating a question set, then?

David Moloney
Yeah, that’s right. It’s not a checklist where we’re just going to, you know, just ask standard questions, it’s more to help develop conversation. So it’s extremely natural, not forced, but we just want to get to the bottom of what our client’s needs are, and what the pain points are, and trying to figure out, you know, what service is appropriate. So the MDA is typically our premium service, you know, we’ve got, you know, basic services as well, where we will not go down that into that space.

Fraser Jack
Yep. And I guess that also helps with if you’ve got a structure in place it helps with, as you bring advisors on, or new staff start, and everyone can understand the structure.

David Moloney
Exactly. And so just Yeah, touching on that, we obviously, the we do have a documented process around, you know, who it’s appropriate for or not. But at the same time, we don’t want to be too prescriptive, because our advisors are highly skilled themselves. And they can make a distinction as to what is appropriate and what’s not appropriate. So we don’t want to be too prescriptive there, we just want to arm them with as many tools and collateral as possible to make an informed decision themselves.

Fraser Jack
And just take us through the execution process. I guess it’s um, did that add efficiency to the businesses? Where does that sit in this in this scheme of things around the actual implementation and the changes in the work involved?

David Moloney
Yeah, extremely. So part of our business was, I guess we’ll call it the old world for backup, for lack of a better term, in the sense where you might have a platform and you’re selecting funds, and you stick to a model. And then you update that annual review, right? When you needed to, when something needs to be changed, the ability to change that is extremely time consuming, right? Not to mention by the time you get to the 100 client, three months or maybe past and arguably, it’s too late, right when that best idea hasn’t been rolled out. So we’ve created so many efficient efficiencies where our best ideas are implemented immediately. And that’s where we that success, right, we spoke about the 65% kind of comes from because you can have a really good idea. But if you’re not quick enough, or timely enough to implement it, then that good idea can be wasted. And we do have a really good white paper on that and the impact of those delayed investment decisions. But so we did have that in their business, and that’s created enormous efficiencies there. So we feel like we’re still on that journey. But we feel that we’re getting better and better each day as a result of implementing this structure.

Fraser Jack
Hey, Mel, thanks so much for joining us again, in this particular part of the change process, I want to get a little bit deeper into some of the nitty gritty around how do you work out what you were going to do, like, what’s the what’s the structure you want to use? You know, how does that fit with our investment philosophy or beliefs? And so when it comes to, I guess, the rubber hitting the road, what what are you seeing?

Melanie Bennett
Yeah, I think what I see is people tend to have a preconceived idea on the type of structure potentially without doing enough DD into why that specific structure. So I think deciding on the investment philosophy, and the investment partner is a really key thing. I actually think the structure is potentially a second step, because you would shave mostly the outcome you can do it in in different ways with both of these vehicles, it will depend on your platform provider, how your investment partner works. With technology, where it is you can typically do both with an MDA, you need this on your license, but there are also third party, MDA providers that are phenomenal. And you don’t have to put that on your license, you might decide to put it on your license, you might decide to do smees, you might also decide that you want an SMA, what we call off the shelf versus on the shelf. So investment managers put their best ideas together in a portfolio that you can already just buy. But you might decide that you want a bespoke SMA. And now that’s a larger undertaking.

Fraser Jack
And I guess there’s a lot of decisions to be made. And this can be a little bit confusing and confronting too. And this is again, a process of just asking lots of questions and trying to work stuff out and not giving up.

Melanie Bennett
Honestly, as simple as googling like managed account structures. There’s videos managed account 101, like what is an MDA versus an SMA? Don’t let the jargon fool you. And again, ask us ask every single one of your referral networks, your stakeholders, your platforms, your investment partners, everybody will be able to take you through this as well, what isn’t isn’t possible, and the pros and cons of each here. So asking around that structure is really key. But don’t let the jargon overwhelm you. Again, once you get your toe in a little bit, it’s a lot easier than you think.

Fraser Jack
Tom, thanks for joining us again, in step 10 of our 12 step process. Look, I think in this step, we really need to get into the nitty gritty into the weeds into the into the tactical into the how to implement that in the first place. So we’ve been talking a lot about the concept, but let’s get into the How to advisors actually go through and put this in place. Sounds good. So let’s start with let’s start I guess with the you know, they’ve got the strong Phyllis, investment philosophy or belief in place. That what do they need to do then to actually adopt it.

Tom Schubert
So there’s a number of different structures in the market. So there’s a managed discretionary account, or separately managed account, MDA, or SMA are the two major structures that are available. And so firstly, you need to decide which one you’re going to adopt. MDA, I think presents a little more like a service. It’s an investment program with embedded within a statement of advice. And so, again, depending on your other considerations around structure and platform, the ability to deliver it in a way that doesn’t seem that different to the existing advice process can be powerful and help the transition process. SMA is often an issue, you know, it’s a PDS to manage investments game and its issues generally by one of the major platforms. And so, you know, you can go to the platform and have an SMA or a CT or this is in the build your own sort of scenario. There are many SMEs that you can buy straight off the shelf, they won’t have your advice practices brand on them, they will have you know, the brand of the the investment partner such as German. However, you know, that may be a good first step for for many practices or smaller practices looking to adopt.

Fraser Jack
Okay, so this is a this is a really, really integral part of it, choosing one or the other, or can you choose both,

Tom Schubert
you can choose both. I think in the end, you need to make a decision, we find convictions really important here. So conviction in the investment philosophy that you adopt, and even if that’s adopting our investment philosophy, understanding it and having conviction in it, having conviction in the structure, having conviction in the platform, really believing that the total solution you’re presenting to your clients is the best that you can best that you can be and I think that resonates with the clients the clients buy into that. If you don’t really understand whether it should be MDM MBA or SMA if you don’t really understand which platform. You know, I think that that gets lost in the conversation. And the clients don’t buy into your conviction. So, in the end, some of those considerations don’t matter. It’s just it’s a managed account, it’s a better it’s a better solution. It’s a, it’s a holistic investment solution tends to be more important than which structure or which platform platform necessarily.

Fraser Jack
And what are some of the big considerations for advisors making the decision? What do they what are the some of the things that they hang their hat on when it comes to that choice,

Tom Schubert
the perception around the product and theirs, and often the brand. So particularly for larger practices are north of $100 million, the ability to white label that they still irrespective of whether they have the ultimate decision making, they want something that they can take to their clients and own as their own. And so the white labeling is important. And you know, the number of different, you know, features and functions, I guess, that come around the different types of portfolios or flexibility within the mandates is an important consideration. And sometimes in MDA, there’s more flexibility there is in SMA, which can be more rigid.

Fraser Jack
Do you see a certain size of firm going one way or the other, we

Tom Schubert
were pretty thick. They partly driven by the platform and partly our own is that we say saba 100 million dollar practices, they’re not really at a scale to build something from scratch. There is a lot of upfront legal and operational work that’s involved in that that has a cost. And so under 100 million, you should be thinking about adopting like a great solution off the shelf. Whereas over 100 million, you can start to think about potentially having some say in the design of that. But also the ability to put your brand friend on the solution, if you will white label the solution.

Fraser Jack
Yeah, I guess I guess Licensing can often have an effect on it to licensing even things like professional indemnity could have a say in this.

Tom Schubert
That’s right, as well as licensees. So if you’re independent, obviously you can choose but different licensees we find in the market have different preferences around structure and the way that it’s delivered as well. And so you may have to lean one way or the other depending on the view of your licensee.

Fraser Jack
And what about the inside the practice the level of the client, whether they’re, you know, sort of, you know, mums and dads High Net Worth ultra high net worth, that obviously has a say in in which direction and advice might go.

Tom Schubert
It does. It’s actually I think I misspoke a little bit earlier, around some of the misconceptions. But I think that in the end, people think that high net worth clients want really tailored portfolios, and so that often the managed account is just suitable for that low balance clients, because they’re thinking about cost to serve and efficiency. So I’ll use a managed account for the lower lower tier of my client base. And I’ll stick to, you know, tailoring bespoke portfolios for the higher end of my client base and, and we sort of say, Well, really, is that the right way, because in our view, the best 7030 portfolio that you can have, the best idea should be suitable from the wealthiest client through to the smallest client, best ideas or best ideas. And so, you know, potentially, there’s ways of sort of, you know, segmenting the client base and delivering slightly different service models. And so maybe with your, you know, high net worth clients, you may incorporate some satellite opportunities, maybe there’s some other growth investments or wholesale investments that you can offer to them, but really, with the managed account, the best 7030 portfolio for example, sitting at the core of that solution, and, and so again, it comes back to adopting a consistent philosophy across your business and setting the market narrative and, and the communication strategy. If you segment your client base and think that you know, the managed account is only going to be suitable for you know, the bottom 25% or 50%, then again, you still need him to come up with a bespoke way of managing the other half of your business and you’re kind of missing the whole point, what we’re really trying to do is transform the way in which deliver investments to your whole practice, and deliver consistent communications from your practice to all of your clients that apply equally and I think that’s comes back to the business objectives and what’s best practice

Fraser Jack
you know, doing that obviously, there’s a bit of work in investment and changing that with as you said earlier, that you know, SOA it’s and things like that. So this to me sounds like it’s a really busy 12 months, what’s the expectations around for advisors around what the actual practical implementation process is going to take within the business is it is it like taking one step back to take two steps forward? Or is it like in there to scale up their their their practice,

Tom Schubert
do interesting I think the first quarter it certainly feels like one step back two steps forward and that is just awning out the process. And partly it’s, you know, understanding and getting better at the conversations with the client. But really after beyond that, once the power planning team or support team and the advisors are up to speed and having the conversations it is it can be rolled out effectively Over a year, on the regular client Reporting Site or review cycle, if you will, really in the end, you’re going to have to continue to deliver on the next 12 months, a number of stagnant advices, a number of records of advice. And so if you’re doing that, you might as well be delivering a statement of advice that actually results in, you know, a material change for your, for your client and for your business. Because if you don’t do it this year, next year, you’re still going to be producing the same advice documents, fast forward 12 months having done the hard work, you’re going to be going into reviews producing a lot less ROI and a lot less SLA s, and you will get the efficiency dividend from review one. And so yes, sure, there’s a little bit of work. But usually, like all these things, it’s we find it’s just in the beginning, it’s just ironing out, you know, some of the issues and getting everyone up to speed and understanding. And then after that, we tend to see a real acceleration in the adoption throughout the practice

Fraser Jack
on just step 11. Now, when we talk about the client service, enhanced mints, we’re obviously talking about client experience here. This is a big part we’ve talked about in the previous sections, the structure and the advice, but we really want to get into the you know, what’s in it for the client. And what they get out of it, of course, step 11. We’re in the process, we’ve sort of made the decision with mood, we’ve worked out how, but talk to us about the relationship with the client, and then their thoughts and feelings.

Simone McMullin
Sure, it is a big change for clients to move from, you know, sitting with an advisor, and it’s in the adviser seeking permission to make an investment change, versus an investment change happening, and then finding out after the fact. So we were very conscious of this when building the new investment service. And we we, we make sure that clients are communicated in a very timely manner, so that when changes happen, they’re notified on the same day, so that they’re given that benefit of the insight into why things are happening. And then it also gives them a sense of control and information, I suppose the more information they have, the more control they feel, the advisor has, and they’re partnering, you know, obviously partnering with the advisor to get the outcome. So we were conscious of that change that that clients may feel as though Hang on, or was in control of these decisions. And now they’re just happening. But our experience and feedback from clients has been quite opposite to that, in that they feel very informed. It was important to us that the communication from the portfolio manager was quite onpoint. And they’re very open to us giving them feedback about what clients want to hear. But breaking down the jargon and explaining to clients this move has been made for these reasons. And it’s been executed was quite it was quite important.

Fraser Jack
Yeah, it feels to me, like if I put my client head on that, you know, keeping them informed is one thing, but I guess the the feeling of inclusion of them being included in the decisions, yes, has been made. And it’s been implemented, they get told straight away. So they’re feeling like they’re included in the in the conversation as it happened.

Simone McMullin
Definitely. And part of the benefit of the managed account is that execution is is happening straightaway. So there’s a sense of things have happened, things are shifting, and now we’re executing. And it comes back to the point around the inefficiencies that the client used to experience in terms of how that was rolled out to when things are identified. They happen reasonably quickly. Yeah, I think that that has helped the clients to feel comfortable.

Fraser Jack
And this again, forms California, you know, best ideas at the time.

Simone McMullin
Yes, that’s right. And there’s no real surprises for clients, once you get on that, that that wheel of communication. And we really make sure we have a monthly communication with clients, and then a quarterly communication that is, is more detailed, and then the quarterly investment webinars as well. Because if they understand the themes, and that the macro themes as to what’s going on, when things are executed, there are no big crazy surprises. So because we’ve already talked about a certain theme playing out in investment markets, and then is executed upon so at the moment, there’s been no big surprises, which would be nice if it stayed that way.

Fraser Jack
Fair enough. Now, in communicating to, you know, larger groups at scale and you know, 500 odd, you know, client groups. Talk to us about how important digital adoption technology. How important is that is the role that technology plays in communicating to that many people at once.

Simone McMullin
Yeah, really important. So we use MailChimp through x plan, and that’s been to set up it was relatively messy to set up. But now that it’s all set up, it’s running quite well. So it’s really important that clients all clients get the same information at the same time. Also, because we offer a number of different managed account solutions to clients, it was important within our software that we could flag the client for which particular communication They get so all of our clients get the same macro view of the world of what we think the world is looking like. And then underneath that it’s tailored to which investment service they’re part of. Well, so

Fraser Jack
that was, as you mentioned, there’s quite an intense set up. But the benefit of those is pretty, pretty decent imagine.

Simone McMullin
Yeah, that’s right. And I think it results in more customized communication, which, you know, is important from from how the client feels when they receive that.

Fraser Jack
Yeah. And do you find that that communication is a is a, probably a key to clients, talking other clients talking to other clients about you or referring other clients to you?

Simone McMullin
Definitely, definitely, we’ve had about 30% of our new business this whole, the last 12 months has been from client referrals. And we’re quite surprised by that, given the extent of change we’ve put these clients through. So we’re pleased with that, and would like to increase that where possible in the next 12 months, but a lot of it comes from, from that communication, we believe,

Fraser Jack
David, thank you for joining me, again, we are up to step 11 of the 12 step process. We’re nearly at the end. Let’s talk about the concept around client communications. And and, you know, the user experience has been highly focused on over the last few years, as we’ve got that UX term came out of the tech world. Tell us a little bit about your business and the communications that sends in the ongoing information that’s provided to clients.

David Moloney
Sure. So obviously, through platform, you get an app as a starting point. And all that communication kind of gets faded through that. But the key thing for us, is our communication program that we roll out. And we do shedule it, we map it out for the full year. And we say what bits of communication are we sending out at each point in time, and we do that at the start of each year, we use Campaign Monitor, to roll our digital marketing, communications, not marketing, I should say but our digital communication, and what you’ll find is our any one time I’ll read rate is about 85%. That’s because people are extremely engaged. And we’ve done things we’ve sent mess emails out before and you know, the engagement might be 5%. Whereas as everyone aims to read it, they may not read it one month, but then they might read it in the next right. But they definitely are reading these documents. And we can see that right on the backend. So whether we don’t necessarily need to ask our clients whether they’re like the repeatedly reading it. So that’s a fantastic bit of validation for us. So using some bit of technology there, I believe is really important. Also the look and feel. If you’re into branding and those type of things, you want something that has a great interface that looks slick. For us, we want it to look slick and professional. So Campaign Monitor is great in terms of providing a really good interface, you can make really high resolution and good quality images in a lot of the documentation that we sent out. So it looks good on a mobile tablet, or your standard email on your desktop. So that’s a little bit of an insight into how we run our communication program.

Fraser Jack
Yeah, I love I love the engagement rate from the clients, it certainly is amazing thing in those sorts of open rates when it comes to sending out content and or information. Congratulations on that. And that just goes to show I guess that that’s a real, you know, combined effort between those ongoing regular comm communications, as well as you know, the regular review meetings spot on. Now. Thanks for joining me, again, we’re in step 11 of our 12 step process. And we’re talking about the service enhancement. Obviously, we’ve been through the process of making some changes at this point. And we’re getting into the concept of you know, how do we actually service the client in this new world to tell us what you’re seeing when people come through this process. And it’s, it’s all new to them,

Melanie Bennett
I actually see people skip this step a little bit too frequently. And this is where you know, your rubber is hitting the road from the client delivery perspective. So this one is really vital. I’d say, it’s really important here to look back at what you’re trying to achieve what that value proposition is for the client, looking at all the client touchpoints looking at it from their view, how are they interacting with you? How are they receiving value from you? What did you want to be giving them in this? And then how do you rebuild your processes accordingly. And the key thing for me here is make sure you actually documenting these processes. Make sure it’s written down and it’s not one piece, right? It’s literally just a document saying, each month we’re going to do X Y Zed, we get this communication from here. This is the system and process. We’re pushing it out for her through who is responsible for that in our office and making sure you’re leveraging all of the amazing material that your investment partner will be giving you Gone are the days where you’re rewriting this, how are you getting the information that you’re paying for, and getting it out to your clients? Yeah, this

Fraser Jack
is probably one that you have to rely on your investment partner to tell you what you could be doing at the beginning. But then I guess after you know, 368 months, 12 months, you really just need to sort of keep keep reviewing this process and going, Oh, what are we sending out? Is it resonating? Do we need to, you know, making improvements or changes or, you know, reduce stuff, or whatever it might be?

Melanie Bennett
Yeah, I really encourage you in the planning stage with the investment partners. And when you’re kind of interviewing for an investment partner, make sure you’re asking them what type of communication and collateral they’ll be providing you and at what frequency, typically, it’ll be in a white paper format, or an editable format. So you can then pick and choose how you’re sending this out and distributing it to your different client bases. So you might want to be sending out, you know, when when they do an update to the portfolios, they’ll be writing about that post and letting you know, you might choose to send that out every single time, you might choose to put that in a newsletter, you might do monthly marketing, market updates, sorry. So you should have in the first phases, a clear understanding of what your investment partner is going to be providing you. But again, to your point, it needs to be effective. So there’s no point having a very elaborate marketing and communication plan. If it’s not being opened, if it’s not being read, it’s not hitting the mark.

Fraser Jack
And some of this, I guess, is around setting client expectations too, as to like, we’ve got this new process, and this is what’s going to happen. Maybe under under under promising and over delivering but you know, certainly not, not just, you know, not having that communication with the client about what you’re going to going to provide and what value that’s in it for them.

Melanie Bennett
And ask them, you know, did you receive our last monthly update? Notice you didn’t read it? You know, some clients do not care. They don’t want, they want to know that you’re doing it, and they won’t read it. And that’s okay, as well,

Fraser Jack
Tom, thanks for joining us again, step 11 of the process, we’re really getting into the client service enhancement or what the new client services is going to be. Talk to us about what you’re seeing with some of the practices that you’ve seen come through this journey and how they’ve been redesigned their ongoing service to their clients.

Tom Schubert
Thanks, Bobo, this is the sort of exciting bit once they’ve actually decided to adopt and we’re now implementing yet to come in and really change the way in which they’re communicating with their clients and servicing their clients. And so we will sit down and work with them on the sort of CRM, you know, and so say, Well leverage the technology within their business to deliver a lot of the insights. And so we produce real time portfolio changes, monthly market insights, quarterly portfolio reports, which can white label and so we sort of make sure they segment their client base, and work with them on understanding, you know, the communication strategy and how that can be delivered. And so really what we find, if you adopt in full, like all of the services and reporting, what we say is, then the advisors don’t have to turn up to review meetings and have, you know, market presentations or investment related reviews, it really tells them turning up to talk about, you know, strategic advice, the relationship, because all of the investment related communication and work has already been delivered on a consistent basis in real time. It also helps we found, you know, 12 months later, I turn up and there might be 16, or 20 different bits of you know, investment related communication sitting on the client file. So when they’re taking the FDS box, they’ve actually got more communication, more contact points sitting in the client file than they had in the previous 12 months. So that’s been a real, a real important sort of advancement for them as well. And then the ability to sort of focus on more high level marketing activities, whether that’s through seminars or webinars or other ways of engaging the market now that they’ve got more time and more help on that front.

Fraser Jack
Yeah, I also think from the marketing point of view, once you’ve got your value proposition down, Pat, and you know that you’re there for a strategic reason. And you know, you have a team for team for tactical stuff. And as I mentioned before, that, you know, getting down in the nitty gritty of stuff, that you’ve got a team of people that do that, you’re able to communicate that a lot better. And then if you’re able to communicate it a lot better than you’re able to your marketing picks up in that respect.

Tom Schubert
Absolutely. Absolutely. We spend a lot of time trying to set the narrative. And so, again, I think a lot of the communication and particularly in relation to investment in advice, well, it’s quite reactive, something’s generally happened often it’s not good. And so the communication strategy becomes quite defensive. We see you know, lots and lots of pick up in communication when markets go bad because advisors are encouraging people to sit, Pat, don’t worry, don’t change your strategy. Whereas what we’ve been able to deliver for our clients because we have discretion over have an active asset allocation process that’s focused on risk management, the ability to actually get ahead of the curve and make decisions to protect portfolios provide proactive communication through to the clients means that, you know, they’re getting less calls, you know, less emails and more proactive communication. But again, it’s sort of that narrative is that the theme is that the clients are happy, the advisor understands, you know, where they are, and how the portfolios are positioned. And then when we hit, you know, bad patches in markets, there’s sort of less reactive running around chasing our tail or trying to protect the book, if that makes sense.

Fraser Jack
Yeah, I love I love proactive comms rather than reactive. How important is that, of course, then, is digital engagement and technology in the process.

Tom Schubert
It’s really important. So one of the big benefits we find and again, in assessing, you know, what is the right platform partner potentially is, what is the what is the app, essentially the client facing app that they that they provide, because, again, manage accounts and the transparency, if we’re setting the sort of market narrative, if we’re providing real time communications relating to changes, you want the clients to be able to look in the app and actually see the effect on their portfolios. So really, what we’re trying to do is join the dots between what they might hear on the nightly news with the communication that the advisor is now in turn sending to them, both from a markets perspective, but also an underlying portfolio perspective with what is actually going on in their portfolios. And I think that is one of the huge benefits of managed accounts, if you’re in a big industry fund, you get this quite opaque, not very transparent annual report in July that says, hey, I’ve got a number, we don’t really know what’s going on under the hood. Whereas in the managed account model, it’s proactive, it’s transparent. And it should actually increase, you know, the education of the client and the engagement of the client. And, and ultimately, that is what helps the client stay on the journey through good times. And bad is if they understand what they’re invested in, and they understand what the strategy is, then they’re more likely to stick to their goals, they’re also more likely to save more, because they understand they’re committing more capital, because I believe in it. And that’s really powerful from a long term wealth creation perspective.

Fraser Jack
So thanks for joining us again, and in this step 12 of the process, we’re really looking at the in the past and reviewing some of the numbers and figures, for advisors that are thinking about the transition or transitioning, we’re talking about the you know, after 12 months, and you’ve spoken to every client or whatever it might be past the transition. You mentioned before, you know, percentages of clients getting in to, you know, the the MDA structure. What else are you seeing with regards to now that all of your clients are sort of transition to the structure? Are you is the SMA got a percentage? Or what are your What are you seeing?

Simone McMullin
Yeah, so we’re at about 50% transition of our existing client base into a managed account solution. It’s a bit, I suppose it’s a bit gray for us, because we transition to our own AFSL, at the same time as launching a new managed account, our profit as a business, you know, fell up as a percentage wise to sort of, you know, 20% EBIT sort of thing in that in that year. But we’re looking to push that to 30 35%. So it’s a little bit muddied with the fact that we had to invest heavily in our license invest heavily in infrastructure. But we expect coming off the back of this, that we’re laying the foundations for exponential growth. So we’re not looking to acquire businesses at this point, because we want to get our own business working very well. We’ve definitely freed up advisor capacity, to the extent that we have one or two advisors in the business that can double their client numbers, whereas previously, would not have had the ability to do that. So that has a direct impact on profit, because our costs aren’t going up. But that advisor can double the number of clients that they can see. So getting the foundation’s right, will have an impact on future profit. But for that one or two years, it certainly was a bit of a holding pattern. But in light of the 20 year plan, it was something that we were quite prepared, and happy to invest in for the future success of the business.

Fraser Jack
Yeah. Now, previously, one of the other conversations that we had you talked about, you know, then a metric being, how many clients each particular advisor can serve, and you sort of, you know, the 100 number has been around. I don’t know, it’s sort of a nice round. And whether it’s a nice round number, or it’s practical with whether it’s a benchmark we’ve put in our heads, but you’ve said that you’ve been able to push it up to 150.

Simone McMullin
Yes, yes, we certainly have. And you’re for advisors, now, it’s all about finding clients that they want to take on as well. So we went through a lot of a lot of, I suppose stress in terms of setting up the AFSL but now it’s about advisors being really confident in the service offering and saying this is who and its wealth is this is what we believe in, this is what we can do. And they’re actually finding that they’re attracting the kind of client that they also want To work with long term. So I think it’s had that that impact as well. For internal team members, as I mentioned, a person young person who’s been with us for five years, allowing him to be freed up from the implementation burden of doing switches, and doing records of advice, etc. And allowing him to focus on more complex areas, has really freed him up to do his professional year, which he started in April this year.

Fraser Jack
Yeah, well, that’s a lot those success, success stories of people wants more more advisors coming through, tell us a little bit about the impacts of for the staff with regards to you know, some of the ongoing or the new obligations with reporting and those sorts of things, how that’s, you know, that any savings or cost savings or time savings there,

Simone McMullin
in terms of the new product provided consents and internal consents. I think it really helped us the fact that we’ve got clear client segments, we’ve now really working through this, these projects, we understand who our clients are, what fees they pay, and what service we provide to them. So that really helped we, we know so much more about our business than we did previously. So allowing us to have that information, then was another project in itself in terms of just rolling out how we would be communicating these requirements and changes. So we’re using technology wherever we can to do that via digital consents. But because the advisors are also interacting with the client, so frequently, it then becomes part of a standard agenda, because we have a business wide agenda that we have for review meetings, and it becomes part of that discussion. So building that in via templates and processes, has just been another thing. So I think sometimes going through so much change, it gets you ready for just accepting the fact that there are always changes. And if you approach it with the same mentality, the same methodology, you can get the outcome that you need to get so no different to educating internal staff, for the managed account, having a set process, having a project timeline, all of those things have been consistent across across all of the changes that we face, and, and whatever it may be in the future. Yeah,

Fraser Jack
fantastic. Now, let’s have a quick chat about the future. What does the future hold for you and your business, what’s sort of the next 510 year plan

Simone McMullin
to continue to grow to continue to grow organically, and we’ll do that through our referral partnerships that we have in place, but also through digital marketing. So it’s for us, it’s about getting our our own house in order and then building our brand so that we can go to the marketplace, and seek out those clients that that fit the service model that we have. So they’re really the two main areas is organic growth and the digital marketing that we will be undertaking in the next financial year.

Fraser Jack
Fantastic love the digital marketing space, you’ve got a story to tell it’s a great space to tell it. And by the way, thank you for coming and telling your story whether in sharing it with advisers, I really appreciate it. So if somebody else wants to continue the conversation with you and get ahold of you, what what’s the best way they can find you.

Simone McMullin
They can find me via our website. So annex wealth.com.au, all the contact numbers and email addresses are there.

Fraser Jack
Fantastic. Really appreciate it.

Simone McMullin
Thank you, Fraser,

Fraser Jack
though, thanks for joining us. Again, we are rounding out this, this topic series around the transition business transitions. And of course, the the best part about any business transition is the you know, the review afterwards the post and seeing what the numbers were and going through the business impact tell us for you, what’s the impact been to your business?

David Moloney
Where do I start? It’s been profound to say the least. Importantly, I think the core thing that has really improved is we have a clear methodology, process and philosophy around the investment pace. And that’s something that not only can I communicate to but our entire staff and advisors can communicate to, and hopefully also our clients can communicate in terms of it gives us greater confidence that what we’re delivering is of quality. And it’s given us that you know, that strength within our business to really go out there and feel like we’re competing with the best of them. And we’re winning fantastic clients. We’re winning really big clients that if I look back five years ago, we just were not getting in front of. So it’s really empowered us to become a much better business. We’re humble enough to realize that we can’t be the best at everything. So why not bring in great quality people. And that’s just highlighted a whole range of things that we just weren’t aware of before. So you don’t know what you don’t know sometimes, and we just feel like it’s a whole new world out there. That’s exciting for us and we can pretty much tackle anything. So that has been the key thing to us side benefit, obviously, the efficiency, we feel like we’ve really become a far more efficient business. There are a lot of hurdles outside of the investment process, we feel like we’ve nailed the investment process. But it’s the other inefficiencies that now we can focus on. So it’s not like we’ve clocked it there. So there’s still plenty of things we’re working on. Overall, we also do have the confidence from a business strategic perspective that we can integrate other businesses, we probably would not feel that confident if we hadn’t have gone down this journey, and tried to integrate other businesses. And then long term, hopefully, when you know, other people look at our business and they say our business, they may see there’s a more valuable business there. Hopefully, it does add some kind of additional multiple in the way we operate our business and people see our business. So if we can be a really quality turnkey style business in the back end, we hope that that actually adds value to our underlying value as a business when compared to others.

Fraser Jack
Yeah, David, thanks so much. I really love the way you present that as the you know, the biggest value value for you is that intangible value of competence and strength, and, you know, really being able to articulate what you stand for to your clients and your staff and into anybody else. Thank you so much for being part of this series. If somebody wants to continue this conversation with you, what’s the best way for them to reach out to you?

David Moloney
I think for now, LinkedIn, please reach out to me on LinkedIn, I’ll endeavor to answer any questions or take any phone calls. But that’s probably the best point, we are going through a bit of a website revamp, so you can definitely catch me on LinkedIn.

Fraser Jack
Fantastic. And there’s David Maloney, CFP, if you’re looking on on on LinkedIn, because there’s a few of you around, isn’t there?

David Moloney
Just I thought it was original when I did it at the start. But it seems to be plenty of people doing it these days. But yes,

Fraser Jack
wonderful. Thank you, David. Really appreciate your time. My pleasure. Now, thanks so much for joining us in this process. This wealth of this podcast, I should say, when we were going through the process of change management, in particularly bringing managed accounts into a business such a big, it’s a fairly big step. Tell us post transition we’re talking about after the fact. And let’s just quickly start with how long has this taken us to get here? Like I mean, if somebody’s got, you know, from the very first step through to this step, what sort of timeframes are you seeing,

Melanie Bennett
I’ve seen this done in two to three months or two years plus. So it can take as long or as little time as possible. My general advice would be to make this as quick as possible, prolonging this prolongs the strain on your business as well. So my recommendation is to get in and get it done. You also want to avoid not risk, not gaming, all the benefits of this, you know, one of the worst things you can do when going in, you know, adopting new technology, new processes, new portfolios is ending up with half your clients, they’re half your clients somewhere else, because you kind of lost momentum. And now you’re actually at a higher capacity than you were before. It’s the opposite of what you wanted. So I think post transition, if you’ve been listening to the podcast back in episode one, it was where do you want to end up? What are the KPIs? What do you want to be looking at? So regularly checking that, you know, the same way you have investment committee meetings, be tracking the KPIs of this project, through the project, and then at completion? So have we actually achieved the milestones that we wanted? What were the financial KPIs that we wanted to achieve here? And then if not why

Fraser Jack
I really resonate with the concept of momentum, because, you know, it’s, this is kind of like one step back two steps forward type thing. And if you’re not taking the, if you don’t, you know, give those two steps forward happening, you’re still one step back, so I guess it does, you know, does eat into some of the profitability of the concept and the efficiencies. Now want to talk about quickly about effectiveness, and client experience, what are you seeing with firms that have transitioned with regards to you know, client satisfaction or we have a clients are feeling about it,

Melanie Bennett
overwhelmingly, you get calls from advisors saying, you know, oh, even this client, who I didn’t think would want it is wanted in and everyone wants in everyone’s loving it and loving the communication, loving the interaction. I’ve got some firms that the investment managers will come in as well directly with the clients do some functions where they’re doing up market and portfolio updates. And that’s really cool for the clients because they’re sitting there with professional investment managers, and getting these updates and seeing how their portfolios are working, so it really changes the service that they’re able to get another thing, notably, clients, despite what we think don’t want 100 page documents every time they come in to see us, they really don’t. So it’s been very interesting for me post transition, seeing, you know, we often talk about the time that a managed account will save, you know, per week, etc, for advisors, that I think what you can’t, I guess put a measure to is the the mental capacity that you gain when that part of your business has been taken over as well. And then what you can then address, also a lot of confidence in I’ve just executed this cool project, what else can I do? So you see advisors starting to turn their mind to a lot more new projects and a lot more new technology. So it almost gives them momentum to be tackling other areas of their business, which I think is really cool.

Fraser Jack
Definitely. Very cool. Mel, thanks so much for coming on and chatting to us about this. If someone wants to continue the conversation with you, what’s the best way for them to reach out?

Melanie Bennett
Absolutely, I’m on LinkedIn. So reach out to me, and I’ll come back to you straight away.

Fraser Jack
Thank you so much for generously giving of your time and experience.

Melanie Bennett
Thank you for having me. And looking forward to hearing from anybody about this journey. I really enjoy it and think it’s a great path for firms.

Fraser Jack
Tom, thanks for joining us again. And the last step step 12. Of this change management process. Now, of course, in any any change management process, the review or the looking back, or the, you know, the post, post transformation review is really important. And to understand, you know, we did the last thing and what’s the what has the business impact been? From your observation? What are you seeing practices doing in the space,

Tom Schubert
fortunately, we’ve got clients that have, you know, transition now over a number of years and are well past that sort of 80% conversion rate to they’re seeing the material benefits from the transition and the partnership with us. Firstly, the staff satisfaction internally, the staff are more focused and less burdened by you know, some hot manual administration tasks, and rebalancing and filling out spreadsheets to work out what the client’s portfolio should look like, and more focused on high value work. So that’s been really important. Second, the sort of perception of the business to market now now you have developed and built out a demonstrated track record of investment performance and service, which is helping them go out to referral partners or new clients or actually received more referrals because they’ve got a really well articulated investment process and philosophy. And also more referrals is good, more staff satisfaction. The numbers that our clients give us, those that are fully adopted, they think it’s about 30%, essentially capacity within their business. They haven’t not one of our clients has let anyone go as a result of the efficiency dividend. I think that’s a big misconception. But they’ve just got more satisfied clients, but more and more so more satisfied staff within their business and more capacity for growth. And because they’ve developed a really strong investment proposition that their clients are now giving them more referrals, they’re just driving the business growth, and using up that capacity for ultimately a better business. So that’s really powerful.

Fraser Jack
It certainly isn’t, I always come back to the efficiency gain to there, you know, like, we shouldn’t be efficient by Now surely, like amount of the amount of resources available to financial services businesses to not be efficient is is not not a great result, that existing capacity is quite a quite a leap in in the firm’s ability to grow. Tell us about some of the results that you’re seeing out of the back of that and is that mean? 30% more clients,

Tom Schubert
certainly capacity for 30% more clients so that achieving that through spending more time on working with referral partners on more webinars, more content, we’re seeing a pickup in digital marketing activities from those clients as well, which is really powerful, but also probably capturing, I think more of the client role holistically the client relationships, so maybe dealing with higher net worth clients and a bigger share of their wallet, but also having time then to engage with their children and making sure the next generation is coming through. So capacity to deal with sort of a bigger piece of the total household wealth as well is really important.

Fraser Jack
And one of the things I wanted to touch on was the client experience that’s obviously a big part of it looking back, you know, was Was there an engagement with the client that was at a specific specific level and we didn’t talk cover this in one of the earlier steps but maybe surveying clients beforehand and then afterwards and and looking at their net might have score or their, or their scores in a way to see what the client experience improvements have been,

Tom Schubert
I don’t know whether we’ve had explicit sort of Net Promoter Score surveys done, but certainly the feedback we get our clients are nice enough to share the feedback that they’re, they’re good clients are giving them about the service, and it’s overwhelmingly positive they enjoy the level of activity they’re seeing in the portfolio is, in fact, sort of going well, it makes sense to us, you know, the markets are moving fast, and actually more more needs to be done and more is being done. So they feel like they’re getting better value for money. They’re, they’re not paying more. And they really enjoy the communications. And so they’ve sort of the advisor, and the clients are having deeper, richer conversations around what’s going on in markets, despite the fact that you know, there’s a there’s a partner, they’re actually making the decisions. And they feel, you know, they feel at ease, you know, they’re really there. And I think the the net result, and what’s the best Net Promoter Score is really, are they referring more of their friends to the advisors? And overwhelmingly, the answer is yes.

Fraser Jack
And how are advisors in that situation? Where they were things obviously happened in markets? And then are you? Are you having conversations with them that allows them to have conversations with clients? Or what’s the sort of the chain of information? Is it going direct to client? Or is it going through the adviser generally,

Tom Schubert
No, we never communicate directly with the client, other than if they’re tuned into a webinar or seminar that will be co hosting with the advisor. So we produce all of the content in real time and send it to the advisor and it’s up for the advisor, again, to then disseminate that information to their client base, whether that’s verbally whether that’s via their CRM, again, you know, the adviser is the trusted source of information and they deliver that to their clients in the format that, you know, their their clients expect. And so, our job is to make the advisors job easier and make them look smarter. And we do that by providing real time information to them that they can, in turn share with their clients.

Fraser Jack
Tom, thanks so much for coming on. The series has been an absolute pleasure chatting to you about the 12 step process. If advisors want to get hold of the 12 step process, what’s the best way for them to reach out to you or one of your team and grab a copy of this 12 step process?

Tom Schubert
Thanks, Fraser. Yeah, you can either come to me directly Tom Schubert, T, Schubert Drummond, cpa.com, or our head of strategic growth. Katrina Watley see Watling at drama tv.com Or just sign up to our insights on the website.

Fraser Jack
Fantastic and the website address.

Tom Schubert
www dot Drummond cp.com Thanks, Tom.

Fraser Jack
I really appreciate your time. Thanks, brother.

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