Welcome back ladies and gentleman to the real advisor podcast T R A P. Trap. With me as ever in the digital studio are the three other horsemen of the apocalypse call, which are Andy Hart and Alan Smith. Hello, gents. Before we start the normal spiel, please, please do follow us on Twitter at advisor podcast at advisor
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go into it guys. I'm going to quickly just talk very first about the contemporary issue the budget which which wasn't called a budget was it it was called something else. I thought it was great. I thought it was the first small c conservative budget we've had in a long long time. It's upset all the right people. I'm sorry, call this this next couple of weeks might might not be of interest to you. But for us in the UK it was it was a taxation cutting budget.
Great stuff you can be Alan and immediate views.
So Andrew Thiessen is decent. Yeah.
Thank you, Andrew. Wow, yeah. It was it was it? What can you see, it was very different to the last, however many dozen budgets that we have seen, you know, significant tax cuts significantly, I guess, as you say, Nick, this seems to be a return to the original kind of true values of a Conservative Party, Conservative government, which was all about sort of lower taxes, less authoritarian, less sort of government control and relying upon kind of your enterprise and entrepreneurs and
business to succeed. And I think historically, that's been the the American way, Americans have been very much sort of self starters. You know, in theory, less government, certainly in terms of comparison with other countries. It's a huge gamble. Right is a huge gamble as we speak today, the world the markets don't like it, the markets are saying, you know, how are we going? How are you
going to succeed? Taking in less tax pounds, whilst you've got a big deficit while you are trying to grow us way out of the economy whilst inflation is at record highs. It is a gamble. Some markets don't like it. That's not necessarily a bad thing. Markets often get things wrong in the short term tend to iron out over the longer term, pound has crashed to an all time low against the dollar might see more about the dollar, the dollar strength as a global currency, then the parents
weakness. I think the stock market has taken a tumble as well, the UK stock market less impactful for those of us who embrace global diversification but not in the short term. I think it's good, I think trying to do the same thing time after time. And you know that the last number of budgets and kind of fiscal decisions that have been taken by the current government haven't particularly worked. This is a as I say, this is a risk. This is a gamble. I'm positive for it. Time will tell.
Isn't there that famous things Laffer Curve? Is it Arthur Laffer today's economy? Laffer, Laffer, Laffer laughter laughter?
Yeah, that basically, and that the ideal kind of sweet spot for the income to top rate of income tax is around 4038 to 40%. Yeah, the moment you go over that people find ways not to pay tax, and the tax tech actually goes down. So but again,
but again, it's the classic mainstream media, they they tell us for years that if you increase taxes by too much, the tax state goes down. So they do the opposite. And then they start moaning that, you know, the fact that they've decreased the tax rates is, you know, playing into the hands of the millionaires and stuff it
can't win, Kenny, I mean, I will just maybe become close on this and Winston Churchill, this this, this is a genuine quote, isn't it? I mean, so many things are attributed to him. But he's once said, I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. And if you think this nation is prosperous now on the back of 10 years worth of ultra high taxation, then I want to be on the same medication
you're on. So let's let's go on over I
have a few comments on that. Number one, I did look at some of the stuff and I I think the best explanation was done on Twitter by Rosie Holt, you should follow her. But trickle down economics is very, very funny. And number two, just hearing about income tax rates, there are 52% here. So we have a long way to go. Our budget is this week and I think the budgets at the moment are there.
The kinds of things I hear what you're saying that, you know, maybe will turn out right or wrong or whatever, but it's kind of important. They're getting it right at the moment. There's a lot of a lot of stuff coming down the tracks, I think.
Okay, just just to close on this the term that the pejorative term trickle down economics was never used by the monetarists it was it was invented by the by the Keynesian detractors of tax cuts in the early 1980s. So you know, just that there's a laden phrase. Okay, it's now moving on to more and more stuff call in your, your neck of the woods.
The you know, what I used to, I used to get mildly offended by that. But actually, with some of the stuff that's happening at the moment, I'm going to have to say, You know what, you're absolutely right. So it was an article in the Irish Independent, one of the main newspapers here this morning, Vanguard, we're entering the pensions market in Ireland, I got really excited. And then I read it and no, actually they're not, you can still access exactly the way you
could access them already. And then Roy London, who you guys would be familiar with are entering the Irish market in terms of pensions, so the new protection and some really good stuff, and their service is really, really good. So, you know, I was really hopeful for good stuff coming from London, I went on to their, their launch webinar, we got 20 minutes of the usual how great they are. And to be fair to them, their services, fantastic. They only deal through financial advisors,
so it's all good. And then they put up the charges on it. So the first thing was extra allocation, the magic money for percentage. And I just went I just, I pressed escape, I come out of the webinar, because it's like, guys, you know, we we've we've had, we have so many opportunities at the moment, we have an executive pension debacle going on where I ops two was introduced. So European directive, so probably not
affecting you guys. Or maybe it is, but the long the short of it is the pension to the heart United said, okay, all providers, you're not actually playing ball here, you're not doing what you should be doing. So we're we're going to have to stop doing executive pensions, and we want you to do them via these Master Trusts, which is, I think, probably a good thing.
And hopefully, we have an opportunity now to do Master Trusts the way you say it's done in the UK or in the Netherlands or in the US, right, proper transparent, grown up charging structures, right. But then they're talking about maybe putting exit penalties and Master Trusts now exit penalties, as we all know means high commission, right. So that's how they're gonna do, they're going to pay the brokers the high commission put an exit
penalties. And then if the client stops paying or moves it on, then the client that pays Okay. Some, I'm just getting a little bit demoralized, I have a little bit of man flu. So maybe my, my sense of being demoralized today is accentuated. But my God, when I read those articles today, I just went this is, you know, we really, really have a massive opportunity like i When was already are brought into the UK early 2000s. Like, here we are
2012 to 2012. Okay, so 10 years on, you know, but we won't do it, because it's the advisors and the providers are looking after themselves. And the clients are last on the list every single time. That's not the way it should be done.
Carl, first of all, can I just on the last podcast episode, you explained that you've recently introduced running water and electricity to Ireland. Now you've had Vanguard and Royal London come in. It's not all bad news. Think he quite big he can be good news. The unfortunate thing here is you're right this were an opportunity comes along and it's not embraced. If we go back to those
days of RDR. In the UK, there was lots of doom and gloom about it because people in the industry had a view that clients weren't going to like paying fees. If I go back before that to commission disclosure was brought in years and years ago.
Grab yourself a drink a very long drink it Storytime with Alan Smith.
This good any more of those of you got, there's not as thorough I'm just reflecting back. And all this stuff that was supposed to end our industry, what it did was make us better, we had to be sharper, we had to articulate our value, better cleanse all the bad advisors out. Yeah. And so, but at some stage, somebody, I mean, what's what's the what's the, what's the regulator, like in Ireland, because we've got, we've historically had one of the toughest regulators in the
world. And I gather that, you know, places around the world look to the UK, um, you know, we've got a love hate relationship with our current regulator, but some of what they do is actually pretty good. Or brought
the Irish I'd say the Irish regulator is quite good, quite strong. But there are way, way, way too many advisors and the reasons there's way too many advisors, if you have a 400, round pension client, right. And every five years, you can make 20 grand commission on moving to another provider. You don't need you, we were talking about, you know, do you need 50 or 100 families, you could get by on about 10.
Right. And so going back to the that, so going back in time, hit two here.
Come on, come on, you can be a part time advisor with a few, and just every five years moving around, and there are and we have seen them in Metis. Ireland, there are cases where they don't even wait to five years so that they move the client, they'll take an extra penalty years to the client has been hit by an exit penalty, and the advisor gets the 5%
Commission up front again. And there is is there I've always argued there's a really simple solution to this for existing pension funds, just ban any commission just banish the say so then you can only move them if it's in their best interest, by all means take trail on your trail. But stop this upfront commission monarchy because it is not doing us any good. And it's not you made a point there, Alan, you know, what did RDR it made you better? And how can we
become a profession? You know, we can we can actually start looking towards giving our clients the best service possible. act with integrity and in the clients best interest. It's written on the wall behind me.
But why do you think that's not happening then, in our advise the regulator allowing this to happen because it's it cannot be in the clients best long term interests. And that's surely their number one remit is to look after the consumer.
Of course, there's lobby groups that will make the point that I'm wrong. And and I will, you know, my man flu protestations this morning will probably come back to haunt me, right. But hey, I just call it as it is. And I've been very, very consistent with this for a very, very, very long time.
And it's just so just wrapping a bow on this as a conscious of, yes, it's, it just sounds it sounds retrograde. But from your point of view, because you're, you're you're going out on a limb really, and then there are you know, your your, your way will eventually be in Ireland. So in a way this is this is this is a positive view, because it gives you a real chance to differentiate again, and to say this, and this is the way it's done, this is the way
it's always been done. We don't think it's right, this is how we do it. And this is why we're going to do it for you. And this is our value proposition and I, you know, making a silk purse out about whatever. You know, from that point of view, I think it's it's going to help your business just differentiate itself quite quite dramatic. Yeah.
And look, I should say, before we wrap this up, there are some really good firms doing it the right way. And the amount of really good firms doing it the right way is increasing every single year. So we are making progress. There is progress be made, but not enough in my view. And when you have the just, I just saw an opportunity for Royal London common from a very mature market, do something a little bit different. And they just, they will maybe I exit out of
the webinar too early. And I'm sure they're going to be ensuite after this. And I'd be all yours. But I just when I saw allocation rates and clawback or commission or exit penalties or you know, yeah, that's,
I can only imagine, okay, that's great stuff. So, things to discuss, I don't know who wants to go first. And uh, you did mention that subject of welcome meetings. Do you want to? Do you want to tell the ladies and gents what your what your thoughts are?
Yeah, sure. I mean, I'm sure quite a few people have introduced these anyway to their businesses. I've introduced it to my businesses this year. I was doing it sort of less intentionally, I suppose I've just introduced it more more intentionally. And this is when you take on a new client. And there's all of this admin paperwork to and fro in filling in forms DocuSign, building financial plans, presenting financial plans, setting up the paperwork, direct debits, yada,
yada, yada. And once all that's done, it becomes a bit quieter. So then you're like, right, we're going to do We're gonna have a welcome meeting. And we're going to set out basically how everything works. So, you know, reconfirm you know, their investment setup, you know what, what they're invested in, what
does it mean? How they need to contact me to book meetings, who they speak to, they don't speak to a bit of recap about how the investment markets gonna work, how we communicate with each other, email, WhatsApp, etc. Yeah, and just be a bit more intentional once they're, they've been on boarded as clients. So yeah, I just wanted to, yeah, to the fact with you guys around the around welcome meetings, I know, various people on the call would have done different things on this. So yeah,
I mean, I, I quit to get my butt out of the way. And then I'll let the more mature business people take over. I mean, I'm pretty I don't do much, which might come as a massive surprise to nobody. I, you know, I there is this chasm isn't there you have the discovery meetings. And you say, This is what our cost is. And you decide Mr. Club, what the value is, because it's always the purchaser that decides the
value, not the provider. But that's we'll come on to that and another other day about consumer duty, and their clients go away and decide and then they come back to you. So we'd love to work with you. And yes, it is at that painful process, then is far less painful now than it used to be with DocuSign. And everything else, they come on board, and then they kind of hear radio silence for me because I won't speak to them until the next Annual planning
meeting. But obviously, that the channels of communication are always open, but I don't do anything. From that moment when their portfolios are set up when their financial plan initial plan has been done for another 12 months. And maybe I should just finesse it a little bit more, check in after say three months. You know, just let you know, everything is set up, as you know, but I just wanted to confirm that with you. Everything is hunky dory, look forward to speaking with you.
You know, I don't know how often the cadence should be in terms of that kind of thing. I think one planning meeting a year is definitely enough. Yeah, guys. Okay,
don't play the jingle again. Take we only have one of them per episode. Okay. But I'll tell you, I'll tell you a little bit of background to this though.
My hands are wiping the mouse.
Yes, we've been doing a version of this for a decade. We, I mean, many years ago, there is still they're still going to a company called CG CG worldwide think the names who are supposed to be well, they are sort of coaches to apparently elite financial planners around the world US based company came to the UK about a decade ago. And they sort of unpack their entire what they said this is the optimal
client journey. This we work with, you know, multimillion dollar IRAs, all that sort of stuff in the US, and this is what the best firms do. So I'm nothing if not a sort of a copycat when I hear people who do good things. So we adopted this. They called it at the time the induction meeting, but I'd rather be welcomed and inducted. I think so we call it the welcome meeting. And we like and you're absolutely right. And there's so much stuff going on. And that can be months and
months. And that first point of contact that we kind of lost, we forgot what what are we supposed to be doing. So it's like let's complete the circle back in the room. Remember that when you first approached us right? This is what which this was what
we're planning to do. You set out we also like to share, like the neck, the calendar, the next 12 months, the calendar for the next year, what we'd like to be doing for the clients so they can make tangible, the kind of rather intangible process and proposition that we deliver and where possible. And now in the postcode environment, we like to embrace a bit of social with it as well. We like to meet people face to face having done the whole onboarding process,
digitally. If we can encourage people to, to meet face to face perhaps go for a bit of lunch, over a sort of in a social environment glass of wine, and we can use this as an opportunity to get real life immediate feedback from those newly onboard clients. You know, I guess what we're looking at the positive opportunity to seek testimonials, referrals, introductions, anything that that might come to them in a natural kind of social
environment. Because the client at that point should be kind of at the is the tends to be an emotional roller coaster during the process for the first engage and you identify you can really help them as a positive. There can be a month or two or more sometimes of just not much going on. We're in the background of busy you know, trying to get data get information from legacy
companies and so on. So it can hit a bit of a lull and then hopefully towards the end whilst the coming on board welcome meeting glass of wine but at lunch. They were in a positive space, your frame of mind so we have an opportunity just sort of dig a bit deeper and yet deepen the relationship. So it works. Yeah, it works really well. Clients seem to enjoy it. And we'll continue doing it.
Yeah, I was going oh, yeah, no, I we don't do the work that we should be doing on this. And I know and a huge talk to me recently about the local meeting and my seven, Alan are always talking about it. We have it as a project for q1 of next
year. And I totally get the points that we've actually got some negative feedback from a relatively new client, that we did all the all the great work, all the financial planning stuff, we got all the wild moments, we did the video after it, told him what we were going to do. And then like you're saying, we went off to try and gather all the assets and put it into one pot and blah, blah, blah, and it took months and months and months, and the
client didn't hear from us. Even though we were doing loads and loads of work in the background, you know, so we had to take that on the chin. So we've kind of broken our business into each client will have a part of three. So they'll have their private client manager, which you guys know as your advisor, your your financial planner, you
guys know as paraplanner. And then we have a client service exec, who's kind of doing a lot of the really important kind of making sure everything is pulled together, etc. So we are doing, we're doing a client engagements kind of exercise at the moment, with a view to try to get everyone just talk to everyone before the end of the year, but a proper project for next year.
So really, what I'm going to try and do is meet Ireland before the start of next year and just get all of Ireland's ideas, and then we'll implement as usual, because because Alan said, he's good. He's good at copying, right? I'm the best, the absolute best in the business. And, you know, we we go and get these great ideas and like, like Alan says on a on a serious note, like if you can find somebody who's doing great work in a particular space, we're not we're not inventing stuff here.
Right? Great financial planning has been around for a while. And there's lots of people doing it really well. And if you can find bits and pieces from various people, and then implemented in your business, then it's fantastic. I remember Alan gave me an idea. And I hope you don't mind me telling this story, Alan said, and I sent out this book, and it was really, really great. And then about three months later, I told Alan, the story of me sending this book to somebody
and adamant. That's a fantastic idea.
was like, what? signs of dementia?
But yeah, but look, I you know, I think it's really important. If you're if you're serious about this business, you know, you can get in touch with all of these people via their websites, via podcasts via newsletters or whatever. And you can extrapolate all these fantastic ideas. It takes time, it takes a lot of effort. And it takes it to do news consistently over a long period of time to make them work for your business. But but the ideas are there. You don't
that's a slightly different, we could come back to this at a later date. The idea of copycatting looking at what else is out there in the marketplace, because cloning CLI suspect called that you don't copy I mean, you and I've had plenty of conversations over the years, you don't copy exactly things we do because they don't they don't work necessarily on an exact copy basis, my firm's different to your firm different values of genetics and so on.
But if you can take 10 ideas, distill it all down, and then you know, overlay your unique, you know, culture processes and things, then you've then you've created actually something new, which is the blend of Yeah, and other things. That's that's what we've we've all been doing. Really there is very few very few unique ideas.
At the welcome meeting. I also tell them when we're going to be meetings, I have my own and my annual planning meetings now between January and March. So whenever I take them on our slot them into that schedule, I tell them, there's one point of contact and the job come to me or then work out who's going to do it, which is obviously different to what Carl said. I asked them, what do they expect of me, which is very interesting question that goes
off on a complete tangent. I also tell them what I expected for them. I go through the 2575 minus 14% rule, which is basically the markets going up 75% of the time down 25% at the time and every year or generally declined from high points or low point to minus 14. I'm just teeing them up because the worst thing is, in the early stages of taking on clients, looking after 100 grand a million quid whatever that number isn't.
Immediately there's a there's a minus 13% in the markets, which is very, you know, likely to happen. I talked about how their investment platform works, how the online access works. I actually got a whole section about our first month as our first 12 months. I then talk about communication. All of my clients have got my direct mobile number, the bat number all of my clients talk to me on WhatsApp, couples have WhatsApp groups, but anything important goes via email. You know, like an important
there is a there's a there's a magnificent idea. Never thought of it that so couples have a WhatsApp group so they get one message so
so it will be the surname in WhatsApp it will be honest Smith, hyphen and the heart or whatever. And then we communicate via via that But anything important via email, I tell them that I look off the family. So if their kids need any help with anything, I'm on hand and a lot of new clients have taken me up on that. It's normally like random questions about mortgages or pensions or something like that. And then yeah, how to how to book meetings and stuff. So yeah, that's generally how it works.
So as to the client on board. Andy, are you now saying that three months later, you will then have a follow up with them? Have you actually got it scheduled that you'll speak to them?
Now, once all the initial works done is in the faffing around with the investment platforms, which your money setting up direct debits invest in the portfolio, I might write Let's have a meeting. Now to kind of recap everything. I call it a welcome meeting here, we book it, and then we go through everything I've just said. Yeah. It's sort of the exciting stuff at first, and yeah, I can work with you and build the plan, everything's fine. And then it's just like this just sludge in the middle.
And then I'm sort of bringing it back to a bit more of the exciting personal type stuff. I don't know. It's like an hour long. It's nothing, nothing, nothing too long.
I love the idea of doing your review meetings between January and March. I think it really sets your your up as much as it sets the tone to Europe.
Yeah. I also say, you know, you, as an ongoing client of mine, you have access to unlimited meetings, unlimited emails, unlimited phone calls, they obviously don't take anywhere near that. But that's basically what the offer is. And then I say, obviously, if you if you've had a very quiet year, and you don't hear from us, and obviously we're gonna sit down and have your annual planning meeting. Yeah, just to set the scene really?
Oh, no divorce lawyers.
Yeah, interesting. Has an assumption. Just on that, can I ask you that would worry me senseless, having WhatsApp groups for each individual client? There's
just not a WhatsApp group. So every one of my clients has got my number. And every single one of my clients WhatsApp, me, I want to take on new clients, and it's a couple and they're very much both engaged, then I'll just set up a group. It's just it's a lot easier.
Yeah, no issues about regulation or anything, you know, communicating messages. I just, we just wouldn't do that. We use
things seriously. If they send me an email Sandy, can I have 10 grand for my eyesight? So just send me an email, please. That's like a different type of communication. So anything that requires a trace? Or a sort of, whatever, it's email, everything else is on WhatsApp?
Yeah, I've got I've got quite a few clients, which do WhatsApp me and I don't, you know, it's just, but as Andy said, if it's anything, even slightly advice driven or regulatory bound, then I say, No, I need that an email please, for my audit. And, and yeah, if people just go out and people just use WhatsApp, and there might be you know, I don't want to get messages on a Saturday
morning from clients. Because even if I say to myself, I will not respond for two days, it might still be in my head, you know, it's in the subconscious thinking so and so's WhatsApp, me, but it's just the way of the world.
It's the way the world. Okay,
good. What else?
What else? Okay. As Andy, have you is that I think we have to that subject.
I think we should explore perhaps not this one, but but the kind of the entire, the client journey, what you go through because we have, it's one of this is back to this concept that the work we do is very experiential. How do you separate yourself from everyone else out there? And you want to make a positive? Truce? Yeah, well, you don't need to, and you can be mediocre. No,
I've got great way of separating yourself. I've got a great way. Because because there is so much mediocrity out there not just in our profession, but across most professions. Tell people what you're going to do. And then do it. Right And straight away you're on an island. Next next lab, which is which is not which is a bit sad, but it just this is what I'm going to do for you. And then make sure you bloody well do it. And already you've separated yourself from the from the chaff.
Yeah, hopefully there are things that you will do that the client has in doesn't even know or understand what you've done, where there is huge value has been created. The it's a cliche, but it's an it's
an obvious one. That's why it's a cliche, but I used to always use this example in my office in the city, there is a Starbucks and have a morning, with normal times the queue run the block at like eight o'clock 830 in the morning to get a Starbucks coffee, three pounds 50 for a coffee, and there is an Italian coffee shop around the corner, which has got far better coffee and it's empty at any given time. And you ask yourself why? Because Starbucks create an experience more so than the raw
ingredients. Right? So coffee is just a coffee bean and hot water generally few other bits and pieces sugar, something but that's it. So I was a big fan of creating a really valuable client experience that the clients might say I don't really understand your investment proposition, but I know that so Really, although every time I engage with you every time from the first moment we spoke to you, it's been a positive
experience. And just looking at all the, I think called critical non essentials, it's used in sport. The use of a lot of other world class elite sports teams have used these things and loads of tiny little things all added together, make hang on a minute, this is really quite good, are really enjoying this process. It's a it's always a work in progress. We're always trying to
make make it better. We might not have time to go deep dive on this now, but I've certainly had a lot of experience and learnings over the last number of years and how to how to make that a far better enjoyable experience.
Yeah, I mean, that's that's that was Clive Woodward's formula. Wasn't that critical nonessentials into that? In 2003 Call we did something that may be alien to you. We won a World Cup Rugby World Cup and the success of that was really built on the back of just paying attention to the small stuff. It does incremental stuff. And the same with the British Cycling Team I think as well.
We should do on the last one anyway.
Good if we're just like it was we're we're the cycling team was there? Was there other stuff going on and on? Nevermind, move on. Oh,
you're inferring something nefarious? I
know the cycling team. Dave Brailsford, that was the that was the famous one as well. He went from being just absolute hopeless cycling team to absolute dominating the sport, which the largely continued to true story.
We all know almost unbelievable. Yeah.
Now now now now we don't want we don't want this. We don't want cynicism creeping into this. Okay, very, very good. I'm going to quickly rotate into this is a very in the weeds subjects. And if you think it's boring, we can just do it very quickly. model portfolio services. I don't really see if you're if you believe in the passive approach to investing. I don't really see their utility I'd be welcome to
be shut down. And I'd also like your views if you have them at all about Blackrock entering the model portfolio service for the first time ever. Obviously, one of the biggest asset managers in the world, absolutely ginormous. The biggest Okay, I think them at Vanguard, and they are now offering model portfolios through one platform only Transact. So what am I not getting about model portfolio
services? What what what would they give me that I'm not getting currently and what do we think about Blackrock coming into it? That's my question.
What do you mean that your model what you mean, like Vanguard lifestrategy as a model portfolio service, that'd be me. No,
no, no model portfolio services where where a third idea, the effective DFM, and they put together portfolios for you, which is what Blackrock are doing mainly comprised of Blackrock ETFs, and about 20%, non Blackrock ETFs. And they, they they switch the funds and they allocate in and they have got their proprietary system and all this kind of stuff. I'm thinking, yeah, they they charge about
between between sort of six and 10 basis points to just do a little bit more of the admin that advisors may or may not struggle with. A yes on some things around
rebalancing. Well, why why wouldn't you just use the dimensional world allocation funds? It's rebalanced automatically.
You could that is rebalance automatically. Yeah.
We thank God lifestrategy says, oh, exactly.
Yeah. Okay, I'll throw it out there. I think there are SOP, two advisors who have who are just very nervous that the compliance thing and they think, okay, if I use BlackRock, a, I'm not tying myself to one brand dimensional Vanguard. Although, as I said, 80% of the underlying ETFs at launch, aren't Blackrock funds. And Blackrock tunnels showed all the compliance with a justification for why these funds are using, they'll give me lovely shiny reports. And there's a bit of a tax benefit
as well. So if you've got a lot of money in a GIC that potentially will be liable to CGT capital gains tax when you switch funds yourself when you do a rebalancing. If it's within a model portfolio, I guess that doesn't happen. That's all wrapped up in the unit price. That Blackrock charges six basis points, but I still think okay, but I don't see why there's that friction in the system.
That Hello, charging six. Yeah. And then of course,
they charge six basis points for their admin and oversight. And then you you, obviously, in addition, you pay the underlying fund fee for the
it's about eight to 18% is the model portfolio and 6% is six basis points is there's been like 2024 basis points all in
including a bit of admin, which is good is Does that include
the platform?
Now? Yeah, it's
typically actually, here's a just a question for for myself and anybody else from Ireland? What What are what's a typical platform charge in the UK
24 basis points. 23. Verizon.
FiOS depends on scale and size and if you've negotiated well, from from 10 to 2425. I think under you
just said 35 digit, the average
would be 0.35.
Yeah. Hargreaves Lansdown and those kinds of things. Yeah, just everyone? Yeah,
I would say.
So a good, a good financial planning firm would would be paying homage to their platform provider approximately
25 basis points or less? Yes. Okay.
It seems to me that has always felt really, really punchy, for that I know is there's no need to use them. But if you pay more for your custody and admin than you paying for, you know, global asset allocation and investment management, surely that's
that. He's crushing.
That's fairly priced to be fair. Yeah.
35 basis point basis. And I'm getting I'm getting
Oh, no, not 30. No, no, no, no, not 2025. And less, not. 3535 35 is a lot. 35 is what Transact charge when they first came into this country 20 years ago.
It's 40. Here. So it's point for you. Does it easy? Well,
well, it is I believe this is a whole area is in for significant disruption. As we know there's in the UK, there's one organization which dominate the marketplace F and Zed. They're the kind of the tech behind a lot of the biggest
platforms in the UK. And those platforms are, they're buying it off F F and Zed for pennies, really an badging up as they're on selling it for multiples of it, if you listened to, you know, the likes of David Ferguson speaking about seckel and some of the other innovations that are coming into the UK, that is one part of the value chain, which is under significant pressure and just your 25 basis points is is unsustainable long term, I think, but at the same time, you don't want any of these
companies going out of business. But that's, that's a downward trajectory, I think we'll hit Well, I think we'll settle it closer to 10. You know, the in and talking about and linking this to the black rock thing, you know, in the US a lot of the the versions of that platform cost of free, because you buy their fund, you know, a lot of the big globe, because it's law
of big numbers. If you've got billions and billions and you're paying 24 basis points, you can chuck in the custody for nothing to continue.
So two black dudes in the US then do BlackRock, like have their own platform is that we design our I don't know,
I don't have a black run. I know people like Schwab do fidelity, all those and it's this, this is the whole thing. If you talk about costs in general and the whole value chain, the the numbers are heading to zero, right? We're not going I think but when I started, I didn't know what platform I didn't know what fund management fees were to the degree you knew a headline fund management charge. I didn't know all the other costs and charges. How now we're sort of quibbling.
Platform costs are nine to zero fund management costs of nine to zero and financial advisor fees and lighting to zero.
Well, you know, a financial advisor fees are not that's the one thing that seems to be sticking, if anything are going up, it's the other more commoditized parts of that process because there's lots of ways they make money for look at the getting up same in the UK, Hargreaves, Lansdown AG Bell companies like that they make millions on their, their cash, the amount of money, some cash at any given time, is, you know, 10% of the entire portfolios on which they're paying out close
to zero, but they're making a turn on it, particularly when interest rates are heading back up again. They make plenty of money. So So could you afford to give away other parts of your business in order to secure return on this, which is, which is undisclosed? You don't have to disclose it, and it's just part of their makeup. But you look at the accounts of some of these companies. It is interesting pricing is becoming more nuanced how you work these
things out. So I anyway, I think certainly platform costs are under pressure is clear fund management fees are under pressure. And hopefully advisor fees are not.
I would say with with platforms, there's always going to be a cost because it's still human centric. They need the back office staff with their salaries and their pensions live in the US. And the cost of software. Redevelopment and refining does come at cost whereas if your management and your and regular
regulation and
companion regulation Yeah, you know,
it's it does, but it's a bit scale makes a difference. But Transact started they had nothing. They've now got however many billions and billions assets. This is one thing that hasn't there's very little, well, there's been less discounting for significant scale, when you've got a billion assets under management versus 100 billion or more. A lot of those technological aspects are simply duplicated with bigger numbers.
It's like the Vanguard fees for their funds came down over time because they had
mentioned that as well. Yeah. Should be should be doing but interesting. So So you're saying that you don't see the point in model portfolios? I
don't know that's probably been there must be maybe ignorance from my point of view and someone's got an absolute golden bullet, Nick, you must you should consider multiple I mean, I've had I I've used in house model portfolios since 2008. And I haven't really changed them that their market cap weighted their passive with a tilt towards value and small cap. This is not a recommendation audience. And I
just look at it the thing. And also I just played around with download this documents from the Transact website about this Blackrock NPS service and you've got a listing about agreements, who's the who's the client who's not the client, that it's all really thinking, Oh, my God, this is getting me back into that murky water where I'm now dealing with a third party. Yeah, and I just don't
and, and then let's say Blackrock decided that they were going to come out of this market and I've got to get all my clients back out of here or that are then in this situation, Blackrock are not going to get bought, but let's say as a small NPS, and then they get bought and then then my clients and our standard life or something, or any other random company.
That's a really good point, because we you know, with what was cool was for me betta folio, you know, they're now competing against BlackRock and much as we like the people behind betta phone orders now, I think timeline portfolio, they are not ever going to compete ever. With BlackRock, you know, Blackrock would say okay, we're just we'll we'll reduce our charges down to zero basis points, we'll give it away. Well,
it depends upon what you are, what the competing, I don't think that if it's not just cost, then they'll
just challenge you on something you said that you don't believe that this adds value this MPs, but you do your own one.
To explain, yeah, I saw I do it in house, rather than outsource it to a third party to do it. For me, it may be different if I was if I was an active fun picker. And I thought there was value there. And my portfolios were populated with active funds. That involves I think, an enormous amount of work all the time, just because you got to pick the dots up and throw them at that chart having you and hit the top quartile every time and change the fund
manager. And we're doing that all the time and having investment committees and you know, the kind of stuff that was I'm breaking out in a sweat thinking about it there, I could quite happily in that situation delegate you
do not have to do do not have to do that for your MPs, your in house MPs strategy?
Not really.
Lips, you pay lip service to it once a year. You see what
I got. But I think this is this is the crux of it. Nick, we've you know, we did a set I think we all do a version of the same in house. No, we don't you don't do in the house model portfolios? Well, we use we're world allocation funds, three dimensional models, the Vanguard life strategies, what 100%?
Okay, to justify that each year, how do you justify that?
That our belief is that, you know, equities are going to go up over time. So you basically put in what is required for your, we call it the metas, lifeplan, what returns are required, let's have a chat about that. Obviously, we have to do the risk profiling and all that kind of stuff. And then we come to an agreement with the client as to what equity bond content should be there. And that's what the clients go into. And we very, very, very seldom, very seldom change it around very, very soon.
All right. So that's quite interesting, because we did the other version of it, where we do it in house. And we do every now and again. And we've been running this 11 years now this exact process, we've made maybe two or three funds, which is the entire time and they were mainly because kind of the products that we wanted early on didn't exist. And then new things come to the markets, we think this is actually a better version of what we've
currently got. But we don't have discretionary permissions never really felt the value or wanted to do. So therefore, it's a pain. And you have got capital gains tax issues, and you have got admin issues, and you've got the error risk and all that sort of stuff. And to some degree, it'd be better just outsource all that to someone else. Like like what you're doing. Oh, just just embrace
Yeah, and look, I firmly believe that the value we add is through the financial planning. And it's through a hate the words coaching or behavior coaching or whatever, but it's, it's just keeping the client in their seat. I don't believe that there's huge value add in switching a fund here or switching on there. So therefore, our ambition, our task to ourselves was always how do we keep this as simple as possible so that number one, we
understand it ourselves. We can explain it ourselves and that the clients understand it and they're comfortable with it. Like how often do I break out a fun fact sheet I'll be honest and say I don't think I have broken out a fun fact sheet for at least 12 months. Now I'm sure my colleagues in the organization have done right but I haven't so that's how little pay specific attention to you know, to the fund piece, obviously we got to keep an eye
on it. Obviously when funds or when stock markets are having a bit of a blip like they are no I will put out stuff we will do a newsletter, but it's simplicity is the key for me.
Okay. The you you're gonna make a point, Andy, I think
I don't know how similar they are NPS is with temps in America, the temps in America stands for turnkey Asset Management Program. So I think they're big in the US again, I don't know, maybe it's their tax harvest things a bit more complicated than ours. But yeah, these MBS is our tamper equivalence, I believe. I think there's going to be a few more that's going to be launched in the UK at the moment, I can think of three but there must be a lot more.
Right? If it's what I understand it to be this doesn't solve them been around forever, you know, it's the would you call it standard life have got their head, they're coming with a cold now, but there's loads can a model portfolios, somebody used to call them they used to call them fettered or unfettered, some would have all their own in house funds, some would have a bunch of external funds, but your age aren't you had a bit of write, yeah, they've been around forever, it doesn't seem like a
massive new thing that's coming in,
I need to get a wheel we
know, we have to, we still have to use some of those funds here for various reasons for contract reasons for pensions, or whatever. So we're still using those. And at least they've developed so that some of them are kind of just passive strategies. But yeah, they're still, they're still a significant thing. And a very significant thing in the Irish market, I
would say, it's there to solve a problem by many advisors, which is running your own investments in house is difficult. And as Carlos Reddy said, over time we vote, we're all recognizing that it's the less important part of what we do. So you're trying to simplify it, keep your costs down, keep your efficiencies up, and it seems, so that's why there's they're being created.
But clients and certainly new clients, often deem it incredibly important. So we have to straddle that quite well, that's, that's a whole other area I over the years have been like, don't worry about the investments or sort them out. That's the easy part. That's the plumbing, don't worry about that. We can do that in our sleep. And sometimes you lose clients over that. So now it's a
bit more just on that call. We had this whole thing about you know, changing our names, financial advisors, financial planners, it just confusing for clients. I was I was thinking of just to call myself an investment advisor, you know, that's what people are seeking. They're seeking investment advisors. And then obviously, we'll do the financial planning, but do this stuff. Well, you know, it's going full circle. Yeah, the financial planner, I don't want to finance. I need to invest it.
I'm Andy Hart investment advisor. Okay, can you give me some best advice? No, it's not important. I know. You're spot on. You're absolutely right. But if
you're already somewhere, some people say what do you do? And you go, I'm a financial planner, and they look at you like your foreheads. Yeah, for sure. I have, you
know, call Do you just mentioned that you haven't got he hadn't had fun fact sheet out for a year and all that sort of stuff that all I would say to you be aware of personal biases, because we are in the game. And this is what we believe. And the reason I say that, is because we did a client survey. But uh,
yeah, very, very fair point. But we did a survey and we and we said, we were just trying to, you know, up our game on the client meetings and annual planning meetings, and so on, we asked all our clients in on an anonymous survey, what would you like to hear more of what would you like to hear less from me, and it was a significant number of our clients said, I'd like to talk more about my investments, because we'd have meetings, we'd talk about everything, but
investments, that's fine. As long as you're on track, you're under control. People say, Well, I'd like to know just a bit more. And so we've really upped our game. And we it's an important part of our client meetings
Ginola here. So you're so right, we've, we've had client advisory panels I told you about last the last time. And one of the guys that asked me for coffee, and he said, Okay, I get it all, I get all the fluffy stuff courtesy call. But I want to know how my investment is going. I want to know how it's going versus the market and whatever. So as a result, we have a we have a project going on in q4, which is why the client journey is going to q1 next year. And that's to put out an investment
newsletter. So we're going to do that twice a year. I actually don't know how that project is going, but I know when they listen to this, they're gonna get their ass in gear and that will be launched in q4. So yeah, you're totally right, Ireland. Absolutely. 100% take that on board. Yep. Thank you.
Okay, that's great. Listen, guys. We're at the 50 minute mark already so I'm suggesting that we segue to the culture corner if that's okay with you okay, culture corner here we are. I will go first and then Mr. Smithson things and then he's got something so a podcast recommendation is called the modern wisdom podcast by a guy called Chris Williamson. Like all podcasts, you have to be a little bit picky and we're not like this one. You should listen to every one of the trap but
mine was my pocket. She kind of dip in and out to it. But I listened to most of the episodes really interesting guy, British guy. So it's a British voice, which is quite nice to hear through your headphones, as opposed to another American episode 529 They do a life hack episode now and again, where they just him and a couple of friends just throw out ideas about just make make your life
more efficient. And he said a very simple one is to say to your I won't say it out loud because everyone's machine will start blinking but say to S I play coffee, cafe, jazz, relaxing background sounds for concentration. And I tried it
and it really is quite nice. So it's jazz music, but you get sort of bustle of a coffee shop in the background, you can hear the coffee being made you hit background chatter, it's all very low key and if you work on your own, it just makes you my simple brain is then triggered to think I'm with other people and it's quite relaxing and it does kind of does kind of work so there's my there's my little tip the modern wisdom podcast by
Chris Williamson. Mr. Smith, you have a 85 items on your culture corner list.
I'll just I will rattle through them quickly. Similar in terms of a podcast, we will probably cuz which is why we're doing this we consume a fair amount of podcasts and and I've always for years and years, listen to Tim Ferriss, they are a bit hit and miss some are more interested in the others, but a very recent one, episode 618, a guy called Rolf Botha, as you may be able to detect is a South African but of course, he's newly sconce in Silicon Valley, or has been
there for many, many years. This is one of these podcasts you listen to and you actually feel your own IQ increasing by two or three points just by listening to it one of the smartest people I've ever heard in terms of this interview, he's he was one of the original PayPal Mafia, if you know with Elon, a bunch of these, the other guys who've been cheated to yeah, really
smart operators. And now he's managing partner at Sequoia and the sort of tech companies that he hasn't invested, invested in over the years aren't worth talking about. And it's just full of little gems of wisdom as well worth it's I mean, it's a couple of hours long, and it's worth chunking it down and listening to others brilliant really just felt I felt smarter just for listening to it. A couple of other quick ones, there is a Netflix film called
get smart with money. And one of these ones where you kind of heart sinks about thinking, you know, big production, things all about personal finance is just going to be not very good. But I was pleasantly surprised by it. They have four people have quite different backgrounds, who go through a bit of a kind of financial plan, financial
coaching exercise. And what was interesting to me as someone who's obviously in the game, doing this sort of day in day out was seeing it from an outsider's perspective, because you had for example, there's this one guy who was an NFL player, he I think he just picked out $1.6 million part of a contract that was more money
to come and so on. And he just, you know, did that classic thing, he bought his mama house, he bought himself a car that loads of other things and quickly realized he might be running out of money because his contract might not be renewed. And his financial coach who apparently was quite he's quite a big name over in the US. He was talking about we need to dump that into the s&p, s&p. And he was going the Essent what because you know, we use this language is just commonplace.
And this guy, he was just he was a smart professional sportsman, he'd never heard of this thing. These are the essence something. So there was an idea even for these professionals, and you're less than two, all of us just calm down and see things in language that people understand. It's again, it's worth watching to get a sense of, you know, consumers money, anxiety, you have people there was there was a sort of impoverished artist is
working at a bar. She had some challenges financially, and there was a multimillionaire sportsman who had challenges with his finances. And so just to get a perspective of what it's like to be someone who doesn't have a, you know, a deep understanding of money issues worth watching. I think the last one I will bring up is a new article on the kitchen as you
know Michael Kitsis. He is prolific content producer but as an article a couple of weeks ago, and it's written by a guest called Stephanie Brogan, that if any of you've come across Stephanie Brogan, she seems to be some sort of consultant produces a lot of content from her base in Costa Rica. I think it's a bogan broken bogucki bulgan. Okay, but it's recently on the coach's blog, and actually, it relates very closely to what we've been talking about a bit. You
mentioned welcome meetings. But this is where she really breaks down what she believes is the ideal customer experience client journey. And I'm, I'm going to be if you've got that project coming up, Carl well worth reading. The article is very detailed. And I think it's just a much better, more modern version of what we've all been doing a version of for maybe a decade or so that might need a refresh. So well worth checking that out on the Michael Kitsis
blog. And I'm sure Nick will be able to post links to all these things on the infamous show notes.
Over to the show notes. Well, we'll we'll we'll think about that. And the you got a culture couch item.
Yeah, it's a book These books been recommended to me a few times but haven't got around to listening to it. It's called 4000 weeks. Embrace your limits change your life.
Oh, there we go for those who can't see the YouTube cards got on his phone. Yeah. Okay, so forth.
Sorry about it. Yeah.
It's how many weeks the average person has typically got on this planet? Couple of extracts from the Amazon reviews, what have you stopped trying to do everything so you could finally get around to doing what counts? It's a fantastic book is written by an English author that based in the US. Yeah, highly recommend it. It will change the way you think we're just so future obsessed.
Especially us as financial planners, all future obsessed, is that everything you do with your child is your baby all the stuff you're teaching your baby so it's a good toddler? Everything you teach a toddler so it can be a good, you know, young child, you know, is this all future obsessed with everything where we never enjoy the moment basically and all that sort of stuff? It's a fantastic book. Yeah, I think you'll really like it. Check it
just quickly closing on this call. Are you actually are you listening to it presently.
I'm actually reading a site as you guys know, I've tried it I'm trying at the moment to go a little bit more analog right, so dropped my phone. So a big challenge for me is to actually read a book so I picked that one up Andy mad that you had that one today. But I mentioned atomic habits in the last episode. And this is almost the opposite of atomic habits. And I'm replying to it right it's like it's just crazy. But okay, challenge yourself and challenge your way of thinking.
It's about like I did you ever hear the phrase you know, when you're you're never finished painting the Eiffel Tower because when you finish you have got to start all over again. That's the kind of premise of look if you get all your jobs done everything's on your to do list.
I think he's the fourth branch called the Eiffel Tower the fourth bridge
so the concept applies to any large thing made up of metal but
for thanks for correcting me
no worries I'll never do
well but Yeah, but look, I think this book is as much as I love atomic habits. Everyone has to read it and I've been telling my kids I think this one is equally as important because I think it gives you that balance. I can I just say I found because I'm gone. Trying to get off my phone on Netflix. So have you I think I'm the last person on the planet to get onto Stranger Things. But my God, Stranger Things get on
Yeah, I watched the first couple of series then it's live sci fi
Yeah, it's amazing.
Yeah. This is where the Kate Bush song came from running up the sack Yeah, so it's right back on the charts just shows you Yes. Content 30 years ago. Number
one in about 30 countries not in the chain.
Yeah. Okay, great stuff. Guys. We're at 57 minutes. I need to go through a way I think we're done. That was a great episode. Ladies and Gents please do follow us at advisor podcast on Twitter. If you watch this on YouTube, please like and subscribe to our channel please leave a six and a five star review on iTunes. I love you guys. Take care until the next episode. Bye. Thanks bye bye