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Podcast Transcript

Episode 14, Season 1

Dynamic goals based asset allocation, with Matt Walker


Matt Walker: [00:00:00] Goals based investment solution isn’t predicated on matching a benchmark or like the ASX or the MSCI or anything of that sort of nature, it really just comes out and says, “Well, our job is to deliver what we promise; a return or a risk manage solution or a time frame for a client.” Goals based investment portfolios therefore tend to have much more flexibility. There’s no, “You have to be in this particular asset in this particular allocation and you may vary it 5% either way.” It’s more about, what do I invest into to achieve this specific goal and if an investment doesn’t achieve that goal well it’s just not included. So it might be much broader as allocation ranges for example, we can go 100% to cash if we think the world’s going to hell in a hand basket.

Fraser Jack: [00:00:52] Hello and welcome to the Goals Based Advice podcast where we have conversations with pioneers of the new world of financial advice. I’m your host, Fraser Jack, I want to thank you for tuning in today. I would also like to thank our supporting partner, Advice Intelligence, for powering this podcast. In this episode we chat to Matthew Walker who wears many hats and during our chat we cover how he manages to proactively work as an advisor, a self-licensed business owner, a dynamic asset allocation consultant and a founder of the Association of Goals Based Advice.

Fraser Jack: [00:01:34] Matt is passionate about goals based advice as you will hear and positively believes in the future of our profession and also the technology, enabling consumers to get better advice. Without any further do let’s check out what Matt had to say.

Fraser Jack: [00:01:55] Welcome to the show Matt.

Matt Walker: [00:01:55] Morning Fraser, thank you for that.

Fraser Jack: [00:01:55] How have you been?

Matt Walker: [00:02:01] Very well thanks, hey. Looking forward to an interesting conversation and a challenging week ahead. Markets are keeping us entertained and on our toes at the moment so there’s lots to do and say.

Fraser Jack: [00:02:15] They certainly are. Now tell us a little bit about yourself at the moment, just to give a quick introduction to the many, many hats that you wear?

Matt Walker: [00:02:22] Sure, my name’s Matthew Walker, I’m a financial planner, have been for some 25 plus years, it seems to be dragging on with WM Financial Services, we’re an independent financial planning firm with a chartered accounting practice as well providing holistic service advice to retail clients. We also set up a number of years ago an investment management business called Dynamic Asset Consulting for the purpose of providing goals based investment solutions to our retail clients and that’s across superannuation and non superannuation. Apart from that, as a part of my journey I also chair a not for profit industry association called the Association of Goals Based Advice or AGBA which we have conversations with numerous advisors and industry participants around goals based advice and goals based investing. Between those three it gives me plenty.

Fraser Jack: [00:03:21] Yeah, absolutely. So you’re also self-licensed, is that right?

Matt Walker: [00:03:30] We are and we have been for many, many years. we set our business up for the purpose of helping our clients, we wanted our independence, we didn’t want any institutional alignment, we don’t believe in commissions, those types of aspects. So everything that seems to have come out in the woodwork with the royal commission over the last ‘x’ number of years was how we set up the business 20 odd years ago. From [inaudible 00:03:54] so comforting to know that everybody is sort of heading in that direction of professionalism and looking forward to the industry moving forward.

Fraser Jack: [00:04:05] Very good, now that was 21 odd years ago when you set up, 1997 wasn’t it?

Matt Walker: [00:04:12] It was. Been doing your homework there Fraser.

Fraser Jack: [00:04:15] I have, absolutely. So tell me, in 97 when you set that up you would have been one of the few that was not accepting commissions then?

Matt Walker: [00:04:22] Yeah, well it probably still is a low, it’s obviously come a long way since then. We just took a philosophical approach with our clients that we wanted to just have a straight up conversation with them, our role as advisors is to help them achieve their goals, their dreams, their aspirations and everything was just put on the table; a frank conversation if you will. That type of relationship I think has cut through with many of our clients and they’re very well established, very loyal, very happy and good referrers and so forth. So it was more of a philosophical approach, we just wanted to just put it on the table, we don’t care how they pay us. We can collect it by a product commission if you wish, but straight up front everything is just, well this is what we’ll do, this is how much we’ll get paid, are you happy with that?

Matt Walker: [00:05:17] Then the question is, how do you want to pay us? So we’re not saying we don’t take commission in a technical sense, it’s all very upfront in our service.

Fraser Jack: [00:05:28] Yeah, exactly. Okay then your business is now 21 years old, how’s it developed over that time?

Matt Walker: [00:05:35] It’s been developing very well in terms of we’ve stayed true to our core philosophies of helping our clients, doing the right thing, charging a fair price. I mean it’s all very simplistic and makes sense but it’s held us in good stead. We’ve got a very secure and dedicated sort of clientele as I said, referring through to us. We also have had informal working relationships with another accounting firm for longer for those 21 years, in fact before setting up the business and about I think it was 15 years ago, we merged in with that particular business so now we have a holistic integrated accounting financial planning business that allows us to service clients across a whole spectrum of different services from not only just the tax and so forth but also business management, business advisory through to family groups, how will they extract their wealth out of their businesses down to their individual financial planning to holistic financial planning to individual bespoke sort of advice.

Matt Walker: [00:06:47] And then a number of years ago we also set up the wealth management business to provide us with a solution that dovetailed in with those philosophical approach around goals based investing. And that integrates very nicely in with the rest of the services we provide.

Fraser Jack: [00:07:07] Okay so you merged your business with a tax accounting business, if you wouldn’t mind just giving us a bit of an explanation on how that sort of structured? Are you all directors? I’m just think that might be something that a lot of advisors might be thinking about or could think about joining a business with an accounting business.

Matt Walker: [00:07:26] Well it certainly makes sense in terms of a lot of the information that we discuss with clients is common between accounting and financial planning and a lot of the questions clients have and the services they have are common so our clients value significantly the relationship we have with the accounting firm in house. So what that means is a client can come in and talk to both of us at the same time, think about all the technical tax issues that we as financial planners aren’t necessarily best place to advise on, accountants aren’t necessarily licensed to provide our product and so forth. But they are very distinct skillsets if you will, you know accounting is far more technical and rules based if you will, there’s the tax act and this is what needs to happen and et cetera.

Matt Walker: [00:08:12] Financial planning is more around problem solving and perhaps lateral thinking in some respects. Now that’s a generalization, each profession has their won challenges and different approaches but bringing those two together really provide a fantastic solution for the client and you know, classic old term solution is a one stop shop. And I don’t necessarily call it that, I just call it providing a service to a client but the clients do appreciate being able to do it all in one rather than being sent all over town to do various bits and pieces and trying to be able to communicate what the information is off their own bat. It’s like Chinese Whispers if you will, so it’s a strong value proposition.

Matt Walker: [00:09:05] It is challenging to bring together the different philosophies of planning and accounting. As in kind of the, somewhat difference of the mindset. So one of the challenges is more the cultural aspect rather than the operational aspect although even operationally there are no systems, no technologies that really bring the different databases together. So there is no perfect Utopia in terms of providing a singular solution for an integrated multidisciplinary sort of practice. But at the client level, it’s fantastic. As for the rest of it, it is moving in that direction and I’d think from a licensing point of view that’s just sped it up certainly accountants who have traditionally advised on things like self managed super funds and the clients certainly ask them the questions, it becomes really challenging to operate without a relationship with a license. Whether their own or in junction with someone else but we’ve found that it’s too difficult for a lot of people to go across both.

Matt Walker: [00:10:17] It’s just too much information in either or, I think at some stage people need to think about whether or not they want to become a jack of all trades or a master of none type of thing or whether or not you can specialize and have your tax guy and have your planning person and have your risk person and whatever it is. Obviously that requires scale which we’ve been fortunate enough to be building and we can provide that depth of service but for smaller people it might be more of a notion of, “Well, who do we team up with in order to be able to provide these services?” To really get a good depth of service to the clients.

Fraser Jack: [00:10:57] I agree and I also definitely think they’re different skillsets and there’ll be some interesting times ahead as accountants that were providing financial advice or advisors that were providing tax advice would have to sort of, work out where they want to be.

Matt Walker: [00:11:13] Yeah, I’ve actually been one stage or another with accounting firms for about 27, 28 years and that has always been the most challenging aspect is the cultural aspect. Always made sense but it’s always been challenging to integrate. But I think licensing is forcing it together, I think there’s culturally a lot more people that are aware of this and becoming less protective of their clients if you will and more client focused et cetera and technology solutions are coming along strongly as well but it really comes down to the cultural fit and that’s where I think the whole goals based advice approach which funnily enough I think most planners do anyway because that’s the job description and the goals based investing brings those two together is actually very comfortable for the accountants. If they see it as less of a product type of approach and accountants have always been loathe to be product floggers or salespeople or anything of that sort of nature and I think there’s a large part of where the divide comes into it.

Matt Walker: [00:12:16] But if you provide an end to end solution around the goals and helping the clients and you can do that generally for the right reasons and so forth so goals based advice, goals based investing, no commissions and all that stuff then I think it’s entirely possible. In fact, our biggest heroes in our business with the investment solutions and so forth are our accountants, they love it.

Fraser Jack: [00:12:40] And so the cultural part’s obviously huge like you were just saying and bringing those two things together, is there anything that you’ve found has been prohibited, the main things?

Matt Walker: [00:12:51] In terms of what stops people from doing it?

Fraser Jack: [00:12:53] Bringing those cultures together?

Matt Walker: [00:12:55] Well, a large part of is just the mindset and you know if I can generalize and it’s a very very generalized sort of comment, planners seem to be lateral thinkers and accountants seem to be more black and white if you will so trying to work around that, not necessarily saying one’s right or one’s wrong and so forth but bringing it all together we’ve found that if you center it on the clients and make the focus the client it’s less about what we’re doing and who we are and our own identities, it doesn’t really matter about us, it’s all about the client.

Matt Walker: [00:13:33] So there’s a cultural shift if you will in terms of how you get that across to the staff but that’s like any business, in any business where you’re employing any people and so forth it’s all about the people, it’s all about the culture. If you can’t get that right, you’re going to struggle in any business whether or not it’s a multidisciplinary business or a single discipline, it doesn’t really matter. It’s all about the right people. So I’d encourage any business if they want to go down this particular path to find the right people to work with and go from there. It’s difficult, particularly at times of change like now where there’s a lot of balls in the air and so forth and a lot of people looking at changing their operations one way or another, either getting out because of Facier or the Rock Emission or getting different licenses because they want to do this or trying to build in different investment solutions.

Matt Walker: [00:14:30] You’ve got to be very, very careful to make sure you align yourself with the right people. And in that respect what we always look at when we work with people is their investment philosophies or their cultural philosophies, are they on the same page as us? And only then are we even bothering to look at well what’s underneath the hood there? Because if you can’t get that cultural alignment it’s just never going to work, it might be great for a year or two but inevitably it will explode.

Fraser Jack: [00:15:02] Yeah and do you want to just give me an overview of your size of the business? You know, how many people in your practice, in the accounting practice that you’ve been working with?

Matt Walker: [00:15:12] We have three partners if you will, in the accounting and three partners in the planning side of the business. Part of that is succession so there’s some part time and so forth, so I’d say most five full time partners or the equivalent thereof. And about 15 to 20 staff professionals and support. Yeah I guess there’s 20, 25 of us.

Fraser Jack: [00:15:38] Yeah, so there’s a fair amount of communication needs to take place with regards to running the two businesses, working it together.

Matt Walker: [00:15:46] Yeah, as I mentioned, we’ve found the interaction of the technology solutions to be more challenging but we are encouraged that there are systems that are coming together that help bring an operating efficiency to both the businesses. So you can get an overview of the whole business and the solutions such as yours that focuses on philosophical approach of what we do with goals based but that can tap into other software and provide a holistic CRM type of exposure. It can be very useful when you start looking at that, trying to run separate businesses in the same building and deal with the same sort of clients, unless you have that each solutions can be a little challenging.

Matt Walker: [00:16:32] So we are strong advocates of improvements in technology, open architecture, integration, giving access to the information of the clients, and that in fact makes our business more efficient in terms of we’re not picking up the phone every five seconds because a client wants to know what’s going on here and there and everywhere. So that’s great, the exchange of information but it’s also fits in very well with our philosophy of helping our clients, we really want to help them and give them access to all the information. And we don’t want them to have to pick up the phone, they have it at their own fingertips, they’re masters of their own destiny.

Matt Walker: [00:17:08] The whole evolution of technology and availability of information, the rise of consumerism and so forth, people have so much information available at their fingertips and they don’t want to be kept in the dark, we’ve got to open the doors, let them inside, that sort of stuff in both the accounting and the financial sense is becoming low ranked stuff. There’s no value in us crunching numbers and doing a tax return so to speak because it’s hard to compete with a cast of thousands from around the world that can now provide those services, it’s becoming very commoditized, so we’ve got to take ourselves further up the value chain, add more value, help them achieve their goals, provide them with more management advice both on the planning and accounting side of things.

Fraser Jack: [00:18:01] Yeah, I was going to say the banks have actually done quite a good job over the last 10 years converting people from going into branches or ringing them up to their internet banking portals. So I think the banks have been 10 years ahead of us when it comes to getting financial plans online or getting your financial plan update online on the portal side of it.

Matt Walker: [00:18:22] Yeah, no, they have and people are becoming more trusting of it and so forth and I think with the changing generations it’s even more so. We’re going to kick back, we really don’t want paper based reports at all, in fact if you provide us with a paper based report we’ll go elsewhere, you know? So from that point of view, the whole transition to online is more about convenience, record keeping, availability at any particular time better on their phone or pads or computers or while they’re on holidays. They’re not going to lump around a 50 page volume and 10 PDSs and stuff while they go on a holiday to PG but they might look at it while they’re on their phone and sipping a Pina Colada kind of thing. So it’s all about convenience and delivering. People just expect it.

Fraser Jack: [00:19:09] Absolutely, now the goal based advice conversation I always like to simply into three categories. You know, the conversations with clients up front, the tracking of goals for them and there’s the goals based investing piece. I wouldn’t mind having a good chat to you about the goals based investing piece because you’re one of the experts on it and the idea of some of your thoughts and ideas around investing in a goals based environment.

Fraser Jack: [00:19:40] Let’s just start with an overview. Do you want to give us an overview for somebody who’s never really thought about it?

Matt Walker: [00:19:45] Okay well notionally I’d say financial planning has always been goals based advice. People come to us and say, “I want to achieve this.” Whether it’s retirement, buying a home, kids’ education, whatever it may be. So as a financial advisor we’ve always helped people achieve their goals. What we thought was a little bit odd a number of years ago was when you go through the financial planning process, one of the things we’ve been educated and told we have to do is to do a risk profile, that is ask someone how they feel about investing. Now those responses can be really varied depending upon on the person’s understanding of markets, their level of education, how they feel and so forth but we could never really understand why those responses dictated what the investment solution then had to be.

Matt Walker: [00:20:46] so what was the relevance of a risk profile in the context of how did that meet their needs? So we did a [inaudible 00:20:56] work around this with our clients and so forth and firstly our clients fundamentally didn’t understand what risk profiling meant, you get asked a lot of advisors, “What does a balanced profile mean in terms of risk or return?” And it’s interesting to see what sort of response you get. Most of our clients that have responded, “Well, a bit of this, a bit of that but none of them really knew what it meant.” And what that meant, that was really distant from their own psyche, they didn’t really know what was going on, they weren’t comfortable with it, they were just told that’s the way it had to be done.

Matt Walker: [00:21:31] So we thought, no there’s got to be a better way to do this and about seven or eight years ago we had a look at, what are the different solutions? You know, post GFC everyone got smashed around, no one was really happy, everyone was saying, “Let’s just stay in the market, it’s a matter of timing and some time in the market, just hold and you’ll recover eventually” and that sort of stuff. I think some markets like Australian share market are still recovering, still haven’t reached their high.

Matt Walker: [00:22:02] So that’s not a great kind of outcome for a lot of people, then there’s a lot of papers that have come out recently about whether or not strategic has allocations or risk profiling actually works. Institutional research around that suggests that SAA or risk profile actually fails between 35 to 50% of the time. So we didn’t think philosophically that was great either for the plant or if you transposed that, it wasn’t a great business risk for us either. If we fail, 35 to 50% of our clients, A; we don’t feel good about ourselves but B; we’re at risk of those clients coming back and complaining. But that was the groundwork we all had, that was what we’d all been educated and trained on. So goals based advice is obvious enough but how do you then get to goals based investing? How do you bring those two pieces together?

Matt Walker: [00:22:59] Well we found when we researched the market that there were very, very few, in fact if any people in the market at the time we were doing it that provided goals based investing. Institutions have done it for years, superannuation funds, insurance companies and so forth so it’s not a new way of investing, it just wasn’t available at the retail financial planning level. We decided that we’d bite the bullet and build our own advice based solution and that’s Dynamic Asset Consulting. So what we did there was we looked at what the client wants, well I had a look at what was right for a financial planning business and most efficient and then reverse engineer the solution to suit the client rather than be driven by the institution saying, “Well this is what we think is great and you guys can have it, just sell it for us please.”

Matt Walker: [00:23:55] So it really came back to being what is this right investment solution to suit the clients’ needs? Now there are different clients, different needs and therefore you need different solutions. It might be a risk manage solution because we don’t want to take a lot of risk or we don’t need to take a lot of risk or it might be a high growth solution because I’m young and I want to build wealth or I need to take some risk in order to get longevity. It might be cash flow [inaudible 00:24:23], I need to get my money in so I use time or whatever it may be. And even over the last few years a number of institutions have come on board with some gals based stuff, some CPI plus or CAS plus, whatever it may be. But none of them provided a holistic solution.

Matt Walker: [00:24:44] So Dynamic Asset, we wanted to build products that could be across the spectrum of our clients’ requirements and certainly we needed that within our practice. We can’t provide a piece of advice to a client and say, “This meets one of your solutions but we don’t have any other solutions. So therefore we’ll just go back to the old way of thinking and fill the gap with that type of thing. We needed a cross board solution so we could be consistent with our communications, that clients understood what we were doing, we could be efficient within our business and we could be confident that we could deliver the results for the client.

Matt Walker: [00:25:24] So that’s what Dynamic Asset attempts to do for our financial planning business and that’s been doing very well, both in terms of our risk adjusted returns have been fantastic, the reasons for that is a goals based investment solution isn’t predicated on matching a benchmark like the ASX or the MSCI or anything of that sort of nature, it really just comes out and says, “Well, our job is to deliver what we promise; a return or a risk manage solution or a timeframe for a client.”

Matt Walker: [00:26:02] Goals based investment portfolios therefore tend to have much more flexibility and there’s no, “You have to be in this particular asset in this particular allocation and you may vary at 5% either way.” It’s more about, “What do I invest into to achieve this specific goal?” And if an investment doesn’t achieve that goal well it’s just not included. So it might be much broader as allocation ranges for example we can go 100% to cash if we think the world’s going to hell in a hand basket. You know, there’s no reason why we need to sit on the train tracks, watch the train coming along, get flattened and then dust ourselves off and say, “Oh well, we’ll recover eventually. It’s just time in the market that gets us all there.”

Matt Walker: [00:26:48] So it has some flexibility around your mandates, have one asset allocation ranges and then use them. Be dynamic, don’t necessarily sit there and say, “Well, if I do this then I’m going to be so different to the rest of the market that my tracking error is going to be putting me out on a branch.” Dynamic asset is just entirely focused on doing the right thing by the clients, we don’t care about the rest of the market.

Matt Walker: [00:27:20] So that’s a reasonably unique solution in itself but [inaudible 00:27:24] ties with our investment philosophy of an advanced business of looking after our clients. It’s all about the clients, it’s not about the institutions, it’s not about being driven by a product, it’s not about being driven by all those things it’s just doing a good job for the right reasons.

Matt Walker: [00:27:39] It requires somewhat of a different skillset than many others out there because you’re not tracking an index. You can’t just sit there and say, “Well, I’m going to just copy that and I’ll try and find the best fund manager in that particular segment of the market to be my differentiator.” You’ve really got to work hard at it, challenging and I think that’s one of the reasons why a lot of advice firms haven’t necessarily crossed over into goals based investing first of all because it’s the awareness of goals based investing, the concern around moving away from the status quo although there’s no reason why you can’t. But then how do you execute that? That is challenging so over the last six or seven years since we’ve been working on this we’ve found that to be quite a bit more complex than we envisaged and certainly a lot more complex than the risk profiling type of approach. So that requires time, effort, resource, scale and good old fashioned hard work.

Matt Walker: [00:28:46] Trying to achieve that while being a financial planner and being an investment manager is again, challenging. We spoke about being a jack of all trades, master of none. We recognized quite a while ago that we were financial planners, our job was to talk to clients, sort out strategies, help with that big picture sort of stuff and then on the side of that we’re expected to be investment advisors as well, so do a little research, figure out how to access things, all the technology that’s available these days and the requirements under an SOA, comparing hundreds of products and ‘x,y,z’ platforms and providing a whole base of advice of the client; it’s pretty hard.

Matt Walker: [00:29:35] We didn’t have 100% of our time to dedicate towards that, don’t matter that we’re doing on a part time basis, it also makes it more challenging to compete to the market. How do you compete against full time investment people if you’re only doing a part time job? Can you expect to get the best solution for your investors?

Fraser Jack: [00:29:56] To me it makes sense as both a consumer and an advisor that you’re tracking your benchmarking to the client goal, you know the client, you know their goals, I guess it’s hard as a fund manager to track a client goal, it’s very easy to track to the benchmark or to benchmark is helping you to index versus benchmarking yourself against the client goals if they haven’t got that intimate relationship with the client. So as an advisor you’re coming from a different angle than you did as a fund manager.

Matt Walker: [00:30:26] Well that’s right and that’s where we’ve got a bit of a unique perspective, we’re trying to do both at the same time, so we built the investment solution for our clients but from the perspective of being an advisor. So as an investment manager, yeah sure we can sit up and do CPI plus four, five whatever it may be and we can manage it on that sort of basis but joining the dots to advice is a little more challenging so we’re about to develop our own portfolio construction tools and the likes to be able to link the actual client goal to the underlying investments and so forth and being able to bridge that conversation with clients but one of the most challenging aspects has been there’s no software that’s been available in the market that really looks at goals based advice or goals based investment or how you track that.

Matt Walker: [00:31:18] So if the software becomes available then it’ll be much easier conversation for advisors to then match up the goals based investment solution which is clearly more logical from the point of view of if a client needs ‘x, y and z’ you just give them ‘x, y and z’. You just don’t put them into balance because that’s what they told you. And we did want to take an overhead just to confirm that we still do use risk profiling in the context of whatever the investment solution is that we come up for a particular client, we want to make sure that they’re comfortable with it and that they understand it. So with that check in balance if you will, to see that we’re not going too far left field or whatever it may be so risk profiling definitely plays a part within a business. It’s at the end as a check in balance, it’s not as the determinant of the entire strategy.

Matt Walker: [00:32:15] The determinant of the strategy is what the client wants and needs.

Fraser Jack: [00:32:20] So you start with the goals now, this is looking at each individual goal and working out what the risks are around that. I think to be fair, I know clients get emotional about their goals. They can understand what they want in life and then if you’re just looking at a, well, can I outperform the market by 1%? That’s not exactly a feel good moment but if you manage to pay off your home and you send your kids to private school and you do all these things that you wanted to do, those are the things that actually really matter to a client.

Matt Walker: [00:32:49] Oh absolutely, I mean we’re human. What’s in it for me? We all inherently self-interested to some degree or want to be able to achieve our particular goals and aspirations. If we have families we want to look after them, we want to be secure so they’re all very strong natural attributes and I think we all agree most people are driven along that line.

Matt Walker: [00:33:15] So the ability to track against goals, to balance it, the ability to be able to identify goals and then track them is key to managing any particular relationship. So when we now talk to our clients, we focus on that goal conversation; “what is you want? Why is it you want it? What are the level of requirement you have for each particular goal?” So rankings and so forth, setting up the hierarchy of needs and so forth. And then having a piece of software like AI that you can show those particular goals in a demonstrable sense helps bring the conversation back to the client and make it more real for them.

Matt Walker: [00:33:59] In a sense what’s happened within our business as we’ve done that is the clients, you can almost see it like a light bulb moment, the light bulb goes on of the client, they understand what we’re talking about, they get more engaged with it, they get more satisfied with it, they’re actually saying, “Yeah, you’re identifying my goals. I can see them up there on the screen. You’re talking about what we need to to achieve those goals, I can see how those goals can be achieved or can’t be achieved and so forth.” It’s all very powerful stuff, so powerful in fact they forget to talk about what’s required behind the scenes by way of product be it insurances or superannuation or investments or whatever.

Matt Walker: [00:34:40] So within our advice business, we don’t actually talk about investments anymore, it’s kind of irrelevant. The client goes, “Well as long as I can see you’re helping me achieve my goal and this seems to make the most sense in order to be able to do it and we’re on track to achieve that ... happy. I don’t need to know the detail.” Of course there will be some that do want detail and so forth so you need that transparency and flexibility to do that but on the whole; simple interface such as advice intelligence provides around tracking goals and so forth is fantastic.

Fraser Jack: [00:35:14] Yeah, it’s really powerful what you just mentioned there about the clients’ happy but also, you know, obviously they’ll promote you and then be supportive of you and refer to you as well.

Matt Walker: [00:35:25] Well that’s [inaudible 00:35:25] we’ve found not only do we now have more time because we’re outsourcing investment piece, we don’t have to spend 30% of our time researching meeting advantages, having conversations with BDMs, trying to figure out portfolio construction, trying to do the reporting and all that sort of stuff. Now we’ve outsourced that to Dynamic Asset, we’ve got a lot more time to be able to focus on the clients and deep in that conversation and that conversation relationship has improved significantly which has led to an increased number of referrals which has led to an increase basically in the bottom line because we’ve got more time to find new clients, we’re getting more referrals, everyone’s happier. It seems to be a great win-win for everybody actually just providing what the clients want. Again, simplistic in itself.

Fraser Jack: [00:36:15] Sounds simple, doesn’t it? Not that easy. Thank you for sharing that Matt. Now I wanted to also chat about the association that you set up nearly five years ago now; the Association of Goals Based Advice. Talk to us a little bit about that and why you set it up and how’s it going?

Matt Walker: [00:36:32] Well I was approached by a number of other people who were having similar considerations [inaudible 00:36:41] goals based advice and goals based investing and we really just started talking about some different ideas and so forth. They put forward the notion that well, maybe we should get a bunch of people together and have these sort of conversations? The system, as I said, has been set up for one way of doing things around risk profiling, strategic asset allocation, efficient market hypotheses, optimal portfolios and the likes.

Matt Walker: [00:37:07] There’s a reasonably significant school for that, so that doesn’t necessarily always work, sure it works sometimes and particularly in the bull market it works just fine but it doesn’t work some of the other time and we all know what’s happened since the GFC and potentially what could happen going forward in the not so distant future but as individual advisors working hard, running our businesses, growing our families, doing whatever it is that we do with ourselves when having a life, too easy to sometimes just get trapped in our own little world, in our own little bubble. And so what we thought was, “Well we’ll just get a bunch of people together and we’ll start talking about these things. What are you doing? How are you doing it? Why are you doing it?”

Matt Walker: [00:37:52] Now AGBA has grown from there to being a network of several hundred advisors and it dozen corporate sponsors and so forth but running a series of webinars, conferences and the like so it has snowballed a bit. But the fundamental objective of it to help the advice industry through taking the time to provide information understanding about what is goals based advice and what is goals based investing? So bringing it all together if you will mostly through education. What I’ve found encouraging is the willingness of advisors to actually share their thoughts.

Matt Walker: [00:38:35] Now I think we’re maturing as an industry enough to know that we can say what we’re doing to another person without necessarily putting our own business at risk. So I’m using this piece of software or I’m using that sort of technology or this is the conversation I’m having or this is the way I write my statement of advice or this is my investment solution approach. AGBA doesn’t abdicate any one particular solution or method of advice over any particular other so got totally agnostic around what advisors do or say and so forth or what products they may use. But it’s really just bringing an integrated network and providing thoughts on how a business can do stuff in an effective way without being pushed products and flogged stuff by institutions that have got their own agendas. That’s very much driven by the advisor for the advisor, in a no nonsense conversation through whatever forum suits.

Fraser Jack: [00:39:43] Yeah. I love the conversation piece and getting conversation from other advisors that are doing similar things and just talking through the things that they’ve done well and not just that, the things that they tried and didn’t work that they stopped doing as well. Learning along the way.

Matt Walker: [00:39:59] I mean a lot of great financial planners out there say, “I’ve been talking to planners all over the country for the last five years about what they’re doing, how they’re doing it, why they’re doing it.” And some really good ideas from some really novel approaches and some really fantastic solutions. I’m encouraged that out of the ashes of the royal commission we’ll grow a really robust industry because there’s a lot of good people who are genuinely trying to do the right thing. The biggest challenge that we find across the industry is the technology solutions. There aren’t that many technology solutions, so again piece of goals based advice software that can bring it all together and help advisors join the conversation from, “What do you want? And, how can we help you?” Through to executing that is really the missing link.

Matt Walker: [00:40:50] We see lots of different disparaged pieces of technology that solve bits of pieces of it but in a pragmatic sense it’s just too hard to try and manage all those different pieces of technology within a business and get on with your day job and so forth. Or it’s too expensive to develop your own so again, very interested in the advice software solutions from the perspective of an end to end solution for an advice practice executing a goals based investment sort of approach. Together with all of the other things that you need to do as a financial planner if you’re doing your insurances, your super comparators, your statements of advice, your FDSs, your ... the plethora of compliance we’ve got to break in these days, you just want to cut that out basically.

Fraser Jack: [00:41:48] Yes, there’s a lot of moving pieces to this puzzle, certainly been a passion of mine for quite some time, the technology piece, I love it but it’s a huge piece as well so ... and you’re absolutely right about the idea that wearing the hat of an advisor, you’re obviously wearing many different hats at the moment with advising and running practices and licensing and consulting business and association business. So to add a technology piece on to that would probably be a bit too much.

Matt Walker: [00:42:20] Well it’s a passion of mine Fraser and I think technology really is enabling us. If we really want to do the best job we possibly can, and still hope to maintain our sanity and turn a profit we need to use technology as much as we possibly can. See it’s a bit like the banking industries who’s a little further ahead of us in terms of online engagement. I mean, I can’t remember the last time I went down to a branch physically and so forth, but the advice for planning industry seems to be a little bit further back perhaps because it’s more fragmented with the IFA type of solution, lots of advisors on a small scale trying to do some great things but they don’t have the scale. So it’s the collective that AGBA is trying to look at.

Matt Walker: [00:43:12] We’ve also seen a lot of the incumbent in the technology space look to service their existing masters which typically tend to be institutions and their priorities are slightly different, they’ve got their own problems to face at this particular point in time, they’re not necessarily delivering solutions that are 100% of what’s required from a goals based advice or a goals based investment solution. So it’s pretty challenging.

Fraser Jack: [00:43:44] Yeah I heard a comment the other day about efficient and effectiveness of technology and the fact that we are not as efficient as we could be at the moment from an industry point of view. But then you look at it from a consumer point of view and they would be saying, “Why not? It’s an industry that’s got money there sitting, like within the industry it should be efficiency is one of the things that should have happened 10 years ago when the banks started not selling it now.”

Matt Walker: [00:44:13] Absolutely and they’d be 100% right to ask that question and it staggers that we are not better at providing technology solutions. Think about it in terms of execution, that’s just called manage fund, there is no clearing point for manage fund, it’s all done manually. So transactions can settle in between two days and 20 days depending upon whether or not the fax machine’s working. I mean, seriously, how does a trillion dollar industry still operate using faxes and handwritten notes or things like that or why can’t you execute from the desktop by yourself to manage funds? Why can’t there be standardized executions and then the trustees and you know, so not only from the advice but through the whole food chain from the financial advice services industry technology can play a significant part. If we focus back in the advisor portion of what we do, technology is a bit of an inhibitor in terms of providing both client orientated advice around the user interface portion that is in an efficient and organized manner and relate that to the clients so they can see how they’re doing, how they’re tracking and so forth.

Matt Walker: [00:45:37] Hopefully technology will continue to evolve efficiency and again, from an advice practice with all the compliance requirements we need to make sure we’re doing the right thing, but we also need to be able to look after our clients without focusing so much on the compliance, so much on the doing of the stuff that we don’t have time to make a buck. So, ultimately if we can’t be efficient enough to make a dollar we can’t provide advice, clients are going to win, we’re not going to win so ... it’s inevitable but slow.

Fraser Jack: [00:46:14] I don’t think it’s a luxury anymore, I think it’s just a ticket to the game, if you’re not efficient you shouldn’t be there.

Matt Walker: [00:46:20] No, you can’t afford it so from that point of view the world is becoming more and more , conscious and we’ll see that pervading that through the advice stream more and more particularly on a low return investment world. And also with fund managers, we’ll see with investment platforms. There’s no doubt there’s quite a heavy free load as you look through the entire food chain before it gets to the client which perhaps stacks the odds against the client at the end of the day which is perhaps where some of the dissatisfaction comes from. But from that point of view, technology is the only solution to enable that, you’re still going to need that quality and [inaudible 00:46:58].

Fraser Jack: [00:46:58] Yeah, I agree. Now apart from technology, is there anything else you’re working on at the moment over the next year or so within the three businesses?

Matt Walker: [00:47:08] We also have a philosophy of continual self improvement so there’s a lot of things that we are working on. Within our planning and accounting business we’ve actually started a number of projects that we’ll look to work on over the next 12 months and actually primarily amongst one of those is the cultural aspect just to further deepen and embed the fact that we are here to help our clients and culturally we’re all on the same page and that will work in with client engagement, staff engagement, satisfaction for both as we go through because fundamentally really believe in the people.

Matt Walker: [00:47:53] Technology is also another part, so we’re looking at good software that can help us provide goals based advice, part of that’s also to create a client portal. So the ability to share information with clients, have them track their own goals, and integrate that with the accounting side of things. Looking to use technology and so forth, we’re also looking to personally start up our website and get our CRM organized and those sort of standard business practices. So there are a few projects we’re working on there.

Matt Walker: [00:48:36] In terms of the Dynamic Asset business we again continue to evolve, we do have a portfolio manager in there doing professional job so we are looking at how do we make that information more accessible to our clients? Not only that, we’ve now opened up Dynamic Asset to be available to other advice firms so other advice firms can tap into that as an outsource solution if they will, white label or otherwise. We’re agnostic around how people want to build it but we can provide that investment platform and investment solution back into the financial planning business so they can again concentrate on doing that to best effect but knowing there’s a fantastic robust investment solution behind the scenes to back that all up.

Matt Walker: [00:49:34] So Dynamic Asset is now helping itself up, having those conversations and that will be the focus for that business over the next 12 to 18 months. ABGA as a not for profit is going to continue trying to engage with advisors and industry participants to just provide a better way, bring the conversation together.

Fraser Jack: [00:50:01] Fantastic and you may as well give a quick shout out to how people can get a hold of that Dynamic Asset Consulting or the Association of Goals Based Advice if they wanted to go and check those out.

Matt Walker: [00:50:13] Sure, well we’re reasonably straightforward with our thinking here Fraser. So if you want to have a look at goals based advice just type in goalsbased.com.au and that will take you to the AGBA website and if you want to have a look for Dynamic Asset then you type in dynamicasset.com.au and it will get you to the Dynamic Asset business. You know, what you see is what you get.

Fraser Jack: [00:50:41] Fantastic. Now tell me about the, because there’s obviously a lot of change going through, once we get through these changes, how do you see the long term panning out for the profession?

Matt Walker: [00:50:47] Obviously interesting to ask with the royal commission, Facier and the likes. I’m an optimist by nature so I always hope for the best. There are significant challenges in going through this and concerns as to whether or not the regulators are going to get the mix right or wrong or whatever it may be but at the individual level is what we can do. At the industry level, I think we’re definitely heading in the right direction. As I said, I’ve met so many fantastic financial planners and so many good people. I feel like they’re all chafing at the bit to move forward and improve the professionalism. No one likes to have a low ranking perception of what they do of a day job, so one of the finance planners and used car salesmen and [inaudible 00:51:41]. We obviously want to be held in better stead so the rising professionalism so forth is going to be fantastic.

Matt Walker: [00:51:48] No Facier is I think a step in the right direction, I think there are certainly challenges with the way it’s been executed and it might be a little more idealistically put forward that pragmatic and I think that actually might hurt the industry a little bit in terms of some of the older more experienced advisors, if they don’t meet their very narrow and strict definitions of educational requirements we’ll effectively be kicked out of the industry. That’s a lot of experience that might just disappear out the back door because they don’t want to spend another two or three years going through university again or just doesn’t suit what they want or whatever it may be. So I’m not sure that’s going to be good for the consumer at the end of the day but definitely the intent is moving in the right direction.

Matt Walker: [00:52:34] As I said the technology solutions coming through are going to help enable that, I’d love to see it come through faster and stronger and with more scope to provide different solutions for different parts of businesses. But if we come back to what I’ve mentioned is the most important aspect for us, culture and philosophy and so forth, as I said I think the financial planning industry is full of really good people, really good people. Genuinely trying to do the right thing. I mean there’s always going to be bad people and so forth but every industry in the world has that so I think with that good intent with technology, with positive direction from the regulators and so forth we really could build an industry that is a leading industry not only in terms of helping clients but also adding value to the economy and creating a more prosperous society if you will.

Matt Walker: [00:53:33] If we can help build a better industry that engages with clients better, there’ll be more people seeking advice, there’ll be more money to be made from financial planners, there’ll be more money in funds under management for investment platforms and fund managers. And the clients will be better off, I mean it’s a win-win. So driving up the professionalism will be good for everybody and I’m optimistic we’ll do it.

Fraser Jack: [00:54:02] Yeah, I agree. I think the future’s pretty bright once we get through the next couple years of some rocky roads for people but ...

Matt Walker: [00:54:10] Well there’s a lot of emotion around it and a lot of isolated points of really terrible, terrible situations and there’s no way you can excuse or condone any of them. Personally I’m not sure whether or not it’s the regulation that needs to change. I think the regulations exist, they just might not be necessarily policed or manged or the penalties might not be significant enough to be enough of a deterrent. So again, I hope they don’t over regulate because I don’t think the over regulation is necessarily in anyone’s interests but perhaps some enforcement might be useful to change behavior.

Fraser Jack: [00:54:47] Yeah, I agree with you on the regulation thing, I think we’ve probably got enough of that. We just need to look forward now and start moving forward rather than worrying about the past. Now I think I might, thank you very much for that, we’ll just finish on a few of our questions that we finish on. If you were chatting to a consumer at a barbecue and they’re thinking about getting advice, what sort of tips would you give to the consumer to look out for?

Matt Walker: [00:55:13] Well the first one I usually start with is try and get a referral. So from someone that you trust, if they’re a friend, they can refer you to someone who’s doing a good job, fundamentally even once you meet someone from a consumer perspective, it’s important that you get the right fit. So how’s the communication piece, can you talk to them? What sort of services do they provide? Do they match up with what you want? How do they charge? Do you think that’s fair and reasonable? What are their licensing requirements? Are they going to be influenced by anyone for instance institutions, are they logging products? And all that sort of stuff. So generally speaking it would be, get a referral, find someone that you can talk to or communicate and trust through the right structure.

Matt Walker: [00:56:07] I’d obviously be an advocate of someone that would be focused on helping them meet their goals specifically and go through a goals based advice and investment program because I think that will help important the probability of success. But fundamentally it’s just someone to help them navigate the complex web of financial world.

Fraser Jack: [00:56:30] Very good. A complex web is exactly how it is. Now if you were chatting to a new advisor, someone who’s looking to get into advice or just got into advice, what tips would you give to them?

Matt Walker: [00:56:42] I think just to focus on what’s important for them and what’s important for them should mostly be what’s important for the client and how they will see themselves delivering that sort of advice. So stay true to themselves, it might sound simplistic or even naïve but a lot of people come in the industry on the back of, “I really want to help people.” That’s one of the first thing you hear, “Why are you in financial planning?”, “Well I want to help people.” But along the way they have been or can be diverted through interests of institutions or their masters and so forth. So again, I encourage them to align themselves with people that they can believe in, that they trust, that is doing the right thing. Again my preference would be to take a role with a firm that takes goals based advice and investing seriously.

Matt Walker: [00:57:38] It might lead perhaps more to an IFA solution, not to say that there’s not a lot to be gained out of working with institutions. I worked with institutions for many years before I set up my own business and that’s exactly what I shouldn’t be doing. So you know, from that point of view each of their own, there’s a lot of scope out there, if we can make the whole industry work in a more positive sort of direction and get rid of conflicted aspects for the industry then I think that will open up the scope for new advisors come in under whatever mechanism or umbrella and have a brighter future. Today I’d say go more for the IFA.

Fraser Jack: [00:58:21] Yeah, now tell me if you were chatting to an advisor who was wanting to transition from more of a traditional advice business into something that focused more on goals based advice, what would you say to them?

Matt Walker: [00:58:31] I think transitioning a traditional financial planning advice into a goals based advice business really isn’t a transition at all. Most financial planning advice businesses already are a goals based advice business. I mean the role of a financial planner is to help someone achieve their goals. So if they’re not a goals based advice business already then perhaps that was just in the wrong gig full stop.

Matt Walker: [00:58:54] So it’s not so much a transition, it may be a slight nuance of the language they use and how they do that and perhaps it’s more a focus on goals based discussions and goals based identification and management. It is a little bit hard because there’s no software to do that but someone like advice intelligence might be able to help bridge that gap around how to engage at the client communication. I think most advisors really genuinely see themselves and want to help the client achieve their particular goals and they see themselves as goals based advice. Where the real challenge in transition might be is matching up the goals based investment piece to the goals based advice piece. So goals based advice all the way along until you hit the execution piece and then all of a sudden you flip over to something that’s not goals based advice, it’s called risk profiling. So how do you bring that into place?

Matt Walker: [00:59:53] That’s actually quite simple in better respects in terms of you could look at the goals based investment products as just another product. So if you’re an advisor and you say, “Well, I’m choosing between product A and product B and I’m writing a statement of advice about it”, no more complicated than that. The piece that’s perhaps more difficult is identifying the right goals based investment solution for the business that’s true to label, that some goals based investment solutions are really just risk profiling or SA wrapped up with a different marketing brochure around the edges but under the hood it’s just the same old stuff. So maybe do a bit of due diligence around that. The transition itself is not difficult.

Matt Walker: [01:00:38] Dynamic Asset for example has the tools to be able to help advisors build portfolios to match it up exactly with goal, each underlying entity, each particular goal and so forth so you can exactly the right portfolios for them execution through MDA platforms and the likes means it’s all fairly seamless. Superannuation and non superannuation means you can do it across the board. So Dynamic Asset for example is just a simple turn key solution, once you’ve done your DD and you decide to turn it on, all the SAOs are provided, all the tools are provided, all the comparatives are provided, all the investment solutions are provided, all of the reporting’s provided. So it’s not that difficult. It’s more of a philosophical approach; do I really want to go down this particular path?

Matt Walker: [01:01:27] So can I match up goals based advice and goals based investing? Once you’ve done that it’s actually a much easier business to run. It’s like any improvement, any change within a business, opening up a computer for the first time or changing over a platform or whatever it may be, changing licenses. Now there’s a bit of work involved in it but at the end of the day you get a much much better solution that will be more profitable, that is easier to run, that makes clients more satisfied, it’s great.

Matt Walker: [01:01:57] For those people that are prepared to consider or be open minded with the solutions, role up their sleeves, do a bit of DD, find the right solution, execute on that, I think they’ll find themselves with much, much better businesses.

Fraser Jack: [01:02:10] Yep, well said. Now with he benefit of hindsight, if you could go back in time and give yourself a couple of tips or advice, where would you go and what would you say to yourself?

Matt Walker: [01:02:26] Hindsight’s a wonderful thing mate. I think philosophically I’m very comfortable with everything that we’ve done and I’ve been very fortunate with finding the right business partners to work with, really really enjoy working with our clients, you know the relationships are fantastic so there’s a lot of things I’m really proud of and comfortable with. In terms of some of the challenges, perhaps that I didn’t move away from risk profiling sooner. You know, I was uncomfortable for many years but just didn’t know how to make a change but didn’t necessarily have the time to do a whole lot of that then we absolutely bit the bullet and got into it. So that’s great. I would have done it sooner.

Matt Walker: [01:03:05] The other thing is, when we started the investment management business we had these preconceived notions that we already knew a bit about investments and, “It can’t be that difficult and maybe we can make a bit of a money spinner out of it and we can increase the revenue for the business without actually doing anything more than we’re doing.” But what the reality was is that’s actually quite a complex business. There’s a lot of additional compliance, there’s a lot of additional cost of research, resources required. I probably would have outsourced if I could. So rather than build it ourselves over six years, take away all that time for me being able to build a financial planning business and service my clients and make my money that way, I would have rather just say, “Okay, some one can do this job for me and I can outsource.” Just get on with it.

Matt Walker: [01:04:02] I don’t need to run all these businesses and so forth. The challenge for us, and we did look believe me, we had a look at a lot of people, a lot of platforms, there just wasn’t anyone doing a good enough job. I just was not satisfied that anyone was doing the right thing but then sat with our philosophy at a level of due diligence and care. So we kind of had to build it, if we were here today and Dynamic Asset was available for our advice business I’d be using it in a flash. I really, it’s so much simpler, so much easier. And it’s bloody hard work.

Fraser Jack: [01:04:40] Absolutely.

Matt Walker: [01:04:43] So I think the two things are I’d wish I’d done more goals based stuff sooner and I wish I could have outsourced my investment solution.

Fraser Jack: [01:04:52] Very good. Well thank you so much for coming on the show today. We’re going to have to wrap it up there. Tell us, just if someone wanted to continue the conversation with you, how can they get hold of you?

Matt Walker: [01:05:04] They can contact me through any of the websites, be it WM Financial Services, Dynamic Asset or AGBA. So just hit the contact us page and it will all find its way to me. So that’s perhaps the easiest way to go.

Fraser Jack: [01:05:24] Fantastic. Thank you so much. It’s been a great chat today, very good information about the dynamic but also the goals based investing about the AGBA and your business culture especially. Thank you so much for coming on the show, really appreciate your time.

Matt Walker: [01:05:40] Thank you Fraser, hope that’s all been good and look forward to chatting again sometime.

Fraser Jack: [01:05:45] Alright, great, thanks Matt.

Matt Walker: [01:05:47] Okay, cheers mate, bye.

Fraser Jack: [01:05:50] If you haven’t already, I’d love you to subscribe to the podcast on your podcast platform of choice. And to continue the conversation head over to our social media channels, we’ll catch you next time.



Disclaimer: This document is a transcription obtained through a third party. There is no claim to accuracy on the content provided in this document, and divergence from the audio file are to be expected. As a transcription, this is not a legal document in itself, and should not be considered binding to advice intelligence, but merely a convenience for reference.