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Podcast Transcript

Episode 23, Season 1

Client Values based advice with Ray Jaramis


Ray Jaramis: [00:00:00] One of the biggest things I got out of my psychology degree is the power of being introspective. And what I mean by that is, I was talking to my fiance earlier about ethics in financial advice and I say, well, my view on ethics is because of my studies and when I talk to a client, I’m really clear about understanding what my own biases, and flaws, and worries, and comforts are. So, if I talked to Fraser about his financial life, I can be very, very confident that I’m not giving you too much of my baggage.

Fraser Jack: [00:00:42] Hello and welcome to The Goals Based Advice Podcast where I have conversations with pioneers of the new world of financial advice. I’m your host Fraser Jack and I want to thank you so much for tuning in today. And thank you for your feedback and reviews. I love getting them, and if you enjoy an episode, please share it with your friends and colleagues. I would also like to thank our supporting partner Advice Intelligence for powering this podcast. You can book a demo directly from their website at adviceintelligence.com.

Fraser Jack: [00:01:09] In this episode, I talk to award winning values based advisor, Ray Jaramis, about his journey to providing behavioral flavored financial advice that he rubber stamps with a gamified psychological process. Ray, who many of you know from XY Adviser is such an inspiration. He was super generous with his insights in how he provides financial life management. Let’s get started into my chat with Ray now.

Fraser Jack: [00:01:41] Welcome to the show, Ray.

Ray Jaramis: [00:01:43] Hi Fraser. How are you mate?

Fraser Jack: [00:01:44] Really, really good mate. How are you?

Ray Jaramis: [00:01:46] Very well. Very well. We’ve gotten the, what do they call it? Kind of the suicide shift on Friday afternoon, but feeling somewhat sprightly, which is good.

Fraser Jack: [00:01:53] Yeah. Well, Friday is a great day. We’re heading into the weekend.

Ray Jaramis: [00:01:57] Yeah. We have a football trial at 6:15 tonight, so it’ll be the first one of the year and I get to climb to see how much weight I’ve put on over Christmas, so it’s going to be fun.

Fraser Jack: [00:02:07] Well, maybe everybody else will be in the same boat, carbo loading and then putting on some extra pounds for the famine that may be coming or maybe not be.

Ray Jaramis: [00:02:18] Indeed, indeed. Looking forward to it.

Fraser Jack: [00:02:21] Now, I thought you might just start with you. Do you want to give us a bit of an overview of where you are now, what you’re doing in both your advice space and the work you’re doing outside of advice.

Ray Jaramis: [00:02:30 Yeah, sure. So, I’m a financial life manager at Treysta Financial Life Management. We use the term financial life management as a differentiator away from I guess, traditional financial planning, to be a bit more behavioral based. I am one of the co-founders of XY Adviser, which is an organization, a training organization built to drive, I guess, some positive evolution of advice for younger advisors. And I’ve just finished a stint as a research affiliate at the University of Sydney Business School. They were doing a business case on how advice businesses are integrating psychology and behavioral models into a traditional sort of financial planning business and whether or not there’s a viable kind of a proposition there or whether or not it’s just marketing hype, and it’s flavor of the month, and sort of trying to taze out what the output is of a lot of the stuff that you sort of look at and certainly we do as well.

Fraser Jack: [00:03:35] Well, it sounds like a lots of spare time on your hands.

Ray Jaramis: [00:03:37] My fiance is thrilled.

Fraser Jack: [00:03:41] Now, you’ve been around the industry for about, I don’t know, six or seven years now. How did you get into it?

Ray Jaramis: [00:03:47] Yeah, time’s gotten me by, but I turned 30 last November, and I was like, “Oh Geez. I’m kind of old now.” So, how did I get into it? It’s a bit of a vicarious journey, but ultimately, I landed up working in my family business, and they sort of wholesale and input lounge furniture, and I was like, well, to be a business owner, you probably need to understand how to do accounting, right?

Ray Jaramis: [00:04:16] So, kind of went off to university, started doing accounting, I was in there for a couple of months, and sort of looking backwards as accountants generally do, especially 10 years ago, I go, “Well, I’m not sure this is exactly what I’m after. I’m kind of interested in what looking forward is,” and I guess kind of an applied accounting was something that was in my mind. And through sort of doing a bit of homework, I guess I landed up understanding that financial planning was a thing, which led me to a journey into AMP Horizons after 12 months and ultimately landing up here.

Fraser Jack: [00:04:50] How did you get into the horizons program?

Ray Jaramis: [00:04:53] I was in a business that were kind of probably a model of a really traditional type of way of doing financial planning. I wondered whether or not that was the only way that things could be done. And at the time, actually one of my colleagues went up to AMP Horizons before me, so I spoke to him about what that was, and he was in that first sort of three month collegial type of environment where you’re in the academy. And he was just drinking from a fire hose with information, I was like, “Yep, I’ll get on board with that.” And yeah, that was kind of how it went.

Fraser Jack: [00:05:24] A bit of Dunning-Kruger effect happening.

Ray Jaramis: [00:05:29] Indeed. Indeed.

Fraser Jack: [00:05:31] Yeah. You know a little bit of information about something, so it’s great to tell everybody about it.

Ray Jaramis: [00:05:35] Yes. Yeah, absolutely.

Fraser Jack: [00:05:37] Now, so you did the Horizons and then soon after that went to Treysta.

Ray Jaramis: [00:05:44] Yeah, indeed. So, it was pretty much straight off to Horizons. I had met Mark and Santi Burridge sort of in the last quarter of my time at Horizons, and some of the stuff they were talking about back then seven years ago, when I say it it feels like quite a while. I remember meeting Santi and sitting down at the cafe and he was banging on about dynamic asset allocation, and a beneficial learnership, and I wasn’t exactly sure what he had said, but I was like, that’s kind of very interesting and I might like to continue to listen to it.

Fraser Jack: [00:06:23] Basically, he’s so excited about it when he talks, that’s very crosstalk [00:06:25] of him.

Ray Jaramis: [00:06:24] Yeah, indeed. Yeah. I’ve come to realize that what he had given me for lunch with a cup of Kool-Aid. I’m just teasing. No, but yeah. So, I went into there, and I think they had an advisor retire or someone had exited the business at that time, which left an opportunity for myself to come in, and I really haven’t looked back since then.

Fraser Jack: [00:06:47] So, that was appealing to you? Obviously, coming through Horizons, they would have been offering you a position to start with them and then get into your own business crosstalk [00:06:59].

Ray Jaramis: [00:06:59] Yes, yeah.

Fraser Jack: [00:07:00] That was a decision you had to make at the time?

Ray Jaramis: [00:07:02] Yeah, and it was a really, really attractive proposition. I come from a family of business owners, and I quite liked the idea of being the master of your own destiny. So, that was certainly something that was appealing. At the time, I was doing the numbers on what that looked like and I thought I could make it work. But in my mind I was like, I mean, how old would I have been? I would have been, what? 23. In my mind I was sort of like, “Okay, I’m 23 years old, I’ve got an opportunity to start a business that’s fantastic. I’m pretty green in the industry and I just don’t know what I don’t know, and ultimately, that path will always be something that I would like to think is available for me to pursue. But I just don’t know if I want to race there just yet because there seems to be a lot of interesting things going on that I don’t fully understand yet.”

Ray Jaramis: [00:07:49] So, unlike a lot of my previous decisions, I was a bit more patient and thought I would continue to learn instead of jumping off the deep end.

Fraser Jack: [00:08:02] Yeah. Big decision to make for a 23 three year old, I suppose.

Ray Jaramis: [00:08:05] It was really attractive, and a lot of the guys did end up taking the, what they call PSO or practice startup offers, because ultimately you could just build your own destiny, right? You had an opportunity to speak with an existing book of clients, which sort of felt like it made sense, and then ultimately, it felt like they gave you a slab of concrete and then you’ve got to build whatever house you wanted to build, right? So, if you wanted that to be a big mansion and have people working for you and all that sort of stuff, then that’s great, or if you wanted a lifestyle business that provided an income that allowed you to maybe spend a bit more time at the pub on a Thursday and Friday, then that’s fine as well. I didn’t get a sense that anyone was kind of dictating that, and that was really cool as a 23 year old to kind of think through.

Ray Jaramis: [00:08:49] But again, I don’t know what it was over me beyond just being a bit thoughtful of ... I still feel a bit ignorant. I still don’t know what I don’t know. I’m planning on being around for a little while, so if I spend a few years learning before I do do something, then that’s probably not a bad thing.

Fraser Jack: [00:09:07] Yeah. I guess that makes a big difference. I think when I was 23, when everyone was 23, we knew it all.

Ray Jaramis: [00:09:15] Well, it’s unlike me. Certainly previously and going through high school, I was always, as soon as I understood the basic layout of a concept, I thought I understood it intricately and would kind of run off and think that I was good to go. And I’ve always wanted to start businesses, I’ve always sort of been mindful of what opportunities are around. So, when I was confronted with the decision, it was interesting that I actually went the other way, and I was like, “Not sure.” Yeah.

Fraser Jack: [00:09:46] Yeah. So, you went the other way, and I guess when you look back on it, you’re pretty happy with what you’ve achieved there. Tell us about you when you first started and walking into an established practice and how it was for you.

Ray Jaramis: [00:09:58] Yeah, for sure. Well Treysta was a business that was somewhat in transition at that time, and what I mean by that is ... And this is something that we did at the University of Sydney, they did a bit of a teaching case on us. And basically, it was an advice business that looked and felt like a traditional advice business in that we would do all the investment management, we would handle the share trading, and all of that stuff would land on an advisor’s desk on a Monday morning and you would kind of try and manage that through, and that was your kind of management of your client’s financial life.

Ray Jaramis: [00:10:33] Through the incorporation of the work that Santi was doing and what ultimately became implemented portfolios, we’re able to extract the noise and the heavy lifting, I guess, of the investment piece out of the trace to business into its own entity, and ultimately off the advisor’s desk. So, when a client came in to see us, we were ultimately building an investment journey that had a relatively long time horizon as investment journeys often do, with a very robust infrastructure, and then that was not set and forget, but it was certainly done from a hands-on perspective. So, any advisors kind of sitting there, and this is what was kind of happening in my early time, thinking, all right, well, we’ve got a pretty empty desk now, where do we add value? What has that freedom allow us to do?

Ray Jaramis: [00:11:19] And that was kind of a whole bunch of different things. So, that was do we think about investing in a robo type of white label technology and ultimately open up our service to many, many people in a one to many type of offering and offer our services to many more people than we might have otherwise have been able to if we didn’t have the tech, or is it more understanding the behavioral side and what we ultimately did, which was financial life management.

Ray Jaramis: [00:11:49] And I think what drove the decision making was going the United States on these US study tours. I remember in 2014, we went to Boston, and in State Street in Boston, they’ve got something called the Center for Applied Research, which is a really, really interesting department. Unfortunately, they don’t do a lot of public stuff, but if you can get your hands on something they’ve done, take the time to read it. They don’t have a commercial agenda, and at the time, they had produced kind of a white paper called the Folklore of Finance, and the Folklore of Finance was identifying the areas that an advisor actually added value. I guess, in another way of saying it, it was very similar to what Vanguard do at the moment with their Advisor Alpha and those sorts of things.

Ray Jaramis: [00:12:35] And that sort of reaffirmed for us that the behavioral value proposition was one that you could consistently deliver value and kind of not guarantee returns, but certainly guarantee value and consistently deliver it, and that it was a commercial proposition as well. We were seeing businesses in the US that were doing it and we’re happy with how the new world was kind of treating them.

Fraser Jack: [00:13:01] Yeah. I don’t think I’d put that with the Alpha paper that they put out. They put a number on what an advisor has advised client, just in the decision making and in not keeping your clients from making bad decisions at the wrong time emotionally. Were they able to, in that space with their Folklore or Finance, put a number on it or was it just ...?

Ray Jaramis: [00:13:23] No, I don’t remember seeing a number, and I mean, it was 2014 so I’m testing my memory, but I don’t remember seeing a hard number beyond ... Maybe there was, I don’t know. I don’t know. But it was a robust study, so I think it was more of a qualitative type of outcome as opposed to what Vanguard ultimately did.

Fraser Jack: [00:13:44] Yup, yup. So, you moved in. Obviously, quite a bit changed going on as you moved in there. So that’s, I guess, pretty exciting, isn’t it?

Ray Jaramis: [00:13:53] Yeah. Well, and then that kind of led to the education journey. So, I was one year into Treysta-ish I guess, and was saying to mark and the guys here that I’d quite like to pursue ongoing education, and was looking at a master’s of applied finance or ACAP. I’ve kind of always enjoyed working in maths and I just like the logic of it. You kind of remove the subjective element of it, which I always enjoyed at school, and working in that space, working finance, that made a lot of sense. Then it was, well, let’s really think about where we’re adding value, and go back to that analogy of a lot of the investment work has been slid off to to the guy next to me in different business, where are we going to add the value? And is it really focusing on the intricacies of a applied mathematical degree, or is it in understanding the people and applying the numbers to a human, which is ultimately where we want to focus?

Fraser Jack: [00:15:00] Yeah, so you chose the behavioral finance or the behavior route?

Ray Jaramis: [00:15:01] Yeah, indeed. Yeah. And then I was on my way to a psychology degree at the Australian College of Applied Psychology, ACAP. I had a couple of clients or I have a couple of clients who are psychologists and sort of met with them and had coffees and saying, “We’re talking about doing this sort of stuff. What do you think?” Because we were looking at a couple of the larger universities in Sydney and they said, “Look, certainly can. It’s going to be an eight year journey-ish because a lot of the psychology degree, their clinical psychology degree is quite more clinical, quite academic, a lot of statistics, it’s not necessarily applied. However, there is the Australian College of Applied Psychology, and what they do is they teach the applied element of it. So if you need to extract the theories and the basis in a psychology and behavioral discipline and bring that into financial services, then that might be the way to do it.

Ray Jaramis: [00:16:07] And I can’t thank that type of guidance enough. As we were talking just now, I’ve kind of opened up my old curriculum, and it’s looking at things like counseling skills, life coaching, coaching applications, applied social research, group work, social policy, social legal, ethical frameworks, organizational theories, managing ambiguity and change, mental health policy, psychology of peak performance, developmental psychology, positive psychology. I was looking at it and there was just so much there that you could kick at and put into a financial planning business and I think, really ultimately help people, which I was like, “Yeah, I’m all in.”

Fraser Jack: [00:16:52] Yeah. That was fantastic. How long was the course and then what was the qualification you did?

Ray Jaramis: [00:16:59] So, the formal degree is a bachelor of applied social science, social psychology is the formal designation, and it took me five years, I think, five years. It’s a four year full time bachelor’s degree, but I managed to get it done in five.

Fraser Jack: [00:17:17] Well, congratulations.

Ray Jaramis: [00:17:19] Thank you. Yeah. People always sort of go, “Gee, impressive workload that you’ve got through.” And I think at the time, it’s a bit like, if that’s the work that you need to get done, you just do it, and then now that it’s done and I look back and I look at my current schedule I’m like, “I don’t know that I could do it again.” I think I’ve adjusted without it, so it’s gone, that time has gone somewhere, I don’t know. Maybe my fiance might know.

Fraser Jack: [00:17:49] Yeah, I’m sure it was [crosstalk [00:17:51] anyway, right? So, you wasted no time.

Ray Jaramis: [00:17:53] Yeah.

Fraser Jack: [00:17:54] So, tell me, does that give you all the qualifications you need for the new framework?

Ray Jaramis: [00:17:58] Absolutely not. Yeah, I mean, the FASEA things have been of a can of worms, mate, so I don’t know that I fully understand it yet. I know certainly with the work that we’re doing at XY Adviser, we’re desperately trying to build a training platform that is designed to certainly meet a lot of the requirements that FASEA has introduced but what sort of extended beyond that. Ultimately, where my education pathway lays from here, I don’t know, which I think is probably a bit of a common thing at the moment, I suppose. We’ll, sort of wait to see how developments transpire over the coming months and seek to make a decision then.

Ray Jaramis: [00:18:44] But ultimately, I’d like to think that I can try and integrate something that ... I’m not true to traditional. I certainly don’t know that I’ll get away with a masters in psychology or anything, but if I can get something that’s a bit of a hybrid, I’ll be happy with that, I think.

Fraser Jack: [00:19:02] Yeah, it’s one of those things, like I mean, I look at your pathway in Horizons, you have been learning so much, and even working in the business and then going through that full degree, which is inevitably is so helpful with your conversations with clients that more than any degree that is teaching you how to calculate formulas, yet you still, when it comes to the what’s recognition of prior learning, you might be missing on a lot of stuff.

Ray Jaramis: [00:19:31] Yeah, indeed. And I think, certainly, a lot of your listeners would probably be in the same score, but I would love the regulators, or FASEA, or just a line of communication to just really sort of analyze where it is that we can really add value as opposed to from a defensive legal position, which is taking the compliance box. And that’s immensely important, the compliance is immensely important, but you know, gee, if you understand someone at a deeper level and you can help them build a pathway that is designed for them to sort of live the optimized life, what can you ask for? That’s kind of a utopian thing, right? It’s a bit romantic.

Fraser Jack: [00:20:23] Yeah, yeah. I’m a bit on your side on that. And there’s a lot of this legislation and that’s why I [crosstalk [00:20:30] that. But yeah, it would have been good to let that are related to financial planning be certainly be included all the psychology and behavioral finance stuff thing.

Ray Jaramis: [00:20:38] Yeah. Hopefully it’s not too late to open line of communication, because geez, XY Adviser are there. If you’re listening, we want to talk.

Fraser Jack: [00:20:46] Yeah. Totally at XY, because that really started with you guys and the mates that you met at Horizons or not with Horizons, but not even long after that, because it was only about a year or so after you finished up Horizon that you started XY, wasn’t it?

Ray Jaramis: [00:21:02] It was, yeah. Well, it officially started a year after, but what I got out of Horizon, certainly the guys, that’s Clayton Daniel, and Adrian Patty are my partners who we met through Horizons and Clayton introduce Ben Nash into the mix who I think was at Dixon Adviser at the time now has his own business at Pivot Wealth. Something that we really cherished at the time being green, sort of running around trying to do our best was learning off each other’s journeys. And I sort of started talking earlier about the collegiate type of feeling that we had in it. It’s not a wishy washy thing, like that was a legitimate thing that we got to do.

Ray Jaramis: [00:21:46] One of my really good friends, Marcus Roberts, I remember once a week we would grab breakfast on a Monday morning and we’d literally be with client packs swapping over bacon and eggs talking through what we’re doing, and I really valued that. And this is probably where it came from. I don’t know what I don’t know, but I know it’s probably a lot. And then kind of came out of Horizons and I found myself at Treysta and the guys were doing their own thing and I was like, “I kind of miss that.” I don’t know that I want to lose that sort of network. I mean, there were associations that existed at the time and certainly still do, but I just don’t know that they were having conversations that I understood or maybe I was probably a bit too green for them at that stage. So I just wanted a safe space where I could be a bit silly and ask why something didn’t make sense and get an answer I guess.

Ray Jaramis: [00:22:44] And that was the embryonic form of XY Advisers, so we’re sort of shooting the breeze between each other the first year out of Horizons. And it was Clayton got [Brad Fox [00:23:02] to talk at a thing that we put together and we were beyond nervous. We sold 30 tickets and we were asking every friend to buy tickets on seeing Brad Fox talk to us about what a future business would look like if it existed today, and that was the topic. And the feedback from that was really positive and we were like, “We should do this again.” And that manifested in us doing an all day event, which was called the Modern Adviser. And there was 2[00 people there and that was just fantastic. And I think for us, that was like, “Yeah, we have something here. We kind of have a bit of a responsibility to not let this go.” Yeah.

Fraser Jack: [00:23:52] Yeah. It’s been fantastic watching the journey certainly. I get the idea of you’ve got some camaraderie going on in a small group and being able to help each other in a small group. And I think what the difference is what you guys have done, have you been able to expand that out into now a large group and maintain that community aspect and feel to it. Congratulations on that.

Ray Jaramis: [00:24:14] Thank you very much. It’s humbling. I think I speak for all the guys and Emily as well, who’s been with us for 18 months and is beyond helpful. We feel a sense of duty and that’s a real thing where we just don’t want to stuff it up for everyone because it’s we’re the future generation, we say, how do we best. It’s not about us coming up necessarily with the ideas, but how do we drive an environment where the ideas get created, and that’s just how it’s manifested. As you kind of do with the podcast, we’ve got the training portal, the Facebook group, and events and such like. So hopefully, we’re doing a reasonable job because it’s really enjoyable.

Fraser Jack: [00:25:04] Now, that first event that one day of being a modern advisor, what was it about modern advising and taking the old word of advice and maybe that’s not working, we need to think about what’s happening in the new world. What was it about that?

Ray Jaramis: [00:25:16] Well, I think at the time, the time was a bit different. I can’t remember the numbers exactly, but it was something like the average adviser was 59 or something. So, we were like, the average advisor is 59, the average person getting advice is a retiree. These people do not necessarily look and feel like us. So, well, what does a modern version of that industry look like? Because ultimately, I wouldn’t go to my parents’ advisor or, I’m sure there’d be a bit of a disconnect there. So, what would I like to see or what would my friends like to see? And that was kind of the basis of it and it was awesome.

Ray Jaramis: [00:26:01] I mean, we had a Dr. Helen Parker from Sydney University talking about psychology and that was mad. He had Dane Holmes who video linked from London, who has a very successful advice business talking about how he spent a year in London and managed to service all of these clients. I just couldn’t believe it. This is fantastic. I mean, you can be an advisor in Sydney and not being Sydney? That’s great. And sharing all those ideas, we has Chris Bates who was banging the no commission drum and still does quite loudly. They apply to him. You know, it’s just these new and interesting ideas, it felt a bit like the wild west, but it was awesome.

Fraser Jack: [00:26:40] Yeah. Nothing like starting with a blank canvas and just having no rules.

Ray Jaramis: [00:26:44] Yeah. And that was kind of it, right? Because the rules are there, but maybe we’ve built them in our mind, let’s start with that clean piece of paper and see what we come up with.

Fraser Jack: [00:26:57] Yeah. Very good. I want to move back to what you’re doing now with regards to the work you’re doing with your clients. I know that you ... I call it goals based advice, you tend to refer to more about client’s values and getting those sort of things out. Talk to me about your clients, how you work with them, one of the things that you do that’s obviously different to a lot of the market.

Ray Jaramis: [00:27:17] Yeah. I’ll start with kind of the, not the elephant in the room, but I think we would be a bit polarizing in challenging the idea that goals based advice truly adds the highest level of value. And what I mean by that is, I guess what can be simply described through understanding what effective forecasting is. An defective forecasting is basically the idea that, when we forecast what we think we want for ourselves, we’re actually not very good at doing it, however, to make things worse, we think we are really good at doing it. If you think about that in a financial planning context and you sit down with a client and say, “Well, what are your goals?” Clearly, that’s poor framing, but if you two don’t nail that or the client is not sure necessarily, you might end up with a result of what they think they ought to say or they might feel like they need to say, I should’ve said, or things that societies, you know, a bigger house, kids go to private school.

Ray Jaramis: [00:28:34] So, our theory would suggest that rather than starting the conversation there, strip them back a layer and go to the values of a person. So, that’s where we talk about values based advice. So, what drives you as a human? Are you someone of a give type of personality? Are you someone that is a safety type of personality? Are you ambitious and enjoy an excitable life? What are the core things that are you as a human being and then start to introduce numbers on top of that. And I think that just extends things a little further than the goals piece. Does that make sense?

Fraser Jack: [00:29:22] Yeah, absolutely. I completely agree with you because a lot of the time, people will just go, they don’t know what their goals are, or they’ll say something and it’s flipping and not really thought about, and that becomes the goal. And a lot of financial plans, it’s like, “Oh yeah, you want to do this thing,” and then you often ... it doesn’t happen a lot these days but it used to in the past, or any one of them and you want to protect your wealth and you want to do this, and they become instantly they are strategies but they’re not actually goals at all. Like I was being the one of my kids go to private school, I don’t have a goal of paying school fees, that’s not my goal. My goal is to get my kids an opportunity that I ever had and to feel like I’m a good parent. And those are the things that are actually driving me, not paying school fees. Yeah.

Ray Jaramis: [00:30:08] When you sort of saying that, I was like, that’s interesting that you get to ... I mean, does that come from a place of safety in that if I ultimately put my kids in a private education environment, then that would hopefully give them the best chance possible to have a really successful life? Or is it a of a drive type of thing where it’s like, that’s a lovely thing for me as a father to provide to my kids and I work hard so that I can do that and that’s how I get my sense of purpose, or not? And that’s kind of where we start from.

Fraser Jack: [00:30:43] Yeah, I love it. It’s a perfect conversation to actually understand and really know your client.

Ray Jaramis: [00:30:49] Yeah. I think affective forecasting is a really interesting thing for advisors to think about. And so there’s kind of four areas of it and I won’t go into it. But the areas that we overestimate are in the duration and the intensity of the emotions, which kind of makes things amplified, right? So, if you think about what life would look like in five years or the thing that you want in five years, we tend to overestimate the intensity of that emotional state. So, in a worst case scenario, you’re building a goals based plan that you don’t meet, now what happens then? What happens four and a half years into a five year goal based plan that is not achievable anymore because maybe my priorities have changed. I don’t know.

Ray Jaramis: [00:31:42] I think an interesting thing for anyone to do is, if you met yourself five years ago and asked yourself what you would want in five years time, I mean, would you have a sense that you would nail that question or it’s like uh?” Actually, you know what? Five years ago is a bit different to me today. It’s an interesting thing that thinks about.

Fraser Jack: [00:32:05] Yeah, it’s certainly hard to. And then I always also say that those five year goals never come, like the five year goals are always five years away, and they never come.

Ray Jaramis: [00:32:16] Yeah. And I’m about to say, contrary to what I’ve just said, not to say that goals are not important. I think it’s important to be tangible and to understand where things are at and the reality of things. I quite enjoy sports, so I do understand the goal, but I think it needs to be done from a different place. Yeah.

Fraser Jack: [00:32:40] Yeah. So, what are the things that you do in conversation with your clients in tackling that view of effective forecasting?

Ray Jaramis: [00:32:48] Yeah, cool. So, we go through a gamified process with clients to help them understand their heuristics and biases and the things that influence their decision making. And we would traditionally, if it was a couple, we would do it separately from each other and not necessarily share the answers until we’ve gone through the process. So it goes through the gamified process, It’ll kind of give us a sense of their persona, and then we’ve got a tool which allows us to delve deeper into that. So, if your value statement that came through was that you enjoy a life of learning new things, that might mean something very different to you than to somebody else, so we understand what that means. Is that continuing to study? Is it picking up an instrument? What is that thing in your life that it’s that value?

Ray Jaramis: [00:33:39] And there’s a few psychology models built into it. So, there’s things like the scaling questions or on a scale of one to 10 relative to what you’ve just told me, where do you sit? In an idealized way, where would you ideally sit? So, if you said, “I’m at a four, I’d love to be an eight,” and then you sort of go into talking future state. So, if you fast forward now in a couple of years’ time and you’ve hit an eight, what things have you changed that’s allowed that journey to occur?

Ray Jaramis: [00:34:09] And then you do it for both sides of the cup, and it’s just a quick example. Do all that stuff. Do the six point snapshot of their financial world. And we as advisors then start to give just a bit of a health check so we can identify things. It’s looking at assets, liabilities, income, insurances, and just anecdotal information that we’ve noticed, give them a health score and give them an overall life satisfaction mark, which is, from a behavioral or values side, this is where you’re at, from a financial side, this is where your score, mesh those together and that’s where your at-ish. These are the areas that we identify that we are able to help you, and we sort of proceed then on a kind of a hybrid financial plan, quasi life plan journey, which is our process. Does that kind of make sense?

Fraser Jack: [00:35:05] It does now. So, let me just break this down. This is obviously a pretty established process, and again, [inaudible [00:35:13] process, which is quite complex and intense obviously. It took a lot of years to get this right and to get the actual gamification done and the front end of all that so that the consumers went through this journey. For somebody starting out though, a couple of things, one is, what would be a starting point for somebody who wanted to sort of go a bit deeper in this without having the gamified protest because they wouldn’t do because you guys have got that. But what would that be? And if we go through your process of advice, you go through all that with the client and I’m guessing that’s going to take 90 minutes to two hours of conversation with them, and then you sit down and you go through your value proposition as in what you offer as a business and then asked him to become clients?

Ray Jaramis: [00:36:01] Yeah, that’s right. It isn’t for everybody. I think something that we had learned early on in the piece is it can feel somewhat out of left field for someone who’s walked into a financial advisor’s office because they want to consolidate their super, and you’re like, “Well, how do you feel?” You can’t do that necessarily, so there needs to be a bit of qualifying. So, one of the questions that I was going to go into later, which is for someone looking to transition into this type of world, something that I’d learned from ... it was actually an M&C Saatchi exec, and he said, “Look, if you’ve got a business and you’ve got an existing client base, you’ve got to be really careful that you don’t alienate or offend them, right?” So, if you start banging on about this new thing that doesn’t look or feel like what they’ve bought into to begin with, you’ve got to be really, really careful with that.

Ray Jaramis: [00:36:56] So, before you go on that journey, just create a new entity, and it doesn’t necessarily need to be a legal entity, but a new identity. I don’t know. Phrases, phrases, happy days, whatever it is, right? And you give that a look and feel, and it doesn’t necessarily need to be explicitly linked to your core business, but it feels different. It does the thing that you want, and you can test things. So, you can go outbound with that type of framing to begin with and take people through that journey, and ultimately develop a business that way, and then over time, start to transition from your core business into that new new thing, or not if you find that, oh, I’m not sure that I’m really there yet.

Ray Jaramis: [00:37:49] That, from a strategic perspective is how I sort of see an idealized way of doing that. However, for advisors who are kind of keen to start incorporating some of this stuff into their existing meetings, I think there’s a couple of things. So, one of the biggest things I’ve got out of my psychology degree is the power of being introspective. And what I mean by that is, I was talking to my fiance earlier about ethics in financial advice, and I say, “Well, my view on ethics is, because of my studies, and when I talk to a client, I’m really clear about understanding what my own biases, and flaws, and worries, and comforts are.” So, if I talked to Fraser about his financial life, I can be very, very confident that I’m not giving you too much in my baggage, you know?

Ray Jaramis: [00:38:49] So, I think for a financial advisor, all my optimism, I need to be really clear about where you are at and help you through your journey, not give you my stuff. So, for advisors who are looking to do this, just think about just being a bit introspective and helping a client start to do that stuff. So, I think you can start to unwind a level of thinking that takes you down that pathway. And that leads me to the actual way you do it, which you through really, really great and effective questioning. Questioning, there’s lots and lots of lots of things out there about how to ask really good questions and geez, spend a lot of time on it, and do it and do it and do it.

Ray Jaramis: [00:39:30] And sometimes you might see what you are rating and be a bit of a skeptic. I’m a natural skeptic, but geez, it works. And it doesn’t need to be anything complicated beyond. Don’t ask closed questions when you’re trying to explore into things and layer your questions, so phrase or what does that mean to you? What does that mean to you? What does that mean to you? When you ask that five times, then you start to get to the core of what people are really trying to say, but you just hopefully get there.

Fraser Jack: [00:39:57] Yeah. Very good. Thank you. So, asking those questions, are there any categories that people should be looking out for with regards to the layers underneath the goals you sort of mentioned before, sort of like a giving type of person or safety or anything like that? Is there any categories that you would sort of say are the main ones people are?

Ray Jaramis: [00:40:18] Oh yeah. So, in our process, we’ve defined ... so we’ve got an excite personality, a drive personality, a safety personality, a give personality and one other which escapes me just now. But they are kind of the building blocks I like, if you like. And then depending upon where they are, different personalities could have the same sets of numbers that are at applicable to them but mean totally different. So, they’re kind of the core ones. But one basic one that I think is easily accessible and most people should know about is the, is it HBDI, the quadrant one? Let me have a quick look. This is one of the more popular ones.

Fraser Jack: [00:41:10] So, this is really around helping your clients at the beginning, then maybe looking at helping them with a bit of educational areas that you think they may need to think about, if you like, prior to receiving advice. And then after that, you sort of get into the financial advice piece. I was going to ask you about risk profiling as well because obviously knowing all this information at the beginning, when it comes to risk profiling, it’ll be very different results you get or very different process if you go through the standard risk profile.

Ray Jaramis: [00:41:41] Yeah, indeed. So, we look at risk in three kind of scenarios irrespective of what the risk profile is. So, pessimistic marker conditions, base case marker conditions, and optimistic marker conditions, which is just a Monte Carlo type of simulator. And what we do is take people through a process which was developed at Berkeley University, to understand what their tolerance for risk is, and then we receive a result. Once we’ve got that result, we put that into the Monte Carlo simulator and start to layer in their financial life. So, current assets, age of retirement, idealized drawdown amounts, any one of capital expenses, and that will take us through a journey in those free marker conditions.

Ray Jaramis: [00:42:35] And then from there, it’s really as simple as may start to have a conversation to say, “Based on your answers, this is what life looks like.” And clearly if they’ve said, “I’m portfolio one really nervous type thing,” well, that’s okay, but this is what that looks like. So where are the levers that we can stop to play? Is it one, do we need to start talking about understanding whether or not introducing additional risk is something that you’re willing to understand so long as it’s in the context of your financial life? Or is it changing the amount that you’re drawing from retirement? Or do we not introduce those capital expenditure items or a longer work? So, it’s about the risk profiling is done in the context of their longevity plan. And it’s trying to push risk down always. I’m kind of fundamentally conservative, so I guess that’s something I need to continue to work on.

Ray Jaramis: [00:43:30] But ultimately, I believe that if I can achieve a client’s financial plan by taking a lower amount of risk, then I would seek to kind of show that as an option and then start to introduce risk on top of that. But so long as it’s done with the right understanding, I suppose.

Fraser Jack: [00:43:52] Fair enough. And with your client process at the moment, how often ... let’s say it’s a new client coming in, you spend a lot of time with their values and goals and then you get into a little bit of education and then the advice piece, what does that process look like? Is it a three-step process or how many meetings and how long does it take?

Ray Jaramis: [00:44:10] Yeah, the values process is three meetings. So, an introductory meeting where we might start to do the gamified stuff, and potentially even the questionings that could take about an hour and a half. At that meeting as well, we’ll get a very, very basic financial position. So I wouldn’t even call it a fact find, it’s kind of a real basic snapshot of their life. We’ll use the results that we then got out of that process and build that life satisfaction scores. So, the technology will ultimately do this for us, but at the moment, we’re sort of been involved in building it, so we’d invite them back in and present them to them, along with a potential kind of proposal from a financial planning perspective where we’ve identified we can add value, which then manifests in the third meeting being an SOA, and it’s an SOA, but it’s also got a guidebook which builds in the values based elements as well.

Ray Jaramis: [00:45:15] In the current regulatory framework, it’s kind of the best that we can do. I think ultimately, we’d like to try and see that as a much more integrated process. I think we’re quite open to continuing to evolve and find new things. So yeah, at the moment, three stages. I think ultimately, if we can get technology to build that down to one and a half-ish to two, that would be fantastic.

Fraser Jack: [00:45:37] Yeah. And then obviously, because a big part of it is the coaching aspect and the changing behaviors, if you like, and a lot of that or understanding behaviors, it’s all very good that somebody wants something, but if their behavior is very different to that, then there’s something underlying. How often did you see them in that first year?

Ray Jaramis: [00:45:56] Yeah, sure. In the first year traditionally, so I’d often invite people in up to three months, and that would be one ... I’d want to make sure they’re very comfortable with the investment side of things because we do have a firm investment philosophy in terms of the way things are done, so I really want to make sure that’s knocked over. And also as we’re three months in, whatever changes with we’ve discussed should start to be implemented, quite like 90 day runways, so a sanity check on that. Seeing if there’s any pressure points or friction areas that aren’t quite working the way that they had imagined and tying those up. And then probably, often not another time until the end of the year unless there was a reason to. If I sense that there was a need to catch up in a couple of months after that, then we would do that. But ultimately, after that kind of three months, I generally sort of we wouldn’t necessarily catch up until the end of the year.

Fraser Jack: [00:47:06] Yeah. And do you have any way of checking their goals or keeping them accountable for those sorts of, I don’t know, spending habits or anything like that?

Ray Jaramis: [00:47:13] Yeah. The guys are in San Francisco at the moment, and one of their kind of jobs I suppose is to source out technology which will allow us to do that better. We record it in our Salesforce CRM and desperately tried to nudge, is the terminology, or prod people to make sure that they’re on track. It is probably a bit more of a manual process than what we’d ideally like, so we have a sense that a tool would exist to make this automated, so we just need to find it I guess.

Fraser Jack: [00:47:54] Very good. And what sort of things are you work on? You said the boys are over there now, what other things are they working on or are you working on for the near future?

Ray Jaramis: [00:48:03] Yeah, sure. So, often, they’ll go to businesses without really having an agenda. So again, it’s a case of, well, I don’t know what I don’t know, so I’m just interested to hear some wacky and wonderful ideas. There’s a lot of businesses in the US who are very successful and quite large in their operations around the behavioral life management stuff. So, I think for us now it’s about refining the process and getting it to a point where we’re comfortable that we can take it to scale and ultimately broaden that out to a larger set of our clients, and potentially, I guess the idea would be getting the technology in the process to a point where we can white label it and start to give it to other advisors to start to introduce in their business as well.

Fraser Jack: [00:48:55] Fair enough. Now, tell me, I’m just going to go back a little bit to the outcomes for the client.

Ray Jaramis: [00:49:00] Yeah.

Fraser Jack: [00:49:02] To me, it’s quite an emotional journey to come on, to go through and really get those values out onto the table. Do you want to talk us through how a client reacts to sort of the start of the process, because I would imagine sometimes at the start of the process, people are a little bit reluctant to come out of their shell and then by the end of it, they’re pouring their heart out on the table.

Ray Jaramis: [00:49:21] I agree wholeheartedly with what you’ve just said. Initially, we took people through this process who we thought would be the hardest to do. So I had an engineer, our corporate lawyer went through it. We tried to find people that would just be like, not to show me the numbers. And with no word of a lie, it opens up stuff very, very quickly to the point where ... We kind of went back to the guys who helped us develop it going, “This is really powerful. Like, are we okay?” We are getting to places very, very quickly when we first started doing it. I was amazed. I was amazed. Like I said, I’m a bit of a skeptic, so I’m kind of came to test the waters and really quickly, really, really quickly. I don’t know why that is. I think maybe just a bit of framing, but I was, you know, people are people and generally okay to kind of go for the ride and so long as they’re not feeling threatened. Yeah, it was amazing.

Ray Jaramis: [00:50:29] Because I think also, I was thinking, I wonder if this is a bit of an American thing. Americans are really good about talking about their emotions and those sorts of things. Everyone in the states has a therapist. You’ve got a marriage therapists, a business therapist, I don’t know, dog therapist. So I was like, a financial therapist kind of I understand why that would be a thing. Australia is probably less so inclined to talk through all of their emotions. But yeah, it was amazing. It worked, it works.

Fraser Jack: [00:50:57] So, if you had to move to the states you have to change your occupation to financial life therapist?

Ray Jaramis: [00:51:02] Yeah. They call it, yeah, money therapists. It’s a whole industry and there’s some wacky stuff there. I mean, what’s their population? 350 odd million. There’s a big enough population to build some wacky niches.

Fraser Jack: [00:51:20] So, tell me, you mentioned that before that you do this separately, how does that go for as you know, like the outcomes for differences in partners and husband and wife and that sort of thing?

Ray Jaramis: [00:51:35] Yeah. So practically, it’s just we’d have two people in the room, I have two advisors say, and we’d just do it on the other side of the room from each other. The idea of it is to allow the couples to understand more about their partner that they wouldn’t have otherwise had an opportunity to. And the reason being is, all too often we would see people in relationships where one side of the couple is driving all of the financial decisions and clearly with the intention to do the right thing, and the other side of the couple is sitting more passively until something went wrong. When something happened, there was then a moment they go, “Well, hang on. Why is this like this? I thought you had this under control. Had I have known that this was the way things are, I would never have agreed to it anyway.” And that can be from things like private school, from buying a bigger home, creating a stretch type of life because you’re kind of just too nervous to have this conversation around money, which is taboo.

Ray Jaramis: [00:52:40] So, by separating them out, testing their values, asking them, and then presenting them together, what we then ask is that our clients understand how their partner may feel about a particular thing. So, if we are talking about buying a bigger home or whatever it is, you can understand that that’s from a drive personality, so there’s a sense of ambition that’s coming from that, whereas the other one’s coming from a safety side. So, if we can frame things in a way that satisfies both an ambitious but also a conservative type of person, then collectively can we satisfy those values together in a way that we all agree to the financial plan collectively so that if something were to go wrong, no one person in that relationship can be blamed because with the best plan in the world, we went through every which way and we all understood what we were going in for.

Fraser Jack: [00:53:41] Yeah. And there’s a lot of ownership I guess from the clients as well.

Ray Jaramis: [00:53:42] Yeah, yeah. And we still get it sometimes where we’re like, “Oh, you’ll struggle to get the other part of ... her in or you’ll struggle to get him in.” I do all the deciding. Well, it’s really good for them to be informed, but also it’s really good for you to be informed, for you to give some of that back to the other person, so you can collectively own your life. I mean, that’s what it’s all about, right?

Fraser Jack: [00:54:08] Yeah. With this meeting, it’s always in your office or are you able to do it remotely, that sort of thing?

Ray Jaramis: [00:54:15] Yeah. Skype is pretty cool. I have done quite a few over Skype. I think at this stage we prefer to do them in the office. Just where we’re at with our development, there’s quite a bit of framing that we still need to do, and I just find that it’s probably a bit of a barrier to do that virtually at this stage. But ultimately, I would like to see the first stages of our process done automatically and self driven so that we could have that potentially as a kind of emotional freebie for people to do, and then that would get to a point where like, “Ah, that’s really interesting. I learned something. Maybe I should pick up the phone, have a chat with the guys.”

Fraser Jack: [00:55:00] Yup. Looking forward, we sort of touched on the education stuff, but there’s obviously a lot of other pressures going on in businesses at the moment from compliance, or commission, you’ve got PII or those sorts of things going on. How do you see the next few years playing out and into the longterm with businesses? I mean, there’s a lot of pressure on valuations of business at the moment, all these sorts of things.

Ray Jaramis: [00:55:21] Yeah. It’s a real timely one, right? I mean, clearly in Australia we’re going to see a change and we’re starting to see the larger guys selling off their product arms and all advice arms. But ultimately what I would like to see, I guess, or ultimately a model that I see would make sense in Australia is kind of the one that exists in the US, which is in the US, you can be either somebody who looks and feels like an Australian advisor or what they call an RIA and have a fiduciary obligation. And that’s a fee for service. Genuinely no affiliation with any product provider. You are what you are, you have to operate in the best interest of your client. So, you go to see somebody and you understand that you’re seeing an RIA, or you go into what they call a wirehouse or a product provider, and you go in and say, you remove that fiduciary obligation, you remove that fee for service barrier and say, “Yes, I can help you, but I only can help you within my product suite.”

Ray Jaramis: [00:56:33] And I would like to think that because you’ve clearly given that person a different label and a different name, you know in Australia, everyone’s called a financial planner irrespective of what’s behind you, so it’s hard to distinguish it, but in the US you’re not, you’re an RIA or you’re one of the others. So, if we can clearly distinguish that you’re one of the others, as long as you’re making that informed decision, I don’t necessarily have a huge problem with the idea of that existing for the purpose of solving the accessibility to advice problem. I think, ultimately in the Royal Commission, what we’re likely to see is a regulatory framework, which is strong in spirit but practically speaking is going to be very expensive for people to access.

Fraser Jack: [00:57:20] Yeah, it totally makes sense to me, and it works in other purchasing decisions. If you want to buy a Toyota car, you got to see Toyota and funnily enough, they sell you a Toyota car, or if your bank is XYZ bank, and you really like that bank, and you want to get a home loan from them, then you go to see that bank, and it’s pretty clear that that’s what you’re getting in. I think definitely there’s a model in that.

Ray Jaramis: [00:57:51] Yeah. Again, I think the problem comes in the terminology. I really like the idea of maybe thinking about what we’re all called and what we’re all called should be a reflection of what we are, funnily. And maybe it is a couple of different legislative frameworks that we’ve seen on that, with different titles and different requirements. I keep thinking about why that would not work and I don’t know why yet. That’s what I would like to see as the future for us.

Fraser Jack: [00:58:22] Very good. Now, we finish with a few questions. You sort of answered one about what sort of advice or tips you might give to different people. So, let’s start with consumer. You’re talking to a consumer, what would you say to them about tips for them about getting financial advice?

Ray Jaramis: [00:58:38] Yeah, cool. So, I like the idea of people maybe talking to a few different advisors. I think it’s absolutely true to say that a lot of people do really good things in very different ways, and it’s about matching personalities. So, I would say, date a couple of people, you know. Learn to land somewhere that is comfortable, that would be my guidance to the consumers.

Fraser Jack: [00:59:09] Great. Now, you’re talking to some younger advisor, what you do all the time, of course, through XY, what tips would you give to newer or younger advisors coming through?

Ray Jaramis: [00:59:19] Yeah. This is probably one on one really large one, and it was something that if I reflect on I probably should have pushed a bit harder on. It’s as simple as, it’s a bit of like a philosophy. It’s if something feels like it doesn’t make sense, it probably doesn’t. So, don’t accept the status quo if that doesn’t feel comfortable. Ask questions. It’s okay, and if the answers aren’t making sense, then there’s a reason for that. We’re not in a utopian world, so there’s opportunities for you to build things.

Fraser Jack: [01:00:00] And obviously, there’s plenty of communities out there as well, [inaudible 01:[00:03] where they can ask their fellow peers the questions.

Ray Jaramis: [01:00:08 Oh, man. And safe space, like there’s no silly questions either. We’ve all been there, right? I know it can be daunting because there’s a lot of people in that group, but man, ask away please, that’s what it’s all about.

Fraser Jack: [01:00:21] Yeas, that’s the key.

Ray Jaramis: [01:00:24] Yeah.

Fraser Jack: [01:00:24] Then turning to an advisor who has to make some changes to their business, obviously, maybe forced or they’re wanting to become a ‘modern advisor,’ what tips do you give to them?

Ray Jaramis: [01:00:35] Yeah, sure. So certainly, being intrinsic, so understanding where you fit. And the other thing, it sounds silly, but questions, questions, questions, questions, questions, questions, layer, layer, layer, layer, look into that. Have it play in a couple of meetings, you’ll be absolutely surprised what you come back with.

Fraser Jack: [01:00:55] Now, if you could go back in time and do a bit of a do-over and give yourself some advice and tips and maybe something you could change along the way, where would you go and what would you say to yourself?

Ray Jaramis: [01:01:07] It’s probably the same answer as the younger advisor, which is if something doesn’t make sense, don’t be afraid, don’t sit with the status quo for too long, put your hand up, ask earlier, look at where things feel like there’s opportunities and pursue them.

Fraser Jack: [01:01:28] Fantastic. Right. Thanks so much for coming on the show. I really appreciate all your insights and you being really open about your business and how you work and I really appreciate that.

Ray Jaramis: [01:01:37] Really appreciate it. Thanks, Fraser.

Fraser Jack: [01:01:38] All right. Cheers.

Fraser Jack: [01:01:39] 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.