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Episode 24, Season 1

How Alan Smith built the best financial advice business in the UK

 

Alan Smith: [00:00:00] So, I went to a couple seminars. Early on I thought this at the time, this is the missing part [inaudible 00:00:06]. So, we need to bring this in. Because, this is beginning to answer the questions that I think most of my clients are asking. Which, and it still remains the same to this day, I think. I don’t care how wealthy you are, what the circumstances are. The biggest question that I come across all the time, whether it’s expressed or its just an inside thought, is are we going to be okay? Do we have enough? And unless you built that sort of software ... Unless you’re using sort of software it’s very hard to get someone doing the back of an envelope or an Excel spreadsheet is much, much harder to get any sort of rigor to that.

Fraser Jack: [00:00:43] Hello. And welcome to The Goals Based Advice podcast. Where I have conversations with pioneers of the new world of financial advice. I’m you host Fraser Jack. And I want to thank you so much for tuning in today, and for your feedback and reviews. I love getting them. And if you enjoy this podcast please share it with your friends and colleagues and leave me a review. But, I’d also like to thank our supporting partner Advice Intelligence for powering this podcast. You can book a demo directly from the Advice Intelligence website at wwww.adviceintelligence.com

Fraser Jack: [00:01:16] In this episode I chat with award winning U.K. advisor Alan Smith. Now, in episode 13 of The Goals Based Advice podcast Kyle Richards name dropped Alan as one of the best advisors that he had met. And in this chat we find out why. Alan built a highly awarded practice in the U.K. using a sound and [inaudible 00:01:35] philosophy, goals based approach, flat theme modeling, highly detailed processes and surrounding himself with only the best people to build his team.

Fraser Jack: [00:01:46] Now, this is a really long episode because Alan really opened up and just kept giving great tips around running his business, every little detail. And so, we just kept recording the pure gold. Let’s hit play on my chat with Alan right now.

Fraser Jack: [00:02:08] Welcome to the show, Alan.

Alan Smith: [00:02:10] Thank you. Thank you very much. Good to be here.

Fraser Jack: [00:02:12] Yeah. Now do you want to give us a quick overview of where exactly you are and yourself at the moment?

Alan Smith: [00:02:18] Where I am physically. I’m speaking to you actually from my home office in London. I’m here in Marylebone, in Central London. And we are right in the midst of winter. Today’s obviously ... Early February in the middle of winter we’ve had a very unusual weather occurrence. Well, relatively unusual for London, which is a reasonably heavy snowfall overnight last night. So, it’s sort of a little bit wet and windy out there right now. Which I suspect is rather different than where you are.

Fraser Jack: [00:02:49] Very different to where we are at the moment. Just going through a little bit of a heat wave.

Alan Smith: [00:02:53] Oh nice.

Fraser Jack: [00:02:54] Now, go ahead and explain to the listeners just a little bit about your business and your self at the moment as an advisor.

Alan Smith: [00:03:01] Yeah. So, I run a business called Capitol Asset Managements, which we self style ourselves as a boutique financial planning business. Small by design. No ambition to be a large national type brand or business. And we’re currently about 15 staff. Look after just under 200 client families. Got an office based here in the City of London financial district in London.

Alan Smith: [00:03:32] And really, we carved out a bit of a niche for ourselves. We’re very much focuses on the concept of delivering this idea of what is increasingly being know as lifestyle financial planning. [inaudible 00:03:46] and where our clients are today. What their ideal future looks like. And try sort of building the infrastructure and the architecture around that to give them the best possible chance for longterm personal success.

Alan Smith: [00:03:57] And that’s where we are right now. And I feel that we’re in a good place right as a business. And we’ve been around for quite a few years now. We’re a good place ... Our proposition seems to be gaining more and more traction as people begin to actually understand what is it firms like ours do.

Fraser Jack: [00:04:17] Yeah. I want to say also award winning. You know, like CFP of the year award winning.

Alan Smith: [00:04:23] Yeah. Again, quite deliberately part of our strategy was over the years we have put ourselves forward for a number of key industry awards. And I’ll be blushing in a minute. But, we’ve been quite successful. We’ve picked up a few awards over the years. Which, if nothing else is kind of a testament to the work we’re doing, how we’re considered by our peers. And so do the judges on these kind of awards.

Alan Smith: [00:04:46] And yeah. The latest reward we won was the what’s called the Charter Financial ... We’ve got a structure over here, which is run by the some main professional body, Professional Finance Society. And in a similar way that over here we’ve got Chartered Accountants, Charter Surveyors, what have you. All sort of Chartered financial planners.

Alan Smith: [00:05:05] And so, to be a Chartered financial planner sort of sets you aside. I think the last time I looked only about 10% of the market actually had achieved that level of status and qualification. And then to put yourself forward to be your the best Chartered financial planning companies ... It’s quite a punchy type level of rewards.

Alan Smith: [00:05:21] So, we went in for that and fortunately enough we one the award last year. And we’re really pleased with that. It’s a good place to be. But, you can’t rest on laurels.

Fraser Jack: [00:05:31] Yeah. Congratulations for that to by the way. And we’ll dig deeper to that business in a second. But, before we do, I just wanted to go back a little bit in time and just sort of work your pathway to how you got to where you are, and where you started out.

Alan Smith: [00:05:45] Right. Okay. Well, interesting. You might just about pickup, though I get accused of losing my accent. But, I’m a Scott by birth. I’m from the west coast of Scotland. And like many people before me had this idea as they grew up and went through college, university and so on. But, someone told me that the streets of London were paved with gold.

Alan Smith: [00:06:06] And so, I got on my bike ... Or, actually quite literally got on a train and just moved myself down here as a young single man. Moved to London with a view that I’d get a bit of work experience. Stayed here maybe six months, maximum 12 months. And then head on home back to Scotland. And that was about 30 years ago, and I’m still waiting on that return ticket home. So, I’m still here.

Alan Smith: [00:06:30] I’ve only really ever had ... I would say two main jobs in my career. When I moved to London I pretty quickly started working for ... What is now [inaudible 00:06:43] successfully. Effectively a global asset management financial services business. Then are listed companies sort of the FTSE 100 or FTSE 50 business.

Alan Smith: [00:06:54] So, significant global institutional brand and business. And I was there for quite a long time. For about 14 almost 15 years to work my way through that. And I can say I really enjoyed it. There was a lot of good in that time. It seems that there’s always change a foot. Certain it was change in those days. Going back we’re talking about the early 1990’s

Alan Smith: [00:07:17] Our initial goal at Financial Services Regulation have come in quite recently. The Financial Services Act, which all of a sudden just moved the goal post a bit. So, there was ... It’s proof that there’s always change. That’s one thing that’s always going to happen.

Alan Smith: [00:07:33] And as I say, I enjoyed my time there. And one thing, as I reflect back that I thought was pretty useful for me was that I ended up quite quickly in what we called institutional sales. I was promoting my companies brand, their products, their services into the intermediate market. [inaudible 00:07:51] with financial advise, independent advisory market, large companies and some smaller boutique type businesses.

Alan Smith: [00:07:59] And as I would go about my day or my business week. I often look at some of the ... What I would consider to be real best practices. Some folks were doing things I thought really, really super well. And I was doing things less well. And I often thought if you could cherry pick how these guys ran their investment models. How these guys charge their clients. How these guys ran their systems and processes. You can almost create this sort of super brand, or, super business of looking how ... Just picking all of the best pieces and best bits from companies.

Alan Smith: [00:08:29] That was kind of always somewhat in the back of my mind. But, as I say, I was there for a long time certainly by modern standards. I guess I got to a point in my life, I’m now in my early thirties. And it was almost a kind of look I’m either going to be here for the rest of ... One of these career people I’ve been here all my life type thing. Or, I’m going to have to make a move. Sort of a now or never kind of situation.

Alan Smith: [00:08:52] So, series of other coincidences and events, and I find myself speaking with one of the businesses that I was looking after at the time. It’s a very ... It was a sort of one man shop. It was a one man business. And this gentleman was looking to plan his retirement. So, he and I just got talking more and more. And it just seemed like a natural thing to do for me to just sort of take the leap and move into and go from poacher to game keeper I suppose. Or, the other way around, not quite sure.

Alan Smith: [00:09:22] But, just step into the advisory role. I thought having with all the experience I had with identifying what I felt was better aspects of running a good business, I thought I could give this a shot. I have to say there was very, very steep learning curve. All the things I thought I knew is very, very, very different going from a large company ... I always knew it was going to be different, I didn’t quite realize how different it was.

Alan Smith: [00:09:46] Adjusting to some day to day things ... You know, if you’re running your own small business and you’re computers not working, you can’t call IT and some guy comes and fixes it. Like big companies. You haven’t got a company car and gold plated pension scheme and all that sort of stuff.

Alan Smith: [00:10:00] So, a lot of lessons to be learned in the early days. And that little sort of new place, a very small business with a few clients. And that gentleman went off into retirement. And it was back to me. It was me and a secretary and a little one room office. In an area called Victoria, in London.

Alan Smith: [00:10:17] And I just sort of carried on and built the business organically. Just one client at a time. Word of mouth. Referrals. Brick by brick almost. And that’s the origins. That’s what’s brought us to where we are. And as we grew the business I knew I needed extra people to help me. I would just go out and find somebody. Find people that I thought would understood and got what I was talking about.

Alan Smith: [00:10:43] Because, my whole philosophy from early stages was probably quite different to traditional. A much more sales driven culture. I just felt there was something better that we could do. I kept coming back ... And it was probably my own personal experiences. My parents experiences with financial advice, which didn’t end well.

Alan Smith: [00:11:03] And I just thought this stuff that we’re doing is all well and good, but it’s not really answering our customers problems. That was the biggest thing to me. Selling them another product, or a pension, or whatever it might be, is all well and good. It’s making a difference and it’s helping people. But, it’s not really answering some of the big questions that people have got. And that was sort of part of my thought process and my evolution.

Fraser Jack: [00:11:25] So, when you took over that business and those clients would’ve been used to a certain level of service or a certain level of what they were getting with their existing advisor. And then, you took it over and you wanted to introduce something that was new and different. How did you go about that with their existing client expectations, I guess?

Alan Smith: [00:11:44] Yeah. It’s a good question. Because, they’ve been dealing with in a particular way for years, for decades in some cases. And I was the new guy coming in. I mean, it did work really nicely because Simon, the guy who I took over with, he hung around for ... Actually, in the end a couple of years. Then he went down to three days a week. And then he went to one day a week he would come in.

Alan Smith: [00:12:04] And it was just a communication process. He supported the thoughts and ideas I had. He had the kind of relationship and the legacy and the concept of these people. And I was the one coming in with a new thoughts and ideas. I think between the two of us we created a pretty good communication process. And at the end of the day did all the things I was trying to implement and introduce.

Alan Smith: [00:12:27] We’re better than what had been happening in the past. That was the view. We’re going to deliver better quality of service. We’re going to build in some sort of ongoing review type process. Historically, financial services is all about making a sale. And right in your legal contracts it would actually say, “Don’t expect us to call you again, unless you want to buy another product.” And I just thought that was somehow wrong. Maybe, we can build some sort of ongoing model.

Alan Smith: [00:12:54] As I say, it’s still early days here. But, I’ve seen it work with a couple of other companies were they would, what they called, just building a reoccurring revenue model. Which, just seemed to me pretty obvious. As opposed to the sales model where you eat what you kill, to use a phrase. And you’re only as good as your last sale.

Alan Smith: [00:13:10] And I just thought that’s ... I was just sort of taken out and thinking a logical approach and saying, “That is going to drive the wrong kind of behavior.” Even with the best [inaudible 00:13:19] in the world, you gotta put some food on your table [inaudible 00:13:22] then gotta find something to sell to people. Hopefully, it’s something good. Hopefully, it’s something that they need.

Alan Smith: [00:13:27] But, wouldn’t it be better to sort of evolve towards a more consultative process? And help you identify what the important things are and build ... Pretty early stages on our journey. And if you like I’ll give you a couple of [inaudible 00:13:41]. As I learned back in those days, and just the years that evolved overtime. There was several, what I’d call, light bulb moments.

Alan Smith: [00:13:48] Just little things that happened I thought, “Wow. Okay. I’m going to pivot. This is different now. I gotta embrace this. I quite like this, and then I quite like something else.” It was a couple of things ... Early on, I really thought the ... I remember picking up the book called “The E-Myth”, the Michael Gerber book. Which, it’s now a legendary business book.

Alan Smith: [00:14:07] But, it was new to me at the time. And I just like this idea of systemizing your business and processes. A lot of the firms I was dealing with were just a bunch of people who made it up as they went a long. Everyday it was different. And every client they saw offered a slightly different experience. Even differing investment advice process and so on.

Alan Smith: [00:14:24] God, I just thought, “That doesn’t make any sense to me at all.” And I would think of things like hamburger joints and McDonald’s and what have you. Which were ... You know, these places, they were run by half a dozen teenagers. And yet, they were turning over more profitable than any advisory business that I knew. So, I thought, “ How can that be?”

Alan Smith: [00:14:42] But guess what? Because, they got really strong processes and systems that just make the whole thing run like a well oiled machine. So, in early days I thought we gotta build some of this stuff, and they gotta give us a repeatable consistent experience to our clients. That will help us be more efficient. And it’s just a better experience for them.

Alan Smith: [00:15:00] I came across this concept, which we all ... Well, I think people call it different things. But, cashflow modeling. Using software to work with your clients. Offer them some sort of ... Identify what their future might look like. Looking at their entire financial picture, not just the investment products that they had. So, if they got real estate and property, or cash in the bank. And then, identify what their issues and challenges, and the thing they’re trying to achieve with their life.

Alan Smith: [00:15:30] So, I went to a couple seminars. Early on I thought this at the time, this is the missing part [inaudible 00:00:06]. So, we need to bring this in. Because, this is beginning to answer the questions that I think most of my clients are asking. Which, and it still remains the same to this day, I think. I don’t care how wealthy you are, what the circumstances are. The biggest question that I come across all the time, whether it’s expressed or its just an inside thought, is are we going to be okay? Do we have enough? And unless you built that sort of software ... Unless you’re using sort of software it’s very hard to get someone doing the back of an envelope or an Excel spreadsheet is much, much harder to get any sort of rigor to that.

Alan Smith: [00:16:09] It’s still not a rigorous science. You gotta except that no sooner that you done your cash flow model then it’s out of date. But the point is you gotta platform. You gotta basis to build a future. Sort of ideas and investment proposition and tax planning around that. So, that was another light bulb moment. And had two or three after that, around investment propositions and a few other things.

Alan Smith: [00:16:30] But, those were quite important as we evolved business.

Fraser Jack: [00:16:35] So, as you mentioned you’re evolving a business. You’ve got a lot of philosophies. And you’ve got a lot of great ideas you want to bring in. And you’re growing a team from just you and one other. To [inaudible 00:16:45] the team today. There’s gotta be a lot of growing staff, growing ideas and these sort of things. There’s gotta be a lot of great things that are heading our way.

Fraser Jack: [00:16:56] But, there’s probably also quite a few things that didn’t quite go to plan.

Alan Smith: [00:17:02] Yeah. They were. But, I was always prepared to just run with things and see how it worked out. Although, with hindsight I probably should’ve taken more risks. Certainly employed a few people that weren’t a great fit at the time. Financial services, despite all the ups and downs markets over the years ... London’s obviously is a large place. Financial service is always quite a busy sector.

Alan Smith: [00:17:33] And hiring people is always ... Still to this day is quite a challenge. And I’ve always probably taken a few short cuts early on. And getting people in just to fill a need or a demand. And I should’ve been more patient, I think, to try and find the right people. The thing was I had [inaudible 00:17:49] What we, as a business, what we stand for. What our values are. And now we’re quite clear on the sort of people we bring into the company, and the hires we bring in.

Alan Smith: [00:17:58] But, in those days I didn’t ... I said new and intuitively. But, it was never expressed, it was never documented. So, you’d meet people in their resume, their CV checked a few boxes and a few qualifications and bring them in. And that didn’t work out quite so well. And I think ... Over the years I’ve had a few goals at marketing and doing varies things.

Alan Smith: [00:18:23] But again, up until quite recently, and I’m happy to share some thoughts on that later on. But, I think we just didn’t know ... Throwing a bit of money at a website or something without any sort of structure or strategy, again, is a guaranteed way just to burn up pounds of dollars.

Alan Smith: [00:18:39] So, I think some of the lessons I’ve learned is ... You know, have a taste of your own medicine. What were the goals of this? Or, my personal as sort of found of business. What is the objectives need? And what are we trying to achieve as an organization, as a people? And we sort of just mapped that out. Business 101.

Alan Smith: [00:19:05] [inaudible 00:19:05] Let’s crack one every year. Well, that’s going to just try to win over a few more clients. Carry our delivering services to existing clients. But, I think it’s ... Looking back, we should’ve had a little bit more rigor. A bit more structure. And identified what good [inaudible 00:19:21] ourselves as time went on.

Alan Smith: [00:19:23] It’s far more reactive organic type. And it’s recently we decided to sort of get our act together. And that’s kind of like more of a grown up business. Businesses start ... But, they’re like children aren’t they? They’re like babies, and they’re just learning to walk. You don’t know what you’re doing.

Alan Smith: [00:19:38] Although I’d been working in financial services for 14 or 15 years. I didn’t really know what it was like to run a business, nor the other things that go with it. So, you’re just taking baby steps and you’re falling down and you’re getting up again, you’re carrying on. And you just go through the natural thing.

Alan Smith: [00:19:53] All I see is now is kind of unruly teenager. We’re coming up 15 years old this year. And we’re probably at that awkward growth stage of being a teenager looking towards adulthood. Hopefully, in the next year or two. We’ll see how that goes.

Alan Smith: [00:20:08] But, that’s just part of the journey and I don’t think on reflection. Although, of course, there’s a few things I would’ve done differently. I think part of it is an experiential process. You gotta do the hard yards and learn the lessons. And hopefully none too expensive or too disastrous that you can’t recover from. And just be alive to iterate, to change, to improve constantly. And that’s what we aim to do.

Fraser Jack: [00:20:36] I certainly hope some of the advisors listening to this can maybe live from your lessons, which would be great. Now, the business to me feels it’s a bit more advanced than a teenager. But, you’ve just got a lot of time on your processes on designing the end-to-end client journey design. Everything within your business that the minor details from actually getting it right.

Fraser Jack: [00:20:57] You want to give us a bit of an overview of the business? And how deep into the details you’ve gone on it?

Alan Smith: [00:21:03] Yeah. This is another thing. I am actually looking back ... Quite amusing I think for your Australian based audience. One of the initial influences on this ... Again, I’ve talked about The E-Myth. But then, go into the mixed level of granular detail around delivering an outstanding service, and an outstanding experience for the client.

Alan Smith: [00:21:28] I often took the view that the client coming in, especially if they haven’t been to see other advisors, have no idea whether we’re good or bad. And they don’t read. Most of them don’t read no ... In the nicest possible way, what we’re talking about. I could be talking about some sort of investment structure. Or, some sort of tax model. And for most of our clients, the reason that they’re hiring us is because they don’t really enjoy that stuff.

Alan Smith: [00:21:49] And how we would make them feel in terms of a service experience. I called the Starbucks experience. I guess you got Starbucks over there. So, over here in our office I was at before, I’d show up to work in the morning and there would be a Starbucks opposite. And there would be a line at the door. People just queuing up to get their morning caffeine fix.

Alan Smith: [00:22:14] And coffee was okay. It was expensive relatively. There’s a little Italian coffee shop just around the corner, which was half the price and better coffee and was empty most of the time. And that intrigued me. Why was that? Because, for Starbucks it wasn’t about the coffee. It was about the experience. You could hang out there in this nice comfortable sofa with your MacBook and have conversations and drink your coffee.

Alan Smith: [00:22:37] So, this whole kind of client experience became increasingly interesting to me. And I was just ... As I mentioned to your Australian audience, I picked up a book. You look too young to remember ... As a Scotsman I’m kind a neutral on this. But, England’s won the Ruby World Cup a few years ago in your backyard. And the England coach at the time, Clive Woodward. He wrote a book a year or two after that called “Winning”. And Woodward’s an interesting character because his background was he came from amateur Rugby and he had a background in business.

Alan Smith: [00:23:10] And he had a lot of crossover to business and sport. And then today, whatever your sort of affiliations are, winning the world cup you’ve certainly achieved a degree of success. And reading his book he was talking about this concept called critical nonessentials. And in fact, tracking that back, he got that idea from a famous, I think he’s now famous, Australian dentist called Paddi Lund.

Alan Smith: [00:23:33] Well, that’s a very interesting story as well. So, this was this idea of critical nonessentials. So, he’s focusing on things that in themselves they weren’t essential to get right. But, you gotta whole bunch of these together, all of a sudden the whole thing changes. And so, at the time Woodward was talking about the training regime, how the players prepared, how they slept and the fact that they would, in the past, they would share a bedroom together when they’re on tour or trips. And then, all these series sports people, they should all have their own facilities.

Alan Smith: [00:24:01] All these sort of minor things, which combined to provide to give them the winning edge. The modern version of that now is course The Sky British Cycling Team. [inaudible 00:24:12] Dave Brailsford. Looking back a few years, the British Cycling Team were an absolute disaster. And they’ve now pretty much won every cycling competition form the Tour de France, to the Olympics and everything else.

Alan Smith: [00:24:23] And then he focused on this thing called, “the aggregation of marginal gains”. These little tiny, tiny little things. So, I just applied that same philosophy, obviously not to the same degree. But, the same philosophy to ... What is the client experience? What happens when they show up? Do we want to give them a cup of tea or coffee in some sort of crappy plastic mug or something? Or, do we want to invest a bit of money and get sort of high quality cappuccino maker?

Alan Smith: [00:24:48] What are the refreshments? What does the documentation look like? What is the whole thing? How do we answer the phone? Every tiny little thing I could think of. We just spent time and effort and energy, still do to this day. We constantly, every 90 days, we think of something else that we could just enhance. Because, I felt that our ... The clients that we were dealing with, which predominantly were fairly affluent people.

Alan Smith: [00:25:10] The only places they would hang out in their life would be in nice hotels and restaurants and stock market coffee shops and so on. And it would be very incongruent if they show up to our place and they would just treat it as suboptimal kind of way. They would just feel this is a bit strange.

Alan Smith: [00:25:28] I’m a big fan of trying to control what you can control. We can control the environment. In our office now we’ve got really high quality meeting rooms, soft furnishing. It sometimes feel like I’m an interior decorator. But, the aromas ... We’ve got these scented candles. The lighting is very important. These are things we can control.

Alan Smith: [00:25:49] At the end of the day whatever the client thinks about us, that’s up to them. I can’t control that. But, I can control the environment in which we have an engagement and a conversation. And fundamentally, that’s what we do most days. We show up and we engage with other human beings. Across a table or just sitting on a sofa or in a room.

Alan Smith: [00:26:07] So, we’ll do all we can to control that environment and make it as pleasurable and as positive as we possibly can in the clients view point. And a lot of that stuff is taken from sport. Where the difference between winning and losing is just a microsecond. So, why wouldn’t you do all you can just to get that edge?

Fraser Jack: [00:26:24] Yeah. Absolutely. And I’m glad you brought up rugby. You knew because of I’m a rugby nut myself. Being from New Zealand of course I have to support The All Blacks. But, yeah. Absolutely, coming from the clients point of view and what makes them comfortable and what makes them feel at home inside your offices and all those minor details better.

Alan Smith: [00:26:42] Yeah. I think so. And it goes to another level as well. Some of the brands around the world though, whether you like them or not, they’re just successful ... To be fair. And sometimes there’s win rate ratio, your second to none. In business, we [inaudible 00:26:58] some of the detractors back. But, Apple are just a company that has just revolutionized several philosophy. But, Apples very interesting because the whole Steve Jobs approach was begin with the customer experience then work your way back to the technology. Not the other way [inaudible 00:27:13].

Alan Smith: [00:27:12] Then you try to find the customer to fit in. What do we do it the other way around? So, we got to thinking about what is it like for a perspective client? And we’re always aimed to, if appropriate, if it’s a married couple or people in a relationship. Have both partners show up, hey I just got a thing. Coming in their expectation is, “Oh my god. We’re going to see these financial people and going to talk about pensions and tax, and things I don’t know about and it’s going to be an awkward conversation and not ... So we do all we can to soften that to make sure that they have sort of ... We’ve explained what the purpose of the meeting is. That we’re not going to be talking about these things.

Alan Smith: [00:27:51] We just want to understand their own personal ... Their values, what they stand for, how they see their family and their future, all that sort of thing. And who wouldn’t want to have that sort of conversation? And we go to the next level often without wishing to sound to sexist. But, this happens more often than not. Often it’s the husband or the male in a relationship that takes the lead on the family finances. Not always, but more often than not it is.

Alan Smith: [00:28:17] So, we’ll enact conversation in that initial meeting. We’ll have that kind of discovery meeting that we talk about. And we’re sitting there in front of a couple. We’ll ask the question. Make the point [inaudible 00:28:28]. Most families, one member of the household takes the lead. May I ask who is that? And whoever it is, and if they point at the husband and sort of puts his hand out, yeah it’s me.

Alan Smith: [00:28:38] Well we very purposely will turn to the other person, the one who doesn’t take the lead, and say well lets ... If maybe start asking you. Because, we want to get the other person involved in the conversation right up front, early on. And get the whole flow and the rapport building straight off. Because, if we don’t and the person who knows more of the family finance, they can dominate that conversation for the first half an hour. And it’s going to be quite difficult to get the other person engaged.

Alan Smith: [00:29:03] So, that’s a level of granular thinking about what the clients experience is likely to be. And you can go on forever really about every single step of the process. So, we do what we can to an extent to control the environment and make it a world class experience in the clients viewpoint.

Fraser Jack: [00:29:20] Yeah. Now you mentioned that discovery meeting, and I know that you spent fair bit of time doing that discovery meeting with really, really focusing and honing in the questions you ask and a lot of time with the clients. Really trying to list their goals and finding out where they come from and their values and the history. Do you want to run us through that meeting and the questioning and the techniques you use? And the powerful questions you use?

Alan Smith: [00:29:46] Yeah. Happy to. So, we got a structured process. And this is not rocket science. But, there’s a series as most financial planning people and companies ... Series of face to face meetings. And think that’s first of all the key. I don’t think this stuff can be delivered to the same degree digitally. We do need to sort of press the flesh, and see the color of each others eyes. And understand is there a rapport here? Can we actually think about working together?

Alan Smith: [00:30:14] So, we also have what we refer to as a coffee meeting, first off. Just an initial ... Maybe 30 to 60 minutes. How are things, high level type things. Is there an opportunity for us to get together? If yes, then we setup this ... Sort of evolving. I think increasingly we calling it a discovery workshop. Because there’s more of that. Every single [inaudible 00:30:36] ends up getting together and sharing their thoughts, ideas and views on life and now and the past and then the future.

Alan Smith: [00:30:43] And so, again, very intentionally we set this up as such that we have a planner in the room, one of our planners. And we have ... And we refer to them as associates. So, that would be a support person. A [inaudible 00:30:57] planner. We call them associates. And they’re in all those meetings.

Alan Smith: [00:31:03] Another interesting thing, we always record the meeting. We’ll kind of ask permission up to a point. But, not really. Not to much. Because, that’s just how we do things. We’ll just make the point that we are recording this meeting. We make the point. The reason we do that is this stuff is so important. And we use analogies like have you ever watch a film ... Have you watched a movie and then you watched it a second time and you saw something the second time you didn’t see the first time.

Alan Smith: [00:31:28] We’ll some of the conversation here, particularly for when a number of people are talking, we just don’t want to run the risk of something really, really vital and important you might share with us that we just didn’t pick it up at the time. And also, occasionally things can get a bit complex. People sort of discussing things like compensation models or share schemes and option schemes.

Alan Smith: [00:31:46] So, we don’t want to have to ... We just want to be as accurate as possible. So, we record the meeting almost never having anyone object to that. I think we’re really in that moment. We are in the world of building trust. And I think ... I can just put myself in that position. If I went to see somebody [inaudible 00:32:04] so I don’t want to miss anything. I’m just going to record the meeting to make sure we have a better experience.

Alan Smith: [00:32:08] I think that smooths the trust style up notch or two. I think, I like these guys. They seem professional. So, we do that. And then, we will ... And again, this is always evolving. This sort of pressioning process. So, as they say, we aim to engage first with the person who sort of least involved in family finances, and get them to open up.

Alan Smith: [00:32:26] I’ve been quite influenced by a gentleman called Mitch Anthony. I don’t know if you’ve come across this guy in Australia? No. He’s a U.S. based guy and he’s got a lot of stuff about interesting impressioning techniques. And he refers to things like level one, two, three. In the past, we’ve maybe gone in a bit too deep, too early. We’ve gone through some quite sort of deep and soul searching questions as an opening question. Which we’ve kinda stepped back from that a bit and evolved our process.

Alan Smith: [00:32:53] Because we need to, again, take people on this journey. Not forgetting it’s in the clients perspective. They may be coming in still thinking there going to just go to straight away talk about their portfolio and their investments. I don’t think the question now is more about ... It’s just along the lines of an easy one, which is tell me a story. Tell me about your background. How you got where you are today.

Alan Smith: [00:33:14] And who doesn’t know that? Everyone knows their own story. And it’s a nice one and we just want to get the conversation flowing. Want people to tell us and we sort of evolve that conversation into, well what was money like in your family, in your household when you were growing up? And most of us can remember that stuff. And everyone will share interesting stories. And I’ve heard them all, every spectrum. From we were scratching around, had no money to live on what so ever. And to, we had tons of money. We had probably too much money. A different sort of experience, a different sense of what money was like.

Alan Smith: [00:33:45] Because, what we know is our own sort of values of perception of money and finances are significantly shaped by our childhood experiences. And so, that’s quite important for us to know when we come to that line. So, that whole thing tells you story. Tells your background. Tells your family money story. What was it like growing up? And that would then sort of evolve into, well what does money mean to you? What is the concept of finance and money. What’s it mean to you?

Alan Smith: [00:34:15] Again, you got some very, very varied questions. For most people, fundamentally money is security. It’s peace of mind. It’s options and choices. All these sort of things. But, occasionally you’ll see some really out of left field. But again, this is to deliver our services to people down the line. We got a list of about 300 questions. In working on ones that really work and ones who work less well.

Alan Smith: [00:34:43] But, we got maybe about, I think I lost count about 60, which is across six key areas that we would aim. We wouldn’t ask them all but ... The thing is, you’ve got a real art in this stuff. And you just got to practice it and get better. Because, what we need to avoid is this idea of tell me what was money like when you were growing up. And they sort of share a few things. And then you go, “Alright. Thank you. Next question.”

Alan Smith: [00:35:07] This needs to be an evolved conversation. I was quite influenced by ... You had Carl Richards on your show a little while ago. I was pretty influenced by a couple of things he’s done. Particularly his book. The One Page Financial Plan. And within that book is well worth your listeners picking that up and getting ahold of it. Because, there’s some great stories that he shares in his life as delivering financial planning services.

Alan Smith: [00:35:36] There’s one in particular about him giving advise to a young couple and the ability to listen to the first question, what does money mean to you. And it’s security or something. But then, go to the next level. Well, when you say security tell me more what you mean by that. I won’t spoil the story, but three or four layers further on into that questioning process the entire shape of the meeting pivoted and changed completely. And indeed this sort of advise and the plan to alter it was built was completely different. Because he’d taken it upon himself to be patient, to dig deep, to not be fearful.

Alan Smith: [00:36:15] Because you’re entering a new level of territory that a lot of us aren’t really experience that or trained for. A lot of us come into financial services because the money side and number crunching side of things. Which, we’re dipping our toe ... And very clear that we are absolutely not life coaches, we’re not in that. We’re not psychologist.

Alan Smith: [00:36:35] But, you know that money and emotion are two sides of the same coin. And we just need to get a sense of that, at least the high level. So, we’ll aim to just sort of dig a little, but carefully and with respect. Dig another layer or two just find out what this is all about. I can tell, people enjoy having this conversation. They don’t have it with anyone else. Often, they haven’t had it with each other, in a couple. They’ve never gone to this level.

Alan Smith: [00:36:58] They certainly don’t have it with their accountant, their lawyer, their best friend, their family members. So, to have somebody who is genuinely authentically listening to them. And ask them world crafted, well thought through questions. And then, listening and responding in a manner that is clear that they have listened. Frankly, most [inaudible 00:37:20].

Alan Smith: [00:37:22] Most of us our just waiting our turn to talk. That’s the reality of most modern engagements. And we’re just clear, this is the clients meeting. If they say something, even something that is so relevant to us. We’ve got a holiday home in this place in France. And so have I.

Alan Smith: [00:37:39] But that’s not the time for us to build that ... For us to tell them about our own stories as advisors and planners. That is the section that we really need to get deeper with that client. So, depending on how that conversation goes. That sometimes beats out those first two or three questions. And we just sat listening for an hour. And we’re just capturing information and nodding appropriately and going a bit deeper.

Alan Smith: [00:38:05] Other times you gotta work a bit harder to get the information out. But, I’ve seen those meetings run three and a half hours sometimes. Tiring I can tell you. You gotta have your game head on, your really focused. It’s mentally quite exhausting given you only really listening deeply to those meetings. But, I know from feedback we’ve had from clients and just kind of intuitively. As that couple or those people have sort of got up to leave the meeting and go and do something else. I’m pretty sure they’re saying that was ... Well, at the very least, “Hey, that was interesting. That was not what I was expecting. I was expecting some guy to pitch some pension plan.”

Alan Smith: [00:38:45] And most people, there is a kind of just an intellectual process that people go through. People enjoy talking about themselves, as I’m demonstrating. The craft that we continue to try to hone and improve, which is that big first ... Between one and three hour session, that we really go deep. I think it just sets the tone for the future of the relationship.

Fraser Jack: [00:39:09] Yeah. I couldn’t agree more. It feels like a really heavy beating. But, to me it’s the foundation of the relationship. And not just with you and the advisor and the client. But also, the support staff in the room as well. And for them to get to know and pull their heart out like that to a couple people and have it recorded and know that the practice is listening.

Alan Smith: [00:39:28] Yeah. I know. Absolutely. This is another thing that we learned, in the past we’ve gone to these meetings with just me and the advisor. And he’d write up some meeting notes and he’d pass it to the team. Pulled together some advise notes and some[inaudible 00:39:40]. And what we realized, as human beings there are subtle nuances in the conversation. There are areas where there’s just a lot of emotion around a particular conversation. It just doesn’t come across. If you sort of wrote that down and then sent an email to somebody.

Alan Smith: [00:39:57] So, you need to have the people in the room. You need to have them experience what it’s ... And then we have ... We’re quite keen on them having a after action review. We have the meeting that carries on. And then, the people in the room. You know, the advisor and his colleague have got to go through the process where they just discuss what went well, what was not so well. What do you think about they started talking about X, Y and zed. It’s clear that she’s got some emotion around this family issue and so on, and so on.

Alan Smith: [00:40:26] So, we really gotta set on what this is all about. And I think fundamentally this really has a significant impact in how we then go on with the advice of this stuff. And one of the things that I kinda of enjoy to an extent is it’s very hard to scale this kind of thing. As I said at the beginning, we’re very much a self styled boutique business.

Alan Smith: [00:40:46] A lot of our competition is the very large institutional private banks and so on. And I think that these institutions ... Just because of their ... Nothing against them. But, it’s a large institutional structure, where everything is all about tick box and has to go through a process. How on earth do you manage a situation like that, were you’re really working your soft skills and consulting, listening, strategy planning all that sort of stuff. It’s quite hard for most of those organizations to do it. In fact, by the very nature of them it’s not an impossible for them to do.

Alan Smith: [00:41:18] So, we really set that out as being significant differentiator for us.

Fraser Jack: [00:41:23] Yeah. Now as we’re going through the client journey and we’ve been through that discovery meeting and end it in a way. And come back and your second meetings your blueprint meeting.

Alan Smith: [00:41:33] Yeah.

Fraser Jack: [00:41:33] What are the sort of things you do ... And I know you do a lot of financial education in that meeting. But, what are some of the other things ... And if you want to talk about that story telling you do with financial education as well.

Alan Smith: [00:41:45] Yeah. So, that would be the next step. We’ve sort of had this discovery meeting. The other thing that’s interesting, maybe a bit different to others, is that we do a ton of work up front practically for free. No many changes hand obligation. And we’ve done that pretty much from the beginning. Because, again is back to this idea of putting yourself in your customers shoes.

Alan Smith: [00:42:08] A lot of our peers and my competition they charge pretty chunky fees upfront for some of the stuff that we otherwise give away. But, my philosophy was ... I don’t know ... I wouldn’t know how good you guys are. If you would tell me I’m going to pay $3,000 or 5,000 pounds for a financial plan. And that incidentally is one of the most overused generic so called financial plans delivered by other people. And they’re not a financial plan in my book. They’re an excel spreadsheet with a few numbers and figures. That’s not what I call a living breathing comprehensive lifestyle comprehensive financial plan, it’s an entirely different thing.

Alan Smith: [00:42:49] But, if I’m the perspective type I don’t know what it’s going to be. So, you’re asking me to cut a check for quite a few thousand whatever. So, I take the [inaudible 00:42:55] and the same way if I was going to buy an expensive car or anything like that. I gotta test drive. I gotta see if I like it ... Committing [inaudible 00:43:04]. Process of the discovery meeting. And we will do this blueprint, which at the end of the day, what is a blueprint?

Alan Smith: [00:43:10] If you’re going to build and do this very high level. We’re not talking about what color the tiles in the bathroom are. But, we are talking [inaudible 00:43:17]. Where the buildings going to be? How many bedrooms it’s going to be? Is it going to be south facing west, facing all that sort of stuff. So, this is ... We call it the blue print. And as sort of side stone, we do use naming protocols quite often. We are call it blueprint as a capitol blueprint.

Alan Smith: [00:43:35] The cashflow system that sits inside that, we call future map. That is your customized future map. Our investment proposition is called intelligent investing. So, we just think that’s just an important thing to do. Because, we’re creating some unique differentiator. You can’t these things. You can’t get the capitol blue print anywhere other than with us.

Alan Smith: [00:43:52] So, I think that helps. So, the blueprint meeting we invite them back in again. And again, we’re learning. That’s another thing worth saying. We’ve got an office that is got a series of different meeting rooms. Again, when we moved into that place a few years ago it was an empty shell. So, we could design the office the way we wanted it to. So, that’s for our discovery meeting I was talking about.

Alan Smith: [00:44:13] We want the environment to be relaxed. I don’t want people sitting across big clunky desks, with technology and computer screens everywhere. So, we call that room, the room that we generally would aim to hold our discover meeting. We call it the lounge and it’s designed like a sort of upmarket coffee shop or something. It’s sort of a lounge area boutique hotel. It’s soft furnishings. There’s not tables and there’s no computer screens. There’s high quality cappuccinos and coffees and the rest of it.

Alan Smith: [00:44:38] And people just there in a nice soft arm chair, or a sofa. Why don’t we just have a chat. We had this conversation. The next meeting, the blueprint. Now, we’re getting more down towards the business end. So, we’re in a different meeting room. Historically we’ve got these big screens on the wall. Increasingly I’m moving away from that thought process. I think it detracts. And we’re all sitting in a room across a desk looking at a screen on the wall.

Alan Smith: [00:45:01] I think we can do better. I think it would be far better to look across ... Or, look at each other and using technology on a desk. Like kind of tablets, surface pros [inaudible 00:45:13] has that sort of thing. We’re looking at data and facts and information and so on. But, we’re doing it again in a much more conversational style, as opposed to here I’m going to present something to you. So, again, we’re testing that.

Alan Smith: [00:45:23] So, that is a process. But, we will go through and we will just explain to these ... Because, they are prospective clients at this stage. We’ll give them the first cut of their financial plan, their cash flow model. Will give you some high level stuff. We’re not giving advice yet. We’re not in the regulated world but we’re going to give them a sense of how we would like ... How we would move them from where they are now to where they want to be in terms of how we’re going to help them achieve on the things that they’ve identified to us in the discovery meeting are really, really important for them to achieve.

Alan Smith: [00:45:51] And we’ll go through some basic educational processes. And that we talk about what are some of two or three key components? What is the secret sauce to achieving financial success? There’s just a few key things, without over complicating things. But, as far as number one, you’re going to need a financial plan. You’re going to need a documented, time specific, money specific, written road map plan. Call it what you want. And this is what ours looks like.

Alan Smith: [00:46:22] Number two, you need to have ... You need to fuel that plan with the appropriate resources. Whether that’s an investment proposition. An interesting thing about ... No doubt we’ll have a few moments talking about it. But, our fee structure allows us to be entirely independent. Theoretically, if someone says that I’m into real estate property, that’s my bag I want to do that. We’d have some conversations around whether that’s sensible or not. Or, whether that you concentrated on one asset class.

Alan Smith: [00:46:46] But, theoretically because the way that we charge our fees is not dependent upon funds under management. But, with the point being you need a plan. You need to fuel the plan. And then you need to work with a team on an ongoing bases to keep you on track according to the plan. And we’ll show them some examples. We’ll show them some stats and some information.

Alan Smith: [00:47:06] But, we want to keep things to a pretty high level at that point. What we’re looking for at the end of that meeting is an engagement. Does it look like we can mutually work together? And we make the point, again, there’s a fine line. Don’t want to come across as rude or arrogant. But, we make the point, “Hey. We’re not a mass market business. We don’t take on every single person that knocks on our door.” We do our best to help everyone by possibly pointing them in the right direction. But, for us we only really wanna work with clients that a, we can add a ton of value to. And b, that frankly we enjoy working with them. We get along with them. They’re people like us.

Alan Smith: [00:47:41] You never guess that occasionally you have people say, “Well. You know?” Because, they’ve been used to going and being sold to by everyone else. Which, hang on. Hang on. With the nicest possible way, we’re selecting you as much as you’re selecting us. And people sort of understand. So, we’ll do all this work and we’ll give them the high level first cut of their financial plan. Give them this sort of checklist. These are things ... Even if you don’t engage with us. Here’s a bunch of things you need to do, to implement. To give you the best possible chance of success.

Alan Smith: [00:48:06] And at that stage we say let’s take 24, 48 hours to reflect on it and let’s agree whether we want to work together or not. And only at that stage does effectively ... If they say, “Yeah. It sounds fantastic. Let’s get on with it.” Then the clock starts ticking effectively. We’ll now create the paperwork. I mean, that in itself is another thing. We spend time ... Paperwork generally is dull, boring for legal small print and so on.

Alan Smith: [00:48:35] So, we’ve gone through a lot of effort to make sure that our paperwork is far more engaging. To the extent, for example, this is a little ... This is kinda of like the small detail. But, nowadays with technology it’s really easy to do. For example, if the client or the perspective client in the early stage had told me, I don’t know, they we’re big into sailing. Or, they run a rugby club, or something like that. Then we can create on the documentation that we produced. We create some imagery that’s reflecting on what they’ve told us. Why wouldn’t you?

Alan Smith: [00:49:06] Nowadays, you can create these things and have them all digitally. So, an extra five or ten minutes of getting relevant appropriate imagery ... All of a sudden, it’s a bit more of an interesting document than some really dull legal form we’re sending to sign. So, chances of them reading it, first of all, have increased significantly. And we try to make sure that the wording isn’t just boring language. Obviously, there’s client compliance regulatory stuff that we’re duty bound to share.But, we’re trying to make it in just plain language that you tablet it in a conversation with a friend.

Alan Smith: [00:49:39] So, that’s the point. And then, all being well. We’re engaged. We’re up and running. And we begin to work for them.

Fraser Jack: [00:49:46] Yeah. Now, you did mention fees here. And wouldn’t mind touching on that because you introduce fees at that point. You’ve got some different ways and philosophy around fees. And also, some different ways linking those fees if you like? With the value of the advice that you provide. And compare it really to the market.

Alan Smith: [00:50:08] Yeah. This is a pretty big issue, to say the least. I guess it is in probably all around the world. I guess it is in Australia at the moment with all the regulatory stuff you got going on. Commission and so on, going on over there. It’s been an issue here for a long time. We had fee disclosure. Commission disclosure years and years ago. And we had this thing in 2012, 2013 which we called ... It was called Retail Distribution Review, RDR.

Alan Smith: [00:50:34] I think, I remember meeting a few Australian advisors at the time. You’re going through a similar process. We’ve now got, ironically, as we’re on the cusp of leaving the EU. But, we got an EU director called Method Two. Trips off the tongue. Which, all but more and more [inaudible 00:50:53] and so on. We saw the right on the wall of this a long time ago. I never saw the concern and the worry about disclosing what your fees are. Provided you’ve got a service proposition that’s just worth paying.

Alan Smith: [00:51:05] None of us ... And it’s not about cheapness or anything else. It’s just like value. And it’s all just a bit odd that all of these sort of fees and commissions and everything were all shrouded in mystery. No one really knew the full extent. And you get in some sort of headline term quotes about how much you’re actually paying. But, it wasn’t the full story and so on.

Alan Smith: [00:51:23] But, this is ... I paid a bit of attention to this over the years. Because, I think it’s really important and from our view point to feel that we are delivering outstanding value for money. And very much in the clients view point. And as I kept thinking about this ... And another thing of course is if you got good some good clients ... If you’ve made a bit of money over the years, like a lot of our clients have and they’re self made. They’re no dummies. They are clever creative people.

Alan Smith: [00:51:51] And I used to have few conversations with our clients about the default fee model. Commission model, whatever you want to call it. Which, fundamentally was a, I’d call it basis points model. The advisor takes a percentage of the investment assets that you give to them to take care of. To look after. And more of our people say to me, and more and more I was thinking, “Well, that’s just a crazy model for so many reasons.”

Alan Smith: [00:52:21] This doesn’t happen overnight. It was a sort of content thing that just kept coming up. And eventually, myself and my colleagues said, “You know, we gotta do something different.” And it was another one of these examples we probably should’ve jumped it a bit too quickly. But, we just kind of overnight, it was about four, five years ago. We just said, “As of January the first, next year. We are moving away from this percentage based model onto a flat view retainer.” We’re going to engage with people on this basis. We’re going to have a pricey model that reflects a number of different things.

Alan Smith: [00:52:47] But, a predominant one is around complexity. Some peoples situation are extraordinarily complex, which means we’ve gotta have a high level of expertise in the company. And that costs more money to come ... And also, we don’t wanna be selling our time. We’re not going to go to hourly rates. But, there’s some work that just takes 10 times longer, just to do [inaudible 00:53:07] or workout and some other stuff.

Alan Smith: [00:53:09] So, we built this model, which takes up all these things. It also takes our perception of the value we can deliver to the clients. It also takes, to some extent the risks. There some situation ... There’s some areas that the clients are involved in. Highly complex potentially turns up as a risk factor within that we can’t ignore. So, we built a pricing structure. Fundamentally, right now, we’ve got three different service models. Kind of entry level, sort of a flagship, mid tier where most of our clients sit. And a very high end consierish type service as well.

Alan Smith: [00:53:41] And what we’re trying to do. We’re trying to move away from the inherit conflict of interest that exists. The percentage based model. This stuff to me is just logical. If I’m getting paid on the assets you keep with me as an advisor. I can be the best, most ethical advisor in the world. But, the perception from the client, if nothing else, is ... Well, of course you want me to give all my money to you. And every advice you give me ... Every piece of advise is going to be tainted by the fundamental fact that the more assets I give you, the more revenue you keep. And if I move my assets away for doing normal logical sensible planning things like gifting assets to children or family, because it makes sense from a tax view point. Or, buying some real estate. Or, investing in some of venture. Or starting up a new business.

Alan Smith: [00:54:32] But, every time I do that, or I want to do that. You take a haircut on your income. And therefore your advise may be conflicted. And the thing is when we built our service propositions, we’re really focusing on this concept of planning and project management and consulting and behavioral stuff. And this is where the client ... This is where all your value is. I love this stuff we were saying. This bit over here. This money management bit, I can just go buy a bunch of tracker farms or somethings. That was a bit of the concept. They we were all simplifying. But, it was clear to me, that if the perception and the absolves in my belief as well. All the value was in one side of the equation. Why on Earth are we charging our fees to the other part, which is increasingly becoming commoditized. Which is the money management part of the bit, a part of the processes. Makes no sense at all.

Alan Smith: [00:55:24] And we put out a white paper on this a couple of years ago. If any ones interested in this they can go to our website capitol.co.uk/fairfees. And just download it. It’s just our thoughts. And if you’ve actually got a favorite attraction on this, it’s picked up by National Press. And we’ve taken on quite a few good clients as a result, who also felt the same way as we did.

Alan Smith: [00:55:50] And so, for the last good couple number of years we’ve been operating on this model. As I said, we probably jumped ahead a bit to quickly. Because, there’s another thing around just behavioral views. As I’ve said for a while. One percent, which is the default advisory annual fee. One percent of your assets. One percent of anything just doesn’t sound that very much. If I said there’s one percent chance of rain here today I’m not going to bring an umbrella, I’m not going to bother with that. So, one percent in most of our lives is a small fee.

Alan Smith: [00:56:24] But, 10,000 pounds or $10,000 is a big thing. Because, I’m thinking, “Well. Man, that’s more than I spent on my holiday last year.” On a million pound portfolio it’s the same. One percent, that sounds fine. 10,000. Wow, what are you doing for me? And I think sometimes we maybe jumped in ... Occasionally, we had to back track and sell our proposition because it just sounds more. In fact, we had a couple of situations were clients literally said that seems really expensive. And we quickly pointed out to them that it was significantly lower than they were currently paying. Because, they just in their head are saying, “Well no. My advisor only charged me one percent or something.” Yeah, I know. But I did do the math, it’s more than our flat fee.

Alan Smith: [00:57:08] So, it’s a bit of work around the positioning of that, the value description of making sure we get that right. If anyone is thinking of moving towards that. There generally is a ... The movement of the direction of travel in the U.K.. Very, very slowly. But, is towards that sort of model for the reasons that I described. Of course, the other thing is from the firm’s view point.

Alan Smith: [00:57:33] Why on earth would you detach your future revenue stream to something over which you have absolutely no control, which is the best in markets. And as we all know, we’ve had a good run pretty much. 9, 10 years for things to be positive.

Alan Smith: [00:57:47] But anyone’s who’s been around for any length of time knows that doesn’t last forever. And all of a sudden, you get a 20, 30, 40% market correction. And your revenue’s fallen by that amount, but the work you’re expected to do hasn’t gone down. It’s actually probably gone up in that situation.

Alan Smith: [00:58:01] That does not seem like a sensible commercial proposition as it has. And I think as I’ve often said, if we hadn’t have invented this percentage based model in the cost, we wouldn’t invent it now.

Alan Smith: [00:58:12] It makes little logical sense from both the customer, the client’s viewpoint, as well as the advisory firm’s viewpoint. So, that’s our statement. That’s our belief. That’s our view. And we’re sticking to it.

Fraser Jack: [00:58:26] Yeah, absolutely. And to be fair, I think a lot of other people are following you in that way, too. There’s a lot of fee ... A set fee approaches going on these days.

Alan Smith: [00:58:40] Right, okay. Maybe in Australia, you’re a bit further ahead than we are. I can say in the U.K., I keep my eyes and ears to the ground. I can’t think of more than half a dozen companies that ... I don’t know many that sort of 10, 12,000 regulated firms.

Alan Smith: [00:58:55] There’s a very, very small cohort of people who ... I’m not talking about people who do it occasionally. But I’m talking about their core fee model behind net worth clients. I get it. There’s an increasing number of doing it for what you call kind of wealth builders, the young professionals, who haven’t got the assets.

Alan Smith: [00:59:11] So, we charge them a kind of gym membership, a Netflix style approach. Dealing with the high net worth and sort of multi-million pounds clients, I’m not seeing a lot of it. But slowly, but surely.

Alan Smith: [00:59:24] So, it’s great if in Australia, you guys are picking up on this and leading on it. Then, that’s great. Maybe I should tap into some of the sources you’ve got over there.

Fraser Jack: [00:59:33] Yeah. It certainly also feels like when some of your clients have come onto that fee structure, they’re certainly not going to go back to the old way.

Alan Smith: [00:59:43] No, they’re not. The reality is most of our clients hadn’t really given it much thought. But once we sit down and explain to them. If nothing else, if you just take ... Because we’ve got a calculator on our website, as well.

Alan Smith: [00:59:53] If you just take the compounding effect of a set of charges over the next 20 or 30 years is significant. And if you just do the sums, the client will save. We’re still a promotional organization. Don’t get me wrong. We need to be profitable. Every client needs to be profitable.

Alan Smith: [01:00:10] A, we want to minimize, or avoid, if we can the cross subsidy. Like, your wealthy clients are cross subsidizing your less wealthy clients, because you charge them roughly the same. You charge a percentage, so the wealthier clients are paying in monetary terms much more.

Alan Smith: [01:00:24] But we just want to remove that, all those questions. And once you’ve explained it to the clients about the differential, the compounded bases, the total currency of pounds and pence they will pay for the next set of 20 years.

Alan Smith: [01:00:37] Well, no one’s going to argue with you, because it’s got to keep significantly more capital in revenue within their family as opposed to passing out to investment managers or advisors. But at the same time, we are retaining profitability which is the key to this.

Alan Smith: [01:00:53] We’re not doing it for a completely altruistic and charitable reasons. We still run a very robust and commercial business, but not at the expense of our clients long-term.

Fraser Jack: [01:01:04] You mentioned earlier that you have your intelligent investment philosophies and almost not a product, but it’s the word you use. Do you want to talk us through what your investment process is now and how you’re intelligent investing?

Alan Smith: [01:01:18] Yeah. Simplistically, again, a lot of these things have been on the journey. A lot of things have happened in the last year since we started. A lot of these tools and techniques and asset management groups and so on weren’t really around when we began.

Alan Smith: [01:01:33] So, we were generally ... I always thought right at the beginning. I thought, there’s not many advisory firms are [inaudible 01:01:38] scale to do the level of detailed research, due diligence, and so on to give us sort of a whole market review to provide the best possible ...

Alan Smith: [01:01:45] We were happy from day one, an independent business. So, we go, it’s great, but it creates a problem in that there are, I think, last term, 30,000 potential retail investment funds we can provide access to our clients.

Alan Smith: [01:01:57] And I don’t know many organizations that have got the resources to do the due diligence towards those. So, we use the right source to things like discretionary fund managers, banking organizations so that fund management piece.

Alan Smith: [01:02:09] But the whole through the financial crisis of 2007, 2008 made me have a complete rethink, because these were the sort of smart guys we were told. And smart suits that were going to protect our clients and all these terrible things were happening.

Alan Smith: [01:02:21] And frankly, they didn’t. They fall as far and fast as anyone else. So, I thought, hang on a minute. This is not right. There’s got to be a better way. I just don’t know what it is. So, long story short, we will not be hired and an independent consultant.

Alan Smith: [01:02:36] And I said, “We need to create the framework to almost begin with a blank piece of paper.” We wanted to give the best possible investment solution to our clients and customers. And nothing’s off the table.

Alan Smith: [01:02:46] We’re an independent business. Let’s work it out. So, we created this thing and what we ... It’s a very emotive subject. It starts off into advisors about investments. And everyone’s got their own ... This is the trouble. Everyone’s got their opinion.

Alan Smith: [01:03:00] And everyone’s done really good for their clients. The trouble is just an opinion. So, everything that we did through this process, which took the best part of the year actually. It had to be evidence-based.

Alan Smith: [01:03:10] If you say that, find me the empirical independent research, not from your own little calculations. Not from the fund management industry quite so much. You’ve clearly got a best interest in promoting a story.

Alan Smith: [01:03:24] Find the research from the independent academic papers that have been written out of Chicago Finance or Oxford University, or wherever. Where there’s been professors are financed winning Nobel Prizes for economics for this empirical research.

Alan Smith: [ 01:03:37] And that, over time, lead us down a route to say, “Do you know what? Instead of trying to find the needle in the haystack in the best possible stock or bond or fund, let’s just buy the whole haystack.”

Alan Smith: [01:03:48] So, we fundamentally built a model which is low cost index capturing capitalism effectively, capturing the market at the lowest possible cost with some tilts towards what we call here anyway, factor investing.

Alan Smith: [01:04:03] We work alongside dimensional fund advisors who I know are in Australia, as well. And they provide some additional scientific rigor around our investment proposition. So, we built that about eight years ago and it’s worked just super well ever since.

Alan Smith: [01:04:20] It’s efficient. It’s low cost. And it does what it’s supposed to do. And when we do our back testing against our ... What we do in the past is outsourcing to these nice people, but smart guys in smart suits, guys and girls. And our clients are enjoying a significantly better investment experience than had we been doing something else.

Alan Smith: [01:04:42] The interesting thing of having done that though is having built this kind of Roll’s-Royce engine as I would call it. We don’t spend a lot of time talking about it to clients. We just tell them, “You’ve got the best possible investment resource, investment engine.” We keep it ticking along.

Alan Smith: [01:04:59] We don’t make significant changes to it. We do regular rebalancing and so on, but we’re not buying and selling an ongoing basis. We built the model. We tweak it. We adjust it and improve it. And the clients aren’t very happy with that. They’re still interested only in the big question, not necessarily wrong. Are we going to be all right? Do we have enough?

Alan Smith: [01:05:17] And provided, we’ve got the confidence in knowing our investment model works, they’re happy.

Fraser Jack: [01:05:22] Yeah, very good. And as you mentioned, Nobel Prize winning philosophies behind it.

Alan Smith: [01:05:27] Yeah, yeah. But it’s that so. But I have to say, it’s another one of these things, don’t rest on your laurels. We have very robust governance around this process, more so than I think firms 10 times our size maybe have.

Alan Smith: [01:05:42] So, when we get together every 90 days for our investment committee meeting, agenda item number one every time is basically, does this stuff still work? Is there evidence to the contrary? Has there been some new research come up that is independent, academically rigorous, that makes sense? Do we have to have a rethink?

 

Alan Smith: [01:06:00] So far, we haven’t had to, but we’re absolutely open to the possibility that may happen again. I think it’s very, very dangerous to get stuck in your ways, get autocratic and say, “This is there. We found the magic bullet and we’re never going to change.”

Alan Smith: [01:06:14] They’re always going to be open to evolutions and changes.

Fraser Jack: [01:06:18] Yeah, continually evolving. And are you working on anything at the moment as far as evolution is concerned in the next phase of the business?

Alan Smith: [01:06:26] Yeah, I think, we’re always working on things. We probably ... One of the big challenges is converting ideas to action and execution, because we are an ideas machine which is good in some ways, bad in others.

Alan Smith: [01:06:39] Particularly, someone like me who has got short attention span, got ADHD and I’m always looking at shiny new objects and new things. And no sooner have I found one that I want the next one. Which is much to the frustration of my colleagues. But we’ve got a great team who calm me down a bit and say, “No, no. We’re still on this project here. Until we’ve done that one, we’re not going onto the next one.”

Alan Smith: [01:07:00] There’s a couple of things that are applying our attention to at the moment. Quite an interesting position that we’re in. Okay, I see a lot of firms in similar situations to this in that we’ve grown the business. And by many measures, we’re still a very small business. But by many measures, we’re successful.

Alan Smith: [01:07:18] We have enough revenue coming into the business where we know whether ... Particularly on a flat fee model, provided we don’t fall and upset too many clients. Provided we don’t have too many disasters, our income is pretty predictable. That’s great, but it can create a degree of complacency. Where’s the hunger that I had when I just had to find the clients to pay the bills? You can begin to rest in your laurels a little bit.

Alan Smith: [01:07:46] I see this with some of my birds and friends and colleagues who are running similar businesses in the same amount of time. And so, then, this question you’ve got to ask yourself, but lifestyle or enterprise. Are we a lifestyle business? Do we want to take Fridays off and do you want to go and play a bit more golf or hang out with our kids more or whatever, because we’re all doing okay.

Alan Smith: [01:08:05] Or are we going to go again. Are we going to reboot and have a sort of 2.0 version of the business and then, just go and scale and grow? And whatever decision is, it doesn’t matter. One is not right and none is wrong. It depends. Plenty people want to have a very high quality lifestyle business and go and spend some time doing it, doing other things, because the business takes over.

Alan Smith: [01:08:27] So, that took up a bit of my time and attention, which literally probably go back to the last couple of years, trying to decide what was the best route. Came to the conclusion that growth was going to be our future strategy for a number of different reasons. One being I like the idea of achieving potential. I think, we’ve, as a business, haven’t quite achieved our potential yet. I think we’re capable of other things, bigger, better things. Secondly, I believe that the work we do is very, very impactful.

Alan Smith: [01:08:56] It does make a significantly positive difference to the lives of the families that we are privileged to look after. So why wouldn’t we want to go and spread that out amongst a few more? I think everything is just me personally. I don’t think I’ve quite reached the fullness. I’ll probably know when I’m done. I don’t think I’m done yet. So we’re in the world of let’s do it. Let’s roll our sleeves up and go again. Let’s grow this.

Alan Smith: [01:09:17] And that leads you to conversations like where do you find ... Where is the next seam of your great clients going to come from? Relying on just word-of-mouth and referrals is one thing. But it’s just a much more organic and slower process. So, we’re getting really ... We’ve thrown ourselves into a complete digital marketing process.

Alan Smith: [01:09:38] We’re all sort of content led, marketing programs. Early stages yet, you won’t see much online about it. But within the next few months, we get to see some stuff. We’ve hooked up with this organization called HubSpot. They’re a big content marketing platform. Some of the stuff they do, I think is fantastic. It really is going to help us, I believe, deliver high quality content to our target audience. And I expect and I hope it’s going to drive significant amounts of new, prospective clients to our doorstep.

Alan Smith: [01:10:07] That’s the one big area. So, focused growth using sensible marketing techniques. Another thing is sitting just behind that is this whole area of behavioral finance, behavioral economics. I think as we continue to grow and as this whole area of investment becomes increasingly commoditized, next area that’s going to become commoditized is the number crunching, the tax planning. I’m aware of already some really smart algorithm-based tools and techniques that are here in the U.K., no doubt over there, that are going to do the work that’s ... We’ve got highly paid people right now taking them two or three hours to crunch some numbers, build spreadsheets and all that sort of thing.

Alan Smith: [01:10:48] And I’ve seen stuff that will do that with 100% accuracy within half a second. So, a lot of this stuff that people, clients, are certainly paying for, portfolio management, fund selection, asset allocation and now, tax planning, income optimization, all that sort of stuff. Well, the robots are here. Machines are going to do this stuff, which is fantastic. Let them do it. Let them get on with it, because that allows us to create more time to be uniquely human with our clients, with ourselves.

Alan Smith: [01:11:17] So, that takes us down that track of the quality conversations we’re having all the way through from the very beginning. But then, going down to the next level of behavioral stuff. Because I’m different to you to him to her and so on. And how can we understand ... How can we use science to be able to shape our individual proposition to make it a more compelling conversation, meeting, experience, whatever it might be for that particular individual.

Alan Smith: [01:11:43] How can we keep them on the right track? How can we avoid them self-destructing, blowing up making the wrong decisions? And that translates into words and language and people are very visual. Sending them a three minute video is going to be fantastic. And some people just want a written document but this type of ... So, there are various tools that we expect to be able to harness down the line to give people.

Alan Smith: [01:12:06] You take this on to the next level and there’s so much data flying around at the moment about people’s health and their activity and so on. If we can just put all this stuff together, for that to be evolved into some kind of lifestyle brand that is kind of integral. Obviously, everyone lives their lives nowadays on their phones. Can we have something, some sort of tool and technique and process that blends all these things together, that makes ... Pulls the client’s lifestyle, their options, their health and their finance, pulls this all together into some sort of digital experience so they can just sit when they’re waiting for an airplane or something, just pick up their phone and just scroll through it, understand where they are, what the future’s looking like.

Alan Smith: [01:12:49] They read something in the papers, the market’s foreign. Let me just sort of click this. How’s my life right now. Whilst we’re sitting there on the end of a phone just as I say to be uniquely human and deliver that personalized service that, as far as I’m aware, the robots are unlikely to ... Which is great. So, we all have our sort of unique style and approach.

Alan Smith: [01:13:15] I like technology to do what it’s good at. And I like human beings to do what they’re good at. That’s the future as I see it.

Fraser Jack: [01:13:21] Yeah. Yeah. Certainly, singing from a hymn sheet there, that’s exactly what we’re setting about to try to achieve as well here in Australia. It’s a lot of behavioral stuff, a lot of internal representation stuff. Understanding the clients, the way they want to learn, the way that they want to remember what you’ve told them and all that sort of stuff.

Fraser Jack: [01:13:38] So, might just finish quickly. I know, we’ve gone on quite long. But I’ve just got a couple of quick questions to finish on. If you’re talking to a consumer that you don’t know, maybe at a barbecue or something like that, and you ... In the English winter, then what tips would you give to a consumer that was thinking about getting financial advice?

Alan Smith: [01:14:00] I would say, well, do it. There’s maybe a little bit of retrosense around people. There still is. We’ve got a legacy here. The industry has become so much professional. There always will be a few cowboys in any industry and profession, but we still suffer through a bit of a poor reputation.

Alan Smith: [01:14:19] I think that’s the same in Australia, as well. But I would say, yes, people ... In most walks of life, success is usually formed by working with a team, with a coach, with a trusted advisor, someone that you know. There’s very few people who have achieved super great things in their life without having some good people around them. So, number one, advice is important and working with an accomplished professional is likely to be the best possible route for you.

Alan Smith: [01:14:46] Next, well, how do you choose one? How do you work it out and get with the right people? Again, we’ve got a little bit of a checklist that we would give to people with some fundamentals around, look, here’s some qualifications. Use the analogy, if you’re going to go for an operation, do you want somebody who’s got two, we call them, O-levels or GCSE’s, two basic school examples in biology?

Alan Smith: [01:15:08] Or do you want someone who’s a fellow of the Royal College of Surgeons. If I’m going to have someone open me up, I want someone who knows what the hell they’re doing. So, technical qualifications are important. Couple of other things though. What is their investment ... We’re clear in our investment philosophy and we like it. And it makes sense. But having the best in philosophy, I think, is very important.

Alan Smith: [01:15:26] Just ask your advisor, “What’s your investment philosophy?” And have them articulate it with great confidence and hopefully, with some evidence that will back that up. If you start waffling and say something else, then that’s a warning sign. Planning, anyone you’re going to engage with, you need to make sure that this is an organization that is still relatively rare, believe it or not, in the U.K..

Alan Smith: [01:15:48] We are going to build you your personalized financial role plan, your family’s financial plan and be specific about what that looks like. I, obviously, would mention to them, get a sense ... Get an advisor that’s going to offer a sensible fee model that removes or limits the conflicts of interest and additional costs you might otherwise have to pay. So, a retainer base model is better than percentage model in our opinion.

Alan Smith: [01:16:11] But fundamentally, I’d say to them, this is all about humans getting to interact with other human beings. Meet them, trust your gut, go with your intuition. Do you like this person? Do you trust them? Could you see yourself working with this organization, this person, for the next 10 years, maybe 20 years, of your life. If you’ve got some little warning signs popping up, then that’s probably telling you we want to find somebody else.

Alan Smith: [01:16:32] So, there’s a checklist of half a dozen different things but certainly, seek advice, but make sure you put any perspective advisor through that kind of checklist process.

Fraser Jack: [01:16:41] Okay. And what about if you’re giving tips to younger advisors or people that are looking to become an advisor? What sort of tips would you give to them?

Alan Smith: [01:16:51] To me, it is all about the stuff we were chatting about a bit earlier on. It’s about the behavioral stuff. It’s about being uniquely human. Again, when I started, having any sort of qualification in our business was considered a differentiator, because no one had them or very few. The barriers for entry in terms of technical professional qualifications were very, very low.

Alan Smith: [01:17:12] Nowadays, as I said, we have this modification called Charter, Charter Financial Planner, which is in our world here a level six. It’s a pretty decent level of qualification. You know what you’re doing. You should know what you’re talking about in terms of this. But that now is the hygiene factor, frankly. If you haven’t got that, then you’re not ready to sit in front of clients giving advice.

Alan Smith: [01:17:31] So, get your technical qualifications. Get them out of the way quite quickly. And then, obviously, keep up to date with the ongoing, with making sure that you’re refreshing that, your technical expertise, on an ongoing basis. But then, much more importantly, really delve into the right brain stuff. What it is to engage people, how do you build rapport? How do you build trust with a customer and a client? How do you ask deep and meaningful questions?

Alan Smith: [01:17:56] And then, not jump onto the next one as if it’s just asking them their height and weight and so on. Really, how do you properly listen and engage? Pick up books. We mentioned Kyle Richards before. He’s got some great stuff. Go to conferences, no doubt there’s events in Australia. There’s certainly a number in the U.K. and my mate Andy Hart runs something called Humans Under Management.

Alan Smith: [01:18:18] And that’s a lot about behavioral work. There’s a few others. There’s some financial live planning, I think, is one that if you want to be an advisor, you want to be able to differentiate yourself and give your clients a unique and somewhat positive and on skills sort of up to date and brushed up, in terms of the stuff that most of us actually find quite difficult to do.

Fraser Jack: [01:18:42] And that’s certainly a life-long journey too, isn’t it? Continuously up-scaling.

Alan Smith: [01:18:45] For sure, yeah.

Fraser Jack: [01:18:47] Have you been speaking to other advisors that have been running more traditional practices. A lot of changes going on at the moment for those advisors. What advice do you give to them?

Alan Smith: [01:19:00] Well, look, I’m just older now, much more pragmatic. And I realized that some people are never going to change. Or maybe, they shouldn’t change. This is all about where you are in your career and your personal journey. I keep seeing all this stuff, the average age of advisors ... I don’t know. It’s great. They always used to be a little bit older than me, whereas I get older, but I’ll stick to that.

Alan Smith: [01:19:23] The average age in the U.K. last I heard was about 56 or 58, or something. And if you’re 58 and you think you’ve got a couple of years before you’re going to go and hang up your socks and go and do something else, possibly. I don’t know if I’d bother particularly to kind of ... If I hadn’t been on the journey that maybe we’ve been on as a business, completely change everything. Change your fee model. Maybe you shouldn’t.

Alan Smith: [01:19:46] Maybe you should retire gracefully and hand it over to the next generation. But if you’ve got more than 5 or 10 years in your career left, then you’ve got to go to ... This might be cliché, but there’s sort of the famous ice hockey player Wayne Gresky talking about, “I’m going to skate to where the pucks going.” And think about where things are happening. Where are things going in the future?

Alan Smith: [01:20:09] Fees and transparency and value, it’s not financial services. It is everything. Whole industries have been changed. Music industry has changed. The automobile industry has been changed. Everything is changing fast. What is going to happen to financial services and how are you going to position yourself ahead of the pack?

Alan Smith: [01:20:28] There’s a little cavier word of warning, I think, in this though. I read a while ago, there’s a guy called Stewart Rolls. I don’t know if you’ve got them over there, but a big retail organization here called Marks and Spencer’s. And Marks and Spencer’s, they’ve been up and down. They were really successful and then, they were in the dull drums. They were really faced with some difficult times.

Alan Smith: [01:20:49] Stewart Rolls came in and he turned him around. He was a real leader and also one of the top executives in the business over the years. And I remember an interview with him and his advice was, “Be half a step ahead. Be half a step ahead of your customers and your competition. Don’t be one or two steps ahead, because people aren’t ready for that.”

Alan Smith: [01:21:06] I think, sometimes, in our firm, we’ve been about four steps ahead and we’ve been early. And some of the stuff we’ve been trying to do. It was just ahead of its time. People just didn’t get it. It was just such an outlier. I’m talking about fee structures and investment propositions. And some of the other things we’ve done over the years would seem almost ... No one wants to be in the business as an ... That’s a bit odd. It’s a real outlier.

Alan Smith: [01:21:27] So, if I was trying to pivot my business, I’d look at what I’d consider to be best practice. Who were the successful firms? Who were the organization that seemed to have a sense of what the future, the direction of travel, is. And I just sort of seek out and then, replicate some of the things that they’ve done. So, planning’s essential. Sensible investment is essential. Sensible fee models are essential.

Alan Smith: [01:21:46] Transparency, openness, technology, all these things. It’s obvious. Sometimes, you’ve got to lift your head up from the day-to-day and take a look over the horizon and see what’s going on. I would say to anyone, give yourself the gift of thinking time. Most of us don’t spend nearly enough time just go sit by yourself with no technology, no phone or nothing. Maybe a pen, a piece of paper. Treat yourself to a cup of coffee or something and just let your mind wander.

Alan Smith: [01:22:14] That’s when the great ideas come in. That’s where the brain begins to really do what it’s supposed to do as opposed to always fighting fires and being on the back foot on running advice business.

Fraser Jack: [01:22:26] Okay, yeah, good advice. Grab yourself a coffee and listen to the voices inside your head.

Alan Smith: [01:22:31] Yeah, yeah. Put it that way, it sounds strange, but you know what I mean.

Fraser Jack: [01:22:35] Well, now, if you could go back in time and give yourself some advice, do over or something like that, what would you do? Where would you go and what advice would you give to yourself?

Alan Smith: [01:22:43] Well, yeah. I’ve thought about this in the past. We are all probably quite happy with the journey we’ve been on, made a few mistakes. I think I would take more risks than I’ve done. I think it’s just a personal, with my background, my family, growing up and came from a very entrepreneurial background. My father was big into, still is, real estate and property. And that’s a roller coaster ride, I can tell you.

Alan Smith: [01:23:11] And being a kid and when your dad’s rich one day and he’s absolutely dirt poor the next day, well, that probably made me a little bit more sensitive about taking risks and money because it creates a few challenges in my family growing up. But I think and maybe ... That’s why I stayed in the company a big institution probably a bit longer than I should have done. I was just worried about making a risk.

Alan Smith: [01:23:32] And even then, in the new business, I certainly probably lost two or three years early on, just not really wanted to do much. Not when making your first hire, being responsible for someone else’s salary, that’s another level of worry and risk and concern. With hindsight, I was never going to go crazy. I’m not one of these uber entrepreneurial guys who just sort of puts everything on black 32 and blows up the bank or whatever.

Alan Smith: [01:24:02] But I think I ought to take more risks, push myself a bit more and I would have brought in good people early on. And I would have probably hired people ... This kind of sense, hiring people that I couldn’t afford. I just always said, “I’ll bring this person in because they’re kind of affordable.” I’m really clear on when you’re building, your success is all about the team that you build around you.

Alan Smith: [01:24:29] And the difference between what I call an A-player. Someone who’s an A-player ... An A-player in my definition, pick this up somewhere, is someone who’s at the top 10% of their peers and their salary band. So for that sort of salary level of income, you would definitely say in terms of their attitude, their skill sets, the whole thing, the top 10% of all the other people out there are earning the same sort of money.

Alan Smith: [01:24:51] The difference between an A-player and a mediocre person, even a B-player, it’s not just a little bit. It’s exponential. It can be ten times as much. So, yeah, you might have to pay a little bit more to have these A-players on your team. But it’s absolutely worth it and I’ll tell you what, having a bunch of A-players, having 5 or 10 or 15 or 20 A-players, the dynamism and the exponential progress that happens from having that has just mooched you on much further and faster than you can ever achieve with surrounding yourself with people who are okay.

Alan Smith: [01:25:22] They’re fine. They show up and at five o’clock, they go home and have an okay job. So, that’s what I’ve done. I’d have hired great people that I thought, “How the hell could I afford their salary?” Knowing that I probably would have done down the line, because it would have achieved much better success at a faster rate than we otherwise would have achieved.

Fraser Jack: [01:25:39] Fantastic. Well said. Hiring talent instead of just, yeah. Alan, I want to thank you so much for your time and you’ve been very, very generous with your time and your information.

Alan Smith: [01:25:51] Keep your eyes open for what’s going on over here.

Fraser Jack: [01:25:53] We will.

Alan Smith: [01:25:53] So, it’s a pleasure. Sorry I was a bit over time a bit, but as you can see, I’m quite passionate. I’m very passionate about this stuff. I think that the work that we do, your podcast, the goals based approach. Frankly, that’s the ... You want to know what the future is? It’s about creating a goals based approach to life in general and to how you run your business and how you deliver services to clients.

Alan Smith: [01:26:14] So more power to you. You’re doing same great stuff over there.

Fraser Jack: [01:26:17] Great. Thank you very much. I appreciate your time. I appreciate your kind words, as well. Thanks, Alan.

Alan Smith: [01:26:23] Pleasure. Bye bye.

Fraser Jack: [01:26:25] If you haven’t already, I’d like you to subscribe to the podcast on your podcast platform of choice. And to continue the conversation, head over to our social media channel. 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.