Brad Fox: 00:00:00 The AFA was such a challenging period, and still is, right? We thought we were going to go through two or three years of legislative change and industry change. And here we are, more or less 10 years on with, do I dare say five years of it left to go before this 15 year transition to the new world is maybe complete?
Fraser Jack: 00:00:17 Hello, and welcome to the Goals Based Advice Podcast where I have conversations with pioneers of the new world of financial advice. I’m your host, Fraser Jack. And I want to say thank you so much for tuning in today. If you’re enjoying this podcast, then please help me spread the word and share it with your friends and colleagues. And I’d also like to thank our supporting partner, Advice Intelligence for powering this podcast.
Fraser Jack: 00:00:38 In this episode, I chat with Brad Fox, who you may know from his work as CEO of the Association of Financial Advisors from 2012 to 2017. He now spends his days helping advisors in a consulting role through his business, Smart Brave Consulting. In this chat, he opens up and talks about his journey, his time in the AFA and how he juggled work life balance through an extremely high pressure time of his life. And we also cover life after the AFA and how he stays grounded and the work he’s doing to help advisors and practices transition to the new world. Let’s hit play on my chat with Brad now.
Fraser Jack: 00:01:17 Welcome to the show, Brad.
Brad Fox: 00:01:19 How are you, Fraser?
Fraser Jack: 00:01:21 How are you going?
Brad Fox: 00:01:22 Really well, mate.
Fraser Jack: 00:01:23 It’s been a while since we caught up.
Brad Fox: 00:01:25 I know, we’ve been walking different paths, but that doesn’t mean either of us are wrong.
Fraser Jack: 00:01:30 Fair enough. Fair enough. Now, do you want to give the listeners a quick overview of yourself?
Brad Fox: 00:01:35 Sure. Well, these days my business is called Smart Brave Consulting. So, I’m holding a number of board positions for not-for-profits and a few financial advice practices either as actually a board director or as a board of advice member. And also, with Work Sorted, a software business that helps practices manage their money and workflows. And also doing speaking at conferences and training and development days around leadership and strategic planning. I’m on ASIC’s Financial Services and Credit Panel. And I’ve been helping FASEA in the background a bit with the exam that advisors are now sitting. So, I think they call this a portfolio career, Fraser.
Fraser Jack: 00:02:21 Sounds to me like you’ve got a heck of a lot going on.
Brad Fox: 00:02:24 Yeah, a lot of moving parts. But it keeps things fresh.
Fraser Jack: 00:02:27 Yeah, fair enough. Now, do you want to give the listeners a quick overview, how did you get into this financial services industry? Tell us your story.
Brad Fox: 00:02:35 Yeah, look a really natural progression. The eight years before I came into financial services, I was Victorian General Manager of the Brisbane Lions AFL Club, which goes back to my playing days in AFL, brief but memorable in the early 90s. And anyway, I worked with the Brisbane Lions for eight years during their premiership era of four grand finals and three premierships. But I’ve always liked people and I’ve liked numbers. And financial advice was a way to bring those two together and become self-employed, which at that stage, I wanted to do.
Brad Fox: 00:03:11 So, it was a natural progression, not at all, with a one-year-old and a two-year-old baby to go out day one on my own as an advisor with no clients, no income, didn’t buy a book, just built organically with a fallback position of helping an existing advisor do some para-planning. But that only worked for two weeks. And then I said, “I’m actually a bit busy and I’ll be doing my own para-planning.”
Fraser Jack: 00:03:40 Fantastic. Yeah. So, it’s an interesting start when you do that and you actually just have to then work out what you’re doing, who you’re talking to, how you’re building this business. How did you do that?
Brad Fox: 00:03:53 One of the things that was suggested to me by this mentor was, “Make a list of 200 people. And when you start, go and contact the 200 people.” Now, at first, I didn’t. I don’t like to be caught short on knowledge or information or detail. So, I spent most of my first really six weeks, I suppose, reading PDSs. Now, apparently, no one does that anymore. It’s not very cool. But back in the day, this is 2006, you had to sit a multi-choice exam on a product before you were allowed to use the product.
Brad Fox: 00:04:32 So, there was a 20-25 question multi-choice to sit. And any investment fund you wanted to use, any insurance product you wanted to use, read the PDS, sit the exam. So, I’d been reading a lot of PDSs. They weren’t very good. And from there, it was suggested to me that, “You won’t find clients in PDSs, so you better get off your bum and go and start seeing those people on your 200 person list,” which I did. And like many, you start with family and friends and then former clients and colleagues, and then referrals just began. And there was never a patch where I was really worried about where the next one was going to come from. It just seemed quite sequential and orderly that people were then contacting me and saying, “I hear you’re doing financial advice now. I’ve been meaning to see one.”
Fraser Jack: 00:05:22 Yeah. Very similar to my story, actually, with regards to ... I think I had the opportunity to sit at a desk with a telephone and that was it, you know? And you bought your own computer and you set it up and you had to make lists and contact people. I think what I did though in the time was, after I’d read the PDSs, because I did that as well, was to ring up your friends and family and say, “Hey, I’m starting this new thing. Can you do me a favor? Can you listen to me and give me some feedback as to how I’m going?” I think that was my opening conversation piece.
Brad Fox: 00:05:55 Yeah, I certainly had a couple that were ... About four where it was literally that style, “Look, I just want to know that I’m not full of shit. So, can I just sit and you have a listen and let’s see how it goes.” And three of that four in the end said, “Look, that actually sounds pretty good. I think you better look after my stuff.” The other one said, “I just don’t have enough stuff here to look after.” So, it’s not a bad technique for a newbie to start off with, harmless conversation.
Fraser Jack: 00:06:22 Yeah, I think it was good because the feedback I got was both positive and constructive. People said, “Yeah, that’s great. But blah, blah, blah.” And you went, “Yeah, okay. That’s a really good point.” And you actually improved the conversation that you were having.
Brad Fox: 00:06:36 Absolutely. And rehearsal’s everything, you know? Like, the number of times that just in a workbook or on a whiteboard I was drawing up a few key diagrams and things that I wanted to use in appointments and was just practicing them over and over and over to get fluent. And same driving in the car, people must have thought I was on hands free phone calls a lot where I was just talking to myself about, “This is what a platform is and this is what insurance is. And there’s four key types of insurance that most people need to consider. There’s life, TPD, which is total ...” And so it went. And I’d just be driving along rattling this off to myself.
Fraser Jack: 00:07:18 Fantastic. So, you’re a great listener to when you’re talking to yourself.
Brad Fox: 00:07:22 Yeah, I found I asked really, really good questions too.
Fraser Jack: 00:07:27 And then you worked your way in with the AFA and you were a big part of the very first Genxt movement when it started.
Brad Fox: 00:07:35 Yeah, so again, part of the way I’ve always been, if you’re in something, you want to get right in. You want to get involved in whatever the club or professional body is that’s around it. And I didn’t know which one to join, AFA or FPA. So, I went to a roadshow event for each of them about a month apart. And I figured that gives me a look under the bonnet, and the one that fits best, that’s the one I’ll join.
Brad Fox: 00:08:04 Well, the FPA one was very cold, highly structured. The people were not embracing, not warm. The AFA one, before I’d got from the foyer into the actual room to find a seat, it’s like I had three or four new best buddies. Now, admittedly, they were mostly around 60 years old and saying, “What’s a young bloke like you doing here?” Even though I think I was still about 36 or 37, but that was young at the time. And therefore, the AFA was the one that I chose. And it was Jim Taggart who was AFA President back then and been Advisor of the Year was one of the presenters. And completely engaging and just so enthusiastic that he became a great mentor for me later.
Brad Fox: 00:08:54 So, that’s what made me choose AFA at the start. And it was only about three months after that, I got a phone call from Richard Klipin who was the CEO back then, a pretty new CEO to the role. We hadn’t had one before, apparently in the AFA, or at least not for a couple of decades. And he said, “Look, we’ve just got half an idea and we want to get some younger advisors together to see how we can attract more younger advisors. Can you come to a full day thing in Sydney? We’ll fly you up, room in a hotel next to the airport. Grill you all day. And then send you back on a plane in the afternoon.” And I said yes. And that day was the genesis of Genxt.
Fraser Jack: 00:09:41 Wow, yeah. And you had a few advisors in the room talking about what could possibly be done for younger people coming through?
Brad Fox: 00:09:49 Yeah, so there was a couple of the older advisors that were on the board. Kerry Sharp was one of them, and he’s Victorian. So, he was kind of my chaperone or sponsor, if you like. And there was an advisor from just about each state, all young, all been in financial advice for maybe a year or less, thereabouts. A couple of exceptions to that, Adam Smith had been involved longer. And we just started white boarding up, what does a new advisor need? And it was all about, like we talk now in advice, you must be client-centric. Well, this was to be young advisor-centric. Where will we find young advisors? What are the hurdles that they hit when they start? How can we help with those hurdles? What’s the knowledge domains that they need? All those sorts of things.
Brad Fox: 00:10:36 And then the overlay of all that of course was how do you have a bit of fun? Because fun attracts people. So, it was a great day. I think there was actually nine advisors in the room that day, some of which had had babies and career breaks and come back. And others that had moved on all together. And there was probably six, I think, from memory, just at a rough guess that would still be advising today. So, it was a terrific day. And different names were thrown about and a few different things were put up. And I actually got named the inaugural chair. And that happened whilst I was out of the room. We hadn’t structured the breaks very well and I was so busting to go to the toilet. I left and went to the toilet, walked back in and the room went deathly silent. And I thought, “Uh oh. They’ve realized I can’t add value here and this is where they tell me thanks but no thanks.”
Fraser Jack: 00:11:29 Yeah, like any great organization, when it comes to volunteers, you can either stand still and then everyone else steps back and it turns out you stepped forward.
Brad Fox: 00:11:40 Yeah, well it was much like that. And they said, “Look, we’ve decided that you’re the chair.” And I said, “Look, I’ve been advising. I’ve only been four months, five months,” whatever it was. “I don’t even know what I’m doing yet. I can’t lead this.” And anyway, after about 10 minutes of arguing back, I lost the argument and I was the chair.
Fraser Jack: 00:12:01 Well, you had come from a footy club where the culture was a huge part of everything you ran. And an organization starting out like that needed to have something that was a strong culture moving forward.
Brad Fox: 00:12:13 Yeah, there were a lot of crossovers actually, Fraser. After I played footy, I spent a long time, more than a decade trying not to honor the lessons I’d learned through football into my working life. I thought that was maybe cliched or boring if you were to do that. But over that next 10 years, there are so many things that I learnt through the football environment, which is just a peak performance environment, that belongs in business, belongs in life, you know? Discipline and consistency, two things that are required to make it to the top of sport, absolutely the same in your career. They’re pretty boring, discipline and consistency, pretty boring. But you need it, yeah?
Brad Fox: 00:13:00 And so, there was lots of crossover things around culture. And in fact, even now, some of the work that I’ve been doing, some work with the Zurich leadership team on integrating OnePath, for example. A lot of that’s about culture. And you know, for me culture is king. Unfortunately, what we try to do sometimes though is we try to dictate what the culture is that we want instead of focusing on the behaviors that ultimately produce the culture that we want. So, there’s a bit of a tip for those that are running a business or looking to lead part of a business, if you want to get the right culture, then you need to be focusing around, “What are the behaviors? How do we live around here?”
Fraser Jack: 00:13:44 That’s a really good tip, behavior precedes culture.
Brad Fox: 00:13:48 Yeah, absolutely.
Fraser Jack: 00:13:50 So, Brad, then you came through, spent some time as not just the Genxt but as the president and then moving to the CEO.
Brad Fox: 00:14:02 Yeah. So, FOFA was in heavy debate at this stage. And two particular individuals that had been part of Genxt with me really put it on me and said, “Look, you need to lead the AFA for the next couple of years. This is a really difficult challenging time. You’ve got leadership skills. It should be you.” And again, I’m going, “Look, I haven’t got enough experience. It’s not for me, blah, blah, blah.” And I lost the argument again. And I did. I had the great fortune of being named as president.
Brad Fox: 00:14:37 And you know, the thinking was at that stage that FOFA was pretty close to its end state. So, the thought was there’d be about another six months of debate in government around what it should look like. And then probably 18 months to help advisors make the transition and implement it. So, at the end of my two-year term as president, there was still about six months to go on the legislation for FOFA. It didn’t progress. We had changes of government. It was in, it was out, it was changed, you know?
Brad Fox: 00:15:08 We had changes to FOFA then that we were going through when I became the CEO afterwards. And that was all done until Jacqui Lambie fell out of love with the Palmer United Party the night before the vote and then chose not to vote with Palmer to prove that she had left the party. And we lost amendments to FOFA that would have made it a far more workable piece of legislation. Nothing to do with the legislation, just politics. Yeah.
Fraser Jack: 00:15:36 Yeah, it was a crazy time. Absolutely crazy time. But you stayed on as CEO for about four and a half years, is that right?
Brad Fox: 00:15:45 Yeah, about five. So, just after my presidency finished, about three weeks after, I did stay on the board as treasurer just to help transition through more than anything else. And Richard Klipin had been with the AFA at that stage for about eight years as CEO. And he actually rang me on a Sunday afternoon, it was about 3:00 PM. I live on an acre and a half in Melbourne and I was out the back with an open fire and a nice spring day. And I think I might have just opened a coldie actually and was patting the dog. And the phone rang and it’s Klippo. And he said, “Foxy, you know that phone call you never wanted to get when you were president?” And I said, “Yeah.” He said, “Well, this is that phone call. I’ve decided it’s my time to move on. And I’ve also decided you should succeed me.”
Brad Fox: 00:16:37 So, once again, we had a debate that it shouldn’t be me. And that debate actually was about two weeks. And I lost that debate as well.
Fraser Jack: 00:16:44 You’re going to have to work on your debating skills.
Brad Fox: 00:16:47 Apparently. So, I took an interim CEO role for a bit. And then, yeah, about a month I got appointed to it, which necessitated me to then sell my practice, which was a really easy experience in my case. Three phone calls over the space of two days and my practice was sold to two advisors that kind of split the book a little bit. And the staff went with different elements of that as well.
Brad Fox: 00:17:19 And ironically now, those two advisors work together under one license together and I’m not chairman of their board. So, things change, the loop goes around five and a half years on. But the CEO gig was really challenging, Fraser. I was living in Melbourne. But of course, the AFA’s head office is in Sydney. I had about five and a half years of flying up to Sydney just about every week for usually three nights a week, sometimes four.
Brad Fox: 00:17:52 My kids were, I think eight and nine when I started doing it. And you know, I even in that period coached my daughter’s basketball team and then coached my son’s footy team. And it would be Monday night training, get home at 7:30, quickly change, picked up by a taxi at 8:00. Take the 9:00 flight to Sydney. Be in my accommodation by 10:30, 11:00. And then Thursday get the 3:00 PM or 3:30 PM flight that would land at 5:00 and get me at footy training by 5:30 to take footy training. But that’s probably what helped me stay connected to the kids during that stage. It was pretty hard on my wife too, you know? She became a single mom almost for five and a half years with me away so much.
Brad Fox: 00:18:42 I think my record year was something like 142 flights in a year. You get good at it though. Don’t fly peak hour. That’s the first rule, don’t fly peak hour.
Fraser Jack: 00:18:54 Yeah you learn which queue to get into and exactly how many minutes you’ve got before you’re going to make the flight or not make the flight.
Brad Fox: 00:19:01 That’s exactly right. I mean, literally here where I live about 15 minutes north of Melbourne Airport, if my flight was at 9:00 PM and I was picked up at 8:00 PM, you’d be walking in the gate at 8:20, into the lounge, bottom of mineral water, two apples and a mandarin if they’re in season, onto the plane, away you go, job’s done.
Fraser Jack: 00:19:21 Yeah, fair enough, just part of the commute. But yeah, certainly difficult for your family. But I think it’s great that you were still able to continue to coach the footy and coach the basketball.
Brad Fox: 00:19:32 Yeah. Look, I’ve done coaching now for the best part of all of the last 25 years. And you know, it’s leadership. And that again translates so well into my day job, you know? The AFA was such a challenging period, and it still is, right? We thought we were going to go through two or three years of legislative change and industry change. And here we are more or less 10 years on with, do I dare say five years of it left to go before this 15 year transition to the new world is maybe complete?
Brad Fox: 00:20:10 And leadership’s tough because when you’ve got people that are incumbent and have businesses and lives that are structured around what works and what has been so successful for them, they’re highly ingrained in that. It’s part of their identity. It’s who they are. And when change is forced on someone, when they feel it’s being done to them, that they haven’t got a say in it, or at least not much of a say, it’s really, really difficult to be positive about making the transition. And particularly, and I can say this now with the benefit of hindsight, democracies are great, but legislative process is awful. What gets through is often a hybrid pleasing stakeholders which don’t necessarily translate into anything that’s pragmatic, effective, certainly not efficient. Is it piecemeal? Yep. Loads of bandaids? Yep. And yet, I suppose it’s better than the alternative, which is no democracy.
Brad Fox: 00:21:13 So, it was such a challenge through that period to try and get things to land in places that would be workable. And yet at the same time recognize that we were being told by the public which is our most important stakeholder, that they didn’t like where we were at. Our clients did, but the public didn’t.
Fraser Jack: 00:21:36 Yeah, it’s a really interesting one, because you work with a lot in strategy, in leadership, and in culture. And then you’ve got to try and work with politics, which is a very different ballgame all together. And I’ve personally found at certain times during that journey of all the different legislation, you try to make a difference, you get knocked down, you lose a little bit of faith in the politics of the country and how it works. Did you ever find that? Did you ever have a struggle through that political side?
Brad Fox: 00:22:10 Yeah. And I mean, look, you were close enough to the fire to know this first hand, you know? You were on the AFA board there for a while too. And it is difficult to absorb that if the logic of your argument is sound and even if the facts of your argument are sound that someone else won’t absorb that, won’t take it on because of perhaps a zealousness about a different point of view, perhaps just politics and stakeholders on their side.
Brad Fox: 00:22:44 So, it does, it leaves you floundering. You’re going, all the logic, all the sense says, “This is bloody ridiculous. Why are we doing this? Why are we going down this path? It’s not going to work even?” But it’s where you end up. So, there was numerous times. I’m always careful saying about pulling your hair out because it’s obvious at work. But the number of times you’re pulling your hair out going, “How do we influence this? Seriously, how do we influence this?” And I think that’s the challenge is that when you have diametrically opposed views around perhaps free markets and what’s good for the public versus others that want the public to be able to work that out for themselves, they’re diametrically opposed and very hard to navigate.
Brad Fox: 00:23:31 And then, of course, politics got so much more interesting once we had cross benches that were really carrying the balance of power. And that was like herding cats. I mean, the Palmer United Party and I’ve forgotten his first name, Muir from here in-
Fraser Jack: 00:23:46 Andrew.
Brad Fox: 00:23:47 Yeah, south eastern Victoria. No way can an independent get across every issue that’s coming through the parliament and add any meaningful contribution to the debate. They’ve got to pick and choose what they can put their bandwidth on because there’s just too much. There’s too much to know well. So yeah, it was very difficult to even get on their agenda.
Fraser Jack: 00:24:16 Yeah, I found myself getting heavily involved and then just having to step back and go, “I’m not even going to think about politics for a period of time.” And it was just too much.
Brad Fox: 00:24:27 Yeah. I mean, one of the things that we got better at was looking through a lot of different lenses at our position. Obviously we could see it through our members lens. We could see it through our own lens. I could see it as an ex-practitioner. But could we see it through the public’s lens? Could we see it through industry super’s lens? Could we see it through Labor, The Greens, the Nat Libs, the independents? Could we see it through a reporter’s lens? Could we see it through a client’s lens? Could we see it through someone that’s been burnt by poor advice or their perception of poor advice?
Brad Fox: 00:25:10 So, there’s so many different stakeholders looking in on the decisions. Each time you want to put a statement out, you need to try and see it through how it’s going to be received. We were probably at our most popular with our members when we were attacking Labor head on and really being pretty brutal on them. We were probably also our least effective at getting what we wanted at that point in time. So, our members loved us, but we weren’t doing any good. So, over the years, we changed that. And some of our members got pretty unhappy with us because they thought we weren’t fighting hard enough because they didn’t see us bagging out the government in the press.
Brad Fox: 00:25:52 Well, bagging out government in the press wasn’t working. Yes, popularity, great. But life is not a popularity contest. You want to be effective, you want to create change. Just like with your client, when you’ve got to tell them a hard truth, you’ve got to tell them a hard truth or nothing will change. So, this was a very deliberate shift in how we were trying to get outcomes that we believed in. And therefore it meant we did need to compromise on some things to win other things. And you don’t get to win everything. No side in politics does.
Fraser Jack: 00:26:25 Yeah. Interesting. So, you came through that. And then you stepped down from that role.
Brad Fox: 00:26:32 Yeah, so my kids had moved on to being 13 and 14. And I didn’t want them to have ADD, absent dad disorder, you know? As the puberty rolls around, I think it’s important that there’s a consistent man in their life. And that’s dad’s role. So, that amount of traveling and time away was just too much. So, I decided that it was time for me to stop the flying around and move on.
Brad Fox: 00:27:08 Geez, it was a hard decision though, you know? As much as it was a tough job to do. I’m sure Phil Kewin would say the same now, or Dante would at the FPA. It’s not an easy role. And it was very tiring, very stressful. We had an extraordinary general meeting over ... caused by the life insurance framework, and that took a huge personal toll. I had some pretty dark days and hours, which is why since then I’ve been doing a lot of various fundraising things and so on around mental health because it was pretty hard yards back then.
Fraser Jack: 00:27:49 Yeah. And so, then you took a bit of time just to really reconnect with the family and doing a few, as you mentioned, a bit of charity work, but also just a small bit of consulting just to make sure that you grounded yourself back onto your property?
Brad Fox: 00:28:03 Yes, well Stanford Brown, a great practice in north Sydney, Jonathan Hoyle and David Brown there were very quick to get on the front foot as soon as they heard that I was going to be stepping down at the AFA. And we had a chat and I decided to join them as a board director, independent director. Other than that, though, I took the advice of a couple of very senior people in financial services who said, “The most important thing for you to do now is take three months off. You need to recharge your batteries and you need to be really clear on what it is you want to do next because you’ll get a lot of offers. And you don’t want an accidental career path.” And that was tremendous advice.
Brad Fox: 00:28:49 In fact, I’ve passed that advice onto a lot of people since. It’s that time to just get centered. And to be frank, to really recover. I hadn’t realized how tired I actually was. I had no idea because you’re in a routine, you just keep doing it. After two months, I didn’t think ... If it was a battery, if it was your iPhone battery, I would have said I was only half charged after two months. So, that was a really, really important time just to sit back, look after me, and to think about, “Yep, where is the industry going? Where are the opportunities? Is it the right industry for me? Should I go back to professional sport into some sort of role there? What’s on my agenda? What do I want to be when I grow up, Fraser?”
Fraser Jack: 00:29:41 Yeah. Yeah. When you work it out, let me know. But no, I want to talk about this a bit more because this mental health and mental illness spectrum, which I call it, is a big issue, especially right now with a lot of change going on and people struggling to cope with the amount of information. Really hard to recognize when you’re in it though, yeah?
Brad Fox: 00:30:03 Yes, it is. We get busy, you know? We’ve let life make us very busy. And I do love saying, “Busy is bullshit.” It’s a bit of a self mantra to try and get myself out of those habits. But we have so many elements to our life now. And the wonderful mobile phone can make it very difficult to switch off. The number of times where ... I’ll give you a very personal example for me that was a wake up call.
Brad Fox: 00:30:37 About two years into the CEO role at the AFA, Friday night footy, sitting on the couch. I’ve got my arm out to the side with my young fellow, nine years old, 10 years old, whatever he was at that stage, sitting with my arm just draped around his shoulders watching Friday night footy, the AFL on tele. And in my right hand, I’ve got my phone and I’m still flipping and returning emails.
Brad Fox: 00:31:04 Somewhere during the second quarter, I came to the realization that my arm was still out to the side like this, but my son was nowhere to be seen. I wasn’t present. I wasn’t even close to present, you know? You want to have failure in your life? That’s it right there. So, that kind of ... Got to find ways to cut the busyness out and get focused on what it is that you want and why you want it. And that’s hard to do, you know? It’s hard to really get frank and honest with yourself about why you do what you do, what you want, and how are you going to get it?
Brad Fox: 00:31:48 I can’t believe the number of people that I’ve now had the chance to work with over the last, particularly two years, that are between 40 and 55 years of age who are pretty much a shell, you know? They’re hollow. Life’s just won. It’s got over them. It’s got the points on them. They’re exhausted every day. They’re not getting the enjoyment out of it anymore. They kind of call work a means to an end, “It’s just so I can get the money to pay the bills.” That’s not all work was ever really meant to be, you know? I thought we left that behind somewhere in about the 1970s or 80s. But it’s back where people feel trapped in just making do, getting through.
Brad Fox: 00:32:37 And you need good people around you that can help you break that open a bit. And I was very lucky that there’s a group of dads from the local footy club where I’m coaching. And we catch up on Tuesdays 4:30 to 6:00, have a couple of beers, often just laugh, you know? Make fun of each other and the world. And other weeks we solve the world’s problems. And sometimes we solve the problems of our teenage kids, and sometimes we solve the problems of our wives. Sometimes we solve the problems of each other. But it’s brilliant to have this group of ... depends which week it is, four to eight mates that can leave the ego at the door and just get real. And I just wish everyone had that same group of people that they could turn to to just dump a little bit of stuff from the week.
Brad Fox: 00:33:37 Now, you don’t want to be the person who turns up every week sad sack. But you also want the group to be real enough to call it out if you do. You know? “Foxy, every week you turn up. You’re that bloody unhappy. You should do something about it.” You need to hear that.
Fraser Jack: 00:33:53 Yeah, it’s a great support network. That support network’s pretty important. We’ve talked a little bit at the AFA conference recently about that, looking out for your mate kind of conversation because as I sort of mentioned before, it’s really hard to see or help yourself, but it’s probably a lot easier to see somebody else going through it. And if you recognize the signals and the signs and the symptoms and you recognize when someone’s off their game or low, as you said before, low on battery, then to really make a point of doing something about it, getting together and trying to turn the ship around.
Brad Fox: 00:34:31 Look, I had a terrific day last Friday, a couple of Fridays ago. I facilitated a session for the AFL Players Association and the AFL Coaches Association and Zurich and the Zurich Foundation. They’ve come together to create a program that’s had a pilot this year for six months called Tackle Your Feelings, which is all about teaching young ... Sorry, community footy coaches, like I am, how to recognize, understand, and help players that are showing early signs of mental unwellness. And of course, at the same time, recognize that in themselves. So, it’s about creating this really positive mental wellness movement through local footy clubs where having honest conversations, footy is one of the places you still have those. The coach is usually very honest at quarter time, half time, three quarter time, you know?
Brad Fox: 00:35:34 But during that, there was something that came to me. And I know the AFA had RU OK Chelsea Pottenger ambassador there. And are you okay? Great question. But I really encourage everyone that wants to help somebody else out, it’s not one question that will get a real conversation because we’re also really good at wearing masks and covering up and going, “Of course I’m okay. Yeah, I’m good. I’m just tired.” And then change the topic and on we move. Whereas, what we really need is that true, gritty honestness that we do have to do with clients sometimes to get to the bottom of their issues. But we need that from our peers, our friends, to not just ask the one question, but to try and create that space. Ask permission to go a little bit deeper and see why you’re so tired. What’s weighing down on you?
Fraser Jack: 00:36:32 Yeah. I think Chelsea has sort of mentioned that as well. And she was brilliant, by the way. But yeah, make it the start of a conversation, “Are you okay? I’ve noticed you’re looking a bit quiet recently. Haven’t seen you around. What’s happening?” You know, start the conversation with, “Are you okay?” But don’t finish it after, “Yeah, I’m fine.”
Brad Fox: 00:36:54 Yeah, exactly right. And look, we know now that the stats that are coming out are increasingly showing such a higher incidence of mental ill health. And maybe that’s partly because people are a little more prepared now, the stigma’s getting lower to actually say, “Well, actually, I’m not that good.” But I think on top of that, life has become more complex, more moving parts, very busy. The things where we used to center our brains, as a kid I grew up going to church every week. One hour a week where, for the most part, you’re on a rote, you know? Saying my prayers as they need to be said, or whatever. But in the meantime, my brain was quietly decompressing from the week. It was like a quiet hour. Where’s our quiet hour now, you know?
Brad Fox: 00:37:51 Sure, some people are meditating, but most aren’t. Sure, some people are listening to podcasts. Good. But where’s their quiet hour where they’re not trying to think and they’re not trying to learn and they’re not trying to do? They just need to hang, just be.
Fraser Jack: 00:38:04 Yeah.
Brad Fox: 00:38:05 Need to find that quiet hour.
Fraser Jack: 00:38:07 Is yours fishing these days?
Brad Fox: 00:38:09 Love my fishing. But yeah, I don’t get out too much in winter in Melbourne. I’d almost need to crack the ice down here to get the line down. But I do love my fishing. It’s one of the places I rest and recover. My secret place is almost any decent park in my car, particularly in winter with a bit of sun hopefully hitting in a window and turning into a little mini oven. I’m a power napper. So, I love getting my 10, 15 minutes middle of the day somewhere and just chilling. Yeah.
Fraser Jack: 00:38:45 Nice one. Now, tell us about what you’re doing now with the work you’re doing in the Smart Brave Consulting.
Brad Fox: 00:38:51 Yeah, so the core part, various board roles with some financial advice practices. So, we’re all going through transition, right? And even good businesses are going through some degree of reinvention. So, the dual challenge of being effective and being efficient is very much alive in just about every business I can see. And right alongside that is this need to refocus how we’re being client centric. What are the conversations? You know, there’s some tremendous research now being done around the world, including some here in Australia, where it talks about financial wellbeing.
Brad Fox: 00:39:36 And I started talking about financial wellbeing about 18 months ago. I am amazed. This is like a tsunami of wellbeing conversations now 18 months later. It’s brilliant, right? It’s really, really good. And I think there’s a lot of advisors and advice practices that think they’ve more or less gone down this track already, but they haven’t. They’re just scratching the surface. So, a bit part of what I’m doing is going, “How do we take the changes that are happening and get ourselves future proofed with that? And at the same time, how do we kind of reinvent and reinvigorate what the core advice offering is as well?”
Brad Fox: 00:40:14 So, the advisor skillset, how prepared are they to go what we call below the line? So, if you can imagine a model, a great simple little model called the PIES model. The P and the I is political and intellectual. You put that above the line. And the E and the S is below the line, and that’s emotional and spiritual. And for some people, I guess you could go, above the line is all the traditional financial advice stuff of cashflow, budgeting, insurance, superannuation, estate planning, investment, right? All the stuff they’re going to teach the new advisors at uni, and for that matter, still sit in most of the course work that you do as an experienced advisor as well above the line, need that. Need that for compliance, need that for your ticket.
Brad Fox: 00:41:03 But where’s the skill? The craft is below the line, the ability to have real conversations, that get deep, that are meaningful, that create change. Most of the advantages that a financial advisor can bring to a client in my experience is still by coaching them to shift their behavior, shift their attitude about money, shift the way they use it, shift their attitude in retirement to enjoy their money and their lifestyle instead of having more than enough and still spending every second night sleepless about whether it’s going to run out. It’s coaching.
Brad Fox: 00:41:36 So, how do we bring that together? And the US Consumer Financial Protection Bureau has a brilliant whitepaper that goes through the research around what’s the core outcome we’re seeking through teaching financial literacy? And it talks about ... It’s a beautiful little matrix that there’s two core outcomes that clients want. The first is a feeling of safety and security with their money. And they want it in two timeframes. They want it now and they want it for the future.
Brad Fox: 00:42:11 So, what does that look like? Well, sense of security in the now is control over your day to day income and expenses. You want to feel that you’ve got enough money to get stuff done. And what does it mean for the future? It means that you can absorb a shock. Well, that’s life insurance. That’s estate planning. It’s a cash buffer. And the other thing they want is the feeling of a sense of freedom to make choices. And same thing, two timeframes, in the now. The sense to have choices on a day to day basis to get their wants, have the holiday that they want, have the car that they want, have the time off work that they want, quality of life that they want. And what does that mean for the future? It means the ability to stay on track and not see that choice running out. In other words, your money’s not going to ... You’re not going to outlast your money.
Brad Fox: 00:43:07 So, this really simple matrix, I just call it the money wellbeing matrix, is really the core of what financial advice has been for quite a long time. But it showcases it in a way that lets you have a great conversation with client and is a practice that lets you fine tune what does that look like? And at the same time for each of those four core areas, you can get to the emotional driver of the client, why do they want it? Help them understand what’s driving the feelings they have about money.
Brad Fox: 00:43:44 One of the most important tools that I’ve taken to some advisors lately is how to uncover someone’s money script. So, by the age of nine, our attitude to money’s already formed. It’s been decided, if you like. Everything after that is reprogramming, changing that attitude about money. So, the experiences you had in those early days, did you have pocket money? Did mom and dad have enough money? Did they have too much money? Did you get every single thing that you asked for? Or were you the kid that had to save half the price of the bike and then they’d chip in the other half? What was the fighting like over money in your house? Or was there none? Was it resentment? Was it ego driven? Was it not ego driven?
Brad Fox: 00:44:30 All those things shape into the script that you have in your head about money at the age of 30, 40, 50, 70. And often when we see couples fighting over money, the real reason they’re fighting over money is they’ve got two different money scripts. They’re actually coming from a different beginning. So, that’s some of the stuff that I’m doing. But there’s also ... that’s the creative sort of side. And then the other side’s the strategic planning, setting the course and direction of the business, looking at how we structure the business better, that’s in terms of people and the back end so we get a more productive practice. You know, compliance. Just about every practice is being challenged on compliance now, even if it’s not to be more compliant, but how to be compliant effectively. That pendulum has swung way too far, so the side of over-correctness. So, how do we get commercial around compliance?
Brad Fox: 00:45:36 So, all those sorts of things are part of what I’m doing. And working with leadership groups in larger practices to be better at leading people because at the end of the day every business is driven by people’s energy and output. So, how do we get that right?
Fraser Jack: 00:45:50 Yeah, so is this the part you enjoy the most, working with practices?
Brad Fox: 00:45:57 Gee, well I certainly do enjoy working with practices. But I like the work I’ve been helping Zurich with as they’ve integrated OnePath, in the lead up to that working with the CEO and doing reports at that level, very strategic decisions that had very large impacts. Not that I’m there to make the decisions. I’m there in a facilitation role. But challenging them on what will that impact ... You know, pull this lever, what does that change over there? That kind of thing. I love doing that as well. I loved doing the Tackle Your Feelings Day with the AFL players and coaches and Zurich the other week. That was fantastic. I probably don’t have a favorite thing. I like talking at the conferences as well. But yeah, variety. It’s good.
Fraser Jack: 00:46:48 Now, a lot of the stuff you’re doing with the strategy and leadership side, your business is called Smart Brave, is that sort of the theme? Did that theme come out of that?
Brad Fox: 00:46:58 Yeah, look, years ago I was lucky enough to go and do one of those one week executive leadership courses at Stanford Uni in California. Sorry, in LA. No, California. And that was the most amazing experience too. I mean, gosh, I encourage everyone some time in your working life, set aside the 10 grand and go and do one of those sort of courses. They’re just brilliant.
Brad Fox: 00:47:24 But one of the things they talked about was a decision making model about the first question to answer, providing you’ve narrowed down what’s the problem you need to solve? Having done that, is it time to play safe or brave? And what we see in most businesses in most environments is people consistently playing safe for fear of failure, fear of losing your job. You know, the old, no one gets sacked for buying IBM. What they put up is if you want to be successful in an environment that is VUCA, volatile, uncertain, complex, and ambiguous, if you want to be successful in that sort of environment, which is where financial advice is right now, then you’re actually going to have to make some brave decisions too.
Brad Fox: 00:48:14 And then, if you make a brave decision, will it be a smart brave decision or a dumb brave decision? And I think we can all look back and pick our dumb brave ones, Fraser. We’ve all made them. So, there’s certainly some dumb brave experience there. But what’s a smart brave decision look like? How do you de-risk? If you’re going to make a brave call, how do you de-risk it? How do you test and learn it? What are the signposts you’re looking for that you’re either on track or off track? And will you be brave enough to call that you were wrong fast enough?
Brad Fox: 00:48:49 So, the old saying, “If you’ve going to fail, fail fast and cheap.” So, that’s where smart brave came from. In this environment, we can’t play safe all the time and expect to get ahead. We’re just going to choke ourselves like we’re drowning or out of oxygen. So, we need to be brave. If we’re going to be brave, well, we need to try and be smart brave, not dumb brave.
Fraser Jack: 00:49:14 Yeah, sounds like plotting a course.
Brad Fox: 00:49:17 Pretty much.
Fraser Jack: 00:49:17 And by the way, yeah, plenty of dumb brave decisions. Just learnings, I think we call them, don’t we? Learnings.
Brad Fox: 00:49:24 Yes, learnings. Yes. Yeah. We all get them.
Fraser Jack: 00:49:28 Yeah. Let’s look at the short term, the future. How do you see most of this playing out over the next couple of years?
Brad Fox: 00:49:37 Yeah, look, very interesting decision that the government’s going to look to extend the period for achieving education levels and passing the exam. There’s actually some logistical reasons about extending the period for the exam, particularly for country based advisors and so on, right? And I get that. That’s probably the least favorite of the two decisions for mine. The exam, the early evidence is that it’s been well set and it’s appropriate and most experienced advisors will get through it, if not on their first sitting then on their second, as they get more familiar with exam technique, which is an important part of it.
Brad Fox: 00:50:20 The extending the time to get the qualifications, I think that’s going to perhaps make it mentally easier for some of the advisors that have got more work to do. Pragmatically, I don’t think it’s going to make much difference. I think the advisors with the most amount of work to do, if they’re older, would have been passing through their retirement window anyway. And for those that are perhaps in their 40s, then they probably would have just knuckled down and got it done, and one year maybe doesn’t make much difference. But it’s good to see the government was listening anyway to the concerns and are prepared to do that.
Brad Fox: 00:51:00 We will see a lot of advisors leave. We were due to see that anyway with the aging profile of the advice workforce. The one that concerns me most is the transition from institutionally aligned licensees to a majority of non-institution aligned licensees. What’s that transition going to do to businesses? A lot of people think they’re going self licensed or very boutique licensed. But they need to be careful they don’t underestimate the difficulty of being compliant. It’s the one thing the institutions kind of did a pretty good job of was almost being over compliant at a practice owner level, maybe not in their employed channels. So, I think that that’s going to hurt.
Brad Fox: 00:51:48 Good businesses are going to be worth just as much money as they were before. You know, you’ve got a business producing 30% EBIT or above, free cashflow, that’s attractive. So, valuations at that end probably aren’t going to move much, but they certainly are for businesses that haven’t changed much in the last 10 years. And I feel for those advisors, particularly where they’ve got debt aligned to having purchased practices or books along the way. That’s going to be very challenging for them to make their way out the other side.
Brad Fox: 00:52:23 So, I think there’s a lot going on. Advice ends up in a better place, you know? By necessity, we’re going to see some very inventive and creative advice solutions coming on, and that’s probably a good thing. Some will fail. Some aren’t going to work, but we’re going to find some good ones too. A bit worried about the number of advisors that just think they’re going to become cashflow coaches. I haven’t seen too many models where an advisor’s prepared to charge enough money for the amount of handholding needed to change behavior around spending. You can’t do it for $1,000 a year, not at this point in time. So, it’ll be interesting to see how that plays up and whether ASIC decides that they want to tell the government that they should have regulatory control over cashflow coaches, spending coaches. That’ll be interesting to see where that goes as well.
Fraser Jack: 00:53:23 Yeah, no doubt change will be inevitable. Tell me about the one person advice practice. Do you see that being very difficult and maybe even having to merge and become practices, like larger practices?
Brad Fox: 00:53:41 There’s some very good research that’s been done about the long tail, and where are advice businesses on this sort of spectrum? Where’s the sweet spot to be profitable? Michael Kitces from the States has written some ... I saw some good articles around this. And what the data’s showing that he’s got, which is based overseas, is kind of this awkward sized middle practice where the small operator, one or two advisors can be very, very profitable because they’re lean and mean. They don’t have overly large client bases. They’re usually high net wealth, ultra high net wealth, paying a pretty good average fee each. And things are pretty simple.
Brad Fox: 00:54:27 Then you’ve got the very large institutional models, which in Australia now are buggered, they’re broke, as in broken. In the US, they’re actually quite successful. Then you’ve got this middle size. So, if you take a practice between about 15 employees and perhaps 50 employees, that’s where it’s hard because you’ve got so many costs that start to come in about managing the people, leading the people, running the business, being organized. It just starts to become a bureaucratic kind of expense. So, how do we get the small business startup mindset into a mid size practice is a real challenge that at the moment I’m not seeing solved very consistently at all.
Brad Fox: 00:55:15 So, the small operator, I think can be okay. They’ve got to learn to outsource. And the challenge ... You’ve been there as well. The challenge when you’re a one or two or three person practice is if you want to go to one more employee, well, there goes 50% of your profit for the next year. So, do you do it and buy a book? Because there’s going to be some cheap books. Or do you do it and go, “Well, it’s just going to take two years to grow organically and win that back, but I’ll be better at the end of it.”
Brad Fox: 00:55:47 So, what this research more or less says is, if you’re a practice that’s sort of between one advisor and three advisors, you might be in the sweet spot. Go above that, up to maybe 10 or 12 advisors, that’s hard yards. That’s frustration central. You get above that, you’ve probably solved some problems and you’ve got a pretty good model that’s going to make a good hit and be attractive to shareholders to be involved in. So, that’s probably where the Aussie market’s going to be learning over the next five years.
Fraser Jack: 00:56:19 Yeah. I also feel for some of the part-time type maybe stay at home mom and dads, you know? Raising young kids and then also doing part-time advice might also struggle in this new environment.
Brad Fox: 00:56:33 Yeah. Look, Fraser, about the time you and I started in advice, it was called a cottage industry. And it was the one advisor, often an old lifey working from the garage at home and mom did the books and the appointments and their life was wonderful. That is getting harder. No doubt that’s getting harder. But I think the part that is the most challenging about that is, where do you get your peer group learning from? Where do you get your peace of mind from? How do you stay sane in such a changing environment? How do you not get left behind?
Brad Fox: 00:57:11 So, you know, I know you’ve done some stuff in the Fintech space too. These wonderful hubs that are being created in the cities for 10, 12, 15, 20 of those businesses to rent and work from cheaply, sometimes rent free for a year so that you get the rub, you know? You get this collaborative rub going on. Maybe we’ll start to see that develop in the advice space. Maybe that’s what some licensees need to do to create a proposition that advisors are going to support instead of the traditional advisor reaction of, “We pay these licensees fees and get nothing for it.”
Fraser Jack: 00:57:47 Now, how long are we waiting for this all to settle down into a profession and run smoothly?
Brad Fox: 00:57:53 Well, if you’re waiting for it to settle down, you’ve made a poor choice. Don’t wait. You’ve got to be doing, right? You’ve got to be changing. You don’t necessarily have to be the trail blazer, you know? Burke and Wills, that didn’t end so well for them. But you’d want to be starting to make changes around what your advice business looks like on a progressive basis. And don’t forget change overload, you know? Your team and your practice, they’ve got to cope with the change too. So, chasing every new piece of software is not a good recipe for success. Chasing the latest idea of being a wellbeing practice without picking and choosing does it fit you? Is it going to be consistent with our culture? Does it fit your personality? Does it fit your existing client base? Or are you going to change that as well?
Brad Fox: 00:58:47 So, how long am I going to wait for it? Don’t wait. How long will it evolve over? Who was the CEO of General Electric for years and years? Jack Welch. Jack Welch was interviewed once and he said, “What was the turning point for General Electric? For GE? What was the turning point when you got it right?” And he said something like, “It was in the period between 1994 and 1998.” You know, it wasn’t like a date or a point in time where the change was made. It was through an era of change, a period of change. We’re just in that period. It won’t end. But it will keep evolving. We’re in the fast, hard learning part of it now though.
Fraser Jack: 00:59:34 Yeah. Very good, now thank you. Now, if you were at a barbecue chatting to consumers and they say to you, “What’s your tips on finding a good financial advisor?” What do you say to them?
Brad Fox: 00:59:50 First of all, start with a friend who’s got one that they like. I think you really want to be looking to find someone though that obviously you fit well with on a personality basis. But you want to understand their philosophies. What are they really all about? So, Tribeca, which I’m chairman of in Melbourne, they rebranded two years ago. And this brand has continued to evolve and it’s all about living a good life. And everything’s about good life.
Brad Fox: 01:00:23 So, what does that mean for a client? Well, every client’s different. But it does mean that we’re shifting that practice to be maybe 40% about traditional financial advice and 60% about life and lifestyle choices. That’s everything from your quality of your relationships to your feelings of self esteem to your career, career choices, how you’re feeling in yourself, your mental health space. I’d be advising a client to find a practice that’s interested in the whole person of you because the money element ... Money’s just a conduit. It facilitates choices and time. But it’s not the end in itself.
Brad Fox: 01:01:10 You know, I love this one, Fraser. What’s your definition of wealthy? Having enough time. These days, we’re all so busy, but time. How do you win back time? How do you make choices that support having time with the people that you like? Even legacy, you know? We talk about ... We used to talk about leaving a financial legacy. Well, I don’t care about a financial legacy. I care about the legacy of who do you want to have an impact on in life and what do you want that impact to be? They’re the sort of choices that I think financial advisors are going to be helping clients make. Money, that’s just a conduit, a facilitator in the background. That’s what I’d be wanting clients to find, someone that’s interested in their whole life.
Fraser Jack: 01:01:57 That’s good. Thank you. Now, quick tips for somebody who is coming into the industry, a new advisor?
Brad Fox: 01:02:03 Yep. Be flexible. Challenge, don’t accept status quo, ask lots of questions, read, podcast listen, YouTube, just keep going and getting different points of view and information. Subscribe to Michael Kitces’ newsletter. You’ll see stuff from all around the world to feed your knowledge. And then, at the end of the day, try and process all that in a way that lets you be authentic in giving real advice to people.
Brad Fox: 01:02:44 We’re going to see, unfortunately, a lot of kids come out of uni with a ticket ready to advise that are going to be 22, 23, 24 years of age without any of the life skills to be able to make a real impact on someone else’s life. I was very disappointed that when FASEA curriculum was being put together at the start that we didn’t see the social sciences come into it, you know? I think we’re going to get to the stage where 10 years from now, the financial advice degree will become a double major, financial advice and psychology. The two are going to go hand in hand. So, if you’ve done your financial advice degree, start learning a bit of career stuff, perhaps do one psychology unit a year and earn yourself towards a grad dip or something in psych because that’s how you’re going to help people recognize behavior and change it.
Fraser Jack: 01:03:43 Fantastic. Thank you, Brad. Now, last question, if you could go back in time and give yourself a do over, what tips would you give to yourself?
Brad Fox: 01:03:57 Wow. I reckon one of the things for me is specialization is usually more rewarding. And I don’t specialize, as we’ve talked about today, right? I do a whole range of things. I probably could have benefited from just getting a little narrower and deeper. But it might not have fulfilled me either, Fraser. I just worry that it might not have ticked all of my boxes.
Brad Fox: 01:04:30 And I think the other thing is my time at the AFA, particularly as CEO, it can become really difficult for people once they are in leadership roles and they’re short of time, that they can draw within themselves to try and find solutions for problems and challenges, where the solutions normally lie on the outside by talking with people. So, I would have encouraged myself with the benefit of hindsight to be less of the expert through trying to get more knowledge and be more factually correct and become or spend more time out listening, talking, and just connecting with other people.
Fraser Jack: 01:05:22 Fantastic. Thank you. Now, if somebody wants to continue this conversation and find out a bit more about Smart Brave, how can they get hold of you?
Brad Fox: 01:05:29 Smartbrave.com or just email me, email@example.com.
Fraser Jack: 01:05:35 Fantastic. And we might try and also get some of the resources you talked about, the PIES Matrix and the money script and things, if we can try and get some links to those, we might try and put those through in the show notes.
Brad Fox: 01:05:47 Yeah, I can help you with some of those. The money scripts is more of a face to face learning kind of technique. But also a link to that whitepaper from the US Consumer Financial Protection Bureau. Terrific whitepaper, very lengthy, but some real gold in there.
Fraser Jack: 01:06:04 Fantastic. All right. Well, thank you so much for your time, Brad. I really appreciate you coming on the show today and sharing your past and your knowledge and everything you’re doing at the moment.
Brad Fox: 01:06:11 Great to catch up, Fraser. Thanks, mate.
Fraser Jack: 01:06:14 Thanks, Brad. If you haven’t already, I’d love you to subscribe to the podcast on your podcast platform of choice. And to continue the conversation, head over to our social media channels. We’ll catch you next time.
Disclaimer: This document is a transcription obtained through a third party. There is no claim to accuracy on the content provided in this document, and divergence from the audio file are to be expected. As a transcription, this is not a legal document in itself, and should not be considered binding to advice intelligence, but merely a convenience for reference.