Fraser Jack: 00:09 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 today we are coming at you from the FPA Congress in Melbourne. The goals-based advice podcast on tour in the back of a kombi van on the meet the speakers stage. And I’m very lucky to be joined by one of the keynote speakers from yesterday, the first day, Phil. Welcome.
Phil Billingham: 00:36 Thank you for having me. Great to be sat in this kombi. Takes me back to my childhood in South Africa. Driving around one of these. I was smaller then. I fitted in better.
Fraser Jack: 00:47 Yeah, you don’t realize how small they are. I think we traveled around Europe in one of these with six people in it, so yeah.
Phil Billingham: 00:55 Wow.
Fraser Jack: 00:55 Yeah. So tell us about yourself.
Phil Billingham: 00:58 Oh, born a long time ago.
Fraser Jack: 01:01 Yeah.
Phil Billingham: 01:01 At an early age, got older and fatter. I guess the relevant facts is I fell into being a financial insurance salesman 37 years ago and managed to survive that. That was the bad old days, not the good old days. And I spent most of the last six, seven years working with mainly advisors. I went through the training and management and regulatory route and then into business consultancy. For the last 10 years ... We decided 10 years ago to set up the financial planning business that we ... It was almost a test bed, if you like, a model financial planning business that we thought would, we knew would be future proof, if you like. It would have value. Provide us the lifestyle that we wanted and allow us to work with the sort of clients and do the sort of work we wanted.
And we managed to celebrate being 10 years young this year. So, so far so good. We’re looking forward to the next thing.
Fraser Jack: 02:07 Fantastic. So you managed to see all the mistakes that were made previously and what not to do, and molded your business around what really, what was the best practice.
Phil Billingham: 02:18 Yeah. I think it’s important you make your own mistakes as well, rather than keep repeating other people. So we made lots of mistakes. How long have you got? But you can survive the mistakes if you get the culture and value right, and you know what you trying to achieve. So we made lots of mistakes, but yes, there’s things we knew we didn’t want to do and get trapped into.
Certainly being product-based, certainly doing, getting into the game of fun picking and pretending our value was in some way to do with whether the market was up or down in the last 20 minutes, or any of that nonsense. So we successfully stayed away from all of that, and that’s really served us very well.
Fraser Jack: 03:09 Fantastic. Now [inaudible 00:03:10] describe your business, cause you’re from the UK and-
Phil Billingham: 03:13 Yeah it’s not complicated. We’re small. Probably punch above our weight in other things. There’s eight of us in total. The lead financial planner and the person who really set up the business was my wife, [Shannon Currie 00:03:27]. We were running a regulatory consultancy at the time. We sold that off to another consultancy, and I went off to to head up their business consultancy and help them take about 20% of the advisor community in the UK through RDR at the time.
And that allowed us to have a household income to not be under pressure. To go for immediate big wins. We could set up the businesses the way we want it to. So that started in a dining room table in our conservatory. And then part-time staff, and now there’s eight of us. So we brought another planner through. She’s joined us as a part-time administrator and has worked her way up to be a full planner.
There’s three, then, what we call shadows who are client relationship people. And they work with clients along alongside us, and they have the main client relationship and a lot of the planning of that relationship and what they’re doing. An administrator who supports them, who just eats works, she’s fabulous. Absolutely eats work, it’s amazing. And we’ve taken on an operations manager who has had senior roles in some big banks around the world, and he’s to take stuff off my desk so I can take stuff off Shannon’s desk and give us a bit more capacity with client work.
Fraser Jack: 04:58 Okay, now the shadow role, this is an interesting role. So this is a person who’s characteristics and traits are around that people management or relationship piece rather than is technically-based.
Phil Billingham: 05:11 Yeah, they’re coming better, technically, but their job is to know everything there is about the client. Where they’re going on holiday, how the kids are doing. We get all that stuff. They talk to them, they pick up the phone. We have our, all our phones are programmed with a client’s phone number so we know who’s ringing us. So basics like that. We track clients’ lives fairly carefully. Wedding anniversaries. We spend a lot on flowers, a lot on birthday cards.
Fraser Jack: 05:45 Fantastic.
Phil Billingham: 05:47 So it’s making sure of that. If there’s technical stuff on funds, we find out about it before the client does. We tell the client. Just managing that. It’s quite an intense process. It takes a while before somebody really fully functioning in that role. It takes, we think, about 12 months. But it’s a fabulous role and it just means we, you know, we can be here, for example and the clients don’t ... Everything’s going on. They don’t, they’re not missing us at the moment.
Fraser Jack: 06:19 Yeah. I find it really interesting that, you know, there is a person in charge of that relationship that may not necessarily be the planner. And the planner might be that person that does the technical conversation, and the shadow person does the conversations about the kids at a graduation or whatever it might be.
Phil Billingham: 06:35 Absolutely. And the planner is there to do the strategic stuff and see the bigger picture, and sometimes have the tougher conversations that really is not fair for the shadows to have. But we’re the ones who will say, “You can’t really be spending that money. You can’t really be giving their money away.” Or other times, “You’re not spending enough.” You know? The best way to avoid inheritance tax is to spend it.
Fraser Jack: 07:03 Fair enough.
Phil Billingham: 07:04 And you know, for some clients that’s a lifetime of discipline. The reason they have some wealth is a lifetime of savings and prudence and careful living, and it’s okay. You did that for a reason, and it’s time to, yeah. To-
Fraser Jack: 07:20 And that can be a tough change for people.
Phil Billingham: 07:22 It can, psychologically. That can be tremendous. We have clients ... I’m working with some clients on their third retirement. Trying to get them to retire, trying to get them to just take it a bit easy.
Fraser Jack: 07:35 Yeah, fair enough. I was talking to somebody the other day and they were talking about retirement being a new career, a new career opportunity.
Phil Billingham: 07:41 And I think that’s right. People we’ve helped through retirement, and now they’re saying I don’t know how I have time to work. That’s great. You know, you can’t just sit at home and have a pipe and watch TV, you know. That’s ... Our clients are generally bright, successful people. That’s not how their brains work. So there’s got to be a to as well as a from.
Fraser Jack: 08:05 Yep.
Phil Billingham: 08:06 And it’s finding the to with clients, I think, is really important.
Fraser Jack: 08:09 Yeah. So you’re on tour yourself. We’re on tour, the podcast. But you’re on tour as well. You’ve come down under to hang out down here. How’s the trip been?
Phil Billingham: 08:18 Fab. We had some time in Sydney. We’ve been here for almost three weeks now, and then had a tour down from Sydney. So that was very much about wildlife. So I think the highlight was probably a dawn canoe on the Lake to see duck bill platypus. So we were lucky enough to see them. Went off to Raymond Island and got really a up close and personal with about 20 koala in the wild. And just took time, just slowed down and took time. Saw a lot of wildlife. Absolutely fabulous.
Fraser Jack: 08:50 Fantastic. And now tell us, you’re here at the conference and you are presenting. Tell us about your session. You know, the, some of the highlights, I guess. We are trying to drag some of the information about, you know, what happened on stage for people that weren’t there.
Phil Billingham: 09:04 Yeah, it was a short session. I think we could have gone for another three hours, quite easily. There was a huge amount of experience and willingness to share on the stage. I think that the message from a few of us, particularly myself and Janet, our guest from South Africa, is that regulation’s happening. It’s happening everywhere. It’s like gravity. It’s like rainfall. There’s nothing you can do about it except to absorb it, accept it into your business.
There will be new regulation along in the next five years and regulation after that. It’s part of a constant. We live in a consumer-led world. I think one of my messages was, as consumers, we like regulation when it stops airplanes falling out the sky and when it makes food safe and cars safe and our kids can go out in the streets.
We like that regulation and I think we have to learn to absorb that. We run a business. Guess what? Financial services regulations isn’t the only regulation. We have health and safety. We have employment law. These are important pieces of regulation. They’re there for good reason. I think with clients we always present regulation as a good thing. It’s for their protection. It empowers them.
I think one of the problems we’ve had with the relationship with clients, historically as a profession, is the imbalance of information available. Even with Google. Between us and the clients. So regulation that protects and redresses some of that balance is a good thing. That said, it creates paperwork. It creates costs, it creates administration, and as a business we have to be fairly clear that there are people for whom we can work and add enough value so that they can cheerfully pay our fees, and they’re happy that they’re getting the value of the relationship. It’s for them to decide if the relationship is valuable. Not for us. It’s not our money.
So we have to be a business. I think financial planning is a business model as well as a help to clients.
Fraser Jack: 11:25 Yeah. A couple of really good points you raised. We are all actually consumers as well, aren’t we? And we might not be consuming all the services we’re putting out as advisors, but, but we need to put our consumer hats on, don’t we? Try that on and understand how they feel about this regulation and how they feel about the security that it provides and all these other things, or the trust it may provide. Yeah. So it’s interesting. And as you mentioned, change is really hard, and you helped people through change for many, many years. What are your sort of main tips for helping people through that change process?
Phil Billingham: 11:59 I think keep going back to what you’re trying to do. I think sometimes just putting regulation off to one side and just saying, well what would we do? What business would we run if there was no regulation? If the regulator were abolished now, today, after the party, what would we do? Would we really go back to hidden commissions and obscure products and gear and all sorts of nonsense? And then you’re worried when the market goes down, you’re worried when the phone rings. That’s no way to live. It’s much nicer ... It’s a much less stressful environment.
Our clients have the legal right to see anything in our business with their name on it. That’s a fabulous right for them and a [inaudible 00:12:49] protection. Nobody’s ever asked for it, but we always act as if they could. And if there was no law giving them that right, we’d still behave like that. So I think that’s an easier way to be. It’s a cultural thing.
And the most successful planners I meet around the world, and I’ve been extraordinarily fortunate. I’ve worked with planners now in, I think it’s 15 different countries. And the best ones all look the same. They all do the same thing. It’s a cultural thing. And different countries have different economic environments and different demographics. And some countries, you know, with some planners, they don’t have product licenses. Some countries don’t have any investment industry to speak of, and it doesn’t matter. Those are just means to an end. What really matters is the work you do with clients who live complex lives, and they sometimes just need somebody to do it through.
And I think financial planning is as much about coaching, is as much about consultancy-
Fraser Jack: 13:55 And relationship from the sound of [crosstalk 00:13:59]-
Phil Billingham: 13:58 It is very much relationship. We are working ... Shannon in particular works very frequently with a second generation of families now and they’re starting to work with the third generation.
We followed the [inaudible 00:14:13] principle. We give free financial planning to children of our clients. We deliberately set out a few years ago that the children of our clients should be clients in their own right. So they didn’t have to deal with the stress of losing parents at the same time as having the stress of having money. That they had some money education and understanding as they went, and they had somebody to turn to. And that’s proved to be massively valuable for us as well as them.
I think we got up to 85% of children who could be clients became clients. And we’re seeing that wealth now. We’re managing that wealth down the generations during lifetimes, not just on death. So we’re trying to spread out the stress and the guilt.
Fraser Jack: 14:56 This is really interesting. So you, you say to your clients, bring your children and we’ll give them advice.
Phil Billingham: 15:02 Yeah, bring in, I’m being figurative, but introduce. And I think the rule that we have is we are great believers in gifting, but with every gift comes a planner attached. It’s the children’s money, and if it’s appropriate for them to pay off debt, pay off mortgages, put children through school, extend the house, you know, just to do that, then that’s great. The money doesn’t necessarily have to be invested, but they have to have had advice. But we treat them as grownups, and often we get parents then ringing up and saying, “Well, what have you advised?” And we say, well we can’t tell you.
You know? If your daughter wants to tell you, she’ll tell you. But we’re bound by confidentiality. And that takes a little, a few conversations before that becomes clear. But the children have the right to be treated with respect. And don’t forget, we’re talking about children who are grown adults in their forties and sometimes fifties, but certainly thirties and forties
Fraser Jack: 15:56 yeah, I’m in my forties so I’m still a child. So.
Phil Billingham: 15:59 Yeah well, [inaudible 00:16:00] I’m not ready for my second child as I haven’t outlived my first.
Fraser Jack: 16:04 Yeah, they say the first 50 years of childhood’s the hardest.
Phil Billingham: 16:08 Yeah.
Fraser Jack: 16:08 Very good. So the people that come off the stage. What are sort of the main tips you want to, you know ... What were the main takeaways for those people that have come, listened to the presentations? What would be the takeaway for them for say 2020? What’s the one thing they can take away and then start working on?
Phil Billingham: 16:26 Clients will value you at the value you put on yourself. Look hard at the client relationship. If you can’t, hand on heart, see that you’re adding something to their lives and you understand the client, then have a look at that. Regulation’s here to stay. There’s nowhere to go. There’s nowhere to go. So embrace it, deal with it. Don’t waste your time, the negative energy spent moaning and fighting about it, you know? I’m 140 kilograms. I’d love gravity to be a lot lower than it is, but I’m not ... That’s not a choice I’ve got, so I just have to deal with it.
Fraser Jack: 17:12 Fair enough. And is there anything that you’re going to be working on next year in the business?
Phil Billingham: 17:21 I think we need to be looking again at the next generational stuff and some of the complexity. I think I’ve been doing quite a lot of work this year with our [inaudible 00:17:35] clients who are multi-jurisdictional, and more of that work has become non-product. It’s pure fee, pure coaching. And I’d like to package that. I think that’s great fun. I found that personally very liberating, to give pure advice with no product, no investment advice at all. I’d like to do more of that just cause it’s fun, but I think there’s a massive market for it. The product sometimes gets in the way.
I currently am probably the second best planner in our practice. My ambition next year is to become the third best planner by helping to develop [Helena 00:18:10] through.
Fraser Jack: 18:11 That’s a great ambition, I like it.
Phil Billingham: 18:13 But that, and I have a dog that needs more attention and perhaps some time. She’s great. She comes into the office and I walk her around, but perhaps some extra time off during the week to spend-
Fraser Jack: 18:25 [crosstalk 00:18:25].
Phil Billingham: 18:25 Would be great. Absolutely.
Fraser Jack: 18:27 Fantastic. Thanks so much for coming in and having a chat in the back of a kombi van. I really appreciate it, and enjoy the rest of your stay in Australia.
Phil Billingham: 18:34 Will do fabulous, fabulous conference. I’ve got to say. I’ve just come from the Women in Wealth breakfast meeting. [Ameenah 00:18:42] just blew me away. Yeah. I just feel I’ve wasted my entire life. The quality of the speakers has been astonishing.
Fraser Jack: 18:49 Fantastic. And I’ll do my best to tackle Ameenah as she walks past and see if we can have a chat to her.
Phil Billingham: 18:54 Brilliant.
Fraser Jack: 18:54 Thank you.
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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.