Changing Landscape of Retirement #1 – Martin McGrath – Transcript

Episode details

SUMMARY KEYWORDS

clients, conversation, people, retirement, business, retire, advisor, bit, advice, videos, meeting, money, years, retiree, months, find, inheritance, process, week, space

SPEAKERS

Fraser Jack, Martin McGrath

 

Fraser Jack 

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Fraser Jack 

Welcome back to the Expert Advisor podcast. I’m Fraser Jack and we are talking all things retirement in this series the changing landscape of retirement. I’m here today joined by retirement specialist Martin mcra.

 

Martin McGrath 

Welcome. Thanks, man. Thanks for having me.

 

Fraser Jack 

No, no, don’t give the listeners a quick overview of yourself and your business.

 

Martin McGrath 

Yeah, so Martin McGraw based on the Central Coast, New South Wales, financial advisor with my own practice, financial aid group had my own business about five or six years now, and five or six staff and a big transition over the last few years in business specialization into the diamond

 

Fraser Jack 

space. Now, this is a really interesting story, your transition over the last few years because, as you mentioned, sort of an accounting background, don’t give us overview of what your business look like sort of a few years back and how you transitioned it.

 

Martin McGrath 

Yeah, so started about five, six years ago, and basically didn’t buy a book or any business at all, to start it open the doors and hoping people will come in. And they did, it probably was about 8%, accounting, and 27 20% financial planning. And the business just grew. And I thought once a little certain size, I’d be happy. And then it got to that size. And I realized that I felt like I was perhaps spreading myself too thin. And I really enjoyed the financial planning side of things. So did a bit of soul searching some research on some coaches and decided that point in time to focus on my, I suppose, passion and speciality, which is the retirement planning, and sort of the accounting side of the business, and basically stopped taking on any kind of clients that aren’t in that retirement space. So don’t really do a lot of Gen X Gen Y, ironically. And insurance advice, that kind of stuff. So retirements where we’re at, and the business has kind of grown substantially on the back of that. Yeah, this

 

Fraser Jack 

is a interesting decision to look back on at the top because very easy to look back and say that was a great decision. And very happy I did it. But at the time when you’re going through that it’s a big decision to make, isn’t it?

 

Martin McGrath 

Yeah, it was. And it was basically selling off about 70% of the business gave me the other 30%. I still remember telling one of my staff members in particular, and we had a chat about this last week where she’s like, I think it would be crazy. I don’t know what you’re doing. Are you sure you thought about this? And I had had backup plans, but haven’t needed them. And the business has probably grown? Yeah, obviously that 70% back and probably another doubled in size again, on top of that over the last couple of years URL size, like the old, you know,

 

Fraser Jack 

was it two steps, or three steps for deuces back whatever it might be. So you take a step back, you reduce the size you specialized, not just into financial planning, but into financial planning for a certain niche of client? What Why did you choose that nation? That decision came about? Yeah, I

 

Martin McGrath 

think I sat down and kind of figured out that I suppose there was three kind of retirement or secondary kind of financial planning clients I wanted to work with and then sat down with a good mate who was a business coach and sold a business and kind of said, okay, without those three, which one do you like the most, which I knew the best at? And he said, Well, why don’t you just do that one. So the other one was working with small business owners and the other one was Gen X Gen Y and he kind of said, Well, if you really like that you’re the best at that. And then perhaps that’s the best business to build upon just do one and then kind of figured out that there was enough business in that one space to to build a business and if you focus on one area just get better and better at it. And that’s kind of what we’ve done. Excellent. So you’re focused on their binary you essentially shrunk your business by 70%. So you’re down to the 30 then what size was the business in it was sort of just you by yourself with one staff member? Yeah, myself one staff member probably down to like 20 clients and revenue. Yeah 100 150 grand kind of thing. So obviously had to grow up back up. And yeah, kind of ago. We need X amount of per clients per month to grow that back and we’ve probably been doing double that per month and have added a couple offshore vas a couple more in house just bought on the session advisor and some more in our support as well, well.

 

Fraser Jack 

So tell me about how many is just you’d still the advisors or anyone else? Or is it just myself or the advisor,

 

Martin McGrath 

associate advisor started about two months ago. So he’ll get there and perhaps in 12 months time, and but yeah, just myself with the advisor with a whole bunch of support in house and a little bit offshore, and a bit of outsourcing as well recently, because we just had too much work coming in, which is a good problem. So that’s

 

Fraser Jack 

exactly right. So that associate advisor that somebody’s doing the procedure was just a gap year, professional year.

 

Martin McGrath 

So technically, he kind of Isn’t he has managed to skip past that he was on the register. So you don’t have to jump through all those hoops or tick those boxes. But also, I think we both kind of agreed it’s still a bit roll. So helping behind the scenes focusing on strategy kind of doing a bit client service manager role at the moment, with the view that saying his own clients, we’ve said it to you, but effectively, it’s our own little internal process. But yet, technically, he’s a fully fledged advisor, we just get some more confidence up to speed to get that happen. And

 

Fraser Jack 

it’s interesting is that there’s the the technicality. And then there’s also the just the client confidence and the confidence in himself too. That comes with experience.

 

Martin McGrath 

Yeah, for sure. And often you don’t get that until you sit in front of clients. And so every client meeting I have always made sure bring someone in. It also just helps the handover process a lot easier in that process as well. Yep.

 

Fraser Jack 

So typically your clients right now, your specialization, obviously, retirement. Is that pre Is it the consultation? It often happens just before retirement that sometimes happens away too late. Like what’s the nice for you?

 

Martin McGrath 

Yeah, and that’s what I realize is within the nice, they’re still further nice. So we then kind of segmented those clients actually fairly recently, into those three more buckets, kind of that pre retiree, maybe 50 Plus, still got five or 10 years to go in a decent position, but trying to get themselves there faster, or in a better busy to do so. I feel like those kind of last minute ones that I want to retire in six months or 12 months, what do I need to do. And sometimes that’s also because they’ve just received an inheritance or something else has happened. And then more commonly, actually recently, as a few of those that are already retired, might have retired two years ago, five years ago. But circumstances have changed, where they’re actually now needing to get some advice around how to invest and get a better return. But also perhaps, a couple recently received some inheritances when they’re already kind of in the early 70s. You’re nervous. Okay, so

 

Fraser Jack 

this is a really interesting part of the compensation as well. People coming in, in that situation where they’re lucky that they’ve received inheritance. So everything’s changed in their life with regards to you know, tests, income test acid test. How does this go like, like, tell us about this type of client that walks in, that hasn’t received advice before? Yeah, it’s,

 

Martin McGrath 

it’s a scary process for them, I’d imagine. Because a little bit about friend last month, got him on this basis where nearly four pensioners probably haven’t really received advice, because probably haven’t felt like they needed to receive advice might have assets of two or 300 grand outside of their home, comfortable living on a pension, and with a bit of top up, and then something happened, Mama was in the 90s, or whatever, and all of a sudden pass in a million bucks. And their circumstances about to change drastically. So they’re about to lose the full pension, and they’re gonna lose the benefits that come with that. But then also have a lot of money in the bank and not know what to do with it. And want to make sure that set up. So like anyone, we take them through the process, but we particularly make sure we slowly step in through because often draws a bit scary and different in the first time, they’re getting advice, and perhaps even properly considering investment markets and returns and risk all that kind of stuff as well.

 

Fraser Jack 

This is an interesting process to go through hard to me to imagine, obviously not not retired, but interesting process for people to go through that are out that are at that age, they’re part of their life to a massive change between losing a pension or even, you know, having to use a pension in that particular stage. And, and, you know, we see that, you know, inheritance of a million dollars, well, you know that that’s an inheritance, the reason you’re losing your pension is because you’re getting something else out of it, but a difficult transition I would imagine for these clients.

 

Martin McGrath 

Yeah, I think so. And I think there’s be attachment to having that pension, and having those concessions and discounts and all that kind of stuff. And then they feel like they’re definitely losing that and go well, what else can I do? How can I get out of this, but but often it’s too late. So that’s about Okay, well, let’s figure out what to do with this money. Whether we have to consider tax now because our earnings, I’d be higher, obviously, cash flow has drastically changed and I’m able to get a pension coming in every fortnight to now got a lump sum of money. So we focus a lot on what to call the strategy and the structure. So how much do you need? When do we need it? How do we set up that as a structure To make sure that it feels like a regular transfer, and often that conversation is well, Virginie yourself funded, we’ll try and make it feel and look the same. But then also going okay, well, is it best to go and put all this money in the bank returned deposit at the moment, that answer in at the moment, it’s very much not the case. So about trying to start that investment conversation as well, that we might have to start with, let’s get that structure set up. This is how it’s going to work, it’s not just going to be a big bank account, it runs out one runs out, let’s set up the structure. So it’s in different accounts, it feels like it’s in different pots of money. But at the end of day, your bank card or ATM card is still going to get the same fortnightly transfer, it’s just going to come from a different spot. And often that gives us that level of comfort to get Okay, that makes sense. It’s a bit of adjustment we can we can deal with that.

 

Fraser Jack 

Isn’t it amazing the how different the numbers are versus the mindset like just that just that conversation between strategy and structure allows them to then be able to chunk that down into manageable pieces.

 

Martin McGrath 

Yeah, and it just makes that conversation. And I think often they come in with some magic product that’s going to fix it or some investment, they’re going to try to sell to them. And often in the first meeting or two whenever we talk about the investments, but just talk about the structure of where the money is gonna sit and how it’s going to meet their needs, and what is missing what their needs and their goals are. And then as part of that, it kind of comes into Okay, well, if you’re going to may need X amount per fortnight, that’s so much a year a that we do nothing, the money will last this long, or let’s try and do something to get a higher level of return. But often it doesn’t end up in that position where they’re starting to invest in early 70s and want to have an 80% growth portfolio or anything like that, but having a conversation to at least make sure that we are investing some money to get them a better return.

 

Fraser Jack 

Yep. And what are you seeing in that space of that age groups when it comes to? Obviously, they were talking about the conversation around when somebody first retires, and they want to go and spend some of their money and do things and be active and then they start to slow down a little bit and think what’s described as sort of comfy shoes and to him scenario through to through to that, how do you see cash flow in retirement as something that sort of, rather than just being a static number from you know, the day you retire to a life expectancy?

 

Martin McGrath 

Yeah, I mean, I think like, I think there’s lots of people that are different. I’ve got some clients that are in the 77, we still feel very young, some are still working and doing lots of travel and therefore maybe have a lot of that capital requirements. But yeah, I think generally, kind of want to take on, most people will see their 70s or a fuse, you know, the 70s, definitely a lot of that larger capital kind of cost, which is upgrading the car and beginning the caravan and the $20,000 overseas trip drastically reduces. But the kind of finding the same fortnight to fortnight a week to week expenses are fairly similar. It’s just some of those extra one offs might be the case. So might be that they want 50 grand a year, week to week and an extra 20 30,000. The capital cost, that extra capital costs, as we call it might only be for the first five or 10 years of retirement. But we kind of baseline that 1000 bucks a week is expected to continue for a fair while

 

Fraser Jack 

Yeah, so so you have that baseline amount of money for for all those expect? Well, essentially, it’s a little bit of budgeting, as well as

 

Martin McGrath 

it is lodging. And we when we go through that process, we actually do separate it out to go, Okay, we’re not your annual living costs 80,000 a year, yet, your general week to week living costs 50,000 a year. Plus, you want this much for hire every year and upgrade the car every four years. Because like often, they will stop at a certain point in time, where is the week to week down. So rather than lumping it together, we separate it out and some of our modeling, we assume Hey, this is going to stop after 10 years. And therefore you can afford it now. But also that we might factor in in forever, because you’re probably not taking those trips when you’re in your 80s and 90s. Yeah,

 

Fraser Jack 

modeling is an interesting conversation all the time, because obviously, we base stuff off assumptions. And then you know, we get to the other end and it puts out numbers and we can say yes, that’s that’s a lot. That’s a likely possibility. We all know that is probably going to be we don’t know the answer. Because it could be anything. How do you go with those modeling conversations with the client? Because obviously it sort of does provide a little bit of certainty around some stuff, even though it’s it’s still a moving target.

 

Martin McGrath 

Yeah, like, I’m not a big fan of modeling, if you’re in your 20s or 30s or even 40s What’s my retirement gonna look like? I think that’s a bit too hard. And to my side is going to be wrong because something’s going to change. There’ll be inheritance or whatever. So we can only do it perhaps in those kind of three to five years out for retirement just to kind of realize I was on track and what’s the difference between retiring at 62 versus 64. Is that going to be an extra 20 grand a year is it worth it or retire early? That kind of thing? And but it do we find actually give it annually to all their clients who have already retired, just to give a certain confidence that yes, your money is going to last. And it’s not gonna run out to you 110. And at that point, it’s going to be someone else’s problem, that kind of thing. Because often find that is the conversation around that interval, am I gonna have enough? How’s it going? Will that last kind of thing? And I think that seems to be a lot of the main concern, particularly with kind of lower return environments. And some of the uncertainty we’ve seen over the last couple of years that that seems to be a common question.

 

Fraser Jack 

Yep. That take take us back to your pre retiree target market, as in as in those fields that are sort of in a five to 10 years out, let’s say, talk to us about those clients, and around the concept of planning this, you know, five years out versus 10 years out, and what might be the difference in that and just, and then what those people are thinking in as they’re coming into the office, what’s the sort of motivation to getting advice 10 years? Yeah, and

 

Martin McGrath 

I think that is not the ideal time to die. But but but a great time to start at five or 10 years, particularly 10 years out, because it’s close enough to make it feel real, but far enough to kind of make an impact. If it’s four months out, there’s not much we can do. And so in terms of, I probably haven’t thought about too much, but I think about the clients we work with, if it is that less than five years, often, it’s about just maximizing what they’ve got. So it might be that by that point in time The house is paid off or close to paid off, the kids have moved out. So it’s xx excess cash is that going in is and catch up contributions, we’ve been doing lots of non concessions in the right name, or that kind of stuff, or selling that rental property and topping up super and try to fit where they’re at. If it’s the 1010 to 10, plus kind of clients coming in early 50s, at least to 60. And maybe beyond that, beyond, we are still perhaps doing some building. So it might be that were using some equity to invest in some chairs, buy a property, that kind of stuff where we still got to, I’d say at least a full cycle or two, that they kind of get in you got some cash flow, maybe there’s still some debt that we need to plan for. But we’ve got some time still to build some assets. So I’d say generally, that’s kind of the key difference. But the closer we are 50, we’re probably still building some assets, the closer we are to 60, kind of optimizing what we’ve got.

 

Fraser Jack 

Yep. Fantastic. And what about their main motivations for coming? What do you think it’s driving them to seek advice at their time?

 

Martin McGrath 

Yeah, we’ve had a few, I suppose they fall in different parts. Often, it might be that they received a lump sum or an inheritance or something like that, that I often find that seems to be the key driver for a lot of people. And then a few that we’ve had recently as well, kind of in that late 40s, early 50s is that they’ve kind of seen their parents retire and feel like that, hey, will I want to be in a better position than they are? And what do I need to do now to get myself there? A lot of the clients we work with, it’s probably their first time getting advice. And so it’s a big education process. And we really focus on that. And often is you don’t know what you don’t know. So we’re working really hard paying a lot of tax, and trying to clear the mortgage in 2.5%, after paying 47% income tax, to instead going well, maybe we should start building some assets inside of Super. And these tax concessions we can get and, and that kind of stuff that? Okay, I didn’t know about that. That makes sense, we should start doing a bit of that, and then factored into the planning. So I think some of those in the 50s is saying mom and dad retire and not have as many options as they’d like. And in trying to make sure they’re in a better position themselves.

 

Fraser Jack 

It’s interesting, I find the triggers always very interesting that you know that as to why people are motivated to do stuff in your right often it’s a it’s a story where they go on, I want to find myself with a negative motivation. I don’t want to be in that it’s a negative. Yeah, yes, actually, you know, I’ve, I’ve come to a space where I’m gonna start talking to somebody really good. Now. Now, when you like you mentioned that a lot of education and the process. Tell us about that process. is one meeting to meeting threw me out? Like, what is your process when you first meet somebody?

 

Martin McGrath 

Yeah. So for us to go into conference, I talked about doing videos, and why should you videos, so I kind of committed about two, two and a half years ago to do some fairly regular videos, a lot of education stuff. So across all topics and case studies and conversations. And so often, by the time someone’s come to us, they might have seen a few of those, I think that makes that conversation a bit easier. And then we actually use a lot of those videos to our communication. So even before our client comes in, they’ve got a few contact points from us and what to expect in the meeting. And we are talking about that and what the financial planning process looks like. Our first meeting is referred to as a bit of a discovery meeting. I also like a lot of advisors, so we don’t really jump into products or details, but just conceptually talk through some things about where they’re at where they’re trying to get to. What are some things They should look at and consider and how that all comes into play. And then we always follow that up with a few videos that are relevant to what was spoken about. So there’s now a library with over 100 different videos. So I’ll pick two or three and go Yep, please make sense. These are consistent with kind of conversations and concepts for this client. And then we give us the chance to suppose to really understand what they’re looking for and how we can help. And then we come back to them, if they comfortable to do so and kind of COVID. Okay, what’s next? What’s the process look like? What are the fees, where we think we can help them to understand they’ve got a clear understanding about what that process looks like before they get started. And then we come back with another kind of fact find meaning and delve into more detail and speak further about concepts, and then go away and piece it together to put some advice documents, but but generally, from the first kind of contact to putting the essay back on the shelf, there’s at least five face to face meetings through that process.

 

Fraser Jack 

In that now people is sitting listening to that thinking that’s a lot, but a lot of contact and you’ve had with those clients before and I guess, knowing some of the people that have helped you along the way you probably legally you probably get a decision whether they going to proceed with you sort of in the first or second meeting.

 

Martin McGrath 

Yeah, correct. So typically, in the first meeting, we’ll get some kind of yeses. Make sense. We’re very interested, let’s Can you help us understand what the process looks like and cost involved to do so? And that’s what we kind of go through that in the second meeting. And I’d say that we’ve been using that model, probably at least 80%. From the first meeting, go to the second and I know the stats, it’s a bit over 80%. From the second meeting, go ahead with the advice document Yes, away. And we actually asked for the posit, straight after meeting as well.

 

Fraser Jack 

Yep. Fantastic. Now I just want to go back to this pre conversation part, because I love the fact that you’ve done over 100 videos. And you can talk about all these different that every time you say something three or four times. That’s That’s enough. Make a video on it. Yeah. Talk to us about this process just quickly, because I think I think it’s very clever, and underused by many planners, making some videos, putting them into a video bank, and then being able to reuse those, whether you whether you’re talking about a similar strategy, and especially because you’re you’re specialized in a certain zone, I’m sure you would have these conversations a lot. Tell us about how you put that together. And, and you know, what it’s done to your business?

 

Martin McGrath 

Yeah, so I’ve got a, I suppose a video guy that I do. He comes out on once every six months, or thereabout, and update some professional videos, so to speak. But the general kind of library is I record those once a month, just get my iPhone, I’ve got a little mic and a little tripod stand with a light on it, and kind of batch those together, and often that they’re a longer topic. So it is a topic last month about business owners and thought about some questions we’ve got and some ideas that I think we should talk about, and even a few case studies. And I think I went into the boardroom, we’ve got here and recorded about 10 or 11 videos in the space of about two hours. And they’re not for productions in Hollywood things. But there they will go between three and seven minutes often one quick question topic. And as your business owners pay less tax, and here’s a few tips that I recorded those on my iPhone, I flick them to my video guy who puts the intro title, some captions on there, the compliance stuff at the back. If I’ve got some kind of graph or whatever I wanted to insert, I can send that to him. And he takes a week or so to turn them around. And we just scheduled those posts to go out on different social sites a couple times a week over the next few kind of four to six weeks is the plane. So like a lot of things, you can make it as big and sophisticated as you want to. But often it’s just keeping it simple. And they’re the best results we get from those ones. Okay, that that question is exactly what I was looking for. That made a lot of sense and narrow, find it more in error, make that happen and get the implemented and they will reach out on the back of that.

 

Fraser Jack 

Yeah. Brilliant. Love it. Yeah. Really, really good for also for new clients coming in. But how do you find them? Also, do they get watched by your existing client?

 

Martin McGrath 

Yeah, so obviously, they get upload on social networks on that themselves. And often a fine. client will come and go, I saw video last week about that. Ah, that makes lots of sense and Okay, great. So they definitely watching it as well. And then even on the back of reviews, so someone might come in, and it might be that we’re flagging a downsizer contribution, and they haven’t heard it before. And so even I’ll talk it through in the meeting with them, when we send the ROI out or some post paperwork or just Hey, by the way, here’s a link to the video that Martin spoke about the downsizer contribution. And I can just watch that whenever they want later. It might fill in some gaps that we didn’t cover or they might have forgotten some things we covered. And also, I find that what I’m hoping is that they might then flick that on to somebody else. That even if I covered all in them That’s a good little marketing thing that they go oh, by the way, you should check out this guy because he mentioned this for me, this might help

 

Fraser Jack 

you. Yeah, brilliant. I 100% agree with that concept. It’s certainly something that’s, that’s a little bit different, that they feel great about that they get the information, they can absorb it in their own time. And then you’re right, they will take it on to their friends and people in situations where they say, just like that, so congratulations on that well done. Now wanted to talk to you about some of the stuff around, you know, what people are going through. One of the things we’ve mentioned in the past and chatted about was this conversation around longevity, and that being a really weird and conversation to have with people to, to kick off on that sort of subject.

 

Martin McGrath 

Yeah. So I suppose part of that war money, last conversation is around, well, how am I going to live. And that often is a hard conversation to have with people. And often we just kind of best joke it down as well. And go, Well, if you can tell me how long you live for, I can make sure your money last. And but I also as part of conversations beans in the back of that yes, I’m not your doctor. I’m not yell tech. But but it is important to keep me updated on this kind of stuff. Because of you know, there’s different tax consequences and planning consequences when people pass away. So I do try and highlight that pretty early in the process as well that, hey, if something does change in circumstances, sure, there are some other people to call first, but keep me in the loop. Because in case it’s something we need to change or be proactive with. It’s best to do that while we can. But I suppose giving the guys both confidence to clients about where their money last and how long their money is going to last is a large part of that. But there’s a couple clients come to mind who are suppose fairly switched on elderly investors or clients, so to speak, that are in the 80s. One lady in particular, that he’s very proactive and making sure that her estate is set up as best as it can be. And as efficient tax wise, all that kind of stuff that, that she’s smart enough to know that you’re not going to be forever, she’s got more than enough to look after herself and has all our needs covered all that kind of stuff and making sure that the assets are in the right name and most tax efficient, so that when she does pass, because no matter of if, but when she’s leaving the best legacy she can. So I think, for the clients that get that, obviously, that can make a big impact for the future generations as well.

 

Fraser Jack 

Yeah, I couldn’t I couldn’t agree more. Now this conversation that you have around, um, health, because obviously it’s a big part of retirement. So your clients will ring you, you’ll encourage your clients to ring you if after they’ve spoken to the doctor or whatever diagnosis might be. And then that then prompts regular review conversations.

 

Martin McGrath 

Yeah, so it’s an integral part of our agenda, we’re talking about as, as your home as your cash flow as your health. And one of the first kind of questions we cover off on when we have their review meetings. And we make sure we have a client review meeting fairly frequently. And, and yeah, often it’s a bit of a joke, but if they are not, everything’s fine. Cool. Just a reminder that just made sure that I’m aware of any of these kind of stuff. And I just kind of even highlight plants and seeds about some of the things that we couldn’t should consider to make sure that that’s brought up. So it’s not just again, the back of the soI, or is your health good, bad or average, it’s something that we always come back to. And then it kind of what I want to do more and better, is kind of getting those kind of key relationships with that next generation as well, just to make sure that if I know, mom or dad’s being too proud and not telling Martin about what is really going on, that at least they’re aware or that I initially tell Martin, that the health isn’t as good as it was, at least because he might have some things we need to plan for consider. Fortunately, it doesn’t happen very often. But obviously, when you specialize in, in looking after retirees and average age would be close to 60. If not older, it’s a matter of time. So we want to make sure we put their clients in the best position to look out for themselves and future generations.

 

Fraser Jack 

Yeah, I’d imagine there’s a lot of conversations that you would have with, say, an existing client and either their parent or their children that are either approaching retirement or approaching aged care.

 

Martin McGrath 

Yeah, definitely. And it’s happened a few where clients have come to us in their late 50s. And as part of conversation, it’s come up I actually, you know what this is mom situation. Can you help a little bit here? And what does this mean for us and my siblings, and how does that factor in and that kind of stuff. So I’ve actually gone got some qualifications in the APS h k space, you don’t do a lot of advice on it, because we’re too busy doing other things. And there’s specialists that I prefer to refer those clients to. But it’s important that I’m across those to have those conversations and identify problems when they might arise. And so we definitely cover that off on as part of the conversation.

 

Fraser Jack 

Yep. A lot of the obviously, you covering education standards in the conversation. How important has that been? Obviously the education standards are rising and you’re going to get More qualification to all the time. How important is that been around the higher education standards and transparency around the education standards with the client?

 

 

Yeah, so

 

Martin McGrath 

I suppose my background is I’m a tax agent, chartered accountant. And I went and got my rG 146 at the time and got it very quickly when I’m not qualified to give advice. So a number of years ago, when did the master’s degree in financial planning, so I was fairly fortunate, I didn’t have too many hoops to jump through, but still had a mandatory ethics and obviously, the exam and, and we’re being transparent, we’re telling clients that, hey, there’s been some big changes. There’s some changes in terms of cost in terms of how we work in terms of our costs as well, but also, that they’re myself and advice as to make sure we meet and cover off on, we’ve been doing annual opt ins for a while. So it’s not too much changing that space. And, and I’ve always tried to be as transparent as possible in terms of our fees as well. So we’re not too drastic in terms of the changes we need to make there. We didn’t have a lot of kind of grandfathered Commission’s or anything like that, which I’m fortunate. We didn’t. But we’ve kind of Hey, by the way, I’ve done this, and I’ve had to do this. And we’ll always there’ll be something else that we’ll have to cover off on. And I think it’s important that the clients are aware that it’s not a set and forget thing for their plan, but also not set and forget in terms of the environment we’re working in as well.

 

Fraser Jack 

Yeah, environments, or the current environments a bit crazy. Anyway, for a lot of people we’ve been through, we’ve been through a royal commission, and now we’re in a in a zone. You know, there was there was a time for a lot of retirees that sort of have been questioned some of the advice that they had, and then and then we’re sort of I think I feels like we’re almost through that. But now we’re into new sort of weird territories when it comes to things like you know, very low returns on secure products, what are your thoughts around that toaster?

 

Martin McGrath 

Yeah, I mean, there’s no way to hide it in terms of any go back to those previous conversations about those clients that have ever had advice. And all of a sudden, I’ve got a million dollars, and I explained again to lose their pension and the consequences of that. But I think I will forget to put that million dollars in the bank, is that going to cover what I was getting in to? An answer is no, it’s not in the current environment. And so kind of talking them through some options and how we try and find some income and yield. And that we need to take a little bit of extra risk without taking too much risk down that path. And often it’s a big education process for for anybody, but particularly kind of elderly people if it’s a first time investing, and we’ve adapted A few years ago, and it’s worked fairly well, particularly in the last couple of years with the market volatility, a fairly distinct bucket approach, where we have three buckets that we separate clients funds into, whether they’re retired, whether it’s an SMSF, whether it’s outside or super, we approach it the same way. And I find that conversation with clients, give them a certain kind of ease that okay, well, I’m taking some extra risk to try and get some extra return. But I’ve got so many years of cash set aside so that if something does happen, it’s affecting my money that in five years time, or even longer not the money that I need next week or the month after kind of thing.

 

Fraser Jack 

Yep. Now, obviously, debts been, you know, not it’s not just investments that are on low low rates, right, also with debt. How are you finding the the appetite, I guess, if you’d like for having debt in retirement?

 

Martin McGrath 

Yeah, I don’t think and I kind of say to people, that meant that the methodologies changed or the mindsets changed, it used to be that you do nothing else until you paid your mortgage off. And I think given the tax rates we pay here in Australia, and also the low interest rates, that doesn’t make as much sense, particularly those kind of clients in their 50s. And one of the most popular videos we did a few years ago was mortgage versus super, which is just a very fairly simple kind of calculation to kind of show worth on paying less tax and trying to clear it a home loan at a low interest rate versus putting into super means that my loan might not be gone by 60, or whenever I meet my preservation age, but I’ll have more overall. And maybe I can be comfortable that my mortgage won’t be gone by that point in time, but I’ll pay $100,000 better off, and therefore I can take that money out and clear the mortgage that way. I think a lot more people are very comfortable with that conversation, knowing that kind of big picture in mind. Genuinely god of Australia, by the time we’re ready for the age pension, we want to as best as possible being in position where we’re debt free, particularly against time maybe not investment, particularly against time.

 

Fraser Jack 

It’s always been this has always been the sphere of data, isn’t it and you write about with your income stops, you need to make sure you’ve got rid of all of your debt and it’s just interesting to be able to, to visualize or see the numbers and not just just go on the raw emotion of it.

 

Martin McGrath 

Yeah, and emotions exactly another client the other day who was sitting here and I could tell, I could see her tense up as soon as I said that we might try and reduce the mortgage repayments to free up some cash flow for Super contributions. And it’s important that we’re aware of that, that it’s, it’s easy sitting behind a spreadsheet and saying this is definitely the right answer. But people need to have a certain level of comfort that they’re sleeping at night. And they can say that their mortgage free or debt free, or the line will be gone by 58. That, so I think come back with education and kind of go, Okay, this is why we should look at it, this is the benefit of doing so I’ll run some quick numbers for you to show you what it looks like in terms of dollar figures. But at the end of the day, you’ve got to be comfortable that the debt might be here for a bit longer. And often it comes back to gangwal account, I’m comfortable that the debt still here, as long as I know when it’s going to be gone by. And so we paint that demonstration, go and go, when you retire at 62 will cash in the debt will be down to x and we’ll take that out of super, but they’ll still be this much left behind on top. And therefore we will be in a better position.

 

Fraser Jack 

Fantastic. What are the main things that people entering retirement? What are their main fears around enjoying that space? Obviously, it’s an unknown space for them, though, you know, the idea of giving up an income and not having that anymore, that security blanket of being able to, you know, fund the next thing. Talk to us about the other main fears going into retirement.

 

Martin McGrath 

Yeah, I think very simply, as soon as I retire is when is my next pay coming in. And often we even try and use it some of that language of guy will. This is your super nice way pays coming from now. And we’re even trying to line it up as best as possible that if they were getting paid fortnightly, you’re super come up super pension comes in fortnightly, or monthly, whatever it is. So it feels that transition is as smooth as possible. Once they kind of get past that and where even when someone’s retired and we set that up for them. We try and catch up just a couple months later to make sure that he’s it all going smooth. It is what you thought you’d be getting. Does it all make sense? Is it hitting the right day of the week as best as possible? That kind of stuff? And then it I think the other kind of key question is will do I have enough? Am I on track? Is it going to last? Which I completely get because they’re gonna go once I’m retired, am I going back to work? I can’t bring any more money in I need to make sure the money I’ve got last as long as possible. And therefore as best as I can. Those projections put their mind at ease or just a certain level of conflict ago. Yes, your portfolio’s currently generating decent income. And it was nicer when it was higher. That was easy. If it was generating a nice three or four or 5%. And they’re only living off that much well, then clearly you’ve got this, you got 60 grand coming in, you’re only leaving 55 you’re fine. That kind of gives you the comfort that hey, we’ve got this much money stockpiled set aside that you’ve got plenty of years of living expenses looked after

 

Fraser Jack 

he mentioned sort of that transition of the mind conversation going on. And that that snap from being you know, one day you’re employed the next day, you’re not, which is an interesting concept in itself. How long does it take somebody to go through that transition of the mind? And does it help if they’re sort of they cut down from work full time to part time to? To stop it?

 

Martin McGrath 

Yeah, client said to me, actually, last month, he said effectively, I still feel like I’m on holidays. I’m about to get a phone call to go back or something like that. And a few clients have said to me last week, it nearly takes up to six to 12 months to realize that no, no, I’m not going back. And this is not just a nice long holiday. So I think it does take a bit for that nine client to ease and transition as best as we can. We will go after the financial the numbers side and the tax side. But we will have those conversations around Well, what how are we feeling our days? And what are we doing with that? Are we taking those trips? And maybe not in the last 18 months? As much as we’d like to? Or are we looking after grandkids? Are we playing golf to try and understand? So they can also picture what that looks like? Because I think there’s a big impact as well. But I think it does take a while you know, for most people, it’s not waking up the next morning go, Okay, I’m retired, what is life look like now is that that does take a while to feel that transition.

 

Fraser Jack 

Now, technology is a big part of my life as it as it is with most of us. How does technology you know, go for those who are in retirement, I think people that are retiring now or, you know have actually had a chance to get used to a lot of technology. But some of those older ages, it can be a little bit confronting

 

Martin McGrath 

yet again, I definitely and I think we just try and do our best with that. And I think perhaps COVID, so to speak is accelerated a lot of people that they didn’t do docu signing or zoom meetings or whatever. And it quickly just had to adapt and many habitus data that and now most of our clients electronically sign everything and and we’re now they have to drop in the office, there still are a few he kind of said that, that just missed that kind of technology piece and as best as possible. We just try and make it easiest for them and ease the burden and we’ll post something out instead or whatever or a few clients that were more than happy just to drive by an afternoon and get something signed on the way home or in the morning. We’ve got clients that pop in the office but but not as frequently as perhaps even a few years ago, that people are happy to use technology in their favor in terms of portfolio. We’re tracking all that kind of stuff. I think when people retire we offer and we give several that stuff up for them. And they might For a start, check that maybe more frequently than they should. But after a while, it seems that I have you logged on to here. And then I’ve gotten it, I don’t worry about it anymore. I just wait to come and see you or give you a call or something like that. So I think it’s, it’s nice, they know it’s there. But I think also that they’re kind of happy to ignore it. If they don’t need to,

 

Fraser Jack 

you’re still very much a human element, isn’t it? They sort of, you know, if you mentioned they’re checking, can you be checking it too often, too, occasionally, and then, and then have to ring up and say, Oh, the markets dropped overnight.

 

Martin McGrath 

Yeah. And I think also, it’s been to a few other advisors, when we will work from home and car, this might be the new normal, and I might stay doing this way. And I think I personally enjoy getting back in the office and being in front of humans. And I think perhaps, predominantly, the retirement space that I’m in, or the pre retirement space, is that is such a personal, it’s a big thing. It’s more than just numbers or money, that it is a relationship thing. They want to be able to meet someone and have a chat and understand all that, particularly for new client meetings, we do those face to face, and then some review meetings, or we offer to every client and let them pick that we often find that most of them like to come in and have a chat and cover that stuff on because we might spend 510 minutes actually talking about their investment for the rest of time. It’s catching up on other things. And I think it’s much more of that kind of relationship, then I suppose a transactional type of thing.

 

Fraser Jack 

Yeah, exactly. Now, I mentioned earlier that you can build a great relationship with the videos that you’re producing, and the content that you’re providing. So they almost feel to me would feel like almost that they had a deeper relationship with you, then you got to know them. So you really getting in the room with him. It’s also about you getting information around them and getting to know them.

 

Martin McGrath 

Yeah, for sure. Because they might have heard my voice so many times, or seeing my face on the website or in different videos that we drop out to them before they come in. We’ve tried some different things with getting information before they come in. But often I find that it’s best, or they’re most open, when it’s in the meeting and just kind of talking it through and they’ll reveal something, it’ll lead to something, we’ll have that conversation. But yeah, he’s very much trying to understand where they’re at what their concerns are. Because often that’s the first thing you’re going to say, well, I’ve got this money, or I’m in this position. But there are many clients that are in their 60s with the same dollars on the page, but their needs and outcomes are gonna look very different because of different circumstances,

 

Fraser Jack 

concerns or concerns are a big part of it. And sometimes, I’m just thinking that their concerns wouldn’t be apparent or that the first thing that they say it’s sort of something that you find out when you dig a little bit deeper.

 

Martin McGrath 

Yeah. And, you know, the client the other way came in, and all of a sudden there, we spent most of the conversation talking about her son and the concern she’s got for a son and his well being all that kind of stuff. And, and there’s no way a portfolio report or even on a perfect factfinder of risk factor, I would have probably presented all that. But once we’re able to kind of talk her through how she could help him and what that might look like. I think that very much kind of put her concerns at ease.

 

Fraser Jack 

Yeah. Fantastic. Now, Matt, and thanks for coming on and chatting us to us today about the changing landscape of retirement. Tell us about as before we go your business, what where to from here, like what is it going to look like? What’s the changing landscape of your business look like over the next few years?

 

Martin McGrath 

Yeah, so continued growth, I think we’re in a position. And perhaps if we looked at the average age of retirement advisors on 34 2035, a lot of the retirement advisors in my space are in their 50s and 60s themselves. And that’s even part of a marketing thing. We talked a lot about that. When you’re ready to retire, we’ll still be working we can help you transition through was a lot of perhaps even more particularly in the area, I’m in a lot of our retirement advisors that will probably already be retired by the time the clients are retiring. So we’re trying to really set up and focus in the retirement space and continue to niche down grow the business by bringing on another advisor or two over the next few years. And I think we’ll just continue to be in this retirement space because there’s a lot of wealth in this space or wealth transferring into the space. There’s a lot of complexity, and the government always likes to change things on us. So yeah, I think there’s some big opportunities for where we’re at.

 

Fraser Jack 

Couldn’t agree more. You hit the nail on the head when you said wealth transfer, then there’s certainly a lot of that coming. Fantastic. Man, thank you so much for hanging with us today. Really appreciate you coming on and sharing your experiences. Thank you so much. If someone wants to continue the conversation, what’s the best way to get hold of you? Yeah.

 

Martin McGrath 

On the social financial age group on Facebook or Instagram and Mark McGwire on LinkedIn happy to reach out and have a chat. Fantastic.

 

Fraser Jack 

Thank you so much. Perfect. Thanks, Fraser. Well, there you have it another episode of The X Y advisor podcast. I’m Fraser Jack and I’m joined by Emily Blanche and we are going to do some shout outs.

 

 

Yes, my favorite time of the week. So Let’s give a massive shout out to x y advisor and x y legend Brad Evans. He joined us for a an x y plus web event today and absolutely crushed it, we dived into SEO and digital footprint, we went really deep. And Brett totally, like took us through everything, his whole journey in how an advice business can get their brand. on page one of the Google search phenomenal session. We did some live demonstrations as well, Brett actually did some live evaluations of advisors who tuned in live of their of their website. So we could actually get a real life look at where they could improve what where they were doing really well in tips and tricks to start to implement ways to get your business on page one of Google so phenomenal session. Well worth catching up for anyone who’s in x y plus and well worth joining x y plus to be able to be frank, if you want to level up your SEO. Well,

 

Fraser Jack 

well, that’s a glowing, glowing report and absolutely right. It’s one of those things that there is so much to learn. And for somebody who’s you know, been through that process, and you can jump straight into the do this, do this. Don’t do that conversations amazing. So that’s 90 minutes of your life that you’ll use is well worth checking out. Now you mentioned the web event, that’s x y plus members. So as you mentioned, if you’re not part of x y plus, then get on it.