#374 Andrew Rocks – Transcript

Clayton Daniel
G’day, how’s it going? What do you know? Strike a light Clayton here from Ensombl with the one and only chairman of the board occasionally. Chairman Mao. Andrew Rocks. Thank you for coming on the podcast mate.

Andrew Rocks
what a horrible introduction, Clayton. But I’ll, I’ll take I’ll take the intent. And I’ll pick out the delivery. So now it’s been, I’m actually really looking forward to not only chatting with you now, but what comes next? So, thank you. Yeah, correct.

Clayton Daniel
Yeah. So which, which is really like the purpose of this podcast. You know, we met on a podcast many moons ago. And yes, it’s going back maybe four years or so. And obviously, there’s a lot that’s happened between now and then and now and your influence over this company has been quite substantial. And a number of other companies, including Lydian, and you’ve and VBP, and sort of the man with a with a million fingers in a million pies, the the alchemist, some say, and, and I’m really excited to have you, you know, hosting a series, which we’re extremely stoked to have you on for and this is all about, it’s the engine room podcast, right? Well, I mean, you’re probably best place to explain it because you’re hosting it. But let’s jump in. Why do you think that this is relevant to where ensemble is now considering? You know, certainly in the last three years, we’ve we’ve grown a lot. So why why now? And why are we doing a podcast or called the the engine room?

Andrew Rocks
Thanks, quiet. And, and I do vividly remember that that podcast in 2017, or 18. And it was actually pre royal commission. So it was was fun times, fun times. But um, why are we doing it now, when an outsider looking in ensemble, and samples motto, or ethos is to promote the positive evolution, AI financial advice. Now, you can take that a few ways. And I think the sort of the way in which it’s been taken up to now is promote the positive evolution of the financial advisor. But a financial advisor does not operate in a vacuum. Okay, so what we, you know, acknowledging and really lifting the lid on is, we want to promote the positive evolution of financial advice, and advice practices, because without healthy, sustainable, positive environments, you can’t promote the positive evolution for the advice professional. So I know this doesn’t come as a big surprise to people listening, that behind every advisor is significantly more talented and more volume is people to help your clients achieve their objectives. And there’s probably a few silent nods right now as you’re listening. But I wanted to really highlight that we are an ecosystem. And that was that was the purpose of it. The other thing is that as business has changed, so, you know, I have been involved in this industry as a as an advisor for many years. And for those of you don’t know me, I actually was a CFP for about sort of 1520 years. So the practitioner really is as strong as their team. Okay. And there has been an evolution and evolution in the way in which businesses look, you know, 10 years ago, a lot of businesses were sole practitioners, with, potentially, you know, three people in the office, each one of those people kind of just did what it took to do the business. They then evolved into exactly that same format. And then they found someone who was a paraplanner, who basically went and did a paraplanning course and that worked really well. But now, I would say the avatar of the type of business, in financial services in this country really is as a multi AR business. So most practices are at 234 advisors. Most practices have listened to really good advice and a part of this podcast series going to be talking to the people that give the advice, you know, the business coaches that the successful people inside licensees, etc. And a big part of that advice was to price correctly was to move fee for service etc. So those four advisors or three to four advisors, generally have a team around them. And those team that team, you know, they have dedicated roles are emerging, they have paraplanners, either in house or external. They have administration in house or external, and a lot of them are using consultants, particularly if they’re got their own a For Sale. We’re both in compliance and there’s a lot of investment management consulting going on a lot of SMA is MBAs. So the business itself is not the one man band. And the most important person in the room, the advisors us are the most important person in the room when the clients in the room. But if I was to be honest, and grab, grab eights practice and put them in the room, quite possibly the most important person in the room now is the practice manager, the general manager, the CFO, okay, they’re the people that provide the environment, to allow the advisors to do what they do in front of the clients. They’ve had very little airplay in our industry. It’s it’s actually horrifying. In my eyes, that I would say the key decision makers inside the practices that make the decisions. And those decisions aren’t just what type of clients that could be around to what platform they use, what software they use. So for all of you listening, or in the supply side, they’re pretty important people. So I thought, why not give them a voice? That was the reason why Clayton

Clayton Daniel
Yeah, it’s, I feel, I feel a little attacked Roxy, because when you said 10 years ago, the average advisor was where the average practice was one guy that did everything and then slowly brought on a power planner. And then And then, you know, slowly brought on a couple of other roles. And I thought maybe you just purposely having a dig at my exact form of business, because that’s precisely how I grew it. And, and there was something, something kind of, there is something really cool sitting out that kind of business model. Because you, you’re saying, Hey, I know that I can hit, let’s call it five or six, maybe $700,000 a year, right? Like I’m pretty comfortable, like confident that that is achievable. And in looking at sort of my fixed costs, and I can sustainably see a moderate growth rate to make it all interesting for us over the over the long term. And yet, in the time, since I launched my original financial planning business 10 years ago, we have gone to see more and more of these more highly sophisticated companies. And if I was, if I was still practicing, I still do think that there is a place for the smaller advice practice, especially if someone wants to always give advice, right? Because oftentimes, when people grow, grow practices, they end up not being face to face with the client. And and I think for those that choose to stay in that situation, it totally makes sense. But do I think that even those that choose to stay in a small practice, can learn from the people who spend their life in larger practices that are working on the efficiencies that are working on, you know how to deliver best practice, I do, let alone the advisors that want to actually become those bigger, more sophisticated. Outfits anyway, so So basically, I’m pretty excited that we’re building this podcast series, the engine room, because the audience that you’re mentioning, is typically the hardest to get in terms of guests on a podcast. Because they, that they, they are already in a position where, where every micro decision is extraordinarily well thought out, and that they’ve become, you know, they’ve built the engine room, so to speak. And so I’m pumped to have this, this sort of list of guests that we’ve got coming up, because I think everyone can learn from from the smallest practice through to ones that are already growing.

Andrew Rocks
Yeah, look, I think, Clayton, you’ve, you’ve noted there, that’s the reason we’re doing this this podcast because there’s no right. Okay, you can you can run the business that you’ve just mentioned, and you can be very lean, you can be hyper targeted. I mean, there are practitioners out there that just do UK pensions, just do so many you can be hyper targeted and and we’re still we’re still grappling with the the evolution of our of our profession where, where it’s sort of circa 30 years old, but, you know, if you’re getting medical treatment, you go to your GP, let’s call them and then they refer to a myriad of people who work with you, okay to achieve your goals. So, even though smaller practices, no doubt are working with people, but the it’s got Got a bit to learn. The other thing is the life cycle of an advisor. So I actually took the liberty, and I’m going to get this wrong for all you tech heads out there of going into our data pond. No data lake. Okay, just recently and finding out of your water. Yes, that’s right, and finding out the average age of the ensemble cohort. And no surprises there, given that we are, you know, emerging as the majority of the industry. Yeah, it’s about that 4746 47 years old. Yeah. So it’s a lifestyle thing as well. And once your kids are in high school, and you’re in that sort of zone, for all those people listening who’ve been through it, it goes fast, you go from being someone who’s very happy to have a lifestyle business, to actually going well, I actually need to have a succession plan. So what we’re hoping to do to during this, the course of of showcasing these businesses is showcasing all the models, okay, there’s no right or wrong, okay? There’s no winner, there’s no loser. We’re showcasing the models. And we’re hoping that by doing that, you’ll be able to build your own rich tapestry, yourself, or identify really awesome people that you want to be part of in your life. And the great thing is that geography doesn’t really stop us anymore. So yeah, that’s that’s the plan.

Clayton Daniel
Massively true. Who are there? Is there anyone that we can talk about in terms of names that, that we’re we’ve got lined up already, like who who’s coming on? And you don’t need to go into specifics if you can’t yet. But yeah, who are the types of guests that we can expect to be listening to?

Andrew Rocks
Okay, so obviously, what I wanted to do was get a rich tapestry of guests. So I’m not going to mention exactly the practices or the names because some of them are yet to record their podcast, and I wanted to sneak up on them. But we have practices that are that are a single operators. We have practices that are multilocation. We’ve got practices that turn over a million dollars, we’ve got practices that turn over $100 million. We’ve got practices that have over 100 employees, we’ve got some that have got 200 employees, and none of these are owned by the banks. We’ve got practices that are multidisciplinary, that are part of accounting, mortgage broking, multidisciplinary, and businesses. We’ve also got practices who work in with other practices. So where they become specialists in a particular niche in financial planning, and their clients, other financial planners. So I wanted to really have that broad reach of them, we’ve got practices that are at their, the beginning of their growth cycle, we’ve got practices that have just done mergers and acquisitions. You know what, I’ve even got some practices that have taken some money off the table, and how they did it. And some of did it well, and some did it poorly. So what we’re doing now is we’re going to give the perspective from the practice manager, or the general manager, the successful practices of the future, are no longer dominated by ownership by the advisors. Every clever business that inverted commas attempted to corporatize would no doubt have offered their their CIO or their general manager equity or they’re in an ESOP or a buy in. And they’re head of operations. And you’ll find these themes are quite a quite a big part of it. And in fact, whilst I’m sort of rambling on there, I just wanted to give, you know, an ethos or a format that served me well, throughout my career, and it’s breaking almost every conversation into four quadrants. And I will be doing that in in relation to this, these conversations. The first one is the quadrants are people strategy, execution, and cash. Okay. Now, lots of people have heard that. But what I’m really curious is how successful practices have organized their people from an from an org chart, how they’ve transitioned potentially, from a small business, to having a board potentially even even other investment, how they, how they’ve managed to grow people from administration into power planning, how they’ve navigated the py, I know that ensembles got a great py program at the moment, but it’s really only coming in recently. And it’s awesome. But you know, what the intention is to grow these these people through? And then how do you run culture? And I’m not just I’m going to dig deep on culture. Culture is not a throwaway line culture is not ping pong tables. You know, there’s there’s a way of doing things around here. That is that really, the people generate it. The strategy. Now, people think Strategy and Financial Planning, they think what’s the strategy of the advice? No, no. What’s the strategy of delivering the advice? Yes, that could be something like do we have a shared services? Do we have a pod system? You know, I’m not going to say what I think is right wrong, but throughout, you’re going to eat throughout the listeners are going to be able to hear and work out what works for them. And in many respects, it comes down to their personalities. So the great thing about being married is you don’t bury yourself. So quite often you’ll have left brain people married to right brain people, you’ll have detailed people in a in an organization and you’ll have flamboyant people. And when you’re in multi AR practice, it is almost impossible for all of you to be the same. So not only does the practice manager have to put down a, a sort of rigor around a process and a system, but then they’ve got to figure out the foibles of the individual hrs. And for those of you guys were laughing, and girls were laughing at the moment, yes, I’m talking about you, and the fact you like doing these specials, and, and your practice manager, and you’re killing them slowly every day, but they need to work with you. So and then finally, the execution, you know, we are going to talk to a lot of advisors who advise practices and, and their biggest bugbear is that they give great strategic advice. But not every practice executes. And that could be a priority. It could be an authority, you know, are you a practice where your advisors say that they defer to their operations team and whatnot, but when push comes to shove, they want to put their fingers back into the operations every second minute? Well, I can tell you with circa 4% unemployment rate, you have a problem, like so the biggest part of it is and then finally, cash, you know, so once I’ve done that, you know what it is fun making profit. And it’s not a bad word. Okay, God, no, we have we have graduated from recurring earnings multiples. And we’re now all about multiples of EBIT, or in layman’s terms, how much profit do you make? And, and if I was to buy you how many years worth of that profit, would I pay you now, for you to give me the keys to your car so that I can make profit thereafter. And the great thing about that is for everyone who really loves their clients, anyone who buys a business, on that principle really needs to keep them for at least the multiple period, and then some, so your clients will be really well looked after, or else the person coming in is, is is conducting financial suicide. So then there’s other things. So, you know, what’s the level of transparency? So if you’re asking your operations team to trust you, do you trust them? Do you disclose what you’re making, what the profit is? What the targets are? Are you a closed book, very interesting. And then finally, we, we will ultimately wrap it up at the end on who is a good practice. There’s, there’s several metrics around and is a great place to work. And I know that quite a few of the practices, you’ll be happy to know Clayton, I’ve actually pulled in the top 100 great places to work in Australia that I’ll be interviewing. So we are going to get some sort of Northstars perceivably involved as well.

Clayton Daniel
Wow, that, um, yeah, it’s quite interesting to see the growth of the podcast because typically over the last sort of five, six years that we’ve been running this podcast for now. It started with, I mean, we’re in the middle of an episode right now, which is which has traditionally been the backbone of the of the podcast channel. And it was a very free flowing conversational set where it’s always just been centered around what can I start doing in my advice delivery today, after listening to the podcast that’s, that’s kind of always guided. And, and over the last, I’d say, maybe a year, year and a bit we’ve been branching off into almost like different shows and different in the way that we’re kind of approaching the podcast now is less about it being one show on on one podcast channel. But now we’re looking at multiple different shows across the singular podcast channel. And so this engine room podcast, is it from from our point of view, is something that it’s a show that’s very much dedicated to high level experienced operators, who aren’t so much looking for how you know how best to talk about an advice journey with a client. It’s more about well, how can I get all of the team no matter how big it is from from, from five people to 100 people to operate in a fashion where we become more than just financial planners, where we become sort of, and it’s kind of interesting, if you think about the legal professional accounting there for a long time had these sort of have, you know business models that were based around partnerships, and it’s very clear for they’ve got a career a clear career path for for new professionals and they work their way up. And in financial planning, it’s always been this goodness, this maze of opportunity that you have to find your way through to arrive at a position that makes sense for you. But often times, it it, it kind of arrives at a point that’s almost predictable. And the thing that I like about what we’re discussing right now is, over the last 10 years, we have seen great practices emerge. And I’m excited that we’re now going to get the opportunity on a weekly basis to dive in, pull those pieces out, and really use it as as a guiding light to this is best practice on how to grow the business of advice.

Andrew Rocks
Absolutely, Clayton, and when, when I decided to get involved with the X Y, I’ve now called ensemble, a driving motivator for me was that in the 90s, I would have loved to have had this community, not because it would have told me all the good things to do. But importantly, it would have fast forwarded my mistakes, you know. And that’s, that’s what’s going to happen here. I mean, we’re going to go right into the granular we’ll be talking, there will be details we’ll be talking about, you know, what makes a good app. So partner, what makes what makes good consultants, what’s a decent tech stack, what’s fantasy, what’s folly, you know, what makes him good employment arrangements, what makes good HR, what makes good paraplanning. And with my background, and what I’m doing currently, I get to see probably more practices across more licenses than any other person in this country. And it enables me to actually glean that information, which is going to become very useful when I’m interviewing these people. The other facet of it is, is that when you’re talking about people, you can’t leverage a founders vision without leverage. There you go. That’s a double leverage. But you need to be able to work in a team. And I think Deloitte came out I think I read the AFR, I was obviously bought over Christmas. Hi, wife and family. Sorry about that one. But the words coming out saying yet again, predictably, the biggest test for CEOs this year globally is going to be a talent shortage. Okay. So we started percolating this, this because of our passion that we previously mentioned, but now, this is a Bloodsport, there is no talent, there is no talent, or is there? Or is there? Or is there one of the best practices still have resume after resume? People wanting to be that? What is it about them? And if you are one of them, yes, you can smugly keep driving along, okay. But if you’re not one of them, then hopefully I can build a bit of a Rosetta Stone for you to figure out what they’re doing and why they’re doing it. We all know in financial planning, it’s a massive, massive market, we’re not competitors in the spirit of Ensembl. I want to be able to glean and impart as much of that information. So you can become a employer of choice, because when we’re actually getting down to the operations of financial planning, you’re not competing against other financial planning firms. If you’ve got a team member who’s in operations, well, they, they, they can, they might have come from another industry, and they can go to another industry. So not only do you have to be good at financial services, but you just have to be a damn good employer a damn good. You need to create genuine blue sky and create the environment, whether it be flexible or not. I’m sure that topic will come up. That means people want to work for you on a discretionary basis. Okay. And if we do that, Clayton, then I think we’ve promoted the positive evolution of financial advice, advisors and advice practices, mate.

Clayton Daniel
Yeah, no, you’re exactly right. The I often think you know, this, this concept of the talent shortage, is it and you’ve, you’ve been hiring people for a long time. So this is probably a question to you. Have you found that there’s a shortage of talent these days? Or have you found that the expectations of what of what Pete what employers are looking for has increased?

Andrew Rocks
Um, both both. Now, oh, that’s an interesting one. You know, as you intimated, I had an advice practice for many years and and I was fortunate enough to get an accolade the healthiest employer in Australia and and I saw that as first of all a great thing to do. But what what employees want and this is not Do a generations I’m sick and tired of people saying Millennials Gen Y. Now it’s always the same money is not the driving factor. It is one of those factors. what environment do you have? What purpose do you have? Do you have a charitable, charitable or giving nature? You know, what is your intent? As a business? How do you treat your clients when they’re not in the room? All of these things? Matter? Okay. Now, we probably won’t be asking that last question in the podcast, but I think you’ll be able to figure it out. Right. So, so nowadays have never changed Clayton. What has changed though, is that a COVID, has brought forward the or is just completely demolished the tyranny of distance for people staying or leaving from a business. I know really quality practices out in the regions, and I will be getting around to them. And, you know, historically, and I was one of those blacks. I grew up in a country Ghana lifted out of the city, right. And that was the way it was. So you had the I hasten to say, the brain drain but but you know, I left but so you had that talent shortage, and they were always struggle as IT company excluded, carry, but now you can live in cracking places. I mean, I was at Tamworth, on the weekend, country music Wait, there you go. And a couple of really quality advice practices in Tamworth, people who live there have a great cosmopolitan lifestyle, by the House of their dreams and do things and they can get clients from other places. So COVID has accelerated the ability to people to leave and find a better place.

Clayton Daniel
That’s a super interesting, super interesting point. I think on the flip side, and from the employers point of view. Yeah, it’s, it’s so true, what you’re saying. I think there’s, there’s pros and cons. I think, from an employee’s point of view, if I’m looking for a job, I can expand beyond my geographical region to be employed. And I think that’s a huge, positive and a huge benefit as an employee. The downside is, and this is something I haven’t heard enough people talk about. But as a, as a remote employee, I’m technically putting myself on the same, what would you call it? Character, the same genre of employee as an international, because I am now a remote worker, I’m a Virtual Employee. And it is kind of interesting. So as an employee, I could work anywhere. But I’m also now competing with people who are on 20% of my wage. And so that, that, that, that dichotomy, it, there’s definitely pros, and there’s definitely cons and I don’t know how it’s gonna work out. But it’s some it’s some of the trends that I’m paying attention to

Andrew Rocks
now where it’s not Oh, loopback. Right. So that’s part of it. It’s ultra simplistic to be honest. And to view that, as isn’t. When I talk about people strategy, execution and cash, you put cash last, if you’ve got the right people executing the right strategy, cash follows, because if it doesn’t, you’ve got the wrong strategy and the wrong people, right. So I think, for those people out there, if they become indispensable, and how you become indispensable, regardless of whether you’re remote, or in the office, is you go the extra mile, you have initiative, you have discretionary effort, you do things without being asked to do them. Now, I don’t think I don’t think being on a screen or not. Does that. But yeah, if you’re expanding on and bundling off, and I don’t think many people listening to this podcast or fall into that cohort, then then yeah, you’re going to have international competitive pressures. And by the way, those international competitive pressures have been in other industries. And, you know, a lot of the practices we’ll talk to have, by deal with accountants refer to him, they’ve been doing this exercise since the 80s. So and, you know, the reality is, is that the role of the general manager and the practice manager is to get people to do their best highest use, okay? If you’re doing your best highest use, whether you’re in you’re a CSO, or a paraplanner, or an advisor, if on a daily basis, you’re doing your best highest use, then Cerebus paribus, you’re probably getting paid the most that you could possibly be paid, you’re probably the happiest, okay. And if everyone’s doing that in a team, you’re working together as a team and targets that a team targets are fun targets, you know, so, we’ll be we’ll be touching on on that. And also, and we’ll be finding out new things. I think the there is an evolution that I can see around scale, okay. And this is not new happened in the the other professions that we benchmark ourselves against scale, specialization. And the other one is that the the employee of the future is five or six clicks away from figuring out who you are. However, what were you one of the, I suppose, you know, when you spoke to me about doing this, and I’m pretty passionate about that, that creating that environment. I said, Well, there’s got to be a takeout, there’s got to be a, you know, to get these people’s time. So the practice managers, the general managers, we as an organization ensemble have to be able to say, well, this is a take up or a follow up and, and what we’ll be doing is, at the end of the podcast, when it gets released, we’ll be allowing the company to put relevant recruitment ads on our ensemble talent up. Yeah. So what that means is that you as a prospective team member, get to have 30 to 50 minutes of a free interview, where you can listen to them, you can figure out if you like who they are, before you make that meaningful introduction. And it also should filter out the types of people that they want. So that’s our call to action. And if we can just, you know, get the right people working for the right people, then this industry is going to kick some goals. And dare I say that this industry is about to take off. And that’s not just hyperbole, because it’s funny to be exaggerate, hurry, which is not a word. But I thought it was I used hyperbole I’d throw Exaggerator in. This is because there’s tailwinds in our industry, we need lots of new entrants to come in to cover the demand. And if we don’t have sort of a best practice kind of conversation, then we’re going to have the blind leading the blind, and we’re going to stay a cottage industry and we’re just that’s just not going to happen. On on my watch, and it’s not gonna it’s not going to happen on on samples watch over here or overseas, as that’s why I’m Clayton.

Clayton Daniel
Yeah, no, I couldn’t agree more i this, one of the things that’s really driven me personally, is coming from a place in Australia, which was very, very small. You know, no one really knew anything about, about finance. And then so I moved to the city after having been in, you know, in a small accounting practice, I then go on to become a financial planner and launch a financial planning company. And what dawned on me during the process is financial planning is is just too important to be done poorly. It’s too important, like, the conversations that I’ve had with you over the years around, you know, when when you had a massive practice in dealing with a lot of clients, and you help them make all these smart decisions around money in your bank, you know, even though you individually stopped being the, you know, you became the the practice manager, you became the GM, right, relatively early in the piece. But you would still bump into clients that were clients of your offices, and they would say, Thank you for helping me do this, because all of these years later now 10, or 20 years later, they’re in a such a better position. And, and I like everyone who’s in advice, we just love that so much, because it’s not about doing forex trading for a large bank so that they can balance their sheets or whatever, like it’s about real people coming up to you. And it’s just, it’s so important. And I couldn’t agree more that that, you know, ensembles purpose as a company, and then this, this podcast is personally very fulfilling,

Andrew Rocks
or quite just two points of clarification that the closest thing I probably came to for x was via a tab. The rationale or the excitement the clients might have given me, post me handing over to other quality advisors might be as much about the happiness that they have of going to a Quality Advisor. I was I did find myself out to being the worst advisor in there, but I thought maybe in the time I’ve got left, I might just do my own call to action. Please. So I have a large network of practices, but it is not everyone. Okay, what I’ve realized over the last couple of years is this just some cracking practices. So big shout out to all the practices that have come into my world that I just didn’t know of and really good quality and we’ve learned a lot from them. I’ve I would also ask anyone out there in who is who’s advising or coaching I’ve reached out to quite a few of you to give me your it’s not quite a Hunger Games you attribute or or to give me you know, the people who you admire, whether you are advising them or not, and indeed the people in in if ourselves or even in product if you’ve seen a quality practice you owe it to the industry to just to just to pass those details through I don’t mind where it comes from and I’d love to talk to them I want to get as broad as I can thanks mate

Clayton Daniel
Rocks at ensemble.com Cheers guys