For me, David Andrew is someone who really gets it. He knows that there’s far more to financial planning than designing an investment portfolio; that it’s about helping the client to simpler, more fulfilling lives.
David is MD of Capital Partners, based in Perth, Australia, which serves as an excellent model for a modern, client-focused advisory business. I can also highly recommend his recent book, Wealth with Purpose, which sets out, in a clear and common-sense way, how best to deal with our money and invest for the future.
In this interview, David talks about the book, the value of advice and the secrets of his firm’s success. It’s full of useful insights and practical advice for other ambitious advice businesses.
Tell me about your book Wealth with Purpose and what inspired it.
For a long time I have thought that the advice industry focuses too much on investing, rather than the achievement of clients’ life goals. I genuinely believe that real wealth management can have such an impact on people that they end up living simpler, clearer, better lives. So the book was about spreading the message to as many people as possible about what real wealth management is.
You say in the book that investors are too focused on product, price and performance. What do you mean by that?
The financial industry is largely self interested. Shareholders come first, and the adviser’s role is sell product in order to generate profit for the institution. In this model the conversation is all about who has the best product, the best price or the best performance.
Let’s flip that. If we were to focus on the client, the clients goals and their life outcomes then the conversation fundamentally changes. Building a plan to meet these goals becomes the priority, and the final (not first) step in the process is to select the investments to support the plan.
There’s always a danger with a book like this of doing yourself out of business! Do you mind if people read this book and decide they can manage on their own, without the help of a financial adviser?
Maybe, but I believe in sharing. If I’m true to my word then I would want as many people as possible to read Wealth with Purpose. If from there, they can do it themselves, that’s awesome. But in my experience most people need help. They’re busy raising family, building career and caring for others. Money and planning takes a back seat.
If by reading Wealth with Purpose they’re more motivated to engage an adviser, that’s great.
For you, what are the ways in which a good financial planner can really add value?
Great advisers help their client clearly define their values, goals and priorities. Then they help with creating a strategic plan and an investment plan to match. Ideally they will then help to map out the client’s legacy plan so that everything in life is covered.
In a nutshell it’s about providing Clarity: where am I today, where am I going and how do I best get there. Next it’s about Insight: what technical inputs are needed to get tax, cash flow, structures, modelling and all the other complexities sorted. And finally, it is about a Partnership: so that people can focus on the things that really matter while their professional adviser ‘has their back’ on everything financial.
Great advisers are like orchestra conductors, they make sure everything gets done.
You’re a frequent traveler. From what you’ve seen, in what ways do you think the advisory profession in Australia differs from advice in other parts of the world?
The client issues are the same. They care for their families, they want to be successful, they just don’t know how. Great advisers around the world have similar client-centric conversations placing the client at centre-stage. I am constantly learning from the generosity of the world-class advisers I visit and their willingness to share is just amazing.
The advice model in Australia is quite complex because taxes are high and they are complex. There’s a huge amount of value to be added when everything is well coordinated, so there is a great opportunity to sell advice rather than selling investments. That said, the vast majority of financial advisers are firmly stuck in the ‘old world’.
Tell me about Capital Partners, the success you’ve had and why you think you’ve done so well?
We have enjoyed success; it’s just taken close to 20 years! One of our biggest success factors is that we have consistently placed clients at the centre of every decision we make, not just about their affairs, but in every business decision we make.
The next is that we have worked incredibly hard to recruit, train and retain talented, committed people. Advisers who try to control everything can’t grow. It’s impossible. The owner or principal of an advice firm needs to be in charge but not in control. They need to set the strategy and lead the culture, but then they need to trust their people and hold them accountable. That way people grow.
We also have a very efficient business. Our client selection, use of technology and our approach to investing keep things under control and prevent us being all things to all people.
As a company you believe in the importance of high-quality content. Explain why that is, what you’ve done and what impact it’s had.
We’re excited about the new world of content, video and social media is really interesting and our SmartInvestor.TV initiative and our blogs are drawing a lot of content to our website and we think it is helping to raise our profile. We write all of our own blog content, and although this is sometimes a real stretch, it’s important to have an opinion.
For video we wave chosen an outsource arrangement with Regis Media. We simply couldn’t present the concepts with the quality and regularity that they can.
Capital Partners is part of a wider group of Australasian firms and also a global alliance of advisers. Explain more, and how valuable do you feel these sorts of alliances are?
We started out with an Australian and NZ study group with like-minded firms with core beliefs around evidence based investing. This has now become a global study group with firms in the US, Canada, UK, Switzerland, Australia and New Zealand. We meet twice each year to share benchmarking, best practice, marketing and investment ideas.
Sharing with other like-minded advisers is one of the most important things we have ever done.
If you had to give one piece of advice to a new advisory firm, just starting out, what would it be?
One piece of advice? That’s easy. Place the client at the centre of every decision you make.
Let me explain. If you do great work for great clients at a fair price your business will grow. They will tell others. Then your team will recognise that you are doing something special, and they’ll feel that they are doing really important work. They will encourage other smart people to join your team.
When your clients and your team really admire and appreciate the business, success will follow, and your shareholders will be happy too.
None of this is possible with a short term mindset. Take a long view, do things properly and invest in the business.