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Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

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Speaker 1: James Kirby, the Weld editor at The Australian. We came

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Speaker 1: aboard everybody. You may know. One of the biggest mega

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Speaker 1: trends in money in wealth is coming down the line

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Speaker 1: is the transfer of what they call intergenerational wealth now

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Speaker 1: the Productivity Commission and you can trust the Productivity Commission

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Speaker 1: on there on for numbers at least, and they said

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Speaker 1: in a recent report there's three point five trillion trillion

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Speaker 1: to be handed down between the generations in the next

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Speaker 1: thirty years. A little bit sooner, Deloitte tells us that

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Speaker 1: there's half a million Australians are going to retire in

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Speaker 1: the next five years. So as you can see, it's

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Speaker 1: going to be a lot of money transferred in Australia

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Speaker 1: and many people in the middle of this transition really

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Speaker 1: you have very little idea how to manage wealth, particularly

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Speaker 1: if they don't or won't use financial advisors. My guest

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Speaker 1: today is ideal on this subbit. His name Israe Tubman

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Speaker 1: and he's been in the wealth business software side for

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Speaker 1: quite some time and obviously in the business of wealth

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Speaker 1: some time as well, because he sold two companies in

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Speaker 1: the past, and the one he's probably best known for

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Speaker 1: was there was the sale of the Inpocomp group back

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Speaker 1: in two o seven to the GBST Group that was

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Speaker 1: as a reported fifty million dollars at the time fifty

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Speaker 1: six back in two oh seven. He went and did

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Speaker 1: it again with the second company, Finocomp, which he sold

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Speaker 1: to Bravura Solutions, the Listed group more recently and now

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Speaker 1: he's up and away with a group called air Wealth

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Speaker 1: that's h EI or air Wealth Group. It's a platform

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Speaker 1: really for advisors who are dealing with with wealthier Australians

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Speaker 1: and gives us, i think hopefully an insight that we

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Speaker 1: haven't had before to the whole landscape, if you like,

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Speaker 1: of making money in Australia. How are you Ray?

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Speaker 2: Very well, Thank you, James, Thanks for having me on today.

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Speaker 2: Great to have you on today.

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Speaker 1: It's interesting because obviously, as I was saying in the

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Speaker 1: show at the introduction, there you've been on both sides

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Speaker 1: of the fence, if you like. And one of the

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Speaker 1: things about investing in Australia is that there is this

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Speaker 1: formalized legal division between investors. There is every day investors

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Speaker 1: and there are sophisticated investors, and they are actually defined

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Speaker 1: by law. You must have two point five million in

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Speaker 1: investable assets or a salary and income of two hundred

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Speaker 1: and fifty thousand per annum for two years in a row,

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Speaker 1: and you must prove this with an accountant's certificate. First

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Speaker 1: of all, do you think that is actually a good system,

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Speaker 1: because I know in the US, for instance, you don't

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Speaker 1: have to go through the rules like that. What do

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Speaker 1: you think I mean, I know we're protecting people, but

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Speaker 1: it's debatable, isn't it. I actually think it is fair

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Speaker 1: to have some sort of differential between sophisticated and retail investors. Obviously,

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Speaker 1: if you're a retail investor, there's a lot more safety

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Speaker 1: nets and protection put in place. But I think for

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Speaker 1: people who understand what they're investing in are prepared to

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Speaker 1: take the risk, and I think that's fair that they

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Speaker 1: should be able to go into those wholesale investments. I

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Speaker 1: know that Aseka proposing increasing the levels from two and

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Speaker 1: a half million of assets up to four and a

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Speaker 1: half and from two hundred and fifty thousand income up

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Speaker 1: to I think it's four hundred and fifty thousand. I

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Speaker 1: think that's quite reasonable because interestingly enough, the limits were

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Speaker 1: put in place in two thousand and one and they

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Speaker 1: were never indexed.

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Speaker 2: They were never index so at the time they covered

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Speaker 2: one point nine percent of Australia's population and today, obviously

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Speaker 2: with property prices booming and all the rest of it,

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Speaker 2: it's it now allows about sixteen percent of Australia's population

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Speaker 2: to get a Sophisticated Investors certificate. The other thing I

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Speaker 2: would ask is just because you have money in investable money,

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Speaker 2: and just because you have income, it doesn't necessarily make

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Speaker 2: you a sophisticated investor. So I think there's still some

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Speaker 2: traps around that.

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Speaker 1: I mean, as I said in the past, you can

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Speaker 1: be thick as a brick and if someone hands you

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Speaker 1: two million, are you in? You're sophisticated by definition, and

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Speaker 1: that's no good. That's funny. I did read some of

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Speaker 1: the submissions on this inquiry and some operators I think,

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Speaker 1: I'm always such a Winson that being Jeff Winson and cool.

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Speaker 1: They're suggesting an exam, not just money in the bank,

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Speaker 1: but an exam. What do you think of that?

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Speaker 2: Well, it would better provide your credentials as sophisticated invested

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Speaker 2: than just how much money you have or how much

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Speaker 2: money you make. So I actually don't think that's such

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Speaker 2: a silly idea. I think it's quite a good idea.

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Speaker 1: So with you, you obviously are right across this whole

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Speaker 1: thing of the wealth transfer that's going on in Australia,

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Speaker 1: and one I know one of the themes that you

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Speaker 1: constantly talk about is the feminization of wealth. Now, a

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Speaker 1: cynical journalist like me will say, I think what he

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Speaker 1: means there is there's going to be a lot of

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Speaker 1: inheritance and wealth transfer and the actual area studies tell

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Speaker 1: us that women last longer than men, and so that's

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Speaker 1: going to be a feminization of word. Is that is

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Speaker 1: or is it more complex than that?

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Speaker 2: There are other factors at play. So fantastic women entrepreneurs

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Speaker 2: it at the moment, so they're generating Welson in their

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Speaker 2: own right. Divorced settlements play a part in this. But

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Speaker 2: this huge great wealth transfer that it's already begun, is

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Speaker 2: you mentioned three and a half trillion dollars is going

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Speaker 2: to change hands over the next twenty years. Over the

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Speaker 2: past twenty years, one and a half trillion has changed hands.

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Speaker 2: So this is growing and there is you're right about

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Speaker 2: the science. Baby boomers who are aged sixty to seventy

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Speaker 2: eight now of next twenty years are going to be passing.

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Speaker 2: The statistics show that they tended to marry younger women,

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Speaker 2: and women have a longer life expectancy. Two thirds of

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Speaker 2: that three and a half trillion dollars that's going to

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Speaker 2: change hands is going to go to surviving spouses, and

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Speaker 2: there's lots of gob smacking statistics about this. In the UK,

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Speaker 2: they've predicted that women will control sixty percent of family

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Speaker 2: wealth and then the next few year and at some

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Speaker 2: point in their lives women in the UK eighty percent

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Speaker 2: of them will be the sole controllers of the family wealth.

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Speaker 2: In the US, by twenty thirty, they're suggesting that nearly

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Speaker 2: sixty five percent of US family wealth will be controlled

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Speaker 2: by the women.

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Speaker 1: What does that mean? What does it signal then for

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Speaker 1: the wealth industry or for anyone in the wealth in

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Speaker 1: the business of making money. What what does it signal

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Speaker 1: for the future?

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Speaker 2: Well? I think there's a couple of really interesting aspects

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Speaker 2: of that, one of which is the way women invest

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Speaker 2: can be quite different to the way men invest. So

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Speaker 2: there's a lot of focus on purpose and impact investing

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Speaker 2: with WIMP a lot of studies have shown, so I

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Speaker 2: think that's going to change the investment round in a

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Speaker 2: lot of respects. And the other thing I think is

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Speaker 2: the whole advice industry needs to be quite focused on this.

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Speaker 2: There's research came out of Schroeders in the United Kingdom

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Speaker 2: that up to seventy percent of women who are surviving

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Speaker 2: spouses who have been ignored for decades, all of a

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Speaker 2: sudden they're the point of interest from their financial advice

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Speaker 2: firms and they don't like it, and they're moving to

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Speaker 2: advisers to a different advisor within the next twelve months.

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Speaker 2: So what that really means is that US needs to

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Speaker 2: be a strong focus on people that advise these families,

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Speaker 2: needs to be a strong focus on engagement, and engaging

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Speaker 2: at the point of death of the husband is too late.

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Speaker 1: That's really interesting. It's funny, folks that we often have

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Speaker 1: Jackie Clark, for instance, is a regular on the show,

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Speaker 1: and other female advisors. We have several that we talked

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Speaker 1: through all the time. But when I look at the numbers,

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Speaker 1: do you know that only about one in five financial

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Speaker 1: advisors in Australia are female. Actually, it's a really interesting one.

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Speaker 1: We'd come back to that very soon in a week

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Speaker 1: or two, when we get one of our advisors back

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Speaker 1: on the show. Okay, we'll take a short break when

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Speaker 1: we'll be back in a moment. Hello, and welcome back

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Speaker 1: to The Australian's Money Puzzle podcast. I'm James Kirby Wells,

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Speaker 1: editor at The Australian talking to Ray Tubman. Now, Ray,

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Speaker 1: one of the things you were talking about in your

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Speaker 1: world and you're giving these it's interesting. So you're in

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Speaker 1: that sort of you're in that sort of junction between

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Speaker 1: the advisors and wealthy Australians and the mass affluent. I

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Speaker 1: suppose we could call them and we were talking earlier

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Speaker 1: about the sophisticated investors in highness worth investors of which

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Speaker 1: you are on yourself do once someone gets over the line,

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Speaker 1: and many of our listeners would aspire to get over

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Speaker 1: the line to become a sophisticated investor, to be allowed

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Speaker 1: to do to get into those funds that you can't

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Speaker 1: get into a viewer, an every day investor of qualifis,

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Speaker 1: once you're over that line, should you think differently? Should

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Speaker 1: you in what way at its best would it make

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Speaker 1: a difference to get that try a qualification.

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Speaker 2: It's interesting the getting over the line enables you to

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Speaker 2: get in products that you wouldn't normally. But where there's reward,

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Speaker 2: there's risk. So for me, every time I would hand

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Speaker 2: over a sophisticated Investor's certificate, I would want to make

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Speaker 2: sure absolutely that I understand the product. So I always

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Speaker 2: have a philosophy of never investing in a product I

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Speaker 2: don't understand, because some of them are quite complex. But

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Speaker 2: me and myself, I still use a financial advisor hello

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Speaker 2: piece who looks after my interests, who gives me because

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Speaker 2: that's their job, and I rely on his recommendations and advice.

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Speaker 2: And at the end of the day, you've got to

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Speaker 2: be prepared that where the reward is also risk.

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Speaker 1: It has been reported regularly that sophisticate advisers often get

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Speaker 1: bid in and the first thing they do is they

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Speaker 1: go into IPOs pre IPO because they're off because the

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Speaker 1: startbroker signs them up says you should be sophisticated, and

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Speaker 1: then the stuff often calls and goes, guess what, You're

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Speaker 1: sophisticated now, and I've got a beautiful little IPO for you. Statistically,

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Speaker 1: the majority of these do not make money for people.

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Speaker 1: That's often an area. Is there an area that you

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Speaker 1: thought you couldn't be bothered with even though you're now

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Speaker 1: entitled to get in there, And is there an area

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Speaker 1: that you think people would be rewarded in examining.

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Speaker 2: So there's lots of really interesting private market funds and

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Speaker 2: products available as IPOs, etc. I personally have gone into

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Speaker 2: venture funds. Of course it's tech, and at least if

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Speaker 2: I can understand the philosophy behind how they're investing, then

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Speaker 2: I can either go with the sort of the objectives

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Speaker 2: of the fund or not. So I tend to invest

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Speaker 2: in areas that I'm familiar with and same into private companies.

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Speaker 2: I invest into private companies, but I've got to really

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Speaker 2: do my due diligence, and I treat some of these

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Speaker 2: with due caution and never invest money that I can't

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Speaker 2: afford to lose. If so, I think maratter As was

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Speaker 2: the tech or the team. I think the team's highly important.

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Speaker 2: Coming from a tech background, I know that some people

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Speaker 2: just are good and they pick the market and they

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Speaker 2: do the right things in and distributing their products to

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Speaker 2: market got to be both for me, It's got to

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Speaker 2: be I can see the purpose of what they're trying

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Speaker 2: to deliver and the upheaval they intend to cause into

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Speaker 2: the market they're going into, but also that people have

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Speaker 2: got runs on the board. Of course, Frankly, it's a

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Speaker 2: it's a difficult thing. A lot of startups fail, right Exactly.

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Speaker 1: It was a rhetorical question because I was going to

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Speaker 1: ask you if you came across something and the technology

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Speaker 1: was fabulous, and you know what's fabulous, and you said

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Speaker 1: to yourself, this is fantastic. These people really have something.

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Speaker 1: But then you say, this team is a mess. These

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Speaker 1: people are going to just they're never going to get

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Speaker 1: across the line. Does that stop you investing?

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Speaker 2: Yes, it would, as blood splatters everywhere in history of

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Speaker 2: tech companies that had great tech, but they text one thing.

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Speaker 2: Execution and commercialization is a completely other thing, and kind

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Speaker 2: of needs to be a sweet combination of both to

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Speaker 2: really gain success.

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Speaker 1: Just one last thing on the sophisticated investor front, they

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Speaker 1: are often also approached after IPOs. The next sort of

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Speaker 1: alleged treasure trust that is put in front of newly

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Speaker 1: qualified or newly minted sophisticated investors is property opportunities development.

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Speaker 1: Invariably where they're off the plan regularly. How do you

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Speaker 1: view property as a sophisticated investor.

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Speaker 2: As you become a sophistical investor, I guess there's a

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Speaker 2: lot more opportunities around property and I personally always run

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Speaker 2: a healthy skepticism of property development that I know you're

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Speaker 2: right they are in they do target sophisticated investors. Once

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Speaker 2: you get that sophistical investor status, there's lots of very

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Speaker 2: good manage property funds available in the private market space,

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Speaker 2: and where you put down a capital commitment and you

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Speaker 2: contribute as required. They're run by managers who have got

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Speaker 2: a track record, and I think that's an important thing

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Speaker 2: to look at, record of success and they've been around

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Speaker 2: a while. I tend to avoid those that are new

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Speaker 2: on the scene personally. Obviously, with high net worths there's

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Speaker 2: more money that is investible, strong focus on commercial properties

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Speaker 2: not just residentials, and where you're looking at long term

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Speaker 2: yields that can be quite attractive as well. So I

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Speaker 2: think there's in that space there becomes lots of interesting options.

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Speaker 1: And just how did you find them? Did you find

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Speaker 1: them through an advisor? Yeah, I look, I do.

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Speaker 2: I know I'm in a number of property funds and

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Speaker 2: they've been vetted. It's like getting electrical work done for me.

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Speaker 2: I don't want to tamper with the switchboard a loot.

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Speaker 2: Somebody that knows what they're doing can advise me, and

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Speaker 2: then I review myself that I'm really dependent. I like

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Speaker 2: to depend on my advisor, and they cost money, but

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Speaker 2: they can also make money in avoid losing money.

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Speaker 1: Interesting listeners, we are talking about the cost of advice on average,

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Speaker 1: if it seemed to be a five thousand a year

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Speaker 1: or so on a running basis, But and that would

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Speaker 1: be the case, particularly for sophisticated advisors, it could be

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Speaker 1: higher than that, or they could have several advisors, or

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Speaker 1: they could talk to their advisors a lot more than

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Speaker 1: you do, certainly more than once a year, let me

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Speaker 1: tell you. But it's interesting at the point that reymakes,

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Speaker 1: and it's often led to me by sophisticators and a

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Speaker 1: high work investors, that advice is good. Advice is more

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Speaker 1: than worth it. And if it saves you, particularly if

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Speaker 1: it saves you from losing money, then you can rock

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Speaker 1: it out very fast. If you save if you could

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Speaker 1: have lost fifty grand, then you paid five thousand to

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Speaker 1: find out that was going to be a last mithing situation.

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Speaker 1: You've got to think it's worth it. All right, we'll

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Speaker 1: take a short break. We'll be back to some questions. Hello,

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Speaker 1: Welcome back to the Australians Money Puzzle podcast. I'm James

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Speaker 1: Kirby talking to Ray Tupman from airwellth That is h

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Speaker 1: EI or Wealth the Software House, which offers a platform

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Speaker 1: for financial advisors interacting with wealthy investors in Australia. I

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Speaker 1: have a question from Jake. Why do we have to

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Speaker 1: spend the money in our super to buy our first home?

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Speaker 1: There is a large number of young people guaranteed via

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Speaker 1: the bank of Mom and Dad. Why can't we use

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Speaker 1: our own super? It's a guaranteur with the bank. Jake,

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Speaker 1: you are really onto something. This issue of can you

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Speaker 1: use your super tovie house isn't going to go away.

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Speaker 1: And I'll tell you something. There's very sort of call

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Speaker 1: them simple black and white sort of proposes up at

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Speaker 1: the moment, for instance, that to just take money out

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Speaker 1: of your super and buy a house where there is

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Speaker 1: more sophisticated innovations coming down the line. And I know

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Speaker 1: people that are working on ways to get super, the

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Speaker 1: equity from Super into the whole market and I think

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Speaker 1: there will be a break on this soon, So I'm

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Speaker 1: just wondering every UH has any thoughts on this one.

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Speaker 2: It's an interesting one. I actually think that would be

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Speaker 2: really desirable. We've obviously got a huge issue with affordability

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Speaker 2: of housing at the moment. You know, I've written stats

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Speaker 2: at about two thirds of people are relying on their

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Speaker 2: inheritance to get into the property market. I think though,

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Speaker 2: you know, our regulators really have focused on super innuation

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Speaker 2: being having the sole purpose of providing his income in retirement.

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Speaker 2: So I think that means that there need to be

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Speaker 2: quite a bit of regulation around any such scheme, probably

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Speaker 2: with dictated interest rates. But it seemed like a sensible option.

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Speaker 2: We've all got equity in our super and significant equity

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Speaker 2: in a lot of cases, and that would seem to

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Speaker 2: be one of the tools that we could use to

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Speaker 2: beat this housing affordability crisis.

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Speaker 1: Okay, thank you for that. Jake will come back to

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Speaker 1: that subject again, because I'm right across it and I'm

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Speaker 1: following it all the time. And remember, folks, this has

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Speaker 1: never advised its information. Now there's two questions from Dave

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Speaker 1: and one from Chris. They are related and basically they

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Speaker 1: are both are read. Dave's really captures the issue. Surely

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Speaker 1: there's a tipping point, he says, when a self managed

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Speaker 1: super fund becomes a no brainer. When my industry is

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Speaker 1: super is charging a fixed percentage of zero point seventy

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Speaker 1: five percent on my superbalance, it seems to me an

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Speaker 1: SMSF using it, index fund or ETF would obviously be better.

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Speaker 1: I know there's some setup costs for it seems there

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Speaker 1: will be some change, some change left over or am

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Speaker 1: I missing something? Dave? Okay, Dave, here's the thing you're

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Speaker 1: super I expect or in many cases anyway, many people

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Speaker 1: in big funds with super you can take an ETF

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Speaker 1: option inside the super funds, so you don't necessarily have

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Speaker 1: to leave the fund. If you could switch inside the

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Speaker 1: fund to ETF, to a retirement product or a retirement

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Speaker 1: option which is heavily underpinned by ETF, and on that basis,

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Speaker 1: the race, or at least what the commission being charged

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Speaker 1: or the charge basically should come down considerably from where

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Speaker 1: it is at the moment. At no fine supervibe. That

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Speaker 1: would be the first thing that comes to my mind.

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Speaker 1: Never advice here, just information on the broader question of ETFs.

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Speaker 1: And index funds. So many people are so confident about

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Speaker 1: passive investing and you can beat the fund managers. Blah

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Speaker 1: blah blah. I wonder do you think that way? Ray Taubman,

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Speaker 1: have your sought two businesses and rocking on the third

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Speaker 1: one and being a staphistical investor of some breath.

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Speaker 2: Yeah, I think ETFs are a great thing in market

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Speaker 2: linked ETFs?

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Speaker 1: How important are they to you?

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Speaker 2: Though I tend to I still tend to go into

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Speaker 2: funds rather than atfs, not entirely, but I do use ETFs.

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Speaker 2: I have a view that it's not so much about

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Speaker 2: the costs, it's about the returns. So I think every

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Speaker 2: investment should be dictated on what you expect in returns,

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Speaker 2: because if you get significant returns, then the costs become negligible.

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Speaker 2: I think on the topic of I think if you're

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Speaker 2: worried about chargers, that it purely on charges, then do

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Speaker 2: we is a point and people will argue what that

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Speaker 2: point is, whether it's three hundred grand or whatever. Where

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Speaker 2: strictly speaking, you can run a self managed super phone,

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Speaker 2: get your audits done, get your accounting done, and have

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Speaker 2: less charges above a certain point. And beauty of self

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Speaker 2: managed superphones is that you don't have to do it yourself.

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Speaker 2: You can still have an advisor that advises you your investments.

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Speaker 2: It sounds to me like you're a judicious risk taker.

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Speaker 2: I've taken a few risks and I've found on a

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Speaker 2: fear over the years. But just talk was just yes,

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Speaker 2: expand on that. And so you come to the end

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Speaker 2: and some worked and some didn't work. And I don't

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Speaker 2: want to prejudge what you're going to say, but I

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Speaker 2: imagine what do you come to it from this? So

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Speaker 2: I think the total wins outweigh the losses. And I've

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Speaker 2: had personal learnings every time I've lost, because you sit

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Speaker 2: there like a naughty per be in the corner and

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Speaker 2: think what do I do wrong on that one? So

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Speaker 2: it's always good to learn from your mistakes. And you

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Speaker 2: know you take that as future knowledge, don't you. And

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Speaker 2: that's why I guess I am quite diligent about what

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Speaker 2: I review in any investment I take.

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Speaker 1: And you go back and you look back on the

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Speaker 1: when they don't work out, you also review them. You

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Speaker 1: don't just walk away.

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Speaker 2: Absolutely a psychos software development process that every time you

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Speaker 2: do a release, you have a retrospective over what you've done,

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Speaker 2: and you take learnings from what you've done wrong. And

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Speaker 2: for I still make mistakes, but hopefully less than what

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Speaker 2: I would have made ten years ago.

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Speaker 1: Very interesting. I witnessed Karen Elson, of course, who became

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Speaker 1: a billionaire at stage off the back of the Platinum

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Speaker 1: Funds Group, and there was an analyst. They were talking

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Speaker 1: about picking stocks, and the analyst mentioned how they had

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Speaker 1: certain stocks hadn't worcked out, and they had finished with

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Speaker 1: them and basically gone off and done other things. And

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Speaker 1: I remember him picking up this analyst on a point

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Speaker 1: and saying that he was very disappointed that the analyst

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Speaker 1: hadn't gone back and studied what had gone wrong with

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Speaker 1: the investment that had failed. That you would learn as

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Speaker 1: much from what you what doesn't work out as what does.

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Speaker 1: It's interesting and interesting that you would poor less come

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Speaker 1: in from the same angle. Terrific, but Gray, thank you

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Speaker 1: very much for talking to us today. Very interesting. Ray

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Speaker 1: Tubman of the air Wells Group, nice to have you

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Speaker 1: on the show. Thank you, James, lovely to be here,

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Speaker 1: and thank you folks for listening. Let's have some more

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Speaker 1: emails if we would plenty on property at the moment,

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Speaker 1: so let's have some that are on the broader world

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Speaker 1: of investing the money puzzle at the Australian dot com

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Speaker 1: dot Au talk you soon. Four