1 00:00:11,850 --> 00:00:15,050 Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:15,110 --> 00:00:19,980 Speaker 1: James Kirby, the wealth editor at The Australian. Welcome aboard, everybody. 3 00:00:20,000 --> 00:00:22,579 Speaker 1: I wanted to talk to you today. I want to 4 00:00:22,620 --> 00:00:25,520 Speaker 1: step outside the news cycle, if you like, and I 5 00:00:25,540 --> 00:00:28,020 Speaker 1: want to look at something that I think is pertinent 6 00:00:28,060 --> 00:00:31,770 Speaker 1: to every single listener to this show, because you are 7 00:00:31,810 --> 00:00:36,470 Speaker 1: listening to this show for information and observations. And I 8 00:00:36,510 --> 00:00:39,409 Speaker 1: have a lot of financial advisors on the show. And 9 00:00:39,750 --> 00:00:42,510 Speaker 1: I imagine there's no one on this show or no 10 00:00:42,570 --> 00:00:47,170 Speaker 1: one in the audience who would not benefit from good 11 00:00:47,370 --> 00:00:50,910 Speaker 1: financial advice. Now, the reality of it is that it's actually, 12 00:00:51,120 --> 00:00:53,960 Speaker 1: first of all, just sheer mathematics. There used to be 13 00:00:53,960 --> 00:00:57,460 Speaker 1: 30,000 advisors in Australia. Now there's 15,000, right? So it's 14 00:00:58,120 --> 00:01:00,820 Speaker 1: twice as hard as it used to be to find one. Secondly, 15 00:01:02,160 --> 00:01:04,790 Speaker 1: despite great efforts on the professional side, they have a 16 00:01:04,830 --> 00:01:08,400 Speaker 1: mixed reputation still. And that will always be the case, okay? 17 00:01:08,420 --> 00:01:10,780 Speaker 1: Because it's very hard to get it right. And every 18 00:01:10,830 --> 00:01:13,709 Speaker 1: advisor is different. And then on top of that, on 19 00:01:13,790 --> 00:01:17,410 Speaker 1: top of that, there is a, it's an ugly word, bifurcation, 20 00:01:17,550 --> 00:01:20,130 Speaker 1: all right? But there's a split going on in advice. 21 00:01:20,150 --> 00:01:23,850 Speaker 1: There was always a split in advice. Very top advisors 22 00:01:24,069 --> 00:01:26,710 Speaker 1: dealt with the wealthiest people. But that is becoming severe now. 23 00:01:28,090 --> 00:01:33,420 Speaker 1: And we're finding that it is harder to get an advisor... 24 00:01:34,910 --> 00:01:37,610 Speaker 1: And it's particularly hard to get an advisor if you're 25 00:01:37,630 --> 00:01:40,840 Speaker 1: not a multimillionaire. And I mean multimillionaire. That means you 26 00:01:40,860 --> 00:01:44,020 Speaker 1: have a million or so to spend. I don't mean 27 00:01:44,040 --> 00:01:45,780 Speaker 1: your house is worth a million. I mean you have 28 00:01:45,800 --> 00:01:49,480 Speaker 1: a million in the bank, ready to go in any direction. 29 00:01:50,120 --> 00:01:52,390 Speaker 1: So I wanted to talk to someone who really has 30 00:01:52,440 --> 00:01:55,450 Speaker 1: an overview on this, who does work at the top 31 00:01:55,490 --> 00:01:59,310 Speaker 1: of the market, but also has a helicopter view, if 32 00:01:59,350 --> 00:02:02,059 Speaker 1: you like, on the whole scene. It's someone I've had 33 00:02:02,120 --> 00:02:04,940 Speaker 1: on the show before. She's terrific to talk to. It's 34 00:02:05,060 --> 00:02:06,540 Speaker 1: Jackie Clark. How are you, Jackie? 35 00:02:06,980 --> 00:02:08,859 Speaker 2: Great, James. Wonderful to be back today. 36 00:02:09,740 --> 00:02:12,079 Speaker 1: Great to have you on board. We haven't talked for 37 00:02:12,100 --> 00:02:14,380 Speaker 1: a while, but one of the things that's happened, I think, 38 00:02:14,720 --> 00:02:19,090 Speaker 1: since we talked last, is this issue about the role 39 00:02:19,150 --> 00:02:23,090 Speaker 1: of an advisor. And there's been some big changes. And 40 00:02:23,110 --> 00:02:26,830 Speaker 1: one of the things that prompted this particular show and 41 00:02:26,870 --> 00:02:29,329 Speaker 1: the topic of this show is that I had come 42 00:02:29,430 --> 00:02:32,870 Speaker 1: upon something a few months ago, which seemed innocuous in 43 00:02:32,930 --> 00:02:35,790 Speaker 1: and of itself. And this was two advisors. It was 44 00:02:36,210 --> 00:02:39,130 Speaker 1: an industry note. And the industry note said, hey, guys, 45 00:02:39,570 --> 00:02:44,070 Speaker 1: the average advisor in Australia, they've dropped the number of 46 00:02:44,290 --> 00:02:48,880 Speaker 1: clients they have from 120 per person to about 99. 47 00:02:48,880 --> 00:02:50,910 Speaker 1: And it struck me, hey, hang on a second. That 48 00:02:50,960 --> 00:02:54,299 Speaker 1: means about one in six clients have been dropped, have 49 00:02:54,320 --> 00:02:58,959 Speaker 1: been dropped by their advisor. And I did some work 50 00:02:59,060 --> 00:03:00,860 Speaker 1: on it and it did get quite a lot of 51 00:03:00,940 --> 00:03:05,359 Speaker 1: attention because people were already aware that the advisory population 52 00:03:05,400 --> 00:03:07,510 Speaker 1: has been halved, if you like. And then on top 53 00:03:07,550 --> 00:03:11,090 Speaker 1: of that, those who are left are slicing their books back, 54 00:03:11,590 --> 00:03:17,480 Speaker 1: which means it's becoming very difficult. I want to ask you, 55 00:03:17,490 --> 00:03:21,389 Speaker 1: is that a reflection of what's happening now? I was 56 00:03:21,410 --> 00:03:23,630 Speaker 1: going to say, is it fair? But it's an unfair question. 57 00:03:24,210 --> 00:03:27,050 Speaker 1: But is it happening? Tell me, is it happening? Am 58 00:03:27,130 --> 00:03:29,520 Speaker 1: I exaggerating? And why? 59 00:03:29,540 --> 00:03:34,079 Speaker 2: Now, look, James, it's a great point that you raise. 60 00:03:34,300 --> 00:03:38,400 Speaker 2: There's a genuine scarcity of advisors, particularly for what we 61 00:03:38,440 --> 00:03:41,750 Speaker 2: consider the mum and dad population of Australia, those people 62 00:03:41,810 --> 00:03:45,250 Speaker 2: who actually might be paying that $ 5, 000 or $ 10, 000 a year. 63 00:03:45,970 --> 00:03:48,830 Speaker 2: It's actually quite frightening because the There's two sides to 64 00:03:48,850 --> 00:03:53,650 Speaker 2: this coin. Obviously, the cost of advice has become increasingly difficult. 65 00:03:54,010 --> 00:03:56,170 Speaker 2: So if you think of all the layers of regulation, 66 00:03:56,250 --> 00:04:00,250 Speaker 2: particularly over the last decade, are seeing advisors drop like flies. 67 00:04:00,830 --> 00:04:04,120 Speaker 2: So the reality is that providing advice to mum and 68 00:04:04,130 --> 00:04:07,920 Speaker 2: dad is no longer commercially viable. So it makes absolute 69 00:04:07,980 --> 00:04:11,080 Speaker 2: sense to me that people are dropping out of the market. 70 00:04:11,260 --> 00:04:14,060 Speaker 2: And unless you're shifting from retail to wholesale, which is 71 00:04:14,120 --> 00:04:18,270 Speaker 2: a whole other world again... there is a distinct drop 72 00:04:18,730 --> 00:04:21,930 Speaker 2: in the availability of advisors who actually have the time 73 00:04:22,370 --> 00:04:25,240 Speaker 2: to deliver what's required just under the regulations. 74 00:04:26,380 --> 00:04:28,940 Speaker 1: And you say people are dropping, but really they're being 75 00:04:28,980 --> 00:04:32,099 Speaker 1: dropped rather than voluntarily leaving. 76 00:04:32,120 --> 00:04:34,740 Speaker 2: I think there's a combination of factors there, but it 77 00:04:34,800 --> 00:04:38,260 Speaker 2: is becoming increasingly different. I'm also seeing mergers happen again 78 00:04:38,320 --> 00:04:41,659 Speaker 2: where firms such as financial planners and insurance brokers are 79 00:04:41,700 --> 00:04:45,279 Speaker 2: all coming back together to try and get some benefit 80 00:04:45,320 --> 00:04:47,280 Speaker 2: of the economies of scale, if you like, of a 81 00:04:47,300 --> 00:04:50,460 Speaker 2: total business and access to perhaps a greater variety of 82 00:04:50,520 --> 00:04:54,250 Speaker 2: clients who might exceed that minimum threshold somehow in the 83 00:04:54,290 --> 00:04:55,110 Speaker 2: retail space? 84 00:04:55,790 --> 00:04:58,430 Speaker 1: I know it's a brutal question, but I said at 85 00:04:58,450 --> 00:05:00,430 Speaker 1: the start, you want to have a million dollars or whatever. 86 00:05:00,450 --> 00:05:03,289 Speaker 1: I'll tell you a story. I was in, I was 87 00:05:03,350 --> 00:05:06,050 Speaker 1: somewhere the other day, and you know, I often get pinned, 88 00:05:07,420 --> 00:05:10,400 Speaker 1: as you probably get pinned. And someone said to me, 89 00:05:10,520 --> 00:05:14,160 Speaker 1: I've got And I think it was like $ 25, 000. And 90 00:05:14,200 --> 00:05:17,310 Speaker 1: they said, I've got $ 25, 000. I can't remember whether they 91 00:05:17,370 --> 00:05:20,070 Speaker 1: inherited it or something. And they said, could you recommend 92 00:05:20,110 --> 00:05:26,990 Speaker 1: a financial advisor? And I hate doing this. But I said, look, 93 00:05:27,630 --> 00:05:29,400 Speaker 1: I don't think you should go to a financial advisor. 94 00:05:29,960 --> 00:05:31,890 Speaker 1: Not that you shouldn't go, but I don't think you. 95 00:05:32,279 --> 00:05:34,080 Speaker 1: When you walk into a financial advisor, they're going to 96 00:05:34,100 --> 00:05:36,880 Speaker 1: look at you and they're going to say, $ 25, 000. Jesus Christ, 97 00:05:37,060 --> 00:05:39,300 Speaker 1: I'm wasting my time. I need to make $ 5, 000 from 98 00:05:39,320 --> 00:05:39,660 Speaker 1: this person. 99 00:05:42,110 --> 00:05:44,450 Speaker 2: Yeah, and I'm going to spend $ 5, 000 of my time 100 00:05:44,510 --> 00:05:47,410 Speaker 2: doing the compliance just to opt you in as a client, 101 00:05:47,710 --> 00:05:50,890 Speaker 2: which is the reality, unfortunately, that's been created as a 102 00:05:50,970 --> 00:05:54,770 Speaker 2: function of all this complexity, you could say. But the 103 00:05:54,830 --> 00:05:58,790 Speaker 2: other thing is, what do you get for $ 5, 000 a year, James? 104 00:05:59,550 --> 00:06:02,599 Speaker 2: And I think the reality is today, what advisors can 105 00:06:02,640 --> 00:06:05,659 Speaker 2: offer you is not much for that. Especially, I think, 106 00:06:05,720 --> 00:06:09,910 Speaker 2: since the reforms suggested that As advisors, you have to 107 00:06:09,950 --> 00:06:13,350 Speaker 2: get your clients to opt in every year. So whilst 108 00:06:13,390 --> 00:06:16,180 Speaker 2: we can no longer roll as a retail customer every year, 109 00:06:16,200 --> 00:06:18,740 Speaker 2: we have to opt in. That's more compliance and more 110 00:06:18,800 --> 00:06:22,960 Speaker 2: paperwork and administration. So if you're getting an annual review 111 00:06:23,040 --> 00:06:26,190 Speaker 2: and a chat, that's probably all your money is buying you, 112 00:06:26,370 --> 00:06:31,010 Speaker 2: which is incredibly disappointing. Yes. But I'm not saying that 113 00:06:31,050 --> 00:06:33,409 Speaker 2: about the advisors. They're trying to do a job, but 114 00:06:33,490 --> 00:06:36,970 Speaker 2: in an environment that's very constrained. And bang for your buck, right? 115 00:06:37,270 --> 00:06:40,490 Speaker 2: If you've got $ 25, 000 or, quite frankly, a million, does 116 00:06:40,529 --> 00:06:42,210 Speaker 2: it make sense for you to pay that every year? 117 00:06:42,810 --> 00:06:43,450 Speaker 2: I don't think so. 118 00:06:43,529 --> 00:06:45,810 Speaker 1: Well, you want to be making a fair bit for 119 00:06:45,990 --> 00:06:49,530 Speaker 1: it to be worth $ 5, 000 a year, right? Because you're 120 00:06:49,550 --> 00:06:51,890 Speaker 1: going to have to subtract the $ 5, 000 from whatever you make. 121 00:06:53,029 --> 00:06:55,890 Speaker 2: If you make 10% and you pay the tax, you 122 00:06:55,910 --> 00:06:56,830 Speaker 2: get where this is going. 123 00:06:57,230 --> 00:07:01,990 Speaker 1: Yeah, nowhere. So before we go into wholesale retail, I 124 00:07:02,029 --> 00:07:04,890 Speaker 1: know it's hard, but what's the number then? What's the 125 00:07:05,050 --> 00:07:08,770 Speaker 1: number that you think that the average financial advisor in 126 00:07:08,810 --> 00:07:11,679 Speaker 1: Australia wants to hear when you go in to talk 127 00:07:11,740 --> 00:07:14,380 Speaker 1: to them, excluding the value of your home? 128 00:07:15,940 --> 00:07:19,980 Speaker 2: Well, they want to know that they're investing at least 129 00:07:19,980 --> 00:07:21,260 Speaker 2: $ 1 million to $ 2 million. 130 00:07:21,380 --> 00:07:24,720 Speaker 1: That's a lot. That's a lot to have outside the 131 00:07:24,760 --> 00:07:27,520 Speaker 1: value of your home. Does that include your super, if 132 00:07:27,580 --> 00:07:28,930 Speaker 1: it was a self-managed super fund? 133 00:07:28,970 --> 00:07:32,570 Speaker 2: I would say, well, as a financial advisor, it would 134 00:07:32,610 --> 00:07:33,570 Speaker 2: include your super. 135 00:07:33,850 --> 00:07:38,020 Speaker 1: And obviously a self-managed super fund then. But you would 136 00:07:38,060 --> 00:07:40,280 Speaker 1: have to go in with the view that self-managed super 137 00:07:40,320 --> 00:07:43,800 Speaker 1: fund is open. to change. There's no point in going 138 00:07:43,900 --> 00:07:45,600 Speaker 1: to the advisor and saying, hey, listen, I like what 139 00:07:45,620 --> 00:07:48,460 Speaker 1: I'm doing. I've got it all lovely, diversified. I just 140 00:07:48,500 --> 00:07:50,300 Speaker 1: want to know what do you think about it? That's 141 00:07:50,340 --> 00:07:50,600 Speaker 1: kind of. 142 00:07:51,040 --> 00:07:53,830 Speaker 2: Which goes a little bit full circle to possibly you 143 00:07:53,890 --> 00:07:55,650 Speaker 2: and I are in a very similar boat. I would 144 00:07:55,670 --> 00:07:58,590 Speaker 2: get asked every week at least once for a referral 145 00:07:58,630 --> 00:08:01,820 Speaker 2: to a financial planner. And I go let's go 10 146 00:08:01,820 --> 00:08:04,800 Speaker 2: steps back let's actually have a look at back to 147 00:08:04,820 --> 00:08:07,560 Speaker 2: the basics what are you actually saving do you understand 148 00:08:07,600 --> 00:08:10,450 Speaker 2: what your costs are and work out whether there is 149 00:08:10,490 --> 00:08:13,250 Speaker 2: a true sort of savings investment strategy that you've put 150 00:08:13,310 --> 00:08:16,650 Speaker 2: in place before we then start engaging and paying somebody 151 00:08:16,690 --> 00:08:19,380 Speaker 2: to actually take us on that next journey around taking 152 00:08:19,460 --> 00:08:23,430 Speaker 2: our hard-earned cash and putting it into an investment that 153 00:08:23,470 --> 00:08:25,620 Speaker 2: they then will charge you commission for their time. 154 00:08:25,750 --> 00:08:31,340 Speaker 1: We've kicked off on a fairly sober note. Is there 155 00:08:31,420 --> 00:08:36,760 Speaker 1: circumstances where you can have less than that? And it 156 00:08:36,800 --> 00:08:39,640 Speaker 1: makes sense. I'm thinking in terms of the traditional argument 157 00:08:39,679 --> 00:08:43,150 Speaker 1: that you don't want to make mistakes at the start. 158 00:08:43,530 --> 00:08:45,250 Speaker 1: You don't want to go on the wrong track. You 159 00:08:45,290 --> 00:08:48,709 Speaker 1: don't want to make huge structural mistakes where you then 160 00:08:48,750 --> 00:08:51,620 Speaker 1: work for 20 years and realize, damn, I should have 161 00:08:51,640 --> 00:08:54,929 Speaker 1: had some advice 20 years ago. I'll give you an example. 162 00:08:55,270 --> 00:08:58,270 Speaker 1: Once upon a time, I was involved in a startup company. 163 00:08:59,170 --> 00:09:02,829 Speaker 1: And in the end, we were 10 years in this 164 00:09:02,870 --> 00:09:05,350 Speaker 1: company and it was great and it was terrific and 165 00:09:05,370 --> 00:09:10,569 Speaker 1: we sold and we all did fairly well, depending on 166 00:09:10,630 --> 00:09:12,870 Speaker 1: how much stock you had, of course. And I was 167 00:09:12,890 --> 00:09:15,670 Speaker 1: a minor shareholder, but I didn't have it in a 168 00:09:15,730 --> 00:09:18,199 Speaker 1: family trust or anything like that. And then, of course, 169 00:09:18,240 --> 00:09:20,980 Speaker 1: I went to a planner because I finally had something 170 00:09:21,059 --> 00:09:23,320 Speaker 1: to plan with. And they said, you might have had 171 00:09:23,360 --> 00:09:26,400 Speaker 1: this in the family trust. And I thought like, yeah, 172 00:09:26,440 --> 00:09:30,500 Speaker 1: but when we started, I hadn't anything. And a family 173 00:09:30,520 --> 00:09:34,719 Speaker 1: trust would have been, it was outside my realm, if 174 00:09:34,760 --> 00:09:38,610 Speaker 1: you like, at the time because I was up to 175 00:09:38,640 --> 00:09:42,030 Speaker 1: my eyes on loans and mortgages and everything else. But 176 00:09:42,070 --> 00:09:45,030 Speaker 1: the irony is that's when you need the advice, not 177 00:09:45,050 --> 00:09:46,089 Speaker 1: when you've made the money. 178 00:09:46,330 --> 00:09:49,800 Speaker 2: Absolutely. Yeah. So there's that. And it's a really good point. 179 00:09:49,880 --> 00:09:52,420 Speaker 2: And you and I have talked about that experience before. 180 00:09:53,520 --> 00:09:57,690 Speaker 2: What you really want is very early on in life. 181 00:09:58,590 --> 00:10:01,260 Speaker 2: And you know, I've talked about the personal finance village, 182 00:10:01,300 --> 00:10:03,300 Speaker 2: and it doesn't need to be a lawyer and a 183 00:10:03,540 --> 00:10:07,140 Speaker 2: chartered accountant and a financial planner. It needs to be 184 00:10:07,160 --> 00:10:10,740 Speaker 2: a group of trusted individuals who have possibly or more 185 00:10:10,800 --> 00:10:14,350 Speaker 2: likely more knowledge than you, perhaps in that particular area 186 00:10:14,410 --> 00:10:16,950 Speaker 2: that you're contemplating, whether it might be how do I 187 00:10:16,990 --> 00:10:19,830 Speaker 2: structure a new investment in this startup I'm doing, you 188 00:10:19,850 --> 00:10:22,290 Speaker 2: want to be surrounded by people and talking to people 189 00:10:22,350 --> 00:10:24,970 Speaker 2: about these issues because some people hold back, right? You're 190 00:10:24,990 --> 00:10:27,170 Speaker 2: supposed to know this stuff when you're in business, but 191 00:10:27,210 --> 00:10:30,290 Speaker 2: the reality is we've got other things to focus on. 192 00:10:30,320 --> 00:10:33,079 Speaker 2: So sooner rather than later, and I suggest, sure, a 193 00:10:33,120 --> 00:10:35,880 Speaker 2: financial planner can help you, but there may be other 194 00:10:36,260 --> 00:10:39,740 Speaker 2: earlier entry points in your network of people that can 195 00:10:39,800 --> 00:10:42,000 Speaker 2: advise you. I have no doubt that there are. There's 196 00:10:42,200 --> 00:10:46,480 Speaker 2: many more trusted experienced mates or family who can at 197 00:10:46,520 --> 00:10:48,319 Speaker 2: least get you part of the way and perhaps in 198 00:10:48,360 --> 00:10:49,760 Speaker 2: your case might have got you to a point of 199 00:10:49,800 --> 00:10:52,740 Speaker 2: saying before you went into that startup or actually in 200 00:10:52,760 --> 00:10:56,189 Speaker 2: an early period in your investment you could have transitioned 201 00:10:56,929 --> 00:11:00,130 Speaker 2: your entry price or whatever sweat equity you had in 202 00:11:00,170 --> 00:11:02,950 Speaker 2: there to a different structure that could have been even 203 00:11:03,030 --> 00:11:04,850 Speaker 2: more benefit and now I've got my tax hat on 204 00:11:04,910 --> 00:11:07,030 Speaker 2: of course but could have even been more beneficial to 205 00:11:07,080 --> 00:11:09,780 Speaker 2: you down the track it didn't have to be day 206 00:11:09,800 --> 00:11:13,079 Speaker 2: one but fairly quickly you playing in the right circles, 207 00:11:13,120 --> 00:11:15,960 Speaker 2: you could have certainly had some further advice that would 208 00:11:15,980 --> 00:11:17,900 Speaker 2: have cost you less than today's financial plan. 209 00:11:17,920 --> 00:11:20,949 Speaker 1: Yes, as you say, there's no point going in. There's 210 00:11:20,990 --> 00:11:26,350 Speaker 1: no point going in too late. I remember saying, well, 211 00:11:26,390 --> 00:11:28,170 Speaker 1: maybe I'll open one now. I was like, it's too 212 00:11:28,210 --> 00:11:30,480 Speaker 1: late now. All right. Okay, look, we're going to take 213 00:11:30,500 --> 00:11:32,660 Speaker 1: a short break. I really want to get into some 214 00:11:32,700 --> 00:11:35,699 Speaker 1: of the issues that we've talked before the show started. 215 00:11:36,000 --> 00:11:59,160 Speaker 1: We'll be back in a moment. Hello, and welcome back 216 00:11:59,200 --> 00:12:02,960 Speaker 1: to the Australian's Money Puzzle podcast. I'm James Kirby, and 217 00:12:02,980 --> 00:12:06,200 Speaker 1: I'm talking to Jackie Clark. And Jackie, I should have said, 218 00:12:06,760 --> 00:12:11,059 Speaker 1: your operation. I know you're, explain to our listeners. I 219 00:12:11,100 --> 00:12:13,360 Speaker 1: know you're very good, but they need to know. You're 220 00:12:13,380 --> 00:12:17,320 Speaker 1: an author, but also you're, it's hard to repin it, right? 221 00:12:17,340 --> 00:12:19,080 Speaker 1: Because you are a consultant, you're a board member, you're 222 00:12:19,100 --> 00:12:22,040 Speaker 1: an advisor to a family office. How do you describe yourself? 223 00:12:22,110 --> 00:12:23,000 Speaker 1: What's your elevator pitch? 224 00:12:24,740 --> 00:12:28,890 Speaker 2: Well, actually, I don't have one specifically. I have a 225 00:12:29,030 --> 00:12:32,890 Speaker 2: portfolio career. No, I obviously spent 20, almost 30 years 226 00:12:32,929 --> 00:12:36,580 Speaker 2: at Deloitte and then transitioned out, James. So a support 227 00:12:36,630 --> 00:12:39,239 Speaker 2: and accounting practice that I ran with a couple of 228 00:12:39,500 --> 00:12:42,880 Speaker 2: my former colleagues and, yes, consult to a number of 229 00:12:42,920 --> 00:12:45,740 Speaker 2: families and, yes, became an author and spending quite a 230 00:12:45,740 --> 00:12:49,030 Speaker 2: bit of time in the money space actually helping people 231 00:12:49,590 --> 00:12:50,170 Speaker 2: because I love it. 232 00:12:50,880 --> 00:12:52,220 Speaker 1: Might as well allow you to have a plug for 233 00:12:52,250 --> 00:12:53,960 Speaker 1: your book, which is still out there. 234 00:12:53,980 --> 00:12:57,480 Speaker 2: What's it called? Stop Worrying About Money. Only available on 235 00:12:57,559 --> 00:13:00,620 Speaker 2: Amazon these days and in great bookstores because. 236 00:13:00,140 --> 00:13:04,320 Speaker 1: Of book type sale. Stop Worrying About Money. And you 237 00:13:04,340 --> 00:13:07,819 Speaker 1: can get Jackie Clark's book out there if you'd like 238 00:13:07,860 --> 00:13:11,579 Speaker 1: to develop further what we're talking about here today. Oh, yes. Now, 239 00:13:11,660 --> 00:13:14,900 Speaker 1: just before we go into that whole issue about sophisticated 240 00:13:14,980 --> 00:13:18,000 Speaker 1: or retail, wholesale and etc., which is a breakthrough perhaps 241 00:13:18,100 --> 00:13:20,320 Speaker 1: for some listeners. or could be, I want to ask 242 00:13:20,340 --> 00:13:22,980 Speaker 1: you one other thing, because you're very experienced in this space. 243 00:13:23,660 --> 00:13:30,770 Speaker 1: The hope, the only hope, of everyday financial advice, available 244 00:13:30,850 --> 00:13:34,689 Speaker 1: perhaps easily enough that doesn't cost an arm and an egg, 245 00:13:35,090 --> 00:13:38,750 Speaker 1: will come, and there are plans afoot, to get it 246 00:13:38,809 --> 00:13:41,790 Speaker 1: from the big superannuation funds. And the big funds, by 247 00:13:41,809 --> 00:13:43,910 Speaker 1: the way, some of them, are where I think it 248 00:13:44,030 --> 00:13:48,230 Speaker 1: is Australian Super and ART They have teams, they are 249 00:13:48,390 --> 00:13:51,810 Speaker 1: getting ready and the minister basically getting, the minister will 250 00:13:51,830 --> 00:13:54,190 Speaker 1: sign it off sooner or later and the big super 251 00:13:54,230 --> 00:13:56,620 Speaker 1: funds will be able to give much more financial advice 252 00:13:56,650 --> 00:14:01,440 Speaker 1: than they do currently. Would you welcome them in? Do 253 00:14:01,480 --> 00:14:04,360 Speaker 1: you think that will be good or flawed? 254 00:14:05,100 --> 00:14:08,220 Speaker 2: It's a great question again. My answer is yes with 255 00:14:08,280 --> 00:14:11,600 Speaker 2: a very big but. And the but is that it's 256 00:14:12,200 --> 00:14:15,719 Speaker 2: conflicted advice. So I've already seen this at play In fact, 257 00:14:15,780 --> 00:14:19,090 Speaker 2: a family member recently was doing their June contribution. I said, 258 00:14:19,140 --> 00:14:21,230 Speaker 2: why don't you just give them a call, ask for 259 00:14:21,260 --> 00:14:23,750 Speaker 2: the advice to get that right. Husband was getting close 260 00:14:23,830 --> 00:14:26,870 Speaker 2: to what was 59 or 60. It was a really 261 00:14:26,890 --> 00:14:28,190 Speaker 2: good time to have a chat with them. So I 262 00:14:28,210 --> 00:14:30,890 Speaker 2: think there's absolutely a role for Big Super, but the 263 00:14:30,950 --> 00:14:33,930 Speaker 2: conflict is a real problem. And the other thing is, 264 00:14:33,970 --> 00:14:36,290 Speaker 2: is this going to boil down in time to some 265 00:14:36,390 --> 00:14:39,870 Speaker 2: call center type of vibe? It's hard to say, but 266 00:14:39,950 --> 00:14:42,980 Speaker 2: the reality is it's a very complex area. There is 267 00:14:43,010 --> 00:14:47,540 Speaker 2: a strong shortage of good technical superannuation advisors in particular, 268 00:14:48,060 --> 00:14:49,780 Speaker 2: but there's definitely a role for it. And I can 269 00:14:49,840 --> 00:14:54,530 Speaker 2: see at an entry point, phone call troubleshooting level, it 270 00:14:54,550 --> 00:14:55,610 Speaker 2: can be quite valuable. 271 00:14:56,170 --> 00:14:59,570 Speaker 1: They're talking about a very obscure term for it, non-relevant 272 00:14:59,610 --> 00:15:03,210 Speaker 1: advisors was the original thing. Then they talked about qualified advisors. 273 00:15:03,230 --> 00:15:05,560 Speaker 1: They'll come up with something else. But sooner or later, 274 00:15:05,600 --> 00:15:08,420 Speaker 1: they will have this sort of army of advisors. What 275 00:15:08,440 --> 00:15:10,780 Speaker 1: I want to ask you is articulate, if you would, 276 00:15:11,260 --> 00:15:13,780 Speaker 1: to everyone listening, what you mean by conflict of interest. 277 00:15:14,120 --> 00:15:17,710 Speaker 2: Yeah, it's really straightforward. If you've got half a million 278 00:15:17,730 --> 00:15:21,490 Speaker 2: dollars of your superannuation invested with that big industry fund 279 00:15:21,970 --> 00:15:24,710 Speaker 2: and their recommendation is, well, you should stay with us 280 00:15:24,770 --> 00:15:28,230 Speaker 2: and here's an additional product. Or you could change the 281 00:15:28,290 --> 00:15:31,850 Speaker 2: mix of your superannuation investment, possibly putting a member into 282 00:15:31,910 --> 00:15:35,110 Speaker 2: a more growth fund versus balanced or a yield, depending 283 00:15:35,150 --> 00:15:37,950 Speaker 2: on what path they're taking, all of which could generate 284 00:15:38,330 --> 00:15:41,850 Speaker 2: substantial revenue back to the super fund. So it's a 285 00:15:41,910 --> 00:15:45,240 Speaker 2: mega conflict. It's something that other advisors, it's very difficult 286 00:15:45,250 --> 00:15:45,740 Speaker 2: for them to do. 287 00:15:45,750 --> 00:15:50,380 Speaker 1: To put it another way, that fund will never say, 288 00:15:50,780 --> 00:15:51,800 Speaker 1: take your money out of the fund. 289 00:15:52,540 --> 00:15:53,200 Speaker 2: Precisely. 290 00:15:53,860 --> 00:15:54,400 Speaker 1: Precisely. 291 00:15:54,860 --> 00:15:59,490 Speaker 2: And actually, you sound like somebody who would be better 292 00:15:59,550 --> 00:16:02,050 Speaker 2: off X or Y, or maybe a self-managed super fund 293 00:16:02,150 --> 00:16:04,410 Speaker 2: is ideal for you now that you've reached this particular 294 00:16:04,470 --> 00:16:07,510 Speaker 2: level in your investment experience. They're not going to say that. 295 00:16:08,130 --> 00:16:10,050 Speaker 2: So there's things that will be left off the table 296 00:16:10,470 --> 00:16:13,860 Speaker 2: or that remain unsaid that you need to hear. And 297 00:16:13,890 --> 00:16:16,760 Speaker 2: that's again where it's not independent. 298 00:16:16,820 --> 00:16:19,580 Speaker 1: Yeah. But isn't there always an element of that? An 299 00:16:19,620 --> 00:16:21,820 Speaker 1: advisor will never say, hey, I'll tell you what, I've 300 00:16:21,840 --> 00:16:24,210 Speaker 1: just charged you $ 5, 000. And you know what? I think 301 00:16:24,230 --> 00:16:28,050 Speaker 1: you should do nothing. Would an advisor ever say that? 302 00:16:28,490 --> 00:16:32,420 Speaker 2: I'd like to think that before they sat down maybe 303 00:16:32,440 --> 00:16:35,340 Speaker 2: for the first coffee that they said, maybe we're not 304 00:16:35,400 --> 00:16:38,380 Speaker 2: right for you because of X, Y or Z. Yes, yes. 305 00:16:38,680 --> 00:16:41,020 Speaker 1: And I suppose being honest, that's probably more likely to 306 00:16:41,040 --> 00:16:45,300 Speaker 1: happen these days because they are actively cutting their lists. 307 00:16:45,420 --> 00:16:48,970 Speaker 1: Maybe there's a positive dimension to this. Yes, okay. 308 00:16:49,770 --> 00:16:52,170 Speaker 2: The one other thing, James, just on that comment too, 309 00:16:52,190 --> 00:16:54,090 Speaker 2: I did want to mention one other thing to you 310 00:16:54,170 --> 00:16:58,370 Speaker 2: is to realise in this history of advisor relationships and 311 00:16:58,390 --> 00:17:01,790 Speaker 2: the transition, remember the big banks have got out of 312 00:17:01,870 --> 00:17:04,940 Speaker 2: or transitioned out of retail a long time ago. They 313 00:17:05,000 --> 00:17:07,660 Speaker 2: saw these waves. They felt the cost of this coming 314 00:17:07,700 --> 00:17:10,800 Speaker 2: pretty much since 2020, or since the Royal Commission. So 315 00:17:10,859 --> 00:17:13,790 Speaker 2: they're ahead of the pack, realising that this was happening. 316 00:17:14,510 --> 00:17:16,930 Speaker 1: One other thing I want to ask you also, just 317 00:17:17,010 --> 00:17:21,350 Speaker 1: on the same thing, is you deal with very wealthy investors. 318 00:17:21,630 --> 00:17:25,340 Speaker 1: One of the things I've been reading in recent times, 319 00:17:25,720 --> 00:17:29,830 Speaker 1: reading consistently recently, and I wonder if it's really true, 320 00:17:30,070 --> 00:17:34,420 Speaker 1: is that I'm led to believe that wealthy Australians are 321 00:17:34,740 --> 00:17:40,000 Speaker 1: shifting their portfolio and their money, not just shares, but 322 00:17:40,320 --> 00:17:45,639 Speaker 1: all activity more and more outside Australia offshore. Is that 323 00:17:45,680 --> 00:17:46,280 Speaker 1: your experience? 324 00:17:46,300 --> 00:17:49,770 Speaker 2: I've got a number of different experiences in that space. 325 00:17:49,920 --> 00:17:52,590 Speaker 2: What I would say is that with the wealthy families 326 00:17:52,650 --> 00:17:56,190 Speaker 2: I work with, they're always looking for business opportunities offshore. 327 00:17:56,570 --> 00:17:59,280 Speaker 2: So if we can park that, What I am seeing 328 00:17:59,340 --> 00:18:02,419 Speaker 2: perhaps with those that are more the investor style type, 329 00:18:02,540 --> 00:18:04,980 Speaker 2: post a sale event where there may be less in 330 00:18:05,020 --> 00:18:08,459 Speaker 2: their business and more as a wealthy investor, I'm definitely 331 00:18:08,500 --> 00:18:12,590 Speaker 2: seeing that diversification into things like international equities. Now people 332 00:18:12,609 --> 00:18:16,090 Speaker 2: aren't necessarily moving their money offshore, they're investing in funds 333 00:18:16,470 --> 00:18:18,850 Speaker 2: or other, have a direct access to some type of 334 00:18:18,890 --> 00:18:23,169 Speaker 2: international equity diversification. One of the things though that I 335 00:18:23,250 --> 00:18:26,360 Speaker 2: must caution people any of your listeners about, of course, 336 00:18:26,520 --> 00:18:29,619 Speaker 2: is the risk of inheritance tax offshore. So one of 337 00:18:29,640 --> 00:18:32,280 Speaker 2: the things I do see a lot is when my 338 00:18:32,320 --> 00:18:35,740 Speaker 2: clients go to help family members and send money offshore, 339 00:18:36,260 --> 00:18:38,919 Speaker 2: the risk of, particularly, let's just say the UK and 340 00:18:38,940 --> 00:18:42,179 Speaker 2: the US, where they have a really lively inheritance tax 341 00:18:42,260 --> 00:18:45,200 Speaker 2: or death tax, whatever you want to call it, in place, 342 00:18:45,240 --> 00:18:49,790 Speaker 2: there are multiple taxes that prevent, or certainly are ugly, 343 00:18:49,810 --> 00:18:52,840 Speaker 2: if you like, up to 40% tax on your death 344 00:18:52,920 --> 00:18:55,540 Speaker 2: if you've gifted money in a particular way or if 345 00:18:55,580 --> 00:18:58,180 Speaker 2: you've bought assets offshore. You want to be very careful 346 00:18:58,260 --> 00:19:01,659 Speaker 2: about your planning if you are sending money away. And 347 00:19:01,700 --> 00:19:04,650 Speaker 2: you just don't want it to fall into that other 348 00:19:04,690 --> 00:19:07,710 Speaker 2: tax net that brings that exposure to you or your family, 349 00:19:07,770 --> 00:19:11,310 Speaker 2: which unfortunately a lot of the case when people become 350 00:19:11,490 --> 00:19:14,109 Speaker 2: ultra wealthy, they tend to be older in Australia in 351 00:19:14,150 --> 00:19:16,490 Speaker 2: their 70s and 80s at a time where their demise 352 00:19:16,550 --> 00:19:20,150 Speaker 2: may be forthcoming and therefore the risks of inheritance tax 353 00:19:20,170 --> 00:19:22,200 Speaker 2: rise significantly. substantially. 354 00:19:23,160 --> 00:19:25,719 Speaker 1: Ah, I suppose that's all around the world, but I'm 355 00:19:25,740 --> 00:19:29,530 Speaker 1: just trying to identify the depth of this risk. If I, 356 00:19:29,590 --> 00:19:34,109 Speaker 1: as an ordinary everyday investor, went and said, the U.S. 357 00:19:34,170 --> 00:19:37,770 Speaker 1: is really good, the U.S. market always beats the Australian 358 00:19:37,810 --> 00:19:41,350 Speaker 1: market again and again, year after year, I'm going to 359 00:19:41,410 --> 00:19:44,950 Speaker 1: just actually buy directly into the US. Instead of buying 360 00:19:45,170 --> 00:19:48,880 Speaker 1: Australian listed ETFs, I'm going to buy US listed ETFs. 361 00:19:48,960 --> 00:19:51,340 Speaker 1: I'm going to park it in there for 20 years. 362 00:19:51,900 --> 00:19:54,720 Speaker 1: That doesn't expose me to inheritance tax in the US, 363 00:19:54,760 --> 00:19:55,050 Speaker 1: does it? 364 00:19:55,980 --> 00:19:58,840 Speaker 2: I wouldn't be sure that it doesn't because of the 365 00:19:58,900 --> 00:20:02,919 Speaker 2: asset being domiciled over there. But you can actually take it. 366 00:20:02,920 --> 00:20:08,750 Speaker 2: So it's worthwhile, again, considering the domicile of that investment 367 00:20:08,770 --> 00:20:11,530 Speaker 2: itself first. So I'd be talking to somebody before I 368 00:20:12,070 --> 00:20:13,130 Speaker 2: went anywhere near that. 369 00:20:13,369 --> 00:20:17,470 Speaker 1: What if I use a local broker? Like I use ComSec, 370 00:20:17,490 --> 00:20:19,709 Speaker 1: but I put everything through... Same, same. Yeah. 371 00:20:19,990 --> 00:20:22,540 Speaker 2: Same. I think where the difference is getting access from 372 00:20:22,690 --> 00:20:26,140 Speaker 2: here through an advisor here, you might be actually accessing 373 00:20:26,180 --> 00:20:29,100 Speaker 2: those markets in any case without necessarily putting your foot 374 00:20:29,160 --> 00:20:31,620 Speaker 2: in there. So if you start to go offshore yourself 375 00:20:31,700 --> 00:20:37,200 Speaker 2: specifically directly into a share market, you're actually... connecting a 376 00:20:37,260 --> 00:20:40,320 Speaker 2: profile in a foreign country where they'll ask for all 377 00:20:40,359 --> 00:20:42,120 Speaker 2: sorts of numbers and things that you might not have 378 00:20:42,140 --> 00:20:44,420 Speaker 2: at that particular time, creating a profile. It's a bit 379 00:20:44,460 --> 00:20:47,640 Speaker 2: different to buying into a particular asset here that has 380 00:20:47,680 --> 00:20:50,720 Speaker 2: that exposure. And I think what I have seen quite 381 00:20:50,740 --> 00:20:52,700 Speaker 2: a shift in is, and to be fair, the Aussie 382 00:20:52,720 --> 00:20:57,790 Speaker 2: stocks have underperformed. So people are definitely looking beyond our 383 00:20:57,810 --> 00:20:59,510 Speaker 2: ASX 200 for investments. 384 00:21:00,290 --> 00:21:04,869 Speaker 1: Is it percolating down? Is middle Australia, the mass affluence, 385 00:21:04,990 --> 00:21:10,270 Speaker 1: starting to actively look and seek to invest offshore not 386 00:21:10,310 --> 00:21:15,270 Speaker 1: just shares but literally to shunt their wealth to other 387 00:21:15,410 --> 00:21:18,580 Speaker 1: jurisdictions because that's what i'm reading. 388 00:21:21,920 --> 00:21:25,100 Speaker 2: I think it would be limited because of the risks 389 00:21:25,320 --> 00:21:28,300 Speaker 2: that are inherent in doing that and i'm not talking 390 00:21:28,340 --> 00:21:30,740 Speaker 2: about from a return perspective i'm talking more from a 391 00:21:30,780 --> 00:21:34,890 Speaker 2: global tax exposure perspective And perhaps it's what you don't 392 00:21:34,930 --> 00:21:37,580 Speaker 2: know if you've got an advisor who's not actually qualified 393 00:21:37,700 --> 00:21:40,320 Speaker 2: to contemplate that. And I do see people set up 394 00:21:40,359 --> 00:21:42,899 Speaker 2: structures overseas all the time and come to me and 395 00:21:42,920 --> 00:21:45,460 Speaker 2: they're all very well organized from an Australian point of view, 396 00:21:45,480 --> 00:21:48,949 Speaker 2: but they haven't actually contemplated what this means in the UK. 397 00:21:49,030 --> 00:21:52,810 Speaker 2: And I'm often looking at the end of life where 398 00:21:52,869 --> 00:21:54,970 Speaker 2: it comes back to bite you when you're no longer 399 00:21:54,990 --> 00:21:57,189 Speaker 2: here is what do we do with that asset now 400 00:21:57,210 --> 00:21:57,840 Speaker 2: that you're gone? 401 00:21:57,859 --> 00:22:01,470 Speaker 1: What do we do with that asset? what do others 402 00:22:01,510 --> 00:22:03,389 Speaker 1: do with that asset now that you're gone? All right, 403 00:22:03,410 --> 00:22:14,960 Speaker 1: we'll take a short break. Back in a moment. Hello 404 00:22:15,020 --> 00:22:17,719 Speaker 1: and welcome back to the Australian's Money Puzzle podcast. I'm 405 00:22:17,760 --> 00:22:22,330 Speaker 1: James Kirby talking to Jackie Clark. Now, Jackie is an 406 00:22:22,390 --> 00:22:25,650 Speaker 1: advisor and author and we've been talking, in a way, 407 00:22:25,730 --> 00:22:28,770 Speaker 1: we're talking big picture here, something we should do more often. 408 00:22:29,320 --> 00:22:31,420 Speaker 1: And the issue that we're always talking about on the show, 409 00:22:31,460 --> 00:22:33,500 Speaker 1: but we never really stand back and examine it, which 410 00:22:33,560 --> 00:22:37,260 Speaker 1: is about financial advice. How does it work? What do 411 00:22:37,280 --> 00:22:40,179 Speaker 1: they want from you? What are the realities when you 412 00:22:40,220 --> 00:22:42,239 Speaker 1: go looking for an advisor? First of all, when you 413 00:22:42,359 --> 00:22:44,840 Speaker 1: find one, how much do you have to pay? And 414 00:22:44,940 --> 00:22:47,719 Speaker 1: is it worth paying that $ 5, 000 a year? And what 415 00:22:47,740 --> 00:22:50,840 Speaker 1: should you expect? Now, I want to explain something that 416 00:22:51,060 --> 00:22:52,720 Speaker 1: Jackie brought up at the start of the show, which 417 00:22:52,790 --> 00:22:57,100 Speaker 1: is really interesting. There's two layers to financial advice in Australia. 418 00:22:57,119 --> 00:22:59,020 Speaker 1: And when we're talking about it and when you read 419 00:22:59,060 --> 00:23:01,580 Speaker 1: about it, it's mostly about mom and dad, right? It's 420 00:23:01,619 --> 00:23:04,280 Speaker 1: mostly about the general person and all the issues they 421 00:23:04,320 --> 00:23:07,540 Speaker 1: have with financial advice. The problem that the advisor has 422 00:23:07,740 --> 00:23:11,440 Speaker 1: with the average investor is that that person is classified 423 00:23:11,510 --> 00:23:15,950 Speaker 1: as retail. Because they're classified as retail, there is a 424 00:23:16,950 --> 00:23:21,489 Speaker 1: zillion parts of regulation that they must satisfy to satisfy 425 00:23:21,550 --> 00:23:24,990 Speaker 1: the regulators that they're doing the right thing. Now, you 426 00:23:25,030 --> 00:23:29,770 Speaker 1: don't have to go through all that, and not everyone does, 427 00:23:30,390 --> 00:23:36,490 Speaker 1: because you can qualify as a wholesale investor or what 428 00:23:36,530 --> 00:23:41,530 Speaker 1: they call a sophisticated investor. Advisors love sophisticated investors because 429 00:23:41,550 --> 00:23:45,090 Speaker 1: they don't have to do the paperwork, and it means 430 00:23:45,130 --> 00:23:47,280 Speaker 1: they have more money, but almost as much it means 431 00:23:47,300 --> 00:23:49,879 Speaker 1: they don't have to do as much paperwork. So, Jackie, 432 00:23:49,900 --> 00:23:52,080 Speaker 1: first of all, let's tell people what is the legal 433 00:23:52,100 --> 00:23:56,950 Speaker 1: definition of a Sophisticated investor. So money-wise, you need to 434 00:23:56,990 --> 00:24:04,600 Speaker 1: have either $ 2. 5 million in assets. Of net assets. Of 435 00:24:04,619 --> 00:24:08,520 Speaker 1: net assets. Now, does it actually exclude your family home legally? 436 00:24:09,720 --> 00:24:10,000 Speaker 2: No. 437 00:24:10,920 --> 00:24:13,379 Speaker 1: No, it doesn't. I mean, it should, right? But it doesn't. Okay. 438 00:24:13,800 --> 00:24:16,659 Speaker 1: So there you are. Everybody in Sydney is halfway there already. 439 00:24:18,020 --> 00:24:19,640 Speaker 1: On the average price. 440 00:24:20,100 --> 00:24:23,820 Speaker 2: You forgot about the mortgage that most... Oh, the. 441 00:24:23,400 --> 00:24:25,960 Speaker 1: Mortgage is subtracted. The mortgage is subtracted. 442 00:24:26,010 --> 00:24:26,200 Speaker 2: Yeah. 443 00:24:26,330 --> 00:24:28,689 Speaker 1: Oh, fair enough. So there's two criteria, two ways of 444 00:24:28,750 --> 00:24:32,030 Speaker 1: getting into this category. Two and a half million in assets. 445 00:24:32,070 --> 00:24:34,570 Speaker 1: That could include your house, but it must be minus 446 00:24:34,590 --> 00:24:38,389 Speaker 1: your debts. Okay. Keep that in mind. Jackie, if you 447 00:24:38,410 --> 00:24:41,830 Speaker 1: have a self-managed super fund, that's entirely included, right? 448 00:24:41,850 --> 00:24:43,409 Speaker 2: Taken into consideration. 449 00:24:43,820 --> 00:24:45,700 Speaker 1: So that might be the way that most people would 450 00:24:45,720 --> 00:24:49,600 Speaker 1: get in. Alternatively, and I imagine for many people listening 451 00:24:49,619 --> 00:24:52,639 Speaker 1: to this show, this is much, much more important. If 452 00:24:52,700 --> 00:24:56,930 Speaker 1: you earn 250 grand a year or more, you're also 453 00:24:57,190 --> 00:24:59,970 Speaker 1: able to satisfy this. That doesn't mean your salary doesn't 454 00:25:00,010 --> 00:25:02,610 Speaker 1: have to be 250 grand, by the way. If you 455 00:25:02,830 --> 00:25:07,879 Speaker 1: earn it, right? So if you have 200 but you 456 00:25:07,900 --> 00:25:10,619 Speaker 1: make 50 from something else, it doesn't matter what it is. 457 00:25:10,800 --> 00:25:12,800 Speaker 1: If you had an investment property or whatever, that gets 458 00:25:12,820 --> 00:25:15,120 Speaker 1: you over the line as well. So it doesn't matter 459 00:25:15,160 --> 00:25:16,960 Speaker 1: where the income comes from as long as you get 460 00:25:17,040 --> 00:25:19,090 Speaker 1: over this. As long as you can get an accountant 461 00:25:19,140 --> 00:25:21,410 Speaker 1: to tick the box that says you made 250 grand 462 00:25:21,450 --> 00:25:24,830 Speaker 1: in the last two years. So they're the two ways in. Now, 463 00:25:25,790 --> 00:25:29,560 Speaker 1: it's not quite nirvana when you get past that point, 464 00:25:29,890 --> 00:25:32,700 Speaker 1: but tell us how it is very different. 465 00:25:33,400 --> 00:25:36,379 Speaker 2: It's a really good conversation to have because some people 466 00:25:36,440 --> 00:25:40,180 Speaker 2: might not realize that they satisfy the wholesale test. You 467 00:25:40,220 --> 00:25:45,390 Speaker 2: have just an access to a much more vast network 468 00:25:45,450 --> 00:25:50,240 Speaker 2: of advisors who are perhaps more qualified to and understand 469 00:25:50,480 --> 00:25:54,100 Speaker 2: certainly a greater diversity of assets and opportunities for you. 470 00:25:54,200 --> 00:25:57,680 Speaker 2: Plus a lot of them aren't cookie cutter either. So 471 00:25:57,720 --> 00:26:00,040 Speaker 2: rather than having what every mum and dad has in 472 00:26:00,080 --> 00:26:03,310 Speaker 2: the rest superannuation fund, you might find that you get 473 00:26:03,380 --> 00:26:06,970 Speaker 2: access to quite different investments and you can participate in 474 00:26:07,030 --> 00:26:10,110 Speaker 2: more things as a wholesale investor. So it's a bit 475 00:26:10,150 --> 00:26:14,130 Speaker 2: like being led into a new community, not a secret community. 476 00:26:14,190 --> 00:26:17,439 Speaker 2: It's one that's quite accessible to Australians now. You are 477 00:26:17,500 --> 00:26:20,260 Speaker 2: right too. I do find that there is still a 478 00:26:20,310 --> 00:26:23,810 Speaker 2: lot of admin. So the fees go up, the prices 479 00:26:23,850 --> 00:26:26,930 Speaker 2: go up, people charge you a percentage for managing your money. 480 00:26:27,510 --> 00:26:30,650 Speaker 2: It's perhaps a little bit different in some respects. 481 00:26:31,710 --> 00:26:33,330 Speaker 1: So it doesn't cut down the paperwork? 482 00:26:33,890 --> 00:26:36,310 Speaker 2: No, it doesn't really. I think it just cuts down 483 00:26:36,350 --> 00:26:39,300 Speaker 2: the barriers to entry, which is there are certain assumptions 484 00:26:39,359 --> 00:26:42,780 Speaker 2: made about you in the way our financial services regulations 485 00:26:42,900 --> 00:26:45,649 Speaker 2: are created and that mean that the advisor sort of 486 00:26:45,690 --> 00:26:47,970 Speaker 2: comes in at a higher point, that you're assumed to 487 00:26:48,030 --> 00:26:50,710 Speaker 2: have slightly higher knowledge as well. In fact, you're signing 488 00:26:50,790 --> 00:26:54,609 Speaker 2: away that you do have greater knowledge, as the term implies, 489 00:26:55,109 --> 00:26:56,570 Speaker 2: sophisticated investor. 490 00:26:57,609 --> 00:27:01,290 Speaker 1: And the harsh reality of it is, as I understand, 491 00:27:01,310 --> 00:27:04,720 Speaker 1: and we have the list, obviously, the top 100 financial 492 00:27:04,740 --> 00:27:07,139 Speaker 1: advisors list, which we publish every year, which, by the way, 493 00:27:07,300 --> 00:27:09,990 Speaker 1: is going to 150 this year. When it comes out 494 00:27:10,170 --> 00:27:14,710 Speaker 1: in November. And you'll see that they all have their minimum. 495 00:27:15,570 --> 00:27:18,040 Speaker 1: They will say there's a minimum. But as I understand, 496 00:27:18,200 --> 00:27:21,080 Speaker 1: many of them, especially at the upper end, they just 497 00:27:21,140 --> 00:27:24,700 Speaker 1: want sophisticated investors. They just don't want the complication. A 498 00:27:25,280 --> 00:27:27,619 Speaker 1: lot of advisors say, hey, let's make life easy for ourselves. 499 00:27:27,760 --> 00:27:32,440 Speaker 1: Let's just have wholesale investors, sophisticated investors. Is that what's 500 00:27:32,480 --> 00:27:32,840 Speaker 1: going on? 501 00:27:34,210 --> 00:27:36,550 Speaker 2: Yeah, that's actually a good point because what you'll find 502 00:27:36,690 --> 00:27:39,669 Speaker 2: is even though you get in the door, then they say, oh, 503 00:27:39,690 --> 00:27:43,440 Speaker 2: the minimum investment for this particular asset is. 504 00:27:43,320 --> 00:27:43,619 Speaker 1: $ 500, 000. 505 00:27:43,420 --> 00:27:48,140 Speaker 2: And some of them think a little bit more about networks. 506 00:27:48,160 --> 00:27:50,200 Speaker 2: So say, for example, if you're a lawyer in a 507 00:27:50,240 --> 00:27:52,380 Speaker 2: law firm and a couple of you get together, they 508 00:27:52,420 --> 00:27:54,770 Speaker 2: might take you on board as a client where you 509 00:27:54,790 --> 00:27:58,300 Speaker 2: all put $ 100, 000 in. But it's big licks then. I'm 510 00:27:58,359 --> 00:28:01,900 Speaker 2: in situations where you can do $ 10, 000 and $ 15, 000 investments 511 00:28:02,320 --> 00:28:06,600 Speaker 2: in a sophisticated investor relationship, but the total invested sum 512 00:28:06,680 --> 00:28:09,240 Speaker 2: is then half a million or a million and so on. 513 00:28:11,040 --> 00:28:14,740 Speaker 1: Explain, if you could, to listeners what it is they 514 00:28:14,780 --> 00:28:19,400 Speaker 1: could invest in that really is worth it to get 515 00:28:19,480 --> 00:28:22,520 Speaker 1: over the line as a sophisticated investor. 516 00:28:23,060 --> 00:28:23,440 Speaker 2: You mean? 517 00:28:23,520 --> 00:28:29,580 Speaker 1: By the way, I don't think it's IPOs. which they 518 00:28:29,600 --> 00:28:32,020 Speaker 1: seem to throw at you once you're qualified. 519 00:28:32,040 --> 00:28:36,300 Speaker 2: No, I think, James, to be honest, it's just, again, 520 00:28:36,320 --> 00:28:39,840 Speaker 2: it's dependent on their network. So who are they spending 521 00:28:39,920 --> 00:28:42,760 Speaker 2: time with? What's their investment committee look like? Because this 522 00:28:42,780 --> 00:28:46,180 Speaker 2: is the other thing. The size of these organisations, some 523 00:28:46,220 --> 00:28:48,570 Speaker 2: of them, we're not talking about J.P. Morgan, but we could, 524 00:28:49,190 --> 00:28:52,270 Speaker 2: But if you're talking about more private operators, they might 525 00:28:52,290 --> 00:28:56,030 Speaker 2: have an investment committee that puts particular investments through quite 526 00:28:56,110 --> 00:29:00,310 Speaker 2: a significant process to determine whether that's suitable for their clients, 527 00:29:00,350 --> 00:29:05,750 Speaker 2: of which you then have access. So there's nothing consistent, 528 00:29:05,830 --> 00:29:09,470 Speaker 2: I would suggest, about what stepping into the realms of 529 00:29:09,490 --> 00:29:14,700 Speaker 2: sophisticated or wholesale investing means you get access to particular 530 00:29:14,740 --> 00:29:15,880 Speaker 2: things you can't otherwise do. 531 00:29:16,620 --> 00:29:19,510 Speaker 1: You would think logically that the big mega brands, the 532 00:29:19,610 --> 00:29:24,610 Speaker 1: global names, Macquarie to that because they are a global bank, 533 00:29:24,690 --> 00:29:30,990 Speaker 1: they will sell themselves as having access to your top-notch 534 00:29:31,910 --> 00:29:35,050 Speaker 1: independent advisor who has 10 or 15 people on the staff. 535 00:29:36,130 --> 00:29:39,400 Speaker 1: They say, the big brands were saying those guys can't 536 00:29:39,420 --> 00:29:43,590 Speaker 1: compete with us because we've got this machine this global 537 00:29:43,630 --> 00:29:46,070 Speaker 1: machine is it is that true. 538 00:29:47,640 --> 00:29:51,590 Speaker 2: It is because they also create their own, they custom 539 00:29:51,640 --> 00:29:55,290 Speaker 2: their own investments with their own relationships and networks to 540 00:29:55,370 --> 00:29:58,190 Speaker 2: sort their own profit and loss and balance sheet out 541 00:29:58,270 --> 00:30:00,370 Speaker 2: and they give you the opportunity to join them in 542 00:30:01,890 --> 00:30:06,830 Speaker 2: that investment. And it can be very good. 543 00:30:06,850 --> 00:30:10,120 Speaker 1: Well, people often get minced in these big global firms 544 00:30:10,240 --> 00:30:12,480 Speaker 1: too just as fast as they get minced by the 545 00:30:12,560 --> 00:30:17,350 Speaker 1: inadequacies of an independent company. advisor who might have been 546 00:30:17,390 --> 00:30:19,650 Speaker 1: good when they were 35 but has got a bit 547 00:30:19,770 --> 00:30:23,710 Speaker 1: dopey or soft or just doesn't care anymore because their 548 00:30:23,800 --> 00:30:26,390 Speaker 1: career they've made loads and they don't whatever the issue 549 00:30:26,520 --> 00:30:30,000 Speaker 1: is how do you steer between those two you. 550 00:30:29,920 --> 00:30:31,700 Speaker 2: Can do what i do is i say i don't 551 00:30:31,720 --> 00:30:34,320 Speaker 2: want any product that you're in what else have. 552 00:30:34,260 --> 00:30:38,400 Speaker 1: You got to expand that a little bit i don't 553 00:30:38,580 --> 00:30:41,050 Speaker 1: quite understand what that means So. 554 00:30:40,950 --> 00:30:43,290 Speaker 2: If an advisor is presenting to you a number, let's 555 00:30:43,330 --> 00:30:46,140 Speaker 2: say they give you five to ten investment opportunities and 556 00:30:46,160 --> 00:30:48,760 Speaker 2: you say, which ones are you in? Which one is 557 00:30:48,800 --> 00:30:51,470 Speaker 2: the firm in? Which one is the firm participating in? 558 00:30:52,660 --> 00:30:56,350 Speaker 2: So you start to understand up the tree where– because 559 00:30:56,370 --> 00:30:58,890 Speaker 2: you also find that in the tiers of these things, 560 00:30:58,950 --> 00:31:01,670 Speaker 2: people get different pricing benefits, some of which you may 561 00:31:01,690 --> 00:31:05,250 Speaker 2: not anticipate in coming in as an entry-level wholesale investor. 562 00:31:05,310 --> 00:31:08,550 Speaker 2: So unfortunately, there's far too much complexity in all this 563 00:31:08,590 --> 00:31:13,620 Speaker 2: for the average Joe to understand anyway. You're relying. 564 00:31:13,860 --> 00:31:16,900 Speaker 1: Yeah, but you could still– anyone who thinks it through, 565 00:31:17,240 --> 00:31:20,550 Speaker 1: it's very similar to the broker who says– we've got 566 00:31:20,590 --> 00:31:23,920 Speaker 1: a really good IPO coming down the line, which we 567 00:31:23,940 --> 00:31:26,260 Speaker 1: happen to be putting to the market, which we happen 568 00:31:26,280 --> 00:31:28,940 Speaker 1: to be getting fees from. And you say, what are 569 00:31:29,280 --> 00:31:31,430 Speaker 1: any other IPOs that you're not involved in? It's the 570 00:31:31,450 --> 00:31:34,170 Speaker 1: same sort of thinking, right? Yeah, it is. 571 00:31:34,750 --> 00:31:38,040 Speaker 2: And sometimes you can decide that you back their decisions, 572 00:31:38,080 --> 00:31:41,310 Speaker 2: you back their research. We have to anyway as a client, 573 00:31:41,380 --> 00:31:43,730 Speaker 2: but there's other parts of their research you might decide 574 00:31:43,750 --> 00:31:46,890 Speaker 2: I'd rather remain, again, independent of that. What else have 575 00:31:46,930 --> 00:31:49,670 Speaker 2: you got? And a lot of firms will promote independent 576 00:31:49,710 --> 00:31:52,970 Speaker 2: investment opportunities for you. So it's just good to understand 577 00:31:53,110 --> 00:31:55,290 Speaker 2: what their approach to it is themselves. 578 00:31:55,910 --> 00:31:58,310 Speaker 1: I hope I've asked the right questions. I'm just wondering, 579 00:31:58,630 --> 00:32:04,650 Speaker 1: before we finish, you mentioned how you get pinned and caught, 580 00:32:05,390 --> 00:32:08,080 Speaker 1: and so do I all the time. I have an 581 00:32:08,120 --> 00:32:12,670 Speaker 1: easy answer. So someone says, if I feel that it's 582 00:32:12,810 --> 00:32:15,370 Speaker 1: not going to make sense, I do say to them, listen, 583 00:32:15,530 --> 00:32:17,230 Speaker 1: I don't think you should spend the money. I don't 584 00:32:17,250 --> 00:32:18,890 Speaker 1: think you'll get value out of it. If I think 585 00:32:18,930 --> 00:32:21,870 Speaker 1: they can, and they say, can you name an advisor? 586 00:32:21,890 --> 00:32:25,320 Speaker 1: I say, anyone on the advisors list we publish, or 587 00:32:25,560 --> 00:32:29,700 Speaker 1: any advisor who's been on my show, I think they're 588 00:32:29,820 --> 00:32:32,660 Speaker 1: good enough to talk to you. They're my two answers. 589 00:32:32,720 --> 00:32:34,660 Speaker 1: In terms of what you want to tell the listeners 590 00:32:34,720 --> 00:32:39,250 Speaker 1: about interacting with advisors, trying to find one, having one, 591 00:32:39,310 --> 00:32:41,930 Speaker 1: trying to manage the relationship. Is there anything you think 592 00:32:42,310 --> 00:32:44,590 Speaker 1: we haven't covered or haven't pointed out? 593 00:32:45,850 --> 00:32:49,330 Speaker 2: Actually, well, the thing that we have historically covered is, again, 594 00:32:49,410 --> 00:32:52,340 Speaker 2: making sure that you don't fall into the trap Melissa 595 00:32:52,360 --> 00:32:55,900 Speaker 2: Caddick's customers did. So go back, making sure that if 596 00:32:55,940 --> 00:32:58,880 Speaker 2: you are talking to somebody, they've got the right qualifications. 597 00:32:59,340 --> 00:33:03,020 Speaker 2: Really serious point. You'll find their names listed somewhere. You 598 00:33:03,040 --> 00:33:05,620 Speaker 2: want to make sure that they have the qualifications. I 599 00:33:05,640 --> 00:33:08,120 Speaker 2: think the most important thing too is your own preparation. 600 00:33:08,660 --> 00:33:11,460 Speaker 2: Like don't waste a financial advisor's time if you don't 601 00:33:11,500 --> 00:33:14,350 Speaker 2: have your own house in order, knowing what you spend 602 00:33:14,450 --> 00:33:17,310 Speaker 2: every month, what you've got saved, what you've got prepared 603 00:33:17,350 --> 00:33:21,210 Speaker 2: to reinvest. Don't waste their time because you're only wasting 604 00:33:21,230 --> 00:33:23,770 Speaker 2: your own time and money. This is a great opportunity 605 00:33:23,830 --> 00:33:26,959 Speaker 2: to develop your own financial literacy, not just in the 606 00:33:27,100 --> 00:33:31,080 Speaker 2: office of a financial advisor. Like do your own homework 607 00:33:31,140 --> 00:33:33,500 Speaker 2: and be prepared. And I think the last point is 608 00:33:34,220 --> 00:33:36,180 Speaker 2: It's never too late to start and you can start 609 00:33:36,220 --> 00:33:38,550 Speaker 2: as early as you like, but build your network up. 610 00:33:38,990 --> 00:33:45,550 Speaker 2: We don't invest with people that aren't qualified, obviously, but 611 00:33:45,630 --> 00:33:48,410 Speaker 2: you can certainly be talking to your network about understanding 612 00:33:48,430 --> 00:33:50,890 Speaker 2: and building again your literacy up about all these things 613 00:33:50,950 --> 00:33:53,380 Speaker 2: so that when you do eventually make the decision to 614 00:33:54,000 --> 00:33:56,380 Speaker 2: go into a financial advisor's office and you feel like 615 00:33:56,400 --> 00:33:59,780 Speaker 2: you're comfortable, you develop rapport with them, just whatever you do, 616 00:33:59,840 --> 00:34:02,250 Speaker 2: make sure they've got the right qualifications. And at the 617 00:34:02,290 --> 00:34:04,010 Speaker 2: same time, make sure you've got that rapport with them 618 00:34:04,030 --> 00:34:07,260 Speaker 2: where you feel comfortable to be open and honest about 619 00:34:07,320 --> 00:34:09,819 Speaker 2: the things that you're worried about with money so that 620 00:34:09,840 --> 00:34:12,280 Speaker 2: they can then help guide you on the investment part. 621 00:34:12,300 --> 00:34:15,060 Speaker 2: Because you're already going in with a good level of 622 00:34:15,140 --> 00:34:17,600 Speaker 2: knowledge and you're very clear on where you're at. Because 623 00:34:17,660 --> 00:34:19,299 Speaker 2: a lot of people walk in and this is how 624 00:34:19,610 --> 00:34:22,810 Speaker 2: I prepare. People come to me, I need a financial planner, Jackie. 625 00:34:22,890 --> 00:34:25,779 Speaker 2: I say, hang on a minute. Let's work out what 626 00:34:25,800 --> 00:34:27,980 Speaker 2: you've got first. And that's the bit that people think, 627 00:34:28,280 --> 00:34:30,200 Speaker 2: they close their minds and want to just hand it 628 00:34:30,280 --> 00:34:31,920 Speaker 2: over to somebody. And I don't think you want to 629 00:34:31,960 --> 00:34:34,440 Speaker 2: be paying somebody an hourly rate to do that. You 630 00:34:34,460 --> 00:34:36,580 Speaker 2: want to get things ordered, get your house in order, 631 00:34:36,600 --> 00:34:39,080 Speaker 2: as I say in my book, right at the start. Terrific. 632 00:34:39,260 --> 00:34:41,989 Speaker 1: All right. Very good. Hey, thank you very much, Jackie. 633 00:34:42,320 --> 00:34:44,350 Speaker 1: I'll give you the floor to name the title of 634 00:34:44,370 --> 00:34:44,930 Speaker 1: the book again. 635 00:34:45,630 --> 00:34:46,729 Speaker 2: Stop worrying about money. 636 00:34:47,690 --> 00:34:51,089 Speaker 1: Stop worrying about money by Jackie Clark. Stop worrying about 637 00:34:51,130 --> 00:34:54,009 Speaker 1: money and worry about whether the financial advisor you're dealing 638 00:34:54,030 --> 00:34:59,080 Speaker 1: with is good enough for you and whether that amount, 639 00:34:59,219 --> 00:35:01,000 Speaker 1: and at least we know what the amount is, right? 640 00:35:01,020 --> 00:35:03,279 Speaker 1: The average is 5,000 a year. Does that make sense 641 00:35:03,340 --> 00:35:05,520 Speaker 1: to you? Does that make sense with the amount of 642 00:35:05,580 --> 00:35:08,940 Speaker 1: money you're going in the door with? Keep that in mind. Okay, terrific. Hey, 643 00:35:08,960 --> 00:35:10,900 Speaker 1: thank you very much, Jackie. Wonderful to have you on 644 00:35:10,920 --> 00:35:11,239 Speaker 1: the show. 645 00:35:11,260 --> 00:35:13,919 Speaker 2: Thanks, Shane. It's great to be back. 646 00:35:14,680 --> 00:35:19,420 Speaker 1: We'll talk again. Okay, folks, keep those correspondence rolling in. 647 00:35:20,080 --> 00:35:23,320 Speaker 1: Do remember, if you can, mention the show to someone 648 00:35:23,360 --> 00:35:26,430 Speaker 1: you know. We really appreciate that. Today's show was produced 649 00:35:26,469 --> 00:35:31,589 Speaker 1: by Leah Samango, and our email is themoneypuzzle at theaustralian.com.au. 650 00:35:31,750 --> 00:35:32,390 Speaker 1: Thank you. 651 00:35:44,719 --> 00:35:45,750 Speaker 2: Thank you.