Transcript

Matt Heine (MH):

Hi, welcome to episode 97 of Between Meetings and today I am delighted to have one of our guests who actually appeared 50 episodes ago, Clayton Daniels, the CEO of Ensemble. Welcome to the show. Thanks for having me back. It's great. What's happened since we last caught up 50 episodes ago. In fact, I was just reminiscing about that particular episode and back then you were still XY advisor.

Clayton Daniel (CD):

Yes, that was I think six months after we had launched the q and a platform. We had thankfully gained a bit of traction in terms of people coming across from Facebook. We were still very early in what it meant to go from being a hobby to a business. Yeah.

MH:

Why don't you give us a bit of an update on what you've been up to and what ensemble looks like today. 50 episodes ago and five years ago,

CD:

We were two or three staff members. We're now shortly about 18, so we've certainly grown in size in terms of sophistication as well as sort of headcount time. We've also hit the 10,000 member mark of advice professionals, so we've grown sort of, as you can imagine, quite a bit. We've really spent, I would say the majority of our time in the background becoming our purpose is to drive the positive evolution of financial advice. And what that really means is how can we facilitate, and it is more about facilitating than anything else, but facilitate an environment for advisors to succeed. And that has sort of come out in a few different ways since then as well. Yeah,

MH:

Many would be small businesses, advice practices, and in many cases five years ago, many of them probably were three or four staff. So you've tripled in a very short period of time. You've pivoted a number of times. Talk us through some of the highs and lows of the last five years and what you've learned. One thing that

CD:

I've had to become comfortable with as a growing tech-focused company is my energy and my desire to serve our audience is a BA engine, right? It's big and it's loud and it's guzzling, but one of the things you have to deal with, you can't bend everything to your will a hundred percent of the time, and so you have to deal with the fact that out of those eight pistons, all of them are going to be working all the time. So one of the things that I've become a lot more used to and a lot more comfortable with is still taking steps forward into the unknown. Even if you don't have a completely solid base on which to launch from, it's become a skill in itself to sort of leap from a base that might not be as sturdy as you want, but if I kind of go back five years, and I think if you do that just for long enough, the stability does deal over time.

MH:

So really just moving to a far more agile workplace.

CD:

Yeah, I'd say that that is probably one of the biggest changes. So moving from a financial services background where things are relatively conservative people, they like to take their time, certainly there are elements of what we do that require us to pivot and be more agile for sure.

MH:

It's been suggested that before I've got a fair bit of energy in my role as well, not dissimilar to yourself. And as you get bigger, one of the things I've found is you do need to be conscious that maybe everyone's not operating at the same speed. How have you gone modifying your approach and potentially behaviour around the office or maybe is it just about building a different type of team around you?

CD:

Yeah, that's a great question. I would say I've done enough things now in my life to know I don't consider the speed that I work at is the correct speed. I've definitely earlier on in my career have probably overshot the mark before if I was leaning too much on my own opinion. So the fact that our team has some wonderful people who are in some cases far more experienced than me or far better at elements of our entire business model, I thankfully get to lean on them a lot more these days. And by virtue of the fact that we have more people in the team, I typically back people who back themselves. It's never fun to take a risk as a decision maker. So if someone is linked to have an opinion and a spine with that opinion, they're more than likely going to be, I find correct more often than I would be if I'm not as confident in that situation.

MH:

And how have you found that transition going from no doubt being extremely hands-on when you were four or five people and doing everything to more of a management role and helping people do their jobs and find the direction they need to go in, you would obviously be infinitely more experienced than me,

CD:

So I'd love to even ask you that question. From my experience, I spend the majority of my time looking at, I would say the three year mark, so it's not too far into the future, but it's the kind of business that we're all trying so hard to build. I guess I want to make sure that fast forward a couple of years that we land in the type of environment that warranted or at least rewarded all of the hard work to get there.

MH:

And what are some of those big objectives that you are trying to achieve over the next three years? What are the key parts to the ensemble business that most excite you?

CD:

If you go back around about that time, in fact, I was listening to the podcast just recently as well that we originally did in preparation for this, we hadn't yet closed the crowdfund, so that's quite a while ago. In the end, we ended up having 200 financial planners invest about 2000, so we had about $400,000 at the end of that crowdfund. A key element of the product features that we wanted to build was an insight tool for the product side of the market. The way that we've always thought of ourselves is the profession is on one hand, the product is on the other. Collectively it's known as the industry and we see ourselves as a conduit between both, and we wanted to take I guess the thoughts and the opinions and the problems of advisors and turn that into a market intelligence tool would I guess be the closest thing that I could articulate it.

At that stage, it was called XY pulse and it was definitely ahead of its time. The technology wasn't there to help facilitate it, so a lot of it was rather rudimentary. What that did though is it strangely set us up really early adoption of third generation AI went down a path to build a tool that we called XY Pulse that didn't really have a commercial outcome. However, the infrastructure that we built, although it was completely rebuilt, but the initial infrastructure was set up so that we ended up building strangely, one of the world's first third generation AI applications. This is six months prior to the release of chat GPT. We had documentation integration into third gen open ai, and we had this tool that we were using internally and that really sculpted up the next three years to the point that we've just launched a CPD tool now that has AI built into it. We don't do this in every area, but it's allowed us to kind of bat outside of our league in at least one area.

MH:

So AI is obviously a hot topic at the moment and interesting you're referring to it as third generation. I think Gen AI is obviously coming over the top and now we've moved on to a gen AI and no doubt next week it'll be something completely different again. But how are you using AI in the business? It's easy to throw the term out there, but what is it practically doing for you and the business and your customers? We're really big adopters

CD:

Of AI to the extent that I would imagine by the end of this calendar year that we will have weekly training to do with even further adoption of it. I see a situation in the pretty short term, I would say by the end of this calendar year where every person is going to start to multiply. I think we're going to move into a situation where, yeah, weekly training on how to leverage AI internally is going to become a pretty big focus. But in terms of the day-to-day, I rarely Google anymore. Everything is either done on chat GPT, and that's just sort of me at a personal level. But the company operates very closely with AI in the sense that all the conversations that are on the q and a application are all run through ai. They're allocated a topic and ultimately what we're trying to do is we're trying to collectivise the conversations that advisors are having so that the needs and the wants of advisors eventually do turn up into boardrooms like yours. So we believe a concept which is advisor problems driving product efficiencies and product outcomes. And because if a product is better designed along the lines of the needs of their clients, the advisor themselves is asking for those improvements so that they can better serve the client themselves. So we are constantly getting closer and closer to that sort of holy grail of the voice of the advisor being the thing that shapes the entire industry.

MH:

I think that's a really interesting point and I was starting to get visions of the old word clouds where you see certain topics growing as people responded to polls, but this is clearly a far more sophisticated version. What are some of the key trends, problems or trends that you are seeing actually come out of those conversations because incredibly rich and diversified data? Yeah, absolutely. There are in a lot

CD:

Of ways it helps sculpt our own business. So for example, the top topics across five years of conversation in terms of frequency is advice, tech, practise management, investments and insurance. So those are the most common topics for financial planners. However, advice tech and practise management is highly engaged with, whereas investments and insurance are not highly engaged with. And so what we're left with is a piece of data just quite even surface level and that is okay, the frequency of these things are high, but there's a huge divergence in terms of engagement. Those two topics that are highly engaged with, which is advice tech and practise management. We don't really need to do much. We don't really need to play too much of a role. That's a real facilitation, it's a build and they will come approach. But with investments and insurance, what that means is there's been so much information, so much education in this space for such a long period of time that it's hard to create something that cuts through. And what that means is I think it's our responsibility is to solve the problem of engagement with those topics. So from a point of view of ensemble as a platform, we will let some topics run and some topics we actually try to handhold a bit closer.

MH:

I think that's a really interesting observation and it probably doesn't surprise me in a lot of ways when we look at what's happening across our sort of client base and what we are hearing from the industry, which is clearly advice, firms are trying to grow, they're trying to become more professional, they're trying to use technology better, and at the same time as that's happening, we're also seeing continued exponential growth of managed accounts, which would suggest that firms are becoming less focused on the individual investments and also the aggregation of insurance where a lot of firms that we're dealing with will actually outsource it to specialist firms. And I wonder if perhaps that's playing a part in that sort of separation of discussion. There's a couple of

CD:

Really interesting data points actually with what you just spoke about just there. And again, a lot of this is sort of codifying the information that feels correct in your gut. So for example, because we've been doing this for a while, we know when a practise commences, the thing that they're most interested in from day one is sales. After about two and a half years sales turns into talent acquisition because now you've got clients, you need people to work the job after five years, that now turns into efficiencies. So clients tick, team tick efficiencies now tick. And about the seven and a half year stage, these advisors who were built this business look over their shoulder and say, oh, I've actually got a fair bit of money funds under management here. That's when I'll start looking at SMAs and things of that nature.

MH:

So you've obviously got a very diverse client base, different ages and at different stages of their career. How often would they be engaging with the platform, whether that's creating their own content or posts or responding to others.

CD:

Another really interesting data point here is if you go onto something like a Twitter, there is, I believe it's an 80 20 situation where 20% of the users are creating 80% of the content on our platform. It's even more intense. So you are looking at probably about 10% of the users are creating 90% of the content. The thing that's unseen though, and this is kind of the bulk of the behavioural data, is who gets what topics have the engagement and where are the people following, where are the trends? What is the most important thing at any given time? Those are the kind of things that we try very hard to keep abreast of. It's very much to do with, let's think of a very simple example would be, let's say five posts turn up on the platform today we'll have a look at which ones get the most traction, and then tomorrow we'll send out an email that says, Hey, here is a really valuable post. And the reason that we know that is because we can see right, this post had, let's call it 50% more traction than anything else. It's been an iterative process to figure out what advisors want at any given time.

MH:

Now this might be a little bit too recent, but given that you probably do look at this on a daily basis, a few days ago we had the second tranche of DBFO land on everyone's desktops on Friday evening. What has the feedback been from the industry on those announcements? Are they happy? Are they suspicious? Where's the industry sit?

CD:

Yeah, that's a really good question and definitely very recent, but you are right. I am constantly checking this type of information. I would say that the first and foremost is advisors are probably more aware of these changes to rules and regulations. The details are getting discussed pretty granular, I would say relatively quickly as well, or at least that's been my experience. So one of the interesting things is if you are waiting for a hundred page document to get reduced down to one, I think you're going to be waiting for a little bit longer. Now, notwithstanding that advisors, as we were speaking about earlier before the podcast started, my friend Corey, he's been on the video SOA path for quite some time. So it's not that there is no sort of solution to it, but I think one could argue that the latest tranche of updates is probably more about helping some segments of the broader industry deliver quick and easy advice than it is set up to help financial planners. That's how it initially comes across.

MH:

That doesn't surprise me, and there's certainly a number of areas in there which will strengthen certain sectors and one can only hope that the reduction in the size of the SOA, not that we can call it an SOA anymore does actually transpire because that's really what I think so many in the industry have been holding out for. Yes, absolutely. If does go

CD:

Down the path that there are a couple of former financial planners in parliament, so it's a case of whether or not the gumption is it to help the professional side of the industry as much as there is to help some other parts of the industry. Yeah.

MH:

Clayton, I'm going to change tech here. We're chatting to the team earlier and thinking about some of the areas that we might chat about today. And one of the areas that I think would be really interesting for advisors, licensees, or anyone trying to create a community is exactly how you've gone about it because you really have created a thriving and very engaged and growing community in a relatively short period of time. So we'd love to hear your thoughts or what you've learned along the way that could help those in the industry that are looking to build out a community.

CD:

I think there's probably two elements that need to be tightly sort of maybe controlled is not the right word, but certainly watched closely. One is depending upon what the feature set of the community is, but moderation is probably the hardest and most time consuming element of it. This took us many years to figure out. I would say it probably took us five years to get a handle on it. Ultimately, at the end of the day, I think the best way to sort of facilitate it is it's an art and a science. So you can certainly have rules, but the rules aren't going to be known by everyone or cared about by everyone. And I think if you sort of approach moderation in a way that is saying, Hey, we can see what you're trying to achieve, but maybe go about it a different way, here's the way that you probably are looking to achieve it, then you're kind of supporting the person at the same time as supporting the rest of the community by protecting I guess the space.

And the second part is, and I think this is probably a little bit more nuanced and it's taken us a long time to articulate this, we don't own the community and that's a really interesting, I guess articulation is we are facilitators of a space that allow a particular type of user to gain what we call rapidly accelerate the journey to mastery. That's our job. It's not that myself or anyone in our team. It's not that we understand what advisors need more than anyone else. Actually advisors want to learn from other advisors, especially if they've achieved a certain amount of success in a particular area. It's our job to really maintain the purpose of the environment exactly for that and stay away from the interactions as much as possible.

MH:

Yeah, you've clearly built a really big online community, but I think many of the things that you've talked about actually translate into a physical community. Obviously with a licensee small or a large licensee, the health of the community is incredibly important. So creating a safe space, as you say, and an ongoing dialogue. What are some of the other things that you've found are really important as far as frequency, the type of events, the type of interactions that again, could apply in a physical as well as the digital world.

CD:

One of the really interesting things is the platform itself basically gets used nine to five Monday to Friday. One of the things that dawned on me sort of a long time ago is people are only engaging in this community at the point in time in their life that it's relevant. So it's the kind of thing that they will have open on their desktop while they're at work, but they don't really want to go home and continue thinking about work. And so I think there's definitely an element of growing a community that says, let's make sure that work topics and work stuff, if we were to call it, that, is happening within work hours. I think that's a really kind of interesting one. The other thing is I think the same rule kind of applies whether it's in person or online, and that is, it's a professional space, so you don't really want to let people just come and put their feet up on the furniture.

When people come into a virtual arena, they're not always immediately sensitive to their own actions, but everyone else still is. And especially if a group of people have been respecting a place on the internet for a while, it's quite rude to come in and sort of break the culture. So we set a pretty firm culture upon making sure that everything is, not that it has to be positive all the time. You can certainly discuss problems and concerns, but as long as that's done in a respectful and fact driven way, then the purpose of the conversation is more skewed towards solution rather than complaining. And I think that that as a general rule in person or virtual is really important for a professional community, like I mentioned, that operates between nine to five Monday to Friday.

MH:

One of the interesting initiatives that you've had for some time now is your virtual PD days. Clearly during covid, that had to be the format coming out of format. There was a shift back to in-person as people wanted to get away from being behind their desks, but you've managed to actually continue to create a really positive and engaged virtual community where others may have failed. So just again, keen to hear your learnings there. This sort of came about the birth

CD:

Of the all licenced CPD day happened during covid, as you said, our very first couple, we were really just learning as the world sort of woke up again, there was I guess a real push to get everyone in the same room again, and the advisors were saying what during that time, they had developed a relationship with their clients. All of a sudden there was no hurdle to having a virtual relationship. In fact, all meetings went to virtual. So when we sort of come out of covid, the world flipped from a situation where one in five meeting was done virtually to now one in five meetings is now done in person. And that's a really big change in a societal point of view. Again, as our goal is to listen to advisors, they said, well, we can acquire points in a far more efficient manner by doing this virtually.

Why are you going to make me drive to a certain location just to do this? And I think one of the key things that we had to build in right from the start was, well, because we are dealing with a serious topic, which is continuous professional development points, we need to address the acquisition of those points in a serious way. And so very early on, we adopted this policy of, well, even during a virtual event, people need to be notifying back to the presenter that they're still online because the last thing that we wanted was to be able to just put your computer up in a corner and work for the rest of the day. What we saw would be not achieving our goal. And so from a very early in this virtual presentation environment, we made sure to include very simple but effective things.

I remember telling someone, no, we know if people are online or not, and they assumed that our capabilities were way above what they are. They said, oh, is it AI reading through the camera? And I was like, no, no, it just, there's a thing that pops up. It says, are you still there? So every single presentation we have this, it'll occur at a random point during a presentation. It'll actually, the longer that we do this, we've actually moved to, that happens now twice for a presentation. And so if people are proving that they're there, and what's kind of interesting about that is the regular pieces of software that people are using, like Zoom teams, Google Meet, they don't have these really simple functionalities. And why I guess we sort of built this CPD platform is because it's easy to tell if someone's in a room, you can tick them off on a bit of paper, but as soon as you move to a virtual environment, it's hard. And so we sort of had to invent some kind of basic but effective tools that allow us replicate the online environment as closely as possible to the in-person environment.

MH:

I love that story, and it's something that we often talk about here, which is you really need to fall in love with the problem, not the solution. And I think you often you approach it and go, let's go build something really big and use all this technology to solve a problem that can actually be dealt with in a far as EO way. You are in a pretty fortunate position when designing your virtual PD days that you actually know what advisors care about. It's difficult to cater for a very broad range of experience and needs. Is it fair to say, maybe picking up on your earlier comments that a lot of your content now at those virtual PD days is focused on advice tech and practise management and lesser investment and insurance, or how do you actually create that content to keep everyone engaged?

CD:

Yeah, it's actually a conversation we had in our management meeting just yesterday. I think that they're naturally more frequent topics, but they don't necessarily reflect engagement. And so I think it is, I would say sort of easy for us to focus on practise management and advice tech, but I also see it as our responsibility to solve the investment and the insurance discussion. For example, a lot of advisors are using sick consultants. That's a huge growth area within the broader industry. However, one of the things that we're starting to see is this concept of, I don't know how to speak to an asset consultant. I don't know how to push back against an asset consultant. I don't know how to interpret an asset consultant to my clients, especially at the points in time that I need it the most. And so what we are now seeing is, is there a stream of education that's required on how to deal with an asset consultant? So maybe you're not functionally putting together an SMA, maybe you are no longer building the model portfolio of managed investments, but the conversation point to your clients as an advisor doesn't go away. I mean, you can bring them along to an event, but you can't totally outsource that. And so for every new development, there seems to be a corresponding need as you would expect, and it's about how do we address that need and how do we take content with high frequency but low engagement and increase engagement?

MH:

I think that's a really interesting insight and certainly one that we should be thinking about more because as you say, they're increasingly the gatekeepers, but we shouldn't assume that everyone knows how to manage them or to work with them. As an aside, one of the great use cases for AI that I've heard is taking a consultant's report, putting it into your chat GPT engine, and then asking you to rewrite it for a five-year-old. It's a great way to actually then take that information and be able to explain it quickly and simply to your clients. And it might be that you've actually asked it to condense it or summarise it in five dot points, so the power of ai. That's excellent. Clayton, we're getting close to time, so a couple more questions from me before we go. Maybe just one big, what excites you about the future of the industry and where do you see things heading in the next year or two?

CD:

Yeah, I would say what excites me in terms of work in general is this idea of everyone's time becoming more leveraged. That to me is a really exciting development in the nature of work. We worked in a knowledge economy. This profession exists within professional services, which is certainly within the knowledge economy. As someone that's built a couple of tools now with ai, what the source of use case with ai, I would say is highly technical or highly legislative in nature as money is emotional, as much as it is rational, there's a huge element of we are just evolutionarily designed to talk about things that are deeply important to us, to a human rather than a robot. No matter how intelligent or sophisticated it is. I mean, a very good illustration is if information's all we needed, everyone would be billionaires with six packs. And the fact that that doesn't exist means that there is an accountability value to being a human advisor.

And so I'm foolish on human led advice and have been for quite some time. At the same time, I'm really excited about how much more efficient work will become. I think that we're at the very early stages of seeing things like integrations. So if you go back five years, integrations was the brand new kid on the block integration APIs, these types of things are not immediately, but they are going to become more commoditized and it won't have to be through platform one to platform two. It'll be from the AI level of if someone with a university degree given enough time can take information from this platform and move it across to this platform, then an AI will be able to do it instantaneously. And so what I'm really excited to see is the efficiencies that will be turning up across the whole advice process, which is something that I've only really sort of come to grips with in the last couple of weeks. And so that's probably the number one thing I'm looking forward to. While at the same time, I think a financial planner is going to be one of the most protected job positions as we move into the brave new world of ai. I think that there is a natural and strong tie to human led advice, but I think a lot of the annoying admin will start to become more and more automated, which is a great outcome.

MH:

I couldn't agree with you more on both of those things. I've often said and explain that my relationship with my financial planner or financial planners is that they stop me doing dumb things, and I'm happy to pay for that. I think it's right that the admin and the, I guess the parts of the job that people really don't get value from or don't enjoy are being increasingly automated. And I think that's really exciting. And certainly as a business, and you might be seeing this elsewhere, our job is to help advisors increase the number of customers that they can serve while providing the same level of service. And the way that technology's heading at the moment certainly enables that. And again, the work that we're doing with data and the Netwealth data platform is around enabling people to make sure that the data in their business is as clean as possible so they can do all the things that you're talking about.

CD:

Yeah,

MH:

Absolutely. Couldn't agree more. Clayton, we've run out of time. Unfortunately. I've thoroughly enjoyed the chat as always, and congratulations on what you've done over the last five years. Hopefully it's not another 50 episodes before we catch up next, but really appreciate you sharing your thoughts and successes. 

CD:

Thanks so much for having me on, mate. I really appreciate it.