Transcript

Matt Heine (MH):
Welcome to the show. Great to have you here.

Kristine Brooks (KB):
It's great to be here and lovely to see you in person after so long.

MH:
It has been a long time. I was actually trying to work out how long we've known each other for.

KB:
I was just talking to Sarah about this and I think it would be nearly 20 years.

MH:
Is it really?

KB:
That just makes us both feel really old.

MH:
Particularly, when you look at what's happened. It's been a lot, but a little.

KB:
Yes, very, very true. I think we still look very youthful, though.

MH:
Absolutely. Probably not a bad place to start. For those of you that don't know, Kristine, can you give us a bit of background on what you've done over your life. Because it's pretty fascinating when you think about the different roles you've had.

KB:
Yeah. Well it feels like a long time in financial services. But I guess from the start, I started in a stock broking firm when I was about 18 in Perth. And that was a really amazing introduction to the world of financial services in Australia. And seeing trading every day I worked there for the TAB float - things like that were really, really exciting times and moved into more of an advice business with Deutsche Financial Planning that became Godfrey Pembroke. And that was wonderful just seeing the impact of advice on individuals I think I'd found my true calling there, seeing the impact on directly people's personal wealth. I really enjoyed that.

And then I went to work for Challenger as a BDM. And that was the time when Chris Cuff came into the business. It was changing from when bill Ireland, it was very much an annuity style business maybe into asset management. So it was a really good grounding to learn more about asset management. And then I moved to Sydney and started with Zurich and I had a really long career with Zurich. So I was there for 16 years, but had many, many roles and it was a wonderful, wonderful experience. And now I'm at Milford. So I joined Milford in 2020 as the head of Australia and yeah, again, just an amazing business to be part of. And it's a new name in Australia and a real startup vibe, but yeah, I'm loving it.

MH:
You've rattled through that pretty quickly. I've got lots and lots of questions about many of those roles, but thinking back through some of the other podcasts I've done, you're not the first guest that actually started off stockbroking in Perth. I think Paul Heath certainly cut his teeth many years ago. I stockbroking back and Perth, but the question I had was how did you get into stockbroking? Because you were actually brought up in a small town about an hour of Perth. Your old man was a diver, I believe.

KB:
Yeah, that's right. Well, it was a really small town when I grew up there. It was a town that was predominantly owned by Alan Bond. It was pretty mad in that it had a dolphin theme park, which we frequent and often the national park with tapes and heats koalas. It was a bit of a home in a way style little town. And whilst I loved every minute of growing up there, I very much had my eyes on the city, I think. And I started an accounting degree and hated it. So I went into retail and got pretty bored of that pretty quickly. And so I went to do a business degree and the lady that ran the business college, she said look, you're wasting your time. We've got opportunities for you. I want you to go on a couple of interviews. And she said, I don't think you'll get this one, but I want you to start putting on a suit and getting ready to go for an interview.

And I went to the interview at Saw James Capel and it was in a high rise. I don't think I had ever been in a building that high up and the director, Mr. Smith, he was about seven foot tall. So the intimidation was pretty high at the time. And I don't know what I did to impress him on the day, but I got the job and it was actually as a power planner within the financial planning team within the stop broking firm. And then I just became a bit of a Jack of all trades, got exposure to marketing and running their cash management trust and all kinds of things. But I think in, Perth at the time, it was the highest number of stockbrokers per head, per cap in the country, the wild frontier over there at times. And yeah, it was just amazing. It was a really good kickoff to the career.

MH:
As you say the wild frontier, it would've also been an incredibly male dominated industry back then. How did you find moving into a completely new industry with its own jargon, a high pressure and male orientated?

KB:
Yeah, I think that probably comes from dad a little bit. I think he was quite disappointed that I wasn't a boy when I was born. That was a story that was replay, because he wanted me to be a diver and follow in his footsteps. He was really, really successful in his field work and he just drum into me my whole life, not to let being a girl stop me from doing anything. So to be honest, I never really thought of it. I don't think anyone ever stood in my way being a female in the industry. Yes 100% it was incredibly male dominated. But I think I was lucky in that I had a lot of males that sponsored me and really wanted me to be successful.

And especially the advisors that I worked for initially in the stockbroking firm. Both of them had daughters and I think they were really invested. They wanted me to study and I did my diploma of financial in planning with them. That really helped me through that. And yeah, I think that's been repeated through my career. You have to work hard and I think there are definitely challenges growing up as a female in this industry and I think it's maturing, but you also need to be open to be supported and helped and guided and sponsored because that's certainly been the case for me.

MH:
Yeah. And throughout career you've had held some very senior leadership positions. What have you done as a result of that in your role to promote women and equal rights?

KB:
Yeah, definitely. I think I'm an avid mentor and sponsor. I think at Zurich, we had a really amazing, talented female demographic of people coming through the organisation and I took personal responsibility for sponsoring them. I was really invested in the LGBTIQ+ community at Zurich, definitely moving into Milford. And I think it's become much broader than just female sponsors shape. It's been a real calling to me around diversity in all forms, whether that be age, whether that be background, whether that be male, female, but just making sure that talent is recognised and supported and that everyone is free to be themselves when they come to work every day and they feel safe. And that they'll have the opportunity to be successful as anyone within the business.

MH:
And I think that's certainly been seen, certainly since I've known you and the people and the teams that you built around, you have been incredibly diverse and incredibly high performing.

KB:
Yeah. We even bought a couple of mature age, people that have retired in the industry back just to get guidance and to understand their experiences. So it's not always just young people coming through it. There's a lot we can learn from people that have done it before too.

 

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MH:
Whilst we're on leadership, you've had a number of very senior high profile bosses in your time. What are some of the great lessons that you've learnt throughout the various roles that you've held?

KB:
Yeah. I think never ask anyone to do something that you're not willing to do yourself. I think that's a really big one for me and where I've really respected the leaders that I've worked for. Then they're not just of a front man or a front woman of the business. They're someone that's really willing to roll up their sleeves and grow a business. But what I think really resonates for me is when leaders are very people focused and not only want the best out of their people, but they give their best to their people and they make sure that it's a great environment to work within. I think that's really, really important

MH:
Reading through some notes prior to this podcast, I saw you put a quote in there, which I then ran past a few people around me because I hadn't heard it before and was trying to understand what it meant. What does, “It’s better to have a short pencil than a long memory”, mean?

KB:
Well, I have lots of ideas and I think that I can remember everything that I've said to everyone. And generally I'm not too bad, but I did have an instance where I was a little bit challenged and I'd forgotten something because and written it down. And the person that I was dealing with at the time said, Kris, sometimes a short pencil is much better than a long memory. So just writing things down was a good lesson to me.

MH:
I love it. It makes a lot more sense now. And through that time you've also been involved in some pretty incredible projects through some large M&A activity. Love to hear your thoughts on that experience, particularly at Zurich, maybe the good times and the not so good times.

KB:
Yeah. I think the M&A opportunities that we had at Zurich were the biggest achievements of my career, but also the biggest challenges. We acquired two insurance businesses in Australia. So the Macquarie Life business, which was a really successful business in its own right. And then the OnePath business from ANZ, which was actually a larger business than the Zurich business. So that was challenging just from that. It was we were growing, but that was still very much a Goliath in the industry. I think being part of a deal team is an incredible experience that I would recommend to anyone. The excitement, what you learn from performing due intelligence, what you learn from building a business case to get funding and support to win the deal it's really different work to what we might perform in day-to-day. It's incredibly exciting.

I'm a really competitive person. I think I'm really emotionally intelligent. So being able to pick up cues around how the potential seller is engaged on the deal, whether you are going to be successful as the purchaser because it was a competitive process in both of those deals, but it's around the clock. So the Macquarie deal was a little bit smaller - so more manageable, I think. OnePath was around the clock weekends and we were dealing, our bankers were both in Australia and overseas. We had the deal team running 24/7 between Switzerland and Australia. So you'd go to bed late after meetings and then you'd wake up and inbox would be full. And people had been crunching numbers all night that you had to digest pretty quickly to move into management meetings and renegotiating across the table from really experienced deal teams and bankers.

So just incredible in terms of what you learn, the skills that you acquire. I think it's a little bit “careful what you wish for”, though, because you win the deal and you go, everyone celebrates and isn't that fantastic. And look what we've done and you give yourself a big pat in the back, but then to the shareholder, you have to make sure that their rationale for the deal is realised. There's obviously a large amount of money that's being spent. So what does that return in terms of growth of your business? And then when you're putting these deals together, you assume a lot of synergies and cost efficiency that you're going to be able to build, bring to the business or whether its technical capability, technology platforms, those kinds of things.

So when you've won the deal, you've actually got to come back and make it work. And, unfortunately, when you're putting really large businesses together there's challenges from a cultural perspective, but generally the biggest component that's impacted is your people. So whether it's the people on the existing side of the business or on the business that you've acquired. And I think making really big structural decisions that impact really great people and their careers for me, that was the most challenging aspect. And I think you really need to be quick in your decision making, you need to have good rationale for those decisions and you need, if changes are required, you need to make them quickly. Because I think people sitting around waiting to know if they're going to have a job or not is really disruptive and it's really unfair.

And just treating everyone with dignity and transparency through that process. But the thing that I learn is if you invest in people and whether they're going to work for you forever or to move on and work for another organisation, if you've done your very best by them in the period that they work with you or for you that they'll remember that and that you can both move on and still have really strong relationships, whether you work together or not.

MH:
I think that's great advice. So when you look at the industry, particularly post Royal Commission in your point, it was an interesting one that you actually took over a company that was much bigger than you. If you look around the industry, that's happened multiple times as the bank sector has exited wealth, they were quickly selling off large insurance companies, large distribution companies. And you've seen these many scenarios actually where the smaller players ended up buying the bigger player. And we're seeing that in advice as well now. So there's obviously a huge amount of merger and acquisition activity across the advice industry with small firms bulking up, big firms bulking up. How do you actually go from a cultural perspective, understand the people perspective and there was some great advice in there, but where you've had fundamentally two competitors that have hated each other respectfully for many, many years and been out in the field selling against each other, how do you bring those two cultures together?

KB:
Yeah. Macquarie was interesting. I think if you had it on paper described the original Zurich culture and a much more harder edge Macquarie culture you might have had the perception that's not going to work. And we definitely, at the time had people within the Macquarie business really proud of that brand and they liked being a Macquarie person and they didn't necessarily want to be a Zurich person. So we really had to go in and spend a lot of time with that team and understand what was important to them about the Macquarie culture and educate them on what we believe the Zurich culture was. And at that time it was a very, the word that was most consistently used at Zurich was family.

It was very much a family culture and people really wanted to hold onto that as well. They didn't want this new group of people coming in and disrupting that. So it wasn't just the new people that we were catering from a cultural perspective or cultural change perspective, but the existing cohort. And sometimes in a deal, you focus on the people that you're obtaining as part of that transaction. And you forget about the people that have built the business that is in a position strong enough to acquire another business. So they made to feel valued and heard as well. And your culture changes with every additional person that walks in the door. It's not something that ever stays still and it has to continue to evolve to encompass where you want to move to.

So we did a lot of work understanding from the cohorts of teams around what was important to them. And I think there was wins and misses in that process, but broadly I think we gave both sets of teams the chance to influence that culture themselves because culture's not just what the leaders say it is, it's what we all do. And I think we were successful there. The OnePath culture all coming together, I think was a little bit different because what we found was there was a heap of OnePath people that had all already come to Zurich and a lot of Zurich people that had gone to OnePath. So we had a coming or I guess a bit of a reunion and there was more likeness around those two cultures. The OnePath business was very much, I guess, contained within the ANZ business.

So it was less of a banking culture and more of a true insurance business. And they really were excited to go to a dedicated insurer again and move out of a bank institution because they wanted a business that understood insurance and lived and breathed that every day. So that one was a little bit easier to be honest.

MH:
You're getting the band back together.

KB:
Yeah, that's right.

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MH:
Given I guess also the focus on advice on this podcast, do you have a view on whether putting two smaller businesses together is easier or harder than putting two really big businesses together from a cultural perspective? And also what advice would you have for those thinking about maybe looking at an acquisition strategy to grow their own firm?

KB:
Look, I would assume that two smaller businesses would be easier because you can wrap yourself around the population of the business, a little bit more readily. Really big populations of people that's hard to get that level of transparency around what everyone's thinking and feeling and they would be businesses. With one challenge to that thought, I guess, is if you've got two principles that are coming together that have got very, very strong, I guess, thought on what they want their business to be or you know, what they see the future of the business or they're just really strong individuals within those businesses. If they don't form a very strong cohesive relationship or don't agree on direction or culture, I think you'd be challenged. And that you'd probably feel that more because it's a smaller business. So I think you need to make sure that those alliances and those mutual respect for each other's thoughts or directions would need to be there as a foundation, otherwise it'd be pretty hard.

MH:
Fantastic. Now one of the constants throughout your career has obviously been advice, whether that's servicing the advice community from insurance perspective, investment perspective, or as you said, being a para and an advisor. In your new role at Milford, I’d love to hear what you're doing there. It's obviously a new fund manager in the country, but it's also got as expected a real focus on advice and improving the quality of advice.

KB:
Yeah. So Milford was an asset management firm that was started in New Zealand. People might not have a good understanding of the scale of the business in New Zealand, but we're one of the largest non-bank owned asset managers in New Zealand. We're running just this shy of 17 billion funds and message management now. So it's a pretty strong business. The business in New Zealand was, or is still very focused on direct investors, very different market over there. But what I really love about that culturally is that we're very used to sitting across from clients and talking to them about their investments and our performance. Whereas I think in Australia because of the intermediated distribution through advisors, sometimes asset managers get quite removed from that conversation and potentially a little bit protected. So we're very used to having that conversation. I think that makes us a lot more accountable.

The business in New Zealand also has a really strong private wealth firm as part of the broader business. And that's really because of the evolution of the direct business. We had clients that were seeking advice and we needed to establish that proposition. So we were very advice focused, advice centric asset manager which is a little bit different. I think also in terms of when we look to start the business in Australia and I guess, we are a new name here, but I've been overwhelmed with how many people have wanted to hear about a new name. I think it's probably been a little while since there's been a new asset manager and whilst we are new, we are established. So we bring that initial credibility to the market, which is wonderful. We've very much decided to focus on advisor, the advisor market in Australia.

I think from an asset management perspective. What you want to know is that you're bringing solutions that can help advisors in constructing portfolios for clients and when we are building our business we want to make sure that we are building a sustainable robust business and having an advisor involved as part of that process. I think builds a lot of strength to us because we know when people might be challenged from a market volatility perspective, they've got an advisor they're settling them, articulating what the funds are meant to do and educating them. So that's good for us.

MH:
Absolutely. And you've recently done some research with the XY Community. What were some of the findings from that report that you did?

KB:
Yeah, so I guess, really bringing the brand to the market, we wanted to make sure that advisors knew that we were committed to them and that we wanted to support them. We looked at a couple of thought leadership pieces around what were their biggest challenges among the XY community really good at tapping into their conversations and understanding what is being thrown up. And what we were finding was that there was a strong conversation around the influence of behavioural finance on decision making by clients. And if advisors could just tap into people's emotional relationships and money, they might be able to influence them better from a decision making perspective.

And I guess, that's a big shift from technical advice and where the industry street has been born from. So this white paper is all around behavioural finance and really talking to advisors around establishing skills on coaching and coaching clients around their emotional relationships with money. And why we do the things we do. And I think the great thing that I've loved about the paper and engaging advisors on it is that if people can understand their emotional relationship with money, they've got a much better chance of achieving not only financial success, but wellbeing and just how financial wellbeing can really help people have much happier lives.

MH:
Given the renewed focus of an advisor and the new skills that they're having to learn and the way that they're servicing their clients, many are now looking at outsourcing the investment piece to asset consultants managed accounts. So in some ways that almost attaches you from the relationship. Who do you see as your real client these days?

KB:
Yeah, it's been, I guess that big evolution of fragmentation out of the big institutions and a big theme of self licensed advisory firms being established. And I think that's great. I think it's wonderful that people are more in control of how they want to run their businesses and decision making. It's been really interesting starting the business at this point in time and that rise of the asset consultant and how firms are making their investment decisions. So I guess we're seeing all kinds of trends. We're seeing people firms outsourcing can completely to the consultants around how they build their portfolios. We're seeing the consultants perform an advisory service and the advisors within the business, still wanting to have a really strong voice in where the portfolios are being invested.

And then we've still got businesses that they see that as their area of expertise and they want to have full control, but they still might need some compliance support. So really honestly they're all our target market, but it's just how we engage and influence our input into those relationships. We might go through different channels. We are finding advice firms that have a very investment centric proposition that are very much positioning in themselves as investment professionals. Our proposition does seem to be resonating with them more.

MH:
Chance for a quick plug. What are the current strategies that you have in Australia and what's next?

KB:
Oh, that's very generous. Thank you. So our flagship fund is the absolute growth fund. So that's a core defensive Aussie Equity Strategy. It's actually done very, very well through this recent period of volatility. So I definitely want to have a look at, and then our dynamic small companies fund again, is a great proposition. So those two are highly rated by one seconds anything they're available very much on the net wealth platform on, but just more broadly across the market. And then we've got a diversified income fund that's maturing along the ratings process, and we've just launched three global funds. So global assets, global opportunities and global growth. So they're new to market, but yeah again, we've been overwhelmed by interest. I think people are really reassessing what they're doing in global equities at the moment. And then we are going to list three of the strategies over the next couple of months. So just huge demand for listed vehicles from what we are seeing.

MH:
That's a long list, which begs the question. What do you do with all your spare time?

KB:
Protect it. No. Well, I've got two boys that are very busy, so I find that they're the core focus. I love to cook and eat. Unfortunately, I wish I was one of those people that wasn't mad about food, but I wake up and think about what I'm having for dinner. So that consumes me. And then, yeah, I love the beach and the foodie. Yeah. They're probably winter and summer focuses and hopefully a little bit of travel in the next year, not too distant future.

MH:
Have you got anything planned yet?

KB:
No, not really. My partner works in the AFL, so we're a little bit stuck here for winter, but hopefully something at the end of the season.

MH:
Yeah. Or somewhere overseas in January.

KB:
Yes, please.

MH:
Great to catch up as always. Thanks so much for your insights. We've covered a lot of ground as we tend to do, but it's been fascinating for me to hear a lot of those stories for the first time. So thank you very much.

KB:
Thanks for having me.