Transcript

Matt Heine: Hi, and welcome to this special edition episode as it relates to COVID-19. I'm delighted to have Ray Djani with us today. Welcome, Ray.

Ray Djani: Good day, Matt. Thank you very much. Good to be here.

MH: Thank you for being our inaugural virtual podcast.

So really, the point of this special edition series is to try and understand what some of the best wealth management firms in the country are doing and how they've adapted to what I'm calling the new norm. And to that end, Ray, it'd be wonderful if you could just give us a bit of background to your practise or your wealth management firm before we get into it.

RD: Yeah. Thanks, Matt. So Cardena Private Wealth, we've got 10 people in our team, two of which are offshore in the Philippines, and we operate under Sydney Martin Place. Our firm's been around for a very long time and looks after almost exclusively high net worth clients. And I say I'm at work, but really the common thread amongst all of our clients is that they're normal people, but they're just successful people. Be they currently doing what they do or retired, they generally have created their own success through being a really successful lawyer or partner of an accounting firm or a surgeon or a CO.

And so, we don't have a lot of clients. We look after a select group, which sort of looks like about a 130 to a 140 active clients that we look after. At the foot end, we do the usual things that most advisors would do in looking after all of their financial affairs and trying to help them make smart decisions, and then a large part of that is obviously looking after their portfolios and their investments.

MH: And as far as the actual business goes, it's been going obviously for a long time. You joined the firm, it feels like a long time ago. Was that two or three years ago now?

RD: Yep, yep. Initially in a consulting capacity, but full-time more recently. But yeah, I've been engaged with the firm now for three to five years.

MH: And the number of planners that are in the firm?

RD: So we have four advisors. There's four partners in the firm, including myself, and I'm not an advisor, but we have four authorised reps. We have a senior power planner and client services officer, an admin person, and then we're also backed by two people in the Philippines through an outsourced arrangement, who help us with both our power planning and some of the admin tasks.

 

Listen to more Between Meetings podcasts

In this podcast series Matt Heine, Joint Managing Director of Netwealth, chats to industry professionals and thought leaders on what opportunities and challenges they see for financial advisers and the wealth industry as a whole.

Listen to the episodes

 

MH: And no doubt having those outsourced staff or overseas staff actually helped you put in place some of the other tech stack that has no doubt saved you over the last couple of weeks.

RD: Yeah. It's interesting you say that, because I think one of the benefits of outsourcing, and they are part of our team, and that's been the mindset that we've had to adopt over the last year or two, is that really, they're members of our team, but they just happen to be located in the Philippines. So rather than thinking of it as outsourcing, it's just that we have two members of our team that are offshore.

But that brings about a lot of the disciplines and practises that I think we're putting in place right now with our Australian based team, as you said, Matt, which is daily contact with them, be it through Zoom or phone hookups, just as you would with any team member. Because they're not with you in the office doesn't mean that you can just forget them and not talk and engage with them as you would with anybody in the office on a daily basis.

MH: Absolutely. One of the things that I've always admired about your firm is that, from the outset, it struck me that you're not afraid of change. I think since I first met the firm, however many years ago, you've changed licensee, you've changed platform, you've implemented a managed account. I think you may have changed planning software as well in that period. Many of the things you actually did in parallel, as opposed to in some sort of sensible sequence like some other firms may have done.

Since you've joined, what were some of the steps? I should probably ask that slightly different. You were the one of the first firms to decide to work remotely, as far as I'm aware, across the industry. That comes with its own challenges, as everyone would be aware. Was that, in part, because you felt that you had the systems and process already in place and operating under that environment?

RD: Yeah. Look, I mean, that definitely helped. I mean, it's fair to say, when we talk maybe later on about some of the technology stack that you refer to or the processes, obviously we didn't put those in place expecting a pandemic or expecting a COVID situation. We invested in these things sort of over the last three years or so, and I suppose we did that because we wanted to make our business stronger and to make our engagement with clients better and make sure that we could all work collaboratively on pieces of advice and those sorts of things.

So three years ago, when we started investing and making these changes, no one was obviously expecting a pandemic like this and the impacts that it's having now, but you're right, it did help. I know my partners looked at me a little bit like I was probably overreacting three or four weeks ago, when I said, "Look, I really think we should all work remotely." And we were a little bit earlier than most.

Part of that was, in this industry, we read a lot of information about where the pandemic was up and what other countries were experiencing it, so part of that was just anticipating that it would happen here as well. But yes, you're right. Part of it was also, "Well, we can actually try to work remotely. Why don't we give it a go and just see how it goes?"

Because while every single week, we would have at least one person that works remotely a day a week or something like that, we'd never actually all gone and worked remotely. So even though we're only a small team, now we meet some of the challenges you would be experiencing or other bigger organisations. It is still the same issue, which is how's it going to work when we are remote?

So that was also about being honest with our clients and letting them know that that's what we were going to do, and that, as far as we could foresee, there would not be any interruptions to the services that we were able to provide them. And thankfully, looking back, I mean, there have been some challenges, which we can touch on, but by and large, we've managed to do, I think, relatively well considering all that's happening.

MH: And did you have a formal BCP plan in place that you were able to enact? Or did you really have to come up with a plan on the spot?

RD: No, we didn't have a BCP plan. We didn't have, like a larger organisation, something you pull out to say, "This is what we do." It was a plan that we just started to think about and enact sort of a few days before we physically self-located or isolated in terms of a team environment. And look, some of those things you're learning and sort of refining to the plan as you go. But no, we didn't have a formal BCP.

MH: And before we sort of delve down into what worked well and what didn't, could you just spend a couple of minutes just talking through, I guess, your key tech stack and what the systems are that really create the backbone to your practise?

RD: Yeah. So a long time ago, we invested in a cloud service, so we're on Microsoft Office, and I know other people use things like Google Drive and so on. So that was really important to us, even in an office environment, because it meant everything was kept in a very accessible format and could be shared both with clients and internally and could be edited and updated, so that was something we did a while ago now.

We also looked at things like just workflow management and we've used apps that are things like Asana. I mean, there are other apps. Some people use threads within X-Plan, but that's quite cumbersome from what I understand. And so there are some good just simple workflow project management type apps around. It just allows us, as a team, to know where work is up to, and that's, by no means, where it could be, so we've got a way to go still on that.

Digital signatures was another big one, implementing things like DocuSign well before COVID, which just helped us get advice out and signed and turned around and back, and it also just allows you to see, at a glance, where everything's at, how many people have signed something, or haven't, as opposed to the old mail post and follow up.

Obviously, video conferencing. We've used Zoom for a very long time. We still have preferred face to face meetings with clients wherever we can in the office, but there have been instances where Zoom has been helpful, and particularly with just one or two members working off site. We would hold team meetings and people would Zoom in. So they're the main ones.

The other one that we're using at the moment is a messaging system, something like a Slack or Yammer, which particularly now, it just helps us not have millions of emails floating around where you might just want to ask someone a quick question.

And then, look, I know this doesn't sort of seem to come under the technology heading, but the managed account was a massive investment for us and outcome in terms of making the way we delivered our portfolio management service and rebalancing just so much richer and easier for us to do as a practise and get better sort of client engagement outcomes for the client. So that's just been a godsend now, if I think about it, particularly when you're working remotely and you've got massively volatile markets and trying to make re-balances and changes to client's portfolios. I mean, it's been transformational and I'm not sure how we would have done it without that, to be honest.

MH: And love to come back to that a little bit more in a moment. It sounds like you've obviously been trialling or testing using a lot of systems for the business, to some extent, but probably not in a coordinated manner historically. Would that be a fair comment?

RD: Yeah. Yeah, because I think we've always been able to just rely on the fact that eight of us are generally in the office. And messaging through something like Slack or Yammer for instance, why would you do that when you can just walk over and talk to somebody? So that obviously was a great example, same as video conferencing.

And I think when you look at just some of the challenges, there's no doubt that being in an office and just having that ability to walk up to somebody, and even the little breaks you have, be it walking downstairs and getting a coffee and coming back up, or just grabbing someone and going into a meeting room, or having a face to face natural conversation with a client, generally speaking, is easier. There's no question.

Whereas now, every engagement we have, whether it's with a team member or with a client, is either a phone call, a Zoom meeting, et cetera, so it is different. But you're right, we're now having to use this sort of more of as an ecosystem and more collectively than we've ever had to do in the past.

MH: And are you finding that those various systems that you've selected or you used historically, now that they're being, or having to be used very robustly, are you finding that they're integrated? Or are you still finding it a bit disparate and that you're moving and jumping between systems quite often?

RD: I think it's still disparate. I think there still is a long way to go for complete integration, at least with our practise. I'm sure other practises are further down that track, where you've still got databases and documents on things like X-Plan, but you use something else for other file storage, and you might use email and Zoom.

But I think it is, equally, the flip side of that is, it's surprising how just with a laptop or a device, because we're on the cloud, you can be talking with a client through Zoom and then flick over and open up a document and share that document. So while it's not completely integrated, and then, obviously, you've got the platform and investment sides, which are separate again, it's not fully integrated, but it is a much better place than where we might have been five plus years ago.

MH: So picking up on a point that you raised, I think that the cultural piece of working remotely and being forced to adopt technology, for me, is really interesting at the moment. Some people deal with working remotely far better than others, but it's also, I guess, the ways in which people are looking to maintain that engagement. I heard a great comment the other day. We've moved from face to face, to interface to interface. And how do you actually try and create that human connection in what is effectively a fully digital world these days?

RD: Yeah. Matt, I think this is actually the issue. It's a massive issue and a learning, and we're still learning. The reality is that I think when people first talked about working remotely, your mind just goes straight away to your technology processes, accessing files, and so on, and that's probably where you spend, I think, the first two or three or four weeks trying to perfect.

So there were things that I instigated that I'm sort of pretty hard on in the discipline, things like a daily video Zoom with the team. Yeah, 30 minutes every single day just to replace the fact that you might've caught up in the office. Ironically, I think we're catching up and doing that more than we probably did in the office when we were face to face.

Likewise, just really encouraging, and our advisors have done a great job of just proactively talking to clients every single day and rotating through the clients just to ask how they're going. You could argue we should be doing that all the time, but now, more than ever before. I think those advisors that just sit back and wait for the phone to ring are going to be very surprised down the track that they might not have those clients. So that was a lesson I learned through the GFC, which was, those advisors that get on the front foot are the ones that sort of succeed.

But back to your question about cultural. The really big challenge is, how do you continue to keep the team engaged and morale up and all of those things when you're physically not together all the time? And something that's been occupying my mind a lot recently and I'm about to trial a couple of new things, but some of the learnings there are that you just cannot replace the need for communication.

So the big difference now is that, and I was chatting to someone about this the other day, was the fact that everybody is just physically restricted and at home and has probably their own issues at home and their own challenges and stressors makes this a lot harder. So it's less about technology. It's just about the position that we're all placed in.

My father-in-law is in a retirement village. We can't see him. My wife can't go and actually visit him. He's at a vulnerable age. There's all sorts of stressors and impacts that that brings, and then that reflects on the family unit. And I was on a Zoom call the other day with a guy out of a banking unit, and you could see that, in their room, he had his partner there, who also had a full-time job, and they had kids running in the background, and it was like you couldn't just readily hand your kids over or your children over to someone else to look after while you sit in on this Zoom conversation, and you don't have daycare necessarily, you can't get someone in to help you. Grandparents can't necessarily come and look. So I think there's a whole host of COVID community issues that have put a lot of stress on that.

So what are we trying to do? I mean, I'm trying to come up with what I call as circuit breakers. You can't just spend every single day on Zoom talking about where tasks are up, which are important. So I get on the phone and just talk to my staff, talk to my partners, see how they're going. We're really sort of looking out for where someone might be stretched and how we can help, what may not be normally part of our role, but take certain things on.

Actually this afternoon, for the first time, we're trying a quarantini. We're going to have virtual drinks at 4:00. We haven't done that before. I know that's not a new idea, but we're just going to. Partners are welcome, children are welcome. We're just going to see how that goes. Just prior to the long weekend, just talk about other things, other than work.

But I think it's just important to just keep that human connection stronger than ever before, however you do that, in terms of phone calls, Zoom or whatever, and just be compassionate. It's really important to be compassionate at the moment for yourself, but also your team and just really acknowledge that they may be going through a tough time at home because of the whole host of other issues that has nothing to do with work, which just makes it harder.

MH: And presumably, all those same principles apply to the way that you're managing client relationships, whether they be existing or potentially other new clients?

RD: Yeah, absolutely. As I said, just calling clients. I would say, on the whole, our clients, maybe it's because of the situation they're in, but overall, they're not panicking, but they have got anxieties. There's no question. You might have a big portfolio, but that portfolio generally has gone down by a bigger number, so there's still anxieties. They've still got their own personal issues in their families.

So what we're doing is just calling them up, just listening, listening, empathising, asking what other stressors they might have in their life, and then getting onto the thing that we might have called them about, which might be their portfolio or a particular task. Doing that by phone, doing that by Zoom, our clients have generally been pretty receptive to that.

We haven't really found a problem with people saying, "I don't want to have a Zoom meeting," for example. I think clients have really appreciated the fact that they have that option now, particularly when we first started, because it wasn't so much of a lockdown and I think a lot of them were appreciative that we at least gave them that option.

In the early days, it was funny. One of our advisors actually suggested, "We're not in the office, but we could come to your home," and they actually said, "Actually, we prefer Zoom." So sometimes, you can assume that clients want a certain thing.

MH: Yeah, and I think that face to face is critical. Certainly, we're recommending, suggesting, not mandating, but wherever possible, people turn their cameras on if they're chatting to colleagues or clients. It is very important, particularly this time when people are feeling so isolated, to have that human bond.

RD: And the other one is just, particularly as a leader in the business, I mean, just sort of helping and reminding your team that they don't need to sit at the desk for eight hours straight. In fact, they shouldn't. I think it's really easy when you're working from home, because you don't have other distractions that you might have had in the office. You actually can be quite productive.

The first few days, I found getting to 5:00 or 6:00 feeling quite drained, and so I think just trying to continually reinforce that it's okay if one of our team take their dog for a walk and take an hour's break from home or do some exercise or whatever it is that they need to do to sort of get away from the desk and get away from the laptop. That's something that I'm trying to put in my own life, but we've got to continually encourage it and reinforce it with the team.

MH: Should we be expecting to see you leading group exercise sessions any time?

RD: Probably not. Probably not. But one of our team members did send a message on Slack the other day and said, "Guys, I'm just taking my dog out for a walk. I'm going to listen to a webinar as I do that, so I won't be contactable for the next 45 minutes or whatever," so that's great. I mean, it's just having that flexibility I think and trying to think outside the square a bit.

MH: Yeah. I think exercising, getting out of the house, it just couldn't be more important at the moment, because one day does tend to roll into the next and you don't need to pick up that monotony. I think, at the moment, everyone is very productive. Certainly chatting to our staff, they feel that they're getting a lot more done, but I think the novelty wears off pretty quickly, so it's important to find new and interesting ways to adapt.

RD: Yeah.

 

With change comes your chance to explore new perspectives

We’ve developed a suite of resources to help you navigate this changing landscape – our Change/Chance Series. This selection of guides and articles delve into topics that are front of mind for advisers, now.

Access the resources

MH: And just generally, how do you think this is going to change the way that we work in the future? Have you started thinking that far ahead? Or has it really been just getting through the last fortnight?

RD: Yeah. Look, I mean, you hear a lot of that around. I haven't really started thinking that far ahead. Your intuition tells you that it will change. I think time will tell. There's a view that people forget things pretty quickly and go back to norm and all of that. There's another view that says some things just change, and as a result, you've experienced something different.

So look, I dare say it will change. I mean, we definitely are using this crisis, and let's not forget, there are a number of people that are hurting bad, and maybe we are more fortunate than the norm in terms of having our jobs and so on, but also people who've got sick loved ones and so on. So it is a tragedy and a crisis, but I suppose from a business perspective, it's how do you use this to basically innovate wherever you can and try different things?

And I think that's another suggestion, is just don't be afraid to try things. I think your clients, they're going to be quite happy with you trying things and not necessarily being perfect at certain things during this process. I think everyone understands, so it's a good time to try different things and things that you might have put on the back burner.

MH: Well, what are you thinking about in that regard?

RD: Well, just the fact that we've recently got to do a massive piece around documents that need to be signed. Now, we would ordinarily send those out with DocuSign. Some of those can't be DocuSigned, but our client services person, who's going to act as a one-on-one high touch, send it out, call them, help them through it, see if there's any things that can go that they need help with. There's other pieces of technologies I think that you can just bring to forward that you may not have wanted to test.

Pushing yourself just to do things, not to keep deferring things, I think is another one. Not sort of saying, "Ah, we'll just put that on the back burner," but actually forcing yourself to try as much as possible to be business as usual.

MH: Yeah. And there's no doubt that adversity is the mother of innovation. Certainly, we're going to see some really interesting and clever ways of working and engaging coming out of this crisis.

RD: Some of those aren't new, Matt. We traditionally haven't done webinars with clients, so that's something we seriously thinking about now. We've had more written materials, we've had client events, those sorts of things. So it's not a new idea, but it's something that our firm hasn't done a lot of, so that's something that we're looking into right now.

MH: At the risk of coming across slightly self-serving, your comments before on managed accounts were interesting. Just wondering if you can share, I guess, some of the benefits of having moved across to a managed account in a time of crisis?

RD: Yeah. Look, I think there's two main aspects of that, and these held true three years ago, as they do now, which is, first of all, we've got a very robust investment committee, which has our asset consultant on it, an independent chair. We've got the member of our licensee on it, representative, and the directors. So we use that, and with all the knowledge from the asset consultant and others, to obviously bring in a whole heap of views and understanding about how we should be positioning our portfolios, economic factors, etcetera. So that's the first part, so you need that.

But then, once you get all that information and you come up with a view on how you think you want to position your portfolios or client portfolios, I suppose the question I've always had, and it's as true now, is how do you execute? How do you execute that across a whole heap of clients?

Now, we're fortunate in that, compared to other practises, we've got a relatively smaller number of clients. But even with 130 or 140 re-balances, I mean, how do you do that if you don't have some form of structure, like a managed account, that gives you an element of agreed discretion to apply those changes?

RD: So I think once we get the house view or the decision, what we found is fantastic, is that we can just go and press a button on the platform and get those changes executed. So more recently, I mean, we've just had, sometimes daily, at least weekly investment committee hookups, be it on Zoom, where we've talked about the volatility and what we want to do, and then when we've come up with a decision, our asset consultant has been able to feed those through Netwealth and the changes are made for those clients that are in the managed account.

MH: And have you made a lot of changes over the last two to three weeks?

RD: No, not a lot in terms of number. We were already, I suppose, fairly underweight in certain assets classes leading up to sort of December, but I mean, in hindsight, we all wish we were far more underweight, so I don't think we can claim that we've done that, that we've escaped the volatility.

RD: But I suppose, continuing on that theme, we've maybe accelerated some of those changes, but at the same time, we've kept a pretty level head, taking a more medium to long-term view, and our clients are pretty comfortable with that, where we don't want to be just following the herd mentality, and continually selling down in a downward market, and then having the double whammy of missing out, when ultimately, that recovery comes. But when, is the million dollar question?

MH: If you work it out, please let me know.

RD: Yeah, exactly.

MH: Ray, a number of advisors have been asking, are we saying new business being written across the industry? Are you seeing existing clients adding more money to their portfolios? Are you seeing clients withdrawing money? Are you seeing new clients? What's the status?

RD: Yep. So we're not seeing a massive withdrawal at all at the moment. We have some clients, not all, who are quite opportunistic in their mindset and who sort of have access to cash, etcetera, that are asking that question of, "Look, I think longer term, this could be an opportunity." So it's about working what's right for the client and for their circumstances.

In terms of existing, I mean, our focus has been on existing clients, but we have had a handful of new clients that were sort of seated and in the pipeline. I mean, our client sort of gestation, new client, takes a while obviously. So some of these clients that we're putting on now as new clients, we've been talking to for a period of time. I reviewed, just over the last few days, about three or four new engagement letters that are about to go out to prospective clients,

MH: Which is clients you've been working on, but perhaps this has been impetus?

RD: In a couple, yeah. In a couple who have, if I'm being frank, have procrastinated for a very long time. Now, this has been impetus, be it the markets, be it their financial affairs, maybe realising that they need an advisor to help them with their broader financial affairs, so that definitely has been the case.

In a couple of others, they were already sort of down the path, and it just so happened that the signing up process and the proposal process happened to coincide with COVID becoming more of a urgent issue in the community. So we've just dealt with them like we do with existing clients, talking them through what we're going to do, sending them the proposals.

As everybody knows listening to this, there's lots of forms and accounts and things that you have to open. And how could you possibly do that if you weren't online and on the cloud? So we use the platform a lot for that obviously, and digital signatures and all sorts of things.

It's really interesting. We have gone into our physical postal box on occasion, and there's not a lot in there, which is really quite representative, I think, of how we operate. There's actually not a lot of return stuff from clients these days that is physically in a packet for you to go and collect.

MH: One of the things that surprised me, as we were working through working remotely, was just the number of checks that are still actually being sent and received.

RD: Right, right.

MH: Hopefully one of the benefits of this crisis is that we can eliminate them forever, but not sure we're quite there yet.

RD: Yeah. Now, well we don't have that problem, thankfully.

MH: Ray, from a strategic perspective, the final quarter of the financial year is usually extremely busy for wealth management firms and financial advisors. There's tax considerations, superannuation considerations. Do you see that continuing as per normal? How are you going to deal with what would normally be a very busy time? And so those strategies still makes sense?

RD: Oh look, I think it has to. I think if you were normally going to look at superannuation contributions and limits and people's pension positions and all those sorts of things that you would have to do at year end, I think you've got to still do that. We just can't defer that, but you're just doing it over this new medium. Maybe we're collaborating as a team together prior to the meeting, talking about it, discussing it, and then taking a client through it.

And I think just using that mixture of not everything by email, but some conversations followed by an email, maybe a Zoom meet. My general sort of direction I suppose the firm has been to the team has been, obviously there are certain priorities you have to focus on and there are some less important things that you just put off. But as much as possible, I think we've got to expect that this could be the new norm for, who knows, three to six months, and we have to keep the business and client engagement going.

MH: Absolutely. Life must go on.

RD: Yep.

MH: Ray, we're getting close to the end. Just interested in any final thoughts or learnings that you might've had over the last couple of weeks. Perhaps if you had a magic wand, what would you have done differently? Or what do you wish you could've done differently?

RD: Geez, that's a tough one. What would we have done differently? Look, I honestly don't think there's anything that sticks out significant that I would say, "Oh, yeah." Obviously with the benefit of hindsight of markets, we would have gone even way more underweight growth assets, but that was-

MH: If you look back?

RD: Yeah, that's right. So we would have all done that differently, but nobody coming in to December or January, I think, had any clue that this was going to happen to the level that it's had and the physical restrictions and so on and just the broader implications. So on that side-

MH: And there were advisors that suggest they did?

RD: Yeah. Now, we were no way thinking it would be like this. But no, I don't think there's anything massively different, because I think really this is something we haven't dealt with. And so that's, I think, the psyche that I think people should apply, which is don't feel like you need to have all the answers. Don't feel like you need to be perfect. Don't bash yourself up because you haven't got every piece of technology in place or whatever. You can still do it. You can still implement these things offline, or remotely, sorry, and just don't be afraid to try things.

And the number one suggestion that I've been trying to work to is just do not underestimate the importance of communication and human engagement interaction. That interaction may not be physical, but now, more than ever before, I think you've got to spend even more effort talking to your clients, talking to your team, finding out what's working, what's not, how they're feeling, more than ever before.

MH: Ray, I think that's a fantastic place to finish. Thank you so much. You've been very generous with your time, given everything that's going on. Congratulations on navigating through the crisis over the last few weeks, and all the best for the future.

 

You can subscribe to Between Meetings on iTunes, Spotify, Google podcasts or Stitcher.

Views expressed are of the interviewee and may not be the opinion of Netwealth or its related companies.

You may also enjoy these podcasts

• The essential ingredients for success - Grant Hackett OAM
• Industry trends financial advisers should know - Andrew Inwood
• The future of portfolio construction - Charlie Haynes

View all episdoes