Transcript

Matt Heine: Welcome to the show, Wade.

Wade Matterson: Thanks, Matt. A pleasure to be here, virtually, as it is.

MH: Virtually, as it is. Now Wade, you may not know, but this is an inaugural show in that I've never had an actuary on the show before.

WM: All right, well, I guess there's a first time for everything.

MH: Absolutely. Your story's probably a little bit different to most actuaries and I was wondering if you could just spend a bit of time, giving some of the background to your journey, but also just maybe a little bit about Milliman for those that aren't aware.

WM: Yeah, sure. Thanks Matt. So now let me get started on how I got into actuarial sciences, and not that it's a super interesting story, but as I start to reflect on it, kind of timing is parallels in some respects to where we're at now. So I graduated university at the end of 1994, and as we constantly talk about in the Australian market, the last major recession we had was '91. So I didn't actually study actuarial at university, I did mathematics and finance, which was much more around investment-oriented subjects. But coming out of university post that recession, it's hard to find jobs, not necessarily as a graduate, but seeing the experience of people a few years ahead of us.

And so, when I was offered a job to be an actuarial analyst, I kind of grabbed it, sort of bird-in-the-hand type view, and then not entirely knowing what it meant, and spent probably the next 14 or 15 years working to qualify as an actuary. Interestingly, where I started was really as a life insurance actuary. And within five or six years, got into technology to some extent, actuarial software, moved to the UK, worked over there for some time. And in terms of my journey back to Australia, joined Milliman in around 2004 in London. And that was kind of a journey that took me on a path more outside of traditional life insurance work which I've been doing for many years, and focusing more on wealth management. Now at that time, we were working for insurance companies that were developing retirement products in the UK market.

And I was very lucky. My daughter was born in the UK in late 2006 and at that time, we decided to return to Australia. And I had some clients I was working with at the time in the Australian market, and Milliman being a US-centred, an entrepreneurial organisation actually gave me the opportunity to come back and establish a business in Australia. And given the Australian market's dynamics around superannuation, it seemed pretty appropriate. So Milliman itself is an interesting organisation, it's one of the largest global actuarial consulting businesses, but at its core, it's really got that entrepreneurial spirit that you see coming out of US-type firms. So we have quite a bit of autonomy and each business within its domestic boundary is able to scan the market and develop services and research and solutions specific to the leaders of that business but also to the market demand and the market dynamics.

MH: Who's driving that cultural piece because that's quite different to many global institutions, let alone actuarial firms?

WM: Yeah, I think it's certainly my experience and having worked for a bunch of firms and some being based around that European-type model, which is highly centralised, it's something you do tend to find is a bit of a cultural aspect. So I think fortunately for us, the US origins of Milliman as a business meant that we're always had that entrepreneurial approach to things. Each consulting business, whether it's one of the core accounting firms or an actuarial firm, they all have their own different structures, which is always quite interesting. And so Milliman as it's built out of structure, has really tried to retain the best elements of that entrepreneurial spirit. So the way that it's designed, its economics, how it collaborates, how it brings resources together. So I think it's something that is quite unique to our business and it's something that's been in the DNA from the very early stages.

MH: So based on what you said, I think I've got this right. So you were at Milliman for two years before they gave you the opportunity to come and set up in Australia.

WM: Yeah, that's exactly right. So late 2004, I started working on Australian projects in about 2005, but we physically returned early in 2007, so yeah, I was there for a couple of years working on a number of US projects and European projects, and I guess since 2007, I've been fully focused and based in Sydney, looking at Australia and New Zealand and to some extent opportunities and work that we do across the Asian region.

MH: So for the listeners that are working in institutions, I think Milliman is known in institutional land, not so much necessarily for intermediaries or financial planners. How did you, not only convinced them to let you set up a business in Australia, but it sounds like you've pivoted fairly quickly into actually working with the intermediaries within the advice space?

WM: Yeah. I guess there's a couple aspects of that. One is probably just a personal preference and one is more a market dynamic that we face. It's quite unique in Australia. So the personal dimension, from my perspective, as I mentioned, I spent quite a lot of time studying to be an actuary and so I was never the most studious actuary or the most focused on the numbers or the analytics, which is partly the reason why I'm spending a reasonable amount of time in life insurance. It was never really the core calling. And from my perspective, because when you look at those sorts of businesses, you're very much focused on how you structure an institution or how you manage its balance sheet and its liabilities. And to me whilst it was interesting, it missed that really human dimension, which is what am I doing at the end of the day that can benefit society and the public.

So as we got back to Australia, the opportunity opened up because we were working with institutions to help them build products and solutions for end consumers, particularly with this retirement challenge in mind. And really, as we started getting into that and started initially working the same way we worked with institutions in the past, it occurred to me that the problem was so important and so challenging that you could never solve it just by purely focusing on the institutional dynamics. You had to actually get to the point where you understood the end-to-end process from the very basis, basic fundamental question of how do retirees live their lives and what do they need and what do they do with their money, to how is advice given, what sort of analysis is done to support that and how do they make recommendations? And then interestingly, what are the products, solutions and toolkit that you can deliver to help make that experience better and create better outcomes?

And the traditional consulting model was very much, let's start with a product and work our way forwards. From my perspective, the more interesting challenge was start with the consumer and work our way back. And so, as we did that, we just found big gaps because as a market, the market from an institutional perspective, and Australia is generally characterised with small number of large institutions, had that very, very kind of common corporate approach to things. And it wasn't until we started talking to advisors and doing research on the way investors and consumers behave that you recognise that that's where all the activity took place, where the intense focus on outcomes really existed, and the opportunity to help people implement better changes and better solutions existed.

 

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MH: And given that you're sort of looking at the institutional product design. Presumably the focus back then and now has really been around solving longevity and sequencing risk.

WM: Yeah, I think so. Now, this is where there's a really interesting overlap where I've kind of had a kind of a small dig maybe at my life insurance background and pedigree and how that sort of work in a corporate sense, I didn't personally find as interesting as what we're doing now. But the overlap and the benefit of having worked in that field is that life insurance is particularly all about liability management, particularly long-term liabilities. So when you start thinking about how you provide a better solution to create a retirement income for example, then that is all about how we help individuals and consumers manage their own personal liabilities. And they are long-term by definition. Retirement's not a five-year journey. It's a 15, 20, 30-year journey. And so the challenges you encounter there are how do we get a better understanding of those consumer liabilities?

And in a financial planning context, it is a goal. It's a hope, it's a dream, it's the things we want to achieve out of life. And as an actuary, we talked about it as a liability, but ultimately it's a very personal thing, and there's a huge amount of analysis that we can leverage in terms of what we've done in that institutional world and bring that sort of thinking into this world. And so that's inevitably then when you get there, you understand what the liabilities are, what are the goals and the hopes and dreams that people have.

And then the next natural question you ask is, well, what are the key risks that stop people from achieving those goals? And clearly sequencing risk, all the risks that markets have a major correction, our longevity risks that we live longer, are aspects. But I would also suggest there's a whole bunch of other things, which is what if people don't budget appropriately? What if they spend more than they should? What if they switch their investments at the wrong time? So there's this whole behavioural dynamic and all these things interact. And so you have to ultimately blend an analytical solution with a behavioural one, which is why, in my view, it's so important to have strong linkages to the advice community because ultimately, they're the key kind of linkage back to the consumer to help them manage a lot of those behavioural aspects.

MH: And I think that's a really good point. That certainly from an institutional perspective or product manufacturer, you tend to start with product as opposed to starting with the consumer and focusing on some of the things you've just mentioned, such as budgeting and spending and I think that bit's probably overlooked when designing products.

WM: Oh, 100%. Not only is it overlooked, but part of it is in the way that product providers historically have gone about their market development in a sense, has highlighted the fact that they haven't considered all these dimensions. And the way I tend to think about it is if you think about or just took a bunch of actuaries and said, "Design me the ultimate product for a retiree," then they'd go away and they'd build all these models and they'd come back and you know what? It would be perfect from a, if I invest X amount and I want this amount of income, then this is the right strategy for that. And it deals with sequencing risk, longevity risk and all the rest of it. But the challenge with that is, it doesn't necessarily look at how people want to live retirement, how they think about things, how the behaviour it features in, but then in addition, what you tend to find is with that real technical view on things.

Sometimes the approach we might take is we'll take this to market. So everything that an advisor has been doing or using is inappropriate or it's wrong and here is the right solution for you. And just by that approach, then straightaway, you've started on the back foot because you haven't accepted that actually the vast majority of what advisors do and the how they invest people is actually really robust and really powerful. And what you're trying to do is nudge them in enhancing. You can't overhaul an entire advice framework to all of a sudden start incorporating completely different product and approach because there are so many different aspects. So you're talking about how do we address and understand behaviour from a consumer perspective, but actually how do we design things in a way that fits and enhances the advice process. Because there are so many other hurdles that advisors have to meet, which we've seen around education, regulation, compliance, that they can't simply pivot an entire business model to something new. So it's working collaboratively in that sense to build solutions and not product so much. I would argue you've got to start using a real language around solutions and toolkits as opposed to saying, "Here's a product that we think you should use."

MH: And a lot of that presumably has been picked up in some of the research that you've done lately as it relates to that end-to-end process. But also particularly to, I guess, your more recent research, which is how has that process or how has the feedback from consumers changed post-COVID-19.

WM: Yeah, I think that's right. And the interesting dynamic and also slightly challenging one, if you go back to sort of when we started in the Australian market, and my timing's always excellent, right? So I moved back in 2007 and trying to build out and develop a relatively new business in the Australian market. And all of a sudden we had the Financial Crisis. So you've seen the impact of market corrections on retirement plans and on retirement lifestyles.

And now a decade on, well over a decade now. And we're seeing the same thing manifest itself again. So the interesting dynamic there is we saw very much out of the crisis that there are large swathes of people who have had to adapt their lifestyle because their portfolios have taken a hit. They've then recovered, if they remain invested, and now they've taken another hit. There are other groups of people that sold at the bottom of the GFC and they never returned back to growth assets because they were scarred. And so, I think it's a real interesting lesson, that a lot of the behaviour, particularly when it comes to things like loss aversion, which is that people feel much more pain when they see losses, whether that's in a portfolio or whether it's other aspects of life than they do satisfaction from gains, is really present and acute, particularly at times like this. And how we build solutions to help address that and keep people invested appropriately for the long-term is important when we're building and designing investment solutions in particular.

MH: Wade, that probably raises one of my pet hates, which is risk profiling. What's your view on the current approach to risk profiling and why isn't it done better?

WM: Yeah, it's fascinating and I must admit I've seen a lot of your commentary and agree very strongly with it. And I think the challenge in many respects is whether risk profiling as a tool is being used as a compliance mechanism to justify and have the evidence in terms of how we've invested people, or whether it's creating a meaningful solution that links to investor preferences. So the challenge I quite often have with risk profiling is, and the example I use, particularly when it comes to retirement, is we'll sit down with a client, we'll ask them a bunch of questions, number of questions will vary. We'll ask them how much they know about markets, we'll ask them how sensitive they are to a draw down. But at the end of the day, it spits out an answer and it goes, "Okay, you are balanced."

And then we put all their investment money into a balanced portfolio of some description. If I was to change that conversation and sat down with someone about to enter retirement and ignored the investment aspect and said, "Okay, talk to me about three fundamental goals you might have in retirement and tell me how sensitive you are to each one of those," then the conversation's completely different. So you start off and you go, "Okay, what about your goal for maintaining a roof over your head, keeping your family clothed, paying for food, and all the rest of it. Now is that a high priority for you?" And everybody would say, "Yes." And then you ask them, "Well, how sensitive are you to that? How much change are you willing to accept?" And the answer on essential things like that is zero. I have zero tolerance for risk when it comes to that goal.

And then as you go up the tree, you end up with, "Well, how much money would you like to leave behind for your kids?" And again, this is different for everybody, but for my parents, it's not very much. So in that sense they've got complete flexibility on how much money they would leave behind for their kids, so they can take whatever risk they want with that.

So if you start thinking in terms of goals and the risk to goals and the goal profile, as opposed to risk profile, you get a very, very different answer. And even now, would suggest that if you look at someone who's in a balanced fund, you've got lots of different people in a balanced risk profile at the moment. Some of them are ringing you up every day, going, "What the hell's happening to my portfolio?" Others are comfortable and others are going, "Oh geez, I wish I was in growth for the rebound." So the risk profiling isn't as sensitive to short-term market movements. And it's certainly not strongly linked to goals in isolation. So I'm not saying that we should throw the thing out, but it needs to be enhanced and added to to create a much more valuable framework that advisors can use with their clients.

MH: Increasingly, we're seeing more advisors adopting goals-based planning. You just described it so eloquently and it's hard to argue with it. Why do you think that the take-up or implementation has actually been as slow as it has been? Is it technology? Is it education? What's driving the lack of take-up?

WM: Look, I think it is, so again, as an actuarial firm, we do a lot of work in this space in particular. And from an analytical perspective, it actually is a very challenging problem, because now all of a sudden, when I start talking about goals, goals don't operate in isolation, they actually are all linked to each other. So in that example I gave earlier, if my goal for essential spending's very, very high and I want a lot of money to meet that, then that money has to come from somewhere and it's going to detract from my ability to leave money for my family at the end. So every goal is interlinked and it has this really complex interplay between things like social security and the Aged Pension and long-term care and insurance and savings and a whole bunch of things.

So I kind of look at it as in some respects it is a technology problem, but it's a technology problem in the sense that firms that are good at building interfaces and designs and engaging experiences, which can really deal well with this sort of conversation, are not going to be very good at all the complex maths and analysis that needs to underpin it. So you kind of get this disparate skillset that you need to blend. And then the reverse is true as well. Like a firm like ours, which does huge amounts of complex analytics and mathematics, we're the last people you want to ask to come and design the engaging user experience because we're right-brained and you've got to be left-brained for that. So it's how you merge those two things together. There are some real encouraging developments on a global basis where firms are trying to deal with this and I think as we deal with it and we engage advisors and have them intimately involved in putting this stuff together, you'll actually start to see a lot of progress. It's also about being intelligent, about not trying to solve a massive complex problem on day one, but starting with a few of the specific pieces and then stitching it together.

But I think that's an area where you'll see huge amount of advancement and inevitably with things like managed accounts as well, the investment toolkit itself is evolving in such a state that that degree of personalization and monitoring and tracking and ultimately solutions will actually begin to integrate across the value chain, which I think's really important.

MH: Do you see that in that scenario? Because the people are better take a bucketed approach. So they'll actually be running different portfolio designs for each of the goals in that regard?

WM: Yeah, I think that's true. It's also a question of transparency. So if you take some simple examples. So a lot of the challenges, again starting with why risk profiling is used extensively. In some respects, it takes a whole bunch of individuals and then puts them all into a similar structure. So you get the benefit of an efficient process that can apply to lots and lots of people. But the challenge as you get into this goals-based world is that you can actually get much more variation. So I can start, instead of having five different buckets that align to risk profiles, maybe I've now got 20 different goals-based portfolios. And-

MH: Do you happen to know what the average is? I was chatting to a well-known industry participant the other day about goals-based planning, and he said, "Well, it's a furphy." He goes, "I've got a single goal." I said, "What's that?" And he said, "To retire with as much money as possible." So now, I think he was being flippant in his comments. But is there a typical number of sort of big goals that people are working towards in life? Or is it [crosstalk 00:23:35] life stage?

WM: Look, it is definitely a life stage thing. Well we've seen everything from organisations when they're looking at this holistically and they're taking people from their twenties all the way up to people in retirement. They might have somewhere in the vicinity of 30 different goals across the entire kind of experience that someone has, from the time they start working to the time that they've stopped, and eventually kind of passing money down to the family members. But definitely, when it comes to things like retirement, you can... I'm a big proponent of keeping things simpler rather than over-engineering. So I do tend to think you can actually construct frameworks where you're dealing with a small number of goals. And then quite often, they may not be articulated in the sense that, "I need X dollars." It might just be, "I want to maintain a lifestyle."

And that's the question is ultimately if you want to maintain a lifestyle, well, what does that lifestyle look like? And how do we map that out and deliver that to you with certainty? And the way I like to describe it is often, if someone's about to retire, they know roughly what their lifestyle is now. The first problem is they can't extrapolate what a lifestyle looks like realistically over the next 20 years. They can try and extend their current lifestyle as long as they can, but inevitably, age will catch up with you, your mental and physical capabilities will change, your preferences and tastes will evolve. And so that's really where advisors come into their own because they've got the ability to sit there and go, "Well, actually this is what a journey will look like. Now, let's try and plan for the things we know are likely to happen and that we're relatively confident on."

But then what is the plan to have for things that are unknown or uncommon? So it's hard to plan necessarily for a health event. But if you know you're more likely to have one, then you can say, "Well, let's put a contingency in place." So it's those sort of planning and thinking that's really a good fit for... So that's one of the reasons we tend to think, a pure technology solution, if you want to refer to it as robo-advice, is inexplicably challenged to be able to solve these types of problems because you can't escape the human aspect and you have to have this regular sort of engagement with people because life changes as they go through it.

MH: So I take it that Milliman's not a fan of robo generally or do you actually like some of the solutions out there?

WM: No, we do. But I think where we have focused our energy and effort... so I kind of look at robo in a couple of ways. So robo, if you've got people where you want to adopt a risk profiling approach and you want to ask a few questions and come up with a portfolio of ETFs, then great. You don't need someone like us because that is not a overly sophisticated or complex problem you're trying to solve, you're delivering a very kind of simple, unsophisticated solution, which is why actually I think we've tended to refer to it as robo product because there's not really an advice component to that. If you're starting to try and then understand how you help people map out and plan around life events and how asset allocation may need to change because markets are moving, then you start to need and require more sophisticated analysis.

So we look at that as enhancing an advice process by providing them with richer information, which are analytics, and also freeing advisors up in the sense of there's two ways to do this. You can start to deploy smarter analysis so that it makes their job more efficient, more effective and you can automate certain components of it. But it also gives you the ability to have richer conversations. So if you start to think about, what we're seeing at the moment, all of a sudden we see a market decline of 35%, where in my modelling or my plan, have I demonstrated the fact that there is uncertainty in the future here? So we know a lot of advisors will run Monte Carlo models and some are developing them themselves and some financial planning software may have some. But I guess what we're sort of looking at is how you do that with the benefit of the sorts of techniques and capabilities we've been running for institutional clients for many years?

And the interesting thing now, and you can look at it as the evolution of technology is we're now at a point where technology is so good. I can actually run many, many simulations of future states and scenarios in real-time whilst my client is sitting alongside me. And that's immensely powerful because it gives you the ability as an advisor to say, "The world isn't perfect and I can't tell you what's going to happen, but we can quantify the uncertainty that exists. And then I can have a conversation with you about how we manage it."

MH: Wade, I think that did stand true. And I guess a question for you is that a lot of the work that you're doing is around trying to map out someone's future by looking backwards and using historic trends. You get something like COVID-19 that really changes the world in many ways, as far as unemployment and you've got oil going into negative territories. Diversification hasn't worked in many ways. Has that broken your model or what does it actually mean for you and what the team's working on?

WM: Yeah, well, actually it hasn't broken in the model in a sense because models... our approach to models of those two things is ultimately you calibrate assumptions to what you've seen in the past. So that's the starting point to understand that markets are volatile, that there are things like GFCs and tech wrecks, but then the very nature of what a sort of a life insurance, actuary and a firm like ours does is we actually don't run all those historical scenarios and just point to them. We actually want to run thousands and thousands of simulations into the future. Because by doing that, we actually are running scenarios that have never been seen before that you can't anticipate. Now, the challenge that really manifests itself from that is, and it's kind the example is, if I look at something and I go, here's the probability of across thousands and thousands of simulations that you've won't achieve the income objective that you've set.

And we might go, okay, no problems. We're 95% confident that we'll get what we need across all these different scenarios. And I sort of talk about I would normally disclose... it's a little bit like when you're playing kind of Texas Hold 'em and you're sitting in a round table and someone gives you two Aces and you're sitting there and the stats are that you're 98% certain that you've got the best hand, that you're going to win. But how many times when you're sitting at the table with two Aces in your hand, you end up losing, right? And the problem there is, well, the way risk operates is we can look at probabilities, but at the end of the day it's not thousands and thousands of simulations that happen. It's one that happens, and that one can be a really good scenario or it could be the sort of scenario we're sitting in here, which is at the real extremes of those simulation models.

And so the conversation that you need to have with clients is, "Firstly, here's the range of scenarios where we may or may not achieve what we want." But the next natural follow-on question is, "Okay, that's great. What happens if we don't get there?" So if it's 98% confident that we're going to achieve what they want, what happens in those 2% of cases and am I going to miss out on five years of income? Or I'm going to miss out on 15 years of income. And I think that's where a lot of the analysis we've done starts to blend those two things because you have to have those dimensions to the conversation because the frequency or the opportunity... the chance of something happens is pointless if you don't quantify the severity of what happens with that. And so, COVID's definitely an extreme scenario, but people that have that real risk-focused opinions are willing to make those trade-offs and put in place strategies, where maybe they won't get as much of the upside, but they're much more insulated when these types of events happen.

MH: For a lot of people, a 2% risk of not achieving their goals, typically, I would have thought they ignored. Do you have, at what point do people tend to start paying attention?

WM: Yeah, look, I think it's probably a bit extreme. We tend to think, and this is again, back to almost that risk profiling question where if we're talking about goals then, now that I've set a goal and as an advisor I've sat down with my client and I've said, "Okay, we've run the analysis, 80% of the time you're going to achieve what you want. There's this 20% tail where you may not."

MH: Are you comfortable with that?

WM: Are you comfortable with that? Absolutely. And so then, as I said, the important part is for the client to be able to say, "Well, okay, what happens if we don't and what strategies can we use? What approaches or solutions can we use to deal with those events when they don't happen?" So some of the more recent research we've done for instance is we've looked at things like the Aged Pension. So in a market correction, if you're in that sort of means-tested zone, the taper zone, then the Aged Pension's going up and it partly offsets some of the falling asset values you've had. So for an advisor they might go, "Well, no problems, given how much money you've got. If this event happens and it's really bad, then whilst it's not a great strategy, it's nothing we want to heavily rely on. The Aged Pension's going to give you some aspect of a buffer there."

So it's that kind of extra dimension to the conversation, to say as a planner, we've thought through this, we've looked at the problems and I've had this sort of conversation with you, my client, to agree that if these things happen, which are unlikely, but they can be quite significant, that we've agreed amongst ourselves that we're happy with the strategy we've got in place.

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MH: Wade, I think at the start of this discussion, we said we weren't going to touch on product at all, but it seems like not a bad segue, given that the Netwealth team and your team have been working on some pretty exciting things. Do you want to just touch on some of the solutions that we've been working on and how they might actually help mitigate that 2% risk, or whatever it might be?

WM: Yeah. Yeah. No problems, mate, appreciate it. Yeah. So I think going again back to that sort of background as Milliman as an organisation, we've spent many, many years working with our institutional clients. And part of what we do, as I've said, when we're looking at long-term liabilities, a lot of institutional clients will have those and the way they manage it is they will implement investment strategies that effectively protect them from adverse scenarios. So a market correction, they'll have an investment strategy where they've got assets that go up in value. So typically, we refer to that as a hedging strategy. And that's also an approach that's quite prevalent in various investment guarantees. And Milliman as a business has been doing that with clients for 20 years.

As we've started to look across the market and had experience working on institutional solutions, a few things struck us, which is firstly the solution has to fit with the advice process. Secondly, advisors and their clients don't want to be locked in to a product irrespective of what it offers. Whether that's over a five-year, 10-year, 15-year window. Also, advisors and clients need to have something that's flexible and can change as their life changes.

So what we did is we started looking at with the prevalence of managed accounts, how do we design a solution where an advisor and their client can have a managed account but effectively they can easily turn on or turn off the ability to protect that managed account portfolio for a market decline. And so, that's what we've done. We have a number of models, as you've mentioned we're really pleased to be partnering with Netwealth on launching them. We're referring to them as SmartShield and effectively what they are is a collection of ETFs across risk profiles, moderate all the way through to high-growth. But it comes complete with a risk management protection feature that is easy to turn on and turn off. And again, as I've referred to, timing's always an interesting thing. So-

MH: Would have been six months ago.

WM: Yeah, exactly right. But again, it's something that's leveraged a lot of the work we've done for many, many years. And as you pointed out, the opportunity to actually work closely with advisors and platforms like yourselves to make this accessible at a really low price point as well. Because I think that's another one of the aspects is recognising that things like risk management should be delivered in a cost-effective way to free up budget for advisors and their clients to seek more aggressive alternatives. If you want to think of a core-and-satellite approach, for instance, or deploying this to create a more robust and resilient set of buckets that advisors typically use for their retirement clients, then there's any number of ways that these types of portfolios can be used.

MH: And I think certainly what got us very interested at the start was that it wasn't... it's sort of a typical product that we all remember going into the GFC or even coming out of the GFC where they were sort of CPPI or cash-locked. That this actually overcomes a lot of those initial problems, not to be sold as a capital guarantee, but more as a volatility control.

WM: Yeah, that's right. And I think it's recognising that, from an investment context, there's no free lunch. So it's all about managing risk in a cost-effective way. And if you want to avoid risk altogether, then clearly you can take your money out of markets and put it into cash and TDs. Unfortunately, rates are at such a point now that you're effectively consigned to getting no return on your money. So we've seen as clients move up the risk curve, that they're doing that. But we believe that having a robust risk management process leading alongside that can create quite a bit of value.

MH: Wade, we've covered quite a lot of ground today. I believe you've just finished a number of whitepapers on these topics. You happy to share those for listeners if we make them available on the website?

WM: Yeah, absolutely. So like I said, as an actuarial firm, a lot of our work is research and quantitatively focused. So we've got a number of bits of research that we've done more recently on the Aged Pension as I mentioned. We've also spent a number of years looking at spending patterns of retirees. So there's some interesting insights coming out of that, particularly in light of what markets done recently. And I think importantly, as we've seen in our conversations with advisors, they're really looking for information they can use immediately, in some of their client conversations. So yeah, love to make them available through Netwealth.

MH: Fantastic. Well, thank you for your time, and thank you for all the hard work that you've been doing for the industry for so long.

WM: No, pleasure to be here, mate. Thanks, I appreciate the opportunity.

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