Speaker 1: 0:24

Welcome to Finance Friends with Fabian podcast and today we have Sean Graham, the Managing Director of Assured Support. Welcome.

Speaker 2: 0:33

Thank you, how are you? I'm fantastically well and thanks for having me.

Speaker 1: 0:36

Well, thank you for coming on the podcast, so let's just start by Assured Support. What is. Assured Support.

Speaker 2: 0:44

Well, in a nutshell, assured support does everything that licensees and advisors need, so you can think about it as compliance, risk management, governance technology. Pretty much every step along the way of the advice process, we're there to support advisors and licensees.

Speaker 1: 1:01

Yeah, okay. So if I'm for our audience that might not know what an advice needs, so obviously they need to be compliant, give compliant financial advice. So do you help them with?

Speaker 2: 1:12

that we certainly help them. We do a lot of coaching. You take a step back at a business level, though. Right, Australian financial services licensees. Most advisors work in probably the most complicated, complex and frequently changing environment in the world. Right, Probably childcare's a bit more regulated, but it doesn't change as much as financial services does. So there's a lot of complexity and if you're trying to advise clients and trying to help everyday Australians to get better, or you're trying to run a business and be consistently profitable, it's hard to do that and also concentrate on the legs and regs and everything else you need to do. And that's where we come in. We step in to help, support them and make sure they're okay.

Speaker 1: 1:54

So for our listeners that don't know, legs and regs are legislation. And regulation and regulation that's right which is constantly evolving.

Speaker 2: 2:01

That's right.

Speaker 1: 2:02

And you know I used to be a financial advisor and during my time, you know there was a thing called FOFA Future of Financial Advice, and then there was, you know, advisors have to opt in, opt out fee disclosure statements. There's lots of, you know, lots of changes.

Speaker 2: 2:18

So when I entered the industry in 1996, which is a long, long time ago I'd just finished my law degree and I was working in an insurance company. I spoke to her at legal about what I should do next, where I should get legal experience, and she said whatever you do, don't go into compliance because all the work's been done. Now that was 1996. And every year since that there's been a program of regulatory reform. Every year advisors say to me oh, this is going to be the end of it. Reform. Every year advisors say to me oh, this is going to be the end of it. What are you going to do when there's going to be no more need for compliance? And over 30 years it has not changed the fact that there are businesses like mine and I suppose we're the only one with the scale, resources and the tech footprint that we do. But all these businesses have evolved and entered the industry because of that complexity, because it's a specialised field.

Speaker 1: 3:07

Yeah, so I saw an interesting statistic where maybe back in the 90s, there was maybe one compliance person per I don't know maybe say 100 or 150 advisors. It's interesting to see how many. Well, obviously it's changed because of the last I've just gone blank when the banks had to review their advice and that. What was that?

Speaker 2: 3:30

We had the Royal Commission, we had the Delivery and Better Financial Outcomes, which is the most recent change. You had a whole range of remediation programs that came after the back of the Commonwealth Bank issues and even before that as well. But the issue is really this is we can go back to the old days where there used to be one compliance person for 50 advisors. That used to be in the early 2000s, right? So I didn't think you were that old. But look at it now and you look at the ratios. But the more important thing is to think about well, everyone's a compliance person, right? Every advisor, everyone in the business, is doing compliance, because all compliance is is actually running a business that doesn't get you into trouble, right? That's where it comes down to. And the other part of it is well, what is a compliance person? Because back in the 2000s it used to be people who would go out and would be able to tick boxes on a checklist.

Speaker 2: 4:22

I don't want to dig into the institutional licensees, but that's traditionally how they ran it, right, it was command and control model. Whereas what compliance is now is very, very different to what it was 30 years ago, and what's interesting is that rate of change has accelerated and it's really disparate, because there are some groups who are still out there in that old tick box regime and there are others who go. This is the key to building a more successful, more consistently profitable business. So one of our clients says he sees compliance as the only real leverage point for practice value. Right, so he's really invested in it. So it's always interesting when you sit down with advisors and principals and they want to talk more about compliance than you do, right? Yeah, because they get it and their businesses thrive as a result.

Speaker 1: 5:11

Yeah, so maybe let's touch on when you say compliance. 30 years ago in the 90s, someone mentioned to you you know all- the compliance is done to now. What actually has changed? Obviously, you talk about regulation and legislation. But if you go back 30-odd years ago to today, just a high level.

Speaker 2: 5:32

Yeah, so a high level. 30 years ago I think people just thought it was process that if you give me a checklist and a process document, I'm going to be compliant Whereas now we know well, it's nothing like that. It's like basic criminology, which is why do people do what they do and how do you drive behavior. And also now compliance involves everything right, because it's so broad and your obligations to the law are so broad.

Speaker 2: 5:59

Compliance people nowadays have to know the law. They've got to have a solid foundation of the law, but they've got to know a lot of psychology as well, because it's about how do you change behaviour, how do you influence people where you don't have that command and control power, like when they're an employee, it's fine. You can tell employees to do things, but when you're running a licensee and when you're dealing with authorised reps, these are effectively independent subcontractors, so they don't take well to being told what to do. So it's a very different skill set. And this is where the skill set needed for compliance people now is very different, because they need to be creative people fundamentally, because it's not about you know, knowing the rules and knowing the basis for what needs to be done. That's, I guess, the ticket to ride. But your skill is your ability to be able to contextualize that, to commercialize those obligations and to recognize where the opportunities are, and also then to be able to take people with you, because it's fine knowing what needs to be done, but if you can't engage people and get them to say, hang on, that's a really good idea. I'm going to do that. You're going to fail.

Speaker 2: 7:07

And that's been the big shift. It's this shift away from something being bureaucratic and imposed to being something organic and self-generated. So, like I said, advisors and licensees are talking more about this and they don't talk about compliance per se. They just talk about terms in terms of they might talk about it as governance or running a business, but they just talk about it as good advice. Right, we just want to give good advice. What do we need to do? And here's how you do it.

Speaker 1: 7:37

Yeah, well, to give good advice, you need to be compliant ultimately, because otherwise the reason why you wouldn't be compliant is if you're not giving good advice or advice in line with legislation.

Speaker 2: 7:46

But for so long like particularly in the 90s, early 2000s, up until the Royal Commission if you sold a lot of product, then it didn't matter. So you could say what you did was good advice. Because there was no. Until we built what is essentially the industry index. Until we did that, there was no objective measure for how advice quality could be assessed right. So you go out and see guys who were writing a lot of group product and you could point out compliance issues to them and they wouldn't care less because it didn't matter. They were making a lot of money. Head office was very happy with them because they were writing a lot of product.

Speaker 2: 8:24

Now, until the Royal Commission came along and someone opened that up and said hang on, look at what client detriment's been caused. That started the change. But there's still those pockets where compliance is an add-on or compliance is an obstacle to move around. Or, if we can't just ignore it, what's the bare minimum? We need to do A lot of that's changed. If we can't just ignore it, what's the bare minimum we need to do? A lot of that's changed. And this is where the industry has really shifted over the past five years in a way that I don't think some of the older players have really woken up to yet.

Speaker 1: 8:54

Yeah, so, because obviously there's been a change in education requirements and with new entrants into financial advice as well as existing advisors having to do an ethics course and having to do a financial advisor exam, and do you think? And we've gone from give or take numbers, 28,000 advisors now to 15,000 advisors nationally and a lot have gone out of the industry due to changing compliance requirements and education. So do you think, have you seen the I'm sure you would have seen it evolve, especially over the last circa 10 years since the Royal Commission, how the advisors that are currently giving advice versus you know, overall, the advisors that used to give advice?

Speaker 2: 9:41

some years ago. I'm in a good position to be able to talk based on the data. So we've reviewed over 21,000 client files since 2012, each at a granular, really detailed level across over 200 licensees over that period of time. So what we've seen over time and I'll give you the bad news and then I'll start with the bad news. And then I'll start with the bad news. The bad news is there's still about 12% of advisors who cannot meet minimum regulatory standards Right Now. Remember so compliance most licences talk about compliance minimum standards. So there's about 12% who can't do that. They can't issue SOAs or advice. That's inappropriate, conflicted, whatever else. They don't hit the professional ethical standards.

Speaker 2: 10:26

On the other side, other professional advisors have gotten better year on year. As the regulation increases. They're still getting better and one of the great things we've noticed recently based on the data is that we've had all these people come through with their professional year. So, as a consequence of the professional year, they have five files reviewed. So we often come in and review those five files and we track them through. What we find is that the professional year advisors what happens is when you review their advice, when they finish, they are well above the industry median, well above the industry median. And what is also interesting is their supervisor. Regardless of what their rating was before they started mentoring, they improve.

Speaker 1: 11:10

That's an example of you learn the most when you teach.

Speaker 2: 11:13

That's exactly right, but this is where advisors, when they look at this and they go. Where are the next group of advisors going to come from, and why should I invest time in doing this? They might go somewhere else. There's some really good reasons to invest in developing professional year advisors. One you're going to build your business. You're going to bring new advisors in who are inculcated with your culture and your approach. But also, you're going to get better. Right, you might think you are the apotheosis of advisors at the moment. Right, but you can get better, and by having to sit down and explain, well, a man teaches. He learns, exactly as you said. While they do that, they're going to get better. So there are so many advantages to do that and I think that's a really good sign for the profession. If you get the right people in, in the right culture and you're trained to support them, you're going to go with great guns.

Speaker 1: 11:59

That's great. Thank you for sharing. We've spoken a lot about compliance and advice, and that's obviously a lot of what you do, but I want to know more about you as an individual right because that's what you're here for and that's what our listeners want to hear about. So you did a.

Speaker 2: 12:14

Bachelor of Laws at Macquarie. I did a Bachelor of Arts and Bachelor of Law and at the time I wanted to go to the bar and I wanted to do family and criminal law. And I took a year out to just work on a phone-based call centre. Because in New South Wales once you finish your law degree, before you went into practice you had to go through the College of Knowledge, the College of Law at St Leonard's, and I was sitting down with all these people who are my peers and they're really brilliant people but I couldn't understand a single word they said.

Speaker 2: 12:45

It was like they were speaking different languages and I thought how pretentious are these people? You know they're talking down to people, whatever. And then I thought, well, maybe that's me right, maybe I'm doing exactly the same thing. So after I finished that, I went into a call centre just to get over my nerves of talking to people and just to develop the skill of being able to relate to all different types of people. So when you're doing 300 calls, you know, routinely you learn those skills. So I did that. Then I went to do and worked on the Threadbow Inquest as part of the Crown Solicitors Legal Team.

Speaker 1: 13:18

So just for our younger listeners, maybe explain to everyone what the Threadbow Inquest is. There is a gentleman called Stuart Diver, is that right? Yes, from my memory. So this is a very long time ago.

Speaker 2: 13:33

But essentially what happened is a lodge at Threadbow in the snow fields collapsed and it collapsed and trapped 18 people and 17 people died. And so the coroner, derek Hand, was charged with exploring how that happened and what parties were involved and how it all occurred. There were national parks and Len Lease and Kosciuszko, threadbow and Greater Union National Parks. Everyone was involved because it was such a big case and that went on for years. And while I, there were national parks and Lend, lease and Kosciuszko, threadbow and Greater Union National Parks. Everyone was involved because it was such a big case and that went on for years.

Speaker 2: 14:02

And while I was working there with the barristers and they said, well, senior counsel and junior counsel, they said, well, what do you want to do next? And I said I want to go to the bar and I want to do family and criminal law because you know I'd grown up on Rumpole and LA law and all that stuff. That's where it was interesting. And the junior barrister looked at me and he goes you mix with all the wrong sort of people and they never pay their bills. He said, if you do corporate law, no one dies and everyone pays. And so then I went into consult. After that I went into work with one of the big consulting groups and this was just when the major investment had started.

Speaker 2: 14:43

So this idea that there's a whole new compliance for managed schemes and all these bits and pieces and that was my introduction to that I never imagined ever that I would go into compliance. I didn't even know what it was. It's one of those industries which it has a name and people think they know what it is, but it's one of those things that has a multitude right. It could be anything you really want it to be, and that's one of the advantages and the disadvantages of working in compliance is everyone thinks they understand what it is, but no one can actually articulate in a way that makes sense. So, from a service provider, it's great because what you find is when you start working with people on what is ostensibly a very simple job, once you build that relationship of trust, then it moves across things and you're dealing with marketing and business plans and sometimes recruitment and all those bits and pieces. You're there just as a trusted source, not driving things, but guiding the decision makers, and that's a really useful and needed function in our industry.

Speaker 1: 15:48

And also you say guiding, but it's also influencing because, like you said, when I first worked in financial advice, my old boss and I won't mention this person's name would say you know compliance they don't get. You know they don't get real life. You know they just tick boxes. You know we need to be commercial, we need to make money.

Speaker 2: 16:07

Yes, and that's true, but so do the compliance people. But the compliance people are also motivated to make sure that the business is sustainable. There's no client detriment. I remember I used to work for a big licensee and I was the RM and I set the policies and one of the policies I set was the gearing policy, so borrowing to invest. So there was no double gearing, so you couldn't borrow money and then borrow against it to leverage your investment and the maximum amount you could borrow was 70%. Well, at the time I was in my office in Sydney and I had people come down.

Speaker 2: 16:43

The head of one of the dealer groups, the head of margin lending and my boss would all come to me and explain to me. You know I was in the wrong. I had to change the position. I was holding them back from business. They were trying to compete with a big business in North Queensland and they just couldn't possibly do it with these restrictive policies. Yeah, and there's pressure all the time, but the reality is that, as I said to them, you know a 20% fall in share market value when you're double geared is 100% loss of capital and there is no director of the bank who wants to be chased down the street by a current affair. Yeah Right, so we're not doing it Now.

Speaker 2: 17:18

I still got all that pressure for a long period of time, but what happened was when Storm fell over and it exposed everything. What was interesting is not. One of them came back and said you know what? You're right, thank you very much.

Speaker 2: 17:30

It was just forgotten about and that's part of the lot of compliance people is it's influence, but sometimes maintaining a position against pressure, and that's a challenge. There's a compliance manager we used to work with who used to say that a good compliance manager will not be in their job any longer than three years, because after three years their licensee or their employee should get rid of them because they've done everything. They've either built everything and everything's working fine, or they're not achieving anything, so they should be shifting around more frequently. So a compliance manager who's in a job for 20 years it's probably going to be largely ineffective. And when you look at the ASIC report on the institutional licensees, what did they find is that all these employed compliance people were hopelessly ineffective because they weren't calling anything out, because it wasn't in their interest to do so, so they wouldn't even criticise you because you could have a word to their boss and that could impact their progress and whatever else, and that's.

Speaker 1: 18:31

I guess there's a bit of an internal conflict.

Speaker 2: 18:34

That's incredible and that's why external businesses like ours work so effectively. It's because we're engaged to do a job. We'll do a job, and I always say to our clients if you don't like my advice, don't hire me again. Yeah Right, this is how we do it. We're not. We have to survive on our reputation. We stand behind our advice, we stand behind our clients, but that means we're going to tell you if you're doing something wrong, yeah, and if you don't want to listen, that's fine, that's on you, but it's not. You know, that's not how it works.

Speaker 1: 19:02

So I've got listening to what you've said in the last 10 minutes or so. I've got a good understanding of what makes it. You know what skills make a great compliance or risk person. So what do you think the most important skills are in being great at? You know risk and compliance, yeah.

Speaker 2: 19:20

Or managing risk and compliance. And it's interesting because, you know, the reason I was talking to you earlier was I've had some incredible bad hires. You know incredibly bad hires because one of the things I always look for is that I always like to work with people I've worked with before, which, again, is the classic blind spot, because you don't question things that you should be doing. And this is the great thing about using an external recruiter as a general principle is that they will see through the blind spots that you can't see right. And often you know have you done reference checking? Have you done? Oh, they're a good guy, I know them, you know, and that's incredible. So what do I look for in good people? One is cultural alignment. Do they get what you're talking about?

Speaker 2: 20:07

If you're interviewing a compliance person, someone who wants to work in compliance and because I like following checklists, then there's no point. Yeah, because the law and the legislation and the regulation is evolving faster than most people can cope with. So you need people who are really good on their feet, who can think contextually, who can think commercially and who can find solutions, because that's the job of a compliance person is to find a solution. Sure, identify problems, but then how do we fix it? How do we avoid it happening again? How do we mitigate the damage here? How do we put the client back in the position they should be in?

Speaker 2: 20:42

So you need people who are creative people and often when you talk to advisors, they go. You don't want creative people. That's exactly who you want and you need. Need people, people, right, Because there's no point knowing what needs to be done if you can't communicate it. And we saw this a couple of years ago in the banks where they, in their insurance division, they brought in all these new graduates and so the SOAs that were going out were excellent. They were fantastic, detailed, had everything in there. There were no sales because the graduates lacked the ability to connect with the clients, so they wouldn't challenge them or raise any issues. They'd just have that conversation with them, go back and then churn out an SOA that didn't resonate with the client and didn't really identify the issues.

Speaker 1: 21:28

Yeah, it's interesting you say that because quite regularly we hear from our clients around you know very technical, very smart people especially with the increase in education requirements for financial advisors but lack the ability to build rapport with their clients the EQ to understand the client. So, as part of the, you know, I'm a committee member for the FAAA and we're running an event in the coming months, hopefully before this gets published around how do you engage your client better, how do you understand your client and how do you get them to actually trust you, and what are the key skills?

Speaker 2: 22:02

to do that. So we've published a lot of stuff on that particular issue, which is how do you drive engagement as an advisor? Because it's one of those really challenging jobs, because it requires such a high level of intimacy so quickly and you can't force it. And yet if you don't get the right level, then the advice is going to be inappropriate and you're going to do a disservice to your client but, more importantly, expose yourself and your employer to risk, and that's if you get to that point right you need to actually get the client to engage.

Speaker 2: 22:33

But you can even fall over before that happens, right?

Speaker 2: 22:36

So that whole engagement and the pre-engagement process and the discovery process is often not talked about, and when you talk to advisors about it, they go oh, it's just compliance, no, no, no, it's the whole sales process, right?

Speaker 2: 22:49

This is where, when you think about what we're talking about, it's about understanding the client and their needs. Yeah, and whether you want to sell something to them or advise them or to support them or to measure appropriateness, you need to understand what that is. And so this is where that discovery process the ability to sit down with clients to get the information you need, to get the relevant information and also to explore those comments they make which might get in the way of your sales process. Sometimes clients will say something and you'll move on to the next piece, and this is why a lot of really good advisors, when they'll do the discovery process, they'll have two people there, or they'll now use AI in the background to record what's going on, because it's very hard to be present and talk to someone and then keep really detailed notes you can use for compliance later on.

Speaker 1: 23:40

I know that's my job trying to remember everything and writing notes so we use an AI tool as well for our engagements with clients and candidates. So maybe if someone wanted to work in compliance that might not be in compliance or risk at the moment, what advice that's? You know someone that's maybe quite young, maybe at university. What advice would you give them and what learnings have you had over your journey?

Speaker 2: 24:09

Okay. So the advice I'd give is probably this is that I spoke to a group of grads recently and I said find something you enjoy and, you know, throw yourself into it. And one of them said well, that's probably a high bar to find something you enjoy. Why not just find something that is going to allow you to get through the day. You're not going to kill yourself if you're doing the job. Yeah, going to allow you to get through the day. You're not going to kill yourself if you're doing the job.

Speaker 2: 24:32

When I talk to graduates now, I'm talking about well, don't worry about what you expect the job to be about. Right, if you're coming out of university, you're going to have skills, hopefully to think and communicate, whatever else and they are broad-ranging skills. You know, one of the difficulties is you become too specialised because careers are changing all the time. Like you, one of the difficulties is becoming too specialised because careers are changing all the time. You've done financial planning you've probably done a range of different things over your time as well is that we have to reinvent ourselves periodically.

Speaker 2: 25:01

So, if you're a new graduate, if you're creative and you like dealing with people and you like almost the architect of the framework issues about how do we tweak things and how do we do things. If you've got an inquiring mind and an abiding curiosity, that's compliance, and I'd reach out to firms like ours and say I'd like to work on this. I've really got a good idea about analytics and indexes and whatever. Whatever it is like. Um, obviously, we've got a really uh strong tech focus, so we do a lot of that development as well. There's a whole broad range of skills, and possible compliance is that it's just understanding what that opportunity is and wanting to go for it, and most people in compliance didn't wake up when, when our kids say I want to be in compliance, right, it's an industry that's developed over the last 30 years and so we've all developed with it so I'm mindful of time.

Speaker 1: 25:50

I really love this conversation, but I think we're at about 25 minutes of work here to work.

Speaker 1: 25:55

So where do I've seen it personally where people that now work in compliance come from, but maybe where you share some just a high-level, quick couple of minutes around some people you have in your team and what their background is. So it gives an idea of maybe you know, maybe you might be working in a client services at a financial planning firm, or maybe you might be working in you know family law and you realise I'm sick of my clients not paying me. So where does some of your you know, your great team members come from and what's their background?

Speaker 2: 26:27

So unsurprisingly, some of them have come from compliance and that people have worked with over a long period of time. So you know, when you've worked with someone over 10 to 12 years, you probably got a good idea. But a lot of the others that have joined since about 2015, I haven't had that direct relationship with and some of them have come from non-compliance roles. So one of our best coaches he was in advising right and he was a bit burnt out and so he came and just decided he wanted to work with us while he worked out his garden leave or whatever was required there. I don't want to do this, but it's a short-term thing and whatever else. And then he realised how much more satisfying it was than being an advisor, because you're having a direct impact and a direct connection with somebody. And that's where he said well, the real value of being able to improve advice and ensure people got really good advice outcomes by working with the providers and coaching them.

Speaker 2: 27:29

And one of the things we do is, after we do the reviews, we survey every advisor. We don't ask them whether they enjoyed the review, because you know no one enjoys being criticised at all. Yeah, of course, but did I learn from it? Did the reviewer identify things that I wasn't aware of? Has it improved my practice? Is it going to make me a better advisor? That type of thing. And those scores are over the top. And what's more interesting is that often, when I try to look at the correlation between that, I often think that when people give really good feedback, it's because they got a really good report, like if I come in and say you're the most awesome person I've ever met.

Speaker 1: 28:05

Yeah, five stars, thumbs up you know great, yeah, it's interesting because you know, sometimes I'm very mindful of time, but sometimes, you know, when I give advice, I'm very transparent and my job is to. I can't get everyone a job, but I can help everyone that I speak to and sometimes, you know, people are very receptive to feedback and and sometimes people aren't, so you know, but I think one of the the lesson I've learned from this is that the people who most often get the bad results because they need the feedback and the support they respond most brilliantly to it.

Speaker 2: 28:37

Because being an advisor in a lot of places is pretty lonely. You don't get a lot of support from your licence. You've got PD days, maybe once a quarter, but when you've got questions or just interactions, you just don't have it right. You're expected to do it all yourself and it's really complex and it's intimidating and it's challenging. And I think when they get that feedback to say here's what you've done wrong, here's how you can get better, they appreciate it and they learn from it and they get better. And that's been the great testament to the resilience of the financial planning industry.

Speaker 1: 29:10

Yeah, and obviously you know you're in the coaching game. I'm in the coaching game too, to a degree, and the people that you are actually able to help and give that and they can use that to become better professionals, they will never forget you.

Speaker 1: 29:21

They'll thank you for life. So, and I guess that you know, this conversation's been great and I love to keep talking, but I'm extremely mindful of time. So, sean, thank you very much. Thank you for the opportunity For coming in today to our Sydney office and recording studio and, you know, if anyone wants to, you know, use your services, we'll obviously connect you, connect the team online. So thank you very much for that and it's been a pleasure.

Speaker 2: 29:44

Thank you for the opportunity. It's been fun. Thank you Sorry. I should warn you I talk too much.

Speaker 1: 29:50

No, that was good.