Why Financial Advisers Must Think Like Business Owners with Johann Maree

When we started our businesses

and financial advice practices,

we were all like having our freedom and flexibility

and we wanna build this business

where I can love the life that I want to.

And then you find that it's very hard to step away

for a day or three days or a week

and every month or three months

or take a sabbatical for six months or a year.

And if we do, it's quite like,

I don't know what's going to happen.

So questions are like,

would it keep running well

or would everything start to slow down

or even fall apart?

I mean, particularly if we're so engrossed

in checking everything before anything gets done.

And all of this is really at the heart of today's episode

because I wanna look at why financial advisors

need to think beyond practice management.

We've been doing our practice management for so long.

My guess has been speaking about this much longer than I have

because when he started with us, I was in standard six.

So it's been many, many years ago

that he's been talking about this.

He is definitely one of the people

that has been foundational in getting that going

in South Africa and starting to talk about it.

I think it's really only starting to catch on now

but we already have to go beyond that.

So I wanna talk to you about that.

While we're getting stuck in certain places

and what can we do to build businesses

that are stronger, that are clearer

and that are least dependent on us as the owners?

Welcome to Propulsion, the weekly show

for financial planners and advisors

who want to build better, more successful businesses.

I'm your host, Francher De Dway,

and every week we dive into the practical strategies

that matter from growing your client base

and improving your services, developing yourself

and your team.

Whether you're running your own practice

or you're part of a larger firm,

you are guaranteed to find actionable insights

to help your business thrive.

So with that, welcome and let's get into today's episode.

So, Johan Maria is a highly respected voice-in

advice business management,

behavioral finance, and client engagement

with more than 35 years of experience

across South Africa and Australia.

He has worked with advisors and advice businesses

at a senior level helping them

improve their business models, client processes,

advisor behavior, and the way their firms are run.

Johan brings a remix of leadership experience

and be a real insight and practical thinking

about what it takes to build a stronger,

advice business.

Johan Maria, it's a pleasure to welcome you

to the show.

Good morning or good evening to you.

I was up here.

Yeah, great afternoon.

So good day, thanks for having me

and who you more are on South Africa.

Fantastic.

Johan, thank you so much for joining me.

And I'm looking forward to a good conversation.

We want to focus on, you know, like,

I think we really align a lot is to talk about business

and not just practice.

We prefer the term business management

over practice management, et cetera, although,

I guess both have its place.

But I'm really keen to hear, you know, in your view

and your definition and the way that you look at it,

what's the difference and why does this distinction

truly matter for us as our initial firms?

Yeah, well, it's almost like a major move question,

you know, what the queer does.

You've heard all those BS before, but it's not.

There is a distinct difference.

It's a great question.

And the language really matters.

So practice management to me is inward facing.

It's about the things we do, good advice,

maintaining those professional standards,

keeping your clients happy, staying compliant.

Well, that's all essential things

that you do in your business, but it's half the job.

Where business management, I believe,

is at a completely different level.

It's about growth strategy.

It's about looking at profitability.

It's pulling an asset that has a real, real value

for you as an advisor.

It's about succession planning

and definitely creating systems that, especially now,

age of AI that don't depend on you

first picking up your job every day.

The business can carry on with art, you can function.

So yeah, most advisors, if you really were honest

to yourself and with yourselves,

to have a set of themselves up in a really good paying job

and there's absolutely nothing wrong with that.

But then the question is, what next you on?

What's the next level?

Do you want to scale your business?

Do you want to sell it?

Do you want to step back?

Hold something it up, lost you.

And I think that's important.

I think it's absolutely travesty for someone to have a business

which you call a lifestyle practice.

And then you retire and your business dies with you.

You have to sit, you can't even sell it.

You just close down and shop.

I think you want to have a succession plan

and you want to bring other people into the business

and have a different type of growth strategy,

give something back.

So that's your future look in terms of business management.

So the risk of staying in a practice only,

mindset is really what I call an advisor trap.

You're successful, but unscalable.

You're profitable, but unsalable.

Busy, but unable to create that next level,

that leverage that you need.

The business is sitting inside your head,

sitting inside your relationships and your calendar.

So business management asks different questions.

It looks at what is your target market?

What does your service model look like

and what does it cost to serve the clients?

What are we worth?

How do we grow without just depending on me, the advisor?

How do we prepare for succession?

And I can't answer this question without saying,

you know, in the coffee world, we are moving

and South Africa is moving into regulators

asking the same question.

So it's not just coffee.

Regulators around the world are asking the same question.

The same question, a good business manager asks.

And that's not a coincidence.

From UK, Australia, the states,

they are embedding business management

into the regulatory environment.

And if you really read coffee carefully and clearly

and could come read the Australian legislation as well,

they are starting to put in things

like governance, documented processes,

client outcomes, fair value for the money you pay,

conflict of interest management.

They're not compliance boxes.

No, maybe someone is getting all the advice to believe,

this is compliance, but it's not.

These are all building blocks

to a really well-run business.

So advisors not asking if coffee's not asking

advice to become regulators,

it's asking them to become proper business owners.

And I think that's really exciting.

And I think that's great foresight

in terms of this impending regulation.

And if you look at the search around the world

and if it's scary, nearly a third of advisors

have got business plans.

And the rest, they're operating a practice not a business.

So I think an advisor is a modern advisor is a CEO,

and he's an advisor in the enterprise.

And I think the sooner the advisor accepts

that they'll run into an enterprise

and make growing something,

instead of structure and infrastructure,

instead of something of value, the better.

So practice management then runs the advice function

and business management builds an asset

who are keeping or selling.

I don't know if I'm gonna ask this question

prematurely now, but I mean,

there's lots that we still need to talk about.

And so two part, I guess I'm gonna try and make this make sense.

If we've got to come back to the one question, that's fine.

But I think part of the thing right now

is that first of all, you know,

they are like I talk to people who they are struggling

just to manage the one or two or three support staff

that they've got.

They have no inclination of getting more advisors

into the business, or they just say that's not what I wanna do.

I'm the advisor.

I'm gonna have this small team.

So I think that's on the one side of it.

And then on the other side of it is like,

like I mean, as you mentioned,

like, you know, we sometimes the side

I'm gonna retire and then the business will just

not be anything.

But now they've got sort of an out

because there's aggregators and there's all these people,

larger faith speeds in South Africa

that says, now come and join us,

we'll be your succession plan.

So now there's a bit of an out.

So there's some money there, I would assume,

or there's at least something where they say

that it makes them feel better about that part

because like I'm not just leaving my clients.

So those are the two aspects that I maybe just wanna delve

into a little bit and get your view on that.

What do you say to the guy or the lady who decides,

like, it's just me and my small team,

I don't want more people, I'm already,

don't enjoy managing people.

What about them?

And then on the other hand, like, you know,

the aggregation thing, like, is that part of the problem

on what we're gonna say because I don't have

to run a great business.

No, no, each to his own front.

So, you know, if your goal is to have a lifestyle practice

that's lean, mean, it's just you and your yesterday,

tomorrow, and then the future,

back office assistance, maybe one of them is a paraplanar,

that's fine, but it's a good analogy, you know,

if you own the right track and many advises

on the right track, but the other thing,

they can get run over if they keep sitting there.

And change and what's coming down the track for an advisor,

you can't just keep sitting there, you have to change.

So if you decide that you wanna stay with the business

that you have in this little environment,

you have two options, one, or you're going to sell it

at the end of the day, because without saying,

you can be efficient, you can put in infrastructure,

you can have processes.

I mean, I visit lots of businesses where the front office

doesn't even know what the back office is doing,

the front office is the reception,

they make the phone calls, they do their appointments,

sometimes the advisor doesn't even know

what the back office is doing.

So, you get different kinds of operations,

but there's nothing wrong with having a well run,

lean mean, efficient lifestyle practice, absolutely not.

The ones that are going through to the aggregators

will again, it depends because,

and by the way, if you're having that lean mean

lifestyle business, you still need to know what it's worth.

I think running your business and not even knowing

what it's worth is a travesty because you're sitting

on an asset and that will dictate what you want to do.

But if you're going to wait, and that there is human nature,

so in Australia, lots of advisors wait,

starts getting expensive and they sell the business

or they just sell their clients.

Most people won't buy your business

because it comes with all sorts of flawed issues,

they'll probably just buy your clients.

And for that, you're going to get a bad multiple,

you get some money.

But again, it just depends, what is it that you want?

And that's what business planning,

looking forward in the future, is important

because you can set your business up to sell.

And you can invest in your business to sell.

And then someone buys your business, not just your clients,

and you probably get a much bigger multiple Australian term,

probably a multiple of five to eight times

what your business is worth.

But just to remember, Australia,

we've already moved to fees, not commissions.

So if you've got a commission, business, lifestyle practice,

I think you're running a risk.

So you probably just have to sell your clients.

So there's no right or wrong answer here.

The bottom line is, have a plan.

What are you working towards personally?

You can be lean or mean.

Or are you going to merge into a bigger machine

where they've got infrastructure,

you share overheads and costs,

and that's why we've got these big dealer groups in Australia

where you can access, they've got the infrastructure,

the software, the processes,

and that there's a massive saving.

You can save 23% of your gross profit

just by moving into a mother's ship, so to speak.

So I don't know if that kind of sets the scene

or for answering your question,

but have a plan, have a structure,

you need to have a goal,

let's coming back to sort of a, what is it that you want?

And then that clarity, I think,

is really, really important.

But also in that same vein is that

there are a lot of the ways that you would build

a bigger business that is absolutely critical

to make sure that small practice,

say, small lifestyle practice or whatever,

run as efficiently as possible

and that you don't have issues with staff

and that you recruit well

and all of those kinds of things, for example,

those are principles, right?

That applies to both.

And maybe just briefly or just quickly on,

what are some of the biggest signs

that an advice business is being run like a job

for the owner instead of a real business?

Look at, you can have a good question.

The, there's patterns.

When you're visiting different businesses

and talking to advise, they are patterns.

And the first, big one comes back

to sort of normal lifestyle type practice.

But if a business can't last without the owner,

they go on holiday and you keep on getting bugged

by your staff or your clients, you've got issues.

If you're a business, you can go away for two weeks,

which or three weeks, which you deserve

and the business can survive without you,

then you're on a good path.

The other one isn't, I've talked about it earlier,

is there's no business plan.

So, so many advisors make good decisions

with cut field, but they don't have a plan.

No vision, no strategic direction

and no way of measuring whether they're moving forward.

That is critical.

And a business plan's not just something that is nice

and shiny, it's something that you keep going back to.

It should be a living document in your business.

You've got a small team.

You need to keep coming back to that on a regular basis

to see, are we on track?

Do we need to tweak it?

Do we need to change it?

And the other one is understanding your numbers.

So, yeah, if I go into business and say,

what does it cost you to serve a client?

Let's think about all the steps in your workflow process.

Have you costed that?

How many staff are involved in that?

So, yes, it's going down to the nitty-gritty,

but once you've done that, you get a full field

because a client ever contests to,

are you charging me so much?

You can pull out and sell this and these, all the things

we do, it takes about X amount of hours

and that's why I'm charging you, you know,

5,000 run for a plan.

And how much profit are you making?

Because once you start doing client segmentation

and getting to that space, you find,

and I found at every single time,

is that your top 20% clients are sponsoring the 80%.

But if that's 20% clients and you

that were sponsoring everyone else through their fees,

you're going to be in trouble.

And how much revenue are you making as an advisor?

How much does it cost you to bring a client on board?

So, just that's the third one.

There's some, no, your number's ready.

No, the mechanics, your profitability ratio is in the business.

And you should do it because you're doing your financials

on an annual basis.

You've got a bookkeeper, you're doing your audits.

So, the numbers are there.

This information, it's pretty easy to obtain.

And coming back to segmentation,

so many businesses are top-heavy.

They've got so many clients that they are servicing.

And inside that, they're getting referrals

from birds of a feather, same kind of client.

So, you're doing a friend of favor.

So, you're going to be careful about your target market

and segmentation.

If you do a segmentation, exercise.

And there's different ways of doing it

with the Pareto principle applies.

I had a advisor I worked with here in Australia

that ended up doing the numbers.

And when he showed me his spreadsheet

and said that 10% of his clients are paying him 95% of his fees,

he got a really, really big fright.

And there are a couple of good stories

in South African environmental advisors I worked with.

Some of them went on to become practice of the year

and planners of the year.

But they've been there.

All these top guys have started in the trenches.

They've learned, they've changed.

They've made a difference in their clients' lives

and in their colleagues' lives.

In the other instance, no succession plan.

So, if you need to go to succession

and the succession plan could let's say it's an exit plan

as well, because if you're going to shut down shop,

you owe to your clients.

You don't want to leave your clients hanging.

And if your clients are asking you,

what's going to happen to you?

To me, when something happens to you,

your business is already in trouble.

And the last one, if I'm asking advisors

to tell me what their business is worth,

they should be able to give me that number.

Well, 100% better proximate.

We think it's worth this and this is the reason why.

But having said all of these five or six things,

doesn't mean you could have bad business.

It just means that you haven't made that shift.

I think it was Michael Gerber talks about the technician

and the entrepreneur business owner.

So, it's that kind of, everyone's familiar with that.

It's that you still great at your job,

but you haven't made the next move.

So, if your business stops when you stop,

you've bought a job, not a business.

And that's, you know, it's an interesting thing

because the seminar that Lenae was referring to,

the bulk of the people, they're not the bulk,

well, I would go out on the level

and say that the majority of us,

they have a job and not a business from that sense.

And this is something we've been working on,

like it's been on my radar now for four years.

If you look at my business plan every single year,

it's still removed me as the face of propulsion

and lead propulsion, lead propulsion.

And we've only really started doing that

in the last year.

So slowly but surely you'll see I'm less and less like

in the front, it's becoming more been and other people

and so forth.

That's something that I'm trying to get right.

And it's not an easy thing to do, right?

Because you love this thing

and there's your way of doing it

and you got it to where it is.

So there's a lot of psychology and emotion

and all that kind of stuff involved in this process.

But the one thing I can say is,

hell man, on the other side of that,

even though I've only gotten like this,

maybe two things that I've managed to really do this part well

and there's still like a list of things

that we need to get it right.

But hell, the difference that makes to me

and in my life is absolutely incredible.

So it's just that letting go part

has always been difficult for us as financial planners

and so on, you know, like, I mean, we really care.

And that's probably the thing that's also holding us back

sometimes, I don't say care less,

but don't be afraid to put some of this stuff in place.

One of the things you briefly touched on was

you mentioned segmentation

and then my brain went to segmentation, right?

So segmentation is something

and voted, I actually said this

on the very first episode of the season,

voted, made a comment.

And then Mark Hederman,

who has my second guest from Ireland on the second episode,

he also made a comment.

And now I want to ask you this question around segmentation

is this is something everybody grapples with?

Because it's fine to look at the numbers

and get everything together and then see

who's my top clients and like,

and it's very much a UM driven or feed driven

or you know, some form of metric.

But it doesn't really make it easy

to really hone in a service proposition

for these people necessarily.

So a lot of people find it very difficult to do that.

And also, as you said, then what do we do?

Oh, these are our top clients,

so they get everything whether they need it or not,

they get everything because they pay us a lot of money

so we try and I think there's a disconnect there.

So in your, I mean, you've now all people with us

and you write about this and talk about this

and all of it,

but how can we make segmentation simpler?

How can we do it properly?

How do we do?

Just make it practical and help us

because I've found that it's difficult as well.

It's not practical and it's not easy

because we're dealing with a couple of things.

The first one is with all the biggest thing,

you know, and the front side, I have to say it,

because it's so true.

You know, that person who loves change

is a baby with a wet napkin.

And really, this is, change is difficult.

And people really need to get the courage

to make that change.

But I think the biggest reason

that's holding advises back

from moving into exploring

to unsegmentation more and more is guilt.

You think about it.

You talked about a text two or three years

to build your business to get to stage

where you're confident and you can start delegating

and start taking a step back

and be more involved in maybe the strategic approach

because someone else is now doing the hard work

on the ground.

But we built our business on relationships.

You say everyone, Deena Katz talks about,

you know, as long as a client can fog a mirror

and they got sent in the pocket, we sell them.

That's how this industry started.

And then it started to change,

but you still have to start somewhere.

No one gets given an advice business

with their infrastructure and beautiful clients

and the last turnover, it's hard.

And you built loyal relationships

and people on the ground.

And now we get someone like me coming in

saying, you must segment your clients.

And what about the relationships?

What about the people?

It's very, very difficult.

And advises intend to feel this loyal.

They betraying the stress

that they built up with their clients.

But what is even more scary,

international research shows us,

even in Australia, UK,

that only 37% of advice businesses have actually gotten there.

So it is, it's an international problem.

It's just South Africa.

Now what does that mean?

Let me just go through some stats quickly

because you can't set the scene to understand

that this is a big problem

and there is a resolution for you.

But you know, if you do proper client segmentation

and the stats show roughly 51% of advisors

are holding unprofitable clients internationally.

And then you think about that.

The cost to serve the administration time,

meeting time, compliance.

Ben was just talking about how you can save more time

with technology.

The phone calls, the follow-up,

all of this, this admin is time consuming.

And the other thing about all this admin,

we never ever tell our clients what it is that we do.

I've never, you know, tried to get advice to document

their process to say, this is what we do.

And this is why it costs five grand.

We're all the charge of client two and a half thousand

for a plan so I can lock the client in.

But I'm actually breaking even while making a loss.

And somewhere during the year,

I might pick up another client that's gonna pay me

seven and a half grand for a plan.

And then we can play with the averages.

And that's when you start learning into trouble.

But the bottom line is half your client base

is costing in advisor money.

So first thing they need to do

to get into this whole segmentation spaces,

understand how much it costs to actually serve a client,

to put that client on your books

because that kind of gets your break even costs.

Secondly, you need to rank those clients

in terms of revenue, existing clients,

revenue and profitability.

And that's important, not the size of their portfolio.

Just the revenue that they bring in, bring in to you.

And then maybe you have those clients into tiers,

maybe two or three tiers.

And then try and build a value proposition

or a service proposition or promise for each one.

What do they get?

Often they get it, what channels they get it.

Remember, we're moving into this AI world.

I'm seeing more and more advisors.

You can be lean, mean.

You can have a, I'll speak to a colleague the other day

and he's just set up something in AI.

That is running five, five employees

and they're all in AI.

Five employees, they're all AI.

But I won't get too much into AI.

I'll scare advisors a little bit with that,

but it's coming.

You can be incredibly profitable

and you could have AI running your business

and your workflows for you.

So that is around the corner.

So once you've done that,

you can review your pricing tiers

and then when you've got clients who fall outside

of this model that you decided is your sweet spot

and you're going to have,

you're going to have clients who fall outside.

You even need to transition them into one of those tiers

or you need to transition them out.

So in other words, you try and work with them

to fit in and expand them while there's a solution

especially if you've got a good relationship.

For you, transition them out.

And you might even have this nothing wrong

by having a fourth tier or fifth tier model

which says,

I'm here, I'll keep you on my books.

You put them on newsletter.

There's a minimum fee that you pay me annually

but you're not going to get service from me.

I'll keep your records that the fee you pay me

is basically to keep the records

or keep you on the books

and then we'll move over to

which I think is going to happen more and more

is a transaction fee.

So the lower end of your clients

might say something's happened.

I need a wall.

I need a beneficiary nomination

and you'll charge them a fee or a rate to do that.

We're not going to the ongoing fee.

We're not going to charge them for the plan

because they don't need a plan.

They're just there.

Or you hand them over to the junior in your business.

So that's the internal succession plan

with segmentation.

What I'm trying to get to hear a segmentation

isn't about treating clients badly.

It's about treating different clients appropriately.

Nothing's business healthier in Australia.

That said, you treat every single client

with love and respect

but you cannot treat them the same.

And I think that kind of sums it up.

If we start treating 150 clients the same,

the business can run into trouble.

You have to save me and you have to break things down.

You have to have service structures.

That starts really.

But try to understand what it costs

to bring your client on the board

and then build my service tiers around that.

And yes, you're going to have to let some clients go.

Some clients you're going to increase your fees.

A good mate of mine, Peter Sullivan,

always said, why are you worried about fees and charging fees?

Increase your fees.

Increase your proposition.

Create value for money.

Some clients will then discontinue their service with you.

So they're firing themselves.

You don't have to say anything.

Your fees increase, they fire themselves.

And then you have more space to hunt for other clients.

What is interesting is those clients,

those are the advice business that have gone in

and done the segmentation exercise.

Within six months to a year,

they are generating 25% to 30% more revenue.

And it's quite, it's easy, it's psychology.

Now, if you have a bought and brand new car

and you've been doing your research

and you look around, you get the car and you buy it.

The next day, you get in the car.

You notice everyone's got the same car.

When you thought it was unique.

And that's the same thing here.

When you understand what your service model is

and what your client, ideal client profile looks like,

you then start getting more.

And that's natural.

A lot of the wives have said, never going to happen to me

until they've done their exercise.

And I'm sure if you can talk to both of them

and planners of the year, they'll tell you,

they suffered through the same kind of anxiety

about making this change.

But when they have both their business model

to start servicing those clients,

the clients started coming and started getting referrals.

So, this doesn't happen overnight.

It's something that is, again, planned,

the steps that you need to take.

And I really want to reiterate this here,

is that segmentation is not about treating your clients badly.

It's about treating them appropriately.

And it's of no skin on your nose to let clients go.

Hope that answers that one.

Yeah, absolutely.

And I mean, the way I tend to put that is to say,

well, you can service your clients the same,

but you can't give them the same services.

So, which comes down to like,

you can still care about them and look after them well.

But what you do is, the things you do for them

is different, not how you do them,

but what you do is different.

So, that's really important.

And also, if you have too many of those things,

it becomes hard to manage across the client base.

You also don't want to over-engineer that kind of stuff.

But then also, like you also now touched on fees, you want.

So, this is also a sticky thing in South Africa, particularly.

And again, like I always say,

if it's not doable, why are some people doing it?

Because we work with some advisors who are absolutely fee-only.

Like, that's what they do there.

There's no commissions, there's no IM, there's nothing.

If there is an IM, it's a very calculated amount

that is being paid for.

It's more a payment facilitation thing than a fee.

So, they will calculate the fees every single year adjusted.

And that's how they're building their business.

And they're growing.

And so, if I recall correctly,

from some of our conversations,

you have helped thousands of clients move to fee for service.

What have you learned from that process?

What works, what doesn't work?

Is there really, because a lot of people say,

you know, most people are going to for it.

So, that's why commission will never go away.

And that's why you aim will never go away.

Just maybe your views on that.

Well, take a quick step back if I can.

What a story.

I'm looking to reveal the name.

But there's a guy in South Africa up north before I moved overseas

from around 13, 14, 15 years ago.

And this guy used to instruct clients

who operated like a professional attorney firm.

And he was charging fees 15 years ago.

And I'm absolutely stunned

that there will still be South Africa

can have a discussion about fees and commission.

This regulation, coffee is going to force advice

to think a little bit differently about how they charge.

Anyway, so this person was doing it 15 years ago.

And we still talking about it today.

And he does it incredibly successfully.

I learned a lot from him as well.

However, when I about four years ago

just before COVID came in,

I was sitting with a national practice manager

of a bigger distribution big company in Australia.

And we had to move because the regulation,

we had to move three and a half thousand advice

of clients off a ongoing percentage

of other management to fee.

So the big lesson that I've got out of that,

the first one that the couple is we had to do again

to do some segmentation, understand the clients

cost to serve, you have to go through that exercise.

But he has this thing, don't sell the fee,

you never sell the fee, you sell the service.

So you have to, you have to go and do some homework.

That segmentation exercise is actually part

of this, this fee environment.

And you can't just adjustifying a fee in isolation.

You're going to lose.

So you need to do some, think about the things that you do.

Just think quickly, you're planning as an advisor,

there's reviews, ongoing reviews,

you've got proactive advice,

and you've got access to the advisor and the team,

there's accountability, there's coaching,

there's engagement with the clients' family,

there's communication during volatile markets,

don't run away with the markets volatile,

that's when you up your communication.

The fee starts becoming obvious in the discussion.

The other one is, clients don't understand

what they're paying for, and that's why I believe invoicing,

and that's one thing I learned those 15 years ago

is that show them, show them what it costs

to actually implement their plan for them,

show them your process, show them your back office,

invite them into the business to meet the team,

you've got an infrastructure.

This will cost money, this team is here to help them,

and you know, in the days of the war and the petrol,

but the fees are the petrol that keep the business going,

so I can serve you better.

61%, you know, 95% of advisors probably say

that they can explain their costs and their fees

to clients properly, and yet 60% of clients say

that the advisors are very poor at doing that,

and it's because they don't show.

Have you documented your work,

or have you got a map to say, you know, Mr. Client,

this is where you come in,

these are the things we're going to do for you,

we're going to get three or four meetings,

you're going to get these kind of documents,

then we're going to implement,

and then we're going to review,

and when your review is going to be,

these things we're going to do for you,

and then you actually deliver to that map,

that's when the client gets it.

Well, okay, that's, that is 3.5 grand a year,

I can live with that, and you deliver to that,

which curfew is going to force you to deliver,

because Australia fee for service was huge,

we had a Royal Commission,

it threw people with big, big fines,

and embarrassed them,

because they were charging fees for no service.

So that is, that is here, it's imminent,

and you need to think about this,

because I think Anton keeps on saying,

yes, you're going to take three years,

to implement it, he's going to take three years,

we'll break it down, it's going to take three,

this is not something you can do in four months,

we saw it in Australia,

making this change into this environment,

you have to pace yourself, you have to plan,

you've got to approach those clients,

you've got to transition the clients across.

That's one of the reasons why we had a service proposition

to three,

behaviourally clients will go for the middle proposition,

so we loaded the middle proposition,

because we, that's where we got most bang for buck,

it was our most profitable,

so we had basic proposition, high end proposition,

middle one, clients in high end downgraded,

and what we also found really, really interesting

with the fee, you can't charge someone,

top end fee for more than five years,

as soon as the client client has implemented the plan,

in other words, you've got a SI,

and that SI is implemented,

and they could draw a word,

this statement of advice in Australia,

but it's called a financial plan,

that might take two or three years

to implement the plan for the client property.

As soon as that's done,

you can't keep on charging the same fee,

you're going to have to go back with the client

and renegotiate your costs,

and you need to do that,

because someone else is going to be there

and take your client away from you,

so I'd rather get the client to move down those tiers

and play with those tiers,

until they get to the transaction one way,

they agreed to pay you fee for service,

and you've got a client portal and you service them differently.

So you have to pace,

that could, with the client pass,

to transition a big client pass,

can take six months to 18 months,

it took us 18 months within a half thousand clients,

and we probably lost about 20% of those clients

in that 18 month period,

but here's the thing,

about 50% of those clients, if you lost, came back.

So it's not as bad as everyone thinks.

The other lesson is simply is that

when you work for service,

your relationship changes,

you move more from a sales person

into a consultant to a trusted life planner, so to speak.

So you're focusing less on short-term,

you're focusing on life,

the life planning part of it,

which is all the behavioral stuff,

which is where the FBI or FBI,

and the financial certified financial planning board of standards,

have done a lot of work on the psychology of financial planning,

and I see the FBI's got some good courses there on that.

That's critical, that's coming,

and as AI is moving more and more into our lives,

that's coming.

And all of these things are part of the package to be able to say,

this is my value proposition,

and this is what you're going to pay me for

when the clients experience that.

So they can actually feel it, they can see it,

you're tangibleizing the service,

they value that far more.

And the big kick out of all of this is,

you're going to get, we talked earlier about the life practice

or the aggregators and so on.

If you've got a fee-based practice

and you've got infrastructure that runs that,

you're going to get prime, prime, prime

when you exit your business.

You're going to make, that is your retirement fund.

That is big money because you're in that.

You've got recurring income stream,

oil clients, those clients normally bring their family in,

they give you more referrals.

They, as Moira Summer said, you've got sticky clients.

So that's what fees bring to you.

It's not a debate about fees or commission or the clients

who aren't one to it, clients will do it.

They understand it, they appreciate it,

and if you can show them what their proposition looks like

and put a fee to, let's say, those three tiers

that you have, they will sign up.

So don't sell the fee, sell the service,

and also the outcome that that service delivers.

Awesome.

You also let's bring this home,

not to South Africa, but it's come to a close.

So I'm going to give you another two minutes

because there's lots of people sitting here,

some are going like, no, it's still,

I'm just going to keep going until they make me change.

And that's fine.

We've seen that over and over again.

There are other people who are forward thinking,

city, okay, so I'm going to take what you're on

is sharing and what parts of this can I implement in my business

and what will work for us,

what do we think will work for us

and then get you work and go and do it.

So for those who are sitting here,

I want to run a beta business,

I want to build a beta business, all of that.

What are the first three,

I mean, not knowing where they are at this stage,

because obviously it matters

where they are in their life stage in their business.

But what are some,

what are maybe first three actions

that they should take in the next three months?

Okay.

Sure.

You want me to smash through this.

So this is basically where the podcast ends

and the work begins really.

But I want to answer this question if I can,

because this is right,

this is probably the most important question

that you've asked me.

That's that, please do.

What are, today we Friday,

what does it advise to do listening,

does the team that's sitting here, the community,

what do they do on Monday?

If you want to help people,

you need to do something different.

And I think there's three big things.

Not in, it's not a program, just three things.

I think the first thing is take stock.

You've got to do an assessment.

Now, if you're really battling

cross-chats GPT to build an assessment for you, it will.

Prompt it, it'll build an assessment, or get to a system

and the business that we've been setting up

to help advise us with, it's got an assessment.

So you need to do an assessment.

That allows you to understand where you are,

which is great, you've taken stock,

it's like a health check.

Then know your numbers,

understand what your numbers are,

how much it costs to serve,

who you're paying, all your operational costs,

understand you've got to talk to your bookkeeper,

your accountant, get them to assist you with that.

So once you understand your numbers, that's great.

Once you've taken stock, that's great.

That's the first one.

Second one is sit down and write a one-page business plan,

not a 50-page strategy document, just a one-page plan.

Maybe I can give you something like that from,

so if you haven't got one, happy to let you have a template,

one-page template that might help.

And then it asks you,

what do you serve, who do you offer this to,

what does it cost, what's the revenue target,

and just work on those priorities

for the next 12 months.

And the third one is have five courageous fee discussions.

This is seriously important.

Go to your five most valuable clients

that you get on well with,

that's been with you for a number of years

and have a conversation about the value that you deliver.

It's not a pitch, you're having a conversation.

Find out from them what matters to them,

why they value your service,

what could you do better as an advisor,

why they're clear on exactly what they pay for,

what they receive and return.

And I think for those of the three things,

that's it if you can do that,

it gives you the courage to jump over into,

you know, taking up the challenge.

But I'm going to end with this really.

This is a part I want every advisor

sitting here listening.

South African advice and South Africa,

you're sitting at a crossroads with this regulation.

I've seen it in Australia,

we all know what's happened in the UK

and it's not a compliance project.

This is not a selling act before coffee's promulgated thing.

It's about business management.

You have to understand that regulators

are looking at documented processes.

That's business management.

They're looking at the evidence of the value provide clients.

So having that discussion with clients about the value

and trying to get a fee for it helps you with that.

Be transparent about your pricing.

Fee for service is coming.

Look to Australia, the work has been done for you.

You can just copy it and copy the models

and then implement them in your business,

then South Africa.

Look at the governance frameworks.

Look at the ongoing monitoring.

All of this is business management.

It's not regulation.

It's not coffee.

So urge advisors to think about this

because the challenge you have is this.

If you don't do business management properly, not coffee.

If you don't do business management properly

in the next two to three years,

AR is going to replace 80% of what it is that you do.

Then you won't be able to compete.

So put those structures in place now.

Then AI will help you and enable you

to run a fantastic business going forward.

And I think AI is a greater threat than coffee

or greater threat than regulation.

So put an infrastructure in place.

Do those three things and know your numbers,

write your plan, be courageous.

And advisors will build real businesses today

who will not just survive what's coming.

They will own what's coming.

Thank you for asking me.

Thanks, Juan.

There are some fantastic questions here.

But if I'm going to ask you all these questions,

now we're going to go for another hour.

So you are, and I'm just going to do this live on air.

Do you mind coming back next week?

And let's delve into some of these questions

that people are asking, which I'll share with you.

And I also like, if you've got any particular questions,

can you come back next week, Juan?

Like, let me ask you that way, can you?

Yeah, I'm sure I can make a plan.

I'm sure I can do that for you.

So please put your questions in the chat now

that you might have for you on.

And we'll build next week's episode around that.

We'll just get into those questions.

So we're not going to provide context

and sort of have a storyline or anything.

We're going to answer your questions.

And so please send them, if you're mess to do it here,

please send it to me in the community on WhatsApp

or wherever you can get hold of me,

so that we can ask.

Because these are really, really powerful questions

and very practical questions.

I think people get the what in the why,

but like how, how?

And you can see all these questions about that.

So please send us your questions

and then we'll have Juan back next week

so that we can talk about those

because we're already 15 minutes over time at this point.

So, but on that note, Juan, thank you so much

for being here, really appreciate it.

And we look forward to chatting to you again next week.

Nice to be here.

Bye, Donkey.

Talk to you soon.

All right, great.

Thank you so much again to Juan Maria

for spending his time with us

and sharing his views on the world.

And I think sometimes, you know,

like it's necessary to hear things

that we don't like hearing.

It's often valuable.

And sometimes when the time is right,

we hear it a little bit differently

from how we heard it previously.

So I really appreciate that.

Then with that, I want to wish you a fantastic weekend.

We'll see you back next week, same time, same place.

And as you know, I know Juan will be our guest

for part two next week to answer your questions.

So please send us your questions.

Please put them in the chat right now

or send them to me, you know, if you want.

Most of you have got my number.

So you're welcome to do that.

But on that note, a fantastic weekend.

Stay safe, we'll place them prosper,

stay curious and continue to raise the bar.

Lovely lots.

Bye.

Thanks for joining us on propulsion.

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