Need some advice about advice? At The Australian, we have expanded our annual roll call of the best advisers: The List: Top 150 Financial Advisers is out this week.
To mark the occasion I'm joined by an adviser who has managed to make the list every year since it was launched in 2017. Will Hamilton of Hamilton Wealth Partners joins wealth editor James Kirby in this episode.
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In today's show, we cover
* How to find a top financial adviser
* What an adviser is looking for when they meet you
* If the industry is thriving, why are there no new recruits?
* Are all traditional ETFs the same ?
Hello, and welcome to The Australian's Money Puzzle podcast. I'm James Kirby, Wealth editor at the Australia. Welcome aboard everybody. It's one of my favorite shows of the year. It's the release of the top financial Advisor's List, which we've been doing every year a modest total of fifty advisors. It is now expanded this year this morning out this morning to one hundred and fifty advisors, the top one hundred and fifty advisors in the market, and it's quite the enterprise. It's produced in conjunction with the Baron's Investment magazine of New York and actually they do all the calculations, so all I have to do in tandem with the Deal editor of the Deal magazine, which is where you'll find the list, or you can find it online. Helen Trinker puts it all together. And I know a lot of people on the list at this stage, and some of them of course have been on the Money Puzzle. So I want to actually today give you a really good guide about financial advice, about how it works, how to find it, and the landscaper within it. Just before I do one thing I want to mention lots of response to the episode about big super funds behaving badly, and part of that was triggered by your own correspondence with me where you had issues about being having trouble with big super funds and how they dealt with you. If you have let us know the money puzzle at the Australian dot com dot au. Send in those emails. I'd like to see them and we can actually we can get a response much faster than you can get a response. Let's put it that way. Okay, Now to join me today, I have an advisor who's actually been one of the handful of advisors who's been on this Top Advice's list since the day we launched in two seventeen. His name is Will Hamilton. He is at Hamilton Wealth Partners, regular on the show How are You Will?
Very well, thank you, James, and thanks for having me.
Good to have you, Good to have you. So every year since two seventeen, feeling the pressure are you?
It's an honor to be honest, to be honest, and that these things are a team effort. You We've got a great team here.
So yeah, well, I tell you what. Putting out a list of one hundred and fifty advisors. Is the team effort, especially these days when you have print and digital and podcasts and the joint venture within New York Publication. I can tell you it's no easy task, and I'm happy to say it seems to be out there all bells ringing today, So that was really good. There's a couple of things I wanted to talk about, and the listeners will be coming in at various angles. Some of them will no advice all to well. Some of them might have started. If I go on if I know nothing, and I go on to Google, which is what most people do to start anything, and they say, how do I find a financial advisor? The first thing I'm going to get is five or six people selling services. That's the first thing I'm going to see, okay, because they're sponsored. And then I'm going to see various sites. But I think generally at the very start, people should, perhaps if you know nothing at all, start with money Smart, which is often where people should start. The the ASSEIC website. That is just to check. That's just to check whether the advisor that your friend at the barbecue said was great, whether they're actually registered, and whether there are any whether they basically tick the elementary boxes and then I would hope the people on the show would be a bit more advanced than that, and perhaps for a start they could look at this list. There's one hundred and fifty names there, and that is quite a list I from all around the nation now. But one thing that struck me will like almost straight away was the whole game is moving up market. That financial advice. I mean, in a way, it would always be an up market activity, but in Australia because it costs so much to do it. I saw a survey during the week that said fifty percent fifty percent of the fee for your financial advices administration costs. So it seems like the whole thing is moving up market. But it seems that it's seriously moving up market now, like it really is starting to be. The companies that are on the list, even the brands that are on the list, if they have multiple arms, it's the up market arm of their of their advice activity that gets the ratings. Basically, so is that what's happening.
Look that I'm not going to mention names, but some of the larger firms have pushed right up to a minimum five million dollars and yeah, that's a commercial call on their part. It's in many cases that decision has been made in Hong Kong or New York or something like that. And yeah, they're good firms, but that's yeah, so when you talk about it, it's a gone up marker. Yes, some of those firms have done that. We are wholesale only, so we have to meet these sophisticated and invest the tests. With any client, we will take less, but we also have a minimum that we think is important that we can grow it to that. Now that's a commercial decision as well, and you need to look at the overall revenue you can bring in and the costs to service that client. But you are right, we don't like to say no to any client, and if we can't service them, we like to introduce and introduce them to a firm that can look after them. And we've been working very closely with a firm for about a decade, but they've even moved up. Yes, so we've sort of had to go and source another firm in the retail space where they can look after retail clients and some of those smaller ones. Because it's important, as you said, go and Google and they then send send something through your website, but we want to make sure that we can point them in the right direction, even if we're not right for them.
And I see that there's variations around this, but in terms of what you might expect to pay ongoing annually for financial advice, we're looking at something in the order of four and a half to five and a half thousand a year on average. Now that's a lot. You want to be making lots of money basically for that. So one thing I wanted to just put to you will before we talk about the landscape out there for top advisors or for very good advisors for listeners who just want to get started. It seems to me there was two sort of promises about if we take it that the whole financial advice market has moved up upscale to the upper end of the mass affluent. And you mentioned how your wholesale and a number on the list are wholesale, but the majority aren't. By the way, for what it's worth, folks, the majority are not wholesale only. But by that you must be a sophisticated investor. You must have two point five million in net assets. But the promise for everyday investors are start investors. Was that there was going to be sort of two things that might save the day. One was digital advice, Digiti advice, and the other was that the big super funds would come in and offer advice of a type. Now on the digit advice side really never came to pass. It certainly didn't come to pass in our market in any way. I know the stock spot which has been has a course now owned by the big Murray Korean fund and they are Digiti advice specialists. But it didn't really get It didn't really take off, did it.
Look that's a really good point. I was at the future Proof conference in Los Angeles a few months ago and they had this panel of female advisors actually and talking to them look back five years and what was being pushed five years ago versus you know what has and what hasn't taken off? And they said there were two things. One was ESG yeah, I know this is in America. And the second one was exactly that online b it Digiti advice, be it online platforms for investing.
Low cost, low touch financial advice. So it's come through a little bit, but it hasn't come through on a sort of mass fashion that was expected, and the other part was the big superannuation funds. Now the big superannuation funds, their efforts to enter financial advice you might say, on their terms has stoled in Parliament. And the big issue is that they want, as they always want, they want to pool everything and so that you'll pay an advice fee, but it won't really reflect how much advice you have or how much you have in the bank or in the fund. This has been blocked if you like, by other parties in Parliament because it's not transparent. And the issue in big super as we know is the lack of transparency is becoming a bigger and bigger issue. And their timing is pretty bad to try and push this because we've just had a flurry of scandals basically in big super often linked with the fact that people couldn't see how their funds were going, couldn't get payments in the timeframe they expected, or even issues around on listed valuations. So we're talking about Sebus here, we're talking about Hester here. But but what I want to ask you is do you think that will ever come to pass that the big super funds will if you like, feel the vacuum at the starter market.
They want to, and that because they're worried about when people going through retirement mode and that's where their leakage is, so that they gather funds in accumulation and lose funds in retirement phase, and so they definitely want to. It's down Outlook, this minister's was going to fix the advice mess. I think his words, Well, it's still a mess. It's fifteen five hundred advisors. There is a shortage of advisors in Australia and there is no what I think, resolution out there at the moment. Will they be able to give impartial advice? No, is the answer. If you talk to SeaBus about keeping your money in SeaBus, and that's not impartial advice.
To what you're saying. If you said to the big fund, you know, I'd like to get into investment property and buy something they are not going to encourage, or you would think because the money would live the fund, it's very impartially. Yeah. Yeah, So with impartial advice, with independent advice, and I'm not asking you to justify it. I'm asking you, as a player in the industry to justify it. The realistic figure of four to five thousand a year. How does a good advisor justify that to the investor.
The amount of work that's required to run a small portfolio probably why we don't do that. It's substantial. It doesn't matter if you're looking after a client. Is it's the small all the end or the bigger end on a relative basis, The amount of work that doesn't justify that increase. And so therefore, unfortunately it might sound a lot to people four and a half to five thousand dollars. I doubt that the firm is making much money out of that, given what they've got to do with respect to regulation compliance. And then when I say regulation, therese are documents that have to be prepared and sent to the client to meet the regulations reviews running the portfolio.
I think the point you made there is really interesting. I'd never really thought about that. If someone comes in the door with twenty two investments and their whole portfolio is worth a million, and someone else comes in with twenty two investments and the whole portfolio is worth ten million, the amount of work isn't much different.
Is that?
The point you're making.
It naturally is more, But it's not that it's not on it.
It's not ten times more. Yeah, yeah, I see, I see, yeah, Okay, all right, But one other thing I want to explain to people that are listening and are keen about getting advice. And by the way, folks, I would always say this good advice is terrific. Pay for it. I have no problem paying for advice. I have no problem paying fees for fund managers as on the assumption that they make you money. If someone saves you anything more than their fee, then you're in the money basically, and often I would say to you, as something of a veteran investor this stage myself, the earlier you get that advice, the more important it is because it's structural, and some of that advice could be around, for instance, the structure of an investment or the tax specifics long term, which you probably won't know unless you are happen to be in that area professionally. I think that's the really important thing. And they often see things as well that are common knowledge among advisors but are not common knowledge to investors. Even though we might be very much across investment and investment allocation, the action we're put in together of a portfolio and how that works with the tax office is actually what really matters in terms of your returns. Okay, we're going to come back in a moment. We'll take a short break and we're going to take a look a little deeper on who's who basically in the standscape for you as a listener and how to optimize your way through the financial advice system. Hello and welcome back to The Australian's Money Puzzle podcast. I'm James Kirby, the Wealth editor at The Australian and welcome aboard everybody. And one of the things will you mentioned there I thought was really interesting is so once upon a time, not that long ago, say ten years ago or so, there was thirty thousand advisors in Australia and now there's fifteen thousand point one point two. The fifteen thousand advisors isn't growing, it's stalled basically at that number. There have very few recruits. They're really worried about this. I mean, professional associations are actually recruiting in India trying to get people to come to Australia to be financial advisors. At the same time there's this huge demand, so more than just finding an advisor, how do you get in the door to a good advisor? What would you need to I'm going to put it this way, what would you need to offer the advisor? Because the point you made at the start there when you were talking about a minimum, you were saying that there's a minimum, but you're happy if the person is aspiring to get to that minimum.
If we're confident that they will get there.
Yeah, And how would the investor persuade you?
Well, it's about their savings and earning's capacity, and we look at the other asset based the other assets outside of what they're potentially giving us that they've got. You know, there's when we get into a competitive situation with another firm and a client mentions that, and I think this is a really important thing. Is I'm not going to pitch why we're good or what we do, et cetera. It's a personal thing. You know what we've got as a skill set. And you know, I think being an advisor is about being a very good listener. And therefore I say to them, you have to decide and go with the firm that you think you can best work with. Very person outside of family, your asset basis is the most important thing you've got, so that people have to decide to work with a firm they think they is the best thing they can work with. Now, we hope that's us, but in many cases sometimes it's decide that's another firm. And I think that's a very important thing. So it's not about looking up Google and deciding, oh, look here's one, go and see them. Yeah, they can do the job. I really think this is you want to have a long term relationship in the firm that you're potentially going to see it wants to have a long term a long term relationship as well, and you therefore need to find the person or people that you can best work with.
And what about let's say when you were in your late twenties or thirties, you found an advisor. They were pretty good, It was all pretty good, got to a point, and then you're older and you say, I'm in a different I'm actually in a different league now and this person is very good. But it's the same thing every year. I'm clearly missing I'm not getting this. I'm not getting that he or she missed something this year that they should have picked up, et cetera. What about that issue of upscaling or switching to a more appropriate advisor.
That you know. Sometimes you do grow out of relationships, don't you. And that's I think what you're talking about. And that doesn't just rate financial advisors. It relates to accountants, lawyers, et cetera. A firm that you go to. You were talking about fund managers and fees before. Sometimes the big firms they come out and say, we get feed discounts. Sorry, guys, everyone gets feed discounts. Make sure that the advisor gets feed discounts with the fund managers. That's nothing unique there. The other thing the really big guys say is we get access to product that others don't get. That's actually not true. Some of the smaller firms get access to things that the larger firms don't get because the larger firms are too big. So it goes both ways. So you just want to make sure there is a good that you are able to access a broad, high quality spectrum of solutions, multi asset class across the board and at the right price.
Right and turning it on the other side of the table in terms of the relationship. So a couple comes in to an advisor and one person is clearly very numerous, conservative, capable, and it's going to be a good client. Unfortunately, the other part in the copple you can see just wants to have, just wants to spend, also wants to just knock it out of the park and find a ten bagger. Then you have, and let's make it even more interesting. Someone told you that that there are the point of divorce.
Yeah.
The point I'm making here is the client changes on you too, I'm sure absolutely, and how do you deal with that?
So one thing we have is that everyone has to do a risk profile. And one thing we do, and we disclose this to the client, is we used to think we'd invested DNA, which has an embedded psychometric test in it, so we can sort of sc see them, and that's fully disclosed to the client. So we can see their stress points and what they rely on when they're under stress. And so it's making sure there's the right advisor is aligned to the right client.
Do the psychometric tests in your experience? Are they reliable?
It's amazing they are.
Yeah, I had this many times, but I wanted to ask you they're very reliable. Yeah, okay, And I think in.
One client in particular I sort of had in my mind after I've met him, X is going to look after him. And back came the test and I was like, WHOA, I was wrong there. I've got to go in a totally different direction. And that's really important, really important, And you know it's sometimes in a relationship, when you have couples, you don't realize that one is definitely stronger personality and with respect to financial literacy than the other. And in that case sometimes you realize that the other part of the couple. You've got a dentist is next to it to us, and they probably prefer to go to the dentist and come to us.
Yes, And that thing that people can be terrific. Someone could be a terrific commercial lawyer and a catastrophic investor. I'm sure you come across that all the time.
I always say, if we've and I think this is something which is really important as well. And I know that a lot of the better advisors, it's especially on your list, would do exactly this as well. When you know we are right, affirm does things a certain way, and if someone comes in and wants as always looking for that ten bagger, as you put it, I would introduce them to somebody else. You know, we are as iways say, we're a service about keeping wealthy people wealthy, and I think that's and I think another most of the other firms on that list, I think if they didn't feel the client was right for them, they would introduce them.
On yes and that and hope and hopefully also making them wealthy on their way, which of course would be what a lot of listeners would be most keen upon, I expect in terms of a mathematical breakdown. Okay, one not thing on this. You mentioned you were in LA at a financial advisor conference. You mentioned there was a female panel. Do you know that my numbers on this are as followers in Australia, among the fifteen five hundred advisors, twenty three percent only our female And on the list that came out today, the top one hundred and fifty top financial Advisors list in the Australian only thirteen percent are female. And that number hasn't moved much since we started. I would have thought it would have, and I would have thought that as an area it would have had a much more sort of natural gender balanced by now, without any need for encouragement I would have thought of it had just happened, but it hasn't at all. Any theories from you as to why.
It gets back to things like the Royal Commission. Now, I very senior female fand manager Tom in Sydney was telling me that she was at her daughter's school. She was asked to host, you know, the careers night to go into finance. You're right, and so she sort of turned up there to host all these young girls and that wanted to go on and finance. Not one person turned up a leading Sydney private school. And I think that at the image of the industry still is it front of mind? You know, you want to go and do commerce. You've sort of got at the end of mind. You want to be a lawyer, you do want it, to be an accountant. It's not we're still becoming a profession. I think we're well down that road. Have we got that to that level yet? It's when society accepts us as such that's when you become a profession. But I don't think we're front of mind enough for a lot of younger people. Oh, I want to become a financial advisor, and I think that's one of the problems in the second issue is some of that the bad reputation that we had from years ago, and that was terrible. Whilst I think we've made incredible inroads in cleaning that up, you know, and I think that's there're two of the things that have been an issue now.
You know.
We train young women and bring them up, and it's very important that we do that. It's the alternative.
Obviously, listeners to the show be familiar with many female advisors that I have on the show all the time. Sally Winn, of course from Shadforth is on the list as usual. She's another veteran on the list this year, and the Shadforth group really really lifted their presence on the list this year. The top, of course is Morgan Stanley once again, Garth Hugh a bradmanesque performance, a Lewis Hamilton like performance in the list. He's number one are for the fifth year in a row. And the number one highest ranking woman is also from Morgan Stanley. That's Kathy Ding in their at number eighteen. So congratulations to all those. Okay, folks, we'll take a short break and we'll be back with some really good questions in a month, so welcome back to The Australian's Money Puzzle podcast, James Kirkby talking to Will Hamilton. Okay, we have a few questions. Okay, I why don't you read the first one because the second one I'm more across. Yeah, from Emma.
So, Emma asks heard you mention a request for dollar cost averaging in the last episode, and I'd like to ask for this topic to be explained. I've recently set up a monthly direct debit investment into high growth ETF for my niece and nephew and would like them to understand how this works over time, so you would do much better than I could. So, Emma, the thing is saying in the markets that time in the market, not timing the market, and if you can get the top or the bottom, you're better than anyone else I know. So the thing is it's about averaging in and what you're doing is exactly what you're doing is a monthly direct debit, which I presum is going in every month as your averaging a certain amount one hundred dollars, one thousand dollars whatever that is into this ETF. And that's dollar cost averaging because you might be going in at a dollar one month and a dollar ten the next month, and at ninety six cents the next month, and you're averaging in with those amounts, and that's still a cost everaging.
In a way. ETFs are almost like that, weren't they that it was in that that they just follow the market. And if you, Emma, if you just put in the same amount of money every month, then a month will happen where the market is overpriced and you've paid too much, but you will balance that off by the month you buy when things are really low and nobody's going in, but you're going in, and that habit basically gives you the consistency. It's Look, it's a very strong theory, which it's very hard to knock. You could. The only thing you can do is there are occasions through history where the market doesn't return, rebound or revert to the mean, and it's tough during those times, that's for sure. But it's very strong principle and in a way, at its very best, our superinnovation system where you must put in so much per month into super by low is it actually okay? We will move on to Greg last weekend in the Weekend Australian with regard to potentially investing in the new Trump American market. You mentioned a couple of Vanguard ETFs. I've since discarded the broadsheet, but I mean, I'm sure you mean the single issue of the paper. Greg. Can you please remind me what they are happy to remind everybody that I will not and do not in any way emphasis one product over another, or one advisor over another, or anything like that. And I'll tell you a funny story there. There's ETFs index funds you can on American markets. Of course you should be in there. I'm in there, and I think any advisor, at least any investor who wants access or exposure to the US, it's a great way in. But here's the thing, and every ETF product maker in Australia will be annoyed on what I'm about to say. They're all the same. I had lunch with a with an employee of a major ETF player and they said, listen, we're like we are like the laundry detergent salesmen in the nineteen seventies. They're all more or less the same, and we have to distinguish ourselves in some fashion. So keep that in mind. There's Vanguard, There's Eye Shares, there's Betas Shares, there is global X and others. And I am happy to say that as long as you get started with one of them, the difference in performance to you over a long period of time would be infinitesimal. I imagine between the ETFs, because the promise is that they exactly replicate the market that they're buying in. I'm talking about traditional ETFs here strictly, I'm not talking about ETF Greg. I hope that's all clear. Okay, A question from Dusty who is I'm guessing male in the way of Dusty Slim, Dusty or maybe Dusty Springfield. Who knows. We'll just have to guess. Anyway, you might read the question.
That's the yes. Since the election and when Trump has been nominating a number of people for a second term for the secretaries. Most recently, Robert F. Kennedy Junior was nominated as as Secretary for Health and Human Services. The following day, most of the vaccine makers stocks went down because RFK Junior stants on vaccines. If he ends up getting the stocks. What are your thoughts on overall healthcare sector, especially for our local blue chips yet it's not financial advice, but I think you know, with these things, you often get a kick down and you get an overreaction. Things balance out if they're quality and they've got a product that saves lives, whatever, it's going to continue on its merry way. But just yeh, expect an overreaction, I think is probably what you usually get.
So when this stever advice is information dusty and all the dusties out there having said that, or FK Junior, who, by the way, whatever else he is, he's pretty healthy looking, he's seventy one. You know, he's openly skeptical about vaccines. He is going to get that post. CSL has fallen sharply in recent times, and it's supposed to be a blue chip that doesn't fall sharply. It's not having a pretty good run at the moment anyway, and this would not seem to be good for them in the assuming it happens in the in the short and medium term. I think that is a reasonable observation. But as you're saying, well, it is a quality stock, and quality stocks should should see it through whatever challenging is put to them or put in front of them. And you think, yeah, and is there any other Australian stock that would be exposed to be like to the idiosyncratic thoughts of Robert F. Kennedy Junior.
That's the big one that stands out, and boy does it stand out.
Yeah right, okay, very good. Well, thank you for listening today, folks, Thank you, will, thank you, James. Always great to have you on the show. Well done for being on the list, for being for one of the stayers on the list. There's very few of them. Actually, I looked at the two seventeen list, which is only fifty people. I'm looking at it all week. I'm dizzy from looking at the list because I've been doing it and it's quite different now with one hundred and fifty. But well done to anyone who was on that list. And if you are considering getting an advisor, well I'm certainly happy to say to put that list in front of you. Okay. Now, today's show was produced by Leah Samuel Gluu. Thank you very much, Leah. And as I said at the start, any correspondence issues, questions, complaints or if you are having problems with big super funds, let me know. The money puzzle at the Australian dot com, dot au talk to you soon.