TRAP: The Real Adviser Podcast

103 - KEITH BUTTEN - Succession Planning Done Right

• Alan Smith; Andy Hart; Carl Widger; Nick Lincoln • Episode 103

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In this latest pile of TRAP, the Trap Pack discuss

  • Topical Titbits
  • Meat and Potatoes: KEITH BUTTEN - Succession Planning Done Right
  • TRAPist question from beloved TRAPist Anon (not his real name)
  • Culture Corner

Show links: http://tiny.cc/traplinks

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Unknown:

Welcome to the Real Advisor Podcast. T R A P Trap. Please follow us and join in the conversation on Twitter at Advisor Podcast, where you can suggest ideas and themes you'd like the Trap team to discuss. Also, remember to like and subscribe to our YouTube channel and leave a six out of five star review on iTunes. Doing all this really really helps us, which means we can do more to help you. Now let's head over to the studio for the latest pile of trap.

Nick Lincoln:

Yes, indeed, dear trappers, welcome back to what many people are calling episode 103 Centitres of the Real Advisor Podcast, T R A P Trap. My name is indeed Lick Lincoln, and joining me as ever in the digital studio Doom are two of the other three horsemen of the Apocalypse: Carl Delavoci, the Voice Widger, and Alan, the Storyteller Smith. Our third compadre is somewhere in Albania. Highly rating the Albanian ladies. This is the first one that ultras missed. Storyteller missed his first one for the last episode. Is the band still intact? Is what people are asking. Actually, it was you missed the last one, Carl, wasn't it? I can't even get the intro right. I missed the last

Carl Widger:

one. Yeah, Dave Quinn did a great job in my stead. Fair play. Thank you, Dave.

Nick Lincoln:

He did. He did. We now know about Mayo football through and through. He was very chuffed with that and sent a link of the people going nuts on that. Someone's on the front boy might pick that up. It's all going off here. It's probably my wife because she's locked herself out. Could could I

Carl Widger:

just say also in case our guest doesn't realize he's muted because I know he has to do something just in a minute, just in case he wasn't aware. Yeah, it's it's

Alan Smith:

been it's been good during this summer because we have rather than what we've tried to do in the past, which was take a microphone on holiday with us, and that that had let's how can I put it that had mixed results. We've just decided to find

Carl Widger:

suboptimal is

Alan Smith:

the phrase that's very Lincoln esque suboptimal outcomes and and smoke alarms and any number of other things. But what's slightly concerning is pretty much every one of the guests from from from Dave to Lisa are better than the actual hosts of the podcast. They're significantly better, and I'm sure today will be no different. I would agree. Back to you, Nick.

Nick Lincoln:

Well, on that note, let's try and work out who the guest member of the Trap Pack is standing in for Ultra today in episode 103, because he's going to lead off the show with a high-energy review read read in his own inimitable style. Please go, mr. Guest, with your review read now.

Keith Butten:

I must listen for new and experienced financial advisors. There's been times over the last few years when I felt isolated within my previous firm, clearly not me, and question whether I'd chosen the right profession, listening to trap every fortnight and speaking with my fellow Singapore Trappists has given me the confidence and motivation to keep delivering real financial planning in a market dominated by private banks and product salespeople. The show doesn't just guide those delivering or wanting to deliver real financial planning; it's also generally quite laugh-out-loud funny. Nick, Keith, Alan, and Carl-a great combination of characters, each quite unique, and the way they bounce off each other is brilliant. Nick's dry wit, Alan's stories, Keith's seemingly endless knowledge, and Carl's positivity make every episode both educational and thoroughly enjoyable. I've been on plenty of training programs over the years. That's a bit long, isn't it? But this beats them all hands down. Thanks to the four horsemen for being so generous with your time, knowledge, and experience, and for helping to build and support such a collaborative global community of advisors. Congratulations on reaching 100 not out, 103 today. Looking forward to many more episodes. Ryan Cottrell Walsh, what a man!

Carl Widger:

Yeah, go right. What a

Nick Lincoln:

great review! What a lovely review! Thank you very much, Ryan Cottrell Walsh. We do appreciate that. So, dear trappers, you're probably hearing those dulcet tones and wondering who on earth can this person be? You might have a clue that his first name is Keith. I can tell you, you're going to get first dibs on this. His surname is Button. He's with us as an honorary member of the Trap Act today, standing here for Ultra. Keith Button, tell the dear listeners in 60 seconds or less who the hell you are.

Keith Butten:

Who am I? Well, I'm this guy that's been around the industry for getting close to 40 years now. Clearly, clearly doing well with it, but that's the case. But obviously, work for my son now. Obviously, Boost is run by Josh. Still highly involved in the business, love everything I do about the business. But we transfer to employee ownership, and that's the topic we're going to talk about today. So, lots to come from from that session that I hope will help everybody. But in terms of myself, I'm also the person behind the master classes that lots of people heard about. We've now done. I think I've now done six of those. 99 advisors a year, but I offer those to. So there's over 500 people that have attended masterclasses that around the UK. Hopefully, they're better financial planners than they were before they attended. So that's just me. I'm all about giving back, and that was something I started after I won a Good Egg Award. I decided that I should do a bit more, and that's what I did.

Nick Lincoln:

Yeah, super, super. You are definitely one of the the givers in this thing of ours, and I've seen on LinkedIn the response you get to your masterclasses when you give up a Saturday morning, typically to do it. It's it's great stuff. I think we are all similarly minded, aren't we? Rather, we wouldn't be doing trap when some have done 203 episodes.

Carl Widger:

But Nick, hold on, hold on, Keith. You you left out something pretty big that's on your financial services CV. I believe you have a world record in this thing of ours. Tell us more.

Keith Butten:

It's funny it's funny you should mention that because this was something that obviously our missing Trappist. He he referenced this in a show, so I had to drop him a note afterwards and say I can't believe you mentioned it. And the way he mentioned it was basically said that somebody that claims to have broken a world record. So if I'd have known you were going to mention it today, I would have brought the evidence with me to Portugal, where I am at the moment. But yeah, it's a long, long time ago. But back in 1990, I'd been at a conference in '89. Peter Rosengard had spoken about his world record, which was what was being spoken about on the show at the time, where he sold 100 policies in a month in the bad old days in the Wild West. So I was on a cruise that summer. I was obviously very young in 19 8923-year-old. Keith, on a company cruise, decided to tell everybody that I was going to try and beat that world record. I wasn't going to try. I was actually going to beat it. And sure enough, in the October, I did. And so, aged 23 and a bit, I managed to sell 134 and a half policies in the days when it was all about selling policies. And then you're going to ask for what was the half. I actually shared a case with somebody. So there you go. So I did 134 and a half, and then just to prove, everyone then said, "Oh, that's that's just luck. That's just because of this, and because everyone had a reason why. I said, "Okay, I'll do it next year. I'll beat it. So sure enough, next October, I then beat it. I did 137, I think it was the year, the following year, just to beat it. So yeah, and that's the story. So yeah, that although Peter Rosenbaum was the first to do 100 policies, I'm still I'm claiming the record. There is

Alan Smith:

some going on a sort of on a how many days there are. This is in a month.

Keith Butten:

In a month, in 30 day month. Yeah, so it was literally five a day, basically. What sort of policies

Alan Smith:

were they, Keith? Just just your life, Keith.

Nick Lincoln:

Alan can't see the raised hand thing on his end of the software. Okay, just got to let you know at the start of the show.

Alan Smith:

Yeah, go on.

Keith Butten:

What type of plans they were? Yeah, they were the same sort of rubbish you used to take round to your wheelbarrow, Alan.

Alan Smith:

Oh yeah, yeah, endowments, mips,

Nick Lincoln:

get it in.

Keith Butten:

All that rubbish. All that potential. Brilliant. Good old good old insurance policies and pensions of all sorts, but well,

Nick Lincoln:

my question my question was similar to that. I might have missed because I had to quickly go to the door. Were you a tired agent back then? Are you using? Were you independent?

Keith Butten:

No, I was definitely not independent. No, I was I was a bound agent. I'm not a tired agent. A bound agent in the Wild West days. So I was at Sun Life for Canada. I was lucky to start. To be fair, they're a good company. They had a great training scheme. I was lucky to start there, but yeah, it was just all about sales, sales, and products, as we know.

Carl Widger:

And you got a nice cruise. You know, got a nice cruise from Sun Life Canada as well. Yeah,

Keith Butten:

I got I got lots of nice trips and cruises in my short time there. Exactly. Do you know what?

Carl Widger:

I I work for a company as a broker consultant called New Ireland, and we we used to get it. We used to we went to Marbella for a week in the the Meliadon Pepe Hotel. I still remember it, and that was part of the gold trip. And there were amazing times, and obviously those times are over. But what I will say, and probably similar to listening to your story. By God, they taught you how to sell, and it's a missing art now, you know. And and and and nobody, I I certainly can't remember anybody telling me to sell anything that was wrong, right? Because we were selling what was the the best that was in front of us at the time, but that art of selling, I think, show me a successful business owner, and I'll show you someone who number one has resilience, and number two who can sell. Because if you can't sell, you ain't going to have a business.

Alan Smith:

Yeah, completely right, Carl. And just if if Andy Hart was here, he would say the following. So I'll say forum. If you've been to Tenerife, Alan's been to Elevenerif. So you went to Marbella. I went on an all expenses trip to South Africa on safari and everything, and it was freaking incredible. One of the best trips I've ever had through the the good old because they I got the Golden Wheelbarrow Award for that stuff. And a night back in the day, you know, gold plated. Oh, here we go.

Unknown:

Grab yourself a drink. With props, sign.

Alan Smith:

That was great, Nick. That's a kind of that's a blended drop now, isn't it? We've got the storytelling. I'll

Nick Lincoln:

press the wrong. It was

Alan Smith:

good. But the other thing I would say, just on that, is that would you say Sun Life of Canada, Keith? Yeah. Yeah. The number and and just linking those two stories. The number when I was wheeling my wheelbarrow round the streets, the number of IFAs that were in business then that had come from Sun Life of Canada. A lot of the really big producers who then decided to set up as independent firms. That that was the one company that I kept coming against, or not against, but that you know seeing a repeated pattern. So the training must have been incredible. It's brilliant, and and you're right, Carl. We lack that now. That that whole kind of infrastructure and training and development just doesn't really exist at all anymore, and it's a real shame. Really is

Nick Lincoln:

because selling selling is evil, but we're all selling. We're all selling. Okay, guys, we're 11 minutes in. We're not even started the topical tidbits, and

Carl Widger:

Barry now. We've got

Nick Lincoln:

to give a shout out to friends of the show Vanguard, as you might know. Trap, or maybe three quarters of trap. Hopefully, three courses of trap car are going to do the Tough Mudder on Friday, the 18th of September. Runs from 11 till 4 p.m. in some parts of Surrey. I think it's near Gatwick. So do come along to that. We'll be there, and we're now mentioned. If you go to the the so-called show notes and click on the link onto the Vanguard Tough Mudder page where you can register, we are there now as one of the friends of the Vanguard brand, along with other brands that want to obviously tarnish themselves and and Vanguard, it's all very strange and bizarre. So do that. Looking forward to it. Right, we've done that. So let's get on to the topical tidbits.

Carl Widger:

Nick, 12 minutes in now. Yeah, yeah, yeah. But but but look, if we're if we're extolling the virtues of our partnership with Vanguard, there is one thing that we it will be remiss of us not to say that Trap Forum is up and running, and the reason I wanted to say this today, I haven't really been involved with Trap Forum because I couldn't get the bloody link to work because I'm a total idiot when it comes to all that kind of stuff, right? But I have I have broken my I have broken my duck and I have started to contribute to trap form. There's some really good stuff in there. There's some people, I suppose, asking some really good questions, but there's also people just making contributions which are very valuable. So look, we'd love to get it up and running. There are a few things that aren't perfect about it, and we are trying to iron those out, but look, please do log on. You'll get a couple of months free to see if it's for you or otherwise. So just wanted to mention that because I have probably been conspicuous by my absence and trap forum. I apologize. I am in now. I am in.

Nick Lincoln:

You have been you have been away living living living the dream, as it were, and doing these things that we need to be doing with our time because it's precious. So thanks for that. I appreciate it. Okay, now Keith Button, honorary member of the Trap Pack on episode 103. You want to talk about family gifting?

Keith Butten:

Yeah, I do because it's a topic that you're coaching the team that I coach today, and obviously the clients and people that we work with. I think if I was to go back over my career, I think I probably made a mistake many, many years ago. And there's probably some of the Trappists that might do this, which is you're often sitting in front of a family, and if we're not talking IHT with our clients now in the UK, we're certainly going to be when it comes to beyond next year. The topic is going to get bigger and bigger. Gifting's going to get bigger and bigger, and we work with families. We work multi-generational. And one of the things that has always been spoken about from family side of the table is, oh well, if I do that for her, then I must do that for him, and I must treat all equal. And I think it was probably quite a long time before I sort of convinced myself of the fact that hold on a minute. This is just madness. To actually try and treat children equally is just madness. And when you actually get into the nuts of it, you know I've had situations where there's three children, one who is absolutely dreadful with money, and the parents wouldn't want him to go and buy another car, and you know two that are perfectly sensible, and of course holding back on giving the money to the sensible ones, and obviously in other situations where there's very successful that don't need any money, but there's then one who's in a teaching career or something where could really do without getting on the property ladder and not being given the help because the parents in question think, well, I can't help everybody and I've got to keep it even, and so for me, I think it's. Something I wanted to flag to people because I think it's a mistake that some financial planners can make is falling into what the client says. I think our job is to challenge the client and educate the client. Actually, not everything totally equal. Is in my view. In my view.

Carl Widger:

Well, I think this is an amazing point to make and something that's dear to my own heart at the moment, it's sometimes, though, Keith, very difficult to get the parents to agree that maybe these things should be distributed unevenly, shall we say? So I welcome your insights as to how you go about that, but I totally agree. It is a it is a big issue for sure. Yeah,

Keith Butten:

to me, it's a it's a coaching thing because I would say it's a coaching thing. Is the answer to that? Yeah, it's proper it's proper deep coaching, and you're only going to achieve that if you've got a deep relationship with the family over built over a long period of time. Which is

Alan Smith:

another thing, Keith, and just relating it back to our story before. And I know this is moving on from selling, but this is another form of selling. It is coaching and understanding it, and people do need because I think it's a lost art. The ability for a financial planner to sit in a room with with a family, with parents, grandparents, and challenge them and ask them those difficult questions. I think we've all had these conversations with families over the years, and recognizing that fair doesn't mean equal. People say, "I want to be fair to my kids. It doesn't mean equal. Funnily enough, I wrote about this in my now famous weekly newsletter, Bulletproof Entrepreneur newsletter, and because I was giving it a lot of thought. And Barbara, so go to bulletproof entrepreneur.co.uk and subscribe to the newsletter. But I and I sort of put together, admittedly, goes without saying, using AI, but a kind of a template or a tool about this, which was and it started with basic things. It sounds a bit sort of wooly, but you know things like what are what are our values as a family, what's important to us, and what what are the sort of areas and projects or subjects that were that we would be happy to support financially, and maybe giving money to one of your children or grandchildren just to go and buy a car or another car or something that that might not necessarily fit. And I and I think there's an opportunity for advisors in the world of AI is coming after all our jobs in theory, but certainly one way you differentiate is using this consultative coaching type process, which an AI tool is never going to do to the same degree, and understand and having almost these kind of family board meeting type things. Just say, look, what are your values? These are some things to think about. Are there areas that you're happy to support, like getting your foot on the property ladder, starting a business, education? Those are the things you're happy to support. But if you're covered for that, or you've taken care, you've already done that yourself. Then maybe we're going to divert some of the family resources to other things. And I think creating that framework super valuable. It's a great point, Keith. And you and you're right. These conversations are happening every day now with the current sort of them tax regime that we're facing in the UK.

Nick Lincoln:

Great, great, great starting points there. And well, I can lead off from that really if we're done on that. And that could really how you how you Keith how you how you coach those conversations, how you start them, how you manage them, how you keep them on guide rails, and get the family where they need to be. That could be a masterclass, and it's only you might well have done that kind of thing already. Because my next point, the topical tip bit, I've just done a pension switch letter, so clients of mine for over a decade now, both both overachievers. He he he works for these startup firms in in a sort of chief financial officer role, they get bought out after a couple of years. He gets equity and then goes into the next one. And in the course of doing that, he picks up these small pension pots, you know, 3040, 50k pension pots. And over the years, we've always consolidated them, and we've always had to do it very carefully. You know, when you're doing a pension switch, you have to be cognizant of the charges, don't you? You don't have to worry so much about GMP and guaranteed annuity rates because they pretty much those policies haven't been written since stakeholder times, if not beforehand. It's really just the charges. But I did my first one for this guy with my new mindset. He's he's left a couple of firms in the last year, got two pension pots with a V, but very competitively costed. There's no way a platform could match that cost, but we're doing the pension switch anyway because I'm saying you've got to start consolidating your pensions. We've done it for you in the past, and I've always been very cognizant of the cost thing. I'm not so bothered about it now because these changes that are coming into pensions from next year, from April next year, when it's going to be an absolute pain in the arse for those you leave behind to manage it and pay the inheritance tax within the timescale. So I, I'm going to go out on a limb on this and say the pension consolidation should be an absolute centerpiece of your business. It's a benefit. It's a real benefit. Clients may not understand it, but their personal representatives certainly will do when it comes to it. I don't want to be dealing with five or six insurance companies. They don't want to be dealing with five or six insurance companies. And the advice letter I wrote last week was for the first time front and center. I put this down as the reason for doing. We're consolidating your pots to get it onto your existing platform and minimize the agony for those you leave behind because it will be agony. And I think we're sleepwalking into this. I know I've broken record, but I I want this to be known that I you know I was saying this now. This is going to be a complete cluster F when it happens, and you want to do your best for your sake and and for your clients to make it as difficult as as easy as possible at a time that is very very difficult. So that's that's my views on this. And unless you've got something to add, well, you both got your hands up. So I don't know who went first because I can't tell with the software.

Keith Butten:

I think the thing it might have been myself that went first there, just about. And I was going to add a little bit to to that, Nick, which is that I actually think there's a different reason why those pensions and charges is not the issue, and we've thought this for a very long time, and I think we all agree on this when we've been around for a little while. But and this partly comes from because we do enterprise work, and a lot of firms don't. But we've got an enterprise side. We see lots of this work of people having their bits and pieces, pots, and something that I see is that if you get a 30-year-old that's got a few pots, got 510, 1000 pots. Let's keep it simple. And suddenly puts them together and got 50 or three, and it's 10 each, and it's 30. It doesn't matter what the numbers are. Bringing them together achieves focus, and that focus means that they put more in. They look at it each year. They bother with it each year, and that is a massive foundation piece that will be worth far more to them than the difference in charge. As long as the difference in charges is obviously sensible and controlled, and we're doing all the right things, the actual motivation that will provide is far, far bigger than than anything else.

Nick Lincoln:

Yeah, and by the way, I'm not. I wasn't saying I don't do those other things as well. I'm just saying that now. I think you know that the charges argument can almost be that there's so many good reasons, like that mental, that that that sort of way. Just oh yeah, I've got one pot now. It's easy to log in. I'm actually invested in this mentally because I'm not scattered amongst five or different so different pots. Definitely, but I'm just thinking the charges argument becomes less and less important. Remember, 15 years ago, it was like you had to really, if you had a compliance function, you had to really justify why you are paying five bips more a year to go on a platform we're having. I think you know buying lives. That's that's that's pretty much gone.

Keith Butten:

Probably harder to justify the client's function. I'd say.

Alan Smith:

Nick, you're muted again. Yeah, sorry.

Nick Lincoln:

It's because I think in the background I have got someone mowing their lawn. It's it's August in England. Everyone and their wife is just shaving stuff down. So that's the noise you can hear. It might be me. I'm muting now. So if it goes,

Alan Smith:

yeah, it's gone.

Nick Lincoln:

Okay, so it's moving. So I'll try mute as much as I can. Just I hope I hope no

Alan Smith:

one's watering their lawn, Nicholas. Hose pipe ban. No, we

Nick Lincoln:

are. No, we're doing the we're doing the classic thing. Penny just fills up the watering can with endless amounts of water from the hose pipe, and then just goes around the garden. We don't have the sprinkler on. I mean, we never have the sprinklers that I think are the things that do it. But no, I'll tell you

Carl Widger:

a good one. We've got a hose pipe ban in Ireland. Could you actually believe that? It's been raining non-stop for

Alan Smith:

six months, and now that it's stopped for a couple of weeks, mad, crazy, absolutely

Carl Widger:

mad. That's a whole other story. So,

Nick Lincoln:

okay, I'm going to ask some. Just following on, yeah,

Alan Smith:

just following on from this very point, and I agree. This idea of simplification, which we all talk about, and particularly as people get older, that's one thing that they all prefer in life, and certainly families and beneficiaries and executors, etc. you're doing everyone a great favor by simplifying, and that is also further compounded by something that I had an exchange with Nick the other day on, which I wasn't aware of until quite recently, and that

is this:

when pensions come in under the inheritance tax regime in the UK, and executors have got to sort of, you know, go through that. And we know, we just know it's going to be an administrative headache, and they've got to account for the inheritance tax due on the deceased's estate. That the unlike other types of assets like property, if the investment portfolio, the pension value falls in value between date of death and the time grant of probate is given, and monies are paid out and distributed and paid, then you don't get the loss relief like you get on, for example, on property. So you got a pension fund that's worth million quid. It falls to 900k. That estate is liable for the inheritance tax on the higher amount, which creates another set of complexity. And imagine you've got that going with five or six different pension pots, all with different funds and different sort of ups and downs of marketplaces, with non-expert. And the other thing

that somebody mentioned to me:

sometimes you have different circumstances, even different executors for different parts of the estate, like property and other aspects versus pensions. So there's a there's just a world of complexity. Now, the the answer would would have been, and we've talked about this before several times on trap. We'll just move to cash. Well, as we know, you can't move to cash. We don't have this. Authority to move to cash after death. We're no longer the advisor. Your agreement has is gone. And then Nick, you were saying, well, as soon as your client is, and I'm taking, I'm sort of being a bit humorous with something which is very, very serious. But sometimes you need to laugh at these things, otherwise you'd cry. But if if your client's looking a bit peaky and they're looking like they're not going to last much longer. Get their authority to move to cash pretty rapidly.

Nick Lincoln:

Well, Nick, it's going to be a hard one to couch, obviously. But I mean, you know, you've got to think about this. I know you know this is like Jim. I love you. Been a great client, but you're obviously going to die in the next week or so. Do you mind if we just go to cash? I'll draft a letter. Keith, can I ask a favor for you, mate? You're you're definitely leaching background noise through your microphone. Can you mute when you're not when you're not

Alan Smith:

speaking, but you know, isn't that a point? You're not going to get this, and it just seems crazy. Why on other assets you get this loss relief? The property has gone down in value, therefore the tax should be due on the lower amount. But but pensions have been carved out specifically, which seems either just a flaw in the legislation or just quite vindictive. I don't know. It's but it's it's just more complexity, more time. So at least the very least, if you've only got one pension pot to manage or to deal with, then it's just going to make life a bit easier during what is. Let's face it, in all seriousness, very difficult circumstances. You're dealing with grieving relatives, families, all that usual stuff. And again, Carl, sadly, you went through it yourself not too long ago, and it is a world of pain on so many levels. So, good shot, Nick. I think that is good advice for anyone to be doing with clients with multiple pension polls.

Nick Lincoln:

Thank you, gentlemen. Keith, Keith, I should know this. Maybe does Boost have discretionary powers? Still mutual?

Keith Butten:

No, we don't. No, no, we don't have discretionary powers. No, I actually posted a comment over the weekend in the in the old forum because I'm actually willing to do something on this topic because I picked it up from a previous trap episode, and I feel that we should be doing something around this. I think we should be in touch with the regulator. I think we should be in touch with Foz, and I think we should be making the point here that you know let's upfront explain why we are being put in a completely impossible position, and you know we need to be allowed to put into our client agreement that we can automatically deal with the executors, and it is for the executors to then cancel our services if they don't want to deal with us. But the client in their lifetime should be able to impose on the executors that we can carry on doing our work and being paid for doing our work. That's my view, and I think it's something that we should all get behind because it's clear that the current situation. And I know I listened to that episode. I know obviously Andy had a view, and Nick, you had a view, and both of you were wrong, but you know you had a view because neither of you could neither of you can do what you wanted to do.

Carl Widger:

And I 100% agree, Keith. As you know, I agree 100 with what you just said. Yeah, and the boys are wrong. Yeah, but look, we leave them off in this one.

Keith Butten:

Yeah, but wrong for good reason. That's the point. You're you're trying to do right trying to do right for wrong. This is the problem, or be wrong.

Nick Lincoln:

I I would like to do what Keith just, but from a compliance point of view, you just cannot do it. I would love to have the ability to switch to cash when a client. When did compliance ever

Carl Widger:

stand in your way of doing the right thing, Nick?

Nick Lincoln:

That's a point. What am I talking about? It must be the right. Ask for forgiveness, not

Alan Smith:

permission. That's Nick.

Nick Lincoln:

Exactly. Thank you. Thank you. I use that line with my my former wife. It never works. So, Waj, now you don't have much of a family, so college fees and so forth won't be a problem for you. Yeah,

Carl Widger:

yeah. So this was a report that was out this week, which was on the cost of third level education in Ireland. So I've got triplets who are all going to college, so back to college in September. So this is like this is like squeaky bum time for me. It's like holy mother of divine Jesus Christ. Like I don't know how vast majority of families actually get through. It is just mental. So anyway, this report says it's 16 grand a year now. I believe it to be a little bit more, but I suppose the big point here is a couple of years ago we were putting in, we were factoring in 12,000 per annum. This is like three years ago, and some people were coming in going, I think it might be a little bit more, and then others were coming in, going, "There's no way it's costing that. And if your kids are living away from home, I absolutely guarantee you the cost of renting any properties, student properties here in Ireland, is astronomical. I have a daughter who's in Cork, which was the second dearest on that on the list in the article, and it's like a I was going to say a small mortgage. It's not. It's like a big mortgage that you have to pay for 10 months of the year, and I have a daughter in the states, and I have to pay for her for the whole year round. It's just absolutely crazy, and it's like. How do people kind of get through this? It's but I suppose you just do, don't you? Because they're your kids, so you you just find a way and you do it. But

Nick Lincoln:

yeah,

Carl Widger:

don't underestimate the cost. And please, please, please, if you have been blessed with a new baby into your house in the recent past, that children's allowance that you're getting, put it away. It's not for nappies now. Put it away, please, because you will thank me if you're listening to this, or if you're you listen. It's our job as advisors to get this message out there. Please put the money away because the costs are enormous, and I and I know about the costs now in the states, right? Thankfully, Chloe's on scholarships. I don't pay the the academic fees, but but even aside from that, it's just really expensive to live in the states, and the academic fees are just I just can't get my head around how big they are over in the states, and is that eventually what's going to happen over here? Because who else is going to pay for it after all? So maybe everything has to be kind of privatized. So yeah, the big message is I didn't put any money away when my kids were born because I was broke because I hadn't a penny, and the children's allowance was needed to put the food on the table. So look, I accept that that's the case for the vast majority of families out there. But if you can at all, if you can put anything away, just start that education fund as soon as you possibly can. Because wow, it's mental. And if you happen to be blessed with triplets like I was, well then, actually, it doesn't matter if you put money away; you're still not going to be able to fund. So just fly by the seat of your pants; it'll all be grand. You'll figure. I think I

Alan Smith:

think it's it's a great point. And funnily enough, Carl, now that welcome to the Trap Forum. There's a live discussion on this education funding right now, so people would welcome your insight and your personal experiences, as you know, I've got a son who's gone to college next year, and it's another area, though. And I think, and and looping back to Keith's earlier point and gifting and all that sort of stuff, where for sure you need to do the sums and the planning and map that all that out. But there's there's and particularly again, I'm not sure what the situation obviously is like in Ireland, but in the UK, we've got a sort of student loan scheme, and whether or not people should just take that full loan, should they roll it forward? It's there's a lot of talk about it right now about the students who are leaving university, getting into early stage jobs, and just saddled with a huge amount of debt, and so the marginal tax rate is heading up to 70 odd percent or something, and it's really negative for for those young people, young early early career people. So I think it's another area where good financial planners can add a ton of value. So yeah, get all your number crunching done, map that all out, use have that sort of family framework discussion, and then and then make sure that you

know decisions around:

do you take the student loan? Do you allow your kids, and I think you should, to feel a bit of pain? In other words, even if you can afford to pay them or cover off the loan, I wouldn't necessarily be telling them that. Just so they know that taking on debt is not to be encouraged, but it's really complex, and you're right; it's bloody expensive and only becoming more expensive. Although Nick, I think there's going to be a few more spaces coming up at Cambridge University. Oh, was that that a bit too far?

Nick Lincoln:

Wow, let's not go into that. What a mess that is! What a disgrace! So coming back to Carl's point, really, and also echoing a really good post I read by Paul Bradley, who's an SJP partner. He put a post on LinkedIn this week about the benefits, and it's not-it's nothing new here, but it's just sometimes you read something that's just using different language to the language you use. It just told the story of how he's accrued wealth in his pension and his ISA that his family would never dream of, and it just did it by because he started years and years and years ago, automated savings, and then regularly up up to the amount he was saving away each year. So, Carl, your point about yeah, put the child benefit away if you can. You know, when when look my my Luke was born in 2002, his mother and I we we said okay, we're going to put some money away. Now it doesn't. It might have been the child benefit. It doesn't. It's all money. Whether you know whatever we put away in a monthly amount into a Fidelity OIC fund for him, and then just topped it up. There were gifts from the grandparents, gifts from the parents, and now he's got you know pretty much it's a six figure sum, and he's it's not he's not going to university now, but it's in an ISA in his own name. It could be a property deposit, but there wasn't stacks of money went into it. It was just that's 24 years of compounding, putting away a little bit extra from all the time, and it suddenly becomes something really significant. And this this wonder of compound mathematics, I think we're a bit glib about it sometimes. We just take it for granted. It is absolutely amazing. It's you know the grass suddenly goes whoosh like a hockey stick up in the later years because you've that tiny snowball gets bigger and bigger, and as it rolls down the hill, it just picks up more snow, and suddenly it's a massive bloody you know it's a massive thing. So that's look if we if we

Carl Widger:

yeah sorry Nick, but if we can link it back to. What what Keith said earlier on, you know, here's here's coaching that we can do to the grandparents, right? Yeah, yeah. I I don't think some grandparents have actually any idea the impact. Say the small gift extension here in Ireland is is three grand, so if there was grandparents, six grand, and you could pay to the child, but you could pay to the parent, right? Like giving give making making that that that gift with a warm hand, the impact that you will actually have on your kids and your grandkids' lives is immense. Because I, you know, there's enough shit to be worrying about in life. There's enough shit to be worrying about in life without the financial pressures. Keep going if you want out of mind. But yeah, look, I I just these these numbers are just they're getting out of hand. It's just yeah. And where does it stop then? You know, but then someone else said to me during the week, "Well, sure, all those kids going to college-they're all wasting their time because AI is going to take the jobs. They should all be training. They should all be doing apprenticeships to be plumbers and electricians. So hey, who knows? But anyway, I'm I am where I am. Yeah,

Nick Lincoln:

which one drops on the show now? My son Luke, he passed his dip PFS. He's now a dip PFS this week at the age of 24. So well done, Luke. Well done, Lincoln

Alan Smith:

and Lincoln taking shape nicely. Oh

Nick Lincoln:

my God, the poor and take over the not going to happen.

Carl Widger:

Yeah, there's a successful plan. It wouldn't work because I've met Luke. He's really nice. Yeah.

Nick Lincoln:

Oh, you see, Keith, with friends like these. Okay, let's move on. Jesus Christ, 37 minutes in, and we're halfway down the topical tip. It's like of episode 103 of the Real Advisor podcast, and a quick one from you, Smithy. A good question. Yeah, guilt. Can we do it or not?

Alan Smith:

Well, I'm glad that Keith's here. Got some. We might get a sensible response. Carl, you're exempt from this as a UK focused thing, but over the last few years, a lot of I hear a lot of advisors talking about buying gilts on behalf of their clients, usually to meet a non liability. Often it's a big tax bill that's due in 18 months or something like that, and rather than just sort of sit money in a cash deposit account and pay tax on the interest, you can allocate it to a gilt. As we know, there are benefits of buying gilts directly, low yield gilts, and getting the return, which is exempt from capital gains tax. So your sort of your overall return that you would get is pretty good and definitely better than most deposit style of accounts. We've got a particular thing on the client at the moment. It's very substantial sum, and so we were kicking around the idea of doing this, and I asked a few different mates of mine who've talked about it in the past. And if I ask five people, I got seven different responses. Are we direct? You know, we've we've got the same regulatory permissions. I think is 95% of advisors. We don't want discretionary permissions. We've got the whatever. I can't remember what it's called, but most advisors have got the same permissions, and some say you do. You need special special permissions because it's a security, and unless you've got authorization to buy direct securities, you are not permitted. We don't have that. And others would say no, you don't need the permissions, but you should have somebody signed off as being. I think it's J 12, which is a qualification, which means you're an expert in buying and selling direct securities. Some advisors I know have gone ahead and just bought gilts on Transact or whoever else directly, and others say no, no, that's breaching rules and regulations. So, long story short, we came to the conclusion. And by the way, we also asked our compliance advisors, who are 360 services, and they say no, you cannot do that. You do not have the authority. You do not have the permission. So it's another one of these kind of gray areas where it's not. You know, I also, by the way, threw into Chat GPT, which again was inconclusive. It sort of said it sort of. If I took it verbatim, it would say that we can do it. We could, and so I don't. So in the end, we've chosen not to, or certainly at the very least, just to outsource it and find a sort of regulated stockbrokery type firm that could execution only type of arrangement. But it's a strange one, Keith. Have you come across this? Do you do you buy gilts for clients? What's your experience? We we

Keith Butten:

don't buy we don't we don't buy direct gilts. But like you, I've spoken to other financial planners that have done. So, if you wanted somebody to speak to, I think Warren Shute has mentioned to me before that he's done that. I believe he might have looked at it and not done it. I, I did like you, and I did, I did a quick bit of research because I saw it on the show notes, and I came to the conclusion, and I'm no compliance expert. Josh holds a compliance function. Arbits is not me. But dealing in investments as agent, Article 21 of the rule book is apparently what you need. And most IFAs, that's not what we've got. So my quick read of it would say, you know, probably it's very debatable whether we can do it. At all, but certainly it would need a lot more digging into. So I can't help you with the answer to that. I'm afraid.

Nick Lincoln:

Okay, interesting, interesting point. But we've got to keep moving on because we've got a lot on the slate to go through. But I, you know, Alan, we both know firms through the

Alan Smith:

yeah the

Nick Lincoln:

the peer group that we used to go to that do this, don't we? So it's one of those areas that's very, very great. Okay, sticking with you, mr. Button. A different. What I like about you, Keith, is you're so consensual. You just want to go with the flow, but you've got a different perspective for once on something. So please do tell us what.

Keith Butten:

Well, I couldn't. I was. I was actually driving my car, listening to an episode of Trap, and I and I could. I was just sitting in the car, getting more and more angry, going, "Let me speak. I want to get on this. I want to speak. I want to say something. This is wrong. Because of course, the guys were saying the obvious, which is that clearly, you know, with multiple, all about service levels, and obviously having one service level and leading with one service, and all the good reasons why it would be a very good thing to do that. And of course, for lots of people, there is a very good reason to do that. But equally, there's lots of good reasons to do something completely different. So I wanted to sort of give that different perspective. So let's start by saying, and I always start this conversation the same. I want to be absolutely clear in that we lead with full-blown, independent lifestyle financial planning, full cash flow, all expenditure, varied based on future assumptions. That is what we lead with. That is what we think is right for the vast majority of people. However, we know it doesn't suit all, and we can give many examples. So we initially built two other service levels. When we built Boost, we had our full Boost, and then we had two other service levels. We made a mistake in that. We we needed to add an extra one. So we finished up today. We have four. The reason for that was we had a little boost, which was for very simple clients, children of clients, etc. so that we can serve households, which we want to be able to do. That sits with our full boost, completely different service. But we realized that there were some people, maybe retired clients, elderly that had been with us for a very long time. Just had so much money; it just didn't need cash flow. They needed HT planning, gifting, all sorts of other things, but that could be done without cash flow, and therefore we needed a slightly different service level to fit them. But they were complicated, so they absolutely were not the little boost. That was the wrong service for them. So we built a little more boost because we're very simple people. So for us, we've had lots of benefits of this, so we're able to serve family members better across the generation, both down the generations and up the generations. We're able to serve entrepreneurs better who can't forecast next month, let alone design a desired lifestyle. Our planners are more efficient as they're not trying to shoehorn a family member into a wrong service level, and for importantly, for our trainees coming through, and we've obviously got a trainee development program for our young people. It's much smoother for them because when they come to the point of dealing with clients, we've got different types of clients that they can work with early on. So early on, they might deal with some of the children of clients, and then they might progress through and deal with all types of difference. So they might become more and more competent as we're developing them through that program. So, you know, and obviously bear in mind that the organic growth of growth of Boost has been very strong. We've developed our own superstars. We've got amongst the lowest fees in the sector. We've got one of the highest profit margins in the sector. So therefore, taking account of all of that, clearly it does work. So I was sitting there listening to this, saying, "Guys, guys, guys, I don't know what you're saying here. I think what I would say about multiple service levels is, and I've gone, I've said this on stage, it is a very difficult thing to do. It makes your business complicated. You have different, different services, different different contractual arrangements with different clients. So you've got to be able to cope with that. You've got to build it in from the beginning. Trying to add it as you go and bolt it on would be very very difficult. But built as part of a business as ours was, we have found it very very helpful in terms of what we do, both in service, delivery, and profit.

Nick Lincoln:

Amazing, Alan.

Alan Smith:

Yeah, I mean, congrats, Keith, for if you've managed to fix that particular issue or a problem. And it's, I guess, every firm does things differently, and I know others who do have multiple different service levels. The challenge we found on do that. I mean, you mentioned, for example, elderly clients where they don't need cash flow, but inheritance tax, but so to my mind, I don't know how you can do inheritance tax without without a cash flow. That's just my take on. I don't know how long the money is going to last, and and all that that sort of thing. And I think our challenge was when we ran. I think we had at least three, maybe four different services. Is they just began to bleed into the each other, and so you've got to be quite rigorous around when you come across something. You say, "Well, that's not part of the service proposition, and we price the service proposition appropriately, and therefore we're going to have to charge you something. You either need this, and if so, we're going to have to charge for it, otherwise, or we're going to just carry the cost ourselves, which means that we are cross. Subsidizing, which we don't want to do, which is why, again, I mean, and I get it. And as I say, congratulations to you. We just sort of went round the houses, and you know, over many years actually, and said, you know, we just we do full planning for everyone because there's no one that doesn't need it. But we're then we're selective about the sort of clients that we take on, and if someone just doesn't fit, where we think we can add a whole lot of value through our comprehensive service, then we'll happily refer them on to somewhere else. But you know, well done for you, Keith, for for solving that because it really is a challenge for lots of companies. I know Carl's trying to fix it as well with his new empire that he's building.

Carl Widger:

Yeah, I've inherited an empire that that this is probably the single biggest issue for me. So that was unbelievably insightful, Keith. I like to say lots of things, but first of all, you're way better than Andy. We should just have you all the time from now on. Andy, I'm joking. I'm joking.

Nick Lincoln:

Motion, motion carried. Raise your hands,

Carl Widger:

but but yeah, like even if I wanted to, I couldn't not do some segmentation, right, and then have different service levels. So that's really, really helpful. Keith, can I just ask how big is your firm in terms of people, employees? Because I'm very interested to hear you like how you kind of train your advisors, and because that's my idea, and I'm I'm I'm I'm encouraged here to say that.

Keith Butten:

Yeah. So so at the beginning of the year we were 15. We had one retire this year that took us to 14. We've had two start today, takes us back to 16, and we got one starting next month. So we're 17. That's employed within the business, and then we've got some power planners sitting outside of that as well. So, like broadly

Carl Widger:

speaking, it was the same size as Mattis before before we were acquired. But I suppose the the wealth team now that I'm trying to, it's the impossible jigsaw or the impossible structure. There's 60 odd people in it, so trying to figure out where everybody goes and the service levels, and like there's an employee benefits team separate to that, and obviously there's there's a flow of business coming from that, and that could be anything from, you know, a five grand PRB to a 2 million pension case. So it would be madness to try and solve both of those cases in the same way, so it's like what do what do the service propositions look like, and you know there's there's going to be an execution only. There has to be an execution only where there is no planning or anything like that. And and Alan, to to to your point, I I I it's really well made that you know the the lines may be blurred, right? But I think, I think actually that's part of what you're going to have to do is to blur the lines, and and and maybe then it is you know no go on, Keith.

Keith Butten:

Disagree disagree strongly. I was going to come in on Alan's point. I was going to let you finish. So on Alan's point, what we absolutely do not do is we do not allow any movement at all. So what we have is we've got our service levels. They're all very clearly. If you imagine buying a piece of software where it's got columns of the various features in each service, they sit in a service level. Absolutely, any client can move up a service level or down a service level. They can move around. That's absolutely clear. But when they're moving, so if they need a bit more, there is no choice. They have to move up because our minimum fee is linked to the service level that they're sitting in. So therefore, there is no choice. So on your business, there, Carl, obviously you've got some very difficult stuff. We have the same because we've got our enterprise business, our employee benefits. You've got to be very careful as to who you take from your enterprise, as we call it, EB business into your individual clients' business. That's got to be very cool. But to be clear, we are only looking. Our target clients are all full boost. It just happens that along the way, we pick up people, children, whoever it might be, where we have to have these other services. But it works really, really well for us. But we're very rigid, Alan. That's I think a key point.

Carl Widger:

Okay, okay, understood. Yeah, yeah. So it's

Alan Smith:

a really interesting subject. One we might come back to. I'm sure you might be getting an email from Carl after this and asking. Yeah,

Carl Widger:

but but it I think it's it's it is really interesting, Alan, because if you want to scale this thing of ours, as we keep saying,

Alan Smith:

completely. But I know that we've got a really full slate because I could go down rabbit holes on this as well because you move somebody up a fee tier but they haven't got the assets to support your higher fee, then you're going to potentially, depending on the numbers, bump up against what we always had, which was decency levels. You know, you you could end up charging someone 3% a year of their 100k pot or something. You know, it just depends, but it's complex, and and and it it sounds and judging by your sort of nodding and agreeing and and vehemently disagreeing with me, Keith, it sounds like you've got it nailed. So you know, again, well done. Some of you might come back and explore more detail.

Nick Lincoln:

Yeah, yeah, yeah. I mean, that could be on the trap forum. We are looking to roll. Our town hall meetings, where maybe once a quarter, once every other month, we'll have an hour of the four of us talking about certain issues that have generated comment on the podcast, and that could be something that we will do in the coming weeks. We can bring in an expert to do most of the talking. Well, it won't be us, will it? It'll be us for sure. Who is um? No, I'm looking for experts. No, no, we're more generalists.

Carl Widger:

We do generalists. We know a little bit about a lot. Yeah,

Nick Lincoln:

yeah, a mile wide, an inch deep. Okay, listen, guys, we are at 50 minutes. 50 minutes in. Okay, we're halfway down the slate. We have to cut some of those items at the end. There's three down to you, Alan. Just mull on that, stew on that. I can feel your tension rising. Okay, the hedge fund with no rules, Carl. You can say the word leverage about 85 times in this story. I think. Crack on.

Carl Widger:

Yeah, this is this is amazing. This story is yeah. So there's a guy called Leopold Ashen Brenner.

Nick Lincoln:

Yeah, he's catchy.

Carl Widger:

He's he's 25 years of age. He worked. He was the valedictorian, is that right? In an Ivy League,

Nick Lincoln:

yeah,

Carl Widger:

yeah. And he graduated when he was 19. Obviously, a maths genius of some description. Worked for OpenAI. There's some argument whether he was fired by OpenAI or whether he left OpenAI. Anyway, he left in 2024, and he wrote a very long essay called"Situational Awareness, and it was about the the impact, as he saw it, of AI and the speed of the impact, and that we were all idiots and we didn't realize how this was going to transform our lives. So what did he do? He got a whole load of people. For example, John and Patrick Collison from Stripe to back a new hedge fund that he was going to set up. So he set up the situational awareness. Wasn't there a fund called the Special Situations Fund that didn't do so well? But anyway, situational awareness was set up by Leopold Aschenbrenner, and he got it to 46 billion, and he was shorting some tech that he thought was going to become outdated, for example Adobe, because AI was going to take over, and he got it badly wrong, and the tech bros, for example, the Collisons and some other big names that you know, all tried to go into them and say, you know, what's going on here? There was one screenshot. I just need to read this bit out, so I need to put my glasses on. So the you know the way the the funds will have their kind of memos and arts, and here's the here's kind of what we're going to do. So, according to the New York Times, an investor document prepared by situational awareness said it would set no limits on the types of investments it might make, nor on the concentration of its investments or the amount of leverage that that it may use.

Nick Lincoln:

So.

Carl Widger:

so he grew to 46 billion, and guess what? The short positions that were all leveraged to the hilt went against him. Fire sale of the stocks to Citadel for under par value. Guess who backed it? Bank of America, Goldman Sachs, J.P. Morgan. They all backed it, as well as all the tech girls. Can you imagine your everyone think about your top two or three wealthiest clients who got this prospectus put in front of them, and the Collison brothers and Jeff Bezos and all these guys were going to invest in it. Goldman Sachs backed it, J.P. Morgan backed it, Bank of America backed it. Called situational awareness from Leopold Ashenbrilla, like you know.

Nick Lincoln:

Yeah, but this is like rinse and repeat, isn't it? They never learn, you know. Hedge funds, they want the shiniest thing. They want to be seen to output, you know, FOMO. So many strands that we talk about, also always coming together. So,

Carl Widger:

yeah, and Nick, I read a whole ton of articles about this. It because it just, I just was gripped by the story. But the the link that I've shared is the Irish take on it, which is the Collison Brothers. Apparently, all the tech bros went into situational awareness for like an afternoon to see if they could save it. Like you can't save shit that's been leveraged up to the. You just can't. Like I, you, you might. These guys all think they're beyond the rules, or you know they clearly are the brains trust now, right? We're the greatest brains in the world because we're creating all these mega companies. You can save this crap, and if you invested in it, well, do you know what? It's your own fault.

Nick Lincoln:

And this was just all all happening as he was organizing his own wedding. Wedding. He was negotiating with the banks to try and meet these margin calls. You know, he's got this very plush, mega million probably wedding somewhere. It must be California, but lots of his clients were in the in the wedding party, and he's organizing that as all this shit is going down. Alan,

Alan Smith:

I was just going to say, yeah, I followed that story quite closely when it all broke a week a week or so ago. There's no question that this guy's a talented individual, as you say, he got all the sort of qualifications and went to all these smart universities. He's smart, but but as often as the case, they get caught up in their own hubris. And I'm sure that out in Silicon Valley right now, you know, they're all patting each other on the back, and all these AI valuation frontier models, you name it, and he's going to got insider information, if you like, presume you know legal insider information, and knows what's going on. No one else understands the market, and he was so convinced by the story. and And it's the same old thing. It's leverage killed him. The fund itself has been fantastic, really, and he has acquired and bought lots of really interesting and useful stock. Don't forget, it still has a massive position in anthropic private markets hasn't gone public yet, and that's going to be worth a ton of money. But they get ahead of themselves, and it's a bit. This is like old world versus new world. If you get caught up in something and everyone tells you you're a genius, and the whole thing compounds and goes on, you think, "Well, I know this is going to go up, and so how am I going to boost the returns even more? I'm going to borrow money. I'm going to and the banks and all the ones that you mentioned as prime brokers are throwing money at them to leverage instead of them instead of going up 40 50% I'll get it going up 500% which is what he did for a period of time, and that works really really well in a bull market when everything's racing away. And all of a sudden, you get a couple of things, couple of the wheels to fall off, and you get margin called, and they want their money back. You haven't got the money to do it. The fund is going to collapse without everyone's going to lose their money, as you say. Ken Griffin steps in, like he's done before. He's the ultimate opportunist and takes it off his hands, sort of you know you know below par for price. But it's a classic story, and we'll hear another one of them, and another one. Kathy Wood a few years ago, and a bunch of others. But listen back to

Carl Widger:

our listen back to our Star Fund manager episode, right? It's only it's only a couple of months ago we did that. Here we are. Here's the new guy. Here is the new. It will always

Alan Smith:

happen, Carl. Will always happen. It's the human condition. They get people get, and even the top top, the Collinson's, who are outstanding smart entrepreneurs, they got hoodwinked by it to some. Yeah, and we and we kind of

Nick Lincoln:

enjoy it. It's the car crash finances that we're watching these, and it's kind of you know it's it's it's kind of our good. Even the bot, even the you know these these these multi millionaire, they're perfectly nicer. They they screw up, you know. We just watch. Well, they'd be better

Carl Widger:

investing what matters.

Nick Lincoln:

Yeah, they they would be they would be Metis Norway or Metis Ireland. Which one? Metis Burke. You can pick any branch you want. John and Patrick, if you're listening, because I know you do. Carl's waiting for the call.

Carl Widger:

They do. They do. I know they do. Okay.

Nick Lincoln:

Right, mr. Button, accredited firms conference and open day, make it interesting and make it snappy, please.

Keith Butten:

I think it's a very quick one. This one, it's just I just wanted to mention the fact that not everybody realizes, but amongst the CISI, you've got the accredited firms, and of all the things that we go to, I think the accredited firms conference, the way that the the firms there help each other, support each other, they're all proper financial planners helping each other, but it tends to be in a tight knit room. There's only 70 or so accredited firms, and they're not all there. So there might be 40 firms in the room, but it's a room that I would encourage people to be amongst. It really is a good room of people, and with Boost having won the firm of the year again last year, we ran an open day just recently. We were asked to to run that, and it was for the accredited firms. So the accredited firm, which was the first that we've run open days for you know younger people, early stages. But this was very different. So this was us doing an open day for effectively our peers, the other financial planning firms that are excellent firms in their own right. The learning in the room and the sharing in the room was absolutely tremendous, and it's a club you can only get into. But a being CFP first of all, and then secondly being an accredited firm, which isn't an easy badge to meet. You can only meet it if you're independent now. So they've made sure it's fiduciary only, so independent only. But once you're in that club, it's a club worth being in. So just wanted to mention those sort of the things that they're doing there are just a little bit better and a little bit different than elsewhere,

Nick Lincoln:

mr. Button. That's a superb point, and you are definitely a good replacement for Andrew because not only have you achieved things, you're not ashamed to talk about them, but if you've achieved real things and he's not ashamed to talk about them, so well done to you, sir. Well done to you. Okay, moving straight on. If we're not talking on that clickbait, Daddy. So yes, our good friends over Antah. You underestimate the power of the dark side. SJP, we know they're going through some travails and they're they're kind of reimagining themselves for this this new era that we're in and they're in. And they're just I saw the story in City World. They're just changing their fee their fee structure. I didn't know this. Maybe you guys knew. Maybe you wouldn't. Why would you? But their their ongoing advice fees. As the partners get paid on an annual basis historically, so it comes in one great big gush, and now they're moving to a monthly thing, which is obviously they're being put under pressure because they've had some very big senior partner practices leave the SJP umbrella. So they're doing this in response to complaints from partners that they want the money on a monthly basis. But they're also bringing in other charges. They're going to properly strip out now. The partners now can charge for cash flow modeling. They weren't allowed to in the past. They were doing cash flow modeling a lot. Whatever we think about them, a lot of the SGP partners do do cash flow modeling, and and and Ultra does train a lot of SGP partners on it. But now they can charge separately for that, which I think is a good thing. But interestingly, they're now allowing for charges on inter SGP product switches, which they weren't allowed to do in the past. So that could lead down a certain route, couldn't it? Let's say, but interesting to see how they're well. You know what I'm. You know, if you get a pail with some milk and you just you get the thing out, and what do you do? Yeah. Okay. I don't know if anyone got views, and they are mr. Button. Good, good, good. Go on, Keith. You're muted, mate.

Keith Butten:

It's just. I mean yeah it's outrageous. I commented on a bit on LinkedIn in relation to this when somebody was saying oh yeah but under the new world you're going to be advising a client and there's going to be IHT work involved and therefore if you're taking them out of their GIA and putting them into their bond in order to get them in a trust for their new IHT work that's a marvelous piece of work and you must charge for it and I was like, no, we haven't charged for that for I think it's about 16 years. We introduced a fair fees policy, and I think I'm guessing I might not be spot on, but I think it's about 16 years ago. Had four rules in the fair fees policy. One of those fees was we could not charge any infantation fee at all on any money we were moving from anything to anything that we already oversaw, and that to me was just complete common sense. The stock churning, because you know you can only erode these things at the top, put your rules in place, run your business to your rules, and then you get none of the problems that other people are getting elsewhere. And I just I can't believe that they're needing to go back to the dark days. We see what's happened. They've reduced their penalties. The advisors are leaving because they can get out and take the clients now. It's obvious what's happening. They're getting pressure from losing people. They are they needing right. Okay, well, how can we tweak this to favor the advisors? And the advisors dictating we're going to go backwards. We're going to ignore everything that RDR has done good for us, and we're going to go backwards. It is terrible.

Nick Lincoln:

Wow, that's a lovely. Okay, this is what we love on the show. We love we love a bit of opinion. We love a bit of. You always sit on the fence,

Alan Smith:

Keith, don't you? You need to have an opinion sometimes.

Nick Lincoln:

They call them splinters down at the the club we go to.

Alan Smith:

Yeah, that's that's that's a the big player clearly going through massive transition. You know, you can't make an omelet without breaking eggs. Got a few challenges. Hopefully, I am hopeful for the benefit of the entire sector that they come out the other side in a proper, good, you know, scaled national, proper financial planning company. I think it's good for all of us, but there's going to be a few bumps in the road along the way.

Carl Widger:

I'm I'm on the record. I'm a big fan of SJP. This is terrible.

Nick Lincoln:

Okay, interesting. Okay, interesting. Interesting. Right, cracking on now, mr. Barton. I'm just you travel the globe, don't you? You're currently in your Portuguese Bond villain type pad, planning world domination. But before you dominate the world, you've got an event you're going to in somewhere called Los Angeles, I believe.

Keith Butten:

Hello, I just thought I thought it'd be a good idea to try and get, and I did invite obviously you guys. I didn't invite you, Carl, because you didn't qualify, but I invited the other three. Zuck is all Irish. Yeah, top of the table club. Haven't sold enough policies. No, I just I just invited. It's amazing. I invited 30 financial planners to come to future proof and let's get a group together and let's go. 17 said yes. Two have since dropped out, so we're at 15. So we've got 15 going, which is just amazing. So we're really really looking forward to it. But the actual the thing to take from this is, yeah, the conference is amazing. I had to spend three hours, and we've all had to spend three hours the other day planning what we wanted to do at the conference because they just offer you all these opportunities to do breakthrough events and sessions. It is so well organized; it's incredible. So, apart from it's in shorts and on the beach, it's incredibly well organized. So, if we have the time that we think we're going to have this year, I think we'll probably be taking a group back there next year, and let's see what happens. So that might be. And are you

Carl Widger:

are you paying for all these advisors to go? Oh,

Keith Butten:

absolutely. That's why I didn't want to pay for you.

Alan Smith:

Is he now?

Carl Widger:

There, there, there are a number of Irish advisors, a few from the Irish IX group, going. So say hello when you see them.

Keith Butten:

Yeah, they're they're actually meeting up with us, I believe, on one of the evenings.

Carl Widger:

Brilliant, brilliant, great. Yeah, we should we

Alan Smith:

should think about going next year, boys. I try to get too

Carl Widger:

trap live out there.

Alan Smith:

I hear it's I hear it's a good conference. Whether or not it will compete. With our current trap live as another story, but we the Americans try. Yeah, sounds great. Sounds great, Keith.

Nick Lincoln:

Yeah, and well done again, Fred. Well done for organizing that. Again, that logistically, there's a lot going on there, but it does. From what you see of it, it does look. You know, Christ, you're on the beach in Southern California. Yeah, you know, and you're going to learn stuff, and you're mixing. You know, but they just do things differently. I think Carl and Alan are both experienced U.S. financial planning conferences, and just say it's just yeah, they're good.

Alan Smith:

They're very good.

Carl Widger:

I didn't mind to go to Keith's one anyway, so you won't invite it. Come

Nick Lincoln:

on, move on, move on, be the bigger man. Okay, so we're coming back to a recurring theme on here, which which I don't have. Yeah, you got him as well. You landed that one. I need a Revolut drop. Watch, tell us some more.

Carl Widger:

Yeah, I'll be really quick about this. So Revolut are finding a way to allow retail investors get involved in the private credit market, which is a terrible, terrible idea. We've already discussed this. It's going to be they're trying to make an illiquid investment, somewhat liquid, with some possibilities of exits along the way. Look, my

point here is number one:

this is a terrible idea. We've spoken about it here before. Retail investors shouldn't be going anywhere near this stuff. And and when you look at the what the retail investors are investing in Revolut. It's like Bitcoin and it's Nvidia and it's SpaceX. That's kind of it, right? So it's totally what's the the next best thing all the time. It's it's it's not investing. It's pure speculation. But hey, this is the thing, right? It's a little bit like the fund managers. You know, we spoke before about a one of the fund managers introduced a gold fund when gold was at the peak, and then this is what they do. That's actually their job is to construct these things. So hey, we can't give out too much about it. It just, I suppose, goes to show the level of work we still have to do and will always have to do when retail investors are investing in private credit and Leopold Ashen can raise get a fund up to 46 billion. Our work will never ever be done long after all of us are gone. Our work will never ever be done, and AI cannot replace us. Yeah, cannot. That's that's

Alan Smith:

what I was going to say. This is all about alignment, and exactly right. It is perfectly reasonable for Revolut and everyone else to meet their commercial objectives by delivering products that the market would appear to want. You can go back to the ESG funds and the bandwagon jumping that went on at that point when that was the sort of flavor of the month, and so on and so on. It's not their fault. That's what they do, but there's no alignment, and I think this is where great financial planners come in. We've got alignment. We're understanding clients' objectives, what they're trying to achieve today, tomorrow, next year, 10 years, 30 years from now, and therefore build portfolio structure strategies in alignment with their outcomes, as opposed to the latest thing. You know, yeah, and Alan as well,

Carl Widger:

right? To to to just go back to Keith's like our our levels of service, right? If you're on little boost, if you're on even littler boost, you're still never getting any of that shite. So, you know, it's it's it's no matter what level of service you are with any good financial planner, you're never going to get that crap. You're still going to be miles ahead of trying to do it yourself and following the you know what you think is the next best thing.

Alan Smith:

All right, Nick, I'm going to drop the last item, but I'm going to throw in just the the last couple of things together. We should we do we need another sort of drop about Jobs Corner. There's we've said it before. We had we had James on the podcast a little while ago because there's there's a lot of movement in the kind of in the financial planning and there's para planning and sort of companies space and and I got some feedback by the way after James the recruitment specialist came on you know he's having quite a few conversations with other advisors. Two things in in this world of AI, when AI is taking on our jobs, we are still we are recruiting again. Quite interesting. Another conversation we went down. You know, one one thing about my business is we will experiment. We often get things wrong, but we'll experiment. And we used to run pods really successfully, and then we kind of I read a few articles and we thought, well, the death of pods, so we're going to get rid of pods. We're going to have centralized admin and what have you. Well, guess what? It hasn't really worked particularly well. So we're full circle, which means that we need to hire. We actually need to hire probably two support people. One definitely, probably two support. I mean, in in old money, what are called para planners. One ideally experienced, and one can be sort of earlier on in their career, could be a bit less experienced. So, if anyone knows people who are fit that role, please do get in touch with me directly and or via LinkedIn. And the last thing I've got to say, which is another, is a mate of mine. I won't mention the name of. Company asked me not to mention, but again, if you want, if you, if this, if you fit the the profile for this, because he is hiring one of his advisors on the south coast of England. One of his advisors is retiring, and he needs a new financial planner. He needs to hire a financial planner, reasonably experienced at least, and they're going to inherit about 800,000 book a business recurring revenue book. I've seen the the job spec. I've seen the package that's on offer. Really, really compelling. I mean, about six figure basic salary plus bonuses plus a whole bunch of other things. It's a really really good offer. And so, if you're particularly

Carl Widger:

over that myself,

Alan Smith:

particularly along around it is on the south coast of England, think Brighton, Hove, Worthing, along that sort of neck of the woods. If that, you don't have to be obviously in the office every day, but if you're in that neck of the woods and you are, you know, reasonably experienced financial planner and want to inherit good booker business from a proper full fat financial planning company, again, get in touch with me and I'll connect you with with my mate.

Nick Lincoln:

Thank you, Keith. That

Keith Butten:

is it. Just a very quick one for you, Alan. On that, so your roles that you're looking for would one of those suit a trainee, somebody that wants to eventually be a financial planner? It sounded like it was a role that if they yeah potentially is in that role.

Alan Smith:

Yeah, exactly. Potentially. This, but to be fair, this is one of the challenges that we've got because everyone wants to be a bloody financial planner, and we've got any number of para planners that are constantly knocking door down to say when am I going to get a book of clients, etc. And that can be a challenge. We do need people to do the actual work. So, but but you know, three years is not a bad time horizon. The challenge again, personal experience, I've had para planners that say three years. Within one year, they're saying, "I thought three years, but I really want to move on to be a financial planner. There are some people who are career para planners, and they're bloody brilliant at it, and they want to do it for years and years to grow. Great career, yeah. But I'm not ruling. I'm not ruling anyone out at this stage.

Keith Butten:

Yeah. The reason I was asking Alan is that I was speaking to somebody only yesterday? I was helping somebody with some career choices, and they might fit for you, so I could put them in touch with me. Person to you, yeah, put them in

Nick Lincoln:

touch. Thank you, synergy. There's the power of connections and networking. Okie dokey, great stuff. So, 72 minutes in, shoot me. We're now moving on to the meat and potatoes of what many people are calling episode 103 of the Real Advisor podcast, and the meat of potatoes is where we take a particular subject and give it a damn good thrashing and wring out any value we can from it in a kind of 15 to 20-minute section. And the honorary member of the trap back today, mr. Button, our shiny new button, has been through what we're going to talk about, which is this thing about employee ownership. How do you transition the ownership of business? There are various ways to do it, mr. Button. The floor is yours, and then we're going to come in with some comments and so forth, and just interrogate you on it.

Keith Butten:

Okay, thanks a lot. It's quite long to start with, but let me take you through a few bits. I think it's important to give a fair bit of background here. So the first thing here, my thoughts are for any founder that's thinking about considering exit paths. To me, it's something that's ideally thought about when you're building a business. It's not a personal date looms and there's an illness accelerates it or something like that. It's not something you do late in the path. It's something that should ideally happen early. And I think the earlier it happens, the better. So we all know that. But let's just sort of think about. For me, I think there's three routes to be considered, and I think there's two if you've already built a strong team, so I think there's one with I'll come on to if you haven't yet built a strong team. But for me, there's two if you have. The first of those is an MBO, and there's so many reasons why that might be a great path. It does, however, simply pass the baton. So when Josh was and I were obviously looking at our situation, thinking about the future, an MBO, a family transition to Josh, a generation two transition, was probably just the most obvious thing to do because he runs the business today. He could have the whole business. We could do that, keep it in the family, etc. But of course, what we realized and what he realized is that at some point down the track, you know, whether he works another 20 years or 30, at some point he's got to repeat and build a new succession plan, and so it goes on. My concern, as a Gen One, not not in his particular case, but when I see other businesses, is that with an MBO, you've got a very small group of people that now get the profit-related rewards. When actually, it's all of the team that are responsible, and the small group could do at any time cash their chips in, and decide it's time for them to get out and take the money. And of course, that's not going to sit well with the rest of the team. It's not going to sit well with Gen One that maybe did a really good deal for Gen Two, steer clear of all the problems of consolidation, did the right thing, did an MBO, and whether they stayed actively involved, retired, or they're under the ground buried. You know how they're going to be feeling when they see this new generation come in and only a few years later sell the thing on. So I think you know MBO structure, how the incentives are built in that with the shares around the business, how that's done. There's a lot to be thought about there, but certainly a good route. Obviously, the one we want to. Talk about is employee ownership and employee trust. I encourage people to first of all forget the word ownership because the employees own nothing in an employee ownership trust. So that's the first thing we need to do. An employee trust ensures that all employees, both those in the business and those that join in the future, will see a share of the profits once the founders have been paid market value for their shares. Importantly, team members lose that if they leave. Therefore, Gen Two, who are focused on themselves, would probably prefer to do an MBO for sure. This isn't going to suit them because yeah, they've got to stay for the long term to see the real rewards in an employee-owned structure. The team, right from the get-go of the trust being set up, can all receive 3600 a year tax-free. Not a small sum in terms of the tax difference for those that are lower paid. So this is particularly good for your lower paid, your admin, your support people. The fact they're getting that bit of extra tax-free is actually quite a considerable pay rise for them, and quite useful. And they can have that straight away, so that's useful. But EOT is not really about those tax incentives. It's about the culture and building something to last. So we encourage, I think, in 100 years, not 10. Then think about infinite rather than thinking about 100 years. How do you have a business which is actually there forever? So for those who've EOT feels right, they already have a business that feels a bit like a work family. They won't have self-employed, what I call self-employed, self-centred advisors. That type of business is never going to work in an EOT environment. The clients will be served by the team, not by an individual, for sure. The clients will be fans for sure. So I believe that there are firms in our sector that absolutely should self-identify that passing the baton to trustees and the employees is a better journey for their team and their clients, and I believe for them, because for founders it gives the opportunity to build solid foundation, guided by a letter of wishes that becomes a lasting legacy, serving multiple generations of families exactly what our clients are seeking and probably what we've promised them. So, you know that for me is why you know in a nutshell we we felt that you know employee ownership was the way for us. I mentioned you know for those that have not got a team, so you know in in this group Nick and Andy, you know your one-man bands are two great examples of smaller one-man bands, small teams. So maybe the thing there, I think, where it's going to work well for people is I think if we can grow the number of EOTs and really good MBOs, slightly bigger firms that are doing really well, that's going to start to create some really good homes for the one-man band to sell their business into, transfer their business into, rather than going the route of the PE consolidator that's going to force things on your teams, your business, your clients that we just don't feel comfortable with. And I think you know, and I fully appreciate that Carl's in a completely different place with this right now. But you know, Carl's obviously going to have these challenges, and I was already mentioned a couple today. So the whole bringing a business together, you know, all of the platform changes, the repapering, the possible CGT costs, the the fund costs, etc. I think there's so much in there. So yeah, there's my kick off, and I'm obviously very happy to discuss any elements of employee ownership.

Alan Smith:

Thanks, Keith. Let me let me jump in here. Really interesting. You say that you've named MBOs, EOTs, and then traditional, generally private equity-backed exits, which seem to be the kind of three main. I think there's probably others, but those are the three main ways where founders can build their succession plan. We've talked a lot on this podcast in the past about the challenges around the PE backed exit. It's not it's not all doom and gloom. It's not all negative, but there undoubtedly are challenges. The MBO aspect you you you explain some of the the issues and challenges. The other thing, of course, is that you know I call it our generation, Keith. You and I. These businesses end up being worth quite a lot of money. The recurring revenue model, the stickiness of clients, means that you know that we're not talking about thrupp and saving. These businesses are worth millions, and therefore, in order for a founder to get fair value, MBOs are likely to involve lots of personal debt, leverages, you know, second mortgages, you name it. Often, although there's various other schemes in place of funding it, and I get the interest, and I also do think that the EOT model does sit quite nicely with a lot of financial planning firms who all we all think long term. But nevertheless, I would I'll be devil's advocate on this. Now, your your business is it is a it's historically a family business. You can play the long game. For those who are not family businesses, my understanding, and I've known a few people who've done this, is that you, as the founder, let's just I don't know your circumstances, but if you're a founder, if you're the majority or major shareholder in the business. From what I can gather, you're going to get less value in terms of the actual, the you know the valuation of the business when you come to do the transaction versus selling it in the open market, and you're likely to have to wait an awful long time to extract you because there's unlikely to be enough capital in the business to get the money out. And the last thing is that that trust at that point is just trust with a ton of debt in it, right? And often I've seen these projected, and you're looking at 10 years plus before the trust is in sort of positive territory. So, and this is what I know another founder who've looked at it and rejected it on the basis. Hi, boys and girls. Good news is I'm selling the company. I'm selling it to a trust. You are potential beneficiary. The value of the trust currently is minus 10 million pounds. It owes it owes me, and it's going to get paid back over the next decade or or more. So, I've thrown a number of things at you. What? So, how would you deal with what are the major negatives that one hears about EOTs.

Keith Butten:

Well, let's let's address all of those. One of them is was what you said was incorrect. So the bit about valuation is the bit that's incorrect. Valuation is whatever you want it to be, but you start with full market valuation. So we had independent valuers. Now I fully appreciate that had we gone out because I mean, boost is attractive. We we we were getting offers all the time, as lots of good firms are. So I'm sure that had we gone out and played the game of batting others against each other, we we might have got a premium on what was deemed to be market value. But we decided to take market value. Right. The other thing we did, we actually took the value based on the year before accounts. We could have done management accounts and pushed it up higher. We chose not to do that because the number we're financial planners. The number that we had was much greater than we need anyway. Therefore, our financial plan was the driving force for our family. In terms of the the structure before we did the deal, Josh had 35% So Josh was we took Josh to 35% before the deal, which means that Josh is financially secure and effectively, as long as that business is successful, he is financially secure. And there's a couple of the next bit that is worth understanding that we haven't touched on yet is that the bit I looked at EOT and Josh and I looked at it a few years before, and I told Josh it wasn't good for him, so it wasn't right for us if it wasn't good for him, obviously. And I looked at it, and the and the reason for that was how he was going to be motivated for the long term. And then I did some more chatting and research. A couple of years went back to it because the the MBO had the MBO for us as a family, had tax problems because I had to retire. That was another problem with MBO. The accountants were telling me, in order to get the reliefs, I had to. I could pay more tax and work, or get the reliefs and retire. Now, obviously, none of us wanted me to retire, clients included. So therefore, that wasn't ideal. Are you sure? I asked him. Nick, don't worry, that will not be a problem

Alan Smith:

for you, Nick. Should you ever do an EOT or an,

Keith Butten:

but the client, the client, I'll still want it. So it's nice to be wanted. But the what we are able to do, what we learn, is that we can issue shares. The trust can issue shares back to our leadership, so our practice manager and Josh had shares that they were able to buy. And as you quite rightly say, Alan, at that point the value of those shares was very low because there is a lot long period before they're going to see any money because we wrote those they're restricted shares, not ordinary shares, they're restricted shares written in such a way that they can't have any dividends until everything's been paid to the founders. But what that does do is it ties those individuals in for a very positive future for themselves. So you know that that so that was that's how we got around the thing about how do you reward with an EOT. How do you reward your key players? Because it's obvious how you reward all of the team, but you've got to figure how do you reward and how do you attract future key players as well. So we've now. Can I? Sorry for interrupting

Carl Widger:

your your your train of thought there, but just

an important question for me is:

typically, how many years is is it before they will see some kind of return out of that?

Keith Butten:

Well, they they see some return in our case. They see some return straight away because we've chosen to pay the 3600 tax free right from the beginning. So all of the team all of the team are seeing that. So there's been some benefit there, but the other bit I've got I'll come back to that car. Yeah, the bit I was going to say to Alan's was, we're thinking here we're talking about the financial benefit to the team. There's a much bigger benefit to the team. So we did a presentation to the team, and in the presentation that we did to the team, right from the beginning, we allowed out employee ownership as being early stage. Mid stage and then late stage, and of course, late stage is where all the profits belong to the employees.

Carl Widger:

Yeah, the

Keith Butten:

early stage benefits though was a long list of things because we did an exercise with the team a year ahead that they didn't know the purpose of the exercise at the time, but we did an exercise. We took that, and this is a great thing for a business to do, we took our team, we split our team into two. Half of them were buying Boost, half of them were selling Boost, and there was a room in the middle, and they were allowed to choose one person from each team to go in and interview. So they send in right, go and send somebody in to interview on numbers, go and send somebody to interview on culture, go and say, so they went through how you would think as a buyer and a seller, and it was the team. I wasn't even there, so it's perfect. I was on holiday. Josh stayed out of it and just got the team to. And Jenny said that and got the team to do this, and it was a brilliant exercise. And we did that a year ahead of the transaction, purely because we wanted them to think about the real issues of if a consolidator walked through the door and bought the business. So what the big benefit that came in the short term, Alan, just answer that point first, was job security, staying as we are. We love the business as we are. So for the team, the the employees within the team, that was their number one. They wanted things to be as close to they were currently as possible, so that was important. Moving to the other point about the term, until you get to a lot of people in the EO world call it Freedom Day. Now, what a lot of EOs do is you only have to sell 51% to get the benefit, so they sell 51% Then what they do is they motivate the whole team. Oh, we're now employee owned. Let's all rah rah. Let's do well, do well for five years, pay back the 51% and then they say, oh, now we've got this new valuation. We're now worth 25 million. We've now got another 49% we can sell. We'll sell that now, and we'll have another seven years or whatever it might be, which we felt that was completely the wrong thing to do. So we wanted a very transparent, 100% we would sell with the restricted shares that I've spoken about. Keep it as clean as possible. Everybody in the team is very open, which is why I can talk about it, and therefore it's a much cleaner arrangement. So the answer to

your question is:

We expect it to be somewhere between 10 and 12 years. There'll be that kind of period until you get to what I call Freedom Day. But you've got to remember what is Freedom Day arriving at. Freedom Day is arriving at something that doesn't exist in any other option because there is no other option where all of the team own all of the profit, so your man Alan that we're saying, oh, it's a very long time. Well, a long time is better than no time.

Nick Lincoln:

Yeah,

Alan Smith:

yeah, true.

Carl Widger:

Can can can I ask question on that then? Right. This is just from my experience, and then I'll talk about actually what we're doing. But anyway, it's easier in my experience to talk to a 40-year-old or a 45-year-old about a 10-year time horizon or 12-year time because they they they've been around the block and they understand. Yeah, I I understand that. Talking to 2530, even early 30-year-olds, they have no patience at all, and 12-year time horizons is just not going to fly. I've asked some people here to just hold tough for a few months, and they're they're gone, right? So, has that been a challenge, or is

Keith Butten:

that no? Because because the culture, the culture we've already got. No, nobody's looking. Nobody was looking at leaving. Nobody is looking at leaving. I mean, we've got a very team, and I think that's what I was trying to say in my introduction. There, I think an EO business will look like an EO business. If I went into a financial planning firm, I could probably, within about an hour of meeting a few people, say this is a business where EO could fly, or this is a business where EOs the wrong culture. Yeah, because it's got to have that whole family feel. Everybody wants to be part of the mission. It's all about it's all about a collective mission. It's not about any individuals.

Carl Widger:

Yeah. Okay.

Alan Smith:

Yeah, I think you make a great point there, Keith. It is. It's absolutely not for every company, but for those, and we've got several clients that have done this, and they absolutely swear by it. It was the best thing for them, for the founder, and for everyone else. But I can think of another few clients that just wouldn't it wouldn't work. They just just different setup, different culture, and that's fine. But I think it's I do think it's particularly valid as an option for financial planning businesses because of the very nature. We're not like a quick startup scale up. Let's get to multi millions and look for a VC a PE exit. We've been playing the long game in our business lives ourselves anyway. We tell our clients to play the long game, and it's yeah, it's a nice outcome. Nick, have you got any thoughts before we wrap up?

Nick Lincoln:

Well, have we? As Carl, have you have you said all you want? Yeah, I just

Carl Widger:

want to kind of just. Maybe just throw something else into the mix here. Like we've spoken about MBO, EOT, private equity consolidators. Well, there is the other option which I've done, which is not private equity, but it's a consolidator for sure. And I can tell you my experience is only really good, albeit I'm in the very early days, but I can tell you it hasn't come without its challenges. It certainly challenged me. I've never been busier in my whole life, but I'm I'm weirdly really really enjoying the challenge because the the the NFP are allowing me to okay go and do it. Go and scale financial planning. You got it. We'll back you. And they've done every single thing that they promised me they would do before the acquisition happened. To be fair to them, so nothing has changed for our clients. So all the you know, the the minute people start start talking about PE consolidators, they go oh, and then they'll start telling you what to do with your clients or whatever. On the contrary, in in my experience, it's like okay, if you believe that's where we should be putting everybody, well then let's look to create some segments, and that the people at the higher end will get the financial planning, they'll get the platform, they'll get your house view, Declan King is our CIO. Has been our CIO for a few years. That investment philosophy is going to follow through. So, so there is, and there is. It's it's not all a dirty word. Consolidators, right? There, there are options out there for people. We need to settle our business into some sort of uniformity process systems patterns and all that before we'd look to maybe acquire again. So I'm not saying this to say hey come and talk to us because right now it definitely wouldn't be the right time. But there are options out there outside of private equity whereby I really, really believe that the people who-and I said this at Trap Live-and people sniggered a small bit-people who, you know, oh, we've just been acquired by a consolidator, and now we have to transfer our clients to their platform and into their funds and whatever. Well, do you know what? I'm sorry if you didn't check that and get that agreed and in writing beforehand, and tell them if you do that, I'm actually going to blow this thing up. Well, if you didn't do that due diligence, that level of due diligence, well, you kind of deserve what you get. Yeah, I mean that's

Nick Lincoln:

that's that that is that is so elemental, isn't it? So yeah, yeah. What what else are they not asking or checking? You know, it's like yeah,

Carl Widger:

but it's the biggest criticism I hear from you know yeah yeah yeah oh the consolidators came in and they changed every well what you didn't know that well then that's kind of on you sorry anyway but I think

Keith Butten:

I think it is the case that we've seen a lot of that I mean I I know I do know of good firms and you know good firms good people you know and that's exactly what's happened now obviously none of us will know what they were promised in the closed room when it was all being negotiated, but what we do know is that they have been forced to move their clients, change their clients, and I think there's some really good examples that we can talk about and explore where we know, and I know this has been mentioned track before, but we know that there are people that did a deal with person A in all good faith, only for person A to decide it was going to person B, who then decided it was going to person C, and you know we so we've seen some stuff where what's ended up the end offering to the client is so far away from the original thing, and of course person B says, oh well that wasn't my intention, my intention was this, and person sees, and it just moves on. So, hopefully, Carl, your example is going to be one that when you speak about it in years' time, you keep talking about it positively. But we do know, and we have seen lots of people saying it is a genuine shit show.

Carl Widger:

Yeah, but Kate, Kate, yeah, but I, I, I will challenge that point, right? Because if that happens, then leave, and and I've been consistent with this. Then leave, right? Because if that happens to me, I'm leaving, because I will not have that outcome from my clients. Because I built this business on fucking years of hard work, but integrity and doing it the right way, and I am not, absolutely not ever going to have my legacy to be. Oh well, your man Widger got a check, and then his clients were all fucked over. Like, sorry for using bad language, but I'm really, really, really passionate about this. So the people are going, oh, and they said this, and then they did so. Then leave. I'm sorry. Then leave and suffer to bring on the consequences because, like, if you're willing to take the check and then go, oh, there was nothing really you could do. There is, could go public about it. Go come on, trap, and tell us your story, and call them out.

Alan Smith:

Yeah, that's good. I think the thing, Keith, that the the route that you took, the real, the big, big attraction, and that you've you've just discussed. A lot of benefits of it, but there's no one else involved. It's just you and the team. You're not waiting, and that your your your buyer then gets bought themselves or sells on that, and then they sells on. And we're now in probably the third round of private equity buyouts as time's gone on. And you know you've got no relationship with you now, your new owner, but work with you, other than no doubt getting some good advice, getting some legal stuff put in place. It's just you and the team, so you can work it out amongst yourselves. I think there's a lot to be said for that. Yeah,

Keith Butten:

we've we've we've chosen to do the no debt route, so you can do an EOT with debt. Right. We chose to do it with the. So we've done it with no debt. So the EOT has got no debt. So just to be clear on your other point about the OT. So the trust is actually just a dormant limited company. So if you were to go look in on company sales, you'll see there's Boost the OT Limited is just dormant company. Nothing nothing actually goes through that. So but

Alan Smith:

the profits come into the trust. Is that how it works? No, let's not let's not get into it. Okay, we can. Okay. It's just a. It's very interesting, though. Yeah,

Carl Widger:

and and as Alan says, it is that it is perfect for some firms. I would say, yeah, yeah, very interesting.

Nick Lincoln:

Yep. Okay. As Barry Ritholtz would say, that was quite interesting from my point of view. It was quite interesting. Quite

Alan Smith:

interesting.

Nick Lincoln:

Quite in. Quite interesting. So thank you for that, Keith. And and that's a journey you're on and in, and yeah, good stuff. Okay, so let's listen. 96 minutes. 96 minutes of probably the number one podcast in the world with the world's greatest moderator. That's right, Lincoln Lincoln. Let's move on to what many people call Trappist questions, because I can see at the front door there she is. She's ringing the front door of Lincoln Lodge. She's hauled the bulging sack of Capist questions up my executive drive past the 14 park saloon cars, and this is where you get chance to ask for a question from our beloved Fappus. There's a link in the so-called show notes. Click on it, leave your question. There's a link in X or on Twitter, wherever you're going to call it. We do get questions, and this one is from us. Have a look at this. This is a quite cheap envelope. It doesn't look too promising. This is like one of those fold-over Telegram envelopes from 30 years ago, that you had to nick the sides. This is from someone who calls himself Anon or Anon. I can't believe that's his real name. Anon is saying, "Hi, I currently look after 120 households, which I think is already more than I can properly and effectively manage. Our firm has been acquired, aha, and our new parents believe that AI and new tools will enable an advisor to look after close to 300 clients. Obviously, not acquired by an employee ownership trust. What do you believe is the right number of clients per advisor now? And will this change with the introduction of more planning and time management tools? I'll quickly go ahead, and then we've got things to say on this. I heard somewhere at a seminar conference, it could have been humans under management, that the human mind can probably handle about 125 deep relationships, and that's pushing it. So AI is going to automate things for sure. It's going to get rid of some of the task-driven mundaneness of our financial services lives. But I think if you want to have meaningful relationships with people, 300 is pushing it. That would be my view. I don't, you know, AI might be doing a lot of the heavy lifting in the background with tasks and follow-ups to APMs and and getting arranging the annual planning meetings, but to know 300 families well and to know their foibles and as Keith alluded to at the top of the show, just know how they're going to give different things to different children because different children have different needs. I think that's a lot of spinning plates in your head, and I don't think I think 120 is about the max, Keith.

Keith Butten:

I think just to add to that, I totally agree with that. I think the number is getting bigger, so I think the company is saying that the number is going up. I think that's true. I think if you ran multiple service levels, the number would be higher than that. However, it's not 300 in my opinion at the moment, and I don't see a future yet where that would be the number for the reasons you're saying, Nick. But I think the thing that's important I would add to this is there's a bit here that we're not discussing and wasn't in the question, and it's all about the support. You know, I've always been for as many years as I can think I've been what I would call myself as a fully supported financial planner. I do nothing but client meetings and a little bit of follow-up work. You know that that is what I do. Obviously, I now obviously sit on boards and various other things. But my actual client work is I don't do any of the prep, my agendas, my prep. I don't do any of that stuff at all. So you know our financial planners don't start like that. They end up like that. And how long it gets them once they're all from when they're authorized to when they're fully supported, the question I'd be asking this individual, if you dig into this in much more detail, would all be about what support are you getting? If you're fully supported, maybe the number can get closer to 200, but I still don't see it being anywhere near 300.

Nick Lincoln:

Yeah. Okay. Great answer, Alan. Quickly.

Alan Smith:

Yeah. It is a bit of how long's a piece of string. It depends on, as Keith just said, the support levels, also your core service proposition. Because as we know, we talk this this is the thread that runs through a lot of our conversations. Full fat financial planning is the right way to do it, but it is more time consuming. It's more complex. There's a lot more moving parts. So if you're doing that, there is a limit. The the number you was sort of alluding to, Nick. There's some research in this Dunbar's number, 150. I think is it you could hold any meaningful relationship. But by the way, that includes your own friends and family. So you know that's just 149

Nick Lincoln:

then.

Alan Smith:

Not no 150. But but just sort of tying a couple of things together. I read, you know, Kitsis Michael Kitsis did some work on this, and he does it every year. And all his surveys and things with with the financial planners that he engages with. How much? And the question is, how much client-facing time do you have as a percentage of your total time in a working week? How much of that is actual client-facing, either meeting clients, phoning clients, Zoom calls, Teams calls, whatever? the The overall average is about 20% which I think is about right. If you so, and so everything else is just stuff around the clients thing. In my opinion, you will get to 40% You probably won't get much. You might get to 50% You never get to 100% There's just stuff to do. There's CPD. There's listening to trap. There's any number of other things. My view is probably yeah is about 150. I think 150. You could deliver for full fat financial planning if you are doing spending much more of your time because all the other junk is taken care of. I don't think you get remotely. You can't get close to 300 unless you're doing pure transactional work, just topping up ISOs and rebalances, which is what we do.

Nick Lincoln:

334 life policies in 12 months. Yeah. Okay, Carly, you haven't got a hand raised. I'll make sure we've given that.

Carl Widger:

My fast answer is 150. I think the boys covered it beautifully.

Nick Lincoln:

Yeah. Okay. Thanks, fellas. Okay. Let's move on to the next stage of the trap 103, which is of course. Go button. Go button. Unmute.

Alan Smith:

Unmute button.

Nick Lincoln:

There we go.

Keith Butten:

There you go. Unmute. Unmute the button. That's this. This is just one that I thought people might find find interesting. So and some lots of trappies would have seen this, but Ubar Butler on Channel Four, how to trick your way on the property ladder if you want a bit of fun and watching something. And he he talks about how he outfucked not his not my word his words, but it shows how first time buyers can trick their way onto the property ladder, and there's a whole host of things here. The obvious bank of mum and dad, and obviously illustrating that in a unique way, where he sort of has some sexual organs, is quite funny. But there's the there's the impacts of avocado and property inflation. There's then employing a master negotiator who's a hypnotist? It turns out it's very funny. You need to see that, but he manages to persuade an estate agent to sell her the house for five pounds, which obviously is illegal. The spoiler alert on the program is that the avocados are the way forward. But strangely, in all of that, the tried and proven lifetime ISA savings with multiple contributors around the family and building family money to to all chip in and help wasn't mentioned at all with the government helping out. But or you might prefer he has got another show on channel for another documentary. How I made a million in 90 days. They're both worth a watch. They're entertaining and weirdly they're relevant to what we do.

Nick Lincoln:

Okay, and your second one?

Keith Butten:

Ah, the second one is just a bit of employee ownership, so I'll put this in the show notes. But this is just a book. So those that are interested in employee ownership, Simon Morton chap, wrote a really useful book all about the journey that he went on with his journey through employee ownership, and it's something that anybody considering that route might like to read because there's a lot more depth than obviously what we've touched on today.

Nick Lincoln:

Great stuff.

Alan Smith:

Right, standing in for Andy Hart on this occasion, and I'm getting used to his some of his classics of the past, which memory serves me. Included IKEA wardrobes, and what was the other thing? Some and some that nose

Carl Widger:

clips, wasn't it?

Alan Smith:

Nose clips, yeah. Or no, mouth

Carl Widger:

mouth taping, mouth taping, yeah, mouth

Alan Smith:

taping. That was what it was. Yes, I've got a bit of a.

Carl Widger:

Remember, we went the trip, and he,

Alan Smith:

yeah, he had them. Actually, had a room with them. Jesus Christ, he walks the talk. Look, my one is. I'm going to hold up to the my the thing. A kitchen timer, kitchen timer, 799 on Amazon Lincoln. This came from. I quite like this idea, practical tip. This came from Alex Homozy, who's some of who who know and follow him. I watch some of his YouTube videos. He's an absolute just monster when it comes to just growth and business ideas, and I just like this one because for his simplicity, he was saying we start. We sit down at your laptop, start doing a bit of work. You get distracted. Someone calls you, and we never sort of a lot of the work we do. There's no set time for it. So he said you set yourself a project, a task, whatever it is, and you put a specific. You set that kitchen timer on it, and and it has to be. It's not. You can have obviously your. So your laptop's got clocks and things on it, but this is a physical thing that counts down, and you've got to do the work in that time that you've allocated for it. If it's not done, you just finish doing the work and move on to something else. And it doesn't now focus the mind a bit when that clock's ticking down and there's only like four minutes left to go, and you think, "Shit, I need to like stop checking LinkedIn or my email inbox. So kitchen timers-they are the way forward. There you go. A

Nick Lincoln:

sentence I never thought I'd hear on Track, but there we go. We've we've surpassed us. Okay, so my one. Okay, it's a bit of another. We said at the start of the show about the hedge funds. You know, just these come round every five years. The shiny new messiah who somehow knows how to beat the market. And the other recurring thing on that carousel of doom are the fraudsters who rip people off. At the mega end, you've got people like Bernie Madoff. At the other end, you've got people like my one, which is a guy called Paul Regan, a U.S. con man. And the Wall Street Journal podcast is about 20 minutes. His entire story, normal thing, preys on people. If he if he suspects his prospects are religious, he'll suddenly say, "You know, I'm doing the work of the Lord, a real scumbag. He swindled a Vietnam veteran out of his life savings because the Vietnam veteran wanted to make this money work for a family member who'd got dementia. I mean, there's no limit. There's no circle of hell hot enough for these people. Why it's interesting is they got hold of Paul Regan's tapes that he would use to train his salespeople. So you can hear the voice of the man who did it. You can hear his techniques. You can hear what he called these people. The marks, you know, the euphemisms for these people. Just down and dirty. 60 million. Not not a massive swindle, but it's still out there. Absolute filth. And another guy who was struck off by the SEC years ago, and still managed to do this kind of thing. So you know, much as we criticize the FCA, and I'll come on to the FCA in a minute when Carl's done his bit. 20 minutes of your life, engaging, depressing, but it's what we don't do. That's the uplift from it. Watch

Carl Widger:

the business by Richard Curran. So this guy is great. He's a very well-respected journalist in Ireland. He was the host of the Irish Dragons Den, actually, but he's he he's broken some of the biggest business stories in Ireland. He's a really engaging guy, and this show talks about some of the big business stuff that's going on in the world. But then he interviews some smaller businesses that are doing really well. But he's just a really engaging guy. the the the The show itself is definitely worth subscribing to, but this particular episode, he interviews somebody who's been to Starbase, which is Elon Musk's the town or the city that he's building for all the SpaceX families. Have a listen. Tell me what you think.

Nick Lincoln:

Okay, good stuff. I mentioned FCA. There is no positive FCA. I've been I've been waiting for my FCA annual fee levy, and it came in during the show. It's a bit later than normal, and Keith, you'll be getting yours maybe, and Anna got you'll be getting yours perhaps around now. Mine's just come in. The fee has gone up by 2.3% So well done, FCA. I'll take that every day. My turnover was up by nearly 20% So good news, good news abounds on Trap episode 103, and there we go, de Trappist. It comes to a close. Another pile of trap is sliding down the U bend of far the time. Please do like and subscribe to us on YouTube. Do leave a review on iTunes or your app of choice. More more apps now, more podcast apps are letting you leave a review, and it's all good. It's all grist the mill for us, and it all helps boost our our profile. So anyway, until the next time, it's Adios from the Trap Pack. Thank you so much, Keith Button, for standing in for Ultra. Ultra, we miss you both. Keith has been an absolute star. Keith, you were brilliant.

Carl Widger:

Brilliant. Well done.

Nick Lincoln:

Yeah, really loved it. Take care out there. We'll see another side. It's Adios from the Trap Pack, including the Right Honorable Mister Keith Button.

Carl Widger:

Cheerio. Thank you. Jesus, lads! An hour and 50 minutes. You could have gone on. There

Nick Lincoln:

was loads of great stuff in there. Let me talk to the Christ.

Carl Widger:

We can talk shite, huh?

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Nick Lincoln

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Alan Smith

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Andy Hart

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Carl Widger

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