By Jayson Forrest - Managing Editor  - IMAP Perspectives
referencing the IMAP webinar run in June 2020

Angus Mason: We’ve been lucky in that over the last 18 months and more, we’ve been holding quite a large amount of cash in portfolios, and probably more than we would normally do so. We received a fair bit of criticism late last year from clients for for doing that.

But the unique thing about our model is we are a commercial family office. So, while we get paid a fee for funds under advice and a brokerage fee for mortgage broking or insurance broking, we’re not incentivised to transact. Instead, we’re aligned to our clients’ best interests.

When clients invest with us, they are investing as our staff are investing and as my family is investing. We’re about protecting capital and growing that capital when there is confidence in the market.

We didn’t expect the coronavirus pandemic to be this black swan event, but we were expecting some rocky times and market uncertainty. We’ve begun to selectively redeploy some of that capital back into the market, particularly around the dip.

And while I’ve seen a few little dips in the market over the last 13 years, we tend to do better in those dips because we often have cash ready on the side for clients to take advantage of those opportunities.

From a client perspective, we have educated them around the asset allocation risk-on, risk-off process, and that’s part of what we do during the client on-boarding process. So, in that respect, the coronavirus pandemic hasn’t been a major issue for us.

Clients have been very comfortable throughout COVID-19 because they’ve been able to see where their portfolio positions are and they’ve had regular communication with us. Communication has been critical for our clients.

They want reassurance about how they are tracking, particularly during times of market volatlity.

Angus Mason: At Cashel Family Office, we have client account/services teams that comprise of a financial planner, a private banker, a mortgage broker, an insurance broker and administration. The team looks after the day-to-day interaction with the client, including gathering client information, which is critical.

The client account team then works with the portfolio management team, so we get scale advantages having a centralised team around portfolio management.

We use separately managed accounts (SMAs) for direct equities, but overall, we provide an individually managed account (IMA) offering that we’re utilising from Xplore Wealth. Clients don’t want to be dealing with paperwork, instead, they want a seamless experience and managed accounts provide that.

From a client value proposition, the client account team talks to the client at least weekly or monthly, depending on what needs to happen with the client. We are pro-active in ensuring we are prepared throughout the year, including with the client’s investments, tax structure, their ownership structure, pre-planning, estate planning and working with specialists.

That’s because ultimately, a client’s lifestyle is determined by their after-tax wealth. And while investments drive a lot of that wealth, it’s also about the structuring that goes along with it, which can make a net difference to their lifestyle.

We do take a very holistic approach to wealth creation, which includes building our own proprietary CRM system to support gathering data, because there are so many data points on every individual that we need to monitor - from their spending habits through to their goals and aspirations.

Our client value proposition is very broad. There’s no hidden fees or charges, and there are no hourly-based fees. We try and make it very simple.

We invest time in getting to know our clients, knowing that we’re going to have a very, very long-term relationship with them, extending to their children and grandchildren

Angus Mason: We start with a risk-based approach. This includes factors such as: are we confident with what’s happening in the market; and should we be invested or not be invested.

Towards the middle of 2019, we were taking a more conservative approach, thinking that the market was becoming too unpredictable. A lot of that has been inflated by monetary easing and so forth, but with lifestyles not improving and wages not going up, we believed the market had become unpredictable.

When it comes to investing, we start with an active approach - should we or shouldn’t we be invested? We’re quite happy to sit in cash waiting for the right opportunity to invest.

And when it comes to asset allocation, we have the advantage of being able to see all our clients’ assets; their car collection, their art collection, their holiday house and so forth. However, the one thing we don’t want to do is duplicate their asset allocation. When clients come to us, they generally already have a large proportion of their wealth tied up in real estate, so this is an asset class we don’t typically put in a client’s portfolio.

We also like to see what we’re investing in. We like to be able to call a company’s CEO and have a conversation with the person in charge. We like to be able to call a portfolio manager and have a direct conversation with that individual.

So, typically, the way we operate is that 30 per cent of the asset allocation we manage internally is through direct equities and that is run by the portfolio management team. The remaining 70 per cent of the asset allocation is mandated out to external managers, representing small, mid or large cap, international, alternatives, commodities and so forth.

We also have an allocation to private equity. Typically that allocation is for clients who want to have an active role in that private equity. We focus on opportunities where we think we can add advantage. For example, if we are going into a private equity opportunity, we consider if there are any company board members we can approach from our client base for their insights.

Other than our smaller clients, who have risk-based model portfolios, all our larger clients are generally operating under an IMA, because these clients tend to have very strong views about investing.

We focus on the risk-on, risk-off around those IMAs and also their asset allocation. We work with the client in the investment selection process to ensure that the investments that sit within the asset allocation, are investments the client is comfortable with.

These are the types of conversations we enjoy having with our clients because we often learn new things from them, like their experiences working within a certain sector or what they’re seeing or hearing on the ground.

This enables us to use that information to recalibrate our portfolios.

Angus Mason: As a business, we’ve been ahead of many of these regulatory changes, and that’s not due to foresight but probably due to the mistakes we’ve made in the past.

One of the main things you want to do during this time of regulatory change is to align your interests to that of the regulator. You only need to look at what FASEA is doing around education standards and remuneration. This type of change, which is in the client’s best interest, should be obvious to all planning businesses.

Knowing that, what we’ve been working on is how do we gather all the client information. We’ve tried various applications over the years to try and gather this all into one database. However, we ended up building our own database, using a platform and Microsoft Dynamics. This has allowed us to gather all the information into one spot, which enables us to really enforce the compliance regime that we want around client service deliveries.

And while these regulatory changes are for the benefit of the client, there is still a question of whether the software and technology available in the market is keeping up with these changes.

That’s why it’s important that there are hard stops on processes, like the annual fee disclosure statement, to ensure there can’t be any charging of fees if a client hasn’t re-engaged the business to continue.

It’s commonsense things like this that we are enforcing through our business processes and proprietary CRM system. And while the industry is heading in the right direction, it can be a full-time job just focusing on technology.

Angus Mason: I was trained as a computer systems engineer over 20 years ago. So, I’m able to speak the same language as IT developers, which makes it easier for me to understand the application of technology.

But when it comes to technology adoption and automation, you need to start by looking at your own business, including your existing processes and workflow. It’s also important that your staff fully engage with that process, including identifying what’s working within the business and what’s not. This means when you consider automating your processes, you’ve got a proper understanding of where the manual points are within the business.

There are some great applications available in the market that a business can start off with. For example, AdviserLogic has a plug-in with Zapier, which can automate a lot of processes. We’ve gone down the path of using Microsoft Dynamics, which can become expensive because it has a lot of artificial intelligence and machine learning capacity.

So, when it comes to technology and automating processes, start with some basic applications. You don’t need to go over the top, because it may be as simple as just wanting to have one database you can communicate to clients through. For example, something like MailChimp or AdviserLogic, rather than having to build your own technology or portal.

Start small on little things. If the business grows, then iterate. Don’t try and do everything in one go.

Angus Mason: In may cases, things haven’t changed much for Cashel Family Office. Staff have been very productive working remotely from their homes. So, perhaps the only issue I had was ensuring that staff were set-up properly within their home office to work remotely.

Zoom has been fantastic, and being able to do digital verification has been great. Applications like DocuSign have been terrific during this period of working remotely.

However, a consequence of self-isolation and remote working has highlighted something we have taken for granted, and that’s the simple act of sitting down and talking to clients face-to-face, and then observing their reaction when talking about challenges that impact them.

So, having that personal face-to-face contact with clients is something that we’ve missed during the coronavirus crisis.

Anne Hamieh is Head of Distribution and Marketing at Xplore Wealth

Angus Mason is Chief Executive Officer at Cashel Family Office.