In the Slipstream – Episode 18 – Bold Practitioner Interview – Ray Miles


Scott Charlton:
Hello, and welcome to another episode of In the Slipstream FM, the podcast which is produced specifically to help accountants and financial planners in practice. The aim of this show is to help practitioners improve, not so much technically, but by way of empowering you to make better business decisions. My name’s Scott Charlton, and I’m the Director of Coaching here at Slipstream Coaching. Today, there’s a terrific feature interview in store for you, where I get to chat with a financial services entrepreneur who has some inspiring messages. I think you’ll find his remarks to be extremely relevant for accountants and planners. We’re also adding to the content of the show. Here at Slipstream Coaching, we’re interacting with practitioners every day. Before we finish up, I’m going to share a few observations about the issues we’re seeing out there in practice, along with some tips which our clients have found helpful. Let’s get started.

Recording:
Now, here’s some great ideas for your firm, where we’re all about success on your terms. Get the knowledge, the tools, and insights from special guests. Everything you need to become your very best. So come and build the business of your dreams. Settle in, and listen now, to In the Slipstream.

Scott Charlton:
My guest today in the feature interview is Ray Miles. There’ll be many financial planners listening to this podcast who know of Ray’s stellar track record and reputation. Amongst accountants, Ray is much less widely known. Regardless, I think you’re in for a treat. Over many years, and in particular, during the role I had before co-founding Slipstream Coaching, I worked with Ray and got to see him operate firsthand. The defining role of Ray’s career was his 20-odd years as Managing Director of Associated Planners, an independently owned and run licensee, that became, by most definitions, the best in the country. Ray took AP from those early days, when it was a virtual startup, right through to its eventual sale to a publicly listed company. It was Ray who was the drive behind many of the groundbreaking developments that made AP such a trailblazer in the industry. Since then, Ray has founded another financial services business, Fortnum Financial Advisers, which again, he has taken to the forefront in Australia. In short, we’re in for an interesting discussion. So, Ray, welcome to the podcast.

Ray Miles:
Hi, Scott. Lovely to be here.

Scott Charlton:
Excellent. Now, Ray, in the introduction, I’ve touched a little on your role at Associated Planners, and more recently at Fortnum Financial Advisers. So, to give the listeners just a little bit more context, I was wondering if you could provide just a quick overview of your role in those respective organizations.

Ray Miles:
Yeah, sure Scott. Well, that’s similar in both circumstances. I was the Founding and Managing Director of Associated Planners, and the founder of Fortnum. So, in the Associated Planners case, I was a founding MD, but there were 30 other advisers involved in the set-up of it. In Fortnum’s case, we started from scratch with nobody. So the role in Associate Planners evolved into a Managing Director role from a founder role, I guess. As it really has evolved into a Chairman’s role in the Fortnum case.

Scott Charlton:
Fantastic. All right.

Ray Miles:
Does that make sense?

Scott Charlton:
Yes it does. Thanks very much, and doubtless, we’ll get into a little bit more detail as we go on. But, what I’d actually like to do is explore some of your defining philosophies, if I may?

Ray Miles:
Sure.

Scott Charlton:
So, I remember early on in my AP career, I was, I think it was actually in relation to a little MBA assignment that I was doing at the time, and I remember you enlightening me with this philosophy: “If it’s not broken, we’ll break it,” you said with some feeling. So, would you care to just elaborate on this, and why it was so important, too?

Ray Miles:
Yeah. Well, I guess I was, that linked in with another philosophy I have, and that is, “It’s only the lead dog that gets a change of view.” It’s all the same piece. No progress is made when everything stays the same, and I really can’t … I get really bored with the status quo. The only progress that ever gets made is when someone finds something new. Finds a new way to do something, finds a new idea. Finds something new. All organizations that stagnate stay in the old world. Organizations that progress move into the new world, right? So we will always try to find the new world, trying to think about what tomorrow will look like, and try and get there before anyone else.

Scott Charlton:
Love it. So, are there any examples that come to mind which would illustrate that?

Ray Miles:
There’s a lot of them.

Scott Charlton:
Yep, just a couple of them.

Ray Miles:
There’s a lot of examples of things that we’ve done here. I mean, I’ll just give you some with Fortnum, right. So, we’ve, very early in the place decided that the way portfolios were constructed in the financial planning space doesn’t work. And we know it doesn’t work, right? If you look at what happened in the crash in 2007, 2008, balanced portfolios lost 30% of their value, and that should have never happened. But it means that the portfolios were being constructed wrongly. That, in fact, the risk implicit in a balanced portfolio varies widely, when in fact, it’s not supposed to vary much at all.

So, we’ve spent a lot of money in this business building what we call risk factor portfolios, where we can manage the risk inside the portfolio. So that, actually, when the crash happens, the client doesn’t lose 30% of their dough, but there’s a bunch of big gambles. There were about fourteen things, as I recall, in Associated Planners days, where we could put our flag in the top of the hill and say, “We’re here first.” And that was things like, the integration of financial planning technology, so that we could, you could enter the data once and manage your client’s entire portfolio online, from that one space. That was 1996. No one else had done that anywhere in the world. We’re the first deal group to have its own credit card, right? When everybody else got into it, we got out of it. But yeah, so there’s a bunch of things we tried first. Not everything succeeded, but a lot of things succeeded.

Scott Charlton:
So other than your natural predisposition to doing things new, there’s obviously a degree of risk that’s associated with doing something that hasn’t been done before, but nevertheless, you’d be far happier doing that than just following the same old, same old.

Ray Miles:
Yeah. I just, I just think tomorrow is a more exciting place than yesterday. And I think we’d like to find tomorrow, and not spend too much time on yesterday. You’ve got to remember that a lot of things happen and need to happen on a systematic process, and all that sort of stuff. So the day-to-day stuff. But the new stuff, the new ideas that will change people’s lives, the things that.

You think about the client experience, right, the biggest thing at the moment, the client experience when they deal with a financial planner or an accountant. The client experience is terrible. Like, there’s no other way of saying it. It’s just a terrible client experience. What are we doing about that? We got to fix that. Otherwise, we will be put out of business by somebody who does fix it, right? So there’s a bunch of things that need to be done, that need to be invented, that need to be fixed. And you need to be searching, you need be continually improving.

Scott Charlton:
I think that’s brilliantly expressed, and pretty much takes care of the question I was going to ask you. But I don’t think I need to, and sort of, which was like, “When do you think about taking on a bold new direction, or just keep the faith with the status quo?” But man, it’s pretty clear that you can’t do that in this financial world.

Ray Miles:
Well, no. And I think the pace is getting more frenetic. The other thing to remember is that, because of the way Fortnum, after Associated Planners, that Fortnum was structured, where the practices owned the parent’s share of the business. So we were very close to practices. And the practices were very close to the customers. So we get to understand what the customers’ requirements are as well. What amuses me is that, the conversation the big banks’ll have about getting close to the customer. They have no idea who the customer is. No, they make these statements about getting close to customers, don’t know who their customers are. They could pull up stats. But how many of the big bank CEOs would even understand what a customer looked like?

We know what our customers are. We know them really well. And we understand what their problems are. And so, most of the prudence we’re trying for are the solutions to our customers’ problems, or to our practice problems. How do we make their practices’ lives more efficient, better, all that sort of stuff? But how do we make our clients’ lives better, more efficient? How do we give them a better result? How do they give them better return? How do we give them better accounts?

Scott Charlton:
Well, I think that you’re well qualified to ask those questions. Because as long as I’ve known you, you’ve been relentless in pursuing those. Perhaps that sort of leads onto another thing, which I know you’ve been unflinchingly steadfast, “We would rather lose money than trust.” So would you care to expand on that view?

Ray Miles:
Sure. And I think you mentioned I should try and give an example. But let me start with the first piece first. We work in the financial advice industry, right? And there is no question in my mind that our client has to be able to trust what they’re told. They have to be able to trust what they’re told. So if they’re told something that doesn’t end up being true, then they need to be compensate for it. That’s true with our practices as well, right? So if you’re prepared to compromise, and say, “Well, you know, I didn’t really make that mistake” or “You misunderstood me,” then we start to erode trust in the business. And I think trust is the most important thing that you should have.

I have a very strong belief that this industry should be working in the best interests of clients. And it clearly isn’t, right? The financial planning industry clearly does not work in the best interest of clients. Well, in our business, it does. And that’s pretty important. So we’ve had, I’ll give you two very simple examples of where this has happened. We launched a special fund in GBP, a GBP. So the British Pound Fund for ex-patriates out of England who didn’t want to convert their money from GBP to Australian Dollars, because they thought they’ll lose money on it. So we launched a GBP Fund. And we had expectations from the people that we launched it for that they would deliver a certain amount of funds that would make it viable, in terms of size.

But it didn’t actually get to viable in terms of size, which means the MER, which is a floating number inside any fund, started to go over the amount it should’ve, right? With the limits now. There were no, inside the document, it was acceptable to say, “I’m sorry that’s happened, but. It’s gone outside the limit, but we did warn you that it could go outside the limit when you started.” We didn’t do that. We actually made the decision to reimburse them the amount it went over the limit. Now, that wasn’t a cheap decision, Scott. It cost 290 grand. So it’s a get-up-and-take-notice moment. But it was a really important decision.

But in the same token, we had the, when Eclipse was shut down, we had a very key, very valuable staff member in there. You will remember who it was, I won’t mention the name. But she’d resigned, she was going somewhere else. And she was like, I don’t know how far it was. Maybe three or four weeks shy of getting to a stage where she would’ve actually got a reasonable check for redundancy. And so, she was about, she was costing herself about 30 grand and the CFO at the time was also kind of encouraging her to go a bit early to save her 30 grand. But we delayed her departure, so she got it. Because she was a really, she really worked hard. She deserved it. So doing the right thing, being honest with people, I think is a pretty important part of this business.

Scott Charlton:
Bravo. Well said. I don’t think I’ve much to add to that. So good for team members and clients, and I guess is a good way of just enhancing the firm’s reputation as good people to deal with.

Ray Miles:
Good looks, yeah. Well, we’ve never had feedback about someone doing the wrong thing by somebody else. And I don’t, it doesn’t cost a lot every year, but it would cost us a lot if we didn’t do it, in my view. Because it’d cost a lot, both to how the staff feel about the business. And I think people like to deal with, work for honest businesses. But it’d cost a lot in relation there, disgruntled clients saying bad things about you. I know a lot of people think that they don’t say much, but at the end of the day, it’s a matter of how you feel about your business as well.

Scott Charlton:
Excellent. Another thing that you’ve been very strong on over a long period of time is your own self-development. So that, the time when you were a really well respected CEO at the Associated Planners, you yourself lined up for a coaching program, which involved partly working on yourself, and particularly working on the business quite intensively. And I know that that meant traveling enormous distances each quarter. So what was the thought process that led you to that? And then how did you share it with other members, sort of say, your board members, etc., that this was a path that you were embarking on?

Ray Miles:
The course I did was a Strategic Coach course in America. And I’d looked at stuff in Australia, and didn’t really see anything that I thought would help. But I’d had really good feedback about this course and thought it might actually provide us with a way forward, in terms of what the future of the industry looked like, and the future business should look like, and so on. So in terms of a sale to the board, it was a pretty easy sell. I just, we’re always trying to find better ways to do business, if you like, and try and draw the business forward. From my point of view, my life was just too busy. Right? Even after I did this course, I typically would have around 23 face-to-face appointments a week with a whole range of different people. Right? But I don’t know too many people, I’ve known a couple of people that had more appointments than I did.

But I was looking for this course to solve some problems. Because if, I just couldn’t keep working at that pace, right? So the issue was, “How did I find the time to go and do the course to help me save the time?” Well, I’ve had people say to me, “I don’t have time to go and do the course.” And my response is, “You’re an idiot.”

Scott Charlton:
Yeah. Right, okay.

Ray Miles:
You have to find the time to do the course. We just, like there’s just, we plugged it into my diary. My PA plugged it in my diary, so I went and did the course. I’d come back, I plugged in time to do the stuff that I had to do as a result of it, and it transformed my life, actually. It really, the way I manage my time revolutionized and I remember when we sold the business to Challenger, the Associated Planners business, to Challenger, the CEOs of Challenger were working for that house I used to work. And I was more effective than they were, working half or quarter of the hours.

In fact, most of the time, I had eight to 10 weeks’ a year off-leave at that stage, as a part of the things that I learnt in the course. So it was a pretty easy decision. The course, the business, I think the business quadrupled in size in about the next six years, from doing the course as well. So if you’ve picked the right places to go and do, it makes a huge difference to your development. No one knows everything, right? No one knows everything. If you’re not learning, you’re dying.

Scott Charlton:
Yeah. So someone who listened to this podcast or thinking, “Okay, well look, I’ll write the time to do the program, and I’ll write time in to do the follow-ups.” But in the back of their mind, it would be still like, “Oh, gosh, I’ve got all these other things.” So is that a delegation issue, to sort of just get some things off your plate?

Ray Miles:
Oh. It’s interesting. I started the course with a bunch of people. So I did the, I completed the course, came back, did every quarter. And there was a guy that I’m still very good friend with. I catch up with him every couple years skiing and stuff. And he did the course for the first year, and then he got too busy, so he didn’t do it. And I kept doing it, right? And our business quadrupled in size. And in the same period of time, his business stayed stagnant, stayed exactly where it was. So in fact, it still hasn’t grown. He’s now selling bits of offer in retirement. But it still hasn’t grown. So like, you tell me, who made the better choice?

And in terms of doing it, you’ve got no choice. There’s some other people who did the course, but they didn’t actually allocate the time afterwards to actually do the stuff that had to be done. Well, there’s no point in doing the course unless you’re going to do the follow-up. So it’s the follow-up that actually does, you learn stuff in the course. You [have to do the follow-up to make the thing work. And so, yeah, people do that as well. And I kind of shake my head thinking, “If I put the really, if I’d manage my diary.” And I learnt this on the course, right, “If I manage my diary according to what I call focused activities, the things that make a difference in the business, and then none of the other stuff after that, then my life’s going to work out okay, and the business is going to work out okay. But if I’d just keep doing stuff the way I’ve done in the past, then we’re just going to keep flopping around, doing stuff that isn’t necessarily effective as it needs to be.

So the other thing I learnt at the course was that, you better understand what you’re good at, right? And you better also understand what you’re not good at. And if you’re not good at it, you need to delegate it. And so, that was the other piece, as you were alluding to. Scott, the stuff I wasn’t good at, I might choose somebody else did it. And there was no point in me doing it, because I’d do it badly, whereas they’d do it well. And so, that took a whole chunk of time out of my diary. And people knew not to come and ask me about it, because I wouldn’t, and I just sent them away.

Scott Charlton:
Right, fair enough. That obviously worked. Going to-

Ray Miles:
It did-

Scott Charlton:
Tap into that innate ability of yours to see into the future. So would you care to share what you see happening in the next few years, for the financial services industry?

Ray Miles:
Yeah, yeah, that’s a $64 million-dollar question isn’t it-

Everyone has an answer to that. Well, so, let me start with the customer first. There’s a few pieces to this. The first is, I see, obviously that, the merging of the professions, right? The financial advisors are as, becoming the profession as opposed to accounting, financial planning, all that sort of stuff. I think we’ll see the emergence of a professional financial advice. And I think that’s how accountants and everybody’s going to stay to relevant through this process. Because it’s about giving a complete advice solutions to the client around all their financial parts of their life.

And you can see, some technologies are merging out of that. But so the first, if you think of the client in mind, “What is it that our clients needs in the go-forward position?” Everybody’s got complex lives, and they’re busy. And the time they have to take out to go and see their accountant and their financial planner is not a great experience. It just isn’t, right?

Scott Charlton:
Yeah.

Ray Miles:
And it’s not going to get any better, unless we find technologies that fix the client experience, that integrate all the solutions together, and we act in the best interest of the clients as a team. So we’re putting forward our best foot, with the best person to deal with that client’s issues going forward. So that, we need, we can get this stuff now, though. But you need live P&Ls and balance sheets of the client’s total financial life.

So that’s the first piece of it, I see is, in terms of the merging of professions. If I look specifically at financial planning, the two keys that I think we have to solve, and we have to solve now. The first is that, we have to merge to conflict-free advice. The industry is deeply corrupted by the fact that the in stows run deal groups and authorize advisers. And that’s just not where it should be. It should never be anywhere near that. We should be in a situation where the adviser pay is only ever paid by the client. Doesn’t get commissions. I’m with the Institute of Charter Council. And there’s no, I don’t think anyone should get anything except a fee from the client. I don’t think they should get commissions, kickback, any of that stuff. I think it’s all got to go.

But the second piece is, we’ve got to start building better portfolios. Because the portfolios that are currently being built are built by lousy people who have not changed, even since 2007, 2008. The portfolios simply don’t work. Okay? So we have another, 2007 to 2008, 70-80% of the world’s investments were dropped, in a balanced portfolio, dropped by 30%. And that should never happen. It shouldn’t, they shouldn’t, it should drop by 2 or 3%, but not by 30. So we’re spending a lot of money in this entire portfolio construction arena, understanding how risk eventuated type portfolios, and how you manage the risk. Because if you manage the risk, then you’ve managed the outcome for the client. And that becomes a much better place to be-

Scott Charlton:
Yes, I think that that underlines what you’re sort of saying, in terms of keeping the institutions out of directing where that goes. Because I just don’t see that level of new thinking coming out of a typical industry-run dealer group.

Ray Miles:
No, there’s no. They’re not. There is, there are a couple of worldwide institutions like BlackRock, that are looking at that as well. They’re putting a lot of effort and time into it, because we can’t just keep delivering this junk up. Because it is junk. We just can’t keep delivering it up. And I think there’s a few hotspots where this, that we’re very close. We are, we could actually build portfolios now where we can manage the risk within a very slim framework for clients. But I mean, we’re managing maybe, $400 million on that. So there’s a long way to go before it gets taken seriously, and we need a track record to build up over a period of time. But there’s a lot of money being spent by people like minimum the biggest in the world in this area as well. So that, we are eventually constructing portfolios for clients. Because it’s not in anybody’s interest, even if so, the stability to keep delivering this rubbish. We need to-

Scott Charlton:
Well-

Ray Miles:
That whole world needs to be a better place, right?

Scott Charlton:
Will it take a crash to prove that you’re right? Or is there a softer landing to evolve into this?

Ray Miles:
No. And the soft landings never work, right. Everyone, like, it’ll need a crash. And we’ll get a crash, it happens. It happens over time, happens every what, 10 or 12 years or eight years, it happens. I lived through the ’87 crash, when there were people jumping off buildings in Wall Street, which is, if they hadn’t jumped, I reckon they should’ve been pushed. Some of the stuff they were selling at Wall Street in the 80s was just terrible. It’s no different to 2007, 2008, but some of the people that those, the junk rubbish they were selling were making $15 to $20 million a year for selling stuff that was going to blow the whole world up. Makes no sense.

Scott Charlton:
So coming back to this merging of the professions, and providing the complete advice solution, do you see that necessarily as everything physically under the one roof? Or is there still scope for collaboration between sort of the financial planning accountants sort of working in arms’-length businesses?

Ray Miles:
No, we see both happening now. So in an ideal world, I see it as a merged business, to be honest. I see there being, as you get inside a merged business where everybody is actually a shareholder in the overall business, that you’re starting to bring the barriers down. There’ll always be some barriers between organizations, whereas if it’s a one organization with a common goal of really solving the clients’ problems, “Let’s make their life better. Let’s make the experience better.” Then if you’d do that, you’d drag the walls down. There’s always, there has been a large cultural divide between financial planning and accounting, for a long period of time. And I see that divide starting to disappear. I mean, there are a lot of old style accountants up here that just don’t want to have their clients referred to a financial planner that sort of stuff. But that’s disappearing. I think, yeah, in time, every profession’s got its strengths and its weaknesses. If everybody’s acting in the best interests of the client, then I think we’ll end up at a pretty good place.

Scott Charlton:
I agree. And I think perhaps, that’s the optimist in you and me coming out. But if there is a decision that such a firm needs to make. And if you asked the question, “Will this decision we’re about to make, will this initiative we’re considering, make our clients’ lives better? Then, if yes, do. If not, don’t do.”

Ray Miles:
Yeah, exactly right. Exactly right, yeah. Yeah. And there’s been a lot of protecting-your-client-base stuff. People are really terrified of referring their client to somebody else, because they think they’ll lose the client. Well, that’s a pretty selfish decision, right? Because if they refer all their clients to somebody else gives the client a better outcome, then everybody wins. But if you don’t refer them to somebody else and they don’t get a good outcome, then eventually you’ll need to lose a client. The client deserves a better outcome than that.

Scott Charlton:
Yep. Agree absolutely.

Ray Miles:
Both ways, both ways. Both ways. Yeah.

Scott Charlton:
So let me temporarily give you the reins of power, right? Let’s just say there’s a, say a four-partner accounting firm listening to this podcast and going, “Look, yeah, that’s right. But internally, we don’t have the person to lead the charge.” And you hypothetically were appointed sort of a change agent CEO for 12 months-

Ray Miles:
Yeah-

Scott Charlton:
What would be, like if you were put in charge of such an accounting firm, what would be the sort of the things that you’d be looking to do to perhaps would get them moving towards this, making-their-clients-lives-better scenario?

Ray Miles:
Given that little context I’ve got about the accounting firm, accounting, financial planning firm, I’ll answer it as best I can, as you would if you just looked at a business, right? The first is, you need to. There’s a number of things you need. Is that first, you need to understand the direction of the business. Is it going to work, is it going to for the long-term? The second is, you need to understand the strengths of the people inside the business. Right? Who’s good at what? How are they good at what? Why are they good at what, that sort of things. Are they doing what they’re good at? Are they doing what, are they playing to their strengths, or are they covering up? Are they doing any stuff that they shouldn’t be doing? How’s the work allocated? Who’s doing what?

And the, if you’re a client of that business, are you sitting in front of the best person for your needs? That’s their second. The third is: What’s the niche for this business? What’s the niche? Where are we best? What do we do best at? So if you can have the practice dealing in a niche that it’s really good at, with the people in their practice doing the things that they do really well. And if they don’t do it really well, you have someone covering that. And the practice is going in the right direction, then the business really can’t fail. It must succeed. And if you then allow people to do what they’re really good at, then it’ll move forward.

Scott Charlton:
Right. Okay.

Ray Miles:
That’s a really generic answer right, the-

Scott Charlton:
No, that’s good-

Ray Miles:
I mean, I’d need to look at their business and understand it to give a better answer than that.

Scott Charlton:
Sure. So be it sort of coming from the financial planning side of things, or the accounting side of things, I think we’ve recognized for a while that there’s a lot of practitioners who, well into their 50s, and have a firm eye on their exit. So there will be a generation change, and some of the people sort of coming up behind those founders of practices, won’t necessarily aspire to be sort of leading the firm. They might be more happy in sort of continuing the client/technical sort of work. So is there room for a non-traditional career path, with sort of somebody to come in as a leader of the business, that hasn’t sort of spent the last 15 years writing plans or doing sets of accounts, do you think?

Ray Miles:
Yeah. Yeah, there is. You can see the emergence there. I’ll tell you, I’ll tell you the most interesting trend I see in this area in the next five to 10 years. And that is that, if you look inside the institutions, the big financial institutions, they’ve spent a lot of money training a lot of people in management. Right? There’s a fortune being send on some people. And a case in point is the person that just replaced me. They’re all going to be out of jobs in the next 10 years. But this whole industry’s going to change. So there’ll be a bunch of people sitting inside of financial institutions that don’t like it anymore. They’ve had a lot of money spent on them, so that they’re actually, they really understand what they need to do in terms of managing staff that will be available.

And I think, for a good-sized firm that wants to put a high powered CEO on to grow business, that’s where I would be searching. So you need to understand that sometimes that, the institutional bet on some of these guys is to either break. But for the those that have got any entrepreneurial spirit, that have got all this management training and staff, man, they’re gold. They’re gold. Then there’s a few of them, you can see it now. See that, there’s a decent-sized practice in Melbourne that’s just appointed a very senior guy out of one of the institutions, and he’s changed their business. You can see it already. So they’re going to drive that into a very large business. So that’s what you need. You need professional management in these businesses. Now, can you grow them yourself? Yes, you can. Will you have spent the money on them? No, you won’t have. So if you’re going to grow them out inside the business, you’re going to have to spend some money on the person. You better make sure that’s exactly what they need to do, and what they can do, and what their strengths are.

Scott Charlton:
Yes, yes. It reminds me of a conversation I had very recently with the, the owner of a financial planning firm. And on his business card, it says CEO. But really, I was pointing out to him that it would be better for the business and better for the clients if that said something like, “Head of Advice.” And somebody who doesn’t even have the technical skills to do that financial planning work, someone else should actually be sort of running the business

Ray Miles:
Yeah.

Scott Charlton:
Yeah.

Ray Miles:
Well, my history was inside the institution. And they had spent a lot of money on me. And the Associated Planners thirteen advisers, when they wanted to set up a business, approached me. Because they figured, someone had spent a lot of money on me. All right. I was only 34, so they hadn’t spent that much. But there’s a, if not good at anything else, they’re very good at training people. And if you can break their institutional mold when you get them out, which is not that hard to do, because most people don’t like being in there, they can be pretty valuable resources, so.

Scott Charlton:
Cool. All right. I’m going to go on a different tack now. And this is an off-piece question, something that I’ve observed of you from up close and from a distance. So that, while you’ve had significant responsibility in various businesses and had extracurricular things that you’ve undertaken to do, nevertheless, you’ve been able to accommodate a life away from work. I mean, you’ve maintained an enviable golf handicap, and helps if you’re talented in that area. You’ve become a very fit cyclist, and you’ve been involved with good causes that are close to your heart. So it might be coming back to what you’ve already shared. But the conscious decisions that you’ve made to have this life outside of work and how you’ve been able to do that over a long period of time.

Ray Miles:
Yeah. It’s a good question. I always had the view, and I guess the course that I did in the States reinforced it: that you need time away from work. Right? Because you need to recharge the batteries. And so, if you spend all your time in work, you start to run the batteries down, and you’d become less creative. And so, you start doing more of the same stuff, which leaves you where you are, which is not a place you want to be, right? For now, about 25 years, I’ve divided my life into three types of days. I only have three types of days in my life: I have a free day, which is a day I don’t any work. And when I say I don’t do any work, I don’t do any work, right? If someone rings me, I won’t answer the phone. Right? I won’t pick up. I just won’t do any work. It’s a free day, and I try and have a lot of those, as many of those as I can a year. So, and that normally will included my wife, and when I had kids at home, the kids as well. Now I’ve got grandkids and I try to keep away from them.

Scott Charlton:
Yeah.

Ray Miles:
Because they’re great from 20 minutes or half an hour of time. But eventually, they steal all your time. So that’s a free day. A focused day are the days when I am focused on doing stuff that makes a difference to business. You could define it as saying, the stuff that’s revenue-generating stuff for the business. And I try to have, I might, my last weeks now, I have normally three focused day a week, three free days a week. And I have what I call a buffer day, which is a day where you’d clean up mess or plan or stuff like that, right? You’d do the stuff that doesn’t really generate any income for anyone, but it has to be done.

So that, and I then try and make sure that I have a series of, I have about 10 or 12 weeks a year off. So I work four days a week and have 12. So I’m not sure what retirement looks like, but it looks all right, this looks all right to me. And so, I make sure that I make use of that time off. Right? So most people don’t plan their time off, but I plan it. So I make sure I’ve got, so for example, in January every year, I go skiing, go skiing somewhere in the world. In April next year, I’m going to the Masters. This Thursday, Margaret and I and some friends are going to King Island for a week to play golf. Over Christmas I have a place at the beach up the coast. I’ll spend two weeks up there, just, and the grandkids will come up and all that sort of stuff. So I’ll just make sure I. And when I come back from those holidays, I always feel refreshed and charged-up, and I have my best ideas for the next week or two, until you start to run down. And then you got to think about it again. But yeah. So that’s, yeah, that’s been a part of my life. It was, I have to say, when the Challenger guys took over Associated Planners, they got really frustrated with me. Because in the middle of the transaction, the sale of Associated Planners to Challenger, I went skiing in Whistler. And they had some critical questions they wanted to ask, and I wouldn’t answer the phone. So they had to wait until I got back.

Scott Charlton:
Right. Right, okay.

Ray Miles:
They had to wait until I got back.

Scott Charlton:
Yeah

Ray Miles:
Yes, and all the way through and everything. I wouldn’t answer it, well wouldn’t. I had a BlackBerry then, and I suppose didn’t have an iPhone. But I could get emails, and I didn’t, I just refused. I turned the phone off, and didn’t turn it on for two weeks.

Scott Charlton:
I’m sure, that if it did-

Ray Miles:
So you-

Scott Charlton:
If it reflected heat, it would’ve been red hot. But good on you for staring it down.

Ray Miles:
They were not happy. They were not happy when I got back. Yeah.

Scott Charlton:
No Good, okay.

Ray Miles:
But I came back relaxed, and we closed the deal down and got it all fixed more quickly, I reckon. So.

Scott Charlton:
Yeah. There you go. Now, I’m really aware that the number of people on the podcast listening are sort of tuning in to some of the things that have been talking about. And sort of like, “When does one retire?” “What I’m going to do if I actually do head off in the sunset out of my business.” And, “What am I going to do personally, once I actually no longer have a business card to hand out?” Now, I know that you’ve faced up to these issues, sort of, in some cases, multiple times. So the first one I know relates to the start out of Fortnum. So you’d actually got off the bus, and were out of it. And yet, there was a time and you thought, “Okay, well now I’m going to not just get on another bus. I’m going to make the bus, and get going.” So you got back into the game, and like a startup, no less. So what was the thought process there, at a time when like, you could’ve stopped, but decided, “No, no. I’m going to go again.” What was your thought process there?

Ray Miles:
Yeah. Scott, I think the answer to the first question is, “When do I retire?” the answer is, “You retire when you’re done.” Right? You retire when you done. And I’d have to say, after the sale of Associated Planners to Challenger, and the Genesis stuff and a, from running our business where we had complete control, to running a business as part as a listed company, where you spend most of the day ticking boxes and looking at legal documents. Because everything was legal, I was done. I had enough. I wasn’t going to do this anymore. If I don’t enjoy getting out of bed and going to work, then I’m not going to do it. So I didn’t. So I took 18 months off.

But I remember, one morning, and people may relate to this. One morning, I was lying in bed. Now, I’m an early riser. In those days, I was cycling seven days a week, and lots K. And so, it was 8:00 in the morning, and I’m lying in bed. And my wife looks at me and said, “What are you doing?” She couldn’t understand, she’d never seen it, right-

Scott Charlton:
“Who is this person?”

Ray Miles:
“What are you doing?” Yeah, who’s this person? I said to her, “I can’t think of a single good reason to get out of bed.” And she looked at me and she walked out of the room, she went in the bathroom. I said, “Yep, she’s right.” It’s time to do something. So, for interest’s sake, and I’ll come back to the Fortnum story. But I just took seven-and-a-half months off. So I just, just back at work a few weeks after taking seven-and-a-half months off. So I. And I really enjoyed it, but about six months into it, I was just about done. I was ready to go back and do something. And I only do things that I enjoy doing. If I don’t enjoy doing it, I don’t do it.

So I think that’s a, I don’t know how that fits with everybody’s definition of retirement. But I’m going to keep doing stuff. As recently as about three months ago, I started another business as well. So I’ve started a new business, in conjunction with somebody else. We talked about people coming out of the institutions with a whole lot of training. I ran across a guy who I think would be very good at running a business. So he’s going to run a business that we’ve just jointly started. And I could talk about that after stream with you, Scott. But yeah.

Scott Charlton:
Do you think retirement, in the traditional sense of the word, is still valid? Or is it a matter of focusing more on the things that you like to do, be they recreation or business? And constructing a life that suits you?

Ray Miles:
Yeah, I mean, that’s probably pretty good advice. I think it’s different for everybody. I think, I’ve got some mates who’ve been retired for many years. And they say, they’re really busy and they enjoy it. And I look at their lives and think that it’s pretty empty. So, but they think it’s good, so that’s okay. That’s, for me, though, I couldn’t have retired. It was just, this is 10 years ago. I was way too young then. And I had unfinished business. Right? We sold Associated Planners for Challenger to make it into a great business. But in fact, that just destroyed it. So for me, it’s unfinished business. There needs to be a business in Australia that is truly independent, that is truly acting in the best interest of the client. That truly gives great advice. That provides better solutions for it. There needs to be that business. And Associated Planners was that business until we sold it. Fortnum is just a continuation along that stream.

Now, am I the right bloke to run the business going forward? With all the new technology stuff and the ASIC implications, I guess, it’s hard to describe it. But ASIC’s attitude, the stuff that has to be required now in running a license is completely different to what it was even five years ago. Now, so I’ve run licenses ever since they’d come out. So the original licenses came out of the ISC and ASC and they didn’t come out of ASIC. Because ASIC didn’t exist. So I was running those licenses ever since. And you look at the focus on the stuff we have to do now, that’s really actually not productive at all. But you have to do it to cover your back, from a lawsuit point of view. And I kind of go like, “Well, I don’t want to do that anymore. I’ll just do the stuff I like doing.” So that’s kind of why I’m no longer running the business. We get someone running the business who’s, he’s tolerant enough to do their stuff and dot the Is and cross the Ts and stuff. But I’m just not going to do it anymore.

Scott Charlton:
Look, I guess a couple of observations I’d share. One is, my own observation during the time that I was with you at Fortnum. And just sort of thinking, on many an occasion that, at that stage, you were doing that which you were purpose-built to do, and that’s to be the visionary and keep forging on. So just looking at what you’ve just described, it clearly is not you doing sort of like, a compliance-related job. And if what you’ve now got-

Ray Miles:
No-

Scott Charlton:
Is the ability to keep being the visionary, well, that would seem to be a logical evolution to what you should be doing.

Ray Miles:
Yeah. I’ve been running a Risk and Compliance commitee once a month, for three or four hours, and going through that sort of stuff is just boring. But the other point, in terms of the decision I made to hire someone to replace me, was that, I’d spent 27 years trying to find a replacement. So since the beginning of the Associated Planners in 1999, our biggest challenge was trying to find someone to replace you. If I walked under a bus, who’d do the job? And I searched for a long time. And October last year, I was, Neil Younger, the guys from the place we to run, the Wealth division of ANZ Bank. Right? So it was a pretty big job. He had 2,500 people reporting to him. And he had a bit of a blowup with the CEO, because they committed for him to do some stuff, which he went out and did. And then they pulled the plug on it. So he walked out.

Anyway, he was working on another project, which he needed our involvement with it. He needed a deal group to support. And he’s sitting there talking about it. And I was sitting there thinking, “You know, I’ve spent 27 years trying to find a replacement. And he’s sitting in front of me.” So I said to him, “Neil, we need to change this conversation.” And I offered him my job, and he took it. And that’s how it happened.

Scott Charlton:
Right.

Ray Miles:
So like, not every succession solution works exactly how it’s supposed to. But as long as you find a solution, you’re actually in pretty good shape.

Scott Charlton:
So it doesn’t sound-

Ray Miles:
And he’s been running the business now since January.

Scott Charlton:
Yeah. So it doesn’t sound like there was much angst that sort of. When the solution appeared, you were ready to move on it.

Ray Miles:
Well, it becomes obvious, right? So would I have been happy to keep running four different institutes? Course I would’ve. Yeah, it would’ve been fine. But am I better, if I don’t take this opportunity, am I going to spend another 27 years looking for a replacement? Well, that would mean I’d be in a nursing home trying to remember who I am. So no. It was not optional. I had to, if I had the opportunity to grab someone, I had to grab the right person. Right? And he’s the right person. And I had the opportunity. And it’s our first time in 27 years. So you can’t let that one go.

Scott Charlton:
Yes, yes. So that’s when the leg irons came out after he’d said, “Yes.” “Mate, you’re not going anywhere. I’ll buy you 27 years with us.”

Ray Miles:
You got it.

Scott Charlton:
Yeah, fantastic.

Ray Miles:
Yep. You got it

Scott Charlton:
So-

Ray Miles:
And it’s worked really well. I mean, he’s taken the reins. Go on, sorry.

Scott Charlton:
Yeah. And you’re not lost to the business. In fact, you’re freed up to do those things which listeners now appreciate, really, your innate strengths. So it’s being prepared to let go of a title, to free yourself up to do those things that add the most value.

Ray Miles:
Yeah. Absolutely. I have fun every day. It’s good. And I work the hours that I want to work.

Scott Charlton:
That-

Ray Miles:
So that’s good.

Scott Charlton:
Yeah. And I guess it comes back to something I’ve reflected a lot on that. And if that’s the case, then, let’s just drop the whole concept of retirement, and just talk more about a, a continuing to have a life of meaning and the things that you’re engaged in doing. Ray Miles: The people that do that live the longest, as I understand. I mean, you just keep this in mind, right: Warren Buffett hired his replacement when he was 83.

Scott Charlton:
You’re right

Ray Miles:
So 83. Hired his replacement at 83. So. And Berkshire Hathaway are still doing well. They’re still, I don’t know what their share price is now. It must be, it was $150,000 a share at one stage. So I don’t know what it is, because I haven’t followed it in recent times. But yeah, he hired his replacement at 83. He’s still working in the business, and he still sits on the board. And he still does the little bits that he really enjoys doing. But he doesn’t run the thing anymore.

Scott Charlton:
Yeah, wow-

Ray Miles:
And that’s a happy place for him, and there’s plenty of examples of. But I mean, there’s plenty of examples of people retiring at 40. There’s a lady at our golf club who’s retired at 43, I think she’s been retired 20 years. And she’s enjoying retirement. But she gets involved in the golf club committee. Goodness knows how you’d retire and do that. But anyway.

Scott Charlton:
Well, if you were doing that, the commitee meetings would be a lot, lot shorter.

Ray Miles:
Yeah. We wouldn’t need the rest of the commitee.

Scott Charlton:
No, no. That’s right, yes. Yes, when we’d get a few things done. That’s for sure. So look, thank you so much for giving of your time, Ray. It’s always a pleasure to tap into your thoughts on these things. You mentioned that, obviously, you’re sort of still out and about and doing business things. I’ll make sure that your contact details are put into the show notes, which accompany the podcast. Any final thoughts, perhaps, sort of, some words of advice to a practitioner who’s listened to this and thought like, “Gee, I really actually need to take some action.” Any final words of encouragement from you before we finish up?

Ray Miles:
Yeah, sure. I mean, the thing you got to consider is, “What’s the worst thing that could happen, if you actually take the action?” And in most cases, the worst thing that could happen isn’t that bad. But what’s the worst thing that could happen if you don’t take the action? The worst thing that could happen is, you’ll stay where you are. And that isn’t that good.

Scott Charlton:
Brilliant. Ray, thanks very much for your time.

Ray Miles:
Thanks, Scott. See you.

Scott Charlton:
Well, I hope you enjoyed that discussion with Ray. We certainly covered some interesting territory. There were plenty of memorable comments from Ray. But for me, the highlights were: First, Ray’s drive to make the overall experience better for clients and his willingness to change to deliver this outcome. Second: It’s not enough to go and get external ideas. You’ve got to implement. Third: Find your niche, what you can be really good at. And fourth: Plan your time off. And in Ray’s case, make that plenty of time off.

Before we finish the show today, I’d like to introduce a brief segment called Coach’s Corner. In this regard, I’m going to pick up on something Ray mentioned during the interview, about finding your niche, which he referred to as an area that you can be really good at. So often, I come across the websites of firms, which are the complete opposite of what Ray is advocating. That is, they are reluctant to exclude anybody. This is reflected in lots of bullet points. All the different types of clients that the firm supposedly specialize in, and another long list of bullet points of all the things that the firm is supposedly expert in performing.

At Slipstream, we have an approach which helps firm identify their niche, based upon a concept which we’ve christened, “finding their red Honda.” To explain what I mean by that, if you’ve ever been looking to buy a particular type of car, you’ll be amazed to see how many there are on the road. It’s the same number that’s always been there. It’s just that now, you are seeing more of them. Your brain is really switched on to what you’ve programmed it to do.

The practitioners we work with find it’s the same with their ideal clients. By writing down in detail what they know about their preferred client niche, they not only consolidate their knowledge, they also generate lots of ideas about additional services, and how to market these to clients. Often, this process also helps to identify strategic partnerships with non-competing businesses, which also service their target market. Which unlocks a significant additional level of marketing opportunities.

We also assist our clients to develop service packages designed to appeal to target clients. But I’ll leave that for another day. Thanks so much for listening to this podcast. Keep an ear out for future episodes. I’ve already recorded some further interviews with some really interesting people, with several more lined up. So there’s lots of great discussions to look forward to. Until then, onwards and upwards.