Transcript
Speaker: Made on Zencastr. Because Zencastr is the all-in-one podcasting platform that really does make every stage of the podcast production and distribution process so easy.
Speaker: All the details are in the description. Hello and welcome to Rest and Recreation, the work-life balance podcast from Apicida, where we don't tell you what to think, but we do hope to make you think.
Speaker: I am Michael Millward, the Managing Director of Abusida, and in this episode of Rest and Recreation, which is episode 101, I am going to be learning how to manage money so that I can finance the life that I want to live.
Speaker: My guest is Dominic Baldwin, a wealth planning advisor from Knutsford in Cheshire. I'm sure I must have visited Knutsford at some point in my life. It's only across the Pennines after all.
Speaker: When I go again, i will take advantage of the trade prices that are available to me because I am a member of the Ultimate Travel Club. Members of the Ultimate Travel Club benefit from trade prices on flights, hotels, trains, holidays and all sorts of other travel-related purchases.
Speaker: There is a link in the description which has a built-in discount on membership fees. Now that I have paid some bills, it is time to make an episode of Rest and Recreation that will be well worth listening to, liking, downloading and subscribing to.
Speaker: And probably good enough to share with your friends, family and work colleagues as well. So now it's time to say hello, Dominic. Hi, Michael. How are you? I am very well. Thank you very much. and hope you you can say the same.
Speaker: I am. Yeah, great. And thank you very much for having me on your podcast. It's great. I'm looking forward to it because it's always important to look after the money. If you look after the money, everything else gets looked after that little bit better.
Speaker: But I must admit, although it's very important to manage money and look after it well, your career has never really appealed to me. What was it about it that appealed to you? Yeah, great question. um So i I've been working with families now for 35 years.
Speaker: i think what we have to consider is what what is the role of a great financial advisor. For me, the role of a great financial advisor is to act as a guide, whether it's and ah a guide, a confidant, ah somebody to challenge your perspective, to help you and your family consistently make great decisions.
Speaker: Primarily, they're financial, but they don't always have to be financial. The catalyst or the driving of point for me was um x seeing what actually happened to my late father.
Speaker: And he he was a really lovely human being. He was an only child. He inherited a reasonable estate in his late 20s. And over a period of, I think, 25 years, he lost the majority of his wealth. He ultimately yeah needed to have support from from his family to look after him financially and spiritually later on in his life.
Speaker: And when I had an opportunity to go back and look at all of the paperwork, I was just completely disillusioned with the fact that nobody had stepped into his life as a guide who would help him make good decisions. that the The people that stepped into his life were people that were looking to take advantage of the situation rather than to help him.
Speaker: So that was um about 25 years ago. And that was the catalyst for us to create Zentum because I wanted to create a business that ideally should have been there to guide my father when he needed help and he never got the help that he actually needed.
Speaker: It's such an important point that really, that the way in which some aspects of the financial advice type industry is structured really does sort of, and did 20 years ago for definite, sort of encourage financial advisors to recommend products, investments that were going to deliver them the largest commission rather than the in the investment that was going to be right for the individual.
Speaker: Yeah, you're right. 25, well, it's not as much it's not as prevalent now, but 15, 20, 25 years ago, financial services attracted people who predominantly were just good at selling and they wore they were rewarded for selling products.
Speaker: And the commissions that were payable were disproportionately high in my view. And therefore, you had a lot of people within a sector who were going around who were highly motivated just to sell products for the commission that they would receive.
Speaker: I know that that is not the best way for a family to get the most out of their finances. When you talk about getting the most out of your family's finances, are you talking about creating what is, I believe, is called generational wealth, where a family is able to build something that is able to provide the support that is needed for the family, but also then pass on a greater part of that wealth to the next generation?
Speaker: Yeah, it can be. i think I think that where we all sometimes... look in the wrong direction is that I, that wealth, wealth is purely there to facilitate the life that you want for you and your family.
Speaker: it's It's not, it shouldn't be the main event, creating wealth in its own ah is not what we're, what we're here to do. and So I think that The wealth is purely a tool to facilitate what matters to the the journey we want as a human being. So for us, I think it's far and more important that the first conversation that we would ever look to have with a client and also the conversation I wish somebody had had with my father 30 plus years ago was tell me, tell me what matters to you and why.
Speaker: If a family cannot, a lot of times, because we're so busy in whatever it is we're doing, we lose we lose focus on the things that really matter to us and why.
Speaker: Yes, I was just thinking when you said what matters to us and why, I think an awful lot of people would find that an extremely difficult question to answer.
Speaker: i totally agree. and And most of us do not spend the time to to consider that. The easiest way in some ways there is to reflect back to when we were when we were kind of, you know, children and growing up and recognising when we were growing up what things gave us the greatest amount of joy and contentment and fulfilment and purpose and going back to that.
Speaker: And then also you have to then, i over the 35 years I've worked with families, I have sat with probably over 10 families where somebody in that family is relatively close to passing.
Speaker: And the conversation that we have is talking always about their priorities, which could be family, it could be philanthropy, it could be the relationships they've had with different people.
Speaker: Very rarely at the end of this journey do people talk about how much money they have created throughout their lifetime. so So for us, the starting point are relevant of how much wealth you have or how much wealth you you you choose to try and create.
Speaker: it's It's knowing what your priorities are and why. And we have a we have an exercise that where we would sit with a family and say, okay, great.
Speaker: you know Let's see if we can find six to eight areas of your life which are important to you. And then and that can take two or three hours of reflection and quiet time. And then we also ask our clients to see if they can articulate maybe what their three or five core values are.
Speaker: And and if we know they the family's priorities and if we know what their three or five core values are, that that is what the money is there to facilitate.
Speaker: Right. So if so, we use we and then we then move. We the first part is always looking at priorities and values. And that is a really challenging conversation, as you have alluded to. But it is but it is invaluable if if you want to have a high level of financial well-being. yeah What are the things that people usually say are going on?
Speaker: Are their priorities?
Speaker: In most cases, family is is when they when they are put on the spot, some sometimes they will turn around and it will be, you know they might talk about material issues to start with, but then they tend to when they have a quiet mind and when they start to reflect on what they are grateful for, it will be things like family, health,
Speaker: security, home, maybe travel, experiences, philanthropy, um self-improvement.
Speaker: But they are all unique and the way that they and the and the the meaning of each of those words are different to every family we work with.
Speaker: Yes. I'm wondering, you know, what's the most unusual thing that someone has so said is their priority? Yeah, great. um Well, I had one, a client once who wanted to spend an obscene amount of money on purchasing a car.
Speaker: And I was curious as to why they wanted to spend such a huge amount of money. to purchase a car. And the conversation that followed was that they weren't really car lovers at all.
Speaker: They were purely buying the car because they wanted to get one-upmanship on somebody else.
Speaker: and and by And by the time we unraveled that conversation, we concluded that it would make more sense to use the wealth that the person had to to fulfill lots of other dreams and aspirations rather than spending it on something purely to get one upmanship. Yes, I totally agree with you. It sounds almost as if they would be better off moving away from the person they want to impress. Just move away. Go somewhere else where you don't have to look at them. ah But this is one of those things, I suppose, that so many people...
Speaker: I get the impression that lots of people put themselves into debt in order to impress people. And the saying goes, you we put ourselves in debt to impress people we don't like to, and all this sort of stuff. And it seems to be part of human nature, but a mistake, a financial mistake that lots of people make. And I suppose, In many ways, you probably spend a lot of time putting right the mistakes that people have made because they haven't thought things through. and you talk about I'm going to give you all sorts of questions here, but what you've said, i think, is that
Speaker: you though those questions about priorities and values are not about a plan. It's about a strategy. It's about the reasons why you're going to be doing something. the actual tactical operations is something completely different. But you're about, I think, creating the strategy which then drives the decisions which enable the plan to be implemented.
Speaker: Fantastic. that's you know You are hugely insightful to see through that. Thank you. Because most families, when we start working with them, they haven't thought through the consequences of their decision-making.
Speaker: the the decision has been made maybe more from a place of ego rather than really understanding what matters and some of those decisions they make is because they're trying to impress others or feel like that that whatever they do will make them feel better And so there is a there is a whole piece of work that is needed before you get into the academic part of the planning.
Speaker: Because if we do not understand what the dreams and aspirations are of a of an inspirational life for a family, and those are all unique to the families we work with, well, then how can anybody guide them to make great decisions?
Speaker: there's a huge amount of logic in everything that you're saying. And I think one of the things that stands out for me is that you don't talk about individuals, you talk about families.
Speaker: And yeah I suspect in in lots of ways, even within the friendliest of families, my money's mine, you know and I'm not going to talk about how much money I earn, etc., etc., etc., with brothers and cousins and sisters or whatever.
Speaker: But you constantly talk about families. And I'm wondering, how does that manifest itself in, up you know, that's, sorry, I'm getting bit tongue tied now, but I'm so, I know what I mean.
Speaker: Expressing it is like. and yeah you you're You're quite right. I mean, so, so if one ah one of the, if family, if the concept of family, whatever that means to you is not important, then,
Speaker: we are not right to work with you because family is very, very important to us as a collective group of people, you know, looking after the clients we look after.
Speaker: and if And if family isn't important to you, then you have very little complexity because if it's just an individual who wants to create as much wealth or wants to do whatever it is they want to do with their wealth,
Speaker: In my view, there is very little complexity because it's just purely an academic exercise. We could probably go and ask ChatGBT or Gemini to give us some, and we'd probably get 70% of the way there, if it is just purely an individual looking to maximize whatever it is they're maximizing.
Speaker: Where the complexity of life appears, is when you take into consideration all the other people that matter in our lives. So for us, if we've got a business owner or a you know a family, whatever it might be, most of the families we tend to work with have a certain element of material success.
Speaker: But a lot of the conversation is about the dynamics of husband and wives and children and grandparents or and you know nieces and nephews or the next generation.
Speaker: And it's trying to just understand the complexity of the family so we can help them make decisions and understand the consequences of those decisions and how those consequences align with what matters to them and why. Hmm.
Speaker: So it's so it's ah it's far more, it there's you know, just just advising an individual is relatively straightforward because they are then, you know, they can be very specific about, well, ah i don't want to pay tax or i I'm happy with this and this is the amount of money I want to make. And there isn't a lot of there isn't a lot of complexity because it's when when you know when you know what matters to a family and why, sorting out their finances becomes so much easier.
Speaker: the the challenge always is to get the family to articulate to you what matters and why. Yes, I appreciate that. And of course, the bigger the family, the more complex it is. And if you're anything like our family, then our parents are very good at allowing us all to develop as individuals. So you go to some families and they're all football mad or rugby mad or horse racing mad. We've all been allowed to develop um our own hobbies and interests and lead very different lives. It is...
Speaker: Yeah, but it's and it's understanding that. And and once once you understand, you know, and again, some some families or clients are not, they're not quite ready to have that conversation around priorities and value. So if they're not quite, you know, in this right space for it. So if we've got a successful family and whether they've sold a business or they've got come into some wealth or what have you, and they don't feel ready to have what is what with what what is ultimately a conversation which shows vulnerability. Right. So so but what do you mean when you say ready? What would the ideal client for the ideal client family for you look like when they walk through the door?
Speaker: Well, the ideal okay the ideal family values the importance of or family, the concept of family. yeah They also see the value in having a plan or a strategy to manage their wealth.
Speaker: And then they also have to be willing to show vulnerability to be able to articulate what their priorities are and why and what their values are and why.
Speaker: And sometimes because we all have a bit of a you know, we have a facade in in in life to a certain extent. When people, we've we've had situations before where we've been working with very successful families, they then have been willing to have a conversation which shows vulnerability and they then they then share with us that they can't stand the the job they're doing at work. that They've been miserable for a long period of time. They would really love to do something new in life, but they haven't got the confidence
Speaker: to be able to work out how to do that transition now the moment the moment somebody shares that with us we we don't take advantage of that situation we look at it and go brilliant you are now being very honest with yourself and with us you have a certain amount of um assets, material assets, let's look at how we can structure those in a way which allows you to go and fulfill whatever the next chapter looks like.
Speaker: Right. Okay. You've got a model that you work with as well that is your proprietary model, but it's how you yep you structure all of this work that you do with clients. Can you tell us a little bit about this model, please?
Speaker: Okay, so so if we then now are moving to the kind of the more academic side of how we do all of this, in in our view, we want we want our practitioners to be chartered because we want them to understand the subject matter. We want them to be independent because we don't want, ideally, we don't feel that being influenced to recommend a certain solution by an organization is right for the clients. And then we also work on a on a fixed fee basis based on time and complexity and the value that we add. So what we're trying to do is we're trying to remove as many conflicts of interest as we possibly can within the sector of financial services. So if a client comes to us and we look at the complexity of their needs, we would much rather turn around to that family and say, okay, to have a guide who is going to consistently be there
Speaker: to challenge your decision-making and to help you make great decisions, the fee for this year is going to be X amount of money. And whether you invest 10 pounds or 10 million pounds, that fee is pretty much the same.
Speaker: So what that does is that that removes removes the feeling of a conflict of interest. It removes the need to be be selling a product.
Speaker: So the client feels... that they can be more open and honest with whoever they're working with because they are looking to get guidance on how to make a great decision.
Speaker: Okay. So that's the first part of the model is the way in which you actually, the advisors work. It's their incentivized but to provide the solution that works for the client rather than, as we started, talking about commissions and amount of money that might be in because the amount of money has already been out.
Speaker: Correct. try to remove it And then and then when you when you go when you dig a little bit more into the kind of financial sector, you then need to be looking at things like who are the custodians of your money?
Speaker: And so you that they that's where like the platforms where your money sits. So you need to make sure that you've got a great custodian and that have the right bells and whistles. Ideally, it should be set up so that whoever is guiding you does not have a monetary benefit of you going with any one particular custodian.
Speaker: We then also think on fund management that there shouldn't be a financial there shouldn't be a financial benefit to anybody if they use a certain um fund manager. And it is our belief from the data that we currently receive is that low cost passive investing will consistently deliver what clients want them to deliver. So we we don't, as I say, in the current climate, paying for active management, the data does not demonstrate that paying the extra fees justify active management when the client doesn't need to pay for active management.
Speaker: Right. And active management is where people can see their investments moved and changed almost on a daily basis or even more frequently than that. Yeah, you know you normally are in like a discretionary portfolio service where you have given permission to a fund manager to buy and sell whatever they feel appropriate at any point with the aim of of trying to increase your wealth accordingly. Whereas a passive portfolio, we it is more about asset allocation and low cost.
Speaker: And the data would demonstrate that a passive low cost strategy
Speaker: proportionally or percentage wise will deliver more consistently than on paying for active management yes yes so you don't need to be in a buy sell buy sell type of situation correct it it's a buy it is work out work out what level of risk is appropriate for you and your family once you've worked out the level of risk then align yourself with a certain area of the market that represents that risk. And then it is a buy and hold strategy, of course, continually monitoring, but we don't see the need to buy and sell on a regular basis.
Speaker: Right. Okay. So what sort of lifestyle aspirations have you seen clients being able to fulfill by using this strategy that had previously just been pipe dreams? and I may have mentioned this to you on our on our call previously, but About eight months ago, i went to I went to celebrate the life of one of our clients who had who had passed. hed He'd had a fantastic life and everything else. And his his son came up to us after the funeral and he thanked me and the team at Zentum for giving giving his father and his mother the confidence to live the life they had lived for the last 25 years.
Speaker: And the confidence we gave this particular family was that they traveled the world. So without the confidence and the plan and knowing that their wealth would allow them to do it, they traveled the world.
Speaker: They moved homes on a number of occasions. They had a holiday home. They gave money to their children. They gave money to charity. They went to all of the events that they wanted to go to. So they fulfilled all of the aspirational dreams that this family had over a 25 year period. And the key value that a brilliant planner brings to that relationship is it gives the family the confidence and the clarity that the wealth that they have created will allow them to fu fulfill their dreams and aspirations.
Speaker: So this they were spending their income, not their capital. ah Well, again, in some cases there, they were spending their income. But but again, we when we get to the end of our journey as a human being, ideally, we don't want to have any capital.
Speaker: Why why why why do we why do any of us want to have any capital when we are 100 and if if we make it to, you know, we cash flow our clients to 100 years old unless they tell us otherwise. So our aim is is by the time you reach 100, we want you to have had the most amazing life between now and whenever 100 is. And we want you to have done everything possible you can, whether that's giving money away to charity, to your family, traveling the world,
Speaker: going going on adventures, whatever it is, we want you to have run out of money or to have very little wealth in your own name when you 100 years old.
Speaker: It's an interesting idea. Certainly a very interesting idea. And you've certainly made me think, Dominic. I've got a few years to go now, but it's certainly something worth thinking about.
Speaker: Thank you very much. Really appreciate your time today. It's been great. We must do this again. Good. My pleasure. Thank you. the best. Thank you. I am Michael Millward, the Managing Director of Abusida, and I have been having a conversation with Dominic Baldwin, a wealth planning expert.
Speaker: You can find out more information about both of us by using the links in the description. The Zencaster system has been great today, but if you've experienced problems while whilst listening to this program on your smartphone, you will want to know that 3.0 has the UK's fastest 5G network with unlimited data. So listening on 3.0 means you can wave goodbye to buffering.
Speaker: There is a link in the description that will take you to more information about business and personal telecom solutions from 3.0 and the special offers available when you quote my referral code. I'm sure you will have enjoyed listening to this episode of Rest and Recreation as much as Dominic and I have enjoyed making it.
Speaker: So please give it a like and download it so you can listen anytime, anywhere. To make sure you don't miss out on future episodes, please subscribe. Remember, the aim of all the podcasts produced by Abbasida is not to tell you what to think, but we do hope to have made you think.
Speaker: Until episode 102, thank you for listening and goodbye.
