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Special Edition - Australia's Top Financial Adviser tells all · The Money Puzzle

0:09
Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm
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Speaker 1: James Kirby. Welcome aboard everybody to a special edition of
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Speaker 1: the show. You may know I've been associated with the
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Speaker 1: Top one hundred and fifty Barons Financial Advisor's List, which
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Speaker 1: is produced by us at The Australian in conjunction with
0:27
Speaker 1: Barons of New York. Well, it's out today and this year,
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Speaker 1: this year we have a new number one financial advisor
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Speaker 1: in Australia which is a big deal. I'll tell you why,
0:38
Speaker 1: because there hasn't been a new number one for five years.
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Speaker 1: And it is Matthew Cassidy of the Partner's Wealth Group
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Speaker 1: and I've got him on the show him, Matthew, how are.
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Speaker 2: You very well? Thank you, James, I'm very good morning.
0:53
Speaker 1: Great to have you on. Matthew has been on the
0:55
Speaker 1: show before, folks, so it's good to have him as regular.
0:57
Speaker 1: Best we know him on the show and he is
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Speaker 1: obviously both a top advisor but very good on the
1:04
Speaker 1: big picture as well.
1:05
Speaker 2: Matthew.
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Speaker 1: I mean, I just did a lot of work this
1:08
Speaker 1: time of the year on the whole advisory scene and
1:13
Speaker 1: a couple of things I wanted to ask you, but
1:15
Speaker 1: just quickly, just for the listeners, and you know, if
1:17
Speaker 1: you're not across this stuff, you know, financial advisors basically
1:20
Speaker 1: there was fifteen thousand of them left in Australia. There
1:22
Speaker 1: was about thirty ten years ago or so. That's the
1:26
Speaker 1: first sort of big piece of news. The second major
1:31
Speaker 1: change in the industry is apart from the fact that
1:35
Speaker 1: they've become very expensive and even an ordinary every day
1:39
Speaker 1: around the corner suburban advisor will cost you maybe three
1:42
Speaker 1: and a half thousand dollars a year. But apart from that,
1:46
Speaker 1: there's also been something of a split where people like
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Speaker 1: Matthew at his partner's wealth group and other groups they have,
1:54
Speaker 1: they're very much sort of sailed off into a sort
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Speaker 1: of a league of their own. And then there is
2:01
Speaker 1: a gap, I suppose for in the market, and that's
2:03
Speaker 1: something that I would probably talk about. But Matthew, so
2:06
Speaker 1: think the first things first, you know, I want to
2:09
Speaker 1: ask you, what can people reasonably expect from an advisor?
2:15
Speaker 1: And I'm thinking about top advisors, not just you, but
2:18
Speaker 1: that's that whole sort of corehort that's on the group.
2:21
Speaker 1: What do you do that's above and beyond what might
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Speaker 1: be reasonably expected. How come people like you wrapped up
2:30
Speaker 1: to the top of this list.
2:33
Speaker 3: So having a financial advisor is a dedicated financial professional.
2:38
Speaker 3: I was seeing all components of your financial wellbeing for
2:41
Speaker 3: yourself and your family. I think that also gives consideration
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Speaker 3: to your other broader business interests over the last you know,
2:50
Speaker 3: I've been in this industry for twenty five years, and
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Speaker 3: the industry today to what it was when I first entered,
2:56
Speaker 3: looks materially different, and the service offering that we have
2:59
Speaker 3: is also materially different. The Australia, in terms of its
3:04
Speaker 3: tax regime for accumulating wealth is complex on a world scale.
3:09
Speaker 3: Last week I was in Singapore speaking with some wealth
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Speaker 3: management firms, and certainly in the US as well, it is.
3:14
Speaker 2: Not as complex as it is in Australia.
3:15
Speaker 3: And the questions that we think about when we sit
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Speaker 3: down with clients is not simply what do we do
3:22
Speaker 3: to invest your capital? But it gives consideration to components
3:25
Speaker 3: like tax structural advice. We work alongside fifty plus accounting firms.
3:31
Speaker 3: We try to ensure we incorporate the tax structural side
3:34
Speaker 3: into what we do with our accounting partners. Retirement planning, investment,
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Speaker 3: advice including private markets, insurance advice, legal services including a
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Speaker 3: state planning, lending, family office and subfamily office. So to me,
3:48
Speaker 3: what a top advisor will do is collaborate amongst our
3:53
Speaker 3: broader team of professionals within the business that all have
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Speaker 3: certain areas of expertise, and together they're much stronger. And
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Speaker 3: we've got to catch cry within our business Strugma together.
4:01
Speaker 3: And the twenty three year journey of being an advisor
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Speaker 3: as well has certainly or twenty three years within partner's
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Speaker 3: wealth group has certainly taught me a lot. And I'll
4:09
Speaker 3: probably share this term with you before you know, success
4:12
Speaker 3: leaves clues over a long period of time, and I
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Speaker 3: think if you can learn off.
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Speaker 1: Those, yes, tell me about this complexity on an international
4:19
Speaker 1: scared does it hamper does it hamper wealth ACU relation?
4:23
Speaker 1: Does it hold people back across the board that we
4:26
Speaker 1: have such an enormously complex system, particularly obviously in relation
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Speaker 1: to super I.
4:31
Speaker 3: Think at times when people are very busy running their families,
4:34
Speaker 3: running their life, running a business, to then have some
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Speaker 3: dedicated time to focus on their wealth plan.
4:41
Speaker 2: When it is complex, I think create some friction.
4:44
Speaker 3: So we encourage people to engage with an advisor to
4:48
Speaker 3: try to understand where they are, where they're getting to,
4:51
Speaker 3: and what are some strategies to actually help them improve
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Speaker 3: their situation. And I think the encouraging part of what
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Speaker 3: we do every day is to really give clients sights
5:00
Speaker 3: and their families clarity about where they sit, where they
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Speaker 3: can head to, and help unbundle some of the complexity
5:06
Speaker 3: with the tax structures, because you know, you don't need
5:10
Speaker 3: the friction with this.
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Speaker 2: You need a clear path.
5:12
Speaker 3: And we all know that when you've got less friction
5:14
Speaker 3: in your own mind about where you're heading, it does
5:16
Speaker 3: give you the opportunity to focus on what you do best,
5:18
Speaker 3: which is running your family, running your career, and being
5:20
Speaker 3: successful in your own right, which is one thing we're
5:22
Speaker 3: extremely passionate about.
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Speaker 1: So I'm guessing when you were listing there what you do.
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Speaker 1: I'm assuming what you're telling me is that you do
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Speaker 1: a lot more. I mean you charge more, but you
5:34
Speaker 1: do a lot more. So at your level, it's not
5:37
Speaker 1: quarterly call. It's quite a thorough and it can run
5:42
Speaker 1: right across I presume it runs across every aspect of life,
5:45
Speaker 1: from a financial life, I mean from property to wills estates,
5:50
Speaker 1: but active management shares the balance of your portfolio.
5:54
Speaker 2: How deep does it go?
5:55
Speaker 1: Do you like to suggest schools to people?
5:59
Speaker 2: It is real broad.
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Speaker 3: I think you know, while your role and your engagement
6:03
Speaker 3: is often around their financial affairs, if you're fully invested
6:05
Speaker 3: in the relationship, you really use your contacts to solve
6:08
Speaker 3: any issues you've got within within a family situation. And
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Speaker 3: in this last year, I've referred people to medical professionals
6:14
Speaker 3: for surgery because they've had ailments. I've dealt with getting
6:18
Speaker 3: psychologists involved for family issues. We've dealt with trying to
6:22
Speaker 3: help younger members of their family in financial literacy. And
6:26
Speaker 3: you know it's helping clients with travel agents, it could
6:30
Speaker 3: be involved buying property, attending options for them.
6:33
Speaker 2: I think if you're you know when we always.
6:35
Speaker 3: Say that we're all in on a client scenario, and
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Speaker 3: I think if you're all in and you understand there
6:40
Speaker 3: and you use your expertise to benefit the family, I
6:42
Speaker 3: think that can be incredibly powerful. So it's like you
6:44
Speaker 3: paid to do role A, but it so often roll
6:47
Speaker 3: BC and do the clients really value And I think
6:49
Speaker 3: if you can show that you're all in a relationship,
6:51
Speaker 3: you do become an extended part of the family to
6:53
Speaker 3: help them navigate and enjoy life. And I think a
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Speaker 3: key part of wealth is getting to the stage directs
6:59
Speaker 3: you can enjoy your life and not be bogged down
7:01
Speaker 3: by the complexity. And I think that's a nice challenge
7:04
Speaker 3: for everyone to get to to ensure that when they're
7:06
Speaker 3: overseas or they're enjoying their their prosperity, that they're not
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Speaker 3: concerned about the things and they can leave the worry
7:11
Speaker 3: to some other parties that they trust to do that.
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Speaker 1: What about the limits of what you do that I
7:15
Speaker 1: presume there's a point of which you hit a limit.
7:17
Speaker 1: You're talking about families for instance. I mean if a
7:20
Speaker 1: brother and sister simply hate each other and they get
7:23
Speaker 1: on over nothing and their fate all the time, and
7:26
Speaker 1: they're sitting around the table talking about what they're going
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Speaker 1: to invest in, it must be difficult.
7:31
Speaker 3: Well, there's always some challenges and some difficulties, and that's
7:34
Speaker 3: obviously not pleasant when you say those playing out.
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Speaker 2: I think the key thing is you also need to stay.
7:40
Speaker 3: In your lane regarding what you do well, but also
7:42
Speaker 3: refer out to other areas of advice that you believe
7:45
Speaker 3: other experts have got capability. In an example of that
7:49
Speaker 3: is a state planning where you know, taking care of
7:52
Speaker 3: intergenerational wealth and thinking about issues more broadly for the
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Speaker 3: family is a really specialized area. It goes beyond having
8:00
Speaker 3: powers of attorney and a state plan in place. It's
8:03
Speaker 3: thinking about the complexity of families. It could be thinking
8:05
Speaker 3: about God forbid of anything happens to the mum and dad,
8:09
Speaker 3: who's going to take care of the kids into the future.
8:11
Speaker 3: Are they going to stay in the family home or
8:12
Speaker 3: are they not? How do we think about education for them?
8:14
Speaker 3: And so I think therese highly specialized areas. You need
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Speaker 3: to have strong relationships, have you within partner's wealth group
8:21
Speaker 3: as we really have that capability inside the firm again
8:25
Speaker 3: twenty three plus years to do that. But the ability
8:27
Speaker 3: for people to come into our firm and have that
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Speaker 3: professional a plug and play into the advised conversation we
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Speaker 3: find incredibly powerful. And particularly with the more complex families
8:36
Speaker 3: that we have that have broader needs, the ability to
8:39
Speaker 3: come in here and have one conversation and then they
8:41
Speaker 3: have their key advisor to organize those various engagements I
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Speaker 3: think is incredibly powerful.
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Speaker 1: There are many more I mean literally, there are more
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Speaker 1: people in Australia every year. But more to the point,
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Speaker 1: there is also as you mentioned, intergeneration with there is
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Speaker 1: an enormous chance fare of wealth due to happen. I mean,
9:02
Speaker 1: it always happens, but there is this particular occasion due
9:05
Speaker 1: to the useful sort of per capita high levels of
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Speaker 1: per capita wealth in Australia and lucrative and market a
9:13
Speaker 1: really big attractive market for financial advice out there with
9:18
Speaker 1: lots of demand. But the industry that you're in has
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Speaker 1: actually shrunk. It's going nowhere in terms of its number
9:26
Speaker 1: of people who are in it. If you do recruits
9:29
Speaker 1: very few passages through into it. Did you expect that
9:32
Speaker 1: to happen? And do you think there is anything that
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Speaker 1: could change that.
9:38
Speaker 3: I think there's been a huge change over the last
9:40
Speaker 3: seven or eight years with the professionalism within the industry,
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Speaker 3: and I think that is fantastic. You know, from the
9:45
Speaker 3: industry I entered twenty five years ago to what it
9:47
Speaker 3: is like, it's chalk and chose, and I think they added,
9:51
Speaker 3: you know, the added professionalism and the added legislative overside
9:54
Speaker 3: of the industry I think is just essential. Statistic I
9:57
Speaker 3: recently heard is that the Australians superannuation system is now
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Speaker 3: four trillion dollars, it's growing to ten trillion dollars by
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Speaker 3: twenty forty and the current size of the superannuation market
10:06
Speaker 3: is above the israil banking system. Yet the regulation still
10:11
Speaker 3: has some catch up to do, so you know, safeguard
10:13
Speaker 3: to Purple's well being, I think is really important. But
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Speaker 3: I think the important thing for wealth management professionals simply
10:19
Speaker 3: running businesses is to reinvest in the talent within the
10:22
Speaker 3: business and do things like a professional year to make
10:24
Speaker 3: sure that you can give guidance to younger people in
10:27
Speaker 3: the industry, give them a career. And I think the
10:30
Speaker 3: forward looking firms are making big investments into those areas
10:33
Speaker 3: to really develop the talent and really have that talent
10:37
Speaker 3: emerging over the coming years into being financial professionals. I
10:40
Speaker 3: guess the challenge is the cost of advice is also
10:44
Speaker 3: materially increased, and I saw your article this morning in
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Speaker 3: the newspaper about AI and impact that's making as well.
10:50
Speaker 3: And I think what advisors love is being in front
10:54
Speaker 3: of clients, but clearly there's been an increase in the
10:56
Speaker 3: cost of advice and some of the regulations. So I
10:58
Speaker 3: think we're all working through the ability to do what
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Speaker 3: we do best, which is sit in front of clients
11:02
Speaker 3: and solve problems for them.
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Speaker 1: So the thing is that the numbers have changed. Right,
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Speaker 1: It's literally quite difficult to get into an advisor now, right,
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Speaker 1: and I presume by definition it's more difficult to get
11:15
Speaker 1: into a good one. And you were saying like you're
11:18
Speaker 1: basically thaking less is more, and I'm sure that was
11:20
Speaker 1: true to a point, right. So there was a lot
11:22
Speaker 1: of there was a lot of bad operators in financial advice.
11:26
Speaker 1: There's a lot of people who were de fact or
11:27
Speaker 1: salespeople who were posing virtually as advisors and so shrunk
11:31
Speaker 1: very severely. No profession has been cut in half like
11:34
Speaker 1: we've seen, but it needs to grow now. I would think,
11:37
Speaker 1: is there anything that can happen that would make it
11:38
Speaker 1: more accessible to more people?
11:41
Speaker 3: You know, the concept of robo advice, you know, I
11:44
Speaker 3: think it hasn't had a lot of traction in Australia
11:47
Speaker 3: to day. It's been I think it's been extremely complex
11:49
Speaker 3: for any business to scale robo advice. I've seen last
11:53
Speaker 3: week in Singapore, I saw a really smart operation. There
11:56
Speaker 3: was a firm about five years ago I saw in
11:58
Speaker 3: the US doing this really effectively. I'm just not quite
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Speaker 3: sure the technology has been available to scale robo advice
12:04
Speaker 3: within Australia. But you know, financial educational literacy I think
12:08
Speaker 3: is an absolute key, a key part of us financial
12:11
Speaker 3: professionals need to do. And having some understanding an earlier
12:14
Speaker 3: stage about how you navigate this area, how you make
12:17
Speaker 3: us start in a really secure way, I think is important.
12:19
Speaker 3: So I think that robo advice and digital advice at
12:22
Speaker 3: the introductory level will emerge. I think it's necessary because
12:26
Speaker 3: you know, the cost of engaging with advice has increased
12:29
Speaker 3: probably thirty percent over the last two or three years,
12:31
Speaker 3: and therefore, you know, businesses are needing to charge increased
12:34
Speaker 3: prices to navigate those increased costs.
12:37
Speaker 1: One last question before we go to the break, and
12:38
Speaker 1: then we will move on to what I know people
12:40
Speaker 1: will really enjoy, which is basically the having you having
12:44
Speaker 1: access to you through the show. You talked about financial literacy.
12:47
Speaker 1: It is really important. In the UK they've just introduced
12:51
Speaker 1: compulsory financial literacy in schools. In New Zealand they've introduced
12:56
Speaker 1: it to the core curriculum. In Australia, we have actually
12:59
Speaker 1: fallen behind on all we see D scores. We were
13:02
Speaker 1: higher a few years ago. Do you think it should
13:04
Speaker 1: be in the school system.
13:07
Speaker 2: I would strongly encourage that.
13:09
Speaker 3: You know, the average person starts work, they start earning
13:13
Speaker 3: an income, and you know that they start thinking about
13:16
Speaker 3: what do I do?
13:17
Speaker 2: You know, how do I navigate this? How do I
13:18
Speaker 2: get ahead?
13:19
Speaker 3: And you know, one of the one of the big
13:21
Speaker 3: themes that's still a major issue in the capital cities
13:23
Speaker 3: around Australia is the multiple of annual income to a
13:26
Speaker 3: quiet property within twenty of the major cities. You know,
13:30
Speaker 3: that is a major problem that unless you've got the
13:32
Speaker 3: Bank of Mamma data assisting you with that. You listen
13:35
Speaker 3: to one of your great podcasts on that issue, is
13:37
Speaker 3: that it's really challenging. So how do you actually get
13:40
Speaker 3: ahead and how do you start making some positive impacts
13:43
Speaker 3: on that? And we do know that I think Warren
13:45
Speaker 3: Buffett calls it the eighth wonder of the world, that
13:47
Speaker 3: the power of compound interest over time really helps you
13:50
Speaker 3: to navigate that. So the earlier start, the better, and
13:52
Speaker 3: I think getting into the market and getting investing in
13:55
Speaker 3: an early age is the key to that.
13:57
Speaker 1: Okay, I suppose parts of horn Bullets compounding is that
14:00
Speaker 1: he lives so long so live a long time is
14:03
Speaker 1: very good too, isn't it? Which you find not the
14:06
Speaker 1: advisors by the way, folks, but you look at the
14:08
Speaker 1: rich list and the average age. Let me tell you
14:11
Speaker 1: that comes that living a long time is a key
14:13
Speaker 1: part of it. Okay, we are going to talk to
14:15
Speaker 1: Matthew about what's going on in investing in a moment.
14:19
Speaker 1: Back in a second. Hello, and welcome back to the
14:30
Speaker 1: Australian's Money Puzzle podcast. I'm James Kirby and I'm talking
14:33
Speaker 1: to Matthew Cassidy, the newly crowned top advisor in Australia,
14:38
Speaker 1: number one on the one hundred and fifty Baron's Top
14:41
Speaker 1: one fifty list of the Partner's Wealth group and you
14:44
Speaker 1: and your colleague Robert Hand there at number five. And
14:49
Speaker 1: to see the group being so well represented. Now as
14:54
Speaker 1: I speak, I want to I don't want to get
14:57
Speaker 1: too into the thickets too quickly, but but many people
15:01
Speaker 1: believe we're at the upper end of I think very
15:04
Speaker 1: broadly now in terms of how investing has changed and
15:07
Speaker 1: how people approach investing. Passive investing and dtfs have become
15:12
Speaker 1: really big of recent times, and a lot of people
15:15
Speaker 1: have been very comfortable and had met good money in
15:19
Speaker 1: recent years because the markets have been so good, and
15:22
Speaker 1: to some extent that means I won't say you don't
15:24
Speaker 1: need a financial advisor, but you could do quite well
15:27
Speaker 1: with no advice in recent times because in the bull market,
15:30
Speaker 1: you know, all mistakes are concealed and everybody does okay. Now,
15:35
Speaker 1: in a separate role, I'm on an investment committee and
15:38
Speaker 1: we had a presentation from a highly ranked investment manager
15:42
Speaker 1: of which you would sit through many, I'm sure, but
15:45
Speaker 1: their point was that this is the top of a bullmarket.
15:48
Speaker 1: We don't know when it ends, but from here we
15:51
Speaker 1: may have a much tougher, more volatile, more challenging market ahead. Similarly,
15:58
Speaker 1: Raphael ant Of aren't of the Future Fund surprised? I
16:02
Speaker 1: think many people this week talking about how the Future
16:05
Speaker 1: Fund is expecting more volativity, how the Future Fund is
16:08
Speaker 1: actually moving away from passive income to some extent and
16:11
Speaker 1: going back into active and going into gold. On top
16:14
Speaker 1: of all that, where do you think the passive investment?
16:17
Speaker 1: What do you think of that whole contention I've put
16:19
Speaker 1: in front of you, that ETFs and passive income allows
16:22
Speaker 1: people to operate without advice.
16:27
Speaker 2: You know, passive versus active.
16:29
Speaker 3: I think when we give consideration to what your game plan,
16:32
Speaker 3: your strategy is, it's got to come down ultimately to
16:36
Speaker 3: your strategy, your time frame for investing. And I think
16:39
Speaker 3: this is where an individual advisor or an advisor can
16:42
Speaker 3: assist with the family we're referring to sort of Warren Buffert,
16:45
Speaker 3: Berkshire Hathaway. I've been across there on three occasions more
16:48
Speaker 3: than the team think twenty to thirty years ahead on
16:50
Speaker 3: some strategies. So if you think about are you going
16:52
Speaker 3: to try to time the market over a short period
16:55
Speaker 3: of time if you have a superannuation fund and you've
16:57
Speaker 3: got twenty years to accumulate capital, I think it comes
17:01
Speaker 3: down to you down to ultimately to risk management. Clearly,
17:03
Speaker 3: we've had a very good run in markets, and being
17:06
Speaker 3: in an index fund that's done very well has obviously
17:09
Speaker 3: been fantastic from a return perspective, But what now and
17:12
Speaker 3: where are the risks emerging? And how do you ensure
17:14
Speaker 3: that you're not deploying capital at the wrong time in
17:16
Speaker 3: the market.
17:17
Speaker 2: And when you think about.
17:19
Speaker 3: You know, the twenty five years I've been in this industry,
17:20
Speaker 3: the biggest risks actually come from deploying money into a
17:24
Speaker 3: market at the wrong time, whether it be you know,
17:27
Speaker 3: two thousand and one September eleven, whether it be two
17:30
Speaker 3: thousand and seven before the GFC, you know, pre COVID,
17:33
Speaker 3: we had a you know, I think it was a
17:34
Speaker 3: twelve year run of thirteen plus percent returns in the
17:38
Speaker 3: S and P five hundred. So clearly valuations were stretched,
17:41
Speaker 3: and when you're deploying capital, you actually need to think
17:43
Speaker 3: about it is the time on deploying capital appropriate? And
17:47
Speaker 3: I think what a future fund Another other investors are
17:51
Speaker 3: saying at the moment is now is the time to
17:52
Speaker 3: show some caution. At a point in time where you've
17:54
Speaker 3: had well above market for a couple of years in
17:56
Speaker 3: a row performance of markets, you do need to give
17:58
Speaker 3: consideration to risk manager gold. Gold over this last period
18:03
Speaker 3: of time appears to be ultimately a head against the
18:07
Speaker 3: US dollar weakness, and I think gold in its essence,
18:10
Speaker 3: by owning an et if you're not really getting an
18:12
Speaker 3: income and return off gold, you do if you're potentially
18:14
Speaker 3: with a gold producer listed on the market, but by
18:17
Speaker 3: owning ultimately you don't, so you want to make sure
18:18
Speaker 3: you're getting the.
18:19
Speaker 2: Growth on it.
18:19
Speaker 3: So I think it comes down to ultimately, what is
18:22
Speaker 3: your long term strategy. One of the things that we
18:27
Speaker 3: think about that's really important pre retirement is what is
18:31
Speaker 3: your risk of a major market movement in the two
18:34
Speaker 3: years prior to retirement? And having gone through the GFC,
18:37
Speaker 3: it teaches you a lot of things, and your biggest
18:40
Speaker 3: risk prior to retirement if you're two to three years out,
18:43
Speaker 3: is actually having a ten to fifteen or twenty percent
18:45
Speaker 3: reduction in asset values and you actually need to sell
18:49
Speaker 3: those growth assets to fund in your retirement income. And
18:51
Speaker 3: so what planning ahead of that with clear strategies and
18:55
Speaker 3: risk management is essential to safeguard your retirement. I think
18:58
Speaker 3: that the planning around those things which some people don't
19:00
Speaker 3: not for consider it, I think comes down to that
19:02
Speaker 3: decision about are you passive, are you active?
19:05
Speaker 2: Where's your time frame?
19:07
Speaker 1: Can you can you just give us some clues as
19:10
Speaker 1: to what you would see if I said to you,
19:12
Speaker 1: I have two years ago and I'm worried about the crash.
19:15
Speaker 1: I've done greation shares, and my allocation to shares has
19:18
Speaker 1: swelled inadvertently because I've done so well, and now I'm
19:22
Speaker 1: facing sequential risk because I see it is very clear
19:26
Speaker 1: that we're at the very top of a market. Where
19:29
Speaker 1: would you begin the conversation. Would it be just what's
19:32
Speaker 1: the nature of the other investments that should be considered.
19:36
Speaker 3: So some let's say you've got your retirement income is
19:39
Speaker 3: someone wants to be around six percent of your total
19:42
Speaker 3: investment capital. So if you want to safeguard and you
19:46
Speaker 3: study the impact and the probability of risk over a
19:48
Speaker 3: five year period, if you can safeguard two years of income.
19:51
Speaker 3: So having liquidity in assets apparently around fixed interest for
19:55
Speaker 3: two years prior to the period of retirement means that
19:59
Speaker 3: if there was a major market movement on the growth
20:01
Speaker 3: asset you've got allocated to, then you can actually safeguard
20:04
Speaker 3: your time and income by that being available. This absolutely
20:07
Speaker 3: certainty that if there is volatility in growth asset it's
20:10
Speaker 3: been Australian chairs in sessional chairs, property, infrastructure, private equity otherwise,
20:14
Speaker 3: then it ensures that you're not needing to sell at
20:17
Speaker 3: a point in weakness. And I think that's a really
20:19
Speaker 3: important safeguard.
20:20
Speaker 1: Yes, okay, that's a pretty traditional view, isn't it. The
20:24
Speaker 1: two year I haven't to expressed this two years, but
20:28
Speaker 1: two years utterly liquid basically two years where there's a
20:33
Speaker 1: cash pile that you have that sits alone, that is
20:36
Speaker 1: no risk, and you should you wake up in the
20:41
Speaker 1: morning and watch you just followed by twenty five percent.
20:44
Speaker 1: You don't have to panic, you don't have to sell
20:46
Speaker 1: anything you don't want to sell. That's very interesting and
20:49
Speaker 1: it's very apt. I would imagine at this particular time,
20:53
Speaker 1: I just wanted to ask you one or two other
20:55
Speaker 1: quick things. There's been a fashion I say, a fashion
20:59
Speaker 1: to unlisted assets and private credit and private equity, which
21:06
Speaker 1: was restricted if you like to sophisticate it. I won't
21:10
Speaker 1: say sophisticated. That's a classification sophisticated to wealthy and institutional investors.
21:15
Speaker 1: In the last year or two it has become mainstream.
21:18
Speaker 1: It has been pushed actually to some degree at retail
21:20
Speaker 1: investors mums and dads who don't know anything about this
21:23
Speaker 1: area and have no experience in it. And one of
21:26
Speaker 1: the things that they may not be aware of is
21:28
Speaker 1: how illiquid this can be. If there is a crisis
21:31
Speaker 1: of some sort or just an old fashioned, you know,
21:34
Speaker 1: hard correction on the market, some of these funds will freeze,
21:38
Speaker 1: and some of them will partially freeze. Can you tell
21:40
Speaker 1: me whether you on the single question of whether the
21:44
Speaker 1: retail investor is a suitable client for unlisted assets. Do
21:48
Speaker 1: you think they are?
21:50
Speaker 3: I think, you know, when we you know, going through
21:53
Speaker 3: the JFSA, there were clients that I think were saved
21:57
Speaker 3: some unfortunate advice thinking that, you know, private credit or
22:00
Speaker 3: fixed interest assets were liquid and then two years down
22:03
Speaker 3: the path found that due to redemptions, people wanting to
22:06
Speaker 3: pull money seeing risk and seeing what might have been
22:09
Speaker 3: a dollar unit price trading at eighty cents, thinking that
22:11
Speaker 3: was actually liquidity. Answer is it's not so. Private credit
22:16
Speaker 3: really is a broad sector. Obviously, with the changes in
22:20
Speaker 3: terms of the banking system post the GFC, there was
22:23
Speaker 3: some broad changes in terms of what the banks were
22:25
Speaker 3: willing to actually cond and it was really the emergence
22:28
Speaker 3: of private credit. And I think given some of the
22:30
Speaker 3: returns that people have seen, there's been an attraction to it.
22:33
Speaker 2: But it is it really is a broad sector.
22:36
Speaker 3: It's a wide spectrum of strategies and what you often
22:39
Speaker 3: look at and what it actually is can actually be
22:41
Speaker 3: really different. And therefore receiving advice from people that really
22:45
Speaker 3: understand this I think is essential, and just looking at
22:48
Speaker 3: an asset and Saints. That's a great return. I think
22:50
Speaker 3: is really dangerous. I think the recent review, I think
22:55
Speaker 3: was a really important step to also step up the
22:58
Speaker 3: oversight of this particular sect, because, as you're comment, it
23:01
Speaker 3: is a swelling area of capital and one that it's
23:04
Speaker 3: due diligence and regulation on.
23:06
Speaker 1: Okay, So it seems to me, Matthew, what you're saying
23:09
Speaker 1: is it's okay if you're advised, and it's okay, it's
23:14
Speaker 1: okay if you are expertly guided through the forest, as
23:17
Speaker 1: opposed to just wandering in and saying, oh, look at
23:19
Speaker 1: that eleven percent. Yeah, yeah, okay, very interesting. Okay, Now
23:24
Speaker 1: we're going to take a short break and we're going
23:25
Speaker 1: to talk to Matthew about the investment markets. Just I
23:29
Speaker 1: think very keen to see what he says. I'm speaking
23:32
Speaker 1: to him on the morning that Nvidia, which represented nine
23:35
Speaker 1: percent of all Wall Street trade yesterday, has released its
23:40
Speaker 1: results it being the most important stock in the world
23:43
Speaker 1: beyond the doubt.
23:44
Speaker 2: Just now, all right, talk to.
23:45
Speaker 1: You in a moment. Hello, Welcome back to the Australians
23:56
Speaker 1: Money Puzzle podcast. James Kirby talking to Matthew Cassy, Partner's
24:00
Speaker 1: Wealth Group Number one advisor in Australia at the top
24:03
Speaker 1: one hundred and fifty advisors as of today November the
24:07
Speaker 1: twentieth to twenty five. Okay, Matthew, we're talking about the
24:11
Speaker 1: markets and shares. Tell me what you think of this.
24:15
Speaker 1: I'm just looking at a video of codes coming in
24:18
Speaker 1: about a video I've been asked to speak about it
24:20
Speaker 1: here and there on radio.
24:21
Speaker 2: Et cetera.
24:22
Speaker 1: One stock, one stock went from a trillion to three
24:28
Speaker 1: trillion in the blink of an eye, something close to
24:31
Speaker 1: the entire value of the Australian Superannuation System. Okay, so
24:35
Speaker 1: it came out with its results. Hey, the results were good.
24:38
Speaker 1: Yet again, they were higher than expected. Yet again, So
24:41
Speaker 1: we find that this one stock pulls a sector, which
24:44
Speaker 1: is AI, which pulls Wall Street, which pulls sixty four
24:46
Speaker 1: percent of the entire world market with it. How do
24:50
Speaker 1: you view this market? Is it a convincing Are these
24:53
Speaker 1: earnings enough to drive the sorel of excitement we have
24:56
Speaker 1: just now in Wall Street?
25:01
Speaker 3: I mean the last you know, last two years, two
25:04
Speaker 3: hundred and seventy percent return, you know, the market cap
25:07
Speaker 3: four point five trillion dollars at the moment, it is
25:09
Speaker 3: an absolute powerhouse.
25:10
Speaker 2: Effectively powering the future of AI.
25:13
Speaker 3: And I think you know this, we are absolutely on
25:16
Speaker 3: the start of this AI journey. I think that the
25:18
Speaker 3: thing that you need to be careful of with this is,
25:22
Speaker 3: you know, when we're sitting here in two thousand and
25:25
Speaker 3: one thinking that dot com was taking off, then you know,
25:28
Speaker 3: it's not a license to print money in this particular area.
25:30
Speaker 3: You know, you need to pick the right assets, the
25:32
Speaker 3: right sector. But without doubt, this AI theme is going
25:35
Speaker 3: to continue to accelerate. And in VideA is absolutely the
25:38
Speaker 3: pinnacle stock actually with that, and so you know, the
25:41
Speaker 3: further the further growth of this is absolutely going to accelerate.
25:45
Speaker 2: I think.
25:45
Speaker 3: I think the thing is, particularly after such a strong run,
25:49
Speaker 3: you know, where does your allocation the assets sit. You know,
25:51
Speaker 3: it would appear that this trend will continue. Will we
25:54
Speaker 3: have some a market correction moving forward? Obviously on a
25:57
Speaker 3: valuation basis, there's some risk of that, but it's going
26:00
Speaker 3: to be hard to suggest that's not the continuous run.
26:03
Speaker 2: Where do competitors come into this into the future.
26:05
Speaker 3: Are they going to maintain their current market share? Is
26:08
Speaker 3: a new theme of buying some of the services they
26:11
Speaker 3: provide get overtaken by someone else. I mean, therese are
26:13
Speaker 3: all risks when you look at a stop that you
26:15
Speaker 3: need to consider, and again, look at your portfolio, think
26:18
Speaker 3: about your allocation, and if you've had a really good
26:20
Speaker 3: run on at trim it. Because everything plans out the
26:22
Speaker 3: way you think it is into the future and your
26:24
Speaker 3: wealth is a steady accumulation is an important thing thing
26:29
Speaker 3: as opposed to big shocks with over allocation in a
26:32
Speaker 3: particular sector.
26:34
Speaker 1: So when you said trim it, be willing to sell
26:37
Speaker 1: your winners or at least offload tea profits regularly. Is
26:41
Speaker 1: that as something you would suggest.
26:45
Speaker 3: I remember twenty odd years ago there was a client
26:48
Speaker 3: with a mining stock and this wasn't an overly wealthy family,
26:52
Speaker 3: and they had a stop which went from twenty cents
26:54
Speaker 3: to five dollars, and we really strongly encourage them to
26:57
Speaker 3: trim their five million dollars allocation. And that five million
27:00
Speaker 3: was out of a total portfolio of five and a
27:02
Speaker 3: half and our advice that didn't proceed with that, in
27:05
Speaker 3: the stop managed to go down to twenty cents.
27:07
Speaker 2: And they lost a lot of that.
27:08
Speaker 3: I think these things just leave a bit of a
27:11
Speaker 3: something with you over a long period of time, And
27:14
Speaker 3: again you know, from a risk management perspective, you know
27:16
Speaker 3: everyone is going to have an allocation when VideA in
27:18
Speaker 3: their international portfolio.
27:19
Speaker 2: It's at such a large part of the index.
27:20
Speaker 3: But when some of these stocks become above five percent,
27:24
Speaker 3: ten or twenty or thirty percent, it does create risk
27:27
Speaker 3: that if your timing's not right on it, then it
27:30
Speaker 3: does create risk for you. And the safeguarding your cap
27:33
Speaker 3: over a long period of time, I think is the
27:34
Speaker 3: key to accumulating wealth and not making large mistakes. So
27:38
Speaker 3: I think that's an amazing business. I think it's going
27:39
Speaker 3: to continue on a really positive run. It's absolutely got
27:43
Speaker 3: the best business to oversee the future of AI. But
27:45
Speaker 3: tonight everything also runs in a uniform and uniform manner
27:48
Speaker 3: moving forward.
27:50
Speaker 1: Yes, a hell of a story, Matthew. The goals meaning
27:53
Speaker 1: reminds me, and you're thinking about mistakes reminds me of
27:56
Speaker 1: Just to finish off the buffet, leaned about the number
27:58
Speaker 1: one rule of investing is don't lose money, and the
28:01
Speaker 1: second rule is don't forget the first rule. Sounds like
28:04
Speaker 1: that seems to be pretty close to your heart. Okay, hey,
28:07
Speaker 1: look very good to have you on the show this morning,
28:10
Speaker 1: and congratulations I know you for a long time, and
28:12
Speaker 1: I know you're on the list for a long time.
28:14
Speaker 1: And it's nice to see someone someone new and fresh
28:17
Speaker 1: coming on to and someone who's willing to talk about
28:20
Speaker 1: all aspects of investors for everyone. I really do and
28:22
Speaker 1: our listeners appreciate that. Okay, Matthew Cassidy, thanks very much,
28:27
Speaker 1: we'll talk again. Much sent Matthew Cassidy there of the
28:31
Speaker 1: Partner's Wealth Group. Okay, any questions, Let's have some correspondence
28:35
Speaker 1: the Money Puzzle at the Australian dot com dot au.
28:38
Speaker 1: Talk to you soon.