Episode 5 - Planning for the future with Greg Reid

Cavendish Ware is all about the Planning. But what does that actually mean? In this podcast, Greg Reid reflects on a few experiences and the value of the plan in helping clients live the life they want to lead.

Transcript

Speaker: 0:00

Some people are worried about how much they'll spend in retirement, and believe it or not, some people aren't spending enough in retirement. Either way, it's about the plan and the people behind the plan, as Greg Reed explains to us on this episode of Baseline.

Dave: 0:52

Welcome to today's episode, and we've got Greg Reed. Greg, why don't you introduce yourself and tell us a bit about what you do?

Greg: 0:59

Well, hello, Dave. Thanks for having me. Yes, I'm a director of the firm and a very small shareholder, but I'll now treat it as mine. Don't know if Adrian would agree with that, but uh we can have a later conversation about that. I joined Adrian eventually in 2010. I first met Adrian. We can't quite remember when we did meet, but we think it's late 90s, something like that.

Dave: 1:23

Right.

Greg: 1:24

He was working at a private bank at the time, and he kindly invited me on a golf day and got on rather well and kept in touch ever since. So it's been quite a long process, our friendship, and it is definitely a friendship. He took a very brave pill in 2003 and started Cavendish, went out on his own. And I looked at him thinking, You're mad. I think everybody thought that. Three young kids at the time, and yeah, he's done very well. So he eventually persuaded me to join in 2010. I think it was so I moved from a place where I was pretty unhappy with it's a very large Swiss bank director there, looking after numerous people, but in the wrong way, you know, and I think all of us who've come out of that experience of a large private bank suddenly realize that wow, there's just a better world out there. And there is. Since joining Cavendish, we've tried to build that perfect business, you know, where we really try to help clients on various things, on everything really, through financial planning.

Dave: 2:29

I think today's topic is about financial planning and yeah, getting to the heart of what customers need. So it's sort of interesting that you felt that that wasn't something that some of the larger banks do. I'm keen to understand what opportunity you saw around that and then how you've made that a reality.

Greg: 2:49

Well, yeah, when you look at the history of financial planning, I'm using quotes here, financial planning, because there are there are very different views on it and what it is. If we go back to the 70s and 80s, the financial world was really the man from the crew, the guy that was knocking on the door, and there's always was a man, not many females around in those days in the profession, collecting premiums from literally door-to-door salesmen. But the trust that these guys had was enormous, a really trusted professional. Things have moved on, big bang in the 80s. There was a huge explosion in personal pensions in 87, 88. The range of products that came out on the market were enormous, and it was all about selling. Each insurance company had a huge sales team. I was working for back in the day, Midland Bank, before I went through the transition to HSPC, so that ages me a little bit. But they had a sales team, 1500 people, and each year, the top 10% of that 1500 people went away on a big convention and spent lots of money in places like Switzerland and New York and the Caribbean and you know South Africa. And you could see the enormous wealth that that had generated for the institutions at the expense of the client. Products were hugely expensive when you look back on you know the old pension schemes or the old MIPS, people who remember, you know, maximum investment plans.

Dave: 4:18

Yes, I have a few of them myself.

Greg: 4:20

Oh, the sales teams love those for one reason and one reason only, unfortunately. But what it did do is start to engage people in financial services. People started to take an interest in their futures, but there was nobody to talk to about that. So what has emerged in the marketplace with recent changes in legislation, etc., one of them's disclosure of commission, the other one was disclosure of your status. You know, are you independent or are you tied to a particular product provider? That has deconstructed the sales force, and quite rightly, too. What's left are the big banks, the bank assurers steel, that's absolutely fine, but a huge amount of smaller companies now that are focusing on financial planning. And we work with a number of these may call them competitors, but they're not, they're in the same profession. We're doing the same thing. We're really trying to put clients first. And when Adrian started, that was in the forefront of his mind. You know, we've got to put clients first.

Dave: 5:27

The key point is the industry changed with the emergence of sales forces. So, you know, firmly putting my rose-tinted glasses on and sort of looking back before that, we were in a world where people had a kind of relationship with their financial institution, which was, I guess, largely a manager of some description who knew a lot about them. And then suddenly you had the young lads with their brick phones, yeah. It's sort of got that picture of the yuppies in my head for merging. The industry then spent the next 30 years-ish unraveling itself to the point where it's now unraveled. But there's a massive thing which has sort of happened in the meantime, which is the rise and rise of machines as well.

unknown: 6:10

Yeah.

Dave: 6:10

My observation on the banks themselves is they now hide behind technologies. So, you know, trying to talk to a human being is nigh on impossible.

Greg: 6:20

It's very cheap for them, isn't it?

Dave: 6:21

Yeah, absolutely. I mean, they've managed to get rid of a lot of cost, haven't they? Yes, through digital transformation.

Greg: 6:29

Now, what we're doing is putting that human first, insofar as we really listen to a client when you're having that planning conversation. When you Google what is financial planning, you get 150 pages of stuff. And even our professional body, when you go into their page and says what is financial, they talk about products, they talk about investment strategies and products, and you're just thinking, hang on, it's more than this. It's about sitting down with a client and really finding out what they want to achieve, and not by you know, I want a million pounds to be penchant. Nothing like that. It's what does their retirement look like? You know, if they retired last week, what are they doing? What do they want to do? And it's not about money. In a client's mind, it shouldn't be. It should be can I do this? I want to do that. Well, let's see if we can, let's get you there. And we've got hundreds of examples of this. I won't name her, you know, she's a client, and we were talking last week, and I hope she's listening. She was living in Horsham, not particularly happy with living in Horsham. She's now living in about as far west in Wales as you can go.

Dave: 7:36

Yeah, it's literally the Gower Peninsula.

Greg: 7:38

Yeah, absolutely. And she's got a fantastic lifestyle now. She's keeping bees. Right. That's what she wanted to do. Now, that was one of the first things she said to me. I want to be a beekeeper. And you just think, right, okay. I'm not God, but we've given her the confidence to go and do it. And you won't get that from robo advice.

Dave: 8:00

You can almost imagine, can't you, turning up to a website and saying, Well, what do you want? And I want to keep bees, and that would be the end of the conversation, wouldn't it?

Greg: 8:09

Yeah, exactly. Yeah. Another one is a client a couple of months ago phoned me up and said, Greg, I've discovered I've got an old pension. I didn't realize I had it. It's called a SEC 226. What do I do with it? And the reason for asking that question is he's not really that bothered about that 226. And he didn't wake up thinking about that. He probably woke up thinking, When can I retire? Price of living's going up. I don't like my job. And there's all these fears in his mind. And that hasn't really got anything to do with that bit of paper that he was looking at. So the conversation is, well, let's forget about that for the moment. What do you want to have happen? And it's opening that thought process in the client. And it's so easy. We're in a profession where we love to tell people stuff. It would have been very easy for me to go down the 20-minute diatribe about section 226s and then please don't, please don't. I'm glazing over as you talk. Exactly. And I'm very conscious of that. You know, it's very easy for me to make a client glaze over. What they want is a sense of freedom. That's what that conversation deep down is all about. And we have a tendency to interrupt people, to tell people how clever we are, how much technical knowledge we have. And we shouldn't. We should be listening and asking the right questions to a client of what they want. We can cash flow that and we can get in all very technical service with that, but we can sit down with them and actually provide them with a roadmap.

Dave: 9:40

When we spoke last week, because we did a bit of preparation, didn't we? But you told me about another one of your clients who you described as quite sad. And I've really been thinking about that notion of sad or unhappy, or those real human emotions that I just don't think you can capture unless you're an empathetic human being, you know. So would you mind just telling that story? Because I think that one illustrates the point of having people who understand you, who kind of have your best interests at heart.

Greg: 10:12

Yeah, well, absolutely. Another guy that we've done a lot of work for, we've done a lot of pension preparation for him, a couple of big transfers and all of that stuff. But deep down, he was working for a fund manager in the city, very knowledgeable chap, wasn't a trader, was running their back office, very technical guy. Hated it, absolutely hated it. And I'd been down to their place a couple of times. Delightful wife, lovely lady who works in a care home. That was her vocation, you know, she's just such a warm human being. You just think, oh, when I'm old and decrepit, I'd love somebody like you to be looking after me. You know, she's a lovely lady. But her stress was her husband having to jump on the train every day, come into Gresham Street, just around the back of our office, work there for eight or nine hours and hate every second of it. And he was, you know, he's a stressed man. And she said, look, my fear is that this will be the end of him. What can we do? So start working very hard on their plan, on what they have, really going into the details of their expenditure and down to the fact that she was correcting me on well, we say it costs us £13.50 a month now for the TV license, not £12. Sorry, can you change the master plan? Right. We can get granular, but this is getting a bit deep. Anyway, they could afford their lifestyle that they want on the money that they already have, taking as little risk as possible with that money. So they're basically assured that life can go on without him earning any money. And he retired. Now I went to see them last week, and that he's just a different, different person, absolutely different. He's now a household, beginning to get a little bit bored with that, I must say, but he's looking at other avenues, they're transformed, and you just think, actually, you know, he could have done it, it's not down to to Candishware that this happened, but we helped, we helped hugely. And when you have that conversation with review time, and it's really not about how Lance and his team have done so well with managing the wealth as we are, that's the crucial side of the business. It's how's life? What's happening when you're next going away? It's that conversation, and that's so important. That is so important. And she's given up work, she's now pre-training as an audiologist, I think they're called, you know, next time she's looking in my ear. That's lovely. You know, job satisfaction here is just enormous.

Dave: 12:40

You're right, he could have probably got to that answer on his own, but I think there's something about sometimes we need permission. It sounds really weird, doesn't it? Like giving ourselves permission, but that's quite a difficult thing to do. And actually having an advisor who can kind of almost give you permission and say it'd be all right. I mean, that just helps, doesn't it?

Greg: 13:03

You're absolutely right there, it's I think human nature, you need to be told that you can do it. It's okay, do it. And given that work, you know, he had a good position, he was working for a major fundhouse. Can I really do this? It's that sort of realization, and there's a big transition piece as well, and you can't just stop working. I think that's quite dangerous, but it's managing that process, it's fantastic, it's what we do.

Dave: 13:28

With your experience, do you have a formal planning methodology use, or is it very discursive, or you know, how do you build that bridge with your clients and potential clients?

Greg: 13:43

Well, that's very difficult. It's like if you ask three economists the same question, you'll get seven answers. Everybody that we talk to is different, so it's very difficult to say this is how we do it. When there are certain questions that have to be asked, and what you're trying to do all the time is just get the client to open up, to give a lot away, and it's quite difficult, very difficult actually. And some people don't want to do it, that's absolutely fine, and we'll provide the service that they need, but others it's I think it's Adrian who wants to peel away the onion and keep on peeling, keep on asking. You're boarding into life coaching, and you know, we're not life coaches, we're definitely not, but you stray into that area, you find out a lot about the client, sometimes too much, really. But yeah, it's getting the client to really talk about what they want, and that's really what it's all about. And some of those conversations are brilliant conversations to have, you're just not spending enough. You will die with more money than you've got now. I mean, come on. I mean, great if you've got family and things like that, of course. And if you want to do that, that's perfect, but don't think about can I afford that holiday? Because let's put it into the cash flow and see if you can. Oh, yes, look, you can go on, book it. And it's nudging those clients, you know, have you booked that holiday yet? Because you keep on talking about, you know, going to the door doing or wherever it is, you know, and they're still sitting there not going to the door doing.

Dave: 15:07

It's really interesting. Yeah, a lot of that comes back to that permission. Yeah, it's really fascinating. Can I ask? I mean, this is just out of interest in your experience when people think about their wealth and their money. Is that sort of like viewed with fear and with negative overtones, right? Yeah. When people think about it, it's generally not something people are overjoyed about.

Greg: 15:31

Yeah, there's a lot of responsibility on the client's shoulder now, especially if they're used to having a monthly amount of money land in their bank account, magically land in their bank account from something called an employer, and that stops. That's the fear, isn't it? The principal fear of all of our clients, I would think, is will I ever run out of money? We don't want that. And you know, the flip side of me telling the client to go and spend more is also, well, hang on, hang on, let's put the brakes on a little bit here. You know, there are danger signs here. So we've got to manage that.

Dave: 16:08

You've just given a great example there where people sometimes don't spend the money they've got. When people think about their money and the future, is it in negative terms or positive terms in your experience?

Greg: 16:18

Sometimes the feeling guilt, you know, we've done some big transfers lately where people have got a lot of money now, and it was more than they would have ever thought that they would have. I've had sense with some people, there's guilt. Why have I got all of it? I don't deserve this money, you know. And it's the sense of the times of some big transfers that have gone on. So it's giving them, they've now got the responsibility that they've had all of their salaries paid in one go, and that's got to last them the rest of their life. And they obviously must feel, wow, you know, what happens if what happens if I spend it all and what happens then? It's our job to manage them through that, saying, no, you know, let's look at a plan, let's stick to this plan. We'll fulfill our side of the bargain for you. What you have to do is do exactly what you said you wanted to do, and that's go and buy an Avery and get some bees, that sort of thing, you know.

Dave: 17:13

I think it's really interesting. And you talked briefly about things like the sort of rise of robo advice, and I think we can't get away from the fact that kind of technology is out there, which is starting to give people access to products and services which they may have never had in the way before. I guess it's fair to say that technology is going to be important to Cavendishware, but I think it's as a supporting function.

Greg: 17:38

Yeah, completely. You cannot beat somebody picking up the phone to somebody else or jumping on the Zoom call and just saying everything's all right, or this is what we need to do. It's the arm around the client. That's who we are. And it's very difficult to get that from a machine. But there is a role for that, and we're looking at our own systems at the moment. You know, the more functionality we can get, the more process-driven back office we can get, the better, because it just makes things easier. When you're looking at back office, it's got to be effective, it's got to be functional. But I don't think that that extends towards client contact at all. In fact, it's not client contact.

Dave: 18:18

You mentioned Zoom there. So over the pandemic, I mean, have your clients got used to dealing with Zoom?

Greg: 18:23

They have very much, yeah. Insofar as you know, some of them don't want to come back into the office to see me, which is a bit of a shame. But it does, it makes life much easier. And our client contact has gone up enormously. It's difficult in the first few days. We were thinking, well, you know, major panic with Adrian and I, you know, what's going to happen? You know, it's a disaster. We're a people business and we can't meet people. But it's been embraced hugely. Yeah, very positive for the future. Really positive.

Dave: 18:53

That's fantastic. Well, listen, it's been great to have this chat. Really interesting, that whole human first dynamic. I guess for wealth management companies, it's a massive opportunity, you know, because so many of the larger institutions don't have that sort of human element.

Greg: 19:10

Yeah.

Dave: 19:10

You know, it's fantastic to kind of hear Cavendish Ware embracing it. So thank you so much for joining us.

Greg: 19:16

I mean, it's an enormous subject. We've got to do more podcasts on it.

Dave: 19:20

Completely, completely. But brilliant. That's been a fantastic first introduction to it. I really appreciate you joining me.

Greg: 19:26

Thank you, Dave. Lovely.

Speaker 3: 19:30

Thanks for being a lovely podcast series dedicated to the topic.