Unbeknown to many of her clients, Louise Lakomy, principal of investment advice with Yellow Brick Road, leads a double life.
Lakomy often swaps her investment charts for medical charts and does the odd night shift at Sydney’s Royal Prince Alfred Hospital in the intensive care (IC) unit. And, strangely enough, she has found that the qualities that make her a good nurse on the ward are equally as useful as a professional planner.
“Whether you’re dealing with an individual’s physical, financial or emotional wellbeing, the ability to get them to open up is critical to helping deliver the right outcomes,” Lakomy says. “This invariably comes down to exceptional people skills.”
Stethoscopes and balance sheets may make for strange bedfellows, but it was Lakomy’s stint as an assistant IC unit manager – while the boss was away – that spurred her interest in the world of finance.
She had a head start, having grown up in a home filled with accountants. She always had an eye for numbers and was often called on by family and friends to help do their books. And she was introduced to the world of investing as a teenager, when buying her first property with her dad.
Wanting to keep one foot in the financial arena while still nursing as well, Lakomy eventually decided to complete a Master of Business Administration (MBA) on the side. On completion, she joined a boutique accounting firm as an assistant financial adviser. While initially assigned to back-office paperwork, she quickly graduated to a client advisory role. And within six months she was charged with handling the company’s female client base, after unexpectedly bringing in a $1 million client.
Armed with an MBA in finance and funds management, Lakomy was able to operate as a professional planner without undertaking any further study. But being keen to round out her knowledge base, she ended up doing a Graduate Diploma in Financial Planning and, on completion, immediately applied for CFP certification. Wanting to work exclusively with high net worth clients, Lakomy left the boutique accounting firm after three years and moved to St George Private Bank as a financial adviser where she did a similar stint. She was subsequently headhunted to run another boutique financial planning firm before joining the Calliva Group – a wealth management firm bought out by Yellow Brick Road late last year.
The beauty of forging her financial planning career within a firm run by a former accountant was that Lakomy (virtually by default) became wired to a fee-for-service model from day one. Her earliest experiences were fashioned by the fee-based model that the firm operated under. Instead of taking commissions, she would fee – typically 2 per cent of funds under advice, plus $300 an hour to write a plan. Most clients opt for full service advice, she says, and the average plan takes between 10 and 15 hours to complete.S
Having cut her teeth on Self Managed Super Funds (SMSFs) while working at St George Private Bank, Lakomy quickly picked up responsibility for SMSFs at the Calliva Group. In fact, 90 per cent of her 170 clients have SMSFs (administered by Multiport). While most of these clients have high net worth portfolios, she still finds some SMSFs that are not big enough to warrant the time and effort involved. Unless a client is planning to build up their SMSF to around $450,000 – well under the average of $780,000 – Lakomy doesn’t believe it is the right vehicle. And, when necessary, she will wind up a fund. “I’m finding that a lot of younger professionals who are attracted to SMSFs would be better off holding their smaller portfolios within more cost-effective wrap accounts,” says Lakomy.
She says while a lot of people are interested in SMSFs due to the flexibility they offer as a tax structure, too few understand the complexity associated with running them. With the Australian Taxation Office (ATO) starting to take a closer look at the country’s 360,000-plus SMSFs, Lakomy is constantly warning clients to review the suitability of the assets being held within them. At the extreme, she had one client who had simply parked cash inside their SMSF for three years. Then there are those who think a SMSF is a suitable vehicle for holiday homes and art collections.
Ideally, she would like to see clients investing a good portion of their SMSFs in liquid assets, like equities, and some in property, depending on the size of their portfolio. “While clients are concerned that they’re unqualified to act as SMSF trustees, others clearly need to be stepped through all the tax issues,” Lakomy says. “Given that it’s now possible to gear property as well as shares within a SMSF, we’re getting a lot of enquires about how this should be done.” When the prpressurure’s on Lakomy witnessed an abnormally high level of client enquiries during the recent sharemarket slump. Being able to take the emotion out of negative market sentiment, and steer clients into real buying opportunities, is where she believes professional planners add the most value.
One of the keys to being a successful planner is being open and offering excellent advice to clients in times of need, Lakomy says. Integral to delivering the best returns, she adds, is dealing with the myriad paperwork on the client’s behalf. That also means dealing with Centrelink, to ensure all available entitlements have been claimed, even if that’s little more than a healthcare card and a telephone allowance. “When the market is going well the phones don’t ring, so we need to get on the phone and make regular contact, especially when the heat is on,” Lakomy says. “They often need the reassurance of knowing we’ve got the finger on financial markets.”
The number of clients who called in amid the recent sharemarket volatility, not realising that “blood on the sharemarket floor” presented a unique buying opportunity, genuinely surprised her. “It’s especially hard when clients say they’re cashing up. We had to reassure those unnerved by the degree of volatility that this is what markets do from time to time,” she says.
Sharemarket jitters aside, Lakomy meets clients either quarterly, six-monthly or, in some cases, annually. And for those who live overseas, she provides regular phone and email contact, supported by regular newsletters. The firm operates under a managed discretionary account for around 85 per cent of its clients, so Lakomy is authorised to be in full control of a client’s portfolio. For example, if BHP’s share price suddenly dropped 30 per cent, she has the discretionary power to decide whether or not to sell.
“Stockland was a classic example, with only a yield of 6 per cent, we decided the stock wasn’t worth holding at its current rate,” she says. At the current rate of exponential growth, Yellow Brick Road has needed to add a new adviser to its team every six months. As a rule of thumb, Lakomy says a new adviser is typically brought on board when the company has absorbed another 60 new clients. Up until recently, most of the firm’s new business came by word of mouth, either locally or via a longstanding relationship with a Melbourne-based accounting firm. But since the new wave of marketing following the new ownership, Lakomy expects the rate of growth to accelerate rapidly.
She says a lack of public awareness about what professional planners actually do is largely to blame for the shortage of quality people within the industry. And unless the number of people moving into this profession increases significantly over the next few years, the current shortage will get progressively worse. It’s estimated that around half of the country’s 19,000 part- or full-time financial advisers will move into retirement within the next 10 years. “Not only does the entry level into this profession need to be higher, but we also need to be respected more as an industry,” Lakomy says.