Catherine Robson’s thesis at university was on prospectus regulation. Specifically, it focused on the prospectus issued for the demutualisation and float of the NRMA, and the overlap of the Trade Practices Act with prospectus rules.

“Wait till we get to the pointy end of the studies I’ve done – you’ll realise what a fascinating person I really am,” Robson jokes. Earlier this year, Robson was named Outstanding Investment Adviser of the Year by the Australian Private Banking Council (APBC). The award was based on a number of case studies submitted by Robson and her team at NAB Private Wealth, based in Melbourne.

Robson says the award was “the culmination of a journey that my business has been on for a couple of years”. “I joined the NAB 10 years ago and did a pretty good job of building a client base, and finding some good people to work with, and plodding along,” Robson says.

“But I came back from my second set of maternity leave a couple of years ago, and felt that if I was going to spend time away from my family, I wanted to be doing a job I could absolutely adore, and was really passionate about, and was the best it could possibly be.” About two years ago, Robson’s business turned to another arm of the NAB empire, the MLC Adviser Business Centre, to revamp the business offering, from the ground up. “They really sat with us in our business and helped us understand what our clients were actually looking for – to go to every single client and ask them what do you value, what can we do to improve the business – and then build a process to deliver what clients found of value,” Robson says. “And then, when we understood what our clients were looking for, to embed that in every single interaction that we had with clients – every email, every letter, every time you answer the telephone – to support that value message. “When clients tell us what they want, it’s very seldom [that] I want this share or that share; it’s much more I want the feeling of confidence that I’m making the right decision, I want to feel comfortable that I know that in 15 years, when I’m not working my guts out, I’ll have something I can rely on. It has really informed the way that we relate to our clients and the way we do new business with new clients.

“The award is a natural conclusion of that process. We set out to build a business that we passionately believe in. We had the opportunity to get the best out of the relationship we have with out clients, and for our clients to be as happy as they can possibly be.” Robson says one of the case studies submitted for the APBC awards was “a client of ours [who] has a very heavy concentration of assets in shares in a company of which he was formerly a senior employee”. “He has a couple of sons who he would like to buy property for; he’d like to sell shares in that company, but then the share price is not currently where he’d like it to be to sell,” Robson says. “So we said to him, why don’t we write some call options against that company? It will generate several hundred thousand dollars in option premium [income] for you to do it, and the strike price is at the price that notionally you’d like to sell at anyway. So if, in the next year or so it bounces around and never gets to that price, you’ve generated a couple of hundred thousand dollars that your sons can use to purchase properties; if it gets above that point, fantastic.” In another case study, there was a client whose accountant contacted NAB Private Wealth about an excess superannuation contribution problem. “[The accountant] said we’re wanting to put in place a regular payment plan to the Tax Office because the client had exceeded their contributions cap for the 2007 year by $1.6 million,” Robson says.

“We said that didn’t sound right to us, can you give us some more information? This was a newish client that we didn’t advise at the time. The accountant said, ‘Here you go, have a look at the information, but we’ve been through it and we know what’s going on’. “We looked at it, we went to the superannuation providers at the time and they said there was nothing they could do; again, we thought this doesn’t make sense. We drew on our internal technical resources, and it was actually an employer eligible termination payment that had been rolled into superannuation, in addition to an undeducted contribution at the time. There was actually no excess contributions tax to be paid whatsoever. “So that’s not strictly investment advice, but that is, in our mind, putting the client’s interests first and rather than saying, ‘Not my fault’, [saying], ‘How do we get a good outcome on this?’.” Robson says her business could not approach issues such as the excess super contribution if it relied on transactions to generate income. “We work on an agreed fixed-dollar-foradvice basis, and that’s been a relatively recent change,” she says. Making that change involved “reviewing what it cost us to deliver our service, and then putting in place a pricing structure that delivered what clients were looking for, and then obviously is profitable for us, and for us to have a mechanism to determine what it’s going to cost us to deliver the service”. “So it’s not a flat fee in the sense that every single client pays the same amount; the fee is determined on the complexity of the client’s need and the level of intensity of service,” Robson says.

“We would not be able to run a profitable business if we did not genuinely understand what the input costs of doing business look like. It didn’t take long, because we’d done the process bit first, and genuinely knew how much time everything takes. “You can under- or over-estimate what it costs to deliver service to particular clients, but… everything we do we time record, so we have a workflow system that means every time you work on something there’s a timer going that records how long it takes; and at the end of the month we can aggregate how much time we’ve spent as a group, or on a particular client, or on particular activities. We had that information, and we already knew we wanted to go to a fixeddollar fee, but we just needed that mechanism to get there. “The pervasive reason is we want clients to feel comfortable to use our service whenever they need out help. The disincentive for people to pick up the phone to talk to their accountant or their lawyer is that it’s going to cost them money. Because our clients are asking us to work with them to deliver outcomes; to them it’s not of value how much time it takes. For them the value is what the outcome is.

[They] do not care if it takes you 50 hours; they care about feeling like they’ve got that confidence, or that they’ve got an after-tax result that was much better than before, or that they are buying properties for two of [their] kids that means [they’re] not selling other properties to do it. “Clients understand that some years their needs are going to ebb and flow, but on the whole they really value the service, and for us to deliver the service, that’s what it costs. Some years it may be less profitable for that particular client, but in the scheme of things we’re confident that it’s a robust pricing mechanism.” Robson says the cost to the client is estimated at the initial meeting, but a binding fee is not quoted until a full picture of the client’s needs emerges. Robson says a new client would typically pay between $11,000 and $15,000 for initial advice, and the average annual fee is $20,000, but there are wide ranges around this average.

All commission is rebated to the client, including commissions on risk products. An amount for the work involved in setting up insurance is built into the initial and annual fees. Robson says she has found rebating commission and charging a fee on risk business works better for the firm. “Because we’re so confident it’s in our client’s best interest, and because we’ve got no vested interest in strongly recommending they take the insurance cover we think is appropriate for them – and it’s very clear to the client that’s the case – invariably the client will take our recommendation,” she says. “Previously it was much more like a sales conversation: ‘I know I’m going to get $10,000 commission, but you should take what I’m saying, and do what I say’. “Insurance doesn’t sell itself; no one wants to pay for insurance. But we believe passionately that our advice can be made redundant if things don’t work out the way clients expect them to from a health perspective and they’re not properly protected.”

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