Trading handcuffs and a police badge to head up a financial planning practice is an unorthodox entry to the industry – but that is the road taken by Brett Schatto, director, Pride Advice.
“One night, I tried to break up a fight and arrest someone, and I was ‘coward punched’ by one of the offenders’ mates, who I hadn’t realised was behind me,” Schatto says.
“I’d been out cold unconscious for 30 minutes, and some brain damage had been done, enough to cause scarring in the brain.”
Around nine months after being discharged from hospital, he had his first epileptic seizure. This was ultimately attributed to the earlier scarring.
Given the requirement to handle firearms and to sometimes drive vehicles at high speeds, epilepsy automatically disqualifies many sufferers from the police force.
‘That’s when I had to think ‘well you can’t be in the police force…my whole world’s changed, I didn’t know what I wanted to do, but thought I’d better go to university,” Schatto says.
Anti-corruption and serious fraud
However, his exit from the police force didn’t happen immediately. Though he was accepted into a commerce degree at Adelaide University, majoring in corporate finance, he found himself moving into the anti-corruption branch of the South Australian Police Force. He then progressed into the serious fraud investigation branch.
He recalls at one time being an investigator on a financial planning job in South Australia. “We were often looking at the financial services sector – financial planners, accountants, solicitors – it was good in that what I was learning, I was able to apply in the workforce.
“But the study had opened my eyes, and having worked on the financial planning sector trying to identify bad apples…I’d developed an understanding of why people sought out financial planning, and the damage bad advisers could do.
“So at the age of 30, I thought, ‘if I’m going to do it, I’d better do it soon’. I resigned and took a job as a para-planner…including a massive pay cut,” Schatto says.
He joined a practice named Patrick Whelan Investments, which was wrapped up soon after, with Schatto then joining a Retireinvest practice. His practice, Pride Advice, was established in 2003, also under the RI Advice Australian Financial Services license.
Pride in achievement
From a small book of business brought from his first financial planning employer, under the terms of a redundancy, Pride Advice has grown into a $1.5 million business employing eight people.
Schatto is proud of the achievement, something which has been achieved through a fee-only strategy, along with two small acquisitions along the way.
However, this hasn’t been without difficulties. Soon after purchasing the original business, he found a number of clients had been invested in high-risk double gearing strategies – similar to the structures that brought many of Storm Financial’s clients undone. “I went straight to ASIC…It’s very hard to pick up double gearing when you’re not aware of the loans the client has,” Schatto says.
He’s completely fee-for-service within the practice, and is also a strong advocate of higher educational and professional standards.
“There’s been enough clients out there, conditions have been good, nil entry fees, we’ve been able to pick up revenue without providing a service, and that’s’ what’s attracting mortgage brokers and accountants: these big trailing commissions.
“That’s why people pay three times recurring revenue for financial planning businesses…but I just don’t think good businesses are built on that,” Schatto says.
He believes too many financial planning principals are thinking only as practitioners, rather than as business owners.
“But if you’re the business owner, there’s a time and place to think as a CEO,” he says.
“Not enough of them are doing it.”
