In 1989, with official interest rates scaling the high teens, the founder and then-managing director of Count Financial, Barry Lambert, had a conversation with his bank that would
colour his views about business, and specifically about debt, from then on.
Count had a $100,000 overdraft with the Commonwealth Bank, supported at the time by a $100,000 term deposit. The bank also had a mortgage over Lambert’s home, to support a personal guarantee he’d provided as a director of Count for the overdraft.
“I rang them up one day – because back then they never put the interest rates on your statement – and asked them what the interest rate was on my overdraft,” Lambert says. “They said it’s normally 20.5 per cent, but because you’re over your limit – on that day we were over $100,000 – you’re paying 25.5 per cent. True story. Now, I’m smart enough to know that if you’re paying that sort of interest, you’ll go broke. So I thought, I’ve got to get out of this.
“So they had a mortgage over my house, plus a term deposit, which is our own money, and they’re charging 25 per cent. I paid the overdraft off, and said I’d never borrow again. And I virtually never did, you might say, except for day-to-day business.”
Lambert sought to have the mortgage on his house lifted, but the bank refused.
“So I wrote them a letter and said, I can see the headlines now, front page of the Financial Review: ‘Lambert stronger than CBA term deposits’. I got the house back. No questions. You’ve got to stand up to these guys.”
Just over 20 years later, in 2011, Lambert would pocket a reported $127 million from CBA as part of the bank’s $373 million acquisition of Count.
Whether it’s creating Count, and its offshoot Countplus, or campaigning on a personal front for the legalisation of medicinal cannabis and entering the hemp-growing business, Lambert, with a self-described “socialistic attitude to life”, has always done things his own way and in his own time.
Lambert is among the pioneers of financial planning in Australia. He established Count in
1980 with one eye on the direction in which he believed financial planning would eventually
have to evolve. He proved to be ahead of his time.
“When I started, 35 years ago, I set up Count as an accounting-based group, a professional-based group, I’d hope you’d say, to be different from the sales-based organisations that existed at that time,” Lambert explains. “I went to the accounting-based group, because you had to be university-qualified even then. They had an existing client base, so they didn’t have to worry about prospecting, as such. And their clients came first, because if they upset their clients on financial planning then they’d upset them as clients as a whole, and they had more to lose. So they were very accountable for their advice.”
Lambert says the regulatory picture coming into focus now – through both the Future of Financial Advice (FoFA) changes and upcoming education, professional and ethical standards – will make financial planning closer to what it should always have been. That just wasn’t feasible for an industry that was sales-based and commission-based.
“The situation now, with a more professional base than there has been, is what I expected it
to go to,” Lambert says. “You only had to think forward and you knew what was going on couldn’t last. Upfront fees and commissions and [sales] practices were just unsustainable.”
Deserved disruption
Lambert says that over the past decade or so a strong push towards professionalism, supported
by legislation, has caused disruption in the industry, particularly to “the older guys, my sort of age or a bit younger”.
But legislation and regulation were inevitable, Lambert says, because “the history of the industry wasn’t all that good”.
“Some would argue that the industry didn’t self-regulate well enough and then we got regulated from outside,” he says. “In retrospect, that’s a bit cumbersome and over the top. But the industry deserved that. The industry let itself down and deserved what it got, quite frankly.”
While Count’s financial planning fee was still based on a percentage of client assets, “I never classified Count as distribution,” Lambert says. “We set a fee structure, maximum commissions, so if a company paid more commission than that, it would be rebated. We lost one accountant to Godfrey Pembroke back then because [Godfrey Pembroke] didn’t have a limit on the commission they could take.
“So even within the accounting profession some of them weren’t much better than the rest of
the industry anyhow.”
Count became a major user of BT Wrap and Colonial FirstChoice, and Lambert maintains
that the group was a keen supporter of more than one provider, mostly in the interests of fostering competition.
“Our concern was platforms could get us in, but they might then hold us to ransom on pricing,”
he says. “That’s why we didn’t just go with one.”
That independence remained important to Lambert throughout his career at Count.
“There was no one saying, ‘Look guys, you’re not making enough money, we’re going to pull the pin, or you’ve got to flog our product,’ ” he says. “We had no outside ownership, and that was deliberate as well, because I’d never had such in my life, and I wouldn’t want to be answerable to somebody and having them tell me what to do.”
Lambert says a degree of his success in setting up and developing Count was down to luck, but
at least some of this luck was attributable to having a clear vision for the business.
“We were lucky we came along at the right time, I guess, and we were lucky we set up a structure that meant we could run our own race and, really, it was just a matter of how hard we ran and whether we were good enough to survive,” he says.
But survive the business did, and Lambert’s view of the world inevitably meant that the
spoils of success should be shared.
“I’ve always had a socialistic attitude to life, you might say,” he says. “I believed that
the staff and our franchisees who made this business should share in it. So we listed the company in 2000 and we gave out large amounts of options to our franchisees.”
CBA acquired Count in 2011, and Lambert says that even though banks have since been shown
to have less than stellar track records managing advice businesses, “back then we didn’t have the problems known publicly”, and he was happy that CBA would be a good home for Count.
“I had always thought that if I was going to sell, then CBA’s the one I wanted to sell to,” he says.
Lambert’s attention now is divided between: Countplus, an offshoot designed as a succession-planning vehicle for accounting practice principals; Class Super, which provides administration services to self-managed super funds; and Ecofibre, an Australian medicinal cannabis-growing business with operations in the US.
Successful professional services firms, whether they be financial planning-based or accounting-based, will need to be efficient and provide a holistic service offering. Greater convergence is inevitable, he says.
“To give value, you can’t be inefficient,” he says. “If you’re terribly inefficient and you blame the government, or whatever, for these regulations, the client couldn’t care less about that. It’s costing them too much and they’ll go somewhere else.
“Robo-advice, because of the cost, will happen to some extent for smaller clients. [But can] they ever make any money out of it? You’ll get more robos, and they’ll be doing it for next to nothing.
“There should be more convergence, I would think. There’s a common client base, sharing of knowledge between professionals…It’s all about the advice. You should be in the advice business.”
Ecofibre: Cannabis and hemp
And with that, Lambert veers into a conversation about a golfing mishap and the consequent state of his right knee, before elaborating on the practical hurdles to the widespread, legalised use of medicinal cannabis, which is an issue close to his heart, in light of a medical condition affecting his young granddaughter.
“There are only 23 doctors in Australia who can prescribe it,” Lambert says. “You’ve got 24 million people and 23 doctors. [The rest] haven’t been trained and they know nothing about it. Until it gets into the medical schools, they’re too busy. They’re busy doing what they’re doing. Also, they’re close to big pharma companies. They have the overseas holidays and they learn about the next drug and this, that and the other.
“Cannabis is going to reduce the need for a lot of medication. I take it, by the way, for arthritis
in my left knee. Beautiful – I sleep like a log.”
Ecofibre grows cannabis for medicinal use, as well as producing hemp fibre for clothing,
and seeds for food.
“I’ve given notice to stand down as chairman of Countplus, because being involved in a cannabis business might not fit,” he says.
Ecofibre has shifted its growing operations from the Hunter Valley, north of Sydney, to the United States, where it has planted more than 500 acres. Lambert says the rules around growing medicinal cannabis in Australia “are just so impractical, compared with what happens in America”.
“We grow it over there, with no security, because we grow hemp with very low THC [tetrahydrocannabinol] – if you knocked it off and smoked it, it would do nothing for you,” he says. “Here, you’ve got to have high-security fencing, they call it, high intruder-proof fencing, with back-to-base alarms, out in the country. It’s just ridiculous. In America, we grow it like wheat.”
He says there are political hurdles still to overcome, including protection of the opium poppy industry in Tasmania – the state produces about half of the world’s legal supply of the material, which is refined into opiates, including morphine and codeine.
But as addiction and overdose issues related to opiates gain greater and greater publicity, it may
be that Lambert will once again get lucky by being in the right place – a little ahead of his time.
