The Stephan family, it’s fair to argue, are somewhat pioneers in the fee-for service financial planning model.
Joe Stephan’s father, Magdy Stephan, started off in accounting but moved into financial planning and progressed to teaching financial planning at Melbourne’s RMIT University in the late 1990s.
“A long time ago, my father actually did his Master’s thesis on conflicted remuneration,” notes Stephan.
“He was also teaching one of the first university degrees in financial planning in the country.”
It was a course that Stephan, and his brother, James, both completed, with Magdy teaching each of them Financial Planning Practice Management —the final subject before students graduated.
“It was a bit funny to have your Dad teaching you at university,” Stephan says.
“But what it meant growing up was the notion of goals-based advice was not foreign to us, or new.
“It’s been indoctrinated into our thinking from the get-go and we have always been very firm around fee-for-service and offering objective advice,” he says. “That all came from conversations around the dinner table.”
Stephan followed his passion for planning to the UK and to a firm in Croydon.
He returned home as Magdy’s health began to fail and moved into the family planning business in 2004. His brother joined him a few years later.
“We had managed to work together with Dad for a year before he passed, but he was pretty ill during that time,” Stephan says. “So James and I were mainly talking about higher-level issues with Dad rather than the day-to-day driving of the business.”
The brothers worked well together, but like any new partnership involving a family member there were teething issues.
“There were some disagreements in the early days, but there also seemed to be some gravitational pull keeping us together,” Stephan says.
“Now it’s a beautiful thing because we seem to work so well together.”
Determined to stay true to their father’s beliefs, they applied for their own license and became independent in August, 2016.
“Dad talked about giving advice that is pure and making sure that you give the best advice to clients,” Stephan says.
“Of the roughly 22,000 advisers out there, there are fewer than 100 who can call legally call themselves independent and we are one of them.
“Dad is no longer with us but we feel his guiding hand.”
There are, however, some commercial complexities to becoming independent as Stephan has discovered.
“You can’t just go and take your client base and sell them to a non-independent if you want to retire,” he says.
“It’s also much more expensive as you don’t get the level of subsidisation and help from the product manufacturers when you’re independent.
“The reality for an independent is that it’s very difficult to give low cost and scaled advice.”
The brothers have managed, however, to offer value to clients by staying lean and working with a few select clients.
In addition to the pair of them, there is one client services manager working in the firm’s Melbourne office.
They work primarily with self-funded retirees, many of whom who run or have run family businesses of their own.
“We don’t believe that to be successful there needs to be a huge amount of staff,” Stephan says.
“We prefer to be niche and service a select group of clients, so the clients need to be aligned with our values.
“I feel that the spirit in which we function as a family is reflected in the way we deliver service, and clients are an extension of our family.
One thing is for certain: Magdy Stephan would be please by what his sons have built. “I think he would be super-proud to be honest,” Stephan says.
“And there is an unbelievable richness and meaning to going through milestones and wins with your brother.”
Name of firm: Joe Stephan
Licensee: Stephan Independent Advisory
Years in the industry (previous jobs?): Almost 16 years. Worked abroad in the UK, and planning firm in Croydon before starting Stephan Independent Advisory.
Academic qualifications Bachelor of Business (Financial Planning) with distinction
Professional association memberships: Independent Financial Advisers Association of Australia, Financial Planning Association.