A true believer in delivering affordable advice to clients, MJI Wealth director and financial adviser Matt Illana estimates he’s undercharging around half his clients.
“I undercharge probably half the time because you want to help clients out,” Illana tells Professional Planner.
Illana says if he charged every client around $5000 it’s a given that not all would be able to afford that cost.
“Everyday mums and dads that need [advice] should be able to get it and should be from a qualified adviser, not direct from a fund,” Illana says, straight after acknowledging he was referring to a fully qualified financial adviser not a ‘qualified adviser’ as depicted in the government’s Quality of Advice Review reform package.
Illana says the regulatory noise doesn’t bother him because he believes in working “within the framework given to you” but does hope the transition to advice records over Statements of Advice – also part of the QAR package – comes through.
“I agreed with FASEA and the education requirements because I noticed throughout the years there were a lot of advisers out there that didn’t have the education requirements and lacked the knowledge that is required to provide holistic advice to clients,” Illana says.
“But it also has to be seen as more of a profession which was the whole point of lifting the education requirements.”
Illana says the time to take on a new client won’t change because of the time required for fact finding and understanding the client’s needs and objectives.
“For me to prepare advice, I know what my cost to serve is and what I need to charge, [and] some clients can’t afford it,” Illana says.
Initial placement
Illana’s journey into financial advice started after he finished his finance degree and realised he didn’t enjoy working in business banking.
A colleague was studying financial planning which appealed to Illana.
“I got a job straight away at a financial planning business as client services, moved to paraplanning within say 12 months and like every young adviser I wanted to become an adviser sooner rather than later,” Illana says.
“After two years I got a job at Westpac in 2008 at the start of the GFC so it wasn’t a great time to get into advice face to face with clients. I learned pretty quick it’s not all roses. I didn’t like the banking culture.”
From there he moved into private boutique practices because it lacked the sales-oriented culture and eventually “bit the bullet” and started his own company.
Illana’s business is MJI Wealth (for Matthew Joel Illana), which he owns 100 per cent, along with MPL Wealth, a company he started with former business partners Paul Magiafoglou and Livio Tramontin.
Referrals are a key part of his business and the firm has five joint ventures (JVs) – four with accounting firms and one with a mortgage broker – where he owns 50 per cent, but takes roughly 85 per cent of all revenue.
The JVs are a referral partnership, essentially white labelling the company name to the JV partner. MJI Wealth covers all the costs of the business, including staff who MJI Wealth employs, and is responsible for the day-to-day operations.
Illana says the advantage of this strategy was to keep those partner clients in house, even going as far to keep client meetings in those offices rather than his own.
“The thinking was the referrer and I have a common ground,” Illana says.
“A referrer is more likely to refer to someone inhouse, not because they have skin in the game, but because they’re protective of their clients. [The JV partners] own this business. This is a business we’re both going to have equity in so it just ties the referrer into it.”
On the horizon
Illana says the 12-month goal for the business is to commence a partnership with an asset consultant and a white label portfolio for the firm.
“My aim is to streamline the portfolio management side and I’m looking at engaging an asset consultant and trying to implement a white label Separately Managed Account,” Illana says.
“My FUM is up to about $90 million and when you don’t use SMAs or managed accounts then there’s a lot of work managing portfolios, corporate actions, rebalancing and administrative tasks like that. Financial planning should be about financial planning which is goals based.”
