Grant Hackett on Resilience, Tax Changes and His Push to Quadruple Adviser Numbers

Yeah.

Yeah, it is really funny. It's a really good point that I've actually been doing this much longer than a professional career in swimming, which was 13 years, but I'm going on to close to 20 years in this space now. So I'm doing it for a long time. The cameras don't usually enjoy finance like they did Olympic sport. So obviously with that profile that just sort of seems to carry through with me, even just coming here today, of the swimmer, and people think you don't hear them, but it's something that's going to stick with me, which is a nice thing, and, you know, until I'm obviously not here anymore. So in terms of that transition, it's a big challenge. Like, it's really hard. It's not hard in the sense that, you know, I knew where I wanted to go. I knew finance I was interested in, I loved investing, I loved commerce or transactions, capital markets, I loved all that sort of stuff. But it's going, 'How do I actually get to where I want to be?' So, you know, I studied comm law whilst I was swimming. My dad always said, 'Retirement — well, do one or two subjects here and there,' and it would just take your mind off swimming, which was great. But yeah, the actual transition probably took two years of understanding, okay, what do I need to do? How do I build a team in this environment? And the one thing I really realized in comparison to sport versus business, there was a lot of mediocre. And I say that in the nicest possible way, but there's a lot of people just there to pay their mortgage or, you know, go nine-to-five and they don't want to do anything else. And I find that really uninspirational. You want to be around people that are inspired, willing to do whatever it takes and, you know, be fully aligned across every single way, whether that's achieving an outcome in a business or whether it's remuneration in a business aligned to that outcome. So, you know, being able to try and lift people to that standard rather than coming down to the mediocre standard was a promise I made as part of that transition.

I was in Westpac Private Bank. So I was a private banker. And it's really funny because I was kind of the global CEO at what I did in some respect. You know, I was the best in the world for a long time and I didn't get beaten in my 1500 for 11 years, and then all of a sudden you sit down at the table, you know, Collins Street on a Monday morning, and you're not the best at the table. So you've got to have that humility to realize, okay, I've got to learn the skill, I've got to train myself in this environment, I've got to establish credibility with the customers or clients that we have. So, yeah, that was the first job. Learned a lot. I actually did my MBA and did a thesis around the big four banks in terms of what we should do around industry specialization and segmentation, which was really exciting because we actually got to implement that strategy, and it was a big success for Westpac at the time.

Yeah, I think a lot of people just look at finance and think money. That's the obvious correlation. It was so much deeper than that. I really liked the thought of being in finance because I could actually understand what creates a business, what makes a business run, what makes it successful, you know, in comparison to its competitors or peers, or really stand out full stop, as, you know, like an Apple or what Elon Musk has done with all of his businesses. I was really curious about that and I wanted to do something where I felt inspired, where I thought it was interesting and very challenging, and finance ticked a lot of those boxes. I was really interested in investing too. So I traded shares from a very young age.

Oh, I would have probably been 16 when I started earning money in swimming that I could actually invest some money, and you know, it was quite a bit of capital that year, and also got burnt through the dot-com boom.

One of the first was Mount Isa Mines, I remember, and did quite well out of that, and had a few others that were quite successful. They're outside of the top 300 companies, so they're fairly speccy. But really it was the dot-com boom and bust that really taught me a lot about investing and fundamentals and what to look for, and yeah, not to get too far ahead of yourself. Often enough, when it's too good to be true, it is, and investing is very much like that when you see some of the returns that people are quoting.

Resilience is probably the biggest one. So resilience through hard times is the number one skill that you need to have. It's not about being the best product or even the best leader. It's about having that resilience, and that needs to filter into the team. In terms of the other attributes that I really could transfer from swimming into business was really bringing a team together, being very, very clear on the vision, but also what I call an operating rhythm. So in sport, obviously, you've got to train, you've got to practice, and then you've got your execution moment. In business you do that every single day, so you're always executing. So to have the right structures and what I call operating rhythm around the meetings, the one-on-ones, everything getting actioned, being decisive, failing quickly — all of the stuff that you need to do in sport in order to go after that gold medal, take feedback on board, be accountable — there are a lot of attributes of sport where, in pockets of business, particularly when you're working with big teams, you can see that really fall short. So I think there was a lot of fundamental characteristics and skills from sport, any field really, that you can transfer into the world of business, and I just had to learn how to do that in a business context over time versus a sporting one.

The number one thing is clarity. Have absolute clarity in terms of what you're trying to achieve. Don't go into the how, just this is what we want to achieve. And then I think the next part is making sure that you've got accurate measures in place. So you want to reward your people really well if they perform exceptionally well and they produce the result that you're looking for. And so I'm a big stickler for giving the lion's share of outperformance to the people that really hit those metrics and deliver on their promises and some. So for me, that clarity is really important, making sure you've got real clarity around your metrics and what you're wanting to achieve in a given period, and then making sure that any sort of remuneration or any rewards is absolutely aligned to that, and the team that produces the best result or the individual that does a lot of that goes to them, and everyone knows what you're starting with at the beginning of the year. So you should be able to, as a leader, as a manager, not sit down with an individual and actually have a conversation and there be a surprise on what they're getting. It should be so well structured and set up, and the check-ins should be so regular that you know what's going to happen at that end-of-year discussion or when the bonus period comes up.

There is a lack of compassionate feedback when it comes to the sporting world, because it is so brutally delivered. If you're in the middle of a training session, there's a lot of adjectives that are used in terms of, you know, 'You're stopping at the wall, pick up this, do that, make sure the turn's tighter, get your streamline right, no, that's not good enough.' Like, and it comes — you could say disrespectfully. If it was in the business world, it would be an HR issue. And the reason I say that is because everyone is playing the ball. Everyone is going for that gold medal, that world record, that outcome. We are all very, very focused on that, so we're not personalizing the feedback loop and accountability piece. We're just giving it real time on the spot. We're not waiting for a discussion after training and we've got an agenda item that goes through a bunch of dot points on what you did wrong with your technique, what times you did or didn't hit. So for me, I think that was probably a big adjustment in terms of having compassion as part of that feedback and making sure I understood the person a lot better first. So I could give one person a bunch of feedback very straight up and down and they'll walk away and make the changes. I could give it to someone else and they could be so sensitive their whole mind is being defensive, so they haven't picked up anything you said and they action very little. So what I really needed to unlearn was the brutal sort of feedback that would come through and the way in which it would come through. Not that I did that. I appreciated that was a different environment, but I really realized I had to almost individualize your feedback for the audience that I was sitting in front of to help get to that goal and what we're actually trying to achieve.

So GDG, Generation Development Group, is an ASX top 200 company. It's got three subsidiary businesses. Those three businesses are quite well known in financial services. So the first one is Generation Life, which sells investment bonds and lifetime annuities. The second one, which is probably the biggest brand of the three businesses, is Lonsec Research and Ratings, which rates almost 2,000 financial products in Australia. And the third one is Evidentia Managed Accounts, which has really taken off over the past decade because it allows a lot more operational efficiency for an adviser, also helps with tax efficiency, and there's a lot of other positive attributes and benefits for the end client as well.

So the best way to think of it, an investment bond is like super, your own name, a company, a trust. It's a legal structure. When people hear bond, they think fixed interest. It's not that at all. So it's a legal structure. Maximum tax rate of 30%, effective tax rates often much lower than that. You can have any investment that you want in there that sits on our investment menu, which covers all the different asset classes and multiple options within each. And it's a very good tool and a very good structure for estate planning because it can be structured as a non-estate asset.

Well, the biggest deficiency and something that we're trying to support and help solve is getting more advisers into the industry. So, you know, lobbying politicians and government and obviously the key decision makers to make that pathway a little bit easier. I would love to see the big banks and I would love to see super funds get right into financial advice because they were really good, particularly the big banks, training grounds for new advisers, and it just doesn't feel like it has that pathway anymore. And there is so much complexity in the world of advice. Like when you're going into retirement, you're thinking about tax planning, you're thinking about intergenerational wealth transfer. What am I going to do with my estate? I'm not going to work again, so what are the right investments to produce the income? What are the different thresholds? What's the government changing this year? So I think having more advisers is the number one issue, and we want to support and help solve that. And when it comes to when I see an advice practice, I think the biggest thing you can get in there is operational efficiency. And I think with AI coming along to help with that operational efficiency, to give you more time in front of your clients or grow your book, and instead of having 100 which is killing you to service, you could do 200 much easier. That efficiency would be ideal as well.

Nothing in the pipeline at the moment. We like financial advice because we like financial advice, but have we got an acquisition in that space? Not at all. There was one that was spoken about with Ironbark. We have a really strong partnership with Ironbark because they do all of our RE, our responsible entity services, for our managed account business. So that's where that probably came from. But in terms of, you know, what does GDG look for from an M&A point of view? It's not necessarily, you know, a sector within financial advice that we're looking for. We're more looking for a business that has a certain bunch of characteristics. So it's got to have structural or legislative tailwinds. So you see, you know, obviously tax changes — investment bond, great product, big structural change we're seeing with managed accounts because of the operational efficiency and how advisers get to run their practice with much more ease. So we look at those two things, and then we want to see a 20 to 30% compound annual growth rate for at least four or five years, and we usually like to get something that's a little bit sleepy that no one else is looking at so we can get it at good value. So there's not necessarily a defined category of what we're looking at at any point in time, because people say, 'You're looking at advice, you're looking at traditional life insurance, or are you looking at platforms?' I say we're not looking at any of that. We're looking for these characteristics, and if something fits that, then we'll definitely look to invest.

Oh, favourite child. It's so hard. Who do I get along best with? So, look, they've all got a lot of value and a lot of opportunity for different reasons. So, you know, I came through the Generation Life side of the business and really helped grow that. We took that over when it was doing about 100 mil of inflows per year; it's now doing that in three weeks. So, you know, I've really been a part of that journey. So the emotional connection is obviously strong there. Look, I just love its brand name. I love what it stands for. I love the integrity of that business. You know, you see things like First Guardian and Shield and how we didn't get caught up in that. That's pretty amazing as a business because a lot of those new products come to Lonsec because of the coverage. And then managed accounts — I mean, the growth there, the opportunity, how it helps support advisers. And it's a big number, right? Like we're fast approaching $40 billion in our managed account business. And when we bought into Lonsec back in September 2020, they'd just finished that final financial year at 659 million. So we've had a huge amount of organic and inorganic growth through that. But I would say just that business alone from 2020 until now has done sort of circa 13 to 15 billion dollars' worth of organic growth.