Barry Lambert: why I turned down millions for my financial advice business

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Barry Lambert explains why he turned down an offer for Count that was worth significantly more than the multi-million amount that he received from CBA, and why he wouldn’t want to become a financial planner now.

Speaking at the No More Practice Live event in Sydney last week, Lambert was extremely candid on the state of the financial planning industry today.

While he was confident that there is always going to be a need for financial advisers, top of his list of concerns was the compliance-driven, box-ticking, exercise that he believes financial advice has become.

“I remember the first Choice review. There were eight judges on the Choice review – seven of them were compliance managers,” he said.

“There was no regard for the quality of advice; it was whether or not you ticked this box, ticked that box and all did this bullshit that we call financial planning today. And that has been what’s wrong with the industry.”

He added that these compliance requirements have made financial planning a very expensive industry to work in today, and these harsh business conditions have contributed to the current hot topic of scaled advice.

The concept of putting everyone in the same box “because someone says this is what you should do” was “absolute nonsense”, said Lambert.

“And that’s why I wouldn’t want to be in the industry, personally, if I was a young person today,” he added.

“I don’t count the money I’ve got”

It is an industry, however, that has brought Lambert huge financial success. But he told the audience that personal financial gain was never his primary motivator. In fact, he claimed to have turned down an offer for Count that would have personally netted him considerably more than the multi-million dollar amount that he earned last year when CBA bought the business for $373m.

“I don’t count the money I’ve got. People used to say ‘how many shares do you have in Count?’. I’d say ‘I don’t know. Have a look at the annual report – it’ll tell you’. Because I never sit there and think about how much money I’ve made, or am going to make,” he said.

He explained that, back in 1998, after he had his second heart bypass and was feeling “a bit vulnerable”, BT approached him to purchase 20% of Count – an offer that was then upped to 100%.

“I had no interest in selling 100%,” he said. “So we ended up listing Count instead, so I could give equity to the staff and to the membership. But had I taken that offer then – because I owned 90% of the company then – it would have been more than I would have got today.”

He does occasionally get asked why he sold Count at $1.40 a share, rather than earlier in the game when shares were going for $3.50, but claimed that this is a question that never worries him.

“The money is of no influence,” he said, adding that in reality last year’s CBA offer was the only realistic one that he’d received since he was approached by BT over a decade ago.

“So this was the first time that a real offer was put on the table, and the directors thought it was a good offer – in the best interest of the shareholders,” he said.

Determined to be different

While Lambert remained largely modest about his remarkable success, he did allow himself a pat on the back for putting Count in a position where someone wanted to buy it  and urged today's practice owners to do the same.

“You’ve got to position yourself to be different, so we positioned Count where there was no other business like us,” he said.

“Position your business so your clients don’t think there’s anybody else like you. And if you get that position where your clients think that they can’t go anywhere else because there’s no one as good as you in financial services – or whatever it might be – once you get in that position you have a great business.”

He did concede that his father-in-law certainly thought he was “pretty stupid” for leaving secure employment with the Commonwealth Bank in order to start up his own business all those years ago, but explained that it never dawned on him that going it alone was a stupid thing to do.

“I knew there was a great demand there, so it didn’t occur to me that that was a risky thing at all,” he said.

Are compliance hurdles driving good candidates away from financial advice? Have your say by commenting below.

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Barry Lambert: why I sold Count

  • frank smith on 17/08/2012 9:10:20 PM

    The compliance "industry" has grown because licencees went to lawyers in fear. The law has never changed. Compliance is so simple. ASIC never did nor ever wanted all that nonsense so thank the lawyers and the PI insurers for the mess. These people obviously have never spoken to me.
    I hate to surprise Barry now but it is and always was so easdy to blend compliance into an adviser's daily routine so the AFSL had little to worry over.

  • Paul on 17/08/2012 2:24:05 PM

    Well said, all of you, of Barry Lambert's comments. But the rule makers continue with their non-productive and unaccountable ways. As Kerry Packer said back in 1991, if you are going to bring in a new rule,you have to remove an old one. But of course, that's intelligent...

  • James on 16/08/2012 2:02:28 PM

    Who is Herbert Hubert

  • James on 15/08/2012 2:58:42 PM

    The cost of compliance is such that it will soon be difficult to service smaller clients. The advice industry is not well served by beuracrats that have rarely worked outside of the protected, no risk, environment of the public service.
    I also agree with Herbert.

  • David on 15/08/2012 1:45:34 PM

    Compliane ahh Compliance! That is all you hear now. It is not about the advice provided to the client that is going to get them past "the pit of uncertainty" and achieve their financial goals in a manner that they understand and are comfortable with.

    I had a new client come in yesterday for an SOA presentation that took 2 hours to go through and mentioned the same thing 4 times. You know what? Although I had covered it in the SOA, he asked me about superannuation contributions. Why did he do this? Probably because he was brain dead with the amount of information covered and provided!

    I agree with Hubert. Clients don't want and don't care about compliance, they want advice that is simple, easily understood and addresses their needs effectively.

  • Peter on 15/08/2012 12:39:29 PM

    I am a compliance manager myself - the old world box ticker compliance manager I agree adds no value whatsoever. However there are some of us interested in strategies, appropriateness of advice and coaching advisers on how things can be done better, given experience when things have goine pear shaped. This is what will add value now and in the future !

  • Herbert H Hubert on 15/08/2012 12:09:19 PM

    Without question, given the sometimes puzzling enphasis on compliance I am arriving at the conclusion that clients are becomeing more confused/frustrated and dont understand the "compliance" of our industry more importantly dont really care, the regulators should focus on efficient delivery of advice not tick box advice - SoA , RoFA FSG, the client dosnt care much, sorry to burst the "hard" workiing bubble of the regulators

  • Geoff on 15/08/2012 11:49:44 AM

    Barry has hit the nail on the head. compliance driven tick the box advice. ASIC claims it's recruited planners to ensure its policies and surveillance is implemented. The only "planners" that would work for ASIC are those compliance driven ones who probably have not been succesful in actually communicating to clients!

  • Alex on 15/08/2012 11:10:57 AM

    I dont think that compliance is adding value to the industry. In fact it is destroying value and pushing up the cost to deliver advice without adding value. Having to act in clients best interest, removing conflicts of interest and improving education and skills amoung advisors is what will make this industry better with a better outcome for clients. Unfortunately at the government level they just dont have a clue.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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