Hannah: Well, thanks for joining us, Ashley.
Ashley: It’s a pleasure to be here, Hannah. I’m happy to chat, excited to chat.
Hannah: Yes. That is a long time coming to have you on this podcast. So I’m glad you’re here.
Hannah: Tell me, how did you first get into financial planning?
Ashley: Wow, what a question. I think I was destined to be a financial planner. When I look back I’m like, “Oh my God, I just ignored sign after sign.” Essentially, I think it was 1999. I started reading Rich Dad, Poor Dad by Robert Kiyosaki, I was getting interested in investing, and then moved to the United States for the first time, and just sat in on these sorts of presentations, and was really excited by it. But in my own head I couldn’t disentangle entrepreneurship with personal finance, it was all the same thing to me.
Ashley: Anyway, I went back to Australia, a family tragedy occurred. I came into a settlement and all of a sudden I had some money of my own to invest. And this was peculiar because I had been sitting in on classes I wasn’t enrolled in, in university and going into the stock exchange, and just really actively involved, but I felt like this was an adult amount of money and if I handled it well then it could make a big difference to my life going forward.
Ashley: Which I happened to wear that one with a badge of honor because it always irks me and rubs me the wrong way whenever you hear older planners talk about, “Well, you could never give a 20-year-old $100,000 or $200,000 – they would blow up, for sure.” And I was like, “No, not true. Not everyone does that necessarily.” Anyway, so these were all indicators, these Kiyosaki and the interest in these topics, and I started an investment club, but the way things were … I’m from Australia, the way things were in Australia at that time were very poor from a regulatory point of view.
Ashley: So it was very much a sales focused industry. And it was difficult to find an advisor that really would represent your interests and not their company’s interest. So it planted a seed, but it also was inconceivable to me that I would become a financial advisor. I was like I could become a shoe salesman, a car salesman or a financial. It would all have been the same thing. So it was completely closed off to me.
Hannah: So it’s interesting, you’re talking about in Australia kind of had that very heavy sales culture.
Ashley: It was not professionalized at all. It was the last bastion of people that maybe graduated high school that wanted an office job. They could either choose to go into real estate or become a financial advisor, it was of that sort of cachet. But now with some reforms, some major, major, major reforms, Australia’s gone from being way behind to being way ahead. And now as a result of a royal commission and this thing called FASEA, The Financial Advisor Standards and Ethics Association, they’ve made it so that financial advisors now are protected, a legally protected term.
Ashley: You have to have a relevant undergraduate degree. You have to do a supervised training and then these ethics code, like it’s really rigorous and it’s causing a whole shakeup in the industry over there.
Hannah: So, they’ve really professionalized what it means to be a financial advisor.
Ashley: Absolutely. And I would say within five years, that reputation in the broader market will have disappeared. I just was at the FPA currently, the Australian FPA Conference a month ago and it’s ground zero right now for this royal commission and these reforms are all coming to a head right now. And so, many of these all advisors are just like, “I’m not dealing with this. I’m not gonna go back to school and do these courses again.” And understandably and that’s fine.
Ashley: And now what we’re seeing is many respectable undergraduate universities are offering degrees in financial planning. And it’s fantastic to see. I don’t know when that occurred in law or accounting, but I imagine there was a moment decades ago when went from being just something that was trained by someone with a lot of experience in an office that was … it led to grading consistency between one professional and another to then becoming a legally protected and professionalized. And that’s what’s happening there.
Hannah: And so, are they professionalizing true financial planning or is it just also just what is it investing, like investment management? Do they make the distinction between planning and investment management?
Ashley: Yeah, that’s a great question, Hannah, really good question. And the answer is yes, they do. They’ve gone too far, in my opinion. I actually don’t like what they’ve done, where a financial plan is practically templated. Meaning, you haven’t done a financial plan, what they call a statement of advice. You haven’t done a step advice, unless you’ve included this, this, this, this and this. And it’s all very good. It’s, don’t get me wrong, it’s not like it’s irrelevant. I’m not saying that.
Ashley: It’s more that in the professional experience that I’ve had clients come to you because they trust you, they trust you that you know what you’re doing, that you’ve got their best interests at heart, and they don’t wanna hear every little in and out of how you arrived at your recommendations and the way that they’ve gone in Australia is to force you to disclose that. So you’re talking about voluminous appendices with every cash flow assumption used, and this and that. And while I’m not registered in Australia, thus I’ve never delivered a statement of advice in Australia. I would imagine just like here, no one has ever, other than maybe the most pernicious engineers, have actually read those financial plans cover to cover.
Ashley: So they’ve gone too far. And I’m a big believer in delivering financial advice at the pace that people are ready to assimilate it. And you can’t just dump the way we practice is to deliver recommendations in bite sized modules. So each meeting with a sufficient break between meetings, it’s like, “Here’s this recommendation. You need to go and do this.” And it’s gonna take in between a full time job, a family, and all the other commitments that one has in life. It’s gonna take a month or two to be able to open these accounts or consolidate that for oral care, or get this disability insurance policy, or whatever the case may be.
Hannah: We’re going to get back to your career path, I promise, but I’m so still interested in this Australia model almost. Have they seen impacts on the general public with these regulations? Has financial literacy increased across Australia or I mean, are there any metrics to say that more people are saving for retirement, or have you earn a better financial state because of these regulations?
Ashley: Well, that’s, Hannah, I love talking to you. We have this great organic conversations. The answer to that is multifaceted. It’s too soon to say because of these regulations simply because the ramifications of the Royal Commission are not yet felt because the final recommendations are due out until next February 2019. So too soon for that one. There have been relatively frequent regulatory changes over the past decade, most notably with what was called the future of financial advice, where in 2012, I believe in mid-2012, these new regulations came out which essentially enshrined a … they don’t call it fiduciary, but it is the same thing.
Ashley: It’s best interests duty, which is maybe a better term, I might add. I’m all for fiduciary, a fiduciary fee only, whatever. But it can be a little esoteric, that word for some people. Whereas, if you just say best interests, simple that, you treat my clients like the same recommendations that tender love and care and give to my own mother’s financial plan. I think that that word is a little more accessible. So they reduced commissions on financial products and when I nit-picking, but the use of the term financial products would mean not insurance. So you can still be paid insurance, although they be paid a commission on insurance, but they changed how commissions are paid.
Ashley: So much more even like paid over a number of years and not upfront to reduce churn, that was a really big problem. Someone would sell a whole life policy or equivalent thereof, a whole life policy and then two years later, sell them a different one because it paid a big fat commission all over again. Whereas, now they’ve pretty much eliminated the incentive to do that, but I was saying they’ve eliminated commissions on financial products. And what I mean by financial products is the U.S. definition being anything where there is the possibility of does an investment with a possibility of gain or loss.
Ashley: So commissions on mutual funds or any other REIT or whatever that’s gone away. So it’s now created a very interesting universe of what they call fee for service. Where unlike in the United States where it’s impossible, it’s illegal to separate the commission on an insurance product from the underlying policy itself. It’s all one and the same. In Australia, you can do that. So you have these really interesting business models where people say, “I will do your insurance, but because it’s gonna take many hours to do that work and my professional expertise to make that judgment, I’m still gonna charge you. I’m not gonna charge you a commission. I’m gonna charge you something based more on time or value but it’s a commission free, a truly commissioned free insurance product.” And so, insurance products have become unbundled there, which is great, I think.
Hannah: So do you see AU models over in Australia or is it mainly like hourly rate models?
Ashley: You do and I’ll come back to that, Hannah, I apologize. You know what? I got carried away with my previous thought. I wanted to mention something else. So, your previous question was to do with, have these regulations made a big impact on things? And they’re saving for a time specifically was what you asked. So in 1992, they may, in fact, beginning, I think it was in the ‘80s, mid-80s, they made some changes which … and then were finalized in the early ‘90s, to do with the retirement system. And what they mandated, which it’s according to various think tanks around the world, it’s Australia’s retirement system is rated as one of the best top three, apparently.
Ashley: They’ve mandated at an employer level, a 9.5% increasing over the next eight years or something and capping out eventually in 20 25 at 12% of someone’s full time ordinary earnings. So no if, ands, or buts, if you satisfy fairly low standards for being an employee, your employer must contribute that into your, what’s called a superannuation fund, which is a retirement fund. You could think of it like a cross between social security and a 401(k). It’s important. It’s yet again, maybe too much in the weeds, but I find this kind of a node, for and I find it interesting.
Ashley: Unlike social security, which, keep in mind I’m a patriot and I’m saying this is a lot of love for the U.S. but also somewhat distanced given that I see multiple systems trying to accomplish the same goals. The U.S.’s social security system is unfunded and it’s not in your name, so you don’t have a personal account and there’s no guarantee on your future benefit because the social security tax is just paid into a big general fund that then is paid out to current recipients. Whereas a superannuation, you have your 9.5% plus your other contributions that you can make, like a pretax post-tax here, it’s like a 401(k) versus a Roth 401(k). Very similar concept to that.
Ashley: Your account is in your name and so, it’s relatively generous in its funding but not different, if you think about it. I’m actually just thinking of this for the first time now. So, which is embarrassing. But if you think about social security tax that you pay and your employer contribution, and if your company offers a 401(k), they already are contributing that much and more to or you are at least, and if there’s a 3% match, that it’s pretty much right at 9.5$%. So they’re already doing it. It’s just happening in an unprotected way in the U.S. Whereas in Australia it goes into your account. You can choose the investments, you can choose the investment manager and it’s there for your time.
Ashley: So people have, on average, they have bigger retirement balances, but the benefits cap out now at $1.65 million, which sounds like a nice, healthy balance to achieve, it’s also on an individual level, so you and your spouse could have that much, which would in theory, provide for a pretty healthy retirement. But this is the big but, there is no sort of security equivalent. There is an, what they call an aged pension. So maybe I misspoke. Maybe there is a social security pension, but if it’s skimpy here, it’s even skimpier in Australia. It is a bare bones pension amount. It is bare bones.
Ashley: So they make it very attractive from a both a tax and from an employer contribution to contribute to superannuation, so people do build a decent sized balances, but they’re really encouraged to mind their part because if it runs out then there’ll be doing it pretty hard.
Hannah: Yeah. It’s so interesting hearing how other countries approach some of the same issues and just so that different filter, that different lens. And if you’re dealing with an Australian client that has huge implications on their plan versus even like a U.S. client, they don’t have the social security backdrop, if you would.
Ashley: It’s actually funny and I always have to throw this caveat that I’m not a disloyal citizen of the U.S. or whatever. It’s just that I straddled these multiple cultures and so, see it differently. It is silly, if you think about the Bill Gates and Warren Buffet, Warren Buffet already, Bill Gates someday, will receive the social security. I mean, isn’t that ridiculous? That the wealthiest people in the world are qualifying for this aged care benefit. Why wouldn’t we just coordinate that with the tax system so that it encourages as incentivizes savings and then provides a disincentive if you don’t save. Of course, it gets complicated and the devil’s in the detail, but yeah, just an observation.
Hannah: Yeah. It’s really, it’s so fascinating to think of what if financial planners really spoke to policy issues of today. I mean, there’s just a whole world out there that we can really have influence and really help the general public.
Ashley: Absolutely. When that tax cuts and jobs act was being debated a year ago, I remember thinking, “Oh my God, are you kidding me? They’re talking about … there was discussion, I don’t know how serious it ever got, but about eliminating 401(k)s. I was like, “Are you kidding me?” I mean, we already have a pretty, a meager retirement system and to eliminate one of the last and greatest tax breaks that encourages really productive behavior on behalf of the citizens, it would just make no sense.
Hannah: I wanna go back to your career paths. So you find yourself in the United States, you have some money now to invest, you’ve been researching, you have this investment club. What happens next in your story?
Ashley: Well, thank you for keeping me in line there. I’m known for my ability to wander from interesting idea to interesting idea. So yeah, moved in … I traveled around the world for six months, moved to the bay area in 2005. It is important at this time, just to set some context here. I am a tri citizen of U.K., Australia and the U.S., and have been since birth. So, it’s taken me, it’s funny, it’s been about a year since I had this observation, this realization about myself, but people will instinctively say, “Oh, you’re an Australian and or you’re this or you’re that.” And actually, that’s not true. No, I am an American. My mother is American. Half of my family is American. I’ve got the Midwestern uncle. I’m completely American. I just happened to also have these other identities as well.
Ashley: So the reason I mentioned that is because I moved to the Bay and 2005 as a citizen, never went through any visas, green cards, nothing. So that’s all been education for me to learn what others go through with that. But, my brothers, two of my brothers were already over here, and I got a job working as of corporate financial analysts, so doing essentially budgets and forecasts at a company level. And I found … I think I wandered into that on a subconscious level. There’s a theme that I’m picking up here. I guess that was quite status conscious in my early 20s. I wanted to do something high income, highly respected.
Ashley: So, of course, I couldn’t be a financial advisor, that was just déclassé and not something that was appropriate. So I became a financial analyst, which was a fantastic way to develop misery and hate my job. And even though I made a lot of money, I was living the high life in the bay area in my mid-20s, I pretty soon, within four years had the decision made for me. I got fired. I love how Alan Moore talks about getting fired, this empowered me to tell what was otherwise a shameful story. But now I feel it’s been, gosh, 11 years since that happened. And I can now look back and say that was the event that caused me to become a financial planner.
Ashley: So, I thought I had taken the last job of my life, this Boutique Investment Bank doing financing on aircraft, and it was so fancy, so prestigious, but I hated it. It was the worst job imaginable. Your performance was measured by your hours in the office, not by what you did and how much you brown nosed the boss. So I was not cut out for that and I lasted I think two months and 29 days, and then they let me go right before my three months was up, and they would have owed the recruiting firm tens of thousands of dollars.
Ashley: So anyway, that was early 2008. I started reading a bunch of books and going to having informational interviews and just doing everything I could. I was like, “I am so sick of starting at the bottom. I want to find my career once and for all, what am I gonna be.” And it was not until I went to an information session, UC Berkeley extension, where they’re talking about their CFP program, which coincidentally ended up being as much of an advertisement for being an RIA as doing the CFP program, that I saw the light. The angels saying, the scales fell from my eyes and I thought, “Oh my God, this is it. This is how to have a fiduciary obligation, work as a professional, same side of the table. Independent. Not trying to push the product of any particular provider.” It was fantastic. It all came together.
Ashley: So, that was early 2000 and I may have misspoke, excuse me, it was a little over a decade ago, that was early 2008. SO then I began the CFP classes late 2008, then I started on the CFA in 2009. And that was a really bad time to try and get into the business because there was double digit unemployment and we had the worst economic crisis since the Great Depression. So after 140 job applications, come April of 2010, I ended up getting a job at a family insurance office. A family insurance office that found a convenient way to sell other financial services. All the while life insurance and disability insurance was really the primary product there.
Ashley: I would not have chosen to work there as my first job, but it actually turned out to be about the best first job I could have ever asked for, and I mean that seriously. So I learned all about various types of insurance and annuities, and got to go to the broker dealer conferences and went to FBA conferences, got my licenses, did the CFP study, and basically, learnt how 16 different advisors ran their business. And there was a lot of really great instruction, a lot of practices that I wouldn’t have chosen to repeat and didn’t repeat in starting my own firm.
Ashley: So I stayed there for two and a half years, and then I decided it was time, September 1st of 2002 was time to venture out on my own. And I thought I could do it at my broker dealer. I’d have a whole pass as one of the good old boys, like they knew me for a couple of years and they knew I was a good guy or whatever. But it turns out I didn’t have a whole pass. After less than three months, it’s kind of a recurring theme here, right? With less than three months they said, “You know what, you’re really not selling enough annuities or insurance. Your JDC is not where it needs to be. We could have put you on some sort of performance plan or something.”
Ashley: And so, that, to me, the writing was on the wall and that was when I said, “Okay, I’m gonna go start my own thing,” and I took the first half of 2012 to get my RAA registration through. That’s sounds like an awfully long time and I guess it was, but in California, keep in mind it really does take three months for them to even approve your application. So, this is mid-2013 and I was very good friends with Sofia Bera at the time and Sofia was friends with Mary Beth, and who else? I invited Alan into a study group and sorry, Sophia was also friends with Erik Reverse.
Ashley: So we started the study group together and we’re all young, independent RAAs with the same kind of thinking about independence and working with clients virtually, and so forth. And then Allan had the idea, “Hey, we can’t be the only ones around that are experiencing these.” And from that he launched XY Planning Network and it had just incredible success with that, which I’m very, very proud of him. And we’ve all gone on to succeed in our own ways. It’s really, really striking. I wrote an email to Michael Kitces a few weeks ago after I saw Eric had been interviewed and I said, “What is it, like four or five people from our study group? I’m the only one that hasn’t been.” And that’s really my own insecurities about wanting to claim success. But I think I’ve done incredibly well also.
Hannah: Did you always know that you are gonna go down this entrepreneurial path? Was that part of your vision?
Ashley: Yeah, absolutely. Hannah, you just ask … you go from one great question to the next. So yes, there was more detail in all of that prior story than what I led onto. So, the very, very first thing I mentioned was about reading Kiyosaki and being in the United States in late 1989 was the height of the tech boom. So I was very much into entrepreneurship, worked for a couple startups and then straight out of college, that was the first thing I did before leaving for the U.S. in early 2005, was I had a funded startup, wrote business plans, as the youngest finalist in this big competition back in Australia. So it was very much and I’ve always had a strong inkling to entrepreneurship which are brought into my financial planning practice.
Ashley: So, all the while that I was a financial analyst back in the bay area, I also had dabbled in a couple of startups too. So, when I launched as an advisor, I had a business plan and I went about it very much as an entrepreneur would go about it, and continue to this day. So, there are new ventures going to new ideas that have got all the time. In fact, last week was the culmination of an idea, maybe not the combination, that’s an overstatement, but it was a major milestone last week I launched. What’s astounded me, Hannah, and continues to astound me, is how there it is that there does not exist a multidisciplinary group of professionals, let’s say estate planners, CPAS, trustees, insurance people, bankers, financial advisers, that deal with the personal financial lives of expats. It’s incredible. There’s nothing of the sort.
Ashley: There is a group called STEP, the Society of Trust and Estate Planners, there’s wealth counsel. Both are very planning oriented. There’s a chapter within the AICPA that deals with this, but there’s nothing that’s cross disciplinary that brings us all together that lets us share the different perspectives that we have. So I thought if it doesn’t exist, I’ll start it myself like I did back in college with the Investment Club where I started that and grew that to a couple hundred members. So, I don’t know what future this idea has because I’m not at this stage in my life much like yourself with young children, I’m not too keen on having a super busy travel schedule.
Ashley: But anyway, last week was the first meeting of the group that is tentatively called, it will probably change names for reasons I may describe, but tentatively called the Forum for expatriate finance. And it’s a Minnesota professional group and we met, and we had representation from basically all the different professionals I just listed. And that came about from networking and finding them on LinkedIn, and just sending a cold email like, “Hey, this should exist. It doesn’t, let’s get together and start it and this could be incredible.” And so, here we are.
Hannah: You made a comment about how looking at another venture capital in that entrepreneur lens and how that was different in that helped you. And I know you know many financial planners who start their own firms, but what’s that different perspective or that different lens that you see? Do you have a distinction for that?
Ashley: I do. I think the … it’s both a help and a hindrance. The help was being a crafting business plan but being overly analytical about it. It was if you were intending on starting a highly scalable business where you’re gonna end up having multiple locations and layers of staff, and whatever, then a huge business plan might make sense. But I feel I instilled it from analysis paralysis where it’s easy to get lost in the weeds and think about the minutia. And that’s really not necessary at this level because really what we do is not that scalable. You’ve got your 50 to 100 clients that you can handle, and that’s that.
Ashley: There’s a great term I use, I came across in one of my early informational interviews, which I’m surprised hasn’t caught on and isn’t in wider use, but there’s gentleman with a very successful firm in Palo Alto who referred to high grading his book as in migrating upwards. Which is his goal for growth, is raise the minimum and raise the accounts, and high grade it. And that’s one of the various strategies you can employ. But, anyway, so having a plan is certainly helpful, but I think a one page business plan is really all you need. And the best thing you could do is stop staring at your navel, stop thinking about every little resource that you might purchase so as to facilitate your growth and just get out there and do it, instead of trying to apply that.
Ashley: The benefit of provided was on the finance side, which sounds funny. I feel like I’m overusing the word finance, but coming from the corporate finance background, I really was extremely rigorous and still am on the cashflow side. And that stuck with me yet again, for better or worse with how I do personal financial planning. I don’t think there’s any separating, in fact, this is throwing the fat in the fire, it might start a fight, but here it goes for the improvement and betterment of the profession as a whole. I don’t think you’re doing financial planning if you’re not getting into the cash flow.
Ashley: I think you just have to because the way people spending patterns change over their lives, you just have to understand it. Of course, we don’t have a crystal ball, don’t know exactly what someone’s gonna be doing in 30 years, but doesn’t it make sense to work with the best information that you have available to say, “Oh, you’ve got kids now, they’re gonna move out approximately when they’re, let’s say 22. So therefore, the support that’s gone away for them, the mortgage will eventually be paid off, so we can take that or we could …” Anyway, you get the idea.
Ashley: So I was able to incorporate that understanding of cash flow into planning for my future. So I’m not ashamed to say that I had a side hustle and a diminishing side hustle. It was more involved in the first year and less involved in the second year. And then I think went away entirely by the third year. So understanding this is what the number one error, and it’s not just, I shouldn’t say I think, I know the number one error because we’ve heard it from XY Planning Networks annual surveys. The number one error advisors make that go out independently is they might do a fine budget and forecast for what business expenses look like, but fail to fully appreciate the personal expenses.
Ashley: So they don’t realize, oh, you actually do need two years of personal expenses in addition to whatever business expenses you need to get going. Now there’s gonna be some revenue in there and that’s going to offset some of that, but people don’t seem to have such a delineation between the personal and the corporate side of finance.
Hannah: You have this great plan, this great background to start approaching financial planning. What did it look like when you first started your business?
Ashley: I essentially took the approach that if you could fog a mirror, you are a good prospect for me. And so consequently, I ended up with this motley crew of clients, well, all over the demographic page, which I’ve since had to call and refine, and focus my scope over the years, which in a separate thread, maybe we’ll get to this, maybe we won’t, I think is another form of raising your minimum is just narrowing your scope. Doesn’t have to be a fee increase, you just say, “I’m not gonna work with people that are outside of my target market any longer.” And that’s it.
Hannah: High grading.
Ashley: Thank you for catching on. That’s a great one. I’m sure the originator of that, who was a professor in that CFA program. He would love to hear that, I’m sure. So what was it when I started? I was fee based, in other words, commission and fees, which was fine, made sense when you have a surplus of time and a lack of income, and it made a lot of sense. But when did I? I think it was four years in and went fee only, and I had a bunch of informational interviews with other advisors, and they said that the amount of referrals you’ll get from NAPFA and from other sources, and just economy of scope from just focusing on that one area will pay for itself in about a year.
Ashley: And that’s actually been true and false. So it’s caused me no end of frustration that as soon as I joined NAPFA, I pick up on this thread which you may be aware of, and I’m not sure of it, it has been a very, very loud and ongoing thread with tremendous dissatisfaction represented by the members of NAPFA about how they’ve botched their new Find An Advisor search, which happened exactly when I joined. So, I think in the 18 months that have been FIA, I’ve had two inquiries through the Find An Advisor portal. Which is actually fine because I’m getting more and more disciplined about this Aussie expat niche.
Ashley: Anyway, so my 2019 plan in fact I can say it, look, if we were looking at each other, then they’ll look you right in the eye and say last Friday, an office made here in the building that I’m in, he approached me with a fine sounding prospect. A tax manager at Deloitte and his wife said, “Oh, can you work with them?” I said, “Unless they’re a business owner, Aussie expat, Pat, no, sorry.” And I felt good about myself, it’s like talk about sticking to your guns.
Ashley: And I think the final, final move will be the elimination even if that business owner target market. So it will just strictly be Aussie expats. And I think that’ll happen sooner than most realize like mid next year, I’ll be at that point. We’re 100% our new clients would be Aussie expats only. So that’s essentially in the shortest I could make it. That’s how my business started. So basically, anyone who’s growing through, this was before XY Planning work even existed, I was going to BNI, Business Network International, giving my one minute pitch every week. And that was great by the way.
Ashley: For someone that didn’t know anyone, didn’t go to school, you didn’t grow up here, how do you build a business with no contacts, no referrals, no nothing. And it was contacting old workmates, which that didn’t … that wasn’t that successful for largely because it was in a pretty non internal client facing role within the companies that I worked at. So I didn’t actually meet that many people anyway. But BNI worked well, so I would applaud that.
Ashley: And then I’ve learned a tremendous amount in the last year. My business has doubled, Hannah. It’s been absolutely incredible. In the past year, it’s doubled due to a combination of things. But what I’ve learned is content marketing and I think I can say something very valuable about that. And that is, if you really have a niche that’s truly unique and there are a few of them out there, but if you’re doing something that really few others are doing, then I think content marketing can be extremely valuable.
Ashley: But if your niche is women or if I say that tongue in cheek, by the way, a majority of niches are kind of silly, I’m actually trying to come up with generic niches, but which is why I said that or business owners, or retirees, or something like that. I just don’t know how successful content marketing is gonna be. I mean, because you’re competing with 10,000 other advisors who have the same niche. So that’s, yeah, I think that you’ve gotta balance your marketing mix between in-person networking, online presence, and content as well. It really show that you know what you’re doing and that you’re an expert in what you’re doing.
Hannah: Yeah. Well you don’t get much more niche than Aussie expats.
Ashley: Well, it’s funny you say that and thank you. I should thank you yet again, such a great question. There’s been a thread that’s been going on XY Planning Network now for about nine months, and I think it’s been resolved. It was resolved offline, so no one would have actually seen what was resolved of it, but I can fill you in here. So, there was a lady from the Pacific Northwest who I’ve got a lot of respect for, I think she’s a real up and coming planner. Meg Bartelt was in it and she did something that provoked an interesting reaction from me, which maybe we’ll get to maybe we want exactly what that was.
Ashley: But she essentially said, “Oh, your niche is Aussie expats. Mine is women in tech.” And I replied back respectfully, and I said, “There’s a difference. This is yes, Aussie expats is a niche and yes, women in expats is a niche, but Aussie expats is not just a niche, it’s a specialization. And that might sound all high and mighty, and it’s not my intent, but let’s think about it. Is there anything in the CFP curriculum that talks about cross border international? No, there’s nothing. So is there anything in there that talks about anything? Is there much in there that talks about special needs planning or it used to be before Doma was repealed as same sex relationships, special needs?” if I mentioned that already, I think I did actually. Late stage college planning, international.
Ashley: My point in enumerating this list is these are professional specializations, they’re not just niches, as in what’s the difference between a professional specialization. If you didn’t have specific knowledge, you couldn’t even identify the problems. So it took every bit of wordsmithing to write an email and say, “I’ve got women in tech clients. The fact that that’s your niche, that’s great. And you probably, I’m not saying you don’t do a better job. You might do a better job than me, maybe that’s not for sure because we haven’t completely.” Who knows how you’d even compare that, by the way, just as I think about it.
Ashley: But the thing is I know the questions to ask. I’m not a woman, but I have worked in tech, I have a woman’s name, but maybe, and maybe that’s some advantage, but I think that’s probably gotten me a few appointments that I might not have otherwise have gotten. But my point is if I was working with a woman in tech, who’s to say whether that particular person is more comfortable with a man or a woman? Totally individual, but I know about CFP, I know about options, I know about this, I know about that, and I always like to work in an environment.
Ashley: So now I would, but previously, I wouldn’t have referred that on. I wouldn’t have said, “Oh, this is in violation of the CFP and FPA code of ethics to do with competence,” and it just isn’t. I know the questions, I know what I’m doing, I know who I’m dealing with, I’ve got all the information and I don’t think I’m wandering into a minefield territory. Whereas International, I certainly don’t know everything there is to know. I mean, it’s embarrassing. I can talk for a minute before I realized I’m into a topic that I know very little about.
Ashley: I’m just preparing right now actually for a Webinar I’m doing tomorrow night on estate planning and I just … My clients are younger and I don’t know a ton about this. I don’t know I’m much better on the domestic front either to be honest. So I’m learning all about the estate planning side of all about it. I’m doing it. It’s an introductory program, but a perfect example of this would be two people even realize that if you have a non-resident or okay, what’s the definition of residency? There’s two definitions. There’s tax and there’s legal definitions.
Ashley: So if someone is not illegal resident, not as citizen, not a green card holder of the U.S. the estate tax treatment, the gift tax treatment is completely different. That’s one tiny example. What would you do if you saw a client who had a mutual fund that was registered in the U.K. or Australia? Would you even know that there’s such a thing as a passive foreign investment corporation? I mean, that’s my point. You don’t even know that stuff. How would you advise that client get out of that? So how do you invest in a way that’s compliant?
Ashley: That’s my point, is there’s niches and the Aussie expat niche I’m in is yes, it’s a niche but it’s also a professional specialty, and that needs to be delineated from simple marketing niches where there is efficiency and there is a deeper knowledge that someone may have in having dealt with many clients before, but it’s not specialized knowledge. No is an easy argument to win. You need only one exception, but there are a few questions that someone that CFP wouldn’t know in encountering a woman in tech or an airline pilot, or some of the other dentists, or whatever. These niches that you hear about, they’re not professional specialties. They’re just not. And I don’t mean to diminish anyone’s work. I’m just saying there is a difference between a specialty and a niche.
Hannah: Well, what I was so fascinated by is looking at the complexities of multi … It’s not multicultural, but it’s different … I keep catching myself on that, but working within different countries and working … like how do those countries work together? And I know, I think I had a simplistic view before I really started talking to you more in depth. But can you talk about, I mean, you deal with Aussie expats. Can you talk about the complexities of their situation, so much of what the CFP is just so you know when to ask more questions. And I feel like this is really important for planners listening.
Ashley: Yeah, absolutely. So I’ve devised a taxonomy to do with international cross border planning. You’ll know just that I said international and cross border and that is the taxonomy right there. So international is really broken up between expats people that have migrated away from the United States, so American expats, and what I called tongue in cheek inpats, so people that have moved to the United States. The problem set that an American expat will have, whether they live in Australia, or Austria, or Germany, or Zimbabwe, or wherever, is pretty similar from the U.S. side.
Ashley: Of course, they will have their home country issues, which only someone with knowledge of that market could deal with, but if you’re dealing with an American expat, as I said a second ago, there is a pretty consistent problem set that they are gonna face depending on their marital status, their property ownership, their age, where they’ve vested in security, et cetera, et cetera. An inpat on the other hand is gonna have a different problem set. And it’s too numerous to begin listing what they are.
Ashley: But I think perhaps a good way to attack this topic would be back at that thread that began with Meg Bartelt. So she reached out and she said, “Listen, I’ve got a woman Aussie expat who works in tech. I just want some time to ask some questions about.” And I was like, “Well, I’m about as open source a guy, as open to sharing my knowledge and helping as much as I can but up to a point.” And I think everyone’s like that, to be honest. You’re not gonna share your business secrets, right?
Ashley: So that led to a certain tension that began with echo, I was like, “Well, hold on a minute, Meg, are you competent in even dealing with this person?” And the conclusion I’ve come to is, it depends on the degree of their, what I call it, international complications. If someone moved from a foreign country when they’re a teenager or when they’re in their early 20s or whatever, they didn’t invest in any … they don’t have any foreign pensions, they don’t have any property overseas. They’re effectively pretty much just an American citizen, for all intents and purposes.
Ashley: Then I could easily see, “Hey, you know what, the degree of their international complications is so small that I think a domestic plan, it could do a fine job.” But, if someone was, say in there, probably starting from their late 20s and absolutely by their late 30s, you’re now entering territory where there’s just too many questions to begin even listing them here on the podcast. It’s okay, have you got a will in your foreign country? Is it valid in the U.S.? Is it common law or is it a different legal structure? Do they respect trusts?
Ashley: How a trust tax today the best thing to hold an asset in or the worst thing to hold an asset in? Are they pass through entities or are they separate entities that accumulate income within themselves? How’s the tech system there work? Have you got a balance in a foreign pension account that is there? Is it even possible to get your foreign retirement account balance over to the United States? How do you do that in the most tax and fee efficient way possible? What’s the relative merits of the insurance? Is there something better there? Is this something worse there?
Ashley: Then it depends by the stage of the expat, I defined three stages. There’s the working holiday crowd where they intend on moving back. There’s the dumbest island certain where they’re here for a … They don’t know how long they’re here for. Things are good, they’re gonna wait and see how the wind blows and whether they come or go. And then there are the permanent movers and it’s really the permanent movers where you’re gonna have the most complexities. And my advice which is seemingly self-serving, is don’t try and work with these clients.
Ashley: Hannah, I wanna start a word competition. A word competition. And I think we’ve all been guilty of this at one point or another. There needs to be a word to describe the planner that stretches their professionalism to handle an attractive prospect. Someone comes in the door and they say, “Listen, I’ve got a couple million dollars. I’ve been told that you’re really good. You’re a great planner. I wanna work with you. But I should also mention that I’ve got a child with special needs. We’ve got a business and we’ve got a 401(k) within the business, and we’ve got this, that property overseas, and blah, blah, blah. Can you work with us?”
Ashley: And I would put it to you that nine planners out of 10 would say, “Excuse me, did you say $3? Yep, I think I’m gonna work with you. And I’m gonna figure out all those other difficulties because that sounds really good to me.” I think there needs to be more of an enforcement mechanism and the way I should have had this interesting aside, the FPA in any membership organization is conflicted in their objectives. How do you police that principle of professionalism yet not antagonize your membership base? Because they’re trying to grow the membership base, not reduce it, right?
Ashley: And what they’ve done, they just announced this at the Australian FPA Conference a month ago. What they’ve done over there is they’ve chartered a separate organization. The FPA there has chartered a separate organization altogether whose job is enforcement. And so, the FPA itself can no longer be seen to be the policeman chasing people up. There’s now a separate organization whose job is to chase people, which is great because here, it feels like there’s no naming and shaming. People just do whatever they want.
Ashley: And I never, ever, ever, ever, ever, hand on my heart, set out to become some grouch that said, “You shouldn’t be dealing.” That was never my intention. And I thought that those that were like that were, like I said before, self-serving, but it really is the case. It’s like people … I’ll set a trap and it’s well intentioned, but here’s the trap. If someone did come to you and they said, “I’m a non-resident Australian. I lived back here. Your friend or your whoever told me that you’re a great planner. I’ve got $1.5 million and a 401(k). I don’t wanna touch it for 10 years. Can you manage it?”
Ashley: Okay? Not nine out of 10, 10 out of 10 planners would say, unless then you better, they would say, “Oh yeah, are you kidding me? Like a plan, a 401(k) can rollover to an IRA and just leave it there, and let it ride, and rebalance it, and invest it appropriately as per their client’s needs. But hell yeah.” Well, no, because you’re gonna find out that there are practically none. Zero, practically … I didn’t say zero, but almost zero institutions that would custody and non, what’s called a non-resident alien. Someone who’s not a legal resident of the U.S. has got that money, who was legally here at one point or another, who’s got that money, but you’re gonna find you cannot go anywhere.
Ashley: And unless you rejig your entire business model to handle that one client, you’re gonna find out after dozens of hours spent and emails and calls, you can’t actually handle that client at all. That’s what I mean. That’s where it’s a trap people fall. But I don’t want to forget about that word competition that we need to start to encourage professionalism and get people to swim in their lanes.
Hannah: Yeah. Well, and knowing what you don’t know, I think it’s such an important piece. We always talk about what does it take to be a profession and that’s one of the places, is you know what you don’t know.
Ashley: Yeah, you know what you don’t know, but also there’s a shift. There’s a cultural shift and I’ve felt it, Hannah, I felt that the strongest I’ve ever felt it at the Australian FPA Conference a month ago. And you probably think I’m a broken record now with how many times have mentioned that. But what struck me was the absence of sales strategies, the absence of the … There were zero sessions that I attended, at least, they may have been, but I didn’t even see them. There were zero sessions on how to prospect better or how to do this. It was all about how to be a better planner or a better business manager from a compliance perspective. It was nothing to do with sales strategies and marketing strategies. It was all about coming up with better advice for your clients. And that was the first time.
Ashley: Now, I haven’t been to a NAPFA conference, I’ve been in there for meetings, but not a NAPFA conference. That was the first time I had encountered that and that made me feel like a professional.
Hannah: Do you have any final words or thoughts for new planners who are coming into the profession right now?
Ashley: Yeah, I do. I think it’s an incredibly exciting time to be getting in. I think there is a very slow drift towards a fiduciary standard. I think it’s inevitable, the word has entered the lexicon of most sophisticated, prospects that you would wanna be dealing with and it just stands to reason. As soon as you learn that someone doesn’t infect you or is not bound by your best interest, then it’s pretty off putting. So, for those career changes and for those younger folks listening to this that are thinking about a career in financial planning where you may be geographically bounded, i.e. you don’t wanna move for whatever reason, the right opportunities don’t come up often. I’ll say that.
Ashley: They’re out there, don’t get me wrong, but I remember in the bay area, possibly the most densely concentrated area of RASs in the entire country, one of my former mentors said to me, “All you need to do is to find one of these solo RASs that’s going through a great growth spurt, hook on with them and that could be like taking a ladder up 20 positions on the board.” And he’s right. He’s absolutely correct. That’s true. Would have been. It’s just that there were zero people even in the bay area and I already was traveling an hour and 20 minutes each way to get to that job that I was telling you about before.
Ashley: So don’t lose the faith. It’s field of dreams kind of thing. If you can imagine it, trust your instincts that other people probably want what you can imagine and hold true, and your dream, your vision will be reinforced when you have these informational interviews. When you listen to podcasts perhaps such as this one, and you hear someone is basically described a career path that they’ve lived, that they’ve done, that you’ve only dreamt of. And that’s what I’ve done. No one has done what I’m doing. And but I have found there are other torchbearers that have come up to similar areas. And so, just continue to dream of how you might take the next step and have faith that someone has done it. And there is in fact a path forward.