Talking Money To Us | Grant Hackett – CEO of Generation Life

Candice: [00:00:03] Hello and welcome to talk money to me, your need to know financial podcast. Thanks for joining us today. I'm Candice Bourke

Felicity: [00:00:10] I'm Felicity Thomas, and we're back with our interview episode where we sit down with an expert in our industry chat about financial strategies to markets in all things finance now. In last week's episode, which we think you should go and listen to, we gave our listeners the lowdown on all things investment bonds and why people would consider setting one up. And this week we've got a very, very special guest lined up for you. Please welcome the chief executive officer of Generation Life, Grant Hackett, who actually joined the team back in 2017. Now, I'm sure his name sounds very familiar to a lot of our listeners as his most famous for winning the men's 1500 metre freestyle in both the 2000 and 2004 Olympics. So welcome, Grant. Thanks so much for coming on the show. 

Grant Hackett: [00:00:53] Thanks very much for having me, Felicity, Candice. 

Felicity: [00:00:56] Actually, funnily enough, I have actually met you before, but you wouldn't remember. So I was about nine years old and it was actually at the Crowne Plaza in Terrigal, at the pool and around the spa so far. 

Grant Hackett: [00:01:08] Yeah, nine years old. Oh God, you look a little bit different now, I have to say, so I cannot quite reconcile the two, but that's a small world 

Candice: [00:01:17] we're pumped to have you on the show. Grant. So thanks once again for joining us. Last week, we in our need to know episode. We talked kind about what investment bonds are, who might typically use them, and a few reasons why investors would find them attractive. So today with you, we're super excited to explore more about the particular features of the gen life products that you have and get more about into that. But before we do, here comes our financial disclaimer. Our chat today is not personal advice, even though we are registered financial advisors at Shaw and Partners. So please note that the podcast and the content discussed does not constitute as financial advice nor as a financial product. As always, you should seek professional financial advice before making any of your investment decisions. Jumping straight into it Obviously, you're well known as a sporting athlete and a legend in the swimming pool, but I'm fascinated to hear, you know, the story of actually how and why and what got you into the financial services industry after being an Olympic athlete.

Grant Hackett: [00:02:14] It's really funny. You know, ever since I was a young kid, I was always interested in finance and business and anything that was kind of transactional related. And it was back in 2003. I sit down actually with my current boss, and he was my boss for a while in the Westpac. That days when I see Joint Financial Services after swimming that sat down with Rob Kim and another gentleman from Macquarie Bank. And then really, I just said, you know, look, this is what I want to do after swimming. I'm studying commerce law, and it was kind of looking at investment banking or retail commercial banking. And you know, I really enjoyed my conversation with Rob and stayed in touch with Rob for many years afterwards. And I always kind of had this runway into financial services that I wanted to test to see if it was something I would enjoy. And I was literally a few weeks after the 2008 Olympic Games in Beijing, where I started working in financial services and never really looked back. Really enjoy, I guess, all the different aspects to it. You know, it's I've always loved markets, so I've always been into two investments and obviously going into the finance side of things, you get to understand that and a lot more detail. So for me, it was a space I was always interested in. I think swimming gave me an opportunity and a platform to have conversations with some really senior people in the industry. So to get some mentoring and some guidance on where I should go. And then I guess you get the opportunity to then get in there. And you know, I've studied, done my postgraduate degree and everything else like anybody else who's going into it to the corporate world. And yeah, just had a bit of a crack in and kind of, I guess, found my way into the position that I am today and I've always enjoyed. Probably two aspects of the job is one I love the people lead a side of the job. I really like seeing other people do well and seem step up in their career progress. I find that quite inspiring for myself to, to be totally honest, and it was probably the reason I was the swimming team captain and I did quite well in my own performance when I was captain, which my coach was always worried about because he thought it would detract from my performance. And on the other side, financial service is just a fascinating industry with so many different moving parts and obviously, you know, plays a big role in a lot of people's lives. So, yeah, for me, it was kind of just bringing those two aspects together, and I've thoroughly enjoyed it ever since. 

Felicity: [00:04:17] I got some great insight. Now, has there been any lessons actually gained from being an athlete that crossed over to your current role as a CEO? Besides, obviously, we do kind of. Aren't that, didn't you? With regards to being the team captain, I guess that was your start in leadership. 

Grant Hackett: [00:04:32] Yeah, I think for me, that's probably what I learnt about myself was, you know, going into more of a leadership role was actually good for my performance because sometimes I think you can focus on yourself too much, particularly in the sport of swimming, you know, as we see it, as very much an individual sport, except obviously to realise, but when you're executing, you're out there on your own. So, you know, it's almost like watching a tennis player in many respects. And so for me, when I actually go the captain role and I took that focus a little bit away from myself when I started investing in other people's performance. Is it actually help with my performance and that also came back to me because I started supporting me a lot too. So I really got that insight into myself and how I take and how I'm wired a little bit more with respect to the leadership side of whether it's a business, a sport. Some of the other things that I think are quite interesting that you can transfer over from the sporting world into the business world is obviously that the performance, the drivers of success, the principles of success and you've got to learn, OK, health goal setting or being able to bring a team together, create a high performance structure in sport, which is really, really simple in many respects and actually, you know, bring that structure over into the business world. And so I really tried to put a lot of time and effort and thought into that, particularly when I went into Westpac and I saw very different cultures from what I was used to on the swim team versus what I saw in the business world. And, you know, creating frameworks like just a clear definition of success and value in sport that is so easy in business. Sometimes that can be so great. Understanding the why the purpose, like when I was on the team, those forty one people that you all you want it to be the best in the world at what they do. And thirty six support staff that also want it to be the best in the world at what they do. So it's really easy to see everybody's why. But sometimes the purpose of the reason why people are doing what they're doing is not as clear in business. So when you start to pull that out of other people, you get to see an improvement in their performance because they have more clarity around their objectives and what they're trying to achieve. And then you create an environment that has a clear definition of success and failure where we're going and why we're doing it. From an organisational perspective, it could really drive the performance of the organisation, but more importantly, the culture of the organisation. We're all signing up for the same thing and it naturally weeds out the people that don't want to form part of that, too, because it's so strong within the individuals that are participating in the businesses. I guess overall objectives and the reason why we're trying to achieve those objectives. So yeah, there was a lot of things, and I'm always thinking back to my sporting years when I was kind of up and coming. What was the hunger and the desire that I had then as an athlete that really drove me to get to an Olympic Games and to win in front of my own country because I don't often think back to what it was like when I was winning, because that's when you've kind of got a lot of the hard yards to actually get there. I think about when I was 14, 15, 16, what are the things that were driving me them? What was it like when people were telling me that I wasn't going to be good enough? And how did that motivate me to my performance? So I think of all of those little things, and I just try and put those behaviours and those lessons into the business, and I try and get people along that journey. So so we're all signed up to the same thing. 

Candice: [00:07:32] I really like that because what you're effectively saying is you in you put a lot of effort in the long run to invest into yourself, hitting the pool early when you were at a young age to then set yourself up for that career. And that's that's what we can say in business. And that's what we can say as advisors, as we always say that to our clients is let's invest in you now. So your future self is going to thank you for it. 

Grant Hackett: [00:07:53] Yeah. And it's it's really hard for people to see that sometimes you know you do need coaching, you do need guidance. And it's really funny. You know, we're sitting here talking about financial services and giving financial advice, and it's such an important aspect of life because it's something that affects all of us, whether it's saving for retirement, whether it's buying your first home, whether it's investing to make sure that you've got enough money to be able to support private school fees. And it's such a big part of our life. But it's funnily enough, we don't always have a coach in that area. We don't have. The financial adviser gives us the mentoring of the coaching, but you know, we'll go and talk to Tiger Woods, and he's got a coach who will go and talk to, you know, some of the great tennis players or athletes out there. Michael Phelps is of the world. They're all amazing and the best in the world of what they do, but they still have a coach who keeps them accountable and keeps sharing the vision with them, who keeps putting the pillars and the programmes in place to make sure that every day they're getting the absolute best out of themselves. And it's the same when it comes to your finances to get the absolute best out of yourself and your own financial well-being. You need someone they're supporting and driving that with you. And and just that accountability. It's like going to the gym, right? Like, I'll go to the gym tomorrow morning with a mate. I'm doing it on my own. Maybe I need that extra bit of rest. I think I'm a little bit tired, but I know if I'm meeting someone there and I'm accountable to that, or most likely pull myself out of bed and get to the gym. 

Felicity: [00:09:08] Oh, that's so true. You've basically sold to all of our listeners. The reason that they need a financial adviser. I mean, this is great. We'll just play that clip and send it to new prospects. 

Grant Hackett: [00:09:18] But it just makes sense, right? Like, it's just logic. Like if you want to be really good at something and get an outcome and get a coach, get a mentor. It's like when you go to the gym, you get a personal trainer. It's like when you want to be good at sport or you want to see your kids good at sport. What? What's the first thing you do? You go around for the best coaches, the best teams that you want to form part of. Same financial services. Go get the best advisor getting out there. Go and talk to your friends and family who've got a financial advisor will work with a certain business and get their insights and see what their reputations look. 

Felicity: [00:09:47] Definitely. And I think another really good point which would be relevant in your life and ours is it's not going to happen overnight. You know, you're not going to make money in the markets overnight, you're not going to become an elite athlete. Overnight, it's a long term game plan.

Grant Hackett: [00:10:02] It's like it took me 15 years to become an overnight success. Is this so true? It's like we saw all this amazing talent coming to somewhere, but they've been grinding for 10, 15, 20 years. It's the same in financial services. I mean, what a Warren Buffett called the yeah. Yeah, it's like it's so true. Like, and that's what investing is like, right? It's it's sort of a caste here. I've got this massive goal, and I always use the comparison of my goal in the men's 15 minute freestyle when I had a goal to win the Olympics. It's a 30 lap race. The best in the world at the time was a fellow Australian Kieren Perkins, over four laps behind him. Now you win and lose by 0.1 of a second in the sport, not by over four laps. So it was just a goal that was so far out there. And it's like saying I need a million dollars to own my home or whatever it might be, and I'm earning this much a month. It's like you start at a really small step, but then you make these these increments, these increments, these increments, and you do it over time and you maintain the discipline and all of a sudden got a look back and you, well, I've made some serious progress and you feel really proud of that. And then what happens is you get this thing called motivation. You think I want to do more of that. I want to try harder. And that's and that's the biggest problem. And I often talk to people about motivation. They sit there waiting for motivation to hit them. Motivation doesn't hit you first and then you go on to achieve your goals. You actually just have to stop when you feel tired, when you don't want to do it, when it just it feels like, you know, that goal is insurmountable. That's when you start. Then all of a sudden, those those little steps or those little milestones that you get on the way, they're the things that start to produce a motivation, to want to do more, to want you to try and or try hard or whatever it might be that you're trying to achieve. And I know that's what happened to me in sport. Every time I go to those four laps of, wow, I'm only three laps off now. I'm only 100 metres off now, like, yeah, okay, I want to do more and more and more. And it's exactly the same with your finances soon as you start seeing those milestones, all those goals that you those small goals are digestible ones that you hit, you're ready if you're ready for the bigger ones. 

Felicity: [00:11:58] Well, we're feeling very motivated right now. So I guess for our listeners who might not be familiar with investment bonds, how do you describe what gen life do and actually offer for investors? 

Grant Hackett: [00:12:09] It's it's really simple. I often say to people when they ask about investment bonds, what is it? I said, Well, it's just another legal structure to invest in. So then you go, Well, you know, you can invest through a company, you can invest through your own name, you can invest through superannuation, you can invest through a trust. Investment bonds is just another category like that that you can invest in. Now, the most comparable one of those structures that I just referred to that it's like is superannuation because it's an after tax paying structure. Now we all know super because we're all, you know, pushed into it because of the super guarantees, of course, and there's just so much commentary around it. But if you never heard of superannuation, it would sound very complex. And I don't know how this works. And investment bonds sits in this spot where because it's not as mainstream people don't often understand unless you sort of explain it to them and go through the details a little bit more. The big difference between US and superannuation our headline tax rate is 30 per cent with really rad backs and franking credits. In the way we manage the tax position. It often sits below 20 percent for a lot of our funds that we have on our investment menu now that you and your financial advisor choose. And so, you know, comparable to to superannuation with the headline rate of 15 percent. So the best way to explain it just another legal structure that's been around much longer than superannuation with very few changes in it. And it's an after tax paying structure, so you don't have to worry about doing your tax returns or anything like that. So from an administration point of view, very, very simple, very, very set and forget. 

Candice: [00:13:31] And so the process involved, you don't necessarily need a financial adviser to set one up. Talk us through the process 

Grant Hackett: [00:13:38] the way our inflows work. So if we just look at last quarter, we did, you know, around one hundred eighty two million dollars with a total inflows. Just over 90 per cent of those inflows come through the financial advice network. So it's a lot of it's coming through the advice space. And that's purely because of some of the reasons that I just spoke about that they are a lot more educated. They understand this investment structure. They trust it a lot more. They know how the aftertax position works. And then about eight or nine per cent actually come from the direct channel, which we haven't put much time or energy into at this particular stage because we're big believers of financial advice. So if we go out there and educate the financial advisors, they'll then educate the clients. And that's the way we start to produce, I guess, a bit more scale within our business as well. And we're big believers in financial advice, too. So from our point of view, we are seeing that direct client base actually grow over time. As you know, there is a little bit more education out there. People can appreciate that there are caps in superannuation. So it's like, Well, where do I put this pool of money that I would normally be putting inside superannuation that I can't actually do anymore? And that's really been a big part of the renaissance of investment bonds for us as well. And one of the big reasons I actually joined the business 

Felicity: [00:14:43] well, and they're also not obviously locked away for as long as superannuation pending your age and how long you actually have to retirement. 

Grant Hackett: [00:14:51] Yeah, that's that's the big difference between us is that you've got full liquidity of your fund. So if you set up an investment board last week, you can access those funds. There's a lot of incentive to hold an investment bank for a long time because obviously the tax position improves over time, and then once you get to 10 years onwards, there's actually nothing to declare on a tax return. So if you take a full withdrawal, regardless of how much it is, you don't have to write that down. That money that goes from generation life that you've been holding in your investment option over to your bank account stays that $100000 will be $100000 tomorrow, and the next man is not going to come knocking on your door. So and also for people inside 10 years is obviously a lot of tax incentive around that as well, because even if you take a partial withdrawal, it's always a portion. So the ATO always look at some of it as capital. And some of it is income. So from that point of view, if you're on a high marginal tax rate and you've been paying under 30 percent with us, depending on the investment options that you're in and then your pro-rated, I guess if you're taking a partial redemption inside 10 years, obviously the overall tax that you're paying, if you were to do that investment option directly under your own name, you're going to find yourself in a much, much better position. So you have the liquidity is a big difference between us and superannuation. And obviously, there's a lot of other ancillary features with investment bonds that people don't appreciate as well.

Felicity: [00:16:10] All right. So we've got another question for you then why would a parent or grandparent, for example, use an investment bond to actually invest for their child or grandchild future rather than actually having it in their own name? 

Grant Hackett: [00:16:23] Great question. The reason that you would actually pass it on to someone else or you would leave someone else as a beneficiary is because there's two. There's two probably three reasons one's there's a natural tax arbitrage in there. If you're in a high marginal tax rate, the quite wealthy actually go through a few reasons. The next one is that it's very much said forget. So you don't have to worry about the administration, the tax return, you know you're on to quite a low tax rate. So therefore, you know that you're just putting money into that particular investment and it's going to be safe for a future purpose. So we see a lot of grandparents do that because they like to contribute to private school fees or some other future costs. Maybe a home deposit particularly hasn't been so expensive in this country. Other real aspect is around estate planning. A lot of grandparents want to leave something, you know, a couple of generations down to the grandchildren, and they don't want it to go through their kids. And there's a few reasons why we've got a heap of case studies that we could go through. But sometimes the kids might be divorced, but there's children from that marriage, and they might be worried about that marriage. And so they want to bypass that generation for whatever reason it might be. And you can actually do that through an investment bond and know that those beneficiaries will 100 percent receive those funds because of the bonding nominations. Because it's a non a status, it doesn't have to flow through your estate. So it's really, really powerful. And we do a lot of business for estate planning for these exact reasons. Also, the other aspect which is quite unique to generation life is we have a thing called a future event transfer facility. So basically it's like holding the money in trust for a future point in time. So if you look at those grandchildren, you go on to give each of them $200000 each for my state. But wait a second, that one's aged five. That one's seven. That one's 12 years old. You're like a little bit young for a couple hundred thousand dollars. I think someone else would probably spend that money for them. You can say they're going to get those funds when they turn 21 years of age, and I want to control how and when those funds actually flow out. So you can do that by a certain capital amount coming in each year or a percentage of any which way you want to cut it. And then you can actually lift those restrictions at a certain point in time so they might get to age 30. You might say I don't want any more restrictions than I can access those funds if that's something you want to do. So the flexibility and the security is so powerful with the investment bond. And then you've obviously got this overlay of the tax arbitrage that's in there because you're not paying market tax rates as well. 

Felicity: [00:18:42] That's really important and that's great to hear. So I mean, following on from that, do you actually invest in these investment bonds or child builders for your own children?

Grant Hackett: [00:18:51] Yeah. So you're setting it up for for Ed Wood for his future costs. So I am going to vote for my first two kids, but absolutely. And it's funnily enough, a lot of the investment options that we actually have. Our chairman is one of our biggest investors, so ceded a lot of our strategies and he's and he's done a lot for our kids. So a lot of people within our firm. And funnily enough, even when I'm going out there and talking results from a corporate point of view about how Generation Development Group is doing, you know, whether it's half year or full year results, the amount of people that are going to be now in financial services that are saying offset these ones up for one of my kids or for someone else, it's it's quite quite remarkable. So that's really, really nice to see. 

Felicity: [00:19:31] Yeah, that is really putting money where your mouth is, which is what we do as well. 

Candice: [00:19:35] And we went through that as an example in our last episode. I've recently just had a baby girl. Congratulations. Thank you very much. And she's one lucky little girl because she's got an investment bond set up for. I pick the vetting age for 25 years, but I like what you were saying. You know, you can control your, your children's or your grandchildren or your great grandkids, you know, financial future and set it up and almost control from the grave. It sounds a bit morbid, but. A lot of a lot of our clients, you know, they worry about these things, and it is like setting up a testamentary trust without all the legalities involved in it, right? Because it's protected,

Grant Hackett: [00:20:08] it's so powerful because one of the big things that people don't understand, too, is that these tax free upon death. So it doesn't matter if you set one up last week and then it's going to a beneficiary. If there's any tax liability that's been created in that short time frame is no tax to pay. So, you know, for a lot of people I've got, I guess, all of these unique estate planning features that can actually solve some really complex problems. But then you've got all these tax benefits associated with it, too. So it's really, really powerful because I mean, that's one of the things that a lot of people are worried about when they're transitioning wealth. What are the tax implications? What are they going to do with the money? Go to these baby boomers that have created all this wealth, particularly even their own properties. But in terms of passing it down in what they perceive to be an equitable fashion to the next generation is really challenging for them. And investment bonds come in and help solve the most complex problem because I've had some nightmares when it comes to estate planning, you know, situations where there's two or three children in there. One's been looking after the parents have been quite elderly or maybe over in aged care or whatever it might be. And so I just wanted to leave $20000 extra to say thank you because the other kids might live interstate or overseas. But then that's fractured the whole family. They've all gone into fighting over these states, spending money on lawyers because the big difference with us, if you want to challenge one of these and of course, you can challenge anything that you want to, you have to use your own money where if you're going through these state and probate, you can actually use the funds from there to fight one another. So you fractured relationships and using the funds that someone else has really worked very hard for it to build up over the course of their life so it can avoid a lot of very sad situations. Yeah. 

Felicity: [00:21:44] And I guess this is a kind of a good leeway. Back to superannuation, right? Because the Baby Boomers do have a lot of money in superannuation and a lot of them are actually worried about the tax that their adult children are going to have to pay upon their debt. So this is potentially a good solution, isn't it? 

Grant Hackett: [00:22:01] Absolutely. So we do a lot of modelling for people that might be, you know, sort of a no tax environment when they're retired. And, you know, but they know that there's a taxable portion that sits within their superannuation. So so we look at that and we look at, okay, if you're right near the end of your life going into to our tax structure, what's the what's the tax that you're paying inside the investment bond versus what you could call that death tax that might be sitting inside the superannuation as a liability and will work out, OK, you know, if you pass away within 15 years time, we're inside 15 years time. Sorry, you're actually in a better tax position with the investment boom than what you are with your superannuation. So we make sure that we have a lot of support here for financial advisors if they've got a unique situation. And I think what is second, they've got an estate planning issue. This is something normally I'd go out to the estate planning lawyer and bring the accountants in to look at testamentary trusts and other sort of structures that are quite expensive to set up and very expensive to run over time with the investment bank could be a much simpler and even in a lot of circumstances, much more effective solutions. So we make sure our technical team, you provide all the analysis to the financial advisor. You know, integrity and credibility is very important in business. So we'll say look at structure is is superior or our structure isn't superior as to what you're proposing on the other side. So go with that one or perhaps take a second look at ours. 

Candice: [00:23:19] That's awesome that you go that extra mile to educate and inform the financial advisor because it is a one on one trusted personal relationship at the end of the day. And you know, it's our job and duty of care to make sure we actually exploring lots of different options. So I want to come back to, you know, so it's obviously an investment bond you can use for setting up the next generation, the childrens and so forth. But you can, as you, as you've explained, grant use it for an early retirement option or even if you're already in super and you might be in pension phase, it's another alternative. But I guess when you decided to make that decision with your financial advisor, what typical investment options are there and how does the board and yourself actually go through the investment process to select these investments that you can select inside the bonds? 

Grant Hackett: [00:24:07] Yeah, that's a great question. Candace It's actually it's quite an extensive process for us to get on our investment menu. So we've got an investment committee that's set up that we go through a whole due diligence process with our investments team, which is another team that sits within the business, obviously. And you know, you can select any investment option that sits on our menu. So we cover every single asset class so you can create your own portfolio. You can credit core satellite approach. Whatever it might be, you might go into one of the diversified options. If you want a little bit more simpler and set, forget so, and depending on obviously what your risk profile sort of is overlaid over the top of all of that. So for us, we want to make sure that we've got the right managers on there, that they've got the right performance. We monitor it obviously very, very closely. You know, there's been some big name managers out there at the moment that have seen some, you know, turbulent period. So, you know, we're on the phone to them. We're checking in with them. On a very consistent basis, and for us, it's something that we take a lot of pride and a lot of time and effort into, and look, there's kind of three key criteria is that really the we look at as an investment committee, as a firm, if someone's coming onto our investment menu or we're removing them for some other reason is one, you know, it has to be aligned to the financial advice network so financial advisers have to be using them. So we rely on a lot of feedback from that has to be on that approved product list, not just, you know, for for us, but all the dealer groups and selflessness practises that are out there. So there has to be some sort of alignment, no good putting on an amazing performing fund, but no one can actually write it because it doesn't sort of take their risk and compliance box. The second part is we also have to have a significant tax arbitrage in that it's no good putting strategies inside and out the tax planning structure. If we can't bolster up the value proposition through our tax structure, so we do a lot of homework on that and all sorts of, I guess, stress testing scenarios and all sorts of macro environments that we might find ourselves in to make sure that those funds are going to outperform on a consistent basis. And then the other aspect on it is, you know, brand the team, you know, the quantitative, the qualitative overview. So really just getting into, I guess, the detail that funding their processes, the filtering processes, if it's an ESG fund, a responsible investing, you know, investment option going on the menu, we make sure that they are actually doing everything that they cited doing. It's not just greenwashing. So yeah, it's quite quite an extensive process for us here, and it's even probably more so with us because we have a really interesting, I guess, set of categories that we have in terms of optimising the tax position within our funds. So we've got tax optimised, tax enhance and tax advantage. Now these three layers don't sound too much when you sort of rolling off like that. But what we've been able to do here at generation life is because we've grown to well over two billion worth of funds. Under management is a we talk with the fund managers and we say, hey, instead of being managed in the normal unit size structure, we just get poured into that particular strategy with all the other investors coming from all of the different practises and channels we have. Our assets sit outside so we can more closely manage the after tax position, and we can do things within our tax structure like offset a capital loss against income. We normally have to just carry that forward. And so you've got a capital gain and then you could offset it. So for us, through this tax optimised series, we're able to bring down the tax liability quite materially as opposed to what a lot of other people can. So for us, it's important when we're talking to fund managers that we can actually work with them closely to make sure that we can set up these institutional mandates to maximise the tax position for our investors. And we've seen some amazing results since we set that up 18 months ago for quite a few of our strategies. 

Felicity: [00:27:42] That's fantastic. 

Candice: [00:27:43] Well, in a moment, we're going to be chatting more about the investment process within gen life itself and hearing more about the current markets. You kind of touched on that some keen to pick your brains on that. But before we do that, we're just going to take a quick break to hear from our sponsors. You mentioned earlier, obviously, the caps in the superannuation environment and one of the reasons you did join the firm was to really, you know, change that particular perspective around investment plans and how you can help in retirement situations. So all of the innovations that you just kind of go through, what's that meant in the results for the inflows of the products in your life? 

Grant Hackett: [00:28:19] Yeah, it's it's to be totally honest. It's been quite remarkable when I when I joined here in September 11th, which is a very easy day to remember. One for two reasons, of course, what happened in New York. But it's also my twins birthday and in that year. We did 131 million dollars worth of inflows, which is which is not a bad number. Fast forward to where we are today, and we're doing that in eight or nine weeks. So it's been a big step up in terms of inflows. You know, the business was kind of around for, you know, 13, 14 years at that particular point in time, back in twenty seventeen and, you know, had just over 700 million dollars worth of funds under management. Fast forward to today, and it's well over $2 billion that that we're actually managing. So there has been, I guess, a huge amount of inflows, a big uplift in terms of business and obviously the performance our business, a lot of the innovations that we've brought in and the team that we've got in, we've got a wonderful distribution team that really, really care about that financial advisers and, you know, helping support their businesses as well, which is a sort of big underlying ethos for us in terms of the way we approach things and want to be user friendly business and also, you know, help advisors through what's been a quite a turbulent time for them through the royal commission and everything else. And you know, we're kind of getting a bit more back on track now. I think more broadly as an industry, which is great to see. But yes, for us, we saw that opportunity within superannuation that people just couldn't keep putting money in this after tax paying structure in this low tax environment. And what was really funny about that was you probably expected more of a Labour government to to introduce those caps and superannuation where the wealthy were just putting hundreds of millions. Some people have obviously got inside the superannuation, but it was a liberal government that actually did that. So and I think the other aspect that it's created in some of the feedback, what we hear is, look, I love my superannuation, but I don't completely trust that there's going to be more rule changes. There's not going to be more rule changes in there. And I think that's where we come in and we say, well, we've had one change in just over 20 years. So for us, we've kind of got that empirical data that we feel like a safe city structure and the eyes are really on that three trillion dollar pool. Not this kind of 12, 13 or 14 billion dollar pool that sits over here and investment. Yeah. Well, I 

Felicity: [00:30:24] mean, it is funny, right, because the government does want everyone to be self-funded retirees, but then they've actually made it a little bit harder to be a self-funded retiree, which actually makes sense why people are more leaning towards the gen life investment bonds because they can't get more into super, but they still want a tax effective, you know, retirement stream. 

Grant Hackett: [00:30:43] Absolutely. And this is where we talk about where, where a sleeve? You know, we're not the silver bullet. We form part of your overall strategy. So we're certainly not the holistic approach where we're a piece of that part and where we fit in is we just solve a particular problem. You know, you want to transition to retirement, Elliott Well, you know, preservation age is probably going to get pushed back, particularly for people in our age group category, like, what am I going to actually see my superannuation? Exactly.

Felicity: [00:31:11] It'll be like, you have to be 70. And I think you. Yeah. 

Grant Hackett: [00:31:15] Correct. And so for a lot of people in our position where you're going, OK, that age is probably going to be pushed out a little bit more or there's going to be more requirements when you get there, you think, Oh, I want to have a transition to retirement. So a lot of people that might be on, you know, a tax rate that's over 30 cents in the dollar. So naturally, there's a tax arbitrage in there. They're putting the twenty five thousand dollars, you know that they can each year into superannuation or a certain amount that they're happy with. And I think we'll all want to be able to have an alternative. I want the choice to retire early or dial down my working hours of working days and really enjoy this part of my life and transition a little bit slowly. But I'd love to do it tax effectively where you know, and this is where the investment bank comes in. If you've held it for 10 years plus and then you're taking a distribution from it, there's no more tax to declare it the Darling Downs, the working hours. You've got this great situation where you kind of minimising your tax liability, you still getting the right amount of income that you want to in terms of satisfying your lifestyle. And you still got that purpose of working, but not to the extent that you want it to before. So it's a really, really nice enabler of the lifestyle that you're looking for, particularly for people that sit within, you know, sort of the thirties or forties, and they're a little bit proactive. Look, and I think the other aspect that just touching on investment funds that I think is really important, too, is that there are these uses regardless of where you sit on the spectrum. So, you know, for a lot of people, like all you know, are not necessarily getting the tax efficiency out of that because I'm retired and I'm not paying much in tax. But then they come to us for estate planning because of the estate planning part is a lot more important than whatever tax efficiency that they might have been looking at to to create or they're not even worried about or concerned about as well. So what's interesting about? Simon Bonsu is that there's just so many features to it, and we try not to overwhelm people with it because another feature that's really important is that it's not out there in the marketplace. I mean, a lot of people don't even know about investment bonds is that its credit are protected as well. So on one sixth of the Bankruptcy Act is credit to protect it. So then you start lining up all of these features you like. Well, I've got a tax arbitrage in there. I've got liquidity so I can access my funds at any point in time. I've got more security around my estate planning and well, I've de-risk my overall wealth because if something blows up as a business owner, I still know this money that I've put away over here is protected as well. I'm like it might have been if I was in a trust or something like that, but the accessibility, if you have something go wrong and fold to financial hardship, you don't even need to wait for that 10 years for there to be no tax liability to be created or to be declared, you can actually take those funds straight away. So it's it's the features of an investment, but a really powerful, but it's the flexibility in the strategies that you can deploy that really enhance it depending on enhance it, depending on your circumstances.

Candice: [00:34:01] I think that's a really key point. You know it, it is a like you were saying at the start, you know, you're setting up, you're putting in the hard work now you're setting up your financial future for those certain, you know, variables to play out in your favour. And I guess really topical, given the volatility we're seeing in the markets, a lot of geopolitical risk, we've got to probably election year here in Australia. So lots of moving pieces to the market and someone's financial planning conversation. So to, you know, let's talk about the downside risk, right? You're a small part, like you said of the holistic side of someone's financial future. But what? What happens when it goes wrong in the market? Have you had to sit down with your investment process and go through the mandates and go through their financial products and managers that you do used to say, that's a red flag? Maybe we need to, you know, talk about what goes wrong in the industry, I guess. 

Grant Hackett: [00:34:51] Oh, absolutely. I mean, we have to look at all sorts of parameters when we're talking about a fund manager on there. And you know, is there any sort of stalled rift? Has there been a team turnover? How far is it performance of benchmark? So there's all sorts of aspects that you need look through and you're also going to look through, I guess, a bit of the noise as well. Like some strategies aren't going to perform well in certain environments, you know, whether it's value, whether it's growth, whether it's an absolute return strategy. So that's that's why it always comes back to diversification, right? Like it's like instead of just throwing my eggs in this particular investment bucket, so to speak, it's making sure that I've got a strategy that I know is going to grow, which grow over time. But I could sleep at night, and that's the most important aspect of investing. Definitely, being able to sleep at night is so good. It's good looking at a fund manager going, Wow, they've spent three years at a 40 percent return. I'm going to go on that one. But then all of a sudden their volatility is so high that they could actually have a 40 percent down month. And I've seen some managers know that of this menu, but some hedge funds where you've seen them up to almost 60 percent down in a month when you look back in March 2020. And unless you and you could be 60 percent up, probably at some point in time as well, but you've got to know what level of volatility, what level of risk will allow you to sleep at night. And I think that's one of the most important aspects when it comes to investing and certainly when it comes to, I guess, markets that are growing. You know, there's a lot of winners in those types of scenarios, plenty of liquidity in the system, but you know, you have to make sure that you've got a bit of a black hat on sometimes. And every time you're having the conversation about an investment option or what sitting on the menu, what happens if it all goes wrong? What happens if there's a massive correction within the market, how these strategies are going to perform? Are these teams set up to be able to endure that and for how long? So these are all the questions that we need to consistently ask ourselves to make sure that we're always on the edge of our seat. You know, one of the big things is to kind of underlying principles are really believing is one is always stay humble and always work hard. So humility stops you from creating blind spots in anything because as soon as you think you've got a soliciting is doing well. And I know I've learnt this from my sporting career. Something comes and bites you. And the reason it bites you is because you were on the lookout for it. You went so saying a little bit, you know, level of healthy paranoia. So I think that humility is really important. You've got always going to be asking yourself those really tough questions. And the other aspect is you've got to you've got to work hard. The only way to really produce results, and that's kind of how our business operates. And I think we're really good at not getting ahead of ourselves. And as soon as we have a good result, we're kind of saying, okay, we have good result. Like, you know, after your biggest successes, normally the biggest value is come and vice versa. So we've almost got this internal paranoia of making sure that we're always moving forward and we're not plateauing. Some of our approaches psyche within the business. And I think we have that overlay when we're talking about some of the investment managers that we're looking at on the investment menu as well.

Candice: [00:37:48] And I think, you know, just want to bring in that sport analogy as well. You know, your own investment mandate, your own investment philosophy with all the volatility going on and. No doubt you have a financial plan, you know, one to five, 10 years. What are you saying personally in the markets as an opportunity? 

Grant Hackett: [00:38:07] It's really because it's a very personal question. I'm glad we've got that we started this podcast. 

Candice: [00:38:13] Yeah, this is not stock advice, guys. 

Grant Hackett: [00:38:15] Oh, look. I am a big believer in diversification. And it's funny. The more like kids I've had them up to number three, the more I get, like, hell bent on that because I feel more and more safe and I can sleep at night. So, you know, as I was kind of coming through like my swimming career and, you know, just into business and didn't have kids, I was really all on growth assets the whole time. Like, you know, which there's a lot of risk with a lot of those where, you know, I can say over the last kind of three years, a lot of that psyche for me, I've gone into, OK, where can I produce a little bit more security and cash flow? So I've really started as I've gotten older. I'm forty one. I started just to diversify more and more and go on, Okay, what are the assets that I'm now going to continue to produce cash flow even in a sharp contraction? And what are the ones that might draw out? So I'm I'm a spreadsheet sort of nodes. I'll be sitting there. I'll be going through all sorts of different assets that I'm in all sorts of different investment. What's the purpose? How do they how do they go in the good times? How do they go in the bad times? So. And for me, when I when I look at that overall landscape because I mean Australia, we're always long in property, right? We always have a heap of property. It's the Australian dream and we've all got our money in that. But you know, property is not liquid. Property is expensive to get in and out of this stamp duty. This commission is to get out of this legals is, you know, people can look at the value of the house right now, but to transition into another one or a better one, it's going to be a lot more costly. And then when we got to get this growth spurt that we've had over the last years again, or is it once in a lifetime that this growth that we've seen more recently? So you know, for me, as I get older and the things that I look at at the moment and go, Okay, where are the assets that have had a lot of growth? Should I be like crystallising some of that? And should I be diversifying that risk out a little bit more because it's not going to happen forever? There's always the FOMO, and be careful when you start feeling that emotional need to get into an asset class because you see it growing. Probably don't, because that means it's probably at the tipping edge. So, yeah, so the the best sort of thing that I can see at the moment with so much uncertainty, a lot of volatility coming back into the markets, as we've seen in January 2022. So be diversified going to assets that you feel safe and secure around, know your own budget as well and how those kind of that asset liability matching goes even in the hot zones and the good times. And, you know, save any surplus for a rainy day. 

Felicity: [00:40:45] I think those are great comments because I think we're actually feeling that euphoric state at the moment in NFTs. At the moment, everyone's buying NFTs and crypto. 

Grant Hackett: [00:40:54] We just felt it right and that's obviously come off a lot recently. But there's all these sort of things that I'm like when it comes to these types of alternative asset classes. Yeah, I'd be happy to lose its casino money. It's you can see my money beat. People had to make 200 percent out of it, but be prepared to lose the whole thing. So. And that's the way you kind of need to go with it. Because let's be honest, when it comes to these sort of asset classes, I've spoken to a lot of people about whether it's NetEase, whether it's about crypto, and no one really knows what they're talking about yet. I'm still I'm still not convinced of any one answer that I've received that they can tell me this is the way it works. This is the market. This is how it's going to grow over time. This is from a regulatory point of view what's going to happen. No one has that kind of insight that would really be looking forward to it to feel safe to put a material amount of money in anyway, 100 percent. 

Felicity: [00:41:44] And I guess it does come back to again, it's just time in investment, in time in the market rather than timing it. And I think that's why the investment bonds is such a great alternative investment vehicle because it kind of forces you somewhat to have that 10 year time horizon. Like why be in equities less than that? I mean, just wouldn't be exactly.

Grant Hackett: [00:42:04] It's Felicity spot on. Like, I couldn't agree with that more. I mean, the time value of money, right is the most powerful thing. And and then name the people that pick the top or pick the bottom of when, you know, sort of markets have moved. And so at the end of the day, your best friend is the time value of money. So whenever you invest or if you're a little bit worried about markets, maybe you can dollar cost averaging to them just to make sure that you feel like you're getting a better deal as you enter them. And look, you might enter them and you think, Oh my goodness, it's risen 30 percent of the time frame that I did that I should have just put it all into. The stock will always be a level of regret. But the one thing you won't regret is time in the market because, you know, from what we've seen over history, markets always grow. So if you spend a bit more time, regardless of where you get in and it's funny when you always look back on and I lovelyz Bryce that showed, you know, 100 years of history in financial markets and you look at all the big events and they are so small now, right compared to where the market is. Today, so, you know, you can survive all those as long as you have an overleveraged yourself to get into those particular investments. And what I really like about the investment bond and it was really interesting in March 2020 because a lot of people when I see markets contract, a lot of people like to crystallise their losses and sell out, which, as we all know, is the worst thing to do because you get to get a bounce back pretty quickly. We've all seen the bounce back a year following the massive correction. But with an investment bond, I thought, are we going to see many redemptions? What's going to happen over the next few months is this kind of Covid situation that no one's really enjoyed before starts to play out. And it was it was really, really interesting the insights that we received because no one came to us for their money. In fact, our redemption rate was probably the lowest it's ever been. So people were going, No, you know what? I know I've got some great tax benefits that's going to come along with this particular structure. So I want to keep those so I'm not going to go to this particular asset for liquidity. What was more interesting is that in the last quarter of that year, our inflows for that particular period was was a record. So a lot of people started to invest with us because they looked at things like estate planning stuff because it was it was a pandemic. So that was hot in terms of, you know, it's very, very topical. And the creditor protection piece was another key driver as well around that. 

Felicity: [00:44:17] Wow. Yeah, because a lot of small businesses look to finish off. What advice would you give an athlete starting out in their sporting career in relation to their finances? Because obviously, you know, a lot of people have heard that athletes don't necessarily make the best financial decisions. However, you are a bit different, obviously, because you got into finance. So any advice for any UP-AND-COMING athletes listening? 

Grant Hackett: [00:44:38] I'm actually super passionate about this, this one, because when I was at Westpac, one of the businesses I set up there was called Alpha, which was sport, and it was for sports people and entertainers purely because of this issue. Huge amounts of cash flow, but not much education heaps of, I guess, fans hanging around them, telling them what to do with their money. And if you've got a lot of money, you've got too much education or experience around it and you've got a lot of people are hanging on it. So I called the M.C. hammer effect. I think he was spending like a million dollars a month, he said of his entourage. Like, it doesn't matter how much money you're making, if you spend it, you're going to have nothing left. So my piece of advice would be give the right people around you who are going to help you get the right account and get the right financial adviser to be able to support you and put a heap of discipline in place. The one thing that I did in my career because you're young too. You try to keep up with, you know, if you're on a football team, maybe the other player bought the latest iPhone or whatever it might be. You feel like you're young, so you're a little bit more susceptible, I think, to those sorts of behaviours. But the one thing I did was I had three categories of every time I'd receive income, what would go on the expenses mortgage sort of tax bucket, the next one go pure investments. And then I'd have a certain percentage that would go into discretionary spending, which would be my placement. So if that added up to a lot of money, great, I could spend it on whatever I wanted to. But I almost put these disciplines in place before the money got to me. So I knew what I could and I could spend. And I think if I said anything to add to things that I would say to to an athlete or anyone in that type of situation is make sure you get the right people around you and make sure you put the right disciplines in place and the rest will look after itself. 

Felicity: [00:46:25] That's fantastic. That is a really good way, I think, to wrap your episode before we sign off. Remember, although Candace and I are financial advisers at Shaw Partners. Please note our discussion today does not constitute as personal financial advice. As always, you should seek professional financial advice before making any financial or investment decisions. Now, grant, if people want to follow gen life, how can we how can we find you? 

Grant Hackett: [00:46:48] Yeah, just jump on the website. So just Gen Lotto come to you and have a look at what we've got to offer and give us a call. Give your financial advisor a call and we'd love to, you know, run through some scenarios with you and see if investment funds are for you. 

Felicity: [00:47:00] Awesome. And make sure you also follow us on at Talk Money to Me podcast. The daily market updates are also now on Reddit and Tik-tok, and also follow us on LinkedIn. Until next time, thanks for coming. Great talk 

Grant Hackett: [00:47:12] Thanks for having me on!