Q&A with Emanuel Whybourne
Emanuel Whybourne was founded by Craig Emanuel and Tim Whybourne and manages high net worth clients. Working together for the past 10 years, the firm has more than 60 years of experience between them, and a strong relationship with their clients.
Powerwrap spoke with Tim and Craig off the back of the announcement of their new firm to discuss what is expected for the next 12 months and how they got to where they are today.
What motivated you to choose Powerwrap’s Tickr offering to help establish your business?
Tim: Powerwrap was really the only option for us after exploring a number of options. Our clients need the flexibility to do things like FX, international SMA, unlisted assets, direct bonds etc. There is no other non-aligned platform on the market in Australia that I am aware of that can deliver those outcomes for the price.
Craig: We’ve watched the Powerwrap business develop, evolve and grow over the past 11 years post our exit from UBS, into an adaptable solution allowing us to house and hold a large range of direct and listed assets. Given our business is predominantly SMA focused (to ensure liquidity), Powerwrap was our most logical platform of choice. The platform will also enable us to create and partner with a number of additional investment managers and house many other alternative asset classes. Powerwrap is also the platform used by most of Australia’s largest boutique investment advisory firms, so we were more than confident we were able to partner together to build a long-term, sustainable advice business to service our clients.
What are your expectations for your business in the upcoming 12 months?
Tim: My expectation is to rebuild our FUM back to where it was 6 months ago within 12 months. This year has been a very strange year and I am looking forward to getting back to our core business of helping clients protect and grow their wealth.
Craig: To continue to service all clients who wish to continue working with us personally. Our name is on the door, so we are proud of what we have created and will continue to focus our efforts on the most important thing for our business – clients. Many of our clients are multi-generational families, who have entrusted their capital to us over nearly 3 decades. Our business would not exist without the support of these clients. We would not have created our business without having complete confidence we would be able to continue to service these clients as we have done for such a long time. Our plan is to work with all of our clients over the coming 6 to 12 month period, while accommodating a list of new clients who have already been referred into our firm.
Looking back throughout your professional career, is there any advice you would give to help make a successful financial adviser?
Tim: My advice would be to work with people that you respect and can learn from, this is a small industry and it is hard to start from scratch. If you are a young adviser, then nearly all your competition has more experience than you, so you need to be more educated, never stop learning. If you read any investment survey about important traits in an investment advisor they all say the number one thing is trust, this is above fees and performance. There is an old saying, “Trust takes years to build, seconds to break, and forever to repair”, wealth businesses take a long time to build and an instant to destroy, so never put your integrity at risk.
Craig: As simple as it sounds – the investment advice industry is based on one simple thing. Trust. Not returns, access to research or fees. As an advisor it takes many, many years to develop this client/trust relationship. The key to this relationship is listening to the client, as opposed selling them a product. Being able to connect with the client on many different levels, rather than simply investing their money. Understanding their long-term goals and aspirations, working with their accountant regarding optimal tax structures, planning for retirement or a business exit strategy, getting to know their children. It really is a mix of finance, economics and emotions.
Long-term, successful investing is an emotional game. There is a direct correlation between a client watching their portfolio and the gains they make. The more they watch their portfolio the less gains they will make as a client can easily be influenced by media noise and short-termism. We direct our firm’s energy into selecting the best long-term investment partners to ensure our client’s returns meet their expectations.
What is your dynamic as business partners?
Tim: We all have different academic backgrounds and different personalities and as a result are able to appeal to a wide range of personalities. Often we will have all taken something completely different out of a meeting so we rarely miss much. I also think it is important to respect your colleagues and I can honestly say that we all share a mutual respect for one another.
Craig: We all bring different skillsets to the table. We all hold varying degrees in economics, business, finance and law. Complimentary skills ensure we see the same problem with a different set of eyes. We all however share the very same goal – continuing to service every one of our clients to the highest personal level possible, with the utmost integrity and honesty. We all share the same culture and vision.
How do you see the role of advice playing out over the next year in COVID times?
Tim: The role of an advisor during COVID is more important than ever. Being an adviser in a bull market is easy, it is when markets get tough that we earn our money. The most value we can add is talking someone out of doing something silly like selling at the bottom of the market. We advise all clients to play a long-term game, hold enough liquidity to make it through any market drawdown but don’t react to short term market movement.
Craig: The global pandemic changed the world forever. Not just how we mix socially, more importantly at an investment selection level. The disruptors of the world will continue to be the largest beneficiaries of COVID-19 (for example Tesla, which is one of our largest holdings). Decades of industry change has been forced into the past 6 months. In my view active investing will win over passive investing over the next decade, as many large companies held within the index will not survive. With the global cash rate remaining at near zero for many, many years yet, real defensive asset classes (Bonds) may be a difficult asset class to hold, so advisors will be searching for an alternative to bonds.
There are some very high-profile funds managers and investors who picked the Covid market cycle very wrong, with many cashing up near the market low. This cash is mandated to return to the market, hence the argument the ‘buy the dip’ strategy is still holding well. I believe a major hurdle we will have over the coming years will be educating clients to maintain their core equity allocation, given the common misbelief that equites are expensive on a PE basis. However, compared to the cash rate and other alternative investments (eg. Property market PE at 40x earnings), the listed equity market is actually cheap. Although well overdue for a short-term correction, investors will regret attempting to pick the next equity market peak, as an investor is unable to properly plan re-entry.
We can write off 2020 and look forward the huge earnings expansion expected during 2021. Investors should not be distracted by an index level to make long-term investment decisions.