In this episode of the Trusted Adviser Podcast, Rob Pyne speaks with Terry Dillon, CEO of Shadforth, about the evolution of one of Australia’s largest advice firms and what it takes to build a modern, scalable, client-first business. Terry shares the origin story of Shadforth, the strategic reset following institutional ownership and the Royal Commission era, and how the firm has positioned itself for long-term growth. The conversation explores client strategy, intergenerational wealth transfer, advisor development, technology transformation, and Shadforth’s ambition to become a defining pillar of financial advice in Australia.

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SHOW NOTES

Topics Discussed

History and evolution of Shadforth
The formation of Shadforth through the merger of 13 successful advice firms
Leadership decisions that reshaped the business post-acquisition
Building trust and client advantage in an institutional ownership model
Defining and serving the core high-net-worth client segment
The shift toward ongoing, relationship-driven advice models
Strategies for intergenerational wealth transfer and family engagement
Developing and retaining advisor talent through a “grow your own” model
Equity participation and long-term incentives for advisors
The role of technology in delivering scalable, live financial advice
Organic growth versus acquisition-led expansion strategies
Shadforth’s vision to become a national pillar in financial advice

Episode Highlights

(Timestamps are approximate)

[00:00] – Introduction to Terry Dillon and Shadforth
[01:07] – The origin story. 13 firms merging into one national business
[03:19] – The impact of the GFC on early alignment and decision-making
[04:36] – Leadership reset post-2018 and redefining long-term strategy
[08:23] – Turning institutional ownership into a competitive advantage
[10:23] – Snapshot of Shadforth today. Scale, clients, and revenue
[12:15] – Defining the ideal client and value proposition
[14:04] – Why Shadforth prioritises ongoing advice over transactional work
[20:49] – Intergenerational wealth and the “family advice guarantee”
[25:16] – Building a live financial planning experience through technology
[30:58] – Developing advisors through a graduate-first model
[35:36] – Equity, incentives, and retaining top advisor talent
[38:57] – Acquisition strategy and what Shadforth looks for in partners
[45:07] – The ambition to become a defining pillar in advice
[48:14] – What success looks like over the next 10–20 years

Quotes

“Never waste a crisis.” – Terry Dillon

“If we’re going to be together, it has to be to the benefit of clients.” – Terry Dillon

“Everyone is better with an ongoing relationship with an advisor.” – Terry Dillon

“We’re not trying to charge less. We’re trying to be more meaningful and add more value.” – Terry Dillon

“We’re actually in the business of making and keeping 50-year service promises.” – Terry Dillon

“Our real strength is 100 great advisors all agreeing on the big things.” – Terry Dillon

“You can’t think like an owner and be in and out in five years.” – Rob Pyne

Key Takeaways

Shadforth was formed through the merger of 13 high-performing independent firms in 2007–08
The business was sold for just under $700 million in 2014
Terry Dillon became CEO in 2018 and led a strategic reset focused on long-term client value
The firm serves over 11,000 families and manages around $20 billion in assets
Shadforth focuses on clients with $1M to $10M, primarily professionals and executives
Ongoing advice is central to the business model, with minimal focus on one-off engagements
A “family advice guarantee” supports intergenerational client retention
93 of 97 advisors were developed internally through a graduate program
Advisor equity and long-term incentives are critical for retention and alignment
The firm is investing heavily in technology, including a live financial planning interface
Growth is driven by strong organic performance, supported by selective acquisitions
Shadforth aims to double in size by 2030 and is thinking in terms of 10x scale long-term
The long-term vision is to become a nationally recognised, professional services brand in advice

Resources & Links

The Trusted Adviser: https://thetrustedadviser.com.au/
Shadforth: https://www.sfg.com.au/
Connect with Rob Pyne on LinkedIn
Connect with Terry Dillon on LinkedIn
Follow The Trusted Adviser Podcast

TRANSCRIPT

Rob Pyne (00:01.89)

Welcome Terry Dillon to the Trusted Adviser podcast.

Terry Dillon (00:04.672)

Hey Rob, thanks for having me.

Rob Pyne (00:06.552)

Thanks for taking the time to come on the show, Terry. It’s great to have a chat. We’ve been talking a little bit of late and I thought, gee whiz, this is such a great conversation. I’d really love to have you on the show and talk about what Shadforth are up to, what you’re doing now, but also what you have plans to do. You’ve got big plans. You’re already a big outfit. You’ve got nearly a hundred advisors, some of them in PY, which will take you over the hundred marks. So you’re a scaled advice business already. Probably the largest, I think, in the country if I’m right and saying that you would know the answer to that question.

Terry Dillon (00:38.72)

I mean it depends if you’re counting some of the brokers and things but yes I mean I would say we are one of the largest certainly.

Rob Pyne (00:45.314)

Yeah, and so with that, you’re not resting on your laurels. You’ve got big plans. And before we get into that, I’d like you just to give our listeners a bit of context about Shadforth. You’ve got a hundred year history, but the modern firm really came together when a group of independent advice businesses merged. Can you take us back to when that happened and what was the ambition at the time for those firms?

Terry Dillon (01:07.2)

Sure, I mean, maybe just deal with the 100 year thing because it links to those 13 firms. The 100 years goes back to 1924. Shadforth actually started off as a stock-breaking firm in Tasmania. But the modern version of Shadforth really came together in the mid-2000s, culminating in 2007-8 with 13 very successful entrepreneurial, big or successful in their own right, but state-based firms coming together to form what is Shadforth today.

Rob Pyne (01:09.549)

Yep.

Terry Dillon (01:36.73)

And these were not struggling firms, Rob. These were successful entrepreneur firms that had basically ticked lots of boxes and were considered some of the best firms in the country on their own. So the miracle of Shadforth was getting 13 successful advisors with probably reasonable sized egos. And I think I know best to come together and actually coalesce around an idea of what about if we could get all of the best ideas we have, agree on the big things and then build a national private wealth firm where we could deliver a quality of advice and wealth management all around the country. And that was pretty amazing because if you think of the characters involved, weren’t lacking confidence, but they were actually all attracted to this bigger idea of really solving this opportunity to take a really high quality national private wealth firm and again to put away the egos and to build something that was genuinely going to be pretty special.

Rob Pyne (02:41.998)

Yeah, you describe it as a miracle and I imagine that is a good description because 13, as you say, highly successful firms already. I know those firms. I was around at the time and they were some of the biggest names in every state. They were the most successful entrepreneurial advice firms, independent firms that were doing great things already on their own, but they saw a vision of coming together and what that could look like. that was some effort to get everyone around the table and get agreement as to how we were going to move forward as one united enterprise and which became the Shadforth of today. Very impressive feat to be sure.

Terry Dillon (03:19.54)

There was probably some key figures in it of course. There was also some serendipity right, the GFC happened shortly after they’d all come together and some of the arguments that may have seemed unsolvable. Suddenly everyone’s eyes opened wide and said, shit we need to stop arguing about the colour of the coffee cups, we need to get the big things right. And of course they made those big calls and they’ve ended up being enduring and part of the reason we’ve been so successful since.

Rob Pyne (03:48.121)

Yeah, terrific. And you’ve now been the CEO at Shadforth for around eight years. When you reflect on that period, what have been the biggest shifts or decisions that you’ve had to take as the leader of the business that have shaped it to what it is today?

Terry Dillon (04:06.944)

Just my background, Rob, I’m an advisor for the first 20 years of my career or 20 plus years of my career and I had no plans to be the CEO of the business. I was successful in my own right, in my own way and I had plenty of ideas about what the firm should do. So my own story of how I got here is kind of beside the point. I’ve been in this business or one of the businesses that made it up for 34 years. But if I just reflect on…

Rob Pyne (04:31.298)

Yeah, well.

Terry Dillon (04:36.096)

… the biggest shifts. As amazing as those entrepreneurs were, and they’re still friends of the firm and we love them and we recognise them all the time, they had done an amazing job, I think, putting together the best advice firm collectively of the previous 20 years. And they’d prepared the business beautifully to be sold. And it was, you know, the business was sold for just under $700 million in 2014. And I have no criticism for anyone. That was an amazing feat. But coming into the role in 2018, the first thing I had to face up to is not a lot of thought had gone into how do we make it the best advice firm in the country for the next 20 years. So if you think about what that was, you’ll remember it Rob, in 2018, we had a royal commission. I think it was 2018, around that time. And I took the opportunity as the new CEO to say, never waste a crisis. The other thing that was going on is we had a parent in IFL, had a royal commission and we’re an advice business where all advice business basically survive and thrive on trust. How was I going to marry up institutional ownership from the previous 13 guys coming together, being successful and then being purchased for 700 million. How do we actually restore trust in a business like Shadforth with institutional ownership at a time like that? This is not sort of folklore now, this is true. I basically talked to Renato and who was the CEO of Insignia at the time in the board and said, hey, firstly, if we’re gonna be together, we have to make each other better every day. That means where we’re strong, stay out of our way. Don’t slow us down, don’t get in our way. Where we have gaps or weaknesses or we haven’t created enough client advantage, the door’s open. Let’s work together to try and find a way where we can create genuine client advantage and I said if we can’t do those things really you should probably sell us today because we don’t make any sense. But if you support me with these things it can be number one and most importantly great for clients a better outcome they can get out otherwise but it can be a great business and we can grow and will make sense in any environment, Royal Commission’s, non-Royal Commission’s. So when I think back at that that was actually a watershed moment where we actually gonna you know I reflect on the the IPAC business which was a very good business in the late 80s, early 90s. It was sold a number of times to institutional shareholders and it doesn’t exist today. And it doesn’t exist for many reasons that I’m not close enough to know exactly why, but at some point the people running that IPAC business lost the magic where they ran it like it was their own and they looked for if we’re going to be together, how do we make clients win out of this? So if I just go back over the eight years, taking that opportunity to reset everyone’s objectives that we’re gonna build, if we’re gonna be together, it has to be to the benefit of clients. Once you’ve done that, it’s great for win as well, but it has to be to the benefit of clients. And we made some very big calls about our target operating model and how we would work with the core sort of fundamental, how can we create client advantage? Because in any world I wanna be an advisor in, that’s where I want to be. I also wanted to have a hugely competitive position. And I also wanted to build trust with clients and be able to talk to, and if we ever have a real commission again, I want to go first. Put me up. Let me talk about the way to do this properly. Now, I hope we don’t have one, but it was morally clarifying to say, here’s the way you do it properly. And I got good support…

Rob Pyne (08:15.406)

I hope you don’t need one.

Terry Dillon (08:23.36)

… from the insignia board and from Renato, and we were able to start building Shadforth into a position where we weren’t as competitive as we wanted to be. We weren’t winning strongly enough with new clients. And rather than being on the defensive about our ownership, we actually turned it into an advantage where we could out-compete peers. And I had really interesting discussions with my leadership team, who were smart people, really good people, but the instinct at that time was to run away from institutional ownership and say, oh, let’s not talk about it. Let’s pretend it isn’t there. Whereas I said, well, I think everyone else is doing that. And my own sort of instinct is what everyone else is doing is normally running towards mediocrity. What about if we could actually turn it into a sustainable client advantage that made us more competitive than everyone else? So it’s a very long answer to the first question, Rob. But I actually think it’s where the foundations of Shadful’s success today, those key decisions have been incredibly important.

Rob Pyne (09:11.694)

Yeah, no, it’s a great answer for great context. Yeah, was a pivotal moment, wasn’t it? As you say, you spoke to the board at Insignia about what your ambitions were for the business. You’d inherited a wonderful legacy of a business that had been built by a great group of founders, entrepreneurs that had put this thing together and built it for, as you say, for sale to come together. But you had to reset the agenda. You had to take that legacy and look forward 20 years, not backwards 20 years, and say, well, okay, now how do we actually make this thing the best business it can be? As you say, to build sustainable, competitive client advantage and leverage the capabilities of the institutional support that you had, which to their credit, they did support you in the ambitions that you had. and Shadforce obviously has gone from strength to strength since that time. So it’s a great credit to you and the board that supported you to get here. But for listeners that don’t know Shadforce really well, it’s a name that’s familiar. Give us a snapshot of the firm today. I talked about advisor numbers, but give us an idea of the overall sense of advisors and clients and the overall scale of the business across the country.

Terry Dillon (10:23.04)

Sure, we have 270 staff, as you said about 100 advisors, it’s 97, there’s 111 on the FAR, we’ve got younger advisors coming through. We operate across 12 offices, but really six capital city offices have 95 % of the staff. We’ve got some regional offices and they make sense, but most of the staff are in the capital city offices. And today we look after just over 11,000 families. And those families have entrusted us to steward about $20 billion on their behalf. So 11,000 families. We do something like 18,000 in-person progress meetings a year, plus all the ones we do online, plus the new client work. And our revenue is on track to exceed $120 million from advice revenue this year. So we’re a material advice business, and we have great competitors like you, Rob. And a lot of people I respect, but there’s not as many who are truly national and who can, know, target clients or executives and professionals, they tend to move around the place. There are not as many competitors in that national private wealth firm space as perhaps there will be in the future.

Rob Pyne (11:37.881)

Yeah, that is a great snapshot of the Shadforth of today. Just the scale of that operation. You say we’re a competitor, but I think we’re kind of like one-tenth maybe of where you are. it’s a very well-integrated and impressive national firm you’ve got running there, Terry. So one thing that you just mentioned there about executives and professionals, one thing that stood out from when we chatted earlier was a clear focus for you on the high net worth clients. How would you describe the core client of Shadforth that you’re designed to serve today?

Terry Dillon (12:15.304)

I mean I always start with executives and professionals. Our clients tend to be people who want to delegate. They’re financially literate but they don’t want to do it themselves and that means medical professionals, executives, all of those sorts of people and yet Rob, our average client size is about 1.8 million dollars with us but often that’s two school teachers who’ve had super for 30 years and made a couple of sensible decisions here and there. So we’re not clearly not ultra high net worth, we do have quite a few ultra high net worth clients, but we really see our sweet spot as people with one to 10 million dollars and typically clients will come to us, we don’t take on anyone who’s not gonna be an ongoing client, that’s one sort of rule that we have where we respect people who do that, it’s not our business. So we’re looking for people who want advice, value advice and are prepared to pay for it on ongoing basis. And people tend to come with us with half a million dollars at least in the first year and with two million dollars within the first couple of years. And when I talk to people about that, say, it’s a really high net, it’s not that high net worth. Like it is, but there’s a lot of mums and dads in Shadforth who have a few million dollars that we’re looking after for them.

Rob Pyne (13:34.095)

You say there about the clients that start out with half a million to get to two million. So how do you determine in that first instance whether they do what the ongoing relationship is? Is it something that you’re very clear about right up front with the client that, you know, if you’re looking for this, this is what we do. But if you are looking for a piece of advice just to solve a one off issue, that we’re not the firm for you, is there very intentional upfront communication piece to the clients that are looking for ongoing versus transactional advice?

Terry Dillon (14:04.288)

So obviously we do get some people coming in with a particular problem that they want us to solve. And I won’t say we don’t do it. It’s just such a tiny part of what we do. It’s irrelevant. And we do have a clear bias that everyone is better with an ongoing relationship. Even if the trigger for them coming in is one need they have often when they’ve talked to us and we get the chance to show them our skills and what we can do. I said, do you really want us to now leave you alone to walk away with this and deal with yourself? And people actually don’t. Our view is everyone is better with an ongoing relationship with an advisor and we’ll talk about it later but we’re trying to get deeper in people’s lives. We’re not trying to charge less, we’re actually trying to be more meaningful, add more value and that means we really do believe in ongoing advice and we think I want someone to solve episodic advice, it’s just not going to be Shadforth.

Rob Pyne (14:56.59)

Yeah, I couldn’t agree more. I can relate to that point of view very thoroughly because you wanna be there for the journey with the client because you can make a meaningful difference over time. You also wanna be there to celebrate the success and the wins they get as a result of good advice and guiding them through key pivotal decisions in their life. So yeah, I totally understand. But I wanna talk a bit about the way in which you’ve had to think about your target client. You mentioned when we spoke earlier that there’s a commercial imperative for the firm to keep moving up the value chain in terms of client wealth. And obviously people are getting wealthier on average as well over time, just pure inflation and property prices and asset markets and so on. So what does your strategy look like in practice about that moving up the value chain in terms of the type of client you’ll attract, the wealth that they bring to the table, that 500 to 2 million then, and really your sweet spot as you say is one to $10 million mark. How do you reconcile this younger client who perhaps has high income that doesn’t have the wealth yet? How do you deal with that versus this commercial imperative to go up the value chain?

Terry Dillon (16:04.778)

I mean the first thing is we stay in our lane. I’ve got in the leadership team there’s no bad ideas in the brainstorm to come up with, could we do this, could we do that. And we did actually build a model of Shadforth Essentials we called it, which was, was all our best ideas. But you know those barbers you go into Rob where it’s got 10 haircuts on the wall but everyone comes out with the same haircut. This was designed for smaller clients where we would do it online like this…

Rob Pyne (16:28.142)

Yeah

Terry Dillon (16:33.568)

… they would have the benefit of all of our best ideas, but they were our best ideas only. And there’s a business there. But again, for the time being at least, we’re staying in our high net worth. As you know, the best way to run a better advice business is to move up the value chain and we’re trying to do that now. When I started, I got the leadership team together and I said, what are we going to stand for? Like, how are we going to do this? What’s the sort of what’s going to drive us? And I said these are my three things and I said let’s make decisions for the business as if we were the only shareholders. That gets your focus. We own this thing. The second thing was let’s spend money and that could be more money or less money like it was our own. Like I had to extend my line of credit against my house. Would we spend this money?

Rob Pyne (17:17.048)

I love that. It’s a great framing. Yep.

Terry Dillon (17:30.474)

So let’s make decisions like we’re the only owners. Let’s spend money like it’s our own. And the third thing was let’s build a private wealth business that we’d use ourselves, have our families use ourselves and we’d pay for. Now said, if we focus on those three things, we’re gonna build a great business and we’re gonna make better decisions than we would. So that kind of focus doesn’t allow us to stray off into esoteric things that I don’t think are really the best use of shared forth time. So we stay in our lane. And as I said, we’re not looking to charge less. Our overall wealth management advice offering is incredibly competitive. That allows us to charge what I think is a very great value fee, but a premium fee for our advice. And we’re actually looking to do more for people to see them more, to be more important to them rather than to reduce that value.

Rob Pyne (18:17.752)

Yeah, that trifecta of things that you think about when you’re actually making decisions is a, there really are great core principles to live by, aren’t they? You’re treat it like it’s our own money, treat it like we’re the only shareholders, and make sure we do it in such a way as we’d be happy to be clients of this thing we’re building, and that’s a great framing, because you never wanna be distant in the sense of thinking about who’s getting the advice, how are we delivering it to the end client? If you think about yourself as that client, always, you’re always making good decisions that serve ultimately the client because if you do great work for clients, improve client value equals improve enterprise value because that’s ultimately how we build a great business is just look after our clients and do it in a way that preserves the benefits to both shareholders and employees but making sure clients are never forgotten in the process as you get to be the size you are.

Terry Dillon (19:10.656)

Yeah, and there’s a power, Robin, kind of clear moral clarity. Who are we? What do we stand for? What are we going to do? How are we going to think about the business? So I’m upfront with everyone. Every cent I have is invested as per the average growth client for Shadforth. I live and breathe their outcomes. I tell them all, every cent my family has, every cent outside direct property that they own is invested exactly as our median growth client or from my retired parts of my family, perhaps a little less aggressive. All of my friends in Perth who were my clients who have lots of money are invested the same as me. I’m not pretending, right? This is not transactional. These are our best ideas and the best way we can do things. And again, that just allows you to make better decisions and get up every day and keep following through on it. Cause you know, it’s the right thing to do.

Rob Pyne (20:00.942)

Yeah, because you’re living it, you’re not just talking about it, you’re actually living it personally. Can you talk to me about how you’re dealing with this big question, or intergenerational wealth transfer? I know this is something I’ve just touched on a second ago there, but how do you think about looking after the children of your current clients? Because there’s obviously very wealthy clients in your client group that are gonna be handing off significant wealth into the hands of the next generation. And how do you try to connect your business to those next gen, you know, inheritors of wealth and support the fact that, you know, you’ve got, yeah, wealthy clients that are going to be passing, whether after death or even before they pass, large sums of money to their children who don’t have the same access at the moment to advise the way their parents do.

Terry Dillon (20:49.812)

Yeah, it’s a really good question. We’ve been wrestling with this for a while because the whole industry is not keeping enough of the wealth as it’s flowing down. I think the number is something like 30 % of it stays in the firm if you don’t have a deliberate strategy to do it. And I’ve heard, excuse me for a sec. I’ve heard some advisors speak about it and say it doesn’t matter. They’re low value clients in the short term. I can’t afford to deal with them. And if you’ve got a short of a sort of three year timeframe for your business or yourself, maybe that’s true. All the sort of research I look at says that if you’re not adding younger people into your business, eventually the value of your enterprise, the value of what you’re trying to do is actually going to be undermined by that. So we don’t have perfect answers for this. We’re getting better at it in that the family conversation is part of every client’s progress meetings and we have introduced only very recently a family advice guarantee. Now that family advice guarantee says if you’re paying $12,000 or more and our average client fees about $10,500 if you’re paying $12,000 or more we will look after your children at no cost to you. So we’ll do SOAs and advice for them and those people can sometimes be good clients themselves and perhaps if they’ve got if they’re potentially shared for clients we will charge them for ongoing advice if they want it. But we’ll get them on track. We’ll help them with the basic things that parents want their children looked after. And then we’re going to be the logical advisor that they will use. the thing we’ve got to keep remembering is very few children of the clients want to deal with their parents’ advisor. They’re too old. They actually want to deal with someone within five years of themselves. So through that family advice guarantee, we’re pairing the more senior advisor potentially up with someone closer to the age of the children coming through. Now when I say children, they might be 40. But that’s how we’re thinking about it. It’s early days. The clients we’ve presented it to absolutely love it because they’re secretly all bit worried about, I’ve been so fortunate, life’s been good to me. But Charlie and Madeleine, she’s property prices are so high that perhaps their jobs are not paying as much, AI might take their jobs away. They’re worried about their children. So it’s actually a very good…

Rob Pyne (22:39.18)

Yeah, sure.

Terry Dillon (23:02.238)

… value add for the existing clients and for us if you’re genuinely thinking long term and I drive the guys mad here by saying firstly we’re not a financial planning business or a wealth management business we’re actually a professional services firm where all of our assets are people and the capability of our people but secondly we’re not in the business of providing advice clearly we are but we’re actually in the business of making and keeping 50 year service promises to people. Right? Because probably like you, Rob, our clients are coming to us mid 40s to mid 50s. And then they’re staying for their whole life. So this is, that’s a long time. It’s probably 40 or 50 years. So if we’re thinking like that, that’s the right way to frame the way we want to be dealing with people. And if we’re thinking like that, then the clients of the firm are not just the husband and wife, it is the children. But we’ve got to be proactive in bringing them into the conversation.

Rob Pyne (24:01.868)

Yeah, I love the way you’re doing that. The family wealth guarantee for clients paying more than $12,000, their kids can get advice for free. In effect, they can come in, they can get a statement of advice, direction from an advisor that’s more closely aligned to their age. So they’re not dealing with mom and dad’s advisor. But yeah, it’s really building that connection and trust with the next generation of inheritors of the wealth that’s gonna flow to them at some point in the future. It’s a good one, I like it. I haven’t heard that strategy before and I might steal that one from you Terry if that’s okay.

Terry Dillon (24:37.248)

That’s fine, mate. There’s no original ideas, just good ideas.

Rob Pyne (24:40.238)

Yeah, that’s right. All right, let’s talk about something that everyone’s interested in hearing about what you are doing at the scale you’re at. Technology, it is already and probably will continue to become a major differentiator for advice firms. You spoke about the work that you’ve got underway building something closer to a live financial plan inside a client app on their phone or their tablet. What are you trying to create there? How much that changed do you think the client experience how people engage with their advisor and the advice that’s been delivered?

Terry Dillon (25:16.32)

Firstly, just to level set. mean, like most of the industry, we still use XPLAN. We have a very cool tool in Wealth Central, which is our client engagement modeling tool. But we’re starting with that sort of core functionality that most people who listening to this will be familiar with the XPLAN part of it anyway. And we’re at the early stages of building out a whole new tech stack. And that involves a new CRM. It’ll be Microsoft Dynamics. But also an app that not only is a live balance sheet for clients where it has all the investments we manage plus the bank accounts plus the property with the value updating regularly but also with a stochastic model of their probability of success that updates and tells them every day and basically if their chance of success is within the acceptable range that we’ve said markets can go up and down, doesn’t matter you’re still going to achieve everything we’ve said you’d achieve and you don’t have to worry. Markets break through the bottom of the line in the tolerance, all the lights start flashing at Shad4s, you have to get them in and think again. But what we really want to do is get away from static financial plans where it’s a piece of paper once a year to where it’s live and we’re interacting with them more regularly and reminding of the progress that they’re making and the value that we’re adding. Now in the beginning it will be a simple live balance sheet, we’ll be able to push SOAs to them, their client service agreements will be pushed to them. There’ll be a secure portal on it. And again, they’ll look, they’ll use their phone or they’ll get, or they’ll use a laptop. And we will launch that, that is literally the first version of that is months away. What we want to do with stochastic modeling and building out a comfort zone for people where we help them see where they’re likely to achieve all their objectives. That’s going to be drops over the next couple of years. But if I go back to the whole thing, we’re thinking given the growth plans we have for the business, having a world-class CRM is non-negotiable.

Rob Pyne (27:19.075)

Yep.

Terry Dillon (27:21.888)

No one loves X-Plan. They’re the kind of, and if they’re listening, we want you to do it better. They do a lot of things. Do they do anything the way anyone really wants them to do? Does that mean we will not use them in the future? I think like most people, we’d like to be less reliant on them. And maybe we will move off them. Maybe we won’t. It’s very, people are really wrestling with that idea of if you’re not using X-Plan, what is the alternative? So look, it’s a big uplift for us. One of the benefits of having Insignia as a shareholder and Scott Hartley, who’s the CEO, has a genuine interest in ShadForth and a genuine interest in Advice. He’s a client. He tells everyone, I’ll tell you. But he knows that we need an investment in Advice, a big capital investment, and we can afford to do it. Now it’s taking us longer than lots of my advisors would like and we’re being very methodical about it. But we’re also going, we’re actually trying to build an advice ecosystem that joins advice and wealth management that joins everything up. And if we’re going to have the inorganic growth that we’re looking to Rob, one of the things that will just be table stakes is you have to be bringing value in your technology. So it’s early days, but I’m pretty excited about what is in the roadmap over the next couple of years.

Rob Pyne (28:45.698)

Yeah, it’s a wonderful thing to have a committed parent and CEO of a parent company that sees the value of advice and sees the potential of what advice could be if delivered more live and be more, not a moment in time piece of advice, but actually an engaged professional working alongside the client throughout their days and the year and not just getting a snapshot and a statement of advice. You know, once a year, if that’s what it takes. But yeah, I love that vision. I think it’s a reality of where everyone’s thinking about going. And the ExPlan dependency, I think people can relate to that story. I’m reading and watching as much as I can just on the way technology’s moving at the moment. It’s a fascinating time to be alive in the technology space. It’s going to be very interesting to see where we are even a year from now and you clearly have a very clear vision of what you’re looking to create. I look forward to checking in. Maybe we’ll do this again in 12 months, Terry, and have a chat about exactly what’s happening.

Terry Dillon (29:51.668)

Yeah, it would be nice if we had a few drops that I could talk to then. I’m looking at lots of project management packs and contracts we’re signing and things we’re doing. It’ll be better when we have 100. mean, Shedforce Superpower is 100 great advisors, like really great advisors, all agreeing on the big things and then taking advantage of it together. So yeah, be interesting in 12 months, maybe I’ll have a podcast and I’ll interview you and we can talk about it then.

Rob Pyne (30:19.106)

Okay. All right, let’s talk about the advisors that the 97 plus 11 that you’ve got doing their PY, they’re on the far and some doing their PY. So you talk about having great tech as being one of the key drivers of what will attract and retain your best people, because you have to, it’s table stakes to be the best at this and that’ll draw people in. How do you think about today and in the future attracting, developing and retaining great advisor talent. Cause you’ve got a, you know, one of the best talented group of advisors in the country. They’re often appearing in these awards that go around. So how do you think about that attracting and developing and retaining your talent?

Terry Dillon (30:58.208)

Yeah, sure. Historically, we’ve grown our own. So of the 97 advisors, 93 of them started with us as graduates. Average 10 years, 17 years, and they bleed Shadforth. Right? They’re not here for a transaction. They’re actually here for a career. They’re building something and they’re coming with us. So the first thing is we will continue to do that. It is slower, but the quality we get and the sort of the alignment of ethics and the commitment to best interests and fiduciary standards, all those things that we get through them is worth it in my opinion to have the corpus of your advisors homegrown. Now we do have some of those 97, there’s also 65 associate advisors and senior associate advisors and about 20 of them can provide advice now. They’re either on the far or just finishing their professional year. And that’s our next line of advisors. That’s our huge strength. They’re quality young people. I’m always impressed by them, by how quickly they adopt change and they obviously technology is natural for them. My challenge is to grow the firm quickly enough so we can bring 10 of them on a year because they all want to be advisors. And Rob, if you’ve seen this in your business, they’re a fraction impatient. And they’re also really attractive to our peers who perhaps don’t have the ability or have chosen not to invest in professional years.

Rob Pyne (32:15.214)

Yep, and y’all will.

Terry Dillon (32:25.664)

I do get frustrated with that because we put a lot of time and effort into them and they’re fantastic young people. And they might be six months or 12 months away from a private wealth advisor gig with us, but at that point they’re the most dangerous because someone could come in and offer them 20 or $30,000 more. we want to keep as many of them as possible and we want them to see that the long-term value of their career is going to be fantastic with Shadforth. So that’s the future right, a lot of them will become our next line of advisors. We did an exercise with the advisors at a national event we had where we got everyone to stand in line from the person who’d been here the longest to the person who’s the most junior. There’s a very long line but we also compared it to one that was done sort of 15 years ago and the advisor at the end of the line who was the newest 15 years ago was now one of the most mature guys in the line. So anyway was just a point about saying one of the things we’ve done is we’ve had the sort of the vibe of paying it forward and our more senior advisors, because they were mentored by the Sam Gannons and Craig Sargent’s and there’s a million of David Haynes, all the legends of the place, the advisors, there’s a, shed full thing where they actually love seeing the young client relationship manager, paraplanner associate become a private wealth advisor and then probably be better than they are because they adopted change earlier. So that’s one of our… If you’re thinking about what’s the strength of Shadforth, that army of young advisors coming through is a key strength and we’ve got to obviously look after them and make sure they can see the value in their career with Shadforth and we’ve got to grow fast enough because if you just make someone an advisor but they’re 29 and they’ve supported great advisors but they haven’t ever won a client themselves, we want to be able to make sure they have a decent book to start with and we have enough time and effort into them so they can add material clients every year and they’re going to actually grow their careers not fail basically.

Rob Pyne (34:29.048)

Yeah, you’re have literally waves and waves of advisors coming through with the strategy that you’ve adopted there, which is that graduate approach and bringing people through homegrown. We’ve adopted the same approach because it has for us, like you, been the most successful strategy that we’ve adopted. Yeah, I can just imagine, as you say, you’re thinking about growing the business so that you actually can give them the opportunity that they want when they’re ready for it. So when they’re ready, the business has to be able to be ready for them. So that imperative is always there. We have four of our team going through PY just for the record. So we’re much the same, again, on a smaller scale, but very similar approach there, Terry. So I like the fact that we’re on the same page there. And you touched on what makes them want to stay, know, coming from within, knowing how Shedforce works, becoming very comfortable with the culture and the way in the business is growing, giving the opportunity to them. But how do you think about them growing their client base and participating in perhaps the growth of the firm in an equity sense? How important is ownership or a mindset of ownership in building that team culture that you’ve established?

Terry Dillon (35:36.832)

When ultimately I think it’s key. You can have the best advisors in the world, you can create a great culture and you can support people well. They are rational actors, okay? And they’ve got a 30 year career and rational actors think, how do I get the best value for my career? And they’re sort of very important, a great culture, great support staff, a technology stack, all those sorts of things. But in this environment, I want every advisor equitized and I want them aligned with me. So we’ve built a long-term incentive scheme for advisors that grows. That kind of means by the end of their career, they can have a very meaningful, I mean, multiple million dollar outcome, but they give it all away if they leave and join a competitor. It is all, they’ve got to finish their careers with us, but they build up that equity over time. They have shorter term equity that they can take out, but the long-term equity, and I just think it’s important. We’ve obviously got to pay them well in cash. We’ve got to support them well. We’ve got to have a winning value proposition where they can win clients and succeed. We’ve got to have a culture where they like coming in and actually like the place and they feel proud to work for us. But they’re rational actors and they also get used to spending big incomes and they’d like a capital event at the end of their life. So I’m really proud of this. It was the missing piece of the pie in my… I think we’ve got a very good REM scheme for advisors uncapped. But they’ve now got a chance to create a capital event at the end of their careers and they don’t have to borrow any money. As you know, they don’t have to employ staff or worry about any of those things. So yeah, I think it’s super important and I think it’ll be very important for our existing advisors. It’s pretty attractive market. Everyone wants advisors at the moment. But as we grow and bring advisors in, we want advisors to buy into the ownership of the firm as well.

Rob Pyne (37:26.574)

I just say they’re rational actors, they’re pretty good at maths, they can do the cashflow modeling and they figure out it’s a pretty good deal. So when they can see the opportunities to earn a very good income, but also be a part of the growth of the firm and have a capital event at the end if they stay there for the duration, it’s treating them like owners because that’s how owners have to think. We’re building something that I’ll only get the benefit of if I’m here for the long term. can’t think like an owner and be in and out in five years. That’s not how ownership works.

Terry Dillon (37:29.024)

I can’t.

Rob Pyne (37:53.603)

I love that and you clearly got a very good model because you’ve got such a strong retention of great talent in your team. I knew there must be something you’ve got there that makes it super attractive to not only turn up and give advice at Shadforth, but stick around for the longterm as well. So let’s talk about the growth of the business and you are growing strongly organically. think your double digits, you’ve talked about being double digits in the last few years and that’s impressive for the size firm you are to keep growing at double digit rates because it gets harder as you get bigger to grow double digits but well done on that. You’re also thinking about acquisitions now. It’s something that you’ve very publicly stated or at least if it wasn’t public I certainly knew about it because we end up in a study group together from time to time at a national level and you’ve shared that with the people attending. What does Shadforth’s proposition look like now for advisors that are maybe considering joining the firm that are interested in maybe being acquired by Shadforth and merging in and becoming part of the growth journey that you’re on.

Terry Dillon (38:57.514)

Yeah, just might just backtrack. Last three years, we’ve certainly been growing at double digit returns. Before that, we coming out of that 2018 period. How do we make ourselves competitive? What’s our value proposition look like? And it wasn’t until we kind of fixed those things that we really, and to be honest, we had to build the muscle memory back in our advisors about growth being just part of everyone’s job. But yeah, we’re growing really strongly organically. And quite frankly, Rob, we wouldn’t be thinking about the inorganic growth if we didn’t have that well in hand. And I have to say that FY this year is probably the first year that I’ve believed from day one of the year that we are likely to overreach what seemed like an incredible amount of growth in your client numbers for the year. And that’s a lot of things. It’s strong markets. It’s half the number of advisors to a few years ago. It’s we spend a lot of time on referrals training and making sure that we’re asking clients for feedback, know, the Dan Ellis and stuff. But yeah, if the question was about growth, we wouldn’t be looking at &A if we weren’t growing organically. To the firms that we’re looking at, the first thing to say is we are integrating, we are not aggregating. Okay, there are other business models out there and I wish them well. We’re actually looking for people who believe in our target operating model, who basically believe in comprehensive holistic advice who are aligned or semi-aligned with our evidence-based investment philosophy, who believe in working in teams and in using technology to manage portfolios, and believe that ultimately the business will only be successful and able to serve the clients well long-term if you’re in a growth mode. So when I show potential acquisitions, hey, this is who we are what we believe in, it either lights up their eyes and they get it and they go, wow, we’re on the same page. And then if we are on the same page, I believe someone like Shadforth can pay people as much or more than many other businesses because we have the scale to take advantage of it. I guess we’re going to talk to a lot of people, We’re going to listen to what a lot of people are looking for. We’re going to be really clear on if you join Shadforth, this is what the outcome will be. Price, assuming you can get a great price. But this is what your client experience would be, this is what your experience would be and this is what the backend of your career looks like. And that can be a lot of support, very well paid, you can build up more equity and it’s early days but so far we did our first acquisition for ages in November last year, October last year, PMD. Great business, Tim Donoghue, Roger and James from Melbourne and Roxy were the three advisors and major shareholders. That’s just a beautiful business. It’s higher net worth clients, $10,000 or $11,000 each. They are Shadforth clients. And we brought Tim and Roger and James in and they haven’t missed a beat. And they’re a perfect fit for us. And they got, I’m not going to tell you what their outcome was, but I think they’re happy. So will every acquisition be as good a fit as that? Well, that’s quite difficult. mean, was CBD, was literally hundreds of meters away from our Melbourne office. But there’s lots of opportunity out there. I don’t think anyone knows or until recently has really known that we’re out there looking to acquire the right kind of businesses.

Rob Pyne (42:23.79)

It sounds like a very, very neat fit. yeah, and as you approach firms, are you giving them options around not just paying cash for those acquisitions? Are they wanting sometimes to roll some of the value they’ve established into equity in the business? So they are doing a cash and equity or a combination.

Terry Dillon (42:45.184)

Some of them, I mean some of them want to get some clarity on price today but some of them are backing their whatever their EBIT is today they think they can double it over five years so we’re taking a first stake and if they do we’ve locked in a multiple that will pay for the second stake. There are others who are coming in and we’re effectively adding the equity via the long-term incentive scheme I talked about. So there’s different, I wouldn’t say there’s one model and to be fair we haven’t done enough of them yet to really say this is the way we’ll do it. Who are the community that we’re looking for? Our average fee is around $10,000. We’re not going to go down market. So we’re looking for people who are either at our fee or around that fee. Now it’s different in different states. It’s almost double that in Sydney and it’s about $8,000 in Tasmania. So there’s a bunch of differences state to state. But we’re looking for people who comprehensive advice, similar size clients who want private, want ongoing wealth and who want more from their advisors, not a cheaper service, not less. How can I skinny this thing down and give them less and that’s not what we’re doing. And we want the advisors. We would never buy a book. We actually want the advisors and we want them to finish their career and be able to mark out for them a way that they can not only get the right price for their business, we can keep the 50 year promises that they’ve been making their clients and they can do very well through income and further equity as they work within the Shadforth business. So that’s the proposition. I’m biased, but I think it’s compelling for the right advisors in the right part of their career.

Rob Pyne (44:14.766)

Yeah, it’s clear that you’ve got variable options there for people who are looking to capitalise on what they’ve built, but also continue to serve their clients really well and maybe get a second bite of the cherry down the track as well if they do join. Because as you say, it’s not about, you’re not buying books of business, you’re buying businesses and bringing the talent with it so that you actually can help those clients get a great experience with you, but also the advice is a great experience for being a part of the Shedforce journey. And in that context, you’ve talked about Shedforce, that the idea here of becoming a pillar, a defining pillar in advice in Australia, similar to a lot of firms like PwC and KPMGR pillars in the accounting business. What does that ambition to become a pillar in financial advice in Australia look like for you in practical terms?

Terry Dillon (45:07.968)

I mean, the broader IFL business put a flag in the ground, let’s see, 12 months ago. And our part of that was that we would double the size of Shadforth from its 25 level through to 2030. So that is sort of our, we will double the size of the business and that will be, more of it will come from organic growth, but we will absolutely add &A to close the gap and probably go further than that. To be honest, Rob, our real vision, the way I asked the leadership team to think about this, is think about Shadforth 10X. Think about it 10 times as big, because no one’s done this. A thousand private wealth advisors, $200 billion of assets under management, a billion dollars plus of advice revenue, pushing towards $500 million of EBITDA. Not because that’s necessarily success, but if you’re thinking that way, well, how would we build our tech stack? How would we think about embracing AI to make our advisors more productive? How would we think about we have a winning value proposition now that allows us to make best interest every day and deliver great client outcomes? What would it need to look like to win really big? So again, I’m not, write down that I’m saying we’re gonna be 10 times bigger by 2030, but that thinking is what we’re trying to do to make sure we don’t just get stuck in, you know the small gains which are important, but think differently. If we thought about how we’re really going to change the advice game, then we’d be thinking about being 10 times bigger and helping 10 times as many people and making 10 times as much positive impact.

Rob Pyne (46:49.198)

Well, as it happens, Terry, I’m reading a book. Well, I listen to books actually, I don’t read them because I just go out for a walk or a run and listen to a book. But the book I’m reading or listening to is called The Science of Scaling by Dr. Benjamin Hardy. And the first chapters talk about set a goal so big you think it’s impossible as a key way of approaching how to really build a great business and a big business because it makes you think differently, doesn’t it?

Terry Dillon (46:53.824)

Everyone listens now.

Rob Pyne (47:15.478)

You think about going 10 times, you can’t just think linearly. You have to start thinking, what would it take to go 10 times to where we are? And it changes your frame of mind and the decisions you take today.

Terry Dillon (47:26.708)

Yeah, and it helps you see the reward for succeeding. When you can see how big it could be, all of a sudden your aperture opens up to, we could do this, we could do that. And perhaps that’s not such a, you know, yes, that would be difficult initially, but if it made that much difference, it would be worthwhile.

Rob Pyne (47:44.623)

Yeah, now you’re a busy man and I appreciate your time this morning for taking the time out to have a chat to us and tell everyone what the impressive business of Shadforce is doing. But I’ve got one more question for you if that’s okay. Looking ahead next 10 to 20 years, what would success look like for you? You’ve talked about the big vision there and what role do you hope the firm will play in the future of advice in Australia in 10 to 20 years time?

Terry Dillon (48:14.346)

First thing to say, Rob, is I was 60 last month. It’d be nice to, yeah, thank you. Be nice to think I’m around in this job in 10 to 20 years. Reality is I probably won’t. I’ve had eight years as CEO and most of the time there will come a natural end to this. I do have lots of petrol in the tank though. And I actually think the best years are in front of us. The next five years are incredibly exciting. So look, I see a much more, at the moment, Shadforth, very well known.

Rob Pyne (48:17.314)

Happy birthday for last month.

Terry Dillon (48:42.642)

Amongst our clients and amongst the industry, but no one else really knows who we are. Okay, so by the time, if you’re thinking 10 to 20 years from now, I would expect us to be the preeminent advice name in the business and considered as a professional services firm, like Freehills is in law, or PwC is in accounting, or McKinsey is in consulting, but we’re our national reach and where people know that there’s a quality outcome that Shadforth been delivering for 110 years at that time. And that, you know, the success that we’ve had over the last hundred years, but the last since we’ve come together in the last, whatever it is, 16, 18 years, is dwarfed. Right? Actually, my start of the job saying, I want the job because I want to leave the place better than I found it 20 odd years ago, 30 odd years ago. I do. Oh, well.

Rob Pyne (49:35.406)

We can say that now. Yeah, you could say that now, but you’ve still got petrol in the tank.

Terry Dillon (49:41.578)

Got a lot of petrol in the tank. The most exciting time is going to be the next five years.

Rob Pyne (49:45.656)

Yeah, I’m with you on that Terry. I can’t imagine it being a more, and when we first chatted a couple of weeks back, you and I are on the same page on this. There’s never been a better time in advice. Like there’s never been the, I think just the awareness of what we do. I think even in political circles, they understand the social good that we can do if more people get advice from advisors. And there’s just too few around doing it. So there’s so many people looking for what we do. And so no wonder you’re growing strongly and have big ambitions, which as you say, you’re gonna reach beyond your target this year, just purely based on the demand that’s coming through the door, even before you do the inorganic acquisition stuff. it’s impressive. Do you have any final thoughts, Terry, before we wrap our chat up today?

Terry Dillon (50:32.02)

No, no, just thanks for having me. I’ve admired your business for a long time. think I met you or your, was it your brother? I met one of you somewhere at a dimensional or some industry event. So look, thanks for having me on. I’m always happy to talk about the Shadforth story. It is a strong, something we’re really proud of. And yeah, I’d love to come back sometime, mate, and tell you how we’re progressing.

Rob Pyne (50:56.524)

Yeah, it’s a good story. And I really appreciate taking the time today to have a chat about it because the feeling is mutual. Your impressive business and your impressive leader of a great business and there’s a lot to learn from what you’re doing and what Shadfortheforce is doing. So I really appreciate you taking the time, Terry Dillon today, talking to me on the Trusted Adviser podcast. Thanks, Terry.

Terry Dillon (51:16.064)

Thanks, Rob.