In this episode of the Trusted Adviser Podcast, Rob Pyne sits down with Drew Burden, Partner and Co-CEO of MBS Insurance, to discuss the impressive growth and scaling strategies of MBS, an insurance specialist firm. He shares insights on the importance of technology, automation, and a strong team structure in driving business success. Drew emphasizes the need for personalized client engagement and the challenges faced in the insurance market, while also highlighting the future opportunities for growth in the industry. In this conversation, Drew Burden discusses the evolution of his business, focusing on enhancing underwriting efficiency, building strong partnerships with insurers, and exploring minority investments in risk practices. He emphasizes the importance of intensive onboarding for new partners and the value of equity access for talent retention. Drew also shares future ambitions to serve a larger group of advisors and reflects on lessons learned from early acquisitions, highlighting the significance of quality over price in business transactions.

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SHOW NOTES

Topics Discussed

Building a specialist advice business through focus and long-term thinking.
Scaling MBS from seven staff to a national team of more than 100.
Hiring exceptional people and investing ahead of growth.
The Flywheel Effect and quarterly strategic planning.
Developing proprietary technology to automate insurance advice.
Using Salesforce and data automation to improve adviser productivity.
Creating stronger partnerships with insurers for better client outcomes.
Why specialist insurance advice delivers better outcomes than generalist advice.
Minority investments in risk advice businesses and partnership models.
Equity ownership as a driver of culture, alignment and retention.
Supporting advisers through technology rather than replacing them.
Opportunities for the thousands of wealth advisers who write only occasional insurance business.
Lessons learned from acquisitions, growth and building a scalable advice business.

Episode Highlights

(Timestamps are approximate)

[00:00] – Introducing Drew Burden and the 20-year journey of MBS
[02:00] – How MBS grew from 1,500 clients to more than 25,000
[04:15] – Three strategic decisions that transformed the business
[10:20] – Why MBS invested heavily in proprietary technology
[15:20] – Automating insurance data and eliminating repetitive work
[19:00] – Increasing adviser productivity through better systems
[21:40] – The evolution of automated Statements of Advice
[25:50] – Why MBS advisers consistently outperform the broader market
[29:30] – Building stronger partnerships with insurers
[33:00] – Joint ventures and minority investments in specialist firms
[38:20] – The intensive 90-day onboarding process for partner firms
[41:20] – Merchant Investment Management’s investment in MBS
[44:10] – The opportunity hidden within orphan insurance clients
[47:20] – Creating an ownership culture through employee equity
[51:20] – The future platform vision for Australia’s risk advisers
[54:45] – Lessons from acquisitions and two decades of growth

Quotes

“We’re specialists. We haven’t deviated from that since inception.” – Drew Burden

“If you wanted to truly scale, go and find someone worth more than the role demands and pay them what they’re worth.” – Drew Burden

“Technology should support great processes. It shouldn’t replace them.” – Rob Pyne

“Clients need personalised, tailored advice. Our job is to help advisers spend more time giving it.” – Drew Burden

“Momentum is super powerful. When clients receive a great experience, it creates the confidence for more referrals.” – Drew Burden

“Everyone understands the pathway to equity, the formula and what success looks like.” – Drew Burden

“If you buy something that isn’t great, it doesn’t matter how cheap it is.” – Drew Burden

“Nothing ventured, nothing gained.” – Drew Burden

Key Takeaways

MBS has grown from $8 million in premium to $250 million.
The firm has expanded from 1,500 clients to 25,000 in ten years.
Strategic hiring of experienced leaders accelerated growth and improved operational capability.
The business expanded from seven employees in one office to a national team of around 100 people.
Creating a flywheel effect has driven consistent growth.
Quarterly planning and disciplined execution helped MBS scale without losing focus.
Technology should support well-defined processes, not replace them.
Proprietary technology has dramatically increased adviser productivity by automating repetitive processes.
Automated workflows enable advisers to spend significantly more time with clients.
Maintaining data integrity is essential for business growth.
Accurate live policy data eliminated manual administration and allowed staff to move into higher-value roles.
The insurance market still has significant untapped potential.
MBS believes specialist insurance advice consistently delivers better client outcomes than generalist advice.
Building strong relationships with insurers enhances business opportunities. We’ve tried to work with them and feed them information to improve efficiency.
It’s not acceptable for advisors to give insurers peace of their mind.
We need to understand the challenges insurers are having.
It’s important to have relationships with insurers. Strong partnerships with insurers have improved underwriting, service standards and claims outcomes.
The next stage of growth is building technology that supports thousands of advisers who write insurance as part of broader financial advice.
Employee equity has strengthened alignment, retention and long-term business culture.
Minority investments allow specialist firms to retain independence while leveraging MBS technology, systems and scale.
If you buy something that isn’t great, it doesn’t matter the price. Successful acquisitions depend far more on quality assets and quality people than simply buying at a low price.
Consistent incremental improvement over many years has been a major contributor to MBS’s long-term success.
Nothing ventured, nothing gained.
We want to share in it with them.
We want those firms to be growing.
It’s about alignment, motivation, and momentum.

Resources & Links

The Trusted Adviser: https://thetrustedadviser.com.au/
MBS Insurance: http://www.mbsinsurance.com.au/
Connect with Rob Pyne on LinkedIn
Connect with Drew Burden on LinkedIn
Follow The Trusted Adviser Podcast

TRANSCRIPT

Rob (00:01.74)

Welcome Drew Burden to the Trusted Adviser Podcast.

Drew Burden (00:04.984)

Thank you, Rob.

Rob (00:06.702)

To have you on, Drew. We have known each other, I’m gonna say, probably six years or so. We first met when we realized that this insurance caper was a pretty challenging thing to do part-time when you’re in the wealth space that we’re in. And we went looking for someone to join us initially. We thought we’ll actually find someone who can come in and become our specialist in-house. But then we met your partner, in the Perth office here, Jade Burford, who Congratulations, Jade, just picked up the Risk Advisor of the Year in the Women in Wealth Awards by Financial Newswire. In no surprise, great human and a great insurance specialist, and it’s been a wonderful partnership we’ve had with you since twenty twenty one. It’s a joint venture that’s been profoundly successful for both of us.

Drew Burden (00:46.444)

Yeah, she’s phenomenal.

Rob (01:02.028)

It’s great to have you on. I had Jade on at episode six and we shared some personal anecdotes there. But you’ve been at the helm of something which has been growing in such an impressive fashion. It’s such a good story. I couldn’t help but want to have this chat. And just to share a bit about what MBS has been up to and the fact that you are focused on the one core area of insurance specialist advice and consequently you’re doing it exceptionally well. MBS turns twenty this year. In fact you have your twenty year celebration tonight. I would love to have been there and thank you for the invite. I can’t make it, but I’m sure it’s going to be an amazing event. y you know, a lot of firms in the market have exited insurance entirely, because it’s become really difficult, you’ve not only stayed, you’ve scaled dramatically. And for listeners who might not yet know MBS, tell us about the business as it stands today. Tell us, you know, what’s the state of play for MBS right now?

Drew Burden (01:57.655)

Yeah, I mean, thank you, and thank you very much for having me on. we’re we haven’t deviated. We sort of viewed that since inception in two thousand six that it was a specialist discipline and that would become increasingly so I think we’ve had some, you know, regulatory intervention which on the surface looked challenging but actually helped shape MBS and we’ll probably get into a bit of that later. But yeah, today I sort of think about MBS in blocks of time on occasion. So for the first 10 years, you know, that really was a foundational period. We sort of got to 1500 clients, $8 million in premium. And it was a really pivotal time for anyone who knows life insurance around the lift changes that were brought in. But going from 8 million in premium in 2016, today we sit at 250 million. We went from fifteen hundred clients to twenty-five thousand over that next ten year period. you know, we’ve we’ve spoken about it previously. I think when you look at the stats it feels significant, but when you’re in it and you know, we went on a deliberate path to scale. It sort of felt pretty fine and manageable along the way and it probably gives us the confidence of what the next ten years looks like for us as well.

Rob (03:19.969)

Yeah, tell us about the scope of the business now in terms of across the country. Like how many offices, where are you located in Australia?

Drew Burden (03:29.202)

Yeah, so we were back in sixteen. We were just in Sydney and there was seven of us. Now we’re in Sydney, Melbourne, Brisbane, Perth. We have a presence in Canberra and Hobart. but there’s about a hundred in the team.

Rob (03:43.503)

Yeah, wow. Yeah. So and hundred in your team and that growth you described in terms of the premium and number of clients you now serve is quite extraordinary. Shows to you know, obviously w it wouldn’t have been linear and it wasn’t, I’m sure, smooth the whole way, but as you said, it wasn’t insurmountable for you. It never felt like it was like, you know, speed wobbles off the rails. It was just incrementally, you know, moving forward, making change to improve all the time and Next minute you turn around twenty years later and you look back and go like, Wow, we’ve kind of come a long way in that time.

Drew Burden (04:16.768)

Yeah, and I think the real pinch be moments is the when you have the calibre of people either joining your team or with inside the shareholder group or exec team and what have you. there’s probably three when we made that deliberate decision to scale, there’s probably three key components to that. really fortunate timing we received some advice from a fellow who was quite senior in yum foods in the US. And his view was that if you wanted to truly scale, you know, and you had certain key roles, let’s imagine that role demanded someone, you know, to be paid $150,000, he said, Go and find someone worth two hundred or two fifty and pay them that. Because they will cover the spread absolutely and they’ll help the business grow. And they’ll sort of drive the business rather than solely rely on the management team or the existing shareholders to drive it alone. The second thing was we sought to create a flywheel effect, and that’s something that has no doubt been spoken about or read about by many. I think we truly were able to achieve that. and then the third thing was a recognition that we couldn’t do everything at once. So every quarter we would sit down at a board level and say, what are we going to focus on over the next quarter? Is it distribution? Is it our advisor cohort? You know, training, you know, onboarding, offboarding, capacity, et cetera. We’ll do the same for the ops team, the finance, technology, governance. You know, we sort of had a recognition that if we were going to get to where we wanted to go to, we had to, like little bites at a time, we had to work on things that were really critical at that time and what would benefit us in that next period.

Rob (06:08.662)

Yeah. There’s three great insights there and I think we should just spend a minute going back over them. You said Yum Foods. Now, just for everyone who doesn’t know Yum Foods, they are the parent company of a number of chain businesses in the fast food space.

Drew Burden (06:22.678)

Yeah, the KFC Pizza Hut, all the healthy ones. But you know, I think Yeah, I mean that that was a b individual and a business and it goes I I think the brands they’ve got are many more than that. but their whole ammo was scale. Like how do you actually get something that on the surface might look

Rob (06:26.582)

… all that stuff, yeah. So and the key insight sorry.

Drew Burden (06:49.152)

… reasonably simple or what have you and how do you actually scale that across jurisdictions. know, I’m not sure that that the alignment between MBS and Yum expands further than that.

Rob (07:01.334)

No, but but the principle was s sound in that you find a way to scale but y the point being that you find people that are worth every bit and more of what you’re paying them and you just pay them that money because they’ll actually drive the business without you having to kind of like hand their hold their hand and push them along and sort of because they themselves are highly capable and can drive growth and change that you don’t need to necessarily have your hands all over.

Drew Burden (07:25.206)

Yeah, and Rob, it’s getting people who have a skill set and experience that you don’t have. You know, so that in 2017, Karen Clark joined us, you know, she was running a business with sixty staff, we had seven or eight. she had multiple service lines, we had one. You know, she was really gonna help us systematize and she did. You know, a couple of years later we went from having an internal accountant to bringing on a CFO and that being Grant McClannan. We sort of met the market, you know, it was probably ahead of our time, but he proved up that absolutely right away. You know, I sort of view the right CFO is a great strategic mind and actually is more of a revenue producer than a cost counter or an or an expense driver.

Rob (08:22.572)

Yeah, no, I’ve had a lot to do with grants along the way as we’ve done some merger activity together where you’ve taken the insurance component of businesses we’ve folded into HBH, which has been a great arrangement that’s worked well for both of us. You also mentioned the flywheel effect. That’s the Jim Collins first talked about that in his Good to Great book, which is obviously working well for you and I thought I’d just make that reference for those that hadn’t heard that before. If they haven’t they haven’t been around for and reading like we have, ’cause that’s kind of a pretty commonly well understood principle, and we’ve got our own version of that. and the final one you spoke about, just to jump into that Cordley Rocks thing you spoke of, that’s effectively the Geno Wickman traction sort of principle of Cordley Rocks. I think it was first put together by I think it was Stephen Covey initially that put the Cordley Rocks together with that sort of concept.

Drew Burden (08:57.368)

Yeah, it’s not.

Rob (09:14.286)

And it was picked up by EOS. It was also picked up by Vern Harnish in his book Scaling Up. So that quarterly principle, that discipline of sitting down every quarter and going, Okay, this quarter, what are we going to work on? It just reminded me of the principle that Jim Collins talks about as well, the forty mile march. I think it’s the forty mile march. It’s just that principle of just being consistent and staying true to your plans every quarter. and not trying to do too much all at once, but just being focused every ninety days, what you gonna w what are you gonna work on?

Drew Burden (09:47.009)

Yeah, and some of it’s a gut feel and the other, you know, some of it’s more analytical than that. But it’s if you’re forcing yourself to have a look at those things, if you’re forcing yourself to work on the business rather than just be in it, and naturally we’re pretty competitive. We’re driven by opportunity, you know, Chris Mason and I, who have been around sort of the longest period, have always been very aligned. But we are competitive and we are, you know, looking at what exists in the market and where the opportunities are for sure.

Rob (10:24.92)

Yeah, well it’s just a competitive and driven, but you’ve you’ve actually just no doubt, you know, you’ve you’ve encountered some challenges along the way, but stuck with it and it’s been that it’s actually twenty miles, not forty miles, that Jim Collins is referring to, twenty mile march. So it was just staying consistent and overcoming the challenges as you’ve encountered them. But a bit I just wanna touch on the sort of competitive competitive edge that you’ve actually been able to establish now in this space you’re in. It’s been a deliberate decision that you’ve taken to build your own technology stack rather than waiting for the market to catch up to where you want it to be. What was the moment where or problem that made you feel like the only option was to really build your own tech in-house?

Drew Burden (11:12.246)

So this is all stemming from twenty sixteen really. And that was also this going back to this genuine attempt to create a flywheel effect. We didn’t observe any technology in the market that was great for risk specialists. Whilst we were clear that we weren’t tech people, we thought that we would stay inside the Microsoft and Salesforce ecosystems because we sort of felt from a cyber perspective that was a sensible approach. But what we did with Salesforce and the first part of the flywheel was actually increasing the capacity of the team. So we looked at it in layers. We’d first increase the capacity of the team working in a bottom up approach. Would then acquire efficiently, would you know seek better arrangements with insurers, you know, would onboard talent, would progress people through the PY and would constantly try and increase the volume of premium that we wrote, but also the clients that we manage and the B2B relationships that we enjoyed. But the technology piece, because we didn’t have, you know, any offerings in the market that we thought were amenable to our growth ambition, we started with Salesforce and what we did is if we knew we were gonna onboard new people, like how are we going to train and onboard those team members. So in Salesforce we built action plans. Effectively, if you started at MBS Rob, you know, the task in front of you would be presented and then you just follow the bouncing ball. And that made it easy for us to train, that made it easy to bring people up to speed quickly. But what it truly did is it allowed us to analyse where people spent their time. And so ever since then we haven’t changed this, but for the last decade, we just watch where, you know, what processes take the most time of the team or what processes are better done by a person or better done by some level of automation. And then, you know, the system will update and some will see that now they don’t do steps one through to ten, they do steps one and four and five and seven and nine. you know, so it’s not been about going and canvassing the team as to what changes would you like to see in the system. It’s actually just observing where the time is spent and what that cost is to the business and whether that’s an effective use of time and resources.

Rob (13:49.709)

Yeah. It’s it’s one of the common themes that’s emerged through the conversations I’ve had on this podcast is that people say build great processes and then put the technology there to support that process ’cause people think technology will solve their problems, but if they haven’t got a good process, as you’ve just described, technology won’t be the solution. In fact, I was listening to a podcast recently, someone talking about the th top three things that actually have driven most positive change in businesses and actually was in financial planning space. They talked about team structure being number one. This has come out of the dimensional benchmarking study as well. Team structure being the first one, second one being processes, and everyone who’s sort of heard that before, you know, it’s worth repeating, get a process that you can follow and nail down. And as you say, follow the bouncing ball for a new staff member joining. And the third one is technology then to amplify that process and make as much of as much as what’s possible to be automated, you know, run without a human having to intervene. Walk me through that part of it, the automation of your policy data feeds, because people kind of love this idea of, you know, having information at their fingertips. And it seems logical you’d want to, and I I didn’t think risk insurance data feeds was kind of really well done. In fact, we were with X Plan, still have X Plan in our tech stack, and risk policy data feeds were not a great feature of ours. We would get information on the risk policies we had back in the day before we joined with you guys. What changed there for you operationally and and your ability to then scale the business when you built more automation around your data and how you could manage information?

Drew Burden (15:27.06)

Yeah, so people were just spending a lot of time doing menial tasks that really didn’t add any value. Like we would get very frequent requests for a summary of a client’s cover, be it from their accountant or wealth advisor or from the client itself. And our team never really trusted what was in the system. So then they’d go away and jump on the advisor portal and look at that and update our sales force and then generate a report. And we were spending a reasonably offensive amount of time generating summary schedules when like so that that was an obvious problem to solve, that when we would get larger, you know, giving partners, you know, like in your firm visibility over live data it’s something that we would expect. but that is a huge time unlocked and actually the flow and effect of having accurate information and accurate data, like it is, is quite significant. the first time that we were able to achieve this sort of accurate live information, we were able to repurpose nine people who were doing it really on a full time basis. And it was such a menial, boring task for those capable people to be doing. and we needed them to be doing it at the time, absolutely. Like you, you can’t, you know, acquire and have organic growth at the level that we did and partnerships without actually ensuring that you have some level of integrity of your data. But yeah, that’s been a huge time unlocked for us. And we thought this market opportunity that existed would probably have reasonably expired by now. So we’re running pretty hard in those early years. We sort of thought that by twenty twenty three there’d be some recalibration. There hasn’t been yet. Certainly you know, across all aspects of life insurance. So we’re now, you know, working with some of our c competitors and investing in those businesses and giving them the capacity or technology and processes that we enjoy because there’s a big market opportunity and we’re not gonna do it alone. so yeah it’s been very beneficial and probably akin to what you enjoy in the wealth side to be fair.

Rob (17:52.621)

Yeah, it’s you know I’ve I I’ve just wanna pause here for a second ’cause the audio on your side is starting to be a bit crackly, just a little bit crackly. I’m not sure what that’s it didn’t start that way and it’s just starting to go a little bit sort of like I’m still hearing everything you’re saying, but there’s a there’s a little little popping that’s coming through.

Drew Burden (18:15.328)

Yeah, I did hear that. I didn’t know if it was on your side.

Rob (18:21.23)

It’s possible.

Drew Burden (18:21.446)

It might have and I will it

Rob (18:23.98)

But now that you know that it stopped now.

Drew Burden (18:26.676)

Okay. So do you want me to repeat what I said?

Rob (18:28.248)

So we’ll carry all. I don’t think so. I think it’s not bad enough that people will turn it off because actually the content’s really good and but it now that it’s actually clearer, like you just said, if it WA people it’ll go away and it and people will just carry on. But let’s keep rolling ’cause I could have even just left it and sort of said it’ll be fine, but it was kinda just though I thought it’ll probably get some point people go like, I’m gonna turn that off because it’s just a bit too crackly. Yeah. But it’s good now.

Drew Burden (18:56.81)

Okay. I’m more than happy to walk back if you need me to.

Rob (19:01.346)

Nah, it’s all good. Let’s just recap some of that growth through. You know, in twenty twenty-three you had twenty-four authorized representatives, you’re now at forty-one ARs, or at least last time we chatted a couple of weeks ago, you’re at forty one, you may be more now, and you’re managing that twenty five thousand clients you mentioned. What’s been driving the growth rate? Because the business has changed, obviously you’ve dealt with some of the recalibration or the probably hasn’t come through yet in the risk space, but what’s driving the growth in your business, the rate that it’s coming through?

Drew Burden (19:31.871)

But that’s the capacity of the team. So just that persistent analysis of where people are spending their time. So we’ve sort of always maintained that you know clients need personalized tailored advice. And we’ve had an internal quality assurance team that audits every client, audits every file before advice goes out. We’ve always viewed that advisors are better off having the conversation and giving the advice rather than the documentation of the advice. And so we’ve tried to think about how we can allow our advisors to get in front of more clients, how we can allow them to provide that advice that is tailored and then support them along the way. A few years ago, twenty twenty-three, you quote that year, we would have hoped and expected that our average clients engaged in completed policies would be about a hundred and twenty per advisor. Now we’re probably looking at a hundred and sixty. Some in our team I’ve looked last night are, you know, sort of touching a hundred and ninety lives that they’ve provided full advice and completed portfolios for this year. But that’s been the biggest differential that, you know, if we went back to twenty sixteen and some other risk businesses that we look at, some are looking at around seventy or eighty. I think that we’re probably doing a very similar thing to them. It’s just our advisors are being more deliberately supported.

Rob (21:03.83)

Through that tech investment you’ve made, just that technology that you’ve put in place to make everyone’s life a little easier so they can be in front of clients more, be more effective. And so it’s kind of like you’re at the front edge of what everyone’s dreaming about, really, is to actually get to the point where advisors are better supported with technology so they can be more in front of clients. And you’ve done that deliberately from the word go. Obviously you set out and we’ve got, you know, access to the Salesforce platform you use so we can get we’re one of those firms that was asking for those policy summaries for our clients and and we were no doubt annoying you for those when our clients were being seen for by our wealth advisors. But when you put that in place

Drew Burden (21:39.949)

Yeah. So one of the pain points that has been resolved is around statements of advice and then I’ll talk about the probably the next pain point that we’ll seek to solve, which is applications for insurance. But I think that probably just gives you an idea of what the focus and intent is. So for us an SOA is really the consequence of the inputs and what is required to be disclosed and analysed. So I mean it’s getting that client’s health information, completing the fact, find the needs and objectives, building a strategy, comparing existing policies. They have that, and then providing a recommendation, putting that, you know, the rubber hits the road. And so the system really should be generating an SOA from that point, as opposed to us historically going to you know an old Word template or whatever we may have done and meshing in all of the required disclosures and information for the client to understand. So we’ve got that to a point now where an advisor should be ready to be able to meet with a client and you know have advice presented within four or five days. The thing that is taking the reason is taking that long is because our internal quality assurance team needs to audit the file and needs to audit the advice because, you know, people can make mistakes or what have you, and it’s just better to have a second set of eyes run over that. You know, they’re being supported as well by some technology, but we do have that and want that manual engagement where someone is looking at one of our advisors’ advice and saying, Yeah, have they properly and appropriately explained what the conclusions are and how they come to that and etcetera But but the next one that’s really little bit frustrating is advisors completing applications. Like they’re, they’re just re-keying information they’ve already got. It’s just such a waste of time. I had one of our advisors the other day, he said, I’m going to work from home tomorrow. I’ve got, you know, four or five applications to submit. And he didn’t need to say that for us to know that was a problem, but it just seems such an ineffective use of…

Rob (23:48.919)

Yeah.

Drew Burden (23:53.251)

… You know, and any of our advisors’ times. And it’s you know, y you probably expose yourself and the client to someone keying in, you know, something that’s not correct.

Rob (24:02.22)

Yeah. Potentially transferring information that’s not accurate. So yeah, no, it it makes sense. Well you’ve ticked off the data based management piece and repurposed nine people. So that was a big milestone moment for you and to redeploy people for more productive tasks that are less menial and and more interesting for them as well, I’m sure. The advice production.

Drew Burden (24:21.26)

Yeah, and that’s all sorry to interrupt you. To give Chris Mason credit, like he’s really been on since day one about career progression. So, you know, it’s good for the business to progress, but it’s important for the people to also have, you know, within the team to have the opportunity to progress their career as well. And, you know, doing the same old task every day, year in, year out, is not the most exciting proposition.

Rob (24:49.654)

Absolutely. I think there’d be power planners out there that would be thinking they can’t wait to get to that point as well. Certainly, you know, writing plans all day, every day for years on end is not really an aspiration I’m sure many people have, but it’s a great stepping stone type role. But if we can actually go where you’ve gone in the wealth space as well to actually get SOAs generated off the back of the rich context that the clients are having conversations having with their advisor, that does seem like the next logical step. So you’ve done that piece of it as well and now the application is on your radar to try and get that automated so that the data that’s already been captured is being more seamlessly transferred through to the application process. You shared a data set with me some months ago that showed MBS writing significantly more premium per advisor than virtually anyone else in the market. I actually looked at it, it was like everyone else was on Earth and you guys were on the moon. In terms of the volume of premium per advisor that you guys write relative to the market generally, what does that gap tell you about your business relative to the market?

Drew Burden (25:57.987)

So if you write insurance, like for us, you may have like there was fifteen, something like this, fifteen consecutive points of negative regulatory intervention, right? Where the cost of advice, education, commissions levels, etc. a lot of people stopped. You know, institutions, banks, they sort of got out of it. So the motivation for someone to come in from a tech perspective and monetize a diminishing opportunity just wasn’t there. I thought we would have recalibrated as a market by now. We haven’t. There’s still so many Australians that need to get retail advice. You know, we would expect that the market should be at least two times the size that it is today. You know, if you have a look at how society has grown from a debt to income ratio, people are having, you know, getting married later, having children later, working longer, living longer. So the need for advice has become greater. But there’s not great technology to support advisors in the market in our space. And insurance has become increasingly complex. Like it’s only we only deal with four products. It shouldn’t be complicated, but it seemingly is. So yeah, we work closely with insurers. We distribute their products, so we consider them partners. We make sure we support our advisors with distribution and, you know, relationships with firms such as HBH. But yeah, I think there is a big gap on the market. I’m not sure if I’ve really answered your question, Rob.

Rob (27:43.309)

Yeah, I think the reality is you’ve got technology that underpins the advice process. So I guess you are able to generate more throughput, I guess, per advisor, as well as the fact that you’ve got such volume through the insurers that you use, there’s better rates to be obtained and probably better would it be fair to say that those insurers treat your applications with a little more the greases on the wheels a bit more because they’re so used to seeing volume from you guys. Do you actually feel that you’re getting some arrangements with your insurers that are kind of preferred because of the volume you’re putting through?

Drew Burden (28:25.846)

Yes. I mean we’ve also been very deliberate and proactive in our discussions with them. We were really clear that this was the journey that we were going to go on. I will say that and it sounds cheap, this momentum is super powerful. So if you refer a client to Jade and Jade does a great you know, a great review and portfolio strategy for that client. And maybe it’s, you know, recommending they retain, maybe it’s recommending they reduce whatever it may be. But if it’s done effectively, efficiently, professionally, you’re more inclined to refer to another client. And that momentum is really significant for us. We work with the insurers as well and understand their pain points. So some insurers talk about point of sale acceptance rates…

Rob (29:01.774)

Course.

Drew Burden (29:16.126)

… as being something that, you know, during their underwriting process they analyze. So they’ve got costs, obviously. So they understand the cost, the acquisition costs of putting a client on the books. So we’ve tried to work with them and feed them information to actually improve their efficiency and to have them absolutely deliberately wanting to work with MBS or MBS clients as a priority. And then that evolved to us getting like true dedicated underwriters and premium service team and BDMs and what have you and having those relationships whereby you know I I know that today we have an underwriter from one of the insurers in our office and that’s just a really helpful resource. So we’re at a fortunate period where we are distributing the most retail advice in the country. And so we’re constantly meeting with these insurers on a quarterly basis. Chris Mackenzie, our head of advice, has a great relationship with all of you know, all of the key people at each of the insurers and we we are working together to solve a common need and we’ve got mutual clients. So yeah, I I would I would to be honest, I’d expect that our advisors and our clients are looked after.

Rob (30:31.31)

Yeah. And hence the premium per advisor is obviously higher than everyone in the market f based on that data set that I’ve seen. And it’s just worth just spending a second on the fact that you’ve actually treated the insurers like partners, not as vendors not as providers. They’re actually a partner in your business. And so you thought about how to make their process easier so that it helps them so that we can be doing things with them in a way that’s more productive for both of us. And so that’s a mindset not everyone brings to the table, Drew to be honest. But you’ve actually thought about the whole value chain, how do we make everyone’s life easier so that we actually can be more productive together.

Drew Burden (31:09.398)

Yeah, I mean there’s four critical parties in our value chain. There’s you know, HPH, there’s our partner firms and the advisors there, there’s our advisors, there’s the insurers, and then obviously the client. Now we’re all working towards a common goal. And so we of course should be working with them, not against them. You know, and it goes well beyond. Like it’s not acceptable w advisors might not always agree with an underwriting decision, but it’s not acceptable if you know for them to give them the peace of their mind.

Rob (31:36.707)

Yeah.

Drew Burden (31:41.783)

But then we’ve got to be smarter about that as a business. So one of the challenges that we’ve seen is this premium instability, which is not great. Like insurers, it’s not great for insurers, absolutely not good for clients. It’s not great for us. It’s not great for our like how can we work with the insurers to solve that? How can we understand some of the challenges the insurers are having and actually work together to solve that more effectively and more efficiently? So yeah, I like it.

Rob (32:08.268)

Yeah.

Drew Burden (32:10.272)

We’re distributors of the products, you know, delivered by these product manufacturers. And it’s not just about new businesses, it’s about ongoing. It’s about claims as well. Like Yeah, Lauren, I know I was speaking to Lauren the other day and we have had more claims this year than one of the insurers, which is which is a significant model. It’s not, you know, it’s not great ’cause there’s obviously people who are unwell or injured or worse.

Rob (32:31.789)

Yeah.

Drew Burden (32:39.35)

But it’s important to have those relationships and for everyone in our business to understand that we are partners with the insurers.

Rob (32:46.626)

Yeah. I’ve personally experienced that claims process and Lauren is a superstar. I’m sure she’s got great people working with her team as well in the claims department. So yeah, it’s a great, efficient part of your business, which is so it’s just the critical part, isn’t it? You know, it’s good to get insurance cover in place efficiently, but when the time comes if you’re making a claim, you want it to be a painless process and certainly it was that when I went through it. Let’s go back to the forty to fifty firms you’ve now got in some form of a joint venture arrangement. I just had Rebecca Tai from Game Plan Wealth Advisors. On the last episode and Rebecca shared with me I didn’t realise she was working with you guys as well, doing insurance and she works with a young accumulator client but has said I think it’s a specialist area and yes, whilst we work with young clients and they have insurance needs, we just don’t want to be trying to do something we’re not great at. So we work with the MBS team. You know, you’ve you’ve recently also started doing something which I know that people have heard about from other parts of the investment market or or extract the wealth space, but taking minority positions in selected risk practices, what’s the distinction between the two models that the J V is one version, whereas now you’re thinking, well actually we’ll what’s the logic behind the minority investment approach specifically?

Drew Burden (34:05.196)

So at a macro level, the market opportunity is incredibly large. We’ve got, as you mentioned, forty-one authorised representatives, we’ve got ten going through the PY. Hopefully they’re all successful over time, but it will take time. There’s a lot of quality risk writers. I know there aren’t, you know, an abundance, but there are quality risk writers in the country and you know we sort of thought about it and had conversations around, well, if we’d had the technology, if we’d had the insurer arrangements, if we’d had the capital available to us back in twenty sixteen, would have that been a path that we would have chosen to do rather than build out ourselves? And, you know, the answer was absolutely. So to date we’ve got PRP in Brisbane. Mark, Corey and Courtney up at PRP are a great great team and the business has been around for fourteen years. Similarly, Orbital, Nick and Rachel Fanto and their team, you know, they run quality businesses, they’re quality people. And so we had conversations with them around well, actually how can we help you? How can we help you to grow? Both businesses had an embedded network, both businesses had ambitions to continue to drive distribution, to build their team out. It’s all of the other stuff that we’ve already done that actually we could deliver them. And so we sort of said to them, if you approach this in the right way, we would see that you would go from here to here. We charge them a cost recovery on the but we just don’t want to do that and not be aligned. You know, alignment’s really important. So we want to share it with them. So, you know, our model is to buy twenty-five or thirty percent. We would buy more, absolutely. We’d wanna invest alongside them. So you know, at a minimum we’d look to buy twenty-five or thirty percent and give the existing sellers that remain in the business the greatest incentive and motivation to keep pushing that business forward. But, you know, there’s just such a significant market opportunity out there and there’s such a significant need, you know, why should we just look at them as competitors rather than look at the opportunity larger together?

Rob (36:36.428)

Yeah, well, as you say, you’d built the technology that underpins your business that could be transferable. You’ve had the preferred insurer rates and terms that you’ve actually been able to achieve through volume. So taking a minority position in businesses that afford thinking, where they still own and operate their business, but have now a a really a partner that brings a lot of capability to the table, that helps them really leverage the the what you’ve built and and and grow their business makes a ton of sense for them and for you.

Drew Burden (37:02.24)

It helps them and it helps us, absolutely. Like if now we’ve got you know, instead of forty one ARs we’ve got fifty one ARs, we’ve got, you know, more revenue producers to just, you know, to apportion the expenses or the reinvestment that we might make. We’re now distributing greater levels of insurance and managing greater volumes of existing policies and we can build out our claims team even further. So yeah, it’s just it’s just helpful and you know, they’ve got the motivation and the financial incentive to keep going forward and certainly with both of those businesses. You know, their identity remains, you know PRP and orbital, and they’ve got a lot left to achieve. We will just support them on that. It’s not that we didn’t go in there and say, okay, well we expect that you’ll get from A to B. Like it’s their business, it’s their journey that we’re just we’re just there to support them and we’ll both benefit from that.

Rob (37:56.557)

Yeah, not interfering, just helping to underpin their business growth objectives with what you’re bringing to the table. So yeah, it makes a ton of sense. What is that what is that first

Drew Burden (38:03.734)

Yeah. And Rob, we’ve got our own business to be focused on as well. We don’t need to be, you know, riding shotgun on their business.

Rob (38:10.786)

Yeah. Yeah, exactly. What does that first ninety days look like when you bring a minority partner into the fold? What do you do for them? What does it look like for them and for you?

Drew Burden (38:21.226)

Yeah. Well firstly I wonder if you have had the same thing you know, you’ve grown, your business twenty four years old, you’ve whether you’ve had the same experience. When we bought on an e an experienced advisor into MBS, in the earlier days we’d sort of you know, with sort of softly, softly, let them come into the building and, you know, observe everything and, you know, let them sort of I don’t know, settle in a little bit. What we’ve realized is actually they’ve got expertise and experience and that’s why they’re on board but if we actually onboard them quite intensively then the more that we do that the better the outcomes are gonna be and they’re gonna come a lot quicker. You know, so for a team

The first ninety days are like that as well. Like there’s two elements to it. Like nothing is gonna change in terms of you’re still gonna work in the same office with the same clients, with the same colleagues and the same brand, but everything is gonna change. Like you are now gonna be using Salesforce. we actually will rebuild their entire database within a week because of our data feed. So we don’t really worry about importing their historical information. They’ll retain licenses perhaps with X Plan or whomever, you know, as it might relate to file notes and what have you, but we will stand up their database really quickly and you know when I’ve talked about back in twenty sixteen, all the process and action plans were already in our like it’s the same today. So I’m sure it’s in the shorter term. There’s a fair bit to digest for the team. But they should be able to get in on top of it and going out the other side within ninety days, absolutely.

Rob (40:19.084)

Yeah. So you really go intensive early on and I think you said to me once that you spend two or three days in their office with a group of your people that go up there and literally run them through the process, chapter and verse, intensive training workshop for the first few days and then as you say you stand up their database from your own data source or from the from the insurers directly rather than trying to rebuild their their data from doing a data transfer. So that makes a ton of sense. There’s a lot to…

Drew Burden (40:44.886)

Yeah, so the so the so you know, we would break their business into three components, one being sort of the client services, another being the power plane, another being the advisors, and separate people from our business will go and train. So those goals. So spend three days to the the client services with our dedicated person who looks after client services. But yes, we have benefited and I’d encourage anyone else that you know, onboarding talent or teams. to do it reasonably intensively. Rather than let people sort of settle in and ’cause it, it seems to the benefits seem to compound on the other side.

Rob (41:24.748)

Yeah, makes sense. There’s good lessons and learning there from your experience. So appreciate you sharing it. I certainly know that merchant investment management have become a key partner of yours a couple of years back. they took a minority position in your business, much the same way you’re doing now with Orbital and PRP. What has made that feel like a partnership for you rather than just a capital transaction at the time?

Drew Burden (41:51.585)

Yeah, so we weren’t looking. We weren’t looking for capital at the time. We were being well supported by Macquarie. but they came along and they offered the opportunity to buy primaries, so on balance sheet rather than us look to take some money off the table, we still felt like we’ve got a lot left in us. so they made an investment which allowed us then to probably reset from a debt perspective and go again, to be fair. So you know, it was quite encouraging when someone else came in and said, Hey, we want to buy, you know, twenty percent off of MBS. It was but also we’re up for it. Like we’re, it sort of recharged us as well. I don’t think we need it, but when your debt is reasonably significant and goes back to zero and you get the opportunity to go again, well, yeah, we’re we’re as I said, you know, we’re a reasonably competitive firm. and you know, there’s three people here in Australia, J Melville, and Beck Wells and Ellie Glotzer who who are supporting us as well in dealing mainly in the wealth ecosystem where they’re speaking to new firms or existing firms and saying, hey, you know, you should be dealing with MBS. So it’s n it’s more than money.

Rob (43:10.232)

Jamie and Ellie from Merchant Wear in my office about a month ago. Yeah, so they’re out and about. So yes, I I I they’ll be

Drew Burden (43:13.607)

Yeah.

Rob (43:18.934)

Yeah, representing obviously merchants’ interest but also, as you say, working collaboratively with businesses that are maybe looking for a risk insurance solution because you say it’s become a pretty complex space to be in and you guys have obviously pretty well got it nailed down. You said that that money from a merchant went onto your balance sheet, paid off debt. You did twenty one transactions last year alone. When you’re looking at a acquisition now versus five years ago, what’s changed about what you’re looking for?

Drew Burden (43:48.409)

We’re a lot better at it. We’ve made Yeah, I like we I we’ve made, you know, we’ve we’ve kissed some frogs. when we’re looking at transactions, we’ve always been of the view that we would want to work with partners who have had a history doing life insurance so that there is existing clients. we wanna be aligned with the people.

Rob (43:50.318)

You’d hope so, wouldn’t you?

Drew Burden (44:14.89)

I think we’ve realized that, you know, to be in business or have relationships with the wrong people, it just causes more pain than benefits, irrespective of any c money. and then the last one is we want those firms to be growing so that our advisors and our teams grow with them. That’s more exciting for us and for them. w we’ve what has been really interesting is really since the Royal Commission, you know, a lot of wealth advisors haven’t been writing a lot of business. And a lot of those like it seems that a lot of those portfolios that we’re looking at every year are just one year older on average than they were the prior year. And that’s a bit of a problem. It’s a huge opportunity for our advisors and to provide those clients with a recalibration, not just about rewriting, but we might have you know some discounts that we might be able to embed into existing policies, like some retention discounts. But the biggest observation is there’s a lot of clients who haven’t received advice in a long time. I won’t name them, but one of the insurers mentioned to us that 70% of their in there they’re enormous. One of the 70% of their clients are effectively orphaned. which means they do have an advisor named next to their policy likely or often, but nothing has been happening or communicated by the advisor with those c with those insurers or so so that that’s a problem. it’s yeah. I it’s also an opportunity for us to be fair as well.

Rob (45:59.341)

No question. I mean, people who are doing wealth predominantly and doing a bit of risk on the side or have historically done a bit of risk on the side because it’s been a core part of the offer in their view, but have kind of become a bit reluctant to do it because it’s hard and they’re not specialists at it. And, you know, it seems obvious to me talking to you, and obviously because we’ve got first hand experience that the clients are better off. you actually can actually get leverage off your existing relationships with those clients on the insurance side, but you can actually start to really think about providing a much better service to those clients and grow again in that space with the partner that can specialise in it. So it’s been, you know, our experience is true of what you said there around just that clients get a better experience. There might be, as you say, discounts available. There would be things we looked at that maybe you didn’t think we could change, but exclusions being sort of removed, you know, loadings being removed. So things that we experienced when we first moved across to work with you guys, it became obvious that these guys really know what they’re doing if they don’t think about anything else. So our clients immediately got a much better experience from a specialist firm. So it’s a great credit to you. You’ve got 30 people now on your equity ownership cap table for a firm that was a partnership of trusts not long ago. That’s a meaningful cultural shift. What made equity access…

Drew Burden (47:08.44)

Thank you.

Rob (47:21.89)

… feel like you said there earlier that Chris was very much about career trajectory and growth for people. What made equity access feel like the right mechanism for you for retention and alignment and how do you manage the complexity of that many shareholders?

Drew Burden (47:34.051)

So we both Chris and I, actually used to refer to Chris at the very start and I was in finance. We both worked at businesses that we really liked and enjoyed, but we didn’t feel independent of each other, we didn’t feel like there was a pathway to equity. And we have benefited from many of our you know, our existing shareholders that have come on board to us because we’ve demonstrated a really clear pathway to equity. What that means, it’s not just for advisors. There are some non-advisor shareholders as well who contribute greatly to the team. But we always felt like if it was important to us, why would we not think it’s important to other people? So from a talent retention, a talent acquisition, you know, that would be a key ingredient. But probably more so for alignment, you know, having people. Yeah, it creates alignment, it creates motivation, it creates, you know, great momentum. Like it’s just been really positive. What we have had to do as we’ve grown more, so this is a question around complexity, like how do we manage dirty owners? we’ve had to be really deliberate and you know, we’ve maybe stumbled at times, but around that people gotta play their roles. So the business will benefit from people knowing their role and playing their role and we have five on our exec team. We also have a couple of externals, we have a chairman with great experience as an insurance lawyer and has run AFSLs and super funds and what have you. and we have another and a couple of other advisory people that are really outside from the industry. So yeah, we are trusted by the 25 odd internal shareholders that aren’t on our exec team that we are going to be running the business in the right way. and we do catch up. We the shareholders will catch up three times a year. You know, twice in person and one one time virtually. But everyone’s got access to information at all times. So everyone’s got like everyone’s got dashboards on Salesforce and they will understand where the business is going and where it’s at. You know, everyone knows what the requirements are to be offered the opportunity to buy in and that that comes at one July every year and everyone understands the formula, you know, which is a multiple of E but of what the the price will be. So yeah, we’ve enjoyed that.

Rob (50:23.098)

And provide people with the clarity and transparency of what it takes to get there and what it looks like once they are there in terms of the dashboards you’ve got. It’s a powerful mechanism to, as you say, get that alignment you speak of. And I know we share this philosophy. We’ve approached it very similarly about retention and alignment and you just get that level of engagement that you wouldn’t otherwise see. Not to say people would never be wanting to give their best at their role. But it just levels it up in a way that’s hard to define until you see people really think like an owner, because they are. So a great credit to you to have done that and to see just what it’s done for your business in terms of leveling those people up into that level of ownership and engagement. So, as I say, I share that philosophy and we’ve gone down the same path. But let’s talk a bit more about the future. I’ve got two more questions for you ’cause I know you’re a bit on the clock today and I want to go to a couple more I wanna capture. You’ve begun to think about how MBS might be able to serve the five thousand or so advisors nationally who just write a handful of risk cases each year, like we just talked about a moment ago. What would that model look like and is that a near term priority for you or more of a future ambition?

Drew Burden (51:35.231)

This is something we would want to significantly progress this time next year. So what is often reported is that you have 120 risk specialists or risk advisors that write $45 million in retail advice. The next 45 million is written by 350 advisors. And that’s considered the key or the primary core. You then have five thousand advisors that are writing apparently two hundred and forty, two hundred and fifty million in premium a year. So that’s let’s say fifty thousand dollars on average per annum, it’s that cohort that obviously doesn’t mind doing it. They’re probably wealth advisors with maybe 150 family groups and you know they have a core that they want to do intergenerational advice for the younger accumulators. So we think that we can’t scale, you know, from 41 ARs to 300, you know, quickly and not in the right way. And there is a proper program for PY. So how can we help in the same way that we thought about minorities? How can we actually help those 5,000 advisors that write on occasion and manage it? So this would be the creation of a platform like what you see in wealth. We want to have a crack at, you know, whilst we’ve always viewed ourselves as specialists and staying in our lane, you know, we don’t see this as being a great deviation from that. We already know the front end piece. We know how to generate advice documents. We know how to manage existing portfolios. Can we help with some of that, you know, those writers that write on occasion. maybe instead of doing fifty thousand, maybe they do eighty thousand. Maybe we should make it easier for them to engage with those clients that they really haven’t engaged with since the Royal Commission as an example. You know, the efficiencies that I spoke about, imagine if wealth advisors who are still happy to do it but never had to load another application. I mean, there’s things that we can do to support that group. and I know insurers that we speak to, they’re very motivated about solving that it’s not gonna be easy, but we’re gonna have a crack.

Rob (53:58.231)

Yeah, that’d be impressive because I know a risk platform’s been talked about for many years, but actually given you are effectively doing it now because you’ve got the technology build with those insurers, it seems like a logical step for you and I wish you well on that because it certainly would unlock the opportunity for those advisors to actually run a a more effective part of their business if they don’t want to outsource it or joint venture it with you but actually just stay doing it but do it in a much more productive way than they can do it now with the technology and the systems you’ve built. So one final question. I thought this was a really good story to share. You made a comment about the first client acquisition you ever made. You mentioned the lawyer’s letter you received two days later, the money being gone and then going out and buying the next one. Twenty years on, what do you think’s the biggest lesson you’ve learned along the way?

Drew Burden (54:53.878)

Yeah, so that book that we acquired, that’s a brutal memory. Where the lawyer kindly let us know that the book that we acquired from the individual we acquired it from didn’t actually own the book. What have we learned moving on? I think you know, I think what we have learned, and I would say this to anyone who is doing any acquisitions, if you buy something that isn’t great, it doesn’t matter the price that you pay for it. Like find a good asset, pay a fair price, and you know, the distractions won’t be there to the same degree that they will be there. If you buy something that I won’t say the word, but it’s no good, doesn’t matter, you know, you could get it for free, it’s not worth it.

Rob (55:42.669)

Yeah. So if it’s cheap it might be a good reason and maybe look for something that’s quality that you can own, pay a fair price for it and let it continue to grow on the back of the quality it already has. So yeah, that’s what I think the lesson that I took away when you shared the story with me, and I’ll let you elaborate further, if you will, but it was just the fact that you went like Well, it didn’t work out, but okay, where do we go next? We learn from that, we move on. We don’t just we don’t commiserate forever. We just say, Okay, that didn’t work out. We just need to look a bit harder next time and learn from it.

Drew Burden (56:19.744)

Yeah, and you know, we were better acquisitions now than what we were at the start, but we weren’t afraid to try. Like you know, nothing ventured, nothing gained. Like a lot of people speak about the desire to do acquisitions. Nothing’s perfect. Hopefully you can buy an asset that you can improve. Hopefully you’re buying an asset that is beneficial for the team. Hopefully you’re buying an asset that, you know, might maybe comes with talent as well. You know, I think that if you want to do it, just have a go, and you know, sometimes learning a lesson is hard at the time, but you’ll be better for it, as long as you don’t get over, you don’t get over your skis.

Rob (57:04.46)

Yeah, absolutely. So I know you’re on the clock, so I’ll park it there. But I just wanna say thanks again for being such a great partner for us, working in a joint venture arrangement. It’s been a wonderful relationship since the day we joined and I think it’s just because we’re values aligned. Everything you’ve talked about ownership and alignment and working with the right people and we felt the same way and it’s been terrific to work with…

Drew Burden (57:15.074)

Thank you.

Rob (57:30.476)

… Jade and Shane here in Serena in the Perth office. just how just quality people doing great work that actually makes our clients’ lives better and makes our lives better. And I wish you a wonderful evening for your twenty-year celebration tonight. And you’ve obviously got some great history to reflect upon with the whole team that’s been a part of that and the aspirations you’ve outlined just now. I look forward to watching with interest as to how those things go because you are competitive as you say and you don’t take no for an answer easily. So I’m sure you will achieve great things still to come. So Drew Burden, thank you again for joining me today on the Trusted Adviser Podcast.

Drew Burden (58:11.779)

Thank you, Rob. Absolute pleasure. Really appreciate it, mate. Thank you.