A refined focus
A boutique financial planning firm with just two CFP-accredited advisers and one para-planner, Waterfall Way Associates has built its success on strong personal relationships with clients and expert knowledge in selected fields.
These chosen fields are SMSF advice and administration, as well as estate planning. The firm’s director, Dacian Moses, says he recognised early on the need to carve out a niche and service a select group of clients in the best way possible.
“We cannot be all things to all people and I have [found] a niche role advising business owners and professionals with debt and dependents,” says Mr Moses.
While Waterfall Way does provide some insurance and mortgage advice, it is the firm’s estate planning and SMSF strategy and administration services that deliver the bulk of the revenue. Mr Moses says that by concentrating on these select aspects of wealth management, the firm can provide specialised advice to the right clients.
THE BENEFITS OF PLANNING AHEAD
Intergenerational wealth transfer, as Mr Moses calls it, forms a large part of the practice’s value proposition. Waterfall Way uses several different strategies, including SMSFs and different types of trust. The firm’s estate planning strategies have evolved over the past 15 years, since Mr Moses and his colleagues have found ways to do things better.
While the practice focuses on the intergenerational aspect of estate planning for the benefit of clients, it also has some real benefits for Waterfall Way. As younger generations are brought into the business by their parents or grandparents, they experience firsthand the valuable services offered by the firm and often become clients themselves.
“This is unashamedly client’s best interest first, but as a part of that we are also building in our next generation of clients,” Mr Moses says.
While very important to the business, these aren’t the only referrals Waterfall Way relies on. Referrals both from existing clients and centres of influence also play a large role in Waterfall Way’s winning new business.
“We have found that our tax reporting and fund admin – including contemporaneous trustee minutes consistent with the trust deed – have been well received by accountants and auditors,” Mr Moses says.
Referrals are vital for any SMSF practice but perhaps even more so for Waterfall Way. By Mr Moses’ own admission, sales is not a strong point for the business and something he says he and his colleagues are all working on.
“I describe myself as the least-worst salesman at Waterfall Way,” he says, “which is why it is my job to get the new business.
“My selling style is probably more along the lines of: ‘This is what you’ve told me; I’m pretty good at this, this is what I think; to go forward from this point you actually have to start paying me’.
“I try to keep it as simple and as clear as I can, but that doesn’t necessarily resonate with everybody,” he says.
Like many SMSF practitioners, Mr Moses admits sales and marketing just doesn’t come naturally to him.
“I use cynicism as a substitute for wisdom and so sometimes I find sales and marketing advice difficult to accept at face value,” he says.
Waterfall Way Associates is “platform atheistic,” Mr Moses explains. “We do not believe that platforms provide a cost-effective service,” he says. “We are also philosophically opposed to surrendering legal ownership of assets for a beneficial interest through a platform. We are a natural fit for business owners and professionals who share this view.”
The practice uses Xplan to provide both administration and consolidated tax reporting at a lower cost than that of almost all investor-directed portfolio service arrangements he has seen to date. He also notes conflicted remuneration and rebates for volume through platforms is just one more reason for the firm to “avoid the market altogether”.
“We are in the process of finalising the last few legacy trail commission payments and expect to declare ‘independence’ under Corporations Law in the next few weeks,” Mr Moses says.
Waterfall Way Associates has always been a strong advocate of SMSFs, with Mr Moses saying he has supported the use of SMSF structures throughout his career since he – and his clients – see ownership and control as important in any retirement plan.
However, he also noted SMSFs have now become the “flavour of the month” – something he sees as a real concern.
Alongside this, Mr Moses says he is particularly concerned by the rise in single asset (property) funds with significant gearing.
“Mortgage brokers, property developers, real estate agents, solicitors and financial planners have converged on this market. There is a lot of commission revenue available and this is rarely a good thing for consumers,” he says.
“I see it as the next ‘Storm’,” he adds.
To date, Waterfall Way Associates has done no limited recourse borrowing arrangements.
“It will be the next thing that blows up at some point in the future. I’m concerned because as soon as it blows up it is going to be ‘those financial planners’ who did it again,” he says.
Mr Moses is not against holding property in an SMSF and notes it is often a very valuable asset to hold; he is, however, “philosophically against superannuation funds borrowing”.
“I’m of the view that super funds shouldn’t borrow because borrowing increases risk and super funds aren’t there to be on the far right hand side of the risk scale”.
“The government provides some fairly significant tax relief around superannuation and I think there is a quid pro quo there,” he says.