Paul Benson took over a financial planning company during the toughest economic time in the world! Learn how Paul’s company grew through the GFC and continues to grow today.
After 16 years with the CBA, Paul Benson decided to take on his own venture in 2006.
With 7 years of corporate financial planning under his belt, Paul had the necessary experience to pursue such a venture with another financial planning practice.
The owner of this practice was actually looking for someone to succeed him in business, and so Paul found himself with a valuable mentor from the get-go. Due to a non-compete clause in the contract of his previous employment, Paul couldn’t ask any of his clients to transition over with him.
Sure enough, a few followed him anyway!
Thanks to some unused annual leave saved up at his previous job Paul didn’t have to worry too much when he finally started his own business.
“I had 8 months leave entitlement paid out on departure, so I used that as my runway to get started.”
This paired with some of his former clients following him to his new venture, Paul was able to generate an early cash flow and establish himself in business.
With just a couple of years under his belt, Paul was able to buy out his predecessor in 2008.
This all seemed quite the risk to take during the global financial crisis, but Paul understood this to be good timing given his circumstances.
“Being in the middle of the GFC, it was a tough time to take such a move but organic growth was pretty hard to find too, so an acquisition proved to be the best option. It’s been organic growth ever since.”
When it comes to financial planning, it’s all about building relationships for the long haul.
“Our clients set goals of things they want to achieve over the next 2-40 years, and our job is to work with them to ensure those goals are realized.”
Most of the value in finances comes in the long-term.
The more assets your clients have, the more secure (and, generally, the happier) they’ll feel. And, the more assets your practice has under management, the more profitable you’ll be.
As Paul informs us, this takes time.
There’s a lot of time and work spent acquiring a new client, putting together a financial plan, transferring accounts, etc. This acquisition doesn’t necessarily reflect on the company’s balance sheets immediately.
10% of Paul’s business income comes from new clients and 90% from existing clients.
Keeping that eye on the long-term is the focus – when it does pay off, it pays off big for both the client and the business.
Paul goes about this by staying as affordable for his prospective clients as possible without losing money for his practice. Then, he and his client can focus on making progress toward goals.
“Over time, you can build up a good reliable cash flow and a good base of clients to work with.”
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Paul Benson’s target market seems like your average everyday family.
“We have a fairly broad client base but if I was to nominate an ideal client, I guess it would be someone in their 30s or 40s who has good income but for whom money management and tracking progress towards goals is not their strength.”
Paul’s ideal client has dreams and ambitions as well as a lifestyle full of passions and career-building.
Where Paul’s value comes in is when this type of client doesn’t necessarily have the time or patience to manage portfolios or track numbers. They might not be too well versed in finances, to begin with, and would rather not spend the time and effort swinging up the learning curve of funds and figures.
However, they are not passive!
They care about what happens to their financial future and so are ready to listen and take Paul’s advice.
“My best clients don’t just rubber stamp everything I suggest—we always talk things through together.”
In fact, Paul is currently working through this with a couple.
“One of their medium-term goals is to buy land in Tasmania and embark on a fairly innovative forestry project.”
The first thing to do was to confirm that the new project wouldn’t eat away at the progress they had made toward their retirement. Once it was confirmed that their retirement was secure because of existing and projected contributions, the couple was good to go with the Tassie project, focusing any surplus income there.
With a flexible savings strategy, the couple will be able to buy the right piece of land quickly when it comes up for sale. After that, any funds previously going towards savings will then go toward debt repayment instead.
This shows you that a game plan put together for a client is never set in stone and is a “living” document. Life doesn’t usually go according to plan and it follows that your money won’t either, so be prepared for uncertainty.
“There’s plenty of uncertainty at this point [for the couple], so open channels of communication are important.”
For this couple, in particular, Paul knows that they need to have visibility as to where their money is being spent, so he has developed for them a cash flow management system. This way, the couple knows how and when they can save as much as possible towards their goal and still enjoy the quality of life they prefer.
A game plan, constant communication, and long-term visibility are the factors that make Paul an asset to any family’s financial portfolio.
The biggest challenge Paul Benson had to face was within 6 months of taking over the financial planning practice on his own during the GFC.
“The bank that we used to borrow the funds for the purchase advised they no longer wished to lend to the financial planning sector.”
There was some breathing room, however, as their contract agreement kept the bank from shutting them out completely right away. This was crucial because they were now in the biggest debt of their lives.
“The share market was down over 50% which has a really big impact on an investment focused financial planning business and it was stressful.”
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Paul’s biggest stronghold at this time in his life was his wife who remained optimistic and confident that they would get back on their feet no matter the circumstances.
“I had to raise the possibility that we’d lose our home if the current grim conditions were to continue. That’s not a conversation anyone wants to have. […] She didn’t put any pressure on me or make me feel bad. I am forever grateful.”
As the business gradually got back on its feet, Paul had to make some serious decisions that would affect and secure the business’s future. He decided to sell off a portion of the business that wouldn’t serve them any longer, to lay off a staff member, and to move offices.
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“None of this was easy but perhaps a crisis like this was needed to make some hard calls with long-term benefits.”
In growing the business into something substantial and sustainable, Paul says that referral relationships are essential for the business.
“We didn’t have the funds for large marketing spends, so building relationships with several referral partners has been pivotal to the success of the business.”
Paul’s practice has used two different commission structures: percentages of split income and formal joint ventures. This is where all of the revenue goes into a joint venture (“JV”) account, they charge the JV for their time, and then profit is split up at the end of the year.
“There are pros and cons of each but for anyone building a business, I strongly encourage you to consider how you can build 2 to 4 quality referral relationships.”
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When it comes to his own personal growth, Paul says podcasts are the way to go for him. He consumes a lot of industry-specific content but feels that as long as you’re hungry to learn and you stay curious, you’ll find the content you’re looking for.
In terms of books, Paul says that “E Myth was the most useful book by far.”
Speaking of podcasts, Paul says that his biggest win in the last year has been “launching [their] Financial Autonomy podcast which has led to having articles published in the Fairfax Press which has resulted in new clients.”
In everything he does, Paul remains honest and transparent and admits it’s early days yet in drawing conclusions about joining BLG Boost.
He does admit that it’s great to have a network of people that he can ask questions of “when a curly one” comes at him!
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At first, he worried about the return in value he would get with BLG Boost.
“Money I spend on BLG is money that could instead be spent on marketing, office improvements, staff pay rises or training, etc.”
And, this is the reservation that most entrepreneurs have: with the already scarce or limited resources earned, would my money be well spent on BLG Boost?
“I think Paul [Higgins] is very mindful of this and works hard to deliver value to members of the community.”
With members like Paul Benson contributing to the BLG Boost group, it is not difficult to see where all of the value comes from.
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