Husband and wife team, Finn Kelly and Sarah Riegelhuth, started Wealth Enhancers after meeting at a financial advisory conference back in 2009.
After seeing an opportunity to create a financial advisory business catering for Gen Y clients, the pair decided to focus on a client’s life goals, not just the numbers.
Since growing their business to a team of advisors in both Melbourne and Sydney, Wealth Enhancers has the goal of demystifying wealth creation for younger clients.
Dynamic Business chatted to Finn Kelly about the business, and got his thoughts on what he sees as a financial knowledge gap in Australia.
How did Wealth Enhancers get its start?
The business started three and a half years ago when I met my (now) wife at a financial advice conference. She was from a finance and investment background as well.
Sarah and I started chatting, and I said ‘Is anyone actually doing the combination of [both strategic and investment] advice?’ And no one seemed to be. So we set up a business, which was set on the advice relationship, where everyone met with a strategic advisor and an investment advisor.
How did the original idea involve into the current business model?
So we initially went after high net wealth, because that was the market we knew how to communicate to, and these clients knew how to manage money. Then over a period of time, we started looking at what actually made these clients successful. We realised it wasn’t the amount of the money they made over their lifespan. It was smart financial decisions at a young age, and continuous decisions, rather than ad-hoc decisions.
A lot of friends are young professionals, and they were saying ‘we want advice too’ – but they didn’t fit our model, and didn’t have a couple of million dollars to invest. We started to think ‘well that’s really sad that these up-and-comers can’t access advice’. And we realised there won’t be any future private clients, because no one is focusing on actually building wealth at the moment’.
So we thought why don’t we create a business where it doesn’t matter how much money you have, and it’s more about coaching and accountability. That’s how the modern day Wealth Enhancers got created about a year and a half ago. So now we’ve got WE Private, which is the private client business, and Wealth Enhancers, which is targeted at high income earning young professionals, sports and entertainment people, and entrepreneurs.
Cash flow and money management is a key battleground for business owners; do you advise those who run their own business as well?
The basics of business – and the fundamentals of every business – is what we’re good at, and we realised that we should start giving advice in the business space as well. So we’ve been testing an entrepreneurial business advice offering, where we sit as an outsourced CEO and CFO.
We have a philosophy which says ‘you’ve got to know your numbers’. Where we add value is we sit above the founder and owner – because so often the owner and CEO is the same person – so it’s really easy to justify why they didn’t do ‘this’ and why they spent ‘that’. Naturally then, they become more accountable, and we help them focus on their goals.
What types of poor financial decisions do you see small business owners and entrepreneurs making?
The biggest one is simply not knowing the state of their finances. That’s probably the poorest decision – just not investing in financial accounting software and not keeping their records up to date. A lot of business owners don’t realise the importance of knowing exactly at any point in time what their numbers are.
The second one is, a lot of people have this idea that if they go and spend a lot of money on a fancy website, and go open up an office somewhere, that business is just going to come in the door. Unfortunately that doesn’t happen. You could run a business just through LinkedIn if you really needed to. There’s too many easy ways to spend money, and they don’t hold themselves accountable to that.
Probably the number one thing reason I see as to why businesses go under is that they don’t spend the time actually working out their pricing structure. So it doesn’t matter how good your business product is, even if you’ve picked the right industry, and you’re in the right market – if you don’t actually get the pricing right, and you price it at a loss-making level, you’re never going to be profitable.
Too many people just pluck a number and go ‘oh we’ll try that’. So we spend a lot of time on the pricing, and saying you’ve got to get that right.
Do you see poor levels of financial literacy in Australia, and amongst Gen Y?
Yes, hugely. I think there’s a stigma, and people are afraid to actually ask for help, and ask questions – even the silly ones. I think it’s amazing how many people I come across who don’t actually don’t know there’s such a thing as high-interest savings accounts, or what’s they’re superannuation is doing. I think the GFC left people quite fearful, and so now they’re just doing nothing. But you have to make decisions.
One of the purposes of our business, is to make a comfortable environment where there are no silly questions about money – that we should be talking about it, and there shouldn’t be this whole worry around talking about what they’re earning, or what they could be doing. That’s the way you learn.
What advice can you offer to people who feel they’re financially going backward instead of forward?
We always say, it doesn’t matter what your situation is – just draw a line in the sand, and get a real measurement of where you’re at. Write everything down, all of your different accounts, all your debts, and just see what you’re actually worth at that point. And that’s the first step. Taking responsibility.
The second thing is to then do a budget. It’s amazing how many people go through life not knowing where their money is going. So, how are you ever going to make plans if you don’t know where your money is going?
They’re the two big ones. From that, it’s important to then set goals that are important to you value-wise. What gets you out of bed in the morning? Because if you’re not working towards something which is really important to you, you’re not going to stick to it, and it’s really easy to just give up.
Another key point is that growth is slow and steady. I think a lot of people think they’ve got to go out and make this big decision and it’s going to change everything. The whole concept of getting rich slow is based on incremental steps which grow sustainable wealth. And it does snowball.
