Bailey’s rise to the middle

When Kevin Bailey was a teenager he spent his weekends and school holidays buying railway stations, collecting wads of cash and avoiding jail.

The self confessed Monopoly addict says that while growing up he was very interested in finding out as much as he could about how money worked. Bailey says that by playing Monopoly, he found building up assets like railway stations and utilities was something that interested him on a deeper level than just the imaginary empire he was creating. However, despite having an inkling of what direction he would take in later life, Bailey was not aware of the financial planning profession.

Bailey had his first taste of the financial services industry at 20, after receiving an insurance payout when he was involved in a fairly serious motorbike accident.

“When I received the payout I was interested in seeking out ways to invest,” Bailey says.

“In 1982, a colleague recommended I speak with an adviser on how to invest. And then I became very interested in it. I was one of the pain-in-the-neck clients; the one at the do-it-yourself end of the spectrum, asking questions and always delving deeper,” he says.

In his early 20s, then a member of the crack SAS army unit, Bailey says he was still consciously working out ways to find the right investment for himself. By the time he hit 25, Bailey decided to rethink his career path and quit the army, instead choosing to return to the books and continue studying.

“Before I became involved in the financial planning industry I was a serious investor, striving to understand how investment markets work and what goes on,” Bailey says.

In 1987, Bailey left Western Australia after an opportunity came up in the financial services industry at Monitor Money in Melbourne.

In the same year, Bailey discovered there was a need for understanding the processes and philosophies of investments. He says the metaphor of the fall of the Berlin Wall in 1989 was a major turning point in his financial direction and knowledge.

“It suddenly occurred to me that the entire basis of the planning industry was fatefully flawed. I thought everything I believed in was not valid in a new environment. In the 1990s there was a massive bull market, offering investors artificially high returns,” he says.

As a result of Bailey’s self-discovery, he fronted the crowd at the inaugural Financial Planning Association (FPA) conference in 1992 with a revised look at the industry. He endeavoured to change the mind-set of his fellow advisers and convince them of the benefits of recurring revenue for advice, rather than being remunerated for transactions.

“I had a strong desire to operate, and a strong belief in the way the advice should be given. In order to put flesh on those ideas I came to the conclusion that I would have to start from scratch and develop based on the philosophy, on the concepts I’d built on,” Bailey says.

With his ideas constantly challenged, Bailey decided to stop struggling against the tide and left Monitor Money in 1996 to set up his own practice, where, in partnership with his financial planner wife Grace, he would be able to incorporate the concepts under the one roof.

The Bailey operation started out with one filing cabinet, one desk and a rim of Reflex copy paper.

“In the first couple of years we weren’t charging high entry fees. We started from scratch with no clients. We have built the fee revenue and now have more than $2.5 million funds under advice,” Bailey says.

The Money Managers has been running for the past five years under Bailey’s control. In those five years the group has built up a client base of more than 1,200 clients.

“We have lots of different types of clients. Getting up to well over 1,200 retirees and well-educated professional people,” he says.

Bailey divides his time into 20 per cent working with clients, more than 50 per cent working on internal and external boards and about 30 per cent on corporate governance issues. So where does he find time to run his business?

Bailey says his practice has the unique feature of being corportised, or ultimately, tied to each staff member. He says each staff member is aware of the group’s philosophy of planning for clients being a study of risk and not about risk profile. Bailey says all staff, are expected to study the Diploma in Financial Planning (DFP) as part of compulsory training within the group. As well as undertaking the DFP, staff members are also advised to attend the FPA annual convention.

Apart from controlling the business operations behind his Money Manager desk, Bailey is also a key advocate for the financial planning association (FPA) and its members’ plights. At present Bailey is a director and sits on the FPA national board. In 1995/96 he was the Victorian State Chairman and has held board responsibilities for both initial and continuing education and public awareness. As well as being an active FPA member, Bailey is also a member of the Australian Securities and Investments Commission (ASIC) industry liaison committee. In 1998 he was the recipient of the Money Management Financial Planner of the Year Award.

Money Managers directors are Bailey, his wife Grace and Gregory Keady, another financial planner, who joined the group four years ago. The group has a general manager who runs the business, a company accountant, an IT manager, a full-time client services manager, three client personnel in a client service unit, a receptionist, personal assistant, four financial planners and one paraplanner. The group’s financial planners and paraplanners are salaried staff.

To keep staff morale at its highest level, Bailey believes firmly in staff bonuses and splurging on Christmas dinners, lunches, and getting together for drinks at the pub every Friday night.

The Money Managers use the Advent financial planning software package. The software program enables the group to generate numerous reports from the data and information provided by the BT Portfolio Services through its wrap account. The Money Managers meets monthly for board meetings with the group’s business plan revisited regularly.

Bailey says almost all avenues are covered, or soon will be. The future for Money Managers is bright and if staff figures drop slightly, Bailey can always rely on his own multiplying tribe. At last count there are six junior Baileys. However, when asked if any would take over the reigns, the answer is that it’s all too soon to comment.

Fact Box:

Name - Money Managers

Dealer group - Money Managers - private company

Location- Melbourne

Staff- 16

Clients- 1200

Funds under advice- $2 million

Software- Advent

Master trust BT Wrap Account