Heraud's open door policy

Shy is not a word that you would generally associate with Ian Heraud. Sure, he hates selling and he's not what you'd call a loud mouth, but shy?

Well, he says, his shyness as a youth was one of the driving forces for entering the financial planning arena. Back in the early 1980s, Heraud donned overalls every day and headed off to work in a factory in Melbourne's industrial suburbs. He was shy at work and generally hated the grind of life on the production line.

"I hated going to work. I was very shy. I didn't feel good about myself," Heraud says.

Heraud is now the managing director of Heraud Harrison, he sits on the Financial Planning Association (FPA) board and has built a reputation as one of the best in the business. His practice/dealer group employs 18 people with offices on Melbourne's St Kilda Road.

The transformation from self-proclaimed "perennial negative thinker" to respected financial planner was underpinned by a dogged determination to improve his life. One of the beliefs he formed at the time is one of the underlying philosophies of his practice strategy.

"I don't like people selling things to me, so I don't do it to other people," he says.

Rather than flogging managed funds, his original business philosophy, when he got the practice up and running in 1990, was "to provide technically excellent advice". He still likes getting his teeth into meaty technical issues affecting his retiree customer base. In fact, he still spends most of his time in front of clients.

"But I can only do that because I have an excellent operations manager," he says.

Striking a balance between spending time with clients and spending time managing the business has been one of the most difficult juggling acts for Heraud, but he thinks he has found a workable balance.

His eyes first opened to the issue when he payed $10,000 for a management consultant ("money well spent") in 1994 to dissect the practice and his business plan. He took on the consultant after realising he was "ignoring his responsibility" as managing director of the business, which had grown from a handful of employees to a staff of eight.

"The consultant told us that Michael [Harrison] and I were good planners but not very good managers. So he suggested we hire a general manager," Heraud says.

Heraud subsequently recruited a general manager to run the business. The recruit was improving the running of the business but Heraud reached a new hurdle.

"I had hired a boss for the business but I then realised I wanted to be the boss," he says.

So when the general manager left the practice, Heraud hired an operations manager. The operations manager ensures all the systems of the business are running smoothly but the buck stops with Heraud.

"But I am gradually accepting my role as a director rather than 'the boss'," he says.

Heraud takes part in staff meetings every fortnight, as well as fortnightly management and board meetings. He learned the importance of maintaining regular formal contact with staff when he ceased attending the meetings a few years back.

"I was abrogating my responsibility as managing director and the atmosphere within the practice deteriorated as a result," he says.

On top of regular contact with all staff, Heraud Harrison offers a number of incentive plans to staff and management. Around Christ-mas time, he hands out about $1,000 in cash as a thank-you. He is also developing a bonus incentive scheme but is reluctant to re-introduce a profit-sharing arrangement.

"We used to have a pretty generous profit-share scheme but in the end I got the feeling it was being taken for granted," Heraud says. "One thing I have definitely learned is that you can't fix a problem by throwing money at it. Staff are motivated by recognition as well as money, and therefore I am committed to a bonus scheme of some description."

Developing a career path for budding financial planners has been one of the most successful initiatives introduced into the practice. Heraud's partner Michael Harrison started in the practice as his paraplanner and the most recent addition to the financial planning team, Jamie McKay, also began with Heraud Harrison as a paraplanner.

Each financial planner has a paraplanner that they work alongside and each paraplanner has a paraplanning assistant, so there is a career path that can take up to five years to move from a graduate to a financial planner.

"I am not interested in recruiting established planners into the practice. I like to bring in graduates who can learn the business at the same time as learning how to be a financial planner, so by the time they become a financial planner, they fully understand the business," Heraud says.

All three planners have equity in the business. McKay only recently took out a loan to purchase a 10 per cent stake in the business, which was guaranteed by Heraud. Heraud says he will gradually sell down his share in the practice but won't sell out completely.

"I will never sell out. I will want to come in and annoy them in my dotage."

Tip Sheet

* Use simple language in all communication - most planners write financial plans that not even I can understand.

* Send out a form that collates most client data before the initial appointment.

* When closing an initial interview with a client, make a second interview appointment.

* Profit share does not always work.