Like father, like son: Q&A with Michael and Matt Heine from netwealth

Following in their fathers' footsteps has been a generational trend for Michael and Matt Heine, joint managing directors at netwealth. This week, we speak with the father/son duo about the lessons learnt from one another, some new developments alongside their transition to life as a listed company and some 'lessons from history' that help to steer their family in the right financial direction.

Michael (pictured right) - What initially drew you towards a career in financial services?

I joined the family business started by my father. The business was a major international commodity trading company which was incredibly exciting, and I learnt a great deal from that business and my father. In the early days, in addition to being intimately involved in the international trade financing, I also ran the mortgage lending and property development and investment business. I was particularly attracted to the financial services growth potential and the recurring nature of the income in contrast to the trading business which was very volatile.

Matt (pictured left) - What lead you to follow in your father's footsteps? Was this something that you always wanted to do?

From a very young age, I was fortunate to be exposed to finance, financial management and the stock market as Dad ran several businesses, including listed funds management companies. He made sure to talk about what he did around the kitchen table through the good times and the bad, those discussions have been invaluable throughout my life. From an early age my brother and I learnt about budgeting, earning money (and therefore the value of money) and importantly, how to save or invest it. We bought shares and talked about different ways to save or invest.

My early exposure to the stock market has certainly been a big influence on my career choice and my passion for financial services. It is interesting that as I have learnt more about financial literacy and how kids learn about money through our partnership with Banqer, a digital financial literacy program for kids, that I reflect on the different approaches my brother and myself have with money, despite growing up with the same information and in the same environment. People and their attitudes to money will always be different, however I think having a good understanding of financial principles and possessing good financial capabilities is critical to formulating informed decisions.

Superannuation still remains the ultimate financial challenge of our time. How do you get young people to care about super when they think they are invincible and will never get old? The fact I started working at Netwealth when I was 20, gave me a unique perspective on super. However, to be fair, while I was working for a superannuation provider, I only really took my own super seriously once I realized it was my money and I could choose how to invest it. For me, super was a great way to learn more about the investments I was choosing and the options available.

"He made sure to talk about what he did around the kitchen table through the good times and the bad, those discussion have been invaluable throughout my life." - Matt Heine

Michael - You have worked alongside Matt since he was 21. In what ways has he influenced the way in which you operate?

I have the benefit of experience which comes with age. However, this can be very limiting, and Matt often doesn't see the barriers that I might see and therefore can bring dreams to fruition more readily.

We operate as a team with different strengths and different responsibilities but with a common vision which leads to the very best outcomes. I believe there is far greater strength having the two of us leading the business and is an important part of our success.

Matt - Since taking on the role of joint-managing director with your father in 2014, what lessons have you taken from Michael about effective leadership?

Whilst it might sound cliché building a strong team around you is the single most important ingredient for success and then making sure everyone is focused on the same goals and purpose. It is also really important to constantly take and seek feedback to understand the "temperature" of the business. Working hard is important but over working your team and stretching resources too far will ultimately lead to poor engagement and various other longer term issues. Thankfully we have got the balance right to date but never take this for granted.

As a business we seek to help our clients, staff and business partners see wealth differently and this also drives decisions and our direction. We have also recently sought to better define our culture and understand what make us different to our competitors and ensure we continue to deliver great service and products to our clients. Whilst I don't think you can manufacture "good culture" I think you can nurture, maintain it and reinforce it - this is especially important in a high growth business where new staff are joining on a regular basis.

One way we are now looking to this is to embed our values and redefine our performance review and development system to make it more aligned with how we operate. Our values "Curious, Courageous, Collaborative, Agile, Genuine and Optimistic" - are different to those normally found in a financial services business but important to so many different aspects of our business.

Michael - What has been one of the proudest moments of your career so far?

Having built a respected, successful and profitable business together with my son is something I am very proud of. I am extremely proud of Matt's knowledge and understanding of the industry and his far-reaching vision and delivery. I am also proud to employ so many outstanding people who have contributed to the success of the business and helped them to achieve great things in their careers.

Matt - Last time we spoke you mentioned your family's "lessons from history" document that you often refer to. What have been some of the more recent lessons that you've added to the list?

As a family we have tried to record and refer back to a document we call 'lessons from history' which is exactly what it sounds, a documented reminder of money mistakes made in the past. Many of my own personal mistakes could have been avoided if I had paid closer attention to the stories in this book, but they are not dissimilar to the usual suspects in other people's financial past.

Lessons such as 'it's not timing the market, its time in the market', 'diversify, diversify, diversify' and "paying tax is a good thing as it means you are making money" are all there. The last lesson on tax is a very personal lesson, a mistake I made when I invested in agri-products with borrowed money to reduce my tax bill. The worst part was I then invested the deduction and lost at least 70% in the GFC because I was only invested in a handful of stocks that had been great performers up until then. I'm sure some would remember names such as Babcock and Brown and Centro....

Although at the time the experience was incredibly painful, it taught me a lot of lessons and the amount lost was relative.

"Having built a respected, successful and profitable business together with my son is something I am very proud of." - Michael Heine

What have you got planned for the next 12 months for netwealth?

Matt: Apart from ensuring a smooth transition to life as a listed company we are focused on making sure we continue to roll out great new technology and products that will help advisers drive greater efficiency and deliver clients better investment and retirement outcomes. In the short term we will be launching a new Mobile app, driving new managed account initiatives and releasing a SMART ROA tool to digitally generate advice. We will also be adding a new online administration tool and integrating external data to capture a client's whole financial picture such as off - platform assets and banking information.

Michael: We need to keep focused on building our business for the future and ensuring we continue to invest in technology, our people and supporting our clients.

What is the next step following the over-subscription of your recent IPO?

Matt: As per above - we are focused on continuing to run our business and keep doing more of what we have been.

Michael: The success of our IPO means we need to be very focused on delivering on our promises. We need to manage expectations and not get carried away with the success of the IPO. We still have to run our business which has many challenges as well as opportunities. And we need to keep a focus on our clients and delivering to them.

What is the biggest challenge you face?

Michael: We have many challenges and they include ensuring that as we continue our growth we never let our standards slip. We need to avoid bureaucracy and complacency and keep the business and the staff energized and excited. We need to have the highest standards of governance while still remaining entrepreneurial.

Matt: Given how quickly the world is changing at the moment, in so many different ways, we need to make sure we are staying at the forefront of advances in technology but also consumer and customer expectations. Identifying and then prioritising the right projects at the right time is incredibly important.

How do you attract and retain key staff?

Michael: The majority of our expenses relate to personnel, so people are critical to our success. We want to employ people who are expert in their field and who are hands on and doers and share our vision, we want to challenge them and we want to give them responsibility and authority. We want them to work with us because they love their jobs and the people they work with.