Company Interview / Investing with friends and family | the advisory

Key points:

Decrease in female CEOs within the S&P ASX 300 discussedHelen examines investing with friends and family, stressing the need for legal documentationStrategies to address and bridge the gender pay gap are explored

Helen Baker from Brisbane Private Wealth underscores that the Chief Executive Women's census indicates a decrease in female CEOs within the S&P ASX 300 from 26 to 25, showing persistent gender inequality in leadership. Susan Lloyd Hurwitz, CW President, points out the second occurrence of such a decline, the first being during the height of Covid-19.

Helen talks about the potential pitfalls and benefits of investing with friends and family. She emphasises the importance of defining the investment purpose and having an exit strategy. Helen suggests considering growth investments such as property or shares, but stresses legal documentation and consulting advisors for optimum success.

Highlighting gender pay gap strategies, Helen suggests women should target organisations supporting female leadership, understand pay discrepancies, and choose careers that align with gender equality. She encourages leveraging support from both women and men to bridge the gap.

Full unedited transcript below:

0:00

The chief executive. Women's censorship. The latest census has shown that the path to leadership for women in terms of the ASX appears to be narrowing rather than widening. So yeah, this is an annual census run by Chief Executive Women, and it found that the number of female CEOs in the S&P ASX 300 decreased from 26 in 20 23 to 25 this year. The findings revealed that despite heightened awareness and public discourse about gender equality in Australian workplaces, 91% of CEO positions are still held by men. CW President Susan Lloyd Hurwitz says that it's only the second time in the censuses eight year history where there's been a decline in female representation at the most senior level, the first time being the height of Covid 19.

0:51

Let's get to the advisory now and to discuss insights on investing with friends and family, and how women can leverage the gender pay gap to their advantage. Helen Baker, a financial advisor at Brisbane Private Wealth, joins me now. Helen, welcome. Well, isn't this a breath of fresh air then, considering that census from came out just today?

1:14

Um, but just on the first point, investing with friends and family. Helen, isn't that just riddled with potential pitfalls?

1:23

Yeah, it can certainly keep some lawyers and some financial advisors and accountants employed, that is for sure. But there are benefits to doing it. And obviously when you bring in family members, that gives you an opportunity to buy into maybe a bigger asset such as property or a business. So you've just got to be smart in how you do it. Avoiding a mistake is always key.

1:43

Seeing demand for this style of investing, if you've put some thought into it. Where where should people start though, before they embark on any sort of investing with friends and family? I think you need to go back to the beginning and say, why are we investing together? like what is the purpose? So for some people it could be again trying to buy into something that's big. And then is it for the purpose of, you know, building for retirement? Is it short term where you're just trying to build enough to maybe get into a first time buyers opportunity or, you know, it's like, I've got money now, let's invest together. Let's try and maximize this. But having an exit strategy so just depends why you're investing. And that'll determine a lot of the next steps from there. Because if you know we go through the who what where when you know, you would have to determine what structure you would use, surely.

2:35

Yes. So again, you know, if you were buying just maybe two people, you might look at just buying together, whether it's what we call joint tenants or tenants in common around something that's property based, but if it's something else or even with property but it's bigger. So for intergenerational wealth, you might look at doing it through a family trust. You might look at using a self-managed super fund, but the self-managed super fund is one where it's quite tricky. You definitely want to get some advice before you commit to that, because again, people might be needing to take money out whilst you know there isn't money coming in or it can change. So it's always important to have long term as well as short term strategies. Is there any rule of thumb for what you should be investing in? I mean, are there certain asset classes that lend themselves more easily to this style of investing with friends and family?

3:29

I think it's just more about if you're investing in what we call growth investment, so be it property, be it, um, international or Australian shares something that could be quite volatile and it's value. You want to make sure those have some time on your side. Because if it falls you don't want to be forced to sell it while it's down. Whereas you might look at some softer investments if it's something short term, like, you know, turn deposits, gold, Um, bonds, anything like that. And you might even have a mix depending on whether it's more like a medium term or what the goal. Again, why are you investing? That comes back to the reason of what you would choose that's appropriate for your situation. Okay. And um, I suppose is there always equal ownership within the structure, whatever that may be within the investment?

4:22

I think most time people think, oh, 5050 or if there's a few of them, maybe 25, 25 like that, but it doesn't have to be. So again, it will go back to that strategy around how long are people going to intend to work? What tax bracket might they be in? Does it make sense to give more of the percentage to one person or the other, and does that change over periods of time? So all of that again comes back to all those rules about why are we investing? What's it for? How does it fit, whose name is it in, how much do we allocate and blending all of those together. And so what about getting out of the investment? Does that have to be sort of settled before you even get in, if you're thinking about how you get out? It's probably that phrase begin with the end in mind, right? Like when you're doing a business, you want to have an exit strategy about what I'm building this for, what its purpose is, and then how do I get out, whether it's a management buyout or whether it's, you know, selling to someone

5:22

externally. And that's the same with these investments. It's like, what is it? How is the plan going to be executed down the track? And it could change, but it's just more about thinking, you know, long term we're getting in. How do we get out? Uh, do we get out at different stages with a different strategy and just again, blending it all together? So Helen, clearly, um, like a lot of financial decisions, getting advice is smart, oftentimes a starting point. But I mean, it's there a potential for a pitfall? You know, somebody goes to you, Helen. They take your advice. And somebody else in the syndicate or in the family or friends group, they get advice from somebody else, like, does that cause tension or do you do you all need to have your own advice? Yeah, it's a good question that because it depends whether everyone is on the same page and coming together or there are other advisors involved. So I'm a big believer in having your team. So I like to work with the account with the lawyer, make sure we're all saying the same thing to protect

6:22

the client and make sure that they understand all the pitfalls. And sometimes there's no black and white, you know, it can be a discussion around this is an option and that's an option and what's best for you. Understanding why that is a pro or con and then making a decision. But yes, the more tiers that you add to it, if people getting different advice from different places, that could be sometimes a little more contradictory. But generally, you know, everyone's out there to to make the best of this situation. So you'd like to think they're going to work together and I mean, maybe this goes without saying, but I think we should say it anyways. Um, this is not done on a handshake, is it? This all has to be legal. It has to be written down. It has to be documented. Yeah. I think, you know, documentation is absolutely key. We've certainly seen over the years, um, you know, for anybody who didn't have that documentation and the rubber hit the road, things changed. Whether it was health, whether it was marriage breakdowns, whether it was getting married and

7:22

people having to access these investments earlier than they planned. And then that perception of, oh, I thought you meant that, or I thought that, and it does create some tension. So the more you can document, the better the fact that you're going into an investment with somebody would indicate that there's an element of trust there. But the reality is life just dictates things that we didn't expect or we didn't expect them at that time. So having that sort of documented and understanding is of benefit to go back to and kind of makes it probably more black and white rather than emotional, which is kind of the problem in relationships. Helen, have you seen this work out? Well for people? It'll be a fruitful investment coming together as either family or friends. Massively. In fact, to me it's more successful than it isn't. Really. You know what I mean? It's, um, gives people opportunities to get into things like even simply friends buying houses together where they've shared together and remade it and rented for a long time but just went, you know what? We might as

8:22

well buy together. We're renting together anyway, and that's always been a good one. Businesses is another one. Um, again, you know, unless something really peculiar happens unexpectedly, they should generally drive through. There's generally a lot of understanding between the people. And if it's family members as well, on the same page, it's all for everyone's best interest to accumulate that wealth. Well, we don't have a lot of time left, but Helen, just in, uh, I guess with a tip of the hat to that chief Executive Women's Survey, showing that it's still very unequal out there for us ladies in many ways. Um, how do you advise clients on how they can bridge that gender pay gap?

9:05

Yeah, I think being aware of what the differences are and and I think our industry is still top as one of the worst, which is quite ironic, don't you think? But I think, you know, understanding what, what the discrepancies are that you can bargain with also choosing the careers that are looking after women and also the organisations that are looking after women like what you're referring to there. You know, how many women are on the board, how many women are in senior management who's actually, you know, being my cheer squad. If I get into this organisation, can they help me improve where there might be some gaps? What can we do to support each other as women? But also there's plenty of good guys out there as well. You know, we need people to jump on board and drive this forward internally as well as externally.