55. Phil Smith Works Hard and Stays Humble

This week I speak to financial services veteran, Phil Smith.  

Phil tells how he went from saving his schoolboy pennies in a TSB piggy bank to looking after billions of pounds of other peoples' money as chief executive of financial services support services provider Embark Group.

Seizing the opportunity to work in an embryonic business based in Asia turned out to be the springboard to Phil's future career, wealth and family success. 

Phil is a wonderfully warm and candid individual, who retains incredible humility despite now leading a business which generates in excess of £100M per annum. And he has an optimistic message and encouraging words of wisdom for young people who are apprehensive about their career prospects in the current environment. 

Episode Transcript

Jason Butler 0:05
Hello, and welcome to the Real Money Stories podcast. I'm Jason Butler. And I invite you to join me as I have intimate money conversations with people from all walks of life. Whether you're just starting out and your money journey, or well down the track, there's bound to be something you can learn from these stories about taking more control of your money, so you worry less, and enjoy life more. Real Money stories is sponsored by Vanguard, bringing value to 30 million investors worldwide. Visit vanguardinvestor.co.uk for more details. And remember, the value of investments can go down, as well as up and you may get back less than you invested.

Hello there, Jason here. Thanks for joining me on another edition of the Real Money Stories podcast. Now, this week's interview's really interesting, I'll get to that in a minute. But I just wanted to let you know about this week's blog. And it's called why you shouldn't invest. Now, it's interesting, because we hear all this sort of all the messaging about why you should invest. And I actually want to put the counter argument to really explain why you don't invest or rather, what you need to do in order to be in a position to be able to invest. And it is based around my 8 Money Milestones framework. But read the blog now at my website, jason-butler.com, and see what you think and see if you agree with with my thoughts there. So that's that's that and so last couple of weeks, I've been very busy. I've been doing loads of financial well being virtual presentations and talks with loads of employers summon unearthly hour, seven in the morning, seven, six at night, lunchtime. So, you know, I tried to make these very accessible. And what's really interesting about all of these financial well being webinars that I do, all around the country, with people virtually, is that the single biggest problem that most people face when dealing with their finances, and their money, is understanding how to actually control their day to day spending. And what's really interesting is well over three quarters of people either have no budget at all, or loose budget that they loosely follow, or a very detailed budget that they loosely follow. So very few people have a really detailed budget that they stick to. So I'm going to be covering that in in in a bit more detail in some more blogs and some future podcasts about this whole issue of controlling spending, because I think there's a fundamental shortcoming that most people have. And it starts with how we think about spending and how we think about the role of money. So look for look out for some more content on that, because I know that scenario that most people really need some help with. Now, this week's show is really I'm really excited about this, because it's called Phil Smith and Phil Smith is an ex Barclays chap, who for several years now has been running a financial services group called embark. And embark seems to sort of do all the unglamorous stuff behind the scenes that make financial services firms work, whether it's sort of investment platforms, pension wrappers, you name it, they'd all the sort of plumbing. But Phil's a great guy, very open very. How can I be very optimistic. And although he's in his 50s, his his insights in his real money stories episodes is really interesting, because he's got some great ideas and thoughts for younger people. Not only does his own company embark group actually have a graduate recruitment scheme, and they take on quite a lot of graduates and move them around the organization. But he's got some great insights himself as to what he thinks young people need to do now to be relevant to make sure they can make the most of their human capital, that they can develop their career. A really, really nice guy, and I hope you're gonna enjoy the episode, as much as I enjoyed recording it. So let's get into the show.

Phil Smith 3:58
Mr. Bill Smith. Hello, Jason. Thanks for having me for this podcast. I've been looking forward to it.

Jason Butler 4:04
Yeah, good. Well, before we go into the backstory, Phil, do you want to just tell people who obviously don't know you what you currently do for your, for your day job?

Phil Smith 4:14
Yeah, so I'm founder and chief executive of a little company called embark. So and Barclays in the pension administration, platform admin, and now fund management worlds in in a small way. So collectively, we're about 624 people dotted between Dundee and Salisbury. Up and down the UK. We have about 35 point 1 billion of client money through our various products and services. And we have revenues of getting close to 100 million pounds a year. So we're 70 years old as a company and I try and keep the chaos in order across the whole lot.

Jason Butler 4:54
It's an amazing story and anyone who wants to check out it so what's the website again for your main group company called?

Phil Smith 4:59
embarkgroup.co.uk.

Jason Butler 5:02
Yeah, it's fantastic. Go and check their website out. They're a very interesting company. Phil is the sort of the cheerleader in chief as it were. But they do all sorts of stuff. And essentially, you do a lot of the unglamorous stuff that makes people's financial worlds happen, right?

Phil Smith 5:17
That's absolutely right. Jason, I'm very happy where I'm an invisible widget in a great machine.

Jason Butler 5:24
Yeah, absolutely. Then Scott, you've got some great people sort of feel. Um, so let's go back to the early days, little fails. I call it you know, when you were growing up, I mean, can you remember your use of early money, memories and what it was like growing up at home with money?

Phil Smith 5:37
Yeah, for sure. So, so as you probably know, Jason's I'm from Yorkshire, very working class background, my father left school at 14, went and still works, as most people did in Sheffield. My mother worked for the local council my whole life. So I was looked after as a kid alongside my older brother. But we knew we knew the value of money. Let's put it that way. We weren't in a rich household. Money was month to month. And we got we got the benefit of having great parents, but we weren't a wealthy household, so acutely aware of money from a very young age.

Jason Butler 6:13
And what was it like? Can you remember your earliest money memory, because we've all got that kind of the early one. And we?

Phil Smith 6:21
I can, I can. So I had a TSB piggy bank, probably when I was about four or five years old, that I thought was amazing. And my father particularly was encouraging me to put off my pocket money into my piggy bank. And I remember that I can picture it in my mind right now. Like, it's so important to me.

Jason Butler 6:40
God say your your your dad was telling you earlier right with this, you know, 50% of your income. That's that's a big savings ratio. He I mean, why

Phil Smith 6:49
not changed much over the 50 years, because you're

excited as the driven snow and done all right, as a result. But I think it comes from that, and that generational impact actually, in the parents where, where money wasn't as free flowing as it is today, getting mortgages was hard. All things around money were difficult, anything and they had on the upside was there was plenty of full employment in the post war generation. But that's been a real influence over me and my brother, ever since we were little kids, just being sensible with money and trying to plan ahead, whilst leaving a bit of room to enjoy it, as well. So,

Jason Butler 7:27
presumably, when you were at school, I mean, obviously, there wasn't social media around, right. Okay, because, you know, a similar age group to me, but there was no social media around. But were you all in the same boat at school? Like economically? Or did some kids have more? Or did you notice a difference then at school?

Phil Smith 7:41
Well, yeah, so particularly in secondary school age, you know, GCSE time. So I mean, we went to a dog, rough school, full of poor people, let's be brutally honest about it. So we were probably in relative terms, the rich kids in the school, even though we weren't so wealthy ourselves. Because we had a nice house relative to a place surrounded by effectively social housing and a lot of poverty in the area. So. So yeah, that brings a different set sensitivity. Even at young age, Jason, we were aware of not flaunting the relative difference that we have too much. Otherwise, you'd be getting your year kind of jacket off in your face, with people trying to bully you. So a very, very humble upbringing in that sense, but made me very, very aware of not being too flashy, if I'm honest. Right, I was just gonna say so

Jason Butler 8:32
because I was been out of school because I spoke to posh and I was a very poor kid, right? So you imagine how

Phil Smith 8:38
I've never had that problem.

Jason Butler 8:41
You know what I didn't, I didn't think I was possible again, in the same way. You you potentially and let's face it, kids can be nasty, right? So they if they find a difference, they will push it. So for you, although you looking back now we're in a modest, you know, you would say poor or modest, the household relative to your school kids and your peers, you are actually quite well to do in their eyes.

Phil Smith 9:03
Now I've got about a minute, probably one, but I've got a very, very distinct memory from 1981. So going back some time, so I know we're pretty sure when my brother we were the first kids in school, VHS video recorder, one of the old press button, old fashioned Ferguson video styles. And we got some proper grief for that. But we didn't care. We enjoyed having that was

Jason Butler 9:25
really what 1981 to have. That was quite Yeah, you look happening. So again, this is this dichotomy between being careful with money, but also making sure you can enjoy the things in life because you're not gonna be living forever, right. So your mom and dad must have had that balance, right? Yeah.

Phil Smith 9:42
Yeah, that's the principle that really would be in my DNA today and I'm passing it on to my kids. It's true, we'll get on to is be aware where I'll be money, prepare for the future. In moderation. Just be sensible. But don't ever stop enjoying having what you've earned. Because it all becomes Then a bit of a negative rat race, and we're here to live not to save.

Jason Butler 10:04
Did you? Did you do any jobs when you were a teenager or young man or

Phil Smith 10:11
full full monty so paper around when I was finished, I was old enough, then got promoted to do milk round. So I had four years of getting up at four every morning, virtually every day of the year, before school delivering the milk. I worked in the summer holidays for the local council, you know, stack shelves, Marks and Spencers you name it, how did the fall off? And that was my again, my father saying, you need to learn a work ethic young man, Excel holding good stead for the rest of your life. And thank God he did.

Jason Butler 10:40
Hmm. And what did you learn about yourself doing all those kind of jobs? Did you feel like you're really earning it? Or did you did you go for your fingers? Or did what I mean?

Phil Smith 10:48
I can't really remember. I remember I didn't mind getting up before in the morning. I still remember that now. But it helped when I got into investment banking later in my life. But no, I think I think I obviously like having a bit of money to spend even at a young age, you know, like, I was always into music. So we're a bit of a failed musician. So I wanted to save to buy instruments when I was in my teenage years. By the time I hit 5016, as was the day your show wanted to be going out for a beer with my mates. It looks illegal, and you needed a few quid to do that. And my fellow was I'm not gonna I'm not gonna give it to you. You got to go and own your own. So he was being cruel to be kind, right? He was he was actually helping you stand Was it a fish for yourself rather than giving you a fish? Yeah. It was a dude down. So he gave me more than enough and put me through uni and all that stuff. But he wanted me to learn work ethic. Okay. Yeah.

Jason Butler 11:39
That's a great lesson. Great lesson. So. So you went to this whole company, model school, right, which was a bit tough. But you you managed to get to uni. Is that right?

Phil Smith 11:50
Yeah, yeah, my brother. We're not unique. So we're the occasional smart guys. So we were both very good academically, so Purvis got a dozen migrated to GCSE. So levels, as they were called at the time, so we're superstars academically, not school, for sure. But we were down with kids, we played in the sports teams and mucked about as everybody else did. And that common common sense grounding, but into his bio parents kind of held us quite well. And he went off, my brother did incredibly well. He went to did his a levels, then went to Durham University. He's now a professor of mathematics at the University of Manchester, and was a global partner PwC, before he retired to do academic stuff. And I've gone on to do an engineering degree. So similar tracks. So very, very fortunate to have the grounding that we have through our parents. So what was the

Jason Butler 12:43
what was the cause? I know for a lot of working class families, and I came from one right, there wasn't really a big emphasis on education. Where was that coming from? Did that come from you? Is it the schools that your mom and dad,

Phil Smith 12:52
friends, parents, absolutely everyday were my parents and probably more of my mother than my father. So she wanted and had the brains to go to uni, but never got to do it. So it was almost age with adamant that her kids would get the chance to go to uni. So that was really great into as well, from an early age.

Jason Butler 13:10
Yeah, they sound great. Your mom and dad. So your mom encouraged you really. And obviously, that was supportive, and you went to uni. So when you went to uni Now, I know it was pre sort of, it was all grants, and it was free. You didn't have to pay for the tuition and stuff like that. But um, how did you navigate that baptism of fire that most of us experience of leaving home and having your Washington your food in the cupboard and everything and suddenly having to do it all yourself? Did you come out? Did you get? Do you come out in one piece? Potentially always you're a bit of a train route.

Phil Smith 13:39
Definitely not so. So be very, very, very open with you as one of these things. So I arrived on a Wednesday afternoon at Leicester University in September, and it was like going to club 1830 for three months. So I didn't have a 19 until Christmas. I'd spent my years money in the first term with a complete car crash but at the time in my life. That's the honest authentic what we could

Jason Butler 14:01
probably do another podcast about those three months but let's put that to one side whenever parents Absolutely, absolutely. But But tell me what did you learn about yourself when you got to the following January? Where you in? Did you feel guilty shame? Did you have to go and see your mom and dad? Did you have to dig yourself a hole? Did you roll it forward? How did you how did you how you cope with stuff, right?

Phil Smith 14:21
Yeah, I was aware of it. Looking back, but hey, I'm young one. So I'm going to enjoy this experience. And I'll lean on the goodwill of the old fella to prop me up a little bit, which he did and it was bad karma for the rest of the first year. Second year kind of towards repeat. At that point I went and got some work. So for the latter part of my time for uni I was I was working quite a lot alongside doing a very interesting job.

Jason Butler 14:52
So towards as you come out of uni, what did you learn about yourself about working money discipline, join them, you know this whole thing between pleasure and purpose. Right, which is a big issue of their happiness.

Phil Smith 15:02
Yeah, I guess we were saying that Jason what was engraved into me, so I knew I had a work ethic. And I could always go and earn. And that living that principle of, I've got two hands in a brain. So I'm not gonna be able to work if I want, it gave me a great degree of confidence to be able to earn and spend, and not be too worried about the long term future at that point. So I wasn't, I never worried about whether I get a job. And I wasn't worried about whether I would be able to support myself from from brutally honest about it. But still had a keen, keen sense of value when I was buying stuff.

Jason Butler 15:36
So the point there is, it's just some of the younger, and there's a fair number of younger people listening to this podcast, if you're coming out of uni, and you've made a bit of a mistake and a bit of a step back, and you perhaps you're looking at your bank balance and thinking, Oh, you know, where did all that go? You know, control or delete, right? That's just look at it as an investment. Right? Whatever you did, it was an investment, then you've got to move forward. So that doesn't lie. Yeah.

Phil Smith 15:58
Without doubt, Joseph, if you're my daughter's just finished a second year, she got one year to go. And so she stopped worrying about student debt. Not that she's got any really, and she worried about getting a job. And I said, Well, look, the good news is you've got 70 years left to get it right. Yeah, you know, you got time on your hands. So don't don't dwell on the now in this sense, because it's, it's more beer in the big scheme of things.

Jason Butler 16:22
It's not worrying about this windy day to day, is it never gonna become Yeah, yeah.

Phil Smith 16:26
Okay, right. So you got plenty of time. But don't leave until you're 50 to think about it, because then it'll be too late. You won't have enough time. So it's that kind of bridge.

Jason Butler 16:34
So you left uni? What did you do after uni? Did you go straight into the labor market? Did you go and travel the world? What did you do?

Phil Smith 16:40
Well, I was a little bit similar to now. So so when I came out, was a very, very bad year for the economy. So graduate jobs were were in short supply, and I got a first class degree. So to get good marks and all that stuff, and added decent CV of work experience, that finding a job was like trying to sell snow to Eskimos. So I went off and did a master's in strategic HR management came out in two very different job market A year later, having traded on the goodwill of my old fella to pay for me for an extra year, and found the job market being very different than my pick of jobs, to be honest. So bad experience to good within 12 months. And I'd say that to any young listeners who are coming out of graduate school now is I worry about the short term job market, just make sure you've got the bits in place to make them marketable when it comes back.

Jason Butler 17:33
So you don't have a degree in engineering. And then you did that Master's in project management and HR, which made you much more employable and slightly more not pigeonhole. Right. So you had a mission

Phil Smith 17:42
that was really vocationally focused. So I knew I knew what I wanted to go and do. And I was clear, I wanted to enter the human capital career path, right? So I put myself in the best position to be more more valuable than the next guy.

Jason Butler 17:58
So what did you do then? Then what? What did you do just send off ledger? CVS? Did you have an idea of where you wanted to go? Or did did you

Phil Smith 18:04
use your Moran stuff, so nothing, nothing rocket science, he was here the Buddha renowned graduate employers of the day, which were you Marks and Spencers your credentials. You know, most banks, and those kind of people forget how many I did, but it wouldn't have been more than 10 to a dozen applications, went through the usual milk round and got offers from six of them, including the names I mentioned. So real world choice and getting my memory going here, Jason. So remember, at the time, Marks and Spencers really wanted me, it seemed anyway, as a naive young kid, and they just opened the Meadowhall shopping center in Sheffield.

Jason Butler 18:43
One of the biggest

Phil Smith 18:44
shopping centers, based in the country in a massive, massive mouse expensive there. And they said, Look, we'll break our rules, we will we will put you in as a graduate scheme in Meadowhall so you can stay at home. So there's that local draw, stay with family, friends, and all of that, but a great brand and a great Guardian employer. So that was on the deck, and the other one was a Prudential. He said, Well, look, you're gonna get paid slave wages, and you're going to come to London, and you're gonna work in our asset management business. But if you do well, we might send you all around the world to teach you how to work internationally. So I took the low dress traveled and went for the hard one and went to London.

Jason Butler 19:22
Really? And what was it about that, that you just the idea that you could potentially there was bigger scope to do other stuff?

Phil Smith 19:27
Yeah, it was two things really, the the dream of working internationally was something that was in my head. But the guy who was my kind of board level sponsor, or what came Prudential MMG was just a super super bloke. And I thought, right, I'm gonna hitch my wagon to this guy, he's willing to sponsor me and help me. I'm going to get paid back from that. So I'm going to take the pain of moving south and having no money for a while for the upside in the career, and boy boys that paid back for me.

Jason Butler 19:58
So that's a great lesson. There. The the obvious one, or the one that looks like it's ticking all the boxes is not always as you said the road less traveled. It seems to me that that foresight of thinking, hang on, where does this lead to not like, Where is the park in in ice skating terms? Where is the puck going to? And you could see that. And that's an interesting thing for young people now, right? So. So just because it's not glamorous or high paid now doesn't necessarily mean it's not going to be you know, you might have to do the hard yards, you got to start at the bottom right and

Phil Smith 20:29
you got it, you got one job to notice to anybody and I'm putting my human capital hat back on is in your in your first five years of your career. That's where you define where you're going to end up, in my view, because it's where you get your grounding your DNA, how you approach and the marks of success and trajectory. And if you look at the look at professional service firms, you're either you're in a panic attack or not, in that initial period, it's not very different than investment management and investment banking. You know, it's where the where the real meat happens. So I would trade off pounds for the right home, more important with the right people and sponsors every day of the week, the matter whether you're rich, poor or undecided. That is a great lesson to learn. Yeah,

Jason Butler 21:10
yeah. Okay, so you started off in the investment management business with a great sponsor, you say a great boss. What was I mean, how long did you stay there? What did you learn about yourself? And how were you controlling it? Were you still living at home? Were you traveling in or what?

Phil Smith 21:23
No, no, no, my family, Sheffield, so we moved to I moved to London. So that runs right into the deep end. During day one had a surreal experience because on my first day, it was in the Hoban bars office of the pro the big old headquarters so they were moving back in on that very day. And I've been on the desk five minutes and I shook hands with a queen I kid you not that was my first day surreal experience. I met the Queen on my first day of the proven that my proper career. Matt absolutely Motorola back and I got thrown straight into the deep end, had a cracking time for two and a half, three years in the UK. And then through the the aid of my sponsor, a chap called Mark Tucker, who now is the chairman of HSBC Bank, Mark had taken on a role to go and build the Prudential business in Asia. And he wanted a bit of project work doing human capital budget work. So my sponsor said to mark, take this young young whippersnappers Smith, he'll do a good job. So I should talk to Hong Kong for three weeks to do a spot project for Mark. And I'm thrown in the deep end again, with Mark who's arguably have given a quote here, Mark Tucker is the best guy globally in financial services by anybody's measure, in my view, still, his nose was. So thanks to mark. He was a big help in my career. But only three weeks out there and little did I know that that was an audition for them offering me a long term job, to me was just a project to them. It wasn't it was a long interview, it was a little town little test, which I passed. And before I even left Asia on the project, they offered me a common role for me to move out to Hong Kong to be part of the team that built Prudential Corporation, Asia, and how

Unknown Speaker 23:08
am I stage? What

Phil Smith 23:09
2526 2526 so young kids were my dad with a bunch of really, really, really super guys down there. Who knew what they were doing. He had grand plans, and I I had a bold choices do I then take a second big risk, dive in headfirst without financial wherewithal to do it and not knowing if I had the skills or anything? Probably not in reality, but it was one of those life points where you go, go left, go right. And I went to the risk and Dobin absolutely spectacular time down there. Learn everything that's held me instead for the rest of my career. And life experience was was awesome. But it started off as I've moved to move to Hong Kong, and I to loan five grand from my father, just to be able to live for the first two months, even though as an expat occupied.

Jason Butler 24:02
So you obviously weren't any huge amounts at that stage. You hadn't built capital, you were probably still a little bit in the hole from the student days. So you had to go to dad and say that this is an investment, right?

Phil Smith 24:11
Yeah, absolutely. And so straight straight in the hole. And let me tell you back then, so it was 1995 living in Hong Kong was not cheap. In 1995. It's not now but it was it was terrific. And

Jason Butler 24:25
grand den is about 15 grand now. Right? Roughly,

Phil Smith 24:29
yeah. Okay. Just improved. Close up. inflation. Yeah.

Jason Butler 24:32
Yes. Me. So So you went, were you single at the time, or did you were you in a relationship or

Phil Smith 24:36
I was in relationship and that became a wife came with me. So she gave up her job to come out. So another big investment.

Jason Butler 24:44
You know, it was lovely. She was coming with you.

Phil Smith 24:47
Either that or I couldn't shake her off.

Yeah, so that's a big, big, big, big bet on a lot of things to go and do that. We were really excited. I was unbelievable. And I was aware that the southern hemisphere had already won in the Battle of economics of the world back then. So, to me, it made common sense to go and go and experience and get Asian experience under your belt because the paper if it works would be would be great. And it hasn't.

Jason Butler 25:18
So you moved out there with your girlfriend, now wife, you borrowed five grand off of pops, and you were still feel filling your way probably wasn't earning huge amounts. How do you match? How did you know? Did you say that? Did you think at that time, I'm going to be successful, whatever that means. And I'm going to be okay, financially, whatever that means. Did you think about that? Or did you just think, one week to the other?

Phil Smith 25:43
Now, it's probably somewhere in the middle Jason. So I never set out to be a bazillionaire. Whereas thought I'd be okay. But don't worry about supporting yourself or Family Feud family and all that. But what was really I was really focused on was gathering experience. So I wanted to have for me very deliberate on my CV. So I wanted to have broad international experience, I wanted to have more than experience in one function. I wanted to try different sectors over time. So I did have a kind of skeleton plan in my head of my career, not a brand plan, it was based on a sample a few bits, and have enough variety to keep me employable if things turn badly, and not be caught in one sector doing one thing. So that was that was there, but equally, I gotta tell you, me, it's like now that Asia in the 90s, was just operating at a very freewheeling, exhilarating pace. And it's where I learned my Anything is possible kind of mindset. And so we have tremendous success. If you look at Prudential Corporation, Asia now, it is the biggest insurance investment firm in Asia. And when I joined that little projects, he was three branch offices of the proved UK life company. So we put in the foundations of an unbelievable business. And funny fun. And again, big one for Mark, there were 14 and was in the group center in the regional centers, Mark wouldn't have many more than that. And running this interest businesses, it became an all the other 1412 of them, including myself have gone on to be CEOs of big businesses as a great accolade. Europeans. Absolutely.

Jason Butler 27:17
So So here's the here's a couple of takeaways I'm getting from that is you don't have to have it all mapped out perfectly. You just have to go in a broad direction. And then you have to do the next best thing right now. Okay, rather than trying to, you know, I'm going to have this amount by this time and this or that, because it's constricts you, right? You seem to be a bit more, I'm going in a general direction. But actually, I'm going to take the opportunities as they come. Well, I

Phil Smith 27:40
absolutely agree with that. And I'll give a kind of three part trick to anybody listening, Jason. So first one is starts with having a willingness to take risk, because the risk that you're taking, particularly at a young age is never as big as you think. crudely, people around you are protecting you without you realizing it. So basically jump in the deep end. Second one is show you work ethic that creates the opportunities for you to take a risk and keep reminding people that you're a grafter because that's how life works. Actually, you can be the smartest person in the room. But if you're not a grafter, you won't get on. Yeah. However, if you're dumb as dishwater, but you're a grafter, you'll always be okay. And then the final one, which is really, really, really important is never be so arrogant to think that you don't need to learn. So observe the people you're working with and take something from everybody whether positive or negative, and learn from the people around you. And use it. That's the smart bet.

Jason Butler 28:36
Always be open. Yeah, that's fantastic advice. I mean, it's worth listening to the podcast just for that. I mean, you know, wonderful to hear. So you started to get some traction out there your with your then girlfriend, did you start? I mean, did you start to get a grip of your finances? Were you really focused on Did you have a budget? Were you very relaxed? Or? Or were you very, very fastidious about it? Or did you smash through?

Phil Smith 29:00
It was it was a bit like being back at uni because people knew how to work on by heart in Hong Kong in the 90s. I'll tell you that for nothing. So. So we we had all the fun of the fair, traveled to law saw most of Southeast Asia, so weekends away every weekend and all that sort of stuff. So great life experience. But we were able to put some money aside for when we work when we would come back and then benefiting from the low income tax rates in Hong Kong. So we effectively saved the tax difference in in earnings, which is great when we can

Jason Butler 29:37
so you did that sort of you weren't obsessed with it. You still were, you know, enjoying everything that the area had to offer. But you were many you were purposeful in putting some money aside for building up a reserve. Right? You understood Yeah, that's where it was when I started saving industry sense. And what habits did you did were there certain habits that you stopped doing then and that other has that you developed in relation to your money that you can remember or Did he just sort of he was just very, just very loose?

Phil Smith 30:04
Well, I guess I'm just reflecting on that Jason is probably where family starts to influence you. So as you can probably tell so far, I'm quite happy to take risk. So I'll go We'll pull on market risk and invest in equities and save through that rupee. accelerant. Beth my, my other half, so she thinks that taking money out of the mattress is high risk. So we had a nice counterbalance in Lancashire, Lancashire, she's from the enemy. 30. Yeah. So, so yeah, so that was a,

Jason Butler 30:40
so you've got a different opinion, even in those days, you had a slightly different idea of risk and reward. Interesting. But but that's quite often between couples, right? And so how did you reconcile those slightly different, not just values, but the ideas as it were, when it came to risk and resigned myself to disagreeing a lot? You just managed it as opposed to remote solving. Yeah. And then I was gonna say, that's a really important point that you just made there is that just because you love someone, and just because you want to be with him, and his life partner has not been married 25 years as well. You don't have to agree on everything. And you don't have to have the same opinion on everything, as long as you can land together our broad strategic kind of what you agree enough on the things that matter. And, and except differences, right?

Phil Smith 31:28
Yeah, it's me talking more on the on the binding point. So we have two daughters, and first of which Charlotte was born in Hong Kong. And that that triggered in me, particularly, but her also the same value set that our parents had with us. So my mission at that point was crystallized when, when daughter number one was born, it was right on this planet, to give them a platform, nothing else, as simple as that. So you became very focused, very, very, very, very focused in the earnings to savings to risk to pass on value. And I accentuated when Victoria number two arrived. And everything from them that I've done, economically has been about their future, not necessarily my own. And that's, that's where we've found common ground.

Jason Butler 32:16
Okay, so understanding they'll always be differences in attitudes and approaches, but you've got a common endeavor in priorities. I get it. So I'm obviously normally the birth of your birth your Is it better or worse? Yeah, she wasn't working at the time, or she was working in Hong Kong, and yet the first child,

Phil Smith 32:33
she's a brilliant businesswoman. So she was she was working for the crew as well, when we when I went to Asia, and didn't want to go because she was next pack kid herself. she'd already lived all around the world with the parents and really spend time in the UK. So the deal was, I'll go down and make tons of money in Hong Kong, and you'll never have to work again. So soon as i said that her right hand was out and she's held me to it.

Jason Butler 32:57
Okay, fair comment. But hang on. She's done a lot of work. Right. She's, she's, she has, but she's, she's smarter than me clearly. Yeah. So um, so when you How long were you? I mean, when did you come? But what what was the catalyst for coming back to the UK? How long were you out in the Hong Kong? And you know,

Phil Smith 33:12
so we were out there a few years. And, and the real, the real catalyst was the proof against the proof at that stage wanted to buy retail from management business. And it's set its size on energy. So I was brought back to the part of the team, which did the energy deal. So it was a compelling career move. I really do if I'm honest, I didn't want to come back in many ways, but we had the Charlotte, the youngster, and life is different in Asia with kids than without. And the company wanted me to come back and be a part of that team. So I came back to home base and was part of the MG deal.

Jason Butler 33:52
Got it? So was that was that difficult for you to do that transition? Because I know some expert friends who who found the transition coming back to the UK, not just lifestyle, but everything, you know, the tax system is different. They've got to pay more tax, everything's, you know, different, everything's different.

Phil Smith 34:07
The economic, the economic side was pretty easy. So I'd made a quantum leap in income by that stage. So that looks pretty, pretty smooth. The thing that was really difficult was going at the electrifying prevailing pace of Asia back to the this last mon around the watercooler about the same things we were moaning about when I left one day. And that blew my mind. I couldn't cope with that very well at all, which was the catalyst for me Actually, not too long after I came back, leaving the crew and going to work for Arthur Andersen consulting world. So slightly different

Jason Butler 34:42
environment. Okay, so that stage you had two young children, you're back in the UK. you're transitioning you become quite successful, but you did it after that. You moved off to Arthur Andersen, which are obviously had a very interesting ending that organization but but what was there? What was the what were your learning? there in terms of your Will you really motivated by the money you said about the children, but because sometimes people do a job, they hate just to earn the money. Sometimes people do a job they love. And it doesn't pay a great deal, but they really enjoy it. They've had enough. And sometimes people do a job they love and they get paid. Well, what was the main motivation for you at the time?

Phil Smith 35:19
probably close to the latter. So, for me, I want to do a job I want to do with people I want to do with and no amount of money would get me to do something I don't want to do. Yeah, I want to do something I'm enjoying. Hopefully, I picked a sector where the pays reasonably good. And so I've been in consulting or financial services all my career because we are ridiculously overpaid relative to other locations.

Jason Butler 35:42
Yeah. Okay. So so do it well, and do it to the best of your ability and do stuff you enjoy. And but make sure you're in a situation where you can at least capture good value fair value for the value you're creating. Okay. So, so in the Arthur Andersen years, then how long have you there?

Phil Smith 35:58
Three bit. 32 bit years. Okay, so mine was not really long. kombu like nobody pretty sure gig.

Jason Butler 36:04
Right? So in the.com, tell me did you did you come out unscathed personally, financially in the.com, boom, because taxi drivers into 1999, early 2000. were telling me that they were giving me investment advice. When I was in the back of taxes. I was thinking this is not going well.

Phil Smith 36:19
Yeah, so so now I didn't have any negativity. With that. Obviously, Arthur Andersen was I was there when we sold the business to Deloitte, and involved in that quite heavily and went through all the traumas with the practice. But no, economically, I was pretty sound because was to come on to Jason. So personally investing heavily bricks and mortar real estate. So not to have that short term volatility of capital markets in the main, as it developed over the years. But back then I was, I was all into property, which, if you're a long term investor, you know, you use one of those is traditional long, only investing, you sit and hold you don't worry about it.

Jason Butler 36:58
So tell me about the your attitude to investing then you said it, because obviously you had a lot of money tied up in terms of your human capital and stock options and bonuses from financial markets, the company you're working. So tell us about you started to develop your interest in property? What did that what kind of what was that buy to let was that buying big houses and you could do up or what?

Phil Smith 37:19
Yeah, combination. So beitler was where I started, did quite a bit of that. Then a good school friend of mine is a builder. So in later years, he had some problems with his company and in the credit crunch. And we went into partnership, and we do development work. So conversions and the like. So that's great fun to be back with one of my old school mates. And it's a good earner, shall we say. But property has always been a go to source of balance between leverage return and safety in relative terms, but alongside that, so I have a usual portfolio of mutual funds. And I'm acutely focused not on picking the brand, or indeed the manager in many levels. So I'm looking at the geographic exposure, the sectoral exposure, and the OCR, but when I choose what I'm investing in, I think whilst I'm not an investment professional or an advisor, I look at my two daughters, long term investment trusts that are set up for them when they were born. So one of them's now 23 years old, one's 20. My weighted return across that period is I think, 17.6 on the oldest and 16. And the notch on the youngest, which is not not a bad track record over over an annualized return over 20 odd years.

Jason Butler 38:35
Well, I think the point there is whether it's your own money or children's money, I have to say, my kids as well, is this there's three things isn't just on a blog about this, you first of all got to do the hard graft of saving, right? There's no, there's not glamorous, is it? You've got to build the capital. Secondly, you've got to invest in real assets, things that hopefully, we're going to, you know, reflect the economy and deliver a real positive return the 30 gotta be patient, right? You've got to take time, because exponential growth doesn't happen in year one, it happens in year 910 1520. And, and it's that that latter growth, which is what I keep trying to tell young people, those early pounds you put or make the more money, more money and they'll earn more money for you didn't you can earn yourself.

Phil Smith 39:13
No, you got to Jason the two things I drill into my kids. So first one is the time value of money. So you put a pound away when you're 20 into your pension scheme, it's going to save you hundreds of thousands of pounds downstream. So save as much as you can and put it into that hopper straight away because it's the best thing you can do with your money genuinely. And then the second thing is the dumbest thing you can do with cash is stick it in a non interest bearing bank account with the feeling that it's safe, because it's costing you it's costing you inflation to put it there. So they're very safe things to do one product pawn but Black Rock who one of our investors have a great money market funds called prime, which is paying a four or five times yield over the best deposit rates in the UK. And it's got how the liquidity and pull fscs protection. So it's just common sense to me You hit nuts to put money in a bank account without taking any form of risk?

Jason Butler 40:11
Well, you're just, you're just using that money in the bank account.

Unknown Speaker 40:14
Yeah, you're giving

Phil Smith 40:17
me that simple This was one thing you have to remember is simple to listeners is understand inflation. If you understand the inflation, you know where the first hurdle is, which is at least beat inflation with wherever they put your money, you've gone. If you can do that, then you're on the game. If you don't think about it, you're starting a couple of goals down.

Jason Butler 40:38
So if you think about, I mean, you don't have to go into lots of detail, but I am interested, I'm always open to share my mistakes are not mistakes. But you know, things that didn't work out as well as I, as I wished for does. I did one property development nine for the house away and about 10 grand, but it was like a minimum wage, by the time you worked out the time involved in the risk of the cap. And so is there anything that you've you've kind of done it, you look back and think, well, it didn't work out quite as I as I, as I expected, and I learned the reasons why it was because x, y and Zed because as long as you learn, that's the main

Phil Smith 41:08
thing. There are tons of tons of them over the years, Jason, so can I believe you, me, actually, my, my Chief Operating Officer Bob and I were chatting about cars this morning. We're both quite good petrol heads. And just because it comes to mind, so in 2006, when I moved between employees between porters and Barclays, I bought myself brand new, the very first Jaguar XKR, I've been dealing with number three in the country, I paid 74 grand for it cash. loved it, I thought it was brilliant. So it was Billy Billy big ones if he coined the phrase, and I sold 18 months later with 2000 miles on the clock and got half my money back. So I took a proper bath. And I learned a big lesson about carbine, and outside of probably another dozen things like that in different elements of my life. So I've learned the hard way

Jason Butler 41:56
along the path. And there's a difference between doing something recklessly and burning money, and using money to enjoy things that give you pleasure now, even if they're not creative, or not at the expense of your and this is a point, enjoying life and spending money on things that you that genuinely will bring you pleasure and happiness. And it's fine, as long as it's not at the expense of both your short term well being and your long term, financial situation, right?

Phil Smith 42:22
You know, you've absolutely got it in one, it's time to find that balance. And some time here appear on the right side of the balance, sometimes you edge on the wrong side. But it doesn't matter as long as you're learning along the way. And not not as a you know, as not being reckless. Basically just being self aware. Everybody makes mistakes.

Jason Butler 42:38
And one thing I wanted to know because you you have worked with and you do work within you know, lots of what I call, there's always wealthier people than you right? There's always someone's got more money than you more stuff in the movies, believe it or not even better looking in you right. I know, it's difficult to imagine but but there's always some and and I just wonder what your take on is not getting sucked into other people's agendas, and other people's priorities and other people's ideas of good. Because that sometimes can make you do things that are not in your best interest or aligned with your values or take you down rabbit holes, you don't want to go down, you know, it's running the route with that sort of thing.

Phil Smith 43:16
Yeah, I mean, I mean, it's the kids keeping up with the Joneses methodology. So I'm just not not a me to want to do that at all. Jason. So luckily going I think it's the working class are bringing up almost look down on wealth in some ways. Happy to have it, but you don't see there's no no better than by having money. So, again, Bradley just gave me a real insight into me. So I really, really, really respect the people who've made their own wealth. And I've got little time for the chinless one those who have been gifted it and think there's something special being very brutally honest about it. But know you've got it, you've got to you've got to be aware of yourself and your own means and not overleveraged not overstretch, because at the end of the day, these things are just material items, you know, everything cars, boats, and all of that stuff. So it's a fine line. Do what you know you can afford to do what you want to do to give you maximum pleasure, keeping yourself safe, but not doing without something that's a passion. And it's fine to have the occasional Tory or the occasional bit of madness, just to keep yourself happy. And I'll give you a give you an example of mine. So when I I was toying with early retirement at 45. But just before doing embark on I left Barclays wealth, and I've got a lovely hairstyle in Spain with a beautiful Marina, I thought up on another boat. Now I've never had a boat in my life couldn't sell for photography, wife and kids not interested. But I'm in a boat together and niche I want to scratch. So went out and bought a boat. And I had tremendous fun with that boat. But I got some great advice, which is you should have rented it. Basically And economically it was it was an expensive toy, but it's a buy great fun. And I'm glad I did it. And I've sold it. And I don't have any more. But I'm richer for the experience, even though it cost me a few quid. So what? What did you learn? What did you learn about yourself? What did I learn? What did I learn? I'm more willing now than I was to spend money on pure fun. But that's a natural development because I can afford to do it. And it's not going to damage predominate my kids future, or my ability to have beans on toast of an evening for the rest of my life.

Jason Butler 45:36
And what do you is cars, your big thing? Is that a thing that you get excited about with your mates around? You mentioned it to me before? So what's your what's on the list of something you'd love to buy? was a classic car or something?

Phil Smith 45:49
No, no Next on the list. So I want to get a 720 ask McLaren is my next car. I'm not, I'm not waiting till I retire before I do it. But whatever the equivalent is. Now I've done the full round. Jason. So I've had the Bentley Continentals, your Aston g Porsches, and all that well, but I haven't had a McLaren so. So my bucket list of brands that I must experience.

Jason Butler 46:11
And before we sort of close up today, because I'm conscious of your time, I just wanted to you mentioned about teaching your children we've spoken before about it. And what is it you're doing to try and help your your daughters be good with money, find their own way and respected them and make wise choices. But without living their life for them is

Phil Smith 46:32
really simple. I'm using granddad's playbook. So I'm trying to be my dad using all the same things he did with me, in all the same ways at the same time, so I am copying him 100%. And it seems to be working. All right. So my, my eldest, missed, she had the cheating, she was going to go to Nottingham to their degree, without telling me she applied to Deloitte for their price track a level program. And she's now sat in a tax team at Deloitte doing fabulously well. She has her own class and or a mortgage and great savings behind her and shows me very frequently on a new app, what she's got in a pension. So well, she's a slam dunk. She's just like dads and behavior. And the youngest is at uni. Probably on the other side of the equation, be like dad was at uni and living life to the full and doing all right with it. So they're on the right road.

Jason Butler 47:27
Good. Well, as you say, it's it's trying to help people help themselves as the key. So Phil, I could talk to you for hours and hours, but I appreciate your time. And and before we sort of close Is there anything you want to leave any listeners with in terms of just your money, insights and wisdom and the ideas about wealth and status and a Is there anything you want to sort of sum up and share it? Yeah,

Phil Smith 47:48
so So, so straight off the hook with no particular order here, Jason. So one, if you work hard, you will make wealth. So that's the important bit, create capital to be able to invest in the first place, and you'll feel better for it, if you've made it for yourself. That's tip number one. Tip number two, when you have it, pretty much split it in half, save half and your half the half you invest, put it at risk relative to your age. So if you're young, think long term, and put it into riskier long term longer than the investments but don't chop and change AI investments and sit on them and let them come to their fruition. Don't try and be a day trader, with the stuff that you you take and enjoy. Don't, don't follow the herd, do what you want to do that makes you happy, because that will refresh you and energize you to earn more and do more and invest more. And then finally, is that the two things that really matter in life, I believe are your property where you live, because that's your cave. So you want to have the best that you can have to give you the circumstances you want. So get up the housing ladder as early and as quickly as you possibly can, and invest in that before other things, and then pay off or pay down your mortgage as fast as you can, because that's a big drag factor relative to rates. And then the second one is your pension scheme. So unfortunately, for the younger generation, they're all going to live till their 100. And the state ain't going to be that to prop them up. So if your employer is offering you free money, free pension contributions that matches to yours, put in every penny you can afford, because you will enjoy your later years. Way, way, way, way more. And let's be honest about it. You're young, about 10 years. You're old for about 50

and I'll leave it there

Jason Butler 49:33
Yeah, absolutely fantastic. And I know that you your organization is fast growing so people can go to the website and there's I think there's a vacancies thing and they contact your HR people to see if there are any opportunities whether you're a graduate whether you're a career changer because so fantastic. They're always looking for good people. I know. choosey though, but Phil Smith, absolute legend. It's been wonderful talking to you. I mean, as I say it was good. Speak to you all afternoon. But thank you for your time. It's been a pleasure. hearing some of your insights, there's just more more wisdom there in that last 45 minutes, I think than most people hear in a lifetime. So I'm very grateful for you being on thank you for your time.

Phil Smith 50:10
Real pleasure. Thanks, Jason take care.

Jason Butler 50:16
Thanks for listening to Real Money Stories with me, Jason Butler. If you like what you hear, please do tell your friends. And more importantly, please rate us on your preferred podcast app, because it really does help us get the message out there. So until next time, good luck with your money journey. Real Money stories is sponsored by Vanguard bringing value to 30 million investors worldwide. Visit vanguardinvestor.co.uk for more details. The value of investments can go down as well as up and you may get back less than you invested.

Transcribed by https://otter.ai