On board the podcast today is Pat Garrett, an 30+ year veteran financial advisor and the cofounder and CEO of Six Park online asset management.
Update: After 7 years of operating, Six Park has unfortunately shut down and ceased their investment management services as of the 28th of August 2023. Investors were given the option to either sell their assets or transfer them to another broker.
Co-founder and co-CEO of Six Park, an automated investment management service backed by a unique team of experts that enables Australian investors to access highly professionalised, low cost investment guidance and ongoing management. AFP® Member of the FPA, experienced financial services executive with over 27 years experience spanning small start-up ventures as well as senior positions at JP Morgan, a leading global financial services institution.Pat Garrett
Introduction to Patt Garett, Co founder and CEO of Six Park online asset management.
On board today is Pat Garrett, co founder and CEO of Six Park online asset management.
Pat is a financial advisor and member of the FPA, as well as graduate of the Australian Institute of Company Directors. He has worked as a Board member, CEO, CFO, senior level corporate advisor and a private equity investor.
Pat has over 30 years experience in the financial industry – having worked for JP morgan in New York and San Fransisco before moving to Melbourne where he worked
as managing director for private investment firm Georgica Associates. In 2014 he co founded Six Park with Brian Watson (AO) who himself also worked at JP Morgan,
as the Chairman of JP Morgan Australia.
Pat is himself a serious investor, but outside of finance he loves Surfing, Barbecueing and spending time at home with the family and dog Charlie.
I’ve been in touch with Pat for some time now, and he has always had time to chat with me and answer any questions or concerns I have had – not just about my 5 figure
Six Park balance, but about investing, mindset and life in general. He’s even taught me a few new recipes he’s learned in lockdown!
“The Price of Admission to the stock Market is Volatility”Pat Garrett
Podcast – Pat from Six Park
- Check out my experience and review of Six Park online Asset management here
- Check out Pat’s creds here
Transcript of Pat from Six Park Online Asset Management
Captain FI: [00:00:00] On board today is pat Garrett co-founder and CEO of six park online asset management. Pat’s a financial advisor and a member of the FPA as well as a graduate of the Australian Institute of company directors. He’s worked as a board member, CEO, CFO, senior level corporate advisor, and a private equity investor.
Pat’s got over 30 years experience in the finance industry. Having worked for JP Morgan in New York and San Francisco before moving to Melbourne where he worked as the managing director for private investment from Georgia Kurt associates in 2014, he co-founded six park with Brian Watson IO, who himself also worked at JP Morgan as the chairman of JP Morgan.
So Pat’s a pretty experienced and serious investor, but outside of work, he loves surfing barbecuing and spending time at home with the family. And he’s dog jelly. I’ve been in touch with pat for a little bit now, and he’s always made time to chat with me and answer any questions or [00:01:00] concerns I’ve had, not just about my five figure six block balance, but also about investing mindset and life in.
He’s even taught me a few new recipes he’s learned in lockdown. So pat, thanks for making time and welcome to the show.
Pat: Lucky I’ve been looking forward to this for a while. Thanks very much. It’s great to see.
Captain FI: Awesome. So for the viewers who haven’t heard of you or six bucks before, can you tell us a little bit about you.
Pat: sure. I moved to Australia, about 20 years ago for what I thought was going to be one or two years. But, after uni, I worked in New York city at JP Morgan, for about 10 years, the tail end of which I was fortunate to work in the, private equity, division of the bank, which was being run by a gentlemen named Brian Watson.
Very senior and, accomplished executive Brian’s actually originally from south Melbourne and , he eventually moved back to Australia with his family. And I followed over to have a bit work and fun over here for a couple of years. And that was 20 years ago, we had always thought about, creating a business, building a business, launching a business [00:02:00] ourselves, but we needed the right idea.
That resonated with us personally, and six park ended up being that idea. , I’m thrilled about that because it’s been incredible journey. So originally from the U S been here for about 20 years, love Australia, get back to the states, although not in the last couple of years.
And as you said, I don’t mind getting in the ocean and attempting to surf, or go on for a run along the coast.
Captain FI: Attempting to serve. That’s what I do as well. Pat. Last time I went, I got absolutely danced down at Nabis beach in Newcastle. And I think I gave myself a concussion.
I haven’t gone back in since, but Hey, summer’s just around the corner. So hopefully we’re getting into some good weather for it.
Pat: I think everybody could use getting in the water and I’ve got a few scars on my head from a few cook maneuvers out there.
Captain FI: So, he kind of alluded to it before.
I wanted to ask, why did you start up six park and what were the problems you had seen with traditional, investing or equity management?
Pat: I think the seed for the idea [00:03:00] was probably in my mind in 1997, my father passed away and he had a portfolio of a small number sort of blue chip us stocks that he had inherited.
And my dad was a salesman. He sold books, for a living. And, those investments were important in that they helped fund our, education. But when he passed away, all of a sudden my mom needed those assets and relied on those assets, for her annual living expenses.
So it wasn’t necessarily a good setup. After dad passed away that mom had, , a limited number of shares and she relied on them, for her annual expenses . So there was very little diversification and. All of a sudden, effectively the risk dimension of that portfolio changed quite dramatically.
So I went through the process of, assessing reconfiguring that investment portfolio. even though I’d had 10 years of experience and reasonably fluent in the investment markets and asset management and finance , I found it incredibly hard and stressful. This is 97. So ETFs were popular, not as popular as they [00:04:00] are now.
So basically what I ended up doing, and it took a bit of time, was building a diversified portfolio of ETF. So I could feel comfortable that risk dimension was right. And income level was right. And I wouldn’t worry every night about whether, one or two stocks went up or down.
I remember thinking to myself at the time, if it was hard for me to do. How hard is it for somebody that hasn’t had formal training and all this stuff? So that was sort of a spark in my mind because I then did the same with other family members where it was appropriate.
To 2014, in Australia and with Brian who was on the board of guardians for the future fund effectively providing asset allocation guide, for the country, it was really obvious both personally, with friends and professionally that, there was a massive problem in the market and that people couldn’t really access professionalized investment management.
It was too expensive. It was too confusing and just too hard for most people to get that help. And I think the whole industry knew that, but nobody was doing anything about it. There’s a lot to unpack there, but , the financial institutions were pretty [00:05:00] happy making money the way they were and didn’t really want to change anything.
So what we wanted to do, and I say, wait a minute, Brian,, the co-founder with myself, given we had asset management, sort of in our DNA, so to speak was basically built a technology platform. Cause ETFs at that point we’re growing. This is a significantly in Australia, was built up technology and digital platform that enabled people, not just to transact because that’s effectively a commodity.
And we’re seeing that now today, but to actually provide advice, to actually help people. And recommend, an asset allocation using ETFs. That was the problem. And that was the reason we got. Constructed six park. It resonated really personally, given that backdrop.
It’s been probably the hardest thing and most rewarding thing at times, scariest thing I’ve ever done, but that started in 2014 and we launched into the public sphere, in 2016.
Captain FI: It’s a really interesting point. You hit on pat about feeling anxious and maybe a little bit scared about investing.[00:06:00]
I can remember feeling those exact emotions when I was getting started on my investing journey. And we’re probably at a time now where potentially new investors could feel nervous about investing. We’re constantly seeing headlines about a market crash, human and market at all time highs, what does that mean and is now a good time to start investing?
Pat: Well, the price of admission for owning shares is volatility and. That’s why over time, history would show that if you’re patient you’ll generate a reasonably good risk adjusted return by being invested in the market. It’s an important comment over time, in that. If you’re investing for the medium to longterm.
So call it five or 10 years or more. I genuinely don’t think there’s, a bad time to get invested in the market. If you have money sitting around on the sidelines,
People were talking 3, 6, 9 months ago about, wait, cause things are about to fall. Timing the market generally is a bit of a challenge.[00:07:00] So I would say if somebody has a medium to long-term outlook that, I can think of, as many reasons why near term there’s optimism about where the markets are headed as there are reasons why it might crash.
Who would have thought that in the wake of some challenging or potentially scary inflation numbers markets last night would have gone up over 1%, on optimism about, earnings and employment in the U S , it’s just way too hard to figure this stuff out in the very short term.
The main answer is history would show that, trying to time the market. Is incredibly difficult. So, if you have a reasonable time horizon, I think the best time to get invested is now
Captain FI: I’m really glad you brought that up. Because it’s all about that time horizon.
I found personally when I first started investing, I sort of didn’t really know what I was doing. This sort of muddled my way along and tried to do the best I could. And I got to a point where, I felt confident in ETFs and listed investment companies. And so I was pretty much aggressively or almost a hundred percent shares, for a long time.
And [00:08:00] during the, COVID crash, I did see a huge drawdown, my portfolio went down by 30% or something. Pretty much. It was always terrified. I was saying to myself, oh, I’m this big, strong investor I’ve got guts. I’m just going to buy the deeper that happens.
And as it turned out, I was actually spooked and I sort of held off and held a bit of cash. And once the market started recovering, I started, investing into them a little bit more. So that kind of taught me a little bit about risk tolerance What I’ve been exploring more recently, are ways to diversify my investments, and obviously six park being one of them.
I probably should explain just quickly for everyone. Six park is, a diversified online investment, portfolio. I think I transferred you guys, to start off with a chunk, I think it’s about $10,000 and, you invested that. According to my risk tolerance. And it’s quite funny. I think when I did your survey, I might’ve answered how I wanted to invest rather than how I truly invest that I’ve got to, be going through and doing the annual [00:09:00] updates and trying to be a bit more honest with myself.
In my portfolio, I’m on the high aggressive growth. In that I’ve got some Vanguard, emerging markets, global listed property, Australian equities, international equities, hedged international equities, unhedged global infrastructure and bond fixed income.
So there’s quite a lot. Different asset classes included in that rather than just as I had done before. The straight ETFs. One of the things that’s probably different between six park and a couple of the other online investment advisors. , Is that you specifically don’t have gold in your portfolio.
This is one of the main topics I wanted to talk about with you today, pat, which was, what’s your opinion on and strategies on gold. And then of course, we’ve got, inverted, commerce, digital gold being, Bitcoin. So I’d love to hear. Your thoughts on that.
With that, I actually did buy a little bit of gold today, so [00:10:00]
Pat: diversifications incredibly important. So yeah, I think that’s fine.
Captain FI: I know we were chatting offline before about,, the reason why I bought the gold was more about learning and experimenting. Why doesn’t six park have gold in their portfolios?
Pat: Thank you for clarifying what six bark does. I was remiss in not doing that, earlier, what we effectively do is ask. Clients’ questions about risk appetite, risk, capacity, time, horizon, and experience in the markets. And we have effectively an algorithm it’s very similar to what you would be asked if you want into a financial advisor’s office and ask for investment advice.
And then to drop you into one of several portfolios that have up to eight different ETFs representing Eight different asset classes across growth and defensive asset classes. So in simple terms, they’re riskier you, suggest you want the funds that you invest by the six park platform, the more will be weighted into the, growth assets and the more conservative.
So we’ve got a lot of clients approach. [00:11:00] Retirement and they don’t want to have as risky portfolio. , so they’ll have, more weighted towards bonds and cash yield and those asset classes. We have an investment committee, which is chaired by Brian. My co-founder who has experience with the future fund, but also Lindsay Tanner.
Finance minister and Mark Nicholson, who was, co-chief investment officer of the investment division of the world bank. And when we set up six park, one of the things we wanted to be a bit different, and we thought was unique, was. We’re a technology led company, obviously, and that we deliver our service online, but we’ve got investment asset management DNA.
If you automate investment management, but don’t have the right inputs to state, the obvious you can get not great outcomes. So we’re really careful about reviewing asset allocations, the ETF landscape. Global economic conditions, et cetera. And we’re fortunate with that investment committee.
And we did spend a bit of time, when we were setting up the business, thinking about gold as an asset class. don’t think gold is a bad investment. It has [00:12:00] attributes of, diversify and portfolios and. What I’ve seen. Our investment committee has seen is typically, hedge funds using gold, for example, tactically, when they think, maybe a crisis is eminent or certain market conditions, might be on the horizon, , we look at the super funds and we look at multi-asset. funds across Australia internationally. we really don’t see gold frequently in there. And there’s a reason for that. And in our view, the main one being, it doesn’t generate income as I think most people would probably know.
And when I hear gold referred to as a defensive asset class, bristle a little bit because . I think a defensive asset class generates income, and, in a defensive asset class is also, relatively low volatility and gold is not necessarily a low volatile asset.
Without going into the technicalities as far as gold sort of being a hedge against inflation. I think that data is, not entirely clear on that particularly more recently. So you don’t generate an [00:13:00] income with gold. It has its windows of time. When it performs pretty well, and that happened, right around the COVID time.
But if you look at it over, five and 10 year periods, this all depends on start and end date. It can have times when it performs, reasonably well in terms of price and only price appreciation, because there is no income, but it can also have tenure windows of time where the price is flat.
And there’s no income during that period. So our view is that if you’re a medium to long-term investor, what we would prefer, let’s say, if you’re going to have a 10% allocation to a portfolio to gold, we’d prefer to take that 10% and put some of that into a growth asset class.
And some of it into a defensive asset class, both of which generating common, both of which. the risk reward, volatility parameters are pretty well understood. And so gold will be useful for some periods of time and that for the rest of time, effectively drag on portfolio performance. If [00:14:00] you think of when gold performed really well during and around the onset of the pandemic, and Has sold off of it. it was a great outcome on paper, but then once gold pulled back, it was a less great outcome on paper and you didn’t make income during the rod. So that’s a long way of saying we just think that on balance over the long-term it’s a drag on performance.
Captain FI: Yeah. And so for those, in the financial independence or the fire community who do have that longterm understanding is it’s probably not super relevant, for us.
Pat: Yeah, correct. I think, for those seeking what I understand to be the attributes of the financial independence,
The ability to retire earlier to dial down the work early, so to speak. just think time is the power of compounding interest. probably don’t need to, go into great detail on it. Other than to say, I think people understand how powerful that is. I just think that should be a component of anyone’s portfolio and a non-income generating asset.
It just really is a tough one on that part. [00:15:00] Like you mentioned earlier, don’t think owning gold is a bad idea. We just prefer not to have it in our portfolio.
Captain FI: Okay. So it’s all basically tailored to the risk, of the investor and the timeframe. Yeah. You obviously have different tiers different portfolios for different risk appetites in six
Yeah. So we’ve got portfolios ranging from conservative to aggressive growth, which as you might guess, have heavier or less heavy weddings on growth assets, but then clients also have the ability to basically tick us a sustainable option. So if you’ve got the balanced growth portfolio, for example, you can get the equivalent, but swapping out ETFs where we can with sustainable or ESG equivalent ETF.
So, we try to keep it fairly simple I think one of the things, the investment management, industry. Probably not done great looking backwards is, is over-complicate things and, to put the cynics hat on it’s to confuse people so that they don’t really know what they’re
Pat: paying fees for, and they assume that they’re getting some value out of that.
So in terms of, The landscape of investment management. I think simpler is a lot [00:16:00] better, especially over time. And the same would be true for the DIY.
Captain FI: Yes, simple is better. I couldn’t agree with you more pat. So, having said that what is your opinion on the traditional managed funds, licks, ETFs and the emergence of the I don’t know if it’s a new marketing term, but I only recently heard this.
Active ETFs, which to me sounded like a bit of a, contradiction, but they go, , what do you think of these new? You’re going to say
Pat: sounds like a bit of good marketing, which I think isn’t a bad approach.
Manage funds. I think you mentioned first, in short, I think active in vesting is.
Very difficult, the data, the standard and poor SPIVA report, just Google SPIVA, SPI VA, that data’s really not debatable. When you look at actively managed funds, a vast majority fail to, outperform their index after fees. And so, There are some managed funds that have performed well over time, but very few do that consistently.
In fact, a bit of a generalization, but it has happened repeatedly that [00:17:00] funds, that may be performed really well for a couple of years. Either through skill or luck, people then pile money in and they underperform that is an incredibly common dynamic. So. I think managed funds have a shrinking life ahead of them, to be honest. Except for the asset managers that do it really well and can show that they deserve to get paid to do that. And there’s just not many of them, licks are interesting in that, they’re similar to ETFs, but they tend to also have a bit of an active management overlay fewer underline investments within the fond construct. So a little bit less diversification, a little bit more of, that active overlay. So there were some issues with them as far as who was getting paid to distribute them certain ways was a bit of a mess., so I just think plain vanilla ETFs , are the most effective portfolio tool for investors, the active ETFs or there’s another one which probably falls into what you’re talking about, which is sematic ETFs. Well on active ETFs I agree. I think the concept of active ETFs it’s sort of like [00:18:00] put in a more active filter.
Across an index. What it does is it does a couple of things. It reduces the transparency of exactly. I think what, the underlying holdings are and how that index will perform. think they’re more marketing. Products and anything. Because people got enamored with ETFs and how easy they are to trade and be well-diversified and product manufacturers for the most part, have just draw to continue to feed the base, so to speak.
, I think it sounds a little better than maybe reality as far as having like some programmatic filter that figures out which stocks are going to do better than others. , if it were that easy, would have been done years ago. So I think some will out perform and some definitely not.
And there’s some, a couple of years ago , yield ETFs were popular. Cause people were yield hunting with low interest rates and some of them were fairly spectacular failures in that they were using active filters to include companies that on paper had high yields. But part of the reason for that was the underline company, share [00:19:00] price was weak.
So that seemed like it had a high yield and there was a reason why the underlying share price was weak. So what happened was you were on paper kind of getting a high yield, but the capital appreciation was really weak because the fundamental business wasn’t great. So the total return.
Actually, it was not very inspiring. But on paper it sounded great. Massive yield. Yeah.
Captain FI: I’ve been, and some of my friends have been burned by that in the past. I mentioned, I was a bit muddled when I first started investing and I was following a couple of stock picking and stock.
Subscriptions. I fell into that yield trap as well. I bought , certain companies thinking, they had a great income from dividends. And then the share price went down and I realized, hang on, I’m being taxed on income from these dividends, but I don’t get to claim any tax deduction for my capital loss until I sell it.
So I just felt like I was getting screwed. I had a mate who did a similar, yield hunting with banks. Basically, he came to that same realization that, the ETFs was the simplest way to do it. Yeah. Yeah. I
Pat: think, we’re big fans of, HubSpot or core satellite because whilst I think what [00:20:00] six park An enormous part of the problems that most investors have in terms of getting, diversified and keeping fees low and letting some really experienced people, do the heavy lifting for you and the technology in terms of like rebalancing portfolios
People want to, have a in here and there, or, somebody might have a particular.
Exposure to an industry because of work or life or whatever reason and say, you know what? kind of want to back that industry. Or I believe in this theme, don’t think there’s anything wrong with that. That’s active participation in managing your money and it’s awesome. I just don’t think it should be, your investible assets. So the HubSpot core satellite, what are going to call it, that idea is a majority of your investible assets around something that’s, fairly simple, straightforward, and based in fact, in data and history, and a proven methodology. And then you can play around the edges.
Captain FI: Yeah, I think that’s a very sensible commentary and I sort of do a similar thing. I have some active investments, myself, just basically having a play. So, pat, as a, licensed financial advisor and someone who Scott, decades and decades of experience In finance [00:21:00] and, CEO of a hundred million plus company. What do you think of influences and financial bloggers like myself? you see these as a net positive or do you see it as a potentially a bit risky the readers that are maybe blindly following them? Or what’s your take on the situation?
Pat: Well, I can’t say it’s a bad thing when I’m talking to you cannot. I’m kidding. I’m kidding.
I think the answer, and I feel very strongly about this is on net. I think it’s a very positive thing. But like anything in the world of advice, particularly now that the digital landscape and social media has just opened the doors to the kind of stuff.
That’s been delivered to people. You just need to be really careful about how you consume it as a prospective or existing investor. And in Australia, the number of financial advisors has gone from about 28,000 to close to 19,000 because of increased regulation and basically a out of the industry.
So the numbers. Licensed individuals to help people with their investments has gone down. Significantly. [00:22:00] Interest rates are low. Housing affordability is low. So the need for people to get some help on the way they invest. And let’s even step back before that, how they get out of debt, how they help people, think about preparing a budget, how they work towards, spending less than they earn what to do when you start saving, all that stuff.
I think the world of influencer call it, unlicensed, commentators on financial matters or whatever the right term is. I think those that are doing it well, add a tremendous service.
Know of, and six park has partnered several, and hopefully we’ll be working with you shortly and we’re very careful on who we work with on that front.
Because whoever we work with for example is a kind of an extension of our service, but I think there’s some really, really good people out there. who are genuinely posting content and guidance, as opposed to advice that helps people understand financial wellness, investment matters and how to be better engaged [00:23:00] and in control with their overall financial wellness.
That’s a great thing with that comes. Murky waters where people will take advantage of that. I’ve gone into some of the chat rooms, and it’s frightening some of the stuff I read. just think people should really consider the sources, if you’re following, listening, taking on board content from somebody, assume they’re like a financial advisor, do your homework on their background and make your own judgment.
On whether you think their guidance.
Captain FI: Yeah. It’s funny, you mentioned that about chat rooms. One of my favorite things I like to do is, there’s a podcast called equity mates and they’re actually, they’re quite good. They do a post. I think it’s like the weekly finance fails or the monthly financials, they jump on tick-tock and they get like the most ridiculous financial commentary and just the crappiest advice that people are giving and yeah, it never ceases to give me a little.
But you know, one of the, most prominent, influences, and you’d probably hate me using that term, that shaped my [00:24:00] financial journey was, Mr. Money, mustache, who, Canadian, but I think, he’s lives in America, in Colorado. One of your. Yeah, Patriots, compatriots.
And he was incredible. For me learning, about the mindset shift. And then, there’s a couple of really great ones here in Australia as well. And I guess this might be a bit of a. Question now, pat. But we talked about, the power of ETFs and the power of keeping it simple.
We’ve seen some new products, come out in terms of the diversified ETFs. Say for example, Vanguard and Bita shares now have, products which are groups of their ETFs to try and give investors, An appropriate risk tolerance. Why would someone benefit from using six park over say just, buying the Vanguard high growth fund or similar?
Pat: a really good question. And we get asked that a lot and there’s. couple of basic baseline answers to it first of all, that iShares Vanguard, we use their ETFs. We think they’re great companies. Otherwise we [00:25:00] wouldn’t use our ETF.
But when they put together a multi-asset class portfolio of ETFs, they, almost by definition are only going to use their ETFs in doing that. One of the values of our investment committee is. Assessing the ETF landscape and choosing what we believe to be the best ETFs, for portfolio construction, or that’s why we have five different ETF providers across the eight ETFs that we use.
So I think being product agnostic is one benefit. other is, we actually provide advice, and for the. ATF providers that have multi-asset class ETFs, you might get it right in choosing which one you think is right for you. And if you’ve got a 40 year horizon and you pick up a high growth one from one of the providers, you’re probably right.
For the moment, but people’s life situations change over time. Certainly when the pandemic hit somebody that maybe had a 30 year horizon with their investments, but then, lost a source of income and a variety of other things happen there. Your risk profile changes with six months. You have the ability to retake an assessment at any time.
If appropriate, we’ll modify our [00:26:00] advice to you in terms of portfolio construction with the products you mentioned, very good, but you’re driving the bus so to speak, whereas we help drive the bus.
Captain FI: Okay. So you’re essentially, getting that guidance from six bark, which is you don’t get that when you deal with.
Correct. Yeah. , I just wanted to bring that up as part of the question of, the influencer topic, because, often we see, people looking to the influences to drive the boss who may not be the finance professionals.
Pat: It’s a really important point. Cause you mentioned when we started talking a little bit about influencer, dynamic, licensed versus unlicensed and you’re right. For the most part they’re not licensed. And so the government’s actually in the regulators spending a lot of time thinking about, how to manage or not the activities of the. Providing financial commentary online I think they’re finding it a little bit of a challenge because they don’t necessarily want to stop it because I think they share my view that for the most part it’s helping people. I think 10% of investing is probably some arts and 90% of emotions.
talked about that earlier. When I see people like [00:27:00] yourself, Victoria Davon is she’s on the money. Brandon at new money and others that we’ve spoken with one of my filters, is, these people helping or hurting the education of people around the emotional dimension of investors?
And mainly how it’s detrimental to let emotions get the better of you. I just think that is one of the most important investing lessons you referred to it earlier. I get nervous when the markets start crapping themselves. It’s just natural. And what a history of information data shows is that emotional decisions when it comes to money typically are not good decisions.
So I just. The good influencers are teaching people about the basics like that, as opposed to, get into crypto or don’t get into crypto and, tell him your journeys. Like you do. And others do great because it gives people a bit of a template to look at.
But, think that behavioral side is one of the biggest areas where people get value out of, folks like.
Captain FI: Yeah, it’s almost that I’m trying to set a bit of an example to [00:28:00] say, like it’s okay to spend less than you earn and invest the difference. And, I find a lot of people do reach out to me, and it comes down to more that behavioral side and, I’m always happy to chat and help people where I can, but yeah. Bang on the money there, pat , it’s definitely 90%, behavior and emotions. So talked about earlier, obviously the value that six park, provides is the guidance, and driving the bus.
we’ve heard a lot about yourself and obviously you’ve got a lot of credentials in the finance industry, as well as, your other co-founder so who is on the six park investment committee and what are their views at the moment?
Pat: Our investment committee is chaired by my co-founder Brian Watson, who was the chairman of JP Morgan Australia for a while, and was one of the founding members of the board of guardians of the Australian future fund, the sovereign wealth fund, Mark Nicholson, who was the co-chief investment officer.
The world bank, investment division and Lindsay Tanner, the ex finance minister and their mandate is, to oversee and recommend to six park, the [00:29:00] parameters of our investment strategy. So that’s mainly asset allocation and ETF selection. And commensurate with the asset allocation, comes reviewing markets on a regular basis.
They meet every two months, if not more frequently, if unusual things are happening in the markets. And, really want to record, The meetings and share them publicly because a wholesale level of rigor and analysis. We’ve built our own mean variance optimizer to help us assess asset allocations and inform investment decisions.
One of the most gratifying things about what we do, from my perspective is provide that level of investment guidance, to somebody with a couple thousand dollars just starting their investment journey. I think that’s pretty cool. And their view of the markets right now.
There’s certainly some concern. What happens with the emergence out of this pandemic and the pace of that? What happens with inflation? What happens with China and the policy that we’re seeing out of? The government they’re all risks. And certainly if one wanted to say, is the market overvalued or undervalued, you’d [00:30:00] probably say it’s pretty, fairly priced, but that don’t see any need at the moment to be changing any parameters of our investment portfolios.
Because, when you have a situation where virtually every central bank in the world is saying, we’re going to support, markets and prevent a meltdown. That’s a pretty. Tailwind for markets, and earnings have been solid and admittedly it’s on the heels of, pandemic level earnings, but, companies have a lot of cash companies, there’s obviously been a shakeout of, , some that are fared well on some fared, less well, but on balance, earnings and growth trajectories for corporate America, which is the biggest economy in the market, in the world.
reasonably solid. So I think there’s definitely some concerns. And, as we talked about a bit earlier, markets are volatile markets in Australia. The ASX goes down one, every three and a half years, over the course of the calendar year. So down years it happens. So
at some point markets will exhale. That’s just to give it and that’s what they do. Yeah. Will that be a traumatic [00:31:00] event? Or will it be just an orderly correction? I don’t know. Will that be in two weeks or for 12 months? We don’t know yet. Nobody really knows. I guess, cutting to the chase a little bit. We still have a generally positive outlook. , though it’s relatively short horizon because just a lot of unknowns. But as many as if not more positives than there are now,
Captain FI: And as you said earlier, if we zoom out and take a long-term horizon, we know that the benefit that you take for that volatility is good.
Long-term growth. Yeah. Yeah. Thanks so much for talking investing six park today., I just want to switch lanes a little bit and chat a little bit more about yourself and your career, if that’s okay.
Yeah. Awesome. First up, you’ve had a pretty successful and awesome career in finance. Is there anything you wish you knew before you started?
Pat: It’s a good question. don’t like to look back and think shoulda, woulda, coulda too much.
But I guess, early in my career. actually have an engineering degree with a monitor and [00:32:00] commerce, out of a of Virginia in the states. And I went up to New York. Not knowing exactly what I wanted to do. When you look at a resume, it looks like everything’s neat and orderly in somebody’s trajectory in life.
I had no idea what I wanted to do coming out of an engineering degree. And I was lucky to get a role in the operations department, like internal management consulting if JP Morgan and then meander my way across the corporate finance and M and then ended up into private equity.
I’ll just. Candid about it. had massive insecurities when I was, in the early stages of that journey. Cause I didn’t really know what I wanted to do and I was having a great time in New York, but it’s pretty frenetic pace. I guess if there was something I was gonna just be candid and honest about, that I of then was to worry less.
I worried a lot. anything, am perfectionist at times. And so early in my career, I had a phenomenally great time in New York. But I did worry a lot. And as my role increased and responsibilities increase out of the stress and anxiety. So I guess if there was anything I knew could tell [00:33:00] myself is to enjoy the ride more.
And don’t worry so much. And just back yourself, I did learn that over time. Otherwise I wouldn’t have had a crack at starting a business. That’s probably what I would, tell myself and tell others out there who are early in their career, learn, absorb work for good people. Be observant of the positive attributes you see in people out there back yourself and don’t stress too much.
We live in a really stressful world right now. I think there’s an imperative to figure out how to, not get caught up too much in all the noise.
Captain FI: Yeah. I love it. You can’t control the waves, but we can learn how to surf them. Right? Yeah. I love it. Yeah. So. Well, we’ve talked a bit about investing, but what’s your personal investing preference.
So which portfolio, dispatching investing timeline aligned to?
Pat: I took the six park assessment and they dropped me into balanced. So that’s where I am. And I’m very happy with that because, I’m guessing a little older than some of the people that will be listening to this.
it’s a good question on the heels of what I just said, because I’m genuinely at a stage in my life where I don’t want to worry too much if, and when the markets get [00:34:00] wobbly and a balanced portfolio of 60% allocated to growth. There’s certainly a growth dimension to what I’m invested in, but also a bit of defensive cover so that, I can sleep well at night.
In terms of my kind of investment strategy, generally speaking, I really draw back to that example of what happened when my dad passed away and I had to, set up an investment strategy for my mom. And that was real eye-opener for me and I learned the benefit of having an investment plan, how diversification is a form of risk management, and how, Dean patient over time, pays enormous dividends, literally and figuratively, cause markets do overtime recover.
I think there’s a great stat that We’ve used in a blog where I think if you have a one year investment horizon, the chance of you losing money, and share. Is some number up, 25%. If you have a five-year horizon, it’s, 10%, I’m not getting the numbers, we got fine.
But if you have something like a 10 year horizon, it’s actually 0%. If you’ve been invested in share [00:35:00] markets over a 10 year horizon, there are no windows where you would have lost money from start to finish. So, my preference is to set up a portfolio.
Has the right risk dimension for me and just let it do its thing. So I can focus on things in life that I get, a bit more, fun
Captain FI: out of.
Ah, well said, pat. Now look, this wouldn’t be the captain five podcasts. If I didn’t finish with these two questions. We’ve talked quite a lot about this next one throughout the whole episode, but if we could summarize them into three quick points, what would be your top three financial tips for someone on the path to financial independence?
Pat: Well, one would be start early. I think that’s just a no brainer. Given the power of time in the markets have, the equivalent of a self-managed super fund in the state. The time. And I hadn’t looked at it literally, probably 10 years.
And I looked at it and it had gone up a fair bit, which was great. And it was mainly because of Todd. So start early, spend time on a budget so that you’re living within your mains. And if you can make regular contributions over time, that [00:36:00] just turbocharged. That time dimension of starting early.
And then the other thing I think is one of the most valuable lessons, any investor at any stage could learn is that concept of controlling your emotions. Cause if you’ve got a great plan and you’re saving early and doing all sorts of stuff the right way, but you panic at the wrong time, you can lose the.
Captain FI: Yeah, behavior’s super important. Yeah. Okay. Last question packs. Who or what has been some of the most influential people, experiences or books on your financial journey?
Pat: Good question. Honest answer. The people would be our investment committee.
Which I’ve now had seven years of exposure to, and I feel it’s a privilege to sit in a room every two months with, Lindsey, Brian and mark. And before Mark Paul Nicholson, who unfortunately passed away, but he was a founding general manager of the future fund, their insight.
And views of the world and, the economic conditions in financial markets. have been absolutely fascinated with for seven years and , have learned a great deal. I feel [00:37:00] super privileged to be able to, Have exposure to that on a regular basis. So would say those are the people and in particular, Brian, who I worked for in New York, starting in the mid nineties has been a phenomenal mentor for me whole life.
In terms of the experiences, I’m going back to it again, but that drill of when my father passed away and I had to reconfigure the investments that was baptism by fire, even though I was, steeped in theory and financial. Institution land. That was an experience that taught me everything
I needed to know about investments, through an unfortunate incident, but, having to do it myself.
Captain FI: Yeah, a bit of a child by fire and obviously a really, really difficult situation. But you’ve come out of the other end a lot stronger. Look again, thank you so much for your time. This morning
Pat: I’ve really looked forward to this and I’ve really enjoyed.
Captain FI: I’m so grateful, to be able to, you on the show and share your knowledge with all of the listeners. I’m sure everyone’s taken away a lot of really, really good points. And if people want to get in touch with you or six park, what’s the best way for them to find [00:38:00] yourself or the company?
Pat: Just go to the website. W w w dot six park six, P a R k.com.edu. There’s heaps of information in there on how the service works, who the people are, the different features and functionalities, the costs, everything it’s meant to be transparent and intuitive. So just go have a look, there, and there’s multiple ways to get in contact with, myself and the team on the website.
Captain FI: Awesome. I’ll leave links in the show notes to the website, as well as to stuff we’ve discussed, on the episode today. So again, thanks so much, pat. I’m really, really grateful for your time. Go and smash this next meeting and forward to borders, opening up mate. So I can come down and we can have a surf.
Yeah. Awesome. Cheers mate.