What 17 years in the Navy taught this adviser about money

Imagine spending your entire life serving your country - risking your life in enemy territories, jumping from helicopters into choppy waters, leading your team into warzones - and then retiring with nothing.

That was the reality for many of Jason Petersen’s peers who, after spending their entire careers in military service, often had very little to show for it.

“I thought there had to be a better way,” he said. And so, determined to help veterans and Australians retire with more, he left the Navy to explore a new career in financial advice.

“It’s not the same level of stress, but it’s still stress nonetheless. You’re dealing with clients’ livelihoods every single day. The sense of responsibility is huge,” he added.

He brings that same level of discipline instilled from 17 years of military service to his approach to financial advice. He likens guiding his team into foreign, dangerous territories back in his military era to taking new clients through what to them would be uncharted areas of advice - investment and tax strategies that most would never have heard of before.

This military-like discipline seems to have worked. 5 Financial is now managing around $500 million on behalf of clients, and has its eyes set on doubling that figure over the next five years.

They do things a little differently. The team at 5 Financial has blatantly avoided active managers, choosing to invest only in market-beta strategies instead. S&P Global’s annual SPIVA data, Jason says, is enough proof that passive beats active across a range of asset classes over the long term. He believes the rest of the industry is starting to follow suit, moving away from chasing returns and instead focusing on building long-lasting relationships and improving client outcomes.

In this new AI era, Jason believes that these people skills will become increasingly important. Menial, data-driven tasks will be automated away, leaving those without strong emotional intelligence behind when AI tools are widely adopted by advice firms.

His main message for his peers is this: Advice firms need to get their processes and data right before embracing AI - otherwise, it’s just lipstick on a pig.

5 key lessons from 5 Financials’ Jason Petersen

1. Stop talking about returns and focus on building relationships instead 

Jason spends 90% of his client reviews on their goals and strategies. Markets get 10 minutes. He believes that the advisers winning right now aren't the ones with the best portfolios, but the ones having the richest conversations.

2. Passive can be liberating 

By removing the active vs passive debate entirely, Jason's team freed themselves to focus on what they can actually control: tax, structure, and strategy. He argues that this is where the real value lies for clients.

3. Retention is the most underrated growth strategy in advice

5 Financial has never made an acquisition, and has a 1-2% attrition rate. Every dollar of their $500 million in FUA has come through word of mouth. When clients rarely leave, you don't need to chase new ones. Retention is the most underrated growth strategy in advice.

4. The after-tax story is the one active managers don't want you to tell 

SPIVA already shows passive wins over active on returns. But Jason goes further, arguing that on an after-tax basis, the case is even more damning. Hidden capital gains embedded in active funds are costing clients tens of thousands without them even knowing. He argues that this is the conversation that wins clients over to passive for good.

5. Your clients' kids are your next clients (so, you should start meeting them now)

Baby boomers want to help their children financially. Jason's flipping that into a growth strategy, encouraging clients to fund initial advice for their kids. He thinks that the firms building that pipeline today will dominate the next decade.

Jason has provided a chart from JPMorgan as our “chart of the week”, which he believes could be helpful for advisers and their clients during volatile periods in markets.

The chart tracks the biggest negative declines and positive returns the market will experience in a year - demonstrating that, more often than not, there’s a good chance the market will continue to grind higher after a drawdown.

“If you decide to pull out when it’s at its lowest ebb, there’s a good chance you are going to miss out on a lot of upside, making that silly decision at the worst possible time… Stay invested, and buy when things are on ‘special’,” he says.

If you’ve ever backed a manager and regretted it, last week’s episode of Basis Points is for you. Evidentia’s Head of Manager Research, Jo Cornwell, is transparent and forthcoming with her advice on analysing managers, eloquently distilling 22 years of research experience in just 25 minutes.

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