Meet Ron: He swapped spinning discs with managing money

Financial advice may seem like an unlikely career choice for a disc jockey, but Ron Pratap always knew he wanted a career beyond music. Selling CDs and DJing at gigs was one step in a much longer journey that started with a tough childhood and led him to where is today – an established financial planner with his own practice and 150 clients.

It very nearly could have been a different career instead, though still focused on money.

Ron was thinking of becoming an accountant until he met with the general advice team while working in a call centre selling credit cards and insurance. It changed his plans completely and he then asked as many people as possible for support and opportunities to shadow them at work, to help confirm this was the right direction.

“Financial planners look to the future. It’s so exciting to help people buy their first property, or be able to retire when they didn’t think they could”.

After watching his own mum struggle as a single parent on a pension and then moving in with his father in a blended family with five children, one of his particular passions is being able to help other single mums and families restructure their finances and be able to transform their lives.

Ron has had to fight hard for his career but his background has also given him great empathy for others – and means that regardless of their own stories, his clients know he "gets" them.

In this Meet the Adviser profile, Ron shares his favourite investments – and investments he considers for his clients. Ron also discusses how he has achieved some of his dreams – from financial advice to visiting 30 countries before he turned 30.

Financial Adviser Profile

• Name: Ronald Pratap
• Company: RP Wealth Management
• Licensed under Axies Pty Ltd (Spark Financial Group)
• Years working as an adviser: 11 years
• Investment goals:
  - Grow my financial planning business and help more Australians to achieve their financial goals while increasing my revenue.
  - Invest in other businesses to diversify my portfolio and build a passive income stream
  - Build my property portfolio
  - Continue to allocate a portion of my income every month to regularly invest in my existing shares, ETFs and crypto portfolio.

Why did you choose this profession and how did you get started as a financial adviser?

Growing up, I didn’t have much as a kid and had a bit of a rough upbringing. We had five children in a blended family living in a three-bedroom house, so we didn’t have a lot of money. I paid my own school fees and funded school excursions as soon as I got a job at 14 years and 9 months. 

My first business side hustle was as a DJ and I made a good income. I wasn’t the best with money as I was buying clothes and flashy purchases just to fit in. It wasn’t until I got started in the financial services industry in 2009 that I got better with money. 

I saw financial planning as a career and a way to help others not make the same mistakes that I did as a teenager/young adult and make smarter financial decisions with their money. 

It’s a rewarding career and a way for me to help everyday Australians achieve their financial dreams, which appeals to me, as every client has a different situation. 

Being able to work with retirees, tradies, first-time investors and professionals allow me to meet a wide range of people that I can help.

Do you have a particular speciality in the type of clients you typically work with?

We have a wide range of clients that we work with. I tend to have a number of clients for whom I can add value, such as those planning for retirement, or in the retirement phase needing help with investment strategies and structure. We also have a number of tradies, widows/widowers, or those that have gone through a divorce as they tend to need the most help when it comes to understanding their options, where to invest, and how to set the right foundations for their financial future. 

Navigating financial markets in the current climate can be difficult especially when you are investing new money. We have taken on a number of new clients recently who have received an inheritance, downsized their home or received a divorce settlement. This is where we can help with investment structure, tax minimisation strategies, risk protection, and cash flow management.

What's your process for building portfolios and selecting investment products? 

Our firm strongly believes in first identifying a client’s goals and objectives before building a portfolio around that, through key areas including:

•  diversification, 
• value investing, 
• active management, 
• core/satellite approach,  and 
• regular reviews, especially given the volatile markets.

We work with clients to understand what is important to them such as cost, transparency of underlying holdings, active vs value investments, long-term or short-term holdings, income-producing assets or capital growth. We then use a range of investments that are available on our Approved Product List to build a portfolio which may include Managed Funds, ETFs, direct equities and A-REITs. When selecting our funds, we look for products that provide investment transparency, reasonable fees based on investment, long-term growth potential, company structure and consistency of returns.

Can you share two of your “go-to” funds with us? 

We believe in a core/satellite approach for our clients where the core of their portfolio is in value-based stable investments and taking some additional risk or looking at key objectives with a smaller portion of their portfolio (satellite).

We recommend always researching an investment to ensure it is appropriate for you. In no way is this a personal recommendation, but a couple of my go-to funds at the moment are the La Trobe fixed-term funds. These provide a higher interest rate than what you get with a term deposit while taking some additional risk as the fund is a highly diversified portfolio of mortgage loans with an average LVR of 65%. The history of the business, the underlying securities, and the stability of the fund appeal to investors and our investment philosophy of incorporating this into our client’s core holdings. The fund has continually outperformed its benchmark since inception and provides further security in a volatile market.

The Charter Hall PFA Fund is another fund we have been happy with, especially in this unpredictable investment environment. Its been able to not only achieve long-term capital growth (outperforming its benchmark) for investors but also provides a regular income stream through a portfolio of unlisted property with tenants that are government-based or well-regarded corporate clients. Average lease terms are seven years, which provides stability of portfolio returns, especially in a falling market.

How would you describe your personal investment philosophy?

I take a high level of risk for long-term capital growth as I do not require additional income in the short term and reinvest all of my income distributions back into my holdings.

I diversify my portfolio as much as possible by regularly distributing a portion of my wages to my portfolio of investments including ETFs, direct shares and cryptocurrencies. I use the same philosophy that I use for my clients and look at the long-term outlook of my investments, the previous performance of certain investments, and having a mixture of different industries, investment styles and fund objectives to create a portfolio of holdings.

What are your top three holdings in your personal portfolio and can you share a bit about why you hold each of these positions?

1. Allkem (ASX: AKE) 
   A global lithium Carbonate supplier, Allkem has several key interests in projects around the world. There is still a strong demand for lithium despite recent volatility and the price remains strong. The company's management aims to boost its lithium production three-fold by 2026, aiming for 10% market share of the global lithium market. This is my largest resource holding and I continue to regularly invest in this equity to take advantage of market swings.
2. Flight Centre (ASX: FLT) 
   As international travel opens up further and the profit of the business is expected to grow by 81% over the next year, the future seems bright for this company. COVID restrictions have seen the price plummet meaning opportunities to buy at a discounted price. Previous highs were at the $60 a share mark. FLT also offers fully franked dividends every 6 months allowing you to reinvest or build a passive income stream.
3. Cleanaway Waste Management (ASX: CWY)
   This company is growing year on year and works in several areas around both solid and liquid waste services. CWY continues to grow its revenue and invests in further projects, diversification of its business services and continues to grow its earnings per share. The company's operating expenses remain quite consistent year-on-year and it continues to remain profitable. Cleanaway is a good value-based company to provide stability to my portfolio.

As you can see from the above, my top holdings are in different industries, and I like to hold a portfolio that minimises my risk by diversification and benefitting from companies that have a bright future in their chosen fields. While this may be appropriate for me, investors should do their own research and look to ensure this is suitable for their portfolio.

What was your worst investment? How did you deal with this falling position or fund?

Right now, my worst performing investment is Spenda (ASX: SPX) (formerly Cirralto) which I bought in the early days at 1 cent and added to regularly as the price increased. This went from one of my best performing shares to currently my worst performing. While the current price dropping back close to where I bought in is concerning, I still see a positive outlook for the business as it invests in a range of B2B payment services, small business software, and integrated solutions – while holding cash levels that exceed its outstanding debt. I think the focus of SPX is to invest further in the business rather than focusing on the shareholders and for this reason, I see this as a long-term hold and the short-term volatility doesn’t concern me enough to sell. If anything, I have re-entered the investment and am buying it again at lower prices.

Can you share one of your favourite client success stories?

The first client I signed up with remains on our books today. I met them after they retired, holding a portfolio that was about 80% Australian shares. We restructured their portfolio and made it more conservative while diversifying it into international shares, fixed income and alternative assets. They have drawn an income from the portfolio every year and, even after the recent market drop, their portfolio value is still sitting above their initial balance. This means the income they have generated has been provided through dividends and capital growth of the fund.

This client is now one of my biggest, despite living more than eight hours away from our office in Oran Park. They trust in my work and leave it up to me to manage their portfolio so they can do the things they love, like travelling around the world and making several caravan trips throughout the year.

The ongoing education and tools we have given these clients mean they understand the market volatility that can happen and don’t need to panic in the short term. Between being my longest-serving high-net-worth clients and them having provided video testimonials for me, I'm reassured that I’m doing a good job for them and that they are happy with the service.

What three conversations are you most frequently having right now with clients? And what is your answer to these questions?

Our office has had several enquiries from new or existing clients looking to invest new money into the market, but who are a little worried about where equity and property markets are going to go. We assess their goals and objectives and try to understand their risk profile. Then I focus on the current economic climate and look back on historical events, such as the GFC and tech bubble, showing the growth after those periods. I’ll look at what current opportunities are available and, if they have existing portfolios, whether we need to look at rebalancing to minimise risk in the portfolio.

I like to focus on education with my clients, so they understand why we invest in the companies and assets we select for their portfolio. I also invest regular amounts of money into the market instead of investing a lump sum and this has helped clients buy in at lower prices as we don’t know if things are going to get worse before they get better.

I send regular email communications, short videos, and research updates which helps a lot of clients understand what is happening in the current climate and that they don’t need to panic or get worried about what they hear in the media.

There have been some tough conversations with existing clients over the last six months. After we go back to the initial strategy, clients tend to see that focusing on their long-term goals and outlook outweighs the short term volatility and this is potentially an opportunity to invest further.

What are the two most common mistakes you see in the portfolios that you inherit, and how do you go about fixing them?

I see a number of clients heavily invested in one asset class or in a portfolio that, after we speak with them, we discover is not in line with their risk profile. After going through the risks of continuing to hold those portfolios and the available options, the client has more information to make an informed decision about what they can do.

My job is to advise and if a client still insists on investing in a certain share or fund that we don’t agree with, we then ensure they sign off on the understanding that they are holding it against our advice, and this is potentially scoped out.

If the client is happy to listen to our advice, then we ensure the portfolio aligns with their goals and objectives as well as ensuring they are comfortable with the level of risk.

Another thing is the underlying cost of investments. Several retiree clients are sitting in older-style products or managed funds and they don’t know what they are paying. When we do a cost comparison and show what investments are available at a fraction of the cost, we can truly add more value by looking at maximising returns and minimising costs which could save tens of thousands of dollars in the future. We usually do this through a Statement of Advice and go through the advantages, disadvantages, costs, features and projections of the strategy.

Can you share a personal passion or ambition you have for your future?

Travel is one of my passions. One of the goals I had, when I started travelling, was to go to 30 countries by 30 and I achieved that. I am a strong believer in recharging and enjoying life with whatever you do. 

Being able to travel every year allows me to enjoy time away from work and focus on what I have achieved as well as recharge, refocus and come back to work more motivated than ever. 

I hope to continue to travel the world and discover new places and immerse myself in history. My standout countries are Vietnam, Turkey, Croatia, Italy and the Czech Republic (specifically Prague).

I also love history and immersing myself in other cultures. Travelling allows me to understand how others live and expand my own knowledge while also appreciating how blessed we are to live in a country like Australia. While growing up had its struggles, I was able to follow a career path that I love, set up a business from scratch, grow it to a team of currently five and be named as one of the 50 most influential Financial Advisers of 2021.

One of my current passions that I want to focus on for 2022/2023 is more online content and looking at starting a podcast with a bit of a spin, to help with financial education and strategy discussions. You can follow me on Instagram, Facebook or YouTube to follow some of the content I have created. 

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