Float Financial and Mortgage Advisors

Naylon Cassidy and Jason Longo at Float

How Frank helped Float Financial Advisors structure its operations for profit.

Naylon Cassidy and Jason Longo were experienced bankers. With multi-decade careers in some of New Zealand’s largest banks, they knew lending and risk inside out. Driven by the desire to work more closely with clients and develop deeper and more meaningful long-term relationships, they left their respective corporate roles and set up their own company – Float Financial Advisors and Mortgages. The vision: To grow a profitable broking business by making it super-easy for customers to get the best loans and cover from a wide range of lenders and insurance providers.

10-second summary

  • Challenge: How can two experienced bankers take their financial expertise into the mortgage broking and insurance field by starting up in business for themselves?
  • Solution : Set up an independent broking business and make sure it’s structured correctly to avoid financial pitfalls and drive long-term value for customers, staff, and owners.
  • Result: Float has successfully navigated the first few years as a start-up and is now growing rapidly to meet its founders’ financial and lifestyle aspirations.
Naylon Cassidy and Jason Longo

The challenge

Naylon and Jason had solid commercial skills but running their own business was something new. On top of that, the issues that come with a financial advisory business are not always well understood. For instance, their first accountant didn’t have an in-depth understanding of the nuances of income recognition, business structuring or the application of GST rules in relation to the financial services sector.

Business decisions made early on can have significant long-term effects. If Float didn’t put in place the right business and tax structures, financial disciplines and planning and reporting systems, it would be significantly harder – and more expensive – to deliver sustainable growth. Sub-par advice has a knock-on effect on the value of both the short-term return and long-term value of a business.

 

Naylon Cassidy and Jason Longo

Solution

Fixing a $50K GST hole

An incorrect GST set-up, due to erroneous advice, left Float exposed to the risk of a $50,000 GST shortfall. With previous experience in the broking sector, Frank identified and mitigated this risk immediately. This ensured that GST compliance was bedded down to enable the owners to focus on business growth.

 

Navigating through the death zone

An initially over-optimistic Profit & Loss forecast left Float exposed to the risk of over-estimating liquidity when costs were ramping up. We love the optimism of entrepreneurs but we’re most useful when we inject a note of realism born of experience. By reworking their assumptions, we helped Float build a forecast that didn’t have them running out of cash at a crucial time.

 

The right financial structures and disciplines

With two unrelated owners, it was important to prioritise transparency and simplicity. We advised Float to simplify its ownership and tax structures to minimise the risk of mistakes and management headaches.

 

Quarterly reviews to keep things on track

While the Frank team are readily available, Naylon and Jason have an arrangement to sit down four times a year for a detailed look at the numbers and insight from Frank. Strategic planning has laid the foundations, but it is in stress-testing the operating plan, holding everyone accountable and providing best practice advice where Frank has really proven its value.

 

Naylon and Jason at Float

The results

Since going into business in 2017, Naylon and Jason have grown Float to the point where they now employ two other advisors and are arranging hundreds of loans annually. They’re meeting their financial goals, as well as providing the service and enjoying the independence that they strived for when they left their corporate jobs.

By following Frank’s advice to think about their end game from the beginning, they are now set up to maximise the exit value of their business. Critical decisions around remuneration and commission structures have been bedded in to ensure the business can grow sustainably without eroding its value or taking a hit to EBITDA along the way.

In their own words:

“Strategic planning was really good. I looked at the plan recently and noticed I’d ticked off a lot of the things we said we'd do. Even if I don't look at it regularly, it does guide our action. We get the confidence from our quarterly meetings to know we're on track and having someone who could see what we were capable of, well before we saw this ourselves.

 

“A lot of accountants out there just work backward. So you get to the end of the year, and all of a sudden they produce a profit and loss for you and you just wonder 'what is going on here'. Frank is not about that; you can pull that information yourself through Xero, but Frank is more about the future and having a budget and a plan, so we know that we're on target.