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How Paul Clitheroe made his fortune

Tuesday, April 18, 2006
Paul Clitheroe

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From Money Magazine, April 2006

Paul Clitheroe explains how he made his million.

  • Founding director of ipac securities.

  • Paul hosted the Channel 9 Money program from 1993 to 2001, and has been chairman and chief commentator of Money magazine since 1999.

  • Chairman of the federal government's Financial Literacy Foundation.

  • Author of several financial books including the best-selling Making Money and Make Your Fortune by 40.

  • He lives in Sydney with his wife Vicki and three children Marcus, Jordi and Ellie.


How did you make your fortune?
Well, I'd rather sound a bit more clever, but the truth is 25 years of hard labour! Quite frankly, making a fortune (whatever that is) was not really in my plans. After finishing university in the late 1970s I had absolutely no idea what to do.

But my Dad was always a keen investor, so money issues interested me. A close uni mate saw an ad for a research assistant. I applied and, rather to my surprise, got the job. I loved the work and in 1982, along with four similar-minded guys, we decided to open our own company offering investment advice. This was pretty exciting, but we had very little capital ($20,000 each) and very few contacts. But the good news was we had a terrific business plan.

We recognised the need for advice for an ageing population, and also a competitive advantage. Back then most companies were flogging generally pretty poor products on a commission basis.

As we were a well qualified group of people, we launched our service on a fee-for-advice basis, with commissions refunded to the client. This was well received by lawyers and accountants who entrusted us with client referrals. As we had no marketing budget, we sent out weekly press releases on issues related to personal investment. This was a bit of a novelty to journalists in the 1980s and so we got regular press coverage, leading to new clients. While hosting a TV show or writing for a magazine was not in my plans, those press releases got me involved in the media and eventually led to Channel 9 asking me to host the Money program and also to be involved with Money magazine. Ipac, the company I started, has grown into a large operation and today manages around $12 billion.

What was your breakthrough moment?
There wasn't one. Plucking up the courage to quit my salaried job and start my own business was a key step, but from then on it was a matter of focus and persistence. Basically, running and building a great business is 95 percent perspiration and five percent inspiration. As they say, it isn't rocket science.

How do you maintain your wealth?
Building up your wealth from basically nothing is hard work but, once you've got some, the old saying "money makes money" is true. Since selling my business in 2003, I hold a well-diversified portfolio of residential property, commercial property, local and international shares and interest-bearing securities, plus I invest in smaller "start-up" companies with a small part of my portfolio.

What was your biggest hurdle and how did you overcome it?
A lack of capital. The $20,000 I put into ipac was pretty much all I had. Even back in 1983, $100,000 was not a huge amount, so we barely paid ourselves for the first few years.

But living on so little for quite a few years taught me a great lesson about living within my means. This has been a huge help. You see, the secret to wealth is not what you earn, it is what you spend. Being forced to be frugal for a while was a great lesson. It also means I really enjoy the luxuries I can afford today, such as my yacht, travel and eating out.

What's the best advice you've had?
This may sound a bit odd but, before starting our business, I asked a few experienced people what advice they could give me and quite a few said we couldn't make our business plan work with so little capital. We thought about this long and hard and, appreciating how hard it would be, we started with very realistic expectations.

What motivates you to keep going?
Easy — I love what I do. Sure, I have more leisure time these days, but talking to people about managing their money better, whether it is in this magazine, my books or in my role as chairman of the federal government's Financial Literacy Foundation, is a real privilege.

Is there anything you'd do differently?
No, I reckon I got it pretty right. I have worked with four honest and ethical partners for some 23 years in a great business. I worked hard when I was young and less so as I moved into my 40s. Importantly I always recognised that my family was my first priority. I am very lucky to have been married to Vicki for 23 years and be close to our three children. I also treasure my close friendships, many of which go back to my school and university days.

Is achieving a work/life balance important to you? If so, how do you do it?
Absolutely. But it is easy to say, hard to do. Running a business is not a part-time job. My strategy was to get stuck into it early and then back off as I got older. Frankly, this is why I strongly urge people to plan to be financially independent. It really is only then that you can get the balance right.

Business talks a lot about staff achieving the mythical "work/life balance", but it really is pretty much just talk. We all know that the modern world is a tough place and work/life balance soon gets the back seat to achieving a budget, keeping your job, paying the mortgage and keeping the credit cards under control.

What are your three tips for success?
  1. Planning. Have a plan. It sounds so simple, yet so few people have a halfway sensible plan for their business and personal objectives. The good news is that if you don't have a map you can't get lost, but you'll never find anything you are looking for.
  2. Persistence. In my experience, nothing is easy. It is pretty simple to give up on your studies, when things get tough at work, in your business or in your relationships. But unless you have really thought it through, don't give up on any of these lightly. Most successful people I meet tend to be really committed and not easily deterred from their goals.
  3. Passion. If you don't love it, don't do it. I was passionate about our vision to build a business around high-quality, fee-for-service investment advice. If you don't have a strong belief in what you are doing, nor will anyone else.


For the complete story see Money Magazine's April 2006 issue. Subscribe now.

23/09/2014 14:20Sydney, Australia. 23 September,2014
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