Top 100 Financial Advisers: Bernie Connolly and Patrick Regan, Morgan Stanley

For this Sydney-based duo, amicable disagreements are part and parcel of a constructive partnership.

Bernie Connolly. Picture: Britta Campion/ The Australian

For Morgan Stanley Wealth Management’s Sydney-based executive directors and advisers Bernie Connolly and Patrick Regan, amicable disagreements are part and parcel of a constructive partnership.

“Bernie and I often disagree, but it’s always a healthy professional disagreement,” Regan says. “We are both arguing for what’s best for the clients and we both don’t need to drink the Kool Aid at the same time.”

Connolly adds: “As equal partners we can challenge each other. Our clients really appreciate there are differences between us in our styles and personalities.”

The pair have known each other for 35 years and worked together for 18 years, having joined forces at UBS before migrating to Morgan Stanley eight years ago.

Since then, they have established a solid base of not-for-profit organisations such as charities, sporting bodies, churches and family offices, with funds under management of $2.5 billion.

The client rota also includes schools, medical research institutions, health and aged-care organisations – including some of the country’s most august institutions.

Connolly says there’s a high degree of trust between the pair – and similar core competencies. If a client gravitates towards one rather than the other, that’s fine and the fee structure means that no one is disadvantaged.

“I would say I am more introverted but our values are very similar, so it’s not about being too different,” Regan says. “If your values and your broad levels of experience are the same, clients will appreciate there are two different personalities in the room.”

Regan adds they meet at least weekly with the team “to discuss the world and our clients and to knock ideas around.”

“That way we don’t miss anything, and hear opposite opinions to your own, which is healthy.”

A “student of human nature”, Regan ran a cafe before switching to broking, trading and managing investments, then settling on financial advisory.

His University of NSW commerce degree taught him the basics, but a Harvard University master’s degree specialising in the psychology of trading gave him valuable insights into the investor mindset.

Connolly, meanwhile, worked with institutional investors and in wholesale markets in Australia and Europe, covering everything from money markets and foreign exchange to fixed income and derivatives. In London, she worked in Deutsche Bank’s emerging debt division and, before that, Westpac’s fixed income desk.

But her real passion was to work with private investors and the not-for-profit sector.

Regan says the duo has the advantage of Morgan Stanley’s global resources, including research teams in Hong Kong and New York that generate incisive daily emails.

“Our New York strategist might say things are getting a bit hot here, so you might want to ease out of growth [assets] a touch.”

The firm’s global reach comes in handy in today’s climate of elevated interest rates and inflation, which pose both challenges and opportunities for the not-for-profit client base.

Regan’s and Connolly’s advisory process includes a thorough review of the client organisation’s investment policy statement to ensure its custodians are confident that the funds are being managed in a professional way.

It also helps to get the client’s mix of assets right in the first place.

“The challenge is to keep our clients ahead of inflation as a baseline and that has been a challenge in this environment,” Connolly says.

On the positive side, investors can now get “equity-style returns from fixed interest type risk”. This refers to the high interest rates on offer from lower risk bond and private credit products (also known as alternative credit, private credit is non-bank lending that is typically not traded publicly). So-called “duration risk” – investing in longer-term paper for suboptimal returns – is also abating.

“With yields in the high single digits, we are making sure clients are taking advantage of the higher rates on offer,” Regan says.

The firm uses third party debt managers, but they are far from equal in performance and that’s where Morgan Stanley’s global experience comes into play.

An avid beekeeper, Connolly was devastated when an outbreak of the destructive varroa mite meant authorities had to destroy her hives on the central NSW coast. However, she has revived an old passion, joining Morgan Stanley’s Bulls and Bears netball team in her high school position of wing defence.

“Working with incredibly young and fit people definitely keeps you on your toes,” she says.

A lifetime keen cricketer, Regan wields the willow in informal catch-ups with old mates.

“I’m bowling fifth and batting number 10,” he says.

Regan says he’s fortunate to have a job that doesn’t feel like hard labour.

“I love the strategy of investing. I often print out all Morgan Stanley’s research reports and set aside a couple of hours each Sunday night to read them,” he says. “I love being in the markets and it is such an interesting time at the moment with interest rates coming from nowhere, as well as the geopolitical turbulence.”

Regan has also been president of his local alumnus, the Harvard Club of Australia, and a long-term adviser to Sydney Legacy.

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This feature appears in The Deal/Barron’s Top 100 Financial Advisers 2023 magazine, online and in The Australian.