IFA 61 | September 2017

BUSINESS SPOTLIGHT 2017

magazine 61 • September 2017

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MAKE IT YOUR BUSINESS

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Legal & General Index Funds We’re one of the UK’s largest index managers with £331.5bn in index funds*. We leverage our scale and indexing expertise to offer clients the most cost-effective index funds we can. But we also engage with companies to represent investors’ interests, effect change and improve company performance. Because we believe that good corporate governance protects the long-term prospects of our investors. But also, because it’s the right thing to do for the next generation.

Telephone: 0345 070 8684 † • fundsales@ lgim.com • www.lgim.com/indexfunds This advert is intended for professional investors only. The value of investments and any income from them may fall as well as rise, and investors may get back less than they invest. Details of the specific and general risks associated with the funds mentioned are contained within the Key Investor Information Documents. Legal & General (Unit Trust Managers) Limited. Registered in England and Wales No.1009418. Registered office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority. *As at 30 June 2017.

CONTENTS

07

Reality shows A general perspective on where we are now from Michael Wilson

08

Strategic planning Chris Baigent-Reed brings a practical approach to running an effective financial planning business

10

Ed’s rant: a muffled thunder Michael Wilson considers this summer’s FCA asset management report

22

Summertime Blues Brian Tora on where might equity markets be heading next?

25

How to create a marketing strategy for your advisory firm Sam Turner of ClientsFirst explains

14

Better Business Brett Davidson asks what’s your motivation and gives tips on goal setting

28

If you break it you own it…

Mike Mount takes an alternative look at the benefits of outsourcing your investment portfolio management service

18

Developing profitable introducer relationships for your financial planning business Matt Anderson tells you how

30

Adviser spotlight Sue Whitbread talks to Richard Hopkins of Blackstone Moregate

IN A CHANGING WORLD, WE’LL KEEP YOU AHEAD OF THE PACK.

LET’S TALK HOW.

CUMULATIVE PERFORMANCE (%)

1 Year 3 Years 5 Years

Fidelity Global Special Situations Fund

22.9

71.4

140.0

MSCI AC World Index

17.9

53.7

99.2

1

1

1

Quartile ranking

This advertisement is for investment professionals only and should not be relied upon by private investors. The value of investments and the income from them can go down as well as up and clients may get back less than they invest. Performance: Morningstar as at 31.07.2017. Copyright – © 2017 Morningstar, Inc. All Rights Reserved. Basis: bid-bid, income reinvested in GBP. Past performance is not a reliable indicator of future returns. Sector is IA Global. Manager tenure date 01.03.2012. Ratings as at 30.06.2017. Research Professionals include both analysts and associates. These figures reflect the resources of FIL Limited. Source: FIL 30.06.2017. Data is unaudited. This fund invests in overseas markets and so the value of investments

37

Times like these Steve Preston on the challenges of adviser recruitment

42

Facing the inevitable Neil Martin talks to View Consultancy about recording client meetings

44

Aiming high Mole Valley Asset Management on why investing in AIM is about more than tax breaks

CONTENTS

34

Transition planning Louise Jeffreys reminds advisers to concentrate on the longer term

IFA Magazine is published by IFA Magazine Publications Ltd, Arcade Chambers, 8 Kings Road, Bristol BS8 4AB Tel: +44 (0) 1179 089686

38

Platform due diligence Mark Polson runs through the dos and don’ts of this key process

© 2017. All rights reserved ‘IFA Magazine’ is a trademark of IFA Magazine Publications Limited.

No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies. Wherever appropriate, independent research and where necessary legal advice should be sought before acting on any information contained in this publication.

IFA Magazine is for professional advisers only.

Full details and eligibility at: www.ifamagazine.com

FIDELITY GLOBAL SPECIAL SITUATIONS FUND If you want to make the most of global growth opportunities in your clients’ portfolios, look no further than Jeremy Podger, Morningstar’s Global Equities Fund Manager of the Year.

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Go to fidelity.co.uk/gss

can be affected by changes in currency exchange rates. The fund may also use financial derivative instruments for investment purposes, which may expose the fund to a higher degree of risk and can cause investments to experience larger-than-average price fluctuations. Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document and current and semi-annual reports, free of charge on request, by calling 0800 368 1732. Issued by Financial Administration Services Limited, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0817/20404 /CSO8506/0218.

BNY Mellon’s investment blog, Market Eye is designed to provide investment professionals with a view of key market trends, expert research and insights in an illustrative and shareable format.

You can register to receive Market Eye updates informing you of new posts by visiting bnymellonmarketeye.com

Shaping the future of medicine

7000

More than

medicines in development globally:

Medicines Infectious diseases

Neurological disorders

1,261

1,308

Immunological Cardiovascular disorders disease

1,123

563

Mental health disorders

510

Diabetes

401

HIV / AIDS

208

Cancers

1,919

US$179m:

the average cost in the 1970s to bring a new drug to market

average cost to do the same today – US$2.6bn: the an increase of more than 1,300%

548

BNY Mellon Investment Management is the global investment management arm of BNY Mellon, one of the world’s major financial services groups with operations in 35 countries serving more than 100 markets.

Our multi-boutique model is driven by a unique and compelling approach to investment management.

BNY Mellon Investment Management provides a robust corporate foundation, together with worldwide resources and administrative support whilst our investment boutiques are free to concentrate on what they do best – delivering specialist and focused investment performance.

The number of viruses mammals are exposed to. Around half of these affect humans.

Source: Nature Volume: 546, Pages: 646-650; published: 29 June 2017.

500,000:

the number of hens eggs used in a single day by a single vaccine manufacturer Source: Pharmaceutical Research and Manufacturers of America. 2016 biopharmaceutical research industry profile. Washington, DC: PhRMA; April 2016.

Total unaudited global market: US$1,057.1 bn Latin America Japan

7%

9%

North America

40%

Asia

20%

Europe

24%

Source: Bloomberg and company reported sales; IMS Health Market Prognosis, May 2015. For illustrative purposes only.

Source: Recruit Jobs, August 2015

bnymellonmarketeye.com

IMPORTANT INFORMATION The value of investments can fall. Investors may not get back the amount invested. For Professional Clients only. This advert is a financial promotion and is not investment advice. Any views and opinions are those of the author unless otherwise noted. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and its subsidiaries. BNY Mellon Investment Management EMEA Limited is ultimately owned by The Bank of New York Mellon Corporation. Issued in the UK by BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority. AB00120 Exp 30 Sep 2017. T5909

bnymellonmarketeye.com

WELCOME

Reality Shows Where did the summer go? It seems no time since the general election, and suddenly St Leger’s Day is coming up fast on the outside straight, and the Brexit negotiators are slowly returning to the table from a long lunch, and Donald Trump is preparing for an autumn term where he still hasn’t achieved a single policy goal, and…financial planners are looking for bright ideas to help deliver business success as well as excellence in financial planning service for clients. Welcome to our first ever business spotlight edition of IFA Magazine.

Whitehall Farce, Russian Opera Whoa, hang on a minute, there’s no mistake here.

It really was only a few months ago that the Prime Minister gambled her political fortune on the Westminster roulette table and got busted. It’s been no time at all since David Davis and Michael Gove discovered their reverse gears and started making less stridently euro-dismissive noises in the face of a polite but unyielding stonewall from Brussels. And all the while, Chancellor Philip Hammond has been polishing his trusty spreadsheet in readiness for his best-ever chance of becoming the PM who Europe would most like to be dealing with. The imperious Mrs May, it seems, has more enemies than Caesar.

The theatrics across the Atlantic, however, are becoming less amusingly farcical. Yes, the pace of the intros and outros on Capitol Hill would have shamed even the late Brian Rix – ironically, the man who first gave the name to the Whitehall Farce – but Trump’s failure to distance himself from some very sinister political forces has darkened the mood. Even the steel companies, disgusted, have now deserted his advisory board – hey, wasn’t he once their champion?

Meanwhile, France’s President Macron lost ten percentage points of his popularity in a single July week (after proposing a series of entirely sane spending cuts), and Germany’s Chancellor Angela Merkel was biting her lip and keeping every limb and digit carefully crossed ahead of her nail-biting federal election in September.

What interests me is that I’m getting a sense that real facts and real numbers are surfacing at last.

And that can’t be a bad thing. Am I concerned that equity markets have stalled? Only insofar as they reflect a new, more cautious reality which is probably not as awful as its detractors think. Britain, and America, and France too have been brought up short by statistical realities which have replaced last year’s twinkling fairy lights with the reliable beams of lighthouses. And I’m all in favour of that.

Back to business Meanwhile, the reality for financial planners is in not only needing to have all the soft skills, advanced technical knowledge and qualifications to deliver excellence in client service, but also the business acumen, operational skills and strategic nous needed to operate a profitable and effective business. These are the real facts. At IFA Magazine, we always aim to bring you a combination of insight and analysis on technical topics, the global economy as well as practical ideas and information to support your drive to business success. This business spotlight is an IFA Magazine first – we hope you find it useful and, as always, we’d love to hear what you think of it. After all, a poor financial planner is a poor financial planner!

Michael Wilson Editor-in-Chief IFA Magazine

Business Spotlight • 7

STRATEGIC PLANNING

Strategic planning – the heart of an effective financial planning business Chris Baigent-Reed of Jigsaw Tree outlines a practical approach that you can use to ensure you have an effective operating framework in place to underpin your business development in pursuit of your strategic goals We have plenty of experience of working with advice firms to help them overcome a range of business challenges as they seek to build their business and develop their service. Our premise when working collaboratively with firms is, in the words of the late, great Dr. Stephen Covey, to “start with the end in mind”.

It is only by doing this can we identify the transitions that are required to reach your strategic goals.

At the core of this is ensuring that your business has a target operating framework to aspire to. By knowing and then sharing critical success factors across your business and demonstrating the value of change to all, everyone in your team is engaged and inspired to make the business the success you want it to be.

The key components of the ‘one best way’ operating framework This framework can be used to help you develop your strategic plans. It all starts with having a clear view of your end goal. Once this is established, then you can progress to working out the detail of how this will be achieved.

Vision and values Without having a clear vision of your future, how will you know if and when you have arrived at your destination?

Let’s ‘start with the end in mind’ and look to identify what your vision is for the future of the business. You will need to set out an unclouded vision on what this preferred future looks like.

Make it inspirational and aspirational so as to challenge and excite others in the business.

8 •

Business Spotlight

Your core set of values should show what you believe in and how you and your team will all behave.

A values-led business creates a moral compass to guide on decision making and establishes a standard that all actions can be assessed against.

Vision and values should never be decided just by senior management but must be discussed openly - everyone from the top down needs to live them.

By getting everyone’s 100% support for these, your destination and journey will become clear.

Progress is impossible without change ‘We have always done it that way’ is a common reason which I often hear from advisers for using a particular method or process. Think about your business in this light. If this applies to you, then over time, this attitude allows your processes to become inefficient, long-winded, costly and frequently with workarounds which are no longer needed. Well-developed processes are central to ensuring that your business can convey its value efficiently and effectively, and in a way that delivers a quality client experience.

The absence of clearly defined and documented processes is a key risk. Putting clients at the heart of how you deliver your service, is central to achieving high levels of satisfaction. The reward for this is repeat business, regular referrals and improved client retention which is delivered through robust and repeatable processes which your clients love – and will recommend to others.

Vision and values should never be decided just by senior management but must be discussed openly - everyone from the top down needs to live them

Living your dream Once you have defined your future vision, you can progress to working out how you get there. A ten year vision is distant and things change. The best approach is to work out what your objectives are for each year. Then break it down further and get everyone in your organisation to set themselves their own ‘big rocks’. The big rock theory is a quick and easy time management tool developed by American author and educator, Dr Stephen Covey. It’s based around the concept of first things first, getting your most important objectives and goals identified and agreed first. Only once you have done this, can you really build your strategy around them. If you haven’t already done so, I’d recommend watching his YouTube clip on the subject.

Like all your objectives, these ‘big rocks’ should be SMART (ie specific, measurable, agreed, realistic and time-based). Again, they should be broken down into manageable chunks. It is easier to see what needs to be done this month, this quarter, this year to ensure you are on track to meet your stated vision rather than jumping straight into your ultimate vision.

Within any critical issue, there are always aspects no one wishes to discuss Looking at the bigger picture around your ‘big rocks’ and dealing with any issues or challenges you have to overcome immediately is key to reaching your goals –even if there are painful issues in there. Your business needs to

become great at solving problems. Once an obstruction to reaching your goal has been identified, it needs to be openly discussed. Make sure that you stay solution and outcome focused until the issue has been solved and avoid going off on tangents, which is all too easy to do in practice.

Discussing and solving issues must be done in a positive environment where everyone can share their thoughts and views without judgement or blame and with no adverse repercussions. There must always be a united front in order to keep moving forward and the team working together effectively.

After all is said and done, actions speak louder than words Your business needs a set of key performance indicators ( KPIs) so you can regularly and easily monitor how the business is doing against its strategic objectives.

If you’ve not already done so, these KPIs should be set at multiple levels through the business to ensure you are evaluating every team’s success at reaching their targets. To be effective your KPIs must be: • Applicable to your business.

• Well defined and quantifiable.

• Thoroughly communicated throughout your organisation.

• Crucial to achieving your goals.

To be able to accurately and consistently monitor KPIs, you must have clarity on these numbers and how they underpin the vision of the business. That means having good operational management and control systems to keep you on track. Getting this right will give you an accurate view on where the business is against its goals at all times and is a key tool in your strategic planning success.

In summary By having clarity on the key components and giving accountability for delivery of these, along with a clear view on the future vision of the business, will ensure your key goals are met.

Chris Baigent-Reed is a financial services professional with over twenty years’ experience in this sector. Having worked for FS advice and technology companies for many years Chris founded Jigsaw Tree and Jigsaw Tree Outsourcing. These businesses are support companies specialising in providing expertise and outsourced resources where they are needed most. Jigsaw Tree focuses on combining people, process and technology in order to deliver the right results: Twitter: @JigsawTree Telephone: 07764 232188 Website: www.jigsawtree.com

Business Spotlight • 9

STRATEGIC PLANNING

The challenge of getting the right person Having the right people doing the right things at the right time is critical for your business. It is not only important to regularly assess the roles and responsibilities within the business but also to review who holds those positions and how they interact with others. Using DISC profiling, or other psychometric tools, can be an effective way of assessing behaviour types to ascertain if individuals are actually suited to their roles. We are not suggesting a rip it up and start again approach here, instead we are looking to see where individual people have the best impact in your business. For example, Joanna’s DISC profile may show from her behavioural traits that she would be more effective in a client-facing role, rather than her current accounts role.

ED'S RANT

A Muffled Thunder The FCA’s final report on asset management has been two years in the making, says Michael Wilson. Is it ready yet? You decide…

If Andrew Bailey ever supposed that the FCA’s final findings on asset management would go off like a firework display when they were published at the end of June, he must have been a bit disappointed by the lack of crackle and pop that resulted.

Okay, we’ll agree that the consumer media were keeping themselves alternatively amused at that time with the rival antics of Theresa May and Donald Trump - but it was still disappointing that such an ambitious and consumer-friendly programme had produced such a muffled thud in the consumer financial press. Or that even the serious broadsheets largely overlooked the sexily-named MS15/2.3 with its 114 dense pages and turned their Sunday attentions back to mortgages and pensions instead. Yawn.

Nor should we deny that there were a handful of brave op-eds such as Merryn Somerset-

The FCA’s final report might not be very final, but it’s as far as we’ve got after two solid years of discussion

10 •

Business Spotlight

Webb, Moneyweek’s editor, who had a brief stab at explaining in the FT why consumers could benefit from a more transparent fee-charging system. But otherwise the place seemed to be full of people wandering around in the smoke, wondering what the heck was going on?

Why all the confusion?

Let’s be fair about one thing. The media’s confusion wasn’t entirely the FCA’s fault.

Rather, it was that MS15/2.3 and its counterpart CP/17/18 represent a truly ground-breaking attempt to sort out an entire whole battery of issues that are likely to impact on retail clients in every kind of way. Just, not quite yet….

Firstly, it doesn’t exactly help matters that the regulator’s enormous tome is still at a discussion phase – you have until 28 September to make your final comments on the important parts of it, by the way. Or secondly that some parts of the issue are effectively being kicked into touch for the EU regulators to decide – the FCA’s final report appears to be happy to leave the whole subject of consumer fairness to MiFID II, which comes into force next January but which is itself still a bit of a fog.

Or thirdly, for the moment at least, that the FCA doesn’t have much more to say about sorting out the confusing panoply of fees and charges than that “Something Must Be Done.” Harrumph, as they say in Tunbridge Wells. As we’ll see shortly, simplifying the fees side of things alone is going to stretch the industry’s minds in ways that boggle the mind. This year? Next year? Some time? Never?

to their own governance regimes - which are also constantly evolving in their own various ways.

Just to make things more interesting, the nattilynamed “Consultation on Implementing Asset Management Market Study Remedies and Changes to Handbook” (where do they find these titles?) kicks the issue forward into the far future by announcing that the FCA is still thinking of extending the scope of its asset management proposals to cover a range of other retail investment products: unitlinked funds, with-profits funds, pension funds and investment companies – which, it agrees, account for a huge proportion of retail investment business.

So when the FCA says that it’s now looking for views from “stakeholders” as to whether some or all of the proposals in the Final Report could (or should) be applied to these other retail products, it’s not hard to imagine people shrugging their shoulders and muttering: “for heaven’s sake, come back with a proper strategy report when you’ve had a chance to think it all through.”

Well yes. We couldn’t disagree that, from the investor’s perspective, all of these products do look rather alike. But the problem, as the FCA itself notes, is that it might not be straightforward to bring all of these products into the same regulatory orbit, because they’re all subject in their own ways

Harrumph again. I’ll leave it there, because wiser heads than mine are still furrowing their collective brows as to exactly what this entire programme might amount to, or what the knock-on consequences might be. Let’s turn our attention instead to the key proposals.

And about time too…

Key proposals First things first. The FCA’s final report might not be very final, but it’s as far as we’ve got after two solid years of discussion. The initial market study into asset management was launched in November 2015, leading to the interim report of the Asset Management Market Study (got that?), and hence to this summer’s final document, which was formulated after getting 153 written responses and after holding discussions with almost 200 stakeholders from 135 organisations. Not to mention all the feedback.

The initial report, says the FCA, “considered how asset managers compete to deliver value for both retail and institutional investors,” and the 2016 interim report found that there was only weak price competition in various areas of the asset management industry, and, says Mr Bailey, the competition model is not working well.

“Despite a large number of firms operating in the market, the FCA’s analysis found evidence of sustained, [unacceptably] high profits over a number of years.”

Other issues materialised along the way. The regulator complains that “investors are not always clear what the objectives of funds are, and [that] fund performance is not always reported against an appropriate benchmark.” It also says that it had to fight off “a perception that our interim findings suggested that passive funds were preferable to active funds”; rather than getting into that untidy debate, it says, the FCA has chosen to focus on the need for investors to “understand both the total cost of investing and the objectives of the fund or mandate they are investing in, so that they can choose the product that best meets their needs.”

So far, so clear? Good, let’s move forward. Puhleeze….

Business Spotlight • 11

ED'S RANT

Has anybody seen that perimeter fence?

MANAGERIAL RESPONSIBILITY AND GOVERNANCE

ED'S RANT

The FCA says that it intends to introduce a new responsibility for asset managers to consider the value for money that they deliver to investors (yes, honestly); more significantly, it plans to handle this under the Senior Managers and Certification Regime, which is due to be extended to investment managers in 2018.

But it has fallen short of expecting managers to carry a fiduciary duty toward their investors, a significant shortfall on what some advisers have been asking for. The FCA does go some way toward correcting the balance by insisting that fund boards should assess whether value for money has been provided to investors – and also by requiring that all management boards should include at least two independent members. But, in some observers’ eyes, it has wimped out of the demand that board chairmen should also be independent.

PERFORMANCE As we’ve just said, the regulator has side-swerved the issue of whether active funds are failing to meet investors’ aspirations vis-à-vis passive funds, but the press has been in no doubt that it thinks actives deliver a poor deal. The FCA does say, however, that “on average, both actively managed and passively managed funds did not outperform their own benchmarks after fees. “ And it added that “there is no clear relationship between charges and the gross performance of retail active funds in the UK.” UK press sources estimate that around £109 billion is currently invested in funds that claim to be active but are actually passives in all but name.

Although significantly more expensive than passive index trackers.

You do the maths. But the late-June announcement of the FCA’s report had a sharp downward impact on the share prices of fund houses that specialise in active strategies. Will they soon make up the lost ground? If the FCA’s currently woolly scheduling is anything to go by, I wouldn’t want to bet against it.

FEES Surely the key issue as far as retail investors are concerned? And certainly the only issue that was ever likely to make the newspaper columns. The idea of “pounds and pence” fees looks like a no-brainer, if you don’t look closely enough. But what’s this? More fog, unfortunately.

The FCA commits itself to introducing an all-in fee for retail investors that will include an estimate of trading costs. But not yet, apparently – there is no time line for the change. The regulator plans to look further into ways of improving the reporting of fund costs, and it says it’ll set up a working party, and blah blah blah.

The FT quotes Keith Baird, director of financial services research at Cantor Fitzgerald Europe, as saying: “The fact the FCA says it ‘supports’ action on moving to an all-in fee, rather than using firmer language, is supportive for asset managers.” As distinct from clients. We couldn’t disagree with that.

Will we ever get to a fully all-in fee? First we’ll have to figure out how those fees are calculated. How will a fund-of-funds declare its pyramid of sub-fees, and will it be able to account for all the fee discounts it gets along the way? Bearing in mind, of course, that those sub-funds are sometimes dotted around the globe, including some in tax secrecy havens? Will the all-in fee requirement apply to private wealth managers’ funds, and if so at what level? Where do hedge funds fit into all this?

Answers on a postcard, please. In the meantime, I’ll personally say that the FCA’s copout looks like good news for fund managers and one less thing to worry about for IFAs.

12 •

Business Spotlight

TRANSFERRING SHARE CLASSES

INVESTMENT CONSULTANTS Another kite that’s being flown for future consideration. The FCA has requested new powers that would allow it to oversee consultants, whose advice is still largely unregulated even though it heavily influences the ways in which pension funds invest. Consultant activity in this area is dominated by only a small handful of firms, but the FCA has drawn attention to the opacity of this sector, which it says has left some larger investors unsure as to whether they are receiving value for money.

Meanwhile the FCA is also considering whether to refer investment consultants to the Competition and Markets Authority, alongside other financial advisers. The FT notes that “the increased likelihood of a referral is a blow to investment consultants, who hoped to see off a competition probe.” In either case, it says, the FCA is due to make a call by this September.

PENSION CONSOLIDATION One of the FCA document’s less obvious proposals includes the complete removal of any remaining barriers to consolidating pension scheme funds. The FCA says it believes that there are many benefits to be had from letting pension funds pool their assets – not least, the likelihood of being able to negotiate lower fees with investment managers. Will it happen? We’ll see.

A PLATFORM MARKET STUDY? There’s always a sting in the tail, isn’t there? And yes, the FCA confirmed its intention, as set out in April 2017, to launch a study of retail platforms which will look into the ways in which discounts from providers are recorded and whether they are passed on to consumers.

The gist of the FCA’s argument so far has been that the complexity of charging structures has given the platform providers ample room to hide their gains from retail clients; but the same argument is being used for intermediated investment platforms that are more likely to involve professional investors.

Anything else?

The FCA’s proposals would enable asset managers to move their retail investors’ funds into cheaper share classes without obtaining their explicit permission

Loads and loads of it. But I’ve had to be selective here. This is a vast subject, and as you’ll have noticed, it won’t be coming to a screen near you any time in the very near future. But please do let us know what you think. Write to me at editor@ ifamagazine.com, and we’ll keep you updated.

In the meantime, you have until 28th September to make your voice heard at the FCA on this particular consultation process. Go for it. Give them no peace.

Business Spotlight • 13

ED'S RANT

At last, something uncontroversial. The FCA’s proposals would enable asset managers to move their retail investors’ funds into cheaper share classes without obtaining their explicit permission.

The industry agrees that about a third of the assets held in retail investors’ funds bought are still stuck in expensive share classes that are still paying legacy commissions, and the regulator is anxious to break the inertia. There are other proposals to abolish the last remnants of legacy payments on funds sold before the end of 2012, but they needn’t concern us here.

BETTER BUSINESS

The people who are achieving big time success are working at it every single day – deliberately and consciously.

They aren’t just talking about it, they’re doing it

Better business – what’s your motivation?

Motivation is a tricky subject. There’s lots written about it and much of the advice implies that if you just set a few goals you’ll be motivated.

Brett Davidson of FP Advance is just not convinced it ’s that simple

14 •

Business Spotlight

Strategy 1: Set public goals

It’s not the highest form of motivation if you’re in a slump, but it’s a good first step.

Also, set a goal that’s bigger than money. Find something meaningful to go after that might change the world (or at least your part in it). That’s the sort of stuff that gets you leaping out of bed bright and early every day.

Strategy 2: Find other highly motivated peers We all know a few inspirational people in this profession. If you’re an adviser or paraplanner, it might be someone you have heard speaking, or someone you met at an industry event.

If that person has achieved the level of success that you’re looking for yourself, make an effort to connect with them on social media, subscribe to their blog, seek them out at your next industry event, or give them a call and see if you can get an hour of their time. In my experience, leaders are always available to help in some way shape or form, even if they’re really busy.

Surround yourself with highly motivated winners and it’s likely to rub off on you.

Strategy 3: See each day as a new opportunity to learn I’m not sure why, but sometimes when you reach a level of skill, you plateau. I’m being kind when I say plateau; what I really mean is you stop growing and learning, and that’s not good.

This can happen to you at any stage, but I noticed it in myself a couple of years ago and, looking back, it was a major contributor to a ‘bored’ phase I went through.

When business is going well and you’re seeing lots of on-target clients, whatever that looks like for you, financial planning is great fun.

You make a real difference to people’s lives and earn good money doing it. What’s not to like?

However, if your business is struggling, or it just feels a bit ‘same-old, same-old’ on a daily basis, you can find your motivation flagging. If that’s happening to you right now, or has happened to you in the past, then here are five strategies for getting your mojo back in double-quick time.

However, by getting back on the ‘learning new skills’ horse, I got excited again about my work and my life. You can do the same.

Strategy 4: Use meditation, music or inspirational videos Professional athletes prepare mentally for their chosen sports. They’ll listen to music, meditate, or watch something inspirational to get them in the zone. It’s just a process of getting their mind right, in order to perform better.

There’s no reason you can’t make some of these things part of your professional practice as well.

Business Spotlight • 15

BETTER BUSINESS

Ok, I know I just took issue with a lot of the motivation stuff that says ‘set a few goals and all will be well’.

There’s certainly more to it than that, but setting some goals and sharing them with your team is a great place to start. That’s what I mean by set public goals. I’m not suggesting you get a billboard at the junction of your nearest motorway, merely that you have goals that someone else knows about.

BETTER BUSINESS

Surround yourself with highly motivated winners and it’s likely to rub off on you

Meditation works for some, although I’ve taken the view that my best meditation is doing some exercise.

I switch off for a while and seem to come back afterwards in a great place, mentally and physically.

Strategy 5: Get mad Seriously, how long have you been at this now? Have you achieved what you know you are capable of? Maybe it’s time to get a little bit concerned about that.

I can give you an endless list of why I haven’t quite done what I want to do yet. “It’s not my fault”, I can assure you. However, the real reason for any lack of success is that I haven’t been working on the right things, or I’ve been somehow holding myself back.

The truth is, if I want the things I say I want, then there’s stuff to be done. I won’t get it by wasting more time on Facebook, or watching TV. Do you have an endless list of excuses for why you haven’t achieved your goals in this profession or this life? The people who are achieving big time success are working at it every single day; deliberately and consciously. They aren’t just talking about it, they’re doing it.

Are you mad yet? Good. Then use it to do something new that advances you towards your goals.

Final thoughts Staying motivated can be challenging sometimes as the pressures of life build up, but that’s not an excuse. With a bit of effort you can rekindle or maintain your motivation and keep persisting; which is the biggest factor in most people’s success.

As professional poker player Nathan Williams says, “Nobody gets to the top by half assing it. Nobody climbs up the ranks by putting in a couple of hours a week, you know, if they feel like it.”

Hopefully a few of the tips in this article can help you keep or re-kindle some of that essential motivation.

Brett is the Founder of FP Advance, the boutique consulting firm that helps financial planning professionals advise better and live better. He is recognised as one of the leading consultants to financial advisers in the UK. Professional Adviser magazine has rated him one of the Top 50 Most Influential people in UK financial services on three occasions. You can follow Brett online and via social media: Twitter: @brettdavidson Facebook: www.facebook.com/FPAdvanceLtd LinkedIn: www.linkedin.com/in/davidsonbrett Website: www.fpadvance.com

16 •

Business Spotlight

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INTRODUCERS

As you meet different people, you must put yourself second and focus on how you can help the other person to grow their business

Developing profitable introducer relationships for your financial planning business Leveraging the networks of other quality professionals to generate new business is still a relatively under-utilised strategy by most IFAs and financial planners, suggests Matt Anderson, of The Referrals Academy. Here he presents a step-by-step guide to improving your success in this key area

Why are so many advisers not working effectively with other professionals? I suggest that it is primarily because they simply don’t know how to do it effectively.

18 •

Business Spotlight

If this is an area you’ve identified for development, then carve out some time each week on the following three steps and within six months you will see some measurable shifts in tangible opportunities:

2

Make partners

This is the most important part because it’s where our neediness and fear fail us.

The best connector I know put it this way: “When people see you as a partner instead of a salesperson, all that armour that they put up against being sold something is gone, because now they see you as someone who has come to help them with whatever their problems are - and that's much more important to them.”

1

Decide who you want to meet

Be extremely clear about this otherwise almost nobody will help you.

The traditional adviser asks are to meet specific types of accountants and lawyers - and for a good reason. They are often at the centre of people’s financial world. Of course, you already know that success here will involve much trial and error because most people in these professions are not particularly skilled in the world of business development. You will need to persevere and knock on other doors because it could be a long journey.

Seek out other people of influence who will be connected to a network of others in different organisations and vocations. Start to build strong relationships with a small number of those operating in people-orientated industries such as executive recruiting, commercial property, event organisers, leaders in associations, and board members. It’s important to keep an open mind about who could be great at opening doors for you.

One idea is to tell others that you “like to meet well-connected people who genuinely like to connect others” (this is what I say). There are not many people out there like this and they are more likely to know others like them because that’s who they want to spend their time with.

Yes, you will kiss a lot of frogs on the way but you must persist. The ‘right people’ really do exist.

How do you get there?

It’s quite easy to put yourself second because most people love talking about themselves. So, what you must do first is find out what they want, who they want to meet, and do as much as you can to help them. Counter-intuitive as it may sound, if they have been introduced to you by someone you trust, you really don’t HAVE to spend much time getting to know them. This is a nice-to-have at first – and only important long-term if they’re going to be a profitable introducer for you.

It is good practice to write down what they want: it’s important for people to see that their needs matter to you.

Then follow up within 24 hours on what you said you would do. You will really surprise them because hardly anybody does this. Most people only talk a good game.

This will get you profitable introductions far quicker. Like all journeys of success, it will not happen in three months and it will have peaks and valleys, but the peaks will grow and grow.

Another tip to bear in mind is that you will discover people’s needs more readily by asking them questions such as: • What the best type of business you’re looking for?

• What else are you hoping to accomplish in the next year or so? (I love this question because you never know what people are going to say and it sometimes makes it easier to help them) • Who do you need to meet to help you grow your business? Most people respond in broad generalities to this question which is useless because your goal is to walk away with the names of actual people you can introduce them to.

Show courage here and keep digging until you get several specific ideas: you can start with industries, niche markets, and specific professions until the person says they want to meet people in banking, franchising, venture capital, healthcare, or law firms.

If they name a huge sector such as “the medical field”,

Business Spotlight • 19

INTRODUCERS

As you meet different people, you must put yourself second and focus on how you can help the other person to grow their business. This is what most top IFAs do in order to succeed with introducers. The better you get at this, the faster you will see doors open for you.

INTRODUCERS

you must dig further to narrow it down to areas like dentists, care home owners, or suppliers to hospitals.

• Acts of service: identify particular causes which matter to them that you could help with

The common reaction/objection/fear is to say to ourselves: “but I don’t know very many people.”

We feel foolish by asking the question because we think we don’t know anyone. This is a mind-set you must change because it will never serve you.

If you dig deep enough and continue to meet new people regularly, you will discover that you do, in fact, know many more people than you realise.

• Unexpected gifts – everyone loves them but send ones that are personalised to them

Another part of the problem is that almost nobody keeps track of their network, so take steps to do so now. Start compiling a word document of introductory paragraphs for each person you know, so that it is searchable by name. These paragraphs are going to be useful to you in order to connect them to others.

How else can you bring value to others?

It’s notable that great referral givers are superior listeners. Pay closer attention to other ways you can help to put “water in the well” beyond financial planning. Examples of this may be: • Give them some good ideas that can help them in their professional lives • Build relationships: are there events or groups you belong to - or you could organise - that you could invite them to? This is a great strategy for building relationships and introducing others. This can include social events too.

You’re in a relationship business after all!

• Quality time – it sounds tacky but that’s how some people feel most acknowledged Make it a daily habit to spend at least 15 minutes trying to help others in your network in ways which are beyond your business.

3

Ask for introductions to the specific types of people you want to meet

You need not have worried all along. Now, having done the ground work, you are in a far more powerful position to spell out the types of people you want to meet. Often, they will be asking you. Make sure specific people are identified for introductions, but there is a word of caution here: this does not come easily to many IFAs. Just as you had to dig hard with others to identify specifics, so you will need to work with others on this too.

The good news is that if you have helped them out, others will spend that time with you.

Finally, you should practise these techniques until you see the fruits of your labour: when you help people to get what they want, it is human nature for them to want to reciprocate. The profitable introducers will rise to the surface.

It’s important to keep an open mind about who could be great at opening doors for you

Matt Anderson, founder of The Referrals Academy, has grown his business almost exclusively by referrals. He has trained and coached people from over 30 countries and specialises in helping financial advisers to get more and better prospects. He is based in Chicago but was born and raised in Coventry.

Blog: https://matt-anderson.mykajabi.com/blog LinkedIn: www.linkedin.com/in/mattandersonintl

20 •

Business Spotlight

ACQUISITION AND SALES

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We consider every business to be unique, and therefore finding the right solution for you starts with a thorough understanding of your business operations and your wish list.

Only from here can we make valuable introductions which align to both party’s needs.

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BRIAN TORA

Summertime blues Which way will equity markets be heading? Brian Tora finds it hard to be downright pessimistic as he considers the uncertainties ahead, and suggests that a defensive stance might be appropriate as we head into the autumn

Well, we survived the summer. Despite having a wild card dealt in the White House and a Prime Minister here in Britain whose control over events is anything but strong and stable, shares have held up pretty well.

Meanwhile US markets have been hitting new highs.

We’re not exactly shrinking violets here, though much depends on the demand for oil and minerals if the FTSE 100 Share Index is to travel further, such is the nature of market make-up these days.

IMF downgrades Actually, demand does seem to be picking up. The IMF certainly believes that the global economy remains firmly on its recovery track, even if it did see fit to downgrade prospects for the US and the UK. You can’t blame them. Just as the forecasts for the euro zone improved now that the political threat has receded with more conventional election results being recorded, so the uncertainty generated by the loss of the government majority here and apparent legislative paralysis across the pond must lead to greater caution over likely economic outcomes.

The currency effect Much of the investor enthusiasm here and in America has to do with the declining fortunes of our respective

22 •

Business Spotlight

currencies. At home, a weaker pound is automatically translated into higher profits for an index that earns the bulk of its revenues overseas. In the US, it can only accelerate the transfer of manufacturing processes back to the home country. Neither necessarily results in a stronger domestic economy, but then shares are not automatically tied to GDP growth at home.

Results season surprises Still, the results season on both sides of the Atlantic cheered investors, with more surprises on the upside than the down. At home the miners benefitted from better prices for such commodities as copper. In the US, businesses such as Facebook proved they had a global reach and were able to significantly improve their penetration into the advertisement space. We really are in a period of massive change, and determining the winners and losers has never been tougher.

Let’s take the automobile industry as an example.

In July, we heard that new petrol and diesel engine vehicles are to be banned from sale in 23 years’ time.

Really? Pardon me if I sound a little sceptical, but such a massive shift will take some achieving. Electric cars are a tiny proportion of those sold each year in the UK, while finding a charging point is not an easy

BRIAN TORA

It will be a rocky ride, I fear, for investors over the next year or two, which is not to say that Armageddon lies just around the corner

task, I am told. Still, we must expect a continuing shift towards electric cars and hybrids in the decades ahead, so by 2040 the shape of car ownership across the world is likely to be very different to today.

it seems the bulls have seldom been as bullish as now.

It makes me wonder if October, a month when some of the major market setbacks have occurred, might once again deliver some unpleasant surprises.

Turn and face the strange

Geo-political risks

This is, of course, very much a long view in terms of likely change, but some change will be with us much more quickly. In particular, how America fares under what is increasingly looking like a dysfunctional White House and the nature of the Brexit achieved – if, indeed, Brexit takes place at all. It will be a rocky ride, I fear, for investors over the next year or two, which is not to say that Armageddon lies just around the corner.

Perhaps the biggest imponderable is the risk of geopolitical upsets. Somehow the situation in the Middle East seems no longer to faze investors, but a further escalation of events on the Korean peninsula would be a different matter altogether. Once again it is the unpredictability of the new President which makes assessing likely outcomes that much more difficult, while an increasing influence from the military in the US is hardly likely to soften their approach.

Brace brace?

So I enter the autumn in a cautious frame of mind.

While the UK market does appear less vulnerable from a ratings point of view, such is the nature of investment sentiment that a sell-off in America is bound to have repercussions here. I find it hard to be downright pessimistic and sell regardless, but a more defensive stance does appear appropriate.

Let us hope that, as we often do, we somehow muddle through and avoid any big upsets.

But I am conscious that the bull market in America has now been in place for eight years, which is getting close to a record. There are plenty of potential triggers that could see investor confidence evaporate. Dotcom Bust 2 has been cited as a possibility. Technology companies are increasingly important in US markets and they are not the cheapest shares around. Indeed, the S&P 500 Share Index is arguably overvalued and

Business Spotlight • 23

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MARKETING STRATEGY

The old adage of ‘if you always do what you’ve always done, you’ll always get what you’ve always got’ applies

How to create a marketing strategy for your advisory firm Sam Turner, Head of Digital at ClientsFirst, shares a practical approach to help you achieve your business goals

Business Spotlight • 25

MARKETING STRATEGY

In 2016, we surveyed local businesses to gauge how successful they felt their marketing was. Those businesses were asked whether they had a marketing strategy in place. Amazingly, even though respondents told us they were actively marketing themselves, 53% of businesses did not have a strategy in place.

A marketing strategy is a vital starting point for any firm engaged in marketing activity – including financial planning businesses. Working to a strategy forces you to consider whether your current actions are aligned to the business goals you want to achieve.

Starting points Any effective marketing strategy must begin with your business goals. If it does not, then the strategy will essentially be ‘running blind’ and you will lose the ability to accurately assess the success or failure of the strategy when it reaches its conclusion.

This is particularly true of adviser firms. Some firms tell us, for example, that they are not particularly concerned with gaining a lot of new clients, which is a typical business objective used to underpin many marketing strategies. If not this, then what is your strategy striving for? Perhaps it is better client retention or engagement? These objectives are very different to client acquisition, as are the strategies which support them, so make sure you’re clear on what you want your business to achieve over a defined time frame.

Document this at the top of your marketing strategy as a ‘we’ statement, for example:…

Business objective - In the next 12 months, we are going to add 12 new clients who match our ideal client profile Routes to market Next your marketing strategy needs to consider routes to market. You will know some of these straightaway. Some will be less familiar to you.

Some firms tell us, for example, that they are not particularly concerned with gaining a lot of new clients

26 •

Business Spotlight

The key here is balance. The old adage of ‘if you always do what you’ve always done, you’ll always get what you’ve always got’ applies, but don’t just select five routes to market that are new to you and expect to master them straight away. Choose a mix of familiar and successful routes which you’ve followed before and new ideas which you’d like to pursue. A typical selection could look like this...

• • • •

Referrals Local press Social media advertising Production of new market research

Each route to market that you choose to follow will need time, so be realistic. Large multinationals have teams dedicated to each route but, in the likelihood that this won’t be the case for you, you’ll need to prioritise. If you have no dedicated internal marketing resource then focus on just one or two routes. If you do have someone whose job title is ‘marketing’ then you could expand this to a maximum of perhaps six or seven.

Setting goals Just like your business objectives, having goals within the routes to market you are pursuing will help to steer your strategy and provide you with a method of assessment.

Each goal needs to be related to your business objectives. This might seem simplistic, but it is a necessary step. For a start, you’ll soon get a feel for whether or not your objectives are achievable.

Here’s a good example: Referrals - Obtain two new clients from referrals within the first six months of the year Clearly, this is going to help with the business objective and it feels realistic.

Here’s an example of a different type of goal you might find on a marketing strategy:

OK, so this might give you a bigger audience, but are you confident this goal contributes to the business objectives as much as, say, the referral goal above? It seems less definite and, therefore, it’s probably not right for your strategy. Back to the drawing board on social media!

• Mary to build a list of all clients we consider ‘likely to refer us’

by Monday morning • Jon to liaise with design agency to create a ‘referral scheme flyer; brief to be given to the design agency by Monday morning.

Design to be back with us by Friday’

Creating action

• Mary to send flyer out to all identified clients by a week on Monday

Finally, the ‘doing’ part! Now you’ve got a vision of the end goal in mind, you can create actions underneath each of your route to market objectives.

Each action must pass the following four tests:

• Jon to ring five clients a day for ‘catch up calls’ during the week, commencing two weeks on Monday and gauge reaction to the flyer.

1. It must contribute to the goal for that route to market 2. It must have a timescale 3. It must have an owner 4. You must be able to assess when it is complete Let’s continue our example around referrals.

So far we have the following: Business objective - In the next 12 months, we are going to add 12 new clients who match our ideal client profile Referrals - Obtain two new clients from referrals within the first six months of the year The question becomes: ‘What can we do now to make this happen?’ This is the part that might require some reading of marketing blogs, especially when it comes to routes to market you’re less familiar with.

Meet, assess, repeat You’ve done it! You now have a marketing strategy that is working to help you achieve your objectives.

The final step is to create a ‘marketing group’. If you have internal marketing resource then this could just be your marketing person and one senior individual. In small advisory firms, it could be all of you and perhaps an external consultant.

The group should meet at least monthly to review the strategy. What worked and what didn’t? Which actions are complete and which are not? Which routes to market are the most successful? Can more time be pushed there?

As actions complete, try to add new actions. As you exhaust some routes to market, drop them, at least for the time being, and pursue new ones. An external view on your strategy at this point can be really valuable; how would your consultant assess your efforts so far? What would they change?

You’ll soon find that your marketing strategy document will become a constantly changing, vibrant hub for your activity, which all now pulls towards your business objectives!

Good luck!

Sam Turner is Head of Digital at ClientsFirst, a digital marketing agency specifically for professional services firms

Website: www.clients-first.co.uk

Business Spotlight • 27

MARKETING STRATEGY

Social media - Reach 2,000 Twitter followers

For our example though, how about the following…

BENEFITS OF OUTSOURCING

“If you break it, you own it…”

Mike Mount, of JM Finn, gives an alternative view about the benefits for advisers and their clients of outsourcing the investment management process

28 •

Setting up and running an in-house investment proposition, whether on an advisory or discretionary basis, is a lot of spadework. Practical considerations that come into play are legion, not least how to find and hire the right people to run your proposition, ensuring you incentivise them in such a way as to retain them into the future. This is so important to get right as there are various plates spinning in the air when running an in-house proposition - researching the fund universe (both active and passive in these post-RDR days), meeting with fund managers, executing fund switches and rebalance trades, investing new monies, using the annual CGT allowance and so on. Having laboured to put such a proposition in place, it would be more than a headache to see those people walk out of the door to the rival planning firm down the road…

engaged in a discussion about the benefits of outsourcing, I often recall a meeting with a financial planner in late 2009, some months after the worst of the financial crisis but still very much a time of uncertainty. The planner had got in touch to say that he wanted to discuss the idea of outsourcing and so we set up a meeting to discuss how we might be able to help. After the usual pleasantries and some back and forth about the typical topics related to an outsourcing model - improved risk management, wider research capability, increasing regulation on the horizon – I made a throwaway comment that made him sit up and engage whole-heartedly. The comment was something along the lines of, “of course, if you decide to outsource the investment, then you will be on the same side of the table as your client for both the financial planning and the investment piece.”

The same side of the table But the main reason for considering an outsourcing model is, I believe, one of control. Whenever I find myself

This had struck a chord with him because from late 2007 he had found that wearing two hats – one as the planner and one as the investment manager – had caused nothing

Business Spotlight

The main reason for considering an outsourcing model is, I believe, one of control

but headache. Performance of the advisory portfolios he ran had not outperformed the benchmark on a relative basis, one fund had been spectacularly poor, another fund had been frozen temporarily and a couple of the absolute return funds had been nothing but an absolute disappointment. Client reviews had, as a result, become something to dread; the review of the financial plan was usually fine but when it came to donning the investment hat and discussing the performance of the portfolios, he could sense that the dynamic of the meeting had shifted to become defensive. He would imagine that the client was looking at him while at the same time thinking ‘perhaps someone else could do better with the investment’.

To make it worse, he could give no proper answer to clients who would ask how things could be improved – he found himself trotting out the usual clichés of long term investment, the fund manager’s strategy being not quite right for the current market conditions, ‘black swan’ events and so on. None of this was a remedy, and he certainly could not fire himself for poor performance.

And so he would spend more time on researching funds and trying to predict tactical asset allocation tilts that might help to claw back performance, all against a background of extreme market volatility and uncertainty.

For better or worse The story reminds me of a quote attributed to Colin Powell in 2003 when, as US Secretary of State, he was advising then-President George W. Bush on the possible pitfalls of the planned invasion of Iraq – “if you break it, you own it” he said. His point being that if the invasion of Iraq went ahead, then the US and their allies would have to bear responsibility for the aftermath, for better or worse. Those same cautionary words can apply to various

An in-house proposition means that you own the performance - for better or worse. Being optimists on the whole, we tend to think that those worse times will never materialise, but they do. Since the financial crisis of 2008/9 markets have recovered their losses and volatility seems to have been dampened down considerably – political and economic news is shrugged off as markets around the globe hit new highs. In such a benign environment most people are happy to ‘own the performance’ but will it be the same if things begin to unwind? A conversation with a client during the good times is a pleasure. Portfolios up on an absolute basis and possibly also on a relative basis.

But imagine if markets were to experience another severe downturn that reverses those returns – now it is not such a pleasant conversation and, crucially, the options to do anything about it are limited. Do you fire yourself or the team you have put in place?

How do you win back your client’s confidence?

However, with an outsourcing model in such a bearish scenario you at least have options to consider because you are now, quite simply, aligned with the interests of your client. No longer are you being judged on your portfolio management skills; instead you are monitoring the DFM – or panel of DFMs – and so can make the call on behalf of your client to either put the DFM on notice or even to replace them if performance has been poor and no satisfactory explanation has been offered. This, I believe, is the strategic crux at the heart of why small to mediumsized planning firms consider the benefits of outsourcing.

So, if you are at that strategic crossroads and wondering what to do, you could do worse than to remember that great line in ‘The Leopard’ by Giuseppe Tomasi di Lampedusa – “for everything to stay the same, everything must change.”

Mike is director of intermediary solutions.

He orchestrates a team within JM Finn that builds and manages Centralised Investment Propositions for intermediary firms via wrap platforms. He joined JM Finn in 2010 from Barclays Wealth where he ran long only portfolio distribution, promoting bespoke, multi-manager and index-based discretionary portfolios to high net worth clients across the UK, Europe, Middle East and Africa (EMEA). He is a chartered member of the CISI and is a graduate of the London School of Economics. A former officer in the Brigade of Gurkhas, he commanded a reconnaissance unit of Gurkha paratroopers for two years and served predominantly in Asia.

Email: mike.mount@jmfinn.com

Business Spotlight • 29

BENEFITS OF OUTSOURCING

industries and professions but are just as pertinent spoken to a planner considering carrying out the investment piece on his own - this sage advice, for me, underpins the debate for a financial planner to consider a strategic move away from a business model where investment is done in-house to one that embraces outsourcing.

ADVISER SPOTLIGHT

Adviser spotlight – Richard Hopkins In this popular monthly feature, IFA Magazine talks to leading advisers about what ’s working well for them. This month, Sue Whitbread talks to Richard Hopkins, of London-based Blackstone Moregate, about the development of his innovative financial planning business

30 •

Business Spotlight

SW What’s your “why” when it comes to running a financial planning business? What are the bits you enjoy most and find most fulfilling? What about those areas you find more of a challenge?

RH Our passion is true, holistic financial planning and the buzz comes from seeing a client achieve their life's financial ambitions. There is nothing more satisfying than a client deciding they can retire early or can fly first class as a direct result of our advice and planning. I enjoy the dynamics of the financial planning world. We are constantly evolving, both in how we work with our clients and develop the business. Most of all I enjoy the people we work with, be it our colleagues or our clients.

SW Richard, can you talk us through how your business has grown over the past 16 years or so?

RH We started out as a small firm back in 2001 as just a two-man-band, before merging with the financial services company of an accountancy firm. After the merger we grew through hard work, blood, sweat and tears to a point where we were in a position to acquire other businesses. We then bought three companies in fairly quick succession – a major undertaking. Although it doubled the size of our business, there was a lot of hard work integrating and overlaying our systems and processes so we could move a paper-based firm into a 21st century, cloud-based firm. We also realised the power and benefits of creating an overseas support infrastructure and so now have eight staff working from India for us.

This has enabled us to ensure we can meet all our clients’ and business needs - from valuations to fee reconciliation.

I find the biggest challenge is finding the right people to work with and for the organisation. This is not simply about qualifications or experience, but personality traits such as being able to think outside the box, having an enquiring mind and always looking at ways to improve. We have had to make our recruitment process fairly rigorous to include testing, live case study and role play, to make sure that not only we get the right people but that they share our values.

SW When it comes to investment strategy, how does the business operate?

RH As a result of years of experience we have designed an in-sourced investment proposition which we believe works best for us. Working with a number of leading platforms, we offer risk-rated model portfolios which are managed on our behalf by a DFM working closely with us in terms our key metrics around performance and volatility. This ensures we retain control, as we can replace the DFM at any time if we feel our key measures are not being met, without disturbing the clients’ portfolios. Typically these portfolios will have a 50/50 split between active and passive funds, however this will vary

SW What is your role within the business and how does the team work together?

RH I am one of the directors and have both an advisory and business management function although in 2013, my co-director, Vijay Thakkar moved away from the advice role to one of running the business and this has been very effective.

Team work is essential and good communication across all areas in the business is crucial. Our self-customised CRM is central to that so that advisers, para-planners, admin or India are all aware at what is happening and

Having acquired three businesses over the last ten years, we have been going through a period of consolidation, re-organisation and bedding down our future proof systems

Business Spotlight • 31

ADVISER SPOTLIGHT

As a result of years of experience we have designed an in-sourced investment proposition which we believe works best for us

who is doing what. Everyone has a key role to play and the business wouldn't work without communicating across all our sub-teams. We very much have the approach of giving our clients more than one access point to the business, so they will know exactly who they need to speak to, depending on their enquiry.

depending on the cost of risk. We do have a price cap of 0.6% p.a. for the cost of entire underlying fund holdings.

ADVISER SPOTLIGHT

SW Do you have a clear profile of the types of clients you want to work with? How do you find new clients?

RH Our client profile is driven more by the services and fees we charge. If someone will genuinely benefit from what we offer, can see it will add value and as such are prepared to pay our fees as a result, then they will become clients. We do very little marketing and get most of our clients from our website or from client and professional referrals.

SW Financial planning is all about people but technology plays a big part behind the scenes. What systems do you use within the firm and how well do they work together?

RH We are very much a technology-focused advisory firm and use tech wherever we think it can make a real difference and help to make our business more streamlined. We feel that much of the traditional software is loaded with bolt-ons that we wouldn't use or that don't suit our purpose, so we have built our own CRM using Microsoft Dynamics. This has ensured that workflow and communication in the firm is effective but also fully auditable.

SW How do you co-ordinate your strategic planning, ensuring you can innovate and continue to build best practice as the business is growing?

RH We do this through our regular director meetings and then involve staff at our monthly team meetings to give their input to make sure we can fine-tune things before rolling out any new processes or procedures.

SW What are your plans to grow the business in future?

Richard’s top tips for business success are: • The people who you surround yourself with are the key to driving success, particularly if they have a good mix of complementary skill sets. Get that right and then everyone benefits.

• Use technology effectively to improve processes and systems. The future of financial planning will be increasingly automated, making businesses more streamlined and cost effective. This will be key when margins start being squeezed.

• Constantly reflect on how you work and identify areas for improvement. Ask your clients for their input. As advisers, we sometimes get caught up in implementing something we think is required but may not be. This might save a lot of time and money too.

32 •

Business Spotlight

RH Having acquired three businesses over the last ten years, we have been going through a period of consolidation, re-organisation and bedding down our future proof systems. For now, our plans are around organic growth as the right opportunities arises. Our more pro-active growth plans focus on the defined benefit pension transfer market, as this is a specialist niche of ours.

SW Do you have a co-ordinated exit strategy plan in place?

RH Not at present, in the sense that we are focusing on fine-tuning the business infrastructure and continuing to build the company. This is a project for the future though.

SW Work aside, what do you like to do in your spare time?

RH What spare time I have is very much focused around my two young children and my wife. If anything is left after that, then I enjoy running! When we have a day off, I love a trip to a National Trust property or the theatre.

Richard is a founding director of Blackstone Moregate and has considerable experience in financial services. In addition to having chartered status, he is also a qualified member of STEP (the Society of Trust and Estate Practitioners) and an accredited member of Resolution (specialists in pensions and divorce). Richard also has good working relationships with accountants and solicitors and is often invited to speak at professional conferences. He believes in providing a holistic, professional and highly personalised service to help ensure his clients meet their financial objectives Website: www.blackstonemoregate.com

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EXIT PLANNING

Transition planning; why it is the marriage that really matters – and not just the wedding Louise Jeffreys, Managing Director at Gunner & Co., suggests that building a lasting, trust-based relationship with your business buyer is just as important as it is with your financial planning clients, if you are to achieve the successful transition you seek

To us, in our role as specialist mergers and acquisitions brokers for the financial planning sector, success looks like a good deal done. But what does that really mean in practice? All too often, as we work with both the business seller and buyer on an M&A deal, we find that both parties will focus very heavily on the details of the contract itself – what we refer to as the wedding - and nowhere near enough time on what happens next – the marriage.

It is clear that the most successful arrangements are not only where the details of the deal itself are mutually agreeable, but also the ongoing plan, for clients, staff, family members, suppliers etc. is practically and carefully planned.

34 •

Business Spotlight

Questioning the why At our seminars, keynote speaker Peter Craddock often references ‘questioning the why’. What he means is asking yourself searching questions about why are you looking to sell your business and what are you looking to achieve – for yourself, your clients, your team?

Without having such clarity at the start of your exit journey, it is impossible to measure that idea of a ‘good deal’ with any accuracy.

As you meet business buyers, and even once you’ve found someone who you believe is the very best fit to buy your business, you’ll find that there will have to be compromises made along the way. This is inevitable to reaching a mutually agreeable deal.

However, how do you create a frame of reference for when to compromise, and when not to (and to what extent you’ll risk losing the deal)?

Having absolute clarity over why you are doing this, and what you are looking to achieve, in advance, gives you that reference point from which to compare.

(maybe these are things you looked to escape when you set up your business) – such as 20 days holiday, and rigid working hours. Will you still be responsible for managing your current team, or will someone else become their boss? Will you be directed by targets and reporting? Larger organisations will often have more structure than the business you have led, and this is a mind-set shift you must prepare for.

Try to spend some time with other senior employees in the firm to observe the culture – having as many of your pre-meetings at their office will help. And remember to talk to your family about how your dayto-day availability may change as flexibility might be compromised. But, above all, it’s essential to talk with those taking control – not everything is set in stone, and usual working practises these days are probably much more flexible than before you set up your business.

If your plan is to retire, all buyers will still look for you to complete a transition period. Since your payments will almost always be based on client continuity, a successful transition is just as important to you as it is to your buyer.

Before the deal is complete, be sure that you and your buyer are in agreement as to what that transition looks like. Some examples In addition to having of questions which absolute clarity on why you spring to mind here are selling your business, and are: will you need to be available five days a what you are expecting to week or only at certain get out of it, it is essential you times? Will you work have a clear understanding from your office or of what life will look like their office? Is there on the Monday after the an official end date to the transition, or is it deal has been done based on completing specific tasks?

As you move progress through the journey to sell, from meeting perspective buyers, choosing preferred options, negotiating contracts etc., always take the time to question your why. This will give you the bigger picture perspective you’ll need, when all the questions are relating to what may seem to be tiny details.

If, for example, you are selling your business to spend more time with family, or improve your work/life balance, you may want to prioritise a short transition time over the weighting of financial payments.

Many people often feel they are being asked to work for nothing during this period. The reality is that the value you are offered for your business will be dependent on this transition. A buyer will not pay the market rate for a business without a genuine handover period – it would be deemed too risky.

That Monday morning feeling

A successful transition

No, I don’t mean any old Monday! In addition to having absolute clarity on why you are selling your business, and what you are expecting to get out of it, it is essential you have a clear understanding of what life will look like on the Monday after the deal has been done.

Whether you are retiring or working on, your business will be ‘aligned’ to the new business post the sale, and there are a lot of things to consider to make that process as smooth as possible, without affecting your all-important client service levels.

If you will remain working as part of the new structure, will that be on an employed basis? If so, it is likely to mean being bound to normal terms of employment

Again this is something you should be planning before your deal is completed, because you will want to be putting this into place from that first Monday morning.

Business Spotlight • 35

EXIT PLANNING

In this article, I aim to help you gain insight into this process by sharing with you some of the key topics of conversation and transition planning, that you, as a business seller, should have properly considered before selling your business to your chosen buyer.

Transition Planning – Your seven-point checklist: EXIT PLANNING

1 Role matching exercise If you have a large team, your buyer will want to identify any potential overlaps with their existing team. An exercise has to be carried out together to assess the amount of overlap of staff and understand the plan going forward.

Unfortunately, this may mean redundancies, which could be in the buyer’s business if your team is deemed better qualified for example.

Factors such as work location should be discussed here. If working from home or flexible working hours are currently the norms for your team, this may need to be reviewed to understand what impact such practises might have in the new environment.

2 Announcements to staff It is essential to have planned out how and when you will announce this significant change to your staff. Many sellers prefer to do this ‘once the ink is dry’ on the deal, however you then run the risk of the information leaking, and you not having control over the message. Discuss with your buyer what the best approach is, and also how they will be announcing this to their staff.

3 Client communications This is the backbone of any transition plan. My preferred approach is to segment your clients by their needs/size/ risk level, and develop the right communication plan for each segment. That could be a face to face meeting

with you, followed by a dual meeting with you and a new adviser if that is to be the case. It could be as simple as a letter and a phone call.

You’ll need to get this right.

In an asset purchase, following the FCA’s supervisory report a couple of months back, it is normal practice to get written consent from every client to change agency to the buyer before a deal can complete. Work with your buyer to understand how you are going to do this in the most effective way possible. Clients who do not consent will not be part of your final consideration calculations (how much you receive for the business).

4 Back-office data migration This is another essential - and laborious - element of a good transition. Talking about how you manage your client data right at the start helps to identify any challenges as early as possible. If you are fortuitous enough to use the same back office system as your buyer, the complexity of this task will be reduced. Be sure to set aside significant time with your buyer’s team to plan how this data migration will be executed, and remember to test the system and data significantly before declaring it complete!

5 HR, contract harmonisation and infrastructure Employment contracts are protected by TUPE law, so where an employee

is ‘transferring’ to a new company, their contractual obligations have to be honoured. Identifying any differences in standardised contracts between the buying company and the selling company is essential.

Furthermore, you and your employees will need to move onto the buyer’s internal systems, such as payroll, holiday calendars, sick leave procedures etc. There’s a lot of detail to think about, for example, perhaps your paydays don’t align – all of these things need to be planned and thought through.

6 Financial management As with client data and systems, accounting systems will need to be migrated or aligned.

7 Supplier relationships It is likely that your buyer will not want to maintain relationships and contracts with your current suppliers. A simple exercise of running through your detailed P&L accounts, and specifically your cost base, will allow you to identify your suppliers. Bear in mind any notice periods and break clauses to switching these off – and review them with your buyer before making the final decision which get shut off. It is likely there will be clauses in the contract for this to have happened.

In summary, the more you can plan ahead then the easier and more successful the transition to the new business will be for everyone concerned.

Louise is the managing director of Gunner & Co., the boutique M&A brokerage service supporting financial planners to define and undertake exit planning, and equally with financial services businesses looking to grow through acquisition.

Email: louise.jeffreys@gunnerandco.com Web: ww.gunnerandco.com

36 •

Business Spotlight

ADVISER RECRUITMENT

Times like these adviser recruitment in 2017 As we head into the final quarter of the year, when it comes to adviser recruitment things are looking up for IFAs. Steve Preston, Managing Director of Heat Recruitment, explains

With all the regulation updates and consultation papers coming from the FCA recently, advisory firms and advisers themselves are certainly being kept on their toes to stay up to date with major changes.

This is surely good news for the end client.

As a specialist recruitment business, we have noticed that acquisitions seem to be becoming increasingly more common across the adviser landscape. There are a good number of retiring advisers laying the path of opportunity for other advisers to build their client base and further their careers.

Packages are changing We are certainly seeing a rise in employed positions amongst many of the adviser vacancies which are coming through. Last year, self-employed packages were flooding the market but now employers seem to be recognising the benefits of hiring staff on an employed basis to work with clients.

There are also new bonus structures being advertised for ‘step up advisers’, these are people coming from a paraplanning background and who are looking to move into an advice role - or even newly qualified people. The typical validation seems to be round 3x salary but we have taken roles with packages for new starters from 2x.

When it comes to the packages and incentives which are made available to individuals when joining a company, ‘perks’ seem to be on the increase. Examples of the kinds of things on offer are more study days, bonuses for passing exams, pay rises in line with exam results and even promotions. Companies also seem to be more relaxed about flexible working patterns and

even working from home. If your business is looking to recruit, then all these things should be borne in mind.

Most companies will always look at an IFA with transferable client base. I think that there are more companies which will now look beyond this and don’t need ‘x’ number of clients or ‘x’ amount of funds under management when recruiting. Refreshingly, they look at what the individual is capable of achieving, ask them to present a business plan and then look to assist them with achieving their goals once they find the right person.

Growing competence and professionalism In terms of the regulated environment, in my opinion there will be more and more jobs becoming available as companies are growing, some at a rapid pace. We see more and more advisers working towards Chartered status and other advanced-level qualifications.

People are continuously looking to further their qualifications and their technical knowledge. As more exams become available, I think this will only accelerate the learning curve. The question is how will people get their qualifications in the future and which syllabus will they choose to study?

More and more companies are recognising that using recruitment agencies is a great way to bring talented advisers, paraplanners and support staff into their business. They can negotiate the best deals and really listen to what an adviser or paraplanner actually wants and needs from a new position, hence creating that symbiotic relationship. As with all recruitment, it isn’t about pushing round pegs into square holes, it’s about creating that perfect fit for building a long-term and mutually rewarding professional relationship.

Business Spotlight • 37

PLATFORMS

Platform due diligence How can you make sure you have constructed a robust process within your financial planning business for platform due diligence?

Mark Polson, Principal at the lang cat, takes a practical look at the dos and don’ts of getting this key decision right

38 •

You know how when you stare at certain words for long enough, they stop looking like real words?

That’s how I feel about the phrase ‘due diligence’.

We’ve all said it so many times that it’s sort of lost meaning and now is just a sort of shorthand for ‘picking stuff to use’, or also ‘a pain in the ass’.

what we’re talking about when picking a platform or a DFM or whatever isn’t due diligence as it exists in, like, the proper world. That’s a process that companies go through before investing in or buying other companies, and if advisers had to go to that depth on pretty much anything you’d all be shutting up shop.

So in this piece I thought we might try and reconnect with the process and remember what it’s all about.

Before I get going, it’s instructive to remember that

OK. So let’s address a few common misconceptions, and then get into how to construct a decent due diligence process. Here are some things that you don’t have to do:

Business Spotlight

You don’t have to pick the cheapest.

Something that’s cheap and unsuitable is still unsuitable

5. Be wary of providers’ own DD documents.

Most are brochures in hiding. They’re sometimes good for stats though.

6. Make it a formal document.

7. Discuss it and adopt it formally at a board meeting.

8. Have a named owner for the document and ideally have its maintenance as part of documented objectives for that owner (this helps show you’re taking it seriously) 9. Refresh it periodically – about 1218 months should be fine, or when there’s a big change in the market.

1. You don’t have to do an in-depth assessment of every provider in the market. If there are propositions that are obviously unsuitable then it’s fine to discount them (but keep a note that you’ve done that).

2. You don’t have to create a 200-page monster.

3. You don’t have to pick the cheapest. Something that’s cheap and unsuitable is still unsuitable.

4. You don’t have to do huge tick-sheet grids of functionality. Most platform functionality has little or nothing to do with client suitability.

There are probably more, but that’ll do for now.

In one sense, the lang cat house view on DD is that it can now really be boiled down to two questions. Here they are: 1. Is this platform a secure home for my clients’ investments?

2. Does it allow me to deliver my service proposition to my clients and fulfil their financial plan?

6. Outsource your DD. It’s perfectly feasible to do it yourself.

I didn’t say they were easy questions. As you pull at each one you will inevitably end up with lots of sub-questions, and they’re valuable. It’s by aligning the things you ask platforms to these two areas that you’ll ensure you’re concentrating on suitability; you’ll stick to your agenda and not the agenda of a provider, or someone else.

And here are some things I reckon you do have to do:

Let the fun begin

1. Record every decision you make. If you think that Platform A is plainly unsuitable because it smells of fish or something, then WRITE IT DOWN.

Once you’re ready to start, here’s how we do it. We start with a clear definition of the client segment we’re looking at, and a list of requirements (there is proper work involved in this; it’s actually the hardest part of the process). We mark these as ‘adviser’ or ‘client’ – cool back office integration is something you care about; price or a client mobile app is something a client might care about. Each set needs to be ranked as high/medium/low-ornice-to-have. This will be important later. Group your client highs and adviser highs together, client mediums and adviser mediums and so on.

5. You don’t have to insert a mini DD pack into every suitability report.

2. Make sure to do the exercise for each client segment you have. What works for one won’t necessarily work for another.

3. Have proper rationales. The fish thing in point 1 was a joke. Here are some things that aren’t reasonable to discount platforms on the basis of: a. They’re going to nick my clients b. I only want platforms with over £xx bn c. I don’t like life companies d. The BDM flirted with my wife at the last golf day

What we’re going to do is operate a sort of ‘pass’ structure. We’ll go through the market once for the highs, and knock a load of providers out.

Then it’s the mediums, and then the lows.

Business Spotlight • 39

PLATFORMS

4. Document your sources. If you use, for example a fine resource like the lang cat’s free Platform Directory (www.langcatfinancial. com/platform-directory) then keep a note of that. It’s fine to use free resources as long as you satisfy yourself that they’re up to date. Ours is.

PLATFORMS

Make a list So you’ll need a list of all the providers in the market.

If you don’t have one you can find it on our website.

Once we’ve got that, you can start measuring providers against your requirements. This is where you’ll either have had to do a load of primary research or use secondary sources like the lang cat’s platform directory (others are available but they’re not as good, obviously).

You should resist a binary answer for each requirement.

Platforms are far too nuanced; they resist easy classification. We like to use the venerable Harvey Ball method; you might score from 1-4 or something like that.

If you do, and 4 is good / 1 is bad, then you can tot up scores once you’re finished with the highs. You need to draw a line at this stage and knock a load of companies out. Be brutal. Don’t have any more than, say, 12 or 15 left at this stage or you’ll go crazy. If you’re unsure if someone should go through, look at the balance of client and adviser requirements. If they’re deficient on the client side – bin them. If they’re missing a few things you’d like but they do a decent job for the client – keep them.

Whittle it down I should mention that the whole market list can be winnowed down if you have really clear reasons for not using someone. So, for example, if your model portfolios use ETFs, you can just knock out any platforms that don’t offer them. No point in including them at all. Just document it.

OK, so now we have a reduced pool. It’s time for the mediums. You’d hope to get rid of another 5 or 6 here.

Then repeat for the low or nice-to-have stuff. At the end of this process you should have a shortlist of no more than 4 or 5 platforms – and maybe even fewer.

Time for a deep dive Once you’ve got a short list, it’s time for a deep dive.

In our DD work, this is when we start contacting platforms with specific things we might want to know.

This could include details of any special pricing deals we might be trying to negotiate on the adviser’s behalf, or any bespoke requirements. Oftentimes we’ll have

quite detailed process questions – it’s a great idea to get administrators from your practice involved.

That point about only contacting a few platforms is really important. I’ve seen many firms send 400 question Excel sheets to 20 providers. Even if they agree to fill them out, what are you going to do with 8,000 data points? Nothing, that’s what. So don’t bother. Use resources, and only bother the platforms with the stuff you can’t find out. It’s fairer on them, and will get you better quality answers.

Identifying winners So as long as you follow this process, and write down every decision you make (‘we discounted Platform B on the basis that in comparison to Platforms C, D and E it requires too much paper-based confirmation for commencing drawdown, which we believe will delay income to clients and will be frustrating for them.’) then you’ll be in good shape. We normally find that there are either one or two clear winners. We don’t normally play platforms off against each other on price; that’s bush league stuff. Find who you really want to use, and if you have a commercial case then go into a negotiation with a genuine intention to use that kit if the price is right. Again, it’s a fairer way to do business.

This process, done right, will probably take you 5-10 working days. We do it a little quicker because we’re used to it, but it is time-consuming if not actually the hardest thing in the world to do right. I don’t think you can rely on a system to give you the answer, before you look for short-cuts, but some of the systems out there can be useful resources for proposition detail.

In the end, what the regulator wants is evidence of a structured thought process and a mind at work. It’s fine for your business to have views, and needs, and to bring them to the process. But the client suitability aspect has to trump everything else, and so in your documentation you must present it in that way.

So there you go. I don’t know if this is the best way to do DD, but it’s how we do it and it seems to work. Go forth and be diligent.

Mark is the founder and principal of the lang cat, a specialist platforms, pensions and investment consultancy.

The lang cat works with platforms, life companies, fund managers and large advisory firms helping them develop new propositions, turn marketing strategy into action and articulate their services in such a way that people without a financial services degree have a hope of understanding them. Bit by bit it aims to make the industry just a little less corporate and a little more human.

40 •

Business Spotlight

Mark is a prolific writer, contributor to the trade press and public speaker, even when people ask him not to be.

He doesn’t play guitar as much as he’d like and spends more time than is reasonable going to gigs aimed at people considerably younger and more tattooed than him.

Twitter: @theactualpolson

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Twenty Four Seven IFA Magazine, Britain’s premier online portal and print publication for financial advisers, has launched its ver y own app designed to help you stay up to date with all the latest financial and economic news as it happens.

Main Features: Reviews Features Funds Market and Economics Trading Expert FCA Compliance Jobs

RECORD KEEPING

Facing the inevitable Neil Martin takes a look at View Consultancy and its new iConnect system, which could change the way in which advisers handle client meetings

42 •

Business Spotlight

Yet currently there are few options for an adviser wishing to make a 100% accurate record of what was discussed. The piece of paper with tick boxes which is then buried in a file has obvious flaws, so is using a smartphone or dictaphone (imagine losing that and finding all your client files in someone else’s possession).

But one company thinks it has the answer, one that has been tried and tested within healthcare, corporate training and the education market for several years now.

Ideal solution iConnect, supplied exclusively to the financial services market by Bristol-based View Consultancy, is an application which sits on an adviser’s iPhone, or iPad (the software is fully iOS compatible) and allows an audio, or video file to be made of a meeting. The file is not stored on the device itself, but is uploaded immediately to the secure online platform. At this point, if desired, the file can be linked into a client record on a firm’s CRM system.

Once the meeting is complete, the file is in the cloud, safe and sound. It’s more secure than a client ringing a firm and the phone system recording the call.

Damien Kelland, Director of View Consultancy, explains: “Once uploaded, the file can also be immediately viewed by the compliance team. They can review the meeting and pre-empt any complaints.

“Think about the benefits for say a network.

They have to send a compliance person out several times a year with each of their advisers; iConnect would negate the need to do that, and then they could pick and choose which of their network advisers they listen to at any point.”

Client interviews Kelland comments: “The recording of phone calls is starting to happen, but actually the next step is for advisers to record as much client communication as possible, for both training development and compliance purposes.”

As well as it being hugely reassuring for clients who may be worried about what they are being told at meetings, such a system is ideal for training and development purposes – as many firms are already experiencing – so that new or inexperienced staff can see how meeting should, or should not be conducted, and would also allow them to develop their soft skills when it comes to talking to clients. It’s also a great way to keep other members of the team like paraplanners for example, in the loop as to the exact discussions which took place. There are also long-term potential benefits from possible PI cost reductions as risks are reduced Unified communications package View Consultancy not only offers iConnect, but also provides qualified change management consultants who can advise how such a system is used. They also partner with a number of suppliers which enables the provision of a unified communications package. By using the iConnect system alongside a call recording tool, advisers are able to securely store, retrieve and monitor all client communications – whether phone based or face to face.

Currently there are few options for an adviser wishing to make a 100% accurate record of what was discussed

Business Spotlight • 43

RECORD KEEPING

Regulators are well aware that with such important decisions being made at client meetings, a fool-proof record needs to be made of what is being agreed. It is only a matter of time before advisers need to start digitally recording their meetings with clients.

SPONSORED FEATURE

Aiming high Mole Valley Asset Management argues that investing in AIM is about much more than attractive tax breaks

MVAM are breaking the mould of the traditional asset management market in the UK, and that extends to the AIM market too. Based in Dorking, the firm works closely with advisers and their clients to create bespoke portfolios which are invested directly into the markets, as well as running an AIM IHT portfolio service which is attracting attention. As Craig Harper, Managing Director at MVAM comments “It’s important for us that the clients and their advisers can have a real relationship with their portfolio manager who invests directly into the markets on their behalf.

There is no-one else between them and their money.

It’s all about making institutional-level investment expertise available to the ordinary person.”

44 •

Business Spotlight

Taking AIM One area of particular success is the AIM IHT portfolio, which is proving popular with advisers as part of their estate planning work.

With the majority of companies listed on AIM qualifying for business property relief, exemption from inheritance tax after two years is a particular attraction here. Stellar performance over its first twelve months since June 2016 also supports the case, with the portfolio rising 73% over the period.

Portfolio construction The UK and European markets are screened for investment ideas, with the team looking for various ‘signals’, positive and negative, that indicate in which direction company valuations might be moving.

The team’s attention is then focused on a small number of stocks and shares where deeper analysis is needed. If those still make the grade, the risk level is assessed and then the investments are made for the clients for whom they are deemed most suitable.

So with particular expertise in smaller and mid-cap stocks, are MVAM finding value at the moment or are things a bit pricey?

Again their investment approach works well here, as Harper explains: “Here, our competitors tend to be much larger than us.

For them, they have to own 20 or 30% of a stock for it to be meaningful in their portfolios. If that position goes wrong for them, they can’t get out. Because of our size, it is easier to exit a position and can do so with less impact on prices. There are fewer liquidity constraints for our investors and this flexibility gives us a huge advantage when it comes to performance.

“In the portfolio we hold just 20 stocks, which is enough to gain diversification as they are all in different sectors. The target is to keep those stocks for the long term but with periodic rebalancing, if appropriate.

We look for robust growth stories, carrying out top-down analysis for our themes as well as bottomup analysis - and meeting company management whenever possible. If the balance sheet fits what we’re trying to do, we can also go into smaller AIM shares. We believe our annual management charge of 1% +VAT is at the bottom end of the range.”

Business Spotlight • 45

SPONSORED FEATURE

Harper agrees that these markets have moved a long way of late, but he still sees strong secular trends out there. He comments “We are pan–European investors so we have a universe of around 2000 stocks to choose from. We hold around 70 so we are simply looking for the best picks. There are always opportunities to find mis-priced stocks - it’s just about finding them. That’s not to say the direction of the markets is irrelevant of course, but within that there are always opportunities to find good companies trading on favourable terms. It is difficult for larger fund management groups to replicate this.”

DIRECTORY

Directory of investment solution providers

AJ Bell 4 Exchange Quay, Salford, Quays, Manchester, M5 3EE 0345 40 89 100

Newscape Capital Group 86 Jermyn Street, London, SW1Y 6JD 020 7024 4810

Bordier UK 23 King Street, St James’, London, SW1Y 6QY 020 7667 6600

Nedbank Private Wealth Millennium Bridge House, 2 Lambeth Hill, London EC4V 4GG 020 7002 3600

Brooks Macdonald Group plc 72 Welbeck Street, London, W1G 0AY 020 7499 6424

Cofunds limited Level 43, The Leadenhall Building, 122 Leadenhall Street, London, EC3V 4AB 0345 604 4001

EQ Investors Centennium House, 100 Lower Thames Street, London EC3R 6DL 0207 488 7181

Hawksmoor Investment Management Limited The Senate, Southernhay Gardens, Exeter EX1 1UGE 01392 410180

Hera Indemnity Limited 68 Lombard Street, London, EC3V 9LJ 0207 868 2494 enquiries@heraindemnity.co.uk www.heraindemnity.co.uk

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Business Spotlight

Prospect Wealth Management Plough Court, 37 Lombard Street, London, EC3V 9BQ 020 7392 2800

Psigma Investment Management 11 Strand, London, WC2N 5HR 020 3327 5400 lee.mcdowell@psigma.com www.psigma.com

Rathbones 8 Finsbury Circus, London EC2M 7AZ 020 7399 0399

Raymond James Broadwalk House, 5 Appold Street, London EC2A 2AG 0203 798 3133

Sarasin & Partners LLP Juxon House, 100 St Paul’s Churchyard, London, EC4M 8BU 020 7038 7000

Sharing Alpha 00 972 502465303 oren.kaplan@sharingalpha.com www.sharingalpha.com

TAM Asset Management Ltd City Tower, 40 Basinghall Street, London, EC2V 5DE 020 7549 7650

Transact 29 Clement's Lane, London EC4N 7AE 020 7608 4900

Wellian Investment Solutions 77 Mount Ephraim, Tunbridge Wells, Kent, TN4 8BS 01892 550600

Zurich Intermediary Group Limited The Grange, Bishops Cleeve, Cheltenham, GL52 8XX 08085 546 546

Alliance Trust Savings (ATS Wealth) PO Box 164, 8 West Marketgait, Dundee, DD1 9YP 08000 326 323 www.alliancetrustsavings.co.uk businessdevelopment@alliancetrustsavings.co.uk Alliance Trust Savings (ATS) is an award-winning platform provider with over £15bn AUA (May 2017). We offer advisers and their clients SIPPs, ISAs and Trading accounts along with an unbiased choice of over 4,000 different investments including funds and shares, with real time trading in securities, investment trusts, exchange traded funds, gilts and bonds.= We are also the only flat fee platform provider for advised clients – as their investments grow, their account fees won't. Discover the flat fee difference today. Capital at risk.

Beaufort Securities Limited 63 St Mary Axe, London EC3A 8AA 020 7382 8300 Costas Constantinou - costas.constantinou@beaufortsecurities.com www.beaufortsecurities.com Online Share Dealing, Advisory Stockbroking, Stocks & Shares ISAs, Junior ISASs, SIPPs, CFDs, IPOs & Share Offers, Corporate Bonds, Inheritance Tax Portfolio, Probate Services, Enterprise Investment Scheme (EIS) and International Trading.

Charles Stanley 55 Bishopsgate, London EC2N 3AS 0207 149 6416 www.charles-stanley.co.uk Becky Hancock - becky.hancock@charles-stanley.co.uk Our focus on clients has endured since the foundation of Charles Stanley in 1792. Building our business on experience and quality service, we have over 20 offices across the UK and an in-house research team based in London. We are independently owned and as at March 2017 manage and administer £24 billion. Charles Stanley’s investment services are designed to give you the time to look after the personal and professional relationship with your clients whilst we, operating within your agreed parameters, take over the responsibility of looking after their investments. Better support for you, better investment solutions for your clients.

Business Spotlight • 47

DIRECTORY

Tatton Investment Management 125 Old Broad Street, London, EC2N 1AR 07825 613 010 Alex Antonius - Chief Investment Consultant www.tattoninvestments.com

Thomas Miller Investment 90 Fenchurch Street, London, EC3M 4ST 0207 204 2864

DIRECTORY

Collegiate Underwriting 2nd floor, 18 Mansell Street, London, E1 8FE 020 7459 3456 www.collegiate.co.uk/ifa Richard Turnbull - richard.turnbull@collegiate.co.uk Collegiate are committed to IFAs. We are the only insurer to provide PI cover to IFAs consistently for over 25 years without a break – a record none of our competitors can match. Collegiate clients have had total satisfaction in knowing that we have never withdrawn from the market and left them exposed. Benefits: • Direct contact with the underwriter • Interest free premium instalments • Coverage - our standard policy does not exclude Insolvency, Market Fluctuation, Regulatory Directives or specific products • Industry leading claims service • A rated policy security

FE Invest 2nd floor, Golden House, 30 Geat Pulteney Street, London, W1F 9NN 020 7534 7667 www.feinvest.net Kaavya Dijendranath - kaavya.dijendranath@financialexpress.net FE Invest, FE’s range of discretionary model portfolios offer Advisers investment options to suit a wide range of investor risk profiles and a variety of investment objectives. The suite of risk-optimised portfolios are built using a unique investment process driven by our industry renowned ratings system, comprehensive fund data and cutting edge technology with the oversight of experienced professionals. This ensures that the portfolios are well optimised within their risk bands and are completely free from bias. What’s more is that as a complete investment service, Advisers are provided risk profiling tools to establish portfolio suitability and the ability to create comprehensive white-labelled portfolio reporting.

GAM (U.K.) Limited 20 King Street, London, SW1Y 6QY 020 7393 8847 Aleksandra Ourris - alex.ourris@gam.com www.gam.com GAM is one of the world’s leading independent, pure-play asset managers. It provides active investment solutions and products for institutions, financial intermediaries and private investors. The core investment business is complemented by private labelling services, which include management company and other support services to third-party institutions.

GAM employs around 1,000 people in 13 countries with investment centres in London, Cambridge, Zurich, Hong Kong, New York, Lugano and Milan. The investment managers are supported by an extensive global distribution network.

Howden 16 Eastcheap, London, EC3M 1BD 0207 6233806 www.howdengroup.co.uk Iain Middle - iain.middle@howdengroup.com Howden are one of the most respected PII brokers to the financial service sector trusted with placing over £30m worth of premium a year. We pride ourselves on having the following: • Strong relationships with insurers that enable us to provide our clients updates on their current concerns and expectations.

• A team focused exclusively on the FCA regulated sector that has decades of experience.

• Exclusive access to various facilities with insurers enabling preferential terms on our wordings.

• A professional in-house claims team that provides specialist guidance.

• A long history of representing many of the UK’s top 100 financial advisors.

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Business Spotlight

Our fully tailored proposition is designed to help IFAs with the thinking, developing, adopting and ongoing suitability when they’re considering developing a discretionary investment proposition. Designed to help IFAs retain control, while enhancing their investment proposition and investment governance. We help smaller IFA Firms decide for themselves what a new discretionary management proposition should look like, who should provide it and whether to engage as an investment partner or a buyer of discretionary products. It is this approach that ensure the IFA retains control and their vital role as the investment consultant to their clients. If you are a small firm we believe the best way is to work with a discretionary manager who is prepared to help you make the transition away from advisory portfolios and an investment partner who understands IFAs, and the DFM marketplace, thus enabling you to make the right decisions for your IFA practice and your clients.

JM Finn 4 Coleman Street, London, EC2R 5TA 020 7600 1660 Mike Mount www.jmfinn.com Founded in 1945, JM Finn has been managing client portfolios for nearly 75 years. The success to date is founded upon a commitment to complementing a quality investment management proposition with first class client servicing. This is echoed today as intermediaries look to us to outsource their investment offering to an award winning manager who's clients value the personal service that we offer in a client-focused environment.

Discretionary Portfolio Management, Inheritance Tax Portfolio Service, Managed Portfolio Service, In-house administration, Online valuations and document store. Award winning investment management services, where your relationship is with an investment manager, allowing for a highly personalised investment service.

Myddleton Croft Investment Managers No. 1 Airport West, Lancaster Way, Leeds LS19 7ZA 0113 274 7700 www.mcim.co.uk Julie Jones - julie.jones@mcim.co.uk We offer bespoke discretionary investment management for individuals, trusts, pension funds, charities and their advisers across the UK. We practice true diversification, analysing all asset classes and selecting what best fits our investment outlook at any time. We look at risk and return together and assess whether new investment brings low/ negative correlation to existing assets, thereby reducing the portfolio’s risk level. We also provide a range of risk rated model portfolios on various platforms. We do not provide any financial planning advice, clients of advisers remain their clients and we work closely with adviser firms to understand business needs to complement existing adviser investment solutions.

Business Spotlight • 49

DIRECTORY

IPS Capital 4 Eastcheap, London, EC3M 1AE 07557 341005, 020 74696830 www.ipscap.com/ George Moorey-Denham, gmooreydenham@ipscap.com

DIRECTORY

Mole Valley Asset Management St Martin's House, St Martin's Walk, Dorking, Surrey RH4 1UW 01306 776985 https://mvam.com Craig Harper - craig@mvam.com Andrew Holder - andrew@mvam.com John Baillie - john@mvam.com Mole Valley Asset Management is a new type of Investment Company that is breaking the mould of the traditional asset management market. Based in Dorking we invest our clients’ savings directly into the markets.

Our clients can get to know their portfolio manager personally, ensuring the investments we make are suitably focussed without having to spread investments too widely or compromising returns. Clients are encouraged to keep in touch with their savings with our dedicated app and monthly reports. We are investment people and we love what we do. What we didn’t love was traipsing up to the City every day to work for companies that were only interested in how they could make money out of their clients. We think it should be the other way around.

We offer managed portfolios, including savings held in tax efficient wrappers such as ISAs, JISAs, SIPPs or SSASs. We build bespoke portfolios for our clients, tailored to their individual dreams, aspirations and financial circumstances.

We also offer an AIM-IHT portfolio of just 20 shares, which has gained just over 73% in its first year (launched on 1st June 2016), and a Large Cap Top 20 portfolio. Both of these portfolios are available on the Transact platform.

• • • • • • •

MVAM isn’t just another faceless institution. We require a real relationship with our clients.

We are honest about risk. To us, benchmarks are things to beat, not to cosy up to.

We use a process driven, stock-picking approach. We invest directly into the markets.

There is no-one else between us, our clients and their money Our bespoke portfolios are tailored to each client.

We are happy to be held accountable, with regular client meetings and monthly reporting.

There are no entry or exit fees. Fees are aligned with performance, are fair and transparent.

Old Mutual Wealth Old Mutual House, Portland Terrace, Southampton, SO14 7EJ 0808 171 2626 www.oldmutualwealth.co.uk/adviser/ Andy McGeown - andy.mcgeown@omwealth.com We are a leading wealth management business in the UK, helping to create prosperity for the generations of today and tomorrow. We offer a range of investment, pension, and protection solutions delivered by Old Mutual Wealth; asset management solutions delivered by Old Mutual Global Investors; and discretionary investment management delivered by Quilter Cheviot. In an ever-changing regulatory landscape, it’s crucial that you stay ahead of the game. We are here to give you the support and technical expertise you need to help you maximise opportunities for your clients. Our aim is to be your most trusted partner.

Parmenion Investment Management 2 College Square, Anchor Road, Bristol BS1 5UE 0117 204 7600 www.parmenion.co.uk mail@parmenion.co.uk Parmenion is an integrated discretionary portfolio manager and technology platform. Investment solutions range from fully active Tactical portfolios, through our active/passive blended Conviction portfolios to a range of Ethical portfolios, all at 10 risk grades. Our Guardian portfolios have been specifically designed to handle the stresses of drawdown.

Our Tactical Income portfolio range sets income targets in ten steps of 0.25% from 3.25%-5.5%. Numerous other options exist, including solutions bespoked to individual firms, with and without DFM permissions. Parmenion’s platform offers GIA, ISA, JISA, SIPP, Junior SIPP, over 30 third party SIPPs and SSASs, Offshore and Onshore bonds.

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Business Spotlight

The world's leading financial advisers, investment managers, institutions, accountants and product providers use Praemium to manage or administer over $80 billion (£40 billion) worth of investment globally across more than 300,000 accounts.

Seven Investment Management (7IM) LLP 55 Bishopsgate, London EC2N 3AS 020 7760 8777 Jamie Evans - jamie.evans@7im.co.uk www.7im.co.uk We're Seven Investment Management (7IM) and help professional planners build their businesses. We deliver great service through a cost conscious and common sense approach. We look after around £11bn of our clients' and own investments, with more than 240 of our people taking care of it all.

We work with professional intermediaries who are seeking a long term relationship. It's not just money we run on a long term view. Our approach aims to provide you what you need: onshore or offshore investments ; active or passive funds; model portfolios; discretionary services; the 7IM platform and our award-winning app, 7IMagine.

Whitechurch Securities Wealth Managers The Old Chapel, 14 Fairview Drive, Redland, Bristol BS6 6PH 0117 916 6193 www.whitechurch.co.uk Emma Warren - dfm@whitechurch.co.uk Whitechurch Securities Ltd is a wealth management boutique firm, providing DFM solutions since 1990. We work exclusively with financial advisers to provide a range of competitively priced services; from low entry model portfolios to bespoke solutions for high net worth clients.

We offer a transparent and competitive pricing structure. Our investment portfolios are impartially constructed and administered in-house; shaped by high quality research and sophisticated risk management.

The Whitechurch Investment Team is highly regarded in the industry; our high standards are underpinned by leading industry ratings; our services have won a succession of awards; and our investment managers are widely quoted in the media for their expert views.

View Consultancy F03A, Kestral Court, Harbour Road, Portishead, Bristol, BS20 7AN 01275 390616 www.viewconsultancy.co.uk Damien Kelland - damien@viewconsultancy.co.uk View Consultancy focus on the provision of innovative hardware and software applications to the Corporate market.

Business Spotlight • 51

DIRECTORY

Praemium Ltd F03A, Kestral Court, Harbour Road, Portishead, Bristol, BS20 7AN 01275 390616 www.praemium.co.uk Rebecca Murphy - rebeccamurphy@praemium.com

Make It Your Business

The tax efficient investment market has changed significantly in recent years.

There has never been a better time to get involved, as high value clients are gaining interest in this sector and it’s exactly where you can add tangible value.

Complex structures and investments with higher risk profiles mean that clients would benefit from your advice. Without it, they may invest anyway and could make ill-informed decisions, whilst dis-intermediating you from the process and reducing your revenue potential.

Whether you’re already advising on SEIS, EIS, BPR or VCT products, or perhaps considering them for your clients’ portfolios then contact us at GrowthInvest. We’ll show you how you can consolidate historic investments onto our platform and build a diversified portfolio from a wide range of managed fund or single company investments. Through our intuitive online platform you’ll be able to offer your clients exclusive access to real portfolio growth, secure in the knowledge that these government-backed schemes offer unique tax efficiencies.

Visit us to learn about the products, the pitfalls and how best to advise on this dynamic and evolving sector.

So make it your business, before someone else makes it theirs...

Find out more at growthinvest.com