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Charter to the cause

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Whitechurch Securities client services director Mark Stone has been instrumental in preparing the traditional commission-based business for the RDR arena and describes the difficult decisions that have been made on the way to creating a tiered service proposition. Interview by Cherry Reynard

Whitechurch Securities is a well-established member of the West Country financial advice hub. The group began life in 1982, founded by Kean Seager, who remains chairman of the group. But its lengthy history has also presented some challenges in preparing for the rigours of the post-RDR world. Its size and the scope of its legacy business has left it a bigger hill to climb than most. It now, along with just 3 per cent of firms, holds chartered status from the CII. How has it got there?

Mark Stone, client services director at the group, has provided much of the energy behind the change. Whitechurch has, for some time, comprised two clear divisions - a discretionary side and an advisory side. On the discretionary side, there are now no commission payments, simply a custodian fee and the fund management fee, plus what each financial adviser agrees with the client. The advisory side will continue to focus on providing fully independent financial advice,

Stone and his team have had the long haul of shifting a traditional, commission-based model to a fully-compliant, chartered business. Part of this has been the conversion to fees. On the advisory side, all fees are now agreed. Stone says this has not been without its problems,

“Historically, we took competitive levels of commission from contracts and most clients were happy with this arrangement. As we have made the shift, we have helped them understand properly how the fee was paid and how it would be paid in future. There is no doubt that we have had some difficult discussions.

“A number of clients wanted to be shown exactly how the change benefited them.We found that we needed to educate clients to show them that it was never free, they were paying for it one way or another.”

This exercise was pursued on the back of a client segmentation exercise and the group has now built a tiered service proposition,

Stone says: “For example, on the discretionary side, we already have in place a full review process built into the service. In addition, we have our advice with review offering for those clients who want a portfolio that they have the final say on where investments are made. Then there are those who do not want a full service but need the odd transaction.”

He says they are still waiting for clarification on cash rebates on platforms, which will affect how they build their final proposition, but adds: “We are clear, however, that if we are offering a service for clients going forward, we need to have their portfolio on our discretionary platform or a thirdparty platform or a supermarket.”

As part of creating this service proposition, the group has built the Whitechurch Service Charter.

Stone says the group can offer a discretionary fund management service for as little as £3,000. For the time being, it is also happy to deal with all types of client on the advisory side, from a £10,000 Isa upwards. He says: “We have got the process in place to deal with these people.”

’The supermarket space is one area where big seems to be beautiful’
This flexibility comes from having the right platform in place. Whitechurch’s discretionary platform is now well established. It uses a system called Pulse for its administration and is looking to enhance the back-office systems for advisory clients.

It also uses a number of the major fund platforms, including Cofunds, Axa Elevate, Fidelity and Skandia. Stone says that in choosing the group’s platform partners, they have sought providers that are both cost-effective and likely to be around for the long term. “The supermarket space is very cluttered and you need to ensure that you only go through the process once. It is the one area where big seems to be beautiful.”

Whitechurch’s existing client base is the traditional blend of retirees and pensioners. In terms of building the client base for the future, it has established a proposition for retiring IFAs. Stone says: “There are plenty of IFAs who don’t want to go through RDR. We take on their clients and pay a percentage of their renewals or an income for life, whichever they prefer. We are also picking up some generalist IFA practices. We look at these IFAs on a client base by client base basis. We have not got a one-size-fits-all approach. We have quite a number of these deals in the pipeline. There is less than a year left to the RDR and a lot of people need to do something.”

However, the group will undertake traditional marketing activities as well. All senior staff members are active in the media. They also have regular mailings and a quarterly newsletter to clients.

The IFA team is relatively young compared with its peers, with an average age of early 40s, and they are looking to increase the size of the advisory team in line with the growth of the retired IFAs.

For Stone, achieving chartered status was a statement of intent. He says: “It is a lot of hard work but we had the mindset to go down that route. There are only around 350 companies in the country that have got it. For us, it was a clear demonstration that we are going to be here post-RDR. We also believe that ultimately the chartered title will be the gold standard for clients seeking financial advice.”

Whitechurch Securities

Established: 1982
Based: Bristol
Fee-based? Yes
Outsourced investment management? In-house discretionary fund management service
Platforms: Cofunds, Axa Elevate, Fidelity and Skandia
Client base: The at retirement market but also taking on the client base of retiring IFAs.
Status: Chartered

Key points

  • Whitechurch Securities began life in 1982, founded by Kean Seager, who remains chairman of the group The group now holds chartered status from the CII
  • Whitechurch has comprised two clear divisions - a discretionary side and an advisory side. On the discretionary side, there are now no commission payments, just a custodian fee and the fund management fee, plus what each financial adviser agrees with the client. The advisory side will continue to focus on providing fully independent advice
  • The group has had a process of re-education of its client base in its conversion to fees The group’s offering is built on the Whitechurch Service Charter.
  • Whitechurch’s existing client base is the traditional blend of retirees and pensioners. It has also established a proposition for retiring IFA

The Whitechurch Service Charter

  • We will handle all dealings between you and the provider.
  • You will have a contact point for personal changes such as change of address or marriage
  • You will have a contact point for all changes to the product such as alterations or encashment
  • We will provide quarterly newsletters covering company and market changes, existing services and new services
  • You will have contact by an adviser for all reviews that are mandatory under FSA regulations
  • You will receive market, legislation and product information, as deemed relevant.
  • You will have access to a phone, mail and email contact point for any general or advice queries you may have
  • You will receive a customer questionnaire on each new transaction.
  • Products and Services will be maintained with ongoing research and due diligence
  • Platform or off-platform products will both be available, whichever is the most suitable

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