The managing director of Financial Express says the company is rebranding this week to unify the business and show that it has moved from being a firm that used to make the bricks to being the architects building the houses Interview by Rachael Adams
Financial Express managing director Michael Holland has never regarded investing as a particularly hazardous practice but then he did spend three years of his career in the bomb disposal business.
“My business partner and myself bought an engineering company that specialised in it in 1991,” says Holland. “We went to the French Naval Establishment at Brest to watch robots blowing up cars containing suspected explosive devices.”
Before investing in bomb-detonating robots, Holland’s career was more traditional. “I read economics at university and then joined Citibank’s graduate training scheme because it was the best bank at the time. It taught me about what companies do to succeed, which has been useful in Financial Express’s ratings work.”
His role as co-creator of back-office system LSD Software has been equally useful in making a success of Financial Express. LSD was founded when an IFA friend of Holland’s came to him looking for a computer program to hold his client records instead of using index cards.
“I had got into computers because I was single,” he jokes. “My business partner and I spent all our evenings away from Citibank building the software and LSD ended up servicing 1,000 IFAs.”
Holland and his partner decided to set up Financial Express after buying fund information business Prestel from BT. Before the advent of the internet, Prestel provided a feed of fund prices directly to IFAs.
“Prestel sent automated fund prices to IFAs so they could update portfolios and we were asked if we could develop this service into collecting fund prices because the FT was operating an expensive market monopoly. So we did and Financial Express was born.”
Holland has seen Financial Express develop from being a data collection business to an analytical research business. “As the price data we collected accumulated fund histories it became performance analysis. The more history you have, the more comparisons you can do.”
It has 5,000 IFAs using its Analytics tool, a search package that advisers can use to measure client portfolios against an agreed benchmark. It also has 17,000 IFAs on Trustnet, its free fund research website, as well as supplying most of the UK’s platforms with pricing information.
This progression has prompted Financial Express’s rebranding, which takes place this week. It will see the company rebrand as FE, with the strapline Be Better Informed.
Holland sees the rebranding as a logical step. “We punched below our weight for quite a while. We are still regarded - even internally - as a data company but over the last 10 years we have done more. I see it as we used to make the bricks and now we are the architects building the houses.”
He says the main reason for the rebranding is to unify the business.
“We have a lot of products like Trustnet and Investegate but they are not in a coherent brand structure. All our properties will have the FE prefix.”
International expansion is another reason for the image overhaul. Financial Express already has offices in the Czech Republic, Singapore and Hong Kong and wants to expand to both Australia and German-speaking countries in the autumn. “Australia’s investment and legal structures have been inherited from the UK, so our work translates easily. There is also no language barrier.”
However, for non-English speaking countries, FE is more accessible and enables the business to bundle all its services under one brand. The company is being selective about its expansion plans as not all territories suit what the company has to offer.
“We are looking at countries such as Germany and Switzerland because they have a lot of funds and advisers. In Spain, for example, everything is dictated by a few banks, so there are fewer people needing our service.”
The addition of ex-Towers Watson stochastic modelling subsidiary eValue last June was another driver for the rebranding.
“It helps investors make the right investments. Financial Express is very good at looking at the past in terms of fund performance. eValue is very good at looking at the future in terms of its stochastic risk profiling, which selects asset classes based on a client’s attitude to risk. Our main thrust from now on is to help people make better investments, which is just catching up with the reality of what we have been doing.”
eValue will also help Financial Express capitalise on changes in consumer attitudes after auto-enrolment starts.
“People will want to know about where their money is going once auto-enrolment kicks in. Employees will look at their investments on company intranets and say, ’Am I in the right funds, could it be more optimised?’ and the predictions eValue offers can help them feel more confident in doing that.”
Holland also believes that Financial Express can redress the imbalance he sees in the FSA’s approach to risk-profiling, which he thinks is too focused on deflecting loss.
“Avoiding loss is a worthy aspiration but not if you do it at the risk of your investments not growing. I hope some of our tools can help IFAs and investors be more comfortable in making decisions about risk.”
He thinks the company’s new risk-scoring service, due to launch in July, will help the business in this mission.
“The FE Risk Scores will give every investment a score based on its performance against the FTSE 100. You can look at Barclays shares, an ETF, an investment company and a cash bond and compare them all. People will be able to weigh up performance and risk at the same time.”
Although the majority of Financial Express’s client base is made up of IFAs, the changes it is making this year such as increasing eValue’s role, rebranding and introducing the Risk Scores have also been made with another market in mind as Holland believes self-directed investors will be on the rise after the RDR.
“The number of advisers will fall a bit so there will be at least some self-directed investors who will have no choice but to do it themselves. A lot of people will also think the fees are not worth it.”
Holland does not necessarily think this is a good thing but believes Financial Express is well placed to help these people. He also regards the whole of market approach required by the RDR as an opportunity.
“Advisers will have to look across all investments, and we have information on the whole range. We have the data to put at the disposal of the advisers who are left in the industry.”
Making the most of regulatory changes is not Holland’s only aim for this year.
“We already supply research to almost all the platforms but I want to build relationships with more of them and provide extra services to the existing ones. I would also like to develop more specific research tools in the same vein as eValue, and take investors and IFAs from the general to the specific to a portfolio.”
Born: Southport, Lancashire, 1954
Lives: Battersea, London with his wife and three teenage children
Education: Winchester College and Lincoln College, Oxford studying politics, philosophy and economics
Career: 1996-present: managing director at Financial Express, 1993-96: strategy developer, Prestel; 1991-94: managing director, Morfax Ltd; 1985-91: lending officer, Citibank Middle East; 1984-90: founder, LSD Software;
Likes: Integrity, opera and chocolate
Dislikes: Laziness, my children singing out of tune and apostrophised plurals
Drives: A Mercedes
Book: Anything by Iain M Banks
Film: La Reine Margot
Album: Sam’s Town by The Killers
Career ambition: To bring together good teams that win
Life ambition: To make my children proud of me
If I wasn’t doing this I would be…;Writing unpublishable novels