Joe Cohen set up First Action Finance in 2005 and now the company has 32 mortgage brokers, seven IFAs, one general insurance adviser and funds under management of £30m.
How has Cohen managed to grow an intermediary business through a tough economic and regulatory environment?
“Our business operates as a one-stop shop,” he says. “We separate our mortgage brokerage and financial advising arms, which means that when people come in and take out a mortgage, they get referred on to an IFA who can advise them on anything from investments to pensions. They get the whole package.”
The differentiation between mortgage brokers and independent financial advisers is key to Cohen’s ethos. “You can either be a very good mortgage broker or a very good IFA. How can you know everything about property purchasing, personal pensions or Sipps? Separating the two out means we can offer greater expertise.”
The diversity benefits the company’s self-employed advisers. “All our guys are able to earn income from other places as well. We give our employees the opportunity of working with some of our agents or accountants and offer them career progress. If they are tired of selling mortgages, they can go down the IFA route. It is about having the option.”
Using self-employed advisers gives Cohen a tighter grip on costs. “Even the management can have its tap turned on and off when we need to. So many businesses have failed because they are not in control of cashflow and, in a market where you are not sure what will happen from one month to the next, it is worth watching your costs.”
But that does not mean growth is not on the agenda for First Action Finance this year. Cohen wants to double income from the IFA business and get more funds under management, as well as adding to its current 50 mortgage introducers.
“Another aim is to increase our use of technology. With the retail distribution review approaching, IFAs have to embrace technology 100 per cent or they will get left behind. We want our clients to have information at their fingertips, by speaking to a broker here or accessing it on their iPhone.
“Although we are looking at a number of platforms with a view to implementing them over the next six to 12 months, we are also looking at a broader tech-nological offering in terms of content management systems that keep clients up to date. On the mortgage side, it is more about having a good back-up system to enhance the client offering.”
Increased use of technology does not mean First Action Finance will reduce its face-to-face offering.
The client-adviser bond is the cornerstone of Cohen’s career. “Working at Allied Dunbar taught me how to go out there and get clients and forge relationships with them.”
He believes building relationships is something the FSA and the IFA industry could work on. “Everyone needs to talk to each other. The RDR’s proposal to scrap commission has highlighted this. There needs to be more discussion between the regulator, IFAs and the insurance companies before anything is decided.
“There does need to be more transparency over charging on the pension and investment side but maybe the solution is to put a cap on what percentage a broker earns. I know the odd IFA out there is going to be charging 8 per cent and that is ludicrous, so suggesting insurance companies pay 2 per cent max and a trail is more reasonable. It is about reason and compromise but nobody has talked about compromise. There is only so much clamping down the FSA can do until the industry starts to burst.”
Four of First Action Finance’s seven advisers are already fully qualified for the RDR, Cohen says the firm will operate a mix of restricted advisers, independent advisers and mortgage brokers after the RDR.
“When things were really tough before, our IFA business thrived. I believe it will survive again and even become bigger than our mortgage arm. Our mortgage business will tick along nicely though. It is true that mortgages are more difficult to sell than financial advice but I think the remortgage market will open up this year and the influx of overseas buyers looking for property in central London could make a difference.
“We are going to wait and see what happens. First Action Finance has been successful because it has always looked at the market and gone with it. You have got to grab things with both hands.”
Born: London, 1970
Lives: London, with my wife and three children
Education: BA in business management at American College London
Career: 2005-present: managing director, First Action Finance; 1999-2005: co-founder and managing director, Cavendish Mortgage Brokers; 1996-99: adviser, Allied Dunbar; 1990-95: adviser, NatWest
Likes: Tottenham Hotspur, holidays and going to the cinema
Dislikes: Winter, internal politics in businesses and hangovers
Drives: A Mercedes CLK
Book: True Blue by David Baldacci
Film: The Godfather
Music: The Black Eyed Peas and Alicia Keys
Career ambition: To build a strong, successful and well respected business that makes money
Life ambition: To provide for my family and give them what they need and enjoy in life
If I wasn’t doing this I would be…A restaurateur