Martyn Laverick and his colleagues on the board at AWD Chase de Vere have had the unenviable task of turning round a juggernaut. The group had grown through acquisition to become an unwieldy collection of businesses, each with their own culture, back-office systems and values. The process has been “painful” and is some way from completion but the dust is clearing for this stalwart of the advice industry.
It has not been an easy couple of years for AWD Chase de Vere. There was the high-profile departure of chief executive Mike Kirsch, persistent rumours of a sale to one of the other nationals, plus a misselling fine of £1.12m. More than half the staff had to be made redundant and the business made a loss of £7m in 2008. The group received a chunky cash injection from its German parent to offload its non-core businesses. Far from being the cash cow it had seemed, the business was actually dependent on the rest of the group.
Then there was the thorny issue of RDR. Over 80 per cent of the group’s income was upfront commission. Laverick admits that the group needed a “huge cultural change”, with many advisers taking full initial commission with no ongoing remuneration.
It has been a slow process but the group is beginning to move in a new direction. Former national sales director Stephen Kavanagh was appointed chief executive last December. The divesting of non-core businesses is complete, with the group now solely focused on wealth management and corporate advisory clients. It has also started the slow transition to RDR compliance. Laverick says trail commission now accounts for around half of all revenues and should be as high as 75 per cent by 2012.
He says the executive board at AWD Chase de Vere has also tried to form a unified culture at the group. He says: “We were often doing employee benefits for a company but not doing executive counselling. We have tried to put these people together and build both sides into our client proposition. It is still hard work but people are now sitting next to each other and talking.”
This is all part of building the coherent strategy that has long been missing at the group. Laverick says the group wants to be the leading national IFA, with a strong brand, acting as the agent of their clients. Adviser remuneration needs to be aligned with client interest, the employees need to enjoy their work and shareholders need to see a return. Laverick wants to see these three groups aligned. “Everybody wins,” he says.
The strategy is starting to be reflected in the trading profits for the group. In 2009, it made £1m and is on course for double-digit growth this year. Laverick says: “We have had to be brutal on costs but, in this type of environment, you can’t work on the assumption that revenues will rise.”
The next big change for the group will be technology, which Laverick hopes will facilitate the transition process. He says: “We are scoping this out now. It will be an end-to-end system and will take 12-18 months to deliver. Our client proposition will be embedded in this and we will have a segmented proposition for different types of client.”
The group is working with a number of different systems, which Laverick describes as “hugely expensive”. It has appointed Focus 360 to deliver the new system. Laverick says: “No one provider can do everything, so it is a question of asking whether something is an acceptable modification. For example, Focus 360 had a strong lifetime cashflow tool but we wanted more functionality, so we are working with them to build in improvements.”
Stronger relationships with clients
Laverick believes that, used correctly, the new system should help build stronger relationships with clients. He says: “People don’t invest for growth or income necessarily. They invest because they have a need such as paying for their daughter’s wedding. A good technology tool should show the impact on a client’s lifestyle of the various decisions they make.”
Exams are also a priority for the group. Laverick says AWD Chase de Vere advisers tend to be younger than the industry average, which has ensured that they are more responsive to change. The group recruited Carl Pimlott as head of professional training and development in February and he will be responsible for ensuring that all advisers have achieved level four by 2012.
At the last count, 47 per cent of the group’s advisers had achieved the required standard. New initiatives have already been put in place, with every adviser given an individual training package, for example. They are also paired up with study buddies to create a study club environment. Laverick says: “There are a handful of individuals who have told us that they will be retiring in a couple of years but for everyone else we are doing everything we can to get the pass rate up.”
What will the AWD Chase de Vere client of the future look like? Laverick says: “We have run a customer agreed remuneration pilot for around two years now. The average client has between £150,000 and £180,000 of investable assets but the bar is rising all the time. We are hoping that with the new technology, we will be able to bring down the average cost of servicing clients. This will open up greater possibilities and help us provide an enhanced range of services for our clients.
“IFAs have traditionally tried to be everything to all people but we need to spell out what we can and can’t do for clients. We will offer different services to different segments of the market. We will say to people with £10,000 to invest that we can’t add enough value to charge them £1,000 for a full service but there is a range of funds we could use. We can’t talk to them all the time but we can get a better return. We don’t want to get rid of clients – we just want to offer a defined service at a defined price.”
Laverick believes in the power of nagging clients. He helped out on the BBC show Pay Off Your Mortgage in Two Years, which taught him that advisers may need to be more forceful to ensure their clients’ long-term wealth. He says: “It’s not just about picking funds. It is about taking control of your financial life. It is about ensuring clients understand what they want and not letting money get in the way.” He believes the majorityof clients are turned off by the product focus of many advisers.
AWD Chase de Vere has an investment committee but allows individual advisers some scope to accommodate clients’ existing fund range. The group’s full investment proposition is still a work in progress.
The group’s platform strategy is still being developed. It has successfully used Cofunds but the FSA’s recent platform report suggests that the regulator is unlikely to consider single platforms sufficient in future. The group will also need to ensure that any platform hosts the full range of products required by the FSA. To this end, the group is working closely with Cofunds to identify enhancements required to their platform and is also starting to look at the development of corporate wraps.
Laverick says there is plenty to be done in the re-engineering process for the group. Fortunately, he has some history of running the type of group that he hopes AWD Chase de Vere could become. As a founding director of Chartwell, he built a business that offered a fee-based service with advanced wealth planning. He remains proud of his achievements there although he has now been at AWD Chase de Vere for four-and-a-half years.
He says: “Chartwell was, in many ways, the perfect model – it ticked all the boxes.” Expect a different AWD Chase de Vere in future.
- No of RIs: 179
- Outsourced investment management? No, our investment services are all advisory and we select funds internally through our research department
- National IFA with 13 offices around the UK
- Qualifications: 47 per cent of advisers at level four or above
- No of clients: 20,000
- The business had grown through acquisition to become an unwieldy collection of businesses
- It suffered the departure of chief executive, persistent rumours of a sale, plus a misselling fine. More than half the staff had to be made redundant.Over 80 per cent of the group’s income was upfront commission
- Stephen Kavanagh was app-ointed chief executive in December. “Noncore” businesses have been sold, with group now solely focused on wealth management and corporate advisory clients
- The group wants to be the leading national IFA, with a strong brand, working in the interests of clients, employees and shareholders
- The next big change for the group will be through technology. Exams are also a priority