Richard Romer-Lee

17 December 2009 | By Chris Salih

OBSR research director Richard Romer-Lee has come a long way from being an office junior answering phones and buying cigars for the managing director.

He has been celebrating the 10th anniversary of Old Broad Street Research this year, having founded the company with Richard Downs in July 1999.

He says he did not know what type of career he wanted when he left school and went into financial services as an office junior at BMA Services, which was jointly owned by the British Medical Association and Jardine Insurance Services, a financial services company which offered general insurance and financial advice.

Romer-Lee says BMA Services was ahead of its time in creating investment advisory services, offering investment as opposed to financial advice to the firm’s customers. It quickly became a big part of the business.

“That is where I got my interest in not only understanding investment but also the needs of investors,” he says.

He met Downs at BMA Services in 1987 and he says it became clear that their futures did not rest at the firm. Romer-Lee followed Downs to Buck Consultants in 1989. Having worked in a number of roles at the firm, both Romer-Lee and Downs took on the research for people giving investment advice. It would be the beginnings of what OBSR would eventually become, with the research team being formed in 1994.

Romer-Lee says the beginnings of OBSR came from recognising that accessing fund managers, products or product providers was a completely different skillset from offering advice. “Our primary role then, as it is now, is twofold. First, it is to make intermed-iaries understand what the offerings in the market are as they try to meet and manage customer expectations and, second, whether those funds are going to live up to those objectives.”

Romer-Lee and Downs undertook a management buyout of what would become OBSR in July 1999. “We knew this market was changing quickly and we wanted to be in an environment where we had the flexibility to adapt to that rate of change and that is better to do through a small, independent business than being part of a multinational firm.”

The advent of the internet and technology were also catalysts for the MBO. Romer-Lee believes a number of forces have acted upon the industry to raise the importance of companies such as OBSR, for example, the RDR and the treating customers fairly initiative.

“That plays into our hands after 20-odd years of self-regulation. Ultimately, what we are trying to do is protect intermediaries and investors from themselves by preventing those traits of greed in strong markets.”

OBSR is best known these days for its UK fund rating service, which the firm launched in 2002. “That broadened us out to the wider audience by giving people the chance to look at our world and what we do.”

The company uses a qualitative approach to investment research and informs that with quantitative analysis.

“We don’t think it is fair to judge a fund manager until we know what they are trying to do. There are peer groups to point people in the right direction but there are a multitude of approaches in each different sector, whether that is targets or risks, for example.”

He says there are a number of factors that need to be considered when evaluating a fund manager, such as whether their process is robust and repeatable, the resources available and a manager’s motivation and backing from their company.

“During the TMT bubble, we saw Neil Woodford under pressure at Perpetual as his valuation and long-term investment stance saw his relative performance fall as the market was led by TMT stocks. He stood by his views as a valuation-driven investor despite the pressure but when it came to it, although he was questioned, he was allowed to do what he wanted to do and did not compromise his views as an investor.”

The company currently rates 250 funds in the UK, which equates to around 10 per cent of the total. The Arch-cru fund range did not make it into OBSR’s ratings and Romer-Lee recalls that it was a fairly quick decision.

“Clients did ask, so we did do our research and it took about 25 minutes for us to decide not to continue. There was no information publicly available and what was available was generic rather than fund-specific. We also thought the objectives were unrealistic.”

The past couple of years have been particularly strong for OBSR and Romer-Lee attributes to a combination of difficult markets, regulation and the firm improving its status in the marketplace.

OBSR completed the acquisition of the international research and rating business of Crosby Forsyth last year. OBSR was previously in partnership with Forsyth until earlier in the year when financial difficulties culminated in its purchase by Crosby. OSBR then bought the research arm last September.

“This allowed us to set up an advisory business which enables us to act as an adviser to people, building adviser to fund manager solutions to customers.”

It was recently revealed that OBSR has agreed a strategic tie-up with Cofunds to launch a research panel of funds and model portfolios for the platform and Romer-Lee says the independence of OBSR adds an external stamp to distributors from an intermediary perspective.

“It is fair to say in the past couple of years we have done huge amounts of work with distributors, as you have seen with Pru, Aegon and now Cofunds.”

Romer-Lee says the next layers of growth for OBSR are focused on adviser business and also the development of the firm’s global fund rating platform.

“What we have done there is we have replicated the onshore model on a global capacity due to demand and because we feel the opportunity is huge in that space. We were able to accelerate into that space last year when Crosby decided that it did not want to continue with its research business and we acquired that platform.”

Born: London
Lives: Hampshire with wife and three children
Education: Sherborne School
Career: 1999-present: research director, Old Broad Street Research; 1989-99: Buck Consultants; 1984-89: BMA Services (IFA support)
Likes: Hockey, rugby, skiing, yacht racing, fly fishing and most other sports, caipirinhas (the national cocktail of Brazil)
Dislikes: Reality TV
Drives: R-reg Peugoet 406 estate
Book: The Code of the Woosters by PG Wodehouse
Film: Grosse Pointe Blank
Album: Majestic Grill by The Men They Couldn’t Hang
Career ambition: For OBSR to build success by doing a good job for our clients
Life ambition: To have a happy family and to keep smiling
If I wasn’t doing this I would be…..Mucking about with Nigel Whittingham

 

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