Cliff Gray’s journey in the industry will be familiar to many advisers. He has moved from direct life insurance sales to a fully-fledged RDR-ready business. His business Prosperity Financial Services has grown to become a group of like-minded specialists covering the full range of financial services for clients. But key to his success has been a proper understanding of his client bank.
Gray’s management philosophy is based on partnership. “I had always felt that a small team of men and women working together worked better than a loose association of individual practitioners. We could work on clients together and share expertise. It had always been the model in the franchises I had run. Financial services are so complex that being a pensions’ expert at the same time as a mortgage expert is very difficult.”
Gray joined the industry in 1981, working for Hambro life. He was a direct sales manager for Allied Dunbar and he moved with the group through its various incarnations until finally, in 2005, Openwork was formed. He spotted the opportunity to branch out on his own and Prosperity Financial Services was launched.
He recruited some former colleagues with different skills in and around the Thames Valley, building a remote model, whereby individual advisers could be independent and have their own way of working. This required not only considerable investment in technology but also to ensure that advisers were of the same mindset and were willing to refer clients within the practice where they did not have the expertise.
Gray says: “It is not a culture that is normal in most advisory practices but it has worked for us. People understand it when they join, almost certainly because they realise it has worked in the past. We have had some people who have joined us who have really struggled with the concept and we have seen some advisers who have lost a bit of confidence or their technical knowhow is not up to speed.
“They would not see clients because of this. Knowing that there was a colleague who could help with their advice and strengthen their relationship with the client was a real boost.”
The model extends beyond simply referring within the business. For example, if a client relocates and Prosperity can no longer service them properly, the firm will seek out a like-minded adviser who can help.
As Prosperity has grown, it has taken on new businesses and the client banks of retiring advisers. Gray says this was a deliberate strategy at the start of the business. “Some of the advisers with whom we worked initially were looking for an exit strategy or some form of succession planning. They wanted someone they knew would look after their clients. But it also meant that I could recruit younger advisers possibly those who were RDR-ready.”
’We have carried out a huge analysis of our client bank’
As with many adviser businesses, Prosperity has ended up with a very large client bank as a result. A key part of Gray’s transition has therefore been client analysis and segmentation exercise. He adds: “The whole thing on RDR is one thing but I aim to match advisers and their relationships to clients and their needs.
“We have carried out a huge amount of analysis on our client bank. For example, we have done a lot on age-profiling. So we know that around 40 per cent of our client bank is 25 to 50, another 40 per cent is 50 to 65 and the remainder is over 65. This gives us a starting point for establishing individual client needs a 25-year-old is not worried about inheritance planning, for example.”
Equally, it has allowed Gray to be nuanced about matching clients to advisers. He says: “We would look at whether one of our advisers matched geographic area or client profile. We try to create a client bank that matches the individual adviser in all cases. It is not rocket science but I still find it extraordinary that the structure of an adviser’s client base is not gone into in more detail.
“When you have that information, you can be very targeted in your approach. Of course, it helps with RDR as well.”
The group now has 30 consultants, of which half are pensions or investment specialists and half are mortgage and protection specialists. Gray thinks of it as a generalist practice made up of specialists. He believes that as the group moves towards full RDR compliance, around one-third of existing advisers will no longer advise. They will work as client relationship managers, identifying opportunities and referring them to the relevant specialist.
“Those who are only referring should be in a position to create more opportunities for specialists. It creates capacity for them. We aim to match the specialist to the client. However, it has to be said that this model does not work with much less than 30 advisers. You start to get economies of scale at that point. We believe we could grow to 300 advisers and operate with the same systems.”
Prosperity is part of Openwork and has worked with its RDR team. This has provided the platform for much of the group’s transition. There is a centralised administration and service centre.
Gray says he has found Openwork generally supportive with a good transition team. He has also found the networking with other Openwork advisers valuable. “We have built peer groups over the country to share best practice. We need to do that in the current environment because no one person has the right answer.”
Gray says that while there is still a lot to do over the next 15 months, he believes that the group is much of the way there with change already embedded in the culture of the group. He concludes: “I have not read anything that gives me certainty but I am still working on the assumption that it is going to be what it is going to be when they say it is going to be. The RDR is making people realise they have to change.”
Prosperity Financial Services
- Launch: 2005
- Based: Oxfordshire
- Network: Openwork
- Advisers: 30
- Specialisms: Investment, pensions, mortgages, insurance
- Clients: 20,000 policyholders
- Proper understanding of client bank has been key to successful transition
- Working together and sharing skills and experience has worked well
- Client bank analysis has helped client segmentation and facilitated the advice process
- Gray aims to match advisers and their relationships with clients and their needs
- Post-RDR, around one-third of advisers will work as relationship managers