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Transition trail

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Dean Harris of Harris & Associates talks to Cherry Reynard about changing adviser mindsets during the transition to RDR compliance

Dean Harris

Dean Harris

Advisers faced one of their most challenging periods at the start of 2008 so it was a bold time for Dean Harris of Harris & Associates to attempt structural change. With hindsight, he thinks he got “about 90 per cent” right when the firm went live with his newly re-engineered business in January last year.

It was not a bad start but Harris had started the transition process as part of Thinc and its closure in April forced another re-examination of the business. Having spent 12 months redesigning and rebuilding the company, he had to look at his proposition once again, this time with new network In Partnership. Deciding
on a new network had also taken time. Harris says he believed In Partnership understood the RDR and supported his business model.

The group went live with its rebranded proposition at the end of last year. Harris says: “We are not running at full speed just yet but we do feel that we have gone through the pain and made the tough decisions.”

He says the most important thing he did upfront was to look at how to allocate resources to the transition process, both in terms of money and time. Even having done this, he underestimated the time it would
eat up. He adds: “It was a big job - between mentoring advisers and allocating the time needed for meetings, software testing and other commitments, I lost two days a week for a year.”

Harris also encountered some resistance among his advisers but is happy that they are now fully on board with the RDR transition process. He says: “We had people who did not believe the RDR would come into force. They were also fearful of moving across because they had spent their lives as transaction salespeople and now they needed to get used to a fee style.”

The group had always considered itself servicebased. For example, it had always done annual reviews, it just had not been paid for them. Harris said clearly explaining the benefits of the new structure won his team round but he admits it was an uphill struggle while advisers were trying to earn a living as well. Harris says: “We had to make it clear that nothing was changing day to day with customers, we just had a different way of articulating what we do. It is not too big a leap but the mindset really needs to be changed. Some of our advisers really only got it halfway through. Ultimately, I did not ask the advisers to do anything I would not do. I have tested all our changes on my clients and got their feedback.”

Another problem the group faced was that customers could ostensibly get the same service round the corner for free because there were still plenty of firms which had not moved across. This was particularly difficult with new customers. The key has been to have a clear idea of their value.

Harris says: “We really should not be dealing with clients who don’t realise that what we do is very valuable. Clients are thankful for transparency and, in fact, we have not suffered a great deal of resistance from clients. We are still moving customers over and will do for the next several years. We recognise that we will be having conversations about how we are going to change for some time.”

The group has been through several client segmentation exercises. Harris says: “Instead of focusing on one end of the client spectrum or another, we want to provide a service to everyone who walks through the door and we are keen to continue to provide a service for customers that have been with the firm a long time.

“Everyone has a right to financial advice. Some clients will still want a transaction-style service. Others will want us to build wealth and they will understand the need for advice and that they will have to pay for it. Others will need a wealth management service. These are people who have built their wealth and need us to take over the running and management of it. We want to offer different packages to meet their criteria at a fee level to suit them.”

Wealth-building option
The group’s wealth management option is provided by 7IM. The wealth-building option is based around the F&C Lifestyle funds as a core holding. Harris says: “We have worked with F&C for 10 years - it is a big firm and its lifestyle range is strong. We will then supplement funds around that to suit specialist client needs or requests as appropriate.”

The group is also building its own portfolios, which will be outsourced and managed by a fund management group. Harris thinks the biggest risk will be the way advice firms choose to invest clients’ assets and the evidence used to support that choice.

Much of the second transition was working on the group’s technology and internal procedures. Prior to the start of its transition process, it just had a backoffice data system, which managed client data and little else.

In response to the RDR, Harris began to consider different technologies and spent a lot of time looking at different solutions. Ultimately, he decided on Intelliflo, which went live in November 2008. The group’s wrap platform had originally been provided by Thinc but it has recently shifted to Ascentric.

Harris says: “We did due diligence on 16 different players, looking at things such as costing, tools, the benefits to customers, back-office compatibility and open architecture. We wanted a group that was not interested in pushing its own wrappers on the platform and someone with nothing to hide. We found the team at Ascentric very helpful. They spent a lot of time with us and the training was good.”

Looking to the future, Harris says the group’s proposition is not just to customers but also to other advisers. He says: “We are looking for those who want to exit the industry or who want to come and piggyback on what we have done so far. We have worked with some people who just want to hand over their client banks and ensure their clients continue to receive a good level of service. We can do this on a fee or buyout basis or even using an ongoing service fee.”

Harris believes that life post-RDR will be different but for good reasons. He says: “We have always tried to be ahead of the curve. Ultimately, we believe our clients will thank us.”

Company data

  • Number of RIs: Six IFAs and five mortgage/protection advisers
  • Outsourced investment management: 7IM, F&C Lifestyle
  • Wrap provider: Ascentric
  • Back-office provider: Intelliflo
  • Networks/nationals: In Partnership
  • Membership of associations: PFS, Federation of Small Business
  • Qualifications: Up to level 4
  • Number of clients: 1,500

Key points

  • Harris has been in the industry since 1993, initially working with the Prudential and Friends Provident.
  • Harris Associates was initially set up as an associated representative firm but in 2004 it moved to being an IFA.
  • The original team comprised Harris and Andy Smith.
  • They have built the firm up to 11 people, soon to be 12.
  • Andy is the sales manager and Harris focuses on the overall structure of the business.
  • The firm has individual specialists in mortgages, pensions and other areas

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