London’s access to wealthy clients and location can mean setting up a firm comes at a cost
The capital city may not really be paved with gold, but it has more than its fair share of wealthy clients for advisers to service.
Known as a place where people’s careers and businesses can thrive on the global stage, London has an international flavour that you can hear through the multitude of languages spoken and smell as you pass its many restaurants and street food outlets.
However, the capital is also known as one of the most expensive cities in the world, which impacts on business and exacerbates the poverty which can be just a stone’s throw from its affluent neighbourhoods. So what is it like to be an adviser in London?
By far the biggest benefit of being an adviser in London is greater choice – of premises, clients, staff, industry events, methods of transport, and even in what to do after work.
“In London, there are potentially lots of clients on your doorstep, you have access to a bigger talent pool because people can easily travel into London from outside, and you have a lot of choice in terms of offices,” says Addidi Wealth managing director Anna Sofat.
Based in Bloomsbury’s Tavistock Square, a place that Sofat describes as “having a sense of calmness”, Addidi Wealth is on the third floor of a Grade II-listed period building. Sofat says it was the huge windows, which allow the natural light to flood in, that drew her to the premises.
“Choice is the big thing. A lot of things are happening in London with the trade press and conferences. It’s easier to attend those without taking whole days out when you’re already in London,” she says.
Sofat concedes that costs are a big drawback of running a business in the capital, and adds that it is harder to achieve a community feel in central London because there are so many offices, with people tending to work there, rather than live in the area.
IFS Wealth & Pensions director Ricky Chan agrees that overheads are a key challenge. “In London, costs are naturally a lot higher; generally anything you pay for is higher. When firms face higher costs, that translates into higher charges for clients,” he says. “But on the flip side, there is more choice and lots of opportunities.”
Chan says that because London has so many advice firms, legal practices and accountancy businesses, there is a lot of competition, and specialising in particular areas – in his case, pensions and ethical investments – helps companies to hold their own.
Although the IFS head office is listed in north London, that is merely a postal address. The firm uses the True Potential back-office system and found that it made sense to work out of True Potential’s premises in Victoria, not far from Buckingham Palace and all the tourists it attracts.
“We’re not the leaseholders and we don’t know how long True Potential will retain the office, so we have the head office address to make sure we will always get our post,” explains Chan.
He adds that for those with small IFA firms, it is easy to feel quite alone in business, but being in London means there are plenty of networking opportunities, so advisers can find others experiencing the same issues as them.
Impact on clients
Equanimity Independent Financial Advisers managing director Helen Howcroft regularly sees the impact that London’s high earnings potential and costs have on clients in Islington and the affluent areas of north London surrounding it.
“You might come across complex advice work here and there in some places, but in Islington you come across it on a near-daily basis,” she says. “My clients are self-made entrepreneurs or clients going through a divorce. They have a good deal of money and most spend too much.”
Howcroft’s work often involves getting clients to see that they cannot afford to continue spending at current levels. She says some clients are parents with children in primary or secondary school and have to contend with “keeping up with the Joneses”, because there is pressure to have the same lifestyle as other parents.
As an example, when Howcroft turned down an invitation to Ibiza because she could not afford it at that point, a friend told her she would rather have gone into debt than admit the truth. “One client has so many Chanel handbags, but I know what her husband does for a living and the numbers don’t add up,” she says.
Howcroft describes Islington as “gentrified, but not as posh as Hampstead or Chelsea”.
She concludes: “It’s a mix of posh and shabby chic… Our clients don’t necessarily come to see us in jeans, but they don’t wear suits. They work hard, play hard and expect a really good level of service.”