Lee Robertson’s impulse to re-engineer his business came not from the dictates of regulators, but from a disillusionment with being beholden to the providers of financial products. A series of administrative blunders led him to question why he was relying on the providers to pay his fees and helped him get a head start in rebuilding his business well ahead of the RDR.
The big insurers stopped paying commission on some of their pensions and others lost paperwork, meaning advisers did not get paid commissions. Robertson saw a sea-change coming in the industry. “I began to ask why I was relying on the providers to pay my fees,” he says. From that point on, he has been largely fee-based.
Robertson had a traditional start in the advice business. Having left the Navy after eight years, he learned his trade at RBS on the financial planning side. From there he set up his first IFA business with one of his colleagues. He says it was an ‘old model’ business, paid on commission for giving advice on pensions and investments.
He quickly saw that platforms would help facilitate the change to an alternative business model. He has been with Transact from the start, and considers it the “first and best”. He does not use it exclusively, but adds: “We have now got our discretionary permissions and Transact does not charge for switching. There are the easy wins and our clients really appreciate it.”
When he started out, he took no clients from his RBS days and has built his client base largely from scratch. He says: “When I left RBS, I didn’t take anyone with me. Some clients sought me out. We had some clients from our original IFA business and the remainder of our client base was built through personal recommendation from clients, or from accountants and solicitors.”
Investment Quorum now offers “fully formed” wealth management. “We deal with clients who simply want to protect what they have, through to investment, pensions and mortgages,” says Robertson. “We do our own investments if that is what clients want. We are very open with clients at the end of the financial planning phase. We say that we have identified that there is an investment piece they will need. We say that we can run the money in-house – we have a well-regarded investment management team here. Or we can introduce you to a beauty parade of external managers. Most use us because they like to keep things together, but we are agnostic.”
The group uses 7IM for discretionary, custody and trading. Robertson says: “We had a toss-up between Raymond James and 7IM and the all-in platform charge swayed it for us. The charge includes all switches and trades. The platform we use depends on the complexity of the client. For more sophisticated clients we use 7IM, for less sophisticated clients we use Transact. Cost-wise there is little difference between the deals that we have been negotiating.”
Robertson outsources various parts of the business. For example, he outsources chartered tax advice and has developed a very close, strong working relationship with the company, which does both tax compliance and more complex planning for the group’s clients. “It is so important to have good tax resources because it joins up all the other parts of a client’s financial planning,” he says.
Professional connections have been a valuable source of clients, but the group started close to home. The first professional connection was the group’s accountant. “He became a client and then introduced us to other partners,” says Robertson. “We had a no-commission arrangement so we just made referrals and it worked very well.”
Although the group had the fee structure nailed down early, other aspects of the RDR have proved more challenging. For example, the group had to do a lot of gap-fill to bring the advisers up to the required level.
Robertson says: “On the fee side, there hasn’t been too much stress. We went through a process of segmenting our client base. A number of our clients didn’t want to do work on a fee basis. We helped them to find another adviser, but overall we had very little push-back. A lot of what the FSA is doing leads towards what we are doing already. Some of the FSA guidelines weren’t very clear and that was a problem, but it got better. The FSA had a hang-up about platforms, but the platform is just an enabler.”
Robertson says his marketing has been an area of strength. All clients receive an e-bulletin ‘Lowman’s Lowdown’, which tells them what they need to know about the market environment. The group also has quarterly reporting, which carries market commentary, and ad-hoc comments, such as feedback on the banking crisis. The advisers will also hand-hold clients through difficult market conditions.
Investment Quorum’s clients are based largely in the South East of England. Robertson says: “We have lots of people from the City and West End. We have a cohort of Lloyd’s names, plus bankers, lawyers and entrepreneurs. The main thing they have in common is that they are around 10 or so years from retirement. They are frightened – have they done enough? They tend to have a drawerful of stuff, none of which they really understand.
“We only take clients where we feel we can add value. That tends to be at a level of around £100,000 in investable assets, but we have people who are much younger who have grown with us. We are always mindful of how fees will impact a client portfolio.”
“From here, the group has no intention to become a national firm, but we want to become a large quality firm.”
Robertson is keen to grow organically, having struggled to find good people. “I think we will end up growing our own,” he says. “We like the relationship we have with our clients and a very easy way to jeopardise that relationship is to have the wrong people talking to them.”
Overall Robertson is looking forward to putting the RDR deadline behind him. His biggest concern at the moment is the Financial Services Compensation Scheme levy.
He says: “The consultation paper from the FSA did not address our questions. It feels like signing up to unlimited liabilities and there doesn’t appear to be a lot of will to sort it out. There is, as yet, no back-stop for claims.
“It may be done with good intentions, but it will diminish the availability of advice. People need help with their finances and over-regulation may crush that help out of the market.”
Investment Quorum is a boutique independent wealth manager with about £150m under advice.
Based: City of London
Staff: 6 advisers, 14 total staff
Qualifications: Chartered Wealth Manager, FRSA, MCSI, MIFP, CertPFS
Discretionary fund management: 7IM and in-house
The Investment Quorum approach
- Product: define what you do
- Price: income with profitability
- Packaging: what you look like in every way
- Promotion: getting in front of potential introducers and clients
- Perfection: is everyone in your team on message?
- Premises: do your offices look like those of a wealth manager?
- Professional connections: learn, collaborate and cross-refer
- Premier: seek to be the best you can be
- Profile: is it of a professional, fee-earning operation?