Mark Pittaccio, the newly appointed investment director at In Partnership, ran his own IFA practice for 12 years before deciding to switch to fees in 2001. It was this frustrating experience, during which he admits to making huge mistakes, that kickstarted a career in transition planning, first at Thinc and now at In Partnership.
He joined the group in early 2009, having worked at Thinc and later Bluefin under the tutelage of Ian Shipway. There he helped build the wealth management division and then, having reduced his client work, he began the thorny process of helping advisers to move their businesses to meet the needs of the new business and regulatory climate.
Having built up experience at Thinc, he left to set up Adviser Vision. Initially, he worked as a consultant but is now full-time at In Partnership and sits on the board. He is in the process of defining a full transition planning programme for the In Partnership advisers, which he plans to roll out from January.
“Advisers’ top clients have subsidised their weaker clients. This can’t happen anymore”
Pittaccio says: “We won’t be prescriptive to any of our advisers and say you can only deal with people over £1m or you must give advice in exchange for an hourly rate. We are just saying you need to define your proposition, you need an appropriate back office, you need a wrap strategy, a number of different investment solutions and a method of servicing.”
The group will work with a range of wrap providers and investment providers. Pittaccio believes that everything starts with the client proposition and from there the right wrap or investment solution becomes clear.
Defining their proposition remains the most difficult area for advisers at the moment. Pittaccio says: “It is very difficult to do and you have to be disciplined. The trouble for many advisers is that they want to continue to have a cup of tea with people they have done business with in the past. Their top clients have subsidised their weaker clients. This can happen but they have to understand it is not profitable so it is like a hobby, like football or playing the electric guitar.”
Pittaccio does not believe in calling round and sacking clients, as some transition planning experts have suggested. He says that in most cases the clients will fall away by natural attrition. It is just a question of being clear about what you can afford to provide to whom. Advisers need to be clear on which clients are paying their bills and be clear when defining their service proposition. He says too many are designed by committee and end up looking like 15 different businesses have been shoe-horned into one.
He also believes advisers have to decide the type of business they want to run. He says: “We have one business that decided it would only take 50 clients and they had to have over £500,000 in assets. Another decided that he didn’t like leaving the office or dealing with life or investment companies so he only delivered the report and didn’t want to involve himself in the execution. We don’t aim to define what these businesses should look like.”
He believes that transition will not be for everyone. He says the first question he asks is whether the adviser stills wants to be there in 2012.
“If you look at the journey of most financial advisers, they started as a tied salesforce, then there was a rush to networks, but they were essentially still selling. Some people are better suited to transactional sales and if so, it may be that financial services isn’t the right place for them anymore. Very few came into the business with the view that they were starting a business. They just found themselves running a micro-business without intending to do so.”
He finds that the majority of In Partnership’s 450 advisers do want to remain in the game and if they don’t, the group has ways for them to manage their exit. He remains suspicious of some of the consolidators and believes that advisers shouldn’t see it as the only way to exit their business. “Advisers are perfectly capable of doing it themselves,” he adds.
Nevertheless, he remains extremely positive about the outlook for advisers, believing adviser businesses will be far more valuable in the new environment and advisers will be paid properly for the value they add. Unlike his own haphazard transition in 2001, he believes advisers now have significant tools at their disposal to help them manage the process.