Fidelius chief executive on picking the right industry battles and building advice firms from scratch
Fidelius chief executive Jim Grant bought his first advice firm in 1996, so he is used to the regulatory quirks of the UK financial services industry.
Take the holy grail of “what good looks like”. It is a source of frustration for many advisers who struggle to make sense of what is expected of them but Grant is resigned to it.
“I’d like to see the Financial Ombudsman Service and the FCA agreeing on what good looks like; often the FOS says one thing and the FCA says another. But it has always been like that, so I try not to lose too much sleep over it,” he says.
However, the thorny subject of the Financial Services Compensation Scheme is a different matter.
“The FSCS levies we pay should be based on risk: those who do more higher risk business, such as DB transfers and structured products, should contribute more to the risk they are creating,” he says.
“We’re still asked to contribute based on the number of advisers we have, even if we’re not doing business in complicated and high-risk areas. What happened with British Steel shows some people have made a lot of money from doing business they shouldn’t have done and the good guys are picking up the tab to put things right. The current system is insufficient.”
Grant is wary of DB transfer business and Fidelius does not do much of it.
“If we give advice on pension transfers it is usually to keep it where it is. We do not deal with insistent clients,” he says.
“Our starting point generally is that it’s not a good call, but we look at the client’s circumstances to make sure. There are always exceptions depending on health, marital status and family circumstances.”
Recalling the pensions misselling scandal of the 1990s and the subsequent Pensions Review, Grant likens the cyclical trend for pension transfers to the way the fashion for flared trousers comes and goes.
“I’ve been around long enough to see the last two lots of DB transfers and how they have wrecked a lot of people’s businesses. I don’t know why we haven’t learned the lessons by now.”
The implications of that for professional indemnity cover concern Grant, and he points out that a few years ago many advice firms were struggling to get cover as the market had run out of capacity.
“I don’t think that is right. PI insurance should be underwritten by the government,” he says.
Grant became chief executive of Fidelius in 2012 after a two-year break from the industry following the £17m sale of his previous business, Chartwell Group, to Close Asset Management.
Ironically, he had tried to buy Fidelius as Chartwell chief executive in 2008 but the firm was not interested. However, it expressed an interest in him while taking time out so, when he was ready for a return to the industry, talks were successful.
Grant took a couple of former colleagues with him to Fidelius and bought into the business, saving him over 18 months launching one from scratch.
Building advice firms is a world away from Grant’s early career. As a youngster, he wanted to join the RAF but there was a year-long waiting list, so he became an electronics engineer. By 1986 he had changed career, working as a broker consultant at Allied Dunbar. He made the move to advice a decade later by buying the business of an IFA he knew who wanted to retire.
“It was scary because I had to raise the money and put all my savings in. I borrowed £150,000 from the bank to make the initial payments and there were other payments, but it was the best day’s work I ever did,” he says.
That business and another firm he bought in 1998, Premier Direct, were sold to IFG in 1999. A year later he established Cavendish Grant, which merged with Chartwell in 2005.
At Fidelius, the focus is very much on a commitment to customer service.
“One of our big competencies is customer service. We listen to clients, react accordingly and invest in the business based on feedback,” says Grant. “We do a formal survey with our client bank once a year to ask how we’re doing, how could we improve, what they like and what they don’t like.”
Client feedback has driven the firm’s new proposition, which focuses on intergenerational planning.
“We’re trying to include children, grandchildren and other relatives of high net worth clients like a family office. We’re trying to cater for fairly wealthy clients who want to give money away and provide a service to help those who receive it.”
Professional connections remain a key area for growth, too. In 2014, Fidelius set up Care Planning Services with law firm Stone King, as it felt the financial advice and legal side of care fees planning was disjointed.
“Long-term care is an area I’ve been interested in for a long time but the market is now more difficult to work in and there are fewer providers coming in. Some people won’t need it and that’s why insurance products have struggled over the years,” says Grant.
“Education is needed about how to plan well in advance. It needs to be engaged with and acted upon in good time. Often when families get involved it is too late in the day.”
Other joint ventures include Venthams Wealth Management and Wilkins Kennedy Financial Planning as Fidelius’ appointed representatives, and it is currently in talks with other law and accountancy firms as well.
Grant says finding the right model for these professional relationships has been a case of trial and error.
“How you make it work is to work hard at it, recruit the right people and understand how the partner firm operates.
“Each office is different to another and no one size fits all in terms of approaches. We have separate telephone numbers for the joint ventures and the advisers are branded so clients feel our partner firms are offering a fuller service,” he says.
“We have fallen down on this in the past but we now have a good model that our professional connections like.”
What is the best bit of advice you’ve received in your career?
What keeps you awake at night?
Thinking about all the ideas and plans to grow the business.
What has had the most significant impact on financial advice in the last year?
Defined benefit transfers and the implications for FSCS levies and professional indemnity cover.
If I was in charge of the FCA for a day I would…?
Have a conversation with the FSCS to agree a consistent view of what good looks like.
Any advice for new advisers?
Put as much time and effort into your personal development and people skills as you do in exams and you won’t be short of work.
2012-present: Chief executive, Fidelius
2010-2012: Career break
2005-2010: Chief executive, Chartwell
2000-2005: Managing director, Cavendish Grant
1996-1999: Owner, David Shepherd and Premier Direct
1992-1996: Broker consultant, NPI
1990-92: Sales consultant Eagle Star
1986-90: Sales consultant, Allied Dunbar