Octopus co-founder Guy Myles wants to set the record straight about his new network, Flying Colours.
Launched initially as a telephone and online advice service early last year, the firm received a frosty reception from some advisers critical of its positioning as a low-cost equivalent to full regulated advice.
However, Myles is keen to point out this was a test business, designed to build a track record and pave the way for the range of services Flying Colours now offers affiliated advisers, such as paraplanning and investment management.
Myles believes you need to be flexible in business, so rather than abandoning the original service once it had served its initial purpose, it was allowed to run because there was a market for it. It is, however, now a much smaller part of the organisation.
“We focus on face-to-face advice first because investors value that,” says Myles. He is now on a recruitment drive; the aim being to build a national network of 500 advisers within the next five years.
“We couldn’t go out to advisers with something that wasn’t proven. You can risk careers doing that,” says Myles.
“We were delivering advice in a different way but the business is completely different now. Our goal is to make advisers super-efficient in terms of annual revenue per adviser. How do you get advisers from where they are now to where they should be? You have to support them with high quality administration and paraplanning, allowing them to spend more time with clients and less time on administration.”
The test business made a great deal of improving returns for investors by waging a war on “hidden costs” in the investment management process. That still holds and Myles is vocal about the need for the investment world to focus less on selling features and more on results. Equally important to him, though, is reducing these inefficiencies holding advisers back.
Guy Myles – CV
2014-present: Founder and chief executive, Flying Colours
2000-2014: Co-founder and sales director, then managing director, Octopus Investments
1994-1999: Fund manager, Mercury Asset Management
Myles believes technology can do a lot to help, particularly in respect of things advisers do behind the scenes that clients do not really see or value, such as updating financial plans and report writing.
“We are making a big tech push to take time and cost out of what goes on behind the scenes. The average adviser could end up with revenue of £500,000 a year; three times what a typical adviser does today. We’re proving that now and we’re growing so quickly,” he says.
It has been a fairly long time coming for Myles. In 2014, he left Octopus, the investment management firm he founded with his friends Simon Rogerson and Chris Hulatt in 2000. However, it was another 18 months or so before Flying Colours was officially launched in 2016. Why the delay?
“It took so long to develop because we had a lot of tech to build. We had to build a platform and an investment management service. I believe that if you’re going to attack the hidden costs in tax wrappers and wealth management charges, you need to do that. We couldn’t launch out of a box as the benefits wouldn’t have been there,” he says.
Myles had a colourful initiation into the financial services world. In 1994, he turned up for his first day at fund management group Mercury in a white linen suit.
“Everyone called me the ‘Man from Del Monte’ for years afterwards. It was totally humiliating but I knew nothing about the City. I was naïve. My parents were journalists and I was different to the people I was working with, who were groomed for the City at an early age,” he says.
After nearly six years at Mercury, Myles left to establish Octopus with Rogerson and Hulatt. Octopus made its name through innovation in tax-efficient investments and Myles describes the early years as like living in a film.
“It was a great adventure. We had no track record and that forced us to be innovative, which led directly to our success. Everyone thought we were the pirates, the aliens; but now everyone follows Octopus’ innovation in product design, distribution and, to a certain extent, culture,” he says.
Not surprisingly, Myles found it emotionally difficult to leave Octopus. His departure inevitably meant severing all professional ties but he still remains a shareholder.
“It’s been hard to let go but I’m proud of Octopus,” he says.
Despite his enthusiasm for the use of technology in the advice process, Myles is not a fan of robo-advice. He prefers to align himself with the concept of “NextGen” advice, which refers to technology making it more efficient for humans to deliver advice as opposed to automation and algorithms.
“I don’t believe in robo-advice. It can deal with millennials who want to take out Isas but it’s not going to solve the problems that people with money have. Those people have complex tax situations and to service their needs you have to have qualified advisers.”
Myles thinks the industry has “done a terrible job selling the value of advice” in not getting the message across that paying for advice will save people money in the long run.
“There are so many mistakes clients make that advice can prevent. We think advice makes you money but people still think of it as a cost,” he says.
According to Myles, part of the problem is that no client platform or portal sells the value of advice in terms of relationships as well as investments.
“There is a lot of information on investments, which is okay from a platform’s viewpoint, but not amazing from an adviser’s viewpoint. They don’t combine it with information on the financial plan agreed with the adviser, or the ability to change it,” he says.
“We have put in a lot of effort to create our own portal and expand it to bring in more areas to promote the value of advice. Clients can see information that is relevant for their financial future and this reinforces the value of their relationship with their adviser.”
What is the best bit of advice you’ve received in our career?
If you are going to run a business you have to remain flexible in all ways at all times. You can’t stop listening. If I hadn’t learned that when I was younger I don’t think I’d have achieved very much.
What keeps you awake at night?
Keeping the quality up in terms of hiring people and wanting the right people. I want to keep the essence of the brand in everything I do and avoid anything that would kill it.
What has had the most significant impact on financial advice in the last year?
Probably the rise in demand for defined benefit pension transfers.
If I was in charge of the FCA for a day I would…
Provide clearer guidance on things. I like principles-based regulation but sometimes there are grey areas and it’s stressful trying to work out what you are going to do.
Any advice for new advisers?
You need to have technical knowledge but it’s difficult to be successful unless you are also strong at communicating with clients, gaining their trust and building long-term relationships.