Evestor co-founder Anthony Morrow is among those convinced non-advised drawdown is the next financial services scandal. As such, he will be shedding no tears at the fate of the providers once the FCA completes its thematic review into the area.
“It is clear non-advised drawdown is the next scandal and the big pension providers involved deserve everything they get. Although they’ll probably be used to it once the non-advised annuity scandal comes through,” he says.
“Given the historic problems the industry has faced, I can’t believe people are looking to expose themselves to the risk of a repeat. The rationale behind these non-advised solutions is simply to retain those customers and not lose the assets, whatever the ultimate cost to the customer. It’s shocking and it needs addressing urgently.”
Morrow is annoyed by provider claims that people new to investing and with little money prefer non-advised services. He just does not see how an area as complicated as drawdown can be suitable for the non-advised market.
He believes advice could be mandatory in this area, just as taking regulated advice is mandatory on defined benefit transfers of £30,000 or more. That said, he is not a fan of mandatory advice requirements applying only to those who have investments above a set level and does not see why, under the current system, it is okay for the less wealthy to go down the non-advised route.
“It’s ridiculous that the provision of advice should be restricted to those who have a certain amount of money and who, almost by definition, have experience and associated wealth,” he says.
Morrow’s views on the rights and wrongs of non-advised drawdown perfectly illustrate the thinking behind his creation of online advice firm evestor with his friend, MoneySupermarket co-founder Duncan Cameron, in 2015. The firm aims to make advice available to everyone and lower the price of that advice.
“I’ve known Duncan for over 15 years and we spoke many times about how financial services does not deliver great outcomes for those most in need; the inexperienced and less than affluent. From these conversations we started to sketch out how we could work together.”
CV – Anthony Morrow
2015-present: Chief executive, evestor
2007-2015: Founding partner, Paradigm Partners and co-founder/commercial director at Perspective Financial Group until 2014
2001-2006: Management consultant, KPMG
1997-2000: Management consultant, Deloitte
Morrow believes there is scope for the cost of advice to come down along with platform and fund management fees.
He says: “What we do at evestor is provide people with the choice as to how they engage with advisers and what form the advice takes. It’s not a binary position whereby we are good and everyone else is bad. We are different in that we have looked at our service model and really focused on reducing costs. We don’t have flash offices because we will never welcome any clients here; we are digital only and have virtual meetings.”
Evestor’s website makes it clear it provides restricted advice. “We are restricted in that we only offer one Isa, one pension and one general investment account. Shortly, we will advise on protection and at-retirement solutions, including DB transfers,” says Morrow.
Morrow says being restricted in this way enables the firm to pass on efficiencies and commercial benefits to consumers. “I’m a pretty vocal fan of vertical integration as a way in which the overall benefit for the consumer can be improved. We will integrate further over coming years as it makes commercial sense and will enable us to pass on any savings to the customers. That said, I see many attempts at vertical integration in the industry that seem to be ways to shore up profits and protect margins elsewhere – not to benefit the customer,” he says.
Prior to setting up evestor, Morrow was working at Paradigm Partners, the firm he co-founded in 2006 with Bankhall co-founder Paul Hogarth, whom he describes as one of the industry’s “great front-men”.
“One of the great things about Paul is his ability to recognise future changes and that they may mean changing focus on current plans, which is very rare with many entrepreneurs,” says Morrow.
Paradigm started out as a financial support services company but expanded into other areas, including product manufacture. Various subsidiaries were established, including Tatton Asset Management, jargonfreebenefits and Amber Financial.
“Paradigm is built around the importance of distribution and its partner firms. The move to manufacturing products came about because we felt there was an opportunity to improve the quality of what was available out there.
“Tatton is a perfect example which reflected the growing trend among our firms to outsource and use model portfolios. We had relationships with other discretionary fund managers but costs were high and the quality was varied. We knew pricing would soon become an issue, so the decision was made to create our own and the rest is history.”
In 2008, Morrow also set up IFA consolidator Perspective Financial Group with Hogarth before leaving his role of commercial director in 2014. What does he think of the current level of consolidation among advice firms?
“I’m still a shareholder of Perspective and it is a great business with some great firms and people there. There are different strategies being employed among the so-called consolidators, none of which I would argue have been successful yet – and by successful I mean getting a meaningful exit for their investor – but all of which focus on the increasing appetite for IFA businesses to look to sell up.
“It’s well documented that the IFA population is an aging one and while there seems to be an increasing interest from younger people to pursue this as a career, I’m not sure there will be enough of them to pick up the slack in five to 10 years’ time. If the consolidators, or any business that is looking to acquire in order to grow, can help with that, then it’s a good thing.”
For Morrow, the industry has improved in many areas over the last few years.
“The RDR helped with much of it, although I do think a large part of the industry was already heading that way anyway,” he says.
“Advisers have become more professional, not just in how they work with clients but also how they view their businesses and run them. The one area that still needs lots of work is transparency from the customers’ point of view.
“It is important for customers to feel as though they aren’t getting ripped off and while that isn’t an easy thing to do, it is something we should aim for, especially given the media’s growing focus on costs and the impact these have on returns.”
What’s the best bit of advice you’ve received in your career?
You can’t do everything at once; concentrate on one thing at a time and make it work (I’m still working on that one!).
What keeps you awake at night?
Not much – I’m a pretty decent sleeper.
What has had the most significant impact on financial advice in the last year?
Technology and this will continue to be the case for the next couple of years.
If I was in charge of the FCA for a day I would…?
Ban non-advised retirement products, review the funeral plan industry and look to mirror the price cap on workplace pensions in accumulation for decumulation, among other things. It would be a busy day in the office.
Any advice for new advisers?
Embrace technology, think long-term retention of clients and manage costs carefully.