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Equilibrium: ‘We went restricted and none of our clients noticed’

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It is 21 years since Equilibrium Asset Management managing partner Colin Lawson founded the firm – originally called Applewood – from his bedroom, so it is intriguing to hear his definition of what a business is.

He says: “Many people misinterpret the meaning of a business. A lot of people are self-employed but that is not a business. A business has to be stable enough to operate without you. I’ve pretty much got that now: I have a salary and the profit from the business is separate to that. I own a business that I choose to work in.”

Lawson is celebrating the firm’s “coming-of-age” with a party in September but it has taken years of blood, sweat and toil to get to this point, especially in the early years trying to get it off the ground from home. He admits to putting on a suit, going out and walking back through his front door to get that mental separation between home and work.

“The first two years were about surviving and deciding whether it was right for me. In the early years I was doing a lot of appointments in the evenings. I worked 8am to 11pm for two years.

“It was tough but exciting, new and interesting. At the end of two years, though, that was enough. I didn’t like the idea of doing it for the next two decades, so I decided I would deal with people in the day at a location of my choice. I needed to see people with money and that prompted my move into investing for retirement. Retired people who had money could see me  during the day.”

Applewood became Equilibrium as part of a major overhaul in 2009. It dropped its IFA label and commission-based charging structure years before the RDR. The recent acquisitions of Baigrie Davies, Almary Green and Munro Partnership by Standard Life’s financial planning arm 1825 has reignited the debate about independence but Lawson believes it is no big deal if advice firms are bought by platforms they already use. “If you’re already using a platform, the due diligence you’ve got on that is huge.”

Lawson says the rebrand from Applewood to Equilibrium and the associated move from independent to restricted whole-of-market had no noticeable impact on clients because the firm was still using the same platform and still able to look after legacy products, and choose the same investment funds and so on.

“A lot of people are self-employed but that is not a business. A business has to be stable enough to operate without you”

“We ditched the independent tag but I don’t think it makes any difference. Clients care about the end result. We’ve gone restricted and none of our clients noticed.”

But the impact of change within the wider financial services industry is a different matter. Lawson says the environment now is vastly different to the one that Applewood was launched into. It may be a better industry but the transition has created different problems.

“It’s chalk and cheese. We’ve gone from product flogging transactional business with high-charging products to value-added advice. But there is an advice gap to fill now. You used to have the man from the Pru and people taking out contracts with a bonus. They were expensive but at least people had something, and they were tied in so they had to keep them.”

This was the environment Lawson entered when he started in financial services. In 1988 he moved from a youth training scheme with the AA into pension administration with Norwich Union, the company next door to the AA office. A few years later he became a broker consultant at Britannia Life.

“I was 21 and wrote a list of all the companies I wanted to work for as a broker consultant. I went for every interview I could. I went to 20 interviews but didn’t get anything because of my lack of experience. I was too young, so I grew a moustache. And then I shaved it off,” he jokes.

Britannia Life took a chance on him and after four years of building relationships with advisers Lawson decided to set up as one on his own with Applewood.

Twenty-one years on, he is committed to assisting young people up the career ladder with the help of Equilibrium’s two-year graduate training scheme. He is supportive of such schemes in general but, having taken the broker consultant route himself, is concerned that today’s new entrants are not being taught sales skills.

“Graduate schemes are great. They take people through the process and teach them about the technical side and exams but they don’t do the sales skills – how to deal with people. A lot do struggle with it and there isn’t a financial services sales academy they can go to.

“Advisers have still got to be sales- people and convince people to do something they are not planning to do or that they don’t particularly want to do. But we’ve gone from a huge sales bias to no sales knowl-edge, and that is a problem for the industry.”

Lawson is also frustrated that the regulator has not updated its compliance focus post-RDR. “The RDR was introduced to get away from transactional selling and move to ongoing financial advice, but compliance reviews pick on the transactions we have done. What about the things we haven’t done? Compliance reviews should look at a file from start to finish. Why not look at what we should have done and what a reasonable adviser would have done over that time period?”

Lawson’s vision for the future of his own business is for it to carry on as it is doing now. “We have slowed down growth targets on purpose to £500m over the next five years from £2bn. I’m not going to sell the business; I just want to carry on getting better and keeping it fun.”

Five questions

What’s the best bit of advice you’ve received in your career?

Focus on your unique abilities and delegate everything else. If you want advisers to advise they need to be in front of clients

What keeps you awake at night?

Nothing

What has had the most significant impact on financial advice in the last year?

The pension freedoms

If I was in charge of the FCA for a day I would…

Do everything. I’d review the funding of the Financial Services Compensation Scheme and make all the industry fines go into the kitty. I’d also review the long-stop on complaints and outlaw phoenix firms.

Any advice for new advisers?

Learn sales skills. You get everything else through training.

CV

1995-present: Managing partner, Equilibrium Asset Management (formerly Applewood)

1991-95: Broker consultant, Britannia Life

1988-91: Pension administrator, Norwich Union

1986-88: Automobile Association Youth Training Scheme

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 27th May 2016 at 2:17 pm

    If I was in charge of the FCA for a day I would…

    If you were in charge of the FCA for a day, the option of channelling all industry fines into the FSCS kitty wouldn’t be an option. That’s Osborne’s call.

  2. Clients wouldn’t notice unless you tell them. So do we take it that you didn’t inform your clients? If so isn’t that some sort of breach? At all events I wouldn’t think it very ethical. If you did inform them then all I can say is that they are not very discerning. Presumably you don’t get a whole load of referrals from solicitors and accountants. (Yes I know they have slackened off on this, but many firms – at least the more professional ones – still only deal with independents).

    • Philip Castle 27th May 2016 at 6:16 pm

      I did think that too, but to be fair to Colin Lawson, I don’t think my clients would notice or care either! as you know Harry, I don’t even have “Financial Adviser or Planner” on my business cards, I chose something different, because my mother told me I was special!
      I entirely agree with Colin Lawson about the issue of lack of sales skills being trained for new entrants, or ANY training, even with my firm, we focus on geting the staff member through the exams, but most training money see monkey do as they say. I also agree with Colin about the FCA not getting its’ head round the RDR process changes from transactional selling/product to ongoing advice. The vast majority of my work is supporting existing clients and not taking new clients on and it is a lifetime process, what isn’t sorted at one meeting is invariably picked up and finalized at the next.

  3. Ha ha !! ” we went restricted and none of your clients noticed” ………. I have stopped shopping at Morrisons and now go to Lidl……. Funny enough none of my clients noticed either !

  4. I know Colin and his business. One of the outstanding businesses and exceptionally well run. He gets high quality referrals from solicitors, so obviously restricted isn’t an issue. Also i am sure all clients were informed of the change, so it is probably a misquote or misinterpretation.
    Shame we don’t celebrate quality businesses that give credit to our profession rather than knocking them.

  5. Thank you all for your comments. Please remember that it’s an hour long interview and you don’t get to see the article before it goes to print. Of course we informed clients about the move to restricted. My point was that they did not notice any changes, simply because there were none. The advice we give now is the same as it was before. The word “restricted” does not explain correctly what we do. We review our platforms on a regular basis and from the ones that we use we can choose all products and funds. If and when a client requires something in addition we will accomadate this if we have the expertise to do so or decline to take on the client.

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