FSA figures show a 23 per cent fall in adviser numbers since 2011 as the RDR takes its toll and it is clear there is a rocky road ahead for some.
But Foster Denovo chief executive Roger Brosch believes that while the fall in numbers is a concern, it also presents an opportunity to act on what he believes is increasing client demand.
He says: “There are businesses that are well positioned and have good-quality advice propositions. There is a real opportunity to recruit and attract some of the better advisers in the industry and there is opportunity in the market.”
Brosch and Foster Denovo know a thing or two about recruitment. At the Money Marketing Awards 2013 last month, Foster Denovo picked up the coveted prize for IFA of the Year as well as the award for Best Recruitment and Development.
“I think there is going to be a very significant increase in the adviser gap and that is a real worry. But there is a mass of opportunity there for businesses to offer good-quality advice. I think the demand is there and there is an opportunity for us to expand,” says Brosch.
Brosch launched Foster Denovo in 2005 alongside board non-executive chairman Keith Carby. But Brosch says he did not initially plan to work within the financial services industry.
After studying economics and business studies at Kingston University, he spent a year as a regional sales representative at Rothmans International. But when a friend working within financial services offered him the chance to become a financial adviser, he jumped at it.
“I think it was the opportunity to run my own business and take control of my own destiny. I think there was an entrepreneurial edge in me and corporate life was not particularly to my liking.”
Brosch spent four years at Financial Planning Services working as an IFA and says it was there that he realised his passion for financial services. “I very quickly became interested in helping people with their finances. Everybody I spoke to had some financial worries or financial needs and there was a very big market there.”
In 1986, Brosch joined General Portfolio, working his way up from senior branch manager to regional director before moving on to a regional director role with French insurance company Générale Assurance Nationale, which closed in 1997. After the closure, a group of senior managers and advisers from GAN became the founders and partners of the Millfield Group, where Brosch became distribution director. However, he says the group changed direction and moved away from the partnership culture within which he wanted to work.
Brosch took over the management of Tenet-owned Capital Planning in 2005 alongside Keith Carby and moved 85 senior partners and advisers over from Millfield before relaunching and rebranding as Foster Denovo. In 2007, the management team bought out the business from Tenet and the company is now owned by the partners and staff, operating in three main areas: private clients, employee benefits and the charity sector.
Brosch says it did not take long for the company to become successful, increasing turnover from £5.5m to £18m within the next three years.
“We very much wanted to build a business that was different. We believe passionately in the importance and value that can be added to really strong relationships and wanted to build these with our partners and for them to have really strong relationships with the clients.”
Brosch makes clear it is the clients, partners and staff who are central to the success of the business and he puts a lot of emphasis on continued development and training. “People should have a development programme for everyone,” he says. “For us, our business is about the people and if you do not grow their capability and their competence then the business will suffer.”
Foster Denovo launched a recruitment drive in October last year and is aiming to boost the 100 existing partners by 50 per cent over the next three to five years.
“We’re not looking for stratospheric growth but for sensible and stable organic growth that we can sustain with the quality of business infrastructure we have got. We are looking for good-quality and like-minded partners to join a very successful business model.”
The company has acquired three firms over the past two years, including Barker Poland and Holman and Partners, and Brosch said it will continue to look for opportunities. “I think [acquisitions] are important to us and the three we have done have been very successful, but we are very selective. We are particularly concerned about getting the right cultural fit so that does mean we turn a lot of businesses down.”
Although Brosch is positive towards the firm’s RDR business transformation, he says it has not been easy. “We have refocused our business transformation programme full-time since 2010. We have had a highly resourced team focused on our RDR transition so it has been a relatively smooth journey but that doesn’t mean it has not been a lot of hard work.”
Brosch says Foster Denovo’s current charging structure has been in place since 2009 but was formalised last year to ensure the firm was RDR-ready.
Current charges sit at up to 3 per cent initial charge, depending on complexity. An ongoing service fee of 0.5 per cent is charged for the firm’s Select service, where the adviser focuses on one key area of advice, while a 1 per cent ongoing fee is charged for the Quantum service, which Brosch says looks at a broader advisory service including long-term strategy and cashflow modelling.
Brosch says although the company is constantly reviewing its charging structure, the current fees are well received by clients and there are no plans to change them in the near future.
Foster Denovo has adopted both an independent and restricted advice model and Brosch believes other firms should do the same, as well as some form of execution-only process.
“I think you need to be able to offer clients a proposition that really suits their needs. An independent offering for those who really do require it, and for those who would be comfortable with a restricted offering you should be able to offer that, as well as an execution-only process or a more transactional plane.
“We certainly operate in all three of those propositions and I think that is important for an advisory business going forward.”
Born: Sutton Coldfield, West Midlands, 1962
Lives: Wimbledon Village
Education: BA in Business Studies and Marketing, Kingston University
Career: 2005 – present: chief executive officer and founder, Foster Denovo; 1998-05: senior partner and founder, Millfield partnership; 1994-98: regional director, Generale Assurance Nationale; 1990-94: senior branch manager, regional director, General Portfolio; 1986-90: IFA, Financial Planning Services; 1985-86: regional sales representative, Rothmans International
Likes: Coaching for under-12s rugby, going to the gym, raising money for Muscular Dystrophy
Dislikes: Negative attitudes, people who are full of self importance
Book: Touching the Void by Joe Simpson
Film: The Shawshank Redemption and Skyfall
Album: Rumours by Fleetwood Mac
Career ambition: To make Foster Denovo the best advisory business in the UK and to raise £1m for Muscular Dystrophy
Life Ambition: To be a positive influence and make things happen
If I wasn’t doing this I would be…I would be at a marina in Cornwall tinkering about with boats all day