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MM Profile: Malcolm Streatfield tells providers and regulator to leave trail alone

Lighthouse Group chief executive says changes imposed by the RDR need to be given time to bed down.

Streatfield-Malcolm-Lighthouse-2013
Streatfield: No customer detriment from historic trail

The last year has been a turbulent one for Lighthouse Group, although Malcolm Streatfield is keen to avoid pointing the finger of blame.

Despite a failed attempt to delist from the Aim market and the resulting resignation of chairman David Hickey, chief executive Streatfield is philosophical about the events of the last twelve months.

“We live in a democracy and the shareholders express their views as do the owners. The shareholders let us know how they felt and we have to move on,” he says.

Lighthouse proposed to delist from the market in July last year but failed after 53 per cent of shareholders voted against the proposal. It required 75 per cent of votes in order to push the motion through.

During the proposal, shareholders attempted to install former joint chief executive Allan Rosengren into Hickey’s position. Streatfield says good relations with both Rosengren and Hickey remain and adds he expects Hickey to return to the industry sooner rather than later.

“I would have thought we will see David again in the industry, although I have no insider knowledge. He he gave nine year of his life to Lighthouse and people come back.”

The last year has also seen the industry get to grips with the challenges presented by the RDR.

Perhaps surprisingly, Streatfield is eager to avoid criticism of product providers for the teething problems faced in the early days of mandatory adviser charging.

“I am not one to be too critical because this is a major year of change, that is why we need a real period of constancy to allow these changes to bed down.”

Advisers also need time to implement the changes required by the RDR and Streatfield has called on the regulator and product providers to refrain from switching off trail payments to allow advisers some certainty.

He questions whether it is necessary to switch off trail on historic business as he says there is no consumer detriment.

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“We want to be the go to adviser for middle Britain”

“Lots of businesses have acquired policies that come with a recurring trail and I see no reason why that should be disturbed. Providers that think they can turn it off at a defined date will incur the significant angst of the adviser population.

He adds where trail would be switched off it would not be passed to the customer.

“If that payment is cut off where does it go? It rarely goes back to the client so it should just be left alone.”

Lighthouse today has around 550 advisers in total across four separate parts of the firm.

Streatfield says the aim is to grow its restricted national arm, Lighthouse Financial Advice, to 500 advisers by July 2015.

Streatfield says: ”We are aiming to add 10 per month and we think there is growing demand from British people left in the void by banks and building societies.”

Streatfield is keen to stress that the Lighthouse network is the advice network for middle Britain, something he says is reflected by the group’s numerous affinity partnerships with a number of unions.

Partnerships have been struck with British Airways and the shop workers’, nurses and bakers’ unions in recent months.

He says affinity business currently represents 51 per cent of new flows coming into Lighthouse Financial Advice and that is set to continue.

“We want to be the go to adviser for middle Britain, we see a super opportunity to lock into the space vacated by banks and building societies and are looking to grow the business.

“BA clubs have been particularly successful for us, they have 40,000 employees ranging from pilots to ancillary staff. You can meet with between 200 and 300 retirees through seminars in that space all with differing financial requirements.”

”We see a super opportunity to lock into the space vacated by banks and building societies”

Lighthouse currently has 300 advisers in its network arm, Lighthouse Advisory Services. Around 90 per cent of those advisers are currently independent and Streatfield expects a marginal movement to restricted models.

“The vast majority will remain independent and most have already made up there mind in that space.”

Although Streatfield says recent financial results have recieved negative headlines, he says the general performance has been good, preferring to concentrate not he firm’s earning before interests, taxes, depreciation and amortisation as a key indicator of performance.

The business posted losses of £4.6m for 2012 as it set aside £3.9m in costs relating to its 2008 merger with Sumus Group.

“We have to make adjustments that parts of the business we acquired years ago are worth less than what we paid for them, more important was the £1.5m of Ebitda that showed we were trading profitably. I think some headlines need a bit more analysis.”

The business has between £9m and £10m in cash reserves although Streatfield says a large portion of this is tied up as regulatory capital.

Despite this, Streatfield says the business is not looking to invest in sizeable acquisitions.

“We do need up to £6m of that for regulatory capital purposes. The actual free margin is around £3m but we are not looking to dish this out at the moment on acquisitions.”

Instead, Lighthouse is currently in the early stages of developing its non-advised proposition which is due to launch in 2014.

Based around an online and telephone-based service, Streatfield says it will be used to supplement its face-to-face advice business and provide referrals for when people’s needs become more complex.

“It will launch next year and we are currently going through a process of concluding how to go about making it work. We see this as working alongside, rather than in competition with our advice business.”

Streatfield-Malcolm-2013-700x450.jpg

Born: 1957

Lives: Bury St Edmunds, Suffolk

Education: Langley School, Norfolk ( Boarding )

Career: 2002-present: chief executive, Lighthouse Group, chief executive since 2003; 2000-2002: chief executive, BWA Group Plc which merged with Lighthouse in 2002; 1993-1999: associate commercial director, Burns Anderson Independent network Plc; 1988-1993: area manager, Midland Personal Financial Services (Midland Bank, now HSBC); 1985-1988: financial adviser, TSB Trust Co Limited; 1983-1985: district agent, Prudential Assurance Co Ltd; 1976-1983: Midland Bank branch banking; 1975-1976: British Army

Likes: Rugby, tennis and gardening, and interacting with people

Dislikes: Grumpy and negative people

Drives: BMW 640D

Book: It Doesn’t take a hero, the autobiography of General H. Norman Schwarzkopf

Film: A Bridge Too Far 

Album: Machine Head by Deep Purple, best track “ Smoke on the water”

Career ambition: Lighthouse to be recognised as the go to adviser for middle Britain

Life ambition: To be a good Dad and to make every day count (you don’t know when it will end !)

If I wasn’t doing this I would be… Bored

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There is one comment at the moment, we would love to hear your opinion too.

  1. Julian Stevens 23rd June 2013 at 7:29 pm

    Neither the providers or the regulators are likely to listen to calls from any quarter for trail to be left alond. The former won’t listen because they’ll almost certainly keep it for themselves and the latter won’t listen because the fundamental mindset at Canary Wharf is that intermediaries don’t earn it.

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