Building financial services firms that are based on technology seems almost inevitable for Payingtoomuch.com founder and managing director Michael Ward.
When he was growing up his father, a barrister, was vocal about the benefits of self-employment so when the opportunity arose to be his own boss at the age of 25, with four years’ financial services experience under his belt, Ward took it.
“Setting your own business up is difficult at 48 but not at 25 because you do not recognise the risks.”
Ward’s first foray into self-employment was as an appointed representative of Scottish Amicable in 1990. That business gradually evolved into the protection specialist Direct Life & Pensions.
Venture capital investment from Lloyds TSB in 2000, followed by Skipton Building Society’s acquisition of a 75 per cent stake in the business a year later helped Direct Life & Pensions grow. By 2008, when it was sold outright to BNP Paribas UK subsidiary Cardif Pinnacle, its turnover was more than £20m. Ward stepped down as managing director in 2010.
Ward had prepared himself for the eventual sale of Direct Life & Pensions as soon as he accepted venture capital investment. “Once you get venture capital on board you are on a collision course for a complete exit.”
Direct Life & Pensions was an early provider of interactive protection quotes on the internet but Ward feels the firm did not get the credit it deserved for its technological innovation.
“Direct Life & Pensions was technology-orientated but we were not recognised for it. We used technology in ways that hadn’t been done before to distribute protection products. Now, at Payingtoomuch.com, we are getting recognition for that.”
Ward’s latest venture is an independent price comparison website for financial services.
He says: “I thought we would set up Payingtoomuch.com as a non-advice service where people would only buy if they wanted to. I thought it would naturally appeal to low-value business, so we would build relationships based on low-to-medium value transactions. But what we have actually got are high-value transactions. We have had around half a dozen life insurance applications for £2m and above.”
The challenge of keeping on top of the latest developments in financial services technology with fresh ideas and facilities does not deter Ward. “It is hard work but not impossible and it’s very rewarding.”
The FCA recently drew attention to the problems with providing access to financial services without advice, saying whether advice has been provided is down to the perception of the consumer and Ward says he has been very careful to spell out to consumers how any transaction has been carried out. This is particularly important as the service branches out into areas such as annuities, where the consequences of consumers choosing the wrong option can be substantial.
“It is difficult to nail the digital marketing space as what is allowed and not allowed in digital marketing is quite vague. Some companies do what I would see as misbehaving, and there is a thin line between misbehaving and rulebreaking.”
Ward is also keen to develop relationships with advisers and Payingtoomuch.com promotes financial advice through its Find an Adviser facility. Advisers wishing to be on the referral panel have to register but the service is free of charge for advisers, with the only proviso being that any customers referred get a free 30-minute consultation.
Ward is a strong advocate for taking financial advice on anything high value or complicated in relation to an individual’s circumstances. “If you have had advice from an accountant, that’s fine, but if you have just read an article in the Sunday papers and thought, I’ll have a go at that, it could have bad consequences.
“It is a good idea to say we think you should get financial advice, for example, if you are taking phased retirement or taking money out of a s32 buyout plan when the rules have changed.”
Advisers also have the option of referring their existing clients to the website for business areas they do not deal with, such as home or car insurance, and adviser businesses that choose this option get a 50 per cent share of any revenue.
In Ward’s view, regulation has had a negative impact on access to financial advice but he feels this may not be widely understood. “Whether it is having an affect on the public at large and whether the public realises it has lost something important, I am not sure,” he says.
Ward is more positive about the role of technology in filling the gap left by bancassurance. “Technology has largely filled the gap but there is more to do and that may not come about for 10 years.
“If we look at where we have travelled to, it has been successful. There are imperfections in that process but the thing about the online technology space is that it acts quickly and is transparent. You cannot dual price online; it’s so transparent you would get caught out.”
Born: Bolton, 1964
Lives: Chichester, West Sussex
Education: Bolton School, Liverpool University
Career: 2011-present: owner, Payingtoomuch.com, Eclipse Financial Management and Eclipse Financial Systems; 1990-2010: managing director, Direct Life & Pension Services; 1989-90: financial adviser, Sage Consultants; 1988-89: financial adviser, Carson and Company; 1986-88: mortgage consultant, John Charcol
Likes: Building businesses and great teams; relaxing on a boat with family, friends and a bottle of Rioja
Dislikes: Marmite and people who do not do what they say they are going to do
Drives: BMW 730 sport
Book: The Undercover Economist by Tim Harford
Film: Any James Bond film
Album: Back in Black by AC/DC
Career ambition: To make my website really successful
Life ambition: To see my children become happy adults and reach their full potential
If I wasn’t doing this I would be… A commercial pilot