It is nearly two months since the RDR came in to force and the debate over whether independent or restricted advice is the road to follow for firms is still going on.
One financial adviser who is certain of his path is EA Financial Solutions managing director Minesh Patel.
Patel took over the IFA business in 2001 after purchasing it from an acquaintance. Patel says the business had a good client base to build on but lacked fund-based clients or a recurring pattern of income.
He says: “It was a very old way of an IFA business being run so we bought the client base at a very low level and evolved it over the next 10 years.”
Patel joined the financial services industry from university. After completing a degree in economics, Patel secured a position with Friends Provident as a trainee inspector in Birmingham, before moving on to a broker consultant role in the company’s Ealing and Watford offices. But although he says he learnt many useful skills such as how to build good client relationships, it was not a role he particularly enjoyed.
“I am more of an independent, entrepreneurial type personality who has a preference for doing their own thing and build their own profile and business. There are a lot of factors that were out of my control and input, so it wasn’t the best role for me.”
Patel then moved on to another broker consultant role with Scottish Amicable, a role which he says was driven by the move to London’s West End and the more complex work and career opportunities available there.
His next move into financial advice was driven by the chance to put his own ethos and ideas in to a business.
“It was the idea of having your own business and being in control of developing that business. It wasn’t financially driven. Many can testify that in the early days of being an IFA, you are earning much less than you would have done had you stayed with an insurance company so it’s a slow build.”
However, Patel says it was around 2011 when he realised just what a success his business had become, after seeing statistics which showed EA Financial Solutions was the largest retirement income specialist in North London.
“That told me that what we were doing was of exceptionally good value and I needed to really move that in to a more central space.”
He believes that the reason his business is a success is because of the valuable relationships he has built with his clients and its independent business model.
“I feel that the model that we have got is brilliant. We work with a smaller number of clients and we really try to get to know them well. We are not trying to get people in to some bogus formula that we apply to everybody. Each individual client will have a different plan.”
EA Financial Solutions has always been an independent advisory firm and Patel says there were no deliberations about the business becoming restricted post-RDR.
The firm deals with many wealthy clients who Patel says can be anxious about their finances and want advice from someone they feel is trustworthy. He says the independent label si a strong selling point for these clients.
“The restricted sector, I think, is more suitable for the mainline type of clients and those who demonstrate some reluctance to pay. If I am totally honest, I think restricted suits certain companies because there isn’t financial planning, it’s akin to product selling still.
“I think it will be a sizeable sector through the likes of St James’s Place, Towry and those where there is a volume need. A lot of these companies do the same formula for one client that they have applied to the other. It is not necessarily bespoke or individualised planning.”
Patel believes independent advice as a whole will continue to be attractive to higher net worth clients as they will seek the best quality financial advisors who will plan out their affairs.
“I think the independent sector is categorised by IFAs who are of a very high quality. When I come across the levels of exceptional quality there is in the independent sector, there is very high amount of qualified to chartered status and they have got a very good business proposition.”
Earlier this month Patel scooped the award for IFA of the year at the 2013 Unbiased Media Awards, something he says was a fantastic recognition of more than 10 years hard-work as an IFA. To work with the media is something which Patel says is important to him and the business.
“In 2010 I knew we had a very good quality offering. I wanted that offering to be known and I wanted to demonstrate my knowledge, my experience and my views in the industry.”
At present EA Financial Solutions has around 160 active clients on its books with around £35m in assets under advice. Patel has plans to grow the assets under advice to £50m by 2014 and his focus will be on that rather than the volume of clients.
“The cost of what we do for a client is average, but the quality of what we do is exceptionally high. So clients are getting exceptionally high value at average costs and I have compared my costs against everybody else in the industry.
“My intention is not to be the biggest IFA in the country with the largest salesforce but to be recognised for doing exceptionally high quality work in complex areas. That is what we have started to evolve since 2010.”
In contrast with some other IFA firms post-RDR, EA Financial Solutions will not be launching an online transactional proposition any time soon.
“Our strength is client interaction. We are highly service orientated and we are really transparent about the way we work. Online is more designed, in my view, for a volume business and people who want to do lots of transactions.”
Although Patel believes the independent sector will see growth post-RDR, he says the future for all face to face financial advice is not so bright as it is inevitable that many consumers will not want to pay for financial advice.
“What will become very evident to the consumer is that is that if they are engaging with someone who is independent or restricted, there will be some kind of fee payable. Not everybody is going to pay and that is natural in any marketplace. The market has to evolve and I think that is a very good natural development for the marketplace.”
Born: Walsall in West Midllands, 1971
Lives: Elstree, Hertfordshire
Education: BA Honours in economics, Liverpool University
Career: 2001-present: managing director, EA Financial Solutions Ltd; 2000-01: broker consultant, Scottish Amicable; 1995-2000: broker consultant, Friends Provident; 1994-95: trainee inspector, Friends Provident
Likes: Sport, keeping fit and family life
Dislikes: Profiteering at the consumers’ expense
Drives: Audi A6
Book: The Steve Jobs autobiography
Film: Top Gun
Album: Thriller by Michael Jackson
Career Ambition: To grow the business to £200m AUA and be known as one of the most foremost firms in London for quality
Life Ambition: To see my two sons to grow up to be successful and happy
If I wasn’t doing this I would be… An accountant