Les Conway is a financial planner at Pinner-based group Essentially Financial. He is the sole Director, supported by two staff. He set up the business in 2010, having previously worked at James Harvey Associates and Creeger Financial. He also worked for some years at Allied Dunbar. He offers a full financial planning service, focused on client objectives rather than products. He is part of the Paradigm network and believes in using all the tools it provides.
When Les Conway set up his Pinner-based business two years ago, his goal was to keep things simple. Aware that his was a small business – at least in the short term – and the compliance burden would fall on him, he was keen to outsource as much as possible. This had two happy side-effects – he could spend more time with his clients and he took some risk out of the business.
He had previously worked with a partner, but had branched out on his own when he’d realised that they wanted to go in different directions. It was an amicable split and Conway has enjoyed being master of his own destiny, but he recognised early on that he couldn’t do everything. He says: “I looked at my proposition and what I wanted to achieve. From then on, it was a no-brainer to retain Paradigm. It helped me simplify the process as much as possible.”
He had worked with Paradigm at previous firms and knew and trusted the people and processes. Being part of a network means that Conway outsources both the compliance function of his business and the investment selection as well. It means he must rely on Paradigm’s internal selection criteria, but he has generally been pleased with the results.
For example, he has used Quilter for discretionary fund management because it is recommended by Paradigm. He is not compelled to do so, but says the network has done significant due diligence, that Quilter’s offering is appropriate for his high net worth clients and it fits his business model of avoiding undue complexity.
Conway also uses other parts of Paradigm’s investment selection, likening the network’s investment engine to having an internal investment committee. Paradigm create a series of model portfolios, build from a blend of active and passive funds, depending on adviser preference, with fund selection and asset allocation directly linked to Morningstar. They will do the rebalancing of portfolios, so he does not have to worry. He adds: “This means that my due diligence is covered on the investment side.”
This was vital in de-risking his business, helping Conway avoid exposure to complex or potentially toxic financial products. It meant that Conway did not have to spend swathes of his time researching investments or deciding on tactical asset allocation shifts for clients. It tied in with the RDR and ensuring full compliance.
It helped that the investment names involved were well-known. Conway adds: “I will tell people to Google Morningstar to understand what they do and satisfy themselves that they are a strong and credible company. People criticise the internet, but it can be an extremely useful tool in this way.”
But he has found that his clients are not very interested in the minutiae of their investment strategy. It is simply not what they value from his advice offering: “For most clients, it is a non-issue. They don’t want to know.”
Of course, that doesn’t mean that he can take his eye off the ball. He is acutely aware that his business lives or dies by the solutions he recommends and ‘keeping things simple’ through outsourcing does not rid him of responsibility. At all times, he sees it as a partnership. But he believes that, done well, outsourcing to the right people can help strengthen the relationship with the client. They recognise what these outside experts can bring to their investment selection.
Conway believes that being part of a network is a key strength in terms of the compliance function. He adds: “I don’t think it is very different from being directly authorised. We all work to the same rule book. But this way I don’t have the difficulty of trying to interpret a rule by myself, and worse still, getting that interpretation wrong. With many groups, they can seek advice on compliance, but they don’t have to take that advice. Under the network approach, that doesn’t happen.”
As network fees increase, Conway is constantly reviewing the value of outsourcing, and he believes that it takes work to ensure that he is getting the best out of the relationship at all times. He adds: “We keep an eye on service levels and communication. We keep our eyes open on the market and we always know what is out there. We believe in working the relationship properly. We make sure we talk to the right people and have the right internal relationships. They know what we are trying to achieve.
“I think that if you understand the people that you are working with, you can have the right conversations. If a compliance person is clear on the reason the FSA is implementing a certain rule, it is much easier to comply. It is about understanding what we’ve got to do and why.”
One of his long term strategic plans is potentially to acquire other businesses, possibly where IFAs want to retire. He has also considered mergers in the past. If this happens, he may have to review his existing arrangements. However, to date, he has been happy with the relationship.
It has certainly worked to help keep things simple in the testing early years of a business. He concludes: “It means that when I run my business all I have to think about is the relationship with the client. I don’t have to think about fund selection or what’s happening in the market, or compliance issues. It has worked to simplify my business as far as possible.”