Cornwall-based adviser Rosie Falco’s history of working for life companies taught her a lot about the type of adviser she did not want to be: sales-led, poorly qualified, offering little value to clients. When she set up Evans Falco with Treve Evans in 2010, she believed there must be a better approach. She started with a blank sheet, using her experience of wraps and platforms to build an RDR-compliant business from the outset.
Falco had worked at Allied Dunbar, Legal & General, and then Skandia, before becoming an IFA in 2010. She and Evans met in 2007, when Evans – a former chartered accountant – became an IFA and joined a firm on her panel of supporting IFAs. The new business was authorised in 2010, taking over the client bank of a retiring sole practitioner at the start of 2012.
Falco and Evans took plenty of time to decide how they wanted to build the business. From the start she was resolved to be a financial planner rather than a traditional ‘IFA’.
She says: “I believe that financial planners manage the whole of people’s finances. It’s not just about setting up things. My experience of dealing with lots of IFAs didn’t fill me with confidence. Having had a couple of years’ experience of ‘selling’ with Allied Dunbar, I didn’t enjoy it at all.”
An important part of the process was deciding how she would run the investment side. Again she felt that the historic model of financial advice was not ideal.
“In the past IFAs did their research to a degree” she says. “Their process tended to be a finger in the air. They might invest because they liked a fund manager, or they had been written about in the press. But there was no consistency, and the asset allocation was often very hit and miss. We didn’t want our business to operate like that.”
This meant taking the decision not to be full time investment managers. It also meant a lengthy due diligence process on discretionary fund management partners to build an appropriate short list. Equally the firm, which has a core of high net worth clients alongside a relatively lengthy tail of lower net wealth clients, needed a managed solution for clients with less to invest.
Falco says that one of the advantages of using a platform is access to good solutions at lower cost for smaller investors.
She says: “Cost is a key consideration for us, but the manager should also fit the client and their aspiration and risk profile.”
Although Falco is not prescriptive and keeps her short list of investment firms relatively fluid, she has tended to use a number of providers. London & Capital takes the ‘core’ of client money and she says: “I like the way its managers operate with a blend of passive and active. I also like that they take a view on markets and are happy to switch into cash or short dated gilts at certain points to take risk off the table.”
The group also uses 7IM for cheaper passive portfolios and then uses Hawksmoor Investment Management for clients with greater risk appetite. Falco may also use Saltus for clients where more alternative underlying assets are appropriate, or for diversification.
Nevertheless, the list is always evolving: “We are constantly interviewing managers and doing more due diligence. We want to have enough scope to ensure that we can blend and achieve the right outcome.”
The outsourced solution has generally gone down well with clients. The partnership’s predominantly Cornwall-based clients do not tend to be at a stage in life where they are taking big risks.
Falco says: “Most of our clients are very well engaged in the process. It is quite new to them and often different to advisers with whom they have had contact in the past. Most like to find out about the managers in charge of their portfolios. We find that those clients who say ‘I trust you’ are the ones most likely to say ‘you didn’t tell me that!’. We like it when a client gives us a good grilling. It means that they are invested in the process. They know where there money is and why it’s going there.”
Falco is rigorous in keeping the different parts of the value chain separate. She works on the basis that any cost – the platform, DFM or adviser cost – can be changed at any time without disturbing the other parts of the mix.
As a relatively small firm, Falco has also looked to outsource other parts of the business, at least until the business grows. She uses Paraplanning Online.
She says: “None of the services we’ve looked at is perfect and we are in a constant process of evaluation. However, we find the best way to prevent things going wrong is to use compliance input. We have a compliance adviser, who is ex-Simply Biz, that we use on an ad hoc basis. He will help us with file checking or to give us an overview of new legislation. It will often be for a sense check, to ensure we are doing the right thing.”
The business’s main platform is Novia, which the partners find has almost all of the functionality they need for their client base. Falco believes that some of the major platform providers were far too slow to launch their unbundled propositions, and that Novia makes sense for their business from a cost and services point of view.
Falco concludes: “We are a new company and can be flexible and nimble. We do respond to feedback from our clients and we have generated good local support. Having a range of good partners incorporated into the business is crucial to making the whole thing work. We need to know we can trust the firms that we deal with”.
Underpinning the advice
Compliance: Directly authorised, were using Siimply Biz but just resigned and will manage our own compliance with help from a specialist compliance consultant as required.
Number of advisers: two; plus two more and one trainee at AR’s Morlaix and AFWM
Number of staff: two advisers and four support staff (two admin, one compliance admin and one paraplanning)
Platforms used: Novia, Skandia, Fidelity FundsNetwork and Cofunds, mainly for legacy business
Investment strategy: Outsourced. Our mantra is “investments should be continuously managed, regularly rebalanced, and in line with the client’s attitude to risk”
Estimated assets under advice:£25m (excluding AR firms)