Building meaningful professional connections has become a holy grail for many advisers. Simon Carling had a natural headstart, having trained as a lawyer before becoming a financial adviser. He credits the connections he made with helping him build up his specialist personal injury advisory practice within McGarrie Vahey & Partners.
Carling works closely with a number of legal practices to advise individuals on investing their lump-sum damages payments. Most of his business is derived from word of mouth and referrals are becoming an increasingly important part of his business. In fact, he questions the value of conventional marketing, preferring to focus his efforts on building business through accountancy and solicitor connections.
Carling’s practice sits within McGarrie Vahey & Partners, which covers all aspects of financial planning. The firm was established as an insurance brokerage in 1978, starting in Alderley Edge, Cheshire before moving to Water Lane in Wilmslow in 1980. It was originally a partnership but is now a limited company which includes five registered individuals. The firm as a whole is embedded in its local community, dealing with long-standing clients and small businesses. However, over the last few years, the firm has been instructed by clients throughout the UK.
Carling started in the financial services industry 25 years ago. He has a long history dealing in high-net-worth clients and PI claims. He says: “I got into personal injury via the forensic accountants that I knew. They introduced me to specialist solicitors and word got around quite quickly. That is how I began to build my part of the business.”
With a legal background, Carling was used to the mindset of charging fees but still spent a number of years as a “traditional” IFA selling products but he adds: “We have felt for a few years and it was brought out by the credit crunch and recession that everyone was going into a more service-based business model and that we needed a robust process in place.”
As a result, the group had already started to re-engineer its business before RDR was mooted. Carling says: “Fees have moved from around 5-6 per cent to 35-40 per cent and that is moving up more and more.”
The group now has more high-net-worth clients, willing to pay a fee for advice and implementation. Around 40 per cent of McGarrie-Vahey’s business is recurring and the directors want to take that higher.
At the end of 2010, Carling decided to implement the Finametrica Questionnaire (just prior to the FSA’s Guidance Consultation Document in January 2011). This assesses client’s risk. He says: “We then discuss the results with a client to generate an asset allocation and from there drill down into funds.”
The firm is developing its investment philosophy and process all the time. For bigger high-net-worth clients, bespoke portfolios are often built with discretionary fund managers. For less sophisticated clients, the firm is using more model portfolios such as those provided by Margetts.
It is also starting to make greater use of platforms. Carling says: “While some of our existing clients sit on bundled wraps, we do like the unbundled proposition such as that from Novia.”
He says that by the end of the year, the firm will have its own investment committee. Independent people will sit on the committee and will provide due diligence on funds and the use of model portfolios within platforms/wraps.
He believes the key is service and regularly reviewing client’s investment portfolios.
Away from the investment side, better use of technology remains a priority for the business. Like many adviser groups, McGarrie Vahey has, to date, only used a relatively small amount of the functionality of its software. The firm wants it to become the engine room of the business and is moving in that direction. Instead of just using it to store management information, it is beginning to use it to look at trends, load minutes of meetings and house key performance indicators.
Technology is also helping the firm with full RDR-compliance. First software the technology used by the group is helping it build six-monthly reviews for clients, for example. Carling says: “We are moving forward on using the system in a more proactive way rather than just storing information.”
He says the group is always looking to add new clients but offering a good service proposition to existing clients takes precedence. His priority at the moment is offering more options and flexibility to clients and maintaining momentum on the move to fees.
Where the group has done marketing, it is still largely focused on professional connections and referrals. Carling says: “I was dubious about the website and whether we have got any clients via this means. However, we have had more people contacting us via the website and it makes us more attractive as a business. We have done a seminar but we tend to do more one-on-one presentations, often to private client teams from solicitors’ practices.”
In line with these ambitions, the group has taken on people only when it found a good fit for the business. Carling says: “We took on a new person at the start of this year. We first met him 18 years ago. He was in a national firm and didn’t enjoy it and wanted to work within a smaller organisation. We offer a good environment and our new recruits tend to be people who we have known for some time. We know how to treat clients. We do not want to be a huge and unwieldy organisation.”
In the meantime, all the advisers in the group are working on their exams. Carling is philosophical: “We know it’s all got to be done.” He is extremely supportive of the RDR in general.
He says: “It is very much a good idea. Rather than looking at it in a negative way, we believe that we will offer a better proposition to clients and we will have a more robust business model at the end of the process.”
McGarrie Vahey & Partners
- Established: 1978
- Based: Wilmslow
- RIs: 5
- Fee-based/ other: 40/60
- Outsourced investment management: Rathbones and Margetts
- Wraps: Novia and others
- Main source of business: Referrals from lawyers
- Qualifications: Underway with QCF Level 4: one or two papers still to sit
- Simon Carling has built a niche practice investing personal injury damages payments within Cheshire-based McGarrie Vahey & Partners
- He has built his business through professional connections and retains strong links with a number of legal practices. He trained as a lawyer in the first part of his career
- The group is well on the way to re-engineering its business in preparation for RDR. Just under half
of its business is now fee-based, having been as low as 5-10%
- The group uses discretionary fund managers for bigger clients and model portfolios for smaller clients
- Better use of technology remains a key priority for the group. Carling wants technology to be the engine room of the business
- The group is seeking out new clients and new recruits selectively and only when it does not compromise existing client service