Bestinvest chief executive Peter Hall believes the firm’s “unique business model” comprising online investment services and wealth management gives it a competitive advantage. But while it’s fair to say that Bestinvest has its fingers in a number of pies, an investment service for advisers has never been on the menu – until now.
Permira, the private equity firm that bought the majority stake in Bestinvest last year, recently acquired Tilney from Deutsche Bank. The business is merging with Bestinvest, creating a bigger firm and handing Bestinvest a springboard into discretionary fund management. This fits perfectly with Hall’s ambitions for growth.
“We are intending to invest a lot to broaden the range of services to IFAs and improve services,” he says. “We’re investing for growth. We feel as though we’ve got the ability to compete in the business-to-business space and we can do a lot more.”
Bestinvest will benefit from Tilney’s 250 IFA relationships and £1.5bn in assets, which are almost entirely on the DFM side. Although the Tilney brand has been dormant since 2006, when it became part of Deutsche Bank, Hall says IFAs still recognise it as a DFM brand.
“Most advisers see us as an advice and platform business, but through Tilney we can offer a full range of services. We can offer our range of multi-manager Oeics and model portfolios. One of our strengths is our investment expertise – it’s what we’ve won awards for – and we believe that will be attractive to advisers,” he says.
The wealth management industry has been undergoing consolidation for the past few years and Hall says the financial backing of Permira will enable Bestinvest to continue down this route. “Permira gives us the firepower to do this but its not just about scale – the fit of the company has to be right. Tilney is a perfect fit for us geographicially and in terms of its services and culture. What is really important is that we get the benefits of scale but also continue to provide a personal service.
“If we can negotiate a better deal with fund managers, clients will be better off, and if we can negotiate a better deal with platforms, the cost to clients is reduced.”
Having spent the majority of his career with banking groups, including Barclays and UBS, Hall has been at Bestinvest for the past four years. He inherited his interest in business from his father. “His job was turning around underperforming companies. He would talk to me about all types of businesses,” he says.
Knowing that he was heading for an office-based career, Hall wanted to use his gap year before university to do something “active”, so he spent 1981/82 as a second lieutenant with the British army. He was based in Germany and would have been sent to the Falklands had he joined six months earlier. But in the days of the Soviet Union he was still deployed as if it was war. This meant being woken up in the middle of the night, unsure if he was facing a real attack or a training exercise.
In his present role, he says Bestinvest’s online investment and wealth management services cater for clients with large or small amounts to invest, DIY investors and those who need advice and portfolio management.
“The interesting thing is that the two areas are more related than people think. A large proportion of wealth management clients will have execution-only in place for things like children’s Isas. And we find a large number of execution-only clients reach a point when they do not have the time or inclination to do it themselves and want advice. Having both services is incredibly powerful – otherwise we would either be turning away business or providing services to some clients that didn’t meet their needs.”
The rise of execution-only services and the role of face-to-face advice have become topical since the move away from commission to fees under the RDR. Hall says: “I think there are a growing number of people who will want an execution-only service rather than pay a fee for advice, but not the traditional execution-only service for people interested in investment. Stockbroking businesses where clients choose from lots of shares will not be successful. The growth will be in a different type of execution-only service that helps people make important financial decisions. One that provides helpful tools and information. That’s the type of service we are developing.”
He feels the majority of people will still want advice on the most important issues, such as retirement planning, which is why Bestinvest has its feet in both the execution-only and advice camps. He believes servicing all types of client, albeit through different types of service, is the way to plug the advice gap.
“There are those who have been abandoned by banks but have enough money so that it is profitable to offer them face-to-face advice. But it is more diffficult to provide for clients that have been abandoned and do not have enough money for anyone to offer them face-to-face advice profitably. The service has to be offered through guidance over the phone and online.”
Bestinvest’s efforts to fill the gap include linking up with The Times to offer readers a white-labelled version of Bestinvest’s services at the same cost as business coming directly through Bestinvest. Critics have suggested that this venture, Times Wealth Management, is a money-making exercise for the paper that offers Bestinvest free publicity, but Hall says it was established with the best of intentions. “I feel very proud of it. Times Wealth Management was about reaching out to the readership through a brand they trust – which is careful about the partners it picks – and providing value for money.”
The tie-up fits with Hall’s general plans for Bestinvest.
“One of the greatest things about this business is being able to help people make key financial decisions without charging them lots of money.”
What is the best bit of advice you’ve received in your career?
Surround yourself with the best people.
What is keeping you awake at night?
Marketing ideas for our launch campaign. I tend to come up with ideas in the early hours of the morning.
What has had the most significant impact on financial advice in the past year?
The announcement of no requirement to take out an annuity.
If I was put in charge of the FCA for a day I would…
Change the term ‘restricted advice’ so it distinguishes between advisers who are whole of market and those that are tied.
Any advice for new advisers?
Ask open questions and listen to get a deeper understanding of what clients need. The risk is that advisers can jump in
June 2010-present: Chief executive, Bestinvest
2006-2010: Managing director, UK regions and investment management, UBS Wealth Management
2001-2006: Chief executive, Barclays Stockbrokers, Investment Management and Trust company
1999-2001: Chief operating officer, Barclays Wealth
1997-1999: Chief operating officer, Barclays New York
1995-1997: Strategy director, Barclays Capital and Barclays Global Investors
1991-1995: Manager, Boston Consulting Group
1985-1990: Client relationship manager, SG Warburg (now part of UBS)