We set up Plutus Wealth Management at the start of last year. We wanted to ensure that we built our new company to be dynamic, young but, most of all, useful. We were keen to present something different to the older, more established firms.
We are trying to focus on the service end of wealth management. We want to ensure that we can show our clients exactly the service they will receive. One of the problems with the financial advice industry is that clients have not really been aware of what they are getting for their money.
They don’t understand what commission pays for in terms of the research, phonecalls or administration. We want to make the whole process more transparent.
We have the advantage of no legacy issues in our business. This year, we questioned all our client base – most of whom have had experience with other advisers – and asked them what their expectations were from their adviser. What reports did they want? How often did they want to speak to us? This was an invaluable exercise. We found that many clients wanted a type of concierge service, with a bit of coaching thrown in.
Some want an account management-type approach. A client has one point of contact, someone who they speak to all the time. This person will not be a specialist in all their financial affairs but will work with the different advisers inside and outside the firm to ensure the client gets the best expertise. It is a consultancy approach.
We offer both a fee and a commission option but we charge a retainer for all our clients. This helps clients feel part of something, like we are looking after them.
For us, it ensures that our costs are covered and we can offer proper servicing. It also works in terms of demonstrating value. At the moment,
we have determined different levels of service for different clients.
We found that many clients wanted a type of concierge service, with a bit of coaching thrown in
Each has a different fee structure and reflects the time and attention given to that client. We implemented this following the questionnaires.
We have not yet got as far as logging time and are still debating whether it is necessary to go that far. Do we need to have a spreadsheet documenting every 15 minutes of our time? Should we be billing for units of time or for the nature of the work? We’re not sure yet. We want to have a look at what other people are doing and what has been successful for them.
We are now trying to put everything in place to ensure that we are RDR compliant. We only have one adviser with all the necessary qualifications, so that remains a challenge. We have just recruited a couple of new people who are relatively new to the industry, so there are challenges there about training them up and getting them through the exams.
We would happily outsource some aspects of client work to other financial advisers, for example, tax planning or pension drawdown. We want to get the best advice. We will bring someone in with whom we have a good relationship so another ongoing project for us is to assess our
relationships with external providers.
We did some strategic reviews in the autumn and the results of this will come out at the beginning of this year. This looks at who we are using in terms of discretionary fund management, who we are referring people to if they need a will done. Once we have had that review, our next challenge will be to implement that and sort it out. At the moment, we are also trying to devise a service brochure for new clients to demonstrate the value we add. This sets out what they get if they pay our monthly retainer in terms of time, effort and fees.
In terms of technology, we recently brought in a new back-office system – Intelligent Office – that we believe should also help us with our time management issues. This is where all our client information goes and it has helped us understand our client base better. It helps us ensure that we honour all our promises – if we have said someone will have a review once a quarter, we can make sure they get it.
We brought some clients with us when we started the business but we are certainly still building it up. Our average age as a company is way below that of the average adviser and this is reflected in our client base as well.
Our clients are fairly diverse but we have naturally targeted clients of a similar age. We feel this is important to our long-term growth. It also
means that many of our clients are new to financial services and therefore will not understand the whole fees, commission debate. It is a good place for us to start.
Solid structure softens impact of risk
There is no doubt that Plutus is a new model adviser taking a more structured approach to client acquisition and servicing.
One of the restrictions to their growth could come from the reluctance of some of the client liaison team to make the move to adviser status and those advisers who join mid-process adapting to the model, where they get involved at a later stage in the process.
There is no doubt this approach needs a solid structure as any weaknesses could have an exponential impact of risk within the firm. It is, however, refreshing that they are taking such a client-centric approach, where co-ordination will prove to be the major challenge.
If I have one criticism is that they bothered to get involved in commission as it draws to a close. It would have been more sensible to run on a fee offset rather than create a mixed proposition. Retainers need to cover ongoing servicing if the kind of firm they are striving to create is to succeed. Indeed, a modular approach is the way forward and the way to take maximum advantage from the RDR.
As to the exams, I would suggest that they wait for the new exams due this summer, otherwise their study programme may prove more onerous than it needs to be.
Multiple levels of service
They have alluded to multiple levels of service. I would counsel them to rationalise this or it will soon become impossible to be sure they are delivering what is required. Now for my bête noire – the task of logging time spent on a client- specific basis. It is simple. If you don’t know how long it takes how can you know if you are selling your time profitably?
My message is simple. Define your process, estimate the times for the steps and then track this and similar assignments over the next six months. As to using a back-office system to assist in this, I regret to say that no UK back-office system has a fully functional time-recording system – integration would be ideal but in the interim, Excel offers a lowcost alternative.
As with any change in process, you must always make sure that you can deliver it in budget and on time. Far too many firms will find that moving to adviser charging is not without its issues in terms of system and compliance. The move to adviser charging introduces the dual peril of costing advice accurately and collecting the fees where the product does not suit as a method of collection.
In their favour, this firm has a lack of legacy clients and that is no bad thing. They should stop taking commission as soon as possible and forthwith avoid indemnity commission like the plague.
They have eluded to multiple levels of service. I would rationalise this or it may become impossible to be sure you are delivering what is required
I would be very interested to see their business plan as I suspect it no longer reflects the objectives of this business, hence the number of strategic reviews.
This number of strands can lead to a loss of focus and moving to consider discretionary management, it is probably too early to determine if that move will suit a sufficient number of clients both current and prospective.
Firming up their proposition and having a fully- costed five-year plan will be the best use of non-client time that this firm can achieve in the short term.
As long are Plutus continues to be open to changes and are quick to implement, it will have the opportunity to grow and prosper. We look forward to reading more on their journey and I wish them well. Others need to find the same level of impetus if 2013 is not to come over them in an unhealthy rush.