It was chalking up 35 years in the advice industry and turning 60 that led Trevor Law to think seriously about his succession plans last year.
At the time, the managing director of newly established firm Eastcote Wealth Management was managing director of a different firm, Merito Financial Services.
As a result of buying out his fellow shareholders, Law owned the whole business. This was not part of his original plan and he felt things were going in the wrong direction, particularly as he could not contemplate selling the business to a consolidator when he was ready to retire.
He says: “I was approached all the time to sell the business to a consolidator and turned down some very big cheques. I wanted to understand what they do, what they offer, how they price things and I thought, this isn’t right, I’m never going to sell the business to a consolidator. I wouldn’t do it to my business or to my clients. I knew I needed to put succession plans in place and I wanted the company to be chartered, whole-of-market and privately owned. So I offered four of the directors the option to buy the majority share off me for the next five years.”
However, Merito was an appointed representative of Tenet and the feeling was that direct authorisation was the way forward, alongside a refreshing new brand. That signalled the end of Merito and Eastcote was launched in July; a move which Law says brought certainty to his clients.
“They were saying to me: ‘Trevor, you’re 60 now, how long are you going to go on for?’ But now everyone knows what the deal is.”
Like many long-serving advisers, Law has experienced his fair share of highs and lows. He was a director at IFA firm Montpelier Group, which went into administration in 2012. Merito subsequently bought its assets on the condition that it also took over the liabilities. Such experiences often highlight the dos and don’ts of running a business, so what did Law take away from all this? “What you learn is to stick to your knitting. Don’t go into high-risk areas – no unregulated investments or aggressive tax planning. There is no need to go into these areas, they are not the area of financial advice.”
Cashing in on DB demand
One area that Eastcote is keen to get into is defined benefit pension transfers and the firm has invested heavily in its back office so that it can enter this market with a rock-solid proposition. It is waiting for FCA guidance and is designing a proposition that it hopes will keep its professional indemnity insurer and the regulator happy.
What does Law think of the current situation, where some advice firms have been suspended by the FCA from giving DB transfer advice?
“These firms may not have been doing it properly; maybe they weren’t thorough enough or were pushing too many through.”
Law wonders if independent third parties such as lawyers could provide the solution to the DB transfer advice problem, as clients would be able to discuss their potential transfer with someone other than the adviser. “There has to be a way of doing it that is acceptable to the regulator but we need to know what that is. You can approach the regulator for guidance but they can’t tell you what you should be doing until you’ve done it. Then they come down on you like a ton of bricks.”
2017-present: Managing director, Eastcote Wealth Management
2012-2017: Managing director, Merito Financial Services
2005-2012: Director, Montpelier Group
1992-2005: Independent financial adviser/director, Cadmans Financial Services
1984-1992: Independent financial adviser/director, Cameron Law Financial Services
1981-1984: Independent financial adviser/director, Landor Beck
Law says he now knows exactly what he thinks a financial advice business should look like in terms of what it should and shouldn’t be doing. “We have a compliance manager here and the directors don’t challenge them in that role. At some companies, compliance managers are bullied by the advisers but you have got to have compliance and operations people that are respected and have teeth, otherwise you have problems coming your way.”
The firm is also selective about clients. “We know what clients we are looking for and we have a maximum of 100 clients per adviser because you physically can’t manage any more than that.”
Law swapped a six-year career in property and chartered surveying for a career in financial advice in 1981 and has never looked back. He credits his first financial services employer Landor Beck with training that has stood him in good stead throughout his career. He reels off a list of Landor Beck’s rules that were designed to enforce good habits, but seem unduly harsh – wearing shirts that had to be white or blue; being fined for not wearing a tie in reception, being fined £1 a minute for being late to work and £5 a minute for being late to a managers’ meeting.
“They taught you business and time management, the importance of appearance and investing in yourself. On the way to one manager’s meeting, a guy hit me head-on in the car and the windscreen popped out so I was covered in mud. I had a meeting at 8am and it was 8.25am – I knew they [Landor Beck] weren’t interested in excuses but I didn’t have the sort of money to pay the £125 fine. A policeman asked if I was okay and I said I had to get to a meeting. I arrived in a police car, covered in mud and they said: ‘What has happened to you?’ I didn’t have to pay the £125 because they felt I’d earned the right not to be fined.”
Law is desperate for financial advice to become a profession as opposed to a sales industry. He has tried to model Eastcote on a legal, accountancy or medical practice, with general practitioners and specialists in areas such as pensions and divorce. He is also big on training and education to level four for support staff, paying for staff to take their exams and providing additional support.
He believes this makes life easier for the advisers who rely on them and also provides a clear career path for support staff who want to become advisers.
Until chartered/level six becomes the minimum standard for financial advisers, Law believes the industry will not be regarded as a profession. He believes being a profession will enhance financial advice as a career for younger people.
“It will be easier when we are a profession. At the moment financial advice is not a chosen profession, you don’t hear of a father saying to his son ‘don’t become a chartered accountant, become a chartered financial planner’.
“When we get to that point and it becomes a respected profession, a lot of young people will want to build their career in financial advice.”
What is the best bit of advice you’ve received in your career?
Invest in yourself – educate and motivate yourself and take responsibility for yourself.
What keeps you awake at night?
Deer nibbling my trees!
What has had the most significant impact on financial advice in the last year?
Brexit and the uncertainty around pensions for high earners who are losing tax relief; the lifetime allowance; the money purchase allowance; and people not saving enough for retirement.
If I was in charge of the FCA for a day I would…?
Not turn up! I would stop regulated advisers advising on unregulated investments.
Any advice for new advisers?
Invest in yourself and take the long-term view. There are no short cuts and as a long-term career, financial advice will look after you.