It is hard to appreciate the importance or value of something you are unaware of or do not understand. That is the central theme running through Geoff Towers’ thoughts on financial services.
Towers is just over a year into his current role as chief executive of Pershing: a subsidiary of the Bank of New York Mellon that provides wrap and technology solutions to advisers and wealth managers. He is working hard to raise the firm’s profile, particularly in light of the opportunities he sees the pension freedoms bringing.
He says: “The advisers and wealth managers we serve will find more and more clients consolidating their money and that money will stay with these firms because people are not going to annuitise at the point they retire.”
So what is Pershing’s role? “We do the ‘heavy lifting’. We’ll move cash and securities where you want them to be and make sure they turn up in the right place.”
According to Towers, Pershing’s technology differs from what is broadly known as fintech. “We do ‘tough tech’. If fintech is smart apps and so on, we can offer that. But it is about experimenting with what you can do. If you were flying a plane, it would be doing aerobatics. A lot of our clients say they want to move their clients’ funds and, when it comes to moving money, I would want to know the engine was made by Rolls-Royce.
“We innovate, as big aircraft manufacturers do, but tough tech is about resilience.”
Attacking the industry from all angles
Towers is probably best known in the industry for occupying platform-related roles, initially at Standard Life Savings, then at Legal & General.
But early on in his career, as a graduate trainee with Citibank, he was advised to learn as much
as he could about the industry from all angles. As such, he has spent his 34-year career getting to know it inside out.
“In the early days at Citibank I was working on the insurance side, the trading floor, asset management and on settlements. I thought where else would give me such a range of jobs in one employment contract?”
He later moved into distribution as he felt this was a gap in his CV that needed filling. His biggest highlight to date is his involvement in building Standard Life’s platform.
“At the time there were very few platforms. The vast majority of people didn’t know what a platform was and why they needed one. We put together a great team; we had people really believing in what we were doing and we’d taken it from zero to £5bn by the time I left.”
Towers is reluctant to share specific details of the biggest career challenge he has faced but does say: “The general theme would be when you think there’s potential in something but others don’t see it. Then persuading people it’s a backable case.
“That said, getting to the point when you prove a decision or strategy and deliver it is also a highlight.”
We innovate, as big aircraft manufacturers do, but tough tech is about resilience
For Towers, people need to experience something – whether that be advice or the latest piece of technology – to know the value of it.
“I’m old enough to remember when mobile phones came out and I had a conversation about it with my dad.
“He said ‘Why do you need a phone in your pocket when there’s one in the hall?’ I didn’t have an answer at the time. But because I’ve now experienced why having a mobile is good for me I’d throw out the landline to keep the mobile.”
Similarly, he believes the way to ensure more people get the guidance or advice they need for a decent retirement is for the industry to demonstrate its value.
“It’s about showing the value and not shying away from showing what you do. After RDR and the pension freedoms, if you say to people: ‘Would you want financial advice?’ they would all respond by saying they do not know what it is, so why would they want it?
“But if you said: ‘If you get advice you could pay no tax, or half the tax you pay now’ they would all be biting your hand off.”
Pershing is on a mission to get clients to understand the impact of changes to EU regulation to be introduced by Mifid II in 2018.
Last month the European Securities and Markets Authority published guidelines on transaction reporting, order record-keeping and clock synchronisation under Mifid II, and Towers is concerned that some who should be taking on board the implications are not quite there yet.
“I am getting the guys here to remind clients that we can do the trading for them if they use fixed income and equities, so they don’t have to do Mifid reports.
“Under Mifid I there are 24 different data fields and under Mifid II this is going up to 65 on every trade. It is a challenge. Some clients are up to speed but others are not aware as there is not as much talk about Mifid II as there was about the RDR, for example.”
Whatever your view on Brexit, Towers points out Mifid II is mandated from January 2018, so it will take effect before the UK has formally completed its withdrawal from the EU. “It’s starting to come into wealth management in a way it previously hasn’t and not everyone is aware of that.”
What’s the best bit of advice you’ve received in your career?
Learn everything you can about the industry before you express an opinion.
What keeps you awake at night?
Mifid II because some of the level 2 and 3 texts are coming from the regulator later than you’d like, which compresses the time for organisations to prepare.
What has had the most significant impact on financial advice in the last year?
The Financial Advice Market Review.
If I was in charge of the FCA I would…
Try to get my teams to answer the question: do we want perfect outcomes for a few or okay outcomes for the great majority of people? There are different ways you would then go in terms of regulation and solutions.
Any advice for new advisers?
Look at the firms you admire; they will all do relationships well. Relationships drive business, whether that’s business-to-business or business to the end consumer.
2015-present: Chief executive, Pershing
2014-2015: Senior adviser, Friends Life UK
2010-2014: Managing director, Platforms & Distribution then managing director, UK & International, Legal & General
2007-2010: Chief executive, Standard Life Savings
1999-2006: Managing director, Barclays International Funds Group then director, life & pensions, Barclays Wealth
1996-1999: Director, fixed income & risk management, Sagitta Asset Management
1982-1996: Various roles across departments including graduate trainee and chief administrative officer, Citibank