Entering the financial advice market in 2011 after 10 years in the platform industry was not a conventional move, according to Pilot Financial Planning managing director Ian Thomas.
“A lot of people were trying to get out of the burning building that was the RDR and I was running into it,” he says. “I appreciated there was a reason people were leaving the industry but I saw it as a really good opportunity as the market was moving towards greater professionalism.”
Thomas says he was also keen to escape from the “corporate world” and start his own business.
Having worked in senior roles for firms such as JP Morgan Asset Management, he joined the platform industry in 2002 as IFA sales director for Fidelity. He later worked for Skandia and Axa in head of marketing roles.
‘Change things for the better’
Thomas says he joined the platform industry because it was “one area of the financial services market that was trying to change things for the better”.
He says: “Platforms lobbied hard to get rid of the smoke and mirrors, complex charging structures and vested interests to create a sector that was much more in the interests of the consumer. But I had been in that corporate world for quite some time and I thought if there was any chance to scratch the entrepreneurial itch I had, it was now while I still had the energy and ambition to do it.”
In 2011, Thomas set up Pilot Financial Planning and consulting business Pilot Consulting.
“If you are starting a business from scratch you need funding, so I decided to continue to work in the platform sector on a consultancy basis as a way of creating cashflow,” he says.
“The two are not completely in conflict as remaining close to the platform sector gives me insight I can pass on to my clients. But I have reduced the amount of consulting I do significantly as the advice business has grown.”
Thomas says that with the exception of becoming authorised, the biggest challenge in setting up Pilot Financial Planning was finding clients. He says: “I didn’t come from a bank advice role or another advice business so I had no existing client bank. I had a laptop and a kitchen table to begin with.”
The firm gradually acquired clients through accountancy firm links, local marketing efforts and business acquaintances. It has found a niche in advising independent schools.
He says: “We offer fee-based advice to senior staff at independent schools, and also to the employer, around final salary schemes and tax.
“Our main offering is financial planning and investment advice so this has been something of a sideways move.
“It was more of a fortuitous coincidence than a planned strategic masterstroke but it has worked well for us and is an area where we can really add value.”
As a relatively new entrant to the market, Thomas would like to see the FCA “go harder and faster” with the banning of commission to ensure all firms are operating on a level playing field. He says the logical extension of the RDR is for commission to be banned on protection products and for trail to be turned off on all policies.
The FCA has banned legacy payments between fund managers and platforms from April 2016 and all platforms will have to operate an unbundled charging structure from this date.
“If the regulator is shifting the market to a more transparent world, the RDR should be step one but it should also be extended – and I am not seeing any appetite for that from the regulator,” says Thomas.
“What is the rationale for removing trail in 2016 on platforms only? I am quite annoyed the regulator has not gone faster and harder.
“Our business has never taken commission but we are competing in a market with firms that are propped up by a previous regime and that creates an unlevel playing field.”
Thomas believes the FCA has backed off from further reform due to political pressure over adviser numbers and the advice gap but he says doing so makes it harder for new businesses to enter the market.
“You could say it is a good thing because fewer advisers are going out of business but if it is a barrier to new entrants then there is a downside.”
Thomas believes the regulator also needs to do more to recognise firms that charge fees based on service rather than product. He says: “Our charging is not contingent on products at all – our product is advice. The Conduct of Business Sourcebook completely misses that.
“The RDR has done a lot of good but it has not addressed the fundamental difference between a product salesman and a professional services firm where the product is advice.”
Despite the gripes over regulation, however, Thomas says starting an advice business is the best thing he has ever done. He says: “I swore I would never turn into one of those advisers who whinges about regulation all the time but on the provider side you are slightly sheltered from those realities.
“Equally, though, advisers do not always appreciate how difficult it is to turn around an oil tanker of a life insurance company so there are misunderstandings on both sides.
“Moving from providers to a small advice firm was a huge change and a big risk but I have found it really refreshing and do not regret it for a second.”
2011-present: Managing director, Pilot Financial Planning and Pilot Consulting
2007-2010: Head of marketing and proposition, Axa Elevate
2003-2007: Head of marketing, Skandia Multifunds and Selestia
2002-2003: IFA sales director, Fidelity Investments
1999-2002: Director and head of Nordic region, JP Morgan Asset Management
What’s the best piece of advice you’ve received in your career?
It’s not being employed that’s important, it’s being employable.
What’s keeping you awake at night?
I sleep pretty well but my key challenges are to find more of the right clients and to manage our business growth while maintaining service levels.
What has had the most significant impact on financial advice in the past year?
The implications of the RDR have really started to kick in during 2014.
If I was put in charge of the FCA for a day, I would…
Torch the Cobs and start again from first principles. Less is more.
Any advice for new advisers?
Be very clear on who you want to do business with (and who you don’t).