As executive chairman of the Beaufort Group, Simon Goldthorpe admits he misses being an adviser. “But it is difficult to be an adviser and build a business,” he says. “The distractions are too great and sometimes you can’t see the wood for the trees.”
It is fair to say Goldthorpe knows a thing or two about building businesses. He built and sold two small chains of estate agents before founding Beacon Asset Management, his first IFA firm, in 1994. He then did it all over again in 2010 with the launch of the Beaufort Group, a business that was RDR-ready from inception.
He says: “The great thing about the advice business is client relationships. They are fun and relevant. If you care about what you do it’s where you get most payback.
“Some advisers think that if they are not advising people it reduces their value. But it doesn’t make any difference if the business is providing the advice. I still maintain relationships with clients; it’s just that I don’t get dragged into discussions about Isas, for example. It’s also easier to get genuine feedback from clients when you are not advising them.”
Goldthorpe believes there will be a bigger distinction between advisers and wealth managers in the future, with separate fees for financial planning and portfolio management.
“It’s foolish for IFAs to pretend they are wealth managers. Unless they have the right structure, qualifications and team behind them they are not wealth managers and should relish being true financial planners. Advisers can create more added value through things such as cashflow modelling and life coaching. If they disguise the charges for what they do as partly wealth management they are on the road to nowhere.”
Goldthorpe is proud of what has been achieved at Beaufort, which provides financial advice to clients alongside support services and discretionary fund management to other IFA firms.
“We don’t think of ourselves as a network. Others do, but we’re not a standard business. Beaufort was created in a tough market, an unfashionable market. Everyone thought the RDR was going to kill businesses but we had to embrace it,” he says.
Starting an advice firm at a time when the regulator was busy fleshing out the RDR was an advantage for Goldthorpe. Not only did it formalise his view that doing the right thing by the client was the right way to go about it, the firm was also a blank canvas, with no legacy.
“It was a natural progression from running a standard IFA firm to providing services for other IFAs,” says Goldthorpe. “But my ambition was to build a DFM. I believed that if you could get the right quality of IFAs together you could create the right DFM. So we initially got six or seven firms together that were prepared to finance and create that. It was important to us to create the things IFAs want.”
Giving advisers what they want extends to other areas of the business, including a choice in how partner firms can join Beaufort. “We want to attract more partner firms; they can be outsourced or appointed representatives. We are on the acquisition trail but only for the right firms. We are by no means a consolidator; I don’t like that model,” he says.
This year, the Beaufort Group has started to lend cash to young advisers who want set up their own businesses. The firm provides the infrastructure including the back-office system and paraplanning, helping them start off as an appointed representative or become directly authorised if they want.
“Going back to my early career, I know how much you sometimes need someone to help you,” says Goldthorpe. “For many, starting a business is the biggest thing they do and it’s scary. It’s good to get help from people who have done it and can help you avoid the pitfalls.”
If Goldthorpe, who sketches in his spare time, had been steered by his artistic streak he’d have been designing buildings, not building businesses. But he abandoned the idea of being an architect to become a management trainee at Halifax and worked his way up to assistant manager at Bristol & West. But he hungered for something more than the building societies could offer. “I still recall standing on the steps of the office with the keys in my hand thinking ‘I’ll never own a bit of this’,” he says.
Realising his future laid elsewhere, Goldthorpe received an offer of financial backing to start his own estate agent business and took it. Within three years he had sold the business to Prudential, which wanted a distribution channel for products such as endowments. “I didn’t want to sell, I was resistant. But I wrote the numbers down and the amount they were prepared to pay was about five times what the business was worth on a good day.
“I was thinking ‘they’re better at it than I am and better resourced’. But three years later I could have bought that business back for a pound as it fell apart. Pru had bought us on the Friday and began the rebrand the next day. But they got it wrong – the goodwill and relationships we had built up disappeared and had been replaced by a brand.”
If that taught Goldthorpe anything about other people not necessarily knowing best, the lesson was driven home later in his career. Just before the financial crisis Beacon received an offer for its direct mortgage lending business. “I wanted to take this offer but we had board members from bankers to venture capitalists and they didn’t want to sell as they thought the business was worth double,” says Goldthorpe. “I should have trusted my instincts but I was thinking ‘they’re bright and smart and I’m just a mini-entrepreneur’.”
Goldthorpe’s instincts proved right as the financial crisis dried up liquidity so the business had to be wound down – it had no debt but had no money to lend either. He does not feel bitter about the way things turned out though. “I learnt a lot from that experience; it was a big learning curve,” he says
What’s the best bit of advice you’ve received in your career?
When the general opinion is opposed to your own and it doesn’t seem logical, go with your instincts and be prepared to swim against the tide.
What has had the most significant impact on advice in the past year?
It’s got to be pension freedom.
What keeps you awake at night?
Trying to run that fine balance between a tight, compliant process and giving advisers the freedom to do their job properly. It’s tough.
If I were in charge of the FCA for a day I would…
Instil a culture that balances sanctions on businesses with improving consumer confidence. And insist that no major pronouncements were made without proper consultation with the Treasury and HMRC as that would ensure we had a more joined-up approach.
Any advice for new advisers?
Encourage friends and colleagues to join the industry. It can be a rewarding career.
2012-present: Executive chairman, Beaufort Group
2010-present: Managing director, Beaufort Asset Management
2009 to 2010: Time out to sail and travel, plus consulting work
1994-2009: Founding director, the Beacon Group
1989-1994: Director, JD Ward, London
1986-1989: Managing director, Hitchcocks