Rowan & Co believes it fits the mould of the ideal IFA envisaged by Ron Sandler, combining an IFA with an investment business.
The business has five offices in Bath, Taunton, Bournemouth, Torquay and London serving the mass affluent rather than the super-rich. It has around 8,000 clients with an average age of 63.
The firm is a wholly-owned subsidiary of accountants Seymour Pearce since 2000. It has 60 staff with 18 advisers and five investment managers and has £400m under management. Income is a mixture of fees and commission.
Listening to managing director Jeremy Wake and marketing manager Phil Hull outline the philosophy and the attitude towards clients, you can see why Sandler would be pleased.
Wakes says: “I remember when Sandler came out, it was very comforting to know what we were doing seemed to be what he was proposing. It was almost as if he had looked at the model. It was quite therapeutic.”
The financial planning comes first. Each client account is benchmarked and portfolios modelled and money invested utilising the available wrappers. The emphasis is on assets – equities, fixed interest, cash, property and what the firm describes as aggressive equities.
Hull says: “From our point of view it is very much tailoring to peoples' objectives and agree how they get there.”
Clients are warned about the downside. Wake says: “If you are going to invest in equities, how comfortable are you with a 20 per cent drop one year and another 20 per cent drop the next?
“Equities may well be the place to be but you have got to understand the risks of investment. Likewise, if you are in fixed interest do not expect your money to go through the roof. We decide on the allocation and then construct an appropriate benchmark so our performance can be clearly demonstrated. That way, there is no misunderstanding by the client.”
The firm believes this attitude has helped it during the bear market when the clients of stockbrokers and banks may have been left without adequate explanations for losses.
Wake is scathing about stockbrokers. He says: “I saw a client yesterday who was with a stockbroker and you could tell from the valuations they had sent that they did not know who she was. She was widowed 12 years ago and the stockbroker thought she was still married.”
The firm believes there has been too much bandwagon-jumping, arguably shown by the zeal for property. Has the firm found it difficult persuading people into other assets?
Hull says: “Everyone may have their own ideas and in a very short period of time they may outperform the professionals but in the long term they will do better with a professional investment manager. You have to say: 'You may think that but ' That is part of the advice.”
Wake believes there is a lot of fear among traditional IFAs as the market changes. He notes that, as discretionary manager, Rowan has the ability to rebase a client's portfolios without having to go back to the client – which is a problem for IFAs that do not manage client money.
Rowan is offering to co-brand with other IFAs while they do the financial planning.
But can an 18-RI business hope to compete with the likes of Fidelity?
Wake says: “It is not the number of RIs which drives the business but turnover and profitability. We want to expand the business but we do not have a target of, say, 100 RIs in three years' time, although we do have the capital resources and are looking at acquisitions.”
In terms of providers, Wake believes that insurers must become wrap providers and decisions on which one to adopt will be made on the basis of cost and administration.
He believes that service is by far and away the biggest issue for the provider-IFA relationship, though the sheer weight of regulatory change is another massive issue.
He says: “In the early 1990s. service was what took you away from a provider – now it is the differentiator of choice, not financial strength, although that is important. It has got to be streamlined, it has got to be slick. We do not want to apologise to the client on behalf of anybody else.”