When Richard Jacobs went into business for himself in 1992, he managed to get significantly ahead of the market. After his early career working in occupational pensions followed by a short stint working for a life company and then for another IFA business, he says he believed there was another way of doing things.
“I was looking at a very early age to get on to the execution model of today. I just wanted to get away from sales, from the old high commission route.”
Initially, the managing director of Richard Jacobs Pension and Trustee Services saw an opportunity in advising on the wind-up of small occupational schemes but he says that work never really materialised. Instead, the arrival of self-administered pension schemes provided the opportunity to help establish his business.
One of the two pioneers of the self-administered schemes was Wally Huggins of Pointon York. Jacobs met him while working for a short spell as a rep for a life insurance company and says his influence has had a lasting effect.
“He took me under his wing and gave me a lot of direction on small self-administered schemes. So it was something I majored on from an early age.”
Jacobs’ business is still kept very busy on the member directed schemes but he says pensions and divorce work, and pension transfer work make up the biggest part of his workload.
“I would say pension transfers, in whatever form, has always been the main part of my business, be it Sipp and SSAS, divorce cases or just, as the FSA call it, pension switching. So pension transfers have always been at the forefront of my work.”
The continuing complications of pensions has been good news for Jacobs’ business. He says he was initially sceptical of the FSA pension switching review but when he spoke to the regulator about it, he realised the complexity of pension switching is being underestimated by some advisers.
“I was talking to the FSA about their case studies as I had refused to answer them saying ‘Nobody would transfer in those situations’. And they were saying we go out to IFAs and that is an actual case.”
He predicts that pension transfers are only going to get more complicated.
“Simplification has made pension transfers far more complicated. I can see nasties stacking up. We can see cases due to the new Finance Act for high earners, if you go and move their pensions, you’ve got dreadful problems. You could lose the protection of the next two or three years of contributions.
“It is not just a case of looking at the numbers and pleasing the client by bringing all their pensions together.”
Another area of opportunity, at least for the next two years, is group pensions.
Jacobs says he has “always been a group man” and has been heartened by a noticeable increase in enquires this year.
“I fear it will be short-term but I do see a big increase in group business. When I say a big increase, the increase is really from zero. We have probably had half-a-dozen approaches from employers. These are people who have approached us saying they want to put something in for their employees. So I think the next two years are going to be good.”
But his optimism is not extended to personal accounts. He says even leaving aside the growing evidence from overseas that the over-cautious default options are totally insufficient, he does not give them much chance of success. “If the politicians don’t screw it up, the computer programmers will.”
Jacobs says the RDR holds no fears for his business.
“I’d be very naive to say no it won’t but we we’re now in our 18th year of working the RDR model. We’ve always offered our clients the ability to pay by a fee. The majority still don’t but the remuneration I’ve taken has always been agreed with the client. From a financial perspective, I don’t see it being a problem.” But one thing he is concerned about is where new clients are going to come from, not just for his business but across the industry, and he also says the RDR will have one significant and unfortunate effect for IFAs.
“We are going to see direct sales rolled out again soon, no doubt about it,” says Jacobs.
But despite this, he is upbeat for the future and is actively planning the next phase of the business.
The firm has, until recently, had only one adviser with Jacobs ably supported by a team of administrators. But with an eye to the future, Jacobs has recently added a second authorised representative to the business – his daughter Emily.
Emily joined the business just under two years ago and Jacobs says she is on track to achieve diploma status.
The addition of new blood to the business has brought a number of benefits. With a background in catering rather than financial services, Emily has brought a fresh perspective to the business and with a well diversified business across several specialist areas of pensions advice and a large amount of assets under advice, Jacobs is positive for the future.
“All my staff are young, bar me, so that is a good move forward. Then there is the continuing complication of pensions and the continuing running away from that sector by advisers, so hopefully my advice will be even more sought after.
“But the area that excites me the most is operating in the investment markets. The tools and the research and the help is out there now. For the first time in my life, I have had, through money and time, the ability to work hard in these areas and I can see real benefit for my clients by adding value on investment returns.”
We’ve always offered clients the ability to pay by a fee. The majority still don’t but the remuneration I’ve taken has always been agreed with the client. From a financial perspective, I don’t see it being a problem