There are still many niches remaining to be populated by IFAs wanting to set up specialist practices. This week, we look at how four IFAs came to specialise in the very different areas of long-term care insurance, ethical investing, school fees planning and venture capital.
Philip Spiers is a partner with the Nursing Home Fees Agency, one of the most high-profile niche IFAs. He recounts how the agency came about as a spin-off from his accountancy practice after he carried out research for half a dozen clients who wanted advice on financing care for elderly relatives.
In 1991, Spiers got involved with social services and charities such as Age Concern, culminating in the establishment of the Shortfall Monitoring Group. From this specialisation came referrals, which the practice relies on for new business. Spiers says: “You quickly become recognised as an expert and then you get a lot of media coverage in the press and on local and national radio.”
He emphasises the importance of integrating the business into the concerns of the niche it occupies. As a result, the Nursing Homes Fees Agency also does pro bono work. “Financial advice is only a small part of what we do but it is the part that pays us the money,” says Spiers.
The agency does not advise on mortgages or pensions but there will be clients who require guidance in those areas so Spiers refers clients to a couple of IFAs he has earmarked for those purposes.
Guy Hooker is a director of the Ethical Investment Co-operative, which was formed after a group of sole traders sharing a similar commitment to socially responsible investment decided to set up business together.
Lobbying for environmentally responsible policies is as integral to their work as selling financial products. Hooker says there is now an ethical option right across the financial services menu.
Hooker's advice for IFAs intending to set up a niche practice is: “Be prepared to work 100-hour weeks before you see any fruit.” He also says a high level of commitment to the issues around the specialisation is essential.
The practice tends not to advertise but relies, like so many niche practices, on client referrals. Its website makes much of its links with Amnesty International and Friends of the Earth (Scotland). The latter resulted out of a meeting arranged by the co-operative to discuss areas of overlap. It is important for this niche to have management structures and lobbying activity which meet clients' expectations.
Marshall Williams and Co managing director Ian Williams has a slightly different perspective on specialisation. He has targeted the school fee market but has been drawn more to the advanced pension market, leaving school fees as a second string.
But he still thinks school fee planning presents an opp-ortunity for IFAs. “It is potentially a growth area and the demand for private education is unlikely to drop,” he says.
As a trustee of a scholarship fund for a public school, Williams has seen a surprising lack of financial planning by parents. He suggests IFAs could become more involved in financial planning for education, including the cost of university, as people want help with an increasingly complex tax burden and higher levels of inherited wealth. The answer, he thinks, is good holistic financial planning.
Despite his links with public schools, Williams' expertise in pensions has led to this area becoming his main specialisation. Given the high regulatory burden on IFAs, he believes some sort of specialisation or focus is unavoidable. His own skills – and demand from clients – has meant this focus has been determined as pensions.
Argent Consulting managing director Matthew Brown specialises in selling venture capital trusts, which make up 80 per cent of his business. Before becoming an IFA, he sold VCTs to IFAs so he had a good knowledge of the market.
The element of personal interest is something that Brown thinks is important. He advises: “Specialise in a product you believe in and which you would buy yourself. You are also more likely to keep up to date with a product you are interested in. There are too many products out there for you to be all things to all men.”
Like so many other niche practitioners, Brown does not rely on advertising. Apart from personal recommendations, he has found a listing in the IFAP press directory invaluable in boosting media coverage. The listing of his specialisation on the IFAP website has also proved useful in generating business.
Brown says getting the press interested in what you are doing is important, particularly as the business is establishing itself. He recounts being proactive on the PR side when he started out, calling journalists and making himself available for comment.