MDM Associates was set up by a break-out group of directors from Jardine Lloyd Thompson in 1997. At the time, JLT had decided to change its personal financial planning side and the services it was offering. Instead of bespoke financial planning, the group moved to more customised solutions. The founding directors of MDM wanted to continue to offer a more individual approach.
At the time, now-MD Lisanne Mealing was still at JLT on the corporate advisory side. Her husband was one of the founding partners. She says that from the start, the group prioritised ongoing revenue streams over upfront commissions, adding: “One of the directors had always been quite forward thinking and insisted that much of the company’s revenue stream came from a percentage of funds under management, so we always had cash to service clients. Right from the start, this was built as a single-premium business.”
Lisanne became MD in 2003. She admits to being initially daunted by the prospect, which prompted her decision to do an MBA in 2004. The skills she learned proved vital in the growth of the business and company turnover rose from £200,000 to £1.4m and the staff built up to 16.
In the early stages, much of this was organic growth, with two main business streams – personal financial planning and corporate advisory. The corporate advisory side tended to focus on schemes of about 200 in size. Mealing says: “When we hired, we made sure we took on people we knew to protect our reputation. It was all about controlling our service levels.”
Since then, the group has made acquisitions. It did its first acquisition in 2006. This substantially increased funds under management and the group has done one more since then. The main aim with these acquisitions was to integrate them as quickly and painlessly as possible. Lisanne believes that one of the keys to the successful integration of these businesses was effective use of systems.
As with many advisers, MDM has a lot of close to, at, or in retirement clients that make up the majority of its revenue stream. However, more recently, it took on another female adviser and from here the group plans to build a bespoke financial planning service for women. The new adviser had already done a lot of work with solicitors and divorce. The group plans to launch its female-only financial planning service by the start of October. This service will aim to educate women about finance and inspire financial confidence.
The group now has seven RIs and offers three distinct approaches for its clients, each with its own set of charges. At the top, there is full holistic financial planning, which is all about goal-setting and matching an accumulation strategy to client needs. At the middle level, the group will look after funds that have already been built up and will mainly focus on decumulation strategies and IHT planning. At the next level, there are the more aspiring clients who need to build up funds to match to their goals in future.
The business is largely RDR-ready. It has one adviser who has come up through the corporate route who needs to pass one exam to be diploma-qualified. Mealing admits that she is still fighting for chartered status. Her and her colleague have failed AFI twice and are retaking it again this summer.
The only side that is not fee-based is the corporate side. Lisanne says: “A lot of clients did not want to pay fees on top of the employee benefits strategy so parts of this are still done on a commission basis. With stakeholder, this worked quite well but we are now having to fit this to our corporate fee structure.”
’There is no issue with trust’
The corporate and personal financial planning sides have plenty of cross-fertilisation. Mealing says: “We worked hard to build up a number of centres of influence – people who were high up within the corporate firms – who we had looked after for a number of years who were willing to recommend our employee benefits side. When you are a small firm, cross-fertilisation works well. There is no issue with trust. At JLT, people did not know who you were and were not always willing to trust you with their client relationships. In a small firm, there are none of those issues.”
The group’s marketing strategy is still largely through referrals. It has some professional connections but the majority of its new business comes through recommendations. However, it is now finding that it is building up a lot of fee-based business through its website. Lisanne says this has prompted a new marketing strategy. “We have decided to dedicate our marketing budget to making our website more user-friendly and easier to access. This will be launched in the next couple of weeks. (www.mdmassociates.co.uk). We think this new site is completely different to any other IFA site we have seen. We did not want to over-complicate it but to make it attractive and easy while still being professional.”
At the moment, the group has around 200 clients per adviser although this figure is slightly inflated by the corporate clients. The RIs have a full paraplanning team behind them and there are strict procedures in the background. Mealing says: “We want to ensure that our advisers are always available and always have the right information at their fingertips. This means being very organised about diary systems.
“We have spent a lot of time making technology work for us so that we are not chasing round finding information. It took a lot to implement these systems.”
This focus on technology came about almost by accident. In 2001, the group had a huge flood in its offices. It presented huge problems because everything was almost entirely paper-based at the time. The directors realised how reliant they were on paper and it was not the way they wanted to run a business. They had already been considering moving offices because of the amount of storage required. After the flood, the group devised its own system, which has subsequently evolved with its systems providers.
Mealing says: “We made mistakes in implementation. We tried to put too much data on it and overloaded it. From the start, we have used Quay software and we use their CCD system for marketing, fee/commission reconciliation, compliance. Everything is managed within one place.
“We found that systems are only ever as good as the user and we have focused really hard on marking the systems work for us. As a result, we have not embraced wrap as a firm. For a start, we have put so much time and effort into our own systems.
“Then, we haven’t yet found one that can deliver what we can deliver. It costs us money to implement and maintain these systems but we can then decide how much of that to pass on to the clients. If we went down the wrap route, we would have to charge our clients part of their assets under management to improve our administration. Why should a client have to pay that cost?”
The group is getting ready for the next generation with a profile on Twitter and a blog looking at market movements. Its blog also covers major tax changes and changes to product providers. Technology may seem like a slog but it has helped MDM Associates future-proof its business.
Name: Lisanne Mealing
Number of clients: 1,400
Back-office system: Quay Software
- MDM Associations was built as a single-premium business from the start, prioritising ongoing revenue
- The group has two main business streams – personal financial planning and corporate advisory – and there is good cross-fertilisation between the two areas
- Mealing did an MBA in 2004, which has significantly helped the growth of the business
- The group is setting up a new female-only financial planning service in the next month
- Diligent use of technology has been a key success factor for the group