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Profile: Our opportunities as a smaller adviser business

Andrew Chorley, managing director, Financial Planning Wales, talks to Adviser Business Review about changing the shape of the business, paring down the client base, offering fixed-fee transactional advice and why he believes targeting young clients is a fallacy

Adviser Business Review: What ambitions did you have for growing the business when you joined in 1999?

Andrew Chorley: When I joined, it was very much a generalist firm, offering a wide range of services to a very wide client bank. At that point, there were around 2,000-3,000 names on the database, the majority of which were transactional clients. I first started off in a paraplanning role, having previously worked for a building society, and spent the first 18 months to two years focusing on qualifications. As time went on, however, the founder Alan and I started to look at the business and consider what direction we should take it. I had grown very interested in the investment process and wanted to concentrate more on long-term financial planning, rather than selling products. We spoke to our clients, explaining what we wanted to do with the business and those we already had regular contact with were very interested and have remained with us as long-term active clients.

ABR: What was the biggest challenge you faced in changing the shape of the business?

AC: There were two challenges; information and infrastructure. With the former, it was about getting the right information to the clients to preempt what was happening in the markets. We started a newsletter in 2007, which was very well received among our clients and we continue to send one weekly. In terms of infrastructure, it was looking at the logistics of getting the right reports for our clients. We needed to consider software and what we would invest in. We started using Transact, which was really helpful and things became a lot easier thereafter. We recently moved to Fastrak, which is run by Sprint Enterprise Technology, and we’re happy with our decision so far.

ABR: How do you grow your client base?

AC: We have found that referrals from existing clients work best for us in terms of bringing on new business. It’s helpful when people come to you having already got an idea of what you do and a good recommendation with it. We have a few professional connections that have sent business our way, but we have found that a lot of the referrals that come to us from accountants tend to be for group schemes and we’ve made the decision to move away from corporate work and focus our efforts on private individuals.

We have no aspirations to grow to a big entity; we are targeting around 4-6 new clients a year and so far we’ve been able to achieve those numbers.

ABR: What impact have the pension freedoms had on your business?

AC: We’ve received a lot more enquiries from people, but we’re very much in two minds. The new freedoms can be a high risk area for an adviser, especially in dealing with new clients who are keen to take their money. There are lots of implications that people don’t think about and what might seem simple on the surface can suddenly become more complicated. There’s no doubt that the new rules have created an opportunity for clients and advisers to do more and people certainly appreciate the flexibility and choice it offers, but it’s got to be dealt with sensibly.

Whenever we are speaking to a prospective client, we ask them to fill out an attitude to risk questionnaire along with a factfind as it’s helpful to have this information to hand prior to meeting in person. It also shows a level of commitment from the individual and whether they are serious about financial planning or whether they’re just keen to cash in their pension as quickly as possible.

ABR: What do you see as the biggest opportunity for a small firm like yourselves?

AC: I think one-off consultancy work is a good opportunity for us as a business. Often people need clarification about a particular element of their finances, but don’t wish to receive the all-encompassing financial planning service. We’ve recently started doing a few bits and pieces and I really think it will be a growing area for us. We previously viewed it as something we would offer for free, with a view to bringing on the client on a long-term basis, but we’ve come to realise that it’s better treated as a separate service. We charge a fixed fee, as people generally seem more comfortable operating that way.

ABR: What are your future goals for the business?

AC: Our aim is to attract between 4-6 new clients a year and increase our assets under management by around £800,000 per annum, through a combination of new clients and portfolio growth. Around 85-90% or our clients are between the ages of 50 and 70 and we don’t wish to pigeonhole ourselves, although our ideal client would have minimum investable assets of £100,000. We have spent a lot of time discussing how to attract younger clients, and we have advised children of existing clients, but the fact remains that the majority of people do not want to seek advice until they’re in their 40s and 50s. Advisers think of ‘young clients’ as the holy grail of financial advice, but I think it’s somewhat of a fallacy.

Financial Planning Wales

Facts and figures

Business founded: Started trading as Financial Planning Wales Ltd in 1999 (previously run by Alan Coombs as a sole trader)

Total staff: 5. 1 chairman, 2 advisers, one secretary, one administrator

Clients: 150 active clients

Assets under management: £28 million

Visit the Financial Planning Wales website

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