After 30 years the work I do for clients has changed dramatically. It has been mostly evolution, but along the way there have been periods of revolution too. So here are the 6 revolutions that have occurred, together they have delivered our proposition to where it is today.
Stage One (Homo Floggus) 1987-1989
Assets under Management £0
I joined Abbey Life and just sold life assurance, pensions and savings plans to anyone I could get in front of. Once sold these plans were invested in a Managed fund and left until maturity. I wasn’t interested in how the plans performed because I only got paid for selling more plans.
Although Abbey Life trained their advisers to sell products, they didn’t educate us as to what happened after the client had given up their hard-earned cash. Also we had no idea what other forms of investment existed outside of Abbey Life. So after 18 months I joined a professional body and began to attend meetings and study for exams. This resulted in a series of qualifications which gave me membership of the Life-Assurance Association by Diploma. Not many held any qualifications back in 1989.
Stage Two (Homo Dodo) 1990-1997
Assets under Management £0
I continued to build satisfied clients with Abbey Life and attended company conventions and was a successful Senior Associate. Still clients were invested where the company decided, which was their Managed and International funds. Some years these funds were top quartile and other years they slipped to bottom quartile. Some clients became disillusioned and needed me to invest some of their money outside of Abbey Life. I knew if I stayed with Abbey Life, although currently very successful, I was heading for extinction. I realised a company that needed to look after it’s shareholders before it looked after it’s customers was not a long term proposition.
Stage Three (Homo Networkus) 1997-2003
Assets under Management £0
So I left and become an Independent Financial Adviser (IFA) by joining the Financial Options Network. For the first time I was free to offer investments from any company, not only Abbey Life. I had many more investment options but no matter which company I recommended, some years the funds were top quartile and other years they slipped to bottom quartile. I had confused abundance with choice. I had more options, but they were all the same. I realised all investment providers had a similar ethos and client outcomes were unchanged. Also the network continued to evolve too and wanted to tell me where to invest which I felt compromised independence.
Stage Four (Homo Regulatus) 2003-2005
Assets under Management £8 million
I decided that true independence demanded the freedom to invest where I choose for my clients. Nobody else could be relied upon to take the same level of care. So I left the network and said hello to the regulator. I had graduated. I knew how to be an IFA and I no longer required a network to deal with the regulator on my behalf. I now had un-fettered access to every insurance company and investment provider in the land, and a fair few offshore. This had to produce better client outcomes.
Stage Five (Homo non-commissionus) 2005-Today
Assets under Management £10 million
Does an IFA simply sell the products that earn the highest commission? The UK Press certainly thought so. What started as an in-defensible job description, ended as an opportunity to demonstrate that I was acting on behalf of my clients and my clients alone. I took the business fee-only and since that day never allowed a company of any sort to pay me in return for investments made on behalf of my clients. I had never chosen a company in the past that had paid the highest commission, but without the move to my fee-only proposition, I could never have proved it. Client numbers began to build more quickly now.
I also knew that if I was charging fees then I needed to be able to justify those fees. I needed the best qualifications available. I returned to intensive study and achieved Chartered and Certified Financial Planner Status by 2007. I had now achieved a level 6 qualification (degree level), whilst the majority of advisers at that time were still only level 3 (A level), with a requirement to be only level 4 qualified by 2013.
As funds under management continued to grow steadily, the amount of time required to manage my clients’ life savings also grew. I needed further qualifications to understand investment more and demonstrate to the regulator that I was capable of managing larger amounts of money. I qualified as an Investment Manager in 2011.
Stage Six (Homo Discretionary) 2012-Today
Assets under Management £34 million
Being truly independent and personally very hands-on on a daily basis growing my clients capital, did not go un-noticed. We attracted more clients with capital to invest. We have avoided many of the huge market drops that occurred since 2007, but captured most of the subsequent gains. Over the years the job had evolved from recommending investment managers to becoming a discretionary investment manager myself. I now manage on behalf of my clients around £75 million. The journey has taken 30 years so far and at every stage as I increase my knowledge, my clients’ returns grow. I will continue to learn and gain experience forever, such is the size of the subject. You can’t stop evolution and I look forward to all the future developments. I’m getting too old for revolution now though.