In the current climate, providing a more comprehensive service to a smaller number of clients should be the adviser business model of choice, Ian Green, founder of Green Legal and Financial Consultancy, tells Christopher Salih
How did you get into the financial services industry?
Historically I was a nerd who worked in computer graphics. Unfortunately, I broke my arm, which meant I couldn't do that anymore. In my day-to-day work I did lots of graphs and charts for financial planning companies; I soon realised that was where the money was and ended up selling life insurance at a tied agency, cold-calling 100 people daily. It didn't take long for me to realise I didn't want to do that. I met someone at the LIA (Life Assurance Association, now the PFS) conference, and they persuaded me to be a financial adviser. Ten years later, here I am.
How did you start Green Legal and Financial Consultancy?
I was an adviser at Caversham Buchanan until 2000 then I started my own advisory firm which I ran independently for the next five years, until I decided to re-join Caversham. Originally our paths were going in different directions.
Over the next five years there was a convergence between what Caversham and I were doing. It provided a great service on the employee benefits side but wasn't delivering much to those higher up the ladder. I had been dealing with those higher up but was not doing much for the staff. As a result, we've come together and I am now director of business progression at Caversham. I help the firm and all its advisers to implement fees and offer comprehensive financial planning, while it offers a service to all my corporate clients and their employees.
How do you differ from your competitors?
When I looked at the way I wanted to structure and run my company, I didn't want to be bound by a network structure. Although networks in their day offered a good service, by definition they have to work to the lowest common denominator. Compliance has historically been seen as the business prevention department, I've always seen it as the business generation department. Done right it will bring you more business. So I decided to go directly regulated. From 2000 to 2003, I built the company up to eight advisers and three staff in two locations.
However, in 2003 I got divorced and had to shut the business down. The personal problems and increased paperwork from being directly regulated meant I was spending more of my time as a managing director, a compliance director and less as a financial adviser. Now Green Legal and Financial Consultancy is just me and my business partner, I do the advising, she does everything else, and that's the way I like it.
How is your firm structured?
I go out and see clients while my business partner co-ordinates from base. Someone once said that Frank Sinatra doesn't move pianos, he just turns up and sings. If someone wasn't in the background doing everything else it would look rubbish. I have little to do with the mechanics of the business. On the consultancy side, I may work with life insurance companies or help a firm break into the UK market, for example. All of this is nothing to do with Caversham. At Caversham I'm one of a five-strong management team. I work closely with the managing director, Patrick Harrison, and we work on the strategy of the firm's high net worth business offering.
How do you generate business?
My core market since 2000 has been SMEs and those who are either retired or retiring. I reasoned the best way for me to get to those people was through professional connections. These are typically corporate lawyers, who then refer me to the SMEs and accountants, who refer me to the retired and the retiring. I pitch this in such a way that I am never in conflict with my professional connections. The solicitors will offer a complementary service, such as setting up the trust, the company and venture capital. Meanwhile, I will be there to do the pension and retirement planning, as well as business assurance. The accountants help with tax planning or self assessment and I come in by helping their clients generate a tax-efficient income. I also work on a fee-only model, so these accountants and solicitors don't have to overcome the traditional fear of a commission-hungry salesman.
Do you turn clients away?
Loads. Since the advent of stakeholder I am aware that I offer a very good service at a price. Unlike 10 years ago, I can't add value to someone looking to put away £100 a month, or a few saving plans or insurance. If we meet those types and can't help them, we'll suggest they go elsewhere. I think 120 clients is enough, so I see three a week.
How can advisers promote better understanding of financial services to clients?
The financial world is nothing like it used to be. For example, commission on a product no longer subsidises the whole advice process. At Caversham, we explain that all commission does is help implement that product; it does not pay for the advice. Many advisers have yet to realise this and therefore haven't explained it to their clients, who still expect a "free" service. That's not their fault, it's the industry's for not conveying the right message. I tell clients commission does not subsidise everything we do. Our literature says we are not here to 'flog' them a policy, if they want to buy one, we will help and they can choose how we are remunerated. We try and slice the process up, so buying a policy is merely one piece of the puzzle.
I recently helped someone with his life insurance after he had his first child. He worked for a life insurance provider so could get his policy cheap, but didn't know what he actually needed. We helped him figure out both what type and how much insurance he needed, as well as giving him a ballpark figure for how much he should be paying. He then bought this life insurance from his employer. He paid us to advise him on a policy, he bought it and brought it back to us so we could put it in an appropriate trust. That's a good example of financial planning.
What's your view on adviser websites? and adviser technology?
I feel the financial services profession is up to speed on the subject. There has been lots of drama recently about a certain company doing pension term assurance online. If you are into the direct offering, piling it high and selling it cheap volume, then a website with trading capacity is a fantastic way to go. For me, a website is just a glorified online brochure. But people expect businesses to have websites, which is why Caversham has a web presence. This means new clients know who we are and existing clients can find out what we are doing. As for technology, those who don't embrace it will be left behind. As business people we assume clients will compare us with other financial advisers. They believe a client's mindset is: "Should I see Ian or should I see the man down the road?" They don't compare us just with other financial advisers but with other service providers. We now live an age where Tesco will deliver your shopping tomorrow and Amazon will deliver your book tomorrow. If we don't deliver your policy documents tomorrow we look slow.
How important is it to help new advisers in the industry?
Caversham has a centre of excellence, where we will take people on, give them a salary and let them learn the ropes. They will then be account handlers, where they support a young adviser who is building a new book of business. As someone progresses through the centre, we will offer those more experienced advisers new businesses through Caversham that matches up with their specialisms. We help them generate business because their expertise is financial advice, not client generation.
Does it help to be associated with governing bodies?
I feel strongly on this topic. I attribute all I have achieved to others in financial services who have helped me. At the moment I serve on the board of trustees at the Personal Finance Society Charity Foundation and I think I was the youngest person to ever serve on the LIA board. All the profits from the book that I wrote go to financial service charities because the ideas are not mine but have been passed down through generations of advisers.
What inspired you to write your book?
I was invited to speak at a conference in the US and was asked if I had any literature that backed up my notions. I sat down and wrote the book in 37 hours straight over the weekend. The bottom line is I have received far more back than I have ever put into this profession. Doing talks across the UK, being famous in Korea, talking to 5,000 people in Hong Kong - all of these are fantastic life experiences that I would never have had if I hadn't given back to the industry.
What are the main issues facing the adviser industry at the moment?
More advisers need to change their business model, because the old system doesn't work anymore. Commission is on a downward spiral while service is on the up, and those two will not work together. On a positive note, it's a massive opportunity for advisers and those who find their niche will succeed. I'm now doing more and more work for less and less people, that encapsulates what I do.
What would be the first tip you'd give an adviser on joining the industry?
Don't take indemnity commission as you're in debt to the providers. If external factors cause a policy to fall off the book, it means you lose all the money despite doing all the work. The provider won't lose out, the client won't lose out, but the adviser does. You become beholden to whoever you've taken the commission from and you will be stuck in the circle of selling more policies. The best thing I did was mentally divorce myself from product providers and base my business on client relationships. Providers supply my products and I have the power to say that if I don't like the product I can change the supplier. You can't have a business dependent on a payment from an arbitrary provider that can take their money back at any time.
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