Paul WiIlans, of Mazars, tells Christopher Salih of his belief in a fee-based structure, which empowers the adviser to remain objective and to work in the best interests of the client
How did you get involved in the industry?
I became a financial adviser back in 1988, just a few months after the enactment of the Financial Services Act. I'd been in the RAF for the past six years but felt that it wasn't my thing and I was looking for a new challenge. In the 1980s we were in the middle of an economic boom and, living on the edge of London as I did, the City looked an attractive option.
Was the road to Mazars a bumpy one?
I have been at Mazars since October 2004. I started at Pall Mall Money Management until 1991, when a number of its managers went off and set up Brooks MacDonald. However, I decided to join a larger firm with more structure to it. My CV shows that over the past 10 years, I've always worked in a very professional environment and for professional practices that run investment and financial planning arms with a strong fee and multi-disciplinary basis.
Was a fee-based practice always a big attraction?
Back in the 1990s you could see that financial planning was starting to evolve and it became clear to me that there were firms who did their best to look after a client's needs by using products, and those who sought to unfetter their advice via a fee basis, that could be done either through pure advice or with the use of products in an objective and secondary manner.
There is always an advantage of working with clients who commit with you financially and with whom you have an ongoing relationship. There is also the opportunity, which I learnt while working in a legal environment, to help them with their wills and trusts.
In the past it had been increasingly frustrating to explain to clients the need to restructure their wills, either because they had children from a previous marriage or their wills were not inheritance tax efficient. Yet when I met them a year later I found they hadn't made any changes. I found that working in a legal environment gave me the experience to offer my clients a much more joined up approach to the whole picture of financial planning.
Are we seeing the death of smaller adviser groups as networks become more prominent?
Bringing together smaller practices only works if there is a synergy of ethos and direction between them. Big isn't always beautiful, so you need a similar understanding of goals and an enthusiasm towards that. At Mazars we have lots of support financially to achieve our goals and the group has spent lots of time on its financial planning arm for the past three-and-a-half years.
The rationale for my employment was that the firm had decided to commit to the re-birth of its financial services arm following some difficult times in the aftermath of the 2000 stockmarket crash. At the time Mazars still worked on a product and commission basis, but following my appointment in October 2004 and with agreement from the board, we moved towards a wholly fee-based system, which became a reality in June 2005.
Why don't you keep commission as an option?
It is not as simple as commission is bad, fee is good. It is all to do with transparency. We made a decision in early 2005 to move all our staff, both advisers and back office support staff to a time recording system as we felt that was what best suited us. This allowed us to see how much certain pieces of advice cost us as well as empowering our advisers to do what they felt was best for a client, whether it involved selling a product or not.
If you are a product-selling adviser, the fact that you are selling will still have an impact upon your advice. We wanted to ensure our advice remained entirely objective. It also allows advisers to look at products they would have traditionally ignored, such as exchange-traded funds. The key is we no longer have any axe to grind.
Is there still legacy work from your commission days?
There is a huge amount of legacy work, which in turn means a huge opportunity. We have some 15,000 clients and one has to have some orderly transfer. We are now in the process of moving them from a commission to a fee structure and the response from our clients has been extremely positive. Clients don't mind paying a fee, nor do they mind paying commission as long as it is in their interests. By taking the decision to work solely on a fee basis, with all commission rebated to our clients or used to enhance terms, we can demonstrate that our advice is without side or agenda. Working from commission, your profitability is opaque and it is just not in the best interest of a financial business in the long term.
How many advisers do you have to cater for your 15,000 clients?
About three years ago, the trend at Mazars was to have a large number of advisers and a limited number of support staff. Not only does this put undue pressure on the adviser, it doesn't leverage the operation. In the past 18 months we have increased the number of support staff. Each of our 18 advisers is a trained professional and needs to be available to clients. Each adviser has a trained financial planning assistant, and they are supported by a local administrator. The plan is that the adviser sees clients, the planner is there to compile reports for the adviser, and the administrator deals with all non-advisory work.
Do advisers have specialisms and does that mean you ever turn clients away?
We try to be elite without being elitist. If a client comes to us and wants to engage us, then we will have a free initial meeting to assess what they are looking for and whether we can meet their needs. If we feel we are not compatible with a client we tell them straight away. Our research facilities have been designed over the past few years to ensure advisers are either assisted in their own competence, or have access to someone in a chosen specialism should they need their assistance. We are focused on developing the investment branch at the moment as we have some £400m under influence. We are turning this into assets under management using advisory model portfolios.
How do you incentivise your advisers?
Much of our work is going back to clients, some of whom have been very dormant, and addressing their needs and putting together the proper contractual relationship going forward. Our advisers are targeted by how much chargeable time they get each week, and how much of that time they recover in fees. The focus is on longer-term goals. It isn't the number of clients that is limited, but the hours in the day. The goal for someone at Mazars is to both maintain and develop their client portfolio. We charge for investment services via AMCs. Our advisers only benefit from the AMC if they actually charge time to the client over the course of the year.
How much emphasis do you have on qualifications?
Same as any professional firm. We don't take unqualified staff, or those without an enthusiasm or a desire to succeed. All our advisers are AFPC qualified and beyond, as well as having the Institute of Financial Planning's Certified Planning qualification. The first maintains their knowledge and the second provides them with the holistic skills they need when dealing in such an unfettered area as financial planning.
Do you feel the market is up to date on technology?
The important thing is to have technology that meets your needs. We are constantly reviewing our needs in order to ensure we are both efficient and cost effective. The major challenge for advisers going forward is to adopt working practices which will see them thrive in the 21st century - for example, with the growth of wrap platforms.
Do you use Wraps?
We do all investment transactions through 7IM's platform. We have been using the group since the end of last year and currently have £30m on their platform. We selected 7IM because we wanted to go into partnership with a group that had the same goals as ourselves and whose facilities were in line with the needs of a fee-based practice.
More importantly, we wanted a big platform that was demonstrably open-architecture and would not fetter our requirements for access to any fund in the market. We were also keen that it allowed unfettered access to the various wrappers, that we were likely to need for our client provision. We've been absolutely delighted by the open-mindedness and unstinting co-operation we have had from 7IM.
What are the main issues facing the adviser industry?
Advisers reconsidering their business model at present need to look at how demutualisation, as it continues, affects their viability going forward. The irony is at a time of more technology, people are still questioning the viability of the small adviser, I think whether it is commission or fee-based, small advisers are the lifeblood of the financial services profession.
There will be a greater degree of integration, but if addressed effectively, there is no reason why all small advisory firms should either perish or be subsumed into multi-ties. I do not feel depolarisation has achieved the objectives claimed for it and that any confusion over the objectivity or true impartiality of financial advice cannot be in the client or the consumers best interests. Going forward we believe that an increasingly large number of clients are seeking out fee-based advice, whether it be due to objectivity or the broader approach it gives to their financial strategy.
Does the Government help or hinder you in search of your goals?
Every change in legislation offers an opportunity, which is either to guide clients through the minefield of new legislation or assist them in enhancing their own provision. A-Day is the perfect example of legislation created on the hoof that has then been adapted and amended on countless occasions prior to implementation.
As a consequence, clients were aware of the changes without thinking about what they should do. By working with our accountancy colleagues we were able to give informed and balanced comments to clients to let them know how events were developing and give them specific recommendations. We are seeing a repeat of this with the legislation on trusts in this year's Budget, which was subsequently amended by the Treasury.
Do you have a training ground for advisers?
We are committed to developing both existing advisers and helping to bring new blood into the industry. Every September we take on well-qualified graduates as part of our training scheme. We would expect it to be between four and five-and-a-half years before these graduates became fully authorised chartered and certified financial planners.
What would be the first tip you would give an adviser joining the industry?
Focus on your honesty and integrity, which is generally demonstrated by the professional firms within the UK, but also take time to meet all types of advisers in order to understand the importance of empathy and client management.
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