Nick McBreen, a financial adviser from Worldwide Financial Planning, talks to Cherry Reynard about his &healthy disrespect& for the standard of financial services advice and what he is doing to deliver solutions to his clients
What is your background?
I came from a graduate teacher background, but I gave that up pretty quickly. In the late 1980s I worked for Abbey Life on the direct sales side. I worked my way up to a sales manager role then Abbey Life was sold to Allied Dunbar and I decided to leave. I spent some time as a business management consultant.
As my background was advice-based, it seemed like a logical step to become an adviser. I met Peter McGahan and it was a real meeting of minds. The trouble was, coming from a management role, I had no clients. I have now spent four and a half years as an adviser and it has been a vertical learning curve.
I built up a client base by working with existing contacts, networks and professionals introducers. I never cold called. It is not the way we do business. We have also seen the media side take off in the past year to 18 months. This creates client interest as well.
Are you network members?
We were Sesame members and still maintain a good relationship with them, although we went direct as of January. We value some of their services and use Mark Peters on the research team. We also use their training and compliance.
How many employees do you have in your firm?
It is currently 25, though we have been bigger when we were in acquisition mode up to a year ago.
What do you cover personally and as a group?
We say that we are specialists not generalists. We do believe that the one and two-man bands cannot deliver the service required by clients and the FSA. I specialise in investment, inheritance tax (IHT) planning, long-term care and retirement planning. If anything else comes along, we have someone else within the organisation who can deal with it. For example, I have no idea about mortgages, but we have a mortgage team who can handle clients' needs in that area.
Also we have good relationships with external specialists. I recently had a couple who were going to work overseas. I put them in touch with a tax specialist who could set up offshore companies for them. In that respect, I act more as a facilitator than an adviser.
Are you fee-based?
Yes. Everyone we deal with is invited to go onto a fee schedule. This does not preclude commission offset. But we are very transparent about how we work with people. We have an initial consultation, which is free, but we make it clear from that meeting onwards exactly how we want to be remunerated. We like to make sure that everyone perceives the value we offer. We have always worked on this basis. All we have had to do over the past 18 months to accommodate regulatory changes is a bit of a revamp.
Do you think more people are moving in your direction?
I have seen people who have seen other advisers. We've told them how we do it and they like the clarity. That said, I think people who run a one or two-man band will find it a challenge to make the transition.
Do you turn away clients?
I did it this week. He was a wealthy man, but had fixed ideas about his investments. He didn't perceive the value in what we were doing. But I have never done it because someone wanted me to work on a commission basis and we were only offering fees. Occasionally we have had queries over fees, most notably from bank assurers in one or two big estate planning cases.
I think price has become too important. I was recently at a roundtable with the Pensions Minister and the conversation kept coming back to charging. Yet this is not the issue. If it costs &20,000 to save someone &300,000 in inheritance tax, then it's worth it. We should be focusing on quality rather than simply driving costs down. We need to be paid properly.
Do you have a sense of where your value kicks in, in terms of a client's net worth?
I have never turned away business on the basis of someone being poor, but I would tell them to consider it carefully. If someone came to me with &10,000 they had inherited from granny, it is highly unlikely they would leave our offices having done something. We do give some free advice, usually over the phone and the initial consultations are free. Some people just need a bit of guidance. All we ask is that people remember us and do not keep us a secret.
Do you have a typical client?
No. We do not believe they exist. A recent survey showed that 75% of people are happy with the relationship with their adviser. But most people do not think about finances. The Government is just keen that they are not a drain on the public purse. The majority gravitate to the bank assurers and the multi-ties, who fill an immediate gap.
What are the most important issues facing IFAs?
The key issue for advisers is the ability to run a profitable business efficiently, easily and enjoyably. Advisers need to be playing to their strengths and maximising their strengths within the business. They need to get the right people and have the right marketing strategy. Most are struggling to stay abreast of that. Building a good profile in the marketplace is a challenge. It is helping a client appreciate the value of investment advice rather than just being sold a product. We have to get away from just selling product.
Delivery is also important. You need to use technology that helps and is cost effective. Many adviser firms do not have integrated technology systems. We use Citrix and Quay software - these are hosted solutions. Information is stored remotely by Brooklands. When we log on, everything is there and we don't keep any stuff on local machines.
Succession planning is also critical to a business. Recurring income is the lifeblood of any successful business. We have been looking for decent graduates and have recruited two in the last two years. We spend two or three years mentoring and training.
Regulation is an issue because the goalposts are constantly changing. But we have no complaints on our books, so we are not driven by that. Regulation is non-negotiable. We think whether a business is profitable, has the right clients and the right introducers is more important.
What have been the most important innovations for advisers in recent years?
Wrap does not exist in terms of a real next generation wrap platform. It is all pretty wishy-washy. Abbey is good. Standard Life and Skandia are okay, but do not hold other people's products. The American model is of an aggregation platform and we are not quite there yet.
For me, the biggest innovation has been the ability to access and deliver information through the internet. We have a slick back office and real-time information. We can send emails to clients and push the business forward. There is more and more we can do and it is great.
What has been your most important lesson?
To empower clients to talk about themselves and their concerns and objectives. You have to ask people about what their expectations are and not tell them. Only then can you deliver the right solution. A lot of people are very worried about money and you can turn that round. We do not charge for the initial meeting because we don't know what help they need. It has been a big learning curve for me. Many people have financial products and they don't have a clue why they have got them. I am a very willing student and I believe advisers should be learning every day.
Exit fees and conversions
Initial FOC of 0.6%
Former PFS president
Last commission convened in 2002