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Adviser Profile: James Roberts of Partners Wealth Management

James Roberts and his colleagues at Partners Wealth Management have put the pieces in place for a push to gather billions of pounds of assets over the next decade

Adviser Profile: James Roberts of Partners Wealth Management

James Roberts and his colleagues at Partners Wealth Management have put the pieces in place for a push to gather billions of pounds of assets over the next decade.

Partners Wealth Management has spent 10 years amassing £750 million in assets under advice and is preparing for the push toward £1 billion and beyond. Board partner James Roberts says the firm’s plans to harness and integrate the latest technologies, combined with a range of other initiatives such as a family office service, should help it to gather £2 billion within five years.

The firm’s founding partners, Roberts, Tim Davies and John Sutton, previously worked at financial adviser Scott Goodman Harris. When it was acquired by UBS in 2004, they left and set up Partners with the aim of remaining independent. They were followed by 100 clients, mainly partners in big law firms.

‘We initially acted like a barristers chambers, sharing costs but representing clients individually,’ says Roberts. ‘But from 2008, as the concept of the retail distribution review (RDR) emerged, we moved away from that towards a clearly branded business with a more cohesive proposition and processes.’

Transformation for the RDR

The firm used the services of consultant Brett Davidson for a year to create a transformation strategy for the RDR. The founders also joined the Strategic Coach programme, launched by business guru Dan Sullivan, and Roberts continues with it.

Davidson helped Partners to transform its service, investment proposition, pricing and delivery, even down to details such as the look of the premises, which is in a smart office near St Paul’s Cathedral.

‘We are committed to the location,’ says Roberts. ‘Our clients are City professionals and we are their peers. When people come in, we want them to see our awards laid out, branded brochures and stationery, and interactive technology in every meeting room.

‘Step by step we also created a coherent strategy in areas such as investment and cashflow planning. We chose [cashflow planning tool] Voyant to be at the core of our business because it is multi-tiered. It can cater for the most detail-conscious client with scientific planning, but can also be a very simple cashflow chart for those with a more generalist approach.’

He says Strategic Coach has been inspiring and continues to keep the board updated on the latest business thinking. ‘It has recently helped us focus on risk control, process and vision,’ he says.

‘The main things are to make sure that: everyone in your organisation understands your process – so, for example, never pair a new adviser with new support staff; your process is completely designed around your client; and that you know exactly who your clients are. Also, rather than shooting for too much growth, it has to be planned with the right operational capability.’

JAMES ROBERTS CV

CAREER

  • 2004-date Partners Wealth Management, board partner
  • 2002-2004 Scott Goodman Harris, independent financial adviser
  • 2001-2002 Coutts, private banker
  • 1999-2001 Equitable Life, representative
  • 1993-1999 Endsleigh Insurance, south-east area manager

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

  • CII – DipPFS
  • CII – Cert FP

A growing firm

In 2006, Andrew Garber joined as a partner with responsibility for building a mortgage team.

Garber says this is an important area for Partners because many of its clients are younger and need advice on debt, especially finding mortgages in the less flexible and more regulated post-credit crunch era.

Sutton, who has responsibility for compliance oversight, says the nature of clients in the business has changed, with retirees, divorcees and business owners joining the original niche of City professionals in the accumulation phase. Other IFA firms avoid younger clients in the accumulation phase, but Sutton says: ‘We can really add value for them. Each year their circumstances change and they have more money to invest, so they in particular appreciate regular advice.’

In 2008, the fifth board partner David Stoll joined, with a responsibility for developing financial and business risk controls.

Roberts says: ‘David also brought in the vision of a private banking style of service but without the restricted products.’

Partners Wealth Management's staff and client numbers

Family office service

In 2012, Partners launched a family office service. This includes provision of concierge services, deposit maximisation, protection, general insurance, foreign exchange transfers, accountancy, mortgages and property search, tax efficient structures, and a sophisticated investment proposition [see box]. These are either provided in-house or through external best-of-breed partners.

Davies who has responsibility for this area, says: ‘We aim to offer Partners Wealth Management clients a family office service that traditionally has been restricted to individuals with £5 million or above. We want to make these benefits more accessible.’

While the average Partners mandate is £800,000, clients’ wealth can start at £250,000. Any client can use the family office service, although the firm believes it is most suitable for those with £500,000 and above.

‘Launching the family office boosted growth significantly,’ says Roberts. ‘So often advisers concentrate on selling their investment process; now we can talk to clients about all their needs, with no predefined ideas.

‘As the RDR dragged our industry away from commission towards fees, advisers needed a value proposition based on every aspect of monetary, planning and lifestyle needs. It is why we have recruited eight advisers recently who wanted a coherent, independent proposition behind them.’

Technology to support sustainable growth

Partners’ fees are up to 3% initial, though the maximum is rare, says Roberts. Ongoing fees are 1% with the platform fee discounted, but can be reduced for amounts over £3 million. Still, this means some clients could pay significantly more for ongoing service compared with what they would pay other advisers.

Roberts says the firm is providing much more than many other firms, and remuneration is transparent so all clients must judge that the service is worth the fee. ‘You get a lot for that,’ he says.

For example, the firm has invested significantly in technology to augment the service and, in January, adopted the Enable back office system and SEI-powered Fusion platform. These two systems are designed to integrate seamlessly with each other to create a client-facing portal.

Roberts says: ‘Our business is face to face. Our rivals [such as execution-only platforms] are going online. We have to catch up so that graphically and digitally everything is available to clients. Enable and Fusion allow you to do this.

‘[Financial planning tool] Yodlee has been revolutionary in the States. Fusion has bought it and is trialling it. In the UK it will aggregate clients’ bank accounts and credit card details so they have a complete picture of their total wealth, including investments and deposits via our portal.

‘That is where we have to go as a profession: to have information available in seconds, not after your paraplanner has spent two-and-a-half hours preparing it. I’m told Yodlee will be ready in early 2015.

‘Three years ago, we had 12 or 13 different manual [back office] systems, which we have pulled into one system,’ says Robert. ‘This includes compliance, the management information we need to control business risk, plus financials and client reporting. The time the adviser spends on systems is minimised, empowering them to increase their assets under advice.

‘Growth becomes sustainable when you embed systems like this. Then it is about the delivery of the added-value services, such as the family office.’

Team spirit

The firm has 16 advisers, all self-employed. They receive 40% of their business plus an annual profit share. Roberts says that although the outlook is long term, Partners has built a mechanism that allows advisers to share in any eventual capital realisation of the firm, plus a retirement earn-out.

Outside work, the firm aims to support a culture of fun and fitness. For example, it subsidises gym membership, participates in The Crisis Square Mile Run each year, and organises staff sports tournaments.

In 10 years, the partners have never had a major row, says Roberts. ‘We all share a clear vision of what good client service and good business look like. Tim and I break down the doors of new ideas; John and David make sure we have the operations to support those ideas. Andrew is balanced and straddles both sides. That interplay makes sure our growth is sustainable.’

He says they rarely stop to reflect, but if someone had told them 10 years ago they would be in this position, they would have thought it incredibly fortunate.

‘Looking back, it wasn’t due to fortune but planning, and that is why we are confident about the future and why we aim to have £5 billion under advice in 10 years’ time,’ he says.

Five top tips

  • Have a vision of being the best and plan to progress towards that every week, month and year.
  • Truly understand your core clients’ needs and deliver a service for their every desire.
  • Build a team on people’s strengths.
  • Be a leader in the adoption of technology.
  • Energise others and work only with those who energise you - clients, own team and providers

Blending discretionary managers to diversify risk

Partners creates a matrix of 10 discretionary fund managers (DFM) with help from Asset Risk Consultants (ARC). The matrix features three culturally and stylistically different DFMs in each risk space and for different investment levels.

‘We could go to all those DFMs directly and we do,’ says Roberts. ‘But we’ve said "now we want you to create those portfolios on the Fusion [platform] system".’

Of those the firm has approached, all bar one run portfolios. Roberts says this improves client experience in many ways.

‘You want to blend two or three DFMs together to diversify risk. If you outsource to two DFMs, you lose the ability to control the risk profile by looking at overall asset allocation. But this system allows adviser and client to see overall asset allocation across your products and providers in the portal,’ he says.

‘Plus if you want to switch between them you can do it in 24 hours, not months as it might otherwise take; so there is no inertia bias.’

Partners Wealth Management's business figures

Cost reduction

This approach also drives down cost, says Roberts, as the DFMs typically charge 0.3% or less.

‘The key is that the SEI system that powers Fusion is an institutional trading platform, not a retail wrap,’ he says. ‘DFMs on Fusion have access to over 30,000 tradeable instruments. The trading aggregation technology is market leading. That means the same stock across all portfolios can be sold at once, which massively reduces client trading costs.

‘Often on retail platforms, the DFMs can’t replicate the first choice funds they want and their performance is diluted. And because Fusion feeds directly to our back office, we can give clients an online portal view of a blend of DFMs as well as their legacy holdings.

‘The institutional trading capability on Fusion also means DFMs can create direct equity portfolios that are far more dynamic than fund-only strategies. That strips out an additional layer of cost,’ says Roberts.

Partners expects its advisers to know and understand each DFM’s process and outlook, and to articulate that to clients. ‘The DFMs don’t have to send their manager to meetings. So we have stripped out that service from their manager as well. We are simply buying their investment expertise,’ says Roberts.

He says this allows the firm to reduce overall client fees further. ‘With the DFM holding custody, including our own and all other costs, we used to see typical DFM total expense ratios of 2.2% to 2.9%. With the Partners Fusion Solution, we can deliver a significantly lower price with passive portfolios starting at 1.2% through to full DFM service at about 2.2%; 1.72% is the average.’

Assessing quality

As well as quantitative data, ARC looks at qualitative issues, such as governance and people, and may recommend replacements.

‘For example, in 2011 ARC told us Jonathan Ruffer was starting to take a back seat and recommended removing CF Ruffer from the panel before the relative performance dipped,’ says Roberts. ‘More recently, Jupiter Private Client arm was performing well. But there were concerns that it was not core to Jupiter’s business. ARC recommended replacing it six months before Jupiter sold it.’

Partners replaced Jupiter with Brooks Macdonald. ‘Brooks has had good returns and improved risk control recently,’ says Roberts. ‘We don’t just want to see returns, we need to see the process. We are looking for DFMs to stay within risk grades. Our back office technology provides an automatic email alert function to tell us when they move outside that.

‘Plus we want to know what they are doing to add value. We want to see active, tactical asset allocation. And we want to see straightforward, useful, plain-English updates that we can forward directly to clients.’

Often the DFM services on Fusion are model portfolios but where clients want genuine bespoke portfolios, Partners also provides that through a number of DFMs.

ACTIVE FUNDS: 85%

PASSIVE FUNDS: 15%

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