Adviser profile: Simon Lister and Craig McClurg of ML Financial Associates

For Simon Lister and Craig McClurg, setting up ML Financial Associates was an easy decision because of their unbreakable bond.

The CVs (Part One)

Craig McClurg

2011–present: ML Financial Associates, IFA/director

2004–2011: Foresight/Insight Financial Associates, IFA/director

1998–2004: CGU/Aviva, regional sales manager

1997–1998: Commercial Union, senior financial adviser

1995–1997: Commercial Union, financial adviser

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

Chartered Insurance Institute member

BA (Hons) Marketing and Philosophy

The CVs (Part One)

Craig McClurg

2011–present: ML Financial Associates, IFA/director

2004–2011: Foresight/Insight Financial Associates, IFA/director

1998–2004: CGU/Aviva, regional sales manager

1997–1998: Commercial Union, senior financial adviser

1995–1997: Commercial Union, financial adviser

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

Chartered Insurance Institute member

BA (Hons) Marketing and Philosophy

The CVs (Part Two)

SIMON LISTER CV

2011–present: ML Financial Associates, IFA/director

2002–2011: Insight Financial Associates, IFA/director

2000–2002: Abbey National, financial adviser

1999–2000: Warners Financial Services, mortgage broker

1997–1999: Norwich Union, actuarial pensions

 PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

Chartered Insurance Institute member

Million Dollar Round Table member and top of the table

One-man band?

'I would set up a one-man band,' says Craig McClurg, when asked what he would do differently if he set up an advice firm today. However, a wry glance at business partner Simon Lister gives the game away that he is not being serious.

In 2011 the pair, who describe themselves as 'young-ish', launched Wymondham and Northampton-based ML Financial Associates. They say it was more fun and less stressful because they had a shared vision and each other.

The friendship began when they met playing in a golf competition in the US in 2003. Today they run a firm with £125 million in assets under advice, two offices and 18 staff. 'One of our biggest strengths, because of our friendship, is trust,' says Lister.

'The fact we are genuine best friends means we trust each other and that goes a long way. Our friendship helped build the business because Craig knows I have his back and I know he has mine.'

McClurg agrees, which is unsurprising because, he says, the pair are on the same page 80% to 90% of the time.

'The other 10% or 20%, we just thrash it out,' he says. 'If we are ever at complete loggerheads one of us will just say: "fine, you run with it. I will back you 100% and see what happens."'

Lightbulb moment

Lister’s background was in pensions and actuarial before he joined Abbey National as an adviser in 2000. He left the bank after two years to become an adviser at IFA Insight Financial Associates.

In 2004 McClurg left a role in insurance to start up Foresight Financial Associates. Initially this was a completely separate business from Insight except for some shared resources and a mutual director, Jason Howard.

However, the idea had always been Insight would absorb Foresight. This happened in 2006.

Howard saw Insight as a scale business whereas Lister and McClurg wanted something more bespoke. So it was control over their destinies, says McClurg, rather than financial gain, that was the pair’s main motivation to leave Insight and set up ML in 2011.

'We sold out of Insight because of a desire for a very different type of firm to what Insight was,' says Lister. 'We wanted to be a very personal, high quality financial advice firm.

ML has three business writers: the two directors and Simon’s father, David Lister. Simon followed his father into financial services before his father followed Simon to Insight. David worked as an adviser there and moved to ML when it was set up.

This link is not what ML is talking about when it calls itself a family business though. That is more to do with its ethos.

'We try to run the firm by traditional family values,' says Lister. 'For example, we sit down with the team and have lunch once a month.

'There are positives and negatives to working in a small firm and we see a family spirit as one of the positives. For example, we bought everyone a Christmas present last year that we wrapped in ML paper. They had it under the tree and were not allowed to open it until Christmas Day.'

McClurg says there can be a perception that a smaller firm has less job security than a large company. 'People at Poundworld thought their job was pretty secure. Why? Because it is a big brand,' he says. Last week Poundworld fell into administration.

'The perception can often be "if you're working for a small company, how secure is your job?" We do not share that view. But we bear it in mind when people come to us, especially if they join from a large organisation and want more reassurance.'

ML also recognises a hard-working team deserves staff events that have been given a bit of thought. 'I cannot imagine anything worse than being a firm that goes to a marquee and has a disco,' says McClurg. 'That is not who we are so we try and do something a bit different.'

Over the years ML staff have tried their hand at cocktail making and pizza making in Rome and been tasked with an Apprentice-style treasure hunt around Edinburgh. Lister apologises for not being able to reveal what is lined up for this year’s ML summer and Christmas events because it is top secret. Even the staff do not know until the last minute.

 

In focus

Lister says the company spends a lot of time and money on ‘sharing of minds’. The directors attend the annual Million Dollar Round Table conference, which brings together 14,000 advisers from around the world.

Lister also meets a group of 10 local IFA owners every quarter to discuss business, regulation and investments.

The firm recently gained insight into its clients’ mindset by way of an informal survey that bore valuable results.

McClurg and Lister found clients were put off referring their friends to ML, because they thought it might cause service standards to drop.

The biggest reason for non-referral, however, was simply not knowing the firm was looking for more business. ML now makes it clear it welcomes referrals and reassures clients it will not affect the service they receive.

Through these conversations, alongside investment in new technology systems, assets under advice increased from £88.5 million in 2016 to £125.1 million in 2017.

ML maintains a high service level by focusing on recruitment of back-office staff while the firm expands and funds under advice increase. McClurg says the firm has no desire to try to maintain the quality of the firm by hiring huge numbers of advisers.

The large back-office team gets to know clients well, so queries will often come through to those team members directly, rather than the advisers.

Another way ML has made sure service levels stay high is through so-called 'focus days', says McClurg. 'These are days when Simon and I will do nothing apart from see clients.

'We know the management team are looking after the business and the people in the engine room are doing everything they need to do. So if issues arise, we will not be disturbed and we will not get involved.'

A friend focus day, for example, for the business partners might involve getting their respective families together, playing golf or just going for a drink. But McClurg says the common theme is there is no work talk, just a lot of banter.

The Fee Bit

ML currently has three service levels, which determine a client’s frequency of communications, and access to advisers and administrative staff. It is looking to add a fourth.

Any client who is referred to the firm or comes to them through one of its retirement planning education seminars gets a free initial meeting. It would otherwise cost £270.

Clients are asked to complete a pre-meeting questionnaire to make sure they get the most out of the initial meeting. This is also when the firm establishes whether it needs to use Voyant cashflow modelling in subsequent meetings. After the initial meeting, clients are given a pre-report to look over and discuss it face to face.

The report meeting and a follow-up meeting are covered by one fee determined by the complexity of the client’s finances. The minimum cost for this stage is £500 and the maximum is £2,500.

Clients with up to £75,000 to invest pay 0.5% ongoing and sit in the first service level. Between £75,000 and £150,000, clients pay 1% and sit in the second level.

Clients with a portfolio worth over £150,000 fall into the top, 'all-encompassing,' service level, which also has a 1% ongoing fee. They can have as many meetings as they want throughout the year.

'In the top level, we look at crystallisation of capital gains tax throughout the year,' Lister says.

'We communicate to all our top-level clients monthly on a variety of subjects such as a global market commentary or a newsletter or something else.'

Clients paying 1% will get an actively managed portfolio and for 0.5% clients are more likely to be in a default investment proposition such as Standard Life’s MyFolio.

The investment bit...

Lister heads ML’s five-person investment committee, which meets once a month and strongly follows the principles of Harry Markowitz’s model portfolio theory. The director describes these meetings as very process-led.

'It is a meeting without emotion and with absolute clarity, using data to see where we are,' he says. 'There might be an opportunity to put a slant on it but that is very loose. Nine times out of 10 it is a case of: "this is the process we are following.”’

ML has five risk-rated in-house model portfolios, each holding 15 to 20 different funds on average.

The firm buys in data from FE Analytics. It then uses its own filters to work through the fund universe to find and research suitable investment solutions.

Lister said ML’s filters are like its ‘secret recipe’. It makes the investment model unique and helps the firm deliver above-average performance for below average risk.

For the most part ML clients are invested in active solutions, with passive only introduced where it is felt it will add value.

ML says funds will tend to be dropped if they are flagged as red twice on the firm’s fund traffic light system. This responds to funds showing above average risk, below average return, volatility that is too high, a change in fund manager or anything else that causes the investment team concern.

You can follow Craig and Simon on Twitter using the following handles:

  • @McClurgCraig
  • @simmylister

Here are some highlights from their feeds:

 

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