Adviser profile: Steven Pyne of Holden & Partners

Steven Pyne set up Holden & Partners 15 years ago to give clients an ethical option and says attitudes are now changing quickly.

Steven's CV

2017-present: Holden & Partners, managing director

2003-present: Holden & Partners, founding partner

1998-2003: Holden Meehan, administrator and trainee financial adviser

1996-1998: Elliot Bailey, private client administrator

1995-1996: Edwards Financial Services, trainee mortgage adviser

Investing in the future

Steven Pyne set up Holden & Partners 15 years ago to give clients an ethical option and says attitudes are now changing quickly

thical, sustainable and governance investing is more in vogue as of late. So much so, even six-year-olds are environmentally aware, according to Steven Pyne, managing partner at Farringdon-based Holden & Partners.

Pyne was an early entrant into the world of ethical, or ‘impact’, investing. He joined the advice profession in 1998 with a view to merging a long-standing passion for the environment with his working life. In 2003, Holden & Partners was born.

‘I was always interested in the environment when I was younger. I guess part of that is because I grew up close to the countryside, and went to university to study politics,’ he explains.

‘So there was always an interest in environmentalism through that. It was an added attraction to this career.’

But Holden & Partners did not set out with a ‘point to prove’. Rather, it started from a belief that it was morally right to offer clients a choice to invest ethically, without being ‘evangelical’ and forcing them down the ethical route, or trying to change the way others do business.

‘We were convinced that ultimately the current approach to fuel and so on was unsustainable,’ he says.

‘We believed investing in conscious and sustainable ways would prove to be financially successful in the long term, and this is what happened.’

Organic growth

Since last profiled in New Model Adviser® in 2012, Holden & Partners has grown steadily. It aims to reach milestones of 30 staff, of which 10 will be fee earners, serving 1,000 ongoing clients, by the end of 2018. It has now surpassed £500 million in assets under advice. 

Having hit £2.8 million in total income in 2017 and £507.1 million in assets under advice across 900 clients, the firm is aiming for £3 million income and £588 million assets across 1,000 clients by the end of this year. Holden & Partners has maintained recurring income at 80% annually since 2015.

Pyne has built a track record in identifying paradigm shifts on particular environmental issues. He identifies one current client focus to be the dangers of plastics. As a result, he is investing in firms that are working to ensure products are more sustainable and minimise waste output in production.

‘If you go back seven or eight years, we invested in a number of renewable energy investments, particularly to do with wind energy. They were quite speculative, but ultimately they have done quite well,’ he says.

‘When you’re looking at what’s happening at the moment, sustainable plastic is going to be a growth area. Things like sustainable forestry are going to become more important and attractive as investments. We are currently doing research into that area.’

Increased awareness

Although not wishing to be prescriptive, Pyne does believe financial services could be doing more to offer a wider variety of positive impact investing options.

He adds: ‘There is still a lot of ignorance and scepticism in the profession about ethical and sustainable investing. It is still sneered at in some places, but younger people are becoming more and more interested.

‘If you ask people the right questions about the environment, they are concerned about it. Indeed, the plastics situation has highlighted that,’ he says.

‘I think times are changing; even my six-year-old son is conscious about plastic, and will talk about fish eating it. When six-year-olds are environmentally aware, that is going to have implications for investing in the future.’

But it is not necessarily about avoiding large multinational companies. Pyne highlights Unilever as one example of a company being increasingly held in ethical portfolios, where it had not been previously, due to its efforts to reduce waste from its packaging process.

Holden & Partners did not set out to change anything drastically or create a substantial legacy. But Pyne foresees a future situation in which the next generation of clients end up asking those advisers ignoring ethical and sustainable investing why it was not discussed properly with them.

Annual goals

Pyne has set out clear ambitions for the firm in 2018, one of which is evaluating discretionary fund management permissions. Holden & Partners has a growing in-house investment team, and Pyne says the focus across the board will be to make the business as efficient as possible.

‘Discretionary might be a more appropriate solution for some clients. They just trust us to get on with the investment side, and don’t want a fairly long-winded explanation as to why something is the right investment for them,’ he adds. ‘It’s a process we’re going through. But we have to be totally satisfied that it’s the right thing for us to do before we go for it.’

Holden & Partners is also evaluating a move from LLP to limited company status, with a view to establishing a succession plan. One founding partner recently retired and previous managing partner and cover star Mark Hoskin emigrated to New Zealand, so Pyne is examining ways to establish a more flexible ownership structure.

He says: ‘We have a tier of younger members of staff who’ve been with us for an average of four to five years. We also have four young advisers coming through who potentially might be interested in equity in the business in the future.’

The right hires

Pyne acknowledges hiring new entrants to the profession is not easy. But he says the company is very picky about hiring the right cultural fit, along with creating a collaborative environment and a flat structure where partners are accessible to staff of any level at any time.

‘It’s about offering people a career path,’ he says. ‘We have people who have progressed from paraplanner to adviser, or joined our investment team and moved up from trainee to investment manager. People can see there is a career path here.’

Holden & Partners has made three appointments in the past two months. It recently hired a new trainee, and is looking to bring in another senior adviser and a full-time compliance officer, the latter of which Pyne hopes will help to navigate the ambiguous post-general data protection regulation terrain.

‘Our approach has always been informal, professional but approachable,’ Pyne says. ‘We have always sought out long-term relationships with both clients and staff.

‘The important thing for us has been to listen to our staff and listen to our clients, and take things slowly.’

Flexibility helps Pyne navigate a busy personal life, which includes three children aged nine, six and three, as well as a commitment to running one marathon a year. Music is also high on the agenda, and the family plans to attend Latitude Festival this summer, headlined by Vegas indie pop behemoths The Killers.

Embracing complexity

Pyne anticipates the biggest risks to the advice profession over the remainder of his career will be downward pressure on fees, political and economic stability, and the distribution of wealth among future generations.

However, he also sees opportunity amid this uncertain terrain. ‘The world is becoming more and more complicated. As a member of the public, you’re going to need someone you can talk to any time about complex technical financial planning issues, and to make sure you’re doing the right thing.

‘With change comes opportunity: areas like equity release, for instance. You have a big disparity in wealth between generations. People in their 60s, 70s and 80s are sitting on property with significant equity, looking to release some of that to children and grandchildren. This will be a big area in the future.’

Holden & Partners is also looking at getting involved with local secondary schools to deliver financial education and combat naivety around money among younger generations.

The fee bit...

Holden & Partners offers a first meeting at no cost to the client, to allow the adviser to assess the nature and level of service required. This is then put in writing to agree service and cost in advance of commencing work.

For the full management of an investment portfolio, Holden & Partners charges an initial fee of 1% of funds invested, based on a minimum portfolio size of £250,000.

An annual management fee based on the value of investments then applies, totalling 1% on investments up to £1 million, 0.6% on the next £1 million and 0.35% for everything above that.

For financial planning work, fixed fees are charged on a case by case basis depending on the complexity of work, with a normal minimum fee of £1,250. Clients have the option of paying an ad valorem fee to spread the cost across the year.

If a client paying for financial planning work decides to become a full investment management clients, the firm may then offset the financial planning fee against the initial fee. Again, this is agreed on a case by case basis.

The investment bit

Holden & Partners has an in-house investment team. It uses three discretionary fund managers: Rathbones, Cheviot and Sarasin (for US clients).

Although around 95% of its assets under advice are in active funds, Pyne says this is less of a philosophical decision than a by-product of the firm’s ethical, sustainable and thematic (EST) approach. ‘We run a number of client portfolios, and there is an EST option for each model,’ he says.

‘Generally the EST funds are actively managed, and that’s one reason behind it. When you’re looking at companies from a screening point of view, it’s easier from an active management perspective. We have always found it is better for us to use actively managed funds. But we are not bound to that, and we do use some passive funds in our portfolios.

‘We monitor the performance quite closely, so we will only keep active costs in when we are satisfied with long-term performance. In terms of passives, we use a couple of Legal & General trackers and Vanguard. We are very interested in what Vanguard is doing at the moment [with ethical investment],’ he says.

The firm’s EST Balanced portfolio is its most representative. Its most commonly recommended fund in UK equity is the Royal London Sustainable Leaders Trust fund (managed by Citywire + rated Michael Fox), while the Rathbones Ethical Bond fund (+ rated Bryn Jones) is the top choice in UK fixed interest.

Pyne identifies the top fund in the firm’s portfolios, however, to be the Pictet Global Environmental Opportunities fund. Read more about this in next week’s cover star extra.

The Twittersphere

You can get regular updates from Holden & Partners on Twitter by using the handle @holdenpartners.

Here are some highlights from their feed:

And finally...

Holden & Partners has set itself a 12-month goal, which is:

To implement a viable succession plan.

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