Matthew Pitcher’s biggest fear when setting up a small Hampshire boutique from scratch was not dealing with regulatory costs and back office systems, it was going into business with his wife.
After 16 years of living the corporate life at Towry, he finally decided to break free of internal meetings and office politics in 2017 and take a big leap to be closer to his clients.
The couple had decided to launch Altor Wealth Management out of a shared vision to form a family-style company that would charge fairly and differently. They also wanted to give a 'large' amount of their revenue to charity.
Formerly a teacher, Lucinda Pitcher took on the operational part of the business to allow Pitcher the luxury of shaking off his previous corporate life and spending the best part of his time with clients.
‘You never know whether working with your better half will break up your marriage,’ Pitcher says. ‘But it has worked out phenomenally well.
‘We look after family businesses...so it felt like a better match, because we understand what they’re going through and what challenges they face as opposed to my previous role.’
Pitcher started his career in 2001 at Towry as a wealth adviser. He describes the firm as ‘a small national adviser’ in those early days, but as the years went by and the business expanded, he increasingly found himself spending more time in internal meetings or filling out forms than he did with clients.
The other three were Chris Cole, Bryan Innes and Toby Alcock, who subsequently also set up their own wealth boutique, Lockhart Capital Management, with two more Towry alumni, Andrew Wilson and John Bowes.
Since its launch, Altor has attracted another two advisers with a desire for a more boutique culture. Retired senior Towry partner Jon Whiteley joined the firm soon after it was set up, and Vaughn Watson, Tilney’s former Hayward Heath office managing partner, became the second hire earlier this month.
The company currently manages £133 million for 50 clients, but with Watson on board, this is expected to grow to £250 million in the next 18 months.
Pitcher has put a maximum on the number of clients each adviser can service: Whiteley, who is working for the boutique three days a week, has a 20-client maximum, while Pitcher and Watson have a limit of 40 each.
‘We have set up the maximums deliberately, because in the big corporates, 80% of efforts goes to finding new clients, as a corporate is "a hungry beast", and this feels wrong for us,’ he says. ‘You should be devoting your time to the people who are paying your wages.’
Altor’s straightforward fee structure is another feature that gets Pitcher excited, leading him to get into lively Twitter debates about the fairest way to charge your clients. He firmly believes in a set annual cost with no extra charges.
‘If you take a percentage, you lose money every time your client does the right thing, like paying for their children’s university, weddings and so on,’ he says.
‘It’s very dangerous having a fee. If you don’t have one, you don’t have a conflict in those situations.’
Altor has three annual fee levels of £8,000, £6,000 and £2,000, depending on the complexity of the service. The £8,000 ‘bespoke service’, which has an average client portfolio size of £2.7 million, is for complex cases and includes regular cashflow planning, diversification across multiple discretionary investment managers, advisory portfolios, tax advantaged advice and tax planning.
The £6,000 fee regards simpler cases, offering cashflow and a smaller range of investment choices and tax advice, while the £2,000 self-service option is an unregulated service for clients who are self-managing large portfolios but want cashflow, tax advice, a consolidated valuation service and guidance. Its average portfolio size sits at £850,000 per household.
‘Any of the first two clients can also pay £2,000 per annum for each adult child for them to receive full advice, and this is very popular,’ Pitcher says.
‘We are never going to market to millennials. We don’t have anyone from that generation who is a direct client that pays full fees.’
However, he adds: 'We have quite a lot of that generation as clients because their parents are paying full fees, and the saddest thing about it is that those guys in their 30s need a hell of a lot of advice, because they are starting families, they are buying houses, they have pension needs.
'Their financial lives are a lot more complicated than that of their parents.’
Pitcher’s desire to make a difference does not stop there. The firm has set up a charity committee and the Altor Foundation, which is taking 10% of gross revenue. He said this was not a marketing stunt or recruitment driver, and was one of the reasons Watson chose the firm over other options.
‘There are a lot of companies that make big noise about small [stuff]. We want to have a big impact and make some meaningful difference,’ Pitcher says. ‘If we were just doing it just to look good, we would be giving less than 10%.’
‘Revenue for the full year based on the agreements we have in place would be £460,000, and so £46,000 will go straight into the Altor Foundation.’
Pitcher has certain ambitions for the future. Having made losses for the first two years of its existence, Altor is expected to record its first profit in the accounts it will file next month.
Its running costs are about £150,000 per year at the moment, but these figures will likely change hugely as the firm continues to grow with the addition of Watson.
‘I can see us taking on new partners and getting to a decent mid-size and being regarded as regional, but I have no desire to become a national,’ Pitcher says.
The firm is looking to hire two more staff members, an administrator and a paraplanner, one of whom will ideally be a trainee adviser.
Although the lack of young talent is fast becoming an industry challenge, and Pitcher concedes that the size and location of the boutique may not act as a hook for aspiring investment managers, he is confident someone who shares Altor’s culture and vision will come along.
‘It’s a good thing for trainee advisers to go to bigger firms, because they learn a lot and get exposed to different parts of the business,’ he says.
‘But we would love to grow our own advisers and bring on board the right people.'
He adds: ‘From a client point of view, I wouldn’t say big corporates are wrong for everyone – there are clients who like the safety and security of a huge machine and a big brand – but there are also those who prefer the service we offer.'
‘Each to their own.’