As the UK economy continues its febrile recovery, we wanted to provide an update on how our business has responded to forthcoming regulatory change and our recent period of growth.
Informed Choice was formed in 1994 by Nick and Andrea Bamford. It was initially an appointed representative of a larger IFA firm in London, before becoming directly authorised and regulated by the FSA over a decade ago.
In 2004 we made a decision to change our business model; away from the traditional IFA model of selling products to earn commission, transforming Informed Choice into what is known in the sector as a ‘new model adviser’.
This involved a series of changes, including the introduction of ‘adviser charging’, where we agreed our fees for advice, implementation and review activities with each client before providing advice and other services.
This change meant that we removed the potential for bias from our advice, as we charge advice fees regardless of the advice outcome. The old IFA business model means an IFA needs to recommend a commission-paying financial product in order to make any money.
Moving to adviser charging also meant we removed cross-subsidy from our business. The old IFA business model results in some clients getting ‘free’ advice which is paid for by the IFA charging their clients a higher level of commission when they do sell products.
Another important change we made back in 2004 was an increase in our level of professional qualifications, both individually and collectively as a firm. This enabled us to become a firm of Chartered Financial Planners, only the 99th in the UK, three years later in 2007.
We started making another important change to the business in 2004.
Traditionally, IFA firms have had a very linear structure, with an individual adviser responsible for the formation and delivery of financial advice and then a central administration team processing this advice and checking it for suitability after it had been delivered.
This business structure did not appeal to us for a number of reasons.
Apart from being highly inefficient, with one person carrying out multiple roles, it introduced a high level of regulatory risk into the business as advice was often delivered without prior management approval. Under the old model, the individual IFA is responsible for putting together a recommendation and presenting it to their client.
The new business structure we started to introduce in 2004 was team-based, with a number of people getting involved in the construction of advice for our clients. Individual advisers continue to deliver recommendations, but they are recommendations formed by consensus, with the most appropriate team members involved in their construction.
Time moves on and a couple of years after making these fundamental changes within our business, the Financial Services Authority (FSA) announced its Retail Distribution Review. This major shake-up of retail financial services regulation included the abolition of commission (with the introduction of adviser charging) and higher minimum levels of professional qualifications.
As a firm, we have remained well ahead of this regulatory initiative since it was first announced. What this has meant for us as a business is that we have been able to focus on developing our client proposition and growing our business, rather than struggling to keep up with new requirements imposed on us by the regulator.
This focus on clients and business growth has been extremely positive for Informed Choice, particularly during the past few years.
Over the past couple of years, we have seen our revenues, assets under management and staff numbers grow at a very healthy pace. Our last published accounts show turnover growth of nearly 52% in the space of a year.
We are projecting annual growth of a further 49% when we publish our next set of annual accounts this summer. On the basis that “a poor Financial Planner is a poor Financial Planner”, we have remained profitable as a firm in every year of trading.
An important part of our culture is the acceptance that we are very good at what we do but we can always do better. With this in mind, we are now in the process of implementing a further set of very important changes in the business.
Earlier this week we signed a contract for a new software licence with Avelo for their 1st Adviser Office back office system. This will be installed and implemented across the business over the next six months with the aim of being able to deliver more detailed reporting to our clients. We also aim to improve our business efficiency; speeding up the time it takes to deliver advice and other services.
In terms of people, we recently promoted chartered financial planner Andrew Neligan to the position of Financial Planning Director and Lizanne Doyle to the role of Client Services Manager. Both Andrew and Lizanne will play an important role in the long-term success of the business, as we start to move away from being a small family owned firm to become a larger business with the same important family values.
We have some important recruitment goals to fulfil over the next twelve months. A new Client Services Administrator is starting with us at the beginning of June, joining us from a firm of Chartered Financial Planners in London. We have also appointed the services of a part-time IT manager to help us manage our technology infrastructure this year and beyond.
We are currently interviewing Financial Planner candidates to fulfil our ambition to add one more highly qualified and experienced Financial Planner to the team this year, and then another Financial Planner at the start of next year.
In keeping with our culture of continuous improvement, we continue to welcome feedback from our clients on areas where you think we could improve. Please get in touch in the usual way if you have any suggestions.
