Firm of advisers gives wealth of information

Paul Dickson, head of planning and wealth management at Armstrong Watson, talks to Frances Hughes.

Q. What is the history of Armstrong Watson and when was it established?

A.

We are a firm of chartered accountants. The accountancy practice was established in 1867. In terms of financial planning advice we have been doing that since 1972. It [Armstrong Watson] was always a traditional accountancy practice. It grew through acquisition.

Financial planning was not seen as a core part of the client proposition. Since 1999 or 2000 it has become more integral. It is bringing everything in-house to look after people’s financial affairs holistically.

Q. What services do you offer?

A.

We do the traditional accountancy work. We also specialise in other areas such as corporate finance for people selling their businesses. We tend to find that the financial planning team are quite integral to making that happen. We also have a private clients team in the accountancy side that we work closely with [and we provide] succession planning and shareholder protection. Because our clients are quite diverse we deal with a broad range of financial planning issues.

Q. How important is the financial planning and wealth management part of the business? Is it the main focus?

A.

It is key to our proposition. We advise clients on all aspects of their financial needs. Whether it is to pay as little tax to have a successful business or looking for an exit strategy for retirement. What we do is fundamental to the service proposition the accountancy division provides.

Q. Can you describe your client base?

A.

The majority of our clients own their own businesses but we also act for senior employees such as directors of larger companies, or highly paid employees. We have a whole range of experts who can advise [on business]. We have a strong agricultural team, for example. We have a large agricultural base in the north of England. It is farmers and agribusiness.

Q. How many clients do you have and what are assets under advice?

A.

Across the group we have about 14,000 clients. In our division there is about 4,000 clients we look after. We have £430m of assets under advice. [Of that] £140m is with the Selestia platform.

Q. Does anything differentiate Armstrong Watson wealth management from other financial advisory groups?

A.

We focus on client service. We accept and understand that we are working in the service industry. We try to work with clients and help them through any problems they are facing throughout their financial life.

Asset allocation has become a buzzword in the industry. Some groups will set the asset allocation and only look at it again at certain anniversaries. We do not subscribe to that thought process. We believe in being proactive.

We employ Close Private Client Management to advise us on what is happening in the market and on individual funds. We need to make sure we have people just focusing on fund management. They feed into our business. If we need to make changes to our clients’ portfolios we will do it regardless of what the time is. We monitor our clients’ portfolios in terms of asset allocation and the individual funds they have.

Q. How important is technology to your business?

A.

Technology is key to be able to feed into our back office system, so we have a picture of our clients’ financial needs.

Q. How do you select funds for clients?

A.

We gauge a client’s attitude to risk and we structure the portfolio around that. We have model portfolios based on the advice we get from Close Private Client Management. It is an on-going dialogue we have with Close. We use an asset allocation model and within that they will help us break that down. We drill down into sectors and within each division of funds.

Q. Has the business grown much over the past few years?

A.

We have acquired offices over the last four to five years and merged them into the business. In terms of financial services, that has grown over the last number of years. When we moved away from initial commissions to more trail and fee-based income our profitability dropped. But over the past two years we have seen growth come back.

Q. How many advisers work at Armstrong Watson?

A.

There are 13 advisers, plus myself. But my role is more strategic and involved with group management.

Q. What do you think the most significant challenges have been for the advisory market over the past year or so?

A.

Over the last few years the investment markets have been kind to us. The industry has had it easy. I think the biggest issue is there has been a transition to getting away from upfront fees. It is more about providing a service, working on recurring income and not just chasing new business. You build stronger relationships that way. You still have to find new business, but you are looking after current clients.

Recruitment and finding good quality staff is another issue. If there are no new people coming into the industry what will we do in five years’ time? There’s the RDR [Retail distribution review], which is a concern for us as well. Is the industry going to give us enough time to get everyone through the exams? There’s a lot of pressure on people to get chartered status.

Q. What do you think about the emergence of platforms?

A.

Platforms were good in terms of allowing us to be more proactive in managing our clients’ investments. It allowed us to be more individual and have more control over what happens and to manage more efficiently – 98% of our platform business goes to Selestia. Its merger with Skandia has caused issues in terms of administration though. But overall our experience with Selestia has been good.

Q. How long have you been in the financial planning business? Do you think clients’ needs have changed much?

A.

I’ve been in the business since 1997. I think clients want more direct level service from their advisers [now]. There’s more of an awareness of the different products that are out there. People’s financial needs were a lot more simple in the past. I think they’ve got more complex needs [now]. There is a lot more information, sometimes too much. It can be confusing [and] clients want something specific to them.

Q. What plans does the company have?

A.

One of the main projects is to set up a series of fund of funds Oeics to run a few of our strategies, so we can make changes quickly. We expect that to be up and running in May.

Another area we are looking at is how we can improve our service. That is in the details. We are in the process of revamping our website. We are also about to offer valuations online. It is about how we interact with our clients.

Armstrong Watson is an independent firm of accountants, strategic business and financial advisers. It operates in the north of England and southern Scotland employing more than 380 staff in 14 locations. The wealth management and financial planning division has about 4,000 clients and assets under advice of £430m.