Expanding firm aims to attract younger clients

Jim Grant, chief executive officer at Chartwell, answers this week’s questions from Frances Hughes

Q. Can you explain the different strands of business within Chartwell?
Chartwell is centred on financial advice primarily. We have a face-to-face advisory business where we try to look after individuals’ [investment needs], for example, pensions they wish to invest in. Most of our clients are between 55 and 73-years-old. We have 22 registered individuals who see clients, both corporate and individual.

We have a mortgage broker business in Bristol. It is a telephone-based operation, with loan sizes of £350,000 and upwards. We have the direct side of our business, which is Chartwell Direct. A part of that is the investorcentre.com. It allows clients to put their mutual funds in one place, find out about funds they invest in and get performance data. It is for self-motivated investors. We repay 50% of trail commission to clients who use investorcentre.

Clients can also ring us about a fund they want to invest in and we will do the transaction. There is no initial charge. We have about 40,000 clients who contact us through non-advice services. We have about 5,500-6,500 advisory clients. There is also the funds business. Last October we launched an Oeic with three sub funds, Balanced Income, Cautious Growth and Strategic Growth.

Q. What kind of funds are they?
They are structured as multi-asset funds. They all invest in multi-asset classes. It is cost efficient and well diversified. It gives opportunity for capital preservation. The returns tend to be smooth. Although they do sacrifice some of the upside, clients are happy.

Q. What do you mean by multi-asset?
Of the funds that call themselves multi-asset, there are 13-14 that fit what we think multi-asset is. Bonds and equities with a bit of property thrown in is not a multi-asset fund to our mind. It should have exposure to hedge funds, commodities and structured products as well, all in one wrapper.

Q. Do your clients like the multi-asset approach?
It is a more complicated message to communicate to clients. We ran a seminar and the feedback was fabulous. We are looking to do more around Britain, including London.

Q. Why are the funds outsourced?
We felt that the investment solution was fairly specialist. The full mandate is out of our hands. We are selecting and managing the manager. If they fail to deliver we have the freedom to select other managers. They are on three months’ notice.

We have taken a high net worth investor model and brought it to the market for our clients. From £50 a month clients can access something that they would otherwise not have been able to afford.

Q. Who manages the funds?
Credit Suisse manages Strategic Growth, Midas Asset Management run Balanced Income and Berry Asset Management run Cautious Growth.

Q. What are assets under management in the three funds?
There is £37m in Chartwell Strategic Growth, £45m in Balanced Income and £24m in Cautious Growth.

Q. Will clients always be directed towards Chartwell funds?
There is a range of multi-asset offerings we like to look at. We support several other funds and other managers. All have a slightly different risk profile. Some funds have their own nuances. A client’s objectives and risk profile dictates what happens and narrows down the range of funds suitable for them.

Q. Last month Chartwell acquired Broadoak group, an advisory firm based in Bristol. Can you explain why?
We have a strategy plan in place to grow the business through acquisition of like-minded IFAs over the next five to eight years. Highlighting firms that take a similar view makes integration easier.

Q. Are you considering other acquisitions?
We are looking to acquire a business in London. I’m kissing a few frogs at the moment but I might have identified a potential prospect.

Q. How does the acquisition of Broadoak help Chartwell?
Broadoak brought us another 2,500 advisory clients. We are setting up a telephone-based advisory service for investors who sit in the middle ground. They do not want face-to-face advice every six months but are not direct investors either. We want to cater for them. It is a big driver at the moment.
Clients do not always want to engage with us in the same way. Dealing with more people cost effectively is important. The investorcentre is online. Then there is the telephone service and the face-to-face advice.

Q. Is your client base shifting as the business grows?
The profile of our clients is changing. If we continue just at the elderly end we will run out of clients one day. We are looking to engage longer-term, [for example] bringing in a 40-year-old and moving through the planning stages as they become older.

Our advisory business clients tend to be pre-end or post retirement. Our web offerings and telephone-based advisors will attract a younger profile of client. The more elderly do not use the internet as younger people do. A lot of money is going into engaging with clients. We are a stronger business and have a better platform with three ways of engaging with clients.

Q. How developed are these new ways of engaging?
We are recruiting qualified telephone-based advisors. We hope to have it working fully by April or May next year. The online proposition is offered to existing clients. At the end of November or early December we will do a hard launch to the wider public.

There are 6,700 clients [investing] about £250m on that service. We pay back about £1.5m [of trail commission] to online clients. Advisory clients are investing about £150-160m. We are also doing a three-stage launch of the new Chartwell website.

Q. In June the different strands of the company were rebranded under a single Chartwell banner. How were they known before?
My business was Cavendish Grant. The Chartwell business brought us in another direction. We were a confused structure. We had Chartwell Direct and Cavendish Grant.

Now people understand they are dealing with one company, whether it be Chartwell Funding, Chartwell Private Client business or Chartwell Fund Management.

Q. How will you manage the expansion?
We are getting into full flow now. In the next two to three years there will be more acquisitions and we are likely to launch one or two funds and employ a broker consultant. The focus of our business is shifting to be a manufacturer and distributor as well.