General service values face-to-face approach

Mike Robinson, managing director of Clarkson Hill, answers this week\'s questions from Frances Hughes.

Q. What does Clarkson Hill group do?

A.

We do a bit of everything. We provide financial advice across the spectrum, from life insurance and mortgages, to inheritance tax planning, final salary schemes and complicated VCT [venture capital trust] deals. We do not specialise in any particular kind of bracket or size of investment. Our clients range from multi-millionaires, to people who do not earn as much.

Q. When was it set up and by how much has the business grown?

A.

We listed on Ofex in 2003 and set up slightly before that. We are now Aim [alternative investment market] listed, and have been for the last two years.

We have built Clarkson Hill from 25 advisers to in excess of 350 advisers. We are one of the top 10 IFAs in the UK now. We have 13 regional offices. The most recent is in Northern Ireland.

Q. Can you explain the expansion process and how you have gone about growing the business?

A.

We take full responsibility for the sales and marketing process and provide a full compliance and administration service. [For that] we take a cut of the commission or fee they [the IFAs] are entitled to.

Some [IFAs] take the Clarkson Hill name and some do not, because they want to retain some autonomy. Some want more involvement. It is up to them. The key is flexibility. We tailor the package to [suit] what they want.

Q. How much business does Clarkson Hill do and how much of the business is investment?

A.

Total turnover is in excess of £20m a year. About 60-70% is investment, including pensions business. About 30-40% is single premium investment, in bonds, unit trusts and Oeics. Funds under management and funds under influence are close to £1 billion now.

Q. Can you describe your investment approach?

A.

Our approach is straightforward. We believe in face-to-face advice. We don’t believe in the client doing everything themselves. Our clients want to see their adviser. On that basis we give advice. We do use the tools the industry has got, for example platforms, but that will not replace seeing advisers on a monthly, quarterly or yearly basis. Clients like that service. I don’t think it’s proven not to work. I see that as part of the job and treating customers fairly.

Q. Are you planning to make the Clarkson Hill website more interactive?

A.

The idea of the website is to give a profile, but nothing more than that. It gives information about us if clients are joining. It is not massively high on our priority list.

I’ve never stood in front of a client with a laptop to download this, that or the other. The client is there to talk to you, not a computer screen. We can get all the information a client needs in normal conventional ways.

Q. How do you decide on the right asset allocation for your clients?

A.

There is a deep and fundamental difference between what I do and what an asset allocator does. An asset allocator should have a Masters [degree] in economics at the least.

I work hard to make sure a client’s risk profile is being adhered to. I don’t go dipping in and out of biotechnology. An IFA picking individual funds is dangerous in my view. In most cases they haven’t got enough experience to do that. Asset allocation is someone else’s job. That’s the analysts’ job.

An asset allocator should have the relevant qualifications: an MA in economics and possibly a PhD. We are not asset allocators. I am not an economist. I am an IFA. There is a distinct separation. I see the clients and come up with solutions. It doesn’t mean I rely on all my own research. [Although] On pensions I happen to be pretty good.

Q. So you do not choose individual funds for your clients?

A.

I tend to use a good fund of funds group. It’s a question of expertise. That’s all it is. IFAs are there to provide solutions. It is not our job to decide how that money is best divided up. I haven’t got the education or the facilities.

Fidelity, Margetts and F&C all provide good fund of funds services. I can’t see how I can compete with their asset allocation tools. They have great research tools that we can access and great facilities for identifying clients’ risk profiles, which is the most important thing. I think there are extreme dangers to come in the future if IFAs [do this themselves].

Q. Does Clarkson Hill attract a particular type of client and what is the average size of client portfolio?

A.

There is no typical client. For example, we have mortgage clients in their 20s buying their first property and couples in their 50s buying their last. By and large they are people who want face-to-face contact. A cradle to grave client is the ideal. We do have daughters and sons of clients we’ve catered for. But in my experience you have people for a period of time.

Some clients just have Isas and a few Peps and some clients have millions with us.

Q. Clarkson Hill works on both a fee and a commission basis. Do you see things moving towards fee-only?

A.

I’ve been in the business since 1978 and I’ve seen so many proposals. I’ll just wait and see. We will react to whatever happens. We are flexible.

Q. What do you consider to have been the biggest changes in the investment market over the past few years, from an IFA point of view?

A.

There have been so many developments in the last five or six years. Most of them of little use though. One thing is it is much easier to get prices of clients’ portfolios and assets now than it was five or six years ago. Because of that insurance companies’ helpdesks are run by 21-year-old screen-fillers. That cost cutting is a general trend in this industry. You pay for what you get.

Q. Do you think the investment industry is steadily moving towards do-it-yourself investment?

A.

People have been saying to me for 30 years that the public will go direct. But year-on-year we are growing our business and in 2008 we will probably double our turnover again. In theory it is possible. But there is a limit to what people will want to do themselves. They haven’t got the time or the inclination.

Q. What are your plans in terms of expansion going forward?

A.

We will continue to expand and take the best people from other organisations where they are disappointed or unhappy. We will make Clarkson Hill one of the top five IFAs in the UK. We are better at recruiting and growing than anyone else around. And we are extremely fair in how we do things. Our ambitions are big and we are very hands on. We do it ourselves. We aim to double the number of advisers and drastically increase funds under management.

CLARKSON HILL GROUP is a national IFA, which became a public company in 2003. Since then it has recruited several IFAs and small businesses. It has grown from having 25 advisers to more than 350. Total turnover is more than £20m a year and funds under management are about £1 billion.