Another League: Investec on Advisers

by | May 7, 2015

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The IFA Community is going from strength to strength, says Mark Stevens, Head of Intermediary Services at Investec Wealth & Investment. Neil Martin reports

Having clocked up nearly forty years of working in the financial sector, Mark Stevens, Head of Intermediary Services, Investec Wealth & Investment, has by his own admission, seen most things, done most things and got an entire wardrobe full of t-shirts.

His role as Head of Intermediary Services was created in late 2012 after the acquisition and integration of Williams de Broe into Investec Wealth & Management. It was a new role which, as Stevens explained, was necessary within the group: “It recognised the existing relationships that the firm had across the new unified business, and the increasing importance of the financial advisor community and their role within the advice chain.”

At the time, Stevens said, the focus was very much on RDR: “Obviously we were then all subsumed with the challenges that arose with the RDR the IFAs particularly with all their upskilling and qualification and gap filling. We had to look at transparency of charging, and unbundling, and all of the good stuff that happened as a result of that.”

“The positive of this, from my perspective, is that the IFAs obviously went through a fairly painful and bloody experience. But all in all, I think it has been positive.”

Getting Used to Outsourcing

Stevens is a strong believer that the IFA sector has benefited from the changes, and that it is in growth mode. He cites regular research which confirms that over 60% of the IFA firms questioned said their businesses had grown since the introduction of RDR.

What’s more, says Stevens, this growth is not coming from firms just hoovering up clients left by former friends and colleagues who exited the market because they didn’t have the will or the ability to get qualified. Rather, the research indicates that there has been a much greater focus on business efficiency, a greater trend for outsourcing, and also making sure that they are meeting with their clients and reviewing their requirements and circumstances.

“Outsourcing has always been a challenge for financial advisors,” says Stevens, “and one thing that has come evident post-RDR is that there is a much greater understanding of the discretionary investment management market as a whole.

“We seem to have got over that initial concern that any DFM who took on a client of an IFA was going to immediately steal them. Because the reality is that that would never happen intentionally because you would never get a new client from that IFA again. It would be around the market immediately, and it would be commercial suicide.

“The IFAs of course have had to struggle with how to justify outsourcing to clients. It is a lot easier to explain to a client that you outsource your compliance functionality, your IT expertise, HR function, or marketing.”

Explaining the Changes to Clients

He acknowledges that IFAs have for many years had the appropriate qualifications and expertise to deal with investment management, and have successfully been all things to all people. In their clients’ eyes, he points out, the IFA is a financial guru who deals with everything from basic financial advice to pensions advice and inheritance tax.

Stevens believes that clients are anyway now more accepting of the need to bring in specialist practitioners: “It almost becomes an internal struggle ,with the IFA saying well, if I tell the client now after all these years that I am outsourcing, will they think that I either didn’t ever have the expertise or that it will weaken my future relationship?”

“Whereas what we have found, from speaking to the IFAs and taking the time to understand their business models, and talking with them and their clients, is that actually the clients value the fact that they have a pivotal core relationship with the IFA, but that they then bring in additional expertise when they need to.”

A Changed Role

This is similar to the role of a GP says Stevens, who refers his patients to a specialist whenever necessary. “Where the discretionary investment market has helped this”, he continues, “is that there has been an acceptance that we are working in partnership with the IFAs. It is their client, after all, and we need to make sure that we provide robust communication to all parties. We also need to have the flexibility to adjust to taking into account different requirements for IFA and their specific clients.”

“But the key thing behind it is the fact that the IFA has changed its role slightly, and that the advisers have become even more firmly sat on the clients’ side of the table. They will undertake far more comprehensive due diligence now before they pick a discretionary investment manager. They will act as the policeman – monitoring what we do and how we do it, and checking that the performance is relevant to the client, and appropriate, and in line with both the financial markets and also what our peers would be delivering.”

Focus on Communication with Clients

Stevens believes that having the time to communicate properly with their clients should be the main focus for IFAs. “Gone are the days when it used to just be the guy who was well known to them, or who bought them the best lunch, or who played golf.  They are looking at it far more effectively – and what it then means, of course, is that they are not getting bogged down in the huge amount of time it takes to research the market and individual investments.”

“That time can be more effectively spent speaking to existing clients and making sure that they are picking up other areas of advice that they otherwise wouldn’t have had time to deal.”

“This flushes out new opportunities, and it also promotes their business and allows it to expand.  So the IFA role has really gone back to fundamentals – which means meeting with their clients and understanding implicitly everything about them, and then making sure their needs are met in the most effective manner.”

As for the long term future, Stevens believes that the ultimate aim is a recognition that the IFA is a ‘proper’ profession. “The sort of situation where we could almost have kids at school saying do you want to become a doctor, dentist or IFA? It will become an aspirational profession, rather than something that people drifted in from different areas. I think that is particularly positive.”

Football Crazy

Stevens’s own career began back in September 1975, when he joined the Executor and Trust Department of Lloyds Bank. “That provided me with a really priceless grounding,” he says, “because you dealt with estate trusts, investment management, personal taxation and financial advice.”

From there he’s had various roles within the sector, including a period as an investment manager, in sales management and various head office roles. He joined Williams De Broe in 2002 and ended up as head of private clients until 2006, when it was acquired by Evolution group, and then he moved into his role with Investec.

His experience of a wide range of jobs has stood him in good stead. But, after his time in the industry, does he still enjoy it?

The answer is firm and emphatic: “I still absolutely love it. It still stimulates me to get up at stupid o’clock in the morning and come into work and get it all done.  As it is still an industry that I personally think is exciting and vibrant, and I still have that opportunity not only of getting involved in the more strategic areas, but also direct contact with our end clients, whether they be individual clients, or IFAs.”

Stevens is about a big fan of Watford Football Club, although he admits that watching the team through the years of promotion and regulation worries can be more stressful that his day job. When not watching Watford, he also enjoys antique furniture and clocks, gardening, horticulture and travel.

Last word from Stevens brings us back to football and an observation which might just as well serve as a metaphor for life: “Football is an excellent opportunity to blame someone else for their ability to do something when you’re confident that you could have done better yourself. Whereas, in reality, you would have been out of puff by the time you had got out on the pitch, let alone do anything else

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