Jody Sturman has been round the houses when it comes to working as a financial adviser, and having worked at both ends of the reputational scale from bank advice to running his own IFA firm, has concluded that being a restricted adviser is of no detriment to clients.
Mr Sturman comes from a banking advice background, having spent time at Santander before seeing the writing on the wall and getting out before the bank began laying off its advisers. He jumped before he was pushed, in other words.
From there he pursued the IFA route at Hampshire-based Deep Blue, but he found it so challenging going it alone that when Moneysprite director Ashley Brown approached him with a proposal he jumped at the chance to join Mr Brown’s firm.
“From a personal point of view, I was working as an IFA and having to find all my business off my own back. To do it on your own without a support network is difficult.
“I went from where all your clients are handed to you on a plate to having literally nothing and having to get out one your own. It’s a very slow process.
“It was too time-consuming. You spend all your time running around chasing new clients rather than dealing with the ones you had.”
Joining an existing restricted firm is a refreshing change, he says, because it allows him to spend more time giving advice and dealing with his clients, and less time chasing potential additions to the book.
The real shame of it is that advice is less readily available because banks don’t offer it: people are going into a bank and products are just getting renewedGoing restricted
Having been an IFA, however, how does he find the process of giving, to use the regulator’s post-Retail Distribution Review terminology, ‘restricted’ advice at an AR of part Zurich-owned adviser network Openwork?
Questioned on whether he has to turn clients away or finds the limited range offers enough options, Mr Sturman remains adamant that what is offered is enough to serve the vast majority of clients.
“Initially I was really concerned going from being an IFA to multi-tied but they have got a good range of funds available.
“I didn’t use any more funds as an IFA than I do now. You get a set of funds you are comfortable with and tend to go with that unless your client has special needs.
“I have yet to meet a client I couldn’t help through Openwork.”
On the RDR changes more generally, Mr Sturman seems to think this is a positive step. He says he is working towards level six, which he believes will eventually be a minimum requirement.
However, he bemoans the banks pulling out of advice and the effect this has had on regular clients who no longer have in-branch advice sitting right there in front of them when they visit their banks.
It’s more than just an advice gap: Mr Sturman believes former bank clients are still going into the branch and just rolling over potentially inappropriate products.
“Having seen it from a bank’s point of view and an adviser’s point of view there is no question that quality of advice has gone up. But the real shame of it is that advice is less readily available because banks don’t offer it.
“What’s happening is these people are going into a bank and products are just getting renewed. It’s just being reinvested in most cases.”
For example, some bank customers are getting “stuck” in fixed-rate bonds with low returns and with no opportunity to do anything about it simply because they aren’t told advice is available.
“It’s a difficult one because from the banks’ point of view they have so many regulatory requirements to fill. The only solution will be... going back into financial advice.
“The other possible solution is for banks to have tie-ins with their advisers, but that’s too difficult to do from a regulatory point of view. I imagine it would be absolutely horrendous. It’s very difficult for banks to use a third party.”
“The biggest problem is IFAs... have no way of reaching these clients because the clients don’t know they need financial advice. The banks used to tell them but not anymore.”
Assuming the position
In his new role at Moneysprite which he took on about four months ago, Mr Sturman will help the firm expand from its mortgage and protection roots into offering a fully-fledged pension and investment business.
He also has a training role, helping train the firm’s eight mortgage advisers and prepare them for the expansion.
It’s going against the grain of industry rhetoric in the past year predicting a surge in advisers moving away from RDR activities and into exempt protection, but Mr Sturman says the firm is doing so to head off the risk of clients jumping ship to another adviser that offers the full package.
To help establish a client base in its new offering, the London-based firm plans to comb through its existing book of 2,500 to 3,000 mortgage and protection clients in the hope that some of them will agree to have their pension and investments reviewed.
Mr Sturman is hopeful that about one in 10 existing clients will agree to the additional service.
He said: “They have got a client bank that is pretty big, so you can use that and get in touch and say, ‘we are now in a position to review your pensions for you’, but at the moment we haven’t done that because we haven’t needed to.
It’s a slow process, and Mr Sturman hopes Moneysprite can take on more advisers as its new venture grows. However, he says finding the right advisers is no easy task.
“We have had a couple [of advisers] come in that weren’t prepared to travel to the south coast to meet clients.
“Ultimately we will be looking to take on another few advisers depending on work flow. It’s more than enough to keep me busy now, when we get to saturation point we will look to bring some one new in.”
Eventually, the aim is to go back through the existing protection and mortgage client book to comb for clients to bring over to the new investment and pension offering.
