'If you're standing still you're going backwards in our industry'

She had grilled him in a job interview set up by an acquaintance, one he was certain he had not passed successfully.

But Mearns had different ideas and he was invited to join the firm as an administrator.

Now, several years later, he is a director at multi-award winning Mearns & Company, the firm Margaret founded and throughout which much of her vision and legacy is being felt to this day.

It's what makes the firm different, says McInally. "One of our USPs I feel is that Margaret was a teacher before she worked in the financial services industry so [there's] very much an emphasis on communication with clients, a duty of care to clients as well.

"Then she worked for financial services companies [in the early nineties] and what really frustrated Margaret was at that time she felt as though clients weren’t getting a standard of ongoing service.

"But back then Margaret was feeling that if anyone is receiving ongoing fees you need to be providing an ongoing service, so a pioneer and in many ways Margaret was."

Perhaps the most enduring legacy is Mearns' vision of a good culture and the processes she put in place for ensuring standards are high, including peer reviews of all advice for extra protection. 

But it was her strive for continuous improvement which made an impression on McInally and which he and his fellow directors continue to live by.

[Others] often say Mearns & Company does a lot and perhaps too much in terms of the ongoing service

Mearns & Company was founded by Mearns in Edinburgh in 1994, initially as a sole trader and incorporated some 10 years after.

By 2001 there were five people working for the company and these days the business has 26 full time staff working across two areas - the private client and employee benefits sides of the business.

The business is run by a team of four directors - McInally, Graeme Brown and Margaret's son and daughter Malcolm Steel and Catherine Bell - following Mearns' retirement in 2017 and a management buyout in 2022.

The private client side has 500 ongoing review clients (households) which are served across three tiers, depending on their wealth.

The logic behind the firm's client segmentation is the more money that is coming in from the ongoing advice fees, the more service can be provided.

"We segment [clients] on the number of assets that they have because obviously that dictates the amount of income we've got coming into this to do the work," says McInally.

The first service tier, called the annual investment review service, is the most basic offering and covers an annual review of the client's portfolio.

The next level up is the financial planning review service, offering an annual review meeting of the financial plan.

And the third tier is the most comprehensive level of service, which offers an array of services, typically offset by the percentage based advice fee coming in.

"So if they come to us throughout the year and ask us to review five new pension plans, then we can use the annual adviser charge to offset that cost of the work, we don't need to talk about one-off fees for any additional work throughout the year," says McInally.

Providing value for money is a key driver behind service at Mearns & Company.

"I just love doing a good job for my client," says McInally. "I'm always challenging my team to think about, right even if it's a two-minute call or whatever, just leave the client thinking I didn't know that, that was impressive, or leave them feeling reassured that they're working with you.

"Financial advice is not inexpensive, it is a lot of money when you think of it, so you need to really not get complacent."

To ensure service and standards stay on point, Mearns & Co has a number of processes in place.

This dates back to the days when Margaret Mearns was in charge, and is something the firm has followed religiously since.

"Margaret was always about you need to have a process and everyone follow the process. Of course, if you've got an idea raise that for the process to be developed or changed, but have a process there that mitigates mistakes," says McInally.

A particular process Margaret liked to follow was peer reviews.

These see the adviser, paraplanner and a second adviser discuss the case after the paraplanning stage. 

"Three heads are better than one at the end of the day," says McInally. "So those peer reviews are massively helpful, this is something that Margaret’s always had, it's part of the business and is something obviously we want to continue doing."

Margaret's idea was you should give a good level of service by having a large back office to back up the advisers

He adds: "What I'll say to clients when they come to us is that you are a client of Mearns & Company at the end of the day. Yes, you'll have a main point of contact and that's who you have the main relationship with but you've got a consistent Mearns & Company strategy to do that advice process and the peer review is one way of really ensuring that and protecting that."

But there have also been changes since Mearns' departure. The new directors introduced cashflow planning, new technology and opted to make the business a more commercial operation - a balancing act between maintaining standards and culture while taking the business to the next level.

Charging and costings

When it comes to charging Mearns & Company has worked out a matrix, which will determine the initial advice fee. This fee is mainly based on time spent to do the work and inclusive of all initial costs, barring any specialist investments.

"We don't base the initial fee on a percentage of the assets being reviewed. Instead we've got a matrix that calculates our time, how long it will take us to do a certain exercise," McInally explains.

"We understand that for smaller portfolios that value can sometimes be quite high relative to a percentage basis but conversely for a high net worth client or a larger portfolio that fee can be really competitive, if we're comparing that to our peers."

The way Mearns & Company approaches the costings is to start with the lowest level possible of administration, paraplanning or advice.

What can't be done by administration gets moved up to paraplanning and so on. This ensures the fee will be the lowest it can be for the client. If the work ends up exceeding that cost, the firm absorbs the difference.

"We say to the client the initial fee will be this and that's the fee they will pay. There's not going to be any nasty surprises or any invoices at the end for a higher fee," says McInally.

To administer this service the firm maintains a large back office, which is still somewhat uncommon in the industry, he says.

"And that was always Margaret's idea. Her idea was you should give a good level of service by having a large back office to back up the advisers.

"So I think based on taking that into consideration, we are operating that service and it's just being really efficient in the way we work."

The pinnacle of good client service, however, is a good ongoing service. After all, says McInally, "it was the reason Margaret set up the company back in 1994."

He says peers often say Mearns & Company "does a lot and perhaps too much in terms of the ongoing service.

"We are very, very passionate about the ongoing service. It's something that we take very seriously."

The firm's clients are offered at least one portfolio or financial plan review each year. The latter meeting is preceded by an information update form, which collects information about the client's savings account, bank account balances, any specific discussion points they'd like to raise at the meeting, "so we can get time to research any of that in advance to have a more productive meeting".

The review itself consists of a discussion of the financial plan and assets, the investments and their performance, and the cashflow and future projections.

"[It's] very, very structured from that point of view. But obviously [there's also] a lot of general chat about the personal relationship side of things," says McInally.

In the lowest tier clients will receive an annual investment review and the offer of a chat to discuss any questions they may have about their portfolio.

All clients also have access to an online portal, which allows them to see how their portfolio is performing and receive and send documents securely.

But it has not always been like that. The introduction of the consumer duty has forced Mearns & Co to adapt its processes and this has introduced commercial pressure.

McInally says: "Up until last year the clients with the smallest portfolios that we manage we didn't do a review for them every year. It was perhaps every two years or three years, whatever the charges could cover.

"Of course with consumer duty a change we made is that we need to be reviewing our clients' portfolios at least once a year. So that was where we had to adapt the process."

Mearns & Company is proud of its legacy. Its approach has served it well to date, it has won multiple industry awards for its service, client engagement, website, firm to work for among others.

But it doesn't like to rest on its laurels. It continually strives to make improvements, find new ways of working, better processes, after all "if you're standing still you're going backwards aren't you in our industry," says McInally.

Most recently the firm has been trying to figure out a process whereby it can serve its smaller clients in a way that is commercially viable.

It charges all clients 0.75 per cent of assets under management up to £1mn and 0.25 per cent above that.

"We’ve refined the process [of serving them]," McInally says. "We now just need to work more efficiently to try and make that commercially viable because clearly with a client with 10,000 pounds under management that is not going to cover the cost of reviewing the portfolio once a year.

"So that's a challenge of course. When you're trying to give advice that is tailored for clients' specific objectives you can't really centralise too much because clearly you won't be doing that.

"So that's the challenge that we face now."

carmen.reichman@ft.com