Richard Leeson is going through a change in life.
He has spent years working for large life offices, mainly in offshore businesses, where he helped advisers. Now he is branching out on his own, using the knowledge he has gained to help advisers deal with the post-RDR world.
He said: “The average offshore investment would have been well over £250,000, whereas the average UK investment was £20,000. That was a massive difference in scale. In the offshore sector we have responded to a low-commission and fee-based environment for the past 20 years.”
He has seen advisers who deal in offshore business – amounting to about 10 per cent of the adviser population – grapple with fees and work out how to treat their clients.
Of his former life, he said: “If you have a client who has £1m of assets, they’re going to make sure they look after their client and guide the client.”
This had a knock-on effect on the way providers dealt with advisers. “They expected added value from the provider, from the start of the relationship,” he said. “They tend to be very busy people and expect the insurance company to deliver.
“So the insurance companies tended to be clear about what they could do for the adviser and make sure everything ran smoothly. If you’re dealing with £1m and get it wrong, it has a serious impact on reputation in terms of service delivery.
“That’s something in the post-RDR world that will be more transparent.”
Mr Leeson said his experience with fee-based advisers proves he has invaluable expertise for the vast bulk of advisers making the transition themselves.
He said: “There’s a range of different things, such as helping to generate fee opportunities and educating clients of the benefits of fee-based advice and help with client retention. I can show that they can offer added value and what value is worth to the client, taking the expertise built up in the fee-based advisory market.”
The challenge is for advisers to show clients the value of being fee-based. Mr Leeson said: “If the client knows he would be £3,000 better off because he’s talked to an adviser, he would be much more likely to be happy about paying the adviser.”
According to Mr Leeson, there are too many advisers adopting a fee-based model that still look very much like commission, with an initial charge of 3 per cent and half a per cent a year based on the investment value.
He said: “It is a fee model that’s very close to commission, because it’s the same model and the same shape as commission.” He said the regulator instead was hoping advisers would be paid up front by the client in a more obvious fee transaction.
He said: “It’s new to an awful lot of advisers. They have had so much to do in terms of getting ready, they are still looking for a breathing space.”
This is where Mr Leeson would like to step in. He will look at their businesses, see where they are and where they want to get to. He will then draw up a proposal, which will include a client engagement strategy for advisers and help in formulating and implementing a plan.
The question is, would so many want to move to a fee-based business? Mr Leeson insisted that they certainly would. He said: “The companies that I speak to without exception would find it much more profitable.” He said it could take years to get the full payment sorted if the client is on trail. “But if they pay fees, they get paid up front.”
He also said he wanted to help advisers with their client engagement programmes, claiming that the efforts that advisers make are not sufficient. “It’s making sure the adviser has the right sort of contact with the client in the right way with the right focus and expressing it in terms the client will understand.
“Many advisers send out quarterly newsletters, but post-RDR that needs to be overhauled. They need to look at how they engage with clients.”
He said financial advisers have to incorporate social media. “There are very few using social media in a client-facing way; they have to look more at client retention strategies and that will involve client segmentation and social media.”
Mr Leeson most recently left Axa Wealth International, where he was sales and marketing manager for three years. Before that he was head of development at Prudential International and has been international sales manager of Prudential and Scottish Equitable.
However before going into financial services, he trained as a Catholic priest for three years, from the age of 18 to 21. He stop pursuing this vocation as he realised it was not for him, but the experience left Mr Leeson with a sense of wanting to do something worthwhile.
He said: “I had the opportunity to sit down and think about what I wanted from a job. I wanted to be in a job that involved money, and that I could travel and work with people.
“I like to think that I arrive with these ethics – and being in the offshore world, in which the adviser would take less commission, was the right thing for the client. The offshore world has been RDR-ready for 20 years.”
Melanie Tringham is features editor of Financial Adviser
• 2010 - 2013 AXA Isle of Man
Sales and marketing director
• 2006 - 2010 Prudential International
Head of development
• 2003 - 2006 Prudential International
Sales manager
• 2001 - 2003 Scottish Equitable International sales manager
