When Trevor Phelps founded his company he had a clever plan: Get to the front of the phonebook and let the business flow in. Thus, his company, A Finance was born.
However things didn’t quite work out for Trevor in the way he expected. Sure, he recieved a lot of phone calls, but not from the kind of people he was hoping for.
“When I became independent and started on my own I thought advisertising would be the main thing. I called myself A Finance and bought a website. I bought it and put my name in the Yellow Pages and have never advertised since.
“We got the wrong sort of people. They were trawling. Unfortunately that isn’t what our industry is really about. It was a good idea at the time.”
Maturing along with clients
Mr Phelps is a generalist but since the advent of the Retail Distribution Review (RDR) his business has changed over to mainly investments and the occasional vesting of pensions.
“When I started you wanted to do most things for most people but as the clients I have got matured along with me, I find I am mainly managing investments for people.
“It is like having a plumber. I have had them for a long time. When there is water coming through the ceiling they don’t go to the Yellow Pages.
“Before I changed to an RDR way of working in 2010 I looked after around 150 clients. Now I have got about 40 clients that I deal with on a regular one to one basis. Any initial charge for new money is 1 per cent and the ongoing adviser fee is 1 per cent.
Culling the herd
As reported earlier, Mr Phelps’ income has actually grown despite having to trim his client bank.
“If anything it has increased my level of income because before I was working on an arrangement where half a per cent trail was in place.
“Now, in some cases where I don’t see the client at all, I am writing to the company and saying can you take them off my agency. Whereas before I would try and go back to see them now I need to go and see them once a year.”
Demonstrating added value is a challenge for Mr Phelps, not he insists because of any lack of ability on his part but due to a lack of education in his clients.
“You can do things they don’t see as any value and you can do smaller things they see as great value. For example, giving a suitability report to a client. Often they do
I’m sort of a member of the family, a fixture in the sitting room.“I have known some of my clients for 20 years and I’m sort of a member of the family, a fixture in the sitting room.”
Throwing back the small fry
Mr Phelps managed to get level four qualifications by March 2012, and found it exasperating that many advisers left it so late to take the necessary exams.
“I know a couple who for various reasons aren’t in the game anymore. They aren’t IFAs. It is unfortunate that grandfathering didn’t take place. Why that should be I don’t know.
“For people with smaller amounts of money RDR hasn’t done them any benefit. It has become more limited... and that is the bad thing about RDR.
“Where are people going to get their financial advice from? One of my clients had a letter from Britannia and Co-operative saying they are no longer giving advice.
Mr Phelps is beginning to look at taking on a young adviser-to-be and training them up because the traditional routes into the market seem to be steadily withering on the vine.
“If you speak to most advisers they came from a home service or bank background. The home service disappeared with Prudential and banks are going. That is the unfortunate part of our industry.
“I worked at the Prudential for 13 years but that route is no longer there. It does seem like financial advice is becoming a very difficult industry to get into. There aren’t going to be that many financial advisers around just when we need them.
“If it is below a certain figure I will need to charge them the difference to make it worthwhile. There were problems with the banks but at least they could sit in front of somebody and give them an idea of something. The FCA talks about educating the public but whose job is that?”
So the advice gap is not only real, but according to Mr Phelps will be exacerbated by fewer new entrants to the advice industry.
As for the new regulator, Mr Phelps is, like many, cautiously optimistic.
“I have heard they have got a different stance and I hope they chase the wrongdoers rather than see everybody giving financial advice as a wrongdoer.”
