Speaking to FTAdviser, Mr Shute explained that by shrinking the size of his company he was able to focus on what he enjoys most: providing comprehensive financial plans for clients.
Mr Shute founded Wiltshire-based Lexington Wealth Management in 2000 and went directly authorised in 2006. Around that same time he shed four-fifths of his staff.
“At one point we were about 25 or 30 in staff and I spent a lot of time training and looking after people and it wasn’t something I enjoyed. I really love helping people plan for the rest of their life.
“We took an assessment of the business. I did a financial plan on myself. What do I enjoy doing and what’s profitable? Managing people was very time-intensive but not very financially lucrative or enjoyable.”
Today, Lexington comprises Mr Shute, a paraplanner, a personal assistant and a marketing officer. Mr Shute’s wife does his Gabriel returns. The firm manages around 85 clients.
“Up until a week or so ago I had a financial planner, a mortgage adviser and a paraplanner. And then the financial planner recently moved down to Devon to be near his family so I’m holding the fort, but it’s hard to find good financial planners and not product pushers.
“There is a people skill and a coaching skill that isn’t taught in textbooks. We will probably take on a well-qualified inexperienced new entrant and coach them. Possibly someone who has trained as a paraplanner. There are over well qualified people who have very little practical experience working with clients.”
Pace yourself
Working out of what Mr Shute refers to as “a shed next to my house”, he typically sees four clients a week, with no more than one meeting a day. While some advisers bemoan having too much to do in too little time, the way Mr Shute describes his schedule makes it sound downright easygoing.
“[We have] about a three hour meeting, and have a spot of lunch, and the rest of the day is spent writing up the minutes. The client comes in and the business is wrapped up in one day.”
So how does Mr Shute make this work? A meeting in the morning, paperwork in the afternoon, four days a week? That isn’t to say the fifth day is spent playing golf, but it is refreshing to hear about a thriving - and managable - business while other advisers claim to be overstretched due to the burden of regulation.
“We look at value to the firm and look at generating £2,500 to the firm, and we like that to be recurring. Clients are typically 55-plus, earning £100,000 to £200,000 per year and a net worth of a couple million pounds. They aren’t super rich people.
“It’s always very easy to feel intimidated when you go to a conference and people talk about minimum of £1m.”
Although Mr Shute prefers recurring income - who doesn’t? - he does a fair amount of business through referrals. He writes the occasional piece for local and national press which helps bring in clients.
Recently however he has also been approached by accountancy firms whose go-to advisers have retired in the aftermath of the Retail Distribution Review and who are looking for new advisers to partner with and refer business to.
“It’s unique for us to receive a call from accountants saying ‘we would like to work with you’.”
Gap year
The RDR has had other effects as well that have not been as welcome. According to Mr Shute, Gabriel returns now take two full days to complete whereas pre-RDR he could finish it in a single day.
He also believes the regulatory changed has created a significant advice gap for people with less to invest.
“Somebody wanting to put away some money now or saving a couple hundred pounds a month I don’t know of an adviser who will transact that as a one-off.
“Anyone with less than a quarter or a half-million will find it harder to get advice. The fees as a percentage of assets will probably be too expensive.
“Things needed to change but I wonder if they have got it right. We have become a lot more busy with new enquiries.”
In the meantime, Mr Shute will continue doing what he loves: Helping people make the best possible plans for their lives. Sometimes this extends beyond the realm of pure finance into what some might call life-coaching.
In one recent case, a client told him he had cancelled his golf membership because he was not using it due to simply not having enough time. Mr Shute advised the client to delegate more responsibilities and take up golf again simply to get more enjoyment out of life.
Although he is not looking to expand the firm, Mr Shute is hoping to take on a few more good-quality clients and perhaps employ a newly-qualified trainee.
