On one hand, the plans Portal’s directors have for the future could be seen as an encouraging call to action for IFAs.
In a post-Retail Distribution Review world dominated by signs of firms moving up market and leaving exposed an ‘advice gap’ populated by small-pot savers, if successful the firm would demonstrate that there is a viable business at both ends of the value scale.
It would also show that offering advice to customers of all shapes and sizes that success is possible despite the challenges presented by costs of regulation after the RDR.
On the other hand, it could all be the sort of optimistic dreaming that is often in short supply in this sector, but is no more viable despite the laudable aims.
I’ll let you be the judge.
‘Systematised’ advice
Currently Portal operates out of one office in Rochester, Kent. It’s not a measley operation: the firm’s bosses say it employs approximately 100 staff, but interestingly only six are full advisers and eight are paraplanners.
The firm serves around 2,000 clients holding a total of almost £100m in assets under management, meaning each client is worth roughly £50,000 to the business.
Andy Moore, Portal’s chairman, points out to me that there is no hard bottom when it comes to client assets and that the firm will not turn anyone away.
We’ve all heard of this saying they could serve clients with a low five-figure sum to invest, well Mr Moore says it has taken on clients with as little as £5,000 to invest.
“We are here to help everyone, we don’t turn anyone away. Our average case size is around £50-60,000 but we would do it right down to... £5,000. There might be a few people at the bottom who might not be profitable.”
Much of the work usually done by advisers is picked up by Portal’s eight paraplanners, each of which is diploma-level qualified. For the record the six advisers are all working towards attaining chartered status.
In fact, as the staffing bias towards those in support roles might suggest, Portal manages a large client bank including very small-pot clients by removing the burden on the most qualified members of staff - the advisers.
Portal has a kind of bubbling-upwards type of business model: the dozens of support staff will complete tasks for the paraplanners, who themselves will liaise with the client and do a lot of what is typically left for advisers.
The advisers then take what has been prepared by the paraplanners and deliver what they’re there to do, they make the regulated recommendations.
Moreover, a lot of this is done over the phone, which keeps costs down as well as travel and meeting time.
Mr Moore said: “We have a team of telephone paraplanners and their job is to engage with the client and do a fact find process, and keep them updated, manage people’s expectations.
“We use a lot of behavioural finance. It’s really trying to dig down and understand what the clients’ needs are, so by the time we get to the advice stage we have a really good picture of what the clinet is looking for.
“We are really trying to systematise the process of financial advice and get a lot of efficiencies into it. I wouldn’t say we are perfect at the moment but we are working on it all the time.”
Corporate client ownership
What all of this points to, of course, is a model where the client forges a relationship across the firm, rather than with a single adviser.
Ownership of clients has at times been a touchy subject across the advice sector - remember the Edward Jones-Towry case and the debates that it spawned? - but Mr Moore says “corporate ownership” is fundmental to the way the model works and makes sure the client experience will be the same no matter which adviser a client gets.
“We don’t have adviser ownership of clients here, we have corporate ownership. It means you don’t have advisers being all things to all clients. All the clients interact with the firm, and their relationship is with the firm.”
When asked if this had caused any friction with advisers leaving, or if it had made it hard to recruit, Mr Moore and managing director Jamie Smith-Thompson both say it has not. They argue it is a necessary factor for running such a tight ship and that its advisers buy into that.
Mr Moore adds that adviser bonuses are not related to the volume of business they do in terms of product sales, but instead tied to how many clients an adviser speaks to.
Another efficiency is Portal’s centralised investment strategy. The firm is independent, but Jamie Smith-Thompson, managing director, told me in practice lot of the advice is done centrally at a monthly committee meeting at which particular investments are discounted and appropriate options for client segments are discussed.
“What the adviser isn’t doing is re-inventing the wheel for every client.”
Branching out
So how will the aforementioned expansion work?
At the moment, most of Portal’s customers are near- or at-retirement, but it is looking to change this and shift focus to general financial planning for all age groups based around cash-flow modelling.
Jamie Smith-Thompson says: “At the moment we are very focused on the at retirement market, but we are looking to move into a more general holistic cash-flow modelling type environment.
“We aren’t looking to change what we do too much, it just means it will be more holistic so will entail a much more detailed client interaction.”
The changes will be two-fold: Portal itself will look to expand its reach downwards to scoop up some of the clients who may have been left abandoned when banks pulled out of the advice market - and so increase the number of those clients at the bottom end of the value spectrum using the lessons in efficiency it is already implementing.
At the same time it will open a new office with a new brand which will target high net worth clients with hundreds of thousands to invest and that will offer a more full face-to-face service. This latter will, if all goes to plan, become a nationwide operation.
Mr Smith-Thompson says: “We think a certain level of people, when they get to a certain level, for instance £250,000, are going to want more face-to-face interaction and more complicated service, like tax planning for business owners.”
The first branch of this new brand will likely open in Rochester High Street towards the end of 2014, with the partners hoping to open offices across the country.
Mr Smith-Thompson adds the business decided to launch an entirely new brand to differentiate from Portal Financial, to reflect the fact that it is targeting a ferent target audience and that its “offering is entirely different”.
“The Portal Financial brand was designed to appeal to the masses and was very much a transactional business. The new holistic approach is something entirely different. So clients are really aware of the separation there.”
