Of all the family businesses profiled by FTAdviser, Kim Barrett has been the most open about how he and his son, who is also his colleague, do not always see eye-to-eye.
All in the family
Kim Barrett, managing director of Barretts Financial Solutions which is based in Bishops Stortford near Stansted airport, began in financial services 26 years ago when he took over the financial services arm of an estate agent friend.
Unfortunately, due to a disagreement over the onus of regulation, the pair fell out and Mr Barrett struck out on his own. He took his son Joel into the advice fold several years ago.
Although their paths have diverged with Joel opting to take the investment route, they still manage to chug along and have succeeded in gradually growing a healthy two-man-band operation.
Mr Barrett said: “Sometimes we are known to bicker in client meets and I think the clients love it. Joel is the investment guru, but I put my opinion in. It shows we aren’t working as one but as a team of individuals.
“My son was made redundant in 2006 and I invited him to join the practice because he has the same character as me. The first time I had the conversation with him it was full of expletives and he told me where to go.”
Eventually they worked out a deal whereby Kim would waive the “house-keeping” payments he previously took from Joel for continuing to live in his house, and would also give his son a “bit of pocket money”.
“I told him, ‘you’re no good to me until you get your exams’. He joined in April 2007 and not long after that I thought it would be a good idea to move the business to Stortford. Almost on a whim decided to move.”
Moving house
Bishops Stortford appealed to Kim because he believed it was full of potential clients - affluent individuals ready to take him up on his offering of advice.
“The reverse happened. Stortford is a very clique-y place and because we didn’t know anybody the business went backwards.
“It got to 2008 and we said if it carries on like this we may as well stock shelves at Tesco. It made us kick ourselves up the arse and look at ourselves and make a go of it.
“Joel had passed his exams and I told him he would go off and make himself some money, but he decided to stay and go to the next level. He approached me and said ‘I have made a decision’, saying ‘I don’t want to go down the adviser route, I want to go down the investment route’.”
He has a basic comprehensive school education, but he because a member of CISI and most of them require a degree in economics. He is now chartered by the CISI.
“With the natural competitiveness between us I went off and became chartered and am now a fellow of the CII. The practice itself is also chartered.
“We aren’t Mensa members but we are quite proud of what we have achieved.”
A ‘busted flush’
“We then looked at our branding and changed our name to Barretts Financial Solutions. We looked at our proposition and determined that the old financial advisers business model was a busted flush.
“You only made money when you sold something. You had an ad hoc income when your outgoing was consistent. So we developed our wealth management service.”
Barretts FS charges 0.75 per cent of assets managed on an ongoing basis, and an initial fee of 3 per cent of AUM up to £150,000 and 1 per cent of anything beyond that. This was back in 2008.
“We wrote to all our clients with with-profits bonds, mainly on things like Cofunds and Fidelity, and people with sizable pension assets. We pitched our wealth management service and started to gradually build things up.
“I took more the view than Joel that you grow your business in two ways: organically and through mergers and acquisitions. I actively sought to buy in businesses [from] people that were keen to go out of the industry because of RDR.”
Since then he has taken on client books from eight different exiting single-adviser firms, each representing about £70-£80,000 of AUM.
Currently, the firm has £18m AUM shared between 135 clients, and is on track to increase that to £20m by the end of May.
Regulator behind the curve
With its recent thematic review findings that almost three-quarters of advisers fail to adequately disclose how clients will pay for services, Mr Barrett says the FCA has only itself to blame and says it is “behind the curve”.
He says the regulator could have nipped this problem in the bud by educating consumers about the changes brought in by the RDR. If clients knew what to ask it could make it much more difficult for advisers to keep their charges high by keeping clients confused.
“The bottom line is we have got to serve everybody, and we try to but our wealth management model isn’t economic with less than £75,000. I didn’t make the rules I just work within them. I come out of the east end of London so everything I have got I have had to work for.”
