Having started his own directly authorised IFA business at the age of 24, Alex Simpson, managing director at Harding Financial highlighted the key challenges he faced - many of which can still be applied today.
Speaking to FTAdviser as part of our Coffee Corner series, Simpson said trying to integrate advice as much as possible is one of the key challenges but also one of the best ways to provide advice.
So how did you first start out in the industry?
Simpson said he won an award at the age of 16 to be a market trader with the Securities Institute but had to go away, get a degree and come back.
“They said to get a degree in anything and at the time, there was a lot of money going to property developments so I thought I'll get a degree in architecture.
“I came out of university in 2009 in the credit crunch when there were no jobs and ended up going to work for my local IFA business.”
Simpson said he got all his qualifications and soon after, RDR was coming round the corner.
“I didn't like how [the firm] was doing things and I could see much better ways of being more transparent in charging fees. So I decided to approach the FCA and say, 'I want to have a directly authorised firm please'.
“I was 24 at the time and they said they were a little bit concerned about my level of experience and expertise. I said 'you are looking at bringing RDR to modernise the industry, to bring forward thinking people in the industry, and that’s exactly what I’m looking for'.”
Simpson became directly authorised on October 3, 2011 and has grown the business since then with five acquisitions.
What did exams did you take to qualify?
Simpson originally took the London Institute of Banking and Finance qualifications and became chartered.
“I was quite a young adviser and I needed to know my stuff so I became chartered under that quite quickly,” he said.
“Then people called that the Mickey Mouse Institute, because the Chartered Insurance Institute was more prestigious, and everyone else was doing the CII. So I did the CII and became chartered there.”
Given your experiences, what would you say are the biggest challenges facing new business owners today?
“It's being dynamic to the ever changing landscape,” he said. “I know regulations always change but now there is technology as well.
“You have to look at banks like Monzo - it's not about investing anymore, it’s not about the actual funds underneath the bonnet.
“It is services like robo-advice that are going to be here to stay.”
Simpson explained that his firm looks to do as much integrated advice as possible.
Over the past couple of years, the firm has started a payroll service where advisers can see what everyone's earning and identify high earners..
“We’ve got the employee benefits side of things, the company pension schemes, and then the private clients in it, integrating those things are showing value across services during the tax returns,” he said.
“I feel this is where businesses need to be because then you become really sticky when you're taking care of their finances, their family, their investments, their pensions and their tax.
“Whereas if you're just looking at being an investment manager that looked after one pot - that's going to be the time of the past because the banks will just take over.”
Can you name any lessons you learnt when you first started out?
“When I started, being aware of not knowing everything was a quick learning curve,” he said
“Even if you're in front of the client, I remember very early on they were starting mentioning things I needed more clarity on and it’s just being able to say ‘yeah, that's great I'll look into that, let me take some details down and just take it away'.”
He explained he learnt this quite quickly because there's so many nuances with regulation changes all the time.
“Just be a bit kinder to yourself when you're starting out because you're not going to know it all and the clients don't expect you to know as long as you can follow up.”
Simpson also said trying to do as many different exams as possible and having that breadth of knowledge as well is something that helped.
What has been the biggest change in financial advice since you first started?
“There's been a progression of skills and when I see other advisory firms they are starting to get much more focused on service and value like cash flow modelling,” he said.
“I remember firms around the RDR time were saying, 'fees are just commission by another name' and it took a while for that to kind of die out in the industry. I do feel now you have the cash flow modelling side of things as more integrated services.
“For example, we did tax returns for clients to try and diversify our offering and not just look after investments because performance goes up and down, so I think there has been some professionalism increasing.”
Simpson said he was really excited in 2012 when the FCA came in and said firms were to meet with the regulator every four years.
Within four years, his firm had a meeting with the FCA in which they grilled the firm asking about things such as the conflict of interest policy.
“It was a really good grilling and they gave us some feedback and said this going to happen every four years.
“I welcomed that, I want to be better but then nothing happened since which has been a bit sad from the regulator's side.
“The FSA was so reactive, and they said the FCA is going to be really proactive so I wish that continued because I think that would have really stepped the game up.”
What is the one book you’d recommend to anyone considering a career as a financial adviser?
“The Harvard Business Review is my absolute favourite - it's just on point with everything like AI, what's going on in the industry and things like that so that's my main source of what is going on in the business world,” he said.
But from a financial adviser perspective, he said he would recommend How to Own the World by Andrew Craig.
And finally, the one thing you can’t live without as an adviser?
“Pen and paper,” he said. “I'm such a techie and I'm such a nerd. I'd love to be in a dark room with my laptop, I like writing and Excel formulas and all that.
“But when it comes to clients, a pen and a piece of paper, you just can't beat it.”
He explained that he remembers going to a client meeting once and it was so complex, they had many different plans and he got an A3 sheet of paper, and drew all the plans out as boxes on one side.
“I was like this is your situation right now,” he said. “And then I flipped it over and on the back of it, I had this much simplified model of how it could look.
“They said ‘I want that’ so just illustrating things for clients and drawing it out and showing them how it can work to join the arrows goes a long way.
“You can have all the tech in the world but a pen and a piece of paper and drawing is priceless.”
If you own your own advice firm and would like to get involved with the Coffee Corner interview series, contact deputy news editor Sonia Rach via email at sonia.rach@ft.com
