Charles StanleySep 20 2017

Firing Line: Steve Hill

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Firing Line: Steve Hill

As the industry has changed, he has seen the shape of distribution evolve and the nature of his job has altered dramatically.

He said: "The one thing I have noticed is that there are fewer and fewer people doing the sort of job we do. The old BDM [business development manager] role and sales account manager are around less and less.

"Of the IFAs, we see a very small handful because there are more telephone-based teams out there and, for a number, the main providers have segmented and segmented. Now, it's not unusual for a BDM to have 10 accounts to look after; when I first started I had about 90, and then that halved and then it went to 15."

A big reason for this change was the introduction of platforms, which meant there was less reason for the BDMs to meet the advisers face to face.

He said: "If you go back to 1990 when I started, we would be dealing with product providers [in person], and platforms came along, and it meant we could put client assets on a single platform – it might be different companies, but it would all sit in one place."

The knock-on effect was that the large providers would take branches out. Mr Hill said: "As soon as we started taking branches out, we didn't [need] as many people for that. What that gives me a concern about is that a lot of people in the financial adviser market would have originated either through life companies, direct sales, industrial branch companies – a lot of people in our industry came through that route and we have to ask  the question: where is the next generation coming from?"

Mr Hill started out at Clerical Medical, moving over to Scottish Widows before becoming head of intermediary sales at Charles Stanley. His main reason for speaking to financial advisers is over their use of the Charles Stanley discretionary fund management service, which offers a range of model portfolios for advisers to choose from.

He said: "We rarely go into a meeting blind. No one wants to sit down with us and hear 15 minutes about us as a business and all the different things we do."

Instead, it is straight down to business, and Mr Hill talks about the range of model portfolios Charles Stanley offers. It also has a direct platform, an investment management division for personalised portfolios and a financial planning business.

He said: "There has been a move towards outsourcing. There were businesses before using DFMs [discretionary fund managers], but with all the requirements of RDR and research and being able to evidence the outcome, there's been more outsourcing in the last five years. The adviser is doing the suitability of the client to ensure our solution is the right solution for the underlying client.

"We run five passive models and 10 active models, all carrying external risk management, and we give ratings on our portfolios."

Cost is a big concern, he said, with a charge of 0.3 per cent plus VAT for active, while passive is 0.25 including VAT. The underlying fund costs amount to 0.68 per cent for active, and 0.15 per cent for passive.

Mr Hill  said: "We are seeing an increased interest in passives. People are looking at costs and I think with Mifid II around the corner there will be transparency in how costs are going to be handed out.

"There will be a full breakdown on the costs of a portfolio, and the individual components that make up the costs which are AMC [annual management charges] and underlying costs of the portfolio and charges. 

"There has been some movement down in underlying fund costs. The question I would have is how much further they can go? There must come a point where people go for active management if costs are driven down too far, for then it becomes a questionable exercise."

The company does not get involved in high-risk assets, which means no enterprise investment schemes (EISs) or venture capital trusts (VCTs), private equity or hedge funds. It does use exchange-traded funds (ETFs) and business relief through Aim portfolios.

Mr Hill said that the company was trying change its image from a stockbroking firm to an investment manager. He said: "What we've moved away from is the perception of a stockbroking firm. A lot of people I speak to initially had a perception of a DFM would have £100,000 minimum, but we've got a far broader offering than that.

"Most of the business we do is medium-low to medium-high risk, but there comes a time where the client's requirements are too low risk or too high risk, and we can offer that."

Melanie Tringham is features editor of Financial Adviser

Career highlights

2012 – present: Head of intermediary sales, Charles Stanley

2009 – 2012: IFA sales manager, Scottish Widows 

1990 – 2009: Account manager and regional sales manager, Clerical Medical