Firing line  

Buying an advice firm during lockdown

WH Ireland may be small but it offers a number of discretionary investment management services for professional advisers, which are managed by experienced investment managers and supported by a specialist research team. It is a relationships business.

Mr Ford adds: “The way this industry works is that, quite often, the client has the relationship with the adviser, and it can be quite personal.

“Our responsibility to firms we acquire therefore is to make WH Ireland a good place to work. 

“One other thing we can offer though, which I think makes a difference, is that as a listed business, we can offer people shares in a listed company they work for.”

Margin calls

Mr Ford says the second advantage his business may have over the larger incumbents is that the relatively small assets under management of WH Ireland means the company’s advisers and wealth managers have greater flexibility over the investments they make. 

He says: “If you work at one of the big firms, there are only so many funds you can buy, they have to be a certain size, whereas we will try to exploit that; buying funds that maybe are smaller but perform well, buying funds where the manager has capped the size of the fund in order to protect his performance.

“And we can also buy investment trusts, which some of the larger wealth management firms won’t do.”

He acknowledges that WH Ireland has not yet reached a point where it has the scale to negotiate significant discounts on the fees charged by the fund managers, or to use segregated mandates, which carry a cheaper charge as it is a separate fund managed in the same way as the retail fund it mirrors.

Mr Ford says: “When we get to the stage where we can use segregated mandates we certainly will do, and if it is possible to do that now at an earlier stage than was the case in the past, we will do so.

“Right now, we can’t be as cheap in terms of fund fees as some of the larger players with our DFM offering – quality of service and range of investment opportunities are also important.

“I would also argue that it is harder to get the really good funds at a discount. Smaller players can be more dynamic, I would say far more of the bigger players got caught out by Neil Woodford’s fund, for example, than the smaller players, and the Woodford fund had a discounted fee level for the biggest firms.” 

He says that he also expects DFM margins to fall in the years to come, as many DFMs “use advisers as distributors of their products”, but he does not think the fees charged by advisers will fall.