The managing director of investment consulting and research firm Square Mile is full of energy as he paces the length of the meeting room asking questions about how I got into journalism.
He eventually sits down to answer questions about his business and the big issues that advisers deal with.
According to Mr Romer-Lee, the industry is in a golden age of advice, because responsibility for savings has transferred from companies and governments to individuals. As a result, the complexities of financial planning and tax advice has led to huge demand for advice.
Divergence
He is also seeing a greater divergence between independent, owner-managed, local and regional advice firms that are the modern image of an independent advice firm and the bigger “more industrialised” restricted businesses.
He said: “Basically, they are a wealth manager with a skill set in financial planning, building trust and confidence, being the clients’ financial conscience and helping with decision-making.”
Square Mile has increasingly found itself partnering with these independent and regional businesses. Its services range from arm’s length consulting – in which the firm tailors its knowledge to support a business but leaves them to control the decision-making – to running model portfolios on a discretionary basis.
Volatility and confusion about Mifid II remain the top issues that worry advisers, Mr Romer-Lee said. He added: “People are thinking about how they can access alternative asset classes, but you can encounter liquidity or access issues as well. These are challenges for us we are trying to solve.”
With Mifid II he welcomes the intention ofthe regulation, but also cautions about the unintended consequences that could come out it; for example, telling an investor their portfolio has fallen by 10 per cent could drive the wrong behaviour or reaction.
One of the trends Mr Romer-Lee sees is advisers exerting more control over their clients’ assets.
He said: “Financial advisers are the client’s agent. They determine where the client’s assets will go and they are exerting that control even more. Advisers now provide a greater service, but broadly maintain the overall level of the client’s fee by driving down pricing and administration.
“The larger adviser firms are creating their own products then handing out mandates to fund management companies, with the adviser firms setting the fee levels.”
Also, following the Financial Conduct Authority’s asset management review, Mr Romer-Lee said asset managers responded by moving to single fees and being more transparent about costs and objectives.
He added: “In the asset management market there are hundreds of asset managers, but there appear to have been obstacles and hurdles preventing proper competition.
“There are outcomes, objectives, and skill sets in asset management, and you need to be clear about what those are. But value for money is the most important thing. People will pay more for fund managers who are good at what they do.”
As the market evolves, Mr Romer-Lee said he expects Square Mile’s model will change too. When the firm set out, it wanted to provide “good-quality, independent, outcome-focused research, which it could use on a consulting basis”.
Alongside that, Square Mile has developed a model portfolio business.
He said: “We are supporting more adviser businesses than we anticipated, which is great. Perhaps we underestimated that and overestimated the amount of work we would do with wholesalers, who are increasingly building their own investment portfolios.”
“Some of those companies are looking at the benefits of vertical integration, because financial advisers have taken more control over their investment propositions and they are able to drive what investments propositions look like.”
As Square Mile expands, it will also focus on strategic asset allocation.
Mr Romer-Lee added: “In two or three years we will be doing what we have not even thought of. We have brought in Chris Fleming, who is a strategic asset allocation specialist, and we will be looking at helping people post-retirement.”
Setting up shop
Changes like these are not a challenge for Mr Romer-Lee. He left Morningstar in 2012 to set up Square Mile after OBSR, the business he founded with Nigel Whittingham, was bought by Morningstar in 2010. OBSR was set up in 1999, following a management buy-out of the research business within Buck Consultants.
Asked whether he sees himself as an entrepreneur, he said: “Either that or mad. I just think of it as setting up a business to support people and create a culture.”
His career began after a friend of his father’s took him on as an office assistant at the age of 18, where he fondly recalls buying cigars and making tea. After realising the investment arm excited him the most, he jumped at the chance of a job, which led to a 10-year stint at Buck Consultants.
Mr Romer-Lee may describe himself as “mad, unemployable, an upstart and a non-conformist”, but those qualities seem to have served him well.
Ima Jackson-Obot is a features writer for Financial Adviser
Career highlights:
2014 - present: Managing Director, Square Mile Investment Consulting and Research Limited
April 2012 - December 2012: Managing Director, European Investment Consulting, Morningstar OBSR
1999 - April 2012: Research Director; Joint Managing Director, OBSR
1989 - 1999: Research analyst, Buck Consultants
1985 - 1989: Office junior, BMA Services
