Planning and getting to know your client should always come before the investment conversation, says Philip Dragoumis, founder of Thera Wealth Management.
Dragoumis told FT Adviser as part of its Coffee Corner series that he made the jump to setting up his own firm around two years ago after more than 20 years in financial services.
Dragoumis started out in equity sales and previously held roles at Merrill Lynch and HSBC before entering the world of wealth management, first spending three years at St James's Place.
Now Thera works with around 60 families.
How different is your life now from when you worked at a large firm?
“I was an institutional equity sales person, it was a business that was transactional,” he said.
“That kind of business died a death after the financial crisis and there was less demand for it.
“I was fed up with waking up at the office at 6am so I decided it wasn't for me, I didn’t want to spend the rest of my life doing it."
He therefore made the decision to move into private clients and wealth management.
He added: “It is much more rewarding, the skill set is very different, it is more of a long-term relationship.
“The fact that I’ve got my own business and I can run the business the way I want it is important to me.
“The model is changing more from a sales model into a planning-led model - the investments become less important.
“I am happier now, I have my children and I can plan my life around my meetings with clients.”
What is most important when you start working with a new client?
Dragoumis said advice is not just about someone investing your money but is about being there for life events.
“A lot of the people who come to me could probably do it on their own, but they don’t have the time firstly, and secondly they want to know that if something happened to them, there is someone who knows everything about them and how to help."
He said it can take up to two years to build a relationship with a new client.
“After that they start to trust you because they understand you are not trying to sell them anything and that you are acting in their interest.”
And how important is it to pick which clients you work with?
Dragoumis said the important thing for him is that he can choose his clients, which you can’t do in a big firm.
He said: “I do say no to clients because they may not be the right fit, if they are coming at it in the wrong way and they refuse to understand it is not an investment conversation.
“People in the city aren’t the best clients, they think they know best but the truth is they don’t.
“I probably would have been a bad client myself five or six years ago.
“You have to make some mistakes firsthand when you make those mistakes, then you realise you can’t do it on your own.”
Is there anything you do differently at Thera?
Dragoumis said as a firm you do not necessarily have to be different but you have to be very good at what you do.
“What makes a good firm first and foremost has to be the client and the planning process," he explained.
“After we create the plan we see if these goals are achievable, we implement the plan and put the investments in place.
“That is the way we do it. It is not the investment first, it is the plan first and the investment last."
He explained the process was then about being there for clients when time are tough. Such as when markets are difficult, when there are tax changes or when there are difficult things in their lives like divorce, children growing up and estate planning.
“It is about helping them identify their goals and whether they have thought about retirement.
“Once you know what the plan is you know how much return a client needs to make it work. Then you go to the investment side.”
What are your predictions for the coming years?
While demand for advice remains, the question is whether there will be enough advisers to handle this demand, Dragoumis said.
“There are a lot of people coming into retirement and defined benefit pensions are falling away.
“For me, I don’t think fees will go down anytime soon. It is a high touch process and advisers can only deal with a limited number of people.
“If you’re seeing 5,000 clients you are not advising them.
“Over the next five years the industry will be more planning-led and client focussed. The old style is going to fade away, that is only a good thing.”
What would be your advice for someone wanting to go it solo?
“It is going to be difficult building your own business for the first two or three years. Be prepared to have to finance yourself for a bit. You can cut your teeth in a big firm then move on.
“I had a good network I could leverage but it was still difficult to get going.
“I do strongly recommend it though. Ultimately, I think clients appreciate working with an adviser who owns their own business.
“They know you're going to be around and they can depend on you and you can depend on them.
“It is a two-way relationship which is very strong, which I don’t think exists in an employee relationship.”
If you own your own advice firm and would like to feature in the Coffee Corner interview series, get in touch at tara.o’connor@ft.com.
