Adviser profile: Jason Butler of Bloomsbury Financial Planning

Jason Butler has maintained Bloomsbury Financial Planning’s focus on wealthy clients and is now streamlining the business process further by aiming to get all new clients by referral only.

As the consolidation across the financial services sector has taken hold, a number of New Model Adviser® firms have sold up, often allowing their owners to realise their personal financial plans and move towards retirement.

Jason Butler is unlikely to join them, however. The Bloomsbury Financial Planning director doesn’t intend to retire at all, preferring to stay an adviser until the very end. ‘I never want to retire’ he says.

‘I have no aspiration not to come to London three days a week for as long as I can. I like it. As long as I can have a month off in August and don’t work for two or three weeks at Christmas, then I’m happy.’

Butler is in for the long haul, and his vision for the growth of the business, which he runs together with fellow partners Carolyn Gowen and Robert Lockie, takes a similarly long-term view.

Since New Model Adviser® last visited the business four years ago, Bloomsbury has only taken on around a dozen more clients, but that is in line with Butler’s steady growth plan, and his selective attitude towards new clients.

Butler hasn’t shifted the firm’s focus on serving exclusively clients with £1 million or more to invest. Clients pay the firm either a percentage of their assets, or £10,000 – whichever is the most, and so the business does not depend on attracting large numbers of new clients.

Gaining clients by referral only

Where Butler is making changes, however, is on how it gains those new clients. He wants the firm to get all of them from referrals, and is assigning a select number of existing clients to attract others to Bloomsbury’s services.

‘They have to be clients who are in our top 10. They have to be really nice people, very well connected and absolute raving fans of ours, where they love what we do and everything about it,’ he says.

Referrals have always played an important part in attracting new clients to the firm, he says, but Bloomsbury has also taken on clients who have contacted the firm themselves. That will stop if Butler’s plan is successful. ‘My experience is you have had lovely clients who have come unreferred. But they are hard work. The decision to use our services takes longer,’ he says.

Butler has handed a number of clients metal cases filled with five referral cards, with the objective of securing more clients for Bloomsbury from their friends and business associates.

‘You need a process,’ he explains. ‘You can’t just sit back and expect people to refer.

‘It’s about being very purposeful. Clients have to be comfortable, for example, that you have enough people to deal with new clients,’ he adds.

Professional connections

Butler is also targeting solicitors and accountants. In May, he will speak at the first of a series of seminars Bloomsbury is running for professional connection firms.

He thinks that the business can move naturally to relying solely on referrals over the next 10 years, but is keen to do it more quickly. Butler believes this process will be helped by some of the competition falling out of the financial services sector, not just due to the retail distribution review but also because of business pressures.

‘When I look at what we have to do as a firm – and bear in mind that we are an affiliate of Raymond James and so they do a lot on the regulatory side – when I know that our disaster recovery plan is 65 pages long, and when I think about the infrastructure and the internal processes… these other firms that are £1 million to £1.5 million, I don’t believe they’ve got their ducks in a row as businesses, let alone because of RDR,’ he says.

Disillusionment with private banks

Bloomsbury is also picking up business from private client banks, as clients unhappy with their treatment look to move elsewhere, he says, pointing to the fall-out from the use of the AIG Enhanced fund that was hit by liquidity problems as an example.

‘The big thing we are benefiting from is the failure of the private banks – their failure to actually provide anything frankly, other than a banking service and even that they don’t do very well. There was a long-standing failure that they couldn’t do planning because they didn’t understand it,’ he says.

‘But since the credit crunch and the AIG fiasco and all that sort of stuff, they’ve realised that actually these posh people with double-barrelled names didn’t know any more than anyone else. I just ask the silly questions and if I wouldn’t put my own dough into it I wouldn’t put my clients’.

CV: Jason Butler

Career

• July 1990 Representative of Howson Investment Ltd (AR of Cornhill Life)
• 1991-1995 Consultant at Lamensdorf & Co
• 1995-1998 Consultant at Jackson Batten Financial (now part of Origen)
• 1998- Founder of Bloomsbury Financial Planning

Qualifications

• APFS
• Certified financial planner
• Chartered financial planner investment management certificate

Meet the team

TEAM LINE-UP: (from left) Robert Lockie, branch principal; Nicole Lamburn, financial planning executive; Jason Butler, branch principal; Hattie Graham, financial planning executive; Camilla Raeburn, practice manager  

Passive investment strategy 

Bloomsbury’s investment philosophy is based on a belief in passive investment. Gowen runs a series of portfolios composed mainly of funds run by Dimensional Fund Advisors. These are rebalanced quarterly, a process which Butler says is crucial to the returns the firm has delivered, and where Bloomsbury’s discretionary status plays a crucial role.

Butler explains that the firm would not be able to run the same investment strategy if it had to ask for client’s approval of investment decisions.

‘We’ve proven that works because clients are incapable of signing off investments when they are emotionally charged,’ he says.

He points to one of Bloomsbury’s most popular strategies, Portfolio 60, which invests 60% in riskier assets like equities and 40% in defensive assets like bonds.

Net of costs, that portfolio delivered 4.1% in the 12 months to the end of September 2009, lost 4.1% over two years, 0.3% over three and delivered a 4.3% return over five, beating a FTSE All Share tracker in each case.

That performance was delivered largely through the discipline of rebalancing, which meant Bloomsbury was selling off risky exposure in the market peaks of 2007 and 2008, before buying up more in the meltdown at the end of 2008.

‘We sell boring, but boring does not mean no returns,’ he says. ‘Your investment strategy should be as boring as watching paint dry.

‘People have realised with our portfolios, they are not risk free – but it’s risk they can cope with and they need, but it’s also quantifiable. There’s no Madoffs, there’s no student funds, there’s no life settlement funds, there’s no private equity. There’s no junk – it’s what I call clean.’

Little use for ETFs

Despite Bloomsbury’s adherence to the principles of passive investing, however, the firm is not a heavy user of exchange traded funds (ETFs).

Butler says that ETFs are not cost-effective when set against index funds, and argues they are not designed to meet the long-term needs of financial planners.

‘ETFs aren’t really efficient,’ he says. ‘To hug an index – one, how do you know it is the right index? And two, it costs a lot of money to keep replicating. There are a lot of spreads, lots of market impact and underlying costs you can’t see. ETFs were never designed as a long-term buy-and-hold thing. They were designed as a speculation tool by investment banks that could see the writing on the wall.’

He favours Dimensional over more mainstream index funds, meanwhile, because he buys into its investment approach and believes that, on average, the overall costs are lower. ‘We believe they replicate a better definition of an index, and give better asset class exposure,’ he says.

All or nothing

Bloomsbury only offers its investment service to clients within the context of a financial plan, says Butler.

‘We won’t do that portfolio work without the plan because we know they won’t be doing it in context. We had a guy the other day who said, I just want investment management. We said, well we can’t help you out – and he had £4 million. There is no point taking them on because you know they won’t stay the course.’

Butler will take on clients who sign up just for the financial planning without any investment work, however.

‘We’re just helping them strategically. I’ve got one guy – he’s a very, very big restaurateur, and he needed help with his tax planning and his estate planning. But he needed someone first of all to understand him.

‘He needed someone who he could trust, who asked the tough questions, and then would bring in the right specialists. It’s connecting what he’s trying to articulate, choosing the right specialist and then making sure it is pulled together. He’s happy to pay for that – I’m his lowest paid employee,’ he says.

‘We’ve got the technical understanding to know when to bring the right people in and where, and who is right for the client,’ he adds.

The importance of the team

Butler still spends a lot of his time with clients, but the addition of financial planners Hattie Graham from Mazars this year, and Nicole Lamburn the year before means that clients now have a new main contact at the firm.

‘Moving forward, the central point of contact will be Nicole, Hattie and the other client managers we are bringing in. I’ll just be in the background for the off-piste stuff, the more esoteric and creative stuff,’ he says.

Increasing the size of the team has also allowed Butler to bounce his ideas off more people. In 2007, Campbell Edgar, a former partner at the firm, left before joining Andersen Charnely, and Butler missed the intellectual confidence he derived from working with him. But now he has a bigger team working for him, he feels that working together has helped to sharpen the whole firm.

‘Things move so quickly that working in a team, a bright team I think, really is the only way to go forward. I feel sorry for anyone working as a one-man band or even a two-man band. We have a little natter. I asked Hattie a question this morning on something which was fiddly. But by constantly being around people who are good at playing tennis, you get better yourself.’

As well as moving a bit more into the background, Butler says he is working to ensure the firm is not too reliant on him even though he plans not to retire.

Maintaining momentum

‘I just want it to continue if I drop dead,’ he says. ‘I can’t help the fact I’m a strong personality and I’ve got a lot of enthusiasm, but that’s what we needed in the early years. The firm will evolve,’ he says.

Butler says he has someone in mind to take up a non-executive post at Bloomsbury who would be ready to step into the breach if anything happened to him.

‘My whole objective is to ensure this is not a one-trick pony and we are building that culture of, "this is what we do around here".’

He anticipates recruiting another financial planner this year, although it doesn’t form part of a rigid growth plan.

‘I don’t know what success looks like,’ he says. ‘I’d be quite happy for four-to-six client managers, £5 million to £6 million revenue with staff who are earning good money.

‘I’m privileged that with both the people we work for and work with, it’s a great story. Long after you’ve earned the money, that’s what matters, that when you take your last breath, did you do something of value? I don’t doubt there are other firms that are better than us, but we do our best.’

Five top tips

• Make promises to clients that you can deliver and make sure you do deliver
• Make financial planning core to everything that you do
• Choose your clients and staff very, very carefully
• Make sure your work/business provides you with a lot of happiness and profits
• Invest time and money in developing excellent IT, work systems and processes