Cover Star: Making plans for Nigel Speirs of Buckles

'We are struggling to see why we need a wrap. Snowdonia is its own wrap. Cofunds or Selestia want a share of that annual management charge and what value is that providing to anyone?’ he says.

The annual management charge is 1.5% for Snowdonia, but as Speirs clarifies: ‘There are underlying charges because it is a fund of funds. Underlying funds are bought normally at about 0.7% of the annual management charge. We’ve compared ourselves with the New Stars of this world and it is exactly the same. Where we think we have an advantage is that we have more of a vote on whether a fund manager continues or not. If a fund manager does not perform against the benchmark he won’t be there.’

As an example, the income sub-fund can only invest in UK equities, gilts and bonds. The fund manager decides whether he is allowed to go up to 60% in equities or 60% in bonds. The skill is deciding the asset mix. Speirs thinks a cautious managed fund should not have overseas equities in it: ‘But you would be surprised by how many cautious managed funds have a holding in Japan. I asked for a fund to be designed to replace the with profits fund and the income fund is what they came up with,’ he says.

Where next on fees and commission

Speirs points out that since the launch of the Snowdonia fund Daborn has added around £300,000 to his earnings.

‘In the Snowdonia fund we take 5% upfront and we can still take renewal,’ says Speirs. ‘Insurance companies don’t like Snowdonia because they don’t get a share of the action. There will be those who view 5% as too much but we are running on about a 10% profit margin and there is not an awful lot of room to do that at a lower rate. We are spending £200,000 a year on a graduate training programme, compliance, PI etc.’

Buckles currently offer fees or commission, the latter forming the majority part of the business at the moment. However, Speirs is committed to moving to a fee-only basis and he thinks that is a five-year process. ‘It’s not clear yet how that will look. If we do make the move we make it all in one go and there are lots of differing opinions on that. The worst-case scenario is you only move the high net worth clients to fees and the low clients stay on commission and I think that is the worst of both worlds. You have got to do it all in one go.

‘As a business we think we are quite successful but we only create £50 an hour earnings at the moment taken across our whole salesforce by the number of hours they work so it seems logical that if you can charge £100, or in our case pitch in at £125 per hour then you should increase earnings.

‘When I drill down into all these guys who say I switched to a fee model the fee seems to be 3% plus 0.5%. The model I want to get to is an hourly charged rate. It seems to work in the solicitor’s world. The difficulty is that I’m still convinced financial services has to be sold. Selling a fee basis is I think quite difficult.’

Strong management