After some hard work and difficult decisions Bruce Foskett is sitting pretty. He runs his business from home, has pared down his client base to a group of comfortable retirees and his efficient management leaves him plenty of spare time. But now he wants something more.
Bruce Foskett says a lot of people are trying to paddle their own canoe on the investment front. A type of client he likes is aged around 58 and he has suddenly realised he’s only two years away from retirement.
‘He’s got all this financial baggage dragging along behind him and he wants to make sense of it,’ he explains. ‘Sometimes you have to give people some bad news. If they think they are going to retire on a certain amount and they are not, they need to know that.’
Foskett adds: ‘It’s really scary when some people say, “I’ll do whatever you say, who do I make the cheque payable to?” I say, “hang on a minute, we’ve got to go through a fact finding process.” Some people have got no idea and you really can see how they get ripped off. Even some clients of mine, educated people who have held senior positions, have not got a clue about their finances.’
The man from the Pru
Foskett’s journey to the point where he could sort out these ‘scary’ situations began when he left school and answered a job advert in the Watford Observer that said he could be earning £2,000 a year by the age of 25, which seemed like a fortune to him at the age of 17.
He found himself working in the audit department at the Prudential and recalls the first policy he sold was a £4 a month whole life £4,000 sum assured. ‘That earned me £17 per thousand pounds, a fortune in my eyes back then.’
He later returned to work at the family business, a garden nursery, but he suffered a back injury and when the recession came at the start of the 1980s he returned to Prudential, even though the money was not good and he had just married his first wife.
He completed a couple of years as an agent, where he was introduced to cold door knocking, which he remembered as being a horrible experience. ‘If I didn’t get anywhere in the first half hour I went home, and I got my golf handicap down during that time!’
After stints at Prudential’s less than salubrious Kilburn patch he moved to the Uxbridge office where he met his second wife to be, Barbara, who now works with him at Meridan Park Associates. In 1989 he became Newbury life inspector, a position he held for a year.
‘I tried to build relationships but the system did not allow for that. This was not good with the Pru when they were making cuts. In 1993, in a fit of pique and also on a point of principle, I left, which was stupid – I was earning £42,000, I had a company car, a mortgage to pay, maintenance, and young children.’
Foskett had to give 12 weeks’ notice during which he was on gardening leave. At the age of 36 there he was and all he had ever done was insurance and pensions, so he took a position with Rothschilds (now SJP), which he remembers being quite innovative with outside fund managers. It was here he was introduced to the world of independent financial advisers.
‘I did not realise what IFAs did before because of my tied background,’ he recalls. ‘A light turned on and I realised this was the way to go. My wife’s brother in law was an IFA in Winchester, so I began by working with him.’
At nine feet square, this firm had one of the smallest office spaces and Foskett and his brother in law soon had different ideas about what they wanted to do. In December 1995, Foskett forged his own advisory path and set up Meridan Park Associates in Newbury.
From the outset, Foskett was determined to avoid getting locked into a cycle of taking indemnity commission, and during 1996 and 1997 he was ‘running around like a blue-arsed fly looking for single premium business’. This was helped by having a connection with a union in the print industry, so Foskett was getting called in for redundancy consultancy, and pension scheme wind ups.
There was also a business in Newbury called Mainstay Associates which used to do retirement seminars for the NHS and was looking for a way out. Foskett started doing business with the firm and when in 1999 the owners retired the business was merged into Meridan Associates. The deal involved Foskett paying all their renewal commission for four years with the option to buy out at any time, and after that four years for a lump sum of three times renewal.
‘By that time, I knew who the clients were going to be and I had either secured them or they had gone.’
A HOME-BASED BUSINESS
A key consideration for Foskett when he purchased a big and smart detached house back in October 2000 was its potential as a home office, which is two office rooms on part of the ground floor.
Foskett has his own office along with his wife, who works full time, and another helper, Emma Crawcombe, occupies the next room two days a week.
He admits that working from home has the disadvantage that you are never away from it unless you go away. ‘But it is quite handy if I can’t sleep at night – I can come down at 3am and clear some paperwork, as I have done on more than one occasion.
‘Some clients come here, but I do most meetings wherever they are. My background is with the Prudential home service and that’s the way I’m used to working. I think people are more comfortable and relaxed in their own home and you can learn a lot by seeing them there.’
One of 20 houses in the road opposite the rugby club grounds, Foskett says nobody moved in the first five years, so it was quite a close community with street parties every year. ‘But in the last two years everyone seems to have turned over, and I don’t recognise half the people now.’
He has got no intention of moving now unless he has to and he says it is quite a nice place to live with the convenience of being able to get to London in just over an hour, the south coast in an hour, with Bristol just an hour and a quarter away.
His clients, however, are spread across quite a big area, and he shows me a big map on the other side of his office wall pinpointing the number of clients in each postcode.
There are big clusters around London and Berkshire, along the M4 corridor and a sprinkling of clients in Isle of Wight who all stemmed from the referral of one client. Some of the figures need updating; in Newbury, for example, he has 79 clients which have since been reduced by a third.
‘After a big client reduction I now have half the workload and profitability has gone up, so you think to yourself, “why didn’t I do this years ago?”
‘But when you come from a sales background you cling onto a name just in case they win the pools or granny dies and leaves them a fortune. It’s been quite a cathartic exercise, we finalised it all at the beginning of this year and it has taken about 15 months.
He has found Pivotal consultant Liz Pemberton a great help in identifying where the business is heading and how to segment the client base by relationship. Pivotal poses 12 questions, for example, ‘Have they transacted in the last year?’, ‘Have they given any referrals?’ The responses then all go into the matrix and the best relationships are identified.
‘When you overlay these responses with your remuneration from clients there is actually quite a close fit,’ says Foskett. Then you identify people you don’t get on with. It seemed a bit daunting at first, but it’s no pain, no gain.’
With Pemberton guiding him through he could more easily deal with situations where they were getting good remuneration from a client but did not have a good relationship.
‘I’ve been working with Liz for two or three years and I always try and rebel and do it slightly differently. This sometimes makes it more awkward, however, and sometimes my ideas do not work.’
One time, he tried to introduce retainers and ended up with 40 clients on this basis, yet he was doing exactly the same for them as for other clients. ‘So, rather than getting them to pay retainers we cancelled all the retainers. This was only fair. We actually had some customers asking “how are you going to get paid?” It was more difficult than signing them up!’
Foskett says he now has the clients he wants to work with and he is particular about who he takes on. ‘Anyone with less than £50,000 I will think long and hard about. We are predominantly in the “at” and “in retirement” market. We don’t do a lot of regular saving. This is about structuring the asset base and giving the income they want.’
Though some IFAs specialise in accumulation, Meridan Park Associates controls the decumulation of assets by ensuring clients spend at the right rate.
Most clients of his are 10 to 15 years older than him, which presents a ‘slight problem’, he says. ‘If I want to stop working in 10 or 15 years time these people are going to be over 80 and are not going to want to change advisers, if they are still around.’
In this circumstance, he says, ‘we either need to bring someone in or merge with a bigger business and get used to dealing with a set process that others can follow’.
What about children of clients? He mentions one client who was taken very ill and Foskett went down to the hospice the client was in near Brands Hatch and tidied up a lot of things. When he died the money was reinvested with his son and daughter, his ex wife and the partners of the children. ‘So from looking after one client we’ve ended up with the thick end of £4 million from the family connection, and we give them a good service.’
Another example was a businessman who died in 2006 and the family went to a solicitor who wanted to charge him £28,000 to get probate, as the fee was a percentage of assets. ‘I did a lot of the leg work myself and got a local solicitor. In the end we did it for about £3,000. But I have now got all that family’s business, and the childrens’ as well.’
Foskett points out that if somebody has got £600,000, of which the adviser gets 0.5%, or £3,000, this amount of money may need a lot of time to earn, perhaps 20 hours. If it only takes the adviser 10 hours ‘you mentally bank it and say, “well, I owe them”.’
Going the extra mile can work for both the client and the business. In one case, a client in Torquay had investment trust PEPs which he needed to put onto Cofunds to get up-to-date valuations with them. Foskett ended up paying the £500 costs of exiting.
‘He’s a good client and has a million pounds plus invested with us. It’s worth it and we’ll have our money back in a year.’
The overall number of active clients now stands at 270, down from 780 about three or four years ago.
How did he disengage these people? The first couple of hundred clients he sent a letter to, saying they were changing the way they worked and ‘if they want to talk to us, we will have to charge a fee’.
With this letter Foskett enclosed a slip to return with options of ‘yes, that’s fine’, or ‘we are dealing with another adviser’ or ‘no, terminate the relationship’. He spoke to another IFA about the rest, once the segmentation process was done. ‘His business was a fairly new operation and he took those clients off our hands, there was a small payment of about one year’s renewal.’
Foskett is a fund picker with six portfolios for which he uses Morningstar and is trialling Financial Express Analytics. ‘What I am very keen on is for clients to understand the funds,’ he says.
Few people want to pay fees, so he typically charges 1% upfront plus 0.5% ongoing. For existing clients, he will sometimes do 0% upfront plus 0.5%. He says ‘we are quite happy to work on customer agreed remuneration of 0.5% of assets under management. People have asked me how we can afford to do this – we do it because we know it is profitable.
'If we divide the annual expenses of our business (£73,000) by the funds under management (£60,000,000) we know it costs us 0.12% per annum to service those funds. So if we are receiving 0.5% we are quite happy! It is a calculation I believe all advisers/businesses should make – it will help focus on driving down unnecessary costs in the business, or will at least stop them pricing themselves too cheap.’
He uses FundsNetwork and Skandia with some clients on Transact, but he admits: ‘I’m still not convinced by wraps. Some people I talk who are looking at wraps are taking 1%. I think that is going to come back and bite the industry in the backside, sooner or later. It’s a lot of money.’
In 2005, Foskett considered selling the business and received some verbal offers from a couple of IFAs. ‘But I thought, if I stop now what the hell am I going to do? Also, there is a big regional IFA talking to me coming up with an offer I can’t refuse apparently. I’m sure I can!’ he smiles.
A member of the Whitechurch network, he has since had a look at Thinc Wealth Management. ‘I think it’s a fantastic business model though I’m not sure it’s for me.’
He has decided that he does not want the business to get any bigger. With the scaled-down number of clients and well-defined process, he is more time efficient, giving him and his family scope for more holidays. He went on seven trips in 2007 including stays at a spa in Malta, a cruise around the Baltic, taking all his children to Cyprus, Africa and the Dresden Christmas market.
Indeed, after the aforementioned segmentation exercise, his position is almost too comfortable. One particular convenience is that around 30% of his client bank are former NHS workers with very good index-linked pensions. Foskett says because of who they are and where they are in their lives, there is not a lot more work to be doing with them.
‘Some of our client reviews are simply a report on how their assets have done, over a cup of tea and a biscuit and a nice little chat about the family. It’s great to be in that position but I feel I’m lacking something. I don’t feel like I’m being challenged.
‘When we talk about the business, others dream to be where we are, but the journey is a lot more interesting than the destination.’
Many NHS workers of a certain era finish full service with pensions plus the state pension, which adds up to a little less than they were earning. They then get a lump sum, and Foskett’s role is mainly about investing that sum and doing a bit of inheritance tax planning. ‘I spend a lot of time trying to get people to spend money!’ he says.
One of the questions he asks now is, if the investment was held for five years, what is the client going to do with it? ‘I am probing a lot deeper on what they might spend on,’ he explains. ‘I know we’re told that everybody has got a need, an objective and their desired income, but the reality is that some people don’t have a clue.’
Foskett is sitting pretty: his business provides a good income, his mortgage is paid off, and his children are finishing university. He is now considering what is he going to do for the next 10 years.
‘I’m 50 and too young to retire. However, I don’t want to be doing this for the next decade. I need something to drive me. I’m having my mid life crisis!’ he says.
One area he feels he can explore further with clients who have objectives is by putting his CFP qualification and his life coach training from Newcastle University to better use. He completed George Kinder’s two-day course, which he found, ‘a bit rah rah, American’ but acknowledged ‘there is some powerful stuff in there. We have the power to change peoples’ lives we really have and I don’t think we should take it too lightly.’
On the tools front, he was one of the quite early adoptees of 1st Software in 1999. He quickly learned the value of giving consolidated valuations which brought in a lot of business which he was not servicing before.
With cashflow modelling, he says: ‘I’ve seen cashflow modelling and very fancy plans. Perhaps I’m getting cynical as I get older, but unless your assumptions are realistic, how valuable are they?’
He says he is quite cautious in his approach because of where his clients are. ‘Most of them are not looking for too much speculative risk so we tend to be very conservative in our assumptions and leave a little back.
‘We’ve got some single retired ladies. We generate income for them and every year we ask if they need any extra. They say “you told me last year I could have this much but if you could get some more, that would be great”. So we are continually managing client expectations.
‘I think you can plan individual scenarios but to try and do a complete financial plan is a time consuming and expensive exercise. A lot of IFAs are moving to high-net-worth clients, although this is not my set of skills. I like dealing with ordinary people who for some reason just happen to have money.’
CV: BRUCE FOSKETT
Born: 24 September 1957
Born and brought up in Chipperfield, Hertfordshire where his family still live and are in business.
From about age eight he spent non-school time working in the family business and (from age 12) also shooting and fishing.
1974 – 1977 Prudential Administration, Watford
1977 – 1981 Worked in the family business – a plant nursery
1981 – 1984 District agent, Hemel Hempstead
1985 – 1989 Section manager, in Kilburn and Uxbridge
1989 – 1993 Life inspector and sales manager in Newbury
1994 Associate with J Rothschild
Assurance – now SJP
1994 – 1995 Partner in Insurance Centre Financial
Services (DBS member) – Alresford
1995 – present Director, Meridan Park Associates
Qualified as a certified financial planner with the IFP in 2004 and achieved chartered status with PFS in July 2007. In 2005 he obtained a life coaching certificate from Newcastle University. Also belongs to the Russell Study Group, meeting four times a year.
Married in 1978, divorced in 1990
Two sons: Daniel, born in 1982, and Ben born 1984
Re-married in 1993 (to Barbara) and stepfather to two girls, also born in 1982 and 1984
Completed his first cruise this year and has just come back from safari in Kenya and Tanzania
Wildlife and nature, watching rugby, travel, real ale, red wine, eating out, walking, going to the gym (three to four times per week, including with a personal trainer)
Completed the Lyke Wake Walk (longest single day walk in this country – 42 miles). Trekked on Great Wall of China, Escambray Mountains in Cuba, Inca Trail in Peru and over glaciers and volcanoes in Iceland for the National Deaf Children’s Society
To travel to all continents and do a full A-Z of countries.