In 2012 some advisers around the age of 60 saw the retail distribution review (RDR) as a reason to call time on their careers. There was a steep qualification hurdle to clear and a business model to rethink. For another five years, what was the point?
Nothing could have been further from Alan Moran’s mind. The director of Birmingham-based Interface Financial Planning instead decided to postpone his retirement plan so he could enjoy advising under the new regime.
Now 66, he had planned to retire at 60, but the advent of the RDR gave him fresh enthusiasm for his career. ‘I could afford to retire but there was this wonderful thing coming called the RDR. It was what I always wished for. I wanted to be a part of this new impetus and fun,’ he says.
His CV shows one reason why he was so enthusiastic about the reforms: the level four diploma required by the RDR was never going to be a barrier to one of the most qualified advisers in the profession. He is a chartered financial planner, a Registered Life Planner® and holds Standard International’s ISO 22222 certificate among other qualifications. He also embraced the business model elements of the RDR. As a fellow and lifetime member of the Institute of Financial Planning (IFP), he had moved to fees in 1996.
Slick sole trader
Life at Interface is not without its challenges. Moran is a sole trader and has been the firm’s since only employee since 2011. To make life a little trickier, he has rejected the idea of working only with high-net-worth clients.
‘My goal has always been to help ordinary people,’ he says. ‘I get joy and satisfaction from that. If we can do it profitably, by maximising efficiency through technology we should. Everything I do is structured to be slick, efficient and fast, to the point of shaving a minute off a job.’
To manage these tasks, Moran has looked to outside help. He outsources as many services as possible, including bookkeeping, compliance, reconciliation, regulatory reporting, paraplanning, research, IT, data management, telephone reception, call management, email newsletters, social media management, client management and administration.
Business support expertise
Moran has also worked with a range of consultants and business support services in an effort to improve the firm’s processes. He has worked with Standards International on the ISO 22222 and BS 8577; business and marketing coach David Scarlett; practice management coach Clare Evans; business development consultant Abbie Tanner; and most recently consultant Brett Davidson’s FP Advance.
He says he has taken something different from all of them, and Evans’ coaching was particularly helpful in driving efficiency. ‘Clare is known for her work in time management, but she is much more than that. She is helping me constantly to focus,’ he says.
‘This is about investing in yourself and working out what you are about. David Scarlett gave me the confidence to be bold, and say [who I am and what my mission is]. Everyone says "sack the bottom 80% [of clients in terms of wealth]". I never wanted to do that. Instead, he helped me part with the clients that I didn’t want to work with, either because I didn’t like them or they didn’t inspire me or it was outside my area of focus.
‘I want to feel that all my clients can be in the same room [socially], but some didn’t fit. I only segment according to "niceness".’
ALAN MORAN CV
1992 to date: Interface Financial Planning, director
1990-1992: General Portfolio, representative
1973-1989: Teacher in a number of schools and colleges in the West Midlands
Fellow of the Personal Finance Society
Fellow of the Institute of Financial Planning
Fellow of the Society of Will Writers
Investment Management Certificate
Chartered financial planner
Registered Life Planner®
Affiliate of the Society of Trust and Estate Practitioners
Standards International ISO 22222 certified
Ethical Investment Association member
- The Sustainable Investment and Finance Association UKSIF member
The meaning of life
The client segmentation process was part of a deliberate strategy from the end of 2013 to the beginning of 2014 to reduce income. ‘Having adopted life planning, I decided to live my own life,’ says Moran. ‘Previously I was on £200,000 income, my profits were higher. But then I decided my wife Trish and I [should have more free time].’
He reduced the number of clients by 20. ‘It took time and lots of discussion. David is into niche marketing. He starts with demography, location and occupation and finishes with what he calls psychography, which is values. I start with values,’ he says.
‘So my website now reflects me. Some of the photographs on it are not particularly professional but that is the idea. They are about me; I took them. I am trying to get my clients to live their lives with meaning. If I am not doing the same thing, then what am I?
‘90% of people may look at the website and run. I don’t want them. 10% will like it and will already have bought into what I do.
‘It is not about money, it is about how many satisfied clients you have. We have a limited time on this planet. What difference have we made? How many people have we touched?’
Life planning perspective
Moran himself was touched profoundly when he read Lighting the torch by life planning guru George Kinder. His wife was less impressed.
‘I read Lighting the torch on holiday in Greece,’ he says. ‘I ran to my wife on the sunbed and said: "I have to do this." She said: "Go away, I am enjoying the sun".
‘But it really lit my torch. I met George Kinder that November 2009 and did the life planning course in January 2010, the six-month mentorship, and then Kinder asked me to be a trainer. I have trained over 50 life planners so far.
‘Asking clients the deep, emotional questions and handling that properly has helped [my clients, my business and me equally] to work out what I wanted, who I was and to be comfortable with not being perfect.
‘I had thought that being a good adviser was about accumulating more facts and information about tax and estate planning, for example. It made me realise there were paraplanners who could do that just as well. It is the personal relationship, talking and listening to the client, that adds more value,’ he says.
‘I went to a client’s funeral last week. The widower said I had made such a difference in their lives. He has £30,000 invested. I don’t know any other IFA who would take them on. I will miss her cakes.’
Moran says there are now four pillars to his advice. ‘First we sort out where you are. Then we do a lifetime cashflow. If you don’t want that, please go elsewhere. The third corner is the bucket list and identifying the important things in your life. George Kinder’s second question, "what would you do if you had 48 hours to live?" is so important. I ask it repeatedly.
‘The fourth pillar, estate planning, is not everyone’s favourite but it is important because otherwise we do all this work and when we die, it goes down the drain. Covering all these pillars means you can’t look after huge numbers of clients.’
New proposition pays dividends
Although he shed 20 clients in 2013, Moran gained £2 million in funds under advice and increased recurring income by attracting more money from existing clients. He says restructuring his investment process [see box] helped to achieve this as it gave clients the confidence to invest all their money with him.
‘Previously, because I was running my own portfolios, clients wouldn’t give me all their money,’ he says. ‘Now they understand the rationale of my proposition.’
All his clients pay fee of 1% ongoing plus a retainer of between £17 and £97 a month.
Moran has not yet broken down in detail what clients receive for their 1%, but he believes it is more than enough and plans to make it clearer following FP Advance’s advice that his literature gives the impression that the 1% all relates to investment.
‘Clients get access to the investment proposition for that, but also me exploring what’s important to them and holding their hand, including lifetime cashflow and life planning,’ he says. ‘Plus they can see me whenever they want, either face to face or online.’
Targeting the whole market with in-house model portfolios
Moran outsources as much of his support work as possible, but keeps investment control in-house. ‘That is because I am Investment Management Certificate qualified,’ he says.
‘Previously I did my own research and clients had bespoke portfolios with actively managed funds. After becoming a life planner, I realised this investment approach didn’t add much value. So four years ago, I created in-house model portfolios with help from Dimensional Fund Advisors. These use low-cost funds, mainly from Dimensional, and a scientific asset allocation approach.
‘In addition to the cost factor, Dimensional appeals because of my academic bent. I love the scientific research it does and that it is constantly improving. For example, the profitability tilt that Dimensional introduced recently is amazing.’
Moran believes that advice can be whole of market even if a portfolio is invested all or mostly with one provider.
‘These Dimensional funds give clients the whole of the market,’ he says. ‘Why go elsewhere and buy a slice of the same market?’
In 2012, the Interface 100% Equity Portfolio, which comprises only Dimensional funds, underperformed the MSCI All Country World Index slightly. In 2013, 2014 and the year to date, it outperformed the index.
Dimensional says it would never analyse live performance on short time periods.
‘The tilts within the portfolio to small cap securities, low-relative-price securities and high profitability companies are designed for long-term investment strategies,’ it says. ‘You can expect the Dimensional portfolio to outperform the benchmark on a longer investment horizon.’
*Data net of fund manager charges. Dividends reinvested.
Setting an example
Moran works from his suburban home in Handsworth Wood, Birmingham. The room where he meets clients is full of books, sheet music and musical instruments.
As well as Morris dancing, he enjoys ballroom dancing and playing his collection of 30 instruments, which include the Appalachian dulcimer, hammered dulcimer and mandola.
Moran says it is important that clients see him acting on his own life plan. His bucket list includes personal and professional objectives.
‘On the business side, it would be a great legacy to show there is a way to use technology and outsourcing to make a business [of this size] work,’ he says. ‘Also I aim to have a great relationship with my wife and family, and to have social time with lots of hobbies.
‘We go to the theatre regularly. We started ballroom dancing. We have great fun. I love driving and am a member of the Institute of Advanced Motorists. I sound like a prize nerd! I drove to Belgium just before Christmas and we are talking about [a driving holiday in the US].’
Moran says he still has no plans to retire. ‘My only concern is that I spend lots of time looking after these clients. If a bus hit me tomorrow, what would happen to them?’
His locum is previous New Model Adviser® cover star Luella Keeley, director of Keeley & Co, but she would not have the capacity to take on all his clients. ‘So I have a responsibility to sort something out,’ he says.
‘I wish I was where I am now but 20 years younger. One of the big fights with myself over the years has been to stop going for "the biggie" and getting 500 clients and to settle where I am and do what I love.
‘Life is fun but I like getting it right. I am serious on the technical stuff but you have to see it in the context of fun. I like helping people to get more out of life, and to reflect on how lucky I am. Though I can be hard on myself, I am grateful every day for what I have.’
Five top tips
Your life should control your money, not the other way around.
Ensure you have a good work-life balance.
Analyse your values and stick to them.
Prepare a bucket list and add to it regularly.
- Outsource to allow you to do what is most important.