Ben Cordiner took The Financial Advice Company from the rubble of an insolvent parent, and shaped a fresh firm looking to enhance its client bank with a younger demographic.
Ben Cordiner, director of Leeds-based The Financial Advice Company (TFAC), took an old model company and has reshaped it into a thoroughly forward-thinking firm aimed at attracting young clients.
Cordiner practices ashtanga yoga, where the aim is to flow effortlessly between one position and the next. While the transition at TFAC has taken time, Cordiner has worked hard to make it as smooth as possible.
BEN CORDINER CV
- 2011-present The Financial Advice Company, co-founder and IFA
- 2010-2011 Bates Investment Services, self-employed IFA
- 2008-2010 Bates Investment Services, self-employed trainee adviser
- Diploma in Financial Planning
- Certificate In Financial Planning
- Certificate in Life & Pensions
The firm has its roots in Cordiner’s father-in-law, Frank Rosenhead, whose career as an adviser started in the early 1990s.
Rosenhead retired as an adviser in 2012 but remains at TFAC as a consultant and one-third owner. Cordiner and his wife, co-director and paraplanner Shelley, own the other two thirds.
In 1995, Rosenhead joined Bates Investment Services, which was sold to Money Portal. The latter became Honister Partners before going insolvent in 2012.
In 2008 Cordiner joined Rosenhead at Bates, and by 2010 the pair had turned their IFA business into a limited liability partnership with its own brand, The Financial Advice Company, within Honister. The insolvency did not affect them as badly as it might have. It was a difficult period, but they extracted their business, clients and staff from the mess.
‘We used True Potential to help us reauthorise and reconnect with our clients quickly,’ Cordiner says. ‘Soon after, we went directly authorised. We had been heading in that direction, but those events propelled us there faster.’
One of Cordiner’s first tasks on joining the business in 2008 was to help Rosenhead conduct a human resources review. The credit crunch had squeezed the business, making them over-resourced.
‘We had to start by placing everyone’s job at risk and eventually made two paraplanners and one administrator redundant,’ he says. ‘It was a difficult process but it has put us in a much better position. The team has a better culture and everyone has bought into it.’
Cordiner says Brett Davidson helped TFAC realise it was not charging enough for the amount of work involved, so it created a new charging structure in 2014. TFAC now charges £1,500 for an initial plan, plus 1% ongoing charges, or priced individually for portfolios above £1 million. It charges a tiered fee for implementation: 3% for £1 to £100,000; 2% on the next £100,000; and 1% for anything above that.
For the ongoing fee, clients receive at least one annual planning meeting, unlimited access to their financial planner via phone, email and Skype, access to their personal finance portal via app and website, a monthly newsletter, bimonthly magazine, and Budget updates.
Cordiner’s next task was to start reviewing the direction of the business. He wanted to steer it away from a focus on products, and towards holistic financial planning.
In 2013, he engaged consultant Brett Davidson of FP Advance for 18 months. This prompted a client segmentation exercise, an evidence-based investment proposition, and adopting Voyant cashflow planning software.
‘Brett helped us get a picture of how we could transition from a lifestyle business, based around Frank and myself, to a proper business with a brand,’ says Cordiner.
‘For example, our adviser Jane Wilkinson was self-employed at the time. Brett felt it would be better if she became employed and she was happy to do that.’
TFAC introduced a version of the Institute of Financial Planning’s six-step planning process and started using some of life planning coach George Kinder’s planning questions in 2013.
‘Financial planning is not just about cashflow planning,’ says Cordiner. ‘It’s the focus on what people want to achieve in life and what is important to them. Money is just an enabler.
‘Kinder’s questions deepen the conversation and the relationship. Overlaying that with a financial plan gives them a clear picture of where they are and the cashflow shows them they will not run out of money.’
Cordiner considers the evidence and stands firm on short-term bonds
Cordiner engaged Albion Strategic Consulting chief executive Tim Hale in 2014 to help transform TFAC’s investment proposition towards evidence-based portfolios.
Albion continues to assist with most aspects of investment governance. This includes portfolio structure, due diligence, research, the investment manual, risk documents, and client-facing material. Albion also sits on the firm’s investment committee once a year and provides regular updates.
TFAC’s 60% equities portfolio has outperformed the MSCI WMA Private Investor Income benchmark over three years. ‘One fund we use is the Dimensional Fund Advisors International Value fund, which lagged behind large cap stocks in 2015,’ says Cordiner.
‘We stuck with it as we believed it was the most appropriate fund to capture value premium. It repaid our faith with a strong outperformance in 2016.’
TFAC made no changes to portfolios at the last meeting in December, and decided to stick with its high weighting in short duration bonds due to the negative effect of interest rate rises.
The committee is considering introducing a momentum-focused fund, either from Vanguard or iShares. ‘Tim is doing some more analysis before we decide,’ Cordiner says. ‘I read Your Complete Guide to Factor-Based Investing by Larry Swedroe, which talked about the zoo of potential factors that could affect investment performance. There are hundreds.
‘Swedroe’s research helps us filter them down and suggests momentum is a successful and repeatable factor that can complement the other factors we aim to use. These are developed market returns, emerging markets, value stocks, small cap stocks, and duration and credit rating in the fixed income part.’
The next stage of TFAC’s transition was to create a value framework last year. Cordiner did this with a brainstorming session.
This was supported by research into Vanguard’s adviser alpha concept, podcasts from US planner Michael Kitces, and advice from financial adviser coach Steve Sanduski and Pete Matthew, managing director of Cornwall-based Jacksons Wealth Management. The main areas Cordiner identified for the value framework were organisation, accountability, productivity, partnership, objectivity, and education.
‘We needed to differentiate ourselves and show how we add value. An example of the latter is in trying to beat the market,’ he says.
‘The behavioural side particularly interests me. Providing objectivity that helps people avoid emotionally-driven decisions is a big element of what we do. We are dealing with a person, not a computer, and dealing with life, which will always throw a curve ball.’
The transition away from Honister and the client segmentation process started in 2013, and contributed to client numbers falling consistently over the past four years. But it hardly affected funds under advice.
Changing the vibe
The next big challenge for TFAC is to start attracting new clients again. To aid this, it launched a vibrant new website with a modern design in November last year.
‘The website took a long time to develop,’ says Cordiner. ‘We started working with one firm but weren’t happy with the creative elements. We started again with a new company, Blow Media in Harrogate, who were blunt about the need to change aspects such as the colours and branding.
‘They helped us get away from the clichéd imagery that appears on many adviser websites, opting instead for a picture of a toy aeroplane with a funky design around it. That reflects our brand and will attract the type of young professional and business-owner clients we want. They understand it because the travel theme links to the concept of lifestyle goals.’
The fresh approach that seeks to connect with younger clients does not stop online. Cordiner took it into the wardrobe too.
‘We don’t wear suits anymore. That idea came from consultant Andy Hart [financial planner at London-based Serenity Financial Planning], whose Voyant Mastery programme we follow,’ Cordiner says.
‘He told me I look too stiff in a suit. The client reaction has been positive. I realised the only thing stopping us from being more relaxed at work was ourselves.’
Bigger and better
To help the push for new clients, TFAC has started working with marketing consultant Phil Bray of The Yardstick Agency. It has also joined Standards International’s two-year WOWW! programme. The programme aims at improving services and helps to achieve the BS 8577 standard in financial planning.
Cordiner says TFAC’s 93% recurring income in 2016 brings financial stability. In the future that figure will be lower because the firm wants to grow and bring new clients in.
‘Our marketing will involve more use of social media to drive traffic to our website. We will also include more blogs, newsletters and longer reports,’ he says.
Other plans involve further client segmentation, coupled with automated advice for clients suited to a lighter touch service. ‘That can be an incubator to build a relationship with people at an earlier age,’ says Cordiner.
He says the next generation of new model firms will excel at blending technology and human advice. ‘Some people will want to do more themselves online,’ he says. ‘But people will still want the face-to-face element.
‘Next generation advisers will use new technology in areas such as the client on-boarding process to help reduce the cost of advice, and to help those with smaller pots. That will be necessary because there will be ongoing pressure on fees for advisers, as well as for fund managers.’
Income has been a bit up and down over the past few years as the firm found its feet. Cordiner is, however, confident the hard work will pay off with a more predictable flow of business.
The firm’s profitability has helped staff and directors achieve a better work-life balance, says Cordiner, who along with the other two owners pays himself a small salary, plus a dividend when available.
This better balance allows the Cordiners to spend more time on yoga practice together. They can also spend more time with their son and daughter, aged seven and eight.
‘Shelley and I are both 40 and we enjoy running the business,’ says Cordiner. ‘In the long term we are open for a sale or succession,’ says Cordiner. ‘But we are planning not to need a big sale because we don’t know where the industry will be in 10 to 20 years.’
Looking to the future, Cordiner says: ‘There are still lots of challenges. I feel positive and excited about developing our brand and taking the company to the next level.’
FIVE TOP TIPS
- Have a clear understanding of your ideal client and be prepared to say no to those that do not match your company’s values.
- Use technology and software to help drive efficiencies, and use the time saved to focus on improving the business and service.
- Listen to your peers when sharing best practice and ideas: no one has all the answers.
- Spend time working on your business.
- Surround yourself with people who can challenge you and the status quo.