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Adviser profile: Carl Roberts of RTS Financial Planning

Carl Roberts says adopting a fixed-fee model and finding the right mixture of clients will be the catalyst for success at RTS Financial Planning.

Free to experiment: Carl Roberts of RTS Financial Planning

Carl's CV:

2017–present: RTS Financial Planning, managing director

2015–2017: Wealth & Tax Management, director

2012–2015: Wealth & Tax Management, operations manager

2010–2012: Wealth & Tax Management, paraplanner

2005–2010: Connells, mortgage services development consultant

Free to experiment: Carl Roberts of RTS Financial Planning

Carl's CV:

2017–present: RTS Financial Planning, managing director

2015–2017: Wealth & Tax Management, director

2012–2015: Wealth & Tax Management, operations manager

2010–2012: Wealth & Tax Management, paraplanner

2005–2010: Connells, mortgage services development consultant

Top tips

Carl has given us this detailed set of top business tips. They are:

1. Never stop learning. Read books, attend seminars and listen to podcasts. If you pick up just one idea, it can change everything.

2. Do not rip clients off. Would you or your parents be happy to pay your fees? Can you justify them?

3. Keep up to date with technical knowledge. Things change so quickly that the longer you leave it, the longer it will take to catch up.

4. Experiment with as much technology as possible. It can create massive business efficiencies and cost savings. But always check the clients like it.

5. Put your money where your mouth is. If you do not use the products or investments, why are you recommending them to your clients?

Experimentation exercise

Carl Roberts is not afraid to experiment. With his fees, his propositions, technology, even his office (spoiler: he doesn’t have one).

He is also not afraid to stand out from the crowd. When the managing director set up Milton Keynes-based RTS Financial Planning last February and started trading in October 2017, he saw it as an exciting chance to blow away ‘rip-off adviser’ stereotypes by using fixed fees only with no initial charges, and ultra-low costs.

These efforts, together with his impressive commitment to education and nurturing potential young advisers, earned Roberts recognition as a 2017 New Model Adviser® Top 35 Next Generation planner.

Not about the money

Roberts was previously a paraplanner at New Model Adviser® cover star firm Wealth & Tax Management.

Under the guidance of successive managing directors Roger Prest and Tony Byrne, he became an adviser and director there, achieving chartered status and a Personal Finance Society fellowship.

Roberts says both directors were great mentors. But when his daughter Chloe was born 16 months ago it prompted him to start a new chapter. He set up RTS with his wife Karen, who left her job at Deloitte to become operations director.

Top quote:

'It’s not about the money for me. I gave up a good salary and currently pay myself little. But it was the chance to build something, and to have control and flexibility to spend time with the family. That makes me happier than a good salary.'

21st century advice

Roberts did not bring any clients with him from Wealth & Tax Management.

'We started from scratch,' he says. 'However, I had met some people along the way who had been put off by percentage-based fees but liked our fixed fee proposition.'

'I wanted to be different and explore ways to deliver great advice without the stuffy image: the office, shirt and tie, across the table.'

'Many advisers try to mould clients to their way of working, such as [percentage fees] and making them come to their office during the day. But clients want more flexible access, like they get from an online delivery service, for example. Also people are more likely to open up in their environment.'

Roberts offers clients 24/7 access to RTS, although he says, luckily, no-one has called him up at 3am yet.

Top quote:

'Having an office means you have to pay rent. The cost saving on [not having one] goes to our clients. We want to hire staff who work flexibly from home. Many surveys show employees would rather have more flexible working than a pay rise.'

Technology trials

RTS is big on technology.

Software it uses includes Voyant cashflow modelling; Moneyhub client portal; Hubspot customer relationship management; RingCentral internet phone; and Xero for accounting.

The latter syncs to apps such as Tripcatcher, for travel expenses, and GoCardless to capture recurring payments; and to bank accounts and payroll automation. Roberts also uses G Suite instead of Microsoft for email and spreadsheets.

But he says he is reviewing and experimenting with his technology constantly to bring costs down.

He and Karen put in £20,000 to fund capital adequacy and set up. After four months of trading, the company is just moving into the black, so they are only paying themselves a small salary and no dividends this year. However, profit is projected to hit £30,000 next year and £58,000 in 2020.

Top quote:

'Because costs are so low, we only need 25 clients to achieve some comfort, which we will achieve this year,' Roberts says.

Giving back

Roberts is involved in a wide range of activities. He volunteers with business education charity Young Enterprise and mentors wealth management students at Coventry University. He also gives career advice at local schools and is registered to give pro-bono advice through the Personal Finance Society’s MoneyPlan.

Top quote:

'It’s all giving back. But the mentoring, for example, is also good for networking, as there are 10 other advisers involved.'

 

Butler's backing

At Coventry University, he met new model advice pioneer and financial wellbeing speaker Jason Butler. Roberts says Butler’s advice and writings have been an important influence in establishing RTS’s progressive fee model.

Butler says:

'If you have an investment management arm, a percentage charge is not wrong. But you shouldn’t charge percentages for planning. They are separate services. That would introduce cross-subsidy and bias, so is neither fair nor good business practice. When markets go up or down, why should you get more or less money?'

Top quote:

Jason Butler: 'you should only charge an upfront fee for complex one-off work, such as pension and divorce or expert witness work.' 

Jason Butler was partner at New Model Adviser® coverstar firm Bloomsbury Wealth before he left the business in 2015 to pursue personal finance and education projects. 

2020 Vision

Roberts is an avid reader and says several authors and advisers have influenced him, including Mark Schaefer (KNOWN), Ryan Holiday (Growth Hacker Marketing), Pete Matthew (Meaningful Money), Jeff Rose (jeffrose.com), and Paul Armson (Enough?).

He says his main target is to have 64 clients by 2020. He plans to achieve this via accountancy connections – he has two already – and continuing to trial marketing techniques. 'The biggest challenge is finding clients, but being young I am still experimenting,' he says.

'I also plan to try offering a free service using Moneyhub’s technology to nudge young people into managing their finances when they need to. It tracks them as they accumulate, then they can move to a paid service when they need it.'

Top quote:

'In a way, I wish I’d started this earlier, but it took a lot of reading to realise I could,’ he says. ‘It has been non-stop over the past few months, and it hasn’t sunk in yet. But every now and again we look back and think "wow, we’ve done all this ourselves already."'

The fee bit

RTS charges nothing for initial work and implementation; and fixed fees for ongoing work.

Entry level clients pay £37 a month for guidance and a passive investment portfolio if suitable. They receive an insurance review, but no financial planning or investment review. All clients receive access to Moneyhub.

Tier two clients, who make up the majority of RTS work, pay £127 a month and also receive a financial plan, any initial work such as pension consolidation, and two meetings a year.

Tier three pay £397 a month and receive all the above plus four meetings a year. These tend to have more complex needs such as trusts, wills, powers of attorney and intergenerational planning.

Roberts says these fees are all calculated according to the average time spent based on £150 an hour.

Why no initial fee or percentages? ‘If you have an ongoing relationship, why do you need to charge up front?’ he says. ‘It is misleading to say there is lots of work to do up front. You can gradually implement the plan over the year. Advisers charge initial fees because they need to pay for all their staff and offices.

‘Clients are still being ripped off. Too many advisers are pseudo-investment managers, charging 1% and not doing much for it. If they use an active strategy, clients could be paying close to 3% in total and only getting 5% investment returns. I am paid for the guidance, technical expertise and tax planning. The time I spend on that is roughly the same for everyone, so one shouldn’t cross-subsidise the other.’

Roberts refers to the Mifid II directive, which requires all costs to be reported to clients in pounds and pence.

‘The trouble is 1% a year sounds small,’ he says. ‘Mifid II could help by showing clients the pounds and pence. Some clients never switch advisers due to inertia. But we must get them to realise there is another way.

Top quote:

'I don’t see how people can continue to charge percentage fees, which are still like commission. I wonder how many young advisers are walking the talk on this. If they don’t, they may sink back into ripping clients off.'

The investment bit

One of RTS’ main recommendations to investment clients is Parmenion’s Strategic Passive portfolios.

When that is not suitable, for example for clients in accumulation or who already hold a lower-cost pension, the firm may use Vanguard LifeStrategy, Standard Life MyFolio, and Legal & General Multi-Index.

Although Roberts has only been putting clients in the portfolio since last year, the Parmenion Strategic Multi-Option Passive Risk 6 outperformed the IA Mixed Investment 40% to 85% Shares significantly in 2015. But it trailed it in 2016 and 2017. Roberts says one reason for the portfolio’s deviation from the sector is it has no emerging market exposure. Therefore this supported performance when emerging markets were falling but did the opposite when they started to resurge in 2016.

Of RTS’s investments, 95% are passive. ‘Active managers can outperform, until you take costs into account,’ says Roberts. He disagrees that investing in passives is potentially dangerous due to the risk of being tied to a falling market.

Top quote:

One of RTS’ main recommendations to investment clients is Parmenion’s Strategic Passive portfolios.

Roberts says: ‘We like Parmenion because it does not interact with clients and its investment management is robust.’

When that is not suitable, for example for clients in accumulation or who already hold a lower-cost pension, the firm may use Vanguard LifeStrategy, Standard Life MyFolio, and Legal & General Multi-Index.

Although Roberts has only been putting clients in the portfolio since last year, the Parmenion Strategic Multi-Option Passive Risk 6 outperformed the IA Mixed Investment 40% to 85% Shares significantly in 2015. But it trailed it in 2016 and 2017. Roberts says one reason for the portfolio’s deviation from the sector is it has no emerging market exposure. Therefore this supported performance when emerging markets were falling but did the opposite when they started to resurge in 2016.

Of RTS’s investments, 95% are passive. ‘Active managers can outperform, until you take costs into account,’ says Roberts. He disagrees that investing in passives is potentially dangerous due to the risk of being tied to a falling market.

‘The market is only up a few percentage points since 1999,’ says Roberts. ‘Most clients are investing for more than 20 years. If you are accumulating regular units, a market crash is good. If you put in a lump sum then you are still reinvesting dividends and buying more units. If you are retiring, the conversation is more about [reducing risk in portfolios].’

‘The market is only up a few percentage points since 1999,’ says Roberts. ‘Most clients are investing for more than 20 years. If you are accumulating regular units, a market crash is good. If you put in a lump sum then you are still reinvesting dividends and buying more units. If you are retiring, the conversation is more about [reducing risk in portfolios].’

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Carl is active on Twitter and can be found using the handle @carlrtsfinplan.

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