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Adviser Profile: Chris Daems of Principal Financial Solutions

Adviser Profile: Chris Daems of Principal Financial Solutions

Having facilitated the rapid growth of Principal Financial Solutions using his networking skills, Chris Daems’ game plan now is to recruit more advisers to expand the firm’s geographical footprint across Essex and the South East.

Chris Daems, director of Principal Financial Solutions, has set up an exciting young business with big plans. Since start-up in October 2009, he has used his social networking skills to build up the business quickly by establishing links with other professionals and business groups. He plans to continue growing by coaching recruits in how to develop connections, and expanding on the firm’s two bases in the City and in Essex across the South East.

Daems, a keen badminton player, lives in Hornchurch, Essex, and splits his time between an office there and one in London’s Moorgate, providing access to two lucrative geographical markets. He says his work-life balance is not good, as he has also been working hard to create a new website, www.commonsensemoney.co.uk , with at least 30 educational videos on it.

New website

‘The site is aimed at people who know they should plan financially. They have the resources but lack of knowledge stops them,’ says Daems.

He warned that after the retail distribution review (RDR), there could be an emergence of restricted sales forces targeting the mass market. ‘The concern is where the majority of people will obtain financial advice.’

‘Our website talks about the behaviour of investing and making sure you have disciplines and plans in place to achieve financial goals. I’ve already made the videos and am hoping to launch the site soon.’

He has no immediate aim to use the website to generate profit. ‘It is principally to help raise the profile of professional financial advice,’ he says. ‘As a profession, we have an obligation to get good quality information out there. It is a profile raiser. If we can be known as a firm that [provides this information], it will help us. It will enhance trust in the profession and benefit everyone.

‘It is not purely altruistic: if I can [make money from it], I will. There are many IFAs who don’t use new media as effectively as they could.’

Keen goal setter

Daems is an enthusiastic, upbeat and adventurous character, who says he loves setting himself goals.

Since 1995, the 35-year-old has worked for a variety of financial services organisations, including as an adviser at national IFA Bluefin in 2008 and 2009.

‘I saw Principal as the next progression from Bluefin,’ he says. ‘It was a bit scary as my wife, Cassie, wasn’t keen on my leaving a secure job. But the fear of not doing it was greater; that was my push. Because I was just starting out, I needed support and joined the regional network Blueprint. I only had a small portfolio of 30 clients that came with me.’

He set out on a hectic programme of networking in London and Essex, including at a breakfast club he helped set up in Theydon Bois, a village in a particularly wealthy area near Epping. ‘That’s in the middle of the golden triangle,’ he grins, referring to a term first coined in the Essex Wives TV series.

Finding introducers

Daems’ natural aptitude for networking has paid off and the firm now has 300 active clients. ‘The majority of our work now comes from introducers, including a barrister, three or four solicitors and accountants; plus an arrangement with the Federation of Small Businesses (FSB),’ he says.

‘We have a relationship with another IFA, Independent Financial Services (IFS), which provides its services to FSB members nationwide. IFS advisers provide support to most of the country but if it has gaps in its geographical coverage, it works with trusted partners to fill them. We are one of its trusted partners and primarily look after its clients in London, Essex and Hertfordshire.’

He met his barrister introducer at a London Chamber of Commerce networking event. ‘That connection is an open access barrister, which means they accept referrals from non-solicitors. They have referred a couple of trust cases to us. Our job is to understand what is changing in the legal world so we can have [a useful] conversation with them.’

Daems has also fostered connections with outsourced human resources companies because ‘they have relationships with our target market’, he says.

Skilled networker

All these relationships started with him meeting people at networking events. ‘I enjoy that aspect of the job and my skill is in building relationships,’ he says.

‘The way we achieved that was working hard to make sure the relationships were right. That is where we are strong: staying in touch and working in partnership to look after the client. We are not experts in all areas. If there is a tax issue, we will work with the client’s accountant, for example. That shows we do things professionally and allows us to build a relationship with the accountant.

‘It seems I go out a lot, networking, but actually I don’t, especially now the business is developed, because I want to focus on the relationships we have. The fact that my daughter Sophie is teething isn’t helping, so I am not getting much sleep. I go to the Thursday networking breakfast in Theydon Bois,

I go to the FSB event in London every second Tuesday and that is it now.

‘When I started, I was doing a lot more. Now we have all these people who want to use us, my focus is on how we meet that capacity. We have had to say "no" to some of the clients we couldn’t look after.

‘Capacity is a huge issue for us. If you feel service is going to be an issue, you should say no to a client. We are trying to extend that capacity to make sure we meet our promises,’ he says.

Christopher Daems CV

CAREER

  • 2009-present Principal Financial Solutions, director and financial planner
  • 2008-2009 Bluefin (previously Thinc Group), financial adviser
  • 2004-2008 NatWest, financial planning manager
  • 2002-2004 Norwich and Peterborough Building Society, financial planning manager
  • 1995-2002 Woolwich Building Society (later Barclays), a number of roles

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

  • Member of the Chartered Insurance Institute
  • Member of the Institute of Financial Planning
  • Diploma qualified

Shaping the business model

Capacity has not been the only issue for the firm, which became a limited company in March 2011. Creating the right business model was not straightforward for Daems.

‘Bluefin was quite far down the road with the new model,’ he says. ‘So when I started I had practices that were new model already. We did cashflow modelling and our reports were designed to help our clients achieve goals, but I didn’t have the business model right.

‘Being a business owner and an adviser are two different skill sets so the past three years have been a massive learning process. This year we have worked on systems and processes, making sure they are robust. We wanted to make our client reports more meaningful. I have seen so many that focus on the compliance and not the client. If a client is writing us a cheque, we want to be able to give them something tangible that validates that.’

Rather than use a consultant to help develop the business, Daems prefers to use a business coach. ‘I found a coach gives you that extra push; similar to what we do with our clients. Plus I deliberately didn’t choose someone specialised in this area; I wanted someone with a wider perspective because, as a profession, we are quite insular sometimes.’

Using network expertise for portfolios

Until a year ago, Principal Financial Solutions provided fully bespoke portfolios for clients. To provide a more process-driven approach and boost due diligence, it now uses five active and five passive model portfolios put together by its network, Blueprint.

The Blueprint investment committee reviews and rebalances the portfolios quarterly. Principal also builds bespoke portfolios for clients who require them, at an extra charge of £1,000.

‘Our client split is probably 60% to passive, 40% to active,’ says Daems. ‘The passive argument is quite strong at the moment, but we need to take a longer term view. I think fund managers need to do more to validate their costs. If they do then you may see a step change in the performance of active compared to passive.’

Portfolio total expense ratios are 1.11% for active and 0.77% for passive, including platform charges but excluding the adviser fee.

Blueprint has not made any major changes to the portfolios in the past year. The top three holdings in the Blueprint Strategic Active Balanced portfolio are BlackRock UK, Legal & General UK Alpha Trust, and Threadneedle American. The top three funds in the Blueprint Strategic Passive Balanced portfolio are IFDS Frontier MAP Balanced, Legal & General UK Index Trust and HSBC American Index.

Performance

Over 1 year

Blueprint Strategic Passive Balanced

9.7%

ABI mixed 40% - 85% shares

7.54%

Blueprint Strategic Active Balanced

10.3%

ABI mixed 40% - 85% shares

7.54%

Data is net of fund manager charges and platform charges but gross of adviser charges, and assumes dividends are reinvested.

Target niches

Principal’s main niche is owners of small to medium-sized businesses. ‘A lot of our work comes through accountants because that connection is a natural fit,’ says Daems.

‘The solicitor connections tend to generate trust work and our other adviser, Jenny Goldsmith, is very experienced in working with trusts. But as we grow, I aim to cover other areas and to have a multi-niche practice.’

The firm sets a minimum investment level of £50,000, although most clients have more than £100,000. It offers an annual telephone review service and charges a minimum fee of £600 a year or 0.5% of assets. A service with an annual face-to-face meeting costs a minimum of £800 a year or 0.7%, and with twice-yearly meetings costs at least £1,200 or 0.9%.

Principal’s network, Blueprint, was bought by the Intrinsic network earlier this year, and Daems says: ‘There are lots of changes in the network space and we don’t know how it will look in a year’s time. I have no qualms about going directly authorised; I think that might be the right step for the business, but not now. We need to consolidate and grow first.

‘Independence is crucial, however, for our clients. Blueprint has both an independent and tied proposition, but I have been assured that it intends to retain its independent proposition.’

Turning to time-saving technology

One of the next tasks Daems plans to tackle is to reduce the amount of time he spends visiting clients, and he is looking to technology to help him achieve that.

‘Technology allows me to talk to anyone anywhere. Why are we not using that?’ he says. ‘We are looking at using Skype or Google Connect for client meetings. I am not sure yet if it would improve the relationship.’

He is an avid blog writer and was surprised to acquire a new client through that channel. ‘I didn’t think we would make a connection with a client through the blog but about four weeks after we started it, a new client phoned. She asked me about my daughters. We had never met but she felt she knew me from reading the blog.’ He is also a regular Tweeter.

Seeking growth

Daems says the biggest challenge he faces is to grow the firm slowly and steadily through recruitment. ‘There are plenty of IFAs out there but I am struggling with the calibre we are looking for,’ he says.

‘We are aiming to recruit two advisers a year. There needs to be a balance between them bringing their own clients and us providing them with support on how to develop professional relationships and identify niches. We are looking at geographic spread and longer term we plan to have a medium-sized practice.

‘Also, longer term, I plan to move away from the [technical] side. I want to get up every day and do the bits that I love. The analysis and research are not my favourites. I love meeting people and building relationships,’ he says.

‘We are at an early stage in the business and we still have loads of work to do. It will probably be three to five years before I am happy with the work-life balance but I am far better off now than when I was working for a large corporation.’

 

Downtime activities

As well as playing badminton and spending time with his family, including his young daughters, eight-year-old Charlotte and Sophie, who is nearly one, Daems is a keen traveller. ‘I didn’t travel as a kid,’ he says. ‘My first trip away was at 17. But I have the bug now, experiencing new cultures and people. I have been to Sri Lanka, South Africa, Europe and Egypt. Next I am taking my dad to Kuala Lumpur for a week.

‘This year, as Sophie is so young, we went to France for a week and Cornwall for a long weekend, including a visit to the Adrenalin Quarry, which has the longest zip wire in Europe. I try to set myself a challenge once every six months: my next is to climb the outside of the O2.

‘Also this year I did a 15-kilometre run and I’ve signed up for a half-marathon next year. I would like to do a marathon before I am 40.

‘Other than that it’s about making time with the family. When Charlotte was growing up, I was in corporate life and didn’t have the flexibility to see her as much as I wanted to, so now I’m making up for that.’

Five top tips

  • Don’t be afraid to make mistakes, but see them as an opportunity to develop personally and professionally.
  • Define best practice by establishing and documenting all your business systems and processes.
  • Ensure you allocate enough time working on and not in your business.
  • Spend time nuturing the relationships with your clients and professional contacts.
  • Continually look for new ways to learn and develop personally and professionally.

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