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Adviser profile: David Philips and Steve Bennett of Wealth Design

David Philips and Steve Bennett want to cultivate a unique brand at Wealth Design, with a fresh approach to marketing, fees and acquisition

The CVs (pt.1)

DAVID PHILIPS CV

2014–present: Wealth Design, director

2010–2014: JLT Wealth Management, adviser

2008–2010: Merrill Lynch International Bank, first vice president

2004–2008: BDO Stoy Hayward Investment Management, head of pensions and corporate benefits

2001–2004: Ernest R Shaw Financial Management, managing director

1998–2001: Alexander Forbes Financial Services, director

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

Diploma in Financial Planning

PMI Pension Trustee Certificate

Regional chairman of Personal Finance Society Staffordshire & Shropshire (14 years)

The CVs (pt.1)

DAVID PHILIPS CV

2014–present: Wealth Design, director

2010–2014: JLT Wealth Management, adviser

2008–2010: Merrill Lynch International Bank, first vice president

2004–2008: BDO Stoy Hayward Investment Management, head of pensions and corporate benefits

2001–2004: Ernest R Shaw Financial Management, managing director

1998–2001: Alexander Forbes Financial Services, director

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

Diploma in Financial Planning

PMI Pension Trustee Certificate

Regional chairman of Personal Finance Society Staffordshire & Shropshire (14 years)

The CVs (pt.2)

STEVE BENNETT CV

2014–present: Wealth Design, founder and director

2013–2014: Self-employed IFA

2008–2013: Royal Bank of Scotland Group Independent Financial Services, IFA

2005–2008: HSBC, IFA

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

Diploma in Financial Planning

Award in Long-Term Care Insurance

Love at first sight

'Our eyes met across a crowded office and that was it, love at first sight.' David Philips teases fellow Wealth Design director Steve Bennett across a table in the firm’s Cannock offices.

'I do think it was fate that brought us together,' Bennett concedes. 'We have the same ethics and vision. We want the same things.'

Whether or not it was fate, Philips and Bennett were brought together four years ago. One afternoon at Bennett’s home they plotted the leap into running their own business. Wealth Design was born.

The firm, which specialises in pension work, has added senior adviser Chris O’Meara, who specialises in serious injury and court of protection cases. It appears to be going from strength to strength. It aims to have £155 million funds under advice by the end of this year.

Why Cannock? The pair say it was as simple as finding the mid-point between their two homes: Bennett in Telford and Philips near Lichfield. Location is not hugely important to the business as both advisers have clients from across the UK rather than locally. 

The firm is not a 'walk in off the high street' IFA, says Bennett. It receives most of its business through referrals.

Top quote:

'Our eyes met across a crowded office and that was it, love at first sight.’ 

The right image

But Cannock, and the nearby Cannock Chase forest where this photoshoot took place, do add to the firm’s branding image. The pair have been curating this with the help of Hannah Price from Mischievous Marketing.

Philips says they wanted a different image from the 'copy of the Financial Times, pair of spectacles, calculator and a Montblanc pen'. This explains the green palette and nature imagery on the firm’s website, app and other marketing material. ‘We’re creating a fresh and approachable environment,’ Bennett adds.

As well as being different in look, Philips and Bennett wanted to be different in ideology. The first thing they did when starting out in 2014 was to publish their fee structure on their website and in their client agreement.

'We wanted to be transparent, which is also important to the regulator,' Philips says. 'We didn’t set out to be different just for the sake of it but that was our first big move and has been a winner for developing relationships with professionals and clients.'

A typical client has around £400,000 to invest and is a mid-50s pre-retiree. Most of the firm’s business is pension related.

'I have quite a passionate view about this word "retirement",' Philips says. 'It isn’t what it used to be: everybody gathered in the boardroom with a vol-au-vent and a glass of sherry and we wish you well, keep in touch, bye bye.

'The majority of my clients are positioning themselves to slow down, not stop. So we’re in a great profession at a time of significant change in that regard.'

Philips and Bennett do not see themselves slowing down any time soon, however. Although they are thinking about succession.

Trainee financial planner Kiran Mann joined the firm on day one as an administrator and is now training to become a qualified adviser. Scott Flemings heads up Hunter & Co (IFA), a firm Philips and Bennett bought in 2016, but which has not been absorbed into Wealth Design. The plan is for Flemings to become a shareholder and buy into the main Wealth Design group.

Top quote:

'I have quite a passionate view about this word "retirement",' Philips says. 'It isn’t what it used to be: everybody gathered in the boardroom with a vol-au-vent and a glass of sherry and we wish you well, keep in touch, bye bye.'

Accidental acquisition

Bennett calls the acquisition of Hunter & Co (IFA) a 'sheer accident'. A friend of Philips had called to say the firm was for sale because its managing director, Robin Hunter, was retiring. A larger IFA firm had offered to buy Hunter’s client bank but not the business’s shares.

Philips and Bennett went for a coffee with Hunter. Bennett later called Hunter to say they would consider buying the shares and paying three times Hunter’s ongoing remuneration.

''Brilliant,' Hunter said, 'let’s move forward.' 'So I called David up in a panic,' Bennett says, 'I said, "crumbs, I think we’ve gone and bought an IFA firm".'

The acquisition was a bold move, 12 months into Wealth Design’s first trading year, and neither they nor Hunter had bought or sold a business before. Keeping the Hunter & Co (IFA) branding, office and staff was another unusual decision.

Were there liability risks? 'We didn’t want to scare off Robin’s clients,' Philips says. 'We’ve only lost one client, due to geographical reasons, since acquisition.'

Bennett adds: 'We approached the regulator for the permissions and it asked why we weren’t closing the company down and putting the clients into Wealth Design. We said: "Isn’t this the better way?"'

The pair have made some changes to Hunter & Co (IFA), however. They have introduced clients to discretionary fund managers (Hunter had previously picked funds himself) and brought in new technology.

Wealth Design has used Client Assyst for the back office pretty much from day one, first because it was affordable, and now because they like it.

Mifid II means Philips and Bennett are thinking about what they will do with lower value clients. Bennett says Mifid II will require firms to carry out more client reviews, ‘and if suddenly a client becomes non-profitable and then you’ve got a decision to make.’

But the pair claim Mifid II could push the profession towards more progressive fee structures. This reflects their attitude towards regulation: see the positives, try to learn and be willing to adapt.

The pair are rethinking how their jobs are defined.

'Steve tends to do the tech bit and the financial bit, although we never sat down and divided up roles,' Philips says. 'I don’t do a lot really.'

'No you don’t,' Bennett jokes. 'But you make a nice cup of coffee.’'

Top quote:

'We approached the regulator for the permissions and it asked why we weren’t closing the company down and putting the clients into Wealth Design. We said: "Isn’t this the better way?"'

The fee bit...

The first meeting is free for potential clients. To create a report, the firm then charges £750, which is offset against implementation fees, should the client choose to go ahead.

Implementation is then 3% on the first £100,000 and 1.5% thereafter, up to a maximum fee of £16,000.

The ongoing fee is a maximum of 1%, but is usually around 0.5%. There are two levels of service, standard and enhanced, with the standard service usually nearer the 0.5% mark and enhanced usually higher.

Final salary pension transfer work is charged at a minimum of £4,500. Bennett admits this prices some clients out of this service.

'I think [our firm’s] fee structure puts off those with small final salary pots if I’m honest,' says Bennett. 'We have done this purposefully to price ourselves out of that marketplace.

'Defined benefit transfers is going to be the next PPI scandal, there’s no two ways about it.'

The pair do not believe in contingent charging, where the client only pays for the review if they decide to go ahead with the transfer. 

Philips adds: 'Realistically if we don’t do a transfer for a client, someone else will. And that doesn’t do the profession any good.

'The British Steel debacle really highlighted that. It saddens me but that’s life.'

Top quote:

'Defined benefit transfers is going to be the next PPI scandal, there’s no two ways about it.'

The investment bit...

Philips and Bennett have always worked with discretionary fund managers (DFMs) and say they are planners, not stock pickers. Bennett says they use DFMs not to outperform other options but to derisk.

They use several: Cazenove, Brooks Macdonald, Rathbones, Quilter Cheviot and Charles Stanley.

They have chosen these through a mixture of good relationships and performance. 'I can’t stress enough the importance of relationships,' Philips says.

'There is so much performance data out there, and they’re all saying they’re having meetings with fund managers. For me it comes down to how they’ve managed the data and produced results, then the relationship I think they’ll have with the client.'

But Philips and Bennett believe, with DFM charges, they are not cost effective, and in fact prohibitive, for lower value clients (those with less than £250,000). So they also use model portfolios from FE Analytics.

They use the Hybrid range (as opposed to FE’s active and passive ranges), which has 15 portfolios: risk graded from one to five, with long, short and medium in each. The funds in the FE Hybrid 3L portfolio can be seen in the table (right).

Most clients use 2L or 3L, Philips says, which is cautious to moderate. This is because many pre-retirement clients do not need the money, and need a longer return by nature. 

By definition, the hybrid range uses a mixture of active and passive. But Philips says the firm does believe in active management, evidenced by the use of DFMs.

They are wary of how volatility affects passives, citing the performance of the FTSE 100 at the start of the year, which fell almost 10% at one stage. 'You’re just tracking that loss,' Philips says.

Top quote:

'I can’t stress enough the importance of relationships.'

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