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Adviser Profile: Helen Howcroft of Equanimity IFA

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Adviser Profile: Helen Howcroft of Equanimity IFA

Helen Howcroft says going solo at Equanimity IFA was a huge learning curve. But possessing a strong work ethic and having overcome an acrimonious divorce, she is perfectly placed to advise her client bank.

This year Helen Howcroft has been to see Neil Diamond, Rag’n’Bone Man, Phil Collins, Elbow, Elton John, Blondie. She also took her two young sons to see The Killers in Hyde Park.

She is as comfortable in the dingy surroundings of live music venue Slim Jim’s in Angel, North London (pictured) as she is suited and booted around the corner in her office. Not to mention as chauffeur on the school run, tour guide on holidays around the world and caring granddaughter back home on the family farm in South West Wales.

HELEN HOWCROFT CV

  • 2004–present Equanimity IFA, managing director
  • 2002–2004 Scottish Equitable/Aegon, senior broker consultant
  • 2001–2002 Norwich Union, broker consultant
  • 1998–2001 Scottish Amicable/Prudential, pension broker consultant
  • 1997–1998 NPI, trainee broker consultant
  • 1996–1997 Legal & General, telephone health adviser
  • 1993–1996 HLW Insurance Broker, administrator

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

  • G60, K10, K20, R08, MAQ, CF8, ER1, AF5, J02, JO1, FPC
  • Member of the Personal Finance Society
  • Member of the Chartered Institute for Securities & Investment

 

Counting sheep

It may seem there are not enough hours in the day for Equanimity IFA’s managing director to run her business as sole adviser, take her boys swimming and have dinner with friends. But her extraordinary work ethic was drummed into her at an early age.

Both of Howcroft’s parents died when she was very young. Her father died of multiple sclerosis when he was just 29 years old, and her mother died of cancer at just 35. At the age of 10, Howcroft and her brother went to live with their grandparents in South West Wales.

‘Much of your childhood shapes who you are and my grandfather was phenomenal at planning for the future,’ Howcroft says.

On one occasion, when Howcroft was 13, her grandfather refused to let her go on a school ski trip. Instead, he used the money to buy Howcroft a Texel sheep, which the family used to breed. ‘I used to go to the sales with my grandfather and I always had an eye for picking out good lambs,’ Howcroft says.

She kept the lamb over the winter and sold it for a profit the next year. Her grandfather then invested the money for her. This was Howcroft’s first lesson in saving. ‘At the time I was very unhappy of course,’ she says. ‘It was really unfair that I wasn’t allowed to go on the ski trip but I’m sure he did it for the right reasons.’

FEES

Equanimity was fee-based prior to the retail distribution review but it has since changed its structure. It used to charge 3% initial and 0.5% ongoing. ‘We used to keep really accurate timesheets to work out what we should be charging,’ says Howcroft. ‘These showed we were charging too much up front and not enough ongoing.’

Those fees have been cut, and the firm now charges a 1% initial and implementation fee and 1% ongoing. The ongoing fee is then reduced as clients obtain more than £1 million assets under advice. It is reduced further for more than £2 million. ‘I find it really difficult to justify ongoing advice fees of more than £10,000 per year,’ says Howcroft. ‘It doesn’t sit comfortably with me.’

There is a fixed fee for financial plans, which is generally £3,000 to £5,000 for three 90-minute meetings, depending on the complexity of the work required. This is then deducted from the implementation fee if a client decides to go ahead with the plan.

For this clients typically receive two financial planning meetings a year, with contact in between if necessary. In October there will typically be a meeting to discuss the cashflow modelling plan with clients, which looks at the bigger picture. The second meeting is at the end of the tax year. Clients also receive newsletters every two months with updates, such as news from the Budget.

She has done transactional work for a few clients but Howcroft says she tends not to take this sort of client on. Transactional work is largely limited to divorce clients, because she finds the work rewarding.

Dedication and diligence

Grandad’s next lesson was refusing to fund Howcroft through university. So she funded herself, working for the police for a year before taking up her studies. She also worked at a restaurant and insurance brokers while studying for a degree in computing.

Two days after graduating, she joined Legal & General as a health adviser. ‘I had to look after myself and I’ve worked hard from then on,’ she says. This led to a job at NPI in Bristol where Howcroft gained technical pensions knowledge. She then moved to London and Scottish Amicable (now Prudential), followed by Scottish Equitable (now Aegon).

She looks back on her days at Prudential with fondness. ‘We were a proper team,’ Howcroft says. ‘I was the only female among a team of male consultants but we looked after each other. It was a work hard, play hard kind of environment.’

Equanimity utilises FE’s expertise to ensure clients enjoy a smooth ride

Equanimity outsources to FE model portfolios, using these as the default for most client money. Until the start of last year, it was running everything in-house, using eValue for asset allocation and FE for research.

Howcroft says the reason for the switch was because she was acquiring a lot of funds under management and felt her focus should be on advice. ‘The investment industry has moved on so much over the past 10 to 15 years,’ she says. ‘So a specialist is much better placed to make investment decisions.

‘We are not investment managers, we’re not economists and we’re not analysts. We do not understand what goes on under the bonnet of the funds we invest our client money into. Yes, we go and listen to the managers talk. But we do not have opportunities to interview them day in, day out, to truly understand what they are doing with the fund and what they are trying to achieve. So how can we achieve the best thing for our clients?’

FE has 15 different portfolios: one to five on a risk scale, and short, medium and long-term options within each. Clients complete a risk questionnaire with a capacity for loss section at the back that Howcroft fills out. She stresses this is just a starting point for determining how client money should be invested.

She says she chose FE because it has a good track record during the bad times as well as the good. She likes funds that minimise the downside when the stock markets tank. ‘Clients generally prefer a smoother ride where they might not necessarily grow as much during the growth period but equally they aren’t going to fall as much during those down times.’

Equanimity also has some ethical clients for which it provides in-house research. It is also looking at working with other model portfolio services for assets over £1 million to provide diversification.

It also has some clients invested in passive funds. ‘It would be a shame if no-one brings out a proper passive model portfolio. It’s a shame Vanguard won’t do that,’ Howcroft says. Her preference is for active. She says anyone who benefits from an active portfolio being updated regularly, will see active portfolios outperform passive.

However, over time, if these are not managed regularly, passive will outperform active, says Howcroft.

Women in finance

Perhaps it was this kind of environment that means Howcroft can give as good as she gets. She believes other female advisers should do the same. ‘I don’t think you can be a shrinking violet to survive in this industry,’ she says.

Saying this, Howcroft, often quoted in New Model Adviser® articles about women in advice, is critical of the lack of diversity in the profession. She believes more diversity would create a better public perception of the advice profession. ‘More female role models should be publicised,’ she says.

Howcroft operates flexi-time at Equanimity and believes advice is very well suited to working mothers, as there is more opportunity to set appropriate working hours. Basic financial education in school could go some way to levelling the playing field, empowering female clients and encouraging women to become advisers. Howcroft says many women occupying the traditional roles in the home are often scared of their finances.

Going it alone

In 2004 Howcroft set up Equanimity, receiving direct authorisation from the Financial Conduct Authority in early 2005. She had no clients and no office, working out of her living room and networking furiously.

‘It’s a huge learning curve. Setting up your own business, learning to properly be an adviser and developing a client bank, and then going off to have kids, all at the same time,’ she says.

Her clients now are largely self-made entrepreneurs, who have either sold several businesses or worked hard building one up, and have more than £1 million to invest. The firm has increased turnover and profits over the past 12 months partly due to taking on wealthier clients and partly because of auto-enrolment.

‘But I quite happily work with entrepreneurs who are within two or three years of having started a business. They have good levels of cashflow and are making surplus profits of £200,000 to £300,000 a year,’ she says.

Howcroft says she can relate to these clients, who work long hours and have created their own wealth, as her family did. She can now also relate to the other side of the work she does: divorcees.

Dealing with divorce

As part of her divorce work, Howcroft works with accountants, solicitors and barristers, providing cashflow modelling for clients and distilling the barrage of information from solicitors. Incidentally, professional connections such as these now make up nearly all of the enquiries and referrals to Equanimity. But she now further understands the precarious position divorcing clients find themselves in, having recently gone through the process herself.

‘To say my divorce was incredibly acrimonious is the understatement of the century,’ Howcroft says. ‘My opening line to clients now is very different to what it was five years ago before going through a divorce myself.’

This helps her in the pensions training she conducts for divorce lawyers across the country, for which she is paid, and the mentoring she runs for business owners, for which she is not.

Looking forward

The team at Equanimity is now eight strong, with Howcroft supported by four paraplanners, two administrators and an office manager. Some paraplanning work is also outsourced to Para-Sols. Howcroft hopes to train up two more advisers from within the firm in the next two years, and reduce her personal client bank to 65.

She hopes this might feed into succession plans at some point as she is reluctant to sell to an external firm. But this is a long way off.

‘I have no intention of going anywhere any time soon. Having put a few very difficult years behind me, I am looking forward to seeing what the next 10 years will bring.’

FIVE TOP TIPS

  1. Do not underestimate the amount of time and effort it will take to establish a business.
  2. Treat your staff as you would want to be treated yourself. They are far more likely to be loyal and will treat your customers well.
  3. Surround yourself with trusted business professionals and associates. You can pick up so many good ideas by surrounding yourself with people at the top of their game.
  4. Listen to the advice of people who are more experienced than you.
  5. Always plan for the worst and keep sufficient business reserves. It will minimise any kneejerk reactions.

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