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Adviser profile: John Hamilton-Hunt of Punter Southall Financial Management

John Hamilton-Hunt has presided over rapid expansion at Punter Southall Financial Management and is determined to prepare the firm for whatever the future holds

John's CV:

2011–present: Punter Southall Financial Management, managing director

2003–2011: Punter Southall Financial Management, operations director

1987–2003: Ridgefield Financial Services, director

1984–1987: FPS Management, consultant and sales team leader

1979–1984: Barclays Bank, securities clerk

 

John's CV:

2011–present: Punter Southall Financial Management, managing director

2003–2011: Punter Southall Financial Management, operations director

1987–2003: Ridgefield Financial Services, director

1984–1987: FPS Management, consultant and sales team leader

1979–1984: Barclays Bank, securities clerk

 

 

No time to celebrate

Punter Southall Financial Management (PSFM) passed £2 billion in funds under advice last year. But managing director John Hamilton-Hunt says there has been no time to celebrate.

One of the largest firms to make New Model Adviser®’s Top 100 list in 2017, PSFM has been upgrading its technology and overseeing a comprehensive rebrand.

The latter will be the culmination of an 18-month project. 'We believe in traditional financial planning but we also want to modernise,' says Hamilton-Hunt, who is based in the firm’s London office. 'We need to listen to clients and use the latest technology to deliver services more efficiently.'

The firm continues to grow and is currently adding £300 million assets a year. A major part of the rebrand project was looking at how that growth has affected the firm and whether it has adapted sufficiently to its size and to market needs.

'We did this by engaging with the Punter Southall Group, staff and clients,' says Hamilton-Hunt. 'The feedback was we have evolved to suit the current marketplace, but we need to align our brand to that.'

He says the firm had become siloed in its five offices, in London, Guildford, Birmingham, Newcastle and Edinburgh. 'We realised we needed to get a consistent message to all clients,' he says. 'We will also be ramping up our social media. In 2016, we hired senior marketing manager Lisa Sergent who has been getting us some good traction there. We will also look to develop our channels through professional introducers.'

Scaling up

Punter Southall Group began as an actuarial business around 30 years ago. It has grown to become a major wealth management, workplace savings, pensions and benefits, and financial data business. In 1999, it bought a small IFA firm, Robarth Securities, based in south-west London, and turned it into PSFM.

Executives from Punter Southall’s corporate clients often need help with their personal finances, so these referrals have supported rapid organic growth at PSFM over the past 18 years.

Hamilton-Hunt founded Ridgefield Financial Services, which he ran for 16 years, but it went into voluntary liquidation in January 2003. PSFM recruited staff from that business, including Hamilton-Hunt, and bought Ridgefield’s business assets from the liquidator, which included access to clients.

The Financial Services Compensation Scheme (FSCS) says it upheld a number of claims against the firm, spanning a range of products and declared the firm in default in August 2004. The first claim triggered the declaration.

Hamilton-Hunt says the voluntary liquidation was because professional indemnity insurance payments had rocketed as a general result of the pensions mis-selling review at that time. He says he is not aware of any issues at the company nor claims against it.

Any liabilities remained with the liquidator and the FSCS to deal with. Punter Southall did not deal with any claims, he adds.

Hamilton-Hunt says: 'When the business was wrapped up, it was done with the full knowledge of the regulator. There were no liabilities at that time, so there was no question of taking over liabilities. Anything that happened after that was the responsibility of the liquidator.'

Hamilton-Hunt joined PSFM as operations director and quickly put all the troubles of running a smaller firm behind him. He flourished in his new large-scale home.

Among other things, he was pivotal in the success of three acquisitions between 2005 and 2009. In 2011, he became managing director of PSFM and its Sipp administration business PSFM Sipp.

PSFM is a subsidiary of Punter Southall Group, which also owns Psigma Investment Management. Psigma is one of 12 discretionary fund managers (DFMs) PSFM uses.

Hamilton-Hunt says there are no conflicts of interest with either the Sipp business or Psigma, as PSFM is fully independent and has strict policies for avoiding any conflicts. 'The Sipp business works well alongside the financial planning,' he says. 'Many clients like having a financial planning adviser who has a close connection with their Sipp administrator and/or their investment manager.'

On the investment side, PSFM uses Asset Risk Consultants (ARC) to set its DFM panel as an entirely outsourced process to ensure independence. 'We are not involved in that selection process and the criteria is all set by ARC,' says Hamilton-Hunt.

'Psigma is on ARC’s panel of 12 firms. Clients are made fully aware of the relationships before they engage them.'

Making progress

Since taking over as managing director, Hamilton-Hunt has focused on staff retention and training. He says this is crucial for any company experiencing fast growth.

The firm became chartered in 2008 and 14 of its 27 registered individuals are chartered. Four are Personal Finance Society (PFS) fellows and one, Richard Libberton, based in PSFM’s Edinburgh office, is a chartered champion.

'We have a comprehensive training plan for each employee, mapping out how they can progress in whichever route they want,' says Hamilton-Hunt.

'Recruiting externally is a challenge, especially for paraplanners. But we are happy to train and develop people.'

The firm also plans to start an apprenticeship programme this year. 'That will allow us to look at a range of talents, including non-graduates,' he says.

All staff are employed on salary and bonuses based on overall firm profits, not individual production. The group is 100% owned by staff and employees, with a variety of share schemes available.

'We also have lots of internal communications and a staff conference with team building, to help share ideas across our five offices,' says Hamilton-Hunt. 'We contribute to charitable causes that our staff choose. All these things help ensure staff feel part of something worthwhile.'

More recently Hamilton-Hunt’s focus has been on technological developments. PSFM uses two cashflow modelling tools: Voyant for more complex cases, and a simpler in-house tool. 'Some clients just want a sense check and do not need a highly detailed tool,' he says. 'Voyant requires considerable time, input and technical capabilities.'

The firm implemented a new back-office system, Xplan, in 2016. 'It also has cashflow planning and we are developing that to benefit from efficiencies by drawing off data already in the system,' says Hamilton-Hunt.

PSFM’s profit grew from £900,000 (11% of revenue) in 2015 to £2.3 million (23%) last year. This is supported by an ongoing client bank of more than 3,700 clients with £540,000 to invest on average.

'Our main distribution channels now are: referrals from our sister companies; existing clients; and around 100 professional connections, with which our planners all have individual relationships,' says Hamilton-Hunt.

The firm also has a strong profitability per staff member of £29,000, though this is projected to reduce to £22,000 this year. Profit margin is also set to fall to 18%.

'Profit was too high in 2017,' says Hamilton-Hunt. 'We were still underspending, particularly in technology. But we have rectified that this year, for example, in upgrading staff desktops and our website as part of the rebrand.'

Sharing the secret

PSFM has rolling five-year plans projecting continued growth at 10% a year, with 20% margins.

'There is consolidation and the number of financial planning firms will reduce,' says Hamilton-Hunt. 'But firms that can grow will benefit. In the longer term, there is no limit for a quality financial planning company. I see no reason to slow down.'

He has no plans to retire. ‘There is still much for me to do here. But we are bringing many great individuals through the business who will take on greater responsibility and leadership. That would be my best legacy.'

Hamilton-Hunt says the hours can be long. But he has sufficient time outside work to spend with his wife, two teenage sons, and Fulham FC, where he and the boys have season tickets.

Reflecting on his time at PSFM, he says: 'Having run my own business for 16 years, coming here was a challenge. But it suited me and gave me flexibility to develop. They were looking for like-minded entrepreneurs and still are.'

He says he is energised by the people he works with. 'It gives me tremendous joy to help clients and our success demonstrates if you treat them well, you will get the rewards. I am lucky and thrilled to be surrounded with such talented staff.'

On achieving £2 billion under advice, he says: 'It is amazing what you can do when you focus your mind. PSFM has been a best-kept secret, but we are doing something about that now. The party will come later.'

The fee bit

PSFM has developed two service levels over the past 18 months.

'We looked at our client bank and found some clients are happy with a fully bespoke service, while others prefer something more streamlined,' says Hamilton-Hunt. 'We have identified those clients and developed a simpler, "primary" service in addition to the existing bespoke one.'

The charges for bespoke or primary services are the same. Clients in both service levels receive at least one annual review or more if they need or request it. They also receive quarterly newsletters and other communications.

The bespoke service is with a dedicated adviser, but the primary is with a team. 'It could be a more junior adviser, depending on their needs,' says Hamilton-Hunt. 'It makes more use of digital communications and reviews are more likely to be over telephone and email.'

Initial advice fees are fixed depending on complexity, with a minimum of £1,500. Implementation is not offset and between 0.5% and 2%. Ongoing clients pay a 0.5% advice fee if they are invested with a DFM. A typical DFM’s charge would be 0.75%.

Those in advised investments pay 1% up to £500,000 and 0.75% thereafter if PSFM manages the asset allocation. Another option is to use multi-asset funds, for which those charges reduce by 0.25%.

The charges are calculated according to average case times, based on adviser fees of £150 to £250 per hour, paraplanners at £125, and administrators at £75.

The investment bit

PSFM believes there are opportunities for active managers, and prefers clients use DFM route

Around 90% of PSFM clients have a DFM. The remaining 10% have an advised portfolio or a multi-asset fund, on a platform.

'We prefer clients to be discretionary and are trying to avoid advisory portfolios, which require more work, for example in rebalancing,' says Hamilton-Hunt. 'We prefer to outsource because we are not investment managers. We are financial planners and we would like to concentrate on that.'

For non-discretionary clients, the firm uses Morningstar to research funds and create a panel.

A top fund in the MPS Balanced portfolio is Macquarie Asian All Stars, which Hamilton-Hunt says captures the long-term growth dynamics the region offers.

Currently, 90% of assets are managed actively. Hamilton-Hunt says: 'The investment environment has moved away from the global market rally. This opens up opportunities that are more conducive to active portfolios.'

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