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Adviser Profile: Julia Parsons of Kreston Reeves

Adviser Profile: Julia Parsons of Kreston Reeves

Julia Parsons of Kreston Reeves says urgent steps must be taken to increase the number of women in advice and she lambasts the ‘boozy bar culture’ of conferences.

The financial planning profession needs urgent action to address gender pay inequality and the low number of women advisers, says Julia Parsons, director of Kreston Reeves Financial Planning.

New hobbies such as playing golf and punting on the Great Stour in Canterbury, where she lives, give Parsons a new perspective on life, but she also says it is time for a fresh view on adviser pay. She cites an April survey by recruitment consultancy BWD, which found employed male advisers earn 43% more than females; and that only 23% of advisers are female.

JULIA PARSONS CV

  • 2010-present Kreston Reeves Financial Planning, director and company secretary
  • 2010-present Kreston Reeves, partner
  • 2004-2010 Coach House Financial Services, director and company secretary
  • 2001-2004 Coach House Financial Services, financial planning manager, compliance and training manager
  • 1999-2001 Coach House Financial Services, administration
  • 1999 Audata, finance director and company secretary
  • 1983-1999 Halifax, branch manager

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

  • Chartered Financial Planner
  • Associate membership of the PFS
  • Member of the Compliance Register

Time for change

Parsons says she has been sheltered from the pay divide working for 17 years at Kreston Reeves (formerly Coach House Financial Services). Kreston, which has achieved New Model Adviser® Top 100 status for the past three years, treats all its staff fairly.

‘The sector is not making itself attractive enough to the whole potential workforce,’ says Parsons. ‘There aren’t enough women advisers and we are not paid equally. Professions are notoriously bad at this – even the BBC. Kreston Reeves has three out of nine female advisers, which is good but not good enough.’

Regarding the pay gap she says: ‘Even if you come back part time from maternity, you’re still doing the same job. We try not to behave like that in our firm.’

Some suggest one reason is that men tend to negotiate for pay rises harder than women do. Parsons says that may be true, ‘but females expect to be paid fairly, so why should we have to ask? But I don’t think people always discriminate deliberately. So women have a responsibility to push that glass ceiling. It works both ways’.

Parsons also lambasts the macho culture that still exists in financial advice. ‘I see it at conferences and the whole boozy bar culture is horrid, intimidating, and the reason not many women are there,’ she says.

‘Somebody must stop that. New Model Adviser® could change that at its conferences. Rather than say "we are all going to the bar", it could have different activities.’

Ongoing development

David Hurst, managing director of Kreston Reeves Financial Planning, set the firm up in 1989 with the original name Coach House Insurance Consultants. It later created a joint venture with a forerunner of accountancy firm Kreston Reeves, eventually becoming Kreston Reeves Financial Planning and a fully-owned part of the group in 2010.

Hurst hired Parsons as an administrator in 1999 and through much hard work she developed her career to become an adviser and then one of its six directors. Parsons says another reason for the firm’s three Top 100 accolades is its emphasis on training. Kreston Reeves is a top 25 accountancy firm and routinely reinvests 25% of annual profits to support its ambitious growth strategy. Parsons says much of the financial planning arm’s share of that goes into IT, training and recruitment, including onto the firm’s graduate scheme.

FEES

Kreston Reeves’ initial charges range from 0% to 3%. It also offers fixed fees based on hourly rates of up to £250 an hour. The ongoing fee is 0.9% for those who use Kreston’s model portfolios; or 0.75% for those in multi-manager funds.

‘We used to charge 0.5% but do much more for clients these days, such as running an investment committee and operating internally many of the client functions that would have previously been run by product providers,’ says Parsons.

The firm has three service levels. Most top-level clients receive quarterly review meetings, full access to advisers, invitations to events such as seminars, and budget briefings. Middle-level clients get two meetings a year plus access by email or telephone. Lower-tier clients receive annual meetings and valuations.

Parsons says the firm does not calculate how much it costs to provide the ongoing service on average. It currently makes £963 recurring income per active client.

Soft skills

Kreston Reeves Financial Planning achieved chartered status in 2009 and all advisers are either chartered or working towards it. But Parsons says soft skills are equally important, and all staff also take Institute of Learning Management (ILM) exams in areas such as managing people and coaching.

A graduate scheme has been running for 10 years and has so far taken on seven recruits. It is structured to enable a seamless transition of clients to graduates as older advisers retire. The ILM soft skills are crucial in that, says Parsons.

The firm is also committed to involvement in community work, charities and financial education in schools. Parsons, who is a magistrate and has been a school governor, says: ‘We encourage people to do things like this outside work as it gives them a different perspective.’

Compliance challenge

Parsons chairs the investment committee at Kreston Reeves Financial Planning and is head of risk, handling areas such as administration, training and compliance. She says regular changes from UK and European regulators have become the norm. So she is taking the revised Mifid II – one of the biggest current rule shake-ups – in her stride.

‘The most onerous Mifid requirement for us is recording all our phone calls and meetings – that is a major change,’ she says. ‘But our systems are prepared and will be ready [when Mifid comes into force in January]. We regard anything such as Mifid, that makes the industry more professional and accountable, as an opportunity.’

Another current project is to implement a client portal in response to client requests. ‘Cybersecurity is a big issue, so we are taking our time,’ says Parsons. ‘Some terms and conditions in portals are scary in the access they allow to financial data from other providers, for example, so we need to ask clients whether they want that.’

The firm’s biggest recent transition was to merge with previous New Model Adviser® cover star firm Spofforths, a Sussex-based company with £40 million under advice, last year.

Spofforths managing director and only adviser Philip Wise left soon after the merger, posing a significant challenge for Parsons and her colleagues.

‘It wasn’t a problem,’ she says. ‘There are always challenges with mergers because they create so much change. Philip is a nice guy and we wish him well. But his number two Kim Williams stepped up and did the job with our support. We are now pushing for growth and looking for more advisers in Sussex.’

Wealth preservation key as ISR helps Kreston keep clients in control

Kreston Reeves clients with less than around £100,000 are invested into multi-manager funds such as Standard Life MyFolio. The firm also set up model portfolios three years ago,

‘Most of our clients are retired, have inherited wealth or made money, so we are mainly wealth preservers,’ says Parsons. ‘We wanted to provide something that we could control.’

Kreston Reeves’ investment committee sets the parameters in factors such as volatility bands and cost; and uses Independent Strategic Research (ISR) to help set asset allocation and choose funds.

‘ISR monitors and tracks investments much better than we can,’ she says. ‘They have a different way of looking at portfolios, which is to use a core, defensive element and a satellite, for growth. The core part of the portfolio is benchmarked against the Retail Prices Index and satellite against the FTSE world equity index. We also have bespoke portfolios, for those with ethical needs.’

We have used a different benchmark for the purposes of illustrating performance in the chart.

Kreston’s Balanced portfolio includes funds such as L&G Global Technology Index and Henderson European Absolute Return, managed by Citywire + rated John Bennett.

Parsons says Kreston has favoured absolute return funds over fixed income for some time in its core part; with equities as satellites.

She accepts absolute return funds can also be controversial. ‘You have to be careful about what’s in them and there are some we wouldn’t touch,’ she says. ‘It is vital to have a large firm such as ISR doing our due diligence.’

Kreston Reeves also uses discretionary fund managers where clients have particular needs such as holding direct equities.

Talent spotting

Mergers aside, Kreston Reeves has grown steadily through referrals from the accountancy firm and existing clients. It also has several solicitor connections and an adviser accredited with the Society of Later Life Advisers, Paul Howson. He has built a niche that the firm wants to build on by recruiting another adviser, adds Parsons.

Kreston Reeves Financial Planning has around 3,400 total clients – including those that have received a transactional service and group scheme members – and 2,200 active members (see chart below). Its 2017 profit figures of £1.6 million total (54% of turnover) and £60,000 per employee are all strong for a firm of its size. ‘As we still only have a full-time presence in three of the group’s 10 locations – in London, Horsham and Canterbury – we are positive for growth [into those offices],’ says Parsons.

‘I recently created more infrastructure with a central operations team of four covering IT, due diligence, investment committee, administration, training and accounts. We are still looking for new talent. That is our biggest headache, which is why we grow our own.’

Greater cohesion

The group is trialling a new customer relationship management system, which Parsons says is part of a plan to boost integration with Kreston Reeves’ accountancy and legal teams.

‘We are creating a single wealth management proposition spanning all three seamlessly, so wealth management clients will not notice the difference between the departments,’ she says.

The partners of the wider group own the shares of the financial planning arm and all the financial planning arm’s directors are also partners in the group. Directors receive a management salary plus profit share. Advisers receive a basic salary with a bonus based on the firm’s balanced scorecard, including compliance, treating customers fairly, marketing and income measures.

In 2015, Kreston Reeves Financial Planning paid a dividend of nearly £800,000 – this rose abnormally to £1.7 million in 2016 due to a pre-merger dividend and tax changes, skewing the picture for last year, says Parsons.

Parsons says one thing that should make financial planning attractive to women is the flexibility of the role. However, the hours can still be long. ‘I’ve never had that work-life balance as I have always been trying to progress my career,’ he says. ‘But it hasn’t stopped me having a good life, doing other things and seeing life through new perspectives.’

FIVE TOP TIPS

  1. Look at the big picture and listen carefully to each client and colleague.
  2. Look ahead and help clients plan for the future. Embrace change and think innovatively.
  3. Tailor solutions to each client.
  4. Be crystal clear so clients and colleagues know what is going on.
  5. Be human. Enjoy helping clients and each other succeed and making a positive impact.

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