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Adviser Profile: Mike Carpenter and Steve Rees of Carpenter Rees

Adviser Profile: Mike Carpenter and Steve Rees of Carpenter Rees

Having bought back the firm they sold in 2004, Mike Carpenter (pictured left) and Steve Rees are investing their energies into building up Carpenter Rees’s brand and adding auto-enrolment advice to its specialist offerings.

Mike Carpenter and Steve Rees, directors of Carpenter Rees, are putting all their energies into their business, having sold it in 2004 and bought it back again in January this year. Since they founded the firm in 1997, they have grown it on the back of a range of specialisms. Having learnt many lessons, they now feel invigorated by having regained control and are creating a comprehensive marketing strategy aimed at increasing the focus on these niche services and exploring another in auto-enrolment advice.

Carpenter Rees is based in Southmoor House, an historic art deco office block in Wythenshawe, near Manchester.

Soon after founding the firm, Carpenter and Rees took on a third director, Steve Jackson, and changed the name to Carpenter Rees Jackson. In 2004 they received an offer from CBG Group.

‘It was a great idea at the time,’ says Rees. CBG’s strategy was to buy financial businesses, consolidate, then sell the business on.

Regret after sale

Rees, who sat on the CBG board, says: ‘With hindsight, selling was not the best thing to have done. CBG Group purchased a number of companies in the run up to 2008 and then the credit crisis hit, which changed the market for consolidation of both insurance and financial services.’

CBG Carpenter Rees Jackson, as it was called, became the financial services element of CBG and the financial advice elements of any acquisitions were merged into it.

‘The biggest problem was that Carpenter Rees Jackson generated annual income, but CBG bought all these financial service firms with transactional models,’ says Rees.

Carpenter says: ‘It’s slightly different for Steve [Rees] as he sat on the board. For CBG, the purchases were made for good reasons at the time. But if we hadn’t sold it, Carpenter Rees Jackson would have grown at a different rate with a different philosophy.

‘The key element of the business was its independence, its brand and the quality of its service. During the CBG period, the purchases the firm made were not designed to benefit Carpenter Rees Jackson. We wouldn’t have done them if we were on our own, even if we had the money, and we certainly wouldn’t have done them at the price they were done at.’

Steve Rees CV


  • 1996-present Carpenter Rees, director
  • 1994-1996 King Street Financial Services, director
  • 1993-1994 Bankhall, financial adviser
  • 1984-1993 Hornbuckle Mitchell, director
  • 1982-1984 Hornbuckle Mitchell, administrator
  • 1979-1982 Pointon York, administrator



Chalk and cheese

Carpenter and Rees get on well even though they say they are like chalk and cheese.

‘The benefit is that we have different skills and different ways of looking at things,’ says Rees. ‘We can discuss and disagree, sometimes quite heatedly, but in the end come to agreement. On the way, we manage to support each other and correct each other.

‘I am the more volatile one, and I have to get things off my chest, whereas Mike is more reasonable.’

Carpenter says: ‘But Steve is more considered about processes, whereas I will tend to fire things off.’

Rees concludes: ‘We have managed to survive this far though.’

Taking back the helm

In 2011, Rees and Carpenter realised they would have to make a change when CBG sold the business to insurance brokers Giles Group, which did not want to keep the financial services element.

‘We were part of Giles Group from August 2011 to January. As I was on the board of CBG, we knew that one way or another we would be able to get out of the PLC,’ says Rees. ‘The deal we negotiated was a good one for both sides, so it was quite enjoyable even though negotiations went on from October to the end of January.

‘We had looked at the option of leaving and starting up again, but didn’t like that because we had built this business up and we have good staff. We could see how the business could develop once we got rid of all that PLC stuff.’

Carpenter says: ‘In hindsight [being in a PLC] did have a negative affect. Up to 2007, it was a great deal, because the acquisitions the group had been making and the way the market perceived the group meant the share price was continuously rising. After 2008, it went cataclysmically downhill.’

Rees adds: ‘It was a good experience to go through, but we will never get involved with a PLC again. You work harder for very little reward.’

Mike Carpenter CV


  • 1996-present Carpenter Rees, director
  • 1986-1996 King Street Financial Services, managing director
  • 1985-1986 Newlin Associates, consultant
  • 1979-1985 Sun Alliance Group (life & pensions), consultant
  • 1978-1979 Crusader Group (life & pensions), junior inspector
  • 1976-1978 Lloyds Bank investment and taxation division, admin assistant


  • Dip PFS Dip CII
  • HND Business Studies, Salford College
  • Prince 2 (Project Management) Foundation

Marketing strategy

Rees has had a niche working in small self-administered schemes (SSASs) for many years and Carpenter’s specialism is in corporate finance and pensions. As the firm evolved, other consultants they recruited developed their own niches in pensions, divorce, later life, inheritance tax and group pensions.

Jackson left the firm in 2010 so when the two men bought it back, they reverted to the original name of Carpenter Rees.

‘We went through the process of what to name it. We had Greek gods, the lot!’ says Carpenter. ‘But everyone knew us as ourselves, so we realised we should be what we are.’

Rees adds: ‘We gave our clients a list of names and to a man, woman and child they said "Carpenter Rees".’

Following the purchase, their first step was to relaunch the firm’s branding, which they have been doing with the help of a public relations (PR) agency. They are retaining the agency for PR and website support for two days a month.

‘When we bought the business back, the intention was that most of our marketing spend would be on PR,’ says Carpenter. ‘[The agency] helped design our new website, which still has a bit of development to do. But they got some national press coverage from a standing start and we have been in The Telegraph, The Times, The Daily Express and other publications. Now we want to focus PR a bit more on our niche areas.

‘We are on Twitter and LinkedIn already, and that is quite a learning curve for us, but it will develop into a proper social media strategy.’

Rees says: ‘That is not so important for our existing clients; they are generally at the older end. But to attract new clients and clients from the professions, you need that presence.’

Carpenter continues: ‘We are learning a different perspective on how to promote our specialisms in a friendly way, so we don’t end up boring people to death.

‘We have a number of long-standing connections with lawyers, accountants and actuaries that we have met through doing group work. They are useful in terms of referrals occasionally. But we want to forge more close relationships with certain law firms. We have some good ways to help them.

‘Lawyers are struggling transactional businesses and need to build regular income.’

Auto-enrolment advice

Carpenter Rees is developing a further specialism in auto-enrolment advice. ‘Beyond 2013, when the smaller companies start getting into auto-enrolment, they won’t have the skills to do it,’ says Carpenter.

‘According to the Chartered Insurance Institute, there are 1.1 million companies with less than 50 employees. Many are going to need some advice.

‘Our project, which is not fully developed yet, is to help those companies through the process and add our other skills to the proposition for companies,’ he says.

‘Two of our bigger clients are auto-enrolling at the end of next year, so we are right at the beginning of the project plan for them. We have an auto-enrolment brochure and are using our PR mechanism to build our presence in the market now.’

Cost-cutting exercise

Following the purchase of their firm, Carpenter and Rees have set about cutting costs. To accelerate this, they hired consultancy Jigsaw Tree to help streamline systems and back office processes.

‘With acquisitions, you end up with people using different bits of software. Jigsaw Tree has shown us how to use it best,’ says Rees. ‘For example, we had an issue with different people using different tools, so Jigsaw Tree harmonised that and improved processes.

‘We have taken a lot of cost out in the past 18 months, and the main thrust over the next 12 months will be to continue to improve our margins. We agreed to stay in this building for two years; we can reduce costs more once that term has come to an end.’

Cost focus drives firm down passive route

Carpenter Rees uses passive investments, including several funds from Dimensional Fund Advisors.

‘The science behind it in terms of the asset allocation and the long-term returns does work and clients are comfortable with it because you are not timing markets, chasing fund managers or stock picking,’ says Rees. ‘The model portfolios have evolved over a seven-year period and we are comfortable with the make-up.’

The firm has one adviser with the Investment Management Certificate and the investment committee meets quarterly to review its seven model portfolios. The average client invests around £300,000 and the firm charges between 0.5% and 1%, though they say it is rare they would charge the upper limit. The total expense ratio (TER) including fees and wrap is a maximum of 1.5%.

‘A lot of adviser’s TERs are 2% plus. How does that work when we have had less than 5% annualised return on the stock market over the past 10 years?’ says Rees. ‘Everyone seems to be pitching at 1% because that’s the going rate, but what are they providing for that? Why should an IFA be able to charge that?’

Low-cost option

Although the majority of clients invest through the portfolios, the firm is carrying out due diligence on other options, including discretionary managers, for appropriate clients.

‘We would not be interested in acting for a new client with less than £150,000 (with the potential to accumulate £300,000), although we are looking at a smaller client offering where we use the Vanguard Life Strategy concept. It will allow us to have some clients at the lower end who will accumulate,’ says Rees.

The only changes the firm has made to the portfolios since they started have been for cost reasons.

‘The only difficulty we have is with property funds,’ says Rees. ‘We have not found a passive property fund we are comfortable with.

‘We replaced Aviva Property with Threadneedle UK Property in June 2011. We replaced the L&G Index Linked Gilt fund with the Royal London Index Linked Gilt fund in December last year. We also replaced L&G FTSE All Share tracker with Vanguard FTSE tracker at the same time. The impact of these changes reduced TER by a fifth.

‘Another good move was to include index-linked fixed interest in the portfolios in the past three years, instead of just having short-dated gilts.’

Recruitment challenge

The biggest challenge the firm faces in the future is recruitment, according to Rees. ‘That is the difficulty in the current and post-January 2013 market. But we believe the business is well placed to benefit from any contraction in the market,’ he says.

‘There will be some good opportunities [not immediately] after the retail distribution review (RDR), but a year down the line. Everyone has been concentrating on getting qualifications ready, but they may not have done a great deal on their business to sort out cashflow, for example, when the RDR happens.

‘Then we want to be in the position where our [employees] can take on a lot more responsibility as we go,’ Rees continues. ‘We have implemented a training programme, which includes leadership development for our management team, focused sales training for the consultants, and we are investing in our staff to increase their skills around running a business.

‘But we have a good basis for the business and we can grow that to £1.5 million turnover without having to take on additional staff.’

Growing team: (L to R) Alison Greenwood, administrator – self-administered schemes; Le-Anne Bradbury, administrator – group pensions, John Kennedy, paraplanner; Nicola Banks, operations and compliance manager; Steve Rees, director; Mike Carpenter, director; Emma Gleaves, corporate paraplanner; Maureen Turner, paraplanner; Alison Fox, administrator – Sipps.

Renewed enthusiasm

Carpenter and Rees are both keen cyclists and have previously completed a cycle ride from Blackpool to Paris together. Having turned the business full cycle by buying it back, neither are thinking about applying the brakes to their careers.

Rees says: ‘I have a three-year-old son so I can’t retire, and Mike is still supporting his three children who are in their 20s. It would be nice to have more social time but the work-life balance is not bad.

‘When we set the business up, I used to go into the office at 4.30am. Now we have a good team of people and one of our goals is to make ourselves dispensable.’

However, Carpenter says now they have the firm’s reins back in their hands, he never stops thinking about the business and his wife has to take his phone away from him when they are on holiday. ‘That is part of the excitement of what you do and why you do it,’ he says.

Rees agrees: ‘When we ran the business ourselves and were an independent brand, we knew where we were going and it made me bounce out of bed in the morning. We got that back.’

Five top tips

  • Try to be the best listener your client has ever met.
  • Develop your niche strengths.
  • Develop your staff in order to make yourself dispensible.
  • Keep jargon out of all communication.
  • Ensure your management information enables you to identify problems in the business at an early stage.

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