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Adviser Profile: Pacific IFA's Mark Pentelow is thinking big

Adviser Profile: Pacific IFA's Mark Pentelow is thinking big

From his chauffeur-driven stretch BMW to his £2 million income target for Pacific IFA, Mark Pentelow’s strategy and dedication to his young business are paying off.

Essex-based Pacific IFA is riding high as it continues a dramatic expansion with its income growing from £437,000 in 2009, its first year of trading, to a projected £2 million by the end of this year. The driving force behind this is chief executive Mark Pentelow, who worked without a single day off in the firm’s first 10 months and still puts in punishing hours.

Pentelow is an intense character, who constantly looks for quirky ways to stand out: from travelling in a chauffeur-driven stretch BMW 7 series to giving his staff and consultants personalised mugs.

‘I wanted to work in financial services from the age of eight and to emulate my grandfather, who worked for Sun Life Financial of Canada for 36 years,’ he says. ‘He passed away when I was 15. At his funeral, the church was so full of his clients that people had to stand outside in the rain. At the wake, I told his director I wanted a job.’

After some persistence, Sun Life Financial of Canada made him the youngest financial adviser in the history of the group, at the age of 18.

‘Everyone else wanted to go into space or to be a fireman. I wanted to sell insurance. It’s very sad,’ Pentelow jokes.

He soon became one of the top-producing advisers in the country and qualified for the Million Dollar Round Table (MDRT) by the age of 26.

The MDRT was set up in the US by 32 advisers, who had each sold at least $1 million of life insurance. A fee-based UK adviser must have an income of £91,200 per year to qualify for membership.

Building a RDR-ready business

Pentelow joined the Zurich Advice Network in 2000, then Essex Financial Planners in 2006. Then in 2009 he founded Pacific with co-director Stephen Davis.

‘The industry wasn’t geared up for the retail distribution review (RDR),’ says Pentelow. ‘We saw that if we set up with a blank sheet and no legacy issues, we could prepare for the RDR and have control over it.

‘We knew that in a fee-based world, you would have to deliver far more to clients than was generally delivered at the time. We wanted to put in platforms, an RDR-friendly IT system, marketing, branding, and client-friendly communications.’

Attracting a quality team

He also wanted to build a scalable business that was attractive for high-quality advisers to join.

‘The top issue in the industry is that IFAs have become more desk bound; they spend 80% of their time at their desks and only 20% seeing clients,’ he says. ‘But clients value face-to-face contact. We built our infrastructure around reversing that and doing it on a bigger scale.

‘That’s about building a team around the advisers. They have a dedicated account manager and paraplanner and a process that allows them to spend their time building relationships.’

Pentelow believes economies of scale have become essential to survival. ‘Financial advice has become a cottage industry with lots of small companies. You can’t be your own secretary, receptionist and administrator. Advisers fear losing control if they delegate, but they must learn to.’

Building a scalable business: (L-R) Mark Pentelow, chief executive officer; Neil Watkins, director; Stephen Davis, managing director.

Putting ideas into action

Pentelow took many of his ideas for Pacific from the MDRT, which he attends regularly. The idea for the firm’s name came from meeting a Peruvian member who worked for Pacifico Vida (Pacific Life). ‘I liked that because it [depicted] a journey,’ he says. ‘Now we use the expression "let the journey begin" in our literature.’

He believes branding is important, and employed a full-time marketing director, Andrew Garrido, from the outset. Pacific now spends more than £100,000 a year on marketing and has spent £80,000 on its website.

The firm has 16 ‘contact points’ with clients a year, including a personalised monthly newsletter, budget reports, a quarterly magazine produced in-house, and seminars. It has also invested in two new offices, in Kent and the City of London.

‘We’ve just had the best start to a year and new business is up 19% on this time in 2012,’ says Pentelow. ‘Most importantly, I now have great employees: the best group of people I have ever worked with.’

The biggest challenge is to maintain quality and control during the expansion, he says. He speaks regularly to AXA Elevate business consultant Kevin Veale for advice on scaling the business with a sustainable infrastructure, among other things.

‘Kevin has gone above and beyond, helping us on cashflow management, job roles, recruitment, branding and marketing,’ says Pentelow. ‘As we grow, it is key that we keep that entrepreneurial spirit but also monitor quality. We have lots of different breaks in the system to ensure that.’

Speedy growth

A driven character, Pentelow is not interested in slowing down the rate of expansion for some years, and has his eye on opening offices in Hertfordshire and Surrey.

‘We have grown a successful business during four years of turmoil. There has to be a point of consolidation but I don’t see that coming until 2017,’ he says.

The speed of new business growth means recurring income and profit margins are still low. However, Pentelow believes both will increase, with recurring income reaching at least 65% based on his service model.

The firm has four service levels and a ‘service department’ to make sure Pacific delivers on its promises. The department liaises with advisers every month, books meetings, reviews the service and keeps an audit trail.

The firm has 10 advisers and 75% of clients are seen in their home or office. ‘We are there for the client. If the only time they can see us is 8.30pm at their house, we are there,’ says Pentelow.

Expanding into new niches

Growth has come from recruitment and acquisition. In March last year, Pacific bought advice business HW Gibbs Financial Services that added £30 million under advice. It has three business development managers whose job is to support advisers and build professional connections.

In September, the firm launched the Pacific Female brand, which matches female advisers with female solicitors and clients. ‘My female advisers came to me and pointed out a gap in the market, which has proved successful,’ says Pentelow.

‘I want to take on five or six more female financial advisers this year. It is a massive market. It has opened doors we would never have gone into. We did a marketing campaign to 25,000 solicitors and some have started engaging with us, and that led to us forging links with the women’s division of the Law Society. That also led to us doing a seminar in May for the lawyers with disabilities division.’

Mark Pentelow: curriculum vitae

CAREER

  • 2009-present Pacific IFA, chief executive
  • 2003-2009 Essex Financial Planners, IFA
  • 2000-2003 Zurich Advice Network, financial adviser
  • 1994-2000 Sun Life Financial of Canada, financial adviser

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

  • Financial Planning Certificate 1, 2 and 3
  • Mortgage advice qualification
  • Level four diploma

Mix-and-match investment approach offers choice

Pacific uses the AXA Elevate and Aegon Retirement Choices platforms for client investments, and was one of 14 firms that took part in the roll-out of the Zurich platform in December.

‘That is an awesome bit of kit. The functionality and support is amazing,’ says Pentelow.

Pacific uses outsourced model portfolios from Old Broad Street Research (OBSR) for actively managed funds; and Architas for a mix of active and passive. It uses the Brewin Dolphin managed funds for clients with more than £100,000 to invest, and Brewin’s bespoke portfolios for those who require a DFM service.

Pentelow says this range of choices is important to retain independence. ‘One thing might not suit a particular client, so you want a blend of solutions. Some clients want different solutions for different parts of their life and not to have all their eggs in one basket,’ he says.

Widening client choice

The firm is looking at extending that choice further. ‘We are talking to other DFMs; that’s something for the second quarter,’ says Pentelow. ‘The feedback from clients and how Brewin Dolphin has engaged with us is spectacular. But we need to keep that under review, so if we can add complementary DFMs, we will.’

Brewin’s announcement that it is raising its fees for adviser clients with less than £10 million reinforces Pentelow’s argument about needing to move away from a cottage industry. ‘It doesn’t affect Pacific as we have in excess of £10 million with Brewin Dolphin,’ he says. ‘This will happen more and more due to economies of scale.

‘We chose Brewin Dolphin because it is truly independent with no in-house funds. With OBSR, again we like its independence combined with its in-depth, qualitative research process. We selected Architas as it has the financial strength and support of AXA: clients receive a 75% rebate off the platform charge if held on Elevate, and we rate manager Caspar Rock’s years of experience.’

Pacific has a quarterly investment committee that meets to stress test all the portfolios it uses against a range of criteria.

OBSR total expense ratios are around 0.8% before wrap or adviser fee, which is up to 1%.

Team spirit

Recruiting good staff can be a challenge, but nevertheless Pacific has tripled employee numbers since it began.

‘They come to us through word of mouth,’ says Pentelow. ‘Only 20% come through recruitment firms. We have a great reputation and we are different and quirky. People enjoy working here and buy into the spirit of the firm. We are still very picky: we reject 10 for every one employed.

‘Staff get flowers or wine on their birthday and champagne at Christmas. We have a training day every month and a conference with a black tie do in the evening.

‘Even our discretionary fund managers (DFMs) and broker consultants have mugs with their faces on. Our Zurich broker consultant was so pleased, she took a picture on her BlackBerry and sent it to other IFA firms asking why they didn’t have a mug for her. It went viral. One paraplanner we recruited said she really wanted to work here so she could have her own mug.’

Aiming to be the best

Pentelow says his goal is to make Pacific the best IFA firm in the country. ‘How do we know we are delivering the best we can?’ he asks. ‘It is about using our own surveys to assess how we deal with clients. The team will also ring a selection of clients each month and go through questions with them to look for areas of improvement.

‘I am never satisfied. As soon as we achieve something, I want to do better. I drive people insane – in a nice way. Every year I strip down the whole business with my management team to look for improvements.’

Within three years, he wants the firm to have a turnover of £4.5 million, 56 employees and at least 20 advisers.

‘I am 36, so I have no exit strategy,’ says Pentelow. ‘[When I achieve all this] I will plan again, because I get bored. Money doesn’t interest me. It is to prove to myself that I can grow something, despite the recession, from nothing. I am terrified of failure. I hate the thought of letting everyone around me down. I never switch off. On Sunday nights, I am lucky to sleep two hours because I just have to get to the office.

‘When I became a financial adviser at 18, everyone said I was too young and that no-one would take me seriously; at 20 I was in the top 50 advisers in the UK. Later they said you can’t set up a firm at 32 and you can’t grow it in the middle of a recession. If everyone says you can’t do something, I say "why?"’

Drive for success

When Pentelow took on his chauffeur, people told him that clients wouldn’t accept it. ‘They said: "You have finally lost the plot"; "it is the end of your career". The year I got my chauffeur, my turnover went up 45%.

‘I was at MDRT six years ago listening to an American guy who had a chauffeured limo because working in the back made him more productive. I worked out that I was spending 40 hours a week in the car; dead time.

‘Now I have a laptop, printer and my BlackBerry in the car and I can do conference calls. When I am in the office, my advisers can use the car. We pick up clients and drive them to meet their DFM in the City. We offer the car to clients for a day at the races, even for their weddings. That is being different.

‘Clients feel they are being looked after, being given something extra. They love it. The only barriers to success are the ones we put in our own heads.’

At Christmas, Pacific gives the top 25 clients a Harrods hamper, plus flowers or champagne for their birthdays. It sends them newspapers from the day they were born for their 60th or 65th birthdays, and gives them a retirement pack when they retire.

The retirement pack includes a new business card, with their name, contact numbers and the words ‘Professionally retired: no work, no stress, no worries, available 24/7 except when I am on a cruise [or whatever their hobby is]’. On the back are the words ‘Provided by Pacific IFA’.

Nose to the grindstone

Pentelow works from 7am to 10pm on weekdays and one day at the weekend. ‘I am envious of people who can switch off and go home,’ he says.

‘My family were successful business people in the care home industry and they were like that. They told my brother, who also works in this firm, and I that you have to work hard in life, nothing is given to you. I blame my parents: they indoctrinated us,’ he jokes, adding that they often try to persuade him to take more time off.

When he does take time off, he likes to watch rugby and football, especially internationals. ‘I used to play but since I have had this firm, all my energy goes into this. I love what I do, for me it is an addiction.’

Five top tips

  • Be passionate about everything you do.
  • Be brave – think big.
  • Lead from the front and don’t be afraid to make unpopular decisions.
  • Use the strengths of the team around you.
  • Don’t be afraid to delegate.

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