Paul Hayden Jones and Graham Kilkelly are taking clients on a journey through time at Hayden Kilkelly, in a bid to explore deeper dimensions of planning.
'We ask clients to step out into the future and attempt to visualise life in retirement,’ says Paul Hayden Jones, co-director of West Midlands-based Hayden Kilkelly, as he prepares to pose with a Tardis. ‘Most people are familiar with the Tardis and the fact it allows the Doctor to time travel.’
For this reason, Hayden Jones says he mentions the famous blue phone box during initial client meetings. ‘It helps get the client’s mindset to a place where they can open up and allow us to unearth things they would otherwise keep hidden.’
Fellow director Graham Kilkelly looks on in bemusement. His initial client meetings tend to feature a Back to the Future DeLorean instead.
PAUL HAYDEN JONES CV
- 2016–present Hayden Kilkelly Independent Financial Advisors, director and chartered financial planner
- 2014–2016 True Potential Wealth Management, chartered financial planner
- 2004–2014 Torquil Clark, chartered financial planner
- 1999–2004 Cooperative Bank Independent Financial Advisers, IFA
Associate of Chartered Institute of Bankers
Advanced Financial Planning Certificate
Member of Chartered Management Institute
- Chartered Financial Planner (includes G10, G60, G80)
Lost in space
Travelling back in time to 2004, the directorial duo were working together at Torquil Clark. ‘It was a great place to work,’ says Kilkelly. However, once the firm was taken over by Skipton Building Society in 2008 (prior to being bought by Bellpenny in 2014), Kilkelly and Hayden Jones both noticed unwelcome changes.
‘There was an investment proposition instilled and a preferred platform instilled,’ says Hayden Jones. ‘It felt towards the end that although we were independent (we had the badge), we were promoting a specific proposition.’
The pair share a disdain for a targets-based approach they say can still be found at some firms. ‘This prompts the wrong sort of behaviour from advisers,’ says Kilkelly. ‘If you enter a meeting with a pension fund worth £200,000, you’re thinking: "If I move that, I’ll fulfil half of my monthly target".’
GRAHAM KILKELLY CV
- 2016–present Hayden Kilkelly Independent Financial Advisors, director and chartered financial planner
- 2012–2015 English Mutual/Sanlam, head of office and chartered financial planner
- 1998–2011 Torquil Clark, executive consultant
Chartered Financial Planner
After leaving Torquil Clark, the duo initially went their separate ways. Hayden Jones moved to True Potential in 2014, and Kilkelly made the switch to English Mutual – later Sanlam – in 2012.
However, in January 2016 they joined forces. Hayden Kilkelly was founded as a directly authorised firm, with their existing client banks novating to the new business.
‘It had to be our own business,’ says Hayden Jones, having assessed the other options. ‘It’s the only way for Graham and I to be doing the job the way we want to, with all the bells and whistles.’ He adds: ‘And I’m fortunate to be working with Graham.’ ‘You are,’ replies Kilkelly with a grin.
Becoming business owners has been a learning curve for the managers. Kilkelly says: ‘All of a sudden we’ve stepped into this new area. We’re employers and we’re directors. We have to pay corporation tax, national insurance, salaries and income tax. Then there’s health and safety, human resources and Financial Conduct Authority fees.’
This has been an eye-opener for Kilkelly and Hayden Jones, who admit it is easy to feel, when employed, that remuneration could be better. Kilkelly says: ‘You realise what the business you worked for paid in overheads, and then you look back at your rate of pay and think: "that was probably fair".’
He adds: ‘You also look at a lot of the things you disagreed with as an employee and understand why they happened. As a business owner you grow up, don’t you? You take things a lot more seriously.’
Hayden Kilkelly charges a minimum upfront fee of £750, which may be partially or fully waived on implementation. Beyond this, the initial advice charge will vary depending on assets under advice.
The first £200,000 is charged at 1.5%, the next £200,000 is charged at 1%, and the third £200,000 is charged at 0.5%. No fee is charged on assets beyond the value of £600,000. As such, the maximum initial fee is £6,000.
Hayden Kilkelly is currently assessing its ongoing fees, and is looking to implement a ‘financial scorecard’ that will minimise cross-subsidy. At present, Hayden Kilkelly has a minimum ongoing fee of £1,125 per year, and ongoing fees are fixed at 0.75%.
For this, clients receive structured reviews. These consist of an annual meeting, a lifetime planning forecast, a view of existing plans and investments, a review of attitude-to-investment risk, and income tax and inheritance tax analysis.
The firm provides advice to family and close friends free of charge. Hayden Jones and Kilkelly justify this by saying if their friends were mechanics or builders, they would expect the same treatment.
In-house ‘HK’ portfolios offer blend of active and passive at a reduced cost to the client
As many of Hayden Kilkelly’s clients were formerly with Torquil Clark, several have legacy investments held on the Standard Life platform. The firm also has a relationship with Charles Stanley, which has led to the creation of five branded ‘HK’ portfolios. These carry almost £15 million of the company’s total assets under advice. These portfolios cover risk ranges three to seven on the Distribution Technology scale.
Charles Stanley has active and passive ranges, but the HK portfolios are a blend of both. As such, a mixture of two Charles Stanley portfolios blend to make an HK portfolio. ‘On the one hand it’s to reduce cost, but on the other it’s due to the debate over which is better,’ says Hayden Jones. ‘You can find different investment time frames where one looks better than the other.’
Of the funds in the HK portfolios, the M&G Global Dividend fund has been a particularly strong performer, beating the MSCI All Country World Index by 11% from February 2016 to January 2017. Manager Stuart Rhodes had endured a period of relatively weak performance prior to this, but his fundamental approach is now reaping rewards.
Over the same time frame, the Neptune European Opportunities fund rose by almost 50%, owing to a strong value bias and a skew away from defensive sectors. High exposure to financials, and banks in particular, had a very positive effect on returns.
Hayden Kilkelly asks clients if they have additional requests, such as ethical investments, guarantees, or smoothed investment returns. This is available at extra cost, and similarly, if low cost is a client’s priority, Hayden Kilkelly will adjust its offering accordingly.
The firm uses True Potential’s back-office system, with Standard Life its preferred platform due to legacy books. However, Kilkelly notes that clients can view investments whenever they want via True Potential, so platform choice is of limited significance. The HK portfolios are available on nine different platforms, and clients are welcome to use whichever they prefer.
Hayden Kilkelly uses discretionary fund managers (DFM) for some legacy clients, but is less likely to involve a DFM for new ones. It currently has assets with Redmayne-Bentley, Smith & Williamson and Sanlam.
The HK way
There are two strands to Hayden Kilkelly’s proposition. The first is lifetime financial planning. ‘The first thing we do is sit down with a client and see if we’re right for each other,’ says Kilkelly. ‘Once we’ve done that, we talk about the future, and this is where the Tardis analogy comes in. Only then do we talk about what they have in terms of cash, investments, pensions, protection.
‘Then we build the plan, showing how long the capital is likely to last, considering what the client wants to do in the rest of their life.’ At this point, the firm looks at how it can improve the situation and perhaps leave a legacy for the client’s children.
The second is the bucket list, typically introduced during the client’s second meeting. It is through the bucket list that the firm wants to tackle the ‘one day’ mentality that can stand in the way of a client’s dreams.
‘One day is a dangerous phrase,’ remarks Kilkelly. ‘One day often never comes. We get enormous satisfaction from giving clients the financial confidence to make their spending plans happen, and getting them to proactively work their way through their bucket lists.’
After 18 months of trading, Kilkelly and Hayden Jones are getting to grips with running a business. They have sought help from other places, including business coach Andie Lawson from Prudential, who has offered strategic direction, and instruction on processes and procedures.
For further inspiration, Hayden Jones and Kilkelly sit down every three months to review their procedures, software, providers and investment managers. They also make sure they keep on top of the relevant literature. Hayden Jones is currently flicking through Traction by Gino Wickman, which offers tips on ‘getting a grip’ on a business.
The firm has hired two administrators, one of whom carries out some of the lower-end paraplanning. The firm outsources to a compliance expert and a paraplanner, and also receives administrative support. ‘The paraplanner is pivotal to our business,’ says Hayden Jones, who also describes his compliance expert as ‘incredibly thorough’.
He explains outsourcing has helped him see things from a different perspective. ‘It’s great to be challenged by people who aren’t in the business. They see things as a client might see them. It’s great input.’
Before concluding, it is time to ask Kilkelly and Hayden Jones to step back into the Tardis once more. What is the future of the firm? The plan, for now, is to look for new premises, which will soon be the proud home of the Tardis used for this photoshoot.
The firm will continue to build the client bank until Kilkelly and Hayden Jones, the only advisers at the firm, are at full capacity, with 125 clients each.
Word-of-mouth referrals are central to this plan, and Hayden Kilkelly has strong connections with four accountancy firms and one law firm. The accountancy referrals are typically business owners, whereas the law firm often refers from matrimonial cases. ‘It’s a brilliant type of referral,’ says Hayden Jones of the matrimonial work. ‘You have to be warm, empathetic, and it’s all about trust.’
They also plan to add an extra adviser, but only when they are unable to handle current levels of demand. As for succession planning, although neither director plans to step down in the next decade, they have both given it some thought.
‘If we sell the business, we’ll make sure it’s to a like-minded company that will do right by our clients, and continue our processes,’ says Kilkelly.
FIVE TOP TIPS
Always start by asking clients why, to understand what is important.
Begin with the end in mind.
Life is not a rehearsal.
Exude passion, but be humble and treat others as you would wish to be treated yourself.
Look forwards and let go of what you cannot change.