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Adviser Profile: Stuart Poonawala of Kubera Wealth

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Adviser Profile: Stuart Poonawala of Kubera Wealth

Stuart Poonawala is putting his ambition for a multi-family office serving high-net-worth clients firmly in the frame at Kubera Wealth.

Stuart Poonawala, managing director of Kubera Wealth, has been on a rapid journey of self-discovery since he started the firm three years ago. This has laid the foundations for what he hopes will one day become a multi-family office servicing clients with more than £5 million of assets.

Although he is still some way from achieving his lofty ambitions in the high-net-worth (HNW) space, Poonawala has already built up the client bank to 65, investing an average of £370,000 each.

He spent 21 years working for HSBC before realising a long-held ambition to start the company. He thanks his wife, Daniella, for coming up with the name Kubera: the lord of wealth in Hindu mythology. ‘This is why other new model advisers, such as Marlene Shalton and Adam Young, call me the lord,’ he says, laughing.

Primary aims

Poonawala’s main influence in creating his business model has been The e-Myth by Michael Gerber, which encourages readers to think about their primary aims in life. ‘That is about understanding how you want to live your life and what you want to be remembered for,’ says Poonawala. ‘It is also the foundation of all life coaching and discovery about an individual.’

His primary aims include ‘a life full of fun, energy, creation, stimulation and drive; making a difference to people’s lives through coaching, friendship and business relationships; being comfortable financially but not fabulously wealthy’, he says.

‘Another is that I love the community that I live in. Because of technology and offshoring, relationships have taken a back seat to profit in banking and other industries. Customers and clients are crying out for that personal touch with a local, trusted adviser.

‘I saw my future as the local go-to firm. I want to walk to work with my dog [Billy, his miniature German Schnauzer, scuttles after him around the office]. And I want to say hello to local business people and clients on the street.’

He also wanted smart premises and so last year renovated a property on the quaint high street in the Middlesex town of Pinner. The office now has an upmarket appearance, including plush, stripy carpets; white leather sofas; and trendy slate-walled toilets reminiscent of a boutique hotel. A keen photographer, Poonawala uses his own snaps on the office walls and in his brochure.

Growth spurt

Another important influence has been the Strategic Coach course that Poonawala has been attending for more than a year. He says it has taught him to identify his unique abilities: forging relationships, helping people and being creative in his business.

He says identifying these abilities and finding that people value them gave him the confidence last year to invest in the firm’s premises, recruit two staff members and employ the services of marketing and branding consultant Abbie Tanner, founder of A Business Innovation.

All this took its toll on the bottom line, with profits falling to less than 10% in 2012. But this year he expects those investments to help him nearly double the number of clients and funds under management without adding substantially to costs.

 

Stuart Poonawala

Curriculum Vitae

Career

  • 2010-present Kubera Wealth, managing director
  • 1988-2009 HSBC, senior independent wealth manager

Professional memberships/qualifications

  • Certificate for financial advisers 1, 2 and 3; plus the Certificate in Mortgage Advice and Practice
  • Diploma for financial advisers
  • Member of Chartered Institute of Insurers, Institute of Financial Planning and ifs School of Finance

Multi-family office

Poonawala has not projected a rise in average funds invested in 2013, however. So when will he start moving towards his HNW multi-family office ambition, and how? ‘I have a full range of tax and legal advisers, both generalists and specialists, who support my clients’ needs,’ he says. ‘So we are already able to operate a family office model, which is where I see the HNW, fee-based financial planning world going.

‘A family office is very simple. It exists to service the tax, legal, financial and perhaps even staffing and property concerns of a family, which pays it a salary. There are no bonuses and no conflicts of interest.’

Besides that, he thinks there is no difference between a HNW financial planner and a multi-family office, except perhaps how they are marketed. ‘£500 million merits a single family office. £50 million to £500 million needs a multi-family office. But that concept can be applied to the £5 million to £50 million market, which is massive,’ says Poonawala.

‘The retail distribution review [RDR] and fee-based financial planning have given HNW IFAs, who understand the concepts, the opportunity to move into that space, which is occupied by private banks. The only thing they lack is the brand and the strength of, say, HSBC.

‘But Kubera Wealth in conjunction with UBS [one of his preferred banking partners]; or a private bank selling its own products: which is the better proposition? I like to think the former, but the challenge is to persuade people in that market.’

Trademark offerings

Poonawala has worked hard on his proposition and is applying for three trademarks to protect it. The first is for his Gift Book. This is based on a 19th century idea: literary annuals or keepsakes, often lavishly decorated, which collected essays, short fiction, and poetry. Poonawala has created a booklet that is styled like a gift book, but inside prompts clients to write about their life goals and values. The second is for Wisewealth, which is the name he has given to his whole planning process. And the third is to protect the name Kubera Wealth.

‘Under the RDR, how do you persuade someone to part with a few thousand pounds for your time? You can do it if you are very good at talking. But wouldn’t it be much better to create trademarked processes around the things people value, such as relationship, leadership and clarity?’ he says.

‘Wisewealth delivers all those things. We have trademarked the name and the imagery but we can’t trademark the process. Other advisers could use a similar process but I don’t mind that; I just want something that looks thought through.’

 

Banking connection

In his bid to provide a comprehensive family office service, Poonawala is tapping his experience in the banking world. ‘Planners have generally not got involved in clients’ banking at all,’ he says. ‘That is partly down to a lack of understanding and lack of access to banking relationships. We have 150 years of banking experience in our office [all employees are ex-HSBC]. We can interact at a higher level. We have forged relationships with UBS and other international private banks.’

He says that, while some banks ‘play at’ business-to-business models, all they really want is to accumulate clients’ money through their discretionary fund management arms. ‘They are not interested in building a long-term relationship or opening up the bank to you,’ he says.

‘But it’s not just about discretionary fund management, it’s about cash management, execution-only, advisory, hedge fund research, a leveraging facility to provide liquidity, philanthropic structures etc. UBS understands that relationship and how to add value to our business. It allows us to deliver a total banking service to clients, with a single point of contact. Ten years ago, that type of relationship didn’t exist.’

Handing over custody to DFMs but keeping control

‘We provide what we are good at: financial planning and relationship management,’ says Poonawala. ‘We are not able to manage money daily. We select managers based on cost, asset allocation and service. Often it boils down to the level of service and interaction the client requires.’

He says that although some advisers see losing control over the client relationship as a disadvantage of using discretionary fund managers (DFMs), he does not. ‘I am very comfortable with losing the custody. Clients don’t see me as the money manager but as the trusted adviser,’ he says.

‘My job is to understand the client’s lifestyle, cashflow forecasting and risk profile, which tell me the numbers the clients must achieve. We then give the DFM a report on all that. I encourage the DFM to communicate directly with the client, copying me in. It is about the trusted team. That interaction is necessary.’

Right for the client

Beyond that, Poonawala prefers to leave investment decisions to the DFMs. ‘I don’t have any views other than doing what is right for the client. I like to be vanilla. I don’t like fancy stuff. If it doesn’t make sense, I won’t go near it.

‘Every six months, I review the DFM market. But UBS and Brooks Macdonald cater for most of Kubera’s clients’ needs. Both offer model portfolios and bespoke options for larger amounts or if the client requires it.

‘I like UBS because of the whole banking package it offers,’ he adds. ‘Where a client doesn’t require the whole package, we use Brooks Macdonald. The account managers generally remain there for a long time and they operate in a team. Their level of support has been fantastic.’

Brooks Macdonald’s total expense ratios for its portfolios are around 1.3%. Kubera charges between 0.5% and 0.75% ongoing.

Performance

2010

2011

2012

Brooks Macdonald MPS Low Risk Portfolio

9.7%

2.7%

10.8%

MPS Low Risk (Defensive Income)

Benchmark*

 

5.9%

1.9%

4.1%

* A composite index consisting of 50% Apcims Income TR and 50% UK base rate.

International arm

Around 10% of Kubera’s clients are international and in future Poonawala wants these clients to be handled separately. He thinks they will respond better to a different type of brand and proposition, so he is setting up a company called Knightsbridge Wealth, which will take on any new international clients. It will start trading in the first quarter of this year and will be a UK-based, fee-based, holistic financial planning business.

‘Knightsbridge Wealth will deliver a new model compared with many international planning firms that are still commission- and product-based,’ he says.

Marketing strategy

To boost Kubera’s business this year, Poonawala is launching a local advertising campaign. He also plans to build local professional connections but says that so far the lack of a steady stream of referrals from them has proved frustrating.

‘Unless you are continually in front of connections, they get on with the things that make them money,’ he says. ‘Every quarter I run networking lunches in London for professional connections. But locally, I want to have much deeper and more meaningful relationships with a smaller number of firms. That will be my focus this year.

‘Some of the connections we are targeting will provide clients similar to the ones we have now; others will, we hope, provide the £5 million-plus families.’

Poonawala is still unsure whether a high street shop front is the right way to attract clients with £5 million to invest. ‘We can be on the high street and attract HNW people as long as our marketing message attracts them,’ he says. ‘We are testing that, having been open for three months, and we will see.

‘The brand will gain recognition by advertising in newspapers and magazines, posters and local sponsorships, plus a magazine we are looking to launch, aimed at connections and clients. We will also run seminars at the local golf club on asset preservation and life coaching for business owners.

‘If a client can see you have a footprint and are spending time integrating into the community, that has far more credibility than operating from a [serviced] office, which I could just disappear from tomorrow,’ he says.

Drive for growth (and leisure time)

Poonawala has an open-minded enthusiasm and is brimming with ambitious ideas. ‘I am very growth orientated, and always looking for the next shiny thing,’ he says.

‘The challenge is one of scale: building beyond what I have here because the business is relying on my skills. We are looking to build a repeatable process. Beyond the end of this year, my thoughts will turn towards building additional sites using the Kubera brand in high streets similar to this in north-west London. Maybe we will start a Kubera academy!’

His workload has been heavy in the past six-to-nine months, leaving little time for photography and his other passion: golf. He has not taken a holiday since last February, and only takes one day off at the weekends. ‘That will change this year,’ he says.

‘I am proud of what we have built here but the free days need to come back. Each of my three children gets a Daddy day with me every quarter. It is important to spend time with them.

‘This business is an extension of my family. Jobs for life and final salary pensions won’t exist in 10 years. I can make the future secure for my children by helping them to be entrepreneurs, ideally in this business. So my passion is in creating businesses, the marketing and the relationships. I love the thrill of it.

‘Once again, that is about connecting your primary aims in business and in life. When you do that, you jump out of bed every morning and you will be happy.’

Five top tips

  • Read The eMyth and especially understand chapters 12 and 13.
  • Join an entrepreneurial programme (such as Strategic Coach) and commit to its principles.
  • Surround yourself by excellent, loyal and gifted staff, and ensure you delegate to them. 
  • Spend 80% of your time on your unique ability; ensure everything else is delegated to others.
  • Champion excellence and build your proposition around the value you can deliver to a client.

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