After 20 years as an IFA, Critchleys’ recently appointed chief executive Jason McGuigan has become restricted. He has joined the Intrinsic network to access its best-of-breed investment solutions.
‘There’s no denying that moving to a more restricted way of doing things contained an element of fear of the unknown,’ he said. ‘How would clients react? But we haven’t found it an issue at all.’
The Oxford-based accountancy and financial planning firm started outsourcing to discretionary fund managers in 2006. Initially it used Tilney, Cazenove and Rathbones. A year later Seven Investment Management (7IM) became the core proposition for most clients.
As a restricted firm, Critchleys still uses 7IM. McGuigan says he has developed a good relationship with it over the past 10 years.
The Intrinsic network includes the Old Mutual Cirilium range of multi-asset portfolios, with Paul Craig heading up the actively managed portfolios. There are five risk grades in this range: conservative, balanced, moderate, dynamic and adventurous.
McGuigan says Critchleys can offer whole-of-market solutions. ‘As a restricted adviser, you work from a pre-approved panel of solutions. If you wish to deviate from this, you need Intrinsic to sign it off,’ he said.
‘The restricted advice process offers a suitable, robust and cost-effective solution for the vast majority of clients. However, a client’s circumstances may sometimes require a more bespoke solution, which can be achieved via our “restricted plus” classification.’
The restricted plus classification is used particularly for wealthier clients, and the accountancy arm of Critchleys has many of these. It is essentially an agreement that Critchleys can go off-panel for clients requiring a more specialised approach in areas such as financial goal setting, retirement planning, inheritance tax planning and protection.
Intrinsic’s best-of-breed solutions, provide access to multi-manager active and multi-manager passive portfolios. The Cirilium passive portfolios comprise traditional assets and are rebalanced quarterly.
On the right track
McGuigan’s personal preference is for a passive approach. He says, over the 20 years he has been observing the markets, it has been hard to find an active manager who can consistently outperform.
Another factor is the difference in price of active and passive funds, which he says is around 0.6%. This means clients often seek a passive option.
Similarly, he believes good returns come from asset allocation, rather than picking particular stocks or funds. This would mean, for example, considering whether to be in China or the UK rather than whether to invest in BP or Shell.
‘You can have a passive asset allocation strategy, with someone overseeing where in the world you need to invest but then getting cheap trackers,’ said McGuigan. ‘That will do the job.’
McGuigan claims becoming restricted will bring down regulatory fees for the firm and costs for clients too.
‘For the past three to five years, our regulatory fees had gone through the roof. We had no control over it. So we had to make a decision: do we want to skill up and perhaps offload these costs on to our clients? Or do we find an alternative solution? To us, a network solved that problem,’ McGuigan said.
Critchleys uses a range of solutions at a lower cost, available both to the firm and clients. But with the ability to go whole of market, McGuigan argues his firm is arguably offering a similar service as some independent advisers.
‘Take a look at how many independent firms manage their affairs. Are they really independent?’ he asked.