The advice gap left by banks’ exit from the market has created an opportunity for national IFAs, according to Towergate Financial chief executive Warren Page.
Page (pictured) and Towergate seem in a unique position to take advantage of the situation, with Page having cut his teeth as a financial planner for HSBC and Towergate having a series of partnerships with building societies and a phone-based advice service.
Page was appointed chief executive of Towergate’s financial advice arm at the start of the year, replacing previous boss Dan Saulter. He was quick to see the benefits of the company’s partnerships with building societies and decided these would be core to the firm’s post-retail distribution review (RDR) strategy.
The national currently has five partnerships with building societies, including Nottingham, Melton Mobray, Loughborough, Scottish and, most recently, Saffron Building Society. It is currently in talks with further two. Page plans to have 10 relationships in place over the next two years.
The nature of the partnerships varies. With Saffron, the firm acquired its three IFAs and their client book. Its deal with Nottingham involved building an advisory team to work out of the society’s offices. Page said he planned to grow the business through nurturing these relationships, rather than relying on Towergate’s previous strategy of acquisition.
‘Something I looked at when I first joined was how to unlock the organic growth opportunities, as acquisitions are quite an inorganic way to grow as you have to keep buying businesses. [Through these partnerships] we recognise we can fill a gap in the market where building societies don’t want to have their own advisory businesses,’ said Page.
Growing advice gap
The decision by a number of high street banks to exit the advice market only serves to reinforce Page’s belief that Towergate can exploit an ever growing advice gap.
In September Lloyds Banking Group announced it would cut investment advice to the mass market.
Lloyds’ announcement followed HSBC’s decision to axe its tied advice service, Barclays’ closure of it financial advice arm and Royal Bank of Scotland’s move towards restricted advice by closing down its IFA arm.
‘Look at the banking sector right now, notably Lloyds shedding a thousand advisers,’ said Page. ‘I grew up in the early days giving advice to HSBC clients, and I think we did a great job for those clients.
‘You are going to get more and more people struggling for financial advice, so if they can’t access that through building societies and banks, why not through us? We can do it well and profitably.’
The profitability question
Providing mass market advice profitably is the very challenge the banks found no answer to. But Page hopes Towergate’s recently launched phone-based advice service will help square this circle.
He said while Towergate’s face-to-face advice will remain independent, the phone service could be restricted. ‘[For the telephone-based service] you might find you have a smaller panel of products, [so] if you are going to give [it] a badge, it might be “restricted”.
‘We have a working party that is looking into this and understanding what the efficiencies are. We might end up with different models: the face-to-face financial planning being independent and the telephone-based advice might look restricted,’ he said.
Articulating the proposition
Page believes, whether IFAs are restricted or independent, firms’ biggest challenge will be how they articulate their proposition to clients.
Towergate is currently training all its advisers in how to make sure their clients understand the proposition.
‘It is critical to be able to articulate to a client how you will interact with them and the client doesn’t feel [they have been] left hanging,’ Page said. ‘The key element is to make sure the proposition focuses on what you are going to do for the client today and how to support them in the long run.’
Warren Page CV
Jan 2012-present Towergate Financial, chief executive
2008-2011 Origen, director of financial services
2006-2008 Barclays, regional director
2001-2006 Sedgwick Independent Financial Consultants, area manager
1998-2001 HSBC, area sales manager
1990-1998 HSBC, executive financial planning manager