Eldon Financial Planning’s healthy profit level was a key factor in the County Durham-based firm’s triumph in the New Model Adviser® awards, and director Tony Conner says keeping a lid on costs is key to its success.
Eldon won the award for the North for the second year in a row, and Conner (pictured), a trained accountant, says he is confident the firm’s low cost base gives it a good platform for growth. The firm delivered a £366,365 profit in 2012 off the back of £597,742 turnover.
‘Turnover really benefits if you don’t deal with [a corresponding increase in costs] – I keep everything as efficient as possible so growth really means growth,’ he says.
One of the contributors to keeping costs low lies in the business’s location, in the North East, where property prices are relatively cheap. ‘Our rent for 1,000 sq ft is £10,000 a year; it’s one of many advantages to where we’re situated’ says Conner.
Another factor is that clients tend to travel to the firm’s offices for meetings, which have a standard 90-minute time limit.
Training advisers in-house
Eldon’s recruitment strategy is based on training its own staff rather than taking on ready-qualified advisers. This strategy has not only helped its efforts to keep costs down, but also led to its succession plans scoring highly in our awards.
Conner says taking on advisers from other firms often costs more than training someone in-house. ‘It raises costs, it takes time to train [advisers from other firms] in the way we do things, and you need time to build trust,’ he says. ‘It’s much better to grow your own talent.’
Conner and co-director Joss Harwood (pictured below) focused on succession after taking part in a one-on-one consultancy provided by EU funding in their local region in 2007.
‘We realised we’re both too young to retire, and because we were incrementally profitable, why would we sell?’ says Conner, adding that they focused on developing a team they could trust before they plan their eventual exit.
A key part of that training has involved encouraging team members to strive for higher qualifications, Harwood says. ‘It’s very illuminating when you start on a path of study and find out what you do not know, so we’ve very much encouraged the young ones who’ve joined our team to strive for professional attainment,’ she says.
One example of this is 29-year-old Eldon adviser Gemma Langlands, who was crowned Personal Finance Society (PFS) paraplanner of the year in October last year, and has become a fellow of the PFS and certified financial planner.
‘She’s hit the standard of excellence, exceeded even the level we would hope to achieve,’ says Harwood.
Moving to passive investment
Eldon’s focus on costs not only encompasses business expenses, but has also led to changes in its investment proposition for clients. In 2009 the firm moved around £42 million of assets to passive investments run by fund manager Parmenion, which it says has helped to bring down investment costs for clients.
The firm charges 1% for its ongoing financial planning service, subject to a minimum of £1,500 a year. It currently services 265 active clients, reviewing 25 cases a month. Review meetings involve a 20-step process, and this set process helps to reduce ad hoc administration and costs, says Conner.
All this contributes to Eldon’s efforts for its clients. ‘We focus on what’s important for them, their lives, their objectives: the investment portfolio is the engine room for this,’ says Conner.